CHAPTER ONE

GENERAL PROVISIONS
TOPICS PER SYLLABUS

I. GENERAL PROVISIONS
..
A. Basic policy on labor
B. Construction in favor of labor
C. Constitutional and Civil Code provisions relating to Labor Law

A.
BASIC POLICY ON LABOR

1. DECLARATION OF BASIC POLICY.

Article 3 of the Labor Code declares the State's basic policy on labor,
thus:
"Article 3. Dedaration of Batie Poiq. - The State shall afford
protection to labor, promote full employment, ensure equal work
opporturuties regardless of sex, n.cc or creed and regulate the relations
between workeis and employers. The State shall assure the eights of
wotkcrs to self-organization, collective bargaining, security of tenure,
and just and humane conditions of work."
Article 3 is a substantial reiteration of Section 9, Article II of the 1973
Constitution1 wider whose regime the Labor Code was enacted. The primordial
reason for the passage of labor laws is social justice. Both under the Constitution
and Article 3, the State is duty-bound to provide and guarantee the following:
a) Full protection to labor;
b) Promotion of full employment;
c) Promotion of equal work opportunities regardless of sex, race or creed;
cl) Regulation of the relations between workers and employers;
e) Protection of the rights of workers to: ·
i. self-organization;
ii. collective bargaining;
iii. security of tenure; and

I
 2
BAR REvlEWER ON lABOR lAW
iv. just and hwnane conditions of wot:k.
The foregoing principles, being constitutionally mandated, should be
treated as the standard guidepost to which all labor laws and social legislations
should conform and upon whlch their legality and validity should be measured.
2. POLICE POWER OF THE STATE.
Even without the applicable provisions of the Constitution mandating the
protection and promotion of the interest of labor, the State is empowered to enact
labor laws and social legislations based on the immemorially-honored principle of
police power, one that inheres in the State to protect itself and all its constituents.
It is principally vested in the legislature to make, ordain and establish all manners of
wholesome and reasonable laws, statutes and ordinances, either with penalties or
without, not repugnant to the Constitution. The presumption is that the exercise
thereof is meant for the good anci welfare of the State and of the subjects thereof.
This is a settled principle and the validity of the exercise of such power is not
affected by the imposition of certain restrictions and regulations on the pursuit of
business, occupation or profession.
. The right to ~ork, j_ust file~ the right of every person to pursue a business,
occupatton ~r pro_fess1on. 1s subJect to the paamount right of government,
pursuant to tts police power, to impose such regulations and restrictions as the
pro!ection of the public may require. They are necessary for the orderly conduct of
society. _For as long as such regulations and restrictions are implemented and
cnfor~ed tn accordance with appropriate limitations, their validity should be upheld
at all tlmes.
B.
CONSTRUCTION IN FAVOR OF LABOR
1. CIVIL CODE'S ARTICLE 1702, IN RELATION TO LABOR CODE'S
ARTICLE 4.
The immemorially honored rule that doubts in labor cases should be
resolved in favor of labor has a strong basis in civil law and lab~r law.
Article 1702 of the Civil Code states:
"Mricle 1702. In case of doubt, all labor legislation and all labor
contracts $hall be construed in favor of the safety and decent living for the
laborcr."1
On the other hand, Article 4 of the Labor Code declares:
' PhlT~NalionaJ~Corpcramv.NLRC,G.R.No.101535,Ja\.22, 1993.
CHAmaONE 3
. GENERAL PROVISIONS
"Article 4. Co111Jntdion in Fawr of Labor. - All doubts in the
implementation and interpretation of the provisions of this Code, including
its implementing rules and regulations, shall be resolved in favor of labor."
Observably, a discussion of the Civil Code's Article 1702 cannot be
complete without correlating it with the Labor Code's Article 4. While the fonner
generally speaks of doubts in labor laws and labor contracts, the latter is specifi~y
confined to doubts involving the provisions of the Labor Code and its
Implementing Rules. There is thus a clear delineation between the tw~- provisio~s
insofar as their respective subject matters are concerned. More definitively, while
Article 1702 is more comprehensive in that it covers all ''labor legulations" which
necessarily include the Labor Code and other special laws, as well as all forms of
"labor mn/rtJdJ" which cover employment contracts and collective agreements,
Article 4 is focused and confined solely on the Labor Code and its Implementing
Rules. This explains the frequent joint invocation by the courts of these twin
articles in resolving doubts in labor cases.
The rule enunciated in the foregoing articles applies to all workers -
whether in the government or in the private sector - in order to give flesh and vigor
to the pro-poor and pro-labor provisions of the Constitution. 1 It is in keeping with
the constitutional mandate of promoting soda] justice and affording protection to
labor.2 Thus, when conflicting interests of labor and capital are to be weighed on
the scales of social justice, the heavier influence of the ·latter should be counter-
balanced by sympathy and compassion the law must accord the underprivileged
worker.l This is, of course, not a harsh rule. The framers of the Labor Code and
the Civil Code had fully taken cognizance of the disparity in tenns of resources and
standing between labor and capital. In any leg.ii controversy between them, the
fonner always suffers the most. Hence, the common adage that those w~o have
less in life should have more in law is best exemplified and made real m both
Articles 4 and 1702. The- worker must look up to the la:w for his protection. The
law regards him with tenderness and even favor and always with faith and hope in
his capacity to help in shaping the nation's future. He must not be taken for
grmted.4
2. DOUBT OR AMBIGUITY IN LABOR CONTRACTS.
a. Rule in case ofemployment contracts.
The general rule remains that where the law speaks in clear and categorical
language, there is no room for interpretation; there is only roo~ for app~ca~on.5
Con tracts which are not ambiguous are to be interpreted according to theu literal
1 Lem and Hoosqj DewqJment Cap. V. Esquilo, G.R No. 152012, Sepl 30, 2005.
See Secfal 18, Mx.te II d Ole Constiu&n Mania E1ect1i: ~ v . NI.RC, G.R No. 78763, Jutt 12, 1989.
l Martq>pef Mfli-4J ColJ)Olillk)nv. NL.RC, G.R No.1035i.5, Marth 29, 1996.
Cebu Ra/al Plant (San Mguel Ccrporatloo)v. t.'ilsterdl.ab«, G.R No. 58639, All;!. 12, 1987.
Leoodov. MST Marine Services, Inc., G.R. No. 230357, 06 Oec. 06, 2017.
 CHAPTER ONE 5
4 BAR RfVIEWER ON lABOR lAW
. GENERAL PROVISIONS

meaning and not beyond their obvious intendment 1 Only when the law is harbo d for his master's profit, then it is but proper that his demise be
ambiguous or of doubtful meaning may the court interpret or construe its true com :sated. Hence, if it has been established . that (a) the sea~arer had been
intent2 Thus, the liberal interpretation of the Labor Code and its Implementing suf£p · from a work-related injmy or illness dunng the !e~ of his e~ployment,
Rules in its Article 4 has been applied to employment contracts3 by virtue of Article
1702 of the New Civil Code which mandates that "all labor mntraas" shall likewise
(b)=·ury (9
ot illness was the cause for his medical repatn~tton, and It was later
det~ed that the injwy or illness for which he was medically repatnated was the
be construed in favor of the laborer. . f his ctual d th although the same occurred after the term of
proximate cause o a ea
Insofar as overseas employment is concerned, the POEA Standard his employment, the above-mentioned rule should squarely app1y.
Employment Contract (POEA-SEq which is required to be signed by evety OFW b. Rule in case ofcollective agreements.
deployed abroad, should be construed libenlly in favor of .the OFW. A strict and
literal construction of the 2010 POEA-SEC,4 especially when the same would In the area of ~ployment bargaining, the employer stands on higher
result into inequitable consequences against labor, is not subscribed to in this foo . than the employee. The law must protect lab~r to ~e extent, at !east, _of
.~ . ual r. • • b!llt'O'llining relations with capttal and to shield hun
jurisdiction. Concordant with the State's avowed policy to give maximum aid and ra1S111g him to eq 1oot1J1g sn -e,--- · l ·d th
full protection to labor as enshrined in Article XIIl of the 1987 Philippine from abuses btought about by the necessity to SU!Vive.1 Thus, the rule_ is ~ - at
Constitution, contracts of labor, such as the 2010 POEA-SEC, are deemed to be so hil CBA's terms and conditions constitute the law between the pa~es, it l~ not
impressed with public interest that the more beneficial conditions must be : o: a_ contract to which is applied the principles of law_ gove~~ ordinary
endeavored in favor of the laborer. The rule therefore is one of liberal construction, dinaxyN b . ,, ... o...J:-Ary contract as it is impressed with public interest, a
contracts. ot emg uwu
4UJ, echni all d th
as enunciated in PhilippiM Tra111111an111 Carrim, In, v. NLRC:5 CBA must be construed h'berally rather than narrowly_ and t .c ~• _an e
w:ts must place a practical and realistic constructton upon it, givmhig. dhu_e
"The POEA Standard Employment Contract for Seamen is designed CO . "ch • • · ted d the pnmnse for w C 1t
primarily for the protection and benefit of Filipino seamen in the consideration to the context m whi it ts negotta an -r-
2
pursuit of their employment on board ocean-going vessels. Its is intended to serve.
provisions must [therefore] be construed and applied fairly,
reasonably and liberally in their favor [as it is only] then can its 3. DOUBT OR AMBIGUITY IN EVIDENCE.

~~:.=
beneficent provisions be fully carried into effect."6 . Th rul enunciated in Article 4 and Article 1702 likewise applies in the
. ti ne f e:dencc in labor proceedings. Consequently, wht"n therr is a doubt
Applying the rule on liberal construction, the Court is thus brought to the
recognition that medical repatriation cases should be considered as an exception to ;e :vidence presented by the employer and ~e employee, such do~bt
Section 20 of the 2000 POEA-SEC. Accordingly, the phrase "work-related death sh uld be resolved in favor of the latter.3 Ttme and agam, the Supreme Court as
of the seafarer, during the tenn of his employment contract" under Part A (1) r:nounced that "if doubt exists between the evidence presented by the e~~loyer
of the said provision should not be strictly and literally construed to mean that the ~d the employee the scales of justice must be tilted in favor of the :ancr. Th~
seafarer's wotk-related death should have precisely occurred timing the term of hi.r . . t extend the doctrine to a greater number of employees. w 10 can av
policy is o b fi d the law which is in consonance with the avowed
1mpH(pll1nt. Rather, it is enough that the seafarer,s work-related injury or illness themselves of the ene ts un .er . ' . s
which eventually causes his death should have occurred during the tean of his policy of the State to give maxunum aid and protectJon to labor.
employment Taking all things into account, the Court reckons that it is by this In illegal dismissal cases, the consistent rule is .tha~ the employ_c~ mus;
method of construction that undue prejudice to the laborer and his heirs may be affinuatively show rationally adequate evidence that the ~snus~al was for a _1ust_ o
obviated and the State policy on labor protection be championed. For if the authorized cause. In case it fails, then it would result in haV111g the temu.naoon
laborer's death was brought about (whether fully or partially) by the work he had
declared illegal.6
1
1Wlcxx:k4iladli (Phis;), he. V. Bcmxk-Hiadli iPfils.L Inc. Makali Cl11)klyeesllnxln, G.R No. 156260. Mcral 10, 2005.
2 ~ •
3 Id., dfn:I Mmcq)per Mnlng Caporalbl v. NI.RC, G.R No. 103525, Ma!th 29, 1996, 255 SCRA322.
' This is Ile lalesthnefml Slaldad T811'S am Qnlals ~ Ile Oleiseas Enl)~d FiipinoSeararecs On-
Boc1110cem-Goilg 9ips(POEAthmlrilwnleitucr th 10,SsiEISd2010,0dober26,2010~Foonert,,2001POEA-
SEC (Sl.armd Terms aid Ccnlons ~ Ile Enl)v,,nent of Fq>m Seafcress On BoiJ'd Qcean.Going Vessels,
issued pWS\SltlD 00!.E Depcrtment Oder No. 4, Series of 2000 [May 31, 20001).
s G.RNo.123891,Feb.28,3»1,405Phl487.
& &rcm;is~
 CHAmRONE 1
6 BAR REvlEWER ON LABOR I.AW . GENERAL PROVISIONS

4. THE RULE DOES NOT DEPRIVE EMPLOYERS OF FAIR
TREATMENT.
Certainly, thls rule of interpretation and construction in favor of labor
does not mean that capital should, at all times, be at the losing end of a
controversy. The law does not sfy so. For while the Constitution and the law tend
to favor the working man, protection to the employer is also assured. Protection of
the rights of the laborer authorizes neither the oppression nor self-destruction of For ease in discussion, all the foregoing sections and articles are discussed below in
the employer. While the Constit.1tion is committed to the policy of social justice seriatim.
and the protection of the working class, it should not be supposed that eveq labor
dispute will be automatically decided in favor of labor. Management also has its
own rights which as such are entJtled to respect.and enfotcement in the interest of
simple fair play. Out of its concern for those with less privilege in life, the Court
bas inclined more often than not towards the work.er and upheld his cause with his
conflicts with the employer. Such favoritism, however, has not blinded the Court t. ARTICLE II HAS TWO PARTS.
to rule that justice is, in every case, for the deserving, to be dispensed in the light of
the established facts and applicable law and doctrine.1
The Philippine Constitution, while inexorably committed towards the
protection of the working class from exploitation and unfair treatment,
nevertheless mandates the policy of social justice so as to strike a balance between
an avowed predilection for laboc, on the one hand, and the maintenance of the
legal rights of capita~ the proverbial hen that lays the golden egg, on the other. The
Supreme Court, in PLDT ,. NLRC,Z underscored that although it is bound by the
social justice mandate of the Constitution and the laws, such policy of social justice
is not intended to countenance wrongdoing.
C.
CONSTITUTIONAL AND CIVIL CODE PROVISIONS
RELATING TO LABOR LAW
1.
CONSTITUTIONAL PROVISIONS
1. NO SPECIFIC CONSTITL'TIONAL PROVISIONS REFERRED TO
IN THE SYLLABUS.
Unlike the previous labor law yllabi, the 2019 Syllabm no longer specifies
the constitutional provisions which bu candidates should focus on. However,
based on past topics prescribed for labor law, the following are the major articles
and sections thereof which relate to labor law:
(a) Article II (Declaration of Principles and State Policies) - S,&tions 9,
10, 18 and 20 thereof;
(b) Article III (Bill of Rights) - S,&tions4, 8, 10, 16 and 18(2) thereof, and
(c) Article XIII (Social Justice and Human Rights) - Stetions 2, J, 13 and
14 thereof.I
Focus should therefore be made only on the above specified provisions.
1-A.
DECLARATION OF PRINCIPLES AND STATE POLICIES
(Article II of the Constitution}
Article II of the Constitution is divided into two (2) parts, vi~:
(a) Principles covering Sections 1 to 6; and
(b) State Policies covering Sections 7 to 28.
Notably, Setlion.r 9, 10, 18 and 20 of Article II fall wid~ State Policies.
Out of the 28 Sections of Article II, only these four (4) Secuons need to be
discussed herein. These provisions state as follows:
ARTICLEil
DECLARATION OF PRINCIPLES AND STATE POUCIES
STATB POUQES
· St,tio11 9. The State shall promote a just and dynamic social order that
will ensure the prosperity and independence of the nation ~d free. the
people from poverty through policies that provide :~eqmte s ~ semces,
promote full emplOJD}cnt. a rising standard of livmg, and an unproved
quality oflife for all. .
Stdion 10. The State shall promote social justice in all phases of national
development. .
Sedio1118. The State affums labor as a prim;uy sodal econnmtc force. It
shall protect the rights of wnrkers ood promote: tbdr welfare. .
Stdio11 20. The State recognizes the iruli§pmsble role of the ~
~ · encourages private entctprise, and provides·. incentive,~ to needed
igvcstments.
2. SECTION 9 (PROMOTION OF FULL EMPLOYMENT).
Section 9's relevance to labor law is accentuated by the State's policy to
· promote full employment to free the peopl~ from poverty with the end of ensuring
the prosperity and independence of the nation.

1 Revkladv.NLRC,GR.No.111105,.uie27, ·995.
2 Phippine loog Distallce Telephone Co. V. NLRC, GR No. l .ao609, N:J. 23, 1988. 164 SCRA 671.
, Miele xm is en8!ed "Social Justice and 1-tJ1nan fflQWs.•
 8 BAR REYIEWER ON L\BOR L\W
Section 9 is aligned with the policy enunciated in Employment Policy
Convention, 1964 (No. 122)1 of the International Labor Orgaruzation (ILO) which
aims at ensuring that {a) there is work for all who are available for and seeking
work; (b) such work is as productive as possible; (c) there is freedom of choice of
employment and the fullest possiJle opportunity for each worker to qualify for, and
to use his skills and endowments in, a job for which he is well suited, irrespective of
race, colour, sex, religion, political opinion, national extraction or social origin.2
3. SECTION 10 (SOCIAL JUSTICE).
It is a fundamental po]cy of the State to promote social justice in all
phases of national development. ~mtra/ Bankl pronounces that equality is one ideal
which cries out for bold attention and action in the Constitution. The Preamble
proclaims •~quaG!J" as an ideal precisely in protest against crushing inequities in
Philippine society. The command to promote social justice in Article II, Section
10, in "all phases of1111/iona/ de11lop111ent, "further expounded in Article XIII,4 are clear
commands to the State to take affirmative action in the direction of greater
equality. There is thus in the Philippine Constitution no lack of doctrinal support
for a more vigorous state effort towards achieving a reasonable measure of equality.
Our present Constitution has gone further in guaranteeing vital social and
economic rights to marginalized groups of society, including labor. Under the
policy of social justice, the law bends over .backward to accommodate the
interests of the working class en the humane justification that those with less
privil,e_ in life should have more in law. And the obligation to afford protection to
labor 1s 1ncwnbent not only on the le~tive and executive branches but also on
the judiciary to translate this pledge into a living reality. Social justice calls for the
humanization of laws and the equalization of social and economic forces by the
State so that justice, in its rational and objectively secular conception, may at least
be approximateds
4. SECTION 18 {PROTECTION-TO-LABOR CLAUSE).
Among the sections in Atticle II, it is Section 18 which is often cited in
labor cases as one of the two protection-to-labor clauses in the Constitution, the
other being Section 3 of Article XIII thereo~ infra. It is often invoked in resolving
doubts or ambiguities in the interpretation of labor laws, employment contracts,
~d collective b~gaining agreements and in the appreciation of evidence presented
Ill labor proceedings. The constitutional tenet embodied in Section 18 is also the
basis for the following provisions in the law: (1) Article 1702 of the Civil Code
which provides that all labor legislation and labor contracts should be construed ~
Conven6on an:eming ~ Pa£y (E~ nto me: 1s J"1 1966) Mopm: Geneva, 481h 1tc sessi>n (09 Ju1
1
1964~ See~ lext al II.O's website k>calecl at 1Etps1hw.wioq, last accessed: Mcltfl 18. 2019. .
2 GRNos. 180849n 187143,t«Jv.16,2011.
SeeAiti!tdlO~PckyConvenlm, 1964~.122).
3 Agaboo v. NLRC, G.R No. 158893, No¥. 17, 2004, ~ capij v. Nl.RC, GR No. 117378. MYd1 26, 1997.
4 Ceilt'al Bri~Assotialioo. Inc. v. Balgko Sentralng Pilpra;, G.RNo.148208, Dec. 15, 2004.
Enblled"Soca.Justeald tbnan Rijt\"
5
CaiarYJ v. Wilts, GR No. 47800, Dec. 2. 1'~. 70 flhl 726.
CHAl'TER ONE
. GENERAL PROVlSIONS
9
favor of the safety and decent living for the laborer, and (2) Article 4 of the Labor
Code, which states that all doubts in the implementation and interpretation of its
provisions, including its implementing rules and regulations, shall be resolved in
favor of labor)
Thus, when conflicting interests of labor and capital are to be weighed on
the scales of social justice, the heavier influence of the latter should be c~~ter-
balanced by sympathy and compassion the law must ~cc~rd_ the un~~rpnvileged
worker.2 In intetpreting the protection to labor and social !usu~ provision~ of the
Constitution and the labor laws or rules and regulations tmplementing the
constitutional mandates, the liberal approach which favors the exercise of labor
rights should always be adopted.3
The same provision is the constitutional touchstone for the State's
disclwge of its avowed duty of protecting and promoting the exercise of ~ll the
rights gmited to workers, such as the right to full empl~yment and. ~uality of
employment opportunities, self-organization, co~e~~ve b ~ and
negotiations, strike and other pea~~ conc~ed a_ctlvtttes,. secunty o~ .ten~e,
humane conditions of wotk, and a livmg wage, mcluding the nght to parttapate 1n
policy and decision-makin~ processes affecting their rights and benefits as may be
provided by law.4
The constitution.al policy in Section 18 is not meant to be a sword to
oppress employers. The co~tment of the C~ut: t?- the c~use ·of lab_or does not
prevent it from sustuning the employer when 1t ts 111 the right. For UlSWlce, an
employer should not be compelled to pay employees for work not actually
perfoJI11ed and ·in fact abandoned.5 N?r sho~ ao employer be _compelled to
continue employing a person who ts a~ttedly ~ty _of misfeasance or
malfeasance and whose continued· employment is patently uumical to the employer.
The law, in protecting the rights of the laborer, authorizes neither oppression nor
self-destruction of the employer.6
5. ON SECTION 20 (ROLE OF PRIVATE SECTOR).
Section 207 is the constitutional basis for the enactment of laws that lay
down a healthy environment which encourages the private sector to put up
businesses that generate employment and provide much-needed goods an~
services. It likewise paves the way for local and foreign investors to put their
1 WesfeYcr1 ~ v. Wesleyan U~iles F~ 181 Staff Association, GR No. 181806, Mlttl
12,2014.
2 ~t.tqCapcxa!Dlv.NLRC,G.RNo.103525,t.'ardl29, 1996.
3 AtBnm &Adanson, ~ v. CIR, G.R t+J. L-35120, Jen 31, 1984, 127 SCRA 268.
• See Sec1bt 3, Mde XIII d tie Cmstilufxln and Miele 3of Cl& lm Code. See also fltlffipplne Nafxm Bank V. Paciao.
Id., am,g ~. Ire. v. NlRC, GR No. L-70546, Oct 16, 1986, 145 SCRA 123. . . .
&
Secoon 20. The Slaf8 recognizes O l e ~ rae d tie pliva!e sec111, enc:oorarJ8S pnvate enlerprise, and provdes
mrilNeSIDneeded~
 10 BAR REVIEWER ON LABOR LAW
investments into the local economy. Indeed. the St.ate cannot do it alone; it needs
the active participation of the ,private _sec!or as a main e_ngine for national growth
and development. 1 The S~t~ s ro_le 1s sunply to prov_ide the most appropriate
favorable incentives to _mobilize p_nvate resources for thls purpose.2 Consequently,
this section has been ated as basis for the enactment of such major laws as R.A.
:I No. 7916, (The Special Economic Zone Act of 1995),l R.A. No. 9184 (I'he
,, Govemment Procurement Refoon Act); R.A. No. 6957,4 as amended by R.A. No.
7718 (!he .Amended Build-Operate-and-Transfer (BOT] Law], to name but a few.
6. STATE POLICIES, NOT SELF-EXECUTING PROVISIONS.
By its very title, Arti~e Il of the Constitution simply reflects the State,s
''dltlaralion ofpn'ndple1 and 1/alt poicier. " As such, the provisions under this article are
not intended to be in the nature of self-executing principles ready for enforcement
5 ~
thr~ugh the co~: _They ~re used by the judiciary as aids or guides in the exercise
of its power of judicial review, and by the legislature, in its enactment of laws. The
disre~d of these provisions cannot give rise to a cause of action in the courts. The
reason 1s. ~t they do no! ~body judicially enforceable constitutional rights but
m~e ~delines for l~latlon.6 These broad constitutional principles need
~slauve enactments t? ~plement them. 7 The reasons for denying a cause of
actton ba_sed on.all~ infringement of b.coad constitutional principles arc sourced
!;t'm baS1c cons1derat1ons of du~ process and ~e lac~ of judicial authority to wade
mto the wicharted ocean of social and econom1c policy-making."8
1-B.
BILL OF RIGHTS
{Article Ill of the Constitution)
1. FIVE (5) RELEVANT SECTIONS.
Out of the 22 Sections of the Bill of Rights (Article III), only five (5) are
most relevant to labor law' lo rvit.• Sections 4' 8' 10, 16 and 1sn1
t'. 11 ,,,, whose provisions
··
state as ,o ows:
~ Secfal 1, RA th 6957 put, 9, 1991). entilled "AA Id. AutxmirJ Ile Fnniig, Conw:tm, OperabJ cm
1
2 ~d~Plqectsbytfle :>rMlleSecla',clldc,()hlrPlBposes_•
3
Ps anended II'/ RA No. 8748 [June 1, 1999], enfided "M AdArnendWJ 0 ..... .i.r... kl No 7916 O!he"""'" .,___ as..,.
'Special EanrntZane Act Of 1995," ,...,_.... . ' "'""' NIUWII URl
4 &pa.
5
Tal'lada V. AB;in. G.R. No. 118295. Ma-f 2, 1997; Toodo Medical Center Employees AssociatiQI\ v CA, GR No
167324, Jut, 17, 'J007 (En Banc).
6
PB hett In Ile leilq c:-ase o f ~ lncxpaa1ad vJ.ball>, G.R No. 118910 Ju!ot 17 1995
: Basa>v.~,G.RNo.91649,Mr,14, 1991, 197SCRA52,68. . ' . .
Tar\ada V. h'dma. supa: See mo 0posa V. ;adcfan, Jr., G.R No. 101083, .Ill/ 30. 1993. 224 SCRA 792, 817.
CHAPTER ONE 11
. GENERAL PROVISIONS
ARTICLE III
BILL OF RIGHI'S
Sedion 4. No law shall be passed abridging the freedom of §peech, 2f
expression. or of the press, or the right of the people peaceably to assemble
and petition the gpyemment for redress of gtieyances.
Sedion 8. The right of the people, including those employed in the l2Yhlk
and printe sectors, to form unions as,c.ociations. or societies for puq,oses
not coptraQ' to Jaw shall not be abridged.
Stdion 10. No law impairing the obli~tion of contmcts shall be passed.
S,dion 16. All petSOOS sh211 have the right to 3 §peed_v rl§position of
their ases before all judicial, q.pasi-j.udicia,l, or administqtiys bodies.
Sedion 18. :ax (2) No inyoluptuf servitude in any foml shall exist
as a punishment for a crime whereof the party shall have been duly
convicted.
2. SECTION 4 (FREEDOM OF SPEECH).
As far as labor law is concemed, Section 4 is relevant only in connection
with the exercise of the right lo pidut provided in the Labor Code,1 but not in
relation to the exercise of the right to rtrik, which derives its constitutional moo.ring
from a different provision2 thereof. Simply put, these rights, although considered
twins or look-alikes in nature, are not one and the same. Thus, the right to pitket is
based on Section 4, Article III of the Constitution; while, the right /Q rtrike is
anchored on Section 3, Article XIIP thereof.
Picketing may be distinguished from strike in that while the latter centers
on stoppage of work, the former focuses on publicizing the labor dispute and its
incidents to the public. For its validity, picketing, being a freedom of speech
activity, is not bound by the mandatory requirements for the conduct of a strike. It
is simply required to be peaceful for its validity. Picketing thus simply involves the
act of marching to and fro in front of the employer's premises, usually
accompanied by the display of placards and other signs making known the facts
involved in a labor dispute. It is an activity separate and distinct from a strike.
(NOTE: For amore comprehensive discussion on picketing and strike,
please read Chapter F,ve [Labor Relations), Infra).
3. SECTION 8 (FREEDOM OF ASSOCIATION).
Section 8 generally guarantees the right of the people to fonn unions,
associations, or societies for purposes not contrary to law. The State makes this
right available to both tmhlk4 and ~ s sector employees. More meaningfully,
' Mk:1e 27912641, Labcr Code.
. . . 2 M;re~,Secbl3dMde)QUlhereof.
> Del.ecrtv. Nata!all.mUnm. G.R tl?. l•758Un 30, 1957.
• See f.xecufM3 Odlr No. 180, Series d 1987 Yotldl prrNiles Ile gtmeiles for Ole ex8'Cise of Ole IYJhl b orgne rl
~ ==-goverring law on !he exen:ise of Ile 19'1 ID sel-organlzaion ii !he pMle secb".
 12 BAR RM EWER ON WOil LAW
for pwposcs of the exercise of this freedom of association, Section 3, Article XIII
of the Constitution guarantees the right of all workers to self-organization.
To breathe life to this constitutional tenet, the Labor Code;
(a) protects the right of workers to self-organization and to foan, join, or
assist labor organizations of their own choosing.I
(b) declares as a policy of the State the fostering of a &ee and volwitaty
organization of a strong and united labor movement2
{c) declares that it shall be unlawful for any person to restrain, coerce,
discriminate against or unduly interfere with ediployees and workers in
their exercise of the right to self-organization, which includes the right
to fonn, join, or assist labor organizations for the purpose of collective
bargaining through representatives of their own choosing and to
engage in lawful concerted activities for the same purpose or for their
mutua} aid and protection.l
4. SECTION 10 (FREEDOM OF CONTRACT).
lhe purpose of the non-impainnent clause of the Constitution is to
safeguard the integrity of contracts against unwarranted interference by the State.
As a rule, contracts should not be tampered with by 111bs41j111nt laws that would
chang~ ~r ~odify the eights and obligations of the parties.4 Impai.anent is anything
that dururushes the efficacy of the contract There is an impainnent if a s11bs1q11111t
l~w changes the terms of a contract between the parties, imposes new conditions,
dispenses with those agreed upon or withdraws remedies for the enforcement of
the rights of the parties.5 The non-impainnent clause is limited in application to
laws that derogate from prior acts or conmcts by enlarging, abridging or in any
manner changing the intention of the parties.6 Necessarily, the constitutional
proscription would not apply to laws already in effect at the lime ofmnlrad 1xe&11tion.1
A good illustrative case is An11aRSion v. Natio11a/ Labor Union.a At issue in
this case is R.A. No. 33509 which exempts members of any religious sects that
prohibit a_ffiliation o_f tl1eir members in any labor oiganization, from being covered
by a uruon secunty clause. The union contends that R.A. No. 3350 is
unconstitutional for impairing the obligation of its conttact, specifically, the ''rl~n
1e&11~ da1111" embodied in its Collective Bargaining Agreement (CBA) with the
I Alfdes3 !00 253 (24311.abctCode.
2 Mde218(A)(c)(211(A)(c)J. laba'Code.
3
Mde257(246).LmCode.
• Goke1way ~ ~ v . ~ PCI Bank, G.R. No. 195540, Mcrch 13, 2013.
s Id~
~ Assodabt fer Natmal Advirmnent nl TrcrlSpa1!0cy (BANAT) Party-lm v. Corrmssion (Xl ~ G.R
6
1
No. 1n508, Aug. 7, 2009. c~ng Sercmv. Gall!rlt ~ Services, Inc., G.R No. 167614, Math 24 2009.
Haciendallisit!,lnc v.PARC.G.RNo.171101,JulyS,2011. ' 1 SeealsoAbelav.NLRC, G.R No. 71813,July20, 1987.
1 G.R. No. L-26097, Nov. 29, 19n.
9
Enacted oo!Jlle 18, 1961. ;rneimig Sectm 4(a), paragraph 4of RA. No. 875.
CHAPTER.ONE 13
• GENERAL PROVISIONS
company, by virtue of which c'membership in the union was required as a condition
for employment for all permanent employees and workers." This agreement was
already in existence at the time R.A. No. 3350 was enacted on June 18, 1961, and it
cannot, therefore, be deemed to have been incoq,oated into the agreement But by
reason of this amendmen~ Anucension as well as others similarly situated, could no
longer be dismissed from bis job even if he should cease to be a member, or
disaffiliate from the union, and the company could continue employing him
notwithstanding his disaffiliation from the union. The Act, therefore, introduced a
change into the express tenns of the uni~n security clause; the company was partly
absolved by law &om the contractual obligation it had with the union of employing
only union members in permanent positions. It cannot be denied, therefore, that
there was indeed an impairment of said union security clause.
The Supreme Court, however, ruled that the prohibition to impair the
obligation of contracts is not absolute and unq:ualified. In spite of the constitutional
prohibition, the State continues to possess authority to safeguard the vital interests
of its people. Legislation appropriate to safeguard said interest may modify or
abrogate contracts already in effect Otherwise, important and valuable refomis
may he precluded by the simple device of entering into contracts for the purpose of
doing that which otherwise may be prohibited. It follows that not all legislations
which have the effect of impairing a contract are obnoxious to the constitutional
prohibition as to impairment, and a statute passed in the legi~ate exercise of
police power, although it incidentally destroys existing contractual tights, must be
up~eld by the courts. This has special application to contracts regulating relations
between capital and labor which are not merely ordinary but impressed with public
interest and therefore must yield to the common good.
W'hat then was the purpose sought to be achieved by R.A. No. 3350? Its
purpose was to insure freedom of belief and religion, and to promote the general
welfare by preventing discrimination against those· members of religious sects
which prohibit their members from joining labor unions, confuming thereby their
natural, statutocy and consti~tional right to work. It cannot be gainsaid that said
purpose is legitimate. It may not be amiss to point out here that the free exercise of
religious profession or belief is superior to contract rights. In case of conflict, the
latter must, therefore, yield to the fonner. 1
As held in the 2009 en ban, case of Se"a110 v. Gallant Maritime Semas, Im..:z.
"The prohibition [against impairment of the obligation of contracts] is
aligned with the general principle that laws newly enacted have only a
prospective operation,3 and cannot affect :icts or contract!I already
' Serranov. GalirtMrine Selvkles, lrc., G.R. No. 167614, ~ 24, 2009.
3 ()rtxJas &Co.. W. v. CA. G.R. ~.126102. De.c4. 20CO, 346 SCRA 748.
 14 BAR REvlEWER ON l.ABOR I.AW
perfected;1 however, as to laws already in existence., their provisions are read
into contracts and deemed a part thcreof. 2 Thus,_ the non-impainnent
clause under Section 10, Article III [of the Constitution] is limited in
application to laws about to be enacted that would in any way derogate
from exjstiog acts or contracts by enlarging, abridging or in any
manner changing the intention of the parties thereto."J
Thus, in this case, the enactment in 1995 of RA. No. 8042, otherwise
known as the ''Migrant Workm and Oumeas FiGpinos Act of 1995" preceded the
execution of the employment contract between petitioner and respondents in
1998. Hence, it cannot be argued that R.A. No. 8042, particularly the subject
clause,4 impaired the employment contract of the parties. Rather, when the
parties executed their 1998 employment contact, they were deemed to have
incorpo.rated into it~ the provisions of RA. No. 8042.
Police Power vs. Freedom of Contract.
It must be bome in mind that police power is superior to the non-
impainnent clause.5 In other words, the constitutional guaranty of non-impairment
of obligations of contact is limited by the exercise of the police power of the State,
in the interest of public health, safety, morals and general welfare.'
Thus, in unfm11t1 of Manti,,,, Manning Agendu, In'-, u. POEA,1 the Court
did not consider violative of the constitutional non-impairment clause, Resolution
No. 01, Series of 1994, of the Goveming Board of the POEA and POEA
Memorandum Circular No. 05, Series of i 9948 that amended and increased the
rates affecting death and wotkm.en's compensation and other benefits provided in
the POEA Standard Employment Contract (POEA-SEq for seafarers and
provided that "[u]pon effectivity, the new compensation and other benefits shall
apply to any Filipino seafarer al""eady on-board an,v vessel provided, that the cause
of action occurs after the said compensation and benefits take effect[.)"
1
~Rescuces. R:.V. BaseM3tals~ReswtesCcrparalm, G.RNo. 163509,Dec.6, 2006,510SCRA«xl.
1
fntala.Amance~v. ReplAJ!i:ctfle Aq,pnes, GR No. 156571,JU¥9, 2008.
3 ~~-
' The sub;act daise is Ole mt daJSe ii lte 5' parcgraph d Sedioo 10 rlRA tb. 8042, to wt "Sec. 10. Mlney Clains ..
xxx In cased Emilalion d waseas ~v.itloutjust. \lad a dDized cause as d"'1ed by law or axmact. lhe
v.oktrS sha!I be OOlilled ID Ile U reinbtrsementdh6 piamentfee ~ hlerastct t.Yett1e peraint(12%) per arrum, plJs
116 salaries for lhe unexpiled porticxl clhls efflllatmen1CXJ1nctautlree (3J nKXlfhs brMy}9'ofthe im,iedtenn,
vithewr is~ XXX ~ Im ll1delscaing ~ i1 lhe (nJi1al texlof lhe decisbl). This clause \1,35 dedared
llllCXXdJJb1al ilfis case.
A1qlpn8Nama Bankv. Rlmp), G.R No. 78508,21 ~ 1994.
5
6
The~ M1eriar1 life k1surance Ccn1D!Yv. The Audmr General. G.R No. L-19255, Jan. 18, 1968.
1
~dMnineMrmgAgencies,tn:.,v:POEA,GANo.114714,April21, 1995.
8
Memcmbn Ciwlar No. 05, Issued oo 19 Jaway 19942 by POEA Adrnitistrafa Fekisino Josoo cm addressed lo al
Flipho seafaels, manning ajE!nCies, ~fflcrli'J8S and Jri,dpals hii-g Flipho seafaes, ilfooned lhem .lhal
Govemi'g Boan! Reso~ No.01 lllijusted he rates ctcar~ensaticn cmabenefils il Pat II, Sectioo C. paragraph 1;
Sedioo L. para;raplls 1 cm 2; and Appendix 1-A cl hi POEA Standard ~ t Conlrads for Seafcm, ~
~ kxi effect oo 20 Mml 1994, cm flat "VI. Upoo effedMty, tie ne.v ~ and oiler benefG s11a1
appy kl Mt Fifpilo seafcm ueact, oo-t<>ad 2tr'/ WS&!I pomed, 01id Ole case cl adicn ocxurs al\J 81e sail
~a,dbenefibtakee&d."
CHAITTRONE 15
. GENERAL PROVISIONS
The challenged Resolution and Memorandum Circular were held to be
valid implementations of E.O. No. 797, the executive order creating the POP.A
which was enacted to further implement the social justice provisions of the 1973
Constitution and which have been greatly enhanced and expanded in the 1987
Constitution. They were enacted under the police power of the State and thus, they
cannot be struck down on the ground that they violate the cont.tact clause. To hold
othenvise is to alter long-established constitutional doctrine and to subordinate the
police power to the contract clause.
This must be so because constitutional prohibition against impairing
contactual obligations is not absolute and is not to be read with literal exactness. It
is restricted to contracts with respect to property or some object of value and
which confer rights that may be asserted in a court of justice; it has oo application
to s~tutes relating to public subjects within the domain of the general legislative
powers of the State and involving the public rights and public welfare of the entire
community affected by it It does not prevent a proper exercise by the State of its
police power by enacting regulations reasonably necessary to secure the health,
safety, moms; comfort, or generctl welfare of the community, even though
contacts may thereby be affected, for such matters cannot be placed by contract
beyond the power of the State to regulate and control them.I
Police power· legislations adopted by the State to promote the health,
morals, peace, education, good order; safety, and general welfare of the people are
generally applicable not only to future contracts but even to those already in
existence, for all private contracts must yield to the superior and legitimate
measures taken by the State to promote public welfare.2
5. SECTION 16 (SPEEDY LABOR JUSTICE).
Section 16 guarantees to all persons, employees and emp1oyers alike, the
right to a speedy disposition of their labor cases and disputes before all quasi-
judicial or administ.rative bodies like the NLRC, Bureau of Labor Relations, DOLE
and other agencies tasked to dispense labor justice as we11 as hrfon· judicia1
tribunals like the Court of Appeals and the Supreme Court when such labor cases
and disputes are elevated to these superior courts by way of Ruk· 65 certiorari
petition or appeal, as the case may be.
However, ".rpeet!J disposition of ,asd' or ".rpmly labor justkl' is a relative term
and a flexible concept. It is consistent with delays and depends upon the
circumstances of each case. What the Constitution prohibits are unreasonahle,
arbitrary and oppressive delays which rendet rights nugatory.3
1 Cooferenceof tJdne Mnq Ageooes. "-. V. P0EA. G.R No. 114714, April 21, 1995.
2 Sernmv. GalantPlartine Servi:es, n:.. G.R. No. 167614, f.ladl 24, 2009.
3 Cadcinv.POfA,NLRC,GRNos.11M776, 104911-14and105029-32.0ec.05, 1994.
 16 BAR :lEVIEWER ON IASOR !AW
Speedy labor justice, in :erms of period, is provided under Article 292(i)
[277(i)] of the Labor Code, thus:
"(1) To ensure ~d-1 labor justice, the periods provided in this Code
within which decisions o: 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 itsdf, or the Labor Arbiter, or the Director of the Bureau of
Labor Rdations or Med-Arbiter, or the Regional Director."
In the deteanination of whether or not the righ\ to a "!pteefy trial' has
been violat«;cl, certain factors mzy be considered and balanced against each other.
These are the length of delay, re:1son for the delay, assertion of the right or failure
to a~sert it,_and prejudice caused by the delay. lne same factors may also be
considered_ 1n answerin_g _the j~dicial inquiry as to whether or not a person officially
charged with the administrallon of justice has violated the speedy disposition of
cases.1
While the speedy disposition of labor cases may be the policy of the law, it
must be emphasized that speed alone is not the chief objective of a trial. It is the
careful and deliberate consider,tion for the administration of justice, a genuine
respect for the rights of all parties and the requirements of procedural due process,
and an adherence to the Court's standing admonition tJ1at the disposition of cases
should always be predicated on the consideration that more than the mere
c~nvenience of the courts and Jf the parties in tJ1e case, the ends of justice and
fairness would be served thereby. These are more important than a race to end the
triaJ.2 As eloquently expressed by the US Supreme Court in one case,J which,
although not legally controlling in this jurisdiction, nevertheless has persuasive
effect -
. '::1e establishment of prompt efficacious procedures 10
achie_vc lcgtUmate sta'.e ~nds is a proper sratc interest worthy of
cogruzance in const1tullonal adjudication. But the Constitution
recognizes higher values than speed and efficiency. Indeed, one may
fairly say of the Bill of filsbts in general, and the Due Process Clause in
particular, that they wer-! designed to protect the fragile values of a
vulneable citizenry from the overbearing concern for efficiency and
efficacy that maycharacterize xxx government officials nx"
6. SECTION 18[2) (INVOLl:NTARY SERVITUDE).
A rea~g of ~ecrion 1_81 indicates that it is obviously applicable to criminal
cases only. Titis expla1ns why 113 2nd paragraph on involuntary servitude is phrased
Caba'.ero V.Alfooso, Jr, 153 SCRA 153 11987; Gonzales V.Senf~. 199 SCRA 298.
Halanav. NtRC,G.R.No. 129418, ~ 10. 1999:SeeOeGuzm.rl v.Eooas, G.R. No. 57395 Apri 17 1989
i Id, drg Striey v. lhis, 405 U.S. 645, 65€.
' SediJl 18. (I) No peoo1 shal bedelailoo solef( l1f reasoi ci his poijca beiefs ;m i1S1ta1ions.
CHAl'TER ONE 17
GENERAL rROVISJONS
in this fashion: "No involuntary servitude in any form shall exist except as a
punishment for a crime whereof the party shaU have been duly convicted."
However, in at least three (3) labor law situations, the concept of involuntary
servitude finds application, namely:
(1) Volwitary resignation;
(2) Return-to-work order in national interest disputes; or
(3) Compulsory fulfillment of military or civic duty.
6.1. VOLUNTARY RESIGNATION.
"Invo/11ntory servit11dl' is every condition of enforced or compulsory service
of one to another, no matter wider what foan such servitude may be disguised.1
The constitution categorically prohibits involuntary se1vitude.2 It is on the basis of
this -constitutional precept that employees arc granted the right to resign or 10
terminate · their employment relationship with their employers under Article 300
(285]3 of the Labor Code. Titis article recognizes the equality of the parties to an
employment relationship. Thus, an employee may resign from employment al any
time he wishes and with or without just cause, subject only to certain minimum
conditions imposed by law.4
The case of BPI v. BPI Emphym U11io11,3 1s mstrucnve on this point. It
involves the merger of BPI ,vith FEBTC,6 where the Vohmtary Arbitrator ruled
that, in accordance with Section 80 of the Corporation Code, the employees of
FEBTC for:m part of the "assets and liabilities" transferred 10 the surviving bank,
petitioner BPI, by virtue of the merger. The Supreme Coun, however, did nor
agree to this postulation. In legal parlance, human beings are never embraced in the
term "assets and liabilities." lt is contrary to public policy to declare the former
FEBTC employees as formi ng part of the asset~ or habih11cs of FEBTC that were
transferred and absorbed by BPI in the :\rticlcs of ;\lerger. ,-\ssw and liabilities, in
this irts.tance, should be deemed to refer only to property rights and obligations of
FEBTC and do not include the employment contracts of its personnel. ,\
corporation cannot Wlilaterally transfer its employees to another employer like
chattel. Certainly, if BPI as an employer had the right to choose who to retain
among FEBTC's employees, FEBTC emplorees had the concomitant right to
choose not to be absorbed by BPI. Even though FEBTC employees had no choice
(2) No i1IUllay sel'llxle il Irr/ bill shal exist except as a pt.rislrnenl for a crime v.1-eeci toe party shal have been
lilfcmw:tecl.
rujy, Pnm;aS:mf ciMndao, GR. No. l-14078. Mrdl 7, 1919, 39Phil. 600.
Sedm 18 (2J.Altide UI [Bi ciRiJhl<;11987 Consfuoon.
) EnliUed 'Tenriliim 11/ ~ . " This ii amnont,, kroM! as 'rosiJnalioo • N. reoorrt>ered pursuant lo Secbl 5, RA
No. 10151, Jll1e 21, 2011 and OOI.E Depatnen1 AIMsoly No. 01, Series ci 2015 {Rerl.rrbesi'9 ci lhe uw Code ci lhe
~ .as Ml!llded), issued oo JoJf 21, 2015.
• 4 Sxti as m an 8ll)lcrfee resi)lls rx lemi'lales ~ j.Jst caise he € I l l ) ~ rela!i:nshi>, l1t seivrg a
• • · v.ri!len nooce oo tie enl)loyer at least one (1) moo3l il ~ (See Article 300 (285]. uw Code~
s BPIv. BPt 8rpla,'ees lki:nOa,<aO Oiq,lef.federatial ci lm1s il BPI Unbank. G.R. No. 164301, Aug. 10, 2010.
I FcrEastBriandTrustCal1)alY(FEBTC).
 CHAl'TER ONE 19
18 8All REVIEWER ON IASOR IAW . GENERAL PROVISIONS

or control over the merger of their employer with BPI, they had a choice whether which falls under the exception to trus constitutional proscription on involuntary
or not they would allow themselves to be absorbed by BPL Certainly nothing servitude. This is so because the constitutional prohibition should be subordinated
prevented the FEBTC's employees from resigning or retiring and seeking to the right of the govemment to call upon its citizens to protect their State as
employment elsewhere instead of going along with the proposed absorption. provided under Section 4, Article II of the Constitu~on. The survival of the State is
Employment is a personal consensual contract and absorption by BPI of a former the paramount justification for such involuntary semtude.
FEBTC employee without the consent of the employee is in violation of an
1-C.
individual's freedom to cont.net It would have been a different matter if there was
SOCIAL JUSTICE AND HUMAN RIGHTS
an express provision in the Articles of Merger that as a condition for the merger,
(Article XIII-of the Constitution)
BPI was being required to assume all the employment cpntacts of all existing
FEBTC employees with the conformity of the employees. In the absence of such a
provision in the Articles of Metger, then BPI clearly had the business management 1. FOUR (4) RELEVANT SECTIONS OF ARTICLE XIII.
decision as to whether or not to employ FEBTC's employees. FEBTC employees Article XIII embodies 19 Sections but only four (4) are most relevant to
likewise retained the prerogative to allow themselves to be absorbed or not; labor law, viZ:: Sections 2, 3, 13 and 14, whose provisions are as follows:
otherwise, that would be tantamount to involuntary servitude.
ARTICLE XIII
6.2. RETURN-TO-WORK ORDER IN NATIONAL INTEREST SOCIAL JUS11CE AND HUMAN RIGHTS
DISPUTES. Stdion 2. The promotion of social j.ustice shall include the commitment
to create economic opportunities based oo freedom of initiative and self-
In national interest cases1
where the DOLE Secretary exercises his
reliancc.
assumption or certification power, returning to work on the part of the wotker by
LABOR
virtue of a return-to-work order is not a matter of option or voluntariness but of
obligation. 2 It must be discharged as a duty even against the worker's will The S,dion 3. The State shall afford full protection to labor, ~ -
~ . orgwized and unoJgPJizcd, and promote full emplQJIDent and
worker must return to his job together with his co-workers so that the operation of
the company can be resumed and it can continue serving the public and promoting equaljn, of emplQJrnent op_portunities for all
its interest.3 1bis is the real reason such return can be compelled. So imperative is It shall guanntec the rights of all workers to sc1f:9~ti?n ~
the order in fact .that it is not even considered violative of the constitutional right bargaining and ru:~ons, and peaceful !yQPcertcd act1v_it1es mcludin~ the
right to strike in accordance with Jaw. They shall be entitled to secunty of
against involuntaiy servitude, as held in Gotam&a Sa Mill' A retum-to-work order
is immediately executory in character and should be strictly complied with by the
tenure. humane conditions of work, and a living ~ Tuer ~hall also
participate in policy and dctjsion-maki.gg processes affectmg thcu gghti and
parties even during the pendency of any motion or petition questioning its validity ~ as may be provided by bw. ·
in order to maintain the status IJIIO while the determination is being made.s The The State shall promote the principle of shared te§pQnstbilitf betwe':°
obligation so imposed must be discharged as a duty mo.re than as a right that may workers and employers and the prefqentw ·use of voluqt;u;y ?)odes m
be waived. While the workers may choose not t~ obey~ they do so at the risk of ~ettligg c\i§putcs, including g,pciliation, and shall enforce their mumal
severing their relationship with their employer.6 compliance therewith to foster industrial peace.
6.3. COMPULSORY FULFILLMENT OF MILITARY OR CIVIC DUTY. The State shall regulate the relatio~ between workers and cm?loycrs,
recognizing the right ~£ labor to its just share in the f™!ts of productton and
Article 301 (286]7 of the Labor Code which provides for compulsory the right of entetpnses to reasonable returns to myestmegts, and to
ful6Ilment of milituy or civic duty on the part of employees, is another instance expansion and~
WOMEN
1
Stdion 14. The State shall protect working women .by providing~
Mpcomed ii Article 278(g) [263(g)l. LaborQxle.
2 MltqJper MnirJ Oxpcnticrlv. 8illtes, G.R No. 119381, MTch 11, 1996.
bsalthful working conditionst taking into acc~unt theu ma~ functrons,
' Sirtrinlv. Tub>,G.R.ta. 75271-73,J\re27, 1988, 162SCRA676. and such facilities 211d @portunit,ies that will enhance thcu . ~ and
KaiscM\ng MJa ~saKln,Jsa Plipi1as V. Gotanm Saw MD, G.R. No. l-1573, Man::h 29, 1948. enable them to realize their full potential in the service of the nation.
Mcra,pper ~CorplXalixlv. ailms. supra.
' Phicom ~ Una! v. ~ Gklbal ConmJnica5ons, G.R No. 144315, July 17, 2006.
7
Enled "Mien En'4>kY,fflellt Not Deemed Tennmted." lhfer Olis am:Je, employees ma-, be ca'led t, fulfill CEf1ail mi!ilaty a
avic duty but such shall not temmate ~
 20 BAR REVIEWER ON LABOR I.AW
2. SECTION 2 (SOCIAL JUSTICE).
Section t Oof Article II of the Constitution declares that it is a policy of
the State to promote social justice in all phases of national development Section 2
of Article XIII thereof is the amplification of this policy in that the promotion of
social justice shall include the commitment to create economic opportunities based
on freedom of utjtiative and self-reliance.
The Article on Socia) Justice was aptly described as the "heart of the new
Charter" by the President of the 1986 Constitution Commission, retired Justice-
Cecilia Mwioz-Pa!ma. 1 Social justice is identified with the bro"cld scope of the police
power of the state and requires the extensive use of such power.2 In Calalang v.
Wi/.iams, 3 the Court, speaking through Justice Jose P. Laurel, expounded on social
justice thus:
"Socia) justice is 'neither communism, nor despotism, nor
atomism, nor anarchy,' but the humanization of laws and the
equalization of social and ec:>nomic forces by the State so that justice in
its rational and objectively secular conception may at least be
approximated. Social justice me211S the promotion of the welfare of all
the people, the adoption by the Govemment of measures calculated to
insure economic stability of all the competent clements of society,
through the maintenance of a proper economic and social equilibrium
in the inteaclatioos of the members of the community, constitutionally,
th.rough the adoption of measures legally justimbl~ or extra-
constitutiooally, through the exercise of powers underlying the existence
of all governments on the timc-honoied principle of sa/Ju popll.i 111
SII/Jftllltl !IX.
"Social justice, therefore, must be founded on the recognition
of the necessity of interdependence among divers and 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,
consistent with the fundamental and paamouot objective of the state of
promoting the health, comf:>rt, and quiet of all persons, and of bringing
about 'the greatest good to the greatest number.,,,
In sum and as articulated in the Constitution, the aim of social justice is to
protect and enhance the right of all the people to human dignity, reduce social,
economic, and political inequalities, and remove cultwal inequities.'
3. SECTION 3 (PROTECTION-TO-LABOR CLAUSE).
Section· 3 is the principal prou,tion-to-labor clause in the t 987 Constitution,
the other being Section 18 of Article II which declares that "[t]he State affirms
1
ConletSnce dM:ufrne Mnq Agendas, h:., V. POEA, G.R No. 114714, Apd 21, 1995.
2
kl.• cli1g E,nJie M. Fenmdo, The ~llcnctte Ph!ppiies, 21:ied. (1977). 79-aO.
3 Caacrlg V. Wians, G.R No. 47800, Dec. 2, 1940, 70 Ph1726.
• See Sedion 1, Aitfe )Q[I Ulered.
l
CHArTERONE 21
. GENERAL PROVISIONS
labor as a primary social economic force. It shall protect the rights of workers and
promote their welfare." The underlined keywords in the quoted provisions of this
section above are worthy to be taken note of considering that they reflect the rights
and principles that encompass almost all of the provisions of the Labor Code and
other related laws.
In the workplace, whete the relations between capit~ and labor are often
skewed in favor of capital, inequality and discrimination by the employer are all the
more reprehensible.1 Section 3 specifically provides that labor is entitled to
"humane conditions of work." These conditions are not restricted to the
physical workplace - the factory, the office or the field - but include as well the
manner by which employers treat their employees.2 The same provision of the
Constitution also directs the State to promote "equality of employment
opportunities for all" Similarly, the Labor Code3 provides that the State shall
11
ensure equal work opportunities regardless of sex, race or creed." It would be an
affront to both the spirit and lettet of these provisions if the State, in spite of its
primoiclial obligation to piomote and ensute eq,ual employment opportunities,
closes its eyes to unequal and discriminatory tetms and conditions of employment.4
Discrimination, particulady in terms of W"AgeS, is &owned upon by the
LaboI Code. Article 13~ (135), for example, prohibits and pcnalizes5 the payment
of lesser compensation to a female employee as against a male employee for work
. of equal value. Article· 259 [248) declaies it an unfair labor practice for an employ~r
to disaiminate in regud to wages in order to encounge OI discourage membership
in any labor otganization.
· It b~rs noting that unlike all the rights granted undet Section 3, the last
paragtaph6 thereof has not been implemented by any provision in the Labor Co~e
or in any o~er laws. It W2S, however, cited in AJia Bmv,ry, Int. v. TPMA,1 in
declaring that the DOLE Secretaty has gravely abused her discretion when she
relied on the unaudited financial statements of petitioner corporation in
determining the wage award because such evidence is self-serving and inadmissible.
Not only did this violate the December 19, 2003 Ordet of the DOLE Secretary
herself to petitionet corporation to submit its complete audited financial
statements, but this may have resulted to a ~ award that is based on an

8AR REVIEWER ON lABOR lAW
22
inaccurate and biased picture o~ petitioner corporatio_n:s ~pacity to ~ay -hone thde
significant factors in making a wage award. PebUoner corpor:atton as ouere
~!
more son why it failed and/or refused to submit its audited financial statements for
: rea st five years relevant to this case. This only further casts doubt as to the
v~~ty and accwacy of the unaudited financial statements it submitted to the
DOLE seaewy. Verily, this procedure cannot be countenanced because this could
unduly deprive labor of its right to a jus.t share in the fruits of production• and
provide employers wi~ a means to understate their profitability in order to defeat
the right oflabor to a Just wage. ._
4. SECTION 14 (PROTECTION OF WOMEN).
The Constitution, cognizant of the disparity in rights between men and
women in almost all phases of social and political life, provides a gamut of
protective provisions. To cite a few of the primordial ones: Stdi!Jn 14, Arlkll II on
the Declaration of Principles and State Policies, expressly recognizes the role of
women in nation-building and commands the State to ensure, at all times, the
fundamental equality before the law of women and men. Similarly, Sedion 14 of
Artit/4 XIII mandates that the State shall protect working women through
provisions for opportunities that would enable them to reach their full potential.2
Several laws have been enacted promoting and protecting women
employees before the passage of the Labor Code on May 1, 1974 as P.O. No. 442. 3
Corrective labor and social laws on gender inequality have emerged with more
frequency in the years since the Labor Code was enacted, largely due to our
country's commitment as a signatory to the United Nations Convention on the
Elimination of All Fotms of Discrimination Against Women (CEDAW). Principal
among these laws are:
(a) R.A. No. 6725 [May 12, 1989), which explicitly prohibits
discrimination against women with respect to terms and conditions
of employment, promotion, and training opportunities;
(b) R.A. No. 6955 Oune 13, 1990], which bans the ''mail-ordtr-bridt"
practice for a fee and the export of female labor to countries that
cannot guarantee protection to the rights of women workers;
(c) R.A. No. 7192 [Febnwy 12, 1992), also known as the 'Women in
Dn,hp111e11t and Nation Building Ad," which affords women equal
' Mde XID, Sedxn 3d hi CalSWm mies h pat xxx 1be Slale shaB ~ Ile rdalim between \\Okers and
en,oyers, ~ Ile r%lflt dlabab b just shn i1 Ile 6ml c l ~ aoo Ile rQht d enterprises t o ~
reuns en lnves1menls, mt bexparlSblandgiw,t."
2 k1
3 These la.vs n: (1) Att. No. 3071 (Mml 16, 1923), enliied "M Act ID~ Ile ~dw«nen and D\Bdren in
Sq)s,Fa:t:n!s, hbt!fal.~nt M:mntle~ andOherPlacedl.mil lhe Phil1Jpne lsmds,
ID Prowle Penalties fir \/aafals tmd and ftl' Oller Pllposes"; (2) RA No. 679 (Apri 15, 1952), entilled "Iv.I NJ. lo
Reg-Gl8 ~dWmien and Oti"en. ID PnMde Pmallles bVdafal Hnof, andtrOhrF\lposes"; (3)
RA. No. 1131 (June 16, 1954) ~ RA No. 679; (4) RA No. 2714 (JU"le 18. 1960). creahJ the lllreau of Women
a-d Mnocs; axf (5} PD. No. 148 (Mwi 13, 1973}. btleranend'nj RA No. 679.
CHAITTR.0NE 23
. GENERAL PROVISIONS
opportunities with men to act and to en~er into contra~ts~ ~d f?r
appointment, admission, training, graduauon, and com1111ss1orung m
all military or similar schools of the Armed Forces of the Philippines
and the Philippine National Police;
(d) R.A. No. 7322 [March 30, 1992], increasing the maternity benefits
granted to women in the private sector; .
(e) R.A. No. 7877 [February 14, 1995]; which outla~ and p~s~es
sexual harassment in the workplace and in the education and tra1111ng
environment;
(f) R.A. No. 8042 Uune 7, 1995], or the· ''Migant Workers_and.Ovmea1
Fi6pinos Ad of 1995, "which prescribes ~s a matter _of policy, znter a6a,
the deployment of migrant wotkers, with ~pha~is ~n women, only
in countries where their rights are secure. Likewise, tt would not be
amiss to point out that in the Family Code (Executive Ord~ ~o. 2~9
dated July 6, 1987 [effective on August 3, 1988)), womens nfhts tn
the field of civil law have been greatly enhanced and expanded;
(g) R.A. No.10151 fiune 21, ·2011), an Act Allowing the Employment of
Night Workers, Thereby Repealing Articles 130 and 131 of P.D. No.
442, as amended, Otherwise Known as the Labor Code of the
Philippines"; and 1
(h) R..A. No. 11210 [February 20, 2019], otherwise known as the '105-
D'!] Expanded Mau~ uave Law."
Additionally, the following laws were enacted to combat violations against
the rights of women, including their children:
1) R.A. No. 9208 [May 26, 2003], an Act to institute poli~es to
eliminate trafficking in persons especially women and child~en,
establishing the necessary institutional mechanisms for th~ protectl~n
and ·support of trafficked persons, pro~ding penaJoes f~~ tt~
violations, and for other pw:poses, otherwase known as the ~nll-
Tr'!IJitking in Persons Ad of200J." . .
2) R.A. No. 9262 [March 08, 2004], an Act de~ violence against
women and their children, providing for protective measures for
·victims, prescribing penalties therefor, and for other purpos~,
otherwise known as the "A.11U-Viollna .Againit Women and Their
Cbildrtn Ad of2004. "
s. ARTICLE XIII, NOT SELF-EXECUTING PROVISIONS.
While all the provisions of the 1987 Constitution are pres~~ ~elf-
executing,Z there are some which the Court bas declared not Judicially
1 ~ Telegraph andTeie,aieC.0. v. NI.RC, G.R th 118978,Ma)' 23,·1997.
Semn>v. Ga11cri Mriine Setvb!s, Inc.. G.R No.167614, Math 24, 2009.

BAil REVIEWER ON lA80R. lAW
· bl .1 .....cl XIII being one of them,1 particulariy the provisions on social
enforcea e, '1,J.~ e . b f s Tu
• • 2 Iabor3 2J1d women,4 as pronounced 111 a num er o cas~s. . ey are mere
JUSUCC, Of p.-nciples and policies. As such, they are mere directlves addressed
statements ..... If wih ded, th d will
to the executive and the legislative delepartm~ts.dis 1 ee ebreme rc. n?t
.liewi'th thec0 ........ but rather the ectorate s p easure may e maru,ested
=..., , 1n
6
theit votes.
More specifically, on Section 3 thereof, the Court, in Agabon v. NLRC,'
explained:
"Thus, the constitutional mandates of protection to tabor and security
of tenure may be deemed as self-executing in the sen.~ that these are
aucomatially acknowledged and observed without need for any enabling
legislation. However, to declare that the constitutional provisions are enough
to guarantee the full exercise of the rights embodied therein, and the
realization of ideals therein expressed, would be impractical, if not
unrealistic. The espousal of such view presents the dangerous tendency of
being ovcrbroad and exaggerated. The guarantees of 'full protection to labor'
and 'security of tenure', when examined in isolation, are facially unqualified,
and the broadest interpretation possible suggests a blanket shield in favor of
labor against any fonn of removal regardless of circumstance. This
interpretation implies an unimpeachable right to continued employment - a
utopian notion, doubtless - but still hardly within the contemplation of the
framecs. Subsequent legislation is still needed to define the parameters of
these gumnteed rights to ensure the protection and promotion, not only of
the rights of the labor sector, but of the employm' as well. Without specific
and pertinent legislation, judicial bodies will be at a loss formulating their
own conclusion to approximate at least the aims of the Constitution.
"Ultimately, tbetefore, Secdon J of Artide XIII cannot, on its
owu, be a source ofaposidve enforceable right to stave off the dismissal
of an employee for just cause owing to the failure to serve proper notice or
hearing. As manifested .by several fmmers of the 1987 Constitution, the
provi.c;ions on social justice require legislative enactments for their
enfoICeability.»s
Thus, Section 3 cannot be treated as a principal source of direct
enforceable rights, for the violation of which the questioned clause may be
1 Id., ci1i1g 8asm V. Pl1qlphe All1lsel!mt and Ganilg Ccxpcxatim, G.R No. 91649, May 14, 1991, 197 SCRA 52.
2 Smls 1in! 2 ~ ~ v. ta.RC, G.R No. 158693, ta. 17, m4, 442 SCRA 573. See Sepilate Opmn d
Justice Dine T• ii tis case.
3 Setfa13 ll8red; See~ v. NLRC, supra.
• Section 141herad: SeeTcnfoMlcb!Cena~Assodablv. CA, G.R No.167324.Jtq17, 2007(En Banc).
5 Such as Ile cases of Basmv. ~ Arrusement en! Gaming Capcrcm\, G.R No. 91649, May 14, 1991.
6 Tcnlo ~ Cena~Amiam\v. CA. G.R No. 167324,Jut, 17, 2007 (En Bcllc).
1 G.R. No. 158693, Nov. 17, 2004, 442 SCRA 573. Tl1s quolalxx1 was ifted mm lhe Sepcrate Opililn d Jusb Danie Tn;ra
nAgmv. Nt.RC.
8 Enl)hasis added il Iha• decml h Semn> v. Galll1t Mari!ine Servk:es, "- vJlkh qooled !IE patb1 d tie
Separate Opi1Dl d Justice Dame fi9t nAgabcinv. NLRC. supra
CHAM'ERONE 25
. GENERAL PROVISIONS
declared unconstitutional. It may. unwittingly risk opening the floodgates of
litigation to every worlteJ: or union over every conceivable violation of so broad a
concept as social justice for labor.1 Section 3 merely clothes it with the status· of
a sector for whom the Constitution urges protection through executive or
legislative action and judicial recognition. Its utility is best limited to being an
impetus not just for the executive and legislative departments, but for the
judiciuy as well, to prot~ct the welfare of the working class.2
1-D.
CONSTITUTIONAL RIGHTS THAT CANNOT BE INVOKED IN
COMPANY-LEVEL ADMINISTRATIVE CASES
1. INAPPLICABILITY P~RJURISPRUDENCE.
Certain constitutional rights and precepts may NOT be invoked in labor
cases, particularly in company-level administrative investigations leading to the
tennination of employment because they can only be asserted against the
government or the state but not against a private party like an employer. More
particularly, the_ following rights, per well-entrenched jurisprudence, generally find
no application in company-level administtative cases initiated or lodged by the
employer against an erring employee:
(a) Right to constitutional due process;
(b) Right to equal protection of tlie laws; and
(c) Right to counsel
The above constitutional rights can be invoked only when the labor case
is finally lodged with the labor and judicial courts, in which case, any deprivation
thereof would _afford the employee the right to inv.oke them, this time, against the
government or state as represented by the labor and judicial authorities.
A.
INAPPLICABILITY OF
RIGHT TO CONSTITUTIONAL DUE PROCESS
L STATUTORY DUE PROCESS APPLIES.
· According to Agabon ,. NLRQ the &o111tit11tional due process prescribed in
Section 1, Article ill of the Constitution does not apply to company-level
administrative investigation that may result in the dismissa1 of an employee. \Xlhat
applies is the statutory due process laid down in Article 292(b) [277(b)] of the Lahor
{
l Senanov. GallaltMarilme SeMces, Inc., G.R No. 167614. Marcil 24. 2009.
'
l
Id.
h.Jab0rl v. NLRC, G.R No. 158693, ta. 17, 2004.
 26 RAR REVIEWER ON LABOR LAW
Code. The Coun, in justifying the shift in doctrine, distinguished co11Jtitutional .d
process from stalutory due process in this wise:
"Due process under the Laboe Code, like Constitutional due
proce.-.s, has two aspects: substantive, i.t., the valid and authorized
causes of ~ployment termination under the Labor Code; and
proc~waJ. ,.,., t~c _manner of ~missal. Procedural due process
requuements for disrrussal are found m the Implementing Rules of P.D.
44~ ~ a~ended, otherwise known as the Labor Code of the
Philippines in Book VI, Rule I, Sec. 2, as amended by Department
~rdec Nos. 9 and 10. Breaches of these due procetis requirements
vi_olatc th~ Labor Code. Therefore ~ due process should be
ditTcrennated from fa11ure · to comply with constitutional due
process.
•• Consdtutiona/ due process protects the individual from
the ~o~em'!1ent and assures him of his rights in criminal, civil or
adm1rustrauye pmceedings: while ~ due process found in
the La~or C~e and ~plementing Rules protects emplOJees
from hang UDJJJStlY tenrunated without just cause after notice and
~."l
In other words, when the employer, in terminating its employee, does not
afford the latter ~e. procedural due process he deserves, it is not the C01lllitutiona/
due process that !s VIOiated ~ut only the rtalrlto,y due process provided in the Labor
Code, more speafically, Article 292(b) (277(b)] thereo£2
2. CONSTITUTIONAL DUE PROCESS, WHEN OBSERVED.
The observance of constitutional due pr~cess becomes necessary only
when _a labor case has already been filed with the labor courts and subsequently,
when it reaches the superior courts (CA and sq. As distinguished from employer's
com~anr-Ievel due process, the government is now involved; hence anv
depnva~on of due process o~ eithe~ party - the employee or employer - ;0 th~
l~bor. swt by su~h labor officials/ tnbunals or superior courts would constitute a
V1olat1on ?f ~e aght to constitutional due process under Section 1 of Article Ill of
the Consututton.
B.
INAPPLICABILITY OF
RIGHT TO EQUAL PROTECTION OF THE LAWS
L RATIONALE FOR ITS INAPPLICABILITY.
lo ea_rlier rulings of the High Court, it was declared that the failure of the
employer to gtve the employee the benefit of procedural due process before he is
1 lklcfnmv suppfed.
2 l
See~ of kings Trnpat b:. V. Mmnac. G.R tt>. 166208, June 29, 2007.
CHAPTER ONE 27
GENERAL PROVISIONS
ue dismissed constitutes an infringement not only of his constitutional right to due
process of law but to equal protection of the laws. 1.However, it is a settled principle
· that the commands of the equal protection clause are addressed only to the mte or
those acting under color of its authority. It has been held in a long array of U.S.
Supreme Court decisions that the equal protection clause erects no shield against
merdy privatt conduct, however discriminatory or wrongful it may have been.2
The only exception occurs when the State, in any of its manifestations or
actions, has been found to have become entwined or involved in a wrongful private
conduct Absent this exception, this constitutional tenet cannot be invoked in
private proceedings such as an administrative case of an employee leading to
his/her dismissal.
For example, such exception has been declared absent in the case of
Duncan Auo&iation of Detaib11an-PTGWO and Pedro A. Tecson v. G/axo Wekome
Philippines, ln&.,3 where the employer's policy prohibiting its employees from any
personal or marital relationships with employees of competitor companies was held
not violative of the equal protection clause in the Constitution and not
unreasonable under the circumstances because relationships of that nature might
compromise the interests of the company. Significantly, the company actually
enforced the policy after repeated requests to the employee to comply therewith.
Indeed, the application of the said policy was made in an impartial and even-
handed manner with due regard for the lot of the employee. In any event, from the
wordings of the contractual provision and the policy in its employee handbook, it is
dear that the company does not impose an absolute prohibition against
relationships ·between its employees and those of competitor companies. Its
employees are free to cultivate relationships with and marry persons of their own
choosing. What the company merely seeks to avoid is a conflict of interest between
the employees and ·the company that may arise out of such relationships.
The same pronouncement was made in 'iraruegui 11. Philzppme Airlines, Inc., 4
where petitioner was dismissed because of bis failure to measure up to the weight
standards set by respondent airline company. His termination due to obesity was
held legal and not violative of the equal protectio~ clause in the Constitution. The
High Court observed that the United States Supreme Court, in interpreting the
Fourteenth Amendment which is the source of the equal protection guarantee in
the 1987 Constitution, is consistent in saying that the equal protection clause
erects no shield against private conduct, however discriminatory or wrongful it may
1 WfJll)hl Ccxp1rafalV. NtRC, G.R No. 80587, Feb. 8, 1989.
2 ~lri:tmCr.bnbiav.cartm",409US418,34LEd2d613, 93S.Ct.602,35 LEd2d694, 93S. Cl. 1411;MloselodgeNo.
107 v. lNis, lg{ US 163, 32 LEd2d 627, 92 S. Cl 1965; Unitl!d S1a1es v. Price, 383 US 787, 16 L Ed. 2d 267, 86 S. Cl
1152.
G.RNo.162994,Sept 17,2004.
4 G.RNo.168081,0ct.17,2008.

28 BAR REV'IEWER ON I.ABOR I.AW
be. Private actions, no matter how egregious, cannot violate the equal protection
guarantee.
C.
INAPPLICABILITY OF
RIGHT TO COUNSEL
1. INVOCATION OF RIGHT TO COUNSEL IN AN ADMINISTRATIVE
PROCEEDING.
The right to counsel cannot· be· invoked in adminfstrative proceedings.
This principle has been enunciated in MalUIII ,. N. C Constr11dion Supp!J. 1 In this
case, petitioners were positively identified as being involved in a series of thefts at
respondent com~y. Tuer were th~ invited to_ the Pasig police station ~or
investigation regarding thm alleged involvement tn the offense. At the police
station, the private respondents' counsel conducted in theit behalf an investigation
regarding petitioners' involvement in the theft He inteaogated the petitioners on
·their alleged participation in the series of thefts committed at respondent company.
Petitioners initially denied the charge. However, after being positively identified by
Jay Calso, petitioners admitted their guilt and offered to resign in exchange for the
withdtawal of any criminal charge against them. The company lawyer accepted their
resignation.
In the illegal dismissal case they filed against private respondents,
petitioners argued that their admission made at the Pasig police station regud.ing
their involvement in the theft as well as their resignation were not voluntary but
were obtained by private respondents' lawyer by means of threat and intimidation.
They contended that their admission is inadmissible as evidence against them under
Section 12 of Artit/1 III [Bill of Rjghts] of the 1987 Constitution. In rejecting this
argument and upholding the validity of their dismissal, the Supreme .Court
emphasized that the right to counsel under the said provision of the 1987
Co111tit11tio11 is meant to protect a suspect in a mmi1llll case who is under custodial
investigation. Custodial investigatfon is the stage where the police investigation is
no longer a general inquiry into an unsolved crime but has begun to focus on a
particular suspect who has been taken into custody by the police to cany out a
process of interrogation that lends itself to elicit incriminating statements. It is that
point when questions are initiated by law enforcement officers after a person has
been taken into custody or otherwise deprived of his freedom of action in any
significant way. The right to counsel attaches only upon the start of such
investigation.2 Therefore, the exclasionary rule under said provision of the Bill of
Rights of the 1987 Constitution applies only to admissions made in a criminal
investigation but not to those ma~ in an administntive investigation.
G.Rth 127553,Nov.28, 1997,282SCRA326.•
Peoplev. BlnUa, G.R ~ 89223, Mr,27, 199',232 ~566.
CHAl'TER ONE 29
. GENERAL PROVISIONS
In the case at bar, the admission was made by petitioners during the
course of the investigation conducted by private respondents' counsel to detennine
whether there is sufficient ground to tenninate their employment Petitioners were
not under custodial investigation as they· were not yet accused by the police of
committing a crime. The investigation was merely an administrative investigation
conducted by the employer, not a criminal investigation. The questions were
propounded by the employer's lawyer, no! by po~ce ~fficers. The fa~t that
the investigation was conducted at the police station did not ne~ess~ly ~ut
petitioners under custodial investigation ~ the venue of th~. mvesuga~on
was merely incidental. Hence, the admissions made by pettttoners dunng
such investigation may be used as evidence to justify their dismissal.
2. EFFECT OF FAILURE OF EMPLOYER TO INFORM EMPLOYEE
OF HIS RIGHT TO COUNSEL.
But would the failure of the employer to infoan the employee, who is
undergoing administrative investigation, of his right to counsel amount to
deprivation of due process?
This was answered in the affirmative in P11nz.al "· ETSI Te,hnolo!fas, In&.,
1
where petitioner's contention that she was denied due process was upheld because
the records do not show that she was informed of her right to be repre~ented by
counsel during the conference with her employer. . The protestations of
respondent-employer that the righ~ t~ be ~onn~ of the right to co~s~ does not
apply to investigations before ad~tntlve bodies and_ that law and 1u._nsprud~ce
merely give the employee the optton to secure ~~ setvtces ~f counsel tn a heartng
or conference, fall in the light of the clear provision of Article 292(b) (277(b)] of
the Labor Code that '~he enrpltrJer xxx shall afford [the worker whose employment is sought to
be temunaltd} fJlltjJle opportunity to be heard and to tkfmd hi111sef wilh the _assistana of his
represent.atives if he so dtsiru in tJtt(Jrdana with &011IJ>al!Y mies and rrgulattons pursuant lo
g11itkGnes set by the Dpartment of LAbor and Employmmt, ,, and th~ Suprem_e Court"s
explicit pronouncement that 'Ta]IIIJ,le opportunity &0nnolls tllllJ kind _of asm/.a':" t~at
manaument 1111111 «cord the enrp"5ee to enable hi111 to prepare adtquate!J for h~s defense m,ludi~g
kgal rtpmentatian." Consequently, the petitioner was awarded nominal damages 111
the amount of P30,000.00 for violation of her right to statutory due process.
3. THE LOPEZ DOCTRINE,
The Punz.al ruling above no longer holds because a new pronowicement
was made in the 2011 case of L,pez_ "· .A1lllms Group ofCo~,~ to_ the e~fect ~t
the tlght to counsel and the assistance of one in tnvt:5tigattons mvolvmg
termination cases is neither indispensable nor mandatory. It ts only under any of
the following circumstances that such right becomes indispensable and mandatory:
G.R. Nos. 170384a5, Mirth 9, '6JJ7.
G.R No. 191008,~i111. 2011, 647 SCRA568.
 30 8,U REvlEWER ON I.ABOR I.AW
1) When the employee himself requests for cowisel; or
2) When he manifests that he wants a formal hearing on the charges
against him.
Consequently, if there is no showing that an employee has requested for a
formal hearing to be conducted or that he be assisted by counsei there can be no
deprivation of due process to speak of.
In this case of Lopez} the NLRC2 hdd that petitioner should have been
afforded, or at least advised of the right to ~ounsel:. It thus held that "any
evaluation which was based only on the explanation to the show-cause letter and
any so-called investigation ~ut ~thout confrontation of the vital witnesses, do[es]
not suffice." 111 reversing this ruling, the Supreme Court pronounced that
"Parenthetically, the Court finds that it was ecroc for the:
NLRC to opine that petitioner should have been afforded coun:-cl or
advised of the right to counsel. The right to counsel and the
assistance of one in investigations involving termination cases is
neither indispensable nor mandatory, except when the employee
himself requests for one or that he manifests that he wants a
formal hearing on the charges against him. In petitioner's case
there is no showing that be requested for a formal hearing to b~
conducted or that he be assisted by counsel. Verily, since he was
furnished a second notice informing him of lus dismissal and the
grounds therefor! the twin-notice requirement bad been complied with
to call for a deletion of the appellate court's award of nominal dan1agcs
to pctitioner.113
2.
CIVIL CODE PROVISIONS
1. RELEVANT PROVISIONS.
There are a number of provisions of the Civil Code related to labor law.
Howev~r, onlr four (4) ~cl~ ~ereof are mentioned in the most recent syllabi in
connection with the maJor topic of ''Fundamental Prindplu and Con«pts 11 which is
now denominated as "General Prindp/,s" under the 2019 Syllabm. These articles
state:
Art. 1700. The relations between capital and labor ace not merely
contractual They are so impressed with public interest that labor
conttacts must yield to the common good Therefore, such contracts
are subject to the spec:al laws on labor unions, collective bargaining,
1 5 Jacullev.SiinanlkMmf, G.RNo.156934,Mrth16,2007.
G.RNo.191008,AprD11,2011,647SCRJ.568.
2
~ Saaalv. NLRC, G.R No. 90786, SEf:t-11, 1991, 202 SCAA 7.
l En¢asis supp5ed.
Cw.mRONE 31
GENERAL PROVISIONS
strikes and lockouts, dosed shop, wages, working conditions, hours of
labor and similar subjects.
Art. 1701. Neither capitlll nor labor shall act oppressively against the
other, or impair the interest or convenience of the public.
Art. 1702. lo case of doubt, all labor legislation and all labor contracts
shall be construed in favor of the safety and decent living fo, the
laborer.
Art. 1703. No contract which practically amounts to involuntary
servitude, under any guise whatsoever, shall be valid. 1
Although provided in the Civil Code, the civil law principles reflected in
the afore-quoted articles are often invoked in labor cases.
2. ARTICLE 1700.
A contract is defined as "a meeting of minds between two persons
whereby one binds himself, with respect to the other, to give something or to
render some service."2 Parties are free to stipulate on tcnns and conditions in
contracts as long as these "are not contrary to law, morals, good customs, public
order, or public policy.,,3 This presupposes that the parties to a contract arc on
equal footing. They can bargain on terms and conditions winl they are able to reach
an agreement. On the other hand, contracts of employment are different and have
a higher level of regulation because they aie impressed with public interest. The
employer and the employee are not on equal footing.
Thus, employment contracts are subject to regulatoty review by the labor
tnbunals and courts of law. The law serves to equalize the unequal. The labor force
is a special class that is constitutionally protected because of the inequality between
capital and laboL4 It is axiomatic that the employer and the employee do not stand
on equal footing, a situation which often causes an employee to act out of need
instead of any genume acquiescence to the employer.5 · "Prolldion 16 labor" does not
signify the promotion of employment alone. What concems the Constitution more
pmmountly is that such. an employment may be above all, decent, just and
humane.'
The supremacy of the law over contracts is explained by the fact that
labor contracts are not ordinaq contracts; these are imbued with public interest
and therefore are subject to the police power of the State? The provision of Article
1 These ~ ae bnl ii Sedian 2 [Ccxltra:t d Labcxl, ~ 3 fNock and LmJ, TtUe VIII [lease) d Boci( W
(()liigalknsand Can:ls) cilleCid Code.
2 Mde1305,CNICode.
3 Altlcle 1306, kt
' FuJ TelEMsal Nett.at, Inc. v. Espttu, GR Nos. 204944-45, Dec. 3, 2014.
& ~Assocla&xi d &m:a Expoters. Inc. v. Hoo. Obi, G.R No. 81958 June 30, 1988.
1 Vilav.NI.RC,G.RNo.117043,JaL 14, 1998.

32 BAR RfVIEWER ON I.A80R I.AW
1700 of the Civil Code reflects this exercise of police power.I Consequently, labor
contracts must yield to the common good and pursuant to the inherent police
power of the State, they are subject to the provisions of the Labor Code and special
laws on such matters as labor unionism, collective bargaining, strikes and lockouts,
closed shop, wages, working conditions, hours of labor and similar subjects.
Simply, this means that pro"isions of these applicable laws, especially provisions
relating to matters affected with public policy, are deemed written into the contract.
Put a little differently, the governing principle is that the parties may not contract
away applicable provisions of law especially peremptory provisions dealing with
matters heavily impressed with public interest. The -la\V relating to labor and
employment is clearly such an area and parties are not at liberty to insulate
themselves and their relationships from the impact of labor laws and regulations by
simply contracting with each other.2 The private agreement of the parties cannot
prevail over Article 1700 of the Civil Code.3
2.1. KINDS OF LABOR CONTRACTS.
The employment contracts referred to in Article 1700 may either be
(1) Employment contract; or
(2) Collective bargaining agreement (CBA).
Leyte Geothmnal v. PNOC.EDC,4 illustrates a case involving an
employment contract. The issue here is whether the members of petitioners are
project employees or regular employees. The Court pronounced that Article 295 ,
[280p of the Labor Code, as worded, establishes that the nature of the employment
is determined by law, regardless of any contract expressing othCJ:Wise. The
supremacy of the law over the nomenclature of the contract and the stipulations
contained therein is to bring to life the policy enshrined in the Constitution to
11
afford full protection to labor. "6 Thus, labor contncts are placed on a higher plane
than ordinary contracts; these are imbued with public interest and therefore subject
to the police power of the State.7 However, notwithstanding the foregoing
iterations, project employment contracts which fix the employment for a specific
project or undertaking remain valid under the law. In the case at bar, the records
reveal that the officers and the members of petitioner union signed employment
contracts indicating the specific project or phase of work for which they were
hired, with a fixed period of employment As clearly shown by petitioner union's
own admission, both parties had executed the contracts freely and voluntarily
1
eatererce aMnme MafvllB:i Agerdes. nc., v. POEA. G.R No. 114714, ,Api21, 1995.
1 PalsrlAmesColpaafolv.~.GR.No 61594,Sept28, 1990.
3
midaal<naMeo;JeSeM:es,rc. v.Wirv;i. GRNo. 211892,0ec. 00,2017.
• Lei/le Geol!ermal flw.w PRlgrass.Ye Empk7fees lJnm.Al.lJ.TUCP V. Ph1ppi'le Na!ional 01, ~
OeveilpnmCorporaoon, G.R No. 170351, ~ 30, 2011.
s Mei! 295 (280). Regldar and Casual~
6 SeeSecoon3,MicleXID, 1987~.
1 SeeAtlides1700and1702oflleC'MCooe;Vllav.NLRC,G.R.No.117043,Jat 14, 1998,348Ph!l.116, 140-141.
CHAPTER.ONE 33
. GENERAL PROVISIONS
without force, duress or acts tending to vitiate the workers' consen_t._ Thus, _there is
no reason not to honor and give effect to the tenns and conditions snpulated
therein.
Davao Integrakd Port Stevedoring Services 11. A~arquey 1 illustrates/ case
involving a collective bargaining agreement. The CBA In ~de 263 [252) of the
Labor Code refers to a contract executed upon request of e1ther the employer or
the exclusive bargaining representative incorporating the agreement reached after
negotiations with respect to wages, hours of work ~d. all other . terms and
conditions of employment, including proposals for adJUStl1lg anr.
gnevances or
questions arising wider such agreement While the teuns and con~ttons of a CBA
constitute the law between the parties, it is not, however, an ordiruuy contract to
which is applied the principles of law goveming ordinary contrac~: A CBA:, as a
labor contract within the contemplation of Article 170Q of the Civil ~ode, ts ~ot
merely contractual in natu.ce but impressed with public interest, thus, tt must yield
to the conimon good.3 As such, it must be construed libeally ra~~ than narro~y
and technically, and the courts must place a prac~cal ~d ~sttc co~tmcuon
upon it, giving due considetation to. the context m which it 1s negotiated and
pmpose which it is intended to serve.4
3. ARTICLE 1701.
Article t 701 clearly mandates that neither capital ~or la~or shall ~~
ressively amiinst the other, or impair the interest or convenience of the public.
opp c- This · · ·ti · of the
Our laws provide for a clear preference for labor. is tn teco~ o~ .
asymmetrical power-of those with capital when they are left to negom:te with thett
workers without the standards and protection of law. The pref~tial ~tment
given by our law to labor, however, is not a li~se ~or abuse. It 1s not a s ~ to
commit acts of unfairness that will unreasonably infringe on the property _rights of
the company. Both labor and employer have s~cial utility,. and ~e law is not so
biased that it does not find a middle ground to give each theu: due.
For example, in one case,6 the employer was allowed to withhold terminal
pay and benefits pending the employee's return of its h~using p~opetty. ~e
employer claims that its property is in petitioners'• pos~ession by virtue of thCU"
status as its employees. It allowed petitioners tCJ use its pro~ as an act ~f
liberality. Put in other words, it would not hav~ all~wed p~tt~oners to use its
property had they not been its employees. Clearly, in this case, it 1s for the workers
1 G.R. No. 102132. Mcrdl 19, 1993. 01 Seres of
2 ,s re,umed puisuant ID Sm! 5, RA No. 10151. Jule 21. 2011 _cnt DOLE Depa\1'8lt Mlftly No. ,
2015 ~ of Ile Laba Codeof Ule ~ as Mlerlded), issued on J>JJ 21, 2015.
3 See dso Clrtek err.,ioyees Laber UniJn,FFWv. Citek Eledn)nk:s, K. G.R. No.100515, Nov. 15, 2010.
• 48AAm.lur2d,s.1800,pp.255-256.
5 WIil v. NLRC, G.R. No. 202961.Feb. 4, 2015.
s Mm v. NLRC,supra.
 CHAPTER ONE 35
34 BAR REYIEWER ON I.ABOR I.AW . GENERAL PROVISIONS

flood, famine, eai:thquake, violent epidemic or epizootic diseases,

to return their housing in exchange for the release of their benefits. This is what
invasion by animal, insect or vegetable pests, and in general any
they agreed upon. It is what is fair in the premises.
circumstance that would endanger the existence or the well-being of
4. ARTICLE 1702, IN RELATION TO ARTICLE 4 OF LABOR CODE. the whole or part of the population;
(NOTE: See discussion above on the topic of (e) minor communal services of a kind which, being perfonned by the
"B. CONSTRUCTION IN FAVOR OF LABORn). membeJ:S of the commwiity in the direct interest of the said
commwiity~ can therefore be considered as nonnal civic obligations
5. ARTICLE 1703. .
incumbent upon the members of the community, provided that the
Article 1703 is very cleat in its prohibition that no contract which
members of the community or their direct representatives shall have
practically amowits to involunt2ty servitude, under any ~ whatsoever, shall be
the right to be consulted in regard to the need for such services.
valid. There is likewise a related provision on involuntaty servitude in Article 32 of
the Civil Code which holds liable for damages "[a]ny public officer or employee, or (NOTE: For more extensive discussion on involuntary servitude, please
any private individual, who directly or indirectly obstructs, defeats, violates or in read the annotation on Section 18(2), Article II of the Constitution, supra).
any manner impedes or impairs Xlt'l[ the right to be free &om involuntaty
servitude in any form." 1
Not only is involuntary servitude prohibited and penalized in the Civil
Code, the Revised Penal Code likewise punishes forced labor in some of its
provisions. 2
The Constitution, in pangraph 2, Section 18 of Article IIP thereof, is very
categorical in declaring that "[n]o involuntary servitude in any form shall exist
except as a punishment for a crime whereof the party shall have been duly
convicted."
---oOo---
In 1930, the ILO has passed the Forced Labour Convention No. 29
concerning forced or compulsory labour.4 Under this convention, the term forced
or compulsory labour shall mean all work or service which is exacted from any
person under the menace of any penalty and for which the said person bas not
offered himself voluntarily. Nevertheless, for the purposes of this Convention, the
term forced or compulsory labour shall .991 include-
(a) any work or service exacted in virtue of compulsory military service
laws for work of a purely militaty clwacter,
(b) any work or service which fomis part of the nounal civic obligations
of the citizens of a fully self-goveming countty;
(c) any work or service exacted from any person as a consequence of a
conviction in a court of law, provided that the said work or service is
carried out under the supervision and control of a public authority and
that the said person is not hired to or placed at the disposal of private
individuals, companies or associations;
(d) any work or service exacted .in cases of_emergency, that is to say, in the
event of war or of a calamity or threatened calamity, such as fire,

, See No. 14 Olereaf.

1
&id1 as Mde 212 oo Sa9r, Miele 273 oo ~ "ctik/ IBba: Mcie 274 oo SeM:es rrnJered utK1er
COlrfJU/siJn ii fJ8'l1M of detts. And Al1i:fe 286 oo Gtawcoenivl. •·
I Iii of Righi$.
~ Emy i'lb bm: 01 Mt/ 1932: Aiq,&n: Geneva, 1411 ILC sessm (28J1111930).
 CHAPTERTWO
PRE-EMPLOYMENT
37

(a) canvassing,
Chapter Two (b) enlisting,
(c) contracting,_
PRE-EMPLOYMENT (d) transporting,
(e) utilizing, or
TOPICS PER SYLLABUS (f) hiring procuring workers.
It also includes:
(1) refemls,
II. (2) contact setvices,
PRE-EMPLOYMENT (3) promising, or
(4) advertising for employment, locally or abroad, whether for profit or
A. Recruitment and placement of local and migrant workers (Labor not.
Code and R.A. 8042, as amended by R.A. 10022) b. No change in meaning as· these tcnns are defined in special laws
1. Illegal recruitment and other prohibited activities and rules.
a. Elements
b. Types of illegal recruitment Both the applicable laws for recruitment and placement for local
c. Illegal recruitment vs. estafa employment1 and overseas employment2 have retained the above definition and
concept of recruitment and placement as originally rendered in Article 13(b) of the
2. Liability of local recruitment agency and foreign employer Labor Code.3
a. Solldary liability
b. Theory of imputed knowledge 2. MEANING OF THE PROVISO IN ARTICLE 13(b).
3. Termination of contract of migrant worker without just or valid Article 13(b) contains a proui10 that states: "Provided, That any person
cause 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
4. Ban on direct hiring
placement."
B. Employment of non-resident aliens
The proviso above has been explained by the Supreme Court in People v.
---------·---·-----------
A.
Panil,4 a case involving recruitment for overseas employment The issue of whether
there is recruitment and placement was raised considering that the four (4) separate
RECRUITMENT AND PLACEMENT OF ci:iminal informations filed against the accused for operating a fee-charging
LOCAL AND MIGRANT WORKERS employment agency without being duly licensed to do so, merely mentioned one
{Labor Code and R.A. 8042,1 as amended by R.A. 10022) person in each of the infoIJDation as having been recruited by him. The accused
[Note: The topics under this Section will be re-arranged C011tends that under Article 13(b) of the Labor Code, there could only be illegal
for amore orderly discussion) reauitinent when two or more persons in any manner were promised or offered
any employment for a fee.
1. WHAT CONSTITUTES RECRUITMENT AND PLACEMENT
ACTMTIES.
1 Secb142, l i s t ~ Id~ SedXlfl 1, ~ r-1, OrmbJs ~and~~~ !he MgrantWorkers and
a. As defined in the Labor Code. OJerseas ~ M. d 1995, as Amended by RA. No 10022. ~ on July 8. 2010: See also Setoon 76. Rule X.
Revised POEA f\des aid Regutatms ~ !he Recrui1ment and En'1)bylriett of l.aJld.8ased Overseas F~no
The Labor Code, in its Article 13(b), defines "recruitment and \\'1tefs of 2016; SedD1 72, ~ X. 2016 ReY&ed POEA ~ crld ~ Ga.emng lhe Recruitrrml and
placement" activity as referring to any act of: ~ c l Seafarels issued oo Februily 26. 2016.
2 Sedkln 6of RA. No. 8042, as amooded by Section 5of RA. No. 10022.
3 ~ . in Ole definlxln ii lhe 2014 Rules u km ~ t d ~ ~ illegal recnwnen~ lhe word
~ is rnlssilg. (See Sedxrl 42. Revised rues and RerJulabls ~ Recruitmert aoo P1acemn ra ~
~ OepammtOrder No. 141-14, Series d2014 (NovenilEr 20, 2014D.
I OlleiwseknoMlaslhe ~Wa#cetsand(NetseasFilpiroskJof 1995." 4 G.R Nos.L-58674-77,.llif 11, 1986. 142SCRA664.

BAR REVIEWER ON lABOR I.AW
The Court declared, however, that the above-quoted proviso in Article
13(b) was intended neither to impose a condition on the basic rule nor to provide
an exception thereto but merely :o create a presumption. The preswnption is that
the individual or entity is engaged in recruitment and placement whenever he or it
is dealing with two or more persons to whom, in consideration of a fee, an offer or
promise of employment is made in the course_ of the "canvassing, enlisting,
contracting, transporting, utilizing, hiring or pr0CW10g of workers."
The number of persons dealt with is not an essential ingredient of the act
of recruitment and placement of wotkers. Any of the.acts mentioned in the basic
rule in .Article t3(b) will constitute recruitment and placement even if only one
prospective worker is involved. The proviso merely lays down a rule of evidence that
where fee is collected in considention of a promise or offer of employment to two
or more prospective wockers, the individual or entity dealing with them shall be
deemed to be engaged in the act of recruitment and placement The words '~hall be
deem«/" s~ould, _by 1!1e same token,_ be ~ven the force of a disputable presumption
or of a pnmaJaae evidence of engaging 111 recruitment and placement
1.
ILL&GAL RECRUITMENT
AND OTHER PROHIBITED ACTIVITIES
1. APPLICATION TO BOTH LOCAL AND OVERSEAS
EMPLOYMENT.
. The c~ncept of 'Wegal rem1itment" under Article 381 of the Labor Code
app~es _to recnutment ~nd placement for both meal and oumea, employment. But a
disnncnon must be po111ted out at the very outset that as far as recruitment for
local employment is concerned, the sole basis thereof is Article 38 and nothing
more, unlike recruitment for overseas employment where new laws2 have been
CUAITTRTWO
PRE-EMPLOYMENT
39
enacted to govern and regulate it, if not to supersede it Under these new lawsl as
well as their implementing rules,2 the concept of illegal recruitment under the Labor
Code has been broadened.3 Thus, while under the original rendering of the Labor
Code, the prohibited activities enumerated in Article 34 constitute illegal
recruitment only when undertaken by non-licensees or non-holders of authoriry,4 the
commission thereof is now considered illegal recruitment, in cases of recruitment
for overseas employment, both under R.A. No. 8042 and its amendatory law,
R.A. No. 10022, when the same are committed by "a'!Y person, whether a non-
licensee, non-holder, licensee or holder ofauthori!J." 5
Although there is no similar corresponding amendment to Article 38 that
would have justified the same ''broadening" of its application to illegal
recruitment involving local employment, the 2014 F.Nks6 have now likewise
reflected the same broadened coverage as to include prohibited acts when
committed by "any person, whether or nota holder of a license or authority."'
This is as it should be since the intendment of the law can never be enlivened and
vivified unless such coverage is broadened as is now provided in the prevailing
Ruks.
2. LICENSE OR AUTHORITY.
a. License vs. authority.
'1..im1Se" refers to the document issue~ by the DOLE Secretaty
authorizing a person, partnership or cotporation to operate a private
recruitment/manning agency.a
''Authon~" refers to a document issued by the DOLE Secretaty
authorizing the officers, personne~ agents or representatives of a licensed
Id. .
Such as Ile OnmJs RI/Jes ard ~ I ~ Ille M'JTcrlt Workels and e>.-e,seas FTpm kJ. cl 1995, as
Amended by RA No. 10022, isrued oo Juty 8, 2010: ReJised POEA ~ and R89w6Jns GcMmiv:I 81e Reaumt
and ~ d . Land-8ased Ovecseas Fiipino Wakersd2016; 2016 Revsed POEA Rules ald Regu!alions GcM!lnrg
018 Reauilmentald En¢)ymentof Seafaels issued oo Februaly 26, 2016.
J The &lprenle ('.rut has declared 8lat R. A. No. 8042 has t.oaferled Ile amept cl ilegal reauiment 11W Ole Laba
Code. (Peoplev. Tdriio, G.R. No. 208686,"' 01, 2015; Peq)lev. Daw, G.R. No. 197539, JuneO'l, 2014; Peoplev.
Ocden, G.R. No. 173198, June 1, 2011; People v. Tlinxiad, G.R. No. 181244, Al,J. 09, 2010; ~ v. ~ G.R No.
170834, Aug. 29, 2008).
~v.~.GRNo.113917,July17, 1995,246SCRA530.
See Secfal 6of RA No. 8042, as amended by Sectixl 5dRA No. 10022.
6 RevsedRIAesaldRapamGovemilgRmuilmenlandPIDnentforl.0cal~()epcnnentOnlerNo.141-
14, Series of 2014 ~ 20. 2014).
7 See Seclal 42 Olereci.
a 5ml 1(w}, Rule II, OIMi>us Rides Md RegulalXXls ~ tie Mgrant WOl'«ers and <Nesseas Flpiu NJ. d
1995, as amencled b'f RA No. 10022. 6SUed oo J1'/ 8, 2010.
40
BAR. 11.MEWER ON IABOR IAW
recruitment/manning agency to conduct recruitment and placement activities in a
place stated in the license or in a specified place.1
b. "Non-licensee" or "non-holder ofauthority. 11
The tean "11011-li&1nsu" •:>r "non-hokkr of a11thori~" refers to any person,
partnership or corporation with no valid license2 or authority3 to engage in
recruitment and placement of workers or whose license or authority is revoked,
cancelled, terminated, expired or otherwise delisted from the roll of licensed
recruitment/ manning agencies registered with the POBA/DOLE. 4
The acts mentioned in Article 13(b) of the Lab~r Code can lawfully be
widertaken only by licensees or holders of authority to engage in the recruitment
and placement of workers.5 To reiterate for emphasis purposes, non-possession of
a license or authority to recruit is, under the law, an essential ingredient of the
crime of illegal recruitment penalized under the law.6
r\ recruiter may be a natural person or juridical person like a partnership
or corporation. 7
1-A.
ILLEGAL RECRUITMENT IN LOCAL EMPLOYMENT
1. LOCAL ILLEGAL RECRUITMENT.
Local illegal recruitment is committed under any of the following
situations, to zvit.
(1) When any of the following acts are undertaken by a non-licensee
or non-holder ofauthority:
1 Sml 1{bi Rule II, Onrilus rues aid Regualions 1mpemen!i1g Ile Mgrcr1t WOlkers and Overseas Fqlinos Pd d
1995, as animect 11/ RA No. 10022. issued on Jut, 8, 2010. · · h) To substitute or alter to the prejudice of the worker, employment
2 Theem 'i:ense" refa's ID lhedcmoont !sud lrf 118 ootf Secretay ~ apersoo, pamersfl1) or cxxpaam ID
qiaate a¢lclle ~ ilJ8lltY. (Sediln 1(¥4 rue I~ Ormllus Rts aid Regula&lns ~ !he
MgrnWakers llld Ot'elseas Fq,ilosAct d 1995, as Anmded by RA No. 10022, issued on July 8, 2010~
3 am
The "altalf reras t, a doamn iesued lrf Ole DOLE Seamy auto1ziYJ Ille obs, pesscmel, a,ienls or
represeolaweS cl alcensed l'l!Cl'IAnooUrnarlq agency ID mdJc:l recninent 8'd placement actMies il a plaoo statoo
ii ht tense cc i1 aspecmed plaa!. (Sedkl1 1(b), Rule ll. Olmllus RIies and ~ ln1)lemlrl~ Ile Ml;lrant
Wcxmsn Olerseasfq1iuAttd1995, asMm!edbyRANo. 10022, lssuedmJuly 8, 2010).
• ~ Ile lam "rmbnsee" lx4oot"1101Hl01:terd autaily"v.tikh ls defiled nSedb'l 1(rq, Rule 11, Omilus ~ en!
Regulalms ~ llelt;pa,tWorkn and C>.rerseas Filpim Actd 1995, askneooed 17/ RA No. 10022. issued
m~ 8, 2010, See a die demfm d '1e term "rmi:81see8 i1 No. 25, ~ I~ ReJised POEA Rules a n d ~
Gcwenq lhe Recnirr8ltaid ~dlaid-Based Osseas FlpmWmkasdal16: See a dteclefinlkln d
Ile 1ertn "ncn«ensee" nNo. 31, rue u. ro1e RIMSed POEA Rum an, Regutatioos GovemqJ Ole Reaubnent and
~ d Seafarers issued oo Febna! 26, 2016; See aso Sedion 1(d), Rules lll)BllellliVJ PD. No. 1920, Ju>f 12.
1984 we lhe lllmli "non-&:ensee" and "lJlllH'dler d aJtaiV ae de&led as refeniYd ID mt person, ccrpaatiln a
df m:11 hasootbeen GJl!dava'ii tnecrWll'oiyberYJ8J8 ilra:nitoontand pa:enmbylhe OOLE Seaefaly,
crvtaie &:ensecrau!hlrtyhasbeensuspERled, Mal rtcanceaed bylle POEAorlle DOLE &mfary.
s Peqmv. Booozo, G.R No. 96621. 0d. 21, -:992, 215 SCRA33.
' Peqi!v. T81}lba. G.R Nos. 95207-17, Jan. 10, 1994; Plqmv. Sendon. G.R ta. L-10157~2. Dec. 15, 1993.
1 Peq,lev.SatA,,G.R.No.125003.Nal.15,ml.
i
CHArTERTWO 41
PRE-EMPLOYMENT
• Any act of canvassing, enlisting, contracting, utilizing, hiring or
procuring workers, and includes referrals, contract services,
promising or advertising for local employment, whether fot profit or
not1 ·
(2) When any of the following acts which have been declared by law
as prohibited are committed by any person, whether or not a
holder ofa license or authority;
a) To charge or accept directly or indirectly any amowit or to make a
worker pay the agency or its representatives any amowit greater
than that actually loaned or advanced to him;
b) To furnish or publish any false notice or infoanation in relation to
recruitment or employment;
c) To give any false notice, testimony, information or document or
commit any act of misrepresentation for the purpose of securing a
license or authority;
cl) To induce or attempt to induce a worker already employed to quit
his employment in order to offer him another unless the transfer 1s
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;
Q To engage in the recruitment or placement of workers in jobs
hannful to public health or morality or to the dignity of rhe
Republic of the Philippines;
g) To obstruct or attempt to. obstruct inspection by the DOLE
Secretary or by his/her duly authorized representatives;
contract prescribed by the DOLE from the time of actual signing
. thereof by the parties up to and including ~e period of the
expitation of the same without the approval of the DOLE. 2
All the foregoing acts are embodied in· Article 34 of the Labor Code, with
the exception of certain acts which apply exclusively to owseas employment.3
1 Sedixl 42. RIMse:I ~ and Regulalicm Gcvemi'g P.ea\mlent a-d Placement for t..oca Efl1>b,ffler4, Oepamnent
Q'derNo. 141-14, Seoosaf 2014 ~ 2 0 . 2014).
2 Id.
3 &di as tm ~ l:ls: .
"(h) To fal b fie~ CXl U1e slll!US d ~ pa:ement Vil3lCies. remllante of b'eiJn exchange eartlf9,
sepa,abl fram)D.deparuesmdsuchoflerrnallErsori'6crmafal as rWlf be requied by too Seaelaly oil.mer.
"Q) To beaxne an Cl'far or mamer d Ile Boad d Bir'/ axpaalD\ engaJ8d il nwl agny orb be ~ed cired!y or
i¥1id/h h l ~ o fanJel~ and

42 SAR REvlEWER. ON lABOR lAW
2. DISTINCTION BETWEEN THE TWO (2) SETS OF ACTS.
The acts described in No. 1 above are, as a general rule, lawful and valid
acts of recruitment and placement of workers for local em~loyment when
undertaken by /imum or holde11 ef authori!J lo reeruil. What makes lt unlawful and
therefore constitutive of illegal recruitment is when the same ~cts are undertaken by
any of the following: (a) Non-lictnRt:or (b) Non-holder ofaulhonty.
The acts enumerated in No. 2 above, being Wllawful, constitute illegal
recruitment when the same are committed by any of the following: (a) Any person;
(b) A licensee; (c) A holder of authority; (d) A non-licensee: or (e) A non-holder of
authority.
The word "person" in letter (a) above may refer to an 'individual" or
'~nfi!y" per Article 34 of the Labor Code. 1
1·8.
ILLEGAL RECRUITMENT IN OVERSEAS EMPLOYMENT
1. ACTS CONSTITUTING OVERSEAS ILLEGAL RECRUITMENT.
R.A. No. 8042, as amended by R.A. No. 10022,2 classifies the acts
constituting illegal recruitment in accordance with- the offender, vi~:
(1) When any of the following acts are undertaken by a non-licensee
or non-holder ofauthori,r.
• Any act of canvassing, enlisting, contracting, transporting, utilizing,
hiring, or procuring work.etS, and includes referring, conttact
services, promising or advertising for employment abroad, whether
for profit or not. 4
0
{k) To~ er deny bavel ~ frtm appbit Wlllkers hem depiRll8 fa' mooetay erfnarx:ial IXXISK!eralioos
mlla1110SeaulvxizedunderlhisCodenl isinl>anentrg ru1es aoo ~ ·
1
The q>amJ paragraph of Mi:18 34 (Prd1itxte:I f>ratbs) states: it shal be urMI roe any incMfla, entltf, bnsee, er
hak1erd~.r
2 SediCl16 of RA No. 8042. anmended boJ Sectim 5dRA. No. 10022.
3 The term 'aitatf is defined nMa! 13(1) of tie LabCJ Code~ refers k> a document aied boJ tie Deparanent ot
Labor~ aPEJSOO oc assooam k> engcl'J(! in !1!0\lltrnentnl placementDities as aprMl!e reauilmentent,.
·I
1
Secml 6d RA No. 8042. as areided by Seclion 5d RA.1-b. 10022: See also Seam 1. rue IV, 0(llm Rules Md
Regdatxxls lnl)~ lhe MgrantWakers and CNel'Seas Fapi1a; tic. d 1995, as M1ended by RA~- 10022, issued
on .1tJ¥ 8, 2010. See also Seclion 76, Rule IC. Revised POEA Rules ald Regulalkxls Gcrlemilg Ile Recruitment and
~ d lJmBased OJeiseas Fqiilo Wcneis of 2016; Sec.tioo 72. Rule X. 2016 ~ POfA ~ and
Regulab,sGcYemiJJ ltie Reauittner4nl Empb;mentot Seafarers issued oo February 26, 2016.
CHAl'TER TWO 43
PRE-EMPLOYMENT
(2) When any of the following acts which have been declared
prohibited by law,1 are committed by any person, whether a non-
licensec, non-holder, licensee or bolder ofauthogty;
(a) To charge or accept directly or indirectly any amow1t greater than
that specified in the schedule of allowable fees prescribed by the
Secretary of Labor and Employment, or to make a worker pay or
acknowledge any amount greater than that actually received by
him as a loan or advance;
(b) To furnish or publish any false notice or information or
document in relation to recruitment or employment;
(c) To give any false notice, testimony, information or document or
commit any act of misrepresentation for the purpose of securing a
license or authority under the Labor Code, or for the purpose of
documenting hired workers with the PO&\, which include the
act of reprocessing workers through a job order that pertains to
non-existent work, work different from the actual overseas work,
or work with a different employer, whether registered or not with
thePOEA;
(d) To induce or attempt to induce a worker already employed to quit
his employment in order to offer him another unless the transfer
is designed to liberate a worker &om oppressive tenns 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 Sllppo~ or has
contacted or is supported by any union or wotketS' organization;
(f) To engage in the recruitment or placement of workers in jobs
harmful to public health or morality or to the dignity of the
Republic of the Philippines;
(g) To obstruct or attempt to obsttuct inspection by the Secretaq of
Labor and Employment or by his duly authorized representative;
(h) To fail to submit reports on ~e status of employment, placement
vacancies, remittance of foreign exchange earnings, separation
from jobs, departures and such other matters or info.anation as
may be required by the Secretuy of Labor and Employment;
As erunerated under Mcie 34 d lhe Laba Code and no.v prowled ooder Sedioo 6 of RA 1-b. 8042, as amerded by
Sedioo 5 of RA No. 10022; See also Secb'l 1, ~ r-1, Ormllus Rules cnt Regu1ations ~ Ole ~
W«kers and Ovefseas Fifpilos tic. d 1995, as Am8lded by RA No. 10022, is5lJed on Jut/ 8, 2010. See also Sedioo 76,
Rule x. Revised POEA Rules ald Regulations GoJerrmg Vie Reaumt and ~ d lald-8ased Overseas
n. x.
Ripm Wortera d 201&: Section Rue 201s R8Wied POEA rues aoo Reg~ Govenq h1 Reauilment and
En1Jlo'y,"nent d SeafareB issued on FebruaJy 26, 2016.
 44 BAR REVIEWER ON lASOR lAW
(Q To substitute or alter to the prejudice of the worker, employment
contracts approved and verified by the Department of Labor and
Employment from the time of actual signing thereof by the
parties up to and including the period of the expiration of the
same without the approval of the Department of Labor and
Employment;
G) For an officer or agent of a recruitment or placement agency to
become an officer or member of the Board of any corpontion
engaged in travel agency or to be engaged directly or indirectly in
the management of travel agency; • payment of legal and allowable placement fees and make the
(k) To withhold or deny travel documents from applicant workers
before departure for monetaiy or financial considerations, or for
any other reas-:ms, other than those authorized under the Labor
Code and its implementing rules and regulations;
(I) Failure to actually deploy a contracted worker without valid
reason as deteanined by the Department of Labor and
Employment;
(m) Failure to reimburse expenses incurred by the worker in
connection wi:h his documentation and processing for purposes
of deployment, in cases where the deployment does not actually
take place without the worker's fault; and
(n) To allow a non-Filipino citizen to head or manage a licensed
recruitment/ manning agency. I
An example of a case where the accused was convicted for committing
the acts enumerated under the provisions of Section 6 (a), (I) and (m) above is
Su!iman v. People,Z when: (1) they separately charged the private complainants the
an10W1ts of Pt32,460.00, P120,000.00 and P21,400.00 as placement fees [Section 6(a));
(2) they failed to actually deploy the private complainants without valid reasons
(Section 6Q))~ and (3) they failed to reunburse the said complainants after such failure
to deploy [Section 6(m)].
2. DISTINCTION BETWEEN THE TWO (2) SETS OF ACTS.
The distinction applicable to illegal recruitment for local employment
earlier cited equally applies to the above two (2) sets of acts constituting illegal
recruitment in overseas employment. Consequently, the acts described in No. 1
above constitute illegal recru.itoent only when they are undertaken by any of the
following: (a) a non•iansee,· or (b) a non-ho/du of authority, and the acts enumerated in
No. 2 above, being prohibitec, are considered illegal recruitment when they are
I Id.; kl.; kl.; Id.; Id.
2
~ V. People, GR No. 190970, New. 24, 2014.
CHAl'TERTwO 45
PRE-EMPLOYMENT
committed by any of the following: (a) any person,1 regardless of whether: (b) a
licensee; (c) a holder of authority; (d) a non-licensee; or (e) a non-holder of
authority.
3. PROHIBITED ACTIVITIES.
To the above enwneration of acts constituting illegal recruitment, the
following prohibited acts were added by R.A. No. 10022:2
(1) Granting of a loan to an overseas Filipino worker with interest
exceeding eight percent (8%) per annum, which will be used for
migmnt worker issue, eithet personally or through a guarantor or
accommodation party, post-dated checks in relation to the said loan;
(2) Imposition of a compulsoty and exclusive auangement whereby an
overseas Filipino worker is required to avail of a loan only from
. specifially designated· institutions, entities or persons;
(3) Refusal 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 bis or her own;
(4) Imposition of a compulsoty and exclusive arrangement whereby an
overseas- Filipino worker is required to undergo health examinations
only from specifically ~esignated medical clinics, institµtions, entities
or persons, except in the case of
a seafarer whose ·medical
examination cost is shouldered by the principal/shipowner,
(5) Imposition of a compulsoty and exclusive ammgement whereby an
overseas Filipino worker is required to undergo training, seminar,
instruction or schooling of any kind only from specifically
designated institutions, entities or persons, except for
recommendatory trainings mandated by principals/shipowners
where the latter shoulder the cost of such ttainings;
(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 brr
salary the payment of the cost of ins~ce fees, premium or other
1 The WIid "peison" may *
ID eitts M ~ or "f!J'flt per Mi:le 34 d Ile l.m Code. This is so because the
q,eiq paagraiil d U1ls alicle (Prohibi!ed Practicei) slates: "It shall be uriaViul fir atr, irldvwa, ent\'. ransee, or
h(ijer cl auncxil)i.f
2 Smi &c1 RA. No. 8042. as anm!ed 17/ Secfal 5cl RA No. 10022; See also Sedion 1, ~ IV, Ormi>us rues and
~ !J111mienq Ole Mgrillt WIikers n101e1seas Filpilos Add 1995, as Amended b'f RA No. 10022, issued
an », 8, 2010. See also Sectioo 76, Ru~ X. Rewed POEA Rules lllCI Regulalicns Golemilg Ille Reawnent and
~ d lJnl.8ased Ovaseas Fqiilo WOlkerS of 2016; Seclm 72. ~ X. 2016 RM8d POEA Rules and
ReglE!icm GcMrnnJ Ile Recrutnettand ~ o f Seafcrers issued on Fellrualy26, 2016.
 SAR REVIEWER ON lABOR !AW (HAl'TERTWO
PRE-EMPLOYMENT
47

insurance related charges, as provided under the compulsory
worker's insurance·coverage.1
1-C.
TYPES OF ILLEGAL RECRUITMENT AND THEIR ELEMENTS
1. TWO (2) TYPES OF ILLEGAL RECRUITMENT.
There are two (2) types of illegal recruitment, to wit.
(a) Simple illegal recruitment; and . ·• . . . broadened4 concept of illegal recruitment under the 19955 law, RA. No. 8042,
(b) Illegal recruitment involving _econolillc sab~tage conststlng of either:
I) Illegal recruitn:ent co~tted ?Y a syndicate; or
2) Illegal recruitrr.ent comtilltted tn large scale.
Further discussion of these topics follows.
a.
SIMPLE ILLEGAL RECRUITMENT
1. CONCEPT.
Simple illegal recruitment or simply, illegal recruitment, covers any
recruitment and placement activity undertaken by a non-lianm or a non-holder of
a11thority. It also includes the commission of prohibited acts as enumerated under
the law,2 not only by a non-liunm or a non-holder of OJ1thority but also by a licenm or
holder ofa11thority.
2. ELEMENTS PER JURISPRUDENCE.
Most pieces of jurisprudence3 have, over the years, consistently declared
tha1 simple illegal recniitment is committed when two (2) essential elements
concur, viz.:
(1) That the offender has no valid license4 or authority1 required by law to
enable him to lawfully engage in the recruitment and placement of
workers; and
kl.; kl.;kl.; kl.
Spedfx:aly, as eoorreraled Ulde' Ar1x:le 34 rJ the Lm <:ode all row p!Mled under Sec6oo 6 cf RA No. 8042. as
areided by Section 5 cf RA No.10022; See aso Sec6oo 1, rue N, Onnbus Rules .rod Regulalms ln1Jk!menting lr.e
";;l1lllt Worl:e!s .m 0-ffieas Fqiros ,c, rJ 1995, as Ameooed by RA No. 10022, issued on Jui'/ 8, 2010. See also
Sec1o1 76, Rule X. Re,,ised POEA rues all Regu1alioos ~ the Recnjmeot inl ~ ci Lnl-8ased
Ol8Seas Fq)ino Wooeis cf 2016; Sec6oo 72, Rule X, 2016 Revised POEA Rules .rod Regulatials Golemi',;J !he
Recnmen1 ard ~ tof Se.mis issued on Fellruay 26, 2016.
i Amost a! cases v.!m tlese ~ a-e menoooed iMWe recruitment fa MISeas ~ ~ oot2Mlflhy rJ
ffie cases .YE! People V. Estrada, G.R No. 225730, Feb. 28, 2018; People v. Ctua, G.R No. 187052. Sept 13, 2012;
Romesov. People, GR No.171644,NoY.23,2011;Riuabv. People, G.R.No. 178337,Jooe 25,2009.
' IJeined nArtoe t3 (d} rJ t.e Laber Code, as aneooed, as 'a doCl.rnent issued by lhe Depa1meot or Im aJ1hcxizrg a
pe!SOOOC enlitf IOope,ate aprivare~agency.' (See Peoplev. Cabat:ang, G.R No.113917,Jlif 17, 1995).
(2) That the offender undertakes any activity within the meaning of
"m:111itmmt and placement" defined under Article 13(b).2 or any
prohibited practices en~erated under the law.3
3. ADDITITIONAL ELEMENTS PER LAW.
A survey indicates that the criminal cases where the foregoing elements
were used as the guidepost in determining the culpability of the accused for ijlegal
recruitment, involve persons who are non-licensees and non-holders of authority.
The above enumeration of the elements curiously failed to consider that under the
which, it must be noted, has not been changed by the latest amendment introduced
thereto in 20106 by R.A. No. 10022, the tean "illegal recruitment'; wilike illegal
recruitment as defined under the Labor Code which is limited to recruitment
activities uridertaken by non-licensees or non-holders of authority,7 now includes
the commission of the prohibited acts enumerated thereunder, "whether
committed by any person, whether a non-licensee, non-holder, licensee or
holder of authority."8 Therefore, under Section 6 of R.A. No. 8042, as amended,9
illegal recruitment (for overseas employment) may be committed not only by non-
licensees or non-holders of authority but also by licensees or holders of authority. 10
Section 6, as amended,11 enumerates fourteen (14) acts or practices [(a) to (n)] plus
seven (7) additional prohibited acts, which constitute illegal recruitment, whether
committed by any person, whether a non-licensee, non-holder, licensee ·or holder
of authority. Except for the last three (3) acts ((1), (m) and (n)] as well as the seven
1 De6sled il Altx:le 13 (Q of lhe Lm Code, as crneoded, as ·a docuneot issued by lhe Oep.m,ent ci Laoo' ~ a
peison oc associa5on I:> ergaie il reaui'Jneot and ~ acMes·as a pmate ~ entify.' [See People v.
~ .supra).
1 Ar1x:le 13(b) of lhe Lm c.ooe defines "recruitment and pa::emert as: Nrt act or c:anvassi"g, enlisti'9. OJOlradirg,
b'a!lSpCl1irg, Utiililg, hili"g, <J' proa.mg wcxkei;, and rdJdes referrals, OlOlrad. sesvi:;es, ~ <J' a<Mllfisng for
~ t kx:ai'{ oc alxooo, llilelher for pron oc not Pro'li:led, !hat any peison oc entity llhxil. il 'dl1'/ rnatlOO'. ollels oc
prorrises lo' afee employmeot lo l'i,ll oc more persons shal be deemed er,ga;ied in reouirnen1 all pooimeot
See eruneraoon tn1er Altx:le 34 a the 1.axr Code cm ro11 prowled tJlder Sec6oo 6rJ RA No.8042, as amended bv
Sedm 5 a RA No. 10022; See also Section 1, RiAe w. OmnbJs Riles and RegU0fms ~ lhe l,iJrant
Wmeis .rod Ovaseas F ~ Ad cf 1995, as Amended by RA No. 10022, issued on Ju~ 8, 2010. See also Sedion 76,
~ X, Revi;ed POEA ~ all Regt.dam Go.>ernrg the Recniment and Errpk7jme!lt d Lard-Based Ovelseas
Ffl)ilo Wmeis d 2016; Sec6oo 72. Rule X. 2016 Revised POEA Ru!es all Regwims Gowmilg lhe Recrubnent i'rld
Err;lloymertcf Semas issued on Februaiy 26, 2016. ·
• The ~ Cwt has dediJed that R A No. 8042 has lxoadEJ1ed the tOrOJpl ci ~a recnament uo:ler the Labor
Code. ~ev..6J>e&3, G.R No. 195666, ~ -20, 2016; People V. Claud, GR No. 197539, nie 02. 2014~
s June 7, 1995.
"9th10,2010.
~ v.Tolentino, GR No. 208686,.kllf 01,2015.
s See erooaation oode! Sec6oo 6 cf RA No. 8042, as im:llded by Secfun 5 cf RA No. 10022; See also Secfun 1, Rule
N, Ormibus Rules and Regulams ~ the Mg/l¥lt Wooers and Ov-elseas Fiipinos Add 1995, as Amended by
RA No. 10022, issued onJu.ly 8,2010. See also Sedan 76, Rule X. RMEd POEA Rules .rod Regliati::xis Go,oemi'g !he
Recnib'rEnland 8rl)bymenldt.and-8ased Ovaseas Ffl)iloWcrters rJ2016; Sedm 72, RtAe X. 2016 Revised POEA
Rules aid Regutatxris Go.'ef1'ing lhe Reouilmentand ~ t ct Seafill!!S issued on Fetiru.Ky 26, 2016.
9 Sedm 6 of RA No.8042. as amended by Sec6oo 5cf RA No. 10022.
10 Peopiev. Tolentilo.~
11 Secfun 6of RA No. 8042, as amended by Sedioo 5rJ RA No. 10022.
 Bil REvlEWEA. ON LABOR I.Aw
('1) additional prohibited acts, on the list under Article 6 of RA 8042, as amended 1
the first eleven (11) acts or practices are also listed in Article 34 of the Labor Cod~
under the heading "Prohibittd pra&tiar." Thus, under Article 34, it is unlawful for any
individual, entity, licensee or holder of authority to engage in any of the
enumerated prohibited practices, but such acts or practices do not constitute illegal
recruitment when undertaken by a licensee or holder of authority.2 However, Wlder
Article 38(a) of the Labor Code, when a non-licensee or non-holder of authoritv
undertakes such "prohibited pradias," he or she is liable for illegal recruitment. R.A.
No. 8042, as amended, broadened the definition of illegal fecruitmcnt for overseas
employment by including the afore-said prohibited acts or practices which now
constitute as illegal recruitment, whether committed by a non-licensee, non-holder,
licensee or bolder of authority.3
Simply put, under R.A. No. 8042, as amended, a non-licensee or non-
holder of authority commits illegal recruitment for overseas employment in two
ways:
(1) By any act of canvassing, enlisting, contracting, transporting, utilizing,
hiring, or procuring workers, and includes referring, contract services,
promising or advertising for employment abroad, whether for profit or
not;and
(2) By undertaking any of the acts enumerated under Section 6 of R.A.
No. 8042, as amended.
On the other hand, a licensee or holder of authority is also liable for
illegal recruitment for overseas employment when he or she undertakes any of the
prohibited acts or practices listed under Section 6 of RA 8042, as amended.4 .
Consequently, if a recruiter is charged with violation of any of the
prohibited acts under Section 6, as amended, there is no more need to prove
whether he is a licensee or holder of authority or not because it is no longer an
element of the crime.5
And it bears noting that this broadened concept of illegal recruitment also
applies to recruitment for local employment where the 2014 Rniied'RN/u explicitly
states that the acts enumerated thereunder "shall be unlawful when committed
by w person, whether or not a holder of a license or authority."6
I Id.
2 Peq)lev. Tolalfno, G.R ft>. 208686,"101,2015.
l Id.
• kl.
5 Peq>le v. Jimrf Ang, G.R. No. 181245, AI.MJ. 06, 2008; ~ V. Nogra. GR No. 170834, Aug. 29, 2008; People V.
Gasacao.GR.No.168445.No.i 11.2005. . Sedioo 6of RA No. 10022.
6
See Section 42. Revised rues a'd Regualixls GcHemilg Reaul.menlnl Platunentb Local Er'1)k1,'metlt. Oepartnetll
OderNo. 141-14, Series of ~14 [NCNen'ber20, 2014), bkx:al ~
CHArnRTwo 49
PRE-EMPLOYMENT
Moreover, since illegal recruitment becomes qualified if committed by 3
or more recruiters (syndicated) or when there are 3 or more reauitees (large-scale),
as the case may be, the total number of recruiters and/ or recruitees in order for a
case to remain one for simple illegal recruitment should not be more than two (2)
persons.
In the light of the foregoing disquisition, the elements of simple illegal
recruitment should now be re-stated as follows:
(1) That the offender engages in acts of recruitment and placement of
workers as defined under Article 13(b) of the Labor Code, or in any
prohibited activities enumeated under the law,1 irrespective of
whether the offender is a non-licenseer non-holder, ~ or ruilikI
of authoriry;
(1) That the offender has no valid license or authority required by law to
enable him to lawfully engage in the recruitment and placement of
workers;2 and
(3) That the number of recruiter/s who committed the unlawful acts
and/ or recruitee/ s who fell victim/ s thereto should not be more than
two (2) persons.3
No. 3 above is a significant element of simple illegal recruitment
considering· that in illegal recruitment cases, the total number of recruiters or
reauitees is detemlinative of the nature of the crime. Thus, where illegal
recruitment is committed by or against one or two persons only, the accused may
be convicted of simple illegal recruitment only, which is punishable with a lower
penalty.4 Corollarily, where the offense is committed by or against three (3) or m?re
persons, it is qualified as an illegal recruitment involving economic" sabotage which
would merit the imposition of a higher penalty. 5
1 See erunera1ion 1.Rter Mae 34 cl te 1..abcr Code aoo naN pnMled under Seclicn 6d RA. No. 8042, as emended by
Sec1icn 5 d RA. No. 10022; See also Section 1, ru& N, Onnhs ~ and Regulalbls kJlllementing Ile Mgrant
Waters am CMJseas Fq,msld.ci 1995, as.Anmied by RA No. 10022, fs.gJed mMt 8. 2010. See a Secirl 76,
~ x, Revised POEA ~lies and RegtEbs GcHmmg fie Recru"tnent cl1CI ~ of l.d8ased Overseas
fqiloWorkers d2016; ~ 72, rue X, 2016 RIMS8d POEA ~ llll Regulalms Gowmi'g Ole Recruament Md
~ofSeafa'ersmuedmFebrualy26,2016.
2 In Poop1e vVelasco. G.R No.
195668, .ble 25, 2014, Ns seanl element is stated as fo'lovi5: "(2) 0iat the ac:rused had
ru~v.ill81eguo!h!sis.gJedbyt,eSeauaydl.Bbc1111d~Mll resped~tie~IDsewre
alicense a auamy ID recnm Md deplaf Y«lrkers:'
, AcalRf"llJ mPeople v. Sadosa, GR No. 107084, Mrf 15, 1998: 'Wlen Ole pecsoos reauited ere three or roore, the afme
beaxnes &!gal reauinri il latgescale lllder M 38 {b)of 818 lm Qlde."
See Peqm v. Ortil-Myalte, GR ta. 115338-39, Sept 16, 1997, 344 Phil 598, ~ - ti Ulis case, Ole prlMSiol1
referred t> is ~ (c} of Altx:le 39 cl Ole labor Code, no.v paraiJraph (a), Seclicn 7, d RA No. 8042, as ameooed by
s See Peqlle v. Ontz~ supra. The JXIMSO\ referred ID is pcr!lllraph (a) of Article 39 of Ole Lm Qxfe. no,v parag~
('o1 Secfal 7, d RA. No. 8042, as amended by Sedm 6of RA No.10022.
 BAR REVIEWER ON IJ,.BOR IJ,.W
so
4. APPLICABILITY TO BOTH LOCAL AND OVERSEAS
EMPLOYMENT.
rveyed where the foregoing elements were invoked by the
Although the cases su . . .. . c I persons come to an agreement concerning the commission of a felony and decide
· I e recruitment and placement acllvtlles ,or overseas cmp oymcnt,
High Court mvo v d principles may well appIy WI'th the same force and e f',ect to
the same concePt an
those committed for local employment.
b.
ILLEGAL RECRUITMENT INVOLVING ECONOMI~ SABOTAGE
1. ELEMENTS.
The first two (2) elements for Iinrpk illegal recruitment as cited and
discussed above likewise apply to illegal recruitment involving economic sabotage.
A third clement is added1 regarding the requirement that there be at least three (2)
recruitees, in the case of large-scale illegal recruitment, or at least three (3)
recruiters, in the case of syndicated illegal recruitment.
2. WHEN CONSIDERED ECONOMIC SABOTAGE.
To iterate, illegal recruitment is considered a crime involving economic
sabotage when it is committed:
1) By a syndicate; or
2) In large scale.2
2.1. SYNDICATED ILLEGAL RECRUITMENT.
Illegal recruitment is deemed committed by a JJ11dicale if it is carried out by
a group of three (3) or more persons conspiring or confederating \\~th one
another.3 The law, it must be emphasized, does not require that the syndicate
should recruit more than one (I) person in order to constitute this crime.
Recruitment of one (1) person would suffice to qualify the illegal recruitment act as
having been committed by a syndicate.
1
Seel'eoplev. Pasrua,G.R. No. 125081.0d. 3, 2001, v.hefeiwasstalootiat1hereis ia'ge-scale i~reO'lJibnentiijis
camil!ed a;ianst !tree (3) cc rrore pe!'SOOS m ~ cc as agroop; it elements, tierefore, are lhe tv.o alxminen!iooed
p\Js lhe fad #lat ft i; coom11ed a;ianst h'ee 0< iroe pe!SOOS.' See aso PeopE V. &waoomi, G.R. No. 200884, June 4,
2014, v.!lere l is staled: "Xxx a tiill element is ooded: that lhe ooeooer OOITfrits arr, of lhe ads c( recrumt and
plcK:Ementa;iiinst !tree ccrrore f)EISOOS, m'Mduailf cc as aQl!X4>.'
1 Artx:le 38(b), Labtc Code; See also Smi 2. rue N, QmbJs M!s cm Regulations ~IEmm;J lhe Mgraol Waxes
and O,,erseasApiiosAdc(1995, asAmendedlrf RA No.10022,issued oo Jilf 8, 2010. ltbeas topootout lhatthereis
no sma pro,isoo oo ilega IOO\llment ilvoNilg earooic~ e (laye-scae ex syno,::aled) nbolh lhe RMOO POEA
Rlrescm RegiJatoos GoYem;i hi Recruibnentcm fnlJlo',Trieotalzd.Basoo CNerseas Fipilo Wat.~ c(2016 and
the 2016 ~ POEA ~ en! RegtJlaioos Gcll8nilg lhe RecniJ11er( cm ~ c( Seafcres issued oo
Fetxuay26,2016. See ~v.No]ra. GR No.170834, />.!Jg. 29,2008.
3 Artx:le 38(b). Lm Code; Sedi:x16, RA No. 8042. as cJOOllded by Secbl 5, RA No. 10022 [Mrth 8, 201ot, Secbl 6,
RA No. 8042. as emended by Sedi:n 5, RA. No. 10022 ('Jad18, 2010J: See aso Secbl 2, IU! IV, Olmilus ~ cm
Regwti:ns ~ tie ~Wakers and CNerseas Fipr,os Ad c( 1995, as Amended by RA No. 10022, is.sued
on.Jult8,2010; Seef'eopEv. La'i, GR No. 195419, 0d. 12,2011; Peq>lev. Gallo. G.R.No. 187730,Jule29,2010.
CHArT'ER TWO 51
PRE-EMPLOYMENT
The core of this kind of illegal recruitment is the conspiracy among the
perpetrators, without which, no syndicated illegal recruitment could be committed.
Under Article 8 of the Revised Penal Code, there is conspiracy when two or more
to commit it.1 Thus, in finding the accused-appellants guilty of syndicated illegal
recruitment in Peopk v. La/li,2 the High Court noted that Lalli, Aringoy and
Relampagos have conspired and confederated with one another to recruit and place
Lolita for work in Malaysia, without a POE1\ license. The three elements o f
syndicated illegal recruitment are present in this case, in particular: (I) the accused
have no valid license or authority required by law to enable them to lawfully engage
in the recruitment and placement of workers; (2) the accused engaged in this
activity of recruitment and placement by actually recmiting, deploying and
transporting Lolita to Malaysia; and (3) illegal recruitment was committed by three
persons (Aringoy, Lalli and Relampagos), conspiring and confederating with one
another.3
In Peopk v. Gutl)(lfTa,4 the accused-appellants5 asserted that the offense
should not have been qualified into illegal recruitment by a syndicate since there
was no proof that they acted in conspiracy with one another. However, the acts of
accused-appellants showed unity of purpose. Guevarra would visit each of the
complainants in their houses for several times, convincing them to work abroad,
and giving them the impression that she had the capability of sending them abroad.
She would accompany them to the house of the other accused, spouses Bea, who,
in tum, would collect the placement fees and process the passports and plane
tickets. All these acts of the appellants establishe.d a common criminal <lrsign
mutually deliberated upon and accomplished through coordinated moves.
2.2. LARGE-SCALE ILLEGAL RECRUITMENT.
Illegal recruitment is deemed committed in large Jcak if it is committed
against three (3) or more persons, individually or as a group.6 1berefore, a
conviction for large scale illegal recruitment must be based on a finding i11 each case
of illegal recruitment of three (3) or more persons having been recruited, whrther
individually or as a group.7 The failure to prove at least three (3) persons recmited
makes the crime a case of simple illegal recruitment.8 This is so because in
1 Peqrev.LaJo,GRNo.121272.Jllle6,2001.
2 Peoplev.La,GRNo.195419,0d. 12,2011.
l See also People V. HemMdez, GR Nos. 141221-36. Mml 7, 2002
• Peoplev.GueYalra;GRNo.120141,Api21, 1999.
s Tue me (3) ~ nlhi;case a-e Lana B. Guev.ra, Josie Beaclld Pedro Bea, Jr.
Artx:1e 38(b) Labor Cooe; Secbl 6, RA No. 8042. as ;mnled by Sectioo 5, RA No. 10022 [Mrth 8, 2010J; See also
Sectioo 2, ~le N, Clfmlxs ~ and Re;Jutatioos ~ tie Mgr.Ill Wax~ .Jld (}.ffieas Ffqiinos Ad of 1995,
as Amended by RA No. 10022. issued oo Juy 8. 2010; People v. ea;i~. GR No. 198664. Nov. 23, 2016; People v.
i
Bayur, GR No.170192, Feb.10, 2016; Peoplev. Abella.GR No. 195666, Jan. 20, 2016.
I Peq)lev. Jmny An,J, GR No. 181245,f>.llg.06, 2008;Peq>lev. Hara!a, GR Nos.11217S-79./>jlli 21, 1995.
I Peoplev. Hu, GR No.182232, Od.06,20C6.
f
1

52 BAR RE\IIEW£R ON LABOR 1/,W
offenses in which the number of victims is essential, f~ure of. the
prosecution to prove by convincing evidence that the off'~nse 15 co~tted
against the minimum numbet of persons required by law is fatal to its cause
of action. 1
• gal ruitment .in iarge scale
Moreover, there can be no ille rec .
if the same is
· . .
· r • filed by only one complainant 1bis was the ruling in
based on severa1m1oanat1ons "th ,
n ,,.,. H ___ ,i_ 2 h th u;....h Court agreed W1 the accused-appellants
reoru: ,. efflllll(#z, w ere e '""6'" . • th 0 f illegal . . lar
argument that the trial court erred in co~vt= ~ • re;ndtln~t tn . ge
scale by cumulating the eight (Sh) 1? r ua.1Ul Otm\tlOnfilsed eb ynl pnvate
1 _:___ I oted that eac 101ormatton was y o y one
compwuauts. t n ··-'
complainant As hdd in Peoplt "· R!,u.-
"xiaWhen the Labor Code speaks of illegal reauitment
'committed agwst three (3) or more persons individually or as a group,'
it mui;t be understood as referring to the number of complainants in
each case who are comFlainants therein; otherwise, prosecutions foe
i;ingle crimes of illegal recruitment can be cumulated to make out a case
of large scale illegal recruitment In other wocds, a conviction for large
scale illegal recruitment must be based on a finding in each case of
illegal recruitment of three or more persons whether individually or as a
group."
2.3. SYNDICATED VS. LARGE-SCALE.
As distinguished from illegal recruitment committed by a syndicate, illegal
recruitment in large scale may be committed by only one (1) person. What is
important as a qualifying element is that there should be at least three (3) victims of
such illegal recruitment, individually or as a group.4
The number of offenders is not material in illegal recruitment in large
scale. As held in Peoplt v. LaurrJ.! the number of offenders, whether an individual or
a syndicate, is clearly not cc,osidered a factor in the deteanination of the
commission of illegal recruitment in large scale. Counsel for accused-appellant was
misled by the fact that illegal recruitment in large scale is· defined immediately after
illegal recruitment by a syndicate. However, the only reason therefor is that they are
both considered offenses involving economic sabotage as the law itself so provides.
In situations where there are three or more illegal recruiters and there are
three or more recmitees involved in one case, the illegal recruiters may be
convicted either as a syndicate or in large-scale, depending on the evidence·
I Id.
2 GR.Nm.141221-36. Mird17.~
3 G.R. No. 105204, M:ldl 9, 1995, 242 $CAA 264.
4 Peopev. Mlaiz, G.R No.205153, Sept. 9, 1015; ~v. Baitista, G.R No.113547,Feb. 9, 1995.
5 G.RNo.120353,Feb.12, 1998.
CHAl'Tl:R Two
PRE-EMPLOYMENT
53
presented. In any case, the penalty imposable is the same for both since the law'
does not make any distinction between these two.
An example of a case where persons were charged with violation of
Section 6 in relation to Section 7 of R.A. No. 8042 for "large scale illegal
recruitment committed by a syndicate" is People 11. Trillidad.2 After due proceedings,
accused Trinidad was ultimately found "guilty of illegal recruitment in large scaJe,
_sentencing her to suffer the penalty of life imprisonment and ordering her to pay a
fine and actual damages."
3. APPLICABILITY TO BOTH LOCAL AND OVERSEAS
EMPLOYMENT.
Albeit the illegal recruitment cases involving economic sabotage studied
and surveyed involve recruitment and placement activities for ovcrseai;
employment, the same concept and principles may also apply with the same force
and effect to those committed for local employment. Notably, however, there is no
single provision in the 2014 RH/es far local employmenJ3 that treats of large-scale or
syndicated illegal recruitment. 4 But since the goveming law, Article 38 of the Labor
Code, contains a provision thereon, the same should likewise apply to local illegal
recruitment cases.
1. SOME PRINCIPLES ON ILLEGAL RECRUITMENT.
• Mere impression is sufficient to constitute illegal recruitment. To convict
a person for illegal recruitment, it suffices to show that he gave the victim the
distinct impm1ion that he had the power or ability to send him abroad for work
such that the latter was· convinced to part with his money in order to be
employed. 5 ·
• Mere promise of employment abroad amounts to recruitment. To be
engaged in the. practice of recruitlnent and placement, it is plain that there
1 Sml 7lb) of RA No. 8042. as anended by Sedol 6d RA No. 10022, pnlVides: "(b) The penatf of f i f e ~
and a file of not Is Om Tv.o rrili0n pesm (P2,00>,000.00) na mote Gal FNe nm pesos (PS.UX,,CXXUX)) shall be
i'1)Qi8d if legal reauJment ar'5titJtes exnrnc sabolage as defiled '1ereh; PRJwled, tmav, That tie maxinlm
pa\' shal be~ I Ile pe,scn legatf reallied is ms am eutmen (18) yeas uage a cxrmiled by a IDl-
tensee orlUl-hliterofau1lcdy."
2 TIEprormmnentwasrralei'I Peoplev. Tlilidad,G.R.No.181244,Aug.09,2010.
1 Re.ml~ and Regulatioos GovemiYJ Reaui!nB1t aid Ftmnent tr Local~ Oepatment Oda' No. 141-
14, Series of 2014 (November 20, 2014).
4 In llesamemmrllat~ lhEJe is a l)RMSOlm laig&«aleclld ~ lle]araaubmllin Sedm2, RiN rJ
rltie Omibus ~am Regtdalm ~ tie M,JrnWcxmsandCMrseasFEpnostau 1995,asAmended
by RA No. 10022. mm:! en J1J/ 8, 2010, Olere is also no sirilar prtMSl0n m ll"dd recnftnEn iMM1g eamnic
sa1>cmJe (lage-srale or syncftated) n baOl tie Rewed POl:A IUs and Ra,iua&xls GcMnq lhe Reaufment cl1d
~ d land-Based Olerseas Fqino watem cl 2016 aid 118 2016 RIMsed POEA rues MCI Regulalions
GcMllni1g lhe Reamnent aoo Em{lkl)m!ntof Seafalels issued on February 26, 2016.
s People v. Fernandez. G.R. No. 199211, Jllle 04, 2014; People v. Abat. G.R. No. 168651, March 16, 2011.
 l!AR REVl~R ON LABOR I.AW
54
must, at least, be a promif.e or an offer of employme11t from the petSon posing
as a recruiter whether loctlly or abroad.•
• There is no need to show that accused represente~ himself as ~ licensed
• Evi·dencewise, it suffices that the prosecution
rcctWter. . has established
. . that
the POEA did not authorize or license the recrwter to _engage _m recrwtme~t
• • • and ~L-t
actmttes despite the absence of such authonty or license, he still
Wli
recruited bis victims.2
• Referrals may constitute illegal recruitment. Article 13(b) of the Labor
Code includes "referrals" in the definition of what constitutes "recruitment
and placement."3 In convicting the accused-petitioner· in Rodolfo u. Peoplt,4 the
Supreme Court declared that the act of referral within the contemplation of
the law, is "the act of passing along or forwarding of an applicant for
employment after an initfal interview of a selected applicant for employment to
a selected employer, placement officer or bureau.'' Petitioner's admission that
she brought private complainants to the agency whose owner she knows and
her acceptance of fees including those for processing betrays her guilt 5
• Conduct of interviews may amount to illegal recruitment The conduct of
interviews by the representatives of the foreign principal amounts to illegal
recruitment under Sectioc. 6 ofR.A. No. 8042.6
• It is immaterial whether the recmitment is done for profit or not The
argument of the accused-appellants that there was no proof that they received
money from the private complainants deserves no credence because money is
not material to a proso..,ition for illegal reauitment considering that the
definition of "illegru recruitment" under the law includes the phtase "whttherfar
profit or IIOI. '"
• Actual receipt of fee, not an element of the crime of illegal recruitment.
Thus, even if the accused recruiter did not actually receive any fee, his
representation that he had the capacity to secure employment for private
complainants made him hable for ~ rcauitment since he had no authority
or license from the POE.\..S Even in the absence of money or other valuables
given as consideration for the ''muias" of the recruiter, he is considered as
being engaged in recruitment activities.9
Peoplev.Laogo,G.RNo.176264,Jal. 10,2011:Pecplev.Dooqo,G.R.No.181475,Aprl7,2009.
People v. Btei1a'os, G.R Nos. 116905-9l8. Aug. 6, 2002; Peqm v. ~ . G.R. No. 113917,Jutf 17, 1995.
3 Mi:le 13(b) ct lle-lm Code defrles "recniment and pla:ement" as '[a)ly a:t rl CcllVlBiing, en.'islnJ, aintradi'lg.
banSpC)rtnJ, utrizqi, hmg II proamg aers, and imles refenui, aJl1!ract servk:es, pnm.q or alvet1ising for
~nent)xa'l·tor ab'oad, v.tiehrforpn:ltornot•
' G.RNo. 146964,hlg.10,m.
~ Seeabof>tq>ev.Gote,G.RNo. 11316\Al.g.29, 1995;Peqjev.Alble,G.RNos.91711-15,Mcrch~, 1993.
6 Cf. SwJ1 Crew Mm.18Tl8nl. ~ v. Har. Espa'd, Jr., GRNo: 155903, Sept 14, 2007.
Peoplev.t.'atao,G.RNo.198012,~22,2015;Peoplev.Olla,G.R.No.187052,Sept.13,2012.
PeoiEv.BdeslHos_G.RNcs.11~.Aug.6, 2002. . 11 O!heswise knaMl as Ile "Expnled AJ16.Tralli;mJ it Pe1sons Ad of 2012." It is c11 NJ. expantlng RA. No. 9208 entitled
Peoplev.Janba,G.RNo.160076,Jcn 27,'l007.
CHAPTER TWO 55
PRE-EMPLOYMENT
• Effect of receipt of payment after expiration of license. Receipt of
payments after the expiration of the license constitutes, as a general ruJc, illegal
recruitment But, if the receipt of payment, although after the expiration of
the license, was meant for services rendered before such expiration, it docs nor
constitute illegal recruitment for purposes of criminal pro~ecution. 1
• Absence of receipt not essential Receipt issued by the recruiter is a
documentary evidence that proves that he/she is engaged in recruitment and
placement activities.2 However, the absence of receipts to prove payment of
recruitment fees is not material nor fatal. 3 The absence of receipts to evidence
payment to the recruiter would not warrant an acquittal, a receipt not being
fatal to the prosecution's cause.4
• Absence of documents evidencing the recruitment activities
strengthens, not weakens, the case for illegal recruitment. 5
• ·Non-prosecution of another suspect, immaterial. It is well settled that only
one peISon recruited is sufficient to convict one for illegal recruitment 6 The
non-prosecution of another suspect provides no ground for an accused-
appellant .to fault the decision of the trial court convicting her.7
• Execution of affidavit of desistance affects only the civil liability but has
no effect on the criminal liability for illegal reauitment.8
1-0. .
ILLEGAL RECRUITMENT VS. ESTAFA
1. ILLEGAL RECRUITMENT, NO BAR TO FILING OF ESTAFA.
R.A. No. 10022 has introduced an amendment to R.A. No. 8042, which
now statutorily recognizes the jurisprudentially settled fact that the filing of an
offense punishable under said law, such as for illegal recruitment, "shall be without
prejudice to the filing of cases punishable under other existing laws, rules or
regulations"' such as swindling or estafa, under Article 315, paragraph 2 (a) of the
Revised Penal Code, or ttafficking in persons, under R.A. No. 9208,10 as
amended by R.A. No. 10364,u Clearly, illegal recruitment is an independent action.1
1 Aqtm v. C\, G.R. No. 91896, Nov. 21, 1991, 204 SCRA 240.
2 Peoplev.~GR.No.198664,Nov.23,2016.
3 Peoplev.Donqo.GR.No.181475,"4>117,2009.
• Peoplev.Abat, GR. No. 168651,Mclth 16, 2011:Peopk!v. Billall&',G.R Nos. 114967-68. Jai. 26, 2004.
s Peq1ev.Pnami,G.RNo.108107,June19, 1997.
~v. Pins, G.R No&. L-58674-n,Jut, 11, 1986, 142 SCRA664.
~v.Sendm,G.R.Nos.101579-89,Dec.15, 1993;SeealsoPeoplev.Goce.G.RNo.113161,AuJ.29, 1995
e P~v.lallel,G.R.No.120353,Feb.12, 1998.
9 SedilJl 6, RA. No. 8042, as amnfoo by Secoon 5, RA No. 10022.
10 OhllwiseblaM'I as"M6-Tratrdi'r;J il PasalsAc:tof 2003."
•All Ac:t to tnstilute Pdieies k> E&nilale Trafficking in Persoos ~ Women a-id Children, Establishrg !he Necessary

BAR REVtEW£R ON l.AB()R. LAW
56
. d estafa cases may be filed simultaneouslf and
Illegal recrwtmencht an r. illegal recruitment does not bar the tiling of
2 Th filin f arges ,or
separatelY· e 3g ~ . 1 ruitment and estafa are entirely different offenses
estafa, and ti" :ma. aril~ga-111:~des or is necessarily included in the other.4
and neither one nccess Y
CTION FOR BOTH ILLEGAL RECRUITMENT & ESTAFA.
2.CONVI
In cases where swindling or estafa is committed in the process of illegal
recruibnent, conviction under the Labor Code, a special law, does not preclude
punishment therefor wider th~ Revised ~enal C~de, a g~~- law.5 ~e ~
therefor is not hard to discern: illegal recrwtment 1s mab proh1b1tum, while estafa 1S
maim,, in st. In the first, the criminal intent of the accused is not necessary for
conviction; the fact alone that the accused violated the law warrants his conviction.6
In the semnd, such an intent is imperative.7 Thus, it is settled that a person, for the
same acts, may be convicted separately of illegal recruitment, whether simple or
committed in large scale or by a syndicate, under R.A. No. 8042, as amended, or
the Labor Code, and estafa under Article 315 (2) (a) of the RPC,8 which provides:
"Article 315. Swindling (estafa). - Any person who shall defraud
another by any of the means mentioned herein below 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, qualifiations, property,
credit, agency, business or imaginary transactions, or by
means of other similar deceits."
Under the above-quoted provision, there are three (3) ways of committing
estafa: (1) by using a fictitious name; (2) by falsely pretending to possess power,
influence, qualifications, property, credit, agency, business or imaginary
transactions; and (3) by means of other similar dcceits.9
k1sUra Mldaisms b-018 PIOOldDl and ~of Traf&:ked Persoos, PnNifrQ Penafties u ils Vdab1s and for
oou Ptrposes..
s.
, Sedial rue r.1. OnnbJS ~and Regula6oos mpkmen1iYJ lhe M]lclltWoters and Olaseas Fqn,s hid 1995,
as Amended by RA No. 10022, mued crt Jutf 8, 2010.
1 b'yv.People.G.RNo.183879.~rB 14,2010.
l kl
• kl.
s Peqllev. Femandez. G.R No. 199211, June 04, 2014; People v. Tuma, GR Nos. 97044-46, July 6, 1994.
1 Peq)lev. T ~ G.R No.173473, Dae. 17, 2008; ~v. Gantoa, G.R No. 135382. Sept 29, m.
1 Peq>ev. IWesleros, G.R Ncs.11~. Au:J. 6, 2002; Seeaso PeoiE v. Enrquez. G.R No. 127159, Miy 5, 1999.
a Peopb v. Estrada, G.R. No. 225730, Feb. 28, 2018; People v. De Los Re-Jes, G.R. No. 198795, JUle 7, 2017; People v.
ea,,te,, G.R No.170192. Feb.10, 2016; Pooplev. Tolenb, G.R No 208686, lit I, 2015.
Feoplev. Gallo, G.R. No. 185277, Mm! 18, 2010; ~ v. Lo, G.R No. 175229, Jen 29, 2009, 577 SCRA 116, 132.
CHArTERTWO
PRE-EMPLOYMENT 57
It must be stressed that"' not. all acts which constitute the felony of ertafa
under the Revised Penal Code necessarily establish the crime of illegal recruitment
under the Labor Code. Esta& is wider in scope and covers deceits, whether related
or not related to recruitment activities. 1 This is clear from the following elements of
emfa, in general, /Q 1llit.
(1) The accused defrauded another by abuse of confidence or by means
of deceit; and
(2) The offended party or a third party suffered damage or prejudice
capable of pecuniary estimation.2
The elements of estafa by means of deceit under Article 315, paragtaph 2
(a) of the Revised Penal Code are the following, vi~:
(a) That the accused used fictitious name or false pretense or fraudulent
representation as to his power, influence, qualifications, property,
credit, agency, business or imaginary transactions or other similar
deceits;
(b) That he used such deceitful means, false pretense or fraudulent
representation prior to or simultaneous with the commission of the
fi:aud;
(c) That the offended party relied on such deceitful means, false pretense
and fraudulent act to part with his money or property; and
(cl) That, as a result thereof, the offended party suffered clamage.3
To emphasize, under this class of estafa, the element of deceit is
indispensable. It is essential that the false statement or fraudulent representation
constitutes the very cause or the onJy motive which induces the complainant to part
with the thing of value.4 To convict for this type of crime, therefore, it is essential
that the false statement or fraudulent representation constitutes the very cause or
the only motive which induces the complainant to part with the thing of value.5
Thus, in convicting the accused spouses for estafa in Peupk u. Cagalingan,6
the High Court found that private complainants were led to believe by accused
spouses that they possessed the power and qualifications to provide them with
work in Macau when in fact they were neither licensed nor authorized to do so.
Accused spouses made it appear to private complainants that Beatriz was requested
by her employer to hire workers for Macau, when in fact she was not. They even
recniited their own relatives in the guise of helping them get better jobs with higher
1 Peoplev. Turda, G.R Nos. 9~,Ju~6.1994, 233 SCRA 702
2 Peq)le v. De Las P.eyes. G.R No. 198795, Jwle 7, 2017; People v. ea,,tEJ, G.R No. 170192, Feb. 10, 2016; Peq)le v.
Amal. G.R No.20515.1,Sepl 9, 2015: ~v. Tdenlilo, G.R No. 208686,Ju~Ot, 2015.
3 People v. Racho, G.R. No. 227505, Oct. 02, 2017; &lfman v. People. GR No. 190970, ~- 24, 2014; l.q,ez v. Plqlle,
G.R No. 199294, Jll/ 31, 2013; People v. Chua, GR No. 187052, ~ 13, 2012
People v. Cljaqa,, G.R No. 198664, to. 23, 2016.
Peqllev.GaSo,GRNo.185277,Mardl 18,2010;Peqilev.Lo,GRNo.175229,Jan.29,2009,5nSCRA 116, 132.
s Pecpev. ~ G.R. No. 198664, to. 23, 2016.
 CHAPTER TWO
PRE-EMPLOYMENT 59
B,U RM EWEil ON lABOR. lAW
58
. . dam of living. Likewise, private for both crimes considering that they were entirely distinct from each other not
pays abroad for them to Uil?[OVe thett stan din that the latter could only from their being punished under different statutes but also from their
complainants were deceived by accused spouses by pthreten . ~resentations false elements being different.1 A person who is convicted of illegal recruitment may, in
• u_ China- With ese aus--r ,
amnge their employment lll J.~cau, d they were forced to part with addition, be convicted of estafa under Article 315 2(a) of the Revised Penal Code.
't, th y suffered damages an
assurances and decei e f them even testified to have mortgaged her There is no problem of jeopardy in this situation.2
their hard-earned mo:;eai:o::u:d money &om a lending institution just to raise 5. USE OF SAME EVIDENCE FOR ILLB(iAL RECRUITMENT &
house and another, to
the alleged processing fees. ESTAFA.
The same deceit was employed in People 11. Gal/tJ, 1
where appellant and To successfully prosecute the illegil recruiter for estafa, the prosecution
Martir led the private complrunants to believe that th~ possessed the power, needs only to p[esent the very same evidence proving his commission of the crime
qualifications and means to p[ovide wotk in Korea. Owing the trial of these cases, of illegal reauitmcnt.3 Case law holds that the same pieces of evidence that
it was clearly shown that, together with Martir, appellant discussed with private establish liability for illegal recruitment confirm culpability fQr es~fa.4 It is thus
complainants the fact of their being deployed abroad for a job if they pay the enough to show that the recruiter and bis cohort acted with unity of purpose in
processing fee, and that he actually received payments from private complainants. defrauding the victims by misrepresenting that they had the power, influence,
Thus, it was proven beyond reasonable doubt that the three private complainants agency and business to obtain overseas employment for them upon payment of a
were deceived into believing that there were jobs waiting for them in a factory in placement fee, which they did pay and deliver to the recruiter.5
I
Korea when in fact there were none. Because of the assurances of appellant, each
of the private complainants p:..rted with their money and suffered damages as a 6. CRIMINAL ACTION, NOT A BAR TO ADMINISTRATIVE ACTION.
result of their being unable to leave for Korea. The elements of estafa - deceit and The institution of criminal action for illegal recruitment is without
damage - are thus indisput,bly present, making the conviction for estafa prejudice to any administrative action against the licensee or holder of authority
appropriate. cognizable by the POEA, which could proceed independently of the criminal
3. ACQUITTAL IN ILLEGAL RECRUITMENT, NO BAR TO action.6 Simply stated, the administrative action is independent from the criminal
CONVICTION FOR ESTAFA. action.7
Considering that illegal recruitment and estafa are distinct crimes, a person 2.
acquitted of illegal recruitment :nay be held liable for estafa.2 A person's acquittal in LIABILITY OF LOCAL RECRUITMENT AGENCY
the illegal recruitment case does not prove that she is not guilty of estafa. Double AND FOREIGN EMPLOYER
jeopardy will not set in as discussed below.3
a.
4. CONVICTION FOR BOTH ILLEGAL RECRUITMENT AND SOLIDARY LIABILITY
ESTAFA, NOT DOUBLEJEOPARDY.
For the same reason as above, that is, that illegal recruitment is maUIIII 1. APPLICABILITY TO ALL FORMS OF LIABILITY.
prohibit11111, whereas estafa is ma/llm in se, there can be no double jeopardy if a person The joint and sevew nature of the liability of the principal/ foreign
is convicted for both illegal recruitment and estafa for one and the same act4 The employer and the local recruitment/placement agency applies to any and all
initianon of an illegal recruitment case does not bar the filing of estafa against one
and the same person since these two crimes are entirely different ·offenses and
neither one necessarily includes or is necessarily included in the other. Double
1 Peqi! V. Bai}ker. G.R. No. 170192. Feb. 10, 2016.
jeopardy could not result from prosecuting and convicting the accused-appellant 2 Peq,lev.Bi'a>er,G.R.Nos. 114967-68,Jat.26,2004.
Peope v. SaNatielra, G.R. No. 200884, Jule 4, 2014; People v. ChJa, GR~- 187052, Sept. 13, 2012; Carmen Raralo v.
Peq,le.GRNo.178337,June25,2009;Pecplev. Ten1l(rllda,GR~.173473,0ec.17,2008.
1
~v.Gido.Sl4)1B.
4 Peoplev. Pa:ho, GR~ 227505, Oct 02, 2017; Peq)le v. Chia. GR No. 187052, &J>t, 13, 2012
2 Syv ~.G.R.~.183879,Apri14,20•0. s Peaplev.Alzma,G.R.No.13202Ut,30,2004.
3 Id. & Secbl 77, Rule X. Revised POEA Rules n Regulalbns Gowmilg he Reauibnent and ~ I of Ulld-8ased
• Fc, dcx.tile jeopan!'/ ID exst. !tree (3) requstes rrustbepresert (1) alistjec)pnf l1lJSt hiNe ala:hed pcirm d1e seanl: Ovetseas Fq,ilo W01kers cl 2016; Secb1 73, Rule X. 2016 Revsed POEA RJes im Regulatioos Govenq Ole
(2) tie fist~ roost have beoo valcllyterrrina1ed; inl (3) Ul8 secxriS jeopirdy rrustbef«Ole scrneo.'fmse as !hat it Recrutnertllld E°f11>kr,fflentcfSeaaeis ~oo Februar)'26. 2016.
lheh 7 Id.; Id.
l 6o
BAil P.EVJEWER ON 1.ABOR LAW
. ·· t : the implementation of the employment contract
t,:irv claitnS amtng OU 0 •
~one-:-, Fili' ino workers for overseas deployment.•
l.ti:vo}\IUlg P
· 11.rALE BEHIND THE SOLIDARY LIABILITY.
~- RATIO,, .
R ,A. No. 8042 is a police power measure 111tended to regulate the
• etl~ and deployment of OFWs. It aims to curb, if not eliminate, the
~~~unes and abuses suffered by numerous OFWs seeking to work abroad. 2 In
lnJUStlC t · d that th -~ provision
J(ll11tlf,J it was e~ aine
. . and ~everal liabili'ty 111
. . on_ JOlllt . R.A: N. o.
S042 is in line with the state's policy of affording protectlon to )abor and allevtanng
workers' plight It assures overseas workers that their rights will not be frustrated
by difficulties in filing money claims apt foreign employers. Hence, in the case
of overseas employment, either the local agency or the foreign employer may be
sued for all claims arising from the foreign employer's labor law violations. This
way, the overseas workers are assured that someone-at the very least, the foreign
employer's local agent-may be made to answer for violations that the foreign
employer may have committed. By providing that the liability of the foreign
employer may be "enforced to the full extent" against the local agent, the overseas
worker is assured of immediate and sufficient payment of what is due them. The
local agency that is held to answer for the overseas worker's money claims,
however, is not left without remedy. The law does not preclude it from going after
the foreign employer for reimbursement of whatever payment it has made to the
employee to answer for the money claims against the foreign employer.
3. A PRE-QUALIFICATION REQUIREMENT.
It is one of the pre-qwlification requirements, both under the 2016 Rivi.red
Rules far Land-bared and Sea-Baml OFW'r, that any person applying for a license to
operate a recruitment agency/manning agency, should, together with the written
application, file with the POEA, a duly notarized undertaking by the sole
proprietor, the managing partner, or the president of the ~orporation stating that
the applicant' shall assume full and complete responsibility for all claims and
liabilities which may arise in connection with the use of the licenseS and assume joint
and several liabili~ with the foreign employer/shipowner/principal for all claims and
liabilities which may arise in connection with the implementation of the contract,
including, but not limited to, unpaid wages, death and disability compensation and
' Sm! 10, RA No. 8042. as amended by Sectioo 7, RA No. 10022; Sedol 3, Ruk! VU, OmniJus !\Es and Regulations
~ lheMvcritW!nefsald Ovsseas fq)ilosActd 1995, asAn'8lded by RA No.10022, issuedon »J 8,
2010. · Overseas fq>ilo Wake!$ d 2016; No. 20, Rue II, Part ~ 2016 Revised POEA Rua aid Regulaoons Govenilg ~e
2 Gq,bv. BaAisla. G.R No. 205953, June 06, 2018.
3 Scineer Omeas Pa:ement~. ~ v. NLRC, G.R No. 132564, Oct. 20, 1999.
' Sedioo 4(1), Rule II, Pat ft, Revised POEA Rukls aid ~ Gowmilg Ille Reauibnent and ~lajment d Land-
Based Oielseas Ftfpno Wlxkers of 2016: Secoon 4(F). Rule II, Pat I~ 2016 Revised POEA Rules. and Regutatms
~ lhe Reauimentaid Enl>b;netof Seafarals 5SUed on Febnay26, 2016.
5 Sedial 4(F)(2), Rule 11, PcUt n, 2016 RMed POfA ~ inl RerJUlation$ Govemi1g lhe RecnlilJT8lt a n d ~ d
Seiirel's issued oo Febnay 26, 2016.
CHAPTER TWO..
PRE•EMPLOYMENT
61
repatriation.• And in case of a corpomtion or partnership, it is further required that
a duly notarized undertaking be executed by the corpomte officers and directors, or
partners, that they shall be jointly and seve~lly liable with the corporation or
partnership for claims and/or damages that may be awarded to the workers. 2
4. INCORPORATION IN THE EMPLOYMENT CONTRACT.
The joint and several obligation must be incorporated in the contract for
overseas employment and shall be a condition precedent for its approval.J
5. WHO ARE LIABLE IN CASE OP JURIDICAL PERSONS?
If the local reauitment/manning agency is a juridical being, the corporate
officers and directors and partners, as the case may be, shall themselves be jointly
and severally liable with the corporation or partnership for the aforesaid claims and
damages.4 This is so because joint and several liability shall likewise refer to the
nature of liability of partners, or officers and directors with the partnership or
corporation over claims arising from employer-employee relationship. 5
6. CONTINUING LIABILITY.
The joint and several liabilities discussed above shall continue during the
entire period or duration of the employment contract and shall not be affected hr
any substitution, amendment or mocli.fication made locally or in a foreign country
of the said contract6
7. EFFECT OP COMPULSORY INSURANCE COVERAGE.
Under a new provision7 introduced by R.A. No. 10022 to R.A. No. 8042,
every OFW should now be compulsorily covered by insurance to answer, among
, Seclicl14{fX8), ~ a, Patll, Revsed P0E4 Rules am Regu1a1xx1s ~ lhe Reautnentand ~ t otum-
Bad 0/erseas Fipno Wcxkers of 2016; Seclion 4{F)(3), ~ U, Part II, 2016 Revised POEA Rum am Ps}Jlmls
GcMlri'lg lhe Reaumnentalll ~ o fSeaaas issued era Felxuary26, 2016.
2 See also Sectim 4{gt ~ ll, Pat II, P.evised POEA Rules and ReglEticns G0'enffJ die Reauilment and Enllbfment of
l.ald-Bad 0ve1seas ~ Wcxkels d 2016; Sectim 4{Gi Rua I~ Patl~ 2016 Revised POEA Rum alXI Regwalms
GcMlmil.l teRecnmm.8111 ~clSeafaasaJedon Febualy26,2016.
3 Sedioo 10, RA No. 8042, a s ~ by Section 7, RA No. 10022; SecliJ'l 3, ~ VII, Omnbus ~ in! Regtl.alk>ns
~ lhe PvijrcnWakers aid Overseas Fqlilos Add 1995. as Amended by RA No. 10022. ssued on Jut,o 8.
2010.
4 SediXI 10, RA No. 8042. as amended by Secral 7, RA No. 10022: Smi 1(s) or rue nand Secbl 3, 2'd ~ .
rue Vil Omnllus rues and Regimtions Imp~ the Mgrcnt wcners and OJelseas Fq>nos M d 1995. as
AnmdedbyRANo.10022,lssuedoo.Jut,8,2010.
s No. 17, Rule ll Pat l Rewi8d POEA ~ n:I Reg1da'lcns Governing hl RecM'nent and l:n1>bJmenl of Lim-8ased
Reauilmenlnl ~ o f Seafilas mued mFetxua,y26, 2016.
& Sect1on 10, RA No. 6042, as anl!tlded by Section 7, RA No. 10022; 8ml 3, Ruk, VII, OmRbus ~ and Re,Juatiolls
!n1>1ementi¥.1 dl8 f4Jrant WDl1<e,s Md Overseas Fq,ilos 1'd. d 1995, as Amended by RA. No. 10022. issued en Jut( 8.
2010.
1 Secfal 37-A, RA No. 8042, as added by Secfal 23, RA No. 10022; Sedial 1, ~ XVI, OrmbJs Rules and
Regu1a1ions ~ 018 ~rant\#bkes aid 01e1seas Fq)ilosMd 1995, asAmeooed by RA No. 10022. issued
onJul'/8,2010.
62 BAR REVIEWER OH lABOR I.AW
othecs, for his/her monetary claims. 1 Th.is compulsory insurance coverage,
however, should not affect the joint and several liability of the foreign employer
and the local recruitment/ manning agency2 as provided in the law.l
b.
THEORY OF IMPUTED KNOWLEDGE
t.CONCBPT.
This theory refecs to a cognizance of a circums~ce or ~~t. attributed to a
party because of its position, or its rela~onship with or respon~-b~~ for ano~~
party. The relationship of the local rec~~ent agency/local ~anrung agency 1111-a-
llis its foreign princi~ is that of agent-pr111apa~ ~e fonner being the agent _and the
latter, the principal. Consequently, the theory of imputed lmowledge ascnbe~ the
knowledge of the agent to the principal.
This was, however, not the case in S11nace v. NLRC,4 where the OFW
(Divina), a domestic helper in Taiwan, has_ extended her 12-month c_o_nir:1ct after its
expiration for two (2) more years after which she retumed to the Philippines. It was
est2blished by evidence that the extension was without the knowledge of the local
recruitment agency, petitioner Sunace. The CA, however, affirmed the Labor
Arbiter's and NLRC's finding that Sunace knew of and impliedly consented to the
extension ofDivina's 2-year contract. It went on to state that "It is undisputed that
[Sunace] was continually communicating with [Divina's] foreign employer." It thus
concluded that "[a]s agent of the foreign principal, 'petitioner cannot profess
ignorance of such extension as obviously, the act of the principal extending
complainant {liq employment contract necessarily bound it.'"
In finding that the application of this theoty of imputed knowledge was
misplaced, the High Court ruled that this theory ascribes ·t1te knowledge of the
agent, Sunace, to the foreign principal/employer Xiong, not the other way around.
The knowledge of the foreign principal/employer cannot therefore be imputed to
its agent Swiace. There being no substantial proof that Swiace knew of and
consented to be bound under the 2-year employment contract extension, it cannot
be said to be privy thereto. As such, it and its "owner'' cannot be held solidarily
1 Seepaagraph (I) dSedion37•A. RA No. 8042, as added by Section 23,RA No. 10022; Sedion 1{~. Rule XVI, Onrilus
~ n ~ krc>lementilg the Mgranl Workers and Overseas Fiq>iios Ad of 1995, as Amended by RA No.
10022, tsuoo al Jut, 8, 2010.
2 SeeSedim37-A (6), RA No. 8042. as aided by Sedion 23, RA. No.10022; Section 10(6), Rule XVI, Ormi>lsRulesand
~ krpemenliWJ Ole Wqant waters cn1 Oterseas FqmQS ldd 1995, as M1ended by RA No. 10022, issued
ai.ldy8,2010.
3 SedxJn 10, RA No. 8042, as Sl8Xled by Sedion 7, RA No. 10022; Sedion 3, Rule VII, OmnbJs ~ and Reg\Ebs
~ Iha MgrantWxms in! Oase.1s FiprlOSM.d 1995, as Amended by RA No. 10022, ssied al Jut, 8,
2010; Seealso No. 17, ~ 0, Pat I, Revi'ied POEA Rules illd Regulalixls ~ Ole Reauimeril and ~ d
L.m»Based C>.lelseas FlcJi!O W<ners of 2016; No. 20, Ra'8 I~ Part ~ 2016 Revised POEA Rues and Regulabls
~ OleRemmner4clll ~ o f Searmers isud oo Febriay26, 2016.
' &rmbllemalicnal~Sesvices. n:. v.NLRC,G.RNo.161757,Jan. 25, 200>.
CHAl'TER TWO
PRE-EMPLOYMENT
liable for any of Divina's claims arismg from the 2-year employment extension. As
the New Civil Code provides: "Contracts take effect only between the parties, their
assigns, and heirs, except in case where the rights and obligations arising from the
contract are not transmissible by their nature, or by stipulation or by provision of
law."
Furthennore, as Sunace correctly points out, there was an implied
revocation of its agency relationship with its foreign principal when, after the
tennination of the original employment contract, the foreign principal directly
negotiated with Divina and entered into a new and separate employment contract
in Taiwan. Article 1924 of the New Civil Code reading: "[t]he agency is revoked if
the principal directly manages the business entrusted to the agent, dealing directly
with third persons0 thus applies. As defined, a "principal" refers to a foreign
employer or foreign placement agency hi.ring or engaging Filipino workers for
overseas employment through a licensed local private recruitment/ manning
agency.I
3.
TERMINATION OF CONTRACT OF MIGRANT WORKER
WITHOUT JUST OR VALID CAUSE
1. ORDER OF TOPICAL DISCUSSION.
The discussion of this topic is divided into the following ~cctionl-:
I. GENERAL PRINCIPLES ON TERMINATION OF OFWs
II. MONETARY CLAIMS OF OFWs, IN GENERAL
Ill. MONETARY CLAIMS OF OFWs ARISING FROM ILLEGAL DISMISSAL
Note: Monetary claims of OFWs arising from work-related disability, sickness or
death Is discussed in Chapter Four (Social Welfare LegislaUon] under the
topic of "C. Disability and Death Benefits u, 2. POEA·Standard
Employment Contract" infra.
I.
GENERAL PRINCIPLES ON TERMINATION OF OFWs
1. OFWs DESERVE TO BE PROTECTED BY OUR LAWS.
OFWs belong to a disadvantaged class. Most of them come from the
poorest sectors of ow: society. Their profile shows they live in suffocating slums,
trapped in an environment of crimes. Hardly literate and in ill health, their only
hope lies in jobs they can hudly find with difficulty in our countty.. Their
 CHAPTER TWO 65
BAR RfVIEWER ON IA80R IAW
PRE-EMPLOYMENT

unfortunate circumstance makes them easy prey to avaricious employers·. They will
climb mountains, cross the seas, endure slave treatment in foreign lands just to
survive. Out of despondence, they will work under sub-human conditions and
accept salaries below the minimum. The least we can do is to protect them with our
laws. 1
There is an extreme need for the strict enforcement of the law and the
rules and regulations governing Filipino contract workers abroad. Many hapless
citizens of this country who have sought foreign employment to earn a few dollars
to ensure for their families a life worthy of human dignity and provide proper
education and a decent future for their children have found themselves enslaved by
foreign masters, harassed or abused and deprived of their employment for the
slightest cause. No one should be made to unjustly profit from their
suffering. Hence, recruiting agencies must oot ooly faithfully comply with
government-prescribed responsibilities; they must impose upon themselves the
duty, borne out of a social conscience, to help citizens of this country senc abroad
to work for foreign principals. They must keep in mind that this country is not
exporting slaves hut human beings, and above all, fellow Filipinos seeking merely
to improve their lives.2
2. APPLICABILITY OF THE SECURITY OF TENURE DOCTRINE.
OFWs, regardless of their classifications, have the right to security of
tenure guaranteed under the Constitution,3 notwithstanding the fact that their place
of work is overseas.• Thus, even if a Filipino is employed abroad, he or she is
entitled to security of tenure, among other constitutional rights.5 For the entire
duration of employment agreed upon in their contracts, their security of tenure
remains even if they work in a different jurisdiction. Th.is is so since their
employment contracts are perfected in the Philippines, and following the principle
of lex loci conlraclu! (the law of the place where the contract is made), these contracts
are governed by our laws, primarily the Labor Code of the Philippines and its
implementing rules and regulations.6 At the same time, our laws generally apply
even to employment contracts of OFWs as our Constitution explicitly provides
that the State shall afford full protection to labor, whether local or ovmeaJ.1 Thus,
even if a Filipino is employed abroad, he or she is entitled to security of tenure,
1
Yapv. ThenarTais Ships~emenl, G.R No.179532,'kyJO, 2011.
1 JSS hioclila Cap. V. Feirer, GR No.156381, Oct 14, 2005.
3 Sedx:,n 3, Artide XIII, Phqipile CoostibJtion.
4
&meer O,,e,seas ~ hp:q, ~ v. J<:tt C. Cables, G.R No. 170139, />aj. 05, 2014; GClpio v. Ba.Jtista, G.R No.
205953,m0&,201s.
5 Da;iasdasv. Graid PlacemelltandGenera Selvices Corporatioo, GR No.205727,Jao.18, 2017,814-SCRA 529,541.
1
Da;jasdas V. Grcfld Picmnen\ ald Geil8lli Selvices, svp@, citirY:I Sooleer ().,ef-seas Placement P/Jerof, Inc. V. Cables,
~
7
Id., Per Sedx:in 3, Artide XIII of tie Cm5tibJtion: 'Sectioo 3. The State shall alloo! fol ~ to labor, bcal and OYe!SeaS,
org.rized and oo:rgarized, crd JXlJlde I.JI ~ i n ! equalfyof ~ tcwcrtmes for al.'
among other constitutional rights.1 Consequently, OFWs cannot be dismissed
without observing both substantive and procedural due process. If they were
illegally dismissed, their right to security of tenure is violated.2
3. POEA STANDARD EMPLOYMENT CONTRACT (PO EA-SEC).
Under the POEA Rules, all foreign employers and principals are required
to adopt the POEA-SEC. The provisions, however, differ for land-based and sea-
based OFWs. They are discussed hereunder.
a, Minimum provisions ofemployment contracts.
Consistent with welfare promotion thrusts of the POEA, the follo\ving
shall be the minimum provisions in employment contracts for OFW's:
a. Complete name and address of the employer/company;
b. Position and johsite of the OF\XI;
c. Basic monthly salary, including benefits and allowances and mode of
payment. The salary shall not be lower than the prescribed minimum
wage in the host country or prevailing minimum wage in the National
Capital Region of the Philippines, whichever is higher;
d. Food and accommodation or the monetary equivalent which shall he
commensurate to the cost of living in the host country, or off-setting
benefits;
e. Commencement and duration of contract;
f. Free transportation from and back to the point of hire, or off-setting
benefits, and free inland transportation at the jobsite or off-setting
benefits;
g. Regular work hours and day of~
h. Overtime pay for services rendered beyond the regular working hours,
rest days and holidays;
1. Vacation leave and sick leave for every year of service;
J· Free emergency medical and dental treatment;
k. Just/valid/authorized causes for termination of the contract or of the
services of .the workers, taking into consideration the customs,
traditions, norms, mores, practices, company policies and the labor
laws and social legislations of the host country;
I. Settlement of disputes;
m. Repatriation of worker in case of imminent danger due to war,
calamity, and other analogous circumstances, at the expense of
employer; and
n. In case of an OFW's death/ repatriation of his human remains and
personal belongings, at the C.'<J)ense of the employer. 1
1 Id.,~ l'e!saY1a &1,1.m_JenmtSelvices, Inc. v. De Vera, G.R. No. 205703, Math 7, 2016.
l Id.
 66 BAR REvlEWER ON LABOR I.AW
The POEA may fonnulate country- or skills-specific policies and
guidelines based on the following: {a) Existing labor and social laws of the host
country; (b) Relevant bilateral and multilateral agreements or arrangements with the
host country; and (c) Prevailing conditions/ realities in the market2
b. Freedom to stipulate.
The parties to overseas employment contracts are allowed to stipulate
other terms and conditions and other benefits than those provided in the POEA-
SEC.3 These benefits should be over and above the minimum standards; provided,
that the stipulations are mutually beneficial to both partres and are not contrary to
law, public policy and morals.' Consequently, a contract freely entered into is
considered the law between the parties.5
c. Disclosure ofterms and conditions ofemployment.
As far as land-based OFWs are concerned, the rule states that the licensed
recruitment agency shall, prior to the signing of the employment contract, infonn
the OFWs of their rights and obligations, and disclose the full tenns and conditions
of employment The licensed recruitment .agency shall likewise ensure that the
OFW is provided with a copy of the POEA-approved contract, to give him/her
ample opportunity to examine the same.6 This same rule applies to sea-based
OFWs where the licensed manning agency and the seafarer are required to fully
disclose all relevant infonnation in relation to the recruitment and employment of
the seafarer.7
d. Interpretati.on ofoverseas employment contract.
Any ambiguity in the overseas employment contract shall be interpreted
against the parties that drafted it8 Labor contracts must be interpreted liberally in
favor of the worker.9 The provisions coo.tamed in the POEA-SEC are
manifestations of the State in favor of the working class, consistent with the social
justice and protection of the working class provisions of the Constitution.10
1
Sec&ri 135, IU! 1, Pat v. P.evised POEA ~m and Reguam GaJerni1g aie Reauilment n1 ~ or 1..aoo-
Based Overseas fq)ilo Winers d2016.
2 Id.
J Oekls Sir1bi v. Jebsen Mriine. R.. GR. No. 154185, ~- 22, 2005.
• Sec&ri 136, Rllkt ~ Pat V, Id.; Smi 116,·Rule ~ Part rv, 2016 R8'vised ~ Rues aoo Regulations GoveninQ !he
Recniinentand-~of Seaaers issued oo Feooay 26, 2016.
5 s klDa'Jmrlv.f"astQsmpalian~llldPl'mx>&ln&Ma,"-,GR.No.156029,Nc;,.,.14,2008,591 Phl662.
ATCIOvnmQipanmtv.Edlil,G.RNo.178551,0ct.11,2010.
6
Sec&rl 137, Rule I, Part V, Revised POEA Rules and Regu1atioos GaJe!n1ng lhe Reauitment and en-.>loyment of land-
Based.~ Fqln) Workefs d 2016.
7
Sec&rl 117, rue l Pat IV, 2016 Rf!'.tsed POEA ~ in! Regula5ons GaJernilg the Recnilmenl nl ~ d
Seafes issued on Febnay26, 2016.
a Cadaln v. POEA's Admi'lislral!Y, G.R No. 104n6, Dec. 5, 1995, 238 SCRA 721.
9
lltirlv. POEA, G.R No. 795&1, Dec. 3.199>, 191 SCRA823.
10
Eastern Shl)ping Liles, Inc. v. POEA, GR. No. L-76633, Oct. 18, 1988, 166 SCRA 533.
CHAmRTWO
PRE-EMPLOYMENT
4. UNAUTHORIZED SUBSTITUTION/ALTERATION OF
EMPLOYMENT CONTRACT.
R.A. No. 8042 explicitly prohibits the substitution or alteration, to the
prejudice of the worker, of employment _co~tracts already approved '.111d verified by
the POEA &om the time of actual sigrung thereof by the parttes up to and
including the period of their expiration without the approval of the POF..A. 1
Thus, if prior to his deployment and while still in the Philippines, the
OFW was made to sign a PORA-approved contract with a licensed recruitment or
placement agency in the Philippines, on ~ f of a foreign empl~yer;_ and, upon
arrival in the foreign country, the foreign employer made hllll sign a new
employment. contract, this new contract is void.2 To be valid, the new contract
must be ·shown to have been processed th.rough the POEA. Under our Labor
Code, employeIS hiring OFWs may only do so through entities auth~rized by the
DOLE Seaetary.3 Unless the employment contract of an OFW 1s processed
through the POEA, the same does not bind the concemed OfW because if the
contract is not reviewed by the PORA, certainly the State has no means of
detennioing the suitability of foreign la~ to our overseas workers.4 Moreover, this
new contract also breached the OFW's original contract as it was entered into even
before the expimtion ~£ the otlginal contract approved b~ ?1e PO~.\. ~erefore, it
cannot supersede the original contra~ its teans an~ conditions being V01~.S .
The same voidness holds true in a case where the subsequently executed
side agreement of an OFW with her foreign employer reduc~ her s ~ b~ow the
amount approved by the POEA. The reason is that such scheme 1S against our
existing laws, motals and public policy. The side agreement cannot ~~persede her
smndard employment contract approved by the POEA.6 In additton to such .
voiding, disciplinary sanctions may be imposed upon the errant
employer/principal.7
, See Sec. Si RA No. 8042, as anirded by Secml 5, RA No. 10022; See Sec&xl 1(i), Rite rv, Omllus Rum il1d
~ ~Ule~\\bmsa,dOJBSeasfipim1d.d1995,asMiendedbyRANo. 10022,lssued
on.Jllf8,2010.
2 (BJasdasv. Grcrd Pl!mnootinl 61nm Secvm. G.R No. ~.Jen 18,2017.
3 ld.,SeeArticle18.Banaie»ea-HmJ,-No~rrfl/lieafqJilovokerb-MSeE~exceptllrwJh
618Boadsilld rifiesaimtzedby0'8Secrelilydl.m. Oi'ect-hilvV by menmsdtiediplomEcaps, illmlablal
agcriza1ms and ad1 <fler ~ E rrfl/ be ab"8d by Ole Seaelay d Label 5 exsl1)led from~ prtMSbl.
(lJlbcrCcdeof Ole fltliiJlmes,Mll!ndild &Renumlered,Jlif 21,2015).
4 Id klduslrial Perscme1 &MnJen,en(Services, Ill:. v. De Vera, G.R No. 205703, Midi 7, 2016.
s Chavezv. Bcrdo-Perez, GR. t«>.109808, tladl 1, 1995, 242 SCRA 73, 82; 312 Phi. 88; See also P'awell ln!oolational
Se1v10es cap. v. Ccrno2. GR. th 169973,June 26, 2006.
1 FcrlcnS-based OfWs. such U1S!iu1m tt a1aa1D1 dtle POEA-appwed coon:t ID lhe prejllb d Ole OFWv.il merit
I l e ~ of !he penat, of permanent~ nl delmYJ fnm Ute roster of aa:rded p c i n ~ .
(Secllon 144(1){i) 1U! N Peised PW Rules and Regulalb\s GcM!rning he Rsaum1ent aid ~ cl lard-
Based~ Fq,ilo wakas cl 2016). F« sea-based OfWs, such SUJSfUol1 CJ ai'terillOI rl I l e ~
cxmact vii be penalzed as fobss: 1• Offense - Frie cl PS0.000.00; 2t'd Offense • Fme cl P100,000.00: ~ Offense -
&ISpel\Skln from pri:ilam h Ile OYe1S8aS ~ pnx.,an (SiK monlhs b One yea,); 4" Offense- Permnnt

68 BAR REvlEWER ON LABOR. LAW
5. DOCTRINE OF PROCESSUAL PRESUMPTION.
It is a hombook principle that the party invoking the application of a
foreign law has the burden of proving such law under the doctrine of ProttJJUal
pn111mption or ')rr111111ed-identi!J approa,h. '" This is an International Law doctrine
which dictates that where a foreign law is not pleaded or, even if pleaded, is not
proved, the presumption is that such foreign law is the same as Philippine law.
Thus, under this situation, Philippine labor laws should apply in detennining the
issues presented in a case.2
It must be noted that the Philippines does ~ot take judicial notice of ·
foreign laws, hence, they must not only be alleged; they must be proven. This is so
because in intemational law, the party who wants to have a foreign law applied to a
dispute or case has the burden ·of proving the foreign law. The foreign law is
treated as a question of fact to be properly pleaded and proved as the judge or
Labor Arbiter cannot take judicial notice of a foreign law. He is presumed to know
only domestic or forum law.3 To prove a foreign law, the party invoking it must
present a copy thereof and comply with Sections 244 and 255 of Rule 132 of the
Revised Rules of Court.
In EDI-Staj/bllilders,6 the employment contract signed by the private
respondent OFW specifically states that the Saudi Labor Laws will govem matters
not provided for in the contract (e.g., specific causes for termination, tennination
procedures, etc.). Being the law intended by the parties (lex l«i intentiow) to apply
to the contract, Saudi Labor Laws should govern all matters relating to the
tennination of the employment of the OFW. Unfortunately for petitioner, it did
not prove the pertinent Saudi Labor Laws on the matter; thus, the lntemational
Law doctrine of presumed-identig appro«h or prousmal pmumption comes into play.
Petitioners in ATG 01emas7 contend that Philippine labor laws on
probationary employment arc not applicable since it was expressly provided in
Oisqualifal&rl and delismg fnm lhe roster of medsl prilq)alsl~. {Section 127(B)(2), ~ IV, 2016 PaGd
POfA Rues met Ps;ulatioos GcMlmiYd lhe Remivnentllld ~ o f Seafaeis 6Slled on Februaly 26, 2016).
, kl
2 Id., clPJ El)I.Slaflbuile lnletna&lnal, lrc. v. NLRC, G.R. No. 14558, Oct 26, 2007.
3 ~kllernma. n:. v.NLRC. supra.
4 This ~ S1ateS: "SEC. 24. Fred of official record. - The record d pubic dcmnens nterred lo ii paragraph (a) d
Sedkrl 19, v.hen oonissl>le b arr, purpose, may be eJdencsj by an official publ'r.aoon thereof er by arJlf/1 atlesled by
Ile a'lm hMl,i Ile 1e1Ja aaxly d lhe reccrd, er by hs deput'f, inf aa:oo1)ri!d, l Ile reard is rd kept il Ile
r n
~Mila cerfx:ale that ad1 a6cer has Ille QJSfm/. Ile olb v.m:n Ile RlC0Cd is kept Is i'1 ab:eiJn cxumy,
lhecd'merrrqbel!1lllehy asmta,ydDteernl>Eycrlegafm. CXXlSll~. c:oosu. vic:eOJ\SUl.cranuragent
er by ctrt dbl ii Ile beign serw:e d lhe Phqlpi'es staliJned nlhe foreign cwty h \\tlidl Ole reaxd Is kept, illd
dei:afedbyateseadhs11b.
5 This sedm ixr,.m: 'SEC. 2i \\41i!l atleslaticrl d rJqf nut sfate. -Yv1-.eneva a CX1Pf d a d0aJrent er recxxd is
a!1eslsd fer lhe 1UJm1 d Ule evklence. he alf!slab1 nut smte. h subslalce, lhat lhe '1Ylf is.a arrect CXIPf d Ole
qilal, craspecfcparttteeal, as lhe cme may be. Thealleslml ltllSt be under lhed&dalmdlheatetiV·afm,
f tse ~ t!lrf, <rlhe be lhe cat d acmthaq aseal, tmrlhe seal d such aiurt.·
s &!Jo..
7 ATCl<Mllseas Capclalxlnv. Edin. G.R No.178551. Oct 11. 2010.
CHArTERTWO
PRE-EMPLOYMENT 69
respondent's employment contract, which she voluntarily entered into, that the
teans of her engagement shall be governed by prevailing Kuwaiti Civil Service
Laws and Regulations, as in fact POEA Rules accord respect to such rules customs
and pnctices of the host country. To prove the Kuwaiti law, petitionets ;ubmitted
the ~ollowing: MOA be~en r~~ndent and her foreign employer, the Ministry of
Public Health of Kuwa1t (the Ministry), as cepresented by ATCI, which provides
that the employee is subject to a probationaiy period of one {1) year anq that the
host cowitty's Civil Service Laws and Regulations apply; a translated copy (Arabic
to English) of the termination letter to respondent stating that she did not pass the
probation tenns, without specifying the grounds therefor, and a _translated copy of
the certificate of termina~on, both of which documents wue cettified by Mr.
Mustapha Alawi, Head of the Department of Foreign Affairs-Office o( Consular
Affairs Islamic Certification and Tnns1ation Unit; and respondent's letter of
~nsiden.tion to the Ministry, wherein she noted that in her first eight (8) months
of employment, she was given a nting of "Excellent'' albeit it changed due to
·changes in her shift of work schedule. The Supreme Court, however, ruled that
these docwnents, whether taken singly or as a whole, do not sufficiently prove that
respondent ·was validly temiinated as a probationary employee under Kuwaiti civil
service laws. Instead of submitting a copy of the pertinen~ Kuwaiti labor laws duly
authenticated and translated by Embassy officials thereat, as required under the
Rules, what petitioners submitted were mere certifications attesting only to the
correctness of the translations of the MOA and the termination letter wbicli does
not prove at all that Kuwaiti civil service laws differ from Philippine laws and that
under such Kuwaiti laws, respondent was validly terminated.
Indeed, the parties to an overseas employment contract may select the law
by which it is to be govemed. A basic policy of contract is to protect the
expectation of the parties and such party expectation is protected by giving effect
to the parties' own choice of the applicable law. In such a case, the foreign law is
adopted as a "systtm" to regulate the relations of the parties, including questions of
their capacity to enter into the contract, the formalities to be obseived by the
parties, matters of perfoanance and the like. Instead of adopting the entire mass of
the foreign law, the parties may just agree that specific provisions of a foreign
statute are to be deemed incotporated in their contract '~ a rel of tmttr. " By such
reference to the provisions of the foreign law, the contract does not become a
foreign contract to be governed by such foreign law since the said law does not
opente asa statute but merely as a set of contractual te11Ds deemed written in the
contract
The choice of law must, however, bear some relationship to the parties or
their transaction. For instance, as Cadalin1 pronounced, where the services of the
claimants were rendered in Bahrain, there is no question that the contracts sought
to be enforced have a direct connection with Bahrain. Consequently, where the
1
cadaSn v. POEA'sMrilsnm, G.R No. 104776, Dec. 5, 1995, 238 SCRA 721.

70 8,U R.fVIEWEll ON V.8011. V.W
claims are for benefits gnnted under the Baluain law, only the claimants who
worked in Bahrain should be entitled to file their claims in a class suit, excluding
those who worked elsewhere.
6. OFWs MAY BE TERMINATED ONLY AFTER DUE PROCESS.
As earlier discussed, OFWs arc entitled to security of tenure as
guaranteed under the Constitution and the laws of the Philippines.' Thus, OFWs
may only be terminated for a just or authorized cause (substantive due process)
and after compliance with procedural due process requirements.2 Article 2~7 [282)
of the Labor Code enumerates the j111t MIIJes of termination by the employer3 and
Articles 298 [283) and 299 [284) thereof enumerate the fllllhoriZ!d (IJIIJtS. The
fundamental procedural rights afforded under Philippine laws to workers equally
apply to OFWs.4 This means that the employer must give the concerned employee
at least two (2) notices before his or her termination. Specifically, the employer
must inform the employee of the cause or causes for his or her termination, and
thereafter, the employer's decision to dismiss hlm. Aside from the notice
requirement. the employee must be accorded the opportunity to b~ heard.5
The 2014 en ban& case of Sameer v. Cabiks,6 is a classic example of illegal
dismissal of an OFW. Respondent's dismissal grounded on inefficiency and
negligence less than one year from hiring and her repatriation on the same day
show not only failure on the part of petitioner to comply with the requirement of
the existence of just cause for termination; they patently show that the employers
did not comply with the due process requirement Thusly:
"A valid dismissal requires both a valid cause and adherence
to the valid procedure of dismissal.7 The employer is required to give
the charged employee at least two written notices before termination.8
One of the written notices must inform the employee of the particular
acts that may cause his or her dismissal.9 The other notice must
'[inform) the employee of the employer's decision.110 Aside from the
notice requirement, the employee must also be given 'an opportunity to
be heard.'"
~v. Bautista, GR No. 205953•.ble~.2018.
Saiw<NerseasPlmmll~. be. v JoyC. caies,G.R No. 170139.~.05.2014.
3 Id.
4 Id.
5 OaJasdas v. Glilld Placement cl'd General SeM:es, G.R. No. 205727, Jen 18, 2017, cifrlg EDl-SlafibuBdeis lnlematitxlal,
~ V. NLRC, GR No. 14558, Oct 26, 2007, 563 Phi. 1, 28-29.
1 Same« Overseas Pa:emelt Pqero/, ~ v. Joy C. Cables, G.R No. 170139, AlJd. 05, 2014. The begn ~
a&lged il !his case that respondenfs d"&Sm6Sal was due ID ilefrDerlcy il hef Miik Md negliJence ii hetduties.
1 Id.• ~ Skippe,s Uniled Pm, k'c. v. Daza, GR No. 175558, FebruayS,2012, m5 smA412,426.
e ld.,kl. • Centenna Transnaile, lru Dela Cruz, G.R No. 180719, Aug. 22, 2008.
9 Id., Id.
,o ld.. ld.
,1 Id., Id.
CHAPTEII.TWO
71
PRE•EMPLOYMENT
"Petitioner failed to comply with the twin notices and
hearing requirements. Respondent started working on June 26, t 997.
She was told tmt she wu tenninatcd on July 14, 1997 effective on the
same day and barely a month from her first workday. She was also
tcpatxiatcd on the same day that she was informed of her temuoation.
The abruptness of the termination negated any finding that she was
properly notified and -given the opportunity to be beard. Her
constitutional right to due process of law WIS violated."
In PCL Shippi,,1;1 petitionecs contend that the twin requirements of notice
and hearing apply strictly only when the employment is within the Philippines and
that the same need not be strictly observed in cases of intemational maritime or
overseas employment The Supreme Court, however, disagreed. The provisions of
the Constitution as well as the Labor Code which afford protection to labor apply
to . Filipino employe_es whether working withln the Philippines or
abroad. Moreover, the principle of lex lod mnlratlll.l (the law of the place where the
contract is made) govems in this jurisdiction. In the present case, it is not disputed
that the Contract of Employment entered into by and between petitioners and
private respondent was executed· here in the ~hilippines with the approval of the
POEA. Hence, the Labor Code, together with its implementing rules and
·~ :
regulations and other laws affecting labor, apply in this case. Accordingly, as to the
requirement of notice and hearing in the case of a seafarer, the Court has already
ruled in a number of cases that before a seaman_ can he dismissed and discharged
from the vessel, it is required that he be given a written notice regarding the charges
against him and that he be afforded a formal investigation where he could defend
himself personally or through a representative. Hence, the employer should strictly
' . comply with the twin requirements of notice and hearing without regard to the
nature and situs of empl~ent or the nationality of the employer. Petitioners
failed to comply with these twin requirements.
Tafidano2 also declares that the minimum requirement of due process in
termination proceedings must be complied with even with respect to seamen on
board a foreign vessel.3 untennial Tra11S111aru11,4 however, is more categorical in
declaring that for officers and crew who ;ue wotking in foreign vessels involved in
overseas shipping, there must be compliance with the applicable laws on overseas
employment as well as with the regulations issued by the POEA, such as those
embodied in the Standard Contract for Seafarers Employed Abroad (Standard
Contract).5
' PCl. Siwill ~ Inc. v. NLRC, G.R No.153031, Dec. 14, 2006.
2 Ta'idanov. Falcon Marftine&Alled SeMces, klc., G.R. No. 172031,Ju~ 14,2008.
3 See also De La Quz v. t1aerst Ff4Jilas QBVfflg, l'lc.. G.R. No. 172038, April 14, 2008.
NaN denonilalBd as "Revised Standard Terms and Ccndilklns Go.oenq lhe Ollerseas En-.,k7,'nelt d Ripilo Seafaras
Ol-Board QQm.Gang S\i>S," &SUed oo OclDbef 4, 2010 byvmed POEA GoYemP;, Boan! Rmmi No. 09, Senes ot
2010.
 BAR. REvlEWER ON l.ABOR I.AW
In Dagasdas,1 petitior:er OFWs termination on the basis of a void
substituted employment contract which was subsequently executed upon his arrival
in Saudi Arabia, in replacement of the POEA-approved employment contract
which he earlier executed in the Philippines, was declared illegal. More so when
there is no clear justification for the dismissal of Dagasdas other than the exercise
of the foreign employefs right to terminate him within the probationary period.
While our Civil Code recognizes that parties ma~ stipulate in their contracts. ~ch
terms and conditions as they may deem convenient, these terms and conclinons
must not be contrary to law, morals, good customs, pubµc order or policy.2 The
right gnnted to the foreign employer to tenninate the employment contract
without serving any notice to petitioner OFW is contrary to law because our
Constitution guarantees that employees, local or overseas, are entitled to security of
tenure. To allow employers to reserve a right to terminate employees without cause
is violative of this guarantee of security of tenure.
In Gopio,l the Court declared that respondent Bautista's incompetence as
the alleged just cause for bis dismissal was not proven by substantial evidence
because the evaluation report of his superior was made only on August 22, 2009,
and the declatation of Paul Thompson, Supervising Engineer of the Project to
which Bautista was assigned, was executed only· on October 1, 2009, which dates
are beyond the date of termination of Bautista's employment on July 10, 2009. The
CA coaecdy concluded that these were made as an afterthought in order to l~d
credence to the claim that the tennination of Bautista's employment was for a valid
reason. In Skippers United,4 it was held that the Master's Statement Report presented
by therein petitioners to cottoborate their claim that the dismissal of ther~
respondents was for just cause, i.e., incompetence, was issued 78 days after therem
respondents were ~epatriated to Manila and two months after the latter instituted a
complaint for illegal dismissal before the NLRC. Such report can no longer be a
fair and accunite assessment of therein respondents' competence as the same was
presented only after the complaint was filed. Its execution was a mere afterthought
in order to justify the dism:ssal of therein respondents which had long been
effected before the report was made; hence, such report is a self-serving one.
6.l STIPULATED PRE-TERMINATION WITHOUT NEED FOR DUE
PROCESS, ILLEGAL.
In the same case of Gopio, respondent Bautista's employment was
terminated on the basis of Article 4.3 of the employment contract by giving him
one-month salary in lieu of one month's written notice. The said provision states:
Dagasdasv. Grand Pa:ernnnlGeneial SeM:es, G.R No. 205727,Jat 18, 2017.
The CM Code cl Ile Plll1pixnes, il i6 Mx;te 1306, ptMdes: "The cxmdrg parties may estmlistl sudl ~ .
daises, ems and CXllldmls as 6le'f may deem CXJMlll8l1t. ptMded ltle'f are net conllay ID law, nuals, good QIStcms,
pull&:*· CJ !UJli: porq,.·
, ~v. Bautis1a, G.R No. 205953, Jire-06, 2018.
~lNedf>m.hc.v.teJuad,GRNo.166363,AlsJ.15,m.
CHAITTRTwO
PRE-EMPLOYMENT
73
"4.3 The Employer or Employee may terminate this contract on other
grounds. The Employer should give one month's written notice of
his intention to terminate or in lieu thereof pay the Employee a
sum equivalent to one month's salary. The Employee may likewise
tcunin.ate this Contract by giving three months' notice to the
Employer."
In holding that Bautista's termination was illegal as it was based on said
paragraph 4.3, the High Court pronounced that the due process requirement is not
a mere formality that may be dispensed with at will. Its disregard is a matter of
serious concem since it constitutes a safeguard of the highest order in response to
man's innate sense of justice. To meet the requirements of due process, the
employer must fumish the worker sought to be dismissed with two written notices
before termination of employment can be legally effected, i.e.: (t) a notice which
apprises the employee of the particular acts or omissions for which his dismissal is
sought; and (2) the subsequent notice after due hearing which informs the
employee of the employer's decision to dismiss him.
Here, Bautista was dismissed under Article 4.3 of the employment
contract which allegedly permits his employer, Shorncliffe, to terminate the
contract on unspecified "other grounds11 by giving one month's written notice of its
intention to teaninate, or in lieu thereo~ to pay the employee a swn equivalent to
one month's salary. Bautista was notified on July 6, 2009 that his services will be
terminated effective on the close of business hours on July 10, 2009, allegedly
because his perf9rmance was "unsatisfactoty and did not meet the standards of the
Company." He was also paid one-month salary in lieu of one month's notice of the
teuninati.on of his employment. Surely, this cannot be considered compliance with
the two-notice requirement mandated by the Labor Code in effecting a valid
dismissal. The Labor Code requires both notice and hearing; notice alone will not
suffice. The requirement of notice is intended to inform the employee concemed
of the employer's intent to dismiss him and the reason for the proposed dismissal.
On the other hand, the requirement of hearing affords the employee an
opportunity to answer his employer's charges against him and accordingly defend
himself therefrom before dismissal is effected. In this case, Bautista was not given a
chance to defend himself. Five days after the notice was !:ervcd, he was repatriated.
Clearly, he was denied his right to due process.
Article 4.3 deprives the employee of his right to due process of law as it
gives the employer the option to do away with the notice requirement provided
that it grants one-month salary to the employee in lieu thereof. It denies the
employee of the right to be apprised of the grounds for the termination of his
employment without giving him an opportunity to defend himself and refute the
charges against him. Moreover, the term "other grounds" is all-encompassing. It
makes the employee susceptible to arbitrary dismissal. The employee may be
tcnninated not only foe just or authorized causes but also for anything under the

BAR REYIEWER ON LABOR I.AW
74
sun that may suit his employer. Thus, the employee is left unprotected and at the
mercy of his employer, subjected to the latter's whims.
The validity of Article 4.3 of the employment conttact cannot be
sustained as it contravenes the constitutionally-protected right of every wotker to
security of tenure. Bautista's employment was for a fixed period of 31 months.
Article 4.3 took back this period from him by rendering it in effect a facultative one
at the option of Shomcliffe, which may shorten that tenn at any time and fot any
cause satisfactory to itself, to a one;.month period or even less, by simply paying
Bautista a month's salary. The net effect of Article 4:3 is to render Bautista's
employment basically employment at the pleasure of Shomcliffe. The Court
considers that the provision is intended to prevent any security of tenure from
accruing in favor of Bautista even during the limited period of 31 months.
6.2. TERMINATION OF EMPLOYMENT OF SEAFARERS.
a. DiJJerent set ofrules.
The 2010 POEA-SEC provides in its Section 18, the following rules on
termination of employment of seafarers:
A. The employment of the seafarer shall cease when the seafar~
completes his period of contractual service aboard the ship, signs-off from the ship
and arrives at the point of hire.
B. The employment of the seafuer is also tenninated effective upon
arrival at the point of hire for any of the following reasons:
1. When the seafarer signs-off and is disembarked for medical reasons
pursuant to Section 20 (A) (5) 1 of the POEA-SEC.
2. When the seafarer signs-off due to shipwreck, ship's sale, lay-up of
ship, discontinuance of voyage or change of ship principal in
accordance with the following provisions of the POEA-SEC:
(a) Section 22 (Tmnination Dm lo Shipwmk and Ship'r Foundmn~;2
(b) Section 23 (TeT111inatio11 Dm to Sale ofShip, Lay•UP or Disamti1111t11ttt of
V!}'age);3 and
(c) Section 26 (Changt ofPrinapa~.4
3. When the seafarer, in writing, voluntarily resigns and signs off prior to
expiration of contract pursuant to Section 19 (G)1 of the POEA-SEC.
, Sectioo 20 (A)(5} of Ile 2010 POfA.SEC states: "5. In case a seafaer is diserrmked mn Ole sq, formedi:al remlS.
Ole enl)byer shall bear Iha U a,st d rapalriation ii the event Ile seafarer is declared (1) 6t tr repatia1iln; er (2) ft tom
butOleerrc>bferis 111a!mkl&xl ~q,nenttrthe semerooboaRI ts bmer!fll)ornNslipdlheerqib/er."
2 SeecfisaJssbl bebv. . ' Id.
3 Id.
• Id.
CHAmRTwO
PRE•EMPLOYMENT
75
4. When the seafuer is discharged for just cause as provided for in
Section 332 of the POEA-SEC.
b. Grounds uniquely applicable to seafarers.
The POEA-SEC enumerates the following grounds for termination that
apply to seafaters:
(1) Termination due to shipwreck and ship's foundering.
Where the ship is wrecked necessitating the termination of employment
before the date indicated in the contract, the seafarer shall be entitled to eamed
wages, medical examination at employer's expense to determine his fitness to
work, repatriation at employer's cost and one month basic wage as tennination
pay.l
In case of tecmination of employment of the seafarer before the
expiration of the term of his contract due to shipwreck, actual or constructive total
toss or foundering of the ship, the seafarer shall be entitled to earned wages,
medical examination at employer's expense to determine his fitness to work,
repatriation at employer's cost and one month basic wage as termination pay. 4
(2) :rermination due_.to sale of ship, lay-up or discontinuance of
~
Where the ship is sold, laid-up, or the voyage is discontinued
necessitating the termination of employment before the date indicated in the
contract, the seafarer shall be entitled to earned wages, repatriation at employer's
cost and one (1) month basic wage as teanination pay, unless arrangements have
been made for the seafarer to join another ship belonging to the same principal to
complete his contract in which case, the seafarer shall be entitled to basic wages
w1til the date of joining the other ship. 5
1 Section 19 (G) prowles: "SECTION 19. REPATRIATION. Xxx G A seafarer llAlo requests for eafy tenni1atkln of his
am-actshal be iab1e b tis repabialxln cost as wel a; Ole mspor1afal costdlisrapacemer4. The ~lllilf, ii
cased~grounds,assumetle1Tcllsp(x1afioncostddieseafcra's~·
2 Seclion 33 m111S the 1ab1e d offenses and correspoodiVJ adnm'ative penslies. The ilmlJday pirt d Cle seda1
states: "SECTION 33. TABLE OF OFFENSES AND CORRESPONDNG AIMNJSJRATIVE PENALTIES.
"A Pima1t lo Seclion 17 illd 18 d ttie Camatt, lhe ~ gmn!s lsted h the Tmle d Offmses and Admillsh!we
Pena'lies herarder or anaqous a Uleseto shal be penaliled ac:ordiV ID is gravity md hquency d c:cmrmiCl1,
i1'4)0S8d byGleM:isterof lhe~. &r:holfensesshalbepenailed asnfcafed.
'13. Ccmrissioo d a seafanJ d 9ll'f d tee dfenses eiunerased mlhe Taile rA Olfmses a i d ~ Pn!ies
herarlder er d sinilar offenses shall be grouro tr ~ ~ a:lix1 al lhe P0EA WlEn lhe ~
arrespaldqj pm'tystal be illiosed- .
"C. The penal6es f o r ~ mlS by lhe Master mt« Ole POEA prowled hereil shall be sepcra1a·and d'lstinGt
from'Mlalever~airilala:tionllatmaybeffled~the~."
3 Seclion22,3)10POtA-SEC.
5 Seclion23,ld.
 SAil REVIEWER ON lABOll lAW
(.3) Ttwination due to unseaworthiness.
If the ship is declared unseaworthy by a classification society, port state
or flag stite, the seafarer shall not be forced to S2il with the ship.1
If the ship's unseaworthiness necessitates the termination of employment
before the date indicated in the Contract, the seafarer shall be entitled to eamed
wages, repatriation at cost to the employer and teanination pay equivalent to one
(1) month basic wage.2
(4) Termination due to Regulation 1/4. conq:ol procedures of the
1978 STCW convention. as amended,
If the seafarer is tenninated and/or repatriated as a result of port state
control procedures/ actions in compliance with Regulation 1/ 4 of the 1978
STCW Convention, as amended, his tean.ination shall be considered valid.
However, he shall be entitled to repatriation and earned wages and benefits only.3
(5) Chaoge of principal.
Where there is a change of Principal of the ship necessitating the pre-
teanination of employment of the seafarer, the seafarer should be entitled to
eamed wages and repatriation at employer's expense. He shall also be entitled to
one (1) month basic pay as teanination pay.4
In case arrangements have been made for the seafarer to directly join
another ship of the same. Principal to complete his contract, he shall only be
entitled to basic wage from the date of his disembarkation from his former ship
until the date of his joining the new ship.5
c. Disciplinary procedures.
.Ii
The 2010 POEA-SEC prcscn'bes in its Section 17, a complete set of
disciplinary procedural rules insofar as seafarers who are undergoing administrative
investigations are concerned. Thus, it is provided therein that the Master shall
comply with the following disciplinuy procedures against an erring seafarer:
A. The Master shall furnish the seafai:er with a written notice containing
the following:
1. Grounds fot the charges as listed in Section 33' of the Contract or .
analogous act constituting the same.
2. Date, time and place for a fonnal investigation of the .charges
&glinst the seafarer concem~
1 Secbl24 (A), Id.
2 Sedion24(B),ld.
3 Sedion 25, Id.
4 Sedicn 26 {A), Id.
s Sedion 26 (8), kf.
' Id.
CHAPTI:ll TWO
PRE-EMPLOYMENT 77
B. The Master or his authorized representative shall conduct the
investigation or hearing, giving the seafarer the opportunity to explain or defend
himself against the charges. These procedures must be duly documented and
entered into the ship's logbook.
C. If after the investigation or hearing, the Master is convinced that
imposition or a p~ty is justifie~ the ~Ster.shall is~ue a written notice of penalty
and the reasons for 1t to the seafarer, with copies furnished to the Philippine agent.
D. Dismissal for just cause may be effected bv the Master \\ithout
fumishing the seafarer with a notice of dismissal if there is a clear and existing
danger to the safe~ of the crew or the ship. The Master shall send a complete
report to the manning agency substantiated by witnesses, testimonies and any other
documents in support thereof. 1
Explaining the foregoing rules, the Court in Skippers Paaftr,2 held:
''Note that under Section t 7 of what is termed the Standard
Format, the 'two - notice rule' is indicated. An erring seaman ii: given a
written notice of the charge against him and is afforded an opportunity
to explain or defend himself. Should sanctions be imposed, then a
written notice of penalty and the reasons for it shall be furnished the
erring seafarer. It is only in the exceptional case of clear and
i
existing danger to the safety of the crew or vessel that the required
notices are dispensed with; but just the ·wne, a complete report
i should be sent to the manning agency, supported by subst2nt:ial evidence
of the findings."
Io holding that respondent's dismissal was illegal in Euit,3 the Court
emphasized that the records are bereft of any evidence showing that respondent
was given a written notice of the charges against him, or that he was given an
opportunity to explain or defend himself: Neither is. there proof that respondent
was furnished with a written notice of the penalty imposed against him and the
reasons for its imposition. In~eed, petitionetS admit that these required notices
were dispensed with because, accoming to them, there was a clear and existing
danger to the safety of _the aew or vessel. Unfortunately for petitioners, however,
there is, again, no evidence that was presen~ to prove such was the situation
when respondent was terminated.
7. BURDEN OF PROOF.
In tennination cases, where the employer~ployee relationship has
been established, the on11S probandi (burden of prooQ that the dismissal of an
employee is for a just cause, lies with the employer.4 The employer must
See Transgbbd M!dineAgency, lrc. v. Qm,Jr.,G .RNo. 222430,hJrl. 30, 2017.
Slippers Pm, h:. v. Mra, G.R No. 144314, NcN. 21,2002. 392 smi\ 371.
3 Eviclbnan Resalrtet.'alarje(ner01c. v. Panahon.GR No. 20689>,.klt, 31. 2017.
Stolt•N"itllsen Mlrine Selvices [Phils.L Inc. v. NlRC, G.R No. 105396, Ne,.,. 19, 1996.
78 S,-.S:. REVIEWER ON LABOR I.AW
affirmatively show rationally 2.dequate evidence that the dismissal was for a
justifiable cause.1 Failure to show that there was valid or just cause for tennination
would necessarily mean that the dismissal was illegal.2
In monetary claims cases, the rule was reiterated in the case of G & M,l
that the burden of proving payment of monetary claims rests on herein petitioner
employer, it being the employment agency or recruitment entity and agent of the
foreign principal which recruited respondent.4
Because of the joint and solidary nature of th~ liability of the foreign-
based employer and the local recruitment agency, the burden of proof to show that
the dismissal of the OFW is legal and valid devolves upon the both of them.
Hence, in the case of EDI-Sta.ffbui!tkr1/' it was held that even though EDI and/or
ESI were merely the local empbyment or recruitment agencies and not the foreign
employer, they should have adc.uced additional evidence to convincingly show that
the OFWs employment was Vllidly and legally terminated. The burden devolves
not only upon the foreign-based employer but also on the recruitment agency for
the latter is not only an agent of the former but is also solidarily liable with the
foreign principal for any claims or liabilities arising from the dismissal of the
work.er.
8. QUANTUM OF EVIDENCE IN OFW CASES.
f.
a. Substantial evidence required.
A fact may be deemed established in cases filed before administrative or
quasi-judicial bodies like the POEA and NLRC, if it is supported by substantial
evidence. POEA and NI.RC are not bound by the technical rules of procedure and
evidence and the rules obtaining in the courts of law. Their proceedings are non-
litigious in nature.6
b. Effect ofabsence ofsubstantial evidence.
In Panganiban,1 it was held that while the Court commiserated with the
petitioner who suffered from brief psychotic disorder, but absent substantial
evidence from which reasonable basis for the grant of benefits prayed for can be
drawn, the Court is left with no choice but to deny his petition, lest an injustice be
caused to the employer. Otherwise stated, while it is true that labor contracts are
impressed with public interest and the provisions of the POEA-SEC must be
construed logically and b"berally in favor of Filipino seamen in the pursuit of their
' Sarooer ().eseas Pa:emenl ~ . lac. v. Jot C. cables, G.R No. 170139, ~- 05. 2014, ~ Him Heav)t
~Capaabl v. 0,, G.R No. 164860, Feb.2.2010, 611 SCRA 329, 338.
2 Slolt-Nielsen Mm! Selvlces {Ph!:l.], lrx:. "· NlRC, G.R. No. 105396, New. 19, 1996.
3 G&M(Phils.L K- Y. Cruz, G.R. No. 140495, Apt 15, 2005.
~ fie 61mm.1, h:. v. NlRC, GR No. 1-12314, Jooe 28, 2001.
s EDJ.Slafhll!Els lrlfana&lnaJ, h:. v. NLR:, G.R No. 14558, Oct. 26, 2007.
• Rasev. NI.RC, G.R No.110637, Oct. 7, 1994; Malak>v. Rolclarl-Ccnfes. G.R. No. 102358. No.i.19, 1992.
7 Palgri)lrlv. Til'S Tracing~ Inc.. G.R No. 187032. Oct 18, 2010.
l
CHAl'TER Two
PRF.-F.MrLOYMENT 79
employment on bo~rd ocean-g~ing vessels~ s~ the ~e is that justice is, in every
case, for the desemng, to be dispensed with 10 the light of established facts the
applicable law and existing jurisprudence. It need not be overemphasized th;t in
the absence of sub~tantial evidenc~, working conditions cannot be accepted to have
~used or at least. tncr~ed ~e nsk of contracting the disease of brief psychotic
disorder. Substantial evidence 1s more than a mere scintilla. The evidence must be
real and substantial and not merely apparent; for the duty to prove work-causation
or woik-aggavation imposed by law is real and not merely apparent
c. Ship's or Captain's logbook; evidentiary value thereo£
. . The. ship's logbook is the official record of a ship's voyage which its
captain _is obligated by law to keep. It is the official repository of the day-to-day
transactions and occurrences on board the vessel. 1 It is where the captain records
the .decisions he has adopted, a summary of the perfonnance of the vessel and
other daily ~veots.2 The en~es ma~e ~ the ship's logbook by a person performing
a duty r~uued by_ law are pnma facu evidence of the fac_ts stated therein.l However,
such ~.tries constltu~e prima fade evi~ence of the incident only if the logbook itself,
~on~g such entnes or photocopies of the pertinent pages thereof, is presented
tn evtd~ce. The logbook is a respectable record that can be relied upon to
au~tl~te ~e ~ fil.ed an~ the px_ocedure taken against the employees prior
to thett clisoussal.4 It is a vit31 evidence smce Article 612 of the Code of Commerce
requires the captain to keep a record of the decisions he had adopted as the vessers
head. Thus, in Wal/em M.aritime,5 the Supreme Court held that a copy of an official
entxy in the logl?ook is legally binding and serves as an exception to the hearsay
rule.'
II.
MONETARY CLAIMS OF OFWS, IN GENERAL
l MONEY CLAIMS CASES.
a. Bases ofdaims.
The money claims of OFWs over which Labor Arbiters have jurisdiction
may arise from any of the following:
(1) From employer-employee relationship;
(2) By virtue of any law; and
1
Trcrisgk>bal Mri&ne Agency, Inc. V, Cooa, Jr., G.R. No. 222430, AIJJ. 30, 2017.
Id., Sadagnotv. ReilierPadf.c lntematiooal ~ . "-· G.R No. 152636mAl,J. 8, 2007.
3
~ v . Reiler Pa ln1emaoonal Stipiq, lne., G.R. No. 152636,At,J. 8, 2007.
SdN"elsen Mme Servias (Phs.1 Inc. v. N_RC, G.R. No.105396, NtN.19, 1996.
5
Walan Muflme &m:es, Inc. v. M.RC, dthg Hava1a1 SIJ4>pPJ ltd. v. NlRC, G.R No. L-65442,Aprl 15, 1985.
Seealso Magsays!r/ Mll Mame, Inc. v.A!Jr4e, G.R. No. 229192, Jul)' 23, 2018.
 BAR RE\IJEWER ON I.ABOR I.AW CHAi'TER Two 81
so PRE•EMPLOYMENT

(3) By reason of contract.I through the Administration {POEA), containing the minimum terms
· and conditions of employment.1
Any resultant or related claims for actual, moral, exemplary and other
fofflls of damages nece.-;sarily will have to be litigated in the same proceeding (u) POEA-Standard Employment Contract (POEA-SEC), which
initiated before the Labor Arbitet.2 refers to the PORA-prescribed contract containing the minimum
tenns and conditions of employment.2
From the foregoin& it is clear that Labor Arbiters may exercise
jurisdiction over an OFW case even absent the employment ,elationship, such as Additionally, there is a Master Employment Contract, which refers to
when the cause of action arose from violation of law or breach, of contract This the model employment agreement submitted by the principal/employer,
is an exception to the general rule that the existence of employer-employee containing the terms and conditions of employment of each wock.er to be
relationship between the patties-litigants is a pre-reqiusite for the exercise of hired by such principal/employer, with such contract to be duly verified
jurisdiction over labor disputes by the Labor Arbiters, the NLRC and the other by the POI.01 or authenticated by the Philippine Embassy/Consulate and
approved by the POEA.4
labor agencies.l
b. Law as basis. 2. For seafarers, ·
The pertinent laws and issuances that may give rise to a cause of action The following contracts apply to seafarers:
refer to R.A. No. 8042, as lately amended by R.A. No. 10022 and its Omnibus © In~vidual Employment Contract, which refers to the contract
Implementing Rules,4 as well as the Rules and Regulations Govcming Overseas containing the tenns and conditions of the employment of the
Employment for land-based OfWs and seafarers.5 contracted seafaret5 which the parties stipulated and mutually agreed
c. Contract as basis. upon over and above the minimum standards set forth in the POEA-
SEC, provided that the stipulations therein are mutually beneficial to
The applicable contracts, the breach of which may give rise to a cause of both parties and are not contrary to law, public policy and morals.6
action cognizable by the Labor Arbiters, vary between a land-based OFW and a (11) POEA-Standard Employment Contract {POEA-SEC), which
seafarer, to wit. refers to the POEA-prescribed contract containing the minimum
1. For land-based OFW. tCJlllS and conditions of employment, which shall commence upon
actual departure of the seafarer from the Philippine airport or seaport
The following contracts apply to land-based OFWs: in the point of hire.7
(i) Employment Contract/Offer of Employment, which refers to an In addition to the foregoing, a seafarer, who is a member of a labor union,
individual wcitte.1 agreement between the principal/employer and the is also covered by the Collective Bargaining Agreement (CBA) which
worker who is hired through a licensed recruitment agency or operates as a supplement to the POEA-SEC and the Individual

1 Secti0n 10, RA No. 8042, as at8lda:l lrf RA. Ho. 10022; Sdxl 1, Rule W, Oimilus Rules a n d ~
~ t.e PlidfilltWorkers clld C>.eS& F]imosAdd 1995, G Amended ll'f RA. No. 10022, issued al JtJt 8,
~10; See also lhe previous Sedkwl 58, RI& ll1d Regwalioos ~ lhe ~ Wcxkers illd Overseas Frpilos
M. of 1995; Seclioo 62, Omhls rues and Regulations 1mpanenq !le MGnv1t Wakers and Overseas Fitpilos M of
1995mued a1'Feb. 29, 1996; Seclon 1, NlRC enbaicRmltian No. 1J.l5, Series ol 1995.
a Iii!.: kl. I ls furtler staled lllder 1116 prorisloo !hat "cxnsislent v«ti Ills mandE, t,e NI.RC shill endeavor to upda1e cl1d
keep meastv.ttl fledewqmJm h Ule global seMX!S iDlsliy."
3 ~CcxllQ\yv.Clirab,G.R~ 106231,Nov.16, 1994.
' ~ rDMl>lhe lateslWISO'lollleOrmiJus l\ellld Regtlatirls ~ h! t.iJrcrilWakeis and Overseas
Fqns Add 1995. asAnulded 11/ RA. No. 10022, Issued CII Jut, 8, 2010.
5 ~ now mtt.o (2) issuRes. nametr. Ret9d POEA ~ and Regulalians Gcvoomg tie Reauiment illd
~d~ CMss& Rpilo Wcxtersd2016 illd 2016 REMSed POEA ~ Md Recpaticns Govemilg
' th 12. rue 11. RMed POEA Rules and RegdafXXls Gownilg 118 Recruiment and ~ of Land-8ased
Ova'Seasfipn>wakefsof 2016.
2 No.44,RulelUiil. .
3 ~OVelseaslabcrOf&:e(POLO).
~ th 22, RJ1e II, Revsed POEA Rules and Regwm Go.iembJ Ile Reaui1ment and Empla,ment of L.and-8ased
CMlrseas FifpiloWakers d2016.
5 A"CXX!lrml seafare( refels to a ff4lb1o seafirer \\4lOSe E!l11lb,,nent cmtact has been processed by the POEA for
ovecseas deplo)ment. (No. 8, Rule u, 2016 Rewed P0EA ~ and Regulaioos Govemilg Ole Reamnent and
fn1lk7,'lnentdSeafilers issueda1 Felxuay26, 2016).
1 Sedicn 116. Rule~. Pat r./, 2016 P.e.ised POEA Rua cl1d RegW!fms Go.,mkig tie Reauilnu1l illCI ~ d
Seaaas mood al fmua,y 26, 2016. ls pwded herein, l1uJs: "Seclim 116. Freedool b ~-Pcrties ID !he
IICWikJal erq,k7jmentCCMa:tare mM1I b sqxdate ax! IIWlff agree IDoUlertams ax! axdions over lllCI alxPle the
nmun samm; proYifed, Olill lhe ~ ae JM.Jat/benefdal to botl parties il1d are rd rmrasy to law, pubic
pci,y and rroals."

l
Ile ~am ~dSeafa8rs Issued a1 Felxuily 26, 2016. 7 No.14,~l~llkl.
82 BAR. 11.EVIEWlR ON IABOR IAW
Employment Contract and whose terms shall prewil to the extent that
they give better benefits to the seafarer.1
d. Pertinent jurisprudence.
The case of Sanliay is the best example of the exception to the general
rule that the existence of employer-employee relationship between the parties-
litigants is a pre-requisite for the exercise of jurisdiction over labor disputes by the
Labor Arbiters, the NLRC and the other labor agencies.3 Here, petitioner seafarer
has already signed a POEA-appmved employment contract but was not deployed
overseas. Consequently, it was ruled that despite the al:>sence of an employer-
employee relationship between petitioner and respondent, the Labor Arbiter has
jurisdiction over petitioner's complaint because his jurisdiction is not limited to
claims arising from such relationship based on Section 10 of R.A. No. 8042, as
amended, but also "by virtue of any law or contract involving Filipino workers for
overseas deplqymmt, including claims for actual, moral, exemplary and other forms
of damage xxx." Considering that petitioner was not able to depart from the aii:port
or seaport in the point of hire, the employment contract did not commence to be
effective and thus, no employer-employee relationship was created between the
parties. However, a distinction must be made between the perftaio11 of the
employment contract and the &0111mena111ent of the employer-employee
relationship. The perfection of the contract, which in this case coincided with the
date of execution thereof, occurred when petitionet and respondent agreed on the
object and the cause, as well as the rest of the terms and conditions set forth
therein. The commencement of the employer-employee relationship would have
taken place had petitioner been actually deployed from the point of. hire. Thus,
even before the start of any. employer-employee relationship, contemporaneous
with the perfection of the employment contract was the birth of certain rights and
obligations, the breach of which may give rise to a cause of action ag.unst the erring
party. Thus, if the reverse had happened, that is, the sea&ter failed or refused ·to be
deployed as agreed upon, he would have been held liable for damages.
Consequently, respondent here was held liable to pay petitioner actual and
compensatoty damages of US$4,635.00 in the form of the loss of nine (9) months'
worth of salaty as provided in the contract.
This case of Santiag, Wc.s cited in the 2012 case of Bright Maritime,4where it
was ruled that while respondent seafarer cannot be deemed as having been illegally
dismissed considering that the employer-employee relationship has not yet
commenced, nevertheless, petit:.oners' act of preventing ~pondent from leaving
1 The roost carmll c~ a ~ crew s #le ooe negotiated between Ml>SUP (Associalad Mame Oflk:ers aid
Searrm's Urioo of Ile fhTCIJi'tes) nS ~
2 Santiagov. CF Sap Qew MNgenet K, G.R. No. 162419.lit, 10. 2007.
1 ~C',on1)illyv. Glmatk:o. GR No. 106231, NoY.16. 1994.
' 8riJhl Mari&ne Cocporatkxlv. Fa\D1ial, G.R No. 165935, Feb. 8, 2012.
CHAPTER Two 83
PRE-EMPLOYMENT
and complying with his contract of employment1 constitutes breach of contiact for
which petitioner company is liable for actual damages to respondent for the loss of
one-year salary as provided in the contract2 Additionally, respondent was awuded
mow damages in the amowit of P30,000.00, exemplaty damages of PS0,000.00 and
10% of all recoverable amounts as attorney's fees.3 '
2. CLAIMS OF OFWs THAT ARE MONETARY IN NATURE.
An OFW's monetary claims may be brought about by any of the
following events:
(a) illegal clismissa~
(b) Disability;
(c) Death; or
(d) Other benefits.
The foregoing monetary claims are not rooted upon any of the provisions
of the Labor Code.4 It is Section 10 of R.A. No. 8042,5 which is the appropriate
legal basis for such claims. And as earlier discussed, all of the foregoing money
claims fall wider the jurisdiction of the Labor Arbiters, regardless of whether they
arose from (1) employer-employee relationship; (2) by virtue of any law; or (3) by
reason of contract.'
Ill.
MONETARY CLAIMS OF OFWs
ARISING FROM ILLEGAL DISMISSAL
1. ARTICLE 294 [279) RELIEFS NOT AVAILABLE TO OFWs.
The. provision of Article 294 (279]7 of the Labor Code is not the proper
basis for the money claims that may be asserted by OFWs as a result of their illegal
dismissal It is Section 10 of R.A. No. 8042, a plain reading of which readily shows
1 In tis case, Olelewasava5d POEA-approvedcmactbetNeetl pe~and respondlllt.
2 ThenU181tf salily sfluated ii lhema:t 6 US$670, idlsM!of albNirm.
3 This awird is based crt tie fact !hat because d petiooners' faille I D ~ ~ based crt a l ~ granl,
respcnfentwas bald ID fie Ol6 case.
NYK.fl Sip Managsnent. h:. v. The NLRC, G.R No. 161104. Sept. 'll, 2006.
OBavdse kncw1 as Ule 'Mdrant Watels atd OJelseas fqlitos M. d 1995,· Yftfl was anemed mMcrd'l 8, 2010 by
Semxl 7of RA th 10022.
6 Semxl 10, RA No. 8042, as arllOOE!d tJtf RA No.10022; Sm! 1, ~ W, Onnbl.s ~ ald Regu!alims
tnplernenlDJ Ole~ Wcxters am Ovelseas Fipim Add 1995, as Amended by RA No. 10022, Issued crt », 8,
2010;Seealso!mpNXJSSedxlrl58, Rues aid Regulabls ~ Dl8 MgfantW<x1c.elslnl<Mrseasffillncs
M.of 1995; Secfal 62. Om1Jus Rules iJld Re!Juatms 1mp1emmwJ ~~Wat.as am Oe9seas ~ Actof
1995 Issued crt Feb. 29, 1996; Secticrl 1. NLRC en bcrlc Resokltion No. 1-95, Series of 1995.
7 I pRM!es: "Mile 279. Seariy of Tentw.! - In cases d 18JlAar ~ l lhe ~sha! nd tennilate tie servkes
cJ al errp1oyee except a a jJst cause or v.tien doized t,,, N; riee. M llf'l1)byee v.no ls wtiJsUY disn&ed tan wort
shal be enWed ID remamment wlholrt b$ of senoity ,iJhls int oh!r privileges aoo ID his U bactwages. hcilsM! d
abvn'es, and 1D his olJler benefds OI llef rro1etay equtJa81I ~ from tt1c! line his CXll11)81S81iorl WZ Ystilekl
tom hin up ID lhe tine of his acwal renstatement..
 BAR REVIEWER ON LABOR lAW
that it applies only to cases of illegal dismissal and finds no application in cases
where the OFW was not illegally dismissed. t Resultantly, the remedies provided for
under Article 294 [279], such as reinstatement or its altemative remedy of
sep~tion pay in lieu thereof, or full backwages, are not available to OFWs. This is
as tt should be since OFWs are contractor's employees whose rights and
obligations are governed primarily by the POEA Standard Employment Contract
(POEA-SEq, the Rules and Regulations Governing Overseas Employment1 and
more importantly, by said R.A. No. 8042, as lately amended by R.A. No. 100223
and its Omrul>us Implementing Rules. 4
Moreover, another justification for not granting .the Labor Code's reliefs
to illegally dismissed OFWs is the fact that the sam~ are available only to regular
employees, as this tenn is understood within the context of the Labor Code. Under
well-established jurisprudence, it has been consistently declared, except in one rare
case,S that OFWs can never acquire regularity of employment, their employment
being always fixed term in nature.6
2. SECTION 10 OF R.A. NO. 8042 AS BASIS OF MONETARY AWARDS.
The legal basis for the reckoning of the monetaty awards in case of illegal
dismissal of OFWs is the 5th paragraph of Section 10 of R.A. No. 8042, which
provides as follows:
"In case of termination of overseas employment without just,
valid or authorized cause as defined by law or cootmct, the workers
~hall be entitled to the full reimbumcmcnt of his placement fee with
mterest of twelve pcttcnt (12%) per annum, plus his salaries for the
unexpired portion of hls employment contract or for three Q) months
for evei;y year of the une5')ired term whichever is less,"7
CHAPTER TWO 85
PRE-EMPLOYMENT
3. SERRANO DOCTRINE- PART OP PAR. 5, SEC. 10 OF R.A. NO.
8042 DECLARED UNCONSTITUTIONAL.
The above-quoted underlined phrase - '~r for thnt montht for PttJ year of the
unt'f#nd 111'111, p,hicheper is Im" - has been declared unconstitutional in Sma,wl for
b~g ~sc~atory, ~ong other significant reasons cited therein. Consequent to
this ruling, illegally dismissed OFWs are now entitled to all the salaries for the
entire unexpired portion of their employment contracts, irrespective of the
stipulated te~ or duration -thereof. In other words, the Supreme Court reverted to
the old rule prior to the effectivity of R.A. No. 8042 on August 25, 1995 as
discussed in the Bdi-Staj/blli/dJrJl case.
Most significantly, although the subject clause was declared not violative
of Sedio11 10,3 Article IIJ4 of the Constitution on non-impairment of conttacts
because the enactment of R.A. No. 8042 in 1995 preceded the execution of the
employment contract between petitioner and respondents in 1998,s it was,
however, pronounced that it violated Sedion 1,6 Artule ill; Section 18,1 Article II; and
l-
t
I
i
!
I
!
 8AA. REVIEWER ON LABOR LAW
86
Sedion J,' .Artielt XIII of the Constitution on labor as a protected sector. To Filipino
workers, the rights guaranteed under these constitutional provisions ~slate to
economic security and parity: all monetary benefits should be equally enJoyed by
rlters of similar categoty, while all monetary obligations should be bo~e ~y
;:n in equal degree; none should be denied the protectio~ of ~e laws which 1S
•
en'oyed by, or spared the burden unpose on, o .
d thers in like ctrcumstances.2 A
. . . . .
J. • • f th b'ect clause reveals that 1t has a discrurunatory intent
closer exanunatton o e su J • 1 1 ,,. OFW
· d · · 'cli · act on, OFWs at the folloWU1g eve s: rust, s On the third, prior to R.A. No. 8042, a uniform system of computation
agauist, an an mvi ous tmp . • . OFW ·th
with em lo ent contracts of W!ff than one year 11tS-a-m_ s W1 emp1oyinent
p fym ear or more; Second, among OFWs \Ylth employment contracts
contracts o one Y Ot::\'Y7 · • · I al k ·th fix d
of more than one year. and Third, rwS lltNl-1/IS oc wor ers WI e-
period employment.
On the first, it is plain that prior to R.A. No. 8042, all OFWs, regardless
of contract periods or the unexpired portions thereof, were treated alike in temis of
the computation of their monetary benefits in case of illegal dismissal. Their claims
were subjected to a uniform rule of computation: their basic salaries multiplied by
the entire unexpired portion of their employment contracts. The enactment of the
subject clause in R.A. No. 8042 introduced a differentiated rule of computation of
the money claims of illegally dismissed OFWs based on their employment periods,
in the process singling out one category whose contracts have an unexpired portion
of one year or more and subjecting them to the peculiar disadvantage of having
their monetary awards limited to their salaries for 3 months or for the unexpired
portion thereot zvhichmr it lers, but all the while sparing the other category from
such prejudice, simply because the latter's unexpired contracts fall short of one
year.
On the second, the subject clause "or far thrte (3) months for every year of the
11n1xpired term, whithevtr is Im" contains the qualifying phrases '~very year" and
"unexpind llf'1II." By its ordinary meaning, the word '~1m1" means a limited or
definite extent of time. Corollarily, that "everyyear" is but part of an •~mexpirtd term"
is significant in many ways: first, the unexpired tenn must be at least one ye3!, for if
it were any shorter, there would be no occasion for such unexpired term to be
measured by every year; and second, the original term must be more than one year,
for otherwise, whatever would be the unexpired term thereof will not reach even a
year. Consequently, the more decisive factor in the determination of when the
subject clause jor thrre (J) 111onth1far everyyear ofthe 11f14xjJind term, zvhichew is leis" shall
apply is not the length of the original contract period, but the length of the
unexpired ~rtion of the contract period• die subject clause applies in case; when
the unexpired portion of the contract period is at least one year, which
arithmetically requires that the original contract period be more than one year.
1 Sedix'l l The Sate shal ab! lll pntedkxl to laba', kx:al illd CMrSeaS. organized illd 11101gaized, illd pctmte UI
emiqmentnf~c:J~CJR)OltLriiesb'al
2 (ll!rJ Cly of Mania v.1.aJub, G.R. No. 118127, Apd 12, 2005, 455 SCRA 308.
CHAPTER TWO
PRE-EMPLOYMENT
Viewed in that light, the subject clause creates a sub-layer of discrimination among
OFWs whose contract periods ate for more than one year: those who are illegally
dismissed with less than one year left in their contracts shall be entitled to their
salaries for the entire unexpired portion thereo~ while those who are illegally
dismissed with one year or more remaining in their contracts shall be covered by
the subject clause, and their monetary benefits limited to their salaries for three
months only.
of the monetaty awards of illegally dismissed OFWs was in place. This uniform
system was applicable even to local workers with fixed-tenn employment. Io swn,
prior to R.A. No. 8042, OFWs and local workers with fixed-term employment who
were illegally discharged were treated alike in terms of the computation of their
money claims: they were unifonnly entitled to their salaries for the entire unexpired
portions of their contracts. But with the enactment of RA. No. 8042, specifically
the adoption of the subject clause, illegally dismissed OFWs with an unexpired
portion of one year or more in their employment contract have since been
differently treated in that their money claims are subject to a 3-month cap, whereas
no such limitation is imposed on local workers with fixed•tenn employment The
Court concludes that the subject clause contains a suspect classification in that, in
the computation of the monetary benefits of fixed-tenn employees who are illegally
discharged, it imposes a 3-month cap on the claim of OFWs with an unexpired
portion of one year or more in their contracts, but none on the claims of other
OFWs ·or local workers with fixed•tenn employment. The subject clause singles out
one classification of OFWs and burdens it with a peculiar disadvantage.
In addition to the foregoing, the subject clause is not supported by the
existence of a compelling state interest that would justify the perpetuation of the
discrimination against OFWs under the subject clause. The Court dug deep into the
records of this case but found no compelling state interest that the subject clause
may possibly serve. Assuming that, as advanced by the OSG, the purpose of the
subject clause is to protect the employment of OFWs by mitigating the solidary
liability of placement agencies, such callous and cavalier rationale will have to be
rejected. There can never be a justification for any form of government action that
allevi2tes the bmden of one sectot, but imp~ses the same burden on another
sectot, especially when the favored sector is composed of private businesses such
as placement agencies, while the disadvantaged sector is composed of OFWs
whose protection no less than the Constitution commands. The idea that private
business interest can be elevated to the level of a compelling state interest is odious.
Moreover, the subject clause violates petitioner's right to substantive due
process, for it deprives him of property, consisting of monetaxy benefits, without
any existing valid governmental pmpose. The argument of the Solicitor General is
that the actual purpose of the subject clause of limiting the entitlement of OFWs to
their three•month salaty in case of illegal dismissal is to give them a better chance
88 BAR REvlEWER ON LABOR. I.AW
of getting hired by foreign employers. This is plain speculation. As earlier
discussed, there is nothing io the text of the law or the records of the deliberations
leading to its enactment or the pleadings of respondent that would indicate that
there is an existing governmental pwpose for the subject clause, or even just a
pretext of one. The subject .clause does not state or imply any definitive
governmental purpose; and it is for that precise reason that the clause violates not
just petitioner's right to equal protection, hut also her right to substantive due
process undet Section 1, Atticle III of the Constitution.
The subject clause being unconstitutional, petitioner Sm(llto was declared
entitled to his salaries for the entire unexpired period of 9 months and 23 days of
his employment contract, pursuant to law and jurisprudence prior to the enactment
of R.A. No. 8042.
P1ior to Semmo, as a fonn of relief, the amount of monetary award to
wluch an illegally dismissed 0£-iW is entitled under Section 10 of IU. No. 8042,
was made dependent on the duration of his contract of employment• Thus, for
purposes of simplification:
1) If the duration of the employment contract is less than one (1) year, an
illegally dismissed OFW shall be entitled to all his salaries for the
unexpired portion thereof;2 or
2) If the duration of the employment contract is at least one (1) yearl or
more,4 an illegally dismissed OFW shall be entitled to ''whichever is less"
between his '~a/arks far the unexpind portion of his mploymmt mntrad" or
his salaries 'Jar thne (J) monthsfar nayjar ofthe unexpind lmll. 11
1 SeeS<we,sPm,lnc. v. Mra,G.R.No. 144314,Nov. 21, 2002,392SCRA371.
2 Exanllles of cases vilere tie dura!iJn rllhe ~c:ama:t is bebH me (1) year are Sdppeis lnted Pede, Inc. v.
Maguad, G.R No. 166363, ~- 15, 2006 v.nere Ile pemd lnvdved is nile (9) l1'0ltlS iu or.rmis me (1) rnoolh by
rrwil wisent; md Ski>Pers PillZ, ~ v. r.ta, supa, \\4lere Ile cfllatm d 11a CM!ISeaSanrad was <ri/ (or sot (6)
rratlls. (See alsoPha. ~ Selvas and Resrutes, tc. v. Pnno, G.R. No. 144786,Apii 15, 2004~
3 ExarpES cl cases ae lhe <lra&ln of 118 ~ amact is at least me (1) yea ae QB!1;j ~
Co., be. Y. Hon. ('A, G.R. No. 153750,JaL 2S,2006vJm respcrdenlsQJ8S1a nf GcmaJaN!18~amacted
uore;,ecrss\teas seafarels butv.tien ~ I D Mria, 6le'f Im eacta been~f«rri/a WJe CNfl~ (2)
moolls n less ltm one (1) rm1, respedNetf, d Ute cm-year mact; an v: Na)'ma. G.R. No. 148407, New. 12,
2003 Mlefe Ile OfW !al wated for at, 21 cfa'ts"d lhe CJl&,fS ma:f; nf Ta'xfn> v. Fak:al Mlifine &Allied
Savi:es. Inc., G.R. No. 172031, Jllf 14, 2008, \\iiere lhe '1rW (seafcm) wxkecl 6an ~ 15, 1996 mmay 21,
1997 orap«Jiodof afit!jerJK:Ime(3) nullls.
• Exan1]les ol cases \fflere lhe duration d the empbyment conb'acl ls nm hrl ooe year are Alhenna lntemational
~ Selvices. lrc. v. Vllli.m, G.R. No. 151303,Aid 15, 2005, \\twre lleOFWwasqagedb-1 ye;s, 10mcnlhs
crd 28 m,s lxl1 was krlJinatwJ after at, amcm d sem:e; Fbaish M:riim ~ v. Amanzl:r, GR No. 177948,
Mml 14. 2008, v.t.ere Ule OFW was Ind tr a two-yecramactbut laJat/ vated u at, 26 cfa'ts pricJ!D his~
~ - There &~ asiniarfcds m&u betiMlerl lhe Ruishcaseard Olil1e (supal Theontf <ffsence les i'I
lhe lengl!l of Ile subjed snpbylnent amact Oaile iMWed a me-veer CXllllra:t \\tlle l i e ~ in 116 cze
CXM!IS amo-yea- perod. Ha.vever, lhey bo91 tal IJ1der Ile three mtnhs' my noo sillC2 d1e tenn c:I tie~ is •at
least ooe ys or lll(Je • In ()ate as well as nJSS k1docf1ila Qxpoqilm v. Ferrar, G.R No. 156381, Oct 14, 2005, 473
SCRA 120 aid Unweisal Sia~ SeM:es, Inc. v. NLRC, G.R No. tn576, JIJf 21, 2008, lhe ~ d !he illegatf
dislrissed OfWwas ordered to pay Oieanoont equivce'lt k>me (3) l70llhs' salary.
CHAITTRTWO 8g
PRE-EMPLOYMENT
In othet words, in the computation of the lump-sum salary due an illegally
dismissed overseas employee, thete are two (2) clauses as points of reckoning: .i.rst
is the cumulative salag for the unexpired pottion of his employment; and second
is the grant of three (3) months' sa1aiy for every year of the unexpired term,
whichever is lesser. 1
By reason of this latest S,"ano doctrine, all past decisions subjecting the
monetary award to the afore-mentioned qualifying clause no longer apply.
4. THE SAME UNCONSTITUTIONAL CLAUSE RE-ENACTED IN R.A.
NO.10022.
It is, however, baffling that despite the March 24, 2009 en ban& declaration
of unconstitutionality of the said qualifying provision in Smano, RA. No. 10022,
which was enacted barely a year later on March 8, 2010, replicated it verbatim.2 The
insistence by Congress of foisting th.is unconstitutional provision in the law created
a constitutional issue. Did such replication in the newly minted Section 10 of R.A.
No. 10022 result in curing its patent nullity and unconstitutionality?
5. SC'S REFUSAL TO RULE ON RE-ENACTED
UNCONSTITUTIONAL LAW.
Notably, for a time, the Supreme Court, in the following cases, refused to
rule on the constitutionality of the _amendment by R.A No. 10022 of the 5th
paragraph of Section 10 ofR.A. No. 8042:
(1) The 2012 case of Skippm,3- where the said unconstitutionality was
invoked and. cited and the amendatory reiteration of the same provision was
acknowledged. "Nevertheless," s~d the Supreme Court, "since the tennination
occurred in January 1999 before the passage of the amendatory RA 10022, we shall
apply RA 8042, as unamended, without touching on the co~~tutionality of
Section 7 of RA 10022."
{2) In another 2012 case, Pm/ CPM,4 where the same issue was raised but
the Supreme Court refused to rule thereon, thus:
"Whether or not R.A. 10022 is constitutional is not for us to
cule upon in the present ase as this is ao issue that is not squuely before
us. Io other wonts, this is an issue that awaits its pmper MY in court; in
the meanwhile, we make no pronouncement on it."
, A!henna lntemalional Mil!pQWEI SeM:es, 1nc. v. Vilanos, G.R No. 151303, Apd 15, 2005; see a1so Mrsarnan MannnJ
tq«,y, 1rc. v. NI.RC, G.R. ~- 127195, Aug. 25, 1~. 313 SCRA 88.
2 Toe Sil1'e 51' paaJf'llllh ~ Sedixl 10 stales: "kl case d bmilalkrl d CM!IS8aS envbyment v.lloul )JSt. veal or
authcrimd CaJSe as demed by aver anact, or-, lllilUlxxized deduc&m mi le niJnlltwcna's saary, 9l8W01ker
shal be enlilled ID lhe tlD IWIUIISel18lt of his placement fee cn1 ht demldlllls nme w.tfl nterest at tNei\ie pata\t
(12%) per arrun, plls tis mies ulle llleXPl1ld podDI d his 8ff1)q'ment cmtatt er u me (3) rnonOis b fNel'f
ye;ydlle unexpied term. v.ttilewr sless."
3 ~ lJMed Pacifc, lrc. v. Ooza, G.R No. 175558, Feb.8, 2012.
• PertCPM Manp(Jwlf ElQloner4 Co., Ire. v. Vnr,a. G.R No.197528, Sept 5, 2012.

90 &AR REvlEWER. O"' LABOR LAW
6. THE SAMBER DOCTRINE REAFFIRMS SERRANO,
That proper day io court arrive~ wh~n. in 2014, t~e Supreme Court en
2
eld · s, 1 that the unconstitutionality of the satd retnstated clause
balU' ~ Thinus "i:'ring
W2ges that should be recovered by an illegally dismissed
rema111s.to three' (3) months 1~
oFW · both
•
protection clauses of the Constitutton.
· latton
vto t
· of due process and th e equal
The following ratiocinations were cited:
(1) On violation of the equal protection clause:
The reinstated clause does not satisfy the requirement of reasonable
classification. A reasonable classification "(1) must rest on substantial distinctions~
(2) must be geanane to the purposes of the law; (3) must not be limited to existjng
conditions onlr, and (4) must apply equally to all members of the same class." A
law is void if classifications ar.e made arbitw:ily.
In Stmzno, the classifications made by the reinstated clause were identified.
It distinguished between fixed-period mnw workers and fixed-period lQg}
workers. It also distinguished between overseas workers with employment
contracts of less than one year and overseas workers with employment contracts of
at least one year. ·Within the class of overseas wotkers with at least one-year
employment contracts, there was a distinction between those with at least a year
left in their contracts and those with less than a year left in their contracts when
they were illegally dismissed. There is here a "legislative classification which
impennissibly interferes with the exercise of a fundamental right or operates to the
1
SaneEr 0Jerseas fllimnl!lt hpr:f, ~ v. Jat C. cati!s, G.R No. 170139, ~- 05, 2014. Respoodent Jct/ Cables
va reatiled by petiooner Smnee'for aoo&year ~ araact ii T8lWll. HEJ nuttif saay was NT$15,360.00.
She alleged lhat Sameer requied her to pay a l)lacernert fee ct P70.ax>.oo m she si]ned tie en1)k7;ment ccn1ract.
She was depb/ed b vm b- Tar«cll Waaa, C'4. Lid. (Wacoal) on J\lle 26, 1997. She sieged lhat i1 her efl11byment
mact. she a,iieed to wak as quaily CXllllrd for one ys. In Tat.va\, however, she was asked to m as a aiuer.
AaxrlfnJ mSarneer, she was laa dismissed due to her i'1efficienc.y, negrgence i1 her dlties, ald her 1am to ainw
v.il1 Ile v a t ~ ~h«~fl ~ . " On OdDber 15, 1997, RJfJed a0Jr4Bllv.ttl Dle NlRC itjjailst
pe1m1er and Wm. Sle dained lhat she was lieQal'f disrnssed. Sle asked tr Ula reun of her placemeri fee. tie
vdhhekl ammttr repatiation om, payment dherm, for 23 mms as well as nua1 aid exefT1DY danages. She
because la based on mere~ On-.
ife:llfm Waxial as Sanee-0/erseas Plaamrnkp'c/s forei]n ~ The Laber Miter disnmed Jr,/s ~
l1e N.RC dednd !hat ¥1/ was ilegat, ciirl'med. 1lle HtRC
awned Jt:Jf mt 3man!ls' m d saJaly ii lhe amintd NT$46.080, fie reinbtlsemeltof lhe NT$3.ax> \IAtbekl flan
her, in! atm,/5 fees rt NTS300. On <dnl, lhe ~ alfrmed Ile dedsb1 d lhe NlRC v.i1l respect ID Ole fRq d
l!gC, diirriml, kJ(s entilanent ID Ille equwaklnt d 3 nm1ls' Y01h cl saay, remiwserrent d Y&hhekl repatrim1
expoose, aoo mre/s fees. Before lhe &lpreme Qiurt. petitioner raised lhe mue d \\tleM the Caul cl Appeals erred
m l aflimed te ruliYJ of Ile NLRC fnd'119 respondmt J<:Jf llega!tf dsnsed 111d ~ her 3 monlhs' watt cl
salaiy, lhe renilusement 11 tie <XJSt of her repalria!ion, aid attomey's fees despite !he aleged existence d jJst causes d
tennilalkn
2 The disp0siwe pmi>n d die decisbl In Ills case paatt slates: ille clause, 'er u me (3) nm1ls for wer, ya d !he
unexpi8d term,~ is less' i\ Sedklfl 7of RA th 10022 amerdrlg Seam 10 of RepwlcAdNo. 8042 is c:leca'ed
urmdJtiooal llld, lhereb:e, IU4 and \'Oid."
3 Sedicxl 1,Mde Wof t.eCalSlibml PMfes: "NopelSOll shal bedepct'8d dtife, lbaty, or prqiert'/wihoutdueproress
dtaw, ncrsha'lanypasan bederiecl he 8(JB proledklndh! as.•
CHAl'T1:R Two 91
PRE-EMPLOYMENT
peculiar disadvantage of a suspect class,, because "the subject clause creates a sub-
layer of discrimination among OFWs whose contract periods are for more than
one year: those who are illegally dismissed with less than one year left in their
contracts shall be entitled to their salaries for the entire unexpired portion rhereof,
while those who are illegally dismissed with one year or more remaining in their
contracts shall be covered by the reinstated clause, and their monetary benefits
limited to their salaries for three months only." These classifications do not rest on
any real or substantial distinctions that would justify different treatments in terms
of the computation of money claims resulting from illegal termination. Moreover.
these classifications are not relevant to the purpose of the law, which is to
"establish a higher standard of protection and promotion of the welfare of migrant
workers, their families and overseas Filipinos in distress, and for other purposes."
Further, it is specious to argue that reducing the liability of placement agencies
"redounds to the benefit of the [overseas] workers."
Putting a cap on the money claims of certam overseas workers does not
inaease the standard of protection afforded to them. On the other hand, foreign
employers are more incentivized by the reinstated clause to enter into contracts of
at least a year because it gives them more flenbility to violate ow: overseas workers'
rights. Their liability for arbitrarily terminating overseas workers is decreased at the
expense of the workers whose tights they violated. Meanwhµe, these overseas
workers who are impressed ~th an expectation of a stable job 9verseas for. the
longer _con~ct period disregud other opportunities only to be terminated earlier.
They are left with claims that are less than what others in the same situation W9uld
receive. The reinstated clause, therefore, aeates a situation where the law meant to
protect them makes violation of rights easier and simply benign to the violatot
Further, "[t)here can never be a justification for any form of govemment
action that alleviates the burden of one sector, but imposes the same burden on
another sector, especially when the favored sector is composed of private
businesses such as placement agencies, while the disadvantaged sector is composed
of OFWs whose protection no less than the Constitution commands. The idea that
private business interest can be elevated to the level of a compelling state interest is
odious."
(2) On violation of the due process clause;
Along the same line, it was held that the i:eiflstated clause violates due
process rights. It is arbitrary as it deprives overseas workers of their monetary
claims without any discemable valid purpose.
(3) Final disposition of the case,
Respondent Joy Cabiles was declared entitled to her salary for the
unexpired portion of her contract, in accordance with Section 10 of R.A. No. 804 2.
The award of the three-month equivalence of respondent's salary has been thui-
 3AR R.EvlEWER ON LABOR lAW
92
d rkin on June 26 1997 and was
modified accordingly. Since she stte wo d~ed entided ~ her salary from
temunated.onjuly 14, 1997, respon cnt was .
July tS, 1997 to June 25, 199s.
?. APPLICATION OF THB SERRANO AND SAMBER RULINGS.
The clause "or /(If' tin, months far emy year of th, 1111,xpind tim11 111hich1v,r is
kJl' having been declared unconstitutional in Se"a110 and Sameer after the provision
found its way again in R.A. No. 10022 which took effect in 2010, the proper
indemnity in illegal dismissaJ cases, according to Gopi4, l should be the amount
equivalent to the unexpired term of the employment cdntract In this case, since
respondent Bautista's conmct is for 31 months with a monthly niuy of
Pt 15,850.00 and he was illegally dismissed just nine (9) months aftet his
deployment in Papua New Guinea, therefore, there remain 22 months of his
unexpired contract. Hence, said amount should be simply multiplied by 22 months,
the remaining tenn of his employment contract, or a total amount of
P2,548,700.00. 2
8. COMPONENT OF CONTRACT'S UNEXPIRED PORTION.
In the computation of the amount due to an illegally dismissed OFW,
only the salaries for the unexpired portion of the employment contract should be
included, as pronounced in Setrano,3 thus:
"The word salaries in Section 10 (5} does not include
overtime and leave pay. For seafarers like petitioner, DOLE
Department Order No. 33, series of 1996, provides a Stnndard
Employment Contract of Seafarers, in which salary is understood as
the basic wage, exclusive of overtime, leave pay and other
bonuses; whereas overtime pay is compensation for all work
'perfonned' in excess of the regular eight hours, and holiday pay is
compensation for an}· work 'performed' on designated rest days and
holidays."'
As far as entitleme~t to overtime pay is concemed, the correct criterion
in deteanining whether or n:,t sailors are entitled to overtime pay is not whether
they were on board and car.not leave ship beyond the regular eight (8) worlcing
hours a day, but whether they actually rendered service in excess of said number of
hours. 5 In pa, Shipping,6 the High Tribunal found that private respondent OFW
was not entitled to overtime pay because he failed to present any evidence to prove
that he rendered service in excess of the regular eight working hours a day.' This
1 Gqli>v. Bal5sla, GR. No. 205953, .line 06, 2018.
2
See aso&t Hlmrl Reso11oo ~ I n c . v. Pmloo. G.R. No. 200890, Jtt, 31, 2017.
3 Antno M. Senano v. Gallant Mliline Salvices, Inc., G.R ~ 167614, Mme 24, 2009.
' SeealsoPhilppile Trnnaile~ R. v. Caria, G.R. No.157975,June26,2007.
5 Sb'l-tfasen Mme Selvices (Philc;.), Inc. v. NLRC, G.R No. 105396, Nol. 19, 1996, 264 SCRA 307; 332 Phil 340, 352.
6 PQ. ~ilg PhliJpines, Inc. v. Nt.RC, 3.R. No. 153031, Dec. 14, 2006:
7 See also Cenfemlal Trasnarine, klc. v. Dela Cruz. G.R. No. 180719, Aug. 22, 2008.
l
CHArTERTWO 93
PRE•EMPLOYMENT
holds true even in cases of guaranteed overtime pay as held in several cases.1 But in
Aama,2 the claim for overtime pay was allowed despite the failure of petitioner•
OFWs to substantiate them on the ratiocination that the claim of overseas workers
against foreign employers could not be subjected to the same rules of evidence and
procedure easily obtained by complainants whose employers are locally
based. While normally the presentation of payrolls, daily time records and: similar
documents before allowing claims for overtime pay may be requited, however, in
·this case, that would be requiring the near~impossible. Here, it is private
respondents who could _have obtained the records of the.ir principal to refute
p~titioners, claim for overtime pay. By their failure to do so, private respondents
waived their defense and in effect admitted the allegations of the
petitioners. Accotdingly, it was ruled that private respondents were solidarily liable
with the foreign principal for the claims for overtime pay of petitioners.
In regard to allowances, they are also not included in such computation.3
However, this rule on exclusion of allowances does not apply in case they are
encapsulated in the basic salary clause.4
9. NATURE OF MONETARY AWARD TO AN ILLEGALLY DISMISSED
OFW.
The monetary award consisting of the illegally dismissed OFW's salaries
for the unexpired portion of his employment contract is not in the nature of
backwages or separation pay in lieu of _reinstatement but a foan of indemnity which
the law giants to him by reason of the illegality of his dismissal5
10. OTHER MONETARY AWARDS CONSEQUENT TO ILLEGAL
DISMISSAL.
· In addition to the monetary award discussed above, an OFW is entitled to
the following moneta.ty awards as a result of illegal termination of bis employment
(a) Reimbursement of placement fee.
Full reimbursement of his placement fee is subject to twelve percent
(12%) interest per ann11111, under any of the following:
1 &al as Ole r.ases d Bahia Sh~ Servk:es, mv. Chua, GR No. 162195, April 8, 2008: $ricWJO v. CF Sl8IJ) Crew
· Mmjement,"-,G.RNo. 162419,Ju>/10,2007.
2 Aaa"la v. Hoo. ('A G.R. No. 159832, May 5, 2006.
3 PQ.Slipphl ~ " ' V. NlRC, G.R No.153031. Oec. 14, 2000.
., I was hekS il Yap v. 'lbEl1!mlis S i p s ~ G.R. No. 179532, Mir/ 30, 2011, 01Js: "A dose pausal of Ile amict
11M1m Blat Ole lrier abNartce d USS130.00 was oot r.afBpized as aboous but was raOvr encapSIAa!ed h !he bB
my dause, hln:e, btring iat rl lhe basic my of pelilicM. P.espoodent; ~ ii ll8i" peOicJ1 b' ceitioraJi
bfme lhe CA aveaed Uiat pelcx\er's basic saay, pwsuant ID Ole amct. was 'US$1,300.00 + US$130.00 ~
alaialce.' ff respcnfen1s ilterded it <fiffa'enltf, dlE! cxrwact per se shook! IWle il<faded M sail alowanr.e does rid bm
l)cllof lhebasc sal!ly or, sill>tf, lhe ainlractshoukl have separamd tt from !he base salaly dause."
5 Sq)pels Unfed Pacifc, klc. v. NL.RC, G.R No. 148893, Jut, 12, 2006.
94 BAR REvlEWE!il ON lABOR IAW
(1) In case of termination of overseas employment without just, valid or
authorized cause as defined by Jaw or conttact; or
(2) In case of any unauthorized deduction or withholding from the
migrant worker's salary.•
, i
(b) Refund of unauthorized d,;;ductions from salaey.
In case of No. 2 above, the OFW is entitled to the full reimbursement or
fund of the deductions made, with interest of twelve percent (12%) per an11J1111,
::ckoned from the dare the deductio~ was made. To -!~rate, this remedy is in
addition to the full reimbursement of his placement fee as discussed above.2
It bears noting that said 12% interest is not affected by the latest Circular
No. 799, Series of 2013,3 issued by the Bangko Sentral ng Pilipinas Monetary
Board (BSP-MB), which reduced the legal interest to 6% effective July 1, 2013. The
reason is that such reduced 6% is applicable only in the absence of a stipulation or
a law that sets a different rate. Since it is the law itsel~ Section 10 of R.A. No. 8042,
as amended, which sets the rate at 12%, the same shall be the rate that should apply
and not the BSP-Monetary Board-prescnbed rate of 6%'
(c) Cost of repatriation and transport of personal belongings.
The repatriation of the worker and the transport of his personal
belongings shall be the primary responsibility of the agency which recruited or
deployed the wotker overseas. All costs attendant to repatriation shall be home by,
or charged to, the agency concemed and/or its principal. However, in cases where
the termination of employment is due solely to the fault of the worker, the
principal/employer or agency shall not in any manner be responsible for the
repatriation of the fotmer and/or his belongings.5
1 Sedm 10, RA No. 8042, as emended by Seebl 7, RA No. 10022; Setfal 5, R.Jle VI~ Omnmls ~ en! Regu1albls
~ te ~Wakecs and 0Yelseas Fipi1os M. d 1995, as Amended by RA th 10022, lssel on »t 8,
2010; See a1so Mienna ln!emaliJnal ~ Serw:es, rr.:. v. Vims, G.R. ~ 151303, '4ri 15;m; Phi. En1!k7f
&Mlesa-dRemces, R- v.Panm>, GR. No.144786,"4xi 15,2004.
2 Id.; Id.; SataJOYelseas Anmn~. h:. v.Jc,JC. Cmles, G.R No.170139,AIJJ_ 05, 2014.
3 Dafed.ble21,2013.
4 l was 8ll)haslzed ii S1e 2014 en bane lli1g il Ille case of Smtm Osseas Plimnent ~111:Y. h:. v. JaJ C. Cabiles,
GA No. 170139, Al,;J. 05, 2014, dial Ckru1cr No. 799 is notapp&:able Yd1en hn isa law dlatsfates°'1erwse. WIie !he
Bqko Semal ng ~ has Ole l)ON8I' to set a- liml i1terest rates. Olese bterest rates cb not aPrif m Ole law
prcwfes !hat acfflerent merest rate shal be applied.?,) Cental Bri Oraacam repeal alaw. Ot~ alaw ari repeal
nherlaw.' (See also See Paaav. CA. G.R No. 106685, Dec.2.1994, 238 SCRA 593,601).
5 See Setml 15, RA No. 8042; Seclicn 1, Rule XIII, OnrixJs 1U!S and Rerpato,s ~ Ole ~rri Wake1S
n CMrseas ftipilos Actrl 1995, as Amended by RA. No. 10022, issJed oo Jllf 8, 2010; Sedul 213, Rule n. Revised
POfA ~ trd Regulations~ Ile Reaulmer4 and En'C)b,mat" land-BRI Olerseas ~ Workas of
2016; Sedi0n 197, Rlde II, 2016 Revised POEA Rules MCI ~ulalin GoYe1niYJ Ile RecnimBlt..and ~ of
Seatcrers mJed oo Februaly 26, 2016; See Sevilal1a v. l.T. pnllmaliooa) Cap., G.R No. 99047, ~ 16, 2001; Sameer
OJerseas Plirsnenlh;Jenet, h:. v. Jt:lf C. Cables, G.R No.170139, Aµg. 05, 2014. l bea's nmYi1 lhat D1is responslJitf
idxles tierepatriatiooof remans aoo bcllSl)(Xtd the persaa beblgilgsd adeceased waker. lb.ls, ana attendalt
lhEreb sha!I be borne by tie prinq,al aid/a" klca ajency.
~ No. 8042,1 denominated as
CHAPTERTWO
PRE-EMPLOYMENT
It must be noted that R.A. No. 10022 has introduced a new provision in
At_ticlc 37-A, which requires compulsoi:y
1nswance coverage for agency-hired wotkets deployed by a recruitment/ manning
agency, to be secured at no cost to the said workers. Such insurance policy is
95
required to be effective for.the duration of the migrant worker's employm~t and
among its coverage is the repatriation cost of the worker, including the transport of
his or her personal belongings, when his/her employment is terminated without
any valid cause, or when he/she terminates such employment with cause.2
However, notwithstanding the provisions of said Section 37-A, the
primacy responsibility to repatriate entails the obligation on the part of the principal
or agency to advance the repatriation and other attendant costs, including plane
fare, deployment cost of the principal, and immigration fines and penalties, and to
immediately repatriate the worker, should the need for it arise, without a prior
detennination of the cause of the termination of the worker's employment.
However, after the worker has retumed to the coWlt:Iy, the principal or agency may
recover the cost of repatriation from the worker if the teanination of employment
was due solely to his/her fault 3 Every contract for overseas employment shall
provide for the primary responsibility of the principal or employer and agency to
advance the cost of plane fare, and the obligation of the worker to refund the cost
thereof in case his/her fault is determined by the Labor Arbiter.4
The right of the employer to recover the cost of repatriation from the
wages and earnings of the OFW hinges on whether the latter was legally or illegally
dismissed. As held in Pa Shippin1} the employer has the right to recover the cost
of repatriation from the seaman's wages and other eamings only if the concemed
seaman is validly discharged for disciplinary measures. In the present case,
however, since petitioners failed to prove that private respondent OFW was validly
terminated from employment on the ground of desertion, it only follows that they
do not have the right to deduct the cost of private· respondent's repatriation from
his wages and other earnings.
1 See Sed'ai 23 lhendv.hi:h added a newprtMSicrl. Sedkli'I 37-A,dled "Cai1)Ulsay mrara CcM!rage tr Plym/-
tfra1 watels.• This is ii ilkitiort ID Ille perfommce bom l'eqlied ube filed lrf Die ~ ;qll'l:f under
Sedicx1 lO of RA tb. 8042, as anen:led by Sectm 7ct RA tb. 10022.
2 See Sedirt 37-A {d), RA No. 8042. as aneilfecl by Sedia123, RA t-b. 10022; Seem 1(d). RIE XVI, Ormbus rues
and Regulabls ~ Ille MgnritWabls8ld °'9seas Flph1cs M. d 1995, as Amended hy RA No. 10022.
issued oo J1Jt 8, 201O. In cased dea!h. lhe ilsurance prowler is recped t> affll'G8R P8'f b'Ole repatialxln orretim of
Ile aei's remans and to render 'oJ'tf aR1arlce neoossay it Ile RISp0lt ~ . oot ra linited t>, locating a local
lamed funeral hcxne, l110ltJaly er died d'sposi!ioo fa:iil'/ ID irepara018 body b'lnrlspat. ~ al doamentaoon,
dllaililg legal cleaances, ~ IU1SUfar seNices, JXt)Viii,g necmmy cmket « ar transpxt aintaner. as well as
mspa1i1g Ille ramam, nc:ufalg retrievalfran siteof dealh lllddewery ID Ille rmil! imalhcme.
3 Sedia-12, Rule XII~ Ormllus IU!S clld Regula1ioos ~ lleMgrantWakelsand Overseas ~Add 1995,
ashnended by RA No. 10022, issued oo Jut, 8, 2010.
4 Id.; ll is lm:J proviSecl il Olis Sectoo nu in CW1lries Wll!re 188 is a need msecure en exl ~ for Ile vmer's
repa!riabl, I l e ~ er emplafer shal be prinart, respcrcslJle b'sectm.1 Ile via atnoa>Stb Olav.mer. The agerq,
shal ~ wi!h Ile pliq>al er en1lk>',er il sec:urilg llevisa.
5 PCL~Pluppines,lnc.v.Nl.RC,G.RNo.153031,Dec.14,m.
 g6 S4R RivfEWER llN lABOR (AW
11. AWARD OF DAMAGES AND ATTORNEY'S FEES.
.~ruitment agencies, as part of their bounden duty to protect the welfare
of the Filipino workers sent abroad from whom they take their profit,' should in
cons?ence not add to the misery of maltreated and a~used Filipino workers by
denying them the reparation to which they are entttled. Instead, they must
"faithfully comply with their govemment prescribed responsibilities" 2 and be the
first to ensure the welfare of the very people upon whose patronage their industry
thrives.3
As a result of illegality of dismissal, an OFW is.entitled to the following
damages:
(a) Actual and compensatoi;y dama,ges.
''Actual or &0111p,n1alory damage," except as provided by law or by stipulation,
is an adequate compensation for pecuniary loss suffered by a person as he has duly
proved.' Its award is ~ed on the Civil Code and not on the Labor Code.5 The
following cases illustrate when an OFW has been awarded actual and compensatocy
damages:
(1) SanlialfJ u. CF Sharp Cmv Management, Inc.,' where it was ruled that
respondent recruitment agency which failed to deploy petitioner overseas after a
PORA-approved employment contract was signed by them is liable to the latter for
actual d_amages. Resp_ondent's act of preventing petitioner from departing the port
~f Manila a_n_d boarding 'MSV S':'1l'nad" constitutes a breach of contract, giving
me to petl~ond~ ~use ot action. ~pondent unilaterally and unreasonably
reneged on its obligation to deploy pettttoner and must therefore answer for the
a~tual damages he suffered. Respondent is thus liable to pay petitioner actual and
compensatocy damages of US$4,635.00 in the form of the loss of nine (9) months'
worth of salary as provided in the contract
(2) Bright Maritime Corporation v. Fantonia/,1 where, based on the same
principles cited in Santiago, a similar award of actual and compensatory damages
was made on the basis of the finding that while respondent., who was not deployed
overseas, cannot be dee~ed a~ having been illegally dismissed considering that the
employer-empl~yee relationship has not yet commenced, nonetheless, petitioners'
act of preventing respondent from leaving and complying with his contract of
employment8 constitutes breach of contract for which petitioner company should
' Nimsv. Oln, GR. No. 169247, June 2, 2014.
~ Id.'. cililg Asia WOrtl P.ecninent Inc. V. Naticrlal ~Relatioos.Ccmrissbl, G.R No. 113363. Al,;!. 24, 1999.
ld.,cililg IRunanv.FrstCosm)polal Manp(Metand Prwdion SeNi:es n: supra
4 Mide2199,CMCode. . ' ..
s kl.
5 G.R No. 162419, !J/ 10, 2007.
1
G.R No. 165935, Feb. 8, 2012.
8
In tis~ hn was avail ~ ama bltNeetl pefimas n respcmrt v.oo was empkJyed as
boaiswlincllhebei;Jnvessel PIN AUK tJGleyea-, M01 abasicnmtiymydUS$450, plJs en alown:eclUS$220.
~was made b ll1da'go amecfi3 eiani1aliln at Ile Olrista1 Medical Cfnk:, M1kh was pelmler's accrediled
CHAPTER Two 97
Pllf-EMPLOYMENT
be held liable for actual ~ges for the loss of respondent's one-year salary as
provided in the contract.1/
(b) Moral and exemplary damages and attorney's fees.
The twin awards of moral2 and exemplary3 damages are also based on the
Civil Code and not on the Labor Code. Hence, the general civil law principles
behind such awards are equally applicable to OFW cases. Notably, evidence of bad
faith, fraud or ill motive on the part of the recruitment agency and/ or its principal
is necessary to successfully assert any claim for moral damages, the absence of
which will not merit such an award. Thus, in .Atuia,4 the mere allegation of
petitionetS that they suffered humiliation, sleepless nights and mental anguish,
thinking how they would pay the money they borrowed for their placement fees,
was not considered sufficient justification for the award of moral damages, absent
anr evidence to prove bad faith, fraud or ill motive on the part of private
respondents.
As far ·as exemplary damages are concemed, they cannot generally be
awarded if thete is no award of moral damages. Exrmpla,y or mndi11t damages are
imposed by way of example or cottection for the public good.5 They cannot be
recovered as a matter of right The court will have to decide whether or not they
should be adjudit?,ted.6 Under .Article 2232 of the Civil Code,. exemplaty damages
may be awatded if the defendant acted in a wanton, fraudulent, reckless, oppressive
or malevolent manner. As applied to labor ca~, the same standards should be
followed · Thus, an award for exemplary damages is only justified when the
dismissal was made in a wanton, fraudulent, oppressive or malevolent manner.
Absent any adequate evidence thereof, exemplary damages should not be awarded.7
The _basis of the 10% attorney's fees is the Labor Code,8 more particularly,
Article 111 thereof, and also Article 2208 of the Civil Code, which cites the
instances where attomey's fees and expenses of hngation may be awarded.9
medica cw:: illd was aa:mrn;, issued aMldical CertificatewU\ Ole phrase "FIT TO WORK" sanped !hereon. HCPMM!r,
011 the daydhis deparalre. he was prevented frcm 188\q h Niloy Aquho lnlefnab,a Aiportdue ID S0ITe defects il his
medical cectlcate. Respoodm his Ned a <XXl'4)lailt a-Jai\st petilionets b' ~ dismissal, payment d SAies fir the
unexpied patm rJ I l l e ~ anrcu rd rc:r tie awad d rm1, exB11)1ary, 1n1 as dirrSJes as we1 ~
al!IJne'lsfees.
lhe!ID'tif m y ~ h llecmrcais USS670, id.ENedablanoe.
SeeAr&:le2220 cl the a. Code b'n-aaldarages. Mide 2219 euneratBs dlecases imer\\ti:h nm damges rra,
bereca.ved. SeeCnlzv.NLRC, G.R No. 116384, Feb. 7,m.
3 lhler Mde 2232 rlthe 0d <'Ade. exanplaJy dam.Jes may be IPNcldedf the dcmdMt acted n awatin, 6aJClumt.
rectooss, q,pressNecrmaEYQB\lmanner.
kliiav.tbl.CA.GR.No.159832,MayS,m.
This is grcned h aidioor\ to the nm. temperalB. lk!Ui2ted er carpensafllcy darrages M may be awalded il acase.
SeeMicle2229,CM~;~AeolJsAull:mtNeUlitedCoqm.ticnv.NLRC,G.RNo.124617,Apt28,2000.
1 Miele 2233, CNi Code.
Nafxlnal l3ccksae, nc.v.CA,G.R.No.146741,Feb.27,2002.
S1meer Ot4e1seas PacemertAgny, Inc. v. Jat C. cables, G.R No. 170139, ~. 05, 2014, aq Article 111 d Ula Labor
<:ode, hJs: "Mcie 111. f>lare/s Fees - (a) In cases rJ Ila.ti vatholdhJ cl wages, Ile~ paitf rre, be
assessed mre(s fees eqmalrimB'I peicentdllearncxlllrlwages 18QM18d."
t See Vanes. etal v. NLRC, G.R No. 108405, Asri 4, 2003. ·
98 BAR RfVIEWER ON l.ABOR l.AW
Attorney's fees awarded in labor cases are deemed part of damages.• Attorney's fees
should be granted as soon as it is established that legal services have been rendered
by the lawyer,2 or if the employee is compelled to litigate in order to seek redress,3
or if the dismissal is attended with bad faith. 4
More importantly, in addition to the foregoing grounds for the grant of
damages and attorney's fees, examination of cases involving OFWs indicates that
the mere breach of the employment contract would suffice for such awards. Thus,
in the same case of Bright Marilime, 5 respondent, because of such breach, was
likewise granted, in addition to the award of actual and .•compensatory damages,
moral damages of P30,000.00, exemplary damages of PS0,000.00 and 10% of all
recoverable amounts· as attorney's fees. 6 In Athmna,1 the same breach of conttact
and bad faith merited the award of PS0,000, in moral damages and PS0,000, in
exemplary damages, in addition to attorney's fees of 10% of the _aggregate
monetary awards.8 Also, in the case of ATCT OU6rseas,9 the award of attorney's fees
equivalent to 10% of the total award was held legally and morally justified as the
OFWs were compelled to litigate and thus incur expenses to protect their rights
and interests.10
In the 2018 case of Gopio, 11 the Labor Arbiter's award of moral and
exemplary damages to Bautista was uphdd based on the finding that his dismissal
was without just and authorized cause, in complete disregard of his right to due
process of law, and done in bad faith, in addition to being anti~Fillpino and
capricious. Likewise, the award of attorney's fees was held proper since it is settled
that when an action is instituted for the recovery of wages, or when employees are
forced to litigate and consequently incur expenses to protect thcir rights and
interests, the grant of attorney's fees is legally justifiable.
(c) Indemnity in the fonn of nominal damages.
As earlier asserted, if an OFW is dismissed for a just or authorized cause
and after affording him procedural due process, his dismissal is considered
perfectly valid and legal and, therefore, he is not entitled to any salary for the
1
PadlaMachheSlcpv.~.G.R.tl?.175960,Feb.19,2008.
2 tJa;a Group d Qxnpa& v. Vpl, G.R No. 143773, .ble 28, 2001.
3 FtqJpile SJri1=1 Wm Resarces, h:. v. CA aid Mnlrn, GR No. 205278, .ble 11, 2014; Zuefi;I Fni,iht SlCI Ccrgo
9,-sans v. NlRC SlCI Sell t.iJuel, G.R. No. 157900, "122, 2013.
' A!iviado v. Pim &Garm1e Phis., h:., G.R. No. 160506, May 9, 2010.
5 BcijltMdneCorpcratkxlv.F~,G.RNo.165935,F~.8,2012.
1 Tlt Mtl is based oo ttle fact lhat beallS8 d peti&ms' fciJ!e' mdepb/ respoodent based oo mUI\\ISllfled gnmd.
lespoodirtwasbmllDfilellisr.ase.
1
Alhema~ ~Saw:es. kl:. v. Vilanos, G.R No. 151303,Apci 15,2005.
a These~ also Ile aoounts awalded by YGJf rA nw aoo 8XE1J18Y damages and aillxne'/s fees it tecase o f ~
~O>.,~v.Hoo.CA,G.RNo.153750,Jin25,m.
9 ATCI <Nerseas CUp(rcl!kln v. CA, G.R No. 143949, luJ_ 9, 2001, 414 Pill 883,893.
io Seealso ~v. Cf StapCrew~ h:., G.R. No. 162419,,Uy 10,2007: P a . ~ ~ . ~ v.
NI.RC, G.R. No. 153031, Dec. 14, 3l06.
11 Gqi)v. Bautisla, GR No. 205953,Jtm~. 2018.
CHAmllTWO 99
PRE-EMPLOYMENT
unexpired portion of his employment contract or any other form of relief.
However, if there is just or authorized cause but procedural due process was not
afforded to him, the rule that applies is the Agabon doctrine,1 thus, his dismissal is
considered valid and legal bht he shall be awarded an indemnity in the form of
nominal damages for lack of procedural due process.2 Following Ag(lbon, .indemnity
in. the fonn of nominal damages has been consistently awarded in cases involving
termination of OFWs.l
12. LEGAL INTEREST ON MONETARY AWARDS.
Legal interest should be imposed upon the monetary awards granted to
OFWs. But it bears stressing that in the absence of stipulation, legal interest is no
longer 12% but 6% effective July 1, 2013. This was pointed out in the 2013 en bane
decision in Nacar, 4 which recognized the validity of the change in reckoning the
legal interest .in the absence of stipulation thereon. This was based on the latest
issuance of the Bangko Sentral ng Pilipinas Monetary Board (BSP-MB),5
particularly its Resolution No. 796 elated May 16, 2013.6
13. EXECUTION OF WAIVER OR QUITCLAIM.
The execution of a waiver or quitclaim by an OFW in favor of his
employer does not preclude him from subsequently filing a suit demanding benefits
to which he is entitled and from filing an illegal dismissal case. 7 This is because
waiver or quitclaim is looked upon with disfavor, and is frowned upon for being
contrary to public policy. Unless it can be established that the person executing the
• Agabcxlv.NLRC,G.RNo.158693,NcY.17,2004.
2 Dela P.osav. Mi:haelmarAlq)piles, h:., (GR No. 182262, ~ 13, 2011.
3 Fa ilslance, !he imxri d immty d P30,000.00 was awaded ii l1M ~ PtiAiles, klc. v. cabila', G.R No.
155389, Feb. 28, 2005 clld P10,000.00 i1 the cased PCl $hqlpa'Q Philippnes, h:. v. NLRC, GR. No. 148418, JrJf 28,
2005.
• Nacn. Galey Franes, G.R No.189871,Aug.13, 2013.
5 In Ile recent cased Advocates fer Tndl il l.endilg, Inc. and EdufJdo B. Olaguec v. BawJko Sent11 Mxl8lary Board, [G.R
No. 192988, Jan. 15, 2013, 688 SCRA 530, 547]. h s..,reme Qut a&mld lhe aut1crit cl Ile BSP-MB tJ set ilterest
ra1es cl1d kl issue il1d enbce Onmsvdlel'i iruled aiat'l18 BS>-NBmay p-esa11e temamunra1ecrrates of ilterest
tr al Ion or renewals ttendcr Ile bbearante d iJl'f llml!'/, goads craedib, i'1dxfbd lhose tr loans dbv ~
smi as anunerbn, asvd as uti kms nale lrf pav.nshcps. him mrc,rils ml sirriradnstUons.1
even aulhatzes lhe BSP.W b presaile dierenl mdnun rale er ra!es tr dlfesent ~ of ~ idlfllYJ
depmilsaid deposit sbslmtes, crbmd mandd ilfarnedaies."
6 This Pmllm ~ 018aninlmridSmt2dQQl!irth 005. Seriesd 1982 ml, amxtmQ¥, mued Ciwlat
No. 799, Series d 2013 dated .lm 21, 2013. Th& sedb1 prtMles: -secrlON 2. The rated mrest for Ile ban er
bbeiranced any money, goodscraedis and die ra1e abwd n)Jtfgments, nIle absermd express CXXllrattas to such
ra2 ctimest. sf1al ainlill8 lo be tl.eN8 percent(12%) per mrn.' As d1ified bller in lhe 2014 mm l1llill ii lhe
raie-of &rneerOJaseas P'amlt~, K v. Jo/ C. Cm1es. G.R. No. 170139, Au,I. OS. 2014, r.iudil'No. 799 is
~at,il mis cnl ~dnD18'J,goodscra1ldils, aid il)Jdgmenlsv.ilEn hn s nosti&Ximl en the
8A1bb1e illl!restrate. Fl.Iller, l is en,~ f hi )llgiratcld nctbecamefnal and e1l!IJIJxy bebe», 1, 2013.
Ftdler, l was ~ - i l lhe Sllll8 cased Snaer, ht Chm No. 799 ls i u ~ m hn Is a Im¥ !hat
slalesdheMise. WiettieBqkoSallral~ PqliiashasllepcMUIDselcrintkaestra!Es,Oleseilletestratesdonat
~ Y'1en Ile av proviles l1al acfiferenl illsaram shall be~ 1A) Cemal Bank Cias
~a law can~ anoGlerlaw: (SeePala1cav. CA, GA No.106685, Dec. 2, 1994, 238 SCRA593, 601).
amt,_ a law.
1 ~asdan Gnni P'iacemeliml General Serttes, G.R No.3l5727,Jan. 18, 2017.
 SAil REVIEWER ON LABOR I.AW CHAl'TIR Two 101
100 rRE-EMPLOYMENT

. did with full understanding of its contents, and with d) Other employers as may be allowed by the DOLE Secretary, such
·
waiver voluntarily
d clibleso,consideration, the same 1·s not a va!id and b.inding as:
reasonable an ere
1) Those provided in (a), (b) and (c) above, who bear a lesser rank, if
uodertaking- 1
endorsed by the POLO, 1 or Head of Mission in the absence of the
MoreOver, the burden to prove that .the waiver. or quitclaim. was POLO;
ecuted is with the employer.2 Thus, in case neither the recnutment
volunta y ex
cil • . . full di h d. b d 2) Professionals· and skilled workers with duly executed/ authenticated
and placement agency nor its fore1gn pnn~1~al success y sc adrged its u_rf ~n, contracts containing terms and conditions over and above the
both shall be held solidarily liable foe the claims of the OFW. In ee , even 1 e standards set by thej POEA. The number of professional and
OFW bas signed a quitclaim, it does not necessarily follow that he freely and skilled OFWs hired for the first time by the employer shall not
voluntarily agreed to waive all his claims against his employer.3 exceed five (5). For the purpose of determining the number,
workers hired as a group shall be counted as one; or
4. 3) Workers hired by a relative/family member who is a permanent
BAN ON DIRECT-HIRING resident of the host counuy.2
3. RATIONALE FOR THE BAN.
1. DEFINITION.
The reason for banning direct hiring of Filipinos for overseas
"Din(! hiring" refers to the process of directly hiring workers by employees employment is to ensure that such employment is fully regulated by the
for overseas employment as authorized by the DOLE Secretary and processed by
the POEA, including:
l government through its agencies, sucli as the POEA. In this· way, adverse
exploitation of the migrant workers by foreign employers is minimized, if not
eradicated.
1. Those hired by international organizations;
2. Those hired by members of the diplomatic corps; 4. NATIONALITY OF EMPLOYER NOT MATERIAL.
3. Name hires or wockers who are able to secure overseas employment It must be emphasized that pertinent la\vs and regulations generally make
opportunity with an employer without the assistance or participation tr, reference to employment of Filipinos overseas, i.e., outside the Philippines. They do
of any ageocy.4
2. BAN ON DIRECT-HIRING; EXEMPTION. r · not limit the coverage to n~n-Filipino employers. Filipinos working overseas share
the same risks and burdens whether their employers be Filipino or foreign.3 For
instance, it is well-known that foreign-owned and foreign-registered vessels have
It is the general rule under Article 185
that no employer shall directly hire frequently also secured Philipp~e registration where the interest of convenience of
an OFW for overseas employment6 The following, however, are exempted from the owners dictated sucli second or dual registration. The underlying regulatory
this ban on direct hiring: policy is that Filipino seamen working in ocean-going vessels should receive the
a) Members of the diplomatic corps;
b) Intematiimal organizations; .
c) Heads of state and government officials with the rank of at least t Thel'hippneCNelseasL.alxrOO:e(POLO)dlleDepmstdlmand ~(DOLE).
deputy minister; or 2
Ar1x:!e 18, kl.; See also Secfui 124. ~ a, Part II~ kl.; The Of\\'S hied by hlse ~ exenl)led tan Ile ban on
m~ ma'f be re(lislered by lleMnillstabl ~sumssbl dlhe bb.i"g dcaJneris:
a)V~apeiTl)b)mentanractYttlk:hlsMJandaxM!llePOEA-presailed~tmJ"ad;
b) Passpatvail al least six (6) nmhs from Ile~ d i1mfed dq,atre; .
, Id c) Va&! in! ~visa av.akpemi;
2 ki,lhlersalSla'fr9Ser.us,~v.MRC,G.RNo. 1n576,Ju~21,200!,581 Phi. 199,2@-210. d)Celflrafad nl!di:aftless;
e) Prai ci cef1ifcale ci ~ co.oerage aM11rg at least lhe benefds ptMded i.rw Secb 37-A ci RA 8042, as
: ~ ~
1Ii), Ru~ 11, Omnillus and Regulations l~ementing the Wi{Jr.¥11 W~ and CNerseas Fiipinos Act amended;
nCertrm ci alleMarlce -,the requied ~~: and
ol 1995, as AmeMed by RA. No. 10022 (Marth 08, 2010). . .
Mx:le 18 prM!es as ~ : 'Mi:ie 18. Ban oo !Nect-lfrrg. - No ~ ma'/ hre a ~ v.aker b- OYeSeaS gJ Cleacrlce tan the DOLE Seae1a1y u me aMYed ooc1er Sectioo 124 {d) or 111ese Rues. Toe Mni'iistraoon shat
~ exCEp( ~ tie Bemis and rite; doaized by tie Seaelay ol Lm. Diecl-hmg by n-embefs ol the enmllal thev.meris nwe Ulf a.vare ctl1e mm in! coodiioosci the ~IXJllrad and Ile acNantlges and
apbMic cxxps. ~ ~ ;n, sudl 0ltlef ~ as ma'/ be alloM!d by the Secretary ol Laba is disaclvanta]es d lfrectq. (Secoon 125, Ride H, Part Ill, Revised POEA ~Jes in! Reg.Jlatioos GoYtrno,J Ile
exEll1l)led tan tlis po,-isol.' . Remilmentin!Empk1y,nentofla-d-Based°'8seasf'll)h>Wcxtersci2016.).
Mi:ie 18 Lm Cooe; See also Secoon 123, ~ 11, Pa1 111, Revised POEA RI.des and Regoolons Go,temi'g the
1
~ a p c i e· Pats Co,pora1m v. Ill.RC, G.R. No. 67035, Jan. 29. 1993, 218 SCRA n:Eastern 91ilPoil Li'les.
~ a n d ~dl.iJlcj.Based C>.-elseas Fq>iloWOOO!!Sd2016. nc. v. POEA, G.R No. 77828, Feb.8, 1989, 170 SCRA 54.
 CHAITTRTWO 103
102 BAR RM EWER ON LABOR LAW
PRE-EMPLOYMENT

'th t e--wl to the nationality or nationalities of the 2 ALIEN EMPLOYMENT PERMIT (AEP), DEFINED.
same wages and bene6ts Wl ou r lS.......
vessels on which they serve.1 · . An Alien Employment Permit (AEP) is. a document issued by the DOLE
5. SUABILITY OF FOREIGN CORPORATIONS DIRECTLY HIRING ', Secretary through the DOLE--Regional Director who has jurisdiction over the
intended place of work of the foreign national, authorizing the foreign national to
FILIPINO WORKB~· ·
'd t for.,ian corpomtion domiciled outside of the Philippines work in the Philippines.
A non-resi en -o·· . b d . . 1__ d . b . .
• Fili' · 0 wodters for employment a roa 1s, Ul aaw, ouig usiness m 3. COVERAGE.
which recrwts pin . . d. b . . th
the Phili ines. Indeed, if a foret~ corpombon not engage_ 111 us~~ss _1.n e All foreign nationals who intend to engage in gainful emplQyment in the
. . pp · ot barred from seeking redress from courts U1 the Philippines, a Philippines shall apply for AEP. The term "gainful employment'' shall refer to a
Philippmestsn c1· • r.
. • ..L.t same corpomtion cannot aun exemption 1rom CU1g su m
b' ed ·
fortion, uu . . th Phili" . z state or condition that aeates an employer-employee relationship between the
Philippine courts for acts done against a person or persons m e pp1.nes. Philippine-based employer and the foreign national where the former has the
power to hire or dismiss the foreign national ftom employment, pays the salaries or
B. wages thereof and has authority to control the performance or conduct of the tasks
EMPLOYMENT OF and duties.1
NON-RESIDENT ALIENS · 4. EXEMPTION.
t. POLICY DECLARATION. The .following categories of foreign nationals are exempt from securing
anAEP: .
Article 403 of the Labor Code imposes the requirement that any alien
seeking admission to the Philippines for employment pmposes and any domestic a. All members of the diplomatic service and foreign government
or foreign employer who desires to engage an alien for employment in · the
Philippines shall obtain an_ Alien Employment Peunit (AEP) from the Department
....
1 ( officials accredited by and with reciprocity arrangement with the
Philippinegovemmen~
of Labor and Employment The AEP is not an exclusive authority for a foreign b. Officers and staff .of internatioµal orgaruzattons of which the
national to work in the Philippines. It is just one of the requirements in the i· Philippine govemment is a member, and their legitimate spouses
issuance of a work visa (9g) to legally engage in gainful employment in the country. ' desiring to work in the Philippines;
The foreign national must obtain the required Sptdal T,mpora,y Permit (STP) from c. Owners and representatives of foreign principals whose companies are
the Professional Regulation ·Commission (PRC), in case the employment involves accredited by the POEA, who come to the Philippines for a limited
practice of profession and Authori!J to Emphy Aien (AEA) from the Department of
Justice (DOJ) where the employment is in a nationalized or partially nationalized
industry and Department of Environment and Natural Resources (DENR) in case
II period and solely for the purpose of intetviewing Filipino applicants
for employment abroad;
d. Foreign nationals who come to the Philippines to teach, present
of mining.4
. and/or conduct research studies in universities and colleges as visiting,
exchange or adjunct professors under formal agreements between the
universities or colleges in the Philippines and foreign universities or
colleges; or between the Philippine government and foreign
govemment, provided that the exemption is on a reciprocal basis;
e. Peauanent resident foreign nationals and probationary or temporary
resident visa holders under Section 13 (a-0 of the Philippine
Immigration Act of 1940 and Section 3 of the Alien Social
Integration Act of 1995 (R.A. 7917);2

1 SediJn 1, DepartnentOrderNo.186,Serles of 2017(NoY.16, 2017), Revised Rules for the Issuance of Emp!Gyment
Pennits t o ~ NaUonals.
2 Remnoo ID Olis prfNism ct "Sm! 3 cl Ile Alien Social Integration Act d 1995 (RA 7917)" was not blfld il the
eromerafa1 cl exen1)ted peiscx,s il b! pcevills . ~ Order No. 146-15, Series d 2015 (August 20, 2015),
Revised Rl.l1es for the Issuance of EmpbJment Pennlts to Foreign Nationals. Foreign nationals under this
pn,vlslon are new expressl-J exempted from AfP coverage.
 IAR REVIEWER ON IABORI.AW
104
f. Refugees and Stateless Persons recognizlcdRelaby_DOJ pmsuantftReoArtifugees·cle
17 of the UN Convention and Protoco ung to status o
and Stateless Persons;' and . ..
g. All foreign nationals granted exemption by law.2
S. EXCLUSION.
The following categories of foreign nationals are excluded from securing
an.AEP:
a. Members of the governing board with vo~ tights only and do not
intervene in the management of the cotporatioo or in the day to day
operation of the enterprise.
b. President and Treasurer, who are part-owners of the ~mpany.3
c. Those providing consultancy services who do not have employers in
the Philippines.
d Intra-corporate transferee who is a manager, executive or specialist as
defined below in accordance with Trade Agreements and an employee
of the foreign mvice supplier for at least one (1) year continuous
employment prior to deployment to a branch, subsidiary, affiliate or
representative office in the Philippines.
i. an Executive: a natural person within the organisation who
primarily directs the management of the organisation and exercises
· wide latitude in decision-making and receives only general
supervision or direction from higher level executives, the board of
directors, or stockholders of the business; an executive would not
directly perform tasks related to the actual provision of the service
or·services of the organisation;
ii. a Manager: a natural person within the organisation who primarily
directs the orgarusation/ department/ subdivision and exercises
supetvisory and control functions over other supervisory,
managerial or professional staff; does not include first-line
supervisors unless employees supervised are professionals; does
not include employees who primarily perform tasks necessary for
the provisio:1 of the service; or
CHAYTER.TWO
105
PRE-EMPLOYMENT
iii. a Specialist a natural person withln the organisation who
possesses ~owledge at an advanced level of expertise essential to
the ~stablishment/provision of the service and/or possesses
pro~netary kno~edge of the organisation's setVice, research
~~P,meot, techniques or management; may include, but is not
limited to, memben of a licensed profession.
All other intra-corporate transferees not within these categories as
defined above are required to secure an AEP prior to their
employment in the Philippines. .
e. Contractual service supplier ~o is a ~ger, executive or specialist
and an _employee of a foreign semce supplier which has no
commercial presence in the Philippines:
i. who enters the Philipp~es temporarily to supply a sel'vice pursuant
to a contract between his/her employer and a service consumer in
the Philippines;
ii. must possess the appropriate educational and professional
qualifications; and
iii. must b~ employed by the foreign service supplier for at least one
year pnor to the supply of service in the Philippines.
\ f. Representa~ve of the F?reign Principal/Employer assigned in the
Office of Licensed Maorung Agency (OLMA) in accordance with the
POEA law, rules and regulations.I
6. PROCESSING AND ISSUANCE OF CERTIFICATE OF EXCLUSION.
All foreign nationals excluded from securing AEP shall secure Certificate
of ~clusion from the Regional Office. Further, Regional Offices shall issue the
Certtficate of Ex~lusion within two (2) working days after receipt of complete
documentary reqwrements and fees.
A foreign national requesting for the issuance of a Certificate of Exclusion
shall submit the following:
1. Le~er req~est addressed to the DOLE Regional Director;
2. Valid ~us1ness/Mayor's permit of the Philippine-based company or
enterpnse;
3. Photocopy of passport (bio page) with valid visa; and
. Additional docwnents shall be required for specific categories, such as the
folloWU1g:
. ~- For Pmidtnl, Treosurrr, and Memberi ofGoventing Boards (excluding those lislld
,n the Fo1?1gn lnve.rtment Negative Usti,
~ 3, Departnem ~rder No. 186, Series of 2017 (Nov. 16, 2017), Revised Rules for the Issuance of Employment
1
Pennits to Foreign Nationals.

&u REVIEWER ON lABOll lAW
106
- Certified true ccpy of the updated Gen~ Info~ti~n Sheet (GIS)
showing the name and position of the fore1~ oatt~nal, .
. . th th esting foreign nauonal ts a member of the
Certificauon at e requ . •
• board with voting rights only, will not tn any manner
~vcrning_ the management and operation of enterprise and with no
111tervene 111
intention to obtain gainful employment;
. Board Secretar:y's Certificate of Election.
b. For lntra-«1,porall Transfmr.
. Contract of Employment from the Origin company including proof
of salary;
- Secondment Agteement.
c. For Contractual Seria Supplier.
- Contract of Employment from the Origin company including proof
of salar:y;
- Service contract between the Philippine based company and the
foreign company
d. For Conmlta11t.
- Service Contract between the Philippine based company and the
consultant or foreign consulting company.
e. For RlpmmtatitJe ofthe Fot?ign Prinapal/Bmp!oyerassig11ed in OLMA
- Letter of Acknowledgment from POEA
In case an authorised representative will file/ claim the Cenificate, an
Authorization Letter must be required. 1
7. PROCEDURE IN THE PROCESSING OF APPLICATIONS FOR AEP.
a. All applications for AEP shall be filed and processed· at the DOLE
Regional Office or Field Office having jurisdiction over the intended place of work.
A duly accomplished application form with the following complete
documentaty requirements must be submitted:
1. Photocopy of Passport with valid visa, except for tempowy visitor's
visa in case of renewal or Certificate of Recognition for Refugees or
Stateless Persons;
2. Original copy of notarized appointment or contract of employment
enumerating the duties and responsibilities, annual salaiy, and other
benefits of the foreign national;
3. Photocopy of Mayor's Permit to operate business, in case of locators
in economic zones, Certification from the PEZA2 or,the Ecozone
1 Section4,ld.
2 Phlllpplne Economic Zone Authority iPEZA~
CHAPTER. Two 107
PRE-EMPLOYMENT
Authority that the company is located and operating within the
ecozone, while in case of a construction company, photocopy of
license from PCAB 1 or D.O. 174-172 Registration should be submitted
in lieu of Mayor's Pennit; and
4. Business Name Registration and Application Form with Department
of Trade and Industry (DTI) or SEC Registration and GJSl;
5. If the position title of the foreign national is included in the list of
regulated professions, a Special Temporary Permit (STP) from the
Professional Regulation Commission (PRq; and
6. If the employer is covered by the Anti-Dummy Law,4 an Authority to
Employ Foreign National (ATEFN) from the DOJ or from the
DENR, in case of mining.
b. In the case of foreign nationals to be assigned in related companies,
applications may be filed in the Regional Office or Field Office having jurisdiction
over any of the applicant's intended places of work.
c. Additional position of the foreign national in the same company or
subsequent assignment in related companies during the validity or renewal of the
AEP will be subject for publication requirement. A change of position or employer
shall require an application for new AEP.
d. At any given time only one AEP shall be issued to a foreign national. 5
8. FEES.
Upon filing of application, the applicant shall pay a fee of P9,000.00 for
an AEP with a validity of one year. In case the period of employment is more than
one year, an additional P4,000.00 shall be charged for every additional year or
fraction thereof. In case of renewal, .the applicant shall pay a permit fee of
P4,000.00 for each year of validity or fraction thereof.
A courier fee of P200.00 shall be charged ·to the foreign national upon the
implementation of the AEP online application system.
Loss of AEP or change of information or entries in the AEP shall be
subject to payment of Pt,500.00 for AEP replacement. In case of loss, the request
for replacement shall be supported by a duly n~tarized Affidavit of Loss.
Processing and issuance of certificate of exclusion shall be subject to
payment of PS00.00 per application.
1 PhUippine Contractors Accrecfitation Board (PCAB~
2 Department Onie- No. 174, Seres of 2017 ttle Rules lmp!ernoofng Mi:les 106 tD 109 of !he Laba Code, as Amended.
I
General lnfonnatlon Sheet (G!S).
l
4 ~ Ad No. 108, M Act to F\l1ish hJs ct Evasot of ttle laws oo Ile Nationaizab of Certain ~ .
Framses or PrMeges, AppnMd oo Ocrober 30, 1936.
5 Sedioo 5, Department Order No. 186, Series of 2017 (Nov. 16, 2017), Revised Rules for the Issuance of Employment
Penn!ts to FOl'eign Nationals.

BAR REVIEWER ON IABOR (AW
108
cial receipt issued by the Regional Office are non-
All fees coveredbY o ffi
refundable.•
9. LABOR MARKET TEST & OTHER OBJECTION AGAINST THE
FOREIGN NATIONAL.
The DOLE Regional Office shall publish in a newspaper2 of general
circulation all applications for new AEP, change or ad~tio~al _position in the same
company or subsequent assignment in related comparues within (2) two work days
from receipt of application.
The same shall be published in the DOLE website and posted in the
PES0,3 such publication and posting shall be for a period o~ thirty (~O~ days
and shall contain the name, position, employer and address, a bnef descnption of
the functions to be performed by the foreign national, qualifications, mon~y
salary range and other benefits, if there are any.
It shall also indicate in the same notice of publication that any person in
the Philippines who is competent, able and willing at ~e time of applica~on_ to
perform the services for which the foreign national is desired may file an ob1ect1on
at the DOLE Regional Office.
Any objection or information agiinst the_ employm~t of the fo~~
national relative to labor market test must be filed with the Regional Office within
thirty (30) days after publication.
The DOLE Regional Office shall refer to the DOLE's Philjo~net and
PESO Employment Information System (PEIS}, the PRC Registry ~f
professionals, and the Technical Education ~d S~s .1:>evelopment _Au~onty
(fESDA) registry of certified workers to establish availability or non-availability of
able and qualified Filipino worker.
Information or criminal offense and grave misconduct in dealing with or
4
ill treatment of workers may be filed with the Regional Offices any time.
10. PROCESSING PERIOD.
Applications for ~ew AEP shall be processed and an AEP s~all be issued
within three (3) working days after publication and payment of requued fees. ~d
fines, if there are any. Applications for renewal of AEP shall be processed within
one (1) day after receipt5
1 Section 6, Id.
BomlMevs. Cc:utof Appeals,G.R No. L-49101, ca. 24, 1983, 125SCRA 122. Y'1ereawashekl: "T~be a~\11
general dladafal, l is lJmjl 111at 1 is ~ tr hl dissenila6on of local news n1 genn ilfonnalkln: !hat l has a
bona &fe ~ list c:l ~ subsaiJels; lhat it is pt4fsl8d al raJUlar ilavas.' (Basa vs. Mmm, 61 Phil 632).
The neYt$pi!pel'need nd have~ largest cira!i8&ln so aig as I is of gaaaldalla!kln. (Banta vs. Pachea>, 74 Phi. 67)."
> P\di:~SavkleOfb(PESO).
• Seclkxl 7, DepmtnentOrderNo.186, Series of 2017 (Ncv.16, 2017], Revised Rules for the Issuance of Employment
Permlls to Foreign NaUona!L
5 Seclkxl 8, Id.
CHAPTERTWO 109
PRE-EMPLOYMENT
11. VERIFICATION INSPECTION.
The authorized representatives of the Regional Director may conduct
inspection to verify legitimacy of employment of the foreign national as deemed
necessary, based on the documents submitted within two (2) working days upon
payment of fees. 1
12. VALIDITY OF ABP.
The AEP shall be valid for the position and the company for which it was
~sued for a period of one (1) year, unless the employment contract, or other modes
of engagement provides otherwise, which in no case shall exceed three (3) years.2
13. RENEWAL OF ABP •.
An application for renewal of AEP shall be filed not earlier than sixty (60)
days before its expiration. In case the foreign national needs to leave the country or
in other similar circwnstances that will hinder the filling of renewal within this
prescribed period, the application may be filed earlier.
Expired AEP shall be processed as a new application subject to the
payment of required fees and penalties in relation to Section 17 (Penalty for
Working without AEP) of this Department Order No. 186, Series of 2017.
I
In the case of officers whose appointment or election takes place before
the expiration of AEP, the application must be filed not later than fifteen (15)
working days after appointment, or before its expiration, whichever comes later.
In case the appointment or election will take place after the expiration of
the AEP, the application for renewal must be filed before the expiration of the
AEP which can be renewed for one (1) year. Within fifteen (15) working days after
the date of appointment or election, the foreign national shall submit to the issuing
Regional Office the Board Secretary's Certification. The Regional Director shall
revoke the AEP after one (1) month from its issuance, if no Certification is filed. 3
14. DENIAL OF APPLICATION FOR NEW OR RENEWAL OF AEP.
An application for AEP or the renewal thereof may be denied by the
Regional Director based on any of the following grounds:
a. Misrepresentation of facts in the application, including fraudulent
misrepresentation i.e., false statement that has a negative effect in the
evaluation of the application made knowingly, or without belief in its
truth, or recklessly whether it is true or false
b. Submission of falsified documents;
c. Conviction of a criminal offense or a fugitive from justice in the
,., country or abroad;
d Grave misconduct in dealing with or ill treatment of workers;
Sedioo 9, Id.
SediootO,ld.
Sedicxl 11, Id.
It
II

uo BAR REVIEWER ON IABOR. IAW
e. Availability of a Filipino.who is competent, able and willing to do the
job intended for or being performed by the foreign national based on
data in the PEIS, PRC Registry of Professional and TESDA Registry
of Certified Workers;
f. Worked without valid AEP for more than a year; or
g. Application for renewal with expired visa or with temporary visitor's
visa.
The Regional Director shall issue an Order denying the application for
new or renewal of AEP which shall have the effect of forfeiture of the fees paid by
the applicant1
15. CANCELLATION/REVOCATION OF AEP.
The Regional Director may, molll proprio or upon petition, cancel or revoke
an AEP after due process, based on any of the following grounds:
a. Non-compliance with any of the requirements or conditions for which
the AEP was issued;
b. Misrepresentation of facts in the application including fraudulent
misrepresentation i.e., false stat~ment that has a negative effect in the
evaluation of the application made knowingly, or without belief in its
truth, or recklessly whether it is true or false;
c. Submission of falsified or tampered documents;
d. Meritorious objection or information against the employment of the
foreign national;
c. Foreign national has been convicted of a criminal offense or a fugitive
from justice;
£ Employer terminated the employment of foreign national~ and
g. Grave misconduct in dealing with or ill treatment of workers.
In such cases, the Regional Director shall issue an Order cancelling or
revoking the AEP.2
16. ADDITIONAL GROUND UNDER ARTICLE 41.
Pamgtaph (a) of Article 41 enunciates another gtoWld for the cancellation
of the employment permit issued to an alien. Here. the alien, without the prior
approval of the DOLE Secretary, is prohibited from committing any of the
following acts:
a) To ttansfer to another job; or
b)To change his employer.
Such transfer to another job or change in position or in employer requires
the filing of an application for new AEP.1
1 Sldll12,ld.
2 Seclirl13,ld.
CHAPTERTWO Ill
rR£.EMPLOYMENT
17. EFFECT OF DENIAL/CANCELLATION OR REVOCATION OF
AEP.
A fo~ natio~ whose AEP has been denied or cancelled is disqualified
to re-apply within a. penod of ten (10) years in case the growids for denial or
cancellation is any of the following:
a) Conviction of criminal offense or fugitive from justice in the cowttry or
abroad; or
b) Grave misconduct in dealing with or ill treatment of workers.
Correspondingly, a foreign national whose AEP has been denied or
cancelled due to misrepresentation of facts or submission of falsified documents
with ~e ~t~t to deceive,.conceal or omit to state material facts and, by reason of
such onuss1on or concealment, the DOLE was prompted to approve/issue the
AEP that would not otherwise have been approved/issued, shall be disqualified to
re-apply within a period of five (5) years.2
18. EFFECT OF FRAUDULENT APPLICATION FOR AEP.
. . Employers, employer's or foreign national's representatives, and/or agents
acu.ng 10 behalf of the applicant fowtd to have filed fraudulent application for AEP
for three (3) counts shall be barred from filing application for a period of five (5)
years after due process.3
19.APPEAL.
!he aggrieved foreign national or his authorized representative may file an
appeal with the DOLE Secrewy within ten (10) days after receipt of the copy of
denial/cancellation/revocation order.
The decision of the DOLE Secretary shall be final and executory wtless a
motion for reconsideration is filed within ten (10) days after receipt of the decision.
No seco~d motion for reconsideration shall be allow~.4
20. PENALTY FOR WORKING WITHOUT AEP.
The Regional Director shall impose a fine of Ten Thousand Pesos (PlO,
0~.00) for ~very year or a fraction thereof to foreign nationals found wotking
without a valid AEP. Employers found employing foreign nationals without a valid
AEP shall also pay a fine of Ten Thousand Pesos ·(PtO, 000.00) for every year or a
fraction thereof Provid,d farthu, that an employer found to have failed to pay the
penalty provided herein shall not be allowed to employ any foreign national for any
position in the said company. . ·
 BAR REYIEW£R ON lABOR lAW 113
112

Newly hired or appointed officers may file the application for new AEP Chapter Three
without penalty thereof within fifteen {15) working days after signing of contract or
appointment
LABOR STANDARDS
If the commencement of employment is later than the fifteen (15)
working days grace period, the application for new AEP may be filed before the TOPICS PER SYLLABUS
commencement of employment without penalty. 1
2l MONITORING AND EVALUATION. Ill.
The Regional Offices shall submit a monthly rePQrt on the issuance of LABOR STANDARDS
AEP to the Bureau of Local Employment (BLE).2
A. Conditions of employment
---oOo--- 1. Coverage
2. Hours of work
a. Normal hours of work; hours worked
b. Meal periods
c. Night-shift differential
d! Overtime work
e. Computation of additional compensation (rates only);
facilities vs. supplements
3. Weekly rest periods
4. Holidays
5. Service Incentive leaves
6. Service charges
7. 13th month pay
B. Wages
1. Payment of wages
2. Prohibitions regarding wages
~- Wage distortion; concept
4. Non-diminution of benefits
C. Leaves
1. Service Incentive leave
2. Maternity leave
3. Paternity leave
4. Solo parent leave
5. Leave benefits for women workers under R.A. 971 Oand R.A.
9262
D. Special groups of employees
1. Women
a. Discrimination
b. Stipulation against marriage
1 Seclloo 17, kl. c. Prohibited acts
2 Smi18,ld.

I&
 BAR REVIEWER ON LABOR I.AW CHAl'TER THREE 115
114 LABOR STANDARDS

d. Sexual harassment (R.A. 7877) · Code's IRR on night shift differential pay but the number of regular employees
2. Minors (R.A. 7610,.as amended by R.A. 9231) required for exemption is "not more than five (5) workers." 1
3. Kasambahay (R.A. 10361)
4. Homeworkers 2.
5. Night workers HOURS OF WORK
6. Apprentices and learners
7. Persons with disabilities 1. COMPENSABLE HOURS WORKED.
a. Discrimination The following shall be considered as compensable hours worked:
b. Incentives for employers
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.2
CONDITTONSOFEMPLOYMENT 2. SOME PRINCIPLES IN DETERMINING HOURS WORKED.
1. The following genetal principles shall govern in determining whether the
COVERAGE time spent by an employee is considered hours worked:

1. EMPLOYEES COVERED. a) All hours are hours worked which the employee is required to give to
his employer, regardless of whether or not such hours are spent in
As a general rule, the provisions of Title I [Working Conditions and Rest productive labor or involve physical or mental exertion;
Periods], Book ID [Conditions of Employment) and the corresponding provisions
b} An employee need not leave the premises of the wotkplace in order
in the &ikr to Implement the Labor Code, are applicable to all employees in all
that his rest period shall not be counted,_it being enough that he stops
establishments and undertakings, whether operated for profit or not. 1 .
working, rests completely and leaves his wotkplace to go elsewhere,
2. EMPLOYEES NOT COVERED. whether within or outside the premises of his workplace;
Article 82 of the Labor Code and its Implementing Rules2 expressly c) If the work performed was necessary or it benefited the employer or
exclude the following persons or employees from the coverage of Tide I, Book ill the employee could not abandon his work at the end of his nonnal
thereof, to wit working hours because he had no replacement, all time spent f~r such
work shall be considered as hours worked if the work was wtth the
1) Government employees; knowledge of his employer or immediate supervisor;
2) Managerial emplc,yees; d) The time during which an employee is inactive by reason of
3) Other officers or members of a managerial staff; interruptions in his work beyond his control shall be considered
4) Domestic servants (now KmambaJxos); working time either if the imminence of the reswnp~on o_f work
5) Persons in the personal service of another; requires the employee's presence at the place of work or if the interval
6) Workers paid hy results; is too brief to be utilized effectively and gainfully in the employee's
7) Field personnel; and own interest.3
8) Members of the :amily of the employer.
It bears emphasizing that the employer retains the management
Notably, in addition to the foregoing Article 82 exemptions, a 9th prerogative, whenever exigencies of the service so require, to change the ~o~g
exemption is provided under the Labor Code's Article 94 (Right to Holiday Pay) hours of its employees. 4 Moreover. the age-old rule which governs the relationship
and Article 95 (Right to Se..--vice Incentive Leave), covering retail and service
establishments regularly employing less than ten (10) workers. A similar
exemption of retail and service establishments is also provided for under the Labor t Sedxltl 1(b), Rule 11 (Nijlt Shit llfferen!ial), Book Ill d. lhe Rules to I ~ Ille lalxJ Code.
2 N&:le 84, Labor Code; Section 3, ~le I, Book Ill ~les k> lcr4>1ement the labor Code; Rada v. NLRC, G.R No. 96078, Jin
9, 1992. 205 SCRA 69.
1 Artle82,LaxrCode;Sec:tial 1.~ I, Bodt 111,1\dest,~lhelaborCode. J Seclicll4, Rule I, Book Ill, Rules u~ 8le LmCooe.
1 See Secoori 2. Ruk! I, Book Ill d !he~ to mplementlhe labor Code. Unblcartiidel.ab«lmlnv.Unmcatlide~n:..215SCRA554(1992].
116 BAR RMEWER ON LABOR LAW
between labor and capital or management and employee of '~o work, no P'!J" or a
jair day's 'lllage far a fair dtg's labor,,, remains the basic factor in determining the
employees' wages and backwages.1
l CHAmRTHREE
a.
NORMAL HOURS OF WORK; HOURS WORKED
1. NORMAL HOURS OF WORK OF EMPLOYEES.
The puq,ose of the hw in limiting the number_ of working hours in each
day is principally to protect the health and welfare of the employees. It is also for
the purpose of affording adequate time to employees to lead richer and more
fruitful, meaningful lives and to be able to participate intelligently in public
concerns. Article 83 of the Labor Code enunciates the general rule that the total
number of working hours of a worker or employee shall not exceed eight (8) hours.
This eight (8) hour period is called the Mr111al hours of work..
Any work in execs~ of eight (8) hours is considered overtime work.
Consequently, the employee who is permitted or required to work beyond the
eight-hour period deserves to be paid an additional compensation for the overtime
work rendered.2
2. WORK DAY, HOW RECKONED.
The tenn 'work ~ 11 means the twenty-four consecutive-hour period
which commences from the time the employee regularly starts to work. Hence, the
24-hour period, in the case of employees working from 8:00 a.m. to 5:00 p.m., is
from 8:00 ~m. to 8:00 a.m. of the following day and the period from 8:00 a.m. to
5:00 p.m. is called the ''regular working hours" or ''shift." Work rendered beyond the
regular working hours within the '~ork day" is considered overtime. It must be
emphasized that 'work dtg" does not necessarily mean the ordinary calendar day
from 12:00 midnight to 12:00 midnight unless the employee starts working at the
unusual hour of 12:00 midnight, in which case, his '~rk daf'is the calendar day.
3. WORK WEEK; HOW RECKONED.
II
A '•k wuk is a week consisting ·or 168 consecutive hoUIS or seven (7)
consecutive 24-hour work days, beginning at the same hour and on the same
calendar day each calendar week.
4. HOURS OF WORK OF PART-TIME WORKERS.
The rules implementing the different Wage Orders issued by the Regional
Tripartite Wages and Pro4uctivity Boards (RlWPBs) in the various regions in the
countty carry a wufonn provision to the effect that wages and allow_ances of part-
' DurabilRecapp!ngPBltColqmfv.NlRC,G.RNo.l-76746,July27,·1987, 152SCRA328.
1 Micle87, L.mCode; Sedicll 8, rue I, Book Ill,~ 1D lqllen1ent he LmorCode.
LABOR STANDARDS
time workers shall not be less than the compensable time that they actually
rendered work. Hence, in the case of cost-of-living allowance (COLA), if the
117
worker rendered work for less than the prescribed eight (8) hours, say, for four (4)
hours only, the employer may validly make proportionate payment of COLA, if it
has granted a proportionate payment in the worker's basic wage. Following the
principle of '~o 1J10rk, no Jx!J, M allmvana," the workers are not entitled to said
benefits for the four-hour period that they did not render work. It is important to
stress, however, that the employees should have entered into an agreement with the
employer that they will be employed as part-time workers.
In view of the foregoing, on the issue of whether the company should
give the part-time employees concerned only fifty percent (50%) of the wages and
other benefits that the employer may pay the workers who will work for four (4)
hours a day, say, from 6:00 to 10:00 in the evening, it was opined in the Aduiso,y
Opinion on Conditio,u ofEn,pkrJment ofPart-time Workers issued by the DOLE's Bureau
of Working Conditions, that compensation in proportion to the time they actually
rendered work or equivalent to only four (4) hoUIS a day must be given to part-time
workers. This is, however, without prejudice to any individual or collective
agreement or company practice or policy that provides higher basis of computation
of wages.
5. BROKEN HOURS~
The nonnal eight (8) working hours mandated by law do not always mean
continuous and uninterrupted eight (8) hours of work. As may be required by
· peculiar circumstances of employment, it may mean broken hours of, say, four
hours in the morning and four hoUIS in the evening or a variation thereat provided
the total of eight (8) hours is accomplished within one 'work day" as this term is
understood in law. Hence, the 4-hour work done in the evening as in the example
above, should not be considered overtime work since the eight-hour period has not
yet been exceeded.
6. REDUCTION OF EIGHT-HOUR WORKING DAY.
The employer, in the lawful exercise of its prerogative, is not prohibited
from reducing the 8-hour normal working time per day provided that no
corresponding reduction is made on the employee's wage or salary equivalent to an
eight-hour work day. In instances where the number of hours required by the
nature of wotk is less than eight (8) hours, such number of hours should be
regarded as the employee's full working day.
7. WORK IN DIFFERENT SHIFTS.
In establishments where work is in different shifts, work done by the
employee beyond his eight-hour shift is considered overtime work which should be
compensated accordingly. For example, if there are three (3) eight-hour shifts in a
'\vork day," say, the first shift is from 6:00 a.m. to 2:00 p.m.; the second shift from

BAA REVIEWER ON LABOR I.AW
118
. . d the third shift from 10:00 p.m. to 6:00 a.m. of the
2:00 p:m. to 10.00 p.m., an hose regular eight-hour· · the first shifit ,16:00
v,ork 1s
· in
folloWlng day, the emp1oyee :-..dto v,orlt in the second or third shift, should be
a:m. to 2cli=?? p.ml.), once =~on for such work done beyond his regular working
given ad uona compen . k
is considered overame wor •
hourswhich Iegaily
8. COMPRESSED WORK WEEK (CWW).
a. Concept.
The Labor Code provides that the normal wor\c hours per day shall be
eight (8) hours. Work may be performed beyond eight hours a day provided the
employee is paid for the overtime work. On the other hand, the normal number of
workdays per week shall be six (6) days, or a total of forty-eight (48) hours based
on the normal workday of eigh! (8) hours. This is without prejudice to firms whose
normal workweek is five (5) days, or a total of forty (40) hours based on the normal
workday of eight (8) hours. 1
''Compremd Workweek ., or "CWW" refers to a situation where the normal
workweek is reduced to less than six (6) days but the total number of work-hours
of 48 hours per week remains. The normal workday is increased to more than eight
(8) hours but not to exceed twelve (12) hours, without corresponding overtime
premium.2 This concept can be adjusted accordingly in cases where the normal
workweek of the fum is five cs:a days.3 •
CWW is a kind of flexible work arrangement which is considered as
better altemativc to the outrigb termination of the services of the employees or the
total closure of the establishment. Anchored on volwitary basis and conditions
mutually acceptable to both the employer and the employees, it is recognized as
beneficial in terms of reduction of business costs and helps in saving jobs while
maintaining competitiveness and productivity in industries.4
"Flexible work arran§MtntJ" refer to altemative arrangements or schedules
other than the traditional or standard work hours, workdays and workweek. The
effectivity and implementation of any of the flexible work arrangements should be
tempomy in nature.5
Under R.A. No. 8972, otherwise known as 'The So/o Parentt' Welfare Ad of
2000, "solo parents are allowed to work on a flexible schedule, thus:
1 OepatnetMim'f ~. 2,Seri!s of 200'-, issued bylhe DOLE Secreay oo December 2. 2004 ~ <XITfJ(eSsed
wakweek(ONNJsctanes.
2 DeparmentMvmy No. 2. Seres d 2009, issued on Januif)' 29, 2009 by DOLE SecretaJy ~ ~- Roque enunciating
lheGuifefnes on lhe Adopiol"I dF1exille 'Mn Amlnganent.
l OepnnatAdvmy No. 2. Seres d 2004, supra.
' OepmentMvrlrfNo.2,Seresd2009,SlVcl-
s Id.
CHAPTER THREE 119
1.ABOR STANDARDS
"Sec. 6. Fllxibk Work SdJtdlllt. - The employer shall provide
for a flexible working schedule for solo parents: Provided, That the same
shall not affect individual and company productivity: Provided, farther,
That any employer may request exemption from the above
requirements from the DOLE on certain mcritorioul- grounds." 1
The phrase "jltxiblt work schedule" is defined in the same law as the right
granted to a solo parent employee to vary his/her arrival and departure time
without affecting the core work hours as defined by the employer.2
b. Other forms of.iexib/e work arrangements.
Other than the CWW, the following are flexible work arrangements which
may be considered, among others:
1. ''&th«tion of Wor~s'' refers to one where the nonnal workdays per
week are reduced but should not last for more than six (6) months.
2. ''Rotation of Workers,. refers to one where the employees are rotated or
alternately provided work within the workweek.
3. "Forrtd Ltaue" refers to one where the employees are required to go on
leave for several days or weeks utilizing their leave credits, if there are
any.
4. ''Broken-time 1dJedult" refers to one where the work schedule is not
continuous but the work-hours within the day or week remain.
5. ''Fltxi-holid'!J11&hedllk'' refers to one where the employees agree to avail
of the holidays at some other days provided there is no diminution of
existing benefits as a result of such arrangement.3
Under these flexible work arrangements, the employers and the
employees are encouraged to explore altemative schemes under any agreement and
company policy or practice in order to cushion and mitigate the effect of the loss of
income of the employees.4
c. Condidqns lot availment.
DOLE shall recognize CWW schemes adopted in accordance with the
following:
1. The CWW scheme is undertaken as a result of an express and
voluntary agreement of majority of the covered employees or their duly
authorized representatives. This agreement may be expressed through collective
bargaining or other legitimate wockplace mechanisms of participation such as
labor-management councils, employee assemblies or referenda.
Sedioo 6, RA No. 89n.
See Sedkln 3{e) reed.
kl.
' Id.

120 BAR P..EYIEWER ON V.BClll V.W
2. In fums using substances, chcrnic:lls and processes o~ operating under
conditions where there are airborne coota!Ill1lants, human caranog~s or noise
prolonged e.xposwe to which may pose hazards to the .employees health and
c th must be a certification from an accredited health and safety
sa,ety, ere ' c •
organization or practitioner or from ~e ~ s sa,ety comm.tttee that work beyo~d
eight (8) hours is within the threshold limns or tolerable levels of exposwe, as set tn
the Occupational Safety and Health Standards (OSHS).
3. The employer shall notify the DOLE, through its Regional Office
having jurisdiction over the workplace, of the adoption of the CWW scheme. The
notice should be made in DOLE CWW Report Form. 1 ·•
d. Effects.
A CWW scheme which complies with the foregoing conditions shall have
the following effects:
1. Unless there is a more favorable practice existing in the furn, work
beyond eight (8) hours will not be compensable by ovenime premium
provided the total number of hours worked per day shall not exceed twelve
(12) hours. In any case, any work performed beyond twelve (12) hours a day or
forty-eight (48) hours a week shall be subject to overtime pay.
2. Consistent with Article 852 of the Labor Code, employees W1der a
CWW scheme are entitled to meal periods of not less than sixty (60) minutes.
Nothing, however, shall impair the right of employees to rest days as well as to
holiday pay, rest day pay or lea'7CS in accordance with law or applicable CBA or
company practice. · •·'
3. Adoption of the CWW scheme shall in no case result in diminution
of existing benefits. Reversion to the nonnal eight-hour workday shall not
constitute a diminution of benefits. The reversion shall be considered a
legitimate exercise of management prerogative provided that the employer shall
give the employees prior notice of such reversion within a reasonable period of
time.J
A case in point is Bisig Man0,agawa 10 Tryco v. NLRC,4 where private
respondent Tryco and the petitioners signed separate Memorand[a] of Agreement
(MOA), providing for a compressed workweek schedule to be implemented in the
company effective May 20, 199S. The MOA was entered into pursuant to DOLE
Department Order (D.O.) No. 21, Seriu of 1990 enunciating the G11idtli11u o" the
lmp1'men/alion of Comprtmd 1/Vorkweek. As provided in the MOA, 8:00 a.m. to 6:12
I OepamriM.isoy No. 2, Series a2004, 9.11)@.
1 It provides: ".6&1e 85. ~Perms.-~ t> sudl ~ as tie Seaeay a Laba rrey ~ l sha1 be he
liltf aevert~ t>QN8 hii ~ not1ess lhivlsixtf (60l nrues line-Olffatierregl.dirmeals.'
i OepmEri Miisar No. 2. Series a2004, rupra. ·
' G.RNo.151309,0d. 15,2008.
' '
I~
CHAr TER THREE 121
LABOR STAN DAR.OS
p.m., froi:n Monday to Friday, shall be considered as the regular working hours, and
no overtune pay shall be due and payable to 1he employee for work rendered
duri.ng those hours. The MOA specifically stated that the employee waives the right
to claim overtime pay for work rendered after 5:00 p.m. Wlt:il 6:12 p.m. from
Monday to Friday considering that the compressed workweek schedule is adopted
in lieu of the regular workweek schedule which also consists of fo rty-six (46) hours.
However, should an employee be pennitted or required to work beyond 6:12 p.m.,
such employee shall be entitled to overtime pay.
Tryco informed the Bureau of Working Conditions (BWC) of the
Department of Labor and Employment of the implementation of the said
compressed workweek in the company.
In upholding the validity of the compressed workweek, it was noted that
Departpienl Order No. 21 sanctions the waiver of overtime pay in consideration of
the benefits that the employees will derive from the adoption of a compressed
workweek scheme, thus:
"The compressed workweek scheme was originally conceived fnr
establishments wishing to save on energy costs, promote greater work efficiency
and lower the rate of employee absenteeism, among others. Workers favor the
·,!:
scheme considering that it would me:m savings oo the increasing cost of
transportation fares for at least one (I) cby a week; savings on meal and ~nack
expenses; louger weekends, or an additional 52 off-days a year, that can be
devoted to rest, leisure, family responsibilities, srudies and other personal mancrs,
and that it will spare them for at le:isr another day in a week from certain
inconveniences that are the normal incidenL• of employment, such as commuting
to and from tbe workplace, travel time spent, exposure to dust and motor vrhirle
fumes, dressing up for work, etc. Thus, under thi.s scheme, the generally observrd
j workweek of six (6) days is shortened to five (5) days but prolonging the working
I
hours from Monday to Friday without the employer being obliged for pay
t overtime premium compensation for work performed in excess of ci~bt (8) hours
on weekdays, in exchange for the benefits above-cited that will accrue to the
employees."
In declaring the compressed workweek arrangement in 1he 2007 case of
l.Jn/Qn Commtrrial Co., In.. v. Helkra,t as unjustified and illegal and in holding that
petitioners are guilty of illegal reduction of work hours, the Supreme Court found
specious the petitioners attempt to justify their action by alleging that the company
was suffering from financial losses owing to the Asian .currency crisis. Petitioners'
claim of financial losses was not supported by evidence. A close examination of
petitioners' financial reports for 1997-1998 shows that while the company suffered
a loss of P3,645,422.00 in 1997, it retained a considerable amoW1t of earnings and
operating income. Cleacly then, while Linton suffet_ed from losses for that year,
there remained enough earnings to sufficiently sustain its operations. In business,
1
G.R No. 163147, 0d. 10, 2007.

122 BAR. REv1EWfll ON LABOR LAW
sustained opemtions in the black is the ideal but being in the red is a c~el reality.
However, a year of financial losses would not warrant the immolation of the
welfare of the employees which in this case was done through a reduced workweek
that resulted in an unsettling diminution of the periodic pay for a protracted period.
Permitting reduction of work and pay at the slightest indication of losses would be
contruy to the State's policy to afford protection to labor and provide full
employment All taken into accowit, the compressed workweek arrangement was
unjustified and illegal. Thus, petitioners committed illegal reduction of work
hours."
.•
9. REDUCTION OF WORKING DAYS DUE TO LOSSES.
An Explanatory B11/letin1 enunciated the rules in determining when an
employer can validly reduce the regular number of working days. It states that _a
reduct.ion of the number of regular working days is valid where the arrangement ~s
resorted to by the employer to prevent serious l~sses due to causes ~>eyond his
controL such as when there is a substantial slump in the demand for hi~ goods_ or
services or when there is lack of raw materials. This is more humane and in keepmg
with sound business operations than the outright termination of the ser\'ices or the
total closure of the enterprise. 2 Consequently, the employer may deduct the wages
and living allowances corresponding to the d~y~ taken off from_ the_ workweek, in
the absence of an agreement specifically providing that a reducnon tn the number
of workdays will not adversely affect the remuneration of the employees. Tius view
is consistent with the principle of "no-'IVDrle-no-pay." Furthennore, since the
reduction of workdays is resorted to as a cost-saving measure, it would be unfair to
require the employer to pay the wages and living allowances even on unworked
days that were taken off from the regular workweek.3
In Philippine Graph« Arn, Int. v. NLR.C,4 the High Court upheld the
validity of the reduction of working hours, taking into consideration tbe following:
the arrangement was temporary; it was a more humane solution instead of the
retrenchment of pCISOnnel; there were notices and consultations with the workers
and supervisors; a consensus was reached on how to deal with the deteriorating
economic conditions; and it was sufficiently proven that the company was suffering
&om losses.
Notably, although the said Expla110to,y B11/letin stands tnore as a set of
directory guidelines than a binding set of implementing rules, it has one main
consideration, consistent with the ruling in PhiBppine Grapbk Artr, in detennining
1 The&lalilDY8Jeti1mll8 Elfeaof Recllc:tiondwatdaysm WagesUq AbmcesdatedJut, 23. 1985 issued by
OOlf~hJgusil)G.Saldlez.
z lllll.
l lbii.; See also No. 1 {Fl, 2019 Hmidbook on Waker$' Slall!1ory Mooetaly Benefds, issued by Ole Bureau of Workilg
Ccnlicns,DOlE.
~ G.R No. L-60737, Sept. 29, 1988, 166 SCRA 118.
,.I
CHAl'TEJl THREE 123
LABOR STANDARDS
the validity of reduction of working hours, i.e., that the company was suffering
from losses.
In declaring the compressed wotkweek arrangement in Linton Commerrial
Co., Inc. v. Hellera, 1 as wijustified and illegal and in holding that petitioners are guilty
of illegal reduction of work hours, the Supreme Court found specious the
petitioners attempt to justify their action by alleging that the company was suffering
&om financial losses owing to the Asian currency crisis. Petitioners' claim of
·financial losses was not supported by evidence. A close examination of petitioners'
financial reports for 1997-1998 shows that while the company suffered a loss of
P3,645,422.00 in 1997, it retained a considerable amowit of earnings and operating
income. Oearly then, while the company suffered from losses for that year, there
remained enough earnings to sufficiently sustain its operations. ln business,
sustained operations in the black is the ideal but being in the red is a cruel reality.
However, a year of financial losses would not warrant the immolation of the
welfare of tl1e employees which in this case was done through a reduced workweek
that resulted in an wisettling diminution of the periodic pay for a protracted period.
Permitting reduction of work and pay at the slightest indication of losses would be
contmy to the State,s policy to afford protection to labor and provide full
employment.
It bears stressing, however, that work reduction scheme sans pro~f of
losses may amount to constructive dismissal. For instance, in Fe la Rosa v.
Ambassador Hote4 2 the records fail to show any docwnentary proof that the work
reduction scheme was adopted due to respondent's business
reverses. Respondent's memorandwn dated April 5, 2000 (.ric, should be 2002)
informing petitioners of the adoption of a two-day work scheme effective April 5,
2002, made no mention why such scheme was being adopted. Neither do the
records show any documentary proof that respondent suffered financial losses to
justify its ~doption of the said scheme to stabilize its operations. What is
undisputed, as found by both the Labor Arbiter and the NLRC and admitted by
respondent itseH: is that the complaints for violation of labor standards laws w~
filed by petitioners against respondent at the DOLE-NCR, some of which
complaints were paitially settled; and that almost immediately after the partial
settlement of the said complaints, the wotk reduction/Iotation scheme was
implemented.
Case law holds that constructive dismissal occurs when there is cessation
of work because continued employment is rendered impossible, unreasonable or
unlikely; when there is a demotion in rank or diminution in pay or both; or when a
cleat discrimination, insensibility, or disdain by an employer becomes wibearable to
the employee. Respondent,s sudden, arbitrary and unfounded adoption. of the
GRNo.163147,0d.10,2007.
GR.No.177059,Mm'dl13,2000.
124 BAR. iUVIEWER ON lABOR lAW
two-day work scheme which greatly reduced petitioners' salaries renders it liable for
constructive dismissal.
10. REGULAR WORKING DAYS OF HOSPITAL OR CLINIC
PERSONNEL.
The regular working diys of covered employees shall not be more than
five (5) days in a workweek. The workweek may begin at any hour and on any day,
including Saturday or Sunday, designated by the employer. Employers are not
precluded from changing the t:.me at which the workday or workweek begins
provided that the change is not intended to evade the requirements of the '&/es. 1
The DOLE Secretary issued PoGq J,utn1dions No. S4 [S11ijed: Working
Ho11rs a,zd Compensation of Horpital/Cli,ti& Per1onne~ on April 12, 1988 to clarify the
enforcement policy of the DOLE on the working hours and compensation of
personnel employed by hospital! or clinics with a bed capacity of 100 or more and
those located in cities and municipalities with a population of one million or more.
It was recognized in this issuance that the Labor Code, in its Article 83, has
adopted and incorporated the basic provisions of R.A. 5901 2 and retained its spirit
and intent which is to shorten the workweek of covered hospital personnel and at
the same time assure them of s full weekly wage. Consequently, consistent with
such spirit and intent, it was declared that personnel in subject hospitals and clinics
are entitled to a full weekly wage for seven (1) days if they have completed the 40-
hom/ 5-day workweek in any given workweek.
The Supreme Court, however, has· voided Poig Inslnl&lions No. 54 in the
case of San }lllln de Di~s Hospital EmplrrJeu hsoda/i,11 v. NLRO thereby voiding the
rule that hospital employees who worked for only 40 hours/5 days in any given
workweek should be compensated for full weekly wage for seven (7) days. The
reliance upon R.A. No. 5901 is misplaced for this law has long been repealed with
the passage of the Labor Code on May 1, 1974. The governing law is now Article
83 of the Labor Code. A curso:y reading of this article betnys petitioners' position
that "hospital employees" are ~titled to "a full weekly salaty with paid two (2)
days' off if they have completed the 40-hour/5-day workweek." What Article 83
merely provides are: (1) the regular office hour of eight hours a day, five days per
week for health personne4 and (2) where the exigencies of service require that
health personnd work for six days or forty-eight hows then such health personnel
shall be entitled to an additional compensation of at least thirty percent (30%) of
1
Sectioo 6, ~I-A.Boat md tie Rules mlq)lelnentlhe l.abcrr.ode.
7 Re,xiti: Act 5001, "AA Ad Presatq Fat/ Hours a Week cl Laber b GMmment illd PM1e Hosplas or C&IC
Pelsonnel,•enaded on June 21, 1009, Pl'l!SO'WeS a40-hoor/5<la'f v.otweekflr hosplaVari: personnel. N. llesane fioo.
tie Act prohbls 1he d'mnJOOn d Ile con,arlSa!m cl these workers YAlo v.ald suffer aredudDl ii lher weektf wage by
reasoo d Ole shaBled ~ rm:rial by lhe Id. In elfett. RA 5001 requtas lhat Ole~ halplla wxkers
"'10 used ID wot seven (7) da,15 aa shoold be~ fir such rurber d da'1s fir v.milg at, 5 days or 40 hairs a
week.
3 G.R.No.126383,l'bt.28, 1997.
CHAPTER THREE 125
IABOR STANDARDS
their regular wage for work on the sixth day. There is nothing in the law that
supports then Secretary of Labor's assertion that "personnel in subJect hospitals
and clinics are entitled to a full weekly wage for seven (7) days if they have
completed the 40-hour/5-day workweek in any given workweek.)) Needless to say,
the Secretaty of Labor exceeded his authority by including a two days off with pay
in contravention of the clear mandate of the statute. Administrative interpretation
of the law is at best merely advisory and the Court will not hesitate to strike down
an administrative interpretation that deviates from the provision of the statute.
11. POWER INTERRUPTIONS/BROWNOUTS
The following are the effects of work interruption due to brownouts:•
1. Brown-outs of short duration but not exceeding twenty (20) minutes
shall be treated as worked or compensable hours whether used
producti,,ely by the employees or not
2. 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
b) The employees can use the time effectively for their own intexest.
3. In each case, the employer ·may extend the wotking hours of his
employees outside the regular schedules to compensate for the loss of
productive man-houis without being liable for overtime pay.
4. Industrial.enteq,rises with one or two workshifts may adopt any of the
workshifts prescribed for enterprises with three (3) wotkshifts to
prevent serious loss or damage to materials, machineries or equipment
that may result in case of power interruptions.2
5. The days when work was not requir~ and no work ~uld be done
because of shutdown due to electrical power intc;rruplions, lack of raw
materials and repair of machines, are not deemed hours worked.3
b.
MEAL PERIODS
1. GENERAL RULE ON MEAL PERIOD.
As a general rule, every employer is required to give his employees,
regardless of sex, not less than one (1) hour (or 60 minutes) time-off for regular
1 PaLy 1ns1nmns No.36 dated May22, 1978was~ tr, Cle lkldersecretary d LabCJaid ~IDclarify Gle
effects cl l)OMll' ilten,uplx)ns orbn7",Muts oo productive rnai;.twrs.
2 ~ lnstndions No. 36, Way 22, 1978.
3 ~~ Plant~v. NlRC,G.R No. L-76746,Ju~ 'lT, 1987, 152 SCRA328.
126 8AR REVIEWER ON IAB()R IAW
meals. 1 Being time-off, it is not compensable hours worked. In this case, the
employee is free to do anything he wants, except to work. If he is required,
however, to work while earing, he should be compensated therefor.
2. SHORTENING OF MEAL TIME TO NOT LESS THAN 20
MINUTES, WHEN COMPENSABLE.
In the following cases, 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:
a) Where the work is non-manual work in nahlre or does not involve
strenuous physical exertion;
b) Where the establishment regularly operates for not less than
sixteen (16) hours a day;
c) In cases of actual or impending emergencies or when there is
urgent work to be performed on machineries, equipment or
installations to avoid serious losses which the employer would
otherwise suffer; and
d) Where the work is necessary to prevent serious loss of perishable
goods.2
3. SHORTENING OF MEAL TIME TO NOT LESS THAN 20
MINUTES, WHEN NOT COMPENSABLE.
The law allows a situation where the employees themselves request for the
shortening of meal period to not less than twenty (20) minutes (say, thirty minutes,
or from 12:00 to 12:30 p.m. instead of 12:00 to 1:00 p.m.) for the purpose of
allowing them to leave work earlier than the lapse of the eight (8) hours requii:ed by
law (say, 4:30 p.m. instead of 5:00 p.m.). This shortened period, however, shall not
be considered compensable w'.>rking time provided the following conditions are
complied with:
a) The employees voluntarily agree in writing to a shortened meal
period of thirty (30) minutes and are willing to waive the overtime pay
for such shortened meal period;
b) There should be no diminution in the benefits of the employees
which they receive prior to the effectivity of the shortened meal
~~~
c) The work of the employees does not involve suenuous physical
exertion ana the:i are provided with adequate coffee breaks in the
morning and afternoon;
1 Micll 85, UlborCode;Secooo 7, Rule I, Book 111, Rules to knplement theUlborCode.
2 Seda, 7, ~ I, Booldll, llkl.
( IIArTER lMREr 127
LABOR STANOAROS
d) The value of the benefits derived by the employees from the
proposed work arrangement is equal to or commensurate with the
compensation due them for the shortened meal period as well as the
overtime pay for 30 minutes as determined by the employees
concerned;
e) The overtime pay of the employees will become due and demandable
if ever they are permitted or made to work beyond 4:30 p.m.; and
Q The effectivity of the proposed working time arrangement shall be for
a temporary duration as determined by the DOLE Secretary.1
4.-SHORTENING OF MEAL TIME TO LESS THAN 20 MINUTES,
EFFECT.
The law does not allow that meal time be shortened to less than twenty
(20).minutes. If so reduced, the same shall no longer be considered as meal time
but merely as rest period or coffee break and, therefore, becomes compensable
working time. 2
5. COFFEE BREAKS AND REST PERIODS OF SHORT DURATION.
Rest periods of short duration during working hours are considered and
counted. as hours worked.3 Rest periods or coffee breaks running from five (5) to
twenty (20) minutes are considered compensable working time.4
6. CHANGING FROM 30-MINUTE PAID "ON CALL" LUNCH BREAK
TO ONE (1) HOUR MEAL TIME WITHOUT PAY, EFFECT.
The case of Sime Darl:J Pilipi11aJ, Inc. v. NLRC,5 is illustrative of this point.
Prior to the present conuoversy, all company factory workers in Marikina including
members of private respondent union worked from 7:45 a.m. to 3:45 p.m. with a
30-minute paid "011 call" lunch break. Petitioner, by way of a memorandum,
changed the meal time schedule from 30 minutes to one {I) hour without pay:
Since private respondent union felt affected adversely by the change in the work
schedule and discontinuance of the 30-mioute paid "011 call" lunch break, it filed on
behalf of its members a complaint with the Labor Arbiter fo r unfair labor practice,
discrimination and evasion of liability. In declaring the change in the work schedule
as valid, the Supreme Court held:
"(The petitioner) rationalizes that while the old wock ,chcdulc included a
. 30-minute paid lunch break, the employees could be called upon to do jobs during
that period as they were 'on call.' Even if denominated as iuncb break. this period
could very well be considered as working time because the factory employees were
1 Lel!!J-Opnio,daled Nov. 27, 1989 ci Secrela'y Fr.nlil Dril:ln to Kodak Phippines.
2 Id.
3 Attx:le84,LooocCode.
' Secooo 7, Rule I, Book 111, Illies to knplemenl lhe Lm Code.
5 GR.No.119205,Apri115, 1998,289SCRA86.
,,
L
...
~.
 CHAPTER THREE 129
BAR REVIEWER ON IABOR IAW IABORSTANDARDS
128
4.2 They customarily and regularly direct the work of two or more
re uired to work if necessary and were paid accordingly for working. Wit!t
the new
employees therein; and
q hed I th I uc now oivcn a one-hour lunch break without any
work sc u e, e emp oyees ,,. dis bed I h b k th 4.3 They have the authority to hire or fire other employees of lower
. · f h· loycr For a full one-hour un tur uoc rea , e
111terrupnon rom t eu- cmp · use this . hour not on1y ,or
r • b al c
d effectively eatmg ut so ,or rank; or their suggestions and recommendations as to hiring,
employees cand freclY an · to more effioency
·
. comfort which are conduove and better firing, and promotion, or any other change of status of other
thctt rest ao .
in their work. Since the employees are no longer reqwred to work employees are given particular weight
pcrfo~•nee .
during this one-h~ur lu_nch break, the~e 1s no more ~eed for them to be . 5) Officers or members of a managerial staff, if they perform the
·compensated for this penod. We agree with the Labor Arbiter that the new work
schedule fully complies with :he daily work period of eight (8) hours without
following duties and responsibilities: '
violating the Labor Code. Besides, the new schedule applies to all employees in the 5.1 Primarily perform work directly related to management policies
fuctoiy similarly situated whether they are union members oc not" of their employer;
5.2 Customarily and regularly exercise discretion and independent
7. MEAL TIME INVOLVING SEVERAL SHIFTS. judgment;
In a company where wotk is continuous for several shifts, the mealtime 5.3 (a) Regularly and directly assist a proprietor or managerial
breaks should be counted as working time for purposes of overtime compensation. employee in the management of the establishment or
Consequently, the workers who are required to work in two (2) full successive subdivision thereof in which he or she is employed; or (b)
shifts should be paid for si.xteen (16) hours and not fourteen (14), the two hours execute, under general supervision, work along specialized or
for rest or mealtime breaks bei.rig included as compensable working time. The idle technical lines requiring special training, experience, or
time that an employee may spend for resting wherein he may leave the work area knowledge; or (c) execute, under general supervision, special
should not be counted as working time only when the work is not continuous.I assignments and tasks; and
5.4 Do not devote more than twenty percent (20%) of their hours
c. worked in a workweek to activities which are not directly and
closely related to the performance of the work described in
NIGHT SHIFT DIFFERENTIAL
paragraphs 5.1, 5.2, and 5.3 above;
1. HOW RECKONED. 6) Field personnel and those whose time and performance are
unsupervised by the employer,1 including those who are engaged on
Night shift differential is equivalent to 10% of employee's regular wage ~ .. task or contract basis, purely commission basis, or those who are paid
for each hour of work perfonned between 10:00 p.m. and 6:00 a.m. of the a fixed amount for performing work irrespective of the time
following day.2 consumed in the performance thereof.2
2. COVERAGE. 3. REASON FOR ADDITIONAL COMPENSATION.
Night shift differential pay applies to all employees except Night shift differential pay is given as a premium for working at a time
1) Government employees, whether employed by the National when the employee is supposed to sleep and rest in accordance with the law of
Government or any of its political subdivisions, including µJose nature. Night work cannot be regarded as desirable. The lack of sunlight tends to
employed in government-owned and/or controlled corporations with produce anemia and tuberculosis and a predisp~sition to other illness. Night work
original charters or created under special laws; brings increased liability to eyestrain and accident. Serious moral dangers are also
2) Those of retail and service establishments regularly employing not likely to result fre>m the necessity of traveling the streets alone at night, and from
more than five (5) workers; the interference with normal home life.
3) Kasambahay and persons in the personal service of another; Moreover, from an economic point of view, investigations show that
4) Managerial employees, if they meet all of the following conditions: night work is unprofitable, being inferior to day work both in quality and in
4.1 Their primary duty is to manage the establishment in which they quantity. Wherever it had been abolished, in the long run, the efficiency both of
are employed or of a department or subdivision thereof;
I
-~::-
!:• No.5 [BJ, Id.; SeealsoSedioo 1, ~le 11 (NiJlt ShiftlliffereoiaQ, Boci lllof1he Rules lo k!l>lemenltoe l.alxrCode.
1 Na1iooa1 lleYeqlmel1t Cafc>anYv. CM d lnduslra Relalms, G.R No. L-15422, NC1,1. 30, 1962.
Sedioo 1(e), ~le II (N"ght Shift D1ferelltial). Book Ill, Rules lo lf11)lement toe l.alxr Code.
1 No. 5IA), 2019 Handboal oo Wollers' Stmmy IJonelaty Benefits, issued by toe Imai olW()00"9 Conditions, DOLE.
 SAR. 11.EVIEWERON LABOR I.AW
130
the management and of the workers was raised. Furthermore, it was found that
nightwork laws are a valuable aid in enforcing acts fixing the maximum period of
employment.'
Additional compensation for nighttime work is founded on public policy.
Therefore, the same cannot be ·w3.ived.2
3. PERCENTAGE OF NIGIIT SHIFT DIFFERENTIAL PAY.
A covered employee sl:-.ould be paid night shift differential pay of no less
than ten percent (10%) of his regular wage for each hpur of work performed
between ten (10) o'clock in the evening and six (6) o'clock in the morning of the
following day.3
4. NIGHT SHIFT DIFFERENTIAL PAY VS. OVERTIME PAY.
When the work of an employee falls at night time, the receipt of overtime
pay shall not preclude the right to receive night differential pay. The reason is the
payment of the night differential pay is for the wock done during the night; while
the payment of the overtime pay is for work in excess of the regular eight (8)
working hours.
.,!
5. COMPUTATION OF NIGHT SHIFT DIFFERENTIAL PAY.
1) Where night shift 00 p.m. to 6 a.m.) work is regular work.
a. On an ordinaty day; Plus 10% of the basic hourly rate or a total
of 110% of the basic hourly rate.
b. Qn a rest day, special holiday or regular holiday;· Plus 10% of
the regular hourly rate on a rest day, special day or regular holiday
or a total of 110% of the regular hourly rate.
2) Where night shifi (10 p.m. to 6 a.m.) work is overtime work.
a. On an ordinai;y day: Plus 10% of the overtime hourly rate on an
ordinary day or"a total of 110% of the overtime hourly rate on an
ordinary day.
b. On a rest day or special holiday or regular holiday; Plus 10%
.of the overtime hourly rate on a rest day or special day or regular
holiday.
3) For overtime work in the night shift. Since overtime work is not
usually eight (8) hours, the compensation for overtime night shift
work is also computed on the basis of the hourly rate.
, 91ea ~ a 111e Plif!>pile Islands, Lt!. v. Natiooallabor Unklo. G.R. No. L-1309,.u,, 26. 1948. s1 Phi. 31s. quoting
Piiq)lesal..aborlegistatioo,Caimoosin!Anaew3,41h Rev. Ed., p.142].
1 Miele 6, Ci1i1 Code; M!ftuly ~ Co.,oc V. Dayao, G.R. No. L-30452, Sepl 30, 1982.
l Sedicwl 2. ~ 11, Book Ill, Rules k l ~ the l..alx:c Code; No. 5 [AJ. 2019 Hadiook 00 ~ Statu1ory ~
Benefils, issued b'f Ile Bureau olWooong ::.aido:ins, OOlE; See GWI Netv.olk. lrc. v. Paliga. G.R. No. 176419, NO'/. 27,
2013.
( HAl'TER THREE 131
LABOR STANDARDS
a. Qn an ordinary day. Plus 10% of 125% of basic hourly rate or a
total of 110% of 125% of basic hourly rate.
b. On a rest day or special holiday or regular holiday. Plus I0% of
130% of regular hourly rate on said days or a total of 110% of I 30%
of the applicable regular hourly rate.
d.
OVERTIME WORK
1. MEANING.
Work iendered after or beyond the normal eight (8) hours of work is
called "overtime work."
2. BASIS.
In computing overtime work, "11gular wage" or "basic salary" means "cash"
wage only without deduction for f adlities provided by the employer.
3. PREMIUM PAY VS. OVERTIME PAY.
"Pre111i11111 P'!J" refers to the additional compensation required by law for
work performed within eight (8) hours on non-working days, such as rest days
and regular and special holidays.1 O_n the other h~d, "overtime pay" refers to 'the
additional compensation for work performed~ eight (8) hours a day. Every
employee who is entitled to premium pay may likewise be entitled to the benefit of
oveitime pay if he/ she has rendered overtime work on such premium days as rest
days and regular and special holidays. 2
4. EXCLUSION OF COLA FROM OVERTIME PAY COMPUTATION.
In computing overtime pay, the cost-.of-living allowance (COLA)
provided under the Wage Orders is !!.Q! to be included.3 For instance, the Pl 0.00
COLA granted under Wage Order No. NCR-21 [October 05, 2017],4 for the
I No. Ill, DOLE Handbook on Wooers Statuloly Mooetary Benefits•
k~m .
Per Lalxr Miw/ ~ 7Ju~ 2011 issued Ii'( bmer DOLE Seaetry Rosal'ida ~~ It was dedared heroo
flat v.hle COlA is rdxloo il te ~ of the regua- h({ijays, ij is not i1ClJded il t h e ~ otier wage. a
related benefis SIJCh as OYertime pay, JmllUll pay, ngl'Hhi! dlferenlial pay, 13" 1ro1th pay crd relranent pay. See also
No. 4 !CL 2019 ~ on waxers· StahJby ~ Benefts, issued by Ile !beau of w~ Coodtions, DOLE:
See alsod'ISOJSSi:n oo ~ II (WEEKLY REST PERIOOS], LalxrCode [ntat
• Wa:Je O'der No. NCR-21 b- Ole Hamal Capi1al Pspi v.taidl bi effect oo Ocix>e" 05, 2017, gralled a basic wage
ilaease a P21.00 perda'f crd maillaiied Ile P10.00 ca.A imertie previous wage Olde', thus:
 8AF. REVIEWER ON LABOR I.AW
132
National Capital Region, is not included in its computation. The basis should,
therefore be the New Basic IP-age of P502.00 and not the New MinimJJm If/age Rate of
P512.00.
5. HOW TO COMPUTE OVERTIME PAY.
a) For overtime work performed OD an ordinary day, the overtime
pay is .P"'1 25% eftk baJic ho11r!J rate.
b) For overtime wotk performed on a rest day or on a special day,
the overtime pay is ,Pl11s 30% of the baic hour& rate which includes 30%
additional compt1uatk11 @provided in Article 93 kl ofthe LAbor Cotk.
c) For overtime work performed OD a rest day which falls on a
special day, the overtime pay is p/111 30% of the baic hour/J rate which
incmdu 50% addifio;1a/ compt11Iatio11 aipropided in Artick 93 fr} ofthe Labor
&!_.
d) For overtime work performed OD a regular holiday, the overtime
pay is plus 30% ef the baic hollf/J rate which inc/Jide1 100% additional
compensation @,Provi¾d in Artick 94 {bJ oftheLabor Code.
e) For overtime work performed OD a rest day which falls on a
regular holiday, the overtime pay is pl"[ 30% ~[ the basic hourfl rat,
which includes 160% additional compwation.
6. BUILT-IN OVERTIME PAY.
In case the employment contract stipulates that the compensation
includes built-in overtime pay rnd the same is duly approved by the Director of the
Bureau of Employment Services (now Bureau of Local Employment), the non-
payment by the employer of my overtime pay for overtime work is justified and
valid. 1
In PESALA v. NLRC,2 where the period of normal working hours per
da)' was increased to twelve (12) hours, it was held that the employer remains liable
for whatever deficiency in the ·imount for overtime work in excess of the first eight
(8) hours, after recomputation shows such deficiency.
7. EMERGENCY OVERTIME WORK.
The general rule rerr.ains that no employee may be compelled to render
overtime work against his wil. The following are the exceptions when employee
may be compelled to render overtime work:
1. \X'hen the country is at war or when any other national or local
emergency has been declared by the National Assembly or the Chief
Executive;
I fu;ji'leefr9 ~pnerd."' v. ~of ..axr. GR I'«>. L-64967, Sept. 23, 1985
2 PAL Employees Savings and Loan AssJciation, Inc. [PESALA] v. NLRC, G.R. No. 105963, August 22, 1996.
CHAl'TER THREE 133
LABOR STANDARDS
2. Wh~n. overtime work is necessary to prevent loss of life or property
or 111 case of unrrunent danger to public safety due to actual or
impending emergency in the locality caused by serious accident, fire,
floods, typhoons, earthquake, epidemic or other disasters or
calamities;
3. When there is urgent work to be performed on machines,
installations or equipment, or in order to avoid serious loss or
damage to the employer or some other causes of similar nature;
4. When the work is necessary to prevent loss or damage to perishable
goods;
5. When the completion or continuation of work started before the Slh
hour is necessary to prevent serious obstruction or prejudice to the
busines~or operations of the employer; and
6. When overtime work is necessary to avail of favorable weather or
environmental conditions where performance or quality of work is
dependent thereon.
It must be emphasized that an employee cannot validly refuse to render
overtime work under any of the foregoing circumstances. When an employee
refuses to render emergency overtime work under any of the foregoing conditions,
he may be dismissed on the ground of insubordination or willful disobedience of
the lawful order of the employer.
8. UNDERTIME NOT OFFSET BY OVERTIME. ·
The following rules shall apply:
a) Undertime work on any particular day shall not be offset by overtime
on any other day.
b) 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 by law such as overtime pay or night shift
differential pay.
9. WAIVER OF OVERTIME PAY.
The right to claim overtime pay is not subject to a waiver. Such right is
governed by law and not merely by the agreement of the parties. 1
While rights m~y be waived, the same must oof be contrary to law, public
order, public policy, morals or good customs or prejudicial to a third person with a
right recognized by law.2
1 Mm!der v. Miria Pelo CU!, GR I'«>. L-a:!73, Sept. 28, 1956; Cluz v. Yoo Srg, GR No. L-12046. Oct. 1959; Mvlila
TemmCo., klc. v. CR GR l'«l.L-9265.,6¢29, 1957,480. G.7,p.2725, 91 Ri 625.
2 h&:le 6, CM Code; ~ a &,Ja-De;eq>meriCo, nc.v. CIR, GR No. L-39387,Jooe29, 1982.
 BAR RM EWER ON IABOR I.AW
134
But if the waiver is done in exchange for and in consideration of certain
valuable privileges, among them that of being given tips when doing overtime
work, there being no proof that the value of said privileges did not compensate for
such work, such waiver may be considered valid.1
10. ENTITLEMENT OF SEAFARERS TO OVERTIME PAY.
a. Actual overtime service necessary.
The correct criterion in determining whether or not seafarers ~e entitled
to overtime pay is not whether they were on board and c,annot leave ship beyond
the regular eight (8) working hours a day, but whether they actually rendered
2
service in excess of said number of hours.
Tn Stolt-Nieiun,l involving the illegal dismissal of a seaman whose ~ontract
· ul th ment of "fixed 011trtimt," the Supreme Court, ll1 reversmg the
sap ates e pay ;•· ~ · · · ()
NLRC ruling that the seaman is entitled thereto ev~. o_r the remauung so: 6
months and three (3) days of his contract, ~t whi~h °:°'e he. wa~ no lon~er
rendering services as he had already been repatrlated, ated tts _holding ll1 the earlier
case of Cag/1Jl/poH,' where it was ruled that th~ contract pr~Vlston mean_s that th_c
fixed overtime pay of 30% would be the basts for computmg the overtlme pay 1f
and when overtime work would be rendered. Simply stated, the rendition of
overtime work and the submission of sufficient proof that said work was actually
performed are conditions to be satisfied before a seaman could be entitled to
overtime pay which should be computed on the basis of 30% of the basic monthly
salary. In short, the contract provision guarantees the right to overtime pay but the
entitlement to such benefit must first be established. Realistically speaking, a
seaman, by the very nature of his job, stays on board a ship or vessel beyond the
regular eight-hour work schedule. For the employer to give him overtime pay for
the extra hours when he might be sleeping or attending to his personal chores or
even just lulling away his time would be extremely unfair and nnreasonable."
In Pa Sbipping,5 the Supreme Court found that private respondent was
not entitled to overtime pay because he failed to present any evidence to prove that
he rendered service in excess of the regular eight (8) working hours a day. But in
Acuiia,6 petitioners' claims for overtime pay -were allowed despite their failure to
substantiate them. It was declared in this case that the claims of OFWs against
foreign employers could not be subjected to the same rules of evidence and
procedure applicable to complainants whose employers are locally based. While
normally, the _Court would require the presentation of payrolls, daily time records
1M:rala,Wcner.;Unilnv.lJaniaEJecux;Co., GRNo.L-11876,Ma-)'29, 1959.
1 Sid-Nielsen M:ri1e Ser,tes (Phi;.), re. v: N.RC,GR No.105396, New. 19, 1996, 264 SCRA307; 332 Pill 340,352.
i Slol-Nelsen~SeM:es[Phis.],lnc. v.NLRC,GRNo.109156,..tif 11, 1996.
• Cagilfl'l)illl v. NlRC, GR Nos.85122-24, Marth 22, 1991, 195 SCRA ~-
PCL Shwing ~ . h:. v. NL.RC, G.R. No. 153031, IJec. 14, 2006.
' Aotiav. Hoo. CA. GR No.159832, M!y 5, 2006.
CHArTER THREE 135
LABOR STANDARDS
and similar documents before allowing claims for overtime pay, in this case, that
would be requiring the near impossible. Here, it is private respondents who could
have obtained the records of their principal to refute petitioners' claims for
ovt:rtime pay. By their failure to do so, private respondents waived their defense
and in effect admitted the allegations of the petitioners. Accordingly, it was ruled
that private respondents were solidarily liable with their foreign principal for the
claims for overtime pay of petitioners.
b. Guaranteed overtime pay, not included in computation ofsalary
for unexpired portion.
In the computation of the monetary award to an illegally dismissed OFW,
the "guaranteed overtime" pay should not be included as part of his salary for the
unexpired portion of his contract.1 This is so because it is improbable that the
Of-W has rendered overtime work during the une.xpired term of his contract.
Consequently, there is no factual or legal basis therefor.2
11. OVERTIME PAY CANNOT CAUSE WAGE DISTORTION.
In PAL Employees Savings,3 the petitioner's contention that the agreed
salary rate in the employment contract which provides for twelve (12) normal
working hours per day should be deemed to cover overtime pay (although the
amount thereof was not sufficient to include overtime pay), otherwise serious
distortions in wages would result "since a mere company guard will be receiving a
salary much more than the salaries of other employees who are much higher in
rank and position than him in the company," is a flimsy argument, undeserving of
consideration. Said the Supreme Court "How can paying an employee the
overtime pay due him cause serious distortions in salary rates or scales? And how
can 'other employees' be aggrieved when they did not render any overtime
service?"
e.
COMPUTATION OF ADDITIONAL COMPENSATION
(RATES ONLY)
1. PREMIUM PAY.
Article 934 of the Labor Code enunciates the prtmium P':I which refers to
the additional compensation for work perfoIIned E!h.in eight (8) hours on non-
1 Sm Shwiig Sevices, klc. v. Chia, G.R No. 162195,Api 8, 2008.
1 SlolNielsen Mime Selvices ll'hJS.J, re v. NLRC, GR No. 1~156, Julf 11, 1996; Sanfiir:l<> v. CF Shai> Crew
Mancl;lemert, r,c, GR No. 162419,..tif 10, 2007.
l PAI. 811)1c,jees SavrY,15.rd Loan Associab1, h:. [PESAlA] v. I-I.RC, GR No. 105963, August 22, 1996.
• • Miele 93. ~ b' Rest Day, $.may a ltllida'f Wak.- {a) mieie c11 ~ is made a pemitted to m oo
his sd1eduled rest day, he shall be pail an additKXlcll ~ of at least hi1)' pettenl (3(1'/o) of his regul.1r ~ An
empklyee shal be entilled to such OO<itiooal ~ lp'w perfom1ed oo SUlda')' f1rf v.l1en ~ is his established
restdey.
 BAR Rf\/lEWER ON IABOR !AW
136
work days, such as rest days and special days (or special holidays} 1 or regular
holidays.2
2. COVERAGE.
Tiie premium pay benefit applies to all employees except:
l) Go,·cmmcnt employees, whether employed by the National
Government or any of its political subdivisions, inclu~g th~se
employed in government-owned and/or controlled corporaoons wtth
original charters or created wider special laws; •,
2) Managerial employees, if they meet all of the following conditions:
2.1 . Tiieir primary duty is to manage the es~b~~hment in which they
are employed or of a department or subdivtston thereof;
2.2. Tiiey customarily and regularly direct the work of two or more
employees therein;
2.3. Tiiey have the authority to hire or fire other employees of lower
rank; or their suggestions and recommendations as to hiring,
firing, aod promotion, or any other change of status of other
employees are given particular weight.
3) Officers or members of a managetial staff, if they perform the
..
following duties and responsibilities:
3.1. Prinmily perform work directly related to management policies of
their employer;
3.2. Customarily and regularly independent judgment;
3.3. (a) Regularly and directly assist a proprietor or managerial
employee in the management of the establishment or subdivision
thereof in which he or she is employed; or (b) execute, under
general supervision, work along specialized or exercise discretion
and technical lines requiring special training, experience, or
knowledge; or (c) execute, under general supervision, special
assignments and tasks; and
3.4. Do not devote more than ~enty percent (20%) of their hours
worked in a workweek to activities which are not directly and
(bl~ te we cl Ille v.ak cl toe empk)yee is sud! tiat he has oo regua- worltdays in:l oo regu& rest days cai be
sdleoJed, 1-e gia1 be paid an addiiooal con11e11satia, a at lea5I ttlity percent (30%) cl his leg\S ~ u w
pelbmed~ &.ldaysofld~.
(c) Ww. periooned oo arr, special hoiday shal be paid an addfu1al COOl)eRSati:)n d at~ lh#l'f peiceot (30%) d lhe
w
regut.r wage rJ tie ertl)loyee. Wlere sudl hoiday fals on lhe eRl)loyee's scheooled rest di!f,he shal be entitled to
an adci1xxlii COll'!)e!lSalXX ofat least ifty per cent (50%) cl his regula' wage.
(d) v.me ¢le cxt,ecwe balgamJ agreemertCJ c4ler e1111i:atJ1e ~ conl'act ~ '1e pa)'lllef1t rJ a hgher
premunpay lh.r1 flat presoi>ed \l\def ltis Article, t h e ~ shal pay~ higher rate.
' No.3IA!. 2019Handbook on Wakeis' Stlb.my Mr.e!aly Benefds, issued Ir/ Ille Bueau ofWorkilg Coootions, DOLE.
1 Artide 94. Labo' Code on regulir hoida"f pay.
CHAl'TER TH Rf.E
137
LABOR STANDARDS
closely related to the perfoanance of tl1e work descabed 111
paragraphs 3.1, 3.2, and 3.3 above.
4) Kmambahay1 and persons in the personal service of another;
5) Workers who are paid by results, including those who are paid on
piece rate, talury, pa~aw or task basis, and other non-time work, if their
output rates arc in accordance with the standards prescribed in the
regulations, or where such rates have been fixed by the DOLE
Secretary; and
6) Field personne~ if they regularly perform their duties away from the
principal or branch office or place of business of the employer and
whose actual hours of work in the field cannot be determined with
reasonable certainty.'
3. OISTINCTIONS.
a. Regular holidays vs. speda/ days/special holidays.
The principal distinctions2 between regular holiday, on the one hand,
and special day/special holiday, on the other hand, are as follows:
1. A covered employee who does not work during a n1,11/ar holitU:J is paid
100% of his regular .daily wage; while a covered employee who does not work
during a pedal day/ Jj!ldal holid'!)I does not receive any compensation under· the
principle of "no work, no pay." · ·
2. A covered employee who works during a reg11/ar ho.iday is paid 200% of
his regular daily wage; while a covered employee who works during a !pedal
day/!pedal holiday is only paid an additional compensation of not less than 30% of
the basic pay or a total of 130% and at least 50%over and above the basic pay or a
total of 150%, if the worker is permitted or suffered to work ·on a Jj!ldal tU!J/!pedal
holiday which falls on his scheduled ml tU:J·
Unless otherwise modified by law, order or proclamation, the following
are the four (4) special days or special holidays in a year under the !awl that shall be
observed in the Philippines:4
• Ninoy Aquino Day - Monday nearest .August 21
• All Saints Day November 1
• Feast oflmmaculate
Conception of Mary - December 8
No.318l,ll.
Qtie.n nofiw:l M t.nier Section 2ri Exeame Order No. 200 µooe 30. 1987). ais prcMled tt1at lJjencefool, tie 1eims
'legal CJ regu.r holilcr( o'1d 'special holda'(, as used i1 laws, orders,~ and regulatois CJ oiler is&Jances shal ro11 be
refefred b as 'regoJarholilcr( and 'speca day'. respecWet)'.° .
3 Executive Order No. 292, as anmled 17/RA No. 9849,and as hl1!lel' aneooed b'( RA No. 10966.
' No. 3[q.2019 Handbook onWal(eis' SWay M:rietayBenefis, issued byIle BlrealolWOlliilg Conditxns, DOLE.
138 BAR RCVIEWER ON IABOR I.AW
• Last Day of the Year - December 31 1
b. Special days/special holidays vs. specialYiJ1lkiI1g days or special
W.Ilsil1g holidays.
As distinguished from special days/ special holidays as discussed above,
for work performed on a declared spetial working d!J or spetial working holi~, an
employee is entitled only to his/ 1:er daily wage rate. No premium pay is required
since work performed on said day is considered work on an ordinary workday.2
An example of a special working holiday is the National Bibk D'!Y
prescribed wider R.A. No. 11163, otherwise known as the "National Bibk Df!Y A,t,"
which was signed into law on December 20, 2018 by President Rodrigo R Duterte.
It declared the last Monday of every year as National Bible Day. Another example
is the National Women's Day pro\-ided for under RA. No. 6949 [April 10, 1990]
which declared March 8th of ever'/ year as a special workin_g holiday to celebrate iLl
c. lnclusion/non-inc/usion of COLA in the computation.
According to a uzbor AduiJo,j issued by the DOLE Secretary, while
COLA is included in the computation of the ~ holidays, it is IlQ! included
in the computation of other wage-related benefits such as premium pay, overtime
pay, night-shift differential pay, 13th month pay and retirement pay.
4. COMPUTATION OF PREMIUM PAY FOR HOLIDAYS.
uzbor Advisory No. 06, Smu of 2013,5 on the Payment of Wages for the
I b. If it is an employee's ~ .
Regular Holidays, Special (Non-working) Days and Special Holiday, specifically
promulgated the following rules that shall apply:
1. REGULAR HOLIDAYS
t • If worked - first 8 hours - plus 30% of 200%
• If the employee did not work he/she shall be paid 100 percent of
his/ her salary for faat day. Computation: (Daily rate + Cost of Living
Allowance) x 100%. The COLA is included in the computation
of regular holiday pay.
• If the employee worked he/she shall be paid 200 percent of
his/her regular salary for that day for the first eight hours.
Computation: (Daily rate + COLA) x 200%. The COLA is also
included in computation of ~holiday pay.
I Id.
l [)()I.E Memoonbn CioJirNo. 1, MiJdl 8, 2004,
1 Seem 2, RA No. 6949.
' Pe.' l.ab<J M-iW'/ dated 7>irt 2011 issu&:I by~ OOLE Secreliry Rosmla D ~ See also No. 3 (Dl
2019 fmdbcia( ai W<Jti,s' SlabJby Mlneay Booefts, issued by hl !ueaJ of'Namg Cood'ltklns, DOLE.
I Issued O'I OailEr 1, 2013by Ac6)J Seaelay Oanio P. Quz.
CHAl'TER TH REE 139
lASOR STANDARDS
• If the employee worked in excess of eight hours (overtime
work), he/she shall be paid an additional 30 percent of his/ her
howly rate on said day. Computation: Hourly rate of the basic daily
w:ige x 200% x 130% x number of hours wocked.
• If the employee worked during a tcgular holiday that also.falls
on his/her rest day. he/she shall be paid an additional 30 percent of
his/ her daily rate of 200 percent. Computation: (Daily rate + COLA)
x 200%] + (30% [Daily rate x 200%)].
• If the emplo_yee worked_in excess of eight hours (overtime
work) during a rc_gular holiday that 'also falls on his/her rest
dax, he/she shall be paid an additional 30 percent of his/ her hourly
rate on said day. Computation: (Hourly rate of the basic daily wage x
200% x 130% x 130% x number of hours worked);
Simplified Computation:
a. If work is tendered on an employee's regular workday -
• If unworked - 100%
• If worked - 1st 8 hours - 200%
• Work in excess of 8 hours- plus 30% of hourly rate on said day
• If unworked -100%
• Work in excess of 8 hours - plus 30% of hourly rate on said day
2. SPECIAL (NON-WORKING) DAYS OR SPECIAL
HOLIDAYS
• If the employee did not work, the "no work, no pay" principle
shall apply, unless there is a favorable company policy, practice, or
CBA granting payment on a special day.
• If the employee worked, he/she shall be paid an additional 30
percent of his/her daily rate on the first eight hours of work.
Computation: [(Daily rate x 130%) + COLA).
• If the employee worked in excess of eight hours (overtime
1¥Jl!ls),. he/ she shall be paid an additional 30 percent of his/her
hourly rate on said day. Computation: (Hourly rate of the basic daily
wage x 130% x 130% x number of hours worked).
• If the
employee worked during a 5JJedal day that also falls on
h!slher r~t dav, he/she shall be paid an additional fifty percent of
his/her daily rate on the first ·eight hours of work. Computation:
[(Daily rate x 150%) + COLA).
 SAR P.fVlEWER ON lABOR IAW
140
• If the emplo.,yee warked in excess ofeight hours (overtime work)
during a special dav that also falls on 1!4/her rest day, he/s~e
shall be paid an additional 30 percent of his_/her_houtly rate on said
0
day. Computation: (Hourly rate of the basic daily wage x 1501/o
130% x number of hours worked).
Simplified Computation:
a. ff unworked •
• No pay, exapt if there is a company policy, practice, or collective
bargaining agreement (CBA) which grants.,payment of wages on
special days even if W1worked.
b. If worked •
• Firsr 8 hours - plui 30% of the daily rate of 100%
• Work in excess of 8 hours - plus 30% of hourly rate on said day
c. If falling on the employee's rest day and if worked.
• First 8 hours - plus 50% of the daily rate of 100%
• Work in excess of 8 hours - plus 30% of hourly rate on said day
e-1.
FACILITIES VS. SUPPLEMENTS
(NOTE: This Is included under this topic of Hours of Work.
For better presentation, It :s discussed under the topic "B. Wages", infra)
3.
WEEKLY REST PERIODS
1. DURATION.
It shall be the duty of evecy employer, whether operating for profit or not,
to provide each of his employees a ~ rest period of not less than twenty•
four (24) consecutive hours after every six (6) consecutive normal work
days.1
2. PREROGATIVE OP EMPLOYER TO SCHEDULE WEEKLY REST
DAY; EXCEPTION - RELIGIOUS GROUND.
The employer has the prerogative to determine and schedule the weekly
rest day of his employees subj~t to the CBA and such rules and regulations as the
DOLE Secretary may provide. However, the employer shall respect the preference
of employees as to their weekly rest day when such preference is based on
religious grounds.2
• Article 91 (a).Labor Code.
2 Attide 9l(bj Id.
CHAl'TER THREE 141
IABORSTANDAADS
In other words, the employer's right and prerogative is subject to the
preference in the choice by the employee of his rest day based on religious grounds.
Article 91, in fact, makes the employer duty-bound to respect such preference of
x the employee if based on religious grounds. Where, however, the choice of the
employees as to their rest day based on religious grounds will inevitably result in
serious prejudice or obstruction to the operations of the undertaking and the
employer cannot nocmally be expected to resort to other remedial measures,, the
employer may so schedule the weekly rest day of their choice for at least two (2)
days in a month.1
3. SUNDAY NOT THE REST DAY DESIGNATED BY LAW.
With the repeal of the Blue S1mdtrJ umJ- by the Labor Code,l Sunday is no
longer the rest day designated by law. Consequent to such repeal, the rule now is
that 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 resultant benefits as provided in the law and its implementing rules.•
4. WHEN EMPLOYER MAY REQUIRE WORK ON REST DAY.
.{ The employer may require any of its employees to work on their
scheduled rest day for the duration of the following emergency and exceptional
conditions: ·.., ·
I
a) In case of actual or impending emergencies caused by serious
accident, fire, flood, typhoon, earthquake, epidemic or other disaster
or calamity, to prevent loss of life and property, or in case of forre
maje11re or imminent danger to public safety;
b) In case of urgent work to be perfooned 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 ru1ture of the work is such that the employees have to work
a
continuously for seven (7) days in week or more, as in the case of the
crew members of a vessel to complete a voyage and in other similar
cases; and
Sedm4, Ruleffl,Boollll, ~ k>~lhe l.mCode.
RA. No. 946 {Jooe 20, 1953l dheMise knoY.11 as hl 'Bue &J1day 1.z,y; l)(Wdes ta no carmercial, ~ r,
~ enleqme 01 estatir.slmesrt rruf1r9 sbl?S and 51-q)S rJ ?nf knd, sha'I be ~ CJl airt SUiday, Ovis1rnas
[la't, New Ye.ls [la't, fb'f llusday, and Good Frilirf,i'an 12:00 roongli D12:00 nilnglt.
3 At1x:le 317 l302J,L.ab01 Code; Sedm 1~ -rue IA, 8ool( Vil RIJles k> ffl)lenml tie L.abOI Code.
' Sedm 2. Rule UI, 8ool( Ill, IJid.
 142 BAR REYIEWER ON L\BOR I.AW CHAmRTHREE 143
lABOR STANDARDS

Q When the work is necessary to avail of favorable weather or {a) Regular Holidays
environmental conditions where performance or quality of work is New Year's Day - January 1
dependent thereon. 1 Maundy·Tuursday - Movable Date
Good Friday - Movable Date
5. EXCLUSIVE NATURE OF THE ENUMERATION.
Eidsl/Fitr Movable Date
No employee shall be required against his will to work on his scheduled Eidu/Adha - Movable Date
rest day except under the circumstances provided therein where work on such day Araw ng Kagitingan
may be compelled. 2 However, in case work on rest day is required and not one of (Bataan and Corregidor
the said circumstances is present, the employee may wo~ during such rest day but Day) - Monday nearest April 9
only on voluntary basis. And once an employee volunteers to work on his rest Labor Day - Monday nearest May 1
day, he should express such willingness and desire to work in writing. Accordingly, Independence Day - Monday nearest June 12National Heroes
he should be paid the additional compensation for worlcing on his rest day under Day - Last Monday of August
the law.3 Bonifacio Day - Monday nearest November 30
Christmas Day - December 25
6. SOME PRINCIPLES ON WEEKLY REST DAY.
Rizal Day - Monday nearest December 30
• Where the weekly rest is given to all employees simultaneously, the employer (b) Nationwide Special Holidays
should make known such rest period by means of a written notice posted Ninoy Aquino Day - Monday nearest August 21
conspicuously in the workplace at least one (1) week before it becomes All Saints' Day - November 1
effective.4 Last Day of the Year - December 31
• Where the rest period is not gtanted. to all employees siroultaneously and
collectively, the employer shall make known to the employees their respective 2. TWELVE (12) GUARANTEED PAID REGULAR HOLIDAYS.
schedules of weekly rest day through written notices posted conspicuously in Article 94 of the Labor Code and the subsequent amendments1 thereto
the workplace at least one (1) week before they become effective.5 guuantee a worker the enjoyment of twelve (12) paid regular holidays in a year.
• An express waiver of compensation for work on rest days and holidays 1nis is important for purposes of reckoning certain divison and computation of
provided in an employment contract which fixes annual compensation of the employee benefits.
employees is not valid and does not operate to bar claims for extra
compensation therefor.6 The provision on holiday pay is mandatory, regardless of whether an
employee is paid on a monthly or daily basis.2
• Rest day cannot be offset by regular workdays.7
3. HOLIDAY PAY RULE
4. "Holiday pay" refers to the payment of the cegular daily wage for any
HOLIDAYS 11n111orked regular holiday. 3 The Holiday Pay Rule, therefore, applies to
entitlement to holiday pay during regular holidays and not during special non-
1. LIST OF HOLIDAYS. working days. Thus, evety employee covered by the Holiday Pay Rule is entitled
to the minimum wage rate (Daily Basic Wage and COLA). This means that the
The current regular holidays and nationwide special holidays are as
follows: employee is entitled to at least 100% of his minimum wage rate even if he did not
report for work, provided he is present or is on leave of absence with pay on the
workday immediately preceding the holiday. Should the worker work on that day,
1
Sedioo 6, Rule Ill Book Ill Rules k> Implement lhe Lm Code; Mx:1e 92, Labor C<Xfe.
2 Id.
Such as Exeaiwe Older No. 203, RA No. 9177, RA No. 9492 and RA No. 9849.
l Id.
4
lnsulcr Bcrlk d Asia and Amen:a fn1>b/ees' Union ~BAAEU)v. ~ . G.R. No. l-52415, Oct. 23, 1984. 132 SCRA663:
&m!S(al,Rulell~BookHl,lbn Oicrterad·Bank ~ ~ v. Opie, G.R. No. L-44717, Aug. 28, 1985, 138 SCRA 273; ~
5 Sedioo 5(bl, Ruk! Ill Book I~ Ibid.
6
OMsiofl ~ nlWOlters lklklll v. Bacull,lat. G.R No. l-48437, Sepl 30, 1986, 144 SCRA 510.
As held in Mettury Drug Co., Inc. V. Dayao, G.R No. L-30452, Sept 30, 1982. No. 2(At Id.: Sedicxl 3, ~ IV, Book Ill, Rules t o ~ dle Lalor Code; COLE Mmrcn1um Ciwlar No. 01, March
1
Lagalic v. NLRC. G.R ~- 121004, Jan. 28, 1998. 8,2004.
144 BAR REVIEWER ON IABOR lAW
such work performed on that day would merit at least twice or two hundred
percent (200%) of the wage rate of the employee. 1
4. COVERAGE OF THE HOLIDAY PAY RULE; EXEMPTED
EMPLOYEES.
As a general rule, the holiday pay benefit is applicable to all employees.
The following, however, are not covered by this benefit as they are considered
exempted employees:
1. Government employees, whether employed by the N.ational
Government or any of its political subdivisions, including those
employed in govemment-owned and/or controlled corporations with
original charters or created under special laws;
2. Those of retail and setvice establishments regularly employing less than
ten (10) workers; . benefits - Employers should grant the same percentage of the holiday
3. Kas(JlllbahtlJ and persons in the personal service of another;
4. Managerial employees, if they meet all of the following conditions:
4.1. Their primary duty is to manage the establishment in which they
are employed or of a department or subdivision thereof,
4.2. They customarily and regularly direct the work of two or more
employees therein; and
4.3. They have the authority to hire or fire other employees of lower
rank; or their suggestions and recommendations as to hiring, firing,
and promotion, or any other change of status of other employees
are given particular weight
5. Officers or members of a managerial staff, if they perform the
following duties and responsibilities:
5.1. Primarily perform work directly related to management policies of
their employer;
5.2. Customarily and regularly exercise discretion and independent
judgment;
5.3. (a) Regularly and directly assist a proprietor or managerial
employee in the management of the establishment or subdivision
thereof in which he or she is employed; or (b) execute, under
genecal supetvision, work along specialized or technical lines
requiring special training, experience, or knowledge; or (c) execute,
under general supervision, special assignments and tasks; and
~.4. Do not devote _more ·than twenty percent (20%) of their hours
worked in a wotkweek to activities which are not ditectly aild
closely related to the performance of the work described in
paragraphs 5.1, 5.2, and 5.3 above.
1
No. 2(C). Id :Secbl 4. rue r1, Boci 111, ~ t o ~ Ole l.abcx"Code.
CHAITTR THREE 145
lABOR STANDARDS
6. Field personnel and other employees whose time and performance are
unsupetvised 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 iaespective of the time consumed in the
performance thereof. 1
5. RIGHT TO HOLIDAY PAY IN CASE OF ABSENCES.
1) Employees on leave of absence with pay - entitled to holiday- pay
when they are on leave of absence with pay.2
2) Employees on leave of absence without pay on the day
immediately preceding the regular holiday - may not be paid the
required holiday pay if they have not worked on such regular holiday.3
3) Employees on leave while on SSS or employee's compensation
pay as the benefit granted by competent authority in the form of
employee's compensation or social security payment, whichever is
higher, if they are not reporting for work while on such benefits.4
4) When day preceding regular holiday is a non-working day or
scheduled rest day - should not be deemed to be on leave of absence
on that day, in which csse, employees are entitled to the regular
holiday pay if they worked on the day immediately preceding the non•
working day or rest day.5
6. RULE WHEN REGULAR HOLIDAY FALLS ON A SUNDAY.
The latest DOLE Hantibook6 states that when a regular holiday falls on a
Sunday, the following Monday shall not be a holiday, unless a proclamation is
issued declaring it a special day. The President issues a proclamation in advance for
l the following year which specifies the dates when all the holidays should be
celebrated or observed. In the absence of a presidential proclamation, what should
be observed is the provision of R.A. No. 9849 which states-that if the holiday falls
on a Sunday, the holiday will be observed on the MondtrJ that follows.
7. SUCCESSIVE REGULAR HOLIDAYS.
Where there are two (2) successive regular holidays, like Maundy Th11rsdig
and Good Fridtg, an employee may not be paid for both holidays if he absents
himself from work on the day immediately preceding the first holiday, unless he
l
 BAR REVlEWER ON lABOR lAW
wodts on the fort holiday, in which case, he is entitled to his holiday pay on· the
nmnd holiday. 1
8. TWO REGULAR HOLIDAYS FALLING ON THE SAME DAY.
There are cases in the past2 when two (2) regular holidays fell on one and
the same day, such as when Annv ng Kaitingan falls on the same day as Ma11ndy
Thurs"'9 or Good FridtrJ. The rulel is .that a covered employee is entitled to the
following:
o If unworked - 200% for the two regular holiday~,
o If worked - 200% for the two regular holidays tllYi premium of 100% for
work on that day for a total of 300¾ of the daily wage.4
The 200% represents the two (2) guaranteed paid regular holidays of Ar01V
,~ Ka/jtingan and either Ma11ndy Th11mlay or Good Frulay. I f ~ another 100% is
added to his 200% basic pay for working not more than eight hours in consonance
with the requirement of wage legislations. However, if the same day happens to be
the employee's scheduled rest day, and he is pennitted or suffered to work, he is
entitled to an additional JO% of his wage for that day, that is, 300% of his daily rate,
or a total of 390%. 5 It bears noting that the DOLE Explanatory Bulleti~ enunciating
the above manner of reckonmg the holiday pay has been declared valid in Arian
Transmis.rion Corporation u. CA. 7
·1··..
9. RIGHT TO HOLIDAY PAY OF TEACHERS.
. ·,
a. Private school teachers, in general.
i
Private school teachers, including faculty members of colleges and
universities, may not be paid for the regular holidays during semestral vacations.
They shall, however, be paid for the regular holidays during Christmas vacation.B
b. Holiday pay ofhourly-paid teachers.
A school is exempted from paying hourly-paid faculty members their pay
for regular holidays, whether the same be during the regular semesters of the
CHArnR THREE 147
IARORSTANDARDS
school year or during semestnl, Christmas, or Holy Week vacations. However, it is
liable to pay the faculty members their regular hourly rate on days declared as
special holidays or if, for some reason, classes are called off or shortened for the
hours they are supposed to have taught, whether extensions of class days be
· ordered or not; and in case of extensions, said faculty members shall likewise be
paid their hourly rates should they teach during said extensions.•
10. RIGHT TO HOLIDAY PAY OF PIECE WORKERS, TA.KAY AND
OTHERS PAID BY RESULTS.
a. Holiday pay ofpiece workers, takay or employees paid by results.
Where a covered employee is paid by results or output such as payment
on piece-work, his holiday pay should not be less than his average daily earnings
for the last seven (7) actual working days preceding the regular holiday. In no
case. however, should the holiday pay be less than the applicable statutory
minimum wage rate. 2
b. Workers paid by results dassi.ied into supervised and
unsupervised.
The principal test to detennine entitlement to holiday pay is whether the
employees' time and performance of the work are ''supmued" or "unmpervised,, by
their employer. If supervised, the employee is entitled to holiday pay. If
unsupervised, he is not.3
The distinctions between mpm,ised and 1111111/Jervised workets paid by results
are as follows:
(t) Those whose time and perfonnance are mpmistd by the
emplQJer. ~ there is an element of control and supervision over
the manner as to how the work is to be perfonned. A piece-rate
worker belongs to this category especially if he performs his work in
th~ company premises; and
(2) Those whose time and performance are Hll!I/J)l,rvi.r1d. Here, the
employer's .control is ovet the _result of the woilc. Workers on palgao
and takay basis belong to this gtQUp. Both classes of workers ate
paid per unit accomplished. Piece-rate payment is genetally practiced
in gannent factories where work is done in the company premises,
while payment on pakyao and takay basis is commonly observed in the
1
Jase Rizal College v. NI.RC, G.R. No. 65482, Oeam>er 1, 1987.
1 Sedkln 8 ~t ~ W, 8cdt 111. ~ ID Implement lhe Lm Qide; No. 11 GL OOl.E ~ oo Wakers Sla1uby
t.bleayBenerds.
1 Labc, Cqress d !he Phq)piles v. NLRC, G.R No. 123938, M8'f 21, 1998, 200 SCRA 509; TiJI v. Lapre. GR No.
151228.Aug\l;t 15, 2002.
 BAR ~EVIEWER ON LABOR LAW
agricultural indusU;7, such as in sugar plantations where the work is
perfoancd in bulk or in volumes, hence, difficult to quantify.1
11. RIGHT TO HOLIDAY PAY OF SEASONAL WORKERS.
Seasonal workers are entitled to holiday pay while working during the
season. They may not be paid the required regular holiday pay during off-season
where they arc not at work.2
12. RIGHT TO HOLIDAY PAY OF SEAFARERS.
Anv hours of work or duty including hours of ~atcbkeeping performed
by the seafa;er on designated rest days and holidays shall be paid rest day or holiday
pay.l
13. MONTHLY-PAID EMPLOYEES, NOT EXCLUDED.
In the cases of IBAAEU v. lndong,4 and The Chartered Bank v. Opk,5 the
provision of Sectio11 2, &le IV, Book III of the Labor Code'_s Implementing RNk.r,
which provides that
"SEC. 2 S~ of,mp!O_Jtupaid by tht 111onlh. - Employees
who arc unifocmly paid by the month, irrespective of the number of
working days therein, with a salary of not less than the statutory or
e.srablished minimum wage, shall be presumed to be paid for all
days in the month whether worked or not
"For this purpose, th~ monthly minimum wage shall not
be less tlun the stitutory minimwn wage multiplied by 365 days
divided byrwclve."
was declared null and void by the Supreme Court, alongside with Policy Innructio11.r
No. 9 [Paid Legal Holidays] issued by the DOLE Secretary because in the guise of
clarifying the provision on holiday pay of the Labor Code, the same, in effect,
amended it by amplifying the scope of its exclusion.6 The Labor Code does not
exclude monthly-paid employees from the benefit of holiday pay. However, the
implementing rules on holiday pay excluded monthly-paid employees from the said
benefit by inserting Section 2 under Rule W, Book ill thereof which provides that
monthly-paid employees are presumed to l?e paid for all days in the month,
whe1her worked oc not. Further, in Policy Instruction.r No. 9, the DOLE Secretary
categorically declared that the benefit of holiday pay is intended primarily for daily-
paid employees when the law clearly states that every worker should be paid his
1
Lmov.NLRC.G.RNo.111042.0ctx>er:!6, 1999,317SCRA420.
8 ~). ~ 'N, Book Ill, fqjes kl ~ lhe Laba Code; th II G), DOLE Handboo( on Wcners Sf.atltay
1 Seaic,,
llonelily Benei1s.
J Seciul 11{o.ertime and Hadays), lv'Elro81dtrn Ciruar No. 10, Series d 2010, Octi>er' 26, 2010 (:A.mer1ded Standeid
Te,ms and C<mtions Ci<M!mi't,J the Ole,seas ~ d Fqli'i<) ~ Oo-Bcml 0cearGoog Shipsj.
• lnWial Bani< at Asia and Amerol E/11Jbyees Unb1 OBAAEUJv. roong,G.R No. L-52415, Oct 23, 1984, 132 SCRA 663.
s The Omered Bani< ~Association v. Opie, G.R No. L-44717, AulJ. 28, 1985.
6 See a1sO Vtluga v. NI.RC. G.R No. 75038,AulJ. 23, 1993, 225 SCRA 537.
CHAPTER Ttt REE 149
LABOR STAN DAROS
regular holiday pay. 1bis is a flagrant violation of the mandatory directive of Article
4 of the Labor Code which states that doubts in the implementation and
interpretation of the Labor Code, including its implementing rules, should he
resolved in favor of labor. Moreover, it should always be presumed that the
legislature intended to enact a valid and permanent statute which would have the
most beneficial effect that its language peanits. t
14. SOME IMPORTANT PRINCIPLES ON HOLIDAYS.
• Non-Muslims are entitled to Muslim holiday pay during Muslim
holidays2 considering that all private corporations, offices, agencies, and
entities or establishments operating within the designated Muslim provinces
and cities are required to observe Muslim holidays, hence, both Muslims and
Christians wotking within the Muslim att?-5 may not report for work on the
days designated by law as Muslim holidays.3
• The day designated by law for holding a general election is deemed a regular
holiday.4 But recent issuances by the President declared general elections as
special (non-wotking) holidays. For instance, the May 9, 2016 national and
local elections and the May 13, 2019 midterm elections were declared by
Presiden~ Benigno Aquino5 and President Rodrigo Duterte,6 respectively, as
special (non-wotking) holidays. ·
• Offsetting of holiday work with work on regula+ days is not allowed.7
5.
SERVICE INCENTIVE LEAVE
1. RIGHT TO SERVICE INCENTIVE LEAVE.
Under Article 958 of the Labor Code, every covered employee who has
rendered at least one (1) year of service is entitled to a yearly service incentive leave
I hsularSn d Asia aid America~ Union {l8AAEU) v. kloo'q,&4)1a.
2 San Mi:Juel Corpaa!i:xl v. The Hon. CA, GR No. 146n5, Jcri. 30, 2002.
1999 Handbook oo W<rtS'1 Slal!Al:ry Bmefds. approYed by tien DOLE Secretly 8iernrilo E. l.aJuesma on Decm-ber
14, 1999. .
• Artide 94{c). Labor Code; See Associa1ed Labor Unoos (ALUJ-TUCP v. lelrond~tejo. GR th 111988. Oct 14,
1994,237 SCRA621 v.ti:11 i'l'lavest.eeledmdSa-gg\llicl'g Kalml (SK).Theem'generaleledi:lns" meais,rt lhe
context athe ~Ul'GY:l Kabml (SK) electials, toe regliTelldm b- rnetrm at,e SK. as lisinguished rcxn toe
special ek!dms fer such officersMlreol'ii, lhe fact that 00~ toose betNeerl 15 aid 21 t>at part rt t,e eledxln for rnerrbels
d lhe SK does not nae such elecion ~ less a regular kx:a electm. Coosequenltf,ij was held M 'ltilelher h lhe cootex1
d lhe CBA a he Labor Cooe, Dec. 4, 1992 was ahofr:!ay tn,l1m hcida'f Pa'/ shwd be pail by res;xment ~ -
1 Per Presidential Proclamation No. 1254 (April 25, 2016).
Per Presidential Proclamation No. 719(Mly9,2019}.
Lagatic v. NLRC, GR No. 121004, Jal. 28, 1998.
M<r. 95. Rift to ~ n:ri-8 save. •(a) Evert en1)klyee llllo has reodered al least one '/fS d seivw;e shal be
eoWed lo aYmf seivce ilcentive leaYe of frle days v.ith Pa'/,
{b) This pro.isioo shall not applo/ kl rose llllo .re aread'/ enjoyrlJ lhe beoeft heroo ~ed, toose eiip/ng vacatia1
leave v,ith Pa'/ of at leastfrle days aid !hose~ i'1 estab6slvl8"G regulcriJ er!'l)OjTg less lhan B l ~ or i'1
 CHAma THREE 151
!\A, REVIFWER ON LABOR I.AW lASOR STANDARDS
150
firing, and promotion, or any other_ change of status of other
(SIL) of five (5) days with pay. 1 The phrase ''leave with pay" means that the employee employees are given particular weight.
is entitled to his full compensation during his leave of absence from work.2 4. Officers or members of a managerial staff, if they perform the
The tean '~I /e(JI/ on,y.ar ofsenna" should mean service within twelve. (12) following d1,1ties and responsibilities: ..
,months, whether continuous or broken, reckoned from the date the employee 4.1. Primarily perfonn work directly related to management polices of
started working, including authorized absences and paid regular holidays, unless the their employer; . . . .
4.2. Customarily arid regularly exerase discretion and independent
number of working days in the establishment as a matter of practice or policy, or
that provided in the employment"contract, is less than twelve (12) months, in which judgment; . . .
case, said period should be considered as one (1) year for the purpose of 4.3, (a) Regulady and directly asS1st a pro~netor or man~~~al
employee in the management of the establishment or subdivision
deteanining entitlement to the service incentive leave benefit.3
thereof in which he or she is employed; or (b) execute, under
In ]PL ,. CA,4 where an employee was never paid his service incentive gener.tl supervision, work along specialized or technical lines
leave during all the time he was employed, it was held that the same should be requiring special tiaining, experience, or knowledge; or (c)
computed not from the start of employment but a year after commencement of execute, under general supervision, special assignments and tasks;
semce, for it is only then that the employee is entitled to said benefit This is and
because the entid~ent to said benefit accrues only from·the time he has rendered 4.4. Do not devote more than twenty percent {20%) of their hours
at least one year of service to his employer. The computation thereof should only worked in a workweek to activities which are not directly and
be up to the date of termination of employment There is no cause for granting closely related to the performance of the work described in
said incentive to one who has already tenninated his relationship with the paragraphs 4.1, 4.2, and 4.3 above; .
employer. s. Field personnel and those whose time and performance are 11nslljJfflltJtd
by the employer,• including those who are engaged o_n task or contract
2. COVERAGE.
basis, purely commission basis, ~r those who ~re paid a fixed a~ount
This benefit applies to all employees 1xapt. for perfomung work irrespecove of the ttme consumed 1J1 the
1. Government employees, whether employed by the National perfoJlllance thereof,2
Government or any of its political subdivisions, including those 6. Those already enjoying this benefit;
7. Those enjoying vacation leave with pay of at least fiv~ (5) days; and
employed in government-owned and/or controlled corporations with
8. Those employed in establishments regularly employ1J1g less than ten
original charters o: created under special laws;
2. Persons in the personal setvice of anothei; (10) employees.3
3. Managerial employees, if they meet all of the following conditions: 3. KA.SAMBA.HAYS ARE NOW ENTITLED TO SIL.
3.1. Their primary duty is to manage the establishment in which they
The grant of 5-day SIL to domestic workers or kasambahays is not ~ased
are employed or of a department or subdivision thereof;
3.2. They customarily and regularly direct the work of two or more on Article 95 of the Labor Code but on the following provision of R.A. 10361:
employees therein; and "SEC. 29. Lttn,, Btn,fas. - A domestic worker who has
3.3. They have the authority to liire or fire other employees of lower rendered at least one (1) year of service shall be entide~ to an annual
rank; or their suggestions and recommendations as to hiring, savicc incentive leave of five (5) days with pay: ProviJ_td, That ~ny
unused portion of said annual leave shall not be cumulative or earned

es1ltisvnen1s exeff1Jled fnxn grantilg this benefit by lhe Seaelaly dlabor and EfllbJrnent mccnsidering lhevialx'ity
«rfira'dalcmllmdsdleslalishmerll
(c) The gm d beneft In excess d aa prrNided heC'ei1 n'I not Ile miKle a ~ d aatitlalicn er art cwt er
atrram!Mlm.
1 No. 7 ~ 2019 HllldbookmWakels' ~ tJamy Beneis, is5ued byh! 1ueai dWamg Ccrldilioos, OOlE;
SeealsoMde 95 (a). LabaCode; Sectioo 2. Rule V, Bodt Ul, IU!s lD~lhe Laba'Code.
2 1:sasiav. SantljJuel Bn!M31y.~ G.R No. L-16696;.Jcll.31, 1962.
3 Secfm 3, ~ V, Bock W, ~ ID l1l)lement Ile Laber Qxle; No. VI (BJ, DOLE Haixllxd oo Wake1s StatuDy
M:l1elaly Bmeft;; ln!egrafaS Cm'm Md Punllilg Waks. klc. v. M.RC, G.R No. 152427, hlg. 9, 2005.
' JPL M!lke&1g Frtrn0&m v. CA, G.R. No. 151966, Jltf 8, 2005.
152 IIAR I\EVIEWER ()N LABOR I.AW CHAl'TER THREE 153
IABORSTANDAROS

over to the succeeding years. Unusc~ lea~cs shall not be convertible to Labor Code and its implementing rules, speak of the number of months in a year
cash."1 for entitlement to said benefit Resultantly, part-time employees are also entitled to
the full SIL benefit and not on a pro-ra/a basis. 1
Clearly, as distinguished from the SIL under Article 95, this kind of SIL
benefit is not convertible to cash, if unused. 6. CURIOUS ANIMAL DOCTRINE.
4. USAGE/CONVERSION TO CASH; BASIS OF COMPUTATION. Auto B11s TranJj>orf System, Inc. v. Ba111isla,2 clarified the correct reck~ning of
the prescriptive period for SIL pay in that it is a curious animal in relation to
a. Use ofSIL for sick and vacation leave. other benefits granted by the law to every employee. This is so because in the case
The service incentive leave may be used for sick and vacation leave of SIL, the employee may choose to either use his leave credits or commute it to its
purposes.2 monetary equivalent if not exhausted at the end of the year. Furthennore, if the
employee entitled to SIL does not use or commute the same, he is entitled upon his
b. Commutability to cash if unused. resignation or separation from work to the commutation of his accrued service
The unused service incentive leave is commutable to its money equivalent incentive leave. In other words, an employee who has served for one year is entitled
at the end of the year.3 to it..He may use it as leave days or he may collect its monetary value. To limit the
award to three years is to unduly restrict such right3
c. Basis ofcomputation.
Correspondingly, it can be conscientiously deduced that the cause of
In computing rhe SIL benefit, the basis is the salary rate at the date of
action of an entitled employee to claim his SIL pay accrues from the moment the
conversion.• The use and cor_version of the SIL benefit may be on a pro-ra/a basis.5
employer refuses to remunerate its monetary equivalent if the employee did not
d. Wustration. make use of said leave credits but instead chose to avail of its commutation.
Accordingly, if the employee wishes to accumulate his leave credits and ~pts for its
To illustrate the computation of the SIL cash commutation, an employee commutation upon his resignation or separation from employment, his cause of
who is hired on January 1, 2018 and resigned on March 1, 2019, asswning he has
action to claim the whole amount of his accumulated SIL shall arise when the
not used or commuted any of his accrued SIL, is entitled upon his resignation to employer fails to pay such amount at the time of his resignation or separation from
the commutation of his accrued SIL as follows:6
employment.
SIL earned as of December 31, 2018 - Five (5) days Applying Article 306 [291 j of the Labor Code in light of this peculiarity of
Proportionate SIL for Jan. and Feb. the SIL, it can be concluded that the three (3)-year prescriptive period commences,
2019 (2/Ux 5 days) - 0.833 day not at the end of the year when the employee becomes entitled to the commutation
Total accrued SIL as of March 1, 2019 - 5.833 days of his SIL, but from the time when the employer refuses to pay its monetuy
equivalent after demand of commutation or upon termination of the employee's
5. RIGHT OF PART-TIME WORKERS TO SIL.
services, as the case may be.
In an Advisory Opini~n issued by DOLE's Bureau of Working Conditions, Thus, in the 2017 case of Lo11rdu C. Rodriguez v. Park N Ridt, Inc.,'
it was declared that part-time workers are en_titled to the full benefit of the yearly involving an employee who bas not availed of SIL for the entire 25 year~ _of her
five (5) days SIL with pay. The reason is that the provision of Article 95 .of the
employment, it was held that the prescriptive period wi~ respect to ~e1111_oner's
claim for her entire SIL pay commenced only from the tune of her restgnallon or
1
See Sectal 7, R1Ae II/, ~~ J;lJ\Js il1d ~ cl RA No. 10361 v.ti:11 JXtMies: 'SECTK>N 7. SeM:e separation from employment. Since petitioner had filed her complaint for illegal
h::enwe leaYe. • AKasaTibimy v.ho tes ~ at least ooe (1) yeat cl seiv,ce shal be riled Dan amal seiv,ce
ilcenwe leave cl al leastwe (5) days ~lh pa'/. dismissal on October 7, 2009, or a few days after her resignation in September
"Nrf ll1JSed palm d sal mi~ leave shal not be am.ilawe or carried Ml Dt i e ~ years. lrused leaves 2009, her claim for SIL pay has not prescribed. Accordingly, petitioner was
shal not be ronvenble kl cash."
2 No.71q, 2019 Hil1dbook 00 Wo!l(eis' Slalltay MJOetry Beoefits, issued by Ile &v'8au olWoitrg Coofm, DOLE.
A11iM:y Clprol cl the Boreai cl Worxi'9 Condioons, Depm,ent cl Labo' il1d ~lct(menl 00 Concfdion.5 a
3
Sooixl 5, Rue V, Bock Ill, Ru'es t o ~ Ile l.alxJCode; No. 7[q. 2019 Hil1dbook 00 Worxess'.Stai.rto!y MJne1ruy 1
Beneits, issuoo by the &mu aWm~ Cooatioos, DOLE. . Errpk)ymer,tclf'alt-titreWoo.ess; Cebunstiulteof T~yv. Op'e,GR. No.L- 58870,0ec.18, 1987, 156SCRA629.
' No. 7!Cl, bi!. 1 GR No. 156367, M?)' 16, 2005.
s kJ. This is based 00 tie ~oo a DOLE legal SeM:e. Femcn:lezv. M..RC, GR No. 105892, Jan. 28, 1998, 285 SCRA 149. 176; 349 Phil65.
' ki, based 00 Ille ~mi a OOlE Legal SeM:e. • LrudesC. RoooJuezv.Pcn NF&le, klc:.,G.R No.222380. Mnh 20, 2017.
154 8AR REVIEWER ON IABOR IAW
awarded SIL pay for her entire 25 years of service-from 1984 to 2009-and not
only three (3) years' worth (2006 to 2009) as determined by the Court of Appeals.1
6.
SERVICE CHARGES
1. ESTABLISHMENTS COVERED.
Article 962 of the Labor Code enunciates the rules on service charges
which apply only to establishments collecting service ~harges, such as hotels,
restaurants, lodging houses, night clubs, cocktail lounges, massage clinics, bars,
casinos and gambling houses, and similar enterprises, including those entities
operating primarily as private subsidiaries of the govemment.3
2. EMPLOYEES COVERED; EXCLUSION.
The same rules on service charges apply to all employees of covered
employers, regardless of their positions, designations or employment status, and
irrespective of the method by which their wages are paid except those receiving
more than P2,000.00 a month.•
Specifically excluded from coverage are employees who are receiving
wages of more than P2,000.00 a month.5 However, it must be pointed out that the
P2,000.00 ceiling is no longer realistic considering the applicable minimum wages
prevailing in the country. Hence, it must be disregarded.6
3. DISTRIBUTION.
All service charges c~llected by covered employers are required to be
distributed at the following rates:
I) 85% to be distributed equally among the covered employees; and
2) 15% to management to answer for losses and brea.kages.7
The share of the employees referred to above should be distributed and
paid to them not less often than once every two (2) weeks or twice a month at
intervals not exceeding sixteen (16) days.1
1
See also Ba-mJav. Quezon CoBeges alle Na1h, GR No. 235572. Dec. 05, 2018v.toere tie aw.rd aSil ran 1985 ~
retrerrenlgilrlled by tie CA was affin'noo by t i e ~ Ccut.
2
ART. 96. Service chatges. • Al service charges colecled by hotels, restaurants and similar estabfishmenls shall be
d'islriluted at the rate of e~hty-five perCEOt (85%) fOf al covered employees and fifteen percent (15%) for
manageme11t The share of the employees shal be equaDy distibuted among them. In case the service charge is
abolished, the share of the covered empio'fees shaft be considered Integrated In their wages.
3 kl.; Sedioo 1,Rule VI ISe!vi:e~esl,Book nt oflheRules blrrl)lemenltiel.abocCode.
4 Sedioo 2, Rule VI, Book Ill, Rules b ~ the l.abocCode.
Id
No. VII !Al, OOLE Haldbook oo Woocers Stahitory Mxlelaly Benefils.
1 Sedioo 3, Rule VI, Book UI.lli:I.: No. VII IAl. lbil.
CHAl'TER THREE 155
LABOR STANDARDS
4. INTEGRATION.
1n case the service charge is abolished, the share of covered employees
should be considered integrated in their wages, in accordance with Article 96 of the
Labor Code. The basis of the amount to be integrated is the average monthly share
of each employee for the past twelve (12) months immediately preceding the
abolition or withdrawal of such charges.2
5. SOME PRINCIPLES ON SERVICE CHARGE.
• Tips and services charges ace two different things. Tips are given by
customers voluntarily to waiters and other people who serve them out of
recognition of satisfactory or excellent service. There is no compulsion to give
tips under the law. The same may not be said of service charges which are
considered integral part of the cost of the food, goods or services ordered by
the customers. As a general rule, tips do not fotm part of the service charges
which should be distributed in accordance with the sharing ratio prescribed
under Article 96 of the Labor Code. However, where a restaurant or similar
establishment does not collect service charges but has a practice or policy of
monitoring and pooling tips given voluntarily by its customers to its
employees, the pooled tips should be monitored, accounted for and distributed
in the same manner as the service charges.3 Hence, the 85% : 15% sharing
ratio should be observed.
• Service charge is not in the nature of profit share and, therefore, cannot be
deducted from wage. It is not part ofwages.4
7.
13TH MONTH PAY
1. COVERAGE.
Under rhe law,s all employers are required to pay all their rank-and-file
employees, a 1311, month pay not later than December 24 of every year.
Only rank-and-file employees, regardless of their designation or
employment status and irrespective of the method by which their wages are paid,
are entitled to the 1311, month pay benefit. 6 Managerial employees are I!2!
1 Section 4, Rllle VI, Book 111, lbil.; No. VII 18], llld.
l Section 5, Rule VI, Book Ill, lbil.; No. VII 181 lbi:!.
i No. VII IC], DOLE Handbool( oo WrilRJs Stmllory lv'ooelaly Benefits.
l,lay0l1 Hotel &ReslaLrall V. Adana, GR No. 157634, Mrt 16, 2005.
p D. No. 851 ioece,rre- 16. 1975; ~ ()der No. 28 (Au;Just 13. 1986; ~ Gooelr.es on the
~ a l ! l e 131hMlnttiPaytaw[NoYerrber16, 1987.
6 bil.; SedXXl 1.t/em:r.r,d\Jn Onie' No. 28.

3AR REVIEWER ON IABOR !AW
entitled to 13th month payl unless they are so granted under an employment
contract or a company policy or practice.
2. EXCLUSIONS/EXEMPTIONS FROM COVERAGE.
The following employers are not covered by the 13"' month pay Jaw:2
1) The govemme.,t and any of its political subdivisions, including
government-owned and con~lled co1?orations, . ~x~ept those
corporations operating essentially as pnvate subsidiaries of the
govemment.3
2) Employers ahei;dy paying their employees 13th month pay or more in
2 calendar year or its equivalent at the time of the issuance of the
Revised Guidelines.•
3) Employers of those who are paid on purely commission, boundary,
or task basis, and those who are paid a fixed amount for performing a
specific work, irrespective of the time consumed in the performance
thereof, except where the workers are paid on piece-rate basis, in
which case, the employer shall be covered by the Rtviied G11ideli11es
insofar as such workers are concerned. Workers paid on piece-rate
lli!§. shall refer to those who are paid a standard amount for every
piece or unit of work produced that is more or less regularly
replicated without regard to the time_spent in producing the same.5
2.1. DOMESTIC WORKERS OR KASAMBAHAYS, NOW COVERED.
Previously, not co,ered by the 13th month pay law are employers of
household helpers and persons in the personal service of another in relation to
such wockers.6 However, R.A. No. 10361' is now explicit in its commandment tl1at
a domestic worker or kaJambah'!"j is entitled to 13"' month pay as provided by law.
3. NATURE OF 13m MONTH PAY.
131h month pay is in the nature of additional income granted to
employees who are not receiving the same.8 P.D. No. 851 is undoubtedly a labor
1
HoosedSataleev.Rey,G.RNo.149013,AulJ.31,ZOOi.
1 PD. No.851, as .mended.
3
No. 2 ~L Revised Qile'1es oo 1he ~ d 1he 13" Mlnlh Pay UIW, bmert)' Sedion 3 [bl. Rules ard
~ ~ P.O. No. 851; Alalce d Gaienmn Wooeis v. Mnister a l.i>oc ard ~ G.R. No. l·
60403, Al,J.3, 1983. . 3 Sm12 laJ, ruesardRegulaoons kll>~ P.o.No. 851. ·
4 Secbl 2, P.D. No. 851; No. 2~J, Revised Gt.ideries on t i e ~ ol tie 13h M:xllh Pay UIW, fameftt Sedion 3
(cl,~ Md Regilations ~ P D . No. 851.
5 No.2[dj, llld., bmMf Sedion3(eJ, Rules ard ~ ~ P . O . No.851. , s Reyesv. NLRC, G.R No.160233, AIJJ. 8, 2007.
1 No. 2 !:I, Revised Guilea1es on tie ~ d lhe 13h 1..-blOl Pay UIW, bmel1y Section J [dj, ~les ard
Regwi:ns ~ P.O.No.851. . 921741 ard PhJwi-e Fl.ji X8ox Cap(mrl v.T~ GR No. 102552, Marth 24, 1994.
1 Section 25, Ar1icle rl, RA No. 10361. othelwise known as lhe •Danestic WooecsAct' (January 18, 2013).
Agabalv. NIRC, G.R No.158693, Nai. 17, 2004.
CHAPTER THREE 157
LABOR STANOARDS
standards law whose purpose is to increase the real wages of the workcrs. 1 It is
based on wage but not part of wage.2
4. MINIMUM AMOUNT OF 13TH MONTH PAY.
·The minimum 13th month pay required by law should not be less than
one-twelfth (1/ 12) of the total basic salary earned by an employee within a calendar
year.3
5. MINIMUM PERIOD OF SERVICE REQUIRED.
To be entitled to the 13"' month pay benefit, it is imposed as a minimum
service requirement that the employee should have worked for at least one (1)
month during a calendar year.4
6. COMMISSION VIS-.A.-VIS13Tii MONTH PAY.
In order to be considered part of 13"' month pay, die commission should
be part of the basic salary of the employee. However, whether or not a commission
forms part of the basic salary depends upon the circumstance~ or conclition~ for its
payment which indubitably are factual in nature for they will require a re-
examination and calibration of the evidence on record.5
.. If the commission paid ip addition to the basic salary is in the narure of a
prodPctivity bo11J11 or profit-sharing benefit which is dependent on and generally tied
to the productivity or capacity for revenue production of a company, it should not
be considered as part of basic sa)acy.6 But if the commission paid in addition to the
basic salary has a clear direct or necessary relation to tlie amount of work actually
....
done by the employee, it should be considered as part of basic salacy.7
If the employee is paid on commission basis only,_he is excluded from
receiving the 13th month pay benefit.8
7. CBA VIS-A-VIS13TH MONTH PAY.
For purposes of computing the 13"' month pay, "basic salary" includes
all remunerations or earnings paid by the employer for services rendered but does
not include allowances and monetary benefits which are not considered or
integrated as part of the regular or basic salary, such as the cash equivalent of
Aim, d GcMmneftWtners v. Mnsterof l.i>oc,GR No. l~ . hJ!I. 3, 1983.
CEraal Azuca-e:ade Ta1ac v.Cenbi11 Anmera de Talac l.i>oc ltilon-Nl.U, G.R No. 188949,Jli( 26, 2010.
4 No. 1, Revised <lileiles on I l e ~ d he 13" Mm Pay I..BN; No. XIA!, DOLE H!V'ldm on Wtners
~ M:cietJyBenefits.
1 ~ ~ . I n c . v. NLRC, GR No. 110008,Feb.15, 1995; Bde-Taleda Cllellicals, Inc. v. Dela Serna, G.R No.
7 Id.
1 1<nJ aKi'Y,ls Transpat. n:. v. Mmlc. G.R No.166208, Jooe 29, 2007.
 BAR REVIEWER (lN IABOR !AW
unused vacation and sick leave credits, maternity leave, overtime, premiwn, night
differential and holiday pay, premiums for work done on rest days and special
holidays and cost-of-living allowances. However, these salary-related benefits
should be included as part of the basic salary in the. computation of the 131h morith
pay if by individual or collective bargaining agreement, company practice or
policy, the same are treated as part of the basic salary of the employees.1
8. SOME PRINCIPLES ON 13TH MONTH PAY.
I. ''Ba1ic salary" or "ba1fr wage" contemplates work within the normal eight (8)
working hours in a day. TI1is means that the basic salary of an employee for
purposes of computing the l3lh month pay should include all remunerations
or earnings paid by tJ1e employer for services rendered during normal
wocking hours.2
2. For purposes of computing tJ1e l3lh month pay, "btJJi, 1ala,y" should be
interpreted to mean not the amount actually meived by an employee, but 1/12
of ilieir standard monthly wage multiplied by their length of service within a
given calendar year.1
3. Extras, casuals and seasonal employees are entitled to 13th month pay.4
..
B.
WAGES
1.
PAYMENT OF WAGES
..
1. BASIC WAGE.
The term "basic wage" means all the remuneration or eamings paid by an
employer to a worker for services rendered on normal working days and hours but
does not include cost-of-living allowances, profit-sharing payments, premium
payments, 13th month pay or other monetary benefits which are not considered as
part ofor integrated into the regylar salary of the workers.5
Further, as held in Hoizda,6 the following should be excluded from the
computation of ''basic 10/a,y, " ta wit. payments for sick, vacation and maternity
1 No. 4 lal. Re.ised Gooernes oo tie mp1ementafol a lhe 13" 1vm11 Pay 1.aw, famedf Secfol 2 lbl a11e Rules a,x1
Regtjmls ~ P.O. fob.8.51: No. X[CL OOl£ ~ooWam StalDyMxletayllen8ils.
2 See No.1, DOI.£ Expmaby a.e&J (Xl tie klwsicJl ciTeadlers' (),,ermj Pay il Ile 13'1 M:m Pay Delelmilaoon [Dec.
03, 1!JJ3.
3 l'ada Phis, h;. V. &rnml rg Maayallg Manggcgawa sa Hi:rda, G.R No. 145561, .Aile 15, 2005; San Mguel
• Secfm 1, Rue WA. Boo\ ULRules ID ~ Ille Laba Code, as ameroed 11/ ~ Cias No. 3, Nol. 4,
Co1pam1 (CalJay.li Coca-Cola PmQ v. lnci:lng, GR No.L-49TT4, Feb.24, 1981, 103 SCRA 139.
BWC OpilOl dated Dec. 19,1987, ~ ~ Wo1cfs FashiJn Wo,',(e,; lkioo, Woofs Faslioo, ric.
~ lell~iOemwiofTems,IU!S~ ~Ad.No.67l/.
6 Honda Phis., Inc. v. Samahan ng Malayarg Man9gagawa sa HOO<la, GR No. 145561, June 15, 2005, 460 SCRA
187.
CHArTER TH REE 159
LABOR STAN DAROS
leaves, night differentials, regular holiday pay and premiums for work done
on rest days and special holidays.1 ·
2. ATTRIBUTES OF WAGE.
'W'age"paid to any employee has the following attributes:
1) It is the remuneration or earnings, however designated, for wo\1< done
or to be done or for services rendered or to be rendered;
2) It is capable of being expressed in terms of money, .whether fixed or
ascertained on a time, task, piece or commission basis, or other
method of calculating the same;
3) It is payable by an employer to an employee under a written or
unwritten contract of employment for work done or to be done or for
services rendered or to be rendered; and
4) It includes the fair and reasonable value, as determined by the DOLE
Secretary, of board, lodging, or oilier facilities customarily furnished
by the employer to the employee. "Fair and muonabk value" shall not
include any profit to the employer or to any person affiliated with the
employer.2
3. MINIMUM WAGE.
The minimum .wage rat.es prescribed _by law shall be ·the b;isic cash
wages without deduction therefrom of whatever benefits, supplements or
allowances which the employees enjoy free of charge aside from the basis; pay.3
4. STATUTORY MINIMUM WAGE.
• ~ mininmm wage" refers simply to the lowut basic wage rate ftxtd ~
~ that an employer can pay his workers.•
5. REGIONAL MINIMUM WAGE RATES. .
• ~ minimum wage rates" refer to tlie lowest basic wage rates that an
employer can pay his workers, as fixed by the Regional Tripartite Wage~ and
Productivity Boards (R'IWPBs), .and ·which shall not be lower than the applicable
statutory minimum wage rates.5
The minimum wage rates for agricultural and non-agricultural employees
and workers in eaah and !!:Very ~egion of the country shall be those prescribed by
1 See also Sa,~ Colpaatioo~ay.YJ Qx;a.<:da Pmt v. rci:rg,GR No. L-49774, Feb.24, 1981, 103 SCRA 139.
2 Based (Xl tt1e defn101 a "wage" nAlide 97 [fl. Labaeooe.
1992.
Item [oJ, lletmoo ciTenns, Roos ~ting RA No. 6727; Secfm 4 [1]. Rule I, NWPC ~ No. 01, Series of
2007, ..uie 19, 2007 [Arm1ded Roos ciProcedue on Mrirum Wage F!Xi"g, •
Secfun 4 ~ Rue I, NWPC Qooelines No. 01, Series of 2007, J\llt! 19, 2007 ~ Roos ci Procedure oo ~
WageF,m;i.
160 BAR REVIEWER ON LABOR LAW
the "RTWPBs.'-1 These wage rates may include wages by industty, province or
locality as may be deemed necessary by the RlWPBs. 2
6. WAGE RATES.
"117age rates" iru;!y!k cost-of-living allowances as fixed by the
R1WPB, but rxcbuks other wage-related benefits such as overtime pay bonuses
night shift differ~ntial pay, holiday pi!,Y, premium pay. 13111 month pay, premium
(l1YJeave benefits. among others.3
7. RATIONALE.
The principal reason why a legislated wage increase is considered valid is
that it prevents the e.xploitation of defenseless workers who are situated in an
unequal position vis-a-uis their employers in terms of bargaining power. By setting
the minimum below which the law considers illega~ the workers are assured of
decent living subsistence without need for them to bargain for the same.
The employer cannot hope to validate his non-compliance with the
legislated minimum wage by contending that he has liquidity problem or is
suffering from financial reverses or business losses. Whatever problem he may have
in the operation of his business ·cannot certainly affect his obligation to pay the
minimum wage rate fixed by law.
Thus, in M'!}on Hotel & Rtstaurant v. Adana/ the Supreme Court ruled that
petitioner's repeated invocation of serious business losses is not a defense to
payment of labor standard benefits. The employee cannot exempt himself from
liability to pay minimum wages because of poor financial condition of the
company. The payment of minimum wages is not dependent on the employer's
ability to pay.s . 10. WAGE VS. SALARY
It must be noted that acceptance by the employee of wage below the
minim~ set by law does not preclude him from suing for the deficiency.
The pnnople of estoppel or !aches does not apply in this situation.
8. INTEGRATION OF COLA AND OTHER MONETARY BENEFITS
INTO THE BASIC PAY.
a. Meaning ofcost-of-living allowance (COLA).
Clearly, COL\ is not in the nature of an allowance intended to reimburse
expenses incurred by employees in the perfonnance of their official functions. It is
not payment in consideration of the fulfillment of official duty.' As defined, "cost
1
See Al1icle 99 (Regional t.wiiroom W~es),.asMtendedl7)' Sectioo3, RANo.6727,m9, 1989.
Mkfe 99, l.aborCode; Sediln 1, Oiap(a' Ill Rules~ RA No. 6n7.
Sedxrl 2GI, Oepa1ment Cxder No. 10, Seies d 1998 (May 04, 1998.
' G.R. No. 157634, May 16, 2005.
1 Seeaso Vda. deRachov.Mmqii,tydlia'pl, G.R No.L-23542, Jcr,,2, 1968, 22 SCRA 1.
1 Gu!ielrezv.OOM,G.RNo.153266.lkn:h18,2010,6)6SCRA 1, 18.
CIIArTER THREE 161
LABOR STANDARDS
of living'' refers to "the level of prices relating to a range of everyday items" 1 or
"the cost of purchasing the goods and services which are included in an accepted
stmdard level of consumption."2 Based on this premise, COLA is a benefit
intended to cover increases in the cost of living.3
b. Validity ofintegration.
The integration of monetary benefits into the basic pay of workers is not a
riew method of increasing the minimum wage.
By way of latest illustration, under Section 1 of Wage Order No. NCR-20
which was issued on May 17, 2016, the COLA of PlS.00 per day under the
previous Wage Order No. NCR-19 was ordered integrated into the basic pay of
P466.00 upon its effectivity thereby making· P481.00 as the new basic wage.
Furt4er, a new COLA of Pi0.00 per day wanddect resulting in the new minimum
wage rate of P491.00.
9. "NO WORK; NO PAY''PRINCIPLE.
It must be emphasized that the age-old rule governing the relation
between labor and capital, or management and employee of ''no wdr/e, 110 Pf!Y" or
... jair df!J~ wage far fair df!J's labor" remains to be adhered to in our jurisdiction as the
basic factor in determining the wages of employees. If the worker does not wock,
he is generally not entitled to any wage or pay. The exception is when it. was the;
employer who unduly prevented him from working despite his ableness,·willingness
and readiness to work; or 1n cases where he· is illegally locked out or illegally
suspended or .illegally dismissed, or otherwise illegally prevented from working, in
which event, he should be entitled to his wage.4
The term '~agt'' is used to characterize the.compensation paid for manYlll
skilled or unskilled labor. ''Salary," on the other hand, is used to describe the
compensation for higher or superior level of employment5
In cases of execution, attachment or garnishment of the compensation
of an employee received from work issued by the court to satisfy a judicially-
detennined obligation, a distinction should be niade whether such compensation is
considered '\vage" or •~alary. "Under Article 1708 of the Civil Code, if considered a
'\vage," the employee's compensation shall not be subject to execution or
attachment or garnishment, except for debts incurred for food, shelter, clothing
t kl. al 19, c:itirlij The New Oxbtf Amen3t Oi:&lnaly, Oxml UnNersay Press, 2005 Edb.
2 Id., ciirg Wetsa's Thi'd New ntemabla llic:1i(my,Meniam-Websler klc., 1993 Edo:n.
J Ma)TB!Wafa'~~tioov. MaynaadWa1erSelvi:es, re., GR No.198935.No'I. 27, 2013.
• Aldan Eledn: CooperM v. NI.RC,GR No. 121439, Jal. 25, 2000.
1lte teims 'wqJ' (etyrrdogk;a'tf tan te Wd'le ~fish v.ad '\vagell). ·mt (from Ole Rm8l WOo'd •S'if Md l.ati1
\\Old 'mi.fl!) cVe S)1l00)11'00S il meaiiYJ and usr,;ie. They al refer ID lhe same lhi'g. i.e., a ~ paid oo
a
accrut wodl ocsetw:es rendered.
...
t
i
 BAil REYIEWER ON LABOR LAW
and medical attendance. If dee:ned a ''salary," such compensation is not exempt
from execution or attachment or gamishment. Thus, the salary, commission and
other remuneration received by a managerial employee (as distin~hed from an
ordinary worker or laborer) cannot be considered wages. Salary ts understood to
relate to a position or office, or the compensation given for official or other
service; while wage is the compensation for labor. 1
11. FACILITIES VS. SUPPLEMENTS.
a. Facilities, defined.
The temi jaalities" includes articles or services for the benefit of the
employee or his family but does not include tools ofthe trade or articles or services
primarily for the benefit of ~e employer or necessary to the conduct of the
employer's busincss.2 They are rtems of expense necessary for the laborer's and his
family's existence and subsistence which form part of the wage and when furnished
by the employer, are deductible therefrom, since if they are not so furnished, the
laborer would spend and pay fa: them just the same.l
b. Supplements, defined.
"?ie term '~llj)~kment.r" means extra remuneration or special privileges or
benefits given to or receJved by the laborers over and above their ordinary earnings
or w:ages.4 ·
c. Facilities d.isd.nguished from supplements.
The benefit or privilege given to the employee which constitutes an extra
remuneratio~ over and abo~e- his ~asic or ordinary earning or wage is 111pplemmt, "·
an~ _when said _be~efit_or pnvilegc 1s made part of the laborer's basic wage, it is a
faali~. The coteoo_n 1s not so_ much ~th the kind of the benefit or item (food,
lodgtn~, bonus or sick leave) grven but Its purpose. Thus, free meals supplied by
th~- ~~P ope.rater to crew members, out of necessity, cannot be considered as
facilittes but supplements which·could not be reduced having been given not as
part of wages but as a necessary matter in the maintenance of the health and
efficiency of the crew during the voyage.s
12. SOME PRINCIPLES ON FACILITIES AND SUPPLEMENTS. '
'
• Facilities are deductible from wage but not supplements.6
1 ' See ·Chapter IV (Prohibitions Regardilg Wages), nue II (Wages), Book Ill {Conditions of Emplo'fment), Labor
Gaa_v. CA. ima: See also Equ'lable Ba-mg Corp. v. Sada:, GR No. 164n2, m 8, 2006.
~ 2, Rue VII-A; Boat IA, rues k l ~ Ole Laboc Code, as anendoo by lv'etwancun Ciruar No. 3, N<N. 4,
3 ~ lo crispose a his wages. He shal nol il ~ mam8' bte, ~ a oofge lis en1)loyees kl puthase
Slate~~ and Roy;Hn,_ID:. Y. Cebu Seamen'sAssocialioo, klc., GR No. L-12444,Feb. 28, 1963.
~ Ilg Wedge Mnir9 Co. n:.Y. AIDk BiJ Wedge~ Beneft Associalioo, G.R. No. L-5276, Marth 3, 1953.
M?/00 Holel &ResliuiWv. AdMa. G.R. No. 157634, Ma'/ 16,2005; Milezav. NL.RC G.R. No 118506 Ajri 18 1997
Sla1e Mme Capcm)n in! ~ Ule, Inc. V, CetJu Seamen's Associabl, klc., ~-
0 0
1 . •
CHAITTR THREE 163
lABORSTANDARDS
• Legal requirements must be complied with before facilities may be deducted
from wages. The employer simply cannot deduct the value from the
employee's wages without satisfying the following:
(1) Proof that such facilities are customarily furnished by the trade;
(2) The provision of deductible facilities is voluntarily accepted in writing by
the employee; and
(3) The facilities are charged at fair and reasonable value.1 ,
• An employer·may provide subsidized meals and snacks to his employees
provided that the subsidy shall not be less than thirty percent (30%) of the
fair and reasonable value of such facilities. In such a case, the employer may
deduct from the wages of the employees not more than seventy percent
(70%) of the value of the meals and snacks enjoyed by the employees,
provided that such deduction is with the written authorization of the
employees concemed.2
• The free board and lodging petitioner SIP furnished its employees cannot
operate as a set-off for the underpayment of their wages.3
2.
PROHIBITIONS REGARDING WAGES
1. PERTINENT LABOR CODE PROVISIONS.
The Labor Code devotes an entire Chapter4 on the prohibitions regarding
wages, spanning Articles 112 to 119 thereof. Below is a discussion of all these
prohibitions.
2. NON-INTERFERENCE BY EMPLOYER IN THE DISPOSAL BY
EMPLOYEES OF THEIR WAGES.
Article 1125 of the Labor Code is clear-cut in it's interdiction that no
employer is allowed to limit or otherwise interfere with the freedom of any
employee to dispose of his wages and no employer shall in any manner oblige any
of his employees to patronize any store qr avail of the services offered by any
person.6 ·
t tJaleza v. ~ . S1JPra. .
2 Sectioo 1, Rue VJI-A, Book Ill Rules kl h'4>1emert t,e 1.m Code, as aneoded by Memlrandun Ciulla' No. 3, Nol. 4,
1992.
l SeeAsocle 124, LabaCode.
Code.
°'
5 ART. 112. Noomference n~ of wages. - No er11)klyer w1 flTi ~ inteffere v.itl tie freedan d arrf
l!lel\'.hinlise, CllfTlllOQ&s a aher propeny Iran 'irTI olher pe!S(lfl, a oiheMise make use ci ;rr, m or SEMl!S ci sudl
~orarrfohlrpersm.
1 See also Seem 12, Ride VIII, Boat UI, ~les ID lnl>lement tie Labo' Code.
 BAR REVIEWER ON IABOR IAW CHAl'TER THREE
IABOR STANDARDS

3. WAGES NOT SUBJECT TO EXECUTION OR ATTACHMENT; 2) Deductions made for agency fees from non-union members who
EXCEPTION. accept the benefits under the CBA negotiated ·by the bargaining union.
1bis form of deduction does not require the written authorization of
The general rule is that laborer's wages are not subject to execution or
the non-bargaining.union m~ber concemed;1
attachment. The exception is when such execution or attachment is made for debts
incurred for food, shelter, clothing and medical attendance.1 3) Union service fees;2
4) When the deductions are with the written authorization of the
4. DEDUCTIONS FROM WAGES. employee for payment to a third person and the employer agrees to
do so, pro\~ded that the latter does not receive any pecuniary benefit,
The general rule is that an employer, by himself or through his
directly or indirectly, from the transaction;j
representative, is prohibited from making any deductjons from the wages of
5) Deductions for value of meal and other facilities;'
his employees. The employer is not allowed to make unnecessary deductions
6) Deductions for premiums for SSS, PhilHealth, employees'
without the knowledge or authorization of the employees.2
compensation and Pag-IBIG;
4.1. PERMISSIBLE DEDUCTIONS FROM WAGES. 7) Withholding tax mandated under the National Internal Revenue
Code {NIR.q;
a. Deductions allowed under Article 113. 8) Withholding of wages because of the employee's debt to the employer
Article 1133 of the Labor Code allows only three (3) kinds of deductions, which is already due;S
namely: 9) Deductions made pursuant to a court judgment against the worker
under circumstances where the wages may be the subject of
(a) In cases where the worker is insured with his consent by the attachment or execution but only for debts incurred for food, clothing,
employer, and the deduction is to recompense the employee for the shelter and medical attendance;6
amount paid by him as premium on the insurance; 10) When deductions from wages are ordered by the court;
(b) For union dues, in cases where the right of the worker or his union 11) Salary deductions of a member of a cooperative.'
to check-off has been recognized by the employer or authorized in
writing by the individual worker concerned; and 5. PROHIBITION AGAINST DEPOSIT REQUIREMENT.
(c) In cases where the employer is authorized by law or regulations
a. General role; exceptions.
issued by the DOLE Secretary.
Article 114s of the Labor Code enunciates the general rule that while
b. Other deductions.
deductions from the employees' wages may be made for cash bonds or deposit~..-,".
Under other provisions of the Labor Code and other laws, deductions the employer, however, is not allowed to unila!erally ~ pose ~pon its employe~r. ·~
from the wages of employees may be made by the employer in any of the following the giving of cash bonds or deposits. To jusllfy such tmpostll~n, the e~ployer
cases: should first prove and establish that it falls under any of the following exceptions:
1) Deductions for loss or damage under Article 1144 of the Labor (a) That it is engaged in such trades, occupations_~r busines_s w~ere
Code; the practice of making deductions or reqrunng deposits ts a
recognized one; or
Mi:le 1708, Civ'i Cale.
~ v.T$10, G.R No. L-70067, Sept 15, 1986,144 SCRA 138.
3
ART. 113. W~e deoodill. -No~- i1 his Ml behaf a- i1 bdial of Mt poo;oo, shal m~e ~ dedJlfu1 mn the deims s a ~nized ooe, a- ii ~ a- desirable as de!emined by tle Secretry tJ l.m cm Empk)ymerlt in
wages dhis ~ except ~pqxiale rues and regu1am.
(a} ncasesv.tiere tevmerisilstredv.ill his coosentby te ~ -cm Ille dedudioo ii t o ~ t e oo¢yer , Mde 259(e} (248(e)1 Lm Cooe.
b'Ile aTWC pail by hrn as prerriun oo Ile ilsulrce: R a d i o ~ of the Phi!s., Inc. v. SeaetJyol l.m cm Err4)1oyme!ll GR No. 77959.JcJl 9. 1989.
(b} f'«lllill rues, i1 cases v.tlere lhe ~ht d the Ymer 0( his lJlal to d'edc-Off has beeo real(Jrized by h e ~ or i Sedm 13, Rtt.e VIII, Bode Ill. Ruies to mplement the Labo' Cooe.
~ il~b'f 11eroriolal¥,QU'r~:cm • Sedm 7, Rtt.e VI, Bode 111. lbi:l.
(c} kl cases v.tiere the enl)bJer is aumnzl!d b'f law a- fe!lUlalions S&Je:l by tie Secretay of Laba- im'8r¢7,Tnent. Mde 1706, CNi Code.
ART. 114.Dcposis b' klss a- danc,Je.- No empbyershal ll1Quie his WO!ker to make depoo1s fmm llith dedl.dms shal Artoe1708,lbil.
be made let !he reirwsemert it klss tJ a d.m9e to toas, malerials. a equ¢,eot suppled b'f lhe ~ . exel!Pl Moe 59, RA No. 6938, The Cooperawe Code d the Ph~.
v.4ien the ~ ii ~ed n&.di I-aces, oa:upatioos a- busi1ess v.llere the practice of makilg deducoons 0( requmg 8 Supra.
.,

'i
166 MR IUVIEWER ON I.A&OR I.AW
(b) That the cash bond or deposit is necessary or desirable as determined
by the DOLE Secretary in appropriate rul!!s and regulations.
In 2014, the DOLE Secretary1 made known her determination of such
exception in her 1.AborAdvisory No. 11, SerieJ of201,P. where she clarified that it is
only in private security agency where the ~ is recognized or allowed)
With this clarification, the rules and legal principles proclaimed in Articles 114 and
115' are, at the moment, applicable only to private security agencies, absent any
other appropriate rules and regulations declaring other sectors as falling under the
exception. Thus, the LAbor Advisory states that "(d]eductions or requiring cash
deposits from employees to answer for reimbursement of loss or damage on tools,
materials, or equipment supplied by the employer is allowed in private security
agencies as a recognized and reasonable industry practice given the nature
of the service/business."5
b. Due process required-before deduction from deposits.
Due process should first be afforded the employee before any deduction
from his deposits for the actual amount of the loss or damage alleged to have been
committed by him, may be made therefrom. This presupposes, of course, that the
deposits from which such deductions may be taken are legally allowed or permitted.
Consequently, for deductions of such nature to be valid, the following
conditions must be observed:
a) The employee concerned is clearly shown to be responsible for the
loss or damage;
b) The employee i~ given reasonable opportunity to show cause why
deductions shoul:i not be made;
c) The amount of ,uch deduction is fair and reasonable and shall not
exceed the actual loss or damage; and
d} The deduction from the wages of the employee does not exceed 20%
of the employee's wages in a week.6
c. Amount ofcash deposit.
. In the event that a private security agency requires a cash deposit from
tts ~mployees, the maximwn amount shall not exceed the employee's one month
baste salary. The said cash deposit may be deducted from the employee's wages in
I RefamJ k>DOIE Seaetry fWrda ~
2 Issued oo Septerrber03. 2014 aid isentiled ~ ii t,e Dispooal d Wages aid Abvable Deductions •
J See ClpeMJ Pcrlqaph ile'ed. . No.5,ld.
' ART.115. Lmalxns. •No deQm:n fra7 tie deposits aill ~byee b' tie adlJal ilnWlla tie kiss erdamage shall be
madel«liess t i e ~ has been_ hea"d tiereoo,aid his responsi)iity has been dea!!t stic,,m.
5 No. 3. 1..t>or Mir;tX'f No. 11, Seies cl 2014 !Seplenter 03, 2014): Norl-lnll!lfelmce i1 lhe Dispooa1 <i Wages Md
I
~ Dedudxns.
5 Id.; See alsoSedioo 14, ~le VIU, llool( 1B, ~les t o ~ tie 1.abcrCode.
CHAl'TER THREE
lASOR STANDARDS
an amount which shall not exceed twenty percent (20%) of the employee's wages in
a week. 1
d. Refund ofcash deposit.
The full amount of cash deposit deducted shall be returned to the
employee within ten (10) days from his/her separation from the setvice.2
e. Limitation.
No other deductions from the wages of the employees or cash
deposit/bond shall be required by the employer without express authorization
from the DOLE Secretary tluough an advisory or guidelines.3
£ Unauthorized deductions.
Deductions made from the employees' wages for company unifonns, cash
deposits for loss or damage, personal protective equipment (PPE), capital share or
capital .build-up.in service coopetatives, training fees,- and other deductions not
included in the enumetation above, are unauthorized.4
g. Relevant cases.
In Five J Taxi,5 the Supreme Court. considered violative of Article 114 of
the Labor Code the PlS.00 daily deposit required by the employer from taxi drivers
for the purpose of defraying shortage in ''boundary;" since there is no showing that
the DOLE Secretary has recognized the same as a "practia" in the taxi industry.
While Article 114 provides the rule on deposits for loss or damage to tools,
materials or equipment supplied by the employer, it does not, however, perm.it
deposits to defray any deficiency which the taxi driver may incur in the remittance
of his "boundary." Such illegally collected deposits should be refunded to the
drivers.6
In Bluer Than Blue,1 the petitioner deducted the amount of PS,304.93 from
respondent Esteban's last salary. According to the petitioner, this represents the
store's negative variance for the year 2005 to 2006. The petitioner justifies the
deduction on the basis-of alleged trade practice and that it is allowed by the Labor
Code. The Supreme Court, however, disagreed because the petitioner failed to
sufficiently establish that Esteban was responsible for the negative variance it had
in its sales for the year 2005 to 2006 and that Esteban_was given the opportunity to
show cause why the deduction from her last salary should not be made. The Court
I No.4,Id.
No. 6, kl.
No. 7, kl.
FMlJTaxiv.NIRC,GR No.111474,Al.g.22, 1994,235SCRA556.
See aso Dentech Mntfacmlg Coqxralm V. NIRC, GR No.814n, Apri 19, 1989, 172 SCRA 588.
Ellerlhan Bkle.killVeiwres Coo°l)illyv. Gfyza ~ G.R. t«l. 192582,Apii 07,2014.
168 SAA RMEW£RON LABOR LAW
cannot accept the petitioner's statement that it is the practice in the retail indusuy
to deduct variances from an employee's sawy, without more.
In Niia Jewel,y, 1 the Comt ruled that
"(T}he petitioneis shocld first establish that the making of deductions
from the salaries is authorized by law, or regulations issued by the
Scaewy of Labor. Further, the posting of cash bonds should be
proven as a recognizec practice in the jewelry manufacturing business,
or alteroatively, the petitioneis should seek for the detcanination by the
Sccrewy of La.bot through the issuance of ap~ropriate rules aod
reguJations that the policy the former seeks to implement is neceswy
or desirable in the coaduct of business. The petitioners failed in this
respect It bears stre8sing that without proofs that req~og depo~
aod effecting dcductiCDlS are recognized practices, ~r wtthou_t se~~ang
the Secretary ofLabois deteunination of the necessity or desuability of
the same, the imposition of new policies celativc to deduc~ons and
deposits can be made subject to abuse by the employers. This is not
what the law intends."
6. PROHIBITION ON WITHHOLDING OF WAGES.
Article 1162 of the Labor Code categorically prohibits and considers it
unlawful for any person, whether employer or not, directly or indirectly, to
withhold any amount from the wages of a worker.
Under Article 1706 of the Civil Code, withholding of the wages, except
for a debt due, is not allowed to be made by the employer. Moreover, wider Article
1709 of the same Code, the employer is not allowed to seize or retain any tool or
other articles belonging to th: laborer.
The above-cited provisions are clear and need no further elucidation.
Indeed, as held in Spedal St:1/ ProdNm, lnr. v. Villarra~ 3 an employer has no legal
authority to withhold the employee's 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
,:,
.t
,.
Ji
.
'
.
CHAPTER THREE 169
lABORSTANDAROS
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
ptoperty.
In SHS Pe,farakd Materials, Int. 11. Diaz, 1 petitioners contended that
withholding respondent employee's last salaty covering the period from November
16 to November 30, 2005, was justified because respondent was absent and did not
·~ow up for work during that period. He also failed to account for his whereabouts
and wotk accomplishments during said period. Petitioners further argued that when
there is an issue as to whether an employee has, in fact, worked and is entitled to
his salary, it is within management prerogative to temporarily withhold an
employee's salary/wages pending determination of whether or not such employee
did indeed work. In disagreeing to this postulation of petitioners, the High Court
stated that although management prerogative refers to "the right to regulate all
aspects of employm~t," it cannot be understood to include the right to
temporarily withhold salary/wages without the consent of thr employer. To
sanction such an interpretation would be contrary to Article 116 of the Labor
Code. Any withholding of an employee's wages by an employer may onlr be
allowed in the form of wage deductions under the circumstances provided in
Article 113 of the same Code. As correctly pointed out by the Labor Arbiter,
"absent a showing that the withholding of complainant's wages falls under the
exceptions provided in Article 113, the withholding thereof is thus unlaw(u.1.1'
Although it cannot be determined with certainty whether respondent worked for
the entile period from November 16 to November 30, 2005, the consistent rule is
that if doubt exists between the evidence presented by the employer and that by the
employee, the scales of justice must be tilted in favor of the latter in line with the
p~licy mandated by Articles 2 and 3 of the Labor Code to afford protection to
labor and construe doubts in favor of labor.· For petitioners' failure to satisfy their
burden of prooL respondent is preswned to have worked during the period in
question and is, accordingly, entitled to his salary. Therefore, the withholding of
respondent's salaty by petitioners is contmy to Article 116 of the Labor Code and,
thus, unlawful.
6.1 WHEN WITHHOLDING OF WAGES AMOUNTS TO
CONSTRUCTIVE DISMISSAL.
In the same case of SHS Pnjofflld Materials, the unlawful withholding of
the last salary of respondent was declared to constitute constructive dismissal since
for this reason, h~ was forced to resign as it has made it impossible, WU"easonable
or ~ y for him to continue working for petitioners. It is of no moment that he
served his resignation lettet on November 30, 2005, the last day of the payroll
period and ~ non-working holiday, since bis salary was already due rum on
November 29, 2005, being the last working day of said period. In fact, he was then
1 G.R No. 185814, Ocl 13, 2010.
170 BAR RIYIEWER ON IABOR LAW
info~ed that t!1e wages of all the other SHS employees were already released, and
only his was be1ng Withheld. What is significant is that the respondent prepared and
se_rved his resignation letter right after he was informed that his salary was being
Withheld. It would be absurd to require respondent to tole.rate the Wllawful
withholding of his salary for a longer period before his employment can be
considered as so impossible, W1reasonable or unlikely as to constirute conscructiv~
dismissal. Even granting that the withholding of respondent's salary on November
30, 2005, would not constitute an unlawful act, the continued refusal to release his
salary after the payroll period was clearly unlawful. The petitioners' claim that they
prepared the check ready for pick-up cannot Wldo the·unlawful withholding. It is
worthy to note that in his resignation letter, responde'nt cited petitioners' "ilkgal and
unfair labor practice" as his cause for resignation. As correctly noted by the CA,
respondent lost no rime in submitting his resignation letter and eventually filing a
complaint for illegal dismissal just a few days after his salary was withheld. These
circwnstances are inconsistent with voluntary resignation and bolster the finding of
constructive dismissal.
6.2. VALIDITY OF WITHHOLDING OF RELEASE OF LAST
PAYMENTS TO EMPLOYEES FOR FAILURE TO COMPLY WITH
CLEARANCE REQUIREMENTS;
Although as a general rule, employers are prohibited fro~ withholding.
wages• from employees, they usually withhold the release of the last salary and
b:°efits o~ tenninated or resigning employees prior to or pending their compliance
With certain clearance pro~edures. !hls appears to be a standard procedure among
employers, whether public or pnvate.2 Clearance procedures are instituted to
ensure that the properties, real or personal, belonging to the employer but are in
the possession of the separated employee, are returned to the employer before the
employee's departure.l
The law supports the employers' institution of clearance procedures
before ~e release of wages. 4 As an exception to the general rule that wages may
~ot be _withheld5 and benefits may not be diminished,6 the Labor Code provides in
its Arttcle 113 [Wage Deduction) that "[n)o employer, in his own behalf or in
behalf of any person, shall make any deduction from the wages of his employees,
except xn (3) In cases where the employer is authorized by law or regulations
issued by the Secretary of Labor and Employment."
1
Refenng k>Mx:le 116ollhe LcWCode, entilloo ' Wttdo119 of wages 3nd ki:i~prohilited.'
1/mv.NLRCand Sall Mis, ric, G.R. ~- 202961.Feb. 04,2015.
3 Id.
Id.
SeeArti::'.e 116ollhe LaborCode,entilled •~olwages and loo<bacxs p!OOi)el.'
~ t o ~ 100 o1 t.e Labor Code \\!th prtMdes: 'M 100. Prohllitioo aganst elrnilatioo oc cfrniootm c( benefts.
Nom,J n ltus Book shal be cmsruld to e!iminale oc i1 1nf ww, dinilish SIJJ)lllements. oc other~ benefis """"
erjoo/ed at lhe tireol p!WAJ~al;oo ol1his Code.'
CHAPTER THREE
IABOR STANDARDS
The Civil Code1 provides that the employer is authorized to withhold
wages for debts due. "Debt" in this case refers to any obligation due from the
employee to the employer. It includes any accountability that the employee may
have to the employer. Thus, there is no reason to limit its scope 10 uniforms and
equipment.
"Accountability," in its ordinary sense, means obligation or debt.2 1bc
ordinary meaning of the term "accountability" does not limit the definition of
accountability to those incurred in the worksite.l As long as the debt or obligation
was incurred by virtue of the employer-employee relationship, generally, it shall be
included in the employee's accountabilities that are subject to clearance
procedures.4 There is no reason to limit its scope to uniforms and equipment.
Thus, the term ''acro11ntability" was construed in the 2015 case of Milan v. NLRC and
Solid Mills, lnc.,5 as including petitioners' possession of their constructed houses
within the SMI Village, a property of private respondent Solid Mills where
petitioners and their families were allowed to occupy during their employment.
When Solid Mills closed its operations resulting in the tennination of petitioners,
they were bound to vacate and tum-over their possession over their houses to Solid
Mills. Consequently, their refusal to do so justified tl1e withholding by Solid Mills of
their separation pay and termination benefits.6
6.3. KICKBACKS.
The second instance prohibited by Article 116 of the Labor Code is the
so-called •~ckbatk"which consists in the act of any person, whether employer or
not, directly or indirectly, to induce a worker to give up any part of his wages by
force, stealth, intimidation, threat or by any other means whatsoever, "'~thout the
worker's consent
7. PROHIBITION AGAINST DEDUCTION TO ENSURE
EMPLOYMENT.
I
f
Article 1177 of the Labor Code prohibits and considers it unlawful for any
person, whether the employer himself or his representative or an intermediary, to
require that a deduction _be made or to·actually make any deduction from the wages
of any employee or worker, for the benefit of sui:h employer or his representative
or an intermediary, as consideration of a promise of employment or, when already
employed, for the continuation of such employment or retention therein.
I Mx:le 1700. 'Mltddi"g d Ile W3JeS, except !tr a debt due, shall not be rrade by lhe employer.
~v. NlRCinl Said Mils, Inc., GR No. 202961, Feb. 04, 2015.
l l:f.
• Id.
s GRNo.202961,Feb.04,2015.
• I ~ of vacali:Xl iDJ sick leave bene!its 30013~ mJllh pay.
1 ART. 117. Dedudm to EOSlJ'e en,pbyment • It shal be lmWful to make ~ dedlx:ro1 mn the wages of arr/ flff4lb'fee
v,.,.,,.. - ,., kJ lhe beneit d I l e ~oc his representatile r, i1temled'.ry as oonsideraoon of a prr,nise of en1)bymenl oc rerenlial
ilen1)Cf!llelll.
J
172 SAR REVIEWER ON LABOR LAW CHAl'TER THREE 173
LABOR STAN DAROS

8. RETALIATORY ACTIONS BY EMPLOYER. upon said freedom, the dismissal of his brother owing to the non-withdrawal of the
charges of the former, would be and constitute as much, in fact a greater and more
Article 1181 of the Labor Code prohibits and declares it unlawful for the effective, restraint upon the same freedom. What is prohibited to be done directly
employer:
shall not be allowed to be accomplished indirectly.
a) to refuse to pay the wages and benefits of an employee; or In another case, Itogo11-foyoc,1 the High Court declared that an unfair labor
b) to reduce his wages and benefits; or practice was committed by the employer when it dismissed the worker who had
c) 10 discharge him from employment; or testified in the bearing of a certification election case despite its prior request for
d) to discriminate against him in any manner; the employee not to testify in the said proceeding accompanied with a promise of
on account and by reason of said employee's: being reinstated if he followed said request2
1) act of filing any complaint or institution of any proceeding under Title
II [Wages], Book III of the Labor Code; or 9. FALSE STATEMENT, REPORT OR RECORD.
2) act of testifying in said proceedings or when he is about to testify Article 1193 of the Labor Code prohibits and considers it unlawful for any
therein. perspn, whether employer or not, to make any false statement, report or record
required to be filed or kept in accordance with and pursuant to the provisions of
8.1. WHEN RETALIATORY ACT CONSIDERED ULP.
the Labor Code, knowing such statement, report or record to be false in any
111e commission of the retaliatory act of discharging or in any manner material respect.4
discriminating against any employee who has filed any complaint or instituted any

I
Examples of such statem~nt, report or record required to be filed or kept
proceeding or has testified or is about to testify in such proceeding described in
under the Labor Code are payrolls, time records, employment records and
Article 118 may be considered an unfair labor practice under Article 259(£) (248(£)]
of the Labor Code. As provided therein, it is an act of unfair labor practice for an production records, among others.
employer to dismiss, discharge or otherwise prejudice or discriminate against an
employee for having given or being about to give testimony under the Labor Code. f: 3. .
It must be noted that it is only this type of unfair labor practice
t WAGE DISTORTION
~l • CONCEPT
mentioned in Article 259 [248) (Unfair Labor Practices of Employers) which may
or may not be related to or connected with the exercise by the employee of his .f'·
right to self-organization or collective bargaining. The employee giving testimony a.
or about to give one, may or may not be a member of a union. 2 WAGE ORDER
To cite an example, in the case of Philippine A1t1erica11 Cigar,l the employer 1. WAGE ORDER, DEFINED.
dismissed the brother of an employee who filed a case against the company. The
Supreme Court ruled that such act of the employer .constitutes an unfair labor The term 'Wage Order" refers to the order promulgated by the R1WPB5
practice. Although Section 4(a) 5 of R.A. No. 875 (now Article 259(£) (248(£)] of pursuant to its wage fixing authority.6
the Labor Code) would seem to refer only to the one who filed charges against the 2. PRESCRIBED INCREASES OR ADJUSTMENTS, DEFINED.
company as constituting unfair labor practice, the legislative intent is to assure
absolute freedom of the employees to establish labor organizations and unions, as "Prescribed inmases or adj11stmenls" refer to the amount of Increases
well as to proffer charges for violation of labor laws. If the dismissal of an or adjustments in the wage rate of workers fixed by the R1WPB (hereafter may be
employee due to the filing by him of charges would be and is an undue restraint
1 11Dgcn-Suyoc !Mes, Inc. v. Baklo, GR No. L-17739, Dec. 24, 1964.
Seeaso Naoona1 Fastena-Capaaoon V. CIR. 1SCRA 17; Heo.re; &Sonsv. Nati:lnall.allorU1101, 3 SCRA 765.
' ART. 118. Relaliauxy measues. - Ushal be unlcMfvl for an empklyer lo refuse lo p;Jf or red!J:e Vie wages aid bene!ils, i ART. 119. Fase repati"IJ. - It shall be unlal'lful loratrf persoo toma<e atrf slaEment, report. or record fi~orkeptpurwant
cfisct.rge or in ?tr/ l11a1l'oe' cfLSClinilate agahst atrf ~ee vbl has fi8f mt ~ I or'1StilJted arr, proalOOllQ ID the promoos ci this Cooe kro.w'l:l such stltement. report or recad ID be false in mt mallra respect
under this Trtle or has testified or is about ID testify in such ~ - • Sectoo 13, ~ X. 8oci 111, Rues to nl)ierreot the Labor Cooe.
1 Plmrn ~ UniCJ'lv. PhlT4)Pine Global Conm.rica!ioos, G.R No. 144315, Ju~ 17, 2006. s Regional T~ W<l;jeS .m Prod~ Board (R'IW'B). .
) Ptif!)pile Amerol1 Cgar ood Cigarette Factory Wmeis h!eperoert I.Jnol V. Phlippile .AJneocan Cgar aid Cigarette Sectm 4 ~]. ~le 1, 1#/PC G.Jide!ines No. 01, Series a 'lf1J7, June 19, 'lf1J7 {Nneooed ~les rJ. ProceoJn! on Mnrrum
~Co.,G.RNo.L-18364,Feb.28, 1963. Wage FIXi"g]; Sectoo 2 ~1 Depm,ent O!der No. 10, Series a 1998 [Mr/ 04, 1998[.
 174 B.\R REYIEWERON lABOR lAW
referred to as "Rtjonal &an/') which the employer is mandated to pay upon effectivity
of a Wage Order.t
3. WHEN PROPER TO ISSUE WAGE ORDER.
Whenever conditions in the region so warrant, the Regional Board shall
investigate and study all pertinent facts and based on the prescribed standards and
criteria, shall proceed to determine whether a Wage Order should be issued. An.y
such Wage Order shall take effect after fifteen (15) days from its complete
publication in at least one (1) newspaper of genetal ~ulation in the region. 2
4. PUBLIC HEARINGS/CONSULTATIONS.
In the performance of its wage-detennining functions, the Regional Board
shall conduct public hearings/consultations, giving notices to employees' and
employers' groups, provincial, city and municipal officials and other interested
parties.3
5. STANDARDS/CRITERIA FOR MINIMUM WAGE FIXING.
a. Relevant factors to consider in fixing minimum wage.
The minimum wage rates 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 workers
within the framework of national economic and social development goals. In the
determination of regional minimum wages, the Regional Board shall, among other
relevant factors, consider the following:
(t) Needs of workers and their families
a) Demand for living wages;
b) Wage adjustment uis-a-uisthe·conswner price index;
c) Cost of L-ving and changes therein;
d) Needs of wo.tkers and their families;
e} Improvements in standards of living.
(2) Capacin, to pay . Wage Order to wage eamers receiving more than the prevailing minimum wage
a) Fair rctum on capital invested and capacity to pay of employers;
b) Productivity. · ·
(3) C'.omparahte wages and incomes
a) Prevailing wage levels.
(4) Reqpirements of economic and social development
a) Need to induce industries to invest in the countryside;
b) Effects on employment geneution and family ~come;
I SectiX12pj.~OnferNo.10,Sefmof1998l}ky04, 1998.
2 Artie 123, l.alxr Code.
3 Id.
CHAPTER THREE 175
IABOR STANDARDS
c) Equitable distribution of income and wealth along the imperatives
of economic and social development1
b. Standardprevailing minimum wages in every region.
The wages shall be the standard prevailing minimum wages in every
region. These wages shall include wages vaiying with industries, provinces or
_localities· if in the judgment of the Regional Board, conditions make such local
differentiation proper and necessary to effectuate the purpose of the law.2
6. METHODS OF FIXING THE MINIMUM WAGE RATES.
The Supreme Court has identified two (2) methods of fixing the minimum
wage, namely:
1: 'Floor-Wage" method: which involves the fixing of a detenninate
amount to be added to the prevailing statutory minimum wage rates.
This was applied in earlier wage orders; and
2. ''Salary-Cap" or ''Salmy-Ctiling" method where the wage adjustment is
to be applied to employees receiving a certain denominated salary
ceiling. In other words, wotlcers already being paid more than the
existing minimum wage (up to a certain amount stated in the Wage
Order) are also to be given a wage increase.3
The ''Sala,y.(,ap" or ''Saia,y-Ceiling"method is the preferred mode.4
The distinction between the two (2) methods is best shown by way of an
illustration. Under the "Floor Wage Method," it would be sufficient if the Wage Order
simply set PtS.00 as the amount to be added to the prevailing statutory mirumwn
wage rates; while in the "Salmy-Ctiling Method," it would be sufficient if the Wage
Order states a specific salary, such as P250.00, and only those eaming below it shall
be entitled to the wage increase.
When neither of the two (2) methods is used and instead what was
granted was an across-the-board (ATB) wage increase, the Regional Board is
deemed to have exceeded its authority (11hra vim) by extending the coverage of the
rate without a denominated salary ceiling. 5
1 Sec&x12, Ride D, ~ Guife&les No. 01, Series d 2007, .lll1e 19, 'Jf1J7 [Amended ~ d Procedlre 111 ~
Wa,JeFmvJ;Mm124,IJlbcJCode.
2 Id.
l ~ QxlfedErcl!m of ttle ~ v. tAWC, G.R. No. 96169, Sept. 24, 1991, 201 SCRA 7f// Seealso Ncxkis
Free 8¥1 lndepeooentWakels UD1 v. Hoods Traq Qlnpany, "-. GR No.157098,Jme 30, 2005.
~ The seam ndlod abc7R was used h Repoolc ras Nos. 6640 Md ol'l1 and il Presi!enlial Decrees Nos. 525. 1123.
1614, 1634, 1678, 1713 cnS W. OtJers Nos. 1, 2, 3, 5cnS 6. This melhod is premed as I ni1irizes cfisptms ilvoMng
wagedistufm~i .
s Me1ropcxitan Bank and Trust Co., Inc. v. NWPC, G.R. No. 144322, Feb. 6, 2007; ~ hferJrated MaSfre aid
Stt!Yedolq SeM:es, klc. (NlASSl) v. ~ ~ l a b o r U1ioo (NB.0)-ALU-TUCP. G.R. No. 162411, June 27,
2008.

BAR. WI EWER ON LABOR LAW •
While ATB wage increases have been granted in the past, current policy
discourages the Regional Boords from granting ATB adjustments as they create
more distortions in the labor market which in turn affect adversely the income and
standard ofliving of workers and their families. Specifically ATB wage increases (1)
have greater impact on inflation; (2) are disincentives to trade unionism; and (3) are
not consistent with the minimum wage fixing mandate of the Regional Boards. 1
7. SOME PRINCIPLES ON WAGE FIXING.
a. On issuance of wage or<kr,
• Contents of Wage Order. - A Wage Ordh shall specify the region,
province, or industry to which the minimum wage rates prescribed
thereunder shall apply and provide exemptions, if any, subject to
guidelines issued by the Commission.2
, Frequency of Wage Order. - Any Wage Order issued by the Regional
Board may not be disturbed for a period of twelve (12) months from its
effectivity, and no ?etition for wage increase shall be entertained within
the said period except when there are supervening conditions, such as
extraordinary increase in prices of petroleum products and basic
goods/services, which demand a review of the minimum wage rates as
detcnuined by the Regional Board and confirmed by the Commission
(NWPC),3 in which case, the Regional Board shall proceed to exercise its
wage fixing function even before the expiration of the said period.4
• E.i'ectivity df Wage Order; requirement of publication. - A Wage
Order shall be published only after its review by the Commission and
shall· take effect fifteen (15) days after its publication in at least one (1)
newspaper of general circulation in the region. s
b. On public hearings/consultations.
• Hearings may be conducted by the Regional Board en bane or by a duly
authorized committee thereof wherein each sector shall be represented.6
• No preliminary or pennanent injunction or temporary restraining order
may be issued by any court, tribunal or any other entity against any
proceeding before the Commission or Regional Board.7
1 Seehlfp1N,W,Ylf,\l)C.dde.go.,.pM.ri.lmi.
2 Sectm 2. ~ rv, WJPC Guileliles No. 01, Series of '1f1J7, June 19. '1f1J7 [Ameooed Rules cl Procedtre on 1-Mirum t
WirJeFlli°9i
3
4
5
Reienl'Y:l 1:>lle Nafmal ~ 811d f'l1xlJ<:My Qmris.soi (N'M'C).
Sectm 3, Rule r-1, WJPC Gmernes No. 01, Series ol '1f1J7, Jule 19, '20071,6,nended ~ cl Procedl.re o n ~
Wc!Je Ftli'g].
Mile 123, l.abo' Code; Secfun 4, Cl\3pter Ill, Rutes ~tirY,j RA No. 6727: Section 5. Rule rv, Wi'PC Gooernes
1-h 01, Series cl'l007,Jt11e 19, '1f1J7 ~ ~ c l ProcedLre on Mrlirun W?JJe Fll(ilgj.
I
~-
r
' Secfun 2, RIM 111. 1-M'PC Gooeli1es No. 01. Series rJ YJ7. June 19. XIJ7 ~ded Rutes ol Procedure on Mnimrn t also $edioo 1(IJ. rue U,NCMB ~ Procedural GuilesleS i1 tie Caidud cl Volwlt;ry Albitrcm1 Proceedrgs (0d. 15.
l
Wi3JeFllilJJi
1 Secfun 7, ~ ll1, lif.
CHAPTER. THREE 177
WIOR STANDARDS
• Failure to conduct public hearings/consultations and to publish a wage
order renders it invalid.1
c. On al!plicability of wage order,
• Wage increases mandated by wage orders apply only to covered
employees specified therein.2
• If none of the employees are receiving salaries below the prescribed
minimum wage, an employer is not obliged to grant the wage increase to
any of them.3
b.
WAGE DISTORTION
1. WAGE DISTORTION, AS DEFINED IN THE LAW AND
IMPLEMENTING RULES.
'11Vage di1tortion'• contemplates a situation where an increase in prescribed
wage rates results in either of the following:
1. Elimination of the quantitative differences in the rates of wages or
salaries; or
2. Severe contrattion of intentional quantitative differences in wage or salary
rates between and among employee groups in an establishment as to
effectively obliterate the distinctions embodied in such wage structure
based on the following criteria:
a) Skills;
b) Length of service; or
c) Other logical bases of differentiation.5
Wage distortion presupposes a cl~ssi~cation o_f positions and _r~nking .of
these positions at various levels. One visualizes a hierarchy -of pos1nons with
corresponding ranks basically in terms of wages and other emoluments. ~ere a
significant change occurs at the lowest level of pos~tions in. teans of basic_ -:v3ge
without a corresponding change in the other level m the hierarch~ ~f pos1nons,
negating as a result thereof_the distinction between one level of pos1non from the
next higher !eve~ and resulting in a parity between the lowest level and the next
higher level or rank, between new entrants and old hires, there e.xists a wage
1 CagayM Sugar Miling Compatrt v. Secretary of Labo! and ~menl GR No.128399 .Jal.15. 1998.
Capilol W,reJess, Inc. V. Bale, G.R No.104682, Ju~ 14, 1995.
i Pag-Asa Steel woos, Inc. v. CA. GR No. 166647. Miro! 31, mi.
Mew.av. NLRC, GR No. 118500,Ap!i 18. 1997, 271 SCRA670. .
s Mile 124, l.lllx1 Code; Item IP!, Demmn r/. Terms, ~les lmplemeotilg Repubfc Ad No. 6727; Sedioo 4 Im), ~le I,
t.fM'C GJKlek1es No. 01, Series cl '1f1J7, Jllle 19. '1f1J7 (M1ooded Rutes cl Procedlle on ~ W<fil(! Fiu-gj; See
2004i
 RAR REvlfWER ON LABOR I.AW
disto_rtion_. xxx. The concept of wage distortion asswnes an existing grouping or
class16cauon of employees which establishes distinctions among such employees
on some relevant or legitimate basis. This classification is reflected in a differing
wage rate for ead1 of the existing classes of employees.I
2. FOUR (4) ELEMENTS OF WAGE DISTORTION.
'The four (4) elements of wage distortion are as follows:
(1) ,\n existing hierarchy of positions with corresponding salary rates;
(2) A significant change in the salary rate of a lower pay class without a
concomitant increase in the salary rate of a higher one;
(3) The elimination of the distinction between the two levels; and
(4) The existence of the distortion in the same region of the country.2
N_ormally, a company has a wage structure or method of determining the
wages of its employees. In a problem dealing with '\vage distortion," the basic
ass~ption _is . tha_t there exists a grouping or classification of employees that
establishes disuncuons among them on some relevant or legitimate bases.J
Involved in the classification of employees are various factors such as the
degr~es of responsibility, the skills and knowledge required, the complexity of
the Job, ?r. other logical basis of differentiation. The differing wage rate for each
of the exJsung classes of employees reflects this classification..
3. ''ELIMINATION11VS. "SEVERE CONTRACTION. 11
In order to justify adjustment in wage rates, it is not required that there
should be a complete elimination of quantitative wage differences. The existence
of 'ievm rontra,tion"of such quantitative wage differences is sufficient.
The law mentions "intentional quantitative differrnees" in wage or salary rates
between and among employee-groups in an establishment. By the te!Dl 'l'ntentional"
mean~ ~at the quantitative differences had been arrived at through the collective
ba.rgauung process and concluded by the parties. The intention of the parties on
the issue of whether or not the benefits under the CBA should be equated with
those granted by law must prevail and should be given full effect
4. SEVERE CONTRACTlON; MEASURE THEREOF.
4 Actual Salary
In Metro Bank, the Supreme Court said that the contraction betwe~
personnel grouping at about eighty-three percent (83%) cenainly cannot be
1
Nali:nal Federafm ollaboc V. NI.RC. G.R. No. 103586, Jul'f 21, 1994, 234 SCRA 311· See also Mooopo1im Bri a1c1
1
Trust ~ 8lw,,ees lffll-AllJ.TUCP v. NL.RC, G.R No. 102636, Sept 10, 1993, 226 SCRA 268; Ca-dcx,a v.
1-lRC, G.R No. 89007, l.'adl 11. 1991. 195 SCRA 92; Asscmed Laber U!ms-lUCP v N,RC G.R No. 109328, At.g
16, 1994,235SCRA395. . '
Pnbcril<as Associalxxlv. Pn.denJa llri aid Trust~. G.R No. 131247, Jan. 25, 1999, 302 SCRA 74.'
. I
I
: Nalmal Fednioo d l.axr v. NIRC, G.R No. 103586, July 21, 1994, 234 SCRA311.
Metrnpolitan Bank and T111st Company Employees Unioo-ALU-T\JCP v. NlRC, G.R No.102636, Sept.10, 1993.
if
CHAPTER THREE
179
LABOR STANDARDS
considered less than severe. Consequently, there is no doubt that there is an
evident severe contraction which resulted in wage distortion.
5. CASES WHERE NO WAGE DISTORTION OCCURS.
In Pmbankm,1 it was declared that wage distortion presupposes an
increase in the compensation of the lower ranks in an office hierarchy without a
corresponding raise for higher-tiered employees in the same region of the country,
resulting in the elimination or the severe diminution of the distinction between the
two groups. Such distortion does not arise when a wage order gives employees in
one branch of a bank higher compensation than that given to their counterparts in
other regions occupying the 1a111e pay scale, who are not covered by said wage
order. In short, the implementation of wage orders in one region but not in others
does not in itself necessarily result in wage distortion.
A disparity in wages between employees holding similar positions
but in different regions does not constitute wage distortion as contemplated
by law. It is the hierarchy of positions and the disparity of their corresponding
wages and other emoluments that arc sought to be preserved by the concept of
wage distortion. Put differently, a wage distortion arises when a wage order
engenders wage parity between employees in diffimtt rungs of the organi2ational
ladder of the same establishment. It bears emphasis that wage distortion involves a
parity in the salary rates of different pay classes which, as a result, eliminates the
distinction between the different ranks in the same region.
The difference in wages between employees in the same pay scale in
di.ffmnt re~ons is not the mischief sought to be banished by the law. In fact, R.A.
No. 6727 recogni2es "existing regional disparities in the cost of living'' in
its Section 2.3
6. FORMULA FOR RESOLVING WAGE DISTORTION.
In the same case of Metro Bank, the Court has given its imprimatur to the
following formula for the correction of wage distortion in the pay scale structures
for being just and equitable:
Minimum Wage = %x Prescribed Increase =Distortion Adjustment
7. WAGE DISTORTION; HOW RECTIFIED.
1. In ozy,anilJd establishments, - Where the application of any prescribed
wage increase by virtue of a Wage Order issued by the R1WPB results in
PrubankersAssociation v. Prudential Bank clld Trust Canpany, GR No. 131247,Jal.25, 1999, 302 SCRA74.
RANo.6n7,omv.iseknaMl aslleWa;ie Raionaizalialhi'
I kl
180 BAR IUVIEWER ON lABOR !AW ·
dis_tortions of the wage structure within an establishment, the employer and the
~on _should negotiate to correct the distortions. Any dispute arising from wage
distortions should be resolved through the grievance procedure under their CBA
and, if it remains uruesolved, through voluntary arbitration. Unless otherwise
agreed by the parties in writing, such dispute should be decided by the Voluntary
A.rbitrator Ot panel of Voluntary Arbitrators within ten (10) days from the time said
dispute was referred to voluntary arbitration.1
2. In ll(IO(f/J,ni'lJd ¢abli1h111en/J. - In cases where there are no collective
agreements or recognized labor unions, the empl<;>yers and workers should
endeavor to correct such distortions. Any dispute arising therefrom should be ·
settled through the National Conciliation and Mediation Board (NCMB) and, if it
remains unresolved after ten (10) days of conciliation, should be referred to any of
the Labor Arbiters of the appropriate branch of the NLRC. It shall be mandatory
for the NLRC to conduct continuous hearings and decide the dispute within
twenty (20) days from the time said dispute is submitted for compulsory
arbitration.2
3. Effect ef penden"r} ef a wage diJtorlio11 disp11te. - The pendency of a dispute
arising from wage distortion shall not, in any way, delay the applicability of any
increase in prescribed wage rates pursuant to the provisions of the Wage Order.3
8. PROHIBITION ON STAGING OF STRI!ffi OR LOCKOUT.
Any issue involving wage distortion is not a valid ground for a strike or
lockout.• Wage distortions should be corrected through voluntary negotiation or
arbitration instead of strikes, lockouts or other concerted activities. Unilateral or
negotiated wage increases granted by employers for the purpose of correcting such
wage distortions are in keeping with the public policy of encouraging employers to
grant wages higher than legislated wage rates.5
To compel employers simply to add upon legislated increases in salaries or
allowances without regard to what is already being paid would be to penalize
employers who grant their workers more than the statutorily-prescribed minimum
rates of increases. Clearly, this would be counter-productive so far as securing the
interests of labor is concemed.6 . statutorily mandated salary increase, supervisory empl~yees were, as a matter of
' ~ 1, ~ 1. Rule VII, NWPC Guideines No. 01, Series c12001. JIJ'le 19, 'JJ1J7 ~ rues c1 Pnia!due
oo lmii'un~ FargtMi:le 124, LmCode; Sec&rl 7, ~I~ rues~ RA No. Gm.
2
~2,Secbl 1,RuleW, lil~!.1i::le 124, lil.;Sml 7, ~IIL W.
3
l'crw2.Secb11,RuleVII, lil~"'1ide 124, lil~Se:lm 7, ~IIL ll«l.
Sedioo 16,
27, 1991.
~'·Rules ~DJ RA No. fil'll; IBN aBlAdod ng Manggagawa V. NlRC GR. No. 91980 June
: '
5 Associated LaborUnloos-TUCPv. tt.RC, G.R No.109328,~.16, 1994,235SCRA395.
6 ~ '-mJ Co.. h:. v. t-4RC, GR No.86200, I'd>. 25, 19'l2_ 200 SCRA 497, 501: ~ Billk iJ1d Trust Coo"!)<llY
~ L,ro;ALU-lUCPv. ti.RC GR. No. 102636, Seit 10, 1993. .
CHArTER THREE 181
IABORSTANDARDS
9. WAGE DISTORTION NOT VALID SUBJECT OF STRIKE OR
. LOCKOUT.
Wage distortion is not a proper ground to be invoked in support of a
strike or lockout. Disputes arising from wage distortion resulting from wage orders
·issued by the R1WPBs which are alleged in the notice of strike or notice of lockout
should be referred to the Labor Arbiter if not settled within ten (10) calendar
_days of conciliation by the NCMB.1
10. WAGE DISTORTION, WHEN CORRECTIBLE.
The employer cannot legally be obligated to correct "wage distorlion" if the
increase in the wages and salaries of the newly-hired employees was not due to a
prescribed law or wage order but due tQ ~creases it_ vol~tarily granted_ to them.
The wordings of Article 124 are clear. If It was the tntcnoon of the legislators to
cover all kinds of wage adjustments, then the language of the law should have been
broad, not restrictive, as it is currently phrased.
If the compulsory mandate under Article 124 to correct "wage distorlio~:• is
applied to vo/11nta,y and 11nilateral increases effected by the e~ployer tn fixing lunog
rates which are inherently a business judgment or prerogallve, then the hands of
the employer would be completely tied even in cases where an increase in _wages of
a particular group is justified due to a re-evaluation o~ ~e high producovny of ,a
particular group, or the need to increase the co.mpett~ve~ess of the employer s
hiring rate. An employer would be discouraged from ad1ust:1og the salary rates of a
particular group of employees for fear that it would resul~ to a d~~and by all
employees for a similar increase, especially if the financial condittons of the
business cannot address an across-the-board increase.
In the case of Banfeard,2 the petitioner cited Metro Transif to support its
claim that ·the obligation to rectify wage distortion is not con~ed to wage
distortion resulting from government decreed law or wage order. Reli:ince on Metro
Tran.sit is, however, misplaced as the obligation therein to recttfy the wage
distortion was not by virtue of Article 124 of the Labor Code but on account of a
then existing ·,'tompa'!J pmdire" that whenever rank-and-file employees were paid a
practice, also paid the same amount plus an added prerruum.
The mere factu21 existence ~f wage distortion does not, however, ipsoJacto
result to ~ obligation to rectify it, absent a law or other source of obligation which
requires its rectification.
·
I 1
Sdxl6 ~ RuleV NCMBMnialdProcewesforCa'Qlaf,ooa'd Prewnwetlafatal cases.
Bankaid Employ~ lklion-Wocteis Aliance Trade Unions, v. NLRC, G.R No.140689, Feb.17, 2004.
Metro Tran5it Organilation, klc. v. NLRC, GR No.116008,.hif 11, 1995, 245 SCRA7ol.
 182 BAR R.EYIEWER ON LABOR LAW •
11. RESTORATION OF SUBSTANTIAL DIFFERENTIATION.
It must be noted that in correcting wage distortion, the law does not
require that the difference which had previously existed between and among the
employees of different classes be restored in exactly the same amoWlt What is
required is substantial difference in such wage rates. 1
4.
NON-DIMINUTION OF BENEFITS
..
1. TWO (2) PRINCIPLES ENUNCIATED IN ARTICLE 100.
Article t002 ordains two (2) principles, namely: [1] the non-elimination and
(2) the non-diminution, in any way, of the "supplements or other employee
benefits." This means that the reduction or diminution or withdrawal by
employers of any such benefits, supplements or payments as may be provided in
existing laws, individual or collective agreements or voluntary employer practice or
policy, is not allowed.l
2. MEANING OF "SUPPLEMENTS OR OTHER EMPLOYEE
BENEFITS"IN ARTICLE 100.
Generally, employees have a vested right over existing benefits voluntarily
granted to them by their employer.4 Thus, any benefit and supplement being
enjoyed by the employees cannot be reduced, diminished, discontinued or
eliminated by the employer.5 Elimination, discontinuance or ~ution of benefits
refers to the act of the employer in willaterally withdrawing the benefits alteady
enjoyed by the employees.6
The principle of non-elimination or non-diminution enshrined in Article
100 covets only "mppkments. or other empk!Jff benefits. '" Verily, the phrase ''Sllppl,_111mts
or other emp/Qy11 beflljits" in Article 100 is construed to mean the compensation and
privileges received by an employee aside from regular salaries or wages.8
The issue of what is meant by the term ''benefits,, under the contemplation
of Article 100 was raised in Royal Plan_t 11. C0ta-Cola. 9 Respondent company
removed the chairs of its bottling operators who, as early as 1974, were provided
1
Nablal Federatioo of Lmv. NI.RC, GR No. 103586, Jutf 21, 1994, 234 SCPA 311.
2
ART. 100. Prd1blcn aJailstemnafxxl ordimmoo d~. - ~ ii tis Bcdt shaB beconslrued belmlle oril
art/YeJd'nilish gpnents, aoCler emsqee bnfiLli behJ er'1,'8d at the fme d ~ o f llis Qxle.
3
Repliltflantln Bai. IQ¥ knaMl as PNB-Republc Ben< v. NI.RC, GR No. 117460, Jal 6, 1997.
• Veigara, Jr. v. Coca-Cola Balers Phq)piies, klc., GR No. 176985, Aprl 1, 2013.
• Eas1em Telec:amuri:abls Plitippi'les, lrx:. v. Eastern Te1ecxms ~ Unkln, G.R NrJ. 185665, Feb. 8, 2012.
5
1
Vergaa, Jr. v. Coc&Cola Bol!!ers Phippiles, lrx:., supra: See also SUpreme Steel~ v. N ~
~ng~lndepeooentl.n,n(~O-APl),GR.No.185556,Mwth28, 2011.
1 Nefnk carcue, klc. v. Dem>, G.R No. 160027. JIJle 18. 2014.
a Id.
9
Royal PlaliWc.keis U!kltl v. Coca-Cola Botllefs PhifWiles, lnc.-Cebu fll.ant, G.R No.198783,.A{)nl 15,2013.
•
C I"''THREE
lAB~ STANDARDS
with chatts upon their request. Sometime in September 2008, or after more than
30 years, the chairs provided for the operators were removed pursuant to a
national directive of respondent company which is in line with its '7 Operate, I
Maintain, I Ckan" program for bottling operators, wherein every bottling operator
is given the responsibility to keep the machinery and equipment assigned to him
clean and safe. The program reinforces the task of bottling operators to constantly
move about in the perfoanance of their duties and responsibilities. The union
· claimed that the CCBPl's decision to unilaterally remove the operators' chairs
constitutes diminution of benefits provided in Article 100 of the Labor Code. The
Supreme Court, however, ruled that there can be no violation of Article 100
because the operators• chairs cannot be considered as one of the '~mphyee benefits"
covered thereWlder. In the Court's view, the tenn ''beneftt.r'' mentioned in the non-
diminution rule refers to monetary benefits or privileges given to the employee
with monetaty equivalents. Such benefits or privileges form part of the employees'
wage, salary or compensation making them enforceable obligations.
It must be noted that several cases have been decided regarding the non-
diminution rule where the benefits or privileges involved therein mainly concern
monetary consideratio~ or privileges with monetary equivalents. Thus, th~ "other
unployu benefits" spokeniof by Article 100 should pertain only to those which are
suscepttole of mone~ considerations. Indeed, ~ could_ only be ~e m~st
plaUS1'bl~ conclusion because the cases tackling Article 100 mvqlve ~~y-wtth
monetary considerations or privileges converted to their monetary eqwvalents.
Some of these cases are:
(1) Eastern TJ~mmmunimtion Phils. In,.,. Bastem Tele&0111J Bmplf!YeuUnion,1
where the case involves the payment of 14th , 151h and 16th month
bonuses;.
(2) Cmtral/4carera Dt Tarht v. Central AZ!'tarera De Tar/at Labor U8!6n-
NLU,2 regarding the 13th month pay, legal/special holiday pay, mght
premium ~ay and vacation and sick leaves;
(3) TSPIC qirp. v. TSPIC · EmpflrJeu Union, 3 regarding salaty wage
inc.ceases,. 1
·
(4) Ameriam !Wi11 and Cable Dai!J Employees Union v. American Wire and
Cable Co~, ln&.,4 involving service awards with cash incentives,
premium; pay, Christmas party with incidental benefits and
promotional increase.
But there are some monetaty claims that cannot be considered as falling
within the definition of ''ben(tll" under the non-diminution principle in Article 100.
1 G.RNo.185665,Feb.8,2012.
2 GR~ 188949,,1\tf 26.2010.
3 GR 163419,Feb. 13, 2008.
4 G.R No. 155059, Apri 29, 2005.
 184 BAR REYIEWER ON LABOR LAW
For instance, in San Mig11,I c~,p. v. Lqyoc, Jr.,1 it was held that overtime pay is not a
''benefit" as this tenn is understood within the contemplation of Article 100 since
the employees could not demand overtime pay from their employer if they did not
render overtime work. The requirement of rendering additional service
differentiates overtime pay from benefits such as 13th month pay or yearly merit
increase. These benefits do not require any additional service from their
beneficiaries. Thus, overtime pay does not fall within the definition of benefits
under Article 100 of the Labor Code. • Contrary to the nature of benefits,
petitioners did not fredy g:ve the payment for overtime wotk to respondents.
Petitioners paid respondents overtime pay as compcn~ation for services rendered
in addition to the regular work hours. Respondents rendered overtime work only
when their services were needed after their regular wotking hours and only upon
. management prerogative. Ia fact, this management prerogative highlights the fact
the instructions of their superiors. Respondents even differ as to the amount of
overtime pay received on account of the difference in the additional hours of
services rendered.
The earlier case of Manila Jockey C/Jlb Emp~ee1 Labor Union PTGWO 11.
Manila Jockry C/Jlb, lnc.,2 has been more categorical in its ruling ~at overtime pay is
not covered by the non-diminution doctrine under Article 100. Respondent
company was not obliged to allow all its employees to render overtime wotk every
day for the whole year, but only those employees whose services were needed after
their regular working hours and only upon the instructions of management. The
overtime pay was not gn·en to each employee consistently, ddiberately and
unconditionally, but as a compensation for additional services rendered. Thus,
overtime pay does not fall within the definition of benefits under Article 100
of the Labor Code on prohibition against elimination or diminution of
benefits.
In the 2018 case of Coca-Cola 11. ICCPELLJ,l the CBA provides for wotk
to be rendered on Saturdays. In the decision of the CA, it was hdd that the fact
that petitioner CCBPl had been providing work to its employees every Saturday for
several years, a circumstance that proved Saturday was part of the regular work
week, made the grant of Saturday work ripen into company practice covered by
Article 100 of the Labor Code. The Supreme Court, however, disagreed with this
CA ruling. It pronounced that it is not Saturday wotk pu 1e which constitutes a
benefit to the company's employees. Rather, the benefit involved in this case is the
premium which the company pays its employees above and beyond the minimum
requirements set by law. The CBA between CCBPI and the respondent union
guarantees the employees that they will be paid their regular wage plus an additional
50% thereof for the first eight (8) hours of work performed on Saturdays.
Therefore, the benefit, ifever there is one, is the premium pay given by reason of
1 G.R No. 149640, Oct 19, 2007.
l G.R No. 167760, Mrdl 7,2007.
3
Coca-Cola Bomes Phis, n:. v. lolc CocaedaPliri~LalJalk',m,GRNo.195297,0ec.05,201a
CIIAITTR THREE 185
LABOR STANDARDS
Saturday work, and not the grant of Saturday work itself. As held in Royal Plant, I the
term "benefits'' mentioned in the non-diminution rule refers to monetary benefits or
privileges given to the employee with monetary equivalents. Stated otherwise, the
employee benefits contemplated by Article 100 are those which are capable of
being measured in terms of money. Thus, it can be readily concluded from past
jurisprudential pronouncements that these privileges constituted money in
themselves or were convertible into monetary equivalents.
In order for there to be proscribed diminution of benefits that prejudiced
the affected employees, C93PI should have unilaterally withdrawn the 50%
premium pay without abolishing Saturday work. These are not the facts of the case
at bar. CCBPI withdrew the Saturday work itself, pursuant, as already held, to its
that the scheduling of the Saturday work was actually made subject to a condition,
i.e.; the prerogative to provide the company's employees with Saturday work based
on the existence of operational necessity
3. CLARIFICATION OF THE NON-DIMINUTION RULE.
Weslryan Univmity-Philippinei,2 succinctly clarified that the Non-
Diminution Rule found in .Article 100 explicitly prohibits employers from
eliminating or reducing the benefits received by their employees provided such
benefits are based on any of the following:
(1) Express policy;
(2) Written contract; or
(3) Company practice.3
There is not much controversy if the benefit involved is provided for
under Nos. 1 and 2 above. Thus, if it is expressly laid down in a written policy
unilaterally promulgated by the employer, the employer is duty-bound to adhere
and comply by its own policy. It cannot be allowed to renege from its commitment
as e.xpressed in the policy. If the benefit is gtanted under a written contract such as
an employment contract or a CBA, the employer is likewise under legal compulsion
to so comply therewith.
No. 3 above presents a different complexity since the benefits are not cast
in St!)ne, so to speak, as there is no written instrument that reflects them which can
readily establish their binding effect and enforceability. The discussion on company
practice below is enlightening and illuminating.
4. COMPANY PRACTICE AND PRINCIPLE OF NON-DIMINUTION
OF BENEFITS.
Royal PlantWcners lktoov. Qx:a-Oila Botllers Phqlpi1es, rc.-Cebu l'lcrll G.R No. 198783,Api 1S, 2013.
W~lkwefsity-~v. ~ ~ F c D J l y i l l d ~~G.R.No. 181800, IIBcl'I
12,2014.
3 atng CEn1ra1 A211::craa De Ta1ac V. Centra AzllCirera De Ta1ac LalJa lkliJn.tolU, G.R No. 188949,Jlif 26, 2010.
.-----
186 BAR REYIEWERON IABOR IAW.
a. No bard and fut rule to establish company pracdce.
Jurisprudence has not laid down any hard-and-fast rule as to the length of
time that company practice should have been exercised or observed in order to
constitute voluntary employer practice.1 There is no such rule which may be used
and applied in deteoninimg whether a certain act of the employer may be
considered as having ripened into a practice which, having been elevated to such
status, may thus be accorded the same enforceability and binding effect equivalent
to a demandable policy or agreement
b. The grant ofbenefit should not be by reason oflegal or
contractual obligation but by reason ofliberality.
To ripen into a cc·mpany practice that is demandable as a matter of right,
the giving of the benefit sh.:>uld not be by reason of a strict legal or contractual
obligation but by reason of an act of liberality on the part of the
employer.2 Hence, even if a company continuously grants a wage increase as
mandated by a Wage Order or pursuant to a CBA, the same would not
automatically ripen into a demandable company practice if it has so acted on its
belief that it was obliged to do so under the CBA.3
c. DimiDution oibene.its, requisites.
According to Vet.Jam, Jr., 4 there is diminution of benefits when the
following requisites are pre;ent
(1) The gtant or benefit is founded on a policy or has ripened into a
practice over a long period of time;
(2) The practice is consistent and deliberate;
(3) The ptactice is not due to error in the construction or application of a
doubtful or difficult question of law; and
(4) The diminution or discontinuance is done 11nilateral!J by the employer. 5
These requisites are discussed in ririatim below.
4.t FIRST RBQUISITE:THE GRANT OR BENEFIT IS FOUNDED ON
A POLICY OR HAS RIPENED INTO APRACTICE OVER A LONG
PERIOD OF TIME,
1
~ Billk 111d TIUSt CcX1l)alY v. ta.RC, GR. No. 152928, Jme 18, 2009, 589 SCRA 376, 385-386; lvr1J Metal
Prcxb:ls, Co., n:. v. Sanlml DJ r111a MrQ)agawa sa lvr1J tlaal-NAFLU ( ~ U ) . GR. No. 170734, May
14. 2008, 554 SCAA 110, 119; Herda Phls., h:. v. Si1raa1 ng Mmyq Mlfflawa sa tblda, GR. No. 145561,
Jllle15,2005,460SCRA 186,195.
2 Pag-Asa SteelWOlks, Inc. v.CA, GR.No.166647,Maim31,2006.
, kl
• Vergara.Jr. v. Coca-ColaBdSels PtiqJpiles. klc., GR. No.176985,P4Xi11, 2013.
s See also &!peme Seel Clxporatioo v. ~ Manggagawa ng Supreme Independent Unkxl (NMs-tNO-APl), G.R.
~ 185556, tJach 28, 2011, 646 SCRA 501,527; TR Ccrpaatm v. TSPtC ~byees Uni>n (FFW), G.R. No.
163419,Fm.13,2008,54SOCRA215,226.
CHAmRTHI\EE
LABOR STANDARD~
The application of the prohibition against the diminution of benefits
presupposes that a company practice, policy or.ttadition favoiable to the employees
has been clearly established and that the payments made by the employer pUISuant
to the practice, policy, or ttadition have ripened into benefits enjoyed by them.1 To
be considered as a practice, policy o~ tradition, however, the giving of the benefits
should have been done over a considerable or long period of time.2 It is relevant to
·mention that no specific minimum number of years3 has been settled as ~e length
of time sufficient to ripen the practice, policy or tradition into a benefit that the
employer cannot unilaterally withdraw.4
If done ooly once as in the case of Philacor,5 where the CBA signing bonus
was granted only once during the 1997 CBA negotiation, or in Supreme Stu/ Corp. 6
where the COLA under Wage Order No. RBIII-10 was erroneously implemented
across the board for less than a year, the same cannot be considered as having
been practiced "over a long period of time."
While it is true that jurisprudence has not laid down any rule requiring a
specific minimwn number of years in order for a practice to be considered as a
voluntary act of the employer, under existing jurisprudence on this matter, an act
carried out within a year or less than a year would certainly not qualify as such.7
In the same vcin, if an act ~ done merely as an isolated instance, it cannot
be considered as constitutive of company practice. In the 2018 case of Del Rio v.
DPO Philippinu, Int.,B petitioner9 voluntarily resigned from respondent company. It
was accepted by the latter. Later, he filed a monetary claims case asserting that it
has been a company practice of respondent company to grant separation pay to
resigning employees. In his attempt to prove this fact, he presented the payslips of
Martinez and Legaspi showing that they received separation pay after they resigned.
The Supreme Court, however, was unconvinced. The rule remains that an
employee who voluntarily resigns from employment is not entitled to separation
pay, except when it is stipulated in the employment contract or the CB~ or it is
sanctioned by established employer practice or policy.10 The cited exceptions do
not obtain in this case. As correctly found by the CA, there was no employment
contract, much less a CBA, whi~ contained the stipulation that would grant
1 Phippne Jammts, klc. v. Jcxma1 ~ Union (JEU). G.R No. 192001, June 03. 2013; See also Borml V.
Na1iCX1a1 PoMll' Capaa1cr1 ~ CcnsordaBf Unial (NECU), G.R No. 162716, Sept 27, m, 503 SCRA 611,
m . .
2 ~BriandTrustCcxr'8l)'v.NLRC,G.R.No.152928,Jme18,2009,589SCRA376.384.
3 Nellilk ~ "- v. Dellro, G.R No.160827,J\lle 18, 2014.
4 Sew1a Tradil Cor9anYv. Sernn, G.R No. 152456, Ajx! 28, 2004, 428 SCRA 239,249.
s Phfclpile~Qrpcratb'l(Phka)v.CA,G.RNo.149434,Jllle3,2004.
1 &lprane Seel r.«paralioo v. ~ ~ RJ Supreme lndepend«lt Urmn ~ ) . G.R No.
185556, Mcrd128, 2011.
7 See also Nafaa Sup Remedes Ccrpaam V. NtRC, G.R. No. 101761, MJth 24, 1993, 220 SCAA 452.
• Del Rk>v. OPO ~ klc.. GA No. 211525, Dec. 10, 2018.
1 MCletineofhisresgnatioo, hewmtdfrQdlepcmon cl ~tCounby~.
10 Del Rbv. DPO ~ he., S1J1118, citing "J" Mmti'9 Corp. v. Tn1;G.R NO. 163924,.llme 18, 2009.
188 8AR REVIEWER ON LABOR I.AW .
separation pay to resigning employees. Neither was there a company practice or
policy that was proven to exist in the instant case. ·
To be considered a company practice, the giving of the benefits should
have been done over a long period of time, and must be shown to have been
consistent and deliberate. 1 As records would show, the giving of the m~netary
benefit by respondents in favor of Legaspi and ~ez is merelf an -~olate:1
instance. From the beginning of respondents' business and ?P until pettt:loner s
resignation took effect on October 7, 2009, there was no showtng that payments ~f
such benefit had been made by respondents to their -~mployees _who vol~tarily
resi ed. The first and only instance when such a benefit was _given to resigned
empgnloyees was on or a1c.t,.• November 15 2009 - not because it was a company
1
-... , •
· but only to pave the ""'Y
practice w.. for Legaspi and Mart1nez s graceful
. cat, so to
speak. As explained by respondents, the said benefit was ~ot 1nten~ed as a
· but more of a promise or an assurance to Legaspi and Martinez that
separauon pay . . . G" d ,
they would be paid a benefit if they tender the11 ~esignation. 1ven respon ents
knowledge of Legaspi and Martinez's act~ of disloyal1! ~d. betrayal o~ ~t,
respondents opted to give them an alt~mattve war of eJat, 1n lieu o~ t~munauon.
Respondents' decision to give Legaspi and ~ e z ~ graceful eJa! 1S p~ectly
within their prerogative. It is settled that there 1S nothing reprehensible or illegal
when the employer grants the employee a chance to resign and save face rather
than smear the latter's employment record.2 Relying on respondents' assurance,
Legaspi and Martinez tendered their resignation and it is incumbent upon
respondents to make good of their promise.
In the case of Cosetmg 11. Perez} a similar claim for sepmtion pay was
asserted by a teacher who resigned from employment in petitioner Dillman
Preparatory School. In an effort to show that the school has a _policy of grantin~
separation pay to its employees who resigned, Perez subm1tted an Affidavit
executed by one Teresita Limochin (Limochin), a co-teacher who attested that she
received separation pay from the school following her voluntary resignation. A
scrutiny of Limochin's affidavit, however, reveals that the school's giant of
separation benefits or financial assistance to her was an isolated act, not home out
by any established employer practice or policy. In fact, Limochiil s~ted that she
was made to choose either to voluntarily resign from work with payment of
separation benefits or to face administrative proceedings, which may lead to
termination, in view of her habitual absenteeism. Rather than face an investigation,
Limochin chose the first option. Still, there is nothing in her affidavit that would
disclose that the School granted her monetary benefits by virtue of an established
practice or policy. Besides, Limochin's situation was different from Perez's; aside
from resigning three years after Perez did, the school gave Limochin a choice only
1 kt., cfrg Scx;ete 1n1ematiooa1e De Te1eammmicatkr1s Aercnalique-' v. ttlijlllga. GR No. 215504. August20. 2018.
2 ld.,dBdCosuev.Ferritz'1lelp!edOewq,mentCorp.,GRNo.230664,J~24,2017.
3 G.R. No. 185938. Sept 06. 2017.
CHAmRTHREE
LABOR STANDARDS
because she faced the possibility of an eventual termination of employment,
whereas Perez did not. In Chiang Kai Shek College v. Torm, 1 the Court acknowledged
that, a compromise agreement, which allows an employee facing an imminent
dismissal to opt for honorable severance from employment, may be validly entered
into between an employer and employee.
In another 2018 case, Sodtlt lnlmlaJUJnale dt Ttk((}mm1mi&alio11J Aeronat1Jiq11e1
(SITA) v. Huliganga, 2 the claim of respondent Huliganga for retirement benefits
provided in the CBA for rank-and-file employees was denied because he was a
managerial employee and thus not eligible to join, assist or fonn any labor
organization under Article 255 (245) of the Labor Code. Most significantly, he was
, •
not able to show by evidence that there exists a company policy or practice
gr.mting the same retirement benefits to managerial employees. To be considered a
company practice, the giving of the benefits should have been done over a long
period of time, and must be shown to have been consistent and deliberate.3 The
test or rationale of this rule on long practic;e requires an indubitable showing that
the employer agreed to continue giving the benefits knowing fully well that said
employees are not covered by the law requiring payment thereof.4 In other words,
the act of extending benefits of the CBA to managerial employees must have been
practiced for a long period of time and must be shown to be consistent and
dehberate.s
In the following cases, the a~t of the ·employer has been declared as
having ripened to a company practice that can no longer be withdrawn:
(1) In DflWIQ Fruils u,p.
v. ALU,6 involving the employer's act for six (6)
years of freely and continuously including in the computation of the 13th month
pay, certain items that were expressly excluded by law.
(2) In Sevilla Trading Co. v. Semana,1 where petitioner kept the practice of
including non-basic benefits such as paid leaves for unused sick leave and vacation
leave in the computation of the employees, 13th month pay for at least two (2)
years.
(3) In Central A!(!l((JrtrtJ v. Central A!(!l((Jrtra,8 where petitioner, for thirty
(30) years, granted its workers the mandatory 13th month pay computed in
accordance with the following fonnula: Total Basic Annual Salary divided by
twelve (12). Included in petitionds computation of the Total Basic Annual Salary
were the following: basic monthly salary; first eight (8) hours overtime pay on
1 G.R.No.189456,Apri2,2014.
a Societe Internationale de Telecxmrunica5on Aercna1DjlJeS (SITA) v. Hulgqa, G.R No. 215504, Aug. 20, 2018.
3 Id., ci!i1g Na!klr1al SuJar Rarleries Corpooiticn v. NLRC, G.R No. 101761. Mml 24, 1993.
• Id., cilnJ Phlippine Appla,t8 Caporamw. CA, G.R No.149434, .b1e 3, 2004.
5 kt.
s 0ava> Fruits Corporm1 v. Asscx:ia1i» labor Unklns, G.R No. 85073. AuJ. 24, 1993, 225 SCRA 562.
1 SMa TradiY:I ~ v . A. V.A. Sanana, G.R No.152456, Aprl 2Ul04, 438 SCRA 239.
a Cema1 Azucaera de Tailac v. Cenlral Azucarera de Tlllac l.alu lnoo-NLU, G.R No. 188949•.lutf 26, 2010.
-
190 IIAR REYIEWER ON LABOR I.AW •
Sunday and legal/ special holday; night premium pay; and vacation and sick leaves
for each year.
(4) In Mtrakv v. Stmla,y of Labor,1 where Meralco further granted its
employees an additional Christmas bonus at the tail-end of the year ~ince 1988,
aside from complying with the regular 13th month bonus. While the spee1al bonuses
differed in amowlt and bor'! different titles, it cannot be denied that these were
given voluntarily and continuously on or about Christ~1ias time. Th: considerable
length of time Meralco has been giving . these special Fts . t? its ~mployees
indicates a unilateral and voluntary act on its part to GontJnue gtVlng s:ud benefits
knowing that such act was not required by law.
(5) In Davao 111/egra!td v. Abarquez}where the employer, for ~ee (3) y~ars
and nine (9) months, approved the commutation to cash of the uoenJoyed porllon
of the sick leave with pay benefits of its intermittent workers.
(6) In Tianga1 v. UJgardo, Jr.,3 where the employer carried on the practice
of giving a fixed monthly emerg~ncy allowance from November 1976 to February
1980, or for a period of three (3) years and four (4) months.
(7) In Metrobank v. NLRC,4 involving Mettobank's act, for over a decade,
of consistently, deliberate]~ and voluntarily granting improved benefits to its
officers, after the signing of each CBA with its rank-and-file employees, retroactive
to January I" of the same rear as the grant of improved benefits and without the
condition that the officers should remain employees as of a certain date. This
undeniably indicates a unilateral and voluntary act on Mettobank's part, to give said
benefits to its officers, knowing that such act was not required by law or the
company retirement plan. In this case, it was held that because of this company
practice, private respondents Patag and Flora, fonner Assistant Manager and Senior
Manager, respectively, of petitioner Mettobank, are entitled to the improved
retirement benefits although they retired after the conclusion of the renewed CBA.5
(8) In Net/ink v. Delmo,6 where the payment of sales commissions in US
dollars instead of Philipp:ne currency was declared as having ripened into a
company practice.7
I 11,ria EJedri:: Con1)ir1Y Y. Seoetity ::ifi.m, GR_ Na. 127598, Jal. 27, 1999.
2 G. Oimo kl1egraled Pat SleYedailg Seivtes Y. ~ R Na. 102132, Mimi 19, 1993, 220 SCRA 197.
3
G.R. No.L-57636.M?f 16, 1983, 122SCRA267; 207 P1i 2235.
• ~ Bert cn1 Trust~v. NtRC, Fel%>eA. Pa1aJ m lle'MriloC. Fl:ta. GR m 152928,JIJle 1s, 2009.
5 lilt see PooibY. ~ Bert d N.b.llbm, U.. G.R No.199338,.lal. 21, 2013, v.here I~ prawx:ed Ir)' lhe ffgh
Cart. citrg.his cased~ Balk, that flere is n o ~ JXadice a pci;y ~ v.ti::h petitioner <3l assat tis
dain b' relielTelt benefits.
1 Nerrik CarjxJter re. v. Dem>. G.R No. 160827, Ju'le 18, 2014. Respa1dellt Eli: S. Demo was a, oonrt mana:ier
tasked kl C3l1YaSS im SMe cfieo1s b petitiooer m cxrrina, them b purchase t,e ~ m seMCeS ol Nelfnt
Dem:>med nhe leld l1l:lSIo1111e line. · Steel CaJ)0ralal v. ~ ~ rq ~ kldepatdert 1ml {NM.%0-APL), GR No. 185556,
1 See RA No. 8183, 'M Ad Repealog ~ f.cJ. t-urbered F!Ye I-Wed T ~. ~ hrmled, l:nUed 'All Ad.
To 1-s9.xe tie Uioon Valll! cl Pliippile Coo crid OJrenty." llis 9N IWMles as bbYs: 'Secfoo 1. Al nmelay
~ sha'I be SEtled i1 t,e Plu~ Wlef'C/ \lhcl is lega ~ i l lhe l'hq:ipi,es. Hol\e,<er, tie paies may agree
hll he ~bl a raisacfm shal be settled i1 a,y <le' runny a tie line ct pa)ffll!lt' See aoo Cf. 9-ap &Co. V.
Ncm,,,es!Ames, klc., GR No. 133498,,6¢ 18,2002,381 SCRA314,319-320.
CHArTIR THREE 191
LABOR STANDARDS
4.2. SECOND REQUISITE: THE PRACTICE IS CONSISTENT AND
DELIBERATE.
To be considered as a practice, policy or tradition, the giving of• the
benefits should be shown to _have been consistently and deliberately done.I The
intention to make a certain act a company practice may be logically inferred from
the peculiar circumstances obtaining in each case. An example is Tiangro v. Leo1,ardo,
Jr.,2 where the discontinuance by the employer effective February, 1980 of the fixed
monthly emergency allowance which it has consistently granted to the employees
since November, 1976, insofar as non-working days are concemed based on the
principle of •~o 1110rk, 111JP'!Y, "was declared violative of the non-diminution principle
in Article 100 of the Labor Code.
In Standard Charterrd Bank 11. SCBEW it was held that petitioners
employees are entitled to "outpatient medicine reimbursements" distinct and
separate from the "medicine allowances" granted in the CBA because there is an
established company practice of reimbursement of outpatient services, including
medicine reimbursement, despite the absence of a provision in the group
hospitalization insurance plan regarding outpatient benefits.
Another example is Republk Pla11teTI Bank v. NLRC,4 where it was ruled
that since petitioner PNB-RB has consistently and deliberately adopted the practice
of granting gratuity ·benefits to its retiring officers based on the salary rate qf the
next higher rank even after the expiration of the 1971-1973 CBA, although it knew
fully well that it was not required to give the benefits after the expiration of the
1971-1973 CBA, such grant of gratuity pay has already ripened into a company
practice or policy which can no longer be peremptorily withdrawn.
4.3. THIRD REQUISITE:THE PRACTICE IS NOT DUE TO ERROR
IN THE CONSTRUCTION OR APPLICATION OF A DOUBTFUL
OR DIFFICULT QUESTION OF LAW,
a. General rule.
The general rule is that if it is a past error that is being corrected, no
vested right may be said to have arisen therefrom nor any diminution of benefit
under Article 100 of the Labor Code may haye resulted by virtue of the correction
1 Verga-a, .... Y. Coca-Cda Bot!lels Phqlpiles, klc., GR No. 176985, .4jxi 1, 2013; Eas1em Telec:arr!lri::a
~ . klc. v. Eastern Teleams fnl>bjees l.k1ioo. G.R ~ -185665, Feb, 8, 2012, 665 SCRA 516,532; ~
Mart:h 2.8, 2011, 646 SCRA 501,527, 528; all Mebll!)0ian Bert nl TI\ISI ~ v. ltRC, GR No. 15292.8,Jooe
18,2009, 589 SCRA376, 384.
1 GR No. L-57636, Mrf 16, 1983, 122 SCRA 267: 2(Jf Pli. 2235.
J Stlrdail Omled B.nv.81.rmd c.ha1ered B.n ~ 1m1 (SCBEU), GR No. 165550, Oct.8, 2008.
• Repltfc Fmtm Bri, (oo,v kro.ln as ~ Brij v. ltRC, GR tb. 117460, Jal. 6, 1997.
 BAil RMEWERON LABOR LAW
192
thereof.1 The error, however, must be corrected immediately after its discovcty;2
otherwise, the rule on non-diminution of benefits would still apply.3
In the following cases, the eaoneous application of a law has been
declared as not having ripened into a binding company practice:
(1) In Globe Matkay Cable and Radio Co,poraJion "· NLRC,4 petitioner
corporation, puisuant to Wage Order No. 6 (effective Octqber 30, 1984), increased
the COLA of its monthly-paid employees by multiplying the P3.00 daily COLA by
22 days which is the number of working days in the coippany. The union disagreed
with the computation, claiming that the daily COLA rate of P3.00 should be
multiplied by 30 days which bas been the practice of the company for several years.
The Supreme Court, however, upheld the contention of petitioner corporation and
thus pronounced that the p t by the employer of b~~fits ~o~ ~ erro_neous
application of the law due to absence of clear administrative gwdelines ts not
considered a volwttary act which cannot be unilateally discontinued.
(2) In TSPIC urp. "· TSPIC Emp"r,ee.r Union [FFWJ,5 the Supreme Court
reiterated the rule enunciated in GkJbe-Matkay, that an erroneously granted benefit
nay be withdrawn without violating the prohibition against non-diminution of
benefits.
(3) In Prubanl:en AJsodation v. Prudential Bank. and Trust Compa~ petitioner
asserts that respondent Bank has already adopted a uniform wage policy which has
attained the status of an established management practice; thus, it is ,stopped from
implementing a W2ge order for a specific region only. In this case, respondent Bank
has previously implemented Wage Orders Nos. NCR-01 and NCR-02 nationwide
although they are supposedly applicable to the National Capital Region.only. With
the issuance of Wage Order No. RB 05-03 (applicable for Region V) and Wage
Order No. RB VII-03 (applicable for Region VII), respondent Bank started to
regionalize the implementation of the wage inaeases. In holding that this atgWI1ent
of petitioner is not persuasive, the Supreme Court ruled that although the Bank
implemented Wage Orders Nos. NCR-01 and NCR-02 nationwide instead of
regionally even after the effectivity of R.A. No. 6727, the Bank at the time was still
uncemin about how to follow the new law. In any event, that single instance
cannot constitute ''m1J111Jg,me11t pradia."
1 Qm M1darf G,be V. NI.RC, i1h.
2 Cna!Azuama De Tlllacv. Centa!Azuarera De Tasl.m~LU, G.R No. 188949, Jutj 26, 2010.
3
Wesle'fan ~ v . Wesleyal ~ Fa:uty am Staff~ S.R No.181806 Matd1
~~
• G.R. No. 74156, Jute 29, 1988, 163 SCRA 71.
s GR.No.163419,Feb.13,2008.
6 G.RNo.131247,.krl.25, 1999,302SCRA74.
CHAmR THREE 193
lABOR STANDARDS
b. Excepdoa.
But if the error does not proceed from the interpretation or construction
of a law or a provision in the CBA, the same may ripen into a company practice.
Thus, in Hinat11t1n Mining Co,poralion, 1 the act of the employer in granting separation
pay to resigning employees, despite the fact that the Labor Code does not grant it,
was considered an established employer practic;e.
In Am Metal Prodllds, Int.,2 petitioner, despite the provision of the law and
the CBA that 13th month pay, vacation leave and sick leave conversion to cash
should be computed in amounts proportional to the service the employees have
actually rendered within a year, had not pro-rated the payment of the same
benefits to seven (1) employees who had not served for the full 12 months in 1992,
1993, 1994, 1996, 1999, 2003, and 2004. Petitioner claims that its full payment of
benefits regardless of the length of service to the company docs not constitute
voluntary employer practice. It points out that the payments had been erroneously
made and they occurred in isolated cases in the years 1992, 1993, 1994, 1999, 2002
and 2003. According to petitioner, it was only in 2003 that the accounting
department discovered the enor '<when there were already three (3) employees
involved with prolonged absences and the error was corrected by implementing the
pro-rata payment of benefits pursuant to law and their existing CBA.,, It adds that
the seven earlier cases of full payment of benefits went unnoticed considering the
proportion of one employee concemed (per year) uis-iz-vis the 170 employees of the
company. Petitioner describes the situation as a "clear oversight" which should
not be taken against it. To further bolster its case, petitioner .argues that for a grant
of a benefit to· be considered a practice, it should have been practiced over a long
period of time and must be shown to be consistent, deliberate and intentional,
which is not what happened in this case. Petitioner tries to make a case out of the
fact that the CBA has not been modified to incorporate the giving of full benefits
regardless of the length of service, p~f that the grant has not ripened into a
·company pmctice.
'f!te Supreme Court, however, disagreed:
"In the years 1992, 1993, 1994, 1999, 2002 and 2003,
petitioner lwl adopted a policy of freely, voluntarily and consistently
granting full benefits to its employees regardless of the length of service
rendered. True, there were only a total o( seven employees who
benefited from such a ptaetice, but it was an established practice
nonetheless. Jurisprudence bas not laid down any rule specifying a
minimum D\11'lber of years within which a company practice must be
exercised in order to constitute voluntary company practice. Thus, it can
be six (6) years, three (3) years, or even as short as two (2) years.
.•
1 Hnwan Mring Ccrl)0rafJlxl and'« ttie Mllagerv. NLRC, G.R. No. 117394. Feb. 21. 1997.
2 MXJ Me1a1 Pnxbds, klc. v. Samahq ng rrga M!nggagava sa NCO MetaJ.NAFLU (SAMA.RM-NAFLU), G.R. No.
170734, Mirf 14,2008. · .
 194 8,\R RE\IIEWER ON LABOR. I.AW . CH,\l'TER THREE
Petitioner cannot shi::k away from its responsibility by merely claiming
that it was a mistake or an error, supported only by an affidavit of its
manufacturing group head.
XXX
"Indeed, if petitioner wants to prove that it merely erred in
giving full benefits, ;t could have easily presented other proofs, such
as the names of other employee:; who did not fully_ se~e for one year
and thus were giV?:n prorated benefits. Exp~~nbally, a ~rfect
attendance in the workplace is ahwys the goal but It IS seldom achieved.
There ffil1$t have been other employees who had ~rtcd for work less
than a full year and who, as a consequence received only prorated
benefits. This could have easily bolstered petitioner's theory of
mistake/error, but S3dly, no evidence to that effect was presented."
Tue same issue of the valiclity of the pro-rating of the 13th month pay as
well as the 14th month pay and financial assistance was raised in Honda Phili., Ine-. 1 It
has not been refuted that Honda has not implemented any pro-rating of the 13th
month pay before the instant case. Honda <lid not adduce evidence to show that
the 13th month, 14th month and financial assistance benefits were previously subject
to deductions or pro-rating or that these were dependent upon the company's
financial standing. As held by the Voluntary Arbitrator, Honda explicitly accepted
that it was the strike held that prompted them to adopt a pro-rata computation,
aside (tom being in a state of rehabilitation due to Php227M substantial losses in
1997, Php114M in 1998. and Php215M loss of sales in 1999 due to strike. 'Ibis is
an implicit acceptance that prior to the strike, a full month basic pay computation
was the "present practice" intended to be maintained in the CBA. The
memorandum dated November 22, 1999 which Honda issued shows that it was the
first time a pro-rating scheme was to be implemented in the company. It was a
convenient coincidence for the company that the work stoppage held by the
employees lasted for thirty-one (31) days or exactly one month. This enabled them
to devise a foanula using 11/12 of the total annual salary as base amount for
computation instead of the entire amount for a 12-month period. That a full month
payment of the t3di month pay is the established practice at Honda is further
bolstered by the affidavits executed by Feliteo Bautista and Edgardo
Cruzada. Both attested that when they were absent from work due to motorcycle
accidents, and after they have exhausted all their leave credits and were no longer
receiving their monthly salary from Honda, they still received the full amount of
their l3di month, 14111 month and financial assistance pay.
The argument of petitioner, in Philippine ]011malists, lnt.,2 that the grant of
the funeral and bereavement benefit was not voluntary but resulted from its
mistaken interpretation as to who was considered a "legal dependent" of a regular
employee deserves scant consideration. To be sure, no doubtful or difficult
Hooda Phils., Inc. V. Sann ng Mlbyang Mqgagawa sa Hoooa, G.R. t-b. 145561, .b1e 15, 2005.
PhlippineJoumatb, klc.v.Joomal~k1jeesUnion (JEU), G.R No.192601,June03,2013.
195
LABOR STANDAROS
question of law was involved inasmuch as the several cogent statutes existing at the
time the CBA was entered into already defined who wecc qualified as the legal
dependents of another. Moreover, the voluntariness of the grant of the benefit
became even manifest from petitioner's admission that, despite the memorandum it
issued in 2000, in order to "correct'' the interpretation of the term legal dependent,
it still approved in 2003 the claims for funeral and bereavement aid of two
employees, namely: (a) Cecille Bulacan, for the death of her father. and (b) Charito
Cartel, for the death of her mother, based on its supposedly mistaken
interpretation.
It is further worthy to note that petitioner granted claims for funeral and
bereavement aid as early as 1999, then issued a memorandum in 2000 to correct its
eaoneous interpretation of legal dependent under Section 4, Article XIII of the
CBA. This notwithstanding, the 2001-2004 CBA still contained the same provision
granting funeral or bereavement aid in case of the death of a legal dep~dent of a
regular employee without differentiating the legal dependents according to the
employee's civil status as married or single. The continuity in the grant .of the
funeral and bereavement aid to regular employees for the death of the1r legal
dependents has undoubtedly ripened into a company policy. With that, the _denial
of respondent Alfante's qualified claim for such benefit pw:suant to Section 4,
Article XIII of the CBA yiolated the-law prohibiting the diminution of benefits.
c. No more error can be asserted at this late hour.
In connection with the grant
of the mandatory 13di month pay~ error in
the interpretation or construction of what should be included in the term ''/,ask
salary" as basis for its computation, as mandated under the law, P.O. No. 8~1, as
well as its implementing rules and regulations can no longer be asserted at this late
hoUL This is so because from the inception of P.O. No. 851 on December 16,
1975, clear-cut administtativ:e guidelines have been issued to insure unifomuty in
the interpretation, applicatio~ and enforcement of ~e provisions of P.O. No. 851
and its implementing rules and regulations. Thus, an employer cannot successfully
assert that it has commi~ed an honest error in including such salary-related benefits
as the cash equivalent of unused vacation and sick l~~e credits, ove_rtime,
premium, rught differential and holiday pay, and cost-of-livtng all~wances in the
computation of the 13th month pay.
Petitioner, in Central AZJl«mra de Tarlac, 1 argued that there was an error in
the computation of the 13th month pay of its emplorces as a resu1t of its mistake in
implementing P.O. No. 851, an error that was discov~red by the manag~ment only
when respondent union caised a question concerning the computation of the
employees' t3th month pay for 2006. Petitioner include~ in the c~mputation of t!1e
13th month pay the cash equivalent of unused vacation and stck leave cr~~ts,
overtime, premium, night differential and holiday pay. a~d cost-of-~Vlllg
allowances. Admittedly, it was an error that was repeatedly comnutted by pebnoner
1 Cawa1 Azucaera de Tailac v. Central Azuarera de TaJ1ac Laba UnmNLU. G.R No 188949. Ju~ 26, 2010.
 BAR REvlEWER ON LABOR LAW
for almost thirty (30) years. Petitioner insisted that the length of time during which
an employer has performed a certain act beneficial to the employees, does not
prove that such an act was not done in e.tror. It maintained that for the claim of
mistake to be negated, there must be a clear showing that the employer had freely,
voluntarily, and continuously performed the act, knowing that he is under no
obligation to do so. Petitioner asserted that such volW1tariness was absent in this
case. The Supreme Court, however, found this argument deserving of scant
consideration. No doubtful or difficult question of law is involved in this case. The
guidelines set by the law are not difficult to decipher. The voluntariness of the
grant of the benefit was manifested by the number of years
the employet had paid
the benefit to its employees. Petitioner only changed the fonnula in the
computation of the 131h month pay after almost thirty (30) years and only after the
dispute between the management and employees erupted. This act of petitioner in
changing the formula at this time cannot be sanctioned, as it indicates a badge of
bad faith.
4.4. FOURTH REQUISITE:THE DIMINUTION OR
DISCONTINUANCE IS DONE UNILATERALLY BY THE
EMPLOYER.
Diminution of benefits refers to the act of the employer in unilaterally
withdrawing the benefits already enjoyed by the employees.• Consequently, if the
diminution or discontinuance of a certain benefit is by mutual consent of the
employer and the employee, there can ~ no violation of the non-diminution
principle.
For instance, parties to a CBA may validly agree in the CBA to reduce
wages and benefits of employees provided such reduction does not go below the
minimwn standards. While it is a fundamental rule that the parties to the CBA are
not allowed to stipulate below the minimum labor standards set by law, they are
not, however, prohibited by law or jurisprudence from negotiating and agreeing to
the reduction of wages and benefits provided such reduction does not go below
the minimum standards.
The case of Insular Holl/ EmpltrJeu .Union-NFL,2 is in~~ctive on thispoint
It was held here that the Memorand~ of Agreement (MOA) executed by the
exclusive bargaining union and respondent hotel providing for the diminution
and/or elimination of some of the benefits provided in the CBA in order to avert
further financial losses on the part of respondent hotel and to enable it to re-open
and resume its operation, did not violate Article 100. And even assuming mgu,ndo
that Article 100 applies to the case at bar, it was further held that the same does not
prohibit a union from offering and agreeing to reduce wages and benefits of the
1 Veigaa. Jr. V. c«a-Cola Balllels P l ~ Inc.. supra: See also Slp(eme Sleel Ccrpcrc6ln V. Nagkakaisallg
~ ng &pre lndepemrnUlb'I (NMS-tlD-APL), G.R No. 185556.Mirth28. 2011.
2 Insular Hots l:fTl)qees ~ V. \Yaledroot lnur Hold Davao, G.R Nos. 174040-41, Sept 22, 2010.
CHAl'TERTHREE 197
LABOR STANDARDS
employees, as held in Rwera v. Espirilll. 1It was rul~ in this case that the right to free
collective bargaining includes the right to suspend it.2
The same principle in !11111/ar Houf and Rivera was cited in Octavio,3where it
was held that even assuming that there has been a diminution of benefits on
petitioner's part, Article 100 does not prohibit a wuon from offering and agr~g
to reduce wages and benefits of the ~ployees as the right to free co~ecttve
bargaining includes the right to suspend 1t.
5. NO COMPANY PRACTICE WHEN BENEFITS ARE GRANTED
DUE TO CERTAIN SPECIFIED CIRCUMSTANCES.
No company practice could ripen in situations where certain bene~ts are
granted only under certain specified •ciicumstan~- Consequ~tly, ~en ~ the
employee has been enjoying certain benefits for qwte a long ~eno~ of time, if the
circumstances have changed which no longer justify the continuation of the grant
of said benefits the removal thereof does not certainly constitute a violation of the
·non-diminutio~ of benefits principle. Thus, the grant of relocation a~owance,
dislocation pay, gasoline allowance or per diem intended for board_ and l~gtng_ once
an employee is assigned away from bis home base, may be disconttnued if the
4
employee is no longer assigned to posts requiring the grant thereof.
6. ELIMINATION OR DIMINUTION OF BENEFITS MAY ·
CONSTITUTE DEMOTION OR CONSTRUCTIVE DISMISSAL.
Elimination or diminution of certain benefits may amount to constructive
dismissal. This kind of dismissal is technically considered an act of ~vol~tai;
resignation resorted to when con~ued em~lo~ent is rendered . ~po~sibl~.
unreasonable or unlikely; when there 1s a demotton in wik and/ or a diminutton 10
~ or when a clear discrimination, insensibility or disdain by an_ emplo~er
becomes unbearable to the employee that it could foreclose any choice by him
except to forego his continued employment.5
c.
LEAVES
1. 6
SERVICE INCENTIVE LEAVE
(NOTE: This topic Is extensively discussed above)
1 GRNo.135547.Jan.23,2002.
2 Qdaw>v.PhqlpilelongDismeTelephooeC0n1)ill'f,G.R.No.175492,Feb.27,2013.
3 Ottaw>v. Phll)l>nel~ Cis11rte TelephoneC001)ilrf, G.R No.175492, Feb. 27,2013. . .
• Lexal LabcrataieS, n:. v. Ccutd hllsnl Relabls, G.R. tt>. l·24832, Ott 26, 1968; As& v. Mnisla' of Laber, G.R. Nos.
58094-95, Mardi 15, 1989.
5 U1i:tJn Safety Gl§s, Inc. V. Basilte, G.R No. 154689, Nc7i. 25, 2004.
6 Mcie 95 tat laxr Code.
 BAR IUVIEWER ON lABOR LAW CHAl'TtR. THREE 199
WOR STANDARDS

2. 1. Paid leave benefit granted to a qualified female worlcer in the

. MATERNITY LEAVE PUBLIC SECTOR, for the du.ration of:
a. One Hundred Five (105) days for live childbirth, regardless of
1.105-DAY EXPANDED MATERNITY LEAVE LAW (R.A. NO.11210).
~ mode of delivei:y, and an additional fifteen (15) days paid
On February 20, 2019, President Rodrigo Duterte approved R.A. No. leave if the female worker qualifies as a solo parent under R.A.
11210, othetWise known as the "105-Day Expanded Matmzi!} Leaue Law.'' This is the No. 8972, or the "Solo Panntl We!fan Aet of2000"; or
prevailing law on maternity leave benefit. It repealed or modified "[a]ll laws,
b. Sixty (60) days paid leave for miscarriage and emergency
decrees, orders, rules and regulations or parts thereof inconsistent [therewith]" and
termination of pregnancy;
this necessarily includes Article 131 [133) of the Labor Code, as amended.2
2. Paid leave benefit granted to a qualified female worker in the
On May 1, 2019, the Implementing Rules and Regulations (IRR) of this
law was signed by the DOLE Secretary, Chairperson of the Civil Service
PRIVATE SECTOR covered by the sss,
including those in the
informal economy, for the duration of:
Commission (CSq and President and CEO of the Social Security System (SSS).
a. One Hundred Five (105) days for live childbirth, regardless of
Inconsistency in recent enacted Jaws.
the mode of delivery, and an additional fifteen (15) days paid
It bears noting that about 13 days before the signing into law of R.A. No. leave if the female worker qualifies as a solo parent under R.A..
11210, President Duterte approved on February 07, 2019, R.A. No. 11199, No. 8972, or the "Soh Parents' l~efm Ael of 2000"; or
otherwise known as the "Soda/ Sea1ri!} .Ad of 2018" which re-enacted the exact
b. Sixty (60) days paid leave for miscarriage and emergency
provision of Section 14-A of the previous R.A. No. 8282, the "Social Sea1n~ ht of
tenninatioo of pregnancy;
1997," which gtants maternity leave of sixty (60) days for normal delivery or
seventy-eight (78) days in case of caesarian delivery. Obviously, the provisions of Employed female workers shall receive full pay which consists of
R.A. No. 11210 should prevail over those of Section 14-A of 11 t 99. (i) SSS matemity benefit computed based on their average daily
salary credit and (u) salary differential to be paid by the employer, if
2. COVERAGE:
any;
The Expanded Matemity Leave Law (EMU.) shall cover the following:
3. An option to extend for an additional thirty (30) days without pay in
1. Female workers in the Public Sector; case of live childbirth;
2 Female worlceis in the Private Sector,
3. Female workers in the Informal Economy; 4. Paid maternity leave, allowances and benefits granted to female
4. Female members who ate voluntary contributors to the Social Security national athletes; and
System (SSS); and 5. Health care services for pre-natal, delivery, postpartum and pregnancy-
5. Female national athletes.l related conditions granted to female workers, particularly those who
3. WHAT BENEFITS ARE GRANTED. are neither voluntary nor regular members of the SSS, as governed by
the existing rules and regulations of the Philippine Health Insurance
The following benefits are granted under the 105-Day Expanded Coq,oration (PhilHealth). l
Maternity Leave Law {EMIL) to the corresponding sectors:
4. GRANT OF MATERNITY LEAVE.
1 Thsl!Msenti&ld"AAPIJ. lncreasi,J Ole Maledf Leaw Paixl bOne lb1dred FM3 (105) DaystJFemale Wakssw:tl All covered females regardless of civil status empl@llent status, and the
1110p&x, b Ex!em tJ an Addiim Toity (30) Days \ihxJt Pert. il1d Grring an Mfms Fifteen (15) Days for Sci> legltimacy of her child, shall be granted one hundred five (105) days maternity
PldmllldFaotierPllposes." leaye with full pay, and an additional fifteen (15) days with full pay in case the
2 The pc1MSions d ~ (a) and (c) rl Mx:le 131 (133) d Ile lm' Code oo malmity leave benefts ceased to be
appli:dJb it Ile fglll d Ile inlegrabl d these beneffs ilfD RA No. 1161, Ile Social Searitf 1.aN, by P.O. No. 1202 female wodter qualifies as a solo parent under R.A. No. 8972, or the "Solo Parmtr'
(Sepleriw 'D, 1977) and tie snendmenls lhereto iltroduood tr, RA No. 7322 I.A4xi 23, 1992) and suisequen!tf, by RA. We!fare A,t of2000."
No. 8282, o!llervme knaMt as Ole "Soda! Seariy Ad of 1997." (May 01, 1997). HaM!Yer, te pievaJi1g 1ctN ro.v is R.A. No.
11210 february 20, 2019). ~ koon11 as 118 "105-0a'f Ellpanded Mm,mf Leave LaH.·
l SeclDl1.~lll. lRRdRA.No.11210. 1 Secbl 2. Rule u~ Id.

I
I,
 200 BAR REVIEWER ON IABOR L\w
In cases of miscarriage or emergency termination ofpregnancy, sixty
(60) days maternity leave v.ith full pay shall be granted. 1
5. MANNER OF ENJOYMENT OF THE BENEFIT.
Enjoyment of maternity leave cannot be deferred but should be availed
of either before or after the actual period of deliveiy in a continuous and
uninterrupted manner, and such that:
a. In cases of live childbirth, one hundred fiye (105\ days maternity
leave with full pay shall be gtanted; or ·•
b. In cases of miscarriage or emergency termination ofpregnancy,
sixtY (60.) days maternity leave shall be granted.
In all of the above instances, the maternity leave can be credited as
combinations of prenatal and postnatal leave as long as it does not exceed one
hundred five (105) days or sixty (60) days. as the case may be. In no case shall
posmatal care be less than sixty (60) days.2
6. EXTENDED MATERNITY LEAVB.
In cases of Jiyc childbi!Jh, an additional maternity leave of thirty (30)
days without pay can be aV2iled of, at the option of the female worlret provided
that the employer shall be given due notice. Due notice to the employer must be in
writing and must be given at least forty-five (45) days before the end of the female
worker's matemity leave. However, no prior notice shall be necessary in the event
of a medical emergency but subsequent notice shall be given to the employer.
The above period of extended maternity leave without pay shall not be
considered as gap in the service.3
7. FREQUENCY OF THE GRANT.
Matemity leave shall be granted to a qualified female worker in every
instance of pregnancy, miscarriage or emergency tennination of pregnancy
reggrdless of frequency. 4
8. GRANT OF MATERNITY LEAVE BENEFITS AFTER
TERMINATION OF EMPLOYMENT.
Matemity leave with ~ shall be granted even if the childbirth,
miscarriage, or emergency tcnnination of pregnancy occurs not more than
flftee~ (15) calendar days after the termination of an employee's service, as
her nght thereto has already accrued. Such period is not applicable when the
employment of the pregnant woman worker has been tenninated without just
1
Sedicxl 1, Rile IV, Id.; Sedxln 3, RA tlo. 11210.
2 Sedxn 2, ~ IV, Id.
3 Seem! 3, Rm IV, kl
• Sectm4, Rife IV, Id.; Secoon 3, RA r~. 11210.
CHAPTER THRU 201
LABOR STANDARDS
gms, in which case the employer will pay her the full amount equivalent to her
salary for one hundred five (105) days for childbirth and sixty (60) days for
miscarriage or emergency termination of pregnancy based on her full pay, in
addition to the other applicable daily cash ·maternity benefits that she should
have received had her employment not been illegally terminated. 1
9. MATERNITY LEAVE OF A FEMALE WORKER WITH PENDING
ADMINISTRATIVE CASE.
The maternity leave benefits granted under R.A. No. ~ 1210 an~ the Rules
shall be enjoyed by a female worker in the public sector and 1n the pnvate sector
even if she has a pending administrative case.2
10. MATERNITY LEAVE FOR FEMALE WORKERS IN THE PUBLIC
SECTOR.
a. Eligibility.
Any pregnant female worker in the government service, regardless _of
employment status and length of service, in National Government Agenaes
(NGAs), Local Government Units (LGUs), Government-Owned or Controlled
Corpotations (GOCCs), State Universities and Colleges (SUCs), or Local
Universities and Colleges (LUCs} shall pe gtanted matemir l~ve of one hundred
five (105) days with full pay regardless of the manner of delivei:y of ~e child, and
an additional fifteen (15) days paid leave if the female worker qualifies as a !212
parent under R.A. No. 8972, or the ''Solo Parmts' Wtfan Ad of2000. •: She ~hall be
entitled to maternity leave of sixty (60) days with full pay for mascama,ge or
• • of pregnancy.3
emergen£Y temunatton
b. Notice ofpregnancy and applicadon for maternity leave.
Toe female worker shall give prior no~ce to the head of agency of her
pregnancy and her availment of maternity leave at least thirty (30) days in advance,
whenever possible, specifying the ·effective ~te of th~ leave. The femal~ worker
shall use the prescribed civil service fonn Ul the filing of the matcrruty leave
application, supported by a medical certificate.•
c. Maternity leave in the teaching profession.
Female teachers in the teaching profession may also av~ of ~ate~ty
leave even during long vacations, ie., summer and Christmas vacations, 10 which
1 Sed:ioo5,RulelV, Id.
2 SediCXI 6, Rule IV, kl.; Sedkn 12. RA No. 11210.
3 SediCXI 1, Rule V, Id~ Secb14, RA No. 11210.
• Sec&n 2, rue V, k1
202 BAR REVIEWER ON lABOR (AW
case, both the maternity leave benefits and the proportional vacation pay {PVP)
shall be gr.mted. 1
d. Extended maternity leave.
In cases of live childbirth1 the female worker has the .QptiQn to extend
her maternity leave for an additional thirty (30) days without pay, or use her
earned sick leave credits for extended leave with pay. In case the sick leave
credits are exhausted, the vacation leave credits may be used.1
e. Manner ofpayment ofmaternity leave benefits.
The female worker shall be entitled to full pay during matemity leave
which shall be paid by the agency. The female worker shall have the option to
receive full pay either through lump sum payment or regular payment of salary
through agency payroll. A clearance from money, property and wotk-related
accountabilities shall be secured by the female worker. Money, property and.work-
related accountabilities as well as pending administrative case shall not deprive the
female worker of the availment of her maternity leave benefits.3
£ Consecutive pregnandes and muldple chDdbirths.
In case of overlapping matemity benefit claims, e.g., one miscarriage or
emergency termination of pregnancy after the other or followed by live
childbirth, the female member shall be granted maternity benefits for the two
contin~eocies in a consecutive manner. The female worker shall be paid only one
matem1ty benefit, regardless of the number of offspring, per childbirth/ delivery.4
g. Dispute resolution.
Any dispute, controversy or claim arising out of or relating to the payment
of full pay shall be filed by the concerned female worker initially to the head of
agency and_ ma~ ~e ~p~ealed to the Civil Service Commission (CSq Regional
Office having Junsdictlon over the agency, and to the Commission Proper,
respectively. The agency shall not hold or delay the payment of full pay to the
female worker pending the resolution of the dispute, controversy or claim.s
11. MATERNITY LEAVE FOR FEMALE WORKERS IN THE PRIVATE
SECTOR.
a. Eligibility.
To qualify for the grant of matemity leave benefit, the female worker
must meet the following requirements:
1 Sectirl 3, fUt V, ki.
2 Sedicn4,IU!V, Id.
3 Sedi0n 5, IUt V, Id.
• Sedicn 6, JU! V, Id.
5 Section 7, rue V, Id.
I.
CHAmRTHREE 203
l.ABOR STANDARDS
a. She must have at least three (3) monthly contributions in the twelve-
month period immediately preceding the semester of childbirth,
miscarriage, or emergency termination of pregnancy.
In determining the female member's entitlement to the benefit, the SSS
shall consider only those contributions paid prior to the semester of
contingency; and
b. She shall have notified her employer of her pregnancy and the probable
date of her childbirth, which notice shall be transmitted to the SSS in
accordance with the rules and regulations it may provide.1
b. Notice requirement.
The notification process for SSS-covered female workers and/ or
members and employers shall be governed by the following rules:
a. The female member, upon confirmation of pregnancy, shall
immediately inform her employer of such fact and the expected date
of childbirth;
b. The employer shall, in tum, notify the SSS through the prescribed
manner;
c. The above rules notwithstanding, failure of the pregnant female
worker to notify the employer shall not bar her from receiving the
maternity benefits, subject to guidelines to be prescribed by the SSS;
and
d. Self-employed female members, including those in the informal
economy, OFWs and voluntaty SSS members may give notice
directly to the SSS.2
c. Amount ofbenefit.
Covered female workers availing of the maternity leave benefits must
receive their full pay. Full payment of the maternity leave benefit shall be advanced
by the employer within thirty (30) days from the filing of the maternity leave
application.
In the case of self-employed female members, including those in the
informal economy, OFWs and voluntary SSS members, the SSS shall directly
pay the matemity benefit.3
d. Reimbursement.
The SSS shall immediately reimbwse to the employer the matemity
benefits advanced to the employed female member, only to the extent of one
5ml 1, ~ VI, kl.; Sedioo 5, RA No. 11210.
5ml 2, ~ VI, Id.
3 SediCXl 3, IUI VI, Id.
 204 BAR. RtvlEWER ON IABOR IAW
hundred percent (100%) of her average daily salary credit for one hundred five
(lOS) days, o~e hundred twenty (120) days or sixty (60) days, as the case may
be, upon receipt of satisfactory and legal proof of such payment 1
e. Salary differential, excepdons.
Employers from the private sector shall pay for the difference between
the full salaty and the actual cash benefits received from the SSS. Female workers
emplo~ed_by _exempt establishments and ~terprises, which satisfy the requirements
and cnteaa listed below, shall not be entttled to the salary differential. Tue said
female workers shall be entitled to receive only their SSS maternity benefits.
. Upon ~ubmissio? of proofs and other necessary documents, the following
e~tablis~ents ~ the ~nvate sec_tor may be exempted from paying the salary
differential herem prescnbed, provided the criteria are satisfied:
1. Those oper2ting distressed establishments.
2. Those retail/service establishments and other enterprises employing
not more than ten (10) workers:
3. Those ~onsidered ~s micro-business enterprises and engaged in the
~rodu~t1on, process1n~, or man_ufacturing of products or commodities,
including agro-process1ng, trading, and services, whose total assets are
not. more than ~3 Million in accordance with the Barangay Micro
BUS111ess Enterpnses (BMBE's) Act of 2002; and
4. Tho~e who. are already providing similar or more than the benefits
herein provided under ~ existing Collective Bargaining Agreement
(CBA), company practice or policy.2
£ Bar to recovery ofsicla,ess benefits.
. The payment of daily SSS maternity benefits shall be a bar to recovery of
S1~ess ~efits provided under R.A. No. 11199,l for the same period for which
daily matenuty-benefits have been received.4
g. Consecudve pregnandes and muldple cbildbirtbs.
:i,ie pay':11en~ of the SSS maternity benefits in cases of consecutive
pr~aes resulting m overlapping matemity leaves and in cases of multiple
childbirths shall be govemed by the following rules:
a. In case of the overlapping of two (2) maternity benefit claims, the
· fem~e mt:tnb:r shall be. granted maternity benefits for the two
contmgenaes 1n a consecutive maruter. However, the amount of
1
Section4, Rule VI, Id.
2
3
4
SectiJn 5, ~le VI, Id.
OOewise bxMa as the "Social Seariy Act of 2018· (Fetruary 01 201si
Sedm6.~leVI, IRRofRA.Ho.11210. '
.I
CHAl'TER THREE 205
lABOR STANDARDS
benefit corresponding to the period where there is an overlap shall be
deducted from the current maternity benefit claim; and
b. The female member shall be paid only one maternity benefit,
regardless of the number of offspring, per childbirth/delivery.1
h. UabiDty ofthe employer.
The employer shall pay to the SSS damages equivalent to the benefits
which said female member would otherwise have been entitled to in any of the
following instances:
a. Failure of employer to remit to the SSS the required contributions for
the female worker; or
b. Failure of the employer to transmit to SSS the female worker's
notification on the fact of pregnancy and probable date of childbirth. 2
i. Dispute resolution.
Any dispute, controversy, or claim as regards the grant of SSS maternity
leave benefit under the Rules shall be filed before the Social Security Commission
(SSq. The filing, detennination, and settlement of disputes shall be govemed by
the Rules and Regulations of the SSC, which provide that all petitions shall be filed
with the Office of the Executive Clerk of the Commission or his/her Deputy, or at
any Regional Commission Legal Department. Any dispute, con~oversy, or claim
a.rising out of or relating to the payment of salary differential shall be filed before
the DOLE Fleld/Provincial/Regional Office having jurisdiction over the
workplace and shall be subject to existing enforcement mechanisms of the DOLE.3
12. MATERNITY LEAVE BENEFITS FOR WOMEN IN THE
INFORMAL ECONOMY.
Matemity benefits shall cover all married and unman:ied women,
including female workers in the informal economy. Female workers in the informal
economy are entitled to maternity leave benefits if they have remitted to the SSS at
least three (3) monthly contributions in the twelve (12)-month period immediately
p.reccding the semester of her childbirth, miscarriage, or emeigency teanination of
pregnancy.•.
13. ALLOCATION OF MATERNITY LEAVE CREDITS.
a. Allocadon to the cbild's father or alternate caregiver.
A female worker entitled to .matemity leave benefits may, at her option,
allocate up to seven (7) days of said benefits to the child's father, whether or not
l
1
2
3
Sedm 7, Rule VI, Id.
SediJn 8, Rim VI, Id.
Sedioo 9, ~ \1. Id.
• Sedm1,RuleW, Id.
 2o6 SAR REvlEWER ON lABOR. lAW
the same is married to the female worker. The allocated benefit granted to the
child's father under this law is over and above that which is provided under R.A.
No. 8187, or the "Patm,iry Leave Act of 1996."
In case of death, absence, or incapacity of the child's father, the female
worker may allocate to an alternate caregiver who may be any of the following,
upon the election of the mother taking into account the best interests of the child:
a. A relative within the fourth degree of consanguinity; or
b. The current p.artner, regardless of sexual orientation or gender identity,
of the female worker sharing the same hol)sehold.
The option to allocate maternity leave credits shall not be applicable in
case the female worker suffers miscarriage or emergency termination of pregnancy. I
b. Allocation for the SSS-covered female workers.
In case the female worker avails of the option to allocate, the SSS shall
pay her the amount of the matemity benefit corresponding to the period not
allocated.
As applicable, the father or, in his death, absence, or incapacity, the
altemate caregiver shall be granted by his employer a leave with pay equivalent to a
period from one (1) to seven (7) days, which may be enjoyed either in a continuous
or in an intermittent manner not later than the period of the matem.ity leave availed
of.
The female worker shall notify her employer of her option to allocate with
her application for matemity leave. The father or altemate caregiver, as the case
may be, shall notify the employer concerned of his or her availment of the allocated
leave and the inclusive dates therefor.
This written notice to the employers shall be required even if the child's
father or the alternate caregiver is employed in the public sector.2
c. Allocadon ofmaternity leave credits for female workers in the
public sector.
In case the female worker avails of the option to allocate, she shall submit
a written notice to the head of agency or the head of agency's authorized
representative, with her application for maternity leave.
The allocated maternity leave may be enjoyed by the child's father or the
altemate caregiver either in a continuous or in an intemuttent manner not later
than the period of the maternity leave availed of.
Sedm 1, Rule VIU, Id.
Sedioo 2, Rule VIII, Id.
i
CHAPTER THREE 207
U.BOR STANDARDS
In case full pay has been given to the female worker, the child's father or
the alternate caregiver, as the case may be, shall only be excused from work (leave
without pay). The leave without pay shall not be considered as a gap in the service. 1
d. Death or pennanent incapacity ofthe female worker.
In the event the beneficiary female worker dies or becomes pennanently
incapacitated, the balance of her maternity leave benefits, if any, shall accrue to the
child's father or to a qualified alternate caregiver as provided in the preceding
sections subject to the following conditions:
a. That the matemity leave benefits have not yet been commuted to
cash, if applicable; and
b. That a certified true copy of the death certificate or medical certificate
or abstract is provided to the employers of both the female worker
and the child's father or altemate caregiver.
In case the maternity leave benefits of the deceased or permanently
incapacitated female worker have already been paid to the lattei: in full, the child's
father or alternate caregiver shall be entitled to enjoy the remaining wiexpired leave
aedits of the female worlrer, if there be any, without pay: Provided, That such leave
without pay shall Jtot be considered 3$ a gap ·in. the service of the child's father or
alternate caregiver, in both the public and private sector.2
14. MATERNITY LEAVE FOR FEMALE NATIONAL ATHLETES.
In the event that a national athlete who· is in the roster of national athletes
of the National Sports Association (NSA) to which she is affiliated becomes
pregnant, she will be referred to a physician of_the Philippine Sports_Co~s~on
(PSq or an obstetrician-gynecologist to detemune her fitness to continue ~ g .
She will be allowed to participate in all team-telated activities, unless the phys1aan
or
advises that participation is not medically safe should be limited. Upon medical
advice, she shall go on maternity leave until cleared to retum to taining. Sh~ shall
continue receiving her allowance and be entitled to the same benefits while on
matemity leave prior to childbirth and up to six (6) months after, unless ~he can
resume sooner as advised by her physician, in which case, she will continue to
receive the same allowances and benefits she received prior to and during the
pregnancy: Provided, That a female national athlete employed in the public sector
shall not receive double compensation or benefits.l
1 Sedilrl 3, Rule VIB, Id.
Sedm4,RuleVIB, Id.
Sedmt,RulelX. ld.;Seam 113,RANo.11210.

208 BAR REVIEWER ON lABOR lAW
3.
PATERNITY LEAVE
t. CONCEPT AND PURPOSE.
Under R.A. No. 8187,• otherwise known as the ''Patemi9 Leave Atl of
1996," every married male employee in the public2 and private sect~rs, rev:rdl:~s
of his employment status (,~., probationary, regular, con~ctual, proJect basis), is
entitled to a paternity leave of seven (7) calerulat_ days with ~ pay fo~ ~e ~t
four (4) deliveries4 of the legitimate spouse5 with ~om he IS cohaba~. If
the spouses are not physically living !ogether because. of the works~uon or
occupation, the male employee is still enutled to the paternity leave benefit
Tue purpose of the leave ~ to enable the male ~ployee to ~ffectively
lend support to his wife i.n her penod of i:ecovery and/or 111 the nuESU1g of the
newly-born child.a Therefore, the usage of the patemity leave shall be after the
delivery9 which means_ tm:t this ~efi~ is grante~ t? the qualified male em~loyee
after the delivery by his wife. Titls ts without preJudice to an employer alloWlllg an
employee to avail of the benefit before or during the delivery, provided that the
total number of days should not exceed seven (7) calendar days for each delivery.
In the event that the patemity leave benefit is not availed of, said leave shall ~
convertible to gsh 10 and shall not be cumulative.u
The married male employee should apply for paternity leave with his
employer within a reasonable period of time from the expected date of delivery by
his pregnant spouse, or within such period as may be provided by company rules
and regulations, or by CBA. In case of a miscan;i3ge. prior application for paternity
leave shall not be requircii.12
' RA No. 8187, "The Puni'f leave Pd of 1996" (.kl1e 11, 1996, rilled 'An M. Grcning Pafemly Leaved Seven (7)
Days ""1 Ful Pay to MMrl8I Mlle En1Jloyees il Ile PNale and Nllc Secbs fo- Ille Frst Foor(4) DeMries rl U1e
legomale Spouse WOl 'Mon He Is Cdmmg and irOhr Ptrposes.' This was~ oo .ltAle 11, 1996. On Man:h
13, 1997, &le Oepatment d l..abOI' cni Empkr,ment and Oeplrtmenl r1 Health~ issued the Read mplemenliYJ
rues il1d ~ c f RANo.818i.
2 GcM!nrntw ~ ae also entitled ID tis benefit but Cl8'f n gcM!ll8d by Ile CM SeM::e rules. (No. 9 [AL 2019
Handbook on Wakers' Sta\ibyMooelaty Benefits, Issued bylheBu1'8i1JofWaiq Coodilions, DOLE).
3 No.9~.lbo.
• The tenn •6t!Nfsf mmchWll rs tfff Jliscarrii'de. (Sedbl 2, lbil.: Sediln 1[cl. BiiJ
s ~ - rere,s to~ lirtll.d Me. Fee Olis f)lipose, w, wtfe' nters ID a Wlll'lll'I ¥mO is lega'.ly naried ID lhe male
1!111)byeeam!m00.(Sedion 1[dJ, i>il.). , 2
6 "Cdlalx&lg"reters m~dl&ja&xlclOietRJSband n1wre1owe~.(Sed'al 1 [eL ltlil.).
7
No.9{8l.2019HinlbockonWakers'S1nlbytJamyBenerlm,lssuedbylheBIJeauafWolm:ICcnlibs.DOLE.
8 Seclioo 3, RA. No. 8187; Sm! 1(a]. Revised~ Rules and Regulatk)ns of RA No. 8187 (Mardl 13, 1997).
9 No 9{BJ, 2019 Hanc!bodlon'Ncxkels'Stab.my Mmary Beneflls,issuedbylhe Blreau ofWodq Ccnftians, DOLE.
IO No. 9tBl, Rm. Secbls5and8,RfMSed ~ ~and RegulablsdRANo.8187lMalth 13, 1997):
11 No.9(El,lbd · Wcmld~DOI.£.
" No. 9[OJ. !bi!.; Sm! 2, RA No. 8187.
CHAl'TER THREE 209
LABOR STANDARDS
2. CONDITIONS FOR AVAILMENT.
A married male employee is entitled to this benefit provided that he has
met the following conditions:
1. He is an employee at the ti.me of the deliveiy ofhis child;
2. He is cohabiting with his spouse at the time that she gives birth or
suffers a miscarriage;
3. He has applied for paternity leave with bis employer within a reasonable
period of ·time from the expected date of delivery by his pregnant
spouse, or within such period as may be pi:ovided by company rules
and i:egulations, or by CBA; and ·
4. His wife has given birth or suffered a miscarriage.'
The following ai:e the rules for crediting of existing benefits to paternity
· 1eave:
1. If the existing patemity leave benefit under the CBA, contract, or
company policy is greater than seven (7) calendai: days as provided for
in RA 8187, the greater benefit shall prevail.
2. If the existing patemity leave benefit is less than that provided in RA
8187, the employer shall adjust the existing benefit to cover the
difference.2
I Where a company policy, contract, or CBA provides for an emergency
i or contingency leave M1hsmt specific provisions on paternity leave, the employer
should still grant to the employee seven (7} calendar days of patemity leave.J
.,j 4.
SOLO PARENT LEAVE
1. CONCEPT AND PURPOSE.
R.A. No. 8972,4 otherwise known as 'The Solo Parents' We!fare Aa of 2000,"
grants a parental leave of not more than seven (7) working days every year to a
solo parent who has rendered service of at least one (1) year, to enable him/her to
perform parental duties and responsibilities where his/her physical presence is
required.5
This leave privilege is an additional leave benefit which is separate and
distinct from any other leave benefits provided under existing laws or agreements.6
1 No. 9[CJ, Ibid.
No. 9lF1, lbkl
3 Id.
I\
4 RA No. 8972, ihe Solo Parents' Wafale Aa d 'SJ'f ~ 1, 2000), enUed "An NJ. Prowling fer Benefits and
PIMeges to Solo Paren1s and Tiiei' Chlkfren, ~JrOPria~ Foods Thm !rd b Olher Purposes.· It was approved on
NcM!mber 7, 2000.
5 Sedb18, RA No. 8972: No. 10 (8). 2019 Hardloolt oo Wakers' SlatlDy Mxlelaly ~ . issued by lhe &reau d
6 Id.: No. 10 [CJ, lbi:I.
210 8AR REVIEWER ON LABOR LAW
The seven-day parental leave is non-cumulativc.1 If there is an existing or similar
benefit under a company policy or a CBA, the same shall be credited as such. If the
same is greater than the seven (7) days provided for in RA 8972, the greater benefit
shall prevai!.2 Emergency or contingency leave provided under a company policy or
a CBA shall not be credited as compliance with the parental leave provided for
under RA 8972.3
The parental leave is with full pay, consisting of basic salary and
mandatory allowances fixed by the Regional Wage Board, if any, provided that
his/her pay shall not be less than the mandated minimum wage.• In the event that
this leave is not availed of, it shall not be convertible? to cash, unless specifically
agreed on previously.s
2. CONDITIONS FOR AVAILMENT.
More specifically, this leave benefit is granted to -any solo parent or
individual who is left alone with the responsibility of parenthood due to:
1. Givtng birth as a result of rape or, as used oy the law, other crimes
against chastity;
2. Death of spouse;
3. Spause is detained or is serving sentence for a criminal conviction for
at least one (1) year;
4. Physical and/or mental incapacity of spouse as certified by a public
medical practitioner;
5. Legal separation or de facto separation from spouse for at least one (1)
year: Provided that he/she is entrusted with the custody of the
children;
6. Declaration of nullity or annulment of marriage as decreed by a court
or by·a church: Provided, that he/she is entrusted with the custody of
the children;
7. Abandonment of spouse for at least one (1) year;
8. Unmarried father/mother who has preferred to keep and rear his/her
child/children, instead of having others care for them Or give them up
to a welfare institution;
9. Any other person who solely provides parental care and support to a
child or children: Providtd, that he/she is duly licensed as a foster
parent by the Department of Social Welfare and Development
(DSWD) or duly appointed legal guardian by the court; and
10. Any family member who assumes the responsibility of head of family
as a result of the death, abandonment, disappearance, or prolonged
· absence of the parents or solo parent Providtd, that such
,i
1 Sedoo 8, RA No. 8972; Sectial 18, Mae V, ~ ard ReglAatioos ~ i r g RA No. 8972
1 No.10 IFJ, 2019 Har,:jlJoo( tx1 W~eis· ~ M:xlet:r'f Benefts, issued by he &reau of w~ Ca-doons, OOLE.
l ld.:Sedm21,ArodeV,IW.
' No. 10 lq, 2019 Ha1Clb<:d( 1X1Wolkels' Stahiby ~ Benefil5, issued by he Bureai olWamg Condwls. OOLE.
I No. 10 [El. llil.; Sedb120, Mi::le V. Rulesand RegwlmS ln1)lemenli1g RA. No. 8972.
H
CHAl'TER THREE 211
LABOR.STANDARDS
abandonment, disappearance, or prolonged absence lasts for at least
one (1) year.1
For purposes of this leave, ,'~hi/d\~ refers to a person living with and
dependent on the solo parent for support. He/she is unmarried, unemployed, and
below eighteen (18) years of age, or even eighteen (18) years old and above but is
incapable of self-support because he/she is mentally- and/or physically-
challenged,2 '
A solo parent employee is entitled 10 the parental leave, provided that
1. He/ she has rendered at least one (I) year of service, whether
continuous or broken;
2. He/she has notified his/her employer that he/ she will avail
himself/herself of it, within a reasonable period of time; and
3. He/ she has presented to his/ her employer a Solo Parent Identification
Card, which may be obtained from the DSWD office of' the city or
municipality where he/ she resides.3
A change in the status or circumstance of the parent claiming the benefit
under the law, such that he/she is no longer left alone with the responsibility of
parenthood, shall terminate his/her eligibility for this benefit.4
No employer shall discriminate against any solo parent employee with
respect to terms and conditions of employment on account of bis/her being a solo
parent.5
5.
LEAVE BENEFITS FOR WOMEN WORKERS
UNDER R.A. 9710 and R.A. 9262
a.
SPECIAL LEAVES FOR WOMEN WORKERS
(R.A. No. 9710)
1 CONCEPT AND PURPOSE.
Under R.A. No. 9710,6 otherwise known as 'The Magna Carta of Women,"
7 a woman employee, regardless of age and civil status, having rendered continuous
aggregate employment service of at least six (6) months for the last twelve (12)
1
No. 10 IAI, bil.; Sedioo 6lb1 Al1ide Ill, ~les ard ReglJlaoons ltr!ll!meoting RA.No. 8972.
2 No.10 [BJ, llid.
3 No.10 IOI, Rid~ Sedioo 19, Mae V, Rules cWld Regulalioos lmplementirg RA. No. 8972.
' No.10 [G], til.
No.10[H],ll«I.
Entitloo 'An Ad ProviJing foc tie Ml'Jna Carta otwanen· enacted r,n At.qust 14. 2009.
7 This is lhe proper desc£1)1ion of this law, RA. No. 9710, otherwise kn= as ' The Magna Carta of w~· !Augusl
14, 2009], not 'Magna Carta for Women' since this is whal 1s embodied in lhe law.

212 BAR REVIEWER ON IAROR IAW
months shall be entitled to a special leave benefit of ivo (2) months with full pay
based on her gross monthly compensation1 following surgery caused by
gynecological disorders. 2
"Gynecola?)cal diJordm" refer to disorders that would require surgical
procedures such as, but not limited to, dilatation and curettage and those_ involving
female reproductive organs such as the vagina, cervix, uterus, fallop1a~ _tubes,
ovaries, breast, adnexa and pelvic floor, as certified by a competent phys1oan. It
shall also include hysterectomy, ovariectomy and mastectomy.
3 option of the woman employee. In the event that the leave benefit is not availed of,
2. CbNDITIONS FORAVAILMENT.
The following are the conditions for entitlement of this leave benefit:
1. She has rendered at least six (6) months continuous aggregate
employment service for the last twelve (12) months prior to surgery;
2. She has filed an application for special leave with her employer ,vithin
a reasonable period of time from the expected date of surgery or
within such period as may be provided by company rules and
regulations or CBA; and
3. She has widergone surgery due to gynecological disorders as certified
by a competent physician.4
The special leave shall be granted to the qualified employee after she has
undergone surgery, without prejudice to an employer allowing an employee to
receive her pay before or during the surgery.5 It is non-cumulative and non-
convertible to cash unless otherwise provided by a CBA.6
b.
LEAVE FOR VICTIMS OF VIOLENCE
AGAINST WOMEN AND CHILDREN
(R.A. No. 9262)
1. CONCEPT AND PURPOSE.
R.A. No. 9262,7 otherwise known as the ''Anli-Viok11ct AgainJI Women and
Their Chiklre11 Act of 2004," grants to victims a leave of up to ten (10) days with full
pay, consisting of basic salary and mandatory allowances fixed by the Regional
' Gross IW1llV)' ~ refefs ID the mootl)' base pay pl.ts rrmdaDy ~ fixed by lhe Regiooal Wage
Bo.Ids.
1 Sedioo 18. RA. No. 9710: flo. 12 ~J m IOI, 2!19 Hcrdbook on~• SlabJby Wonetry Benefts, L'>Slled by lhe
!lreaiolWCMJCooom.OOI.E
l No. 12 [BJ, 2019 HallbookooWakas' SlaUUf M:Jletry Benefts, i;siedby tie lmauofW~ CooodicJls. D<X.E.
No. 12 ICJ, Ibid.
No.12[EJ. l>i:f.
6 No.121F], w. . ' ld.;No.11[E],lbil.
Entiled 'AA Ad Oefni",g Voo-ce /..gilOlSI Wr:,ren cm Tuer ai.iren. Pn7.m;i for Protedile Measures fo" Vdims.
Presaililg PEnalties Therefo", m For Other Pirposes."This lawwasooacted oo MTdl 08, 2004.
CHArTl'R THREE
!AROR STANDARD.I
213
Wage Board, if any. 1 This is in addition to other paid leaves under the Labor Code
and Civil Service Rules and Regulations. It is extendible when the necessity arises as
specified in the protection order issued by the barangay or the court.2
Private sector women employees who are victims as defined in RA 9262
shall be entitled to the paid ten-day leave benefit under such terms and conditions
provided herein. The leave benefit shall cover the days that the woman employee
has to attend to medical and legal concems.3 The usage thereof shall be at the
it shall not be convertible into cash and shall not be cumulative.•
"Violence agaimt women and their children," as used in R,A, 9262, refers to any
act or a series of acts ~ommitted by any person against a woman who is his wife,
former wife, or against a woman with whom the person has or had a sexual or
dating relationship, or with whom he has a common child, or against her child,
whether legitimate or illegitimate, within or without the family abode, which will
result in or is likely to result in physica~ sexual, psychological harm or suffering, or
economic abuse, including threats of such acts, battery, assault, coercion,
harassment or arbitrary deprivation of liberty.5
2. CONDITION FORAVAILMENT.
To be entitled to the leave benefit, the only requirement is for the victim-
employee to present to her employer a certification from the barangay chairman
(P1mo11g Barang'!}) or barangay councilor (bara.ngtry kogawadj or prosecutor or the
Clerk of Court, as the case may be, that an action relative to the matter is pending. 6
D.
SPECIAL GROUPS OF EMPLOYEES
1.
WOMEN
a.
DISCRIMINATION
1. ACTS OF DISCRIMINATION UNDER THE LABOR CODE.
Article 133 f135] of the Labor Code considers as unlawful the act of an
employer to discriminate against any woman employee with respect to terms and
1 No. 11 IDI, 2019 licrldbook on VM.PJS' StmJb)' M:rietl'f Benefits, i$ued by tie lu-eau olW<XkiY;! Coof.Cxxls, OOLE
Id.
" Seclxxl 43, RA No. 9262: No. 11 181 2019 lmdbook on VM.eri ~ ~ Baleils, is.sued by lhe &reau of
Waki'g Concitms. DOl.E.
s Section 3. lbil.: No. 11 IA). lbil.
5 No. 11 [q. 2019 Hmbook O'l Wol1ceis· S1al.JID!y M:roelaly ~ issued by lhe &Jr-eaJ ciWamg Coodlicns, DOLE.
(,
 eAR REVIEWER ON l.ABOR I.AW
CHAPTER THREE
214 215
V.SOR STANDARDS

conditions of employment solely on account of her· sex. More specifically, it Additionally, women are guaranteed their right to decent work. The State
enumerates the following acts of discrirnination: shall progressively realize and ensure decent work standards for women that
involve the creation of jobs of acceptable quality in conditions of freedom, equity,
(a) Payment of a -lesser compensation, including wage, salary or other security and human dignity.2
form of remuneration and fringe benefits, to a female employee as
against a male employee, for work of equal value; and b.
STIPULATION AGAINST MARRIAGE
(b) Favoring a male employee over a female employee ~th respect to
promotion, training opportunities, study and scholarship grants solely 1. INVALIDITY OF STIPULATION AGAINST MARRIAGE.
on account of their sexes.
' Article 134 (n6] of the Labor Code considers as an unlawful act of the
2. ACTS OF DISCRIMINATION UNDER THE MAGNA CARTA OF employer to require as a condition for or continuation of employment that a
WOMEN. ' woman employee shall not get married or to stipulate expressly or tacitly that upon
RA. No. 9710,' otherwise known as 'The Magna_ ~rta of ~o,~e~," i~ a getting married, a woman employee shall be deemed resigned or separated.
· wo men's human rights .law that seeks
comprehens1ve _ to eliminate
_ discnnunatlOn
_ It is likewise an unlawful act of the employer, to actually dismiss,
against women by recognizing, ~rotectmg, _ful~ng and promotmg the nghts of discltarge, discriminate or otherwise prejudice a woman employee merely by reason
Filipino women, especially those in the marginalized sectors. of her marriage.3
Based on the definition of the term "Dimiminalion Against Women" in R.A.
2. RELEVANT JURISPRUDENCE.
No. 9710,2 the following are considered discriminatory acts:
The following cases are relevmt:
I. Any gender-based distinction, exclusion, or restriction which has the
effect or purpose of impairing or nullifying the recognition, 1) Ziakita 11. PAL,• a case decided by the Office of the President, where
enjoyment, or exercise by women, irrespective of their marital status, the provision in a contract between an airline company and a flight attendant which
on a basis of equality of men and women, of human rights and states that "flight attendant-applicants must be single and that they shall be
fundamental freedoms in the political, economic, social, culrural, civil automatically separated from employment in the event they subsequently get
or any other field; married," was declared null and void and thus cannot be enforced for being
contrary to Article 134 (136) of the Labor Code and the protection-to-labor clause
2. Any act or omission, including by law, policy, administrative measure,
in the Constitution.
or practice, that directly or indirectly excludes or restricts women in
the recognition and promotion of their rights and their access to and 2) PT&T 11• NLRC.,5 where it was declared that the company policy of
enjoyment of opportunities, benefits or privileges; not accepting or considering as disqualified from work any woman worker who
contracts marriage runs afoul of the test of, and the right against, discrimination
3. A measure or practice of general application that fails to provide for
afforded all women workers by our labor laws and by no less than the
mechanisms to offset or address sex or gender-based disadvant1ges or
Constitution.6
limitations of women, as a result of which women are denied or
restricted in the recognition and protection of their rights and in their
access to and enjoyment of opportunities, benefits, or privileges; or
women, more than men, are shown to have suffered the greater
adverse effects of those measures or practices; and
4. Discrimination compounded by or intersecting with other grounds, k!.
Sedion25, fqJ!eV, inl>~ Rulesim ReglJai)rsctRA No.9710.
status, or condition, such as ethnicity, age, poverty or religion. 1 3 See also Section 13 [el fqJ1e XII. Book II~~ b krpenent lie U!bcr Cooe; GJallelb Y. ""1mqJe ~ nlustrial
Caporaocn. CA-GR No. 52753-R, .uie28, 1978.
Zialcila Y. Phlippine ~ . Inc., case No. R04-3-39S-76, Feb. 20, 1977.
1 RA. No. 9710, app1)Yed onklp;l 14,2009. . ~Tellqapha:idTele!ilme~v.N.RC,GRNo. 118978,Mi','23, 1997,272SCRA596,605.
SdXl 4(b), ~ n, RA. tb. 9710, ~ oo AuJt!SI 14, 2009: See also Sedion 7(c), ~ 11, lrr4Jlementilg ~
6
See alsoQJalierov. Mnlc1x!ue 1MiYJ &noosbial ~ Sl.V<!: 2lak:ia, v. Phippne Aifnes, Sl.V<!: 45A Am. Jur.
cr1d ReglAations ct RA. No. 9710. 2d, Jco ~ . Sec. 506,p. 486.
 BAR REVIEWER ON lABOR lAW
216
3) Star Paper Corp. v. Simbo41 where the following policy wa~ struck down
as invalid for violating the standard of reasonableness, otherwise called the
''Rlasonable Bll!it11Ss Neas~ Rule, "which is being followed in our jurisdiction:
"1. New applicants will not be allowed to be hired if in case he/she has
(a] relative, up to [the) 3rt1 degree of relationship, already employed
by the company.
"2 In rue of two of our employees (both singles [sic], one male and
another female) developed a friendly relationship ~uring the ~ourse
of their employment and then decided to get nmrned, one ot them
should resign to preserve the policy stated above."
4) Duncan v. Glaxo Wekomt, 2 where the prohibition againSr marriage
embodied in the following stipulation in the employment contract was declared
valid:
"10. You agree to disclose to management. a_ny existin~ or . future
relationship you may have, either by consanguuuty _or affinity ~th co-
employees or employees of competing drug ~om~arue!-. Should 1t pos~ a
possible conflict of interest in management discreuon, you ~~ to resign
voluowily from the Company as a matter of Company policy.
The Supreme Court ruled that the dismissal based on above stip~tion in
the employment contnct is a valid exercise of management prerogattve. ~lie
prohibition against personal or marital relationships with employees o_f competttor
companies upon its employees was held reasonable under the arcumstances
because relationships of this nature might compromise the interests of the
company. In laying down the assailed company policy, the_ employer only ~s !o
protect its interests against the possibility that a competttor company will gam
access to its secrets and procedures.
c,
PROHIBITED ACTS
t PROHIBITED ACTS UNDER ARTICLE 135 [137] AND ITS
IMPLEMENTING RULES.
Article 135 (137) of the Labor Code and its implementing rule consider
·unlawful the followings acts of the employee
1) To discharge any woman employed by him for the purpose of
· preventing such woman from enjoying maternity leave, facilities and
other benefits provided under the Labor Code;
t Sl!rPaperCcxp. v. Simbd, Comlaand Estrella, G.R No.164TT4,Ap!S 12,2006.
lma'IAssodatiOO dOelaitlm-PTGM> v. GlaxoWetane ~ . Inc.. G.R. No. 162994. Sepl 17. 2004.
CHAMcR THREE 217
IABOR STANDARDS
2) To discharge such woman on account of her pregnancy, or while on
leave or in confinement due to her pregnancy;
3) To discharge or refuse the admission of such woman upon returning
to her work for fear that she may agajn be pregnant;
4) To discharge any woman or any other employee for having filed a
complaint or having testified or being about to te~tify under the T,abor
Code;or
S) To require as a condition for or continuation of employment that a
woman employee shall not get married or to stipulate expressly or
tacitly that upon getting married, a woman employee shall be deemed
resigned or sepanted, or to actually dismiss, discharge, discriminate or
otherwise prejudice a woman employee merely by reason of marriage. 1
2. DENIAL OF BENEFITS.
The following are the prohibited acts under Article 135 [137) of the Labor
Code:2
1) To deny any woman employee the following benefits,l namely:
a) Facilities for women;4
b) Maternity leave benefits;5 and
c) Family planning services and incentives for family planning.6
2) To disclwge any woman employee for the purpose of preventing her
from enjoying any of the benefits provided under the Labor Code.7
Under No. 1 above, mere denial of the afore-described benefits wouid
already constitute a violation of Article 135 (137). Under No. 2 above, it is required
that there must not only be denial but actual discharge or dismissal of the woman
employ~ meant to prevent her from enjoying not only the benefits under Chapter
I, Title m ofBook ill of the Labor Code but any of the benefits granted under the
other provisions thereof.
3•.DISCHARGING A WOMAN DUE TO PREGNANCY.
Article 135 [137)1 contemplates the following prohibited acts in
connection with the pregnancy of a woman employee:
1 Sm\13,rueXll.~lllhmi.
2 See paragraph (a) (1) thereof.
3 As prowled in Chapter I (Employment of Women), Title Ill (Wolklng Conditions for Special Groups of Employees)
of Book Ill of the Labor Code.
Under Article· 130 (132), Ibid.
The pcevaing lawnoN is RA No. 11210 lFebruart 20, 20191 otieMise ~ as tie "105-Day&palded tk!l!mity Leave
UIW."
& Under Article 132 (1341, Labor Code.
7 See also Secoon 13, fU! Xll, Boci Ill, rues to Implement lhe Lab« Code.
 SAR REVIEWER ON V.BOR !AW
218
1) To discharge her on account of her pregnancy;
2) To discharge her while she is on leave due to her pregnancy;
3) To discharge her while she is in confinement due to her pregnancy;
4) To discharge her upon returning to her wotk for fear that she may
again be pregnant; or
5) To refuse her admission upon returning to her work for fear that she
may again be pregnant.2
lo Dtl Monie Philippinu, Inr. 1•. Vehsro,3 the series of absences of the
respondent due to her pregnancy and its related ailme'ots, such as urinary tract
infection, were found not to be a valid groWld to dismiss her from employment.
Tue Supreme Coun agreed with the Court of Appeals in concluding that
respondent's sickness was pregnancy-related and therefore the petitioner cannot
tenninate respondent's services because in doing so, petitioner will, in effect, be
violating the Labor Code which, under Article 135 [137] thereof, prohibits an
employer to discharge an employee on account of the latter's pregnancy. The
Court was convinced that the petitioner terminated the services of respondent on
account of her pregnancy which justified her absences and it thus committed a
prohibited act rendering the dismissal illegal.
In ukp11e Dmg, l11t. v. Belga: respondent Belga was dismissed for allegedly
deliberately concealing her pregnancy and for incurring absences without official
leave for 16 days at which time she delivered her baby. Petitioner argued that such
non-disclosure is tantamount to dishonesty. In finding the penalty of dismissal too
harsh and illeg:i1, the Supreme Court ruled that the alleged misconduct of
respondent Belga barely falls within the situation contemplated by law. Her
absence for 16 days was justified considering that she had just delivered a child,
which can hardly be considered a forbidden act, a dereliction of duty; much less
does it imply wrongful intent on her pan. Petitioner harps on the alleged
concealment by Belga of her pregnancy. This argument, however, begs the question
as to how one can conceal a full-term pregnancy. The Court agreed with
respondent's position that it can hardly escape notice how she grows bigger each
day. While there may be inst.ances where the pregnancy may be inconspicuous, it
has not been sufficiently proven by petitioner that Belga's case is such.
4. DISCHARGING A WOMAN EMPLOYEE FOR HAVING FILED A
CASE OR FOR TESTIFYING IN A CASE
An additional prohibued act; is the act of discharging any woman or any
other employee for having filed a complaint or having testified or being about to
' See paragraph lal (2) and (3) thereof.
l See also Sediat 13, rue XII, Boa( Ill, IU!s m~ I tie Lm Code.
l GR No. 153477, Marth 6, 2007.
• G.R No. 166379, Oct 20, 2005.
s See Secfol 13, ~ Xll lloa( IU at.e ~ I D ~ !he Lm Code.
CIIAl'TER THREE 219
LABOR STANDARDS
testify under the Labor Code. Of relevance to this prohibited act are the parallel
provisions in Articles 118 and 259(Q (248(Q] of the Labor Code.
Under Article 118, it is considered unlawful for an employer to discharge
or in any manner discriminate against any employee who has filed any complaint or
instituted any proceeding under Title fl (Wages) of Book III (Conditions of
Employment) or has testified or is about to testify in such proceedings.
Under Article 259(~ [248(Q], it is considered an unfair labor practice
(ULP) to dismiss, discharge or otherwise prejudice or discriminate against an
employee for having given or being about to give testimony under the Labor Code.
This is the only ULP act of the employer which need not be related to the exercise
by the employee of his right to self-organization and collective bargaining.1
d.
SEXUAL HARASSMENT
l THREE (3) SITUATIONS ONLY.
RA. No. 7877,2 otherwise known as the ''Anti-Stxual Hara11ment A&t of
1995," declares sexual harassment unlawful only in three (3) situations, wundy:
(1) emplayment environment,·
(2) tdnration environment; and
(3) training environment ·
Notably, sexual harassment is not the sole domain of women as men may
also be subjected to the same despicable act. Said law does not limit the victim of
sexual harassment to women.
2. SPECIFIC ACTS PENALIZED.
The law punishes sexual harassment if the same is:
1. work-related; or
2. education-related; or
3. lraining-related.3
3. PERSONS WHO MAY BE LIABLE FOR SEXUAL HARASSMENT.
Work, education or training-related sexual harassment is committed by
any employer, employee, manager, supervisor, agent of the employer, teacher,
instructor, professor, coach, trainor, or any other person who, having authority,
influence or moral ascendancy over another in a work or training or education
environment, demands, requests or otherwise requires any sexual favor from
1 Ptw:cm ~ 1.ti:r1 V. Alippi'e ~ ~ GR No. 1-14315, "t 17, 2006; See also lisg
1.-mggaga.vasaTryrov. NLRC, G.R No.151309,Oct 15, 2008.
l RANo.7877,Foo.14, 1995.
l Sedicn 3, RA No. 7877.
 BAI\ REVIEWEI\ ON IABOI\ !AW
220
another, regardless of whether the demand, request or requirement for submission
is accepted by the object of said sct.1
Further, any person wl:o directs or induces another to commit any act of
sexual harassment as defined in the law, or who cooperates in the commission
thereof by another without which it would not have been committed, shall also be
held liable Wlder the law.2
4. SEXUAL HARASSMENT IN A WORK-RELATED OR
EMPLOYMENT ENVIRONMENT.
ln a work-related or employment environment, sexual harassment is
committed when:
1. The sexual favor is made a condition in the hiring or in the
employment, re-employment or continued employment of ~aid
individual or in granting said individual favorable compensanon,
terms, conditions, promotions, or privileges; or the refusal to grant the
sexual favor results in limiting, segregating or classifying the employee
which in any way would discriminate, deprive or diminish employment
opportunities or otherwise adversely affect said employee;
2. The above acts woold impair the employee's rights or privileges under
existing labor laws; or
3. The above acts would result in an intimidating, hostile, or offensive
environment for tr.e employee.3
4.1. ILLUSTRATIVE CASES.
The following cases best exemplify work-related sexual harassment:
(!) Villarama v. NLRC,4 where petitioner was private respondent
company's l'vfaterials Manager. He was charged with sexual harassment by Divina
Gonzaga, a deck-typist assigned in his department The humiliating experience
compelled her to resign from work. In her letter-resignation, she alleged the
following incident:
"Last Friday, July 7, 1989, Mr. Delfin Vil!arama and Mr. Jess
de Jesus invited all the girls of Materials Department for a dinner when
in (sic) the last minute die other three (3) girls decided not to join the
group anymore. I do (si::) not have second thought(s) in accepting their
invitation for they are my colle(a)gues and I had nothing in mind that
would in any manner prompt me to refuse to what appeared to me as a
simple and cordial invitation. We went to a restaurant along Makati
1 Id.
l Id.
j
3 Sectoo 3iaL RA No. 7877.
Dern G. Vilarcirav. tlRC ard Golden Dcnuls,re., G.R. No. 106341, Sept.2, 1994, 236 SCRA 280.
CHAffil\ THREE 221
IABOR STANDARDS
Avenue where we ate our dinner. Mr. Villararoa, Mr. Olaybar and Mr.
Jess de Jesus were drinking while we were eating and (they) even
offered me a few drinks and when we were finished, they decided to
bring me home. Wbik on I'!] IVl!J, I found out thaJ Mr. Vi/larama war not
drwing tbt IVa.J lo I'!] houst. I Illar wndmng 111f!J /IJt 111m taking tbl llJtllnl, IVa.J
until I found 0111 that wt Mn mitring a moul I 111ar nal!J sbock(td). I did not
fXj>(d that a sonmvbot rrp11tabk pmon likt Mr. Vil/aroma ro11"1 tfq su,h a thing
/Q a'!Y of bis s11bordinates. I sha11"1 hove left tbl rompa1!J IVilbout O'!J wrd b11t I
Jul tho/ I w11"1 IN unfair to tbost 111ho might bt simifar& situated. I hope that
you would find time to investigate the ver:acity of my allegations and
make each (sic) responsible for bis own deed."I
The Supreme Court, in finding that petitioner's dismissal was legal,
ratiocinated:
"xxx [L)os.~ of trust and confidence is a good ground for
dismissing a managerial employee. It can be proved by substantial
evidence which is present in the case at bench. As further observed by
the Solicitor General: ·
'... assuming argucndo that De Jesus and Gonzaga wen:
sweethearts and that petitioner merely acceded to the request of the
former to drop them in the motel, petitioner acted in collusion with
the immoral design.~ of De Jesus and did not give due regard ro
Gonzaga's feeling on the matter and acted in chauviniitic disdain of
her honor, thereby justifying public respondent's finding of sexual
h=smcnt Thus, petitioner nol only failed to act accordingly as a
good father of the family because he was not able to mo.inti.in his
moral ascendancy •nd authority over che group in the m2tter of
morality and discipline of hi.~ subordinates. but he actively facilitated
the commission of immoral conducr of his subordinarcs by driving
his c:u inro the morel. (Comment, April 29, 1993, p. 9)'
"As a managerial employee, petitioner is bound by a more
exacting work ethics. He failed to live up to this higher standard of
responsibility when he succumbed to bis moral perversity. And when
such moral perversity is perpetrated against his subordioate, he
provides justifiable ground for his dismissal for lack of trust and
confidence. It is the right, nay, the duty of every employer to protect its
employees from over sexed superiors."
(2) I..ibm v. NLRC,2 where petitioner, an electrical engineer who was an
Assistant Manager in private respondent National Steel Corporation (NSC), was
suspended for 30 days without pay on the basis of the charge of sexual harassment
made by Susan D. Capiral, a secretary. Sexual harassment is considered a violation
of the Plant's Rules and Regulations.3 His act consists of "touching a female
subordinatc's hand and shoulder, caressing her nape and telling other people that
1 ~ b.lld nDie ctgilal 1ex1 cl. toe Supreme Crut decisiln nthis case.
1 Ga'0s G. llires v. NI.RC, GR No. 123737,Ma;- 28. 1999
3 lem 2. Table Vlhered..
222 BAil REVIEWER. ON IAIOll lAW
Capiral was the one who hugged and kissed him and that she responded to the
sexual advances." The Supreme Court affirmed the validity of his 30-day
suspension.
(3) Phih'ppine Aeo!Jll 11. NLRC,1 where private respondent Cortez was
charged by petitioner company, among others, that on August 2, 1994, she
committed acts constituting gross disrespect to her superior, William Chua, the
Plant Manager, consisting of her act of throwing a stapler and uttering abusive
language upon the person of the latter. In her defense, Cortez claims that as early as
her fust year of employment, William Chua already manifested a special liking foe
her, so much so that she was receiving special treatment from him. He would
oftentimes invite her "for a date" which she would as often refuse. On many
occasions, he would make sexual ~dvances - touching her hands, putting his anus
around her shoulders, running his fingers on her arms and telling her she looked
beautiful. The special treatment and sexual adv~ce~ c~ntinued . during her
employment for 4 years but she never reciprocated his flirtanons, until final!~, she
noticed that his attitude towards her changed. He made her understand that 1f she
would not give in 10 his sexual advances, he would cause her tennination from the
service; and he made good his threat when be started harassing her. She just found
out one day that her table which was equipped with telephone and intercom units
and containing her personal belongings was transferred without her knowledge to a
place with neither telephone nor intercom, for which reason, an argument ensued
when she confronted William Chua resulting in her being charged with gross
disrespect
On the foregoing charge, the Supreme Court ruled that private
respondent's act of throwing a stapler and uttering abusive language upon the
person of the plant manager m2y be considered, from a layman's perspective, as a
serious misconduct. However, in order to consider it a serious misconduct that
would justify dismissal undcc the law, it must have been done in relation to the
performance of her duties as would show her·to be unfit to continue working for
her employer. The acts complained of, under the circumstances they were done,
did not in any way pertain to her duties as a nurse. Her employment identification
card discloses the nature of her employment as a nurse and no other. Also, the
memorandum infonning her that she was being preventively suspended pending
investigation ofher case was addressed to her as a nurse.
On the delay in the filing of the case, the Supreme Court observed, thus:
"We arc not persuaded. The gravamen of the offense in
sexual har:issmcot is not the violation of the employee's scruality but
the abuse of power by the employer. Any employee, male or female,
may righcfuUy cry 'foul' provided the claim i.< well subst:intiated. Strictly
speaking, there is no time period within which be or she is expected to
CHAPTEll THllEE
223
IABORSTANOARDS
comp~ through the proper_channels. The time to do so may vary
depending upon the needs, orcumstances, and more importantly, the
emotional threshold of the employee.
"Private respondent admittedly allowed four (4) years to pass
before finally coming out with her employer's sexual impositions. Not
many women, cspecwly in this country, are made of the stuff that e2n
endll!e the agony and trauma of a public, even corporate, scandal. If
petitioner corporation had not issued the third memorandum that
terminated the services of private respondent, we could only speculate
how much longer she would keep her silence. Moreover, few per.;ons
arc privileged indeed to transfer from one employer to another. The
dearth of quality employment has become a daily 'monster' roaming the
streets that one may not be expected to give up one's employment
easily but to bang on to it, so to speak, by all tolerable means. Perhaps,
to private respondent's mind, for as long as she could outwit her
employer's ploys, she would continue on her job and consider them as
mere occupational hazards. This uneasiness in ber place of work
thrived in an atmosphere of tolerance for four (4) years, and one could
only imagine the prevailing anxiety and resentment, if not bitterness,
that beset her all that time. But William Chua faced reality soon
enough. Since be had no place in private respondent's heart, so must
she have no place in his office. So, be provoked her, harassed her, and
fin~y dis!odged ha; and for finally venting her pent-up anger for years,
he found the perfect reason to terminate her."
5. SEXUAL HARASSMENT IN AN EDUCATION OR TRAINING
ENVIRONMENT.
In an education or training environment, sexual harassment is committed:
1) against one who is under the care, custody or supervision of the
offender;
2) against one whose education, training, apprenticeship or tutorship is
entrusted to the offender;
3) when the sexual favor is made a condition to the giving of a passing
grade, or the granting of honors and scholarships, or the payment of
a stipend, all?wance or other benefits, privileges, or considerations;
or
4) when the sexual advances result in an intimidating, hostile or
offensive environment for the student, trainee or apprentice. t
6. DUTY OF THE EMPLOYER OR HEAD OF OFFICE.
It is the duty of the employer or the head of the work-related, educational
or training environment or institution, to prevent or deter the commission of acts
' Secoon J{bl. RA. No. 1an.
 BAR REvlEWER ON lABOR l.AW
of sexual harassment and to provide the procedures for the resolution or
prosecution of acts of sexual harassment.
Towards this end, the employer or head of office is required to:
1. promulgate appropriate rules and regulations, in consultation with and
jointly approved by the employees or students or trainees, through
their duly designated representatives, prescribing the procedure for the
investigation of sexual harassment cases and the administrative
sanctions therefor. The said rules and re~tions issued shall include,
among others, guidelines on proper decorum in the workplace and
educationai or training institutions.
2 aeate a committee on decorum and investigation of cases on sexual
hamssment The ,:ommittee shall conduct meetings, .as the case may
be, with officers and employees, teachers, instructors, professors,
coaches, trainers and students or trainees to increase understanding
and prevent incidents of sexual harassment. It shall also conduct the
investigation of alleged cases constituting sexual harassment.
In the case of work-related environment, the committee is composed of
at least one (1) representative each f.tom the management, the union, if any, the
employees from the supemsory rank and from the rank-and-file employees. In the
case of educational or training institution, the committee is composed of at least
one (1) representative &om the administration, the minors, teachers, instructors,
professors, or coaches and students or tiainees, as the case may be.1
7. SOME PRINCIPLES ON SEXUAL HARASSMENT.
1) The employer or head ,:::,f office or the educational or training institution are
solidarily liable for damages arising from the acts of sexual harassment
committed in an employment, education or training environment, if such
employer or head of office or educational or training institution is informed
of such acts by the -:>£fended party and no immediate action is taken
thereon.2
2) The victim of sexual harassment is not precluded from instituting a separate
and independent action for damages and other affirmative reliefs.3
3) Any action arising from sexual harassment prescribes in three (3) years.•
4) Any person who violates the provisions of R.A. No. 7877 shall, upon
conviction, be penalized by imprisonment of not less than one (1) month
nor more than six (6) months, or a fine of not less than Pt0,000.00 nor
more than P20,000.00, or both such fine and imprisonment at the discretion
Sedxxl4,lbij.
~5.ilil.
3 Sedm6,lbid.
' Sec6on 7, Ibid.
j
CHAffiR THREE 225
LABOR. STANDARDS
of the court. 1 The case of Dr. Ria, S. j11&11ti11 11. Peopfel best illustrates the
proper penalty imposable on the violator. Here, the Supreme Court affirmed
the Sandiganbayan's decision finding Dr. Rico Jacutin_y Salcedo guilty of the
crime of sexual harassment defined and punished under RA. No. 7877,
particularly Sections 3 and 7 thereof, and penalizing him with imprisonment
of six (6) months and to pay a fine of P20,000.00, with subsidiary
imprisonment in case of insolvency. Additionally. he was ordered to
indemnify the offended party, Juliet Yee, in the amount of P30,000.00 and
P20,000.00 by way of moral damages and exemplary damages, respectively.
2.
MINORS
(R.A. No. 7610, as Amended by R.A. No. 9231)
1. GOVERNING LAW ON THE EMPLOYMENT OF CHILDREN.
Secti(?n 12, Article VIII of RA. No. 7610,3 specifically treats the subject
of employment of children. It was first amended by R.A. No. 7658,4 and later, by
R.A. No. 9231.5 As amended, Section 12 now reads as follows:
"Sec. 12 Emphymenl of Childrtn. - Children below fifteen (15)
years of age shall.run be employed except.
"(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,
holVtlltr, That his/her employment neither cndangets
his/her life, safety, health, and monls, nor impairs
his/her noonal development Prollitkd, f11rtber, That the
parent or legal guardian shall provide the said child with
the prescribed primary and/or secondary education;
"(2) Where a child's employment or participation in public
entertainment or information through cinema, theater,
radio, television or o~cr fonns of media is essential:
Prouitkd, 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:
Section 7, Ibid.
G.R. No. 140tJl4, Mith 6, 2002.
3 Olhet\\ise b1l7MI as Ile "Special Prolecoon d alldlen Aga11St Abuse, Expblab1 and llsafrrinaticn /id."
4 Entitled "AN ACT PROHIBITING THE EMPLOYMENT OF CHILDREN BELOW 15 YEARS OF AGE IN PUBLIC
AND PRIVATE UNDERTAKINGS, AMENDING FOR ITS PURPOSE SECTION 12, ARTICLE VIII OF RA. 7610."
5 Entitled "AN A(;f PROVIDING FOR THE ELIMINATION OF THE WORST FORMS OF CHILO LABOR AND
AFFORDING STRONGER PROTECTION FOR THE WORKING CHILO, AMENDING FOR THIS PURPOSE
REPUBUC ACT NO. 7610, Af> AMENDED, OTHERWISE KNOWN AS THE 'SPECIAL PROTECTION OF
i" CHILDREN AGAINST CHILO ABUSE, EXPLOITATION ANO DISCRIMINATION ACT...
226 SAil REVIEWER ON lABOR lAW CHAITTR THREE 227
I.ABOR STANDARDS

Provided, Jmhtr, That the ~ollo~ing requirements in all (b) in "publi& enterlainmmt or information" which refers to amsttc,
inswices aie strictly complied W1th: literuy, and cultural performances for television show, radio
(a) The employer sruill ensure the protection, health, program, cinema or film, theater, commercial advertisement,
safe[!, morals and noanal development of the public relations activities or campaigns, print materials, intemet,
child. and other media.
(b) The employee shall institute measures to prevent
the child's exploitation or discrimination taking 3. PROHIBITION ON THE EMPLOYMENT OP CHILDREN BELOW
into account the system and level of remuneration, -15 YEARS OF AGE; EXCEPTIONS AND CONDITIONS.
and the duration and arrangement of working time;
and ~ . Based on the above discussion, the general rule is that no child below
(c) The employer shall foanulate and implement, fifteen (15) years of age shall be employed,. permitted or suffered to work in any
subject to the approval and supervision of public or private establishment4 The only .exceptions to the prohibition on the
competent authorities, a continuing program for employment of a child below fifteen (15) years of age are as follows:
training and skills acquisition of the child.
(a) When the child works under the sole responsibility of his/her parents
"In the above ~xceptional cases where any such child may be
employed. the employer shall first secure, before engaging such child, a
or guardian, provided that only members of the child's family are
work permit from the Oeparbnent of Labor and Employment which employed.
shall ensure obsetvance of the above requirement,;. (b) When the child's employment or participation in public
"For purposes of this Article, the term ',hild' shall apply to all entertainment or information is essenti~ regardless of the extent of
persons under eighteen (18) years of age." the child's rolc.S .
To reflect the changes introduced by the said amendatory R.A. No. 9231, Such employment shall be strictly under the following conditions:
a new set of lmpkmenting Rlllu and Regulations was issued in 2004.1
L The total number of hours worked shall be in accordance with the
2. WORKING CHILD. working hours prescribed in the Rllks;6
For legal purposes, the term ''thik/" refers to any person less than eighteen ii. The employment does not endanger the child's life, safety, health and
{18) years of age. On the other hand, a "wor/ei111, ,hik/" refers to any child engaged as moms, nor impair the child's nonnal development,1
follows: iii. The child is provided with at least the mandatory elementary or
secondary education; and
1. When the child ts below eighteen (18) years of age, in work or
iv. The employer secures a work permit for .the cbild.8
economic activity that is not ''thild labor';2 and
ii. When the child below fifteen (15) yea.cs of age:
(a) in work where he/ she is directly under the responsibility of
his/her parents3 or legal guardianI and where only members of
the family2 of the child are employed;3 or

1
O\Jltf 26, 2004, focmerDOlE Seaeta,y Pmda Santo Tomas issued 11e ~~cm Regula!xxls of RA No.
9231 \\ticll anended RA No. 7610, as anended. The RIJes supeiseded Oepamm Older No. 18, Seres of 1994 er lhe
rues n ~ tnplemen!ilg RA No. 7658. All offler issuances ¥A1k:ll are i1c:msistent h!re\ilh are deemoo
!hut rd be ittetpreled ti•
m:dfai ~ - (Selin 29, Qlapls' 9, 0epl1merlt Order No. 65-04). tbtlever, l bm ~ 81at te Rules
can=ts exeaJ!ed 1M toils elfett.nly. Al oGler generd nJes a , ~ of
cmrcm n! appt,. (Secml 30, QiapCer 9, l>n). These~ cowr al persons cl1d enfles engagrg lhe serw:es d er
~dwlnn(Sedim1.~1,lii). .
The am "chld labol" cnrioled moe refers to rrr,vm er ecxroni: adMtf pedolmed l1f achld lhitsuijlcls hmberto

.~
2
8[rf famd~ori5hlm6Jllohisllertmlhood safetf crptr,si:al.mentalorpsyd,o,socialdeveqmn
3 "8 tnlelsbld v.i1ill Ile context cl the abat'a desaiplioo of avakiYiJ chid, tie tenn ·parenr nters tD eihrthe bkllogi:al or ·~~·
~ rrolher or faOler.

J .
228 BAR llEVlEWERON IABOR !AW CHArTER TU REE 229
lA60R STANDARDS

4. PROHIBITION ON THE EMPLOYMENT OP CHILDREN IN 1. Debases, degrades or demeans the intrinsic worth and dignity of a
WORST FORMS OP CHILD LABOR. child as a human being; or
The rule is that no child shall be engaged in the worst forms of child ii. Exposes the child to physical, emotional or sexual abuse,2 or is
labor. The phrase "u1<mlfan111 of(hild labor" refers to any of the following: found to be highly stressful psychologically or may prejudice
morals; or
(a) All forms of slavery• or practices similar to slavery, such as sale and iii. Is performed underground, underwater or at dangerous heights;
trafficking of children,2 debt bondagel and serfdom and forced or or
compulsocy labor, including recruitment of children for use in
iv. Involves the use of dangerous machinery, equipment and tools
armed conflict'
such as power-driven or explosive power-actuated tools; or
(b) The use, procuring, offering or exposing of a child for prostjtution,s
v. Exposes the child to physical danger, sucb as, but not limited to,
for the production of pornography' or for pornographic
the dangerous feats of balancing, physical strength or contortion,
performances.
or which requires the manual transport of heavy loads; or
(c) The use, procuring or offering of a child for illegal or illicit activities,
vi. Is performed in an unhealthy environment exposing the child to
including the production or trafficking of dangerous drugs or volatile
hazardous working conditions, elements, substinces, co-agents or
substances prohibited under existing laws; or
processes involving ionizing, radiation, fire, flammable
(d) Work which, by its nature or the circumstances in which it is carried substances, noxious components and the like, or to extreme
out, is hazardous• or likely to be harmful to the health, safety or temperatures, noise levels or vibrations; or
morals of children, such that it:
vii. Is performed under particularly difficult conditions; or
viii. Expos.es the child to biological agents such as bacteria, fungi,
' UndEI RA. No. 9208 [Ma-f 26, 2003], oltlEfNise knoMl as l1e 'AlllHralliirg i1 f>j!fSOOS Pd d 2003,' lhe lenn 'faced viruses, protozoa, nematodes and other parasites; or
looa'ald sl;Ner( relefs b lheextrm dWOtk «ser.tes lromaey l)Eml by mecris ofenti:ement, violooce, illimam
(X hea, used me (X <XleltXII, i1ciJoog de¢t'alm d lree:fan, abused amity (J nm( ascoodarcf, ~
ix. Involves the manufacture or handling of explosives and other
<X decepliln. (Sectioo 3llered). . pyrotechnic products.3
2 lJnde' RA. No. 7610 µtile 17, 19921. otieMlse krlC7Ml as tie 'Speda Proleclioo d Olldren .44)ainst Abuse,~
and Oisaini1aliln M: as v1fil as t,e rues i'nplernenli'9 I, lhe mn 'bcMnJ' refers 1o lhe act a badf9 cc deafrYJ vd1 5. PROHIBITION ON EMPLOYMENT OP CHILDREN IN CERTAIN
chidleo, ilculi-g, blA not rm:ed b, Iha w,iig aid sel'nJ d dihn b- nme'/, « b-~ ollllJ ~«belle'. ADVERTISEMENTS.
(Sedioo 1~I lhered; See aso Sedioo 7, Article rJ, RA No. 7610). ~ . trder RA No. 9208, 'b'affi:mg i1 persoos'
is broa(tf defr1ed as Ile recnibnenl. lrcllspalai:xl, msf« « tmxrrg, er receipt d persoos 'Mil er v.itm lhe vi:&n's No child below eighteen (18) years of age is allowed to be employed as a
cmsent <X knowieoJe, v.il'li'l er across ni6Jna ballers by meais d heat or use d me, er ollllJ bms a oxm:ri,
alldooxxl. lrald, decepliln, aoose aJlONef « a pa;im. taki'Q ~ d t i e ~ d toe l)Eml, er, toe g;.,rg model in any advertisement directly or indirectly pro_moting alcoholic beverages,
a
e r ~ payrr81!s er bene&s b achieve Ile coosenl d al)Eml ~ ama rmr ill0t1er peisoo b' lhe JX.11POSe d intoxicating drinks, tobacco and its by-products, gambling or any form of violence
~ viitl i1dodes at a nnnm. t i e ~ « tie prosti:n d ci1elS a:ot.er bms asexua expblml. or pornography.'
bted looa' <X 5ef'ID!S. 9iN/!ff, seMl.ide or Die rem:lYal er sale d ~ (See Sedirl 3 flered). The recru'JTM,
msptr1alm, mfer, hattxm;j er~ d achid ltrtie p,pose d expolml ~ aso be cxn5ilered as 'bcMnJ i1
per=' eYen l l does rd iMlM! ~ d Die meais sEt b11 i1 t,e dei1i:n d ~ i1 persoos• ii Die~
~{ld.~ t v.tlie 1lazadous" v.ai is dl61ed aoo itf desai>ed ii delais ii Secixl 5, ~ 2 d llepmtrt Oder No. 65-04,
3 UndEI RA No. 9208, 'dell( bcnla!le' relefs t, lhe pledgrg by 11e debb' ahM1er pe,sooal ser.tes cc labor er !hosed a
me is ro de&lti:ln llereil clfle mn ~ v . a i .The rues·t> ~Die l.BbcrCode, OOMMJ, defraes a
pe,:soo ~his,t,eramlasS8lrit)' ccpaymertltra<W, v.tlen tie~ aid nanreofserii:es ae rddea1y demed - ~ v.ai « ~ as~ WOik or ditj i1 l'iitl tie enl)k7jee is rd elll)OSed b ~ risk Yohich
<X v.tiei fie YciJe d lhe ssw:es as reasaialltf 8SSe$8I is rd awied '1Nanl t,e ~ of Ile deli (Seful 3 ta1SIMls en mmrt darger t, his s;Mf a-d heall1. The Seaeay d Laxr a-d ~ shal, tan 6Te t> line,
flerld). JXtish a i:st d haz3dals WOik a-d acMies ii l"1i:II perscns 18 ygs d aJe."'1d bebN arm! be ell1)b/ed. (See
' nrega1! I:> Ile recnnnertddillren b'use il'cnned ~ I is declired tnler Secioo 22. Mcie Xof RA No. 7610, rues
Iha cnitten ae zmes d peace. ~ - ashal be t i e ~ ~ t,e Slale aid al olher sears cnmned b
resollecrmedadds il all«t>pnxrdelleQMof cl1i:ienas mnesofpeace. 1oa1a1 lhiscbjedi,oe.helawl¥ doMl
f Sedirl 3, ~ XI~ Book 111,

(Sedi:n 8,rue rues

1, Book IV,
b lrpement the 1.a1xr <:ode). The Qreau d ~ Callim (BVYC) shal, v.itl lhe
<WM d Ile Seaeli:ry d Laxr aid ~ issue from mi b line. a detailed i:st d haza'dous vmptaces.
t> ~11e 1.axr <:ode~ .
ces1ail pdicies '1a need b be observed. ' 'Selclra ~,'tnler RA No. 9.!re, refers t, ~ by al)Eml i1 pro!,tiln er the pnxb::fo1 d ~
s l.k1der RA No.9208, •p,dlliln' refers b allf ad. birlsadm, sd1efne <X desiJn ~ lhe use of a person by cmtoer. maleriais as aresut d beirY,i SlOjected t> a tvea, decep6:n, ooertm, oooocton, me, abuse d ailllo'tf, dEbl txmacJe,
b'seXIS nsame <X lastM:AlsctOb:t i1 exdla'lgeb-rrr:l'l!f, prtitcc~ollllJ~ (Secial 5, OiapB 2, taJdorllroughabusedavi:lin's~.(Sedial5,~2, lil.).
Iii.). _.......,..... . l Sedirl 5, ~ 2, Im.; Sedirl 12-0, RA No.7610, as added by Sedxln 3, RA No. 9231; See aso Sedxln 8, Rule I,
' ~ : atrodilg I:> RA No. 9208, refers b atrf rep,eseilalxi,;hwjl pub'taliln, exllbitial, c:renaklgraphy, Book IV, rues b krc)lement lhe Laxr <:ode.
"1ece111 shcMs. normalilJl ledrdogy. <X b y ~ me.vis, of a l)Eml er@Jed i1 rea <X silrolated expra 5eXIJal • Sedirl 6, ~ 2, llepmleri Oder No. 65-04; Sedxln 14, Mcie \JIU, RA No. 7610, as .rneoded by Sedoo 5, RA
acMei <X illlf represenli!tioo a he =Jal perts a a persoi b- pmmy 5e110 puposes. (Sedi:n 5. ~ 2. l>il.). No.9231.

230 SAR. R.EVIEWER. ON IABOR. IAW
6. HOURS OF WORK OP A WORKING CHILD.
As applied to working children, ''ho11" of work" include (1) all time during
which a child is requu:ed to be at a prescribed workplace, and (2) all time during
which a child is suffered or permitted to work. Rest periods of short duration
during working hours shall also be cowited as hours wocked. 1
More concretely, the following hours of wock shall be observed for any
child allowed to wock under the law:2
(a) For a cbJld below 15 years of age. the houh of wotlc shall not be
more than 20 hows per week, provided that the work shall not be
more than 4 hours at any given day;
(b) For a child 15 years of age but below 18, the hours of work shall
not be more than 8 hours a day, and in no case beyond 40 hours a
week;and
· (c) No child below 15 years of age shall be allowed to work between 8
o'clock in the evening and 6 o'clock in the moming of the following
day and no child 15 years of age but below 18 shall be allowed to
work between 10 o'clock in the evening and 6 o'clock in the morning
of the following day.3
Sleeping time as well as travel time of a child engaged in public
entertailbnent or infonnation from bis/het residence to his/her workplace shall
not be included as hours worked without prejudice to the application of existing ·
rules on employees' compensation.4
3.
KASAMBAHAY
(R.A. No.10361)
t. EXPRESS REPEAL OF ENTIRE CHAPTER III, TITLE III, BOOK III
OF THE LABOR CODE.
The Chapter on Househelpers originally covers Articles 139 (141] to 150
[152] of the Labor Code. The entire Chapter III, however, has been expressly
repealed by R.A. No. 10361, otherwise known as "Domestic Wor~rs Aa" or "Balm
'KmfJlllbahl!J" approved by President Benigno S. Aquino Ill on January 18, 2013. 5
' Section 3, Chapter 1, Depar1lnenl Order No. 65-04.
2 RA.No. 9231 and 11s ~RIies.
3 Secfm 15, Qiapter 5, lbk1; Secfal 12..\ RA. No. 7610, as aided by Section 3, RA. No. 9231.
• Id.
5 It ii IXo.ifed il is Secb 44, ltllS: "SEC. 44. ~ Clause.-M ri:les Cl provislals d ~ ID (&npbyment d
Househe!pers) cl PD. No. 442, iii anended and renuntered by RA No: 10151 are herel7t expl'8S9f repealed. AD laws.
decrees, exeaJWe ool65, isstaQs, rules Md regualials Cl parlli hired inoonsislent MIil !he prtMSions of U1S Nj. are
heretrfrepealed Cl modfal acxmllg~.•
CHAITTR. THREE 231
LABOR STANDARDS
Further, note must be made that R.A. No. 10361, despite its expressed
intent of repealing the said·provisions, did not follow the numbering pattern of the
Labor Code, as renumbered lately pursuant to Section 5 of R.A. No. 10151 Qune
21, 2011). It, in fact, has its own designation of its provisions which it denominated
as "sections." 11us notwithstanding the fact that it merely rehashed or revived
some principles already embodied in the repealed provisions of the Labor Code.
For purposes of discussion, therefore, its substantive provisions are presented
herein following the presentation in the law itself.
2. COVERAGE.
R.A. No. 10361 applies to all domestic workers employed and working
within the countty.1 It shall cover all parties to an employment contract for the
services of the following KasfJillbah'!JS, whether on a live-in or live-out
arrangement, such as, but not limited to:
(a) Genew househelp;
(b) Yaya;.
(c) Cook;
(d) Gardener,
(e) Laundry person; ot ·
(f) Any person :who regularly performs domestic work in one household
on an occupational basis.2
3. EXCLUSIONS. ·
The following are not covered:
(a) $ervice providers;
(b) Family drivers;
(c) Children under foster family arrangement;3 and
(d) Any other person who perfonns work occasionally or sporadically
and not on an occupational basis.4
.
4. DEFINITIONS.
Some import:2nt tenns are defined below:
<'.ansecprff, Ole fobmg eJeven (11) pnMSilns entraced il sail Chap1er ~ to al hoosehelpefs, \melher
~ mU crpart,(ine basis, are cmBtf expresstf repmt: Al1D? 139 (141) (CoveraJe): Alticle 140 [142] (C<mact
l d Olxnesti: SeM:e~ Mde 141 [143) (tmnun WaJe); Mk1e 142 [144) (ttilun Cash \Ya.le): Mk:1e 143 1145)
(Assgrment ID tmHoosehold Work); Al1i:le 144 (146) (()ppatlJlly tr Eoocation); Mde 145 (1471 {Tream!llt of
tmehelpers~ Mide 146 (148) (Bead, l.odgilg, ald Med"ical AtteMcn:e); ~ 147 (149) (lndermily for Unjust
Temim of SeMces); Miele 1481150) (SeMce dTerimabl Nm): Article 149 (151] ( ~ Certficalioo) and
Altle150[152)(En¢'JmentReaxd).
1 Secb13,Micle~RAth 10361.
2 Sm12,Ru1e~~J\desaicl~ofRANo.10361.
3 Sedlln 3(a), RIE 1, ~ 1U!s andRegulalmsof RA No. 10361.
J
• Sedxxl 4{d), MDe 1, RA No. 10361; Sedian 3(e), ~ I, lmplemen!ilg Rules and Regulations of RA. No. 10361.
232
BAR REVIEWER ON l.ABllR l.AW
(a) ''Domer/it worktr" or "kaJambahay" refers to any person engaged in
domestic work within an employment relationship, whether on a live-in or live-out
arrangement, such as, but not limited to, general househelp, "yaya", cook, gatdener,
or laundry person, but shall exclude service providers, family drivers, children who
are under foster family arrangem~t, or any person who performs domestic work
only occasionally or sporadically and not on an occupational basis. 1
This term shall not include children who are Wlder foster family
arrangement which refers to chi:dren who are living with a family or household of
relative/s and are provided access to education and given aa allowance incidental to
education, i.e., "bao11", transpo:tation, school projects, and s~ool activities;
provided, that the foster family and foster care arrangements are in compliance
with the procedures and requirements as prescribed by R.A No. 10165 or the
"FosflrCareA&t of2012. '2
Because of these new terminologies prescribed in the law, the use of the
term ''ho1mhelper" may no longer ':,e legally correct.
(b) ''Domerlic work" refers to work performed in or for a household or
households.>
(c) "Hou1ehold" refers to the immediate members of the family or the
occupants of the house who are directly and regularly provided services by the
Kasambahay.4
(d) "Enrployd' refers to any person who engages and controls the services
of a Kasambahay and is party to the employment contract.5
(e) "Live-out a"angement' refers to an arrangement whereby the Kmambah'!J
works within the employer's household but does not reside therein.6 ·
(~ "Stndct provid!,'' refers to any person or entity that carries an
independent business and undertakes to perform a job, work or service on his/her
own for a household, according to his/her own manner and method, and free from
the control and direction of the employer in all matters in connection with the
performance of the work except as to the results thereo£7
5. HIRING OF KASAMBAHAY.
a. Mode of Hiring, - A Kmambaht:J can be hired by the employer directly
or indirectly through a licensed ''Private Employment Agenq (PEA)" 8 which refers to
Sedial2.Rulel,Rlkl.
Sedial4 (d],Mi:le I, RA No.10361; Sectiat3(a), RI.de I. ff1)1emen&-,;! Rulesard RegwlirisdRA No. 10361.
3 Sedial 4[cl. Atti:1e 1. llii; Sedial 3(d), Rull 1, bi!.
' Sedial4 PiAlt:lel, l>id~ Sedm3(g), Rule 1, llil.
SediJn 4 [el Mile I, l>id~SediJn 3(~. Rule 1, l>id.
Sedial 3(h), Rule I, l>ii
7 Sedioo 3(1), Rik I, l>id.
1 Sedioo 1, Rule I, l>cl.
CHAl'TER TM REE
LABOR STANDARDS 233
any individual, partnership, corporation or entity licensed by the DOLE to en!l2SC
in the recruitment and placement of K,uambaht:J for local employment.'
b. Cost of Hiring. · The·employer shall shoulder the cost of hiring of a
Kmambaht:J, whether he/she is hired through a licensed PEA.2 In no case shall the
recruitment or finder's fees be charged against the Kmambahay.J
. ''Rtmiitment andfindtls fies" refer to charges qr any amount collected by the
licensed PEA from the Kmambaht:J for his/her recruitment and placement.4
. . c. Dep!Qyment ExJ>enses. - The employer, whether the Kmambahay is
hired directly or through a PEA, shall pay the expenses directly used for his/her
transfer from place of origin to the place of work. The employer may recover ·
deployment costs from the Ka1ambahay whenever he/she leaves without justifiable
reason_within six (6) months from employments
"Deployment expenm" refer to expenses that are directly used for the
transfer of the Kmamhahl!J from place of origin to the place of work covering the
cost of transportation, meals, communication expense, and other incidental
expenses. Advances or loans by the Ka1ambahf!J are not included in the definition of
deployment expenses.6
6. PRE-EMPLOYMENT REQUIREMENT.
Prior to the execution of the employment contract, the employer may
require the following from the Ka1ambahay:.
(a) Medical certificate or a health certificate issued by a local government
health officer;
(b) Barangay and police clearance;
(c) National Bureau of Investigation (NBI) clearance; and
{d) Duly authenticated birth certificate or, if not available, any other
document showing the age of the Kasambahay such as voter's
identification card, baptismal record or passport.
The foregoing shall be the standard requirements when the employment
of the Kmambah'!J is facilitated through a PEA. The cost of the foregoing shall be
home by the prospective employer or agcncy,7 as the case may be.s
' Sedioo 3(ij, Rule I, lbil.
2 Sedioo 2, Rule U, li!:
l Id.
' Seam J(D, Rule I, bo.
Seam 3, Rule 1. llil.
Sedioo 3(c), Rue I. ll«l.
1 Refetm,ibaJXivale~ac;ency(PEA).
1
Sedioo 12, Artide UI, RA No. 10361;Sedioo 4. Rule 11, lmplemenr,g Rules illd Regulafuns ol RA No. 10361.

SAR RivlIWER ON LABOR I.AW
234
7. WRITTEN EMPLOYMENT CONTRACT.
a. The employment contract must be in writing and should contain
the conditions set by Jaw.
To make the relationshiF between the employer and the kasambahay more
formal, R.A. No. 10361 1 requires that a written contract of employment be
executed between them. This is a very significant improveme~t since not even the
Labor Code requires the execution of a written instnllJ1ent Ill order to create or
establish an employer-employee relationship. It is a well:established rule that such
relationship need not be docume::ited by a written contract. <?nee ~c- elements ?f
the employer-employee relationship arc determin~ an~ _established, 1t ts unmatenal
whether such.relationship was created verbally or ll1 woung.
b. Contents ofthe employment contract.
Before the commencement of the service, a wcitt~n employment contr_act
between the Jv,iambaht!J and the employer shall be accomplished Ill three (3) copies.
The contract shall be in a language or dialect understood by both the lvuamba~ay
and the employer, and shall include the following:
(a) Duties and responsibilities of the Ivuambahay, including the
responsibility to render satisfactory service at all times;
(b) Peaod of employm::nt;
(c) Compensation;
(d) Authorized deductions;
(e) Hours of work and proportionate additional payment;
(Q Rest days and allowable leaves;
(,g) Board, lodging and medical attention;
(h) Agreements on deployment expenses, if any;
(i) Loan agreement, if any;
G) Termination of employment; and
(k) Any other lawful condition agreed upon by both parties. If the
Kmambahay is below 18 years old, the employment contract shall be
signed by his/ her parent or lawful guardian on his/her behalf.2
Upon the request of either party, the P1mo11g Bara11gqy or his/her
designated officer shall read and C."'tplain the contents of the contract to both parties
and shall serve as its witness.3
c. Standard employment contract.
The employment contract shall conform to the DOLE Standard
Employment Contract (Kontrala 111 Paglili11gkod ;a Tahanan) or Form BK-1. 1
' Sedicl'I 11, Mide UI Iii.
1 Sedm 11,Miele Ill. Ibid.: Sectm 5. Rll'e II, bid.
l kl.
CHAPTIR THRIE 235
IA80R STANDARDS
d. Distribution ofcopies ofemployment contract.
The employer shall have the obligation to furnish a copy of the
employment contract to the Ka1ambahqy and to the Office of the P11no11g Barangqy in
the bara11gqy where the employer resides.2
e. Renewal of Contract.
Should the parties mutually agree to continue their employment
relationship upon expiration of the contract, they shall execute a new contract to be
registered with the conceme.d bara11gqy. However, if the parties fail to execute a new
contract, the terms and conditions of the original contract and other improvements
granted during the effectivity of said contract are deemed renewed.3
£ Domestic workers cannot acquire regularity ofemployment.
Despite the repeal of the entire chapter of the Labor Code on
Househelpers by R.A. No. 10361, all the indida of regularity of employment remain
absent in the employment of domestic helpers. The following factors clearly show
that domestic hdpers can never become regular employees:
I) By express provision of the law, the employment contracts of
Ka1ambahay1 are for fixed or definite tenn.4 They do not fix the
period of employment nor put a cap on their duration, unlike in
Article 140 (142] of the Labor Code.5
2) The law does not recognize any probationary employment of
&1ambahayr,'
Sedicl'l 6, ~ II, l)n
Sectioo7,fQi!ILlbkl.
I
l Sectioo 8, ~ 11, lbkl.
• Sedicl'l 11 lbL Mide 111, RA No. 10361, i1 relaoon ti Sedicl'I 32, Article Vof RA No. 10361. Sedioo 11[b] ct Mide Ill
Vlereof dea1'j slales lhat the ~kl',menl cootrat by and betWeen t,e ~ v.mer crid tie~ shood rdJde a
..
't
~ c l ~ • c.ooelalirg llis IXIJ'lisix1 wll Sedill 32 cl Mk!a V lh!m \l,IXJkl resut i1 tie ~
coodml flat 9.d1 ~ !Xlf'ia:t is b" a "lenn', m: 'SEC. 32 Temi'latioo ct Savi:e. - NeiUier lhe doolesti:
lf w:rter ra lhe enl)k7fer rnBf temi'lale t,e mact bEm lhe expr.ful ol the em except lor gnmls proyijed lor i1
Sedi:x1s 33 crid 34 cilhis NJ.~ Tlis obsavati:xl ii uUier ~ by t,e ~ pcra.ircv,s ct said SedDls 33
t
,,
crid 34, VlJs: 'SEC. 33. Terrnimt l'ltiated by Ile 1MesD: Wm. - The daresli: v.mer rrrtf temi'lale Ile
errpl:7,11lent ~ a t ~ line bEm lhe ~ cl Ile cootra1b"~ ci lhe ~ ca.ises: 'n:f crid 'SEC. 34.
\
.. T ~ niiated by lhe ~ --An en'l)k)yerrrrtf emilate Ile saw:es d t,e daresli: w:rter al aTrf ire beb'e
the expimi ct the cootad. b' W/ cl t,e i:llolW'g caJSeS."'
s t-Wltj, RA No. 10361 no ~er manda!es eiat a de&lie rnmier ci yeas be stiix,laled i1 the ori;lilal amct d
employment d ~ w:rters. Under the 00:JM renderirg d Arial 142 d the Labo' Code. ~is plll'IXled !hat '(f1le
ori;linal caitract ordomestic sem::e shal not last for mae t.an two (2) yeas but~ rnBf be renewed ra soch peoods as rlli1-f
be agreed upoo by the paste;.· This peood-imitaooo has alreaitf been deleled i1 the new 1.1,y_
6 Neilhel RA No. 10361 ncr the Laba Code emxxlies c1rf probatmry employmerl appticable lo doolesfc w:ners.
MhuJh i1 cases ol OYerSeaS A4)i1o \\Ol1(ers v.to are depk:lfed as ocmesoc w:rteis ooroad, the valdily d such
prooatialaty peliod ol e111>k7fmenl i s ~-but tie sane is mt b' tie IUJ)0Se cl de!enrm,J lllletler the ooneslic
w:rter has qaf,ed lor tie ~term ~ ~ by lhe pa-ties as held i1 Phienl)by Selvices crid
Resrut:es. nc.v. Ania Rodti;Juez. G.R No. 152616, !.'arth 31, 2006.
236 BAR RE'IIEWER ON LABOR I.AW CHAl'TER THREE
237
lABOR STANOARDS

3) The l<Asambaht:JI are not included in the concept of regular 8. RIGHTS AND PRIVILEGES OF KASAMBAHAY.
employment under Article 295 (280) (Regular and Casual
The eights and privileges' of the Kasambaht:1 are as follows:
Employment) of the Labor Code;1
4) The Kasambahays are not entitled lo the reliefs provided wider Article (a) Minimum wage;
294 (279) of the Labor Code such as "reinstatement without loss of (b) Other mandatory benefits, such as the daily and weekly rest periods,
seniority rights and other privileges and to his/ her full backwages, service incentive leave and 13th month pay;
inclusive of allowances, and to his/her other benefits or their (c) Freedom from employer's interference in the disposal of wages;
monetary equivalent computed from the time his/her compensation (d) Coverage under the SSS, PhilHea!th and Pag-IBIG laws;
was withheld from him/her up to the ~me of his/her actual (e) Standard of treatment;
reinstatement'';2 (Q Board, lodging and medical attendance;
5) The Kas(llnbahayl enjoyment of security of tenure holds true only (g) Right to privacy;
during the effectivi~ of their fixed-term employment;3 (h) Access to outside communication;
6) The employment of l<Awnbahays ceases upon the expiration of the (~ Access to education and training;
fixed term thereof;4 G) Right to fonn, join or assist labor organization;
7) The contract of employment of Kasambaht:JI is teaninable by mere (k) Right to be provided a copy of the employment contract;
notice, a clear inclic,tion that the employment is not regular in nature;5 (I) Right to certificate of employment;
8) The- Kasambahay is given the right to pre-terminate the cmploy111ent (m) Right to te.tminate the employment; and
contract.6 (n) Right to exercise their own religious beliefs and cultural practices.2
The foregoing eights and privileges are discussed below.
, This is oWaJs Iran fie ra:t flat mis no pcll'lisioo cl ~v.tw:h makes re'elel1ce to the <Wicabiity cl sall provisilo lo
lhe ~ cl dorresfc v.olkeB. On the toniafy, lhe ~ ol ~ for an roefnle period is not abled and 9. MINIMUM WAGE.
they do not become ~ ~ b y reasoo of the na11re of tier \\IJl1t. Series cl re-lliilJ or renewal of the coob'act of
~ciadomesfcv.akerdoosnotliEY,isell)l!lliltol8}Acr~ a. Amount ofminimum wages.
1 The reief to ai ilelJatf dis1!eed domesfc ~ is nn1 il Sedioo 32, Mcie Vcl RA No. 10361 v.li:h 5P9S cl lhe
penatf \\lien Ile ~ '\J¥JSII, dismisses' Ile danesfic 11011(er. Th.ls, ·rot tie danesfic v.lllker is lJljJs1l'f dismissed, The new minimum wage rates prescribed in R.A. No. 103613 are as
lledomesfc vmer shal be pao I l e ~ area:fy ~ pus t.e ~"11 o1 IN (15) days IIIXk by YMf ol follows:
roemtf.'
i This isdearlranlheam-<11JOtedpwsi:rlof Sedioo 32 clArti'.le Vof RA No. 10361 ~ lhe effecwityof t.eicmra:t "SEC 24. Minimum 117agt. - The minimum wage of domestic workm
ard bebe he expia!m of its leml, ne,re- the danesfic 'Mlfker nor t h e ~ ITlirf lemlilate it exrept oo the grooods shall not be less than the following:
menbloo i, lhe lir,vil<ie!I.
' This is dear rorn Sedior\ 32. h.ls: "SEC. 3~. Tenni'1a!m of SeMce. - Neither the domesoc mrker nor the ~ rret (a) Two thousand five hundred pesos (P2,500.00) a month for those
lemme Ile amcd bebe Ile expiatm :i the term except lor grcoo!s ptMled !« ii Secions 33 ard 34 d. lhis Ari' employed in the National Capital Region (NCR);
Secfoo 33 teas d he µ;I c:aJSeS ii cases ci l:!rTni'1atxJl 1-iiated by lhe lmiestic water ard Secioo 34 spe;its cl Ile (b) Two thousand pesos (1'2,000.00) a month for those employed in
pstca.isesllllen~isi'liialedbyte~. chartered cities and first class municipalities; and
5 u
11 case h e ~ tatact dorrs sevi::es does rwx ~ b- a specifl:: 01 defniM! leffTl, 2nd pcragrat)h of
(c) One thousand five hundred pesos (Pl,500.00) a molllh for those
SeciJ132. M::!e VclRA th 10361 sla!es, !Ills: 'SEC. 32. Tenmalm cl Servi:e. - xxx 1fle duaioo cl the danesfic
se-.u is netdei!rnW18:I eilher i i ~ or ll'/ Ile~ cl the se-.u,
lhe ~ a Ile domestic v.lllker rMf gM! employed in other municipalities.
nofke to ero he MJb'g ~ we (51 days belore tie nended BTmml ci tie se,vce.• 1is his ays1a1 dea' rroo,
tis ptMsi:x1, v.tw:n is acmpete rmash ri Ile repealed Mi:le 150 of Ile Im Code. l1at no l)'esurpial ci regutriycl "After one (1) yor from the effectivicy of this Act, and periodically
~ IN1f ml tan he fam ,j the ~ en! Ile daresti: Ymer to ~ 00 a dE!M! lelTll thereafter, the Regional Tripartite and Productivity Wage Boards (RTP\VBs)
~ . I l e ~ ~ is IEnrralle by Ile sirC)e expEderlce cl toe enw,,er a the danesfic v.ooer shall review, and if proper, determine and adjust the minimum wage rates of
•gi,{rg) nofke ID~ flevmi"g ~ me (5) days belore Ile i'1'.md enNDl ci l1e saw:e.' domc.~tic worker.;."4
1
This is l¥l0lh« ~ 11a Ile ~t~ betiieerl adaresti:vmer inl ttJher ~ i s not regulatil
nab.re is tie gai d Ile fglt ID Eitier d. :hem to p-e-~ lhei' oonb'ad d ~ I ooder t,e 3rd para;irat)h cl
Secfoo 32, Moe Vcl RA No. 10361, his: "SEC. 32. Tlm'ilatm of SeMce. - 1XX 'The danesfic llaker ard Ile
~ IN1f nwatt agree upoo \IID3'I no&:e to pre-lelminale Ile cxmct of ~ ID ero the ~
~ : II tie.rs ll00'1!I ~ tiete is ro smar J)ltMlioo ii the erae Lm Code v.lli:h grm toe sane RJ111 of pre-
lemmi:ll to the ~ ard he dorDesic v.mer ~ - ~ existilg l.tN cYld µ,sp!U!ence, never is i 1
PerSedm 1, RIM! I V , ~ RIJles cWl(j Reguatioos of RA. f>b. 10361.
pro'li:led a all:7Mld ii cir/~ forte~ en! ~ t o ~ lher regulcr ~ by smpt, i'lki,g an 2 Id.
agremrt cl pra-tenrr\ain 11 f.d, such agreemert oo pre-emi'1atiin ~ been srucx do¥,o as a rA4 sqltAati:xl il an l SeeSedioo24,Arti'.lelVtieracl.
en1]1oJmer11 cont.x:t ii Ile case ciPri::e v. frnx!ata Phis., ~ Corp, GR No. 178505, Sept 30, 2008. ' SeealsoSedioo2, rue I V , ~ RiJles andRegulatioosclRA No. 10361.

BAR RlVIEWER ON LABOR LAW
238
b. Some important principles on wage.
• Frequency of payment of wages. - The wages of the Kasambahtry
shall be paid at least once a month.1 This is so because the minimum
wage rates are on a monthzy basis.2
• The equivalent minimum daily wage rate of the Kasambah<!J shall
be determined by dividing the applicable minimum monthly rate by
thirty (30) days.3
• The ~ount of the minimwn wage depends on the geographical
4 '
area where the Kasambah'!] works.
• Payment of wages: . .
1. To whom paid. - It should be made on tune ~ to the
Kasambahay to whom they are due in cash at least once a month.5
2. Oeducti~ns, prohibition; when allowed. - The employer,
unless allowed by the Kasambah'!] through a written consent,
shall make no deductions from the wages other than th~t which
is mandated by law6 such as for SSS, PhilHealth or Pag-IBI~
contributions.7
Deduction for loss or damage shall only be made under the
following conditions:
(a) The Kasambah(!Y is clearly shown to be responsible for the
loss or damage;
(b) The Kasa,nbah<!J is given reasonable opportunity to show
cause why deduction should not be made;
(c) The total amount of such deductions is fair and reasonable
and shall not exceed the actual loss or damage; and
(d) The deduction from the wages of the Kasambahl!J does not
exceed 20% of his/her wages in a month.
1be DOLE shall extend free assistance in the determination
of fair and reasonable wage deductions.8
' Secoon 4,Rule IV, rn>iemellUY:I Rules .rid RegulalionsciRA No.10361.
1 As <fistirJuished &an lhe 1egaty nmdaled r.creases il te mmun wages (sud! as tiose mandated l1f RA No. 6640,
RA. No. 6727 .rid w~e Onlers passoo 11,' t,e Rl\WSs) v.hi:11 ae a, a dai'f-rale basis, te miirun ~ rates
ixescrooo il RA. No. 10361 irea, anmtt)' basis.
1 Sooi:xl 6, ~ xm. Book iu, rues t> ~ te LabaCode.
' Sedm24.ArtdelV.RANo.10361.
1 Sedm 25, ArtK:le IV, l>il.
I Id
1 Section 30, At1ide IV, lbil.
a Section 6, Fwle V,kfcllemenlilg Rues nl Rllgulations of RA No. 10361.
CHAPTER THREE 239
IASOR STANDARDS
3. Mode of pa~ent. - It shoul~ be paid in cash and not by
means of pronussory notes, vouchers, coupons, tokens, tickets,
chits, or any object other than cash wage. 1
4. Pay slip. - The employer shall at all times provide the
Kasambah<!J with a copy of the pay slip containing the amount
paid in a1:sh every pay day, and indicating all deductions made, if
any. The copies of the pay slip shall be kept by the employer for
a period of three (3) ycars.2
5. Prohibition on interference in the disposal of wages. - It
shall be unlawful for the employer to interfere with the freedom
of the Kasambah<!J in the disposition of his/her wages, such as:
(a) Forcing, compelling, or obliging the Kasambahf!Y to purchase
merchandise, commodities or other properues from the
employer or from any other person; or
(b) Making use of any store.or services of such employer or any
other person.3
6. Prohibition against withholding of wages. - It shall be
unlawful for an employer, directly or indirectly, to withhold the
wages of the Kasambahay. If the Kasambahf!Y leaves without any
justifiable reas.on, any unpaid salary for a period not exceeding
fifteen (15) days shall be forfeited. Likewise, the employer shall
not induce the Kasambah<!J to give up any part of the· wages by
force, stealth, intimidation, threat or by any other means
1( ' whatsoever.4
10. TERMS AND CONDITIONS OF EMPLOYMENT.
The following is a rundown of the; basic terms and conditions that should
be observed in the employment ofa Kasambah':J.
a. Employable age. - Children whose age is below 15 years are
absolutely prohibited to.work as Kaiambahay.5
b. Noanal daily hours of work. - Because R.A. No. 10361 docs not
contain any provision on the number of normal hours of work that a Kmambahay
should render in a day but merely prescribes said daily rest period of eight (8) hours
1 Sedion 30, Al1kfe IV. tit!.; Sedicxl 3, ~ rv, lbkl.
2 Sedion26,Mkfe IV, RANo.10361; Sedioo 2, Rule V, ll«l.
J Sooi:x127, Al1kfe IV, lbi1; Sedioo 5, Rule V, llid.
c Sedioo2a,MdeN, tii; Sedia,4,IU!V, bkl.
5 Secb116,Mde W ciRA No..10361 slaEs il very dea' Isms, his: 'SEC. 16. ~~ ci Danestic Waxeis.-
It shal be trM.i t> efl'l)l:7)' Inf pemi below Mee!l (15) yeas ci a;ie as a ~ v.oiker. fnllloytnent of 'Mllkilg
didren, as defiled imer ttis /id. shal be SUlject t> t.e pnMslais ci Sedioo 10(A), parag~ 2 of Sedion 12-A.
~ 4 ci Sedion 12-0, and Sooi:xl 13 of RA 1-«l. 7610, as irneoded, ot.eMise lu\o,\n as Ile 'Specia Profecoon of
Ctikfren ~anst Clial .Abuse, Exploiation a n d ~ M."

SAR RfVIEWER ON U.SOR I.AW
240
per day, it may be deduced that the Kosambahay should work for at leas! a total of
sixteen (16) hours per day as normal hours of work. Congruently, it must be
noted that the Labor Code does not contain any provision o~ ~e normal h~urs of
wotk of househelpers. However, Article 1695 of the CIVIi Code speafically
"d that househelpers shall not be required to work for more than ten (10)
ptOVl CS . · f
hours a day. Since R.A. No. 10361, a special -~w, 1s the ~~st recent piece o
legislation, it should prevail over the general provtSton of the Civil Code.
c. Nmm,ru daily hours of work for working child-kasambahay is
eight (8) hours per day. 1 ..
d. lJth
month pay. - The Kasambahay who has rendered at least one (1)
month of service is entitled to a t 3m month pay which shall not be less than on~
twelfth (1/12) of his/her total basic salary earned in a calendar year. The 13
month pay shall be paid not later than December 24 of every yeu or upon
sepamtion from employment.2
e. Daily rest period. - The Kmambahay shall be entitled to an aggregate
test period of eight (8) hours per day.3 · In the event the Kmambahtg avails of certain loan privileges from Pag-
f. Weekly rest period. - The Kasambahay shall be entitled to at least
twenty-four (24) consecutive l:ours of rest in a week. The employee and the
Kasambaht!J shall agree in writing on the schedule of the weekly rest day but the
preference of the Kasambah'!J~ when based . on religious grounds, shall be
respected., Nothing in this pcovision shall depnve the Kosambahtg and the employee
from agreeing to the following:
(1) Offsetting a day of absence with a particular rest d~y; .
(2) Waiving a particular rest day ~ retum for an eqwvalent daily rate of
pay; . .
(3) Accumulating rest days not exceeding five (5) days; or
(4) Other similar amngements.5
g. Service incentive leave. - A Ktuambaht!J ~ho_ has r~deced_ at least one
(1) year of service shall be entitled to an annual semce mcenttve leave of at least
1 Sia as am llisclSed, RA Na 7610, as amlded tr, RA No. 9231, apples fD a "dir Yif1kf1 toon. ~ lelJal
~ re{erslD81rfl)8SOOvdloSIJ1def etdl\teen(18)yeasof aJe,clomeslcwccketsvdmeaJeislllderei'Jhfeen
(18) yeas ~ subject to lhe tws d v.m; d a "Wol1<lng did." SettiDn 16, Al1De Ill d RA. No. 10361 states Ulat !he
~ otwmig chtiul 6 ~ b the l)l'O'tml cl pnJraph 2 of 5ml 12-A d RA No. 7610, as amerded
TJis ~ states flal '{a} dtil liftsen (15) years of age but beklw eijhteen (18) shal not be alowed fD d far nm
lmeiJhl(8)twsadEf,cnl ilnocasebeycnd b1y (40)1ms avs!< . 2
2 Secfat 25, Arfx:1e r-J, RA No. 10361; Sec1ioo 8, llJle r-1, ~ ~ nt ~ d RA No. ~0561. Note
n'USlbemaledlSt~.~cihoosehokl ~and perscnsnll8 pnxli!IS8VIC8~ ~ n relatioolD
such vmeis ae not oblgaled ID pay 13" nmlh Jlilf ID tese kinds d eff'Clloyees. (No. 2 [t). Rei.ted Guidefnes on Vie
mp1ementa6on ctt.e 13111 mcnttl Pay Law, formett/ Sedkx'I 3[d}. Rlrescm Regula!lons mplementing P.O. No. 851).
3 Secoon 20, Miele IV, RA No. 10361; Sediln 5,_Rule IV, lnl)lementing Rules cm Regidatioos dRA. No. 10561.
• Secoon 21,Al&:fe IV, ltil.; Sedol6, RulelV. bkt.
s kl.;ld.
CHAmRTHREE 241
LABOR STAN DAROS
five (5) days with pay. Any unused portion of said annual leave shall not be
cumulative or carried over to the succeeding years. Unused leaves shaU not be
convertible to cash.1
h. Social security benefits. - A Kasambahtry who has rendered at least one
(1) month of service shall be covered by the Social Security System (SSS),
Employees Compensation Commission (ECq, Philippine Health Insurance
Corporation (PhilHealth), and Home Development Murual Fund or Pag-IBIG, and
shall be entitled to all the benefits in accordance with their respective policies, laws,
rules and regulations. 2
Benefits under the SSS include sickness. maternity, disability, retirement,
death and funeral. A unified benefit package W1der PhilHealth includes Inpatient
Hospital Cate and Outpatient Care.3
Mandatory premium payments or contributions shall be shouldered by the
employer. However, if the Kasambah'!J is receiving a monthly wage rate of Five
Thousand Pesos (PS,000.00) and above, the Kmambahay shall pay the proportionate
share in the premium payments or contributions, as provided by law. 4
IBIG Fund which require the payment of additional or upgraded contributions, the
said additional or upgraded contributions shall be shouldered solely by the
Kasambahtg.5
The SSS, Pag-IBIG and PhilHealth shall develop a unified system of
registmtion and ~llment within six (6) months from the promulgation of the
Implementing~ and Regulations (IRR) of R.A. No. 10361.6
i. Obligation of employer to register and enroll with SSS,
PhilHealth, and Pag-IBIG. - As employer of the Kasambah'!J, he/she shall
register himself/herself with, and enroll the latter as his/her employee to the SSS,
~hilHealth, and Pag-IBIG.7
j. Loan assistance. - An employer may agree to extend loan assistance to
the Karambaht!J·in an amount not exceeding his/her six (6) months' salai:y. This
provision shall not apply to working children.8
k. Deduction for loans. - By written agreement, the employer may
deduct the loans from the wages of the Kasambahtfj. which amount shall not exceed
20% of his/hec wages every month. 1
1 Sedicr129,Mide IV, lbil.; Sedioo 7, Rule IV, lbil.
Sedicr130, Article r-1, lbkf.; Sedm 9. Rule IV, lbif.
3 kl.;kl.
4 kl.;kl.
s kl.;ld.
6 ld.;ld.
7 Sedkln 3, Rule V, Ibid.
a Sedkln 10, Rule IV, lad.
 BAR R.EVll:WER ON LABOR LAW
242
1. Deposits for loss or damage. - It shall be unlawful f?r the emplorer
or any other person to require a Ka,ambahay to make deposits from which
deductions shall be made for the reimbursement of loss or damage to tools,
materials, furniture and equipment in the household.2
11. OTHER TERMS AND CONDITIONS OF EMPLOYMENT.
In addition to the foregoing, the following terms and conditions are
mandated under R.A. No. 10361:
a. Standard of treatment, - The Kmambahf!Y shall.,,be treated wi~ respect
· b r of the household. He/ she snail not be subJected to
1
by th~ edmpfoyber or .anr ::g r:peated verbal or psychological, nor be inflicted with
any kin O a use, inc u din d d hi /h
, f h · al violence or harassment or any act ten g to egra e s er
any iorm o p ys1c d Vi I Again W, d . f. Opportunities for education and training. - The Ka!ambahay shall be
di · , as defined under the Revised Penal Co e, . 10 ence. . st ~men ~
th!:1~hildren Law (R.A. No. 9262), Special Protecoon of Children Ag.unst Child
Abuse, Exploitation and Discrimination Act (R.A. No. 7610) as amended by R.A.
No. 9231, Anti-Trafficking in Persons Act of 2003 (R.A. No. 9208), and other
applicable laws.3
b. Board, lodging and medical attendance, - The employer shall
provide for the basic necessities o( the Kmambahl!J, to include the following:
(1) At least three (3) adequate meals a day, taking into consideration the
Kmambahajs religious beliefs and cultural. practices;
(2) Humane sleeping condition that respects the person's privacy for
live-in arrangement; and
(3) Appropriate rest and medical assistance in the form of first-aid
medicines, in case of illnesses and injuries sustained during service
without loss of benefits.
For the Kmambahay under ~ arrangement, he/she shall be provided
space for rest and access to sanitary facility. At no instance shall the employer
withdraw or hold in abeyance the provision of these basic necessities as
punishment to, or disciplinary action against, the Kmambahay.4
c. Guarantee of privacy. - The employer shall, at all times, respect the
right of the Kmambahay to privacy, which shall extend to all forms of
communication and personal effects.5
d. Access to outside communication, - During free time, the
Ka1ambahay shall be granted access to outside communication. In case of
1
Seaoo11,RulelV,bid.
l Secoon 14,Midell~ RA No. 10361;Sedion 7, ~ V, bid.
l Secoon 5, Miele II, bid.;Section 12. Rule IV, Ibid.
Secoon 6, Article 11, Ibid.; Sedion 13,Rule IV, Ibid.
I Sedion 7,Mide U, tlld.;Sedion 14, Rule IV, l>Kl.
Cm.rTER THREC
LABOR STANDARDS
243
emergency, access to communication shall be granted even during working time.
Should the Kmambahay use the employer's telephone or other communication
facilities, the costs shall be borne by the Kmambahay, unless waived by the
employer. 1
e. Prohibition against privileged information. - All communication
and information pertaining to the employer or members of the household sqall be
treated as privileged and confidential, and shall not be publicly disclosed by the
Kmambahay during and after employment. Such privileged infoanation shall be
inadmissible in evidence, except when the suit involves the employer or any
member of the household in a crime against persons, property, personal liberty and
security and chastity.2
afforded the opportunity to finish basic education, which sha!J consist of
elementary and secondary education. He/she may be allowed access to alternative
learning systems and, as far as practicable, higher education or technical vocational
education and training.
The employer shall adjust the work schedule of the Kmambahay to allow
his/her .access to education or training without hampering the services required by
the employer. Access to education may include financial assistance at the option of
the employer. . ·
The Department of Education (DepEd) shall ensure continued access of
the K/1.!ambahay to altemative learning.system education.3 ·
g. Membership jn labor organization. - The Ka!ambahay shall have the
right to join a labor organization of his/her own choosing for purposes of mutual
aid and collective negotiation. The Kmambahay shall be afforded opportunity to
attend organization meetings during free time.•
h. Health and safety. - The employer shall safeguard the safety and
health of the Ka,ambah'!J in accordance with the standards which the DOLE shall
develop through the Bureau of Working Conditions (BWC) and the Occupational
Safety and Health Center (OSHC) within six (6) months from the promulgation of
the Implementing Rules and Regulations (IRR) of R.A. No. 10361. The said
standards shall take into account the peculiar nature of domestic work.5
i. Prohibition on debt bondage. - It shall be unlawful for the employer
or any person acting on his/her behalf to place the Kmambahay under debt
1
Section 8, Moe u. bid.; Secm1)1S. Rule IV, l>Kl.
1 Section 8, Rule V. lbi1,
3
Section 9, Moe 11, i>Kl.; Sec:oon 16, Rule IV, Ibid.
1 Sedion 17. Rule IV, lbi:J.
1 Sedion 19,Al1ide IV, RANo.10361;Sedion 12, Rule V, llid.
 BA~ REVIEWER ON LABOR LAW
244
bondage.' ''Debt bondage" refers to the rendering of service by ~e 'K:11ambahf!Y as
security or payment for a debt where the length and nature of servtce 1s not clearly
defined or when the value of tl:e service is not reasonably applied in the payment
of the debt.2
j. Assignment to non-household work. - The employer sh~ not a_ssign
the Ka!tJlflbahf!Y to work, whether in full or part-time, in a c~mmerctal, ~dustnal or
agricultural enterprise at a wage rate lower than that provided for agncultural or
non-agricultural workers.3
The following cases decided prior to R.A. No. 1"0361, are still relevant to
this proscription in the law:
[1) Apex Mining Comp:iny, Inc. u. NLR~.• - In_ this case, t~e Hig~ Coun
h usehelper in the staffhouses of an mdustnal company ts considered a
heId that a o
gular employee thereof. The mere fact that the househelper ts· work'mg wtt· hin the
;:einises of the business of the em~loyer and in relatio~ to or in connection with
its business, as in its staffhouse~ for tts guest or even for Its officers and employees,
warrants the conclusion that s·.1ch househelper is and should be considered as_ a
regular employee of the employer and not as a mere family houschelper or as
contemplated in the law.5
[2) Rtmington lndustria.' Sales Corp. v. Ca1taneda. 6 - 1l1e same ruling as in
Apex was made in this case. Respondent worked at the company premises and her
duty was to cook and prepare its employees' lunch and merienda. Clearly, the situ! as
well as the nature of respondent's work as a cook, who caters not only to the needs
of Mr. Tan (Managing Director of petitioner) and his family but also to that of the
petitioner's employees, made her fall squarely within the definition of a. regular
employee under the doctrine enunciated in the Apex Mining case. That she works
within company premises and that she does not cater exclusively to the personal
comfort of Mr. Tan and his family, is reflective of the existence of the petitioner's
right of control over her functlons, which is the primary indicator of the existence
of an employer-employee relationship.
[3] Bamna, u. NLRC1 - In this case, private respondent contends that
petitioner was not an employee but a servant at the Manila Buddhist Temple. The
Supreme Court, however, disagreed. It held that petitioner was a regular employee
thereof considering that the work that she performed in the temple could not be
categorized as mere domestic work. Petitioner, being proficient in the Chinese
Sedoo 15, Md? 111, lbi:l~ Seool 9, Rule 'J, Ibid.
Sedbl 4(a), Mi':le I, lli:I.;Sedm3{b),~le ~ lbi:l.; See also Sedioo 3, RA. No. 9208.
3 Sedbl 22, Md? N, lil.;Sedm 10, ~ V, lbil.
G.R t«>.94951, ~ 22. 1991, 196 SCRA 251, 254-255.
kl.
1 GR Nos.16929>96, No'/. 20. 200i.
7 GR No. 87210, .M/ 16, 1990.
CHAPTER THREE 245
IABOR STAN DAROS
la~guage,·attended to the visitors, mostly Chinese, who came to pray or seek advice
before Buddha for personal or business problems; amnged meetings between
these visitors and the Head Mook and supervised the preparation of the food for
the temple visitors; acted as tourist guide of foreign visitors; acted as liaison with
some government offices; and made the payment for the temple's Meralco, MWSS
and PLDT bills. Indeed, these tasks may not be deemed activities of a household
helper. They were essential and important to the operation and religious functions
of the temple.
k. Extent of duty outside the bouseho!d. - The Ka.rambahf!Y and the
employer may mutually agree for the Ka.rambah(!J to temporarily perform a task for
the benefit of another household under the following conditions:
(a) There is an agreement between the Ka,ambahf!Y and the employer for
the purpose, particularly on the tasks to be performed;
(b) The Ka.rambahcry is entitled to additional payment of not less than the
applicable minimum wage rate:
(c) The original employer shall be responsible for any liability incurred
by the Ka.rambahay on account of such arrangement; and
(d) The original employer is not charging any amount from the other
household for the arrangement.
The temporary performance of work shall not exceed thirty (30) days pee
assignment. The other household where the Ka.rambahf!Y is temporarily assigned is
solidarily liable with the original employer for any non-payment of wages during
such temporary assignment.
It shall be unlawful for the original employer to charge any amount from
the said household where the service of the Ka.rambahay was temporarily
performed 1
12. STANDARDS FOR EMPLOYMENT OF WORKING CHILDREN.
a. Working children. - This term refers to Ka.rambahay, who are fifteen
(15) years old and above but below eighteen (18)_years o\d.2
. b. General prohibition. - It shall be unlawful to employ any person
below fifteen (15) years of age as Ka.rambahf!Y,3
c. Benefits of working children. - Working children shall be entitled to
minimum wage, and all benefits provided under R.A. No. 10361, the Bata1
Ka.rambahf!Y, which include access to education and training. 1
Sedxln23,Arti;le rJ, tid.;Sedioo 11, Rule V, lt.l.
Seda\ 3(k), ~ t ifT1>1emen1ilg Rules and Regwtioos Q RA No.10361.
3 Sedxln 1, Rule VI, lbi!.
 BAR REvlEWER ON LABOR LAW
2
d. Employment of working children. - Pursuant to R.A. No. 9231,
working children shall ruu be subjected to the following:
(1) Work for more than eight (8) hours a clay and beyond forty (40)
hours a week;
(2) Work between ten o'clock in the evening and six o'clock in the
morning of the following day; and
(3) Work which is hazardous or likely to be harmful to the health, safety
or morals of children, as defined under existing laws and regulations.3
13. TERMINATION OF .KASAMBAHAY.
a. Pre-tennination ofemployment.
The following rules shall be observed:
(1) In case the duration of employment is specified in the contract, the
Kmambahay and the employer may mutually agree up?n _notice· ~o
terminate the contract of employment before the expttatlon of its
tenn.4
(2) In case the duration is not determined by stipulation or by nature of
service, the employer or the Kasambah(!J may give notice to end the
employment relationship five (5) days before the intended
termination of employment 5
b. Termination ofemployment inidated by the Kasambahay.
The Kasambahay may terminate the employment relationship at any time
before the expiration of the contract for any of the following causes:
(1) Verbal or emotional abuse of the Kasambahf!Y by the employer or any
member of the household;
(2) Inhuman treatment, including physical abuse of the Kasambahay by
the employer or any member of the household;
(3) Commission of a crime or offense against the Kasambaht!J by the
employer or any member of the household;
1 Sedicn 16,Micle II~ RA No. 10361; Secbl 3, Rule VI, lbij,
2 Entiled 'AA Id Prowlilg b-Ole Ermnailn of Ile Wast Fams d Oil Laba in! A!bdQJ SIJmgef" Protedkln b'lhe
~ Qlit,Ameoongfcrlhs 1upose Reptillc ActNo. 7610.AsAmended, OOlenwlekmfflas ttie "Spedal Proiec:1D1
d<Mhn AgiflstChDcl Abuse, Expbtaoon and OscrimilatiJn fvi•
3 Sedicn 2, Rule VI, ·lmplemenfng Rules and Regulations of RA No. 10361. ~ . ft s proi,ded t.ereil as folows:
'SECTION 4. Pn,Jrams b- lhe Efrnila!m a Worst Foons d Chad Lm ii Doom Wot • The DOLE, lhtWJh lhe
Nam! MOOtii lab0f Coom1.1ee (NCLC) Md il ataboralioo wfl the NCLC member-agencies. shca CXll\tinue k>
~ prograns to wittocJN. res01e. and rehabDate WC1mJ cttien bebNfifteen (15) yeas ci aJe. The NClC shal
enue Olat v.am;i cttien and !her faniles are ~ wilh access ID edlcation, access to ~ rescuces, and
llat measures are i'I place ID ensure oompilance 'Mth lhe standards fa" err4)1oyment of chldren il danestic ¥,QI( as
presai>ed il Olii Rule."
• Sectioo 32, Mkte V, RA No. 10361: Sectirit 1. ~ VII, ~ Rules and RegtElilns of RA No. 10361.
5 ld.;ld.
..Jlt
CHAPTER THREE 247
LABOR STANDARDS
(4) Violation by the employer of the terms and conditions of the
employment contnct and other stmdards set forth in the law;
(5) Any disease prejudicial to the health of the Kasambahay, the employer,
or members of the household; and
(6) Other causes analogous to the foregoing. 1
If the Karambahay leaves without cause, any unpaid salary due, not
exceeding the equivalent of fifteen (15) days work, shall be forfeited. In addition,
the employer may recover from the Kasambahay deployment expenses, if any, if
the services have been terminated within six (6) months from employment2
c. Terminadon ofemployment inidated by the employer.
An employer may terminate the employment of the Kasambahay at any
time before the expiration of the· contract for any of the following causes:
(1) Misconduct or willful disobedience by the K.asambabtg of the lawful
order of the employer in connection with the fonner's work;
(2) Gross or habitual neglect or inefficiency by the Kasambahf!Y in the
perfoanance of duties;
(3) Fraud or willful breach of the trust reposed by the employer on the
Kasambah'!Y,
(4) Commission of a crime or offense by the Kasambabtg against the
person of the employer ·or any immediate member of the employer's
family;
(5) Violation by the Kmambahf!Y of the tenns and conditions of the
employment contract and other standards set forth under the law;
(6) Any disease prejudicial to the health of the Kasambahay, the employer,
or members of the household; and
('I) Other causes analogous to the foregoin~.3
If the employer dismissed the Kasambaht!J for reasons other than the
above, he/ she shall pay the Kasambah'!J the eamed compensation plus indemnity in
the amount equivalent to fifteen (15) days work.4
d. Invalid ground for tenninadon.
Pregnan<;y and ~ of the Kasambabay are not valid grounds for
termination of employment.5
1 Section 33, Arti:1e V, lbii; Sedioo 2, ~ VII, lbij,
2 Section 32. Article V, Ibo.; Secoon 2, ~ VII, Ibid.
3 Sectkln 34, Article V, Im.; Sedm 3, Rule VII, Ibid.
4 Secml 32,Al1k:le V, lbil.; Sedion 3, Ride VII, li)ij.
5 Section 4, ~ VUit.
248 SAR REVIEWER ON LABOR I.AW
e. Employment Ccrti.ication.
Upon the termination . of employment, the employer shall issue the
Kasambahl!J, within five (5) days from request, a certificate of employment
indicating the nature, duration of the service and work description. 1
f. Mechanism for settlement/disposition oflabor-re/ated disputes.
All labor-related disputes shall be filed before the DOLE
Field/Provincial/Regional Office having jurisdiction over the workplace and shall
go through the thirty-day (30) mandatory conciliation under the DOLE Single
Entry Approach (SEnA) program to exhaust all efforts for the settlement of the
dispute. 2 The DOLE Secretary issued Labor Advuo,y No. 17, Seriu of2018 [October
30, 2018), for purposes of promulgating the Clarificatory Guidelines on the
handling of Kasambahl!J complaints or request for assistance.3
The phrase ''all labor-related disp11u1" necessarily includes and covers not
only monetary claims, regardl~s of amounts thereof, but termination or illegal
dismissal issues as well.
g. Compliance order.
In case the parties fail to reach a settlement, a mandatory conference not
exceeding thirty (30) days shall be conducted by the DOLE
Field/Provincial/Regional Office from referral of the unsettled dispute. The
DOLE-Regional Director shall issue a Compliance Order within ten (10) days from
the submission of the case for resolution.4
h. Motion for reconsideration.
Any aggrieved party may file a motion for reconsideration from the
Compliance Order wiihin ten (10) days from receipt thereof.5
i.Appeal.
The Resolution on the Motion for Reconsideration of the DOLE-
Regional Director may be appealed to the DOLE Secretary within ten (10) days
from receipt thereof. Thereafter, the Order of the DOLE Secretary shall be final
and executory.6
' Secoon 35, Al1i'.:le v, w.:Sedi:115. rue ~1. Rli:t.
1 Secoon37,Mi'.:leVI. Id.; Sedi:111,~XI, Id.
3 The ftj lext~ llis ~isiM!W! at lhe OOlE websie al:
ht!ps:/MWN.dcie.go,o~_m7%20-
% 2 0 ~ r g ~ ~ t s . p d l . LastAa:essed: ~ 19, 2019.
' Sedion 2, ~ XI. Id.: Seeai;o Nm.Vll cm VIII, l.abaMi&ty No. 17, Series ii 2018 (Octlber 30, 201si
5 Sedx:n 3, RI.de XI, Id.
' Sedi:ln 4. Rule XI, kl.;See also No IX, LaborhMscry No. 17, Saies d2018 [Oc1ooer 30, 2018].
CHATTER TH REE 249
LABOR STANDARDS
j. Crimes and offenses.
Ordinary crimes or offenses committed by either party under the Revised
Penal Code and other special penal laws shall be filed with the appropriate coucts. 1
4.
HOMEWORKERS2
1. DEFINITIONS.
For clarity in understanding, the following terms ace defined as follows;
a) 'Tnd11Jtrial homeworker" refers to a worker who is engaged in industrial
homework.3
b) 'TndUJtrial homework" refers to a system of production under which work
for an employer or contractor is carried out by a homeworker at his/her home.
Materials may or may not be furnished by the employee 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
ofwork.4
c) ''Home" means any nook, house, apartment or other premises used
regularly, in whole or in part, as a dwelling place, except those situated within the
premises or compound of an employer, contractor/subcontractor and the work
performed therein is under the active or personal supervision by or for the latter.;
d) "Field pmonnel" refers to a non-agricultural employee who regularly
perfoans his duties away from the principal place of business or branch office of
the employer and whose actual hours of work in the field cannot be determined
with reasonable ccrtainty.6
e) ''EmpP!Jer" refers to any natural or artificial person who, for his own
account or benefit, or on behalf of any person residing outside the Philippines,
directly or indirectly, or through any employee, agent, contractor, subcontractor or
any other person: (1) delivers or causes to be delivered any goods, articles or
materials to be processed or fabricated in or about a home and thereafter to be
returned or to be disposed of or distributed in accordance with his direction; or (2)
sells any goods, articles or materials for the p~ose of having such goods or
1 Secoon 5, ~ XI, Id.; See aso Sedxx1 37, Mide VII, RA No. 10361; No X, l.ooor hMscry No. 17, Series ct 2018
[OctlberJO, 201si
2
ReleYcrt l'nMsrlns: Maes 151 [153) b 1531155).1.aba Code; Depatrelt Order No. 5, (Februcry 4, 1992] ElllJ1ciati1g
lhe reguams gMmi'YJ lhe ~ cthanevmers. This Cepatrwn Orders OON knoM1 as~ 'fN, Bod<: md
lhe Rues b ~t,el.abc(Qxle.
3 Sedm 2, Depmen!Order No. 5[rue XN, Boa( Ill,~ b '°'l>lementtie l.ab<JCooe].
Id.
Id.
' Arti:1e 82, Laba Code

250 BAR RE\IIEWER ON LABOR I.AW
articles processed in or about a home and then repurchases them himself or
through another after such processing.
~ "Contractor" or ''subrontractor" refers to any person who, for the account
or benefit of an employer, delivers or causes to be delivered to a homeworker,
goods or articles to be processed in or about his home and ~ere~fter to be
returned, disposed of or distributed in accordance with the clirectlon of the
employer.•
g) ''Procming" refers to manufacturing, fabricating, ~shing, rep~g,
altering, packing, wrapping or handling in any way conneGted with the productton
or preparation of an article or material2
2. DUTIES OF EMPLOYER, CONTRACTOR OR SUBCONTRACTOR.
Whenever an employer contracts with another for the _per'.ormance of the
employer's work, it shall be the duty of such employer to provide IIl such contract
that. the employees or· homewockers of the contractor and the latter's subcontractor
shall be paid in accordance with the provisions of the Rules lo Implement the Labor
ude.l In the event that such contractor or subcontractor fails to pay the wages or
earnings of his employees or homeworkers as specified in said RJik1, such employer
shall be jointly and severally liable with the contractor or subcontractor to the
workers of the latter, to the extent that such work is performed wtder such
contract, in the same manner as if the employees or homeworkers were directly
engaged by the employer. The employer, contractor or subcontractor shall assist
the homeworkers in the maintenance of basic safe and healthful working
conditions at the homeworkers' place of work.4
3. PAYMENT FOR HOMEWORK.
Immediately upon receipt of the finished goods or articles, the employer
is required to pay the homeworker or the contractor or subcontractor, as the case
may be, for the wock performed less the corresponding homeworker's share of
SSS, PhilHealth and ECC premium contributions which should be remitted by the
contractor or subcontractor or employer to the SSS with the employer's share.
However, where payment is made to a contractor or subcontractor, the
homeworker should likewise be paid immediately after the goods or articles have
been collected from the workers.5
4. PROHIBITIONS ON CERTAIN KINDS OF HOMEWORK.
No homework shall be performed on the following:
1) Explosives, fireworks and articles of like character;
t·Sectm 2, IJej)menl ()Ider No.5 jRule 'fJI/, Book 111, fU!s-, ~ t.e l.m Code\.
l Id.
3 See~leXJVlhereci.
• Sedioo 11, Depcrtnelll Order No.5 ~le 'iJV, Book Ill, Rules to ~ the l.m Code.
~ Sedion 6, 1bi1
CHAl'TER TH REE 251
IABOR STANDARDS
2) Drugs and poisons; and
3) Other articles, the processing of which requires exposure to toxic
substances. 1
5. CONDITIONS FOR DEDUCTION FROM HOMEWORKER'S
EARNINGS.
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
deduction 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 twenty percent (20%) of the homeworker's earnings in a week.2
5.
NIGHT WORKERS
1. SIGNIFICANCE OF THE LAW.
RA. No. 1015l3 has repealed Article 130 [Nightwork Prohibition] and
Article 131 [Exceptions] of the Labor Code and accordingly renumbered the same
articles. Additionally, it has inserted a new Chapter V to Title III of Book III of the
Labor Code entitled "Employment of Night Workers" which addresses the issue
on nightwork of all employees, including women workers. Chapter V covers newly
renumbered Articles 152 (154) up to 167 (161] of the Labor Code.
2. COVERAGE OF THE LAW.
The law on nightwork applies not only to women but to all persons, who
shall be employed or permitted .or suffered to work at night, except those
employed in agriculture, stock raising, fishing,· maritime transport and inland
navigation, during a period of not less than seven (7) consecutive hours,
including the interval from midnight to five o'clock in the morning, to be
Secfal 13, bid.
Reler.rtf'lolwls: (1) Apirentires-roie-ed b-j Mx:les57-, 72, LablJ Code: (2) l.ealrss-COYE!flld t:Jf Mides 73 to
n, l..axrCode; (3)RA~-7700 [Tedri:al Educaticr1 clld S1<ils OMqxnent Ad a 1994) and its ~lementi'lg ~
and Regwli:xls.
3 fsllitled 'h!AdAbwlg te ~c:INightWateis, Thereby Repealing Astides 130 and 131 dPD. No. 442,f!.s
Amerded, OtherMSe Koo.lo as te Laba Code c:I the Phqlpnes' was approYed on Jtlle 21, 2011.
252 BAR RM EWEil ON l.AaOR. lAW
determined by the DOLE Secretary, after consulting the workers,
representatives/labor organizations and employen. 1
3. NIGHT WORKER, MEANING.
"Night worker" means any employed person whose work covers the
period from 10 o'clock in the evening to 6 o'clock the following morning
provided that the worker perfoans no less than seven (7) consecutive hours of
work.2
4. HEALTH ASSESSMENT.
At their request, workers shall have the right to undergo a health
assessment without charge and to receive advice on how to reduce or avoid health
problems associated with their work:
(a) Before taking up an assignment as a night worker;
(b) At regular intervals during such an assignment; or
(c) If they experience health problems during ·such an assign.men~
With the exception of a finding of unfitness for night work, the findings,
of such assessments shall be confidential and shall not be used to their detriment,
subject, however, to applicable company policies.3
S. MANDATORY FACILITIES.
Mandatory facilities shall be made available for workers perfonning night
work which include the following:
(a) Suitable fitst-aid and emergency facilities as provided for under
Rule 1960 (Occu?ational Health Setvices) of the Occupational Safety
and Health Standards (OSHS);
(b) Lactation station in required companies p ~ t to R.A. No.
t 0028 (The Expanded Breastfeeding Promotion Act of 2009);
{c) Separate toilet facilities for men and women;
{d) Facility for eating with potable drinking water; and
(e) Facilities for transportation and/or properly ventilated temporary
sleeping or resting quarters, separate for male and female
workers, shall be provided except · where any of the following
circumstances is present
1 Mde152[154},t.mCode.asamendedbySeclicn4,RANo.10151.
2 See Secfxln2,0epam1entOWNo.119-12, SeriesdZ>12(Rue kr4)enentllg RA No. 10151~ ttbeals ndi¥J lhattie
defrlml of °1vt4 W0lker" laldErlle law is as folkMs: "Ngttaer" means 8trf errcqed peisa1 v.tme a requires
~ d aSlbSfantial rurbef d lwls of niJht Y«Jdc \\tlich exceeds aspecftied linl This iml shaS be OO!d by Ile
Secrelaydlabcrafteroons1Jltg Ile~ ~orgnablsand efl'Clbfers,•~ 152(154).1..aba
Code,ascrnendedbySecm14, RA No.10151).
3 Secml 3, Oepirment OrdlJ No. 119-1t Series d 2012 ~ ~ RA. No. 10151); Attia 153 [155]. labO'
Code, as crneooed by Sedion 4, RA No.10151.
CHAl'TER. THREE
lASOR STANDARDS
i. Where there is an existing company guideline, practice or policy,
CBA or any similar agreement between management and workers
providing for an equivalent or superior benefit; or
ii. Where the start or end of the night work does not fall within 12
midnight to 5 o'clock in the morning; or
iii. Where the workplace is located in an area that is accessible
twenty-four (24) hours to public transportation;
iv. Where the number of employees does not exceed a specified
number as may be provided for by the DOLE Secretary in
subsequent issuances. 1
6. TRANSFER DUE TO UNFITNESS OF WORK FOR HEALTH
REASONS.
Night workers who are certified by competent physician, as unfit to
render night work due to health reasons, shall be transferred to a job for which
they are fit to wo* whenever practicable. The transfer of the employee must be
to a similar or equivalent position and in good faith.
If such transfer is not practicable or the wotkers are unable to render
night work for a continuous period of not less than six (6) months upon the
certification of a competent public health authority, these workers shall be
granted the same company benefits a$ other workers who are unable to w~rk due
to illness. ·
A night worker cettified · as temporarily unfit for night work for a
period of less than six (6) ·months shall be given the same protection against
dismissal or notice of dismissal as other workers who are prevented from working
for health reasons. 2
7. WQMEN.NIGHT WORKERS; ALTERNATIVE MEASURES TO
NIGHT WORK FOR PREGNANT AND NURSING EMPLOYEES.
Employers shall ensure that measures shall be undertaken to provide an
alternative to night work for pregnant ai:id nursing employees who would othetwise
be called upon to perform such work. Such measures may include the transfer to
day work, where it is possible, as well as the provision of social security benefits
or an extension of maternity leave.
(a) Transfer to day work. - As far as practicable, pregnant or nursing
employees shall be assigned to day work, before and after childbirth for a period of
at least sixteen (16) weeks which shall be divided between the time before and after
childbirth.
1 Sectioo4, Id. Article 156, Id.
2 Sectioo 5, Id. Arlide 157, Id.
254 BAR REvlEWER ON I.ABOR I.AW
. Medical certificate issued by competent physician (i.e., Obstetrician/
Gynecologist, Pediatrician, etc.) is necessaxy for the grant of.
i. additional periods of assignment to day work during pregnancy or
after childbirth other than the period mentioned in the foregoing
paragraph, provided that the length of additional period should not be
more than four (4) weeks or for a longer period as may be agreed
upon by the employer and the worker;
ii. extension of maternity leave; and
iii. clearance to render night work. ..
(b) Provision of social security benefits. - Social security benefits, such
as paid matemity leave shall be provided to women workers in accordance with the
provisions of R.A. No. 8282 (Social Security Act of 1997) and other existing
company policy or CBA. . · establishment and its personnei as well as on the occupational health measures and
(c) Extension of maternity leave. - Where transfer to day work is not
possible, a woman employee may be allowed to extend, as recommended by a
competent physician, her maternity leave without pay or using earned leave credits
of the worker, if any. 1
8. NON-DIMINUTION OF MATERNITY LEAVE BENEFITS UNDER ·
EXISTING LAWS.
'The law and its rules shall not be construed to authorize diminution or
I
reduction of the protection and benefits connected with maternity leave under
existing law.2
9. PROTECTION AGAINST DISMISSAL AND LOSS OF BENEFITS
l
ATTACHED TO EMPLOYMENT STATUS, SENIORITY AND
ACCESS TO PROMOTION.
Where no alternative work can be provided to a woman employee who is
not in a position to render night work, she shall be allowed to go on leave or on
extended maternity leave, using her earned leave credits.
I 6.
A woman employee shall not be dismissed for reasons of pregnancy, f l DEFINITIONS.
childbirth and childcare responsibilities. She shall not lose the benefits J
reguding her employment status, seniority, and access to promotion which may
attach to her regular night work position.3
l
10. COMPENSATION.
The compensation for night workers in the fonn of working time, pay or
similar benefits shall recognize the exceptional nature of night work. 4
1 Sec1m 6, kl. Md3 158, kl.
2 Sec1m 7, Id. Mge 158, Id.
3 Seclm8, ld,Mge 158, kl.
4 Al1k:le 159, Id.
CHAITTR THREE
IABOR STANDARDS 255
Consequently, such compensation shall include, but not be limited to,
working time, pay and benefits under the Labor Code, as amended and under
existing laws, such as service incentive leave, rest day, night differential pay,
13th month pay, and other benefits as 'provided for by law, company policy or
CBA.1
11. SOCIAL SERVICES.
Appropriate social services shall be provided for night workers and, :where
necessary, for wo~ers performing night work.2
12. NIGHT WORK SCHEDULES.
The employer shall at its own initiative, consult the recognized wotkets'
representatives or union in the est2blishment on the details of the night work
schedules and the fonns of organization of night work that are best adapted to the
social services which are required.
In establishments employing night workers, consultation shall take place
regularly and appropriate changes of wotk schedule shall be agreed upon before it
is implemented.l
SPECIAL WORKERS
In the Labor Code, there are three (3) groups that are considered "ipeaal
JJJOrkm" under Title II, Book II thereof, namely:
a) Apprentices - covered by Articles 57 to 72:,
b) Leamers-covered by Articles 73 to 77; and
c) Handicapped workers - covered by Articles 78 to 81.
Following is a discussion of these groups of workers as prescribed in the
Syllabur.
APPRENTICES AND LEARNERS
a. Apprenticeship-related tenns.
''Apprentimhip" means practical training on. the job supplemented by
related theoretical instructions involving apprenticeable occupations and trades as
may be approved by the DOLE Secretary.4 It is a training within employment with
compulsory related theoretical instructions involving a contract between an
1 Sedion 9, Id.
2 Mde 11i0, k1
3 Sedioo 10, Id. Mk:1e 161, Id.
4 Article 58 (a), Lab«Code; Sedioo 2, ~ VI, Bock 11, ~ ID lmpmmtlhe LmQxle.
 &AR. REVIEWER. ON IAIO R IAW CHAl'TER THREE 257
lABOR STANDARDS
apprentice and an employer or an enterprise on an approved apprenticeable ''I..tarnmhip agrtemenl" tefers to the employment and training contract
occupation. 1 c;ntered into between the employer and the leamer.1
An ''apprentice" is a worker who is covered by a written apprenticeship 2. DISTINCTIONS BETWEEN LEARNERSHIP AND
agreement with an individual employer or any of the entities recognized under.the APPRENTICESHIP.
law.2 He is a person undergoing training for an approved apprcoticeable occupation
during an established period and covered by an apprenticeship agreement3 The following are the distinctions:

An ''apprenliaabk ompalion" means any trade, foan of employment or Criteria

Practical tralnln
occupation approved for apprenticeship by the DOLE Secretary, which requires Tralnln , reement
for proficiency, more than three (3) months of p~ctical training on the job Leamable occupaoons consisting of
supplemented by related theoretical instructions.4 It is an occupation officially Occupation. selli-slci/led and other industrial
endorsed by a tripartite body ;ind approved for apprenticeship by TESDA.5 occupations whkh are non-
a ticeab!e
An ''apprentimhip "!,retmtnl" is an employment contract wherein the Theoretical May or may not be supplemented
employer binds himself to tNin the apprentice and the apprentice in tum accepts lns.tructions related theoretical instructions
the terms of the training and agrees to work for the employer' for a recognized Ratio of theoretical Normal ratio is 100 hours of
Instructions and on- theoretical instructions for every
apprenticeable occupation, emphasizing the rights, duties and responsibilities of
lhe-job trainfngl 2,000 hours of practical or on-lhe-
each party.7 . bIra .
Duration of training Practical training on the job for a Pradlcal training on the job ol more
b. Leamership-rel:ued terms. period not exceeding three (J) than three (3) months but not over
''Ltarnmhip" refers to any practical training on learnablc occupation which months six 6 monlhs3
Cltcumstances No similar provision in the Labor Code
may or may not be suppleme:ited by related theoretical instructions.8 Justifying hiring of Article 74 of the Labor Code,
trainees expressly prescooes 1he pre-
''Learner" refers to a person hired as a trainee in semi-skilled and other requisites before learners may be
industrial occupations which are non-apprenticeable and which may be learned validly e~loyed, to wit.
through practical training on the job for a period not exceeding three (3) months, (a) When no experienced workers
whether or not such practical training is supplemented by theoretical instructions.9 are available;
(b) The employment or learners is
necessary to prevent
au1a&nenl of emptoyirent
oppor1unities; and
(c) The ~ t does not
1 5ml 4 Ii}. RA No. 7796; 5ml 1, ~ X, FUs ~ R8pa6:J1s ~ Ile TESOA kt d 1994; l.eilEJ 8(1), aeale lllfair COIJl)elilioo in
llepamrt Qdf.r No. 68-04, Series d.<Xl4; No.2. TESOA Ciaa No. 16, Seriesd 2004. temis of labor costs or •
1
Mi:le 58 lbi Labtr Cede, refemg b ~ I, Tile Dd 8cxi Id Ile Labtr Code; $mi 2, RIJe VI, !kd 11, IUlS ti or lower · · standards.'
~ l h e LabtrCode. A partq>ating enterprise is allowed No similar cap
3 5ml 4[ki RA No. 7796;Sedm 1,RlJe X, fUs in! R8pa6:J1s ~ l1e lESOAktd1994;l.ell!JB(2),
Limitation on the
number of trainees to take in learners only up to a
llepmertQdf.r No.68-04, Seriesd2004; No.2. lESOA Ciaa No. 16, Seriesct 2004, da!ef AIJJ.12, 2004. maxirlllm of t.venty percent (20%)
Mi:le 58 lcl. Labtr Code; Seam 2, !bl VI, 8cxi Q, fUs ti ~ Ile LalxrCode.
Sedm4 H, RA No. 7796; 5ml 1. ~ X. ~ in! Rfgwm ~ Ile TESOAM.d 1994; Letter B(4), of its total ularwofidorces
llepmen\Qtfe.-t-b.68-04, Series d !004; No. 2. TESOA CmlliY No. 16, Seriesd 2004.
Mi:le sa ~ La1xrCode; Seam 2, RiJe vt. Boat nIhm. .
5ml 4 J]. RA No. 7796; 5ml 1, R!Je X, fUs ~ Rfguabls n'C)lenlenli',g Die TESD-\ M. ct 1994; Lelllaf 8(3),
0epcm,ent Onler No. 68-04, Series d 2004; No.2.TESOA Citua' No.16, Series ct 2004.
1
No. 2, TESOA Oras No. 16, Series d 2004, daled hlg. 12, 2004 (Re.ised Gooelnes ii the ~lion d
~ ~ L ~ Progrcms). • 1 5ml 1lb1 ~Vil Boat (!,Rules ti ~tel.lllxrCode.
1 5ml 4 (nl RA No. 7796; Sml 1, Rule X. ~ clld Rfgl.laoons knpenetmJ Die TESOA kt d 1994; (No. 2, • Secb128, ~ ',\ BCllk I. Iii
TESOA Ciru1ar No. 16, ~ d 200l, dated hlg. 12, 2004 IRe'lised Gmel'nes ii Ile in1>1ementation o1 App-enoceship 1 oo..ECiuu'llb.2.SIJ'esolmi, jA,rErdilgC.atlil Pli,,w,so1~01iiJllb.63-04}WldOIAL9,l\1 II. 200i bf bm.-00-E
and L ~ ProgllWT6); 5ml 1(a), Rule VII, Book II, lESOA Cituw No. 16, Series d 2004, dated hlg. 12, 2004 ~(r'Ol(Aslo::iall.lusbdhl$upl,ne~MJ1l0.&nt
• SceuiSecfal 2. ~Vil lblk I. Rues b"l)lmm\tel/to'Cllde.
!Revised~ ilfle~lloo d ~~l..eanershp ~ I- I flb.l7,llid.
 BAR REVIEWER ON I.ABOR I.AW CHAPTER THREE 259
IABORSTANDAROS

Option to employ The enlelJ)rise is obliged to hire The enterprise is given only an (1) All persons under eighteen (18) years of age shall be considered as a
the learner after the lapse of the "option" to hire tl1e apprentice as an "child"; and
leamershio oeriod emnlnvee.1
(2) Children below fifteen (15) years of age shall not be employed excrpt
Wage rate Seventy-fJle percent (75%) ol the Seventy-live percent (75%) ol the
stalulo1Y minimum w:ine.3
if he/she falls under any of the exceptions1 mentioned and
statulol'I minimum waae.2
Qualifications No qualifications expressly enumerated in the law. 2
Article 59 of the Labor Code requires
me1tioned in the law the apprentice: Apprenticeship is not one of the exceptions, therefore, this prohibition on
(a) Be at least fourteen (14) years employing an apprentice below the age of fifteen (15) years applies to apprentices.
ofage; Consequently, the proper age qualification is fifteen (15) y('ars but not because of
(b} Possess vocational aptitude and
the Impkmenling RHkl provision as mentioned above but by reason of R.A. No.
capacity for appropriate tests;
and 9231.
(c) Possess the ability to
comprehend and follow oral and 7.
written instructions. PERSONS WITH DISABILITIES
1. LEGAL BASIS.
3. CONFLICT IN THE AGE REQUIREMENT FOR APPRENTICES, Prior to the advent of R.A. No. 7277,3 otherwise known as the "Magna
HOW RESOLVED. Carta far Disabled Persons," the relevant provisions arc found in the Labor Code on
While the age presc:ibed for apprentices under Article 59 is 14 years of handicapped workers, namely: Articles 78 to 81 thereof. R.A. No. 7277 is now
age, however, the Imp!tmenling RH/ts provided the following age requirement, lo wit. th~ prevailing law. Subsequently, however, R.A. No. 94424 was enacted for
Be at least fifteen (15) years of age, provided those who are at least fifteen (15) purposes, inur alia, of changing the title of R.A. No. 7277 to read as the "Magna
years of age but less than eighteen (18) may be eligible for apprenticeship only in Carla far PersonI with Disabili!J," and all references in the said law to ''diJabkd per.ton"
non-hazardous occupations.4 · were likewise amended to read as "per.ton with disability" or "PWD." The term
"handitapped 1119rkm" therefore should no longer be used to describe persons with
Notably, there is a difference in the age requirement between the 14:year
disability as this is no longer legally correct
old prescribed in the law and the 15-yt:ar old enunciated in the lmplmtenting RH/es.
Generally, the well-settled r.tle of legal hermeneutics dictates that if there is a
conflict between the law and its implementing rule or regulation, the provision of
the former should prevail o,·er the latter. The implementing rule cannot certainly
operate to amend the law. Consequently, the minimum age requirement should 1 TheexCll!)tioos,as eroneraled il Sedioo 12 of RA No. 7610,as amended by Sedioo 2of RA No. 9231 are as kj]ows:
(1) Wien a chld v«rts dm:tlf lllda- tie sole responsibE!f a~ pa-ents or leg~ gllilllal and~ ootf merrbers of
have been fourteen (14) years of age except for the fact that the age requirement in tt,re- la1if are etll)k7fed: F'l'oYi!ed, rowever, That h&ilef ~ n e i t h e r ~ tGller lfe, safety, heafl. clld
the said Impkmenting Ruks is based on and more congruent with latest legislation, rraas, na ~ hisA1er ran-a development F'l'oYi!ed, flmer, Thal lhe PiJer( or ega guaim shal prO'li:le lhe sail
more particularly, the 2003 law, RA. No. 9231,5 where it is provided that: cli! will toe p-escrbed prinaJy iro'a secondary edocailn; or
(2) 'Mlere a dlld's ~ I or partqla!ioo in public enlertanrelt or infomla6oo lhrough cilema, lheale', radi:>,
televism oroUJer kxms ofmeoa is essrial: F'l'oYi!ed, That the ~ tcootract is cmcilded by lhe cl'ifs parents or
e:ia guarda\ with t i e ~ ~ atoe did coocemed,, posst,1e. aoo lhe <W'M rJ lhe 0epmem of Labor
' SeeNo.3.100111:SOAC,rulil'No. 16, Seie$012004 and oa.E c-tulil' No. 2. Scriesof 2006.
a i d ~ Proli!oo, uh!r, Tlaflei:lbwY,l ~ in al ils1ancesare ~coo'Qled v.ilh:
1 Seclon 29, Rui! VI, Boo< I, ti!; Seclon !., ReptAic Pd No. 661,0, Setbl 10, ~ ~ RA No. ~ Secb'I 10, ~ (a) The err,,>k7,-e' sflal ensue lhe proledioo, heath, safiefy, rraals cnl noona develqxnenl r:J lhe chtl:aalaw
~ RA t«J. fiT'D;tb. IJHl oa£ Hadxxi t11 Vb\'as Sla\JtJy t,tmry Bereits; No.18.. TESOACi0"1 No. 16. SE,esa (b) The empbfer shal ilsttute measues kl fX-evenl te cti:l's ~ or discrini'latm laiiY,j ilo ao:ounl lhe system
:i!ll4,W.4li\JISI 12, 2004 ~QJoeresnte~a~andl.eaTEr.tiJ)Pn)Jm. and 1e.-e1 ct renuieratm, m lhe dt.valxJ1 a n d ~ of v.m:rg tine: an<1
1 Seclon 29, Rull.VI, Book II, bl; Seclon 5, ~ c kt No. 66<0; Secbl 10, ~ ~ R A t«J. 66<0; Secbl 10, ~ (c) The errpoyer shal bnlJlate and ill>lemenl Slilject kl lhe aplXl)'lill and ~ ct axnpelent auflaities, a
~ RA No. 67'l/; No. IJH1. DOLE HadJcol< on Wcrl<ln SCa\Jby f.4one+-JY ll<rett; No. l8., TESOA c.oJar No. 16, SEries d roo1n1ilg program b' tranilg cnl skils acquisilion a tie chlkf.
2004,WAi.g.,st 12.2004~Gooelres~ tie ~ o ! ~ a n d ~ l ' l l l ! J a ' r 5. n the alxMl ~ cases v,t,era arry such chlkf may be ~loyed, lhe employet shaHfil.t secure. before engagilg
• ThedJlef 3r~l'lare:(1)Be ph:tsi:atyr.fo-tieoo:upa!i:Jl il lltii:hhe desi'es obe rane:l; (2) Possessvocational
such chld, a ~ perri Iran lhe Oepa,tnent a Laba cnl ~ 1 Yo!ld1 sMt enslKl! ooseiv.n:e a tie iilove
~ cm ~ b' lhe pm.b' OCOJpalXl1 as eslabished ltYWJh appropria!e ESts; cnl (3) Possess the 'Nltf kl
~ls.
~andlobYaalaldwril!fll ~ 2 Mi:1e 59, Labor Qxle; Sedxxi 11, FM! VI. Book II, Rules o mplemGll toe Lallo< Code
1 Eni1led 'AN ACT PROVOl'IG FOR lr.E ELIMINATION OF THE WORST FORMS OF CHILD LABOR AND AFFORDING
l AwMd Oil Madi 24, 1992.
STRONGER PROTECTION FOR THEWORKING CHILD, AMENDING FOR THIS PURPOSE REPUBLIC ACT NO. 7610,
Af', AMENDED. OTHERWISE KNO'v\tl Af', THE 'SPECIAi. PROTECTION OF CHILDREN AGAINST CHILO ABUSE,
E>:PI.OITATION AND OISCRIMINATION ACT appn:,,,ed oo Decenter 19, 2003. • as'pefronswll clsdtt-'
=~·
' See Sedon4 t,e,eol. lhis la,ybecan, eflecMm Aj,i Xl. 2007. Sedon 4 stries:"&C ' Tl-e 11:iecl RA. No. 72n is here!7/ amnlod b
read as tie 'Magla Cir1a llr l'6'S0ns v,;)11 OisabiiV, and alremnces on te !.ail lawn "tisatlld shal i:ev.ise t:e a-nerded b read

-I
f.l..l.i.

260 BA;t ltEVIEWER ON LABOR I.AW
2. DEPTNITION OF IMPORTANT TERMS.
The following terms are specifically defined in the law:
1. "Persons with Disabilify" are those suffering from restriction or different
abilities, as a result of a mental, physical or sensory impairment, to
perform an activity in the manner or within the range considered
normal for a huma.-i being.
2. '1mpairment" refers to any loss, diminution or aberration of
psychological, physiological, or anatomical structure or function.
3. ''Disabilify" means (1) a physical or mental impairment that
substantially limits one or more psychological, physiological or
anatomical functions of an individual or activities of such individua~
(2) a record of such an impairment; or (3) being regarded as having
such an impairment.
4. ''Handicap" refers to a disadvantage for a given individual, resulting
from an impairment or a disability that limits or prevents the function
or activity that is considered normal given the age and ·sex of the
individual.
5. ''MarlJnalized Perrons with.Disabilify" refer to persons with disability who
lack access to rehabilitative services and opportunities to be able to
participate fully in socio-economic activities and who have no means of
livelihood and whose incomes fall below the poverty threshold.
3. EQUAL OPPORTUNITI' FOR EMPLOYMENT.
Under the law,1 PWDs are entitled to equal opportunity for employment.
Consequently, no PWD shall be denied access to opportunities for suitable
employment. A qualified employee with disability shall be subject to the same terms
and conditions of employment and the same compensation, privileges, benefits,
fringe benefits, incentives or allowances as a qualified able-bodied person.
Five percent (5%) of all casual emergency and contractual positions in the
Departments of Social Welfare and Development, Health, Education and other
government agencies, offices or corporations engaged in social development shall
be reserved for PWDs.2
4. PWDs ARE ELIGIBLE FOR APPRENTICESHIP AND
LEARNER.SHIP.
Under R.A. No. 7277,3 it
is provided that subject to the provisions of the
Labor Code, as amended, PWDs shall be eligible as apprentices, or learners;
• lblerRA No. rm,otletwiselnowtas f>e'\livlaCa'airOisabled~·roiflircMII as"MaglaCalatrl'us:nswlllJisabiV.
1 Secb15,O,aplJ 1, 1lle a,RAlh 7217.
l Secb, 7, ~ I, Ti68 I tmof.
CHArTER THREE 261
LABOR STANDARDS
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
and provided further that after the lapse of the period of apprenticeship, if found
satisfactory in the job performance, they shall be eligible for employment.
5. WAGE RATE.
Und~r Article 80 of the Labor Code, handicapped workers are entitled to
not less than seventy-five percent (75%) of the applicable adjusted minimum wage. I
In view, however, of R.A. No. 7277,t the wage rate of PWDs is 100% of the
applicable minimum wage.
Wage orders issued by the Regional Tripartite Wages and Productivity
Boards (R1WPBs) nonnally reflect this principle. To cite an example, Section 7 of
Wage Order No. NCR-20, which was approved on May 17, 20163 by the
R1WPB-National Capital Region, states:
"All qualified handicapped workers shall receive the full amount of the
minimum wage rate prescribed herein pursuant to Republic Act No. 7277,
otherwise known as the Magna Cartafar DiJabkd Pmons."4
Moreover, in case of legally-mandated wage increases enunciated in wage
orders issued by the R1WPBs, the employment agreements with persons with
disability are deemed automatically modified insofar as their wage clauses are
concerned to reflect the said increases.5
6. WAGE RATE AS APPRENTICE OR LEARNER
A PWD hired as an apprentice or learner shall be paid not less than
seventy-five percent (75%) of the applicable minimum wage.
If the PWD, however, is hired as a lea~er and employed in piece or
incentive-rate jobs during the training period, he shall be paid one hundred percent
(100%) of the applicable minimum wage.
a.
DISCRIMINATION
1. DISCRIMINATION ON EMPLOYMENT PROHIBITED.
No entity, whether public or private, shall discriminate against a qualified
PWD by reason of disability in regard to job application procedures, the hiring,
r
'l
J
'
.
 BAR R£VIEWER ON WOR lAW CHAITTR THREE
IABORSTANDARDS

promotion, or discharge of employees, employee compensation, job training, and b.

other terms, conditions and privileges of employment The following constitute INCENTIVES FOR EMPLOYERS
acts of discrimination: ·
1. INCENTIVES FOR EMPLOYERS WHO EMPLOY PWDs.
(a) Limiting, segregating or classifying a job applicant with disability in
such a manner that adversely affects his work opportunities; To encourage the active participation of the private sector in promoting
(b) Using qualification standards, employment tests or other selection the welfare of PWDs and to ensure gainful employment for qualified persons with
criteria that screen out or tend to screen out a PWD unless such disability, adequate incentives shall be provided to private entities which employ
standards, tests or other selection criteria are shown to be job-related PWDs. 1
for the position in question and are consistent with business Private entities that employ PWDs who meet the requited skills or
necessity; qualifications, either as a regular employee, apprentice or learner, shall be entitled to
(c) Utilizing standards, criteria, or methods of administration that an additional deduction from their gross income equivalent to twenty-five percent
(1) have the effect of discrimination on the basis of disability; or (25%) of the total amount paid as salaries and wages to persons with disability;
(2) perpetuate the discrimination of others who are subject to provided, however, that such entities could present proof as certified by the
common administrative control. Department of Labor and Employment (DOLE) that PWDs are under their
employ and provided further that the employee with disability is accredited with the
(d) Providing less compensation, such as salary, wage or other forms of
DOLE and the Department of Health as to his disability, skills and qualifications.2
remuneration and fringe benefits, to a qualified employee with
disability, by reason of his disability, than the amount to which a non- Private entities that improve or modify their physical facilities in order to
disabled person performing the same work is entitled~ provide reasonable accommodation for PWDs shall also be entitled to an
(e) Favoring a non-disabled employee over a qualified employee with additional deduction .from their net taxable income equivalent to fifty percent
disability with respect to promotion, training opportunities, and study (50%) of the direct costs of the improvements or modifications.3
and scholarship grants solely on account of the latter's disability;
(ij Re-assigning or transferring an employee with a disability to a job or
position he cannot perform by reason of his disability;
(g) Dismissing or terminating the services of an employee with disability ----oOo----
by reason of his disability unless the employer can prove that he
impaits the satisfactoiy performance of the work involved to the
prejudice of the business entity; provided, however, that the
employer first sought to provide reasonable accommodations for
pmons with disability;
(h) Failing to select or administer in the most effective manner
employment tests which accmately ceflect the skills, aptitude or other
factor of the applicmt or employee with disability that such tests
puq,orts to measure, rather than the impaired sensory, manual or
speaking skills of such applicant or employee, if any; and
© · Excluding PWD from membership in labor unions or similar
organizations.1

1 SediCl18(aL ~ 1.T~ u, 1bit

2 Sec&n8lbL QiapfiJ 1, Tile o. •
3 lltSed'm,toMMY,doesldaw,ID~ornDfbtionsdfacfltiesreqiied IJlderBalasPamlnsaBlq
344 lFelxualy 25. 1983). rilled "M NJ b Emn:e Ole MJb&/ of Disabled Pau6 by ReQumd Cooai1 Ufirvs,
nslMons, Es1aJlshrnens,nl Poot U!illes to mtal Fdes nl OhrOew:es." (Seam 8{cl. ~ 1. T6? II, lbi1.).
 CliAl'TER FOUR 265
SOCIAL WELFAIU: LEGISLATION

Chapter Four This topic therefore will be discussed in accordance with R.A. No. 11199.

SOCIAL WELFARE LEGISLATION 1.

COVERAGE AND EXCLUSIONS
a.
COVERAGE
TOPICS PER SYLLABUS
1. COMPULSORY COVERAGE.

Coverage in the SSS shall be compulsory upon all employees, including

IV. kasa111bahay or domestic workers not over sixty (60) years of age and their
employers.1
SOCIAL WELFARE LEGISLATION
"E,nphyer" is any person, natural or juridical, domestic or foreign, who
A. SSS Law (R.A. 8282) carries on in the Philippines any trade, business, industry, undertaking, or activity of
1. Coverage and exclusions any kind and uses the services of another person who is under his orders as regards
2. Dependents and beneficiaries the employment, except the government and any of its political subdivisions,
3. Benefits branches or instrumentalities, including corporations owned or controlled by the
Govemment Proviikd, That a self-employed person shall be both employee and
B. GSIS Law (R.A. 8291) employer at the same time.2
1. Coverage and exclusions ''Employ," is any person who perfoans services for an employer in which
2. Dependents and beneficiaries either or both mental or physical efforts are used and who receives compensation
3. Benefits for such services, where there is an employer-employee relationship: Provided, That
a self-employed person shall be both employee and employer at the same time.3
C. Disability and death benefits
1. Labor Code 2. COMPULSORY COVERAGE OF SELF-EMPLOYED PERSONS.
2. POEA-Standard Employment Contract Coverage in the SSS shall also be compulsory upon such self-employed
persons as may be determined by the Commission under such rules and regulations
as it may prescribe, including, but not limited to, the following:
A. (a) All self-employed professionals;
SSSLAW (b) Partners and single proprietors of businesses;
(c) Actors and actresses, directors, scriptwriters and news correspondents
1. R.A. 8282, REPEALED BY R.A. 11199.
who do not fall within the definition of the term "emphJ•tt" (s11pra);
The 2019 Labor La;v Syllabus still prescribed R.A. No. 8282 as the (d) Professional athletes, coaches, trainers and jockeys; and
reference for the discussion of the SSS Law. However, on February 07, 2019, (e) Individual farmers and fishermen.4
President Du1erte approved R.A. No. 11199,1 otherwise known as the "Soda/
Unless otherwise specified in the law, all provisions thereof applicable to
StrorirJ Act of2018, "which exp:essly repealcd2 R.A. No. 8282.
covered employees shall also be applicable to the covered self-employed persons. 1

t
1
RA. No. 11199 is enWed ·AN ACT RATICNALIZJNG AND EXPANDING lHE POWERS AND DUTIES OF THE SOCIAL are hereby repeaed, ITm!ied or Mle!lded aaoof~lf. Pwlicled. That no pesson shal be deemed kl be vested v.iti iJfl'f
SECURITY COM.IISSION TO ENSURE lHE LONG-TERM VIABUTY Of 1HE SOCIAL SECURITY SYSTEM, piqierty 01 olher rijhl by wtJe of tie ena::tmenl OI operatial cl this NJ..'
REPEALING FOO THE PURPOSE REPUBUC ACT NO. 1161, AS AM:1-,t'ED BY REP\Jll.lC ACT NO. 8282, • Sedm9(a),RANo.11199.
OTHER\'IISE KNOWN AS THE'SOCIAi. SECURITY ACT Of 1997." 1 Sedm 8(c), kf.
1
RA No. 11199 ent,oo,es the foloYkg prtllisioo: "SEC. 33. RepeairrJ Clxsse. • Rep(blc />D. No. 1161 .m Repub1c M l Setw:18(C), kf.
No 8282 ~ a'1 otier l.rh'.i. pnxm,ams exeaJtive crders, rules ~ regualxns or pats tiered ncxnsislert Wi1h hs M • Sedm 9-A, Id.

_t
266 BAR REVIEWER ON lABOll lAW CHAPTER fOUR
SOCIAL WELFARE LEGISLATION
''S1!f-mphy1d is any person whose income is not derived from
11
case, these land-based OFWs shall no longer be considered in the same manner as
employment as defined wider this Act, as well as those workers enumerated self-employed persons. Instead. they shall be consideted as compulsorily covered
above. 2 employees with employei and employee shares in contributions that shall be
provided for in the bilateral labor agreements and their implementing
3. COMPULSORY COVERAGE OF OFWs.
adminismtive agreements: Prollitkd, That in countries which already extend social
s. Coverage ofall OFWs. security coveage to OFWs, the DFA through the Philippine embassies and the
. DOLE shall negotiate -further agreements to serve the best interests of the OFWs. l
Coverage in the SSS shall be compulsory upon all sea-based and land-
based OFWs,3 Pro,idld, That they are not ovet sixty (60) years of age.4 The DFA, the DOLE and, the SSS shall ensure compulsory coverage of
...
OFWs through b.ilatenl social security and labor agreements and other measures
All benefit provisions under this Act shall apply to all covered OFWs. The for enforcement1
benefits include, among others, retirement, death, disability, funeral, sickness and
matemity.5 4. VOLUNTARY COVERAGE.
b. Sea~based OFWs. . In addition to the foregoing OFWs who are eligible for voluntary
coverage, the following may be cited~
Manning agencies are agents of their principals and are considered as
employers of sea-based OFWs. 1) Non-working spouses o[SSS members
For purposes of the implementation of R.A. No. 11199, any law to the Spouses who devote full time to managing the household and family
contruy notwithstanding manning agencies are jointly and severally or solidarily ~ unl~s they are also engaged in othei vocation or employment
liable with their principals with respect to the civil liabilities incuned for any which is subject to mandatorv coverage, may be covered by the SSS
violation thereof. on a voluntary basis. 3
The persons having direct controi management or clirection of the
manning agencies shall be held criminally liable for any act or omission penalized
wider R.A. No. 11199 notwithstanding Section 28(ij thereof.6 Upo·n the termination of their employment overseas, OFWs may
continue to pay contributions on a voluntary basis to maintain their
c. Land-based OFWs. rights to full benefits.4
Land-based OFWs are compulsory members of the SSS and considered in 3) Filipino permanent migtants, including Filipino immigrants,
the same manner as self-employed persons wider such rules and regulations that permanent residents and naturalized citizens of their host
the Commission shall prescribe.7 countries
The Department of Foreign A£fairs {DFA), the Department of Labor and Filipino peananent migrants, including Filipino immigrants,
Employment (DOLE) and all its agencies involved in deploying OFWs for pennanent residents and naturalized citizens of their host countries
employment abroad are mandated to negotiate bilateral labor agreements with the may be covered by the SSS on a voluntary basis. 5
OFWs' host countries to cnsme that the employers of land-based OFWs, similar to
5. EFFECTIVE DATE OF COVERAGE. .
the principals of sea-based OFWs, pay the required SSS contributions, in which
The effectivity date of the compulsory coverage are as follow:
' kl
2
1) For employer - Compulsory coverage of the employer shall take
Sedm 8(s), Id. effect on the first day of his operation.•
3 ~ Olis tmn "OfW' sdefiled imer RA No. 8042. olhetwise kraMl as Ule t/qallt waters and Ovelseas Fq>ms M. of
1995, as anmded by RA No. 10022;
c Sedicn9-8(a),RANo.11199.
5 Id. 1 Sedicn 9-8 (d), Id.
1 Sec.fXXl 9-8 {b~ RA No. 11199; Sedxlrl 28(1) 51ales: SEC. 28. Pena Calse.-m (f) If Ile Id er anssioo pena1zed by 2 Sedixl9-B(e),ld.
!his Pd. b e ~ by an as.,ociatioo. pame,shil, COIJ)C)lcl&lrl 01' ~ ilslmtion, b managilg head. dims or, ' Sedkln S(b), Id.
pnasshal be lallleblle pena'llesprr,Jded ii dl&ki ir~cffense: • Sedicn 9-8 (I). Id.
1 Sedion9-8(c),RANo.11199. 5 Sedicn 9-8 (g), Id.

_I
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 BAR REVIEWl:R ON IABOR I.AW
268
2) For employee - Compulsory coverage of the employee sball take
effect on the first day of his employment2 • accordance with. existing labor laws, rules, regulations and
3) For self-employed - The compulsory coverage of the self-employed
person shall take effect upon his registration with the SSS.3
6. EFFECT OF SEPARATION FROM EMPLOYMENT.
When an employee under compu~socy coverage ~s se~a~ted from
employment, his employer's contribution on his account and his obligatton to pay
contributions arising from that employment shall cease at the end of the month of
sepmtion but said employee shall be credited with all contributions paid on his
behalf and entitled to benefits according to the provisions of R.A. No. 11199. He
may, however, continue to pay the total contributions to maintain his right to full
benefit4
7. EFFECT OF INTERRUPTION OF BUSINESS OR PROFESSIONAL
INCOME.
If the self-employed member realizes no income in any given month, he
shall not be required to pay contributions for that month. He may, howeve~ be
allowed to continue paying contributions under the same rules and_ regulations
applicable to a separated employee member: Prouided, !hat no retroac?ve payment
of contributions shall be allowed other than as prescnbed under Section 22-A5 of
R.A. No. 11199.6
b.
EXCLUSIONS
1. EXCLUDED EMPLOYER.
Government and any of its political subdivisions, branches or
instrumentalities, including corporations owned or controlled by the Goveroment7
with original charters.
2. EXCLUDED EMPLOYEES.
Workets whose employment or service falls under any of the following
circwnstances are not coveted:
CHAmR FOUR 269
SOCIAL WUFARE LEGISLATION
(1) Services where there is no employer-employee relationship in
jurisprudence;
(2) Service performed in the employ of the Philippine Government or
instrumentality or agency thereof,
(3) Service performed in the employ of a foreign govemmcnt or
international organization, or their wholly-owned instrumentality:
Pro,ided, however, That this exemption notwithstanding, any foreign
govemment, international organization or their wholly-owned
instrumentality employing workets in the Philippines or employing
Filipinos outside of the Philippines, may enter into an agreement with
the Philippine Govemment for the inclusion of such employees in the
SSS except those already covered by their respective civil service
retirement systems: Provitkd, further, That the terms of such agreement
shall conform with the provisions of R.A. No. t 1199 on coverage and
amount of payment of contributions and benefits: Provided,final!J, That
the provisions of this Act shall be supplementary to any such
agreement and
(4) Such other services performed by temporary and other employees
which m~y be excluded by regulation of die Commission. Employees
of bona fide independent contractors shall not hr deemed employees of
the employer engaging the service of said contractors.•
2.
DEPENDENTS AND BENEFICIARIES
a.
DEPENDENTS
l WHO ARE DEPENDENTS.
The dependents shall be the following:
(1) The legal spouse entitled by law to receive support from the member;
(2) The legitimate, legitimated or legally adopted. and illegitimate child
who is unmarried, not gainfully employed, and has not reached
twenty-one (21) years of age, or if over twenty-one (21) years of age,
he is congenitally or while still a minor has been permanently
incapacitated and incapable of self-support, physically or mentally: and
(3) The parent who is receiving regular support from the member. 2
Sedioo8(j),ld.
Sedioo 8(e), Id.
 BAR REVIEWER ON {!-BOR I.AW CHAPTER FOUR
270
SOCIAL WELFARE LEGISLATION

b. a.
BENEFICIARIES SOCIAL SECURITY BENEFITS
t. PRIMARY BENEFICIARIES. 1.
SICKNESS BENEFIT
The following are primary beneficiaries:
1. WHO MAY AVAIL.
t. The dependent spouse until he or she remanies;
The sickness benefit is a daily cash allowance paid fot the number of days
2. The dependent legitimate, legitimated or ~egally adopted, and a member is unable to wock due to ~ or ~ This benefit may be availed
illegitimate children; .. of as follows:
The dependent illegitimate children shall be entitled to ~ ~f the A member who has paid at least duce (3) monthly contributions in the
share of the legitimate, legitimated or legally. ~dopted ~d.ten. 12-month period immediately preceding the semestei: of sickness or injury and is
However, in the absenee of the dependent legtt:tmate, legitimated confined therefor for more than thtee (3) days in a hospital or elsewhei:e with the
children of the member, his/her dependent filegitimate childten approval of the SSS, shall, for each day of compensable confinement or a fraction
shall be entitled to 100% of the benefits 1 thereof, be paid by his employer, or the SSS, if such person is unemployed or self-
2. SECONDARY BENEFICIARIES. employed, a daily siclmess benefit equivalent to ninety percent (90%) of his
average daily salagy credit,1 subject to the following conditions:
The following are secondary beneficiaries:
(1) In no case shall the daily sickness benefit be paid longer than one
1. The dependent parents, in the absence of the primary beneficiaries. hundred twenty (120) days in one (1) calendar year, nor shall any
2. An; other person designated by the mem~er as _his/her seco~~ unused portion of the one hundred twenty (120) days of sickness
benefit granted Wldei: this section be cmied fo.rward and added to ·the
benefici.-u:y, in the absence of all the foi:egoing pnmaiy benefiaanes
and dependent parents.2 total number of compensable days allowable in the subsequent year;
(2) The daily sickness benefit shall not be paid for more than two hundred
3. forty (240) days on account of the same confinement; and
BENEFITS
(3) The employee membei: shall notify his employer of the fact of his
1. TWO (2) MAIN CLASSIFICATIONS. sickness or injury within five (5) calendar days after the start of his
confinement unless such confinement is in a hospital or the employee
The SSS benefits may be classified as follows:
became sick or was injured while working or within the premises of
(a) Social security benefits: the employer, in which case, notification to the employer is not
necessary: Provided,- That if the member is unemployed or self-
1) Sickness
ernployed, be shall directly notify the SSS of his confinement within
2) Matemity Leave
five (5) calendar days after the start thereof unless such confinement is
3) Retirement in a hospital, in which case, notification is also not necessary: Provided,
4) Unemployment Insurance or lnvoluntaiy Separation
f11rther, That in cases where notification is necessary, the confinement
5) Disability
shall be deemed to have started not .earlier than the fifth day
6) Death immediately preceding the date of notification.2
7) Funeral
(b) Employees' compensation benefits

1 Seam 8(n) of RA. No. 11199 states: ·(n) AverrqJ daJ/ saJay aeat- The result obtined by d~ tie sum d te six (6)
hghest montht, salary credits i'I Ile ~ peood imelia!ett pcececfnJ !he semesler of cmqency by one
hlnlflm eghty (180)..
' Sedkxl 8\t), kl. 2 Sedm 14(a), RA. No. 11199.
2 Id.: Id.
 BAR REVIEWER ON LABOR I.AW
2. COMPENSABLE CONFINEMENT.
The compensable con:inement shall begin on the first day of sickness,
and the payment of such allowances shall be promptly made by the employer every
regular payday or on the fifteenth and last day of each month, and similarly in the
case of direct payment by the SSS, for as long ~s such ·allowances. are due and
payable: Provided, That such allowance shall begin only after all_sick leaves of
absence with full pay to the credit of the employee member shall have been
exhausted.1
One hundred percent (100%) of ihe daily tienefits provided in ~e
preceding paragtaph shall be reunbursed by the SS~ to said employe~ upon receipt
of satisfactory proof of such payment and le~ty. thereof: Provided, That the
employer has notified the SSS of the confinement within five_ (5) calendar days_after
receipt of the notification from the employee member: Provided, farthtr, That if the
notification to the SSS is made by the employer beyond five (5) calendar days after
receipt of the notification from the employee member, said employer shall be
reimbursed only for each day of confinement starting from th~ tenth calendar day
immediately preceding the date of notification to the SSS: Provided, Jina~. That the
SSS shall reimburse the employer or pay the unemploy~d member only for
confinement within the one-year period immediately preceding the date the chum
for benefit or reimbursement is received by the SSS, except confinement tn a
hospital, in which case, the claim for benefit or reimbursement must be filed within
one (I) year from the last day of confinement2
3. NOTIFICATION REQUIREMENT.
Where the employee member has given the required notification but the
employer fails to notify the SSS of the confinement or to file the_ claim for
reimbursement within the period prescribed in this section resulttng tn the
reduction of the benefit or denial of the claim, such employer shall have no right to
recover the corresponding daily allowance he advanced to the employee member as
required in this section.3 The provisions regardin~ ~e no1!Ecation r:quired of the
member and the employer as well as the period within which the chum for benefit
or reimbursement may be filed shall apply to all claims filed with the SSS.4
4. ADJUDICATION OF CLAIM OF REIMBURSEMENT.
The claim of reimbursement shall be adjudicated by the SSS within a
period of two (2) months from receipt thereof: Provided, That should no payment
be received by the employer with.in one (1) month ;ifter the period prescribed
1 Sedioo 14(b), Id.
Sec511114(c), Id.
Sedioo 14(d), Id.
• Sedioo 14(1), Id.
CHAl'TER FOUR 273
SOCIAL WELFARE LEGISLATION
herein for adjudication, the reimbursement shall thereafter earn simple interest of
one percent (1%) per month until paid. 1
2.
MATERNITY LEAVE BENEFIT
1. R.A. NO.11210, THE PREVAILING LAW.
R.A. No. 11199, otherwise known as the "Social Sm1ri!J Act of 2018';
which was approved on February 07 2019, re-enacted the exact provision of
Section 14-A2 of the repealed R.A. No. 8282, the "Social Semri!J Act of 1997."
However, 13 'days later, or on Februazy 20. 2019, President Rodrigo Duterte
approved R.A. No. 11210, otherwise known as the "105-Dcry Expanded Maumity
Leave LAw'5 which contains diametrically different provisions from R.A. No. 11199.
There is thus no doubt that the prevailing law on matemity leave benefit is R.A.
No. 111210 which repealed or modified "[a)ll laws, decrees, orders, rules and
regulations or parts thereof inconsistent (therewith)."
The matemity leave benefit under RA. No. 11210 is discussed extensively
under the topical heading of "C. LEAVES" in Chapter Three, supra.
3.
RETIREMENT BENEFITS
1. TWO TYPES OF RETIREMENT BENEFITS.
Retirement benefit is a cash benefit either in monthly pension or lump
sum paid to a member who can·no longer work due to old age.
The two (2) types of retirement benefits arc:
1) Monthly pension, and
2) Lump sum amount.
The monthly pension is a lifetime cash benefit paid to a retiree who has
paid at least 120 monthly contributions to the SSS prior to the semester of
retirement The lump sum amount is granted to a retiree who has not paid the
required 120 monthly contributions. It is equai to the total contributions paid by
the member and by the employer including interest.
2. WHO ARE QUALIFIED.
A member who has paid at least one hundred twenty (120) monthly
contributions prior to the semester of retirement and who:
1 Sedioo 14{e), Id'.
2 SEC.14-A- Mlaniyl.s.-eBeneft
1 l1is lit.¥ is erii1ed 'AA NJ. measi'G hi M!leniy w,,e Peood kl One f\med FM! (105) Days b' F!male Wmrs 'Mil
c110pfol kl Ex1end b' ill Mabial Tlm1'j (30) Days~ Pat, clld ~il'IJ ill Mi1ialal Fifteen (15) Days b' Soil
M:ilels iM Fa Ofler l'uposes.' .
274 BAR REVIEWER ON LABOR LAW
(1) has reached the age of sixty (60) years and is already separated from
employment or has ceased to be self-employed: or
(2) has reached the age of sixty-five (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 a preferential rate of interest to be
determined by the SSS. 1
A covered member who is sixty (60) years old at retirement and who
does not qualify for pension benefits as above described', 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.2
3. REEMPLOYMENT OR RESUMPTION OF SELF-EMPLOYMENT.
The monthly pension shall be suspended upon rhe reemployment or
resumption of self-employment of a retired member who is less than sixty-five
(65) years old. He shall again be subject to Section 18 (Employee's Contributions)
2nd his employer to Section 19 (Employer's Contributions) of R.A. No. 11199.3
4. DEATH OF RETIRED MEMBER.
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 ifhe bas 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
bal2nce of the five-year guaranteed period, excluding the dependents' pension.•
5. RETIREMENT OF MEMBER AFTER REACHING 60.
The monthly pension of a member who retires after reaching age 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.5
6. RETIREMENT OF UNDERGROUND MINEWORKERS.
An underground mineworker shall be entitled to retirement benefits if he:
Sedix112-8(a), RA No. 11199.
Secfxln 12-8 (b). kl.
3 Secbl 12-8 (c), Id.
' Sedixl 12-8 (d), kl.
I Secbl 12-8 (e). Id.
CHAPTER FOUR 275
SOCIAL WELFARE LEGISIJ.TION
1. has reached the age of 55 years old and is an underground mineworker
for at least 5 years (either continuous or accumulated) prior to the
semester of retirement but whose actual date of retirement is not
earlier than March 13, 1998; separated from employment or in the case
of self-employed, has ceased self-employment, and has paid at least
120 monthly contributions prior to the semester of retirement.
2. has reached the age of 60 years old whether employed or not.
7. MONTHLY PENSION.
a, Amount ofmonthly pension.
The monthly pension shall be the highest of the following amounts:
(1) The sum of P300 plus 20% of the ~rage monthly salary credit!
plus 2% of the average monthly salary credit for each credited year
of service (CYS) in excess of IO years; or
(2) 40% of the average monthly salaiy er~; or
(3) Pl,000 if the member had less than 10 credited years of service (CYS);
Pl,200 i: with at least 10 CYS; or P2,400 if with at least 20 CYS. The
monthly pension is paid for not less than 60 months.2
b. Additional monthly benefit allowance.
P_ursuant to Mc.norandum from the Exe~utive Secretary dated 22
February 2017, by authority of the President of the Republic of the Philippines, an
additional monthly benefit allowance amounting to Pl,000 shall be given to all
retirement, death, and disability pensioners receiving monthly pensions in or after
January 2017.3
c. Dependents'pension.
Where monthly pension is payable on account of death, permanent
total disability or retirement, dependents' pension equivalent to 10% of the
monthly pension or P250, whichever is higher, shall also be paid for each
dependent child conceived on or before the date of the contingency but not
exceeding five (5), beginning with the youngest and without substitution: Provided,
That where there are legitimate and illegitimate children, the fonner shall be
preferred.•
1 Secfxln 8(m) of RA No. 11199 states: "(m) AVf!f81,11 toor/lhlt stby aadt - The resA obtailed by dM!iYJ lhe SJJm cl lhe
last sixfy (60) rrmttt my mt imlediafefy preceang lhe semes1er cl cooli'qeoCf by sixfy (60), a the res1Jl ootailed
by dMilig Ile sun cl al lhe nmNy saay aooits paij pb' kl lhe semest8' d WllrgellCy by Ile Miler cl nmttltf
coobiJutions poo in lhe s.rre peli:ld, v.tom!Yer is gt>all!I: PrrMled, n.. lhe ~ a smiess \\!1kh caused lhe disaililify
stialbe deeJood as the pemlanlrtdisabily b-the p1Jp0Secl~ the average nmtt,s;J;yyaeat"
2 Secfxln 12(a) and (b), RA No. 11199.
3 Secfxln 12(c), Id.
• Secfxln 12-A, Id.

BAC R.EVIEWER ON lABOR lAW
s. RETIREE'S ADDITIONAL BENEFITS.
The retiree is entitled to a 13th month pension payable every December.
All retiree pensioners prior to the effectivity of R.A. No. 78751 on March 4, 1995
are automatically considered members of PhilHealth and he and his legal
dependents are entitled to its hospitalization benefits. On the other hand, retirees
effective March 4, 1995 up to the present will be entitled to hospitalization benefits
under PhilHealth only if they have contributed 120 monthly Medicare
contributions. The counting of 120 monthly contributions shall start in 1972, when
the Medical Care Act of 1969 started implementation. ..
4.
UNEMPLOYMENT INSURANCE
OR INVOLUNTARY SEPARATION BENEFITS
R.A No. t t 199 grants this benefit to a member who is not over sixty (60)
years of age who has paid at ~ast thirty-six (36) m~nth~ con~butions twel~ (12)
months of which should be m the 18-month penod unmediately preceding the
or
involuntary unemployment separation. He shall be paid benefits in the form of
' .
monthly cash payments equivalent to fifty percent (50%) of the average monthly
salary credit for a maximum of two (2) months: Prowkd, That an employee who is
involuntarily Wlemployed can only claim unemployment benefits once every three
(3) years: Provided, further, That in case of concuaence of two or more compensable
contingencies, only the highest benefit shall be paid, subject to the rules and
regulations that the Commission may prcsa1be.2
5.
DISABILITY BENEFITS
1. PERMANENT TOTAL DISABILITY BENEFITS.
Upon the permanent total disability of a member who has paid at least
thirty-SL'< (36) monthly contributions prior to the semester of disability, he shall be
entitled to the monthly pension: Provided, That if he has not paid the required thirty-
six (36) monthly contributions, he shall be entitled to a lump sum benefit
equivalent to the monthly pension times the number of monthly contributions paid
to the SSS or twelve (12) times the monthly pension, whichever is higher.3
2. REEMPLOYMENT OR RESUMPTION OF SELF-EMPLOYMENT.
:\ member who (l) has received a lump sum benefit; and (2) is
reemployed or has resumed s~f-employment not earlier than one (1), year from the
1 This law IS OlhelWise knOMl 8S lhe •Natmal Hea!lh Insurance /vj of 1995."
j
2 SedXX'l14-8,RA.No 11199.
l Sec1m \l-A (a). RA No. 11199.
CHAPTER FOUR. 271
SOCIAL WELFARE LEGISLATION
date _of his disability shall again be subject to compulsory coverage and shall be
considered a new member. t
The monthly pension and dependents' pension shall be suspended upon
~e reemployment or res~ption of self-employment or the recovery of the
~sabled membe~ fr~m his pennanent total disability or his failure to present
himself for exanunatton at least once a year upon notice by the sss.2
.3. DEATH OF PERMANENT TOTAL DISABILITY PENSIONER.
. Upon 1?e . death of the permanent mml disability pensioner, his
~ beneficianes as of the date of disability shall be entitled to receive the
~on_thly_ pension: Provided, That if he has no primary beneficiaries and he dies
within ~ (60) months ~m the start of his monthly pension, his secondagy
benefictanes 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.3
4. PERMANENT TOTAL DISABILITIES.
The following disabilities shall be ~eemed permanent lQ!!I:
(1) Comple~ loss of sight of both eyes;
(2) Loss of two limbs at or.above ~e anJ4e or wrists:
(3) Perman~t complete paralysis of two limbs;
(4) Bain injuty resulting to incw:able imbecility or insanity; and
(5) Such cases as detemlined and approved by the SSS.4 ·
5. PERMANENT PARTIAL DISAB.ILITIES.
. . If the disability is permanent iw:tim, ~d .such disability ocCUIS before
~~~lX (36) monthly contributions have been paid prior to the semester of
disability, the benefit shall be such percentage of the lwnp sum benefit described in
the preceding paragraph with due regard to the degree of disability as the
Commission may determine.s
. . If the disability is permanent IWlia! and such disability occurs after
thirty-SJX (36) monthly contilbutions have been paid prior to the semester of
disability, the benefit shall be the monthly pension fo~ permanent mw disability
payable not longer than the period designated in the following schedule:'
I Id.
2 Sedioo 1M (b), Id.
3 Section 1M {c), Id.
' Secwn 13-A (d), Id.
5 Sml 13-A (e), Id.
5 Secb1 13-A (~. Id.
 BAR REVIEWER ON IABOR !AW CIIAl'TER FOUR 279
SOCIAL WELFARE LEGISLATION
Complete and permanent Humber shall be entitled to the monthly pension: Provided, l11at if he has no primary
loss oUuse of of beneficiaries, his secondary beneficiaries shall be entitled to a lump sum benefit
Months
One thumb 10 equivalent to thirty-six (36) times the monthly pension. If he has not paid the
One index finger 8 required thirty-six (36) monthly contributions, his primary or secondary
One ,niddlc finger 6
One ring finger 5 beneficiaries shall be entitled to a lump swn benefit equivalent to the monthly
Ooe little finger 3 pension times the number of monthly contributions paid to the SSS or twelve (12)
One bigcoe 6
Ooehaod 39 times the monthly pensiqn, whichever is higher.1 .
One arm 50
One foot 31 2. TYPES OF DEATH BENEFITS.
Ooekg 46
Ooc ear 10 Based on· the foregoing, there are two (2) types of death benefits, lo wit.
Bodi can 20 1) Monthly pension; and
Hearing of one ear 10
Heuiag of both ears 50 2) Lump sum amount.
Sight ofone eye 25
. The monthly pension is granted only to the primacy beneficiaries of a
The percentage degree of disability which is equivalent to the ratio that deceased member who had paid 36 monthly contributions before the ~emester of
the designated number of months of compensability bears to seventy five (75), death.
rounded to the next higher integer, shall not be additive for distinct, separate and
unrelated permanent partial disabilities, but shall be additive for deteriorating and The lump sum is the amount gnnted to the primacy beneficiaries of a
related permanent partial disabilities, to a maximum of one hundred percent deceased member who had paid kn than 36 monthly contributions before the
(100%), in which case, the member shall be deemed as permanently totally semester of death. The secondary beneficiaries shall be entitled to a lump sum
disablecl.1 ~

In case of permanent partial disability, the monthly pension benefit
shall be given in lump sum if it is payable for less than twelve (12) months. 2
For the purpose of adjudicating retirement, death and permanent total
disability pension benefits, contributions shall be deemed paid for the months
during which the member received partial disability pension: Provitkd, That such
contributions shall be based on his last contribution prior to his disability.3
Should a member who is on partial disability pension retire or die, his
disability pension shall cease upon his retirement or death.•
6.
DEATH BENEFITS
5. WHO ARE ENTITLED.
Death benefit is a cash benefit either in monthly pension or lump sum
paid to the beneficiaries of a deceased member.
Upon the death of a member who has paid at least thirty-six (36)
monthly contributions prior to the semester of death, his primacy beneficiaries
1 Sm113-A(g),li.
1 Sml 13-A (h), Id.
, Sm113-A(i),ld.
• Sedm 13-A O), Id.
3. AMOUNT OF BENEFITS.
The monthly pension depends on the member's paid conLributions,
including the credited years of service (CYS) and the number of dependent minor
children but not to exceed five (S).
The amount of monthly pension will be the highest of:
1. the sum of P300 plus 20 percent of the average monthly salacy
£!C!lli2 plus two percent of the average monthly salary credit for each
credited year of service (CYS) in excess of 10 years: or
2. 40 percent of the average monthly salary credit; or
3. Pl,000 if the member had less than 10 credited years of service (CYS);
Pl,200 if with at least 10 CYS; or P2,400 if with at leas, 20 CYS. The
monthly pension is paid for not less than 60 months.
If a· deceased member is survived by less than five (5) minor lcgjtimate,
legitimated, or legally adopted children, the illegitimate minor children will be
1 Sm113,ld.
2 Sedixl 8(m) a RA No. 11199.stales: 1m) AvefW/J ITIJfltlt salay crecft. Toe resul ootmed by divi:!rg lhe sum a the
a
lastSW..,, (60) moot.If my credits irmed'ialei'f precedilg lhe semester conlirgency by SW..,, (60), a the result cttaned
a
by dMfrg lhe sun al Ile nmtilf m, aecrAs paid poor lo Ile semester o1 IXJ\lrjJency by the nurroer of moot.If
ta'IIJixJoons paid il Ile same p!rild, v.llk:hever is greater. Pr!Mc/ed, That Ile n)lry a sickness v.it:h caised lhe aisaMtf
shal be deemed as Ile pemmert<fisabi1ybr the JX1POS8 a ~ Ile average montt/ sakvf C1edit•

·~

BAR REVIEWER ON I.ABOR I.AW
280
entitled to 50% of the share of the legitimate, legitimated or leg2lly adopted
children in the basic pension and 100% of the dependents' pension.
In cases where there are no legitimate, legitimated, or leg2lly adopt~
children, the illegitimate minor children shall be entitled to 100% of the baS1c
pension.
The ~ beneficiaries of a deceased member who has paid less than
36 monthly contributions shall ':le entitled to lump sum benefit which shall be the
higher of: ..
1) monthly pension times the number of monthly contributions paid
prior to the semester of death; or
2) twelve (12) times the monthly pension.
The secondary beneficiaries of the deceased member shall be entitled to
a lump sum benefit equivalent to:
a. 36 times the monthly pension; if the member has paid at least 36
monthly contributions prior to the semester of death; ~r . . 1. AMOUNT OF FUNERAL BENEFIT.
b. monthly pension times the number of monthly contnbutions pa1d or
twelve (12) rimes the monthly pension, whichever is higher, if the
member has paid less than 36 monthly contributions prior to the
semester of death.
The primary or secondary beneficiaries of a deceased employee-
member, who had no contribution payment at all and who was reported for
coverage shall be entitled to funeral benefit 2!1!x-
,,__..
The dependent legitimate, legitimated, legally adopted or illegitimate
children, conceived on or before the date of death of a deceased will each receive a
dependents' pension equivalent to 10% of the members' monthly pension or P250,
whichever is higher.
Only five (5) minor children, beginning from the youngest, are entitled to
the dependents' pension. No substitution is allowed.
Where there are more than five (5) legitimate and illegitimate minot
children, the legitimate shall be prefec:ed.
The dependents' pension stops when the child reaches 21 yws old, gets
married, gets employed or dies. However, the dependents' pension is granted for
life to children who are over 21 years old, provided they are incapacitated and
incapable of self-support due to physical or mental defect which is congenital and
acquired during minority.
..\
li
-k ll
&..Iii
CHAPTER FOUR 281
SOCIAL WELFARE LEGISI.ATION
4. OTHER BENEFITS THE DECEASED MEMBER'S BBNBFICIARIES
CAN AVAIL OF.
The deceased member's beneficiaries are entitled to a 13th month pension
payable evexy December and the funeral benefit, which is paid to whoever,
shouldered the funer.tl expenses of the deceased member.
Survivorship pensioners prior to the effectivity ofR.A. 78751 on March 4,
1995 are also entitled to hospitalization benefits under PhilHealth. They need to
register under PhilHealth.
Su1vivorship pensioners under the effectivity of RA 7875 on March 4,
1995 and thereafter, are no longer covered. However, those who wish to avail of
PhilHealth benefits may enroll in the Individually-Paying Program (for
voluntary/self-employed) or the Indigent Program (IP) of PhilHealth.
7.
FUNERAL BENEFIT
A funeral grant equivalent to P12,000 shall be paid, in cash or in kind, to
help defray the cost of funeral expenses upon the death of a member, including
pennanently totally disabled member or retiree.2
b.
EMPLOYEES' COMPENSATION BENEFITS
This is the second class of benefits under the SSS Law, the first being the
Social Security Benefits cliscu.~sed above. For purpo_ses of discussing this topic in
an orderly fashion, the same shall be presented W1der the topic "C. DISABILITY
AND DEATH BENEFITS", infra.
B.
GSISLAW
1. LEGAL BASIS.
R.A. No. 8291, entitled 'The Government Service Inrurance Sysllm Act of 1997."
1 This law is OlhetWise kraMl as the ·National Heallh Insurance P-d. d 1995.·
2 Sedxln 13-8, RA No 11199.
 SH RE\IIEWER ON I.ABOR I.AW
1.
COVERAGE AND EXCLUSIONS
a.
COVERAGE
1. COMPULSORY MEMBERSHIP IN THE GSIS.
(1) All government personnel, whether elective or appointive, irrespective
of status of appointment, provided they are receiving fixed monthly compensation
and have not reached the mandatory retirement age of 65 years, are compulsorily
covered as members of the GSIS and shall be required to pay contributions. 1
(2) However, employees who have reached the retirement age of 65 or
more shall also be covered, sub_iect to the following rules:
An employee who is '.llready beyond the mandatory retirement age of 65
shall be compulsorily covered md be·required to pay both the life and retirement
premiums under the following situations:
a) An ~ official who at the time of election to public office is
below 65 years of age and will be 65 years or more at the end of his
term of office, including the period/s of his re-election to public office
thereafter without interruption.
b) Appointive officials who, before reaching the mandatory age of 65,
are appointed to government position by the President of the Republic
of the Philippines and shall remain in govemmeht service at age
beyond 65.2
c) Contractual employees including casuals and other employees with
an employee-government agency relationship are also compulsorily
covered, provided they are receiving fixed monthly compensation and
rendering the required number of working hours for the month.3
2. CLASSES OF MEMBERSHIP.
Membership in the GSIS is classified either by type or status of
membership.4
• As to~ of members, there are regµlar and special members:
(a) Regular Members - are those employed by the government of the
Republic of the Philippines, national or local, legislative bodies,
government-owned and controlled corporations (GOCCs) with
1 Seiful 2.1., ~ II, kr(>lemen!ilg ~les clld R91Jt.ialicns rJ RA No.8291.
Seiful 22. IU! 11, lli1.
Seiful 2.3., ~ D, bi:!.
' Seiful24.• ~ll.bi:f.
~ -
CHArTER FOUR
SOCIAL WELFARE LEGISLATION
original charters, government financial institutions (GFis), except
uniformed personnel of the Armed Forces of the Philippines, the
Philippine National Police, Bureau of Jail Management and
Penology (BJMP) and Bureau of Fire Protection (BFP), who arc
required by law to remit regular monthly contributions to the GSIS.
(b) Special Members - are constitutional commissioners, members of
the judiciary, including those with equivalent ranks, who are
required by law to remit regular monthly contributions for life
insurance policies to the GSIS in order to answer for their life
insurance benefits defined under RA 8291 .1
• As to™ of membership, there are active and inactive members.
(a) Active member - refers to a member of the GSIS, whether
regular or special, who is still in the government service and
together with the government agency to which he belongs, is
required to pay the monthly contribution.
(b) Inactive member - a member who is separated from the service
either by resignation, retirement, disability, dismissal from the
service, retrenchment or, who is deemed retired from the service
under the GSIS Law.2
3. EFFECTMTY OF MEMBERSHIP.
The effective date of membership shall be the date of the member's
assumption to dutr, on his original appointment or election to public office.3
4. EFFECT OF SEPARATION FROM THE SERVICE.
A member separated from the service shall continue to be a member, and
~hall be entitled to whatever benefit, he ha, qualifiecl tn in 1hr rvrnt nf an:·
contingency compensable under the GSIS Law.•
b.
EXCLUSIONS
1. EXCLUSION FROM COMPULSORY CO.VERAGE OF GSIS LAW.5
The following employees are excluded from compulsory coverage:
(a) Uniformed personnel of the Armed Forces of the Philippines
(AFP), Philippine National Police (PNP), Bureau of Fire Protection
(BFP) and Bureau ofJail Management and Penology (BJMP);1
, Sedioo 2.4.1., Rioo 11, bi:!.
2 Sedioo242.• ~ll,IJil.
l Sedioo 5, Rule 11, bi:f.
• Sedioo 4, RA No. 8291.
~ Sedioo 3., IU! n, Iii.
 BAR REVIEWER ON IABOR IAW
l CHAPTER FOUR 285

I
SOCIAL WELFARE LEGISLATION
(b) Bacangay and Sanggunian Officials who .are not receiving fixed 3.
monthly compensation; 2 BENEFITS
(c) Contractual Employees who are not receiving fixed monthly
compensation;3 and 1. KINDS OF BENEFITS.
(d) Employees who do not have monthly ri;gµlar hours of work and are The following are the benefits under the GSIS Law:
not receiving fixed monthly compensation.•
(1) Compulsory Life Insurance
2. (2) Retirement
DEPENDENTS AND BENEFICIARIES (3) Separation
(4) Unemployment
a. (5) Disability
DEPENDENTS (6) Survivorship
(1) Funeral
1. KINDS OF DEPENDENTS. 1.
Dependents shall be the following: COMPULSORY LIFE INSURANCE
(a) The legitimate spouse dependent for support upon the member or 1. LIFE ENDOWMENT POLICY (LEP) 1
pensioner;
A member under this policy may be entitled to any of the following
(b) The legitimate, legitimated, legally adopted child, including the
illegitimate child, who is unmarried, not gainj11l/y tmpl'!Jtd, not over the benefits, depending on the circumstances:
age of majority, or is over the age of majority but incapacitated and a) Maturity benefits, which is the face amount payable to the member
incapable of self-support due to a mental or physical defect acquired upon maturity of the policy.
prior to age of majority; and b) Cash Surrender Valui:, which is earned values during the tenn of the
(c) The parents dependent upon the member for support.5 insurance payable to the member when he is separated from the
Gainful Occupation - Any productive activity that provided the member with service before maturity date of the policy or when he is considered as
income at least equal to the lll.!nimurn compensation of government employees.G a case of PTD.
c) Death Benefit, which is the face value of the policy payable to
b.
designated beneficiary/beneficiaries or legal heirs, in the absence of
BENEFICIARIES
the former, upon the death of a member.
1. TWO KINDS. d) Accidental Death Benefit {;\DB) is an additional benefit equivalent to
There are two (2) kinds of beneficiaries under the GSIS Law as follows: the amount of Death Benefit when the member dies by accident. In
this connection, proof must be presented to sufficiently establish that
1. Primary beneficiaries - The legal dependent spouse until he/ she the ~use of the member's death is accidental.
remarries and the dependent children.
e) The right to present sufficient proof to show that death was accidental
2. Seconcfatybeneficiaries - The dependent parents and, subject to the
shall prescribe if the claim for ADB is filed four (4) years after the
restrictions on dependent children, the legitimate desccndants.7
death of the member. ·
f) Cash Diyjdi;nd. A policyholder is entitled to dividends subject to the
1 Sectia13.1.1., ~ u, tid. guidelines as approved by the GSIS Board. This is not a guaranteed
1 Sectia13.12., ~ IL lbk!. l;>enefit.2
3 Sectia13.1.3.• ~l(llil.
' Sectia13.1.4., ~ IL lbi:l.
s Sectia12(~.llil.
I Sedi:n 2(p), llid.
7 Sectia12(9), RA No. 8291. Sedirt 18. Rule rv, lil.
Sedxns 18.1. t> 185. ~N. l>if.
286 BAR REVIEWER ON IA&OR IAW
2. ENHANCED LIFE POLICY (ELP).1
A member under fais policy may be entitled to any of the following
benefits, depending on the circumstances:
1. Death Benefit equivalent to the latest annual salary multiplied by
amount of insurance (AO[) factor which is 1.5 or 18 times the current
monthly salary of the member or as determined by the GSIS, payable
to the legal heirs, less all outstanding obligations of the member in
accordance with the CLIP.
2. Termination Value. 'The policy earns a Te'anination Value during the
life of the policy computed from the percentage of life insurance
premiums actually remined and paid to GSIS.
• Termination nlue is equivalent to a percentage of monthly life
insurance pre:niums as determined by the GSIS, due and paid in
full, either by direct reminance or through an APL facility.
• The accumulated termination value will grow at such rate as
determined by the Actuary.
• The termination value shall be paid to the member upon his
separation from the government setvice less all indebtedness of the
3.
member with the GSIS in accordance with CLIP.
Cash Dividend. A policyholder is entitled to dividends, subject to the
guidelines as approved by the GSIS Board. This is not a guaranteed
benefit.2
2.
RETIREMENT BENEFIT
1. COMPONENT.
The retirement benefit consists of a monthly pension which is computed
based on years of creditable service and Average Monthly Compensation (AMC)
for the last 3 years.3
2. ELIGIBILITY.
Themembec
1) has rendered at least fifteen (15) years of setvice;
2) is at least sixty •:60) years of age; and
3)" is not receiving a monthly pension benefit from permanent total
disability.4
I SediJn 19., R1Jle rlJ. lil.
l SediJns 19.1. ~ 19.3.• Rule IV, bll
l Sedoo 20., R1Jle rl/, lil.
• Secoons 20.1.1.1o 20.1.J. Rule rv. lbc.
CHArTER FOUR
SOCIAL WELFARE LEGISLATION
3. RETIREMENT BENEFIT OPTIONS.
A retiring member has the following options:
(1) Five (5) year lump sum equivalent to sixty (60) months of the basic
monthly pension (BMP), subject to qualification requirements, less all outstanding
obligations of the member in accordance with the Claims and Loans
Interdependency Policy (CLIP), plus an old-age pension benefit equal to the BMP
payable for life, starting on the first day of the month following the expiration of
the five year guaranteed period; or
(2) A cash payment benefit equivalent to eighteen (18) times of the BMP,
subject to qualification requirements, less all outstanding obligations of the member
in accordance with the CLIP, plus monthly pension for life payable on the first
month following the date of retirement•
4. CONVERSION IN THE MODE OF RETIREMENT.
Conversion in the mode of retirement from R.A. No. 8291 to any other
retirement laws and vice vma administered by the GSIS shall not be allowed.
Those who became GSIS members prior to the implementation of R.A.
t No. 8291 shall have the option to retire under PD 1146, RA 660, or RA 1616,
I subject to eligibility. 2
I 5. CHANGE OF RETIREMENT BENEFIT OPTION UNDER RA 8291.
Change of retirement benefit option from eighteen (18) mo~ths cash
payment plus immediate pension to five (5) year lump sum, or via m1a, shall not be
I
allowed. The GSIS shall process the claim for retirement benefits based on the
member's records in the GSIS database.3
6. PROCESSING OF RETIREMENT BENEFITS OF MEMBERS WHO
DIED WHILE THEIR CLAIMS ARE BEING PROCESSEP,
For those qualified for retirement benefits:
1. If the deceased member opted for five year lump ~um benefit as
indicated in his/her ~ for retirement application, his legal heirs
shall be entitled to five-year lump sum benefit equival,ent to sixty (60)
months basic monthly pension (BMP). However, the survivorship
pension to qualified primary QCOeficiaries, if any, shall be granted after
the end of the 5-year guaranteed period, but filing of claim for
survivorship benefit should be done before the end of the 4-year
prescription period.
2. If the deceased member opted for immediate pension as indicated in
his/ her claim for retirement benefit his legal heirs shall be entitled to
, Sectioos 202.1. ti 2022. Ru1e rv. lbi!.
l Sedicrl 20.3.. Rule rl/, Ibid.
3 Sedm 20.4.. Rule rv, bi!.
288 SAR REVIEWER ON LABOR I.AW
CHArTER FOUR 289
SOCIAL WELFARE LEGISLATION

retirement benefits equivalent to eighteen (18) months of BMP, plus
accrued pension, if any, up to the date of death of the retiree. 111e
corresponding survivorship pension shall be paid to the qualified
primary beneficiaries, if any, and shall be computed from the date of
death of the retiree, subject to filing of claim.
3. In case the deceased member failed to indicate in his/ her retirement
option, it shall be computed as if he/she opted for immediate pension.
4. The proceeds of retirement benefits shall be paid and distributed to
the legal heirs in accordance with the law'on succession under the
Civil Code of the Philippines.1
For those not qualified for retirement benefits, the GSIS shall determine
if he/she is qualified to other applicable benefits under R.A. 8291 or such other
laws administered by the GSIS.2
7. EFFECTS OF REEMPLOYMENT.
When a retired/separated member is reemployed or reinstated in the
service, his/ her previous services credited at the time of his/ her
retirement/separation for which a cottesponding benefit had been awarded, shall
be excluded in the comput.ation of service. In effect, he/ she shall be considered a
new entrant.
However, for those who retired prior to the enactment of R.A. 8291, the
9. COMPUTATION OF CREDITABLE SERVICE.
The computation of creditable service for the purpose of determining the
amo~t of be?efits payable shall include the period or periods of service with the
reqwred premJuro contributions.I
10. COMPUTATION OF AVERAGE MONTHLY COMPENSATION
(AMC). .
The AMC shall be computed on the basis of the average salary of the
m~mber for the !;is~ 36 months of creditable service immediately preceding his
rettrement or separauon.
. The basis for computing the AMC of a separated or retired member
r~quesUng ~or ~om~utation of benefits shill b_e the prevailing policy on AMC at the
ume the claim ts bemg processed.2
11. COMPUTATION OF REVALUED MONTHLY COMPENSATION.
AMC pius Seven Hundred Pesos (P700.00).3
12. COMPUTATION OF BASIC MONTHLY PENSION.
The formula .for corpputing the BMP may be adjusted subject to the
approval of the Board upon the recommendation by the President and General
Manager. ·

previous services of a retired/ separated member may be added in the computation
of his creditable services (subject to premium-based policy) upon subsequent
retirement under R.A. 8291 only when both conditions are met: (a) the retiree
reentered government service before June 24, 1997; and (b) the total amount of
benefit previously received, if any, including the prescribed interest was refunded to
GSIS on or before March 2, 2006.3
8. BASIS OF COMPUTATION 9F TOTAL SERVICE.
Total Length of Service (ILS) is the number of years in government
service regardless of status of employment, with or without premium contributions.
For purposes of computing the total length of service under part-time
~rnn1s of employment, services shall be converted to their full-time equivalent using
1or1y-hour week and fifty two-week a year as basis.•
I
As a ~eneraJ nile, the BMP shaJI only be computed for those members or
dependents/heu:s of members who are eligible to receive benefits under this law. It
shall be computed on the basis of a percentage of the RAMC at the rate of 2.5%
for every year of creditable service, but in no case shall it exceed 90% of the AMC
f
of the member. The formula for computing BMP shall be: BMP = RAMC x (2.5%
xRCS)4
13. ADJUSTMENT/INCREASE IN PENSION.
Periodic adjustments of the monthly pension of all existing pensioners
shall be done on the basis of what is sustainable and prudent for the GSIS as
recommended by its Actuary and approved by the Board.5
14. POLICIES AFFECTING PENSION ADMINISTRATION.
1) Regardless of the date of retirement, the monthly pension shall
commence on the 1" day of the month following the month of retirement.

Sectial 20.8., ~ le r-1, lif.

1 Sectioo 20.5.1., ~ IV, Aro. Sedms20.9.1. kl 20.92., RlJle IV, lli:I.
3 Sectial 20.10., RlJle IV, lit.
Secful20.52 .~IV.W.
l SedilJls 20.6.1. kl 20.62., Rule IV, Ibid.
Secfoo 20.11., RlJle IV, Ibid.
• SedilJls 20 7.U> 20.7.2., ~ le IV, llid. Secfoo 20.12., RlJle IV, lbc.
290 BAR REVIEWER ON IABOR. l.AW -~ CHAPTER. FOUR.
SOCIAL WELFARE LEGISLATION
291

2) Annual Renewal of Active Status (ARAS) of Old Age and Survivorship
Pensioners is required on theit birth month every year.
3) Effects of non-renewal of active status as pensioner:
a) Suspension of payment of monthly pension;
b) Non-entitlement to cash gift if status is suspended at the time of
declaration;
c) Non-entitlement to pension inaeases if status is suspended at the
rime of declaration. 1 "'
3.
SEPARATION BENEFIT
1. ENTITLEMENT.2
Separation benefit is either one of the following:
(1) For those members who are separated from service and who have at
least 3 years of service but less than 15 years shall be entitled to cash payment
equivalent to 100% of the member's AMC for each year of creditable service, but
not less than P12,000.00, payable upon reaching age 60, or upon his separation if
he is already 60 years of age at the time of separation. 3
(2) A cash payment equivalent to eighteen (18) times the basic monthly
pension payable at the time of resignation or separation, provided the member
resigns or separates from the service after he has rendered at least 15 years of
service and is below 60 years of age, plus an ala-age pension benefit equal to the
basic monthly pension payable monthly for life upon reaching the age of 60.4
(3) Reckoning Date of Separation of Uniformed PNP, BJMP and BFP
Personnel shall be February 1, 1996. The computation of benefit shall be based on
their basic monthly salary (premium-based) when they ceased to be members of the
GSIS.5
(4) Processing of separation benefit of members who died while their
claims are being processed:
a) If the member dies during the pendency of his claim for
separation benefit and he has rendered at least 15 years of
creditable Y..rvice, his legal heirs shall be entitled to receive cash
payment equivalent to eighteen (18) times the basic monthly
pension, plus accrued BMP, if any, up to the date of death of the
1 SedicllS ~13.1. b 20.13.3., Rlit IV, 1bit.
2 Sm121.~r,/,lbki
, Seclion 21.1 .. Ru.a IV, am.
member. Thereafter, the primary beneficiaries shall be entitled to
survivorship pension.•
b) If the member dies during· the pendency of his claim for
separation benefit and he has rendered less than 15 yem of
creditable service, his legal heirs shall be entitled to cash payment
equivalent to one hundred percent (100%) of AMC for each year
of creditable service, but not less than Pt2,000.Q0.2
4.
UNEMPLOYMENT BENEFIT
l ENTITLEMENT,3
A member shall be entitled to the unemployment benefits if the following
conditions are met
1) he/she was a pennanent employee at time of separation;
2) his/her separation was involuntary due to the abolition of his/her
office or position resulting from reorganization; and
3) he/she has been paying the .required premium contributions for at
least one (1) year but less than 15 years prior to separation.'
The amount.of unemployment benefit is equivalent to 50% of the AMC
and shall be paid in accordance with the Schedule in the Implementing Rules. s
5.
DISABILITY BENEFITS
t DEPINITION.6
"Disabili9" refers to any loss or impainnent of the normal functions of the
physical and/or mental faculties of a member, which pennanently or temporarily
prevents him to continue with his work or engage in any other gainful occupation
resulting in the loss of income.7
2. BASIS OF RECKONING.
The corresponding disability benefits .for each kind of disability shall be
granted to a member based on the duration of incapacity to work and actual
loss of income.8 ·
1
Secbt 21A.1., RM IV, 1>11.
2 Sectixl 21.42., rue IV, lli1.
3 SecfaJ 22. fUl IV, lbii
' Sedlans 22.1.U,22.1.3., Rule IV, lbi1
5 Sedloo 22.2.. ~ N, 11m.
8 Seam 23, ~ IV, lbil.

,,
4 Sedm212.,Rule1V,llil. 1
Seclin 23.1., Rule IV, tid.
5 &ml 21.3., ~kt IV, Rlif. I Id,

J
 BAil REVIEWER ON 1.ABOR I.AW CHAmR.fOUll 293
292 SOCIAL WELFARE LEGISLATION

3. KINDS OF DISABILITY.
There are three (3) kinds of disability which shall be detennined by the
GSIS based on established medical standards:
• Pennancnt Total Disability
• Permanent Partial Disability
• Temporary Total Disability1
4. POLICIES GOVERNING DISABILITY BENEFITS.
1. Pegnanent Total Disability (PTD) - disability due to injury or
disease causing complete, ineversible and pemianent incapacity that will
permanently disable a member to work or to engage in any gainful occupation
resulting to loss of income.
The following disabilities shall be deemed total and permanent:
a) Complete loss of sight for both eyes;
b) Loss of two limbs at or above the ankle or wrists;
c) Permanent complete paralysis of two limbs;
d) Brain injury resulting in incurable imbecility or insanity; and
2
e) Such other cases as may be determined and approved by the GSIS.
2 Permanent Partial Disability (PPD) - arises due to the complete and
permanent loss of the use of any of the following resulting to the disability to work
for a limited period of time: • decision shall be final and binding; or
1) any finger 2) any toe 3} one arm; 4} one hand; 5) one foot; 6) one leg; 7)
one or both ears; 8) hearing of one or both ears; 9) sight 6£ one eye; 10)
such other cases as may be determined and approved by the G~IS.3
3. Tcmpomy Total Disability ITTD) - accrues or arises when the
impaired physical and/ or mental faculties can be rehabilitated and/or restored to
their normal functions, but such disability shall result in tempowy incapacity to
work or to engage in any gainful occupation.4
5. DISABILITY OR INJURY NOT COVERED.
Any disability or injury as a result o~ or due to gmve misconduct,
participation in riots gross and inexcusable negligence under the influence of
drggs or alcohol or willful intention to injure or kill himself or another, shall not be
compensable.1
6. ACI'UAL LOSS OF INCOME.
The actual loss of income shall refer to the number of days when a
member went on leave of absence without pay (LWOP) reckoned immediately
from the date of commencement of disability and for the duration of entidement
thereto, based on medical evaluation. Any LWOP ineutted after the duration of
entitlement to the benefit shall not be compensable. 2
7. ENTITLEMENT IN CASE OF TWO OR MORE DIFFERENT
CONTINGENCIES.
If the member has two or more different contingencies during the same
period of benefit entitlemen~ he shall be. compensated only once for the
overlapping periods.3
8. EXCLUSIONS BY REASON OF P.D. 626.
All injuries, disabilities, illnesses and all other infirmities compensable
under P.D. 626 shall not be compensable under this Act (R..A. 8291).4
9. SUSPENSION OF BENEFIT.
Any applicable di~ability benefit shall be suspended when he/ she:
a) is re-employed; or
b} reco\rers from his/her disability as determined by the GSIS, whose
c} fails to present himself for medical examination when required by
GSIS;or
d) is receiving ~y other pension either from GSIS or another local or
foreign institution or organization.5
10. COMPUTATION OF BENEFIT.
1. Permanent Total Disability (PTO). - A member who becomes
pcananently and totilly disabled shall be entitled to the monthly income benefits
for life equivalent to the basic monthly pension (BMP) effective from the date of
disability.6

1 Sec&ln 232.4., ~ r,/, l>il.

I k1 2 Sec&ln 23.2.5., ~ N, lbkl.
3 Sediln 232.6., IUt IV, lbcl
2 Sedm 23.2.1., IU! IV, llki
3 Secoon 23.21, JU! IV, 1bit • Secoon 232.7.• A.oo IV, 11m.
5 Sediln 232.8., IUt IV, lbii.
• Sedm 23.2.3., IU! IV, lbkt. 6 Sedion 23.3.1., fU! IV. 11kt.

·.~
294 SAR REVIEWER ON IABOR IAW
2. Permanent Partial Disability (.PPD). - The period of entitlement to
PPD benefit shall be determined after due medical evaluation; bur such period of
entitlement to the benefit shall not exceed 12 months for the same contingency.
Only the leave of absence/ s without pay incurred during the period of entitlement,
duly certified by the authorized officer of the agency where he is employed, shall be
compensable. 'The amount of PPD benefit shall be computed by dividing the BMP
by 30 days and multiplying the quotient by the number of compensable calendar
days of leave of absence without pay (LWOP).t
3. TempQraty Total Disabiljty (ITO). - The -period of entitlement to
TfD benefit shall be determined after due medical evaluation and proof of actual
loss of work resulting in loss o: income by way of the incurred actual number of
days of leave of abscnce/s witl:out pay duly ce~fied by ~e authorized officer of
the agency where he is employed; but such penod of en~tlemen_t to_~e ben~fit
shall nor exceed 120 days in one calendar year. However, tf the disability requtres
more extensive rrearmenr rhat ltsts beyond 120 days, the payment of the TID may
be extended by the GSIS but not to exceed a total of 240 days.
Only the leave of absence/s without pay incurred during the period of
entitlement shall he compensab'.e. Entitlement, however, shall start from the fourth
day of the disability. The amount ofITD benefit shall be computed by multiplying
75% of the daily salary of the member by the number of days of disability based on
the medical evaluation but net to exceed 240 days for the same contingency.
However, the computed daily s~lary shall not be less than P70.00 but not to exceed
P340.00 per day. 2 For the purpose of computing the corresponding benefit of
inactive membecs foe each kind of disability, the· BMP, with respect to PTD and
PPD, and daily salary, with re~pect to TID, shall be computed as of the time of
separation from GSIS.3
11. CONDITIONS FOR ENTITLEMENT.
I. Permanent Total Disability (PTO) - A member who becomes
pennanently and totallr disable:l shall be entitled to the PTO benefits when:
a) he/ she is in the service at the time of disability; or
b) if separated from :he service, he has paid at least thirty six (36) months
contributions within the five year (5) period immediately preceding
his/ her disability; or has paid a total of at least one hundred eighty
(180) months con:ributions prioc to his/hec disability;
Provitkd, however, that the following conditions shall be met
' Sedm23.32.. ~ IV, IJd.
1 Sedin 23.3.3., ~ rv, Ibo.
l Sedin 23.3.4.. ~ fv, l)ij,
CHArT(ll fOUll 295
SOCIAi. WELFARE LEG!SlATION
• he/she is gainfully employed prior to the commencement of disability
resulting in loss of income as evidenced by any incontrovertible proof
theceof;
• he/ she is not a registered membcc of any social insurance institution;
and
• he/she is not receiving any other pension either from GSIS or another
local or foreign institution or ocganization. t
In addition to the monthly income benefits for life, a cash payment
equivalent to eighteen (18) times his/ her basic monthly pension (BMP), shall be
paid to a membec who was in the service at the time of his/her peananeot total
disability and who has paid a total ·of one hundred eighty (180) monthly
contributions.2
A separated member who has at least three (3) years of service and
becomes pennanently and totally disabled but has not paid a total of at least one
hundred eighty (180) monthly contributions prior to his/her disability shall be
entitled only to cash payment equivalent to one hundred percent (100%) of bis/her
average monthly compensation for each year of service with paid contributions but
not less than twelve thousand pesos (P12,000.00).3
2. Permanent Partial Disability (PPD), - A member whose disability is
partial shall be entitled to the PPD benefit when: ·
a) he/she is in the service at the time of disability; or
b) if separated from the service, he has paid at least thirty six (36) months
{
contributions within the five (5) year period immediately preceding
\ his/ her disability; or has paid a total of at least one hundred eighty
(180) months contributions prior to bis/ her disability; Provided,
howevec, that the following conditions shall be met:
he/ she is gainfully employed prior to the commencemt:nt of
disability resulting in loss of income · as evidenced by any
incontrovertible proof theceof;
• he/ she is not a cegisteced member of any social insurance
institution; and
• he/ she is not receiving any other pension either from GSIS or
another local or foreign institution or organization.•
3. Temporar;y Total Disability (ITO). - r. member shall be entitled to
the TfD benefit when:
a) he/ she is in the service at the time of disability; or
1
Sedin 23.4.1.1, ~ IV, tid.
l Sedin23.4.12,~et\l,lli:l.
3 Sedin23.4.1.3., ~ IV, tid.
4 Secbl 23.42, ~ IV, W.

BAR REVIEWER ON LABOR LAW
b} if separated from the service, he has paid at_leas~ thirty _six (36) mon~s
contributions within the five (5) year penod unmediately precediqg
his/her disability; or has paid a total of at least one hundred eighty
(180) months contributions prior to his/her disability; Provided,
however, that the following conditions shall be met:
• he/she is gainfully employed prior to the commencement of
disability resulting in loss of income as evidenced by any
incontrovertible proof thereof;
• he/she is not a registered member of any social U1surance
institution; and ' Thousand Pesos (P12,000.00).3
he/she is not receiving any other pension either from GSIS or
another local or foreign institution or organization. 1
The payment of 1TD benefit may be extende~ by the ~SIS up to a
maximwn of two hundred forty (240) days, subject to medical evaluanon.2
12. FORFEITURE OF DISABILITY BENEFITS.
All the foregoing provisions nol\\~thstand.ing, any member who is
enjoying disability benefits shall automatically forfeit his/her right to the continued
enjoyment thereof if he/she refuses or deliberately fails to:
a) have himself/herself medically treated by a physician when required by
the GSIS; or
b) take the prescribed medications; or
c) have himself/hmelf confined in a hospital without justifiable reason,
when such confinement is required by the GSJS; or
d) avail himself/herself of such rehabilitation facilities as may be duly
recommended by the GSIS and made available for him/her; or
e) observe such precautionary and/or preventive measures as prescribed
by a physician or expressly required of him/her to prevent the
aggravation or continuance of his/her disability.
However, upon compliance with the requirements, his/her benefits shall
be reswned if he/she is still qUIDfieci.3
6.
SURVIVORSHIP BENEFITS
1. ENTITLEMENT.4
Whe~ a member or pensioner dies, the beneficiaries shall be entitled to
the following survivorship benefits, whichever is applicable:
Sedal 23.4.3.1..~ IV, bl.
Sedal 23.4.32., ~ IV, bl.
J Sedal 23.4.6., ~ IV, bl.
• SediJn 24, ~ll IV, ti:l.
CHArTER FOUR 297
SOCIAL WELFARE LEGISLATION
(1) Survivorship pension consisting of:
a) the basic survivorship pension which is fifty percent (50%) of the
BMP;and
b) the dependent children's pension equivalent to 10% of the BMP for
each child but not to exceed fifty percent (50%) of the BMP. 1
(2) Cash payment equivalent to eighteen (18) months BMP; 2
(3) Cash payment equivalent to one hundred percent (100%) of the AMC
for every year of service with paid contributions but not less than Twelve
2. SURVIVORSHIP BENEFITS OF MEMBERS IN ACTIVE SERVICE.
(1) If at the time of death, a member was in the service and has rendered
at least fifteen (15) years of creditable service:
a) his primary beneficiaries shall receive the survivorship pension and
cash payment equivalent to 18 x the BMP; or
b) in the absence of primary beneficiaries, his secondary beneficiaries
shall receive tl1e cash payment equivalent to 18 x the BMP; or
c) in the absence of secondary beneficiaries, the legal heirs shall receive
the cash payment equivalent to 18 x the BMP.4
(2) If at the time of death, the member was in the service with less than
fifteen (15) years of creditable service; his primary beneficiaries shall receive the
cash payment equivalent to 100% of the AMC for every year of creditable service.5
3. SURVIVORSHIP BENEFITS OF INACTIVE MEMBERS.
Primary beneficiaries of inactive members who have at least 15 years of
creditable service shall receive the survivorship pension only.
1) Primary beneficiaries of inactive members who have at least 3 years
but less than 15 years of creditable service and were less than 60 years
old at the time of death shall receive the cash payment equivalent to
100% of -the AMC for every year of creditable service, but not less
than P12,000.00.
2) Primary beneficiaries of inactive members who have less than 15 years
of creditable service but were at least 60 years old at the time of
separation and have received the corresponding separation benefit,
shall not be entitled to survivorship benefits. However, if the member
1 Sedal24.1.1,rui!IV,l>id.
2 Sedixt 24.12., IU! IV, l>id.
J Sedixt24.1.3.,IU31V,l>id.
Sedal 242.1., rut? IV, lbi!.
Sedal 2422., IUl r-1, l>id.
 BAI. REvlEWER ON lABOR I.AW
has not received y-et his sepantion benefit within four years after
his/her separation: the primacy beneficiaries shall receive the cash
benefit equivalent :o 100% of the inactive member's AMC for every
year of creditable sctvice, but not less than P12,000.00. 1
4. PAYMENT OF SURVIVORSHIP BENEFITS.
The survivorship benefits shall be paid as follows:
1. When the dependent spouse is the only survivor, he shall receive the
basic survivorship ?ension; .•
2. When only the dependent children are the swvivors, they shall be
entitled only to thf dependent children's pension equivalent to 10% of
the BMP for every dependent child, not exceeding five (5), counted
from the youngest and without substitution;
3. When the survivors are the dependent spouse and the dependent
children, the dependent spouse shall receive the basic survivorship
pension for life or until he remarries or cohabits, and the dependent
children shall receive the dependent children's pension.
4. When the dependent spouse and dependent children are already
receiving the bas.c swvivorship pension and dependent children's
pension, respectively, any subsequent death, emancipation or
disqualification of any one of them shall not entitle the other
beneficiaries to the forfeited share.
5. In the absence :,f a natural guardian, the guardian de facto· of
dependent children, as well as the physically or mentally incapacitated
dependent children, must file a Petition for Guanlianship to be able to
claim the sul'Vivomhip benefits on behalf of the dependent children.
6. When the pensio:ier dies within the 5-year periqd after receiving the
five-year lump sum, the survivorship pension shall be paid only after
the end of the said 6ve-year period. However, filing of claim for
survivorship benefit should be done before the end of the 4-year
prescription period.2
5. CONDITIONS FOR ENTITLEMENT.
The primary and seo:mdary beneficiaries, except dependent children, shall
be entitled to applicable survi~orship benefits, subject to the following:
a) not engaged in ar.y gainful occupation;
b) the surviving spouse and the deceased member were living together as
husband and wife;
c) not gainfully engaged in a business or economic activity (self-
employed);
1 Secoon24.3.t.. JU? IV, Ibid.
2 Secoon24.4.1 .• rue IV, Ibid.
CHAl'T£RfOUR 299
SOCIAL WELFARE LEGISLATION
cl) employed/engaged in a business or economic activity but receiving
income less than the minimum compensation of government
employees.
e) not receiving any other pension from the GSIS or another local or
foreign institution or organization; and
f) In the case of the dependent spouse, payment of the basic
survivorship pension shall discontinue when be remarries, cohabits, or
engages in common-law relationship.
The foregoing conditions, except the last one, must be present
immediately preceding the death of the member or pensioner. 1
7.
FUNERAL BENEFITS
1. NATURE OF BENEFIT.
Funeral benefit is intended to help defray the expenses incident to the
burial and funeral of the deceased member, pensioner or retiree under R.A. 660,
R.A. 1616, P.O. 1146 and R.A. 8291.2
2. TO WHOM PAYABLE.
· It is payable to any qualified individual, in accordance wi~ the. following
order of priority: ·
1) Legitimate spouse;
2) Legitimate child who spent for the funeral services; or
3) Any other person who can show incontrovertible proof that he
shouldered the funeral expenses of the deceased.3
3. AMOUNT OF FUNERAL BENEFIT.
The amount of funeral benefit are as follows:
1) The prevailing amount approved by the Board of Trustees at the time
of death of the member or pensioner.
2) For unifoaned members of the P~, BJMP and BFP, the amowit of
funeral benefit is fixed at Pt0,000.00.4
4. CONDITIONS FOR ENTITLEMENT.
Funeral benefit shall be paid upon the death of:
1) An active member; or
Section 24.5., Rule r.J, Ibid.
Seclion 25.1., Ruler,/, lbij. The liM5 menooned nlhs section ref&' ID previoos amendalay laws to fie GSIS law.
) ki
4 Sec1ion 252., Rm IV, lbil.
300 8AR IUVIEWER ON !,\SOR I.AW CHAl'TER FOUR 301
SOCIAL WELFARE LEGISLATION

2) A member who has been separated from the service with more than
15 years of creditable service, but entitled to future separation or
retirement benefits; or
3) Old age or disability pensioner; or
4) A retiree who at the time of his retirement is at least 60 years of age
and with at least 20 years of service but who opts to retire under R.A.
1616 on or after June 24, 1997; or
5) A member who retired under R.A. 1616 prior to June 24, 1997 with at
least twenty (20) years of service, regardless of age.1
LIMITED PORTABILITY LAW2
1. R.A. NO. 7699.
R.A. No. 7699,3 was enacted to enable those from the private sector
who transfer to the government service or from the government sector to the
private sector to combine their years of service and contributions which have been
credited with the SSS or GSIS, as the case may be, to satisfy the required number
of years of service for entitlement to the benefits under the applicable laws.4
"[otaliz.ation" refers to the process of adding up the periods of creditable
services or contributions under each of the Systems, SSS or GSIS, for the purpose
of eligibility and computation of benefits.5 On the other hand, the term "portability"
refers to the transfer of funds for the account and benefit of a worker who
transfers &om one system to the other.6
The benefits provided under R.A. No. 7699 apply to active or inactive
members of eitl1er System (GSIS/SSS) as of the date of its effectivity on May 20,
1994.7
2. COVERAGE.
RA. No. 7699 and its implementing rules apply to all worker-members of
the GSIS and/or SSS who transfer from tl1e public sector to the private sector or
,,icNma, or who wish to retain their membership in both Systems.8
1
Sedion 253. RIJe IV, llil.
1 This qic has been i'dJded il past Syllali b" Lm Law. h lhe 2019 Sylabus, ft is ro blges i'dJded. However, a short
d'~l!-e-edis;.isffiedi1ve11ciis~.
i RA No. 7699, EJJ~ 'M Pd ristilwlg Li'nited Pooabffit)' Scheme ii lhe Social SeaJray Insurance S)'s!em by Tot.{izirg
theWakers' Qrotlble Selvices orCoobixrooosil Ead1 cilhe Systens' apprc7,'Ed tx1 '-tr)' 1, 1994.
• RA. No. 8282, for SSS membels and RA No. 8291. (or GSIS members.
Sedion 2, RA No. 7699; Section 1[e~ ~ 111, Rmls and Regulations kr!>lemenlilg RA. No.7699.
Sedion 2, lbrl.; Sedion 1lb], Rule Ill, Ibo.
7 Section 1,Rule Vll,RulesandRegulams IJrc)lemenlilg Rel)ubicPdNo:7699.
a Sedion 1. Rull I, lil.
3. CREDITABILITY AND TOTALIZATION OF CONTRIBUTIONS
AND BENEFITS IN SSS AND GSIS.
Under R.A. No. 7699,1 it is enunciated that provisions of any general or
special law or rules and regulations to the contrary notwithstanding, a covered
worker who transfers e~ployment from one sector to another (i. e., from private
sector to public sector, or via versa), or is employed in both sectors, shall have his
creditable services or contributions in both Systems (GSIS and SSS) credited to his
service or contribution record in each of the Systems and shall be totalized for
purposes of old-age, disability, survivorship and other benefits in case the covered
m.ember dw not q11alij for s11&h bmejits in tiJhtr or both Systems wilho11/ /Qtaliz.atio11
provided, however, that overlapping periods of membership shall be credited only
once for purposes of totalization.
4. LIMITED PORTABILITY OF FUNDS.
The processes involved in the prompt payment of money benefits to
eligible members are the joint responsibility of the GSIS and SSS.2 The System or
Systems responsible for the payment of money benefits due a covered worker shall
release the same within fifteen (15) working days from receipt of the claim, subject
to the submission of the required documents and availability of complete
employee/employer records in the System or Systems.3
C.
DISABILITY AND DEATH BENEFITS
1.
LABORCODE4
a.
EMPLOYEES' COMPENSATION PROGRAM
1. THE STATE INSURANCE FUND [SIF].
a. SIP created from contributions ofemployers.
The State Insurance Fund (SIF) is built up by the contributions of
employers based on the salaries of their employees as provided under the Labor
Code.
See Secti<xl 3 t.ereci.
Sedion 1, Rule W, Rules .rid Regulaticxls lmplen-eniP;l RA No. 7699.
3 Sedxln2,RuleW,lli
• ~ tprr,lisals:Artides 172 1166]lo 215 [208-A],Td!e II, Book Wof !he LaborCooe.
302 BAR RMEWER ON LABOR I.AW
b. Two (2) separate SIFs.
There are two (2) sepamte and distinct State Insurance Funds: one
establish~ under the SSS for private sector employees; and the other, under the
GSIS for public sector employees. The management and investment of the Funds
are done separately and distinctly by the SSS and the GSIS. It is used exclusively foi
payment of the employees' compensation benefits and no amount thereof is
authorized to be used for any other purpose. 1
c. Three (3) agencies involved in the implemetitation ofthe ECP.
There are three (3) agencies involved in the implementation of the
Employees' Compensation Program (ECP). These ai:e: (1) The Employees'
Compensation Commission (ECC) which is mandated to initiate, rationalize and
coordinate policies of the ECP and to review appealed cases from (2) the
Government Service Insurance System (GSIS) and (3) the Social Security
System (SSS), the administering agencies of the ECP.
d. Role ofthe GSIS and SSS.
Being administering agencies of the ECP, both .the GSIS and SSS are
tasked to:
1) evaluate all employees compensation (Eq claims filed within a given
period and pay the corresponding EC benefits;
2) collect EC premiums remitted by employe~; and
3) manage the SIF.
Both the GSIS and the SSS invest the funds in profitable ventures to
generate earnings which will form part of the State Insurance Fund (SIP) from
which payments for employees' compensation claims ai:e sourced.
e. Role ofthe ECC.
The law applies the social security principle in the handling of workmen's
compensation. Towards this end, the Employees' Compensation Commission
(ECq administers and settles daims from a fund under its exclusive control The
employer does not inceivene in the compensation process and it bas no controi as
in the past, over payment of benefits. The open.ended Tab/, of O&tlljxJli4nal Diseases
requires no proof of causation. A covered claimant suffering from an occupational
disease is automatically paid benefits.
£ Role of the emplc,yer.
On the part of the ~ployer, its duty is only to pay the regular monthly
premiums to the System (GSIS/SSS). It does not look for insurance companies to
meet sudden demands for compensation payments or set up its own funds to meet
1 Article 179, as anended b'f Secoon 4, PD. No. 1368.
CHAYrERfOUR 303
SOCIAL WELFARE LEGISlATION
those contingencies. It does not have to defend itself from spuriously documented
or long past claims.
g. Role ofthe employee.
The injured worker does not have to litigate his right to compensation.
There is no notice of injury or requirement of controversion. The sick worker is
simply required to file a claim with the ECC which determines, on the basis ,of the
employee's supporting papers and medical evidence, whether or not compensation
should be paid. The payment of benefits is more prompt ad the cost of
administration is low.
The employer no longer opposes or fights a claim for compensation by
the employee. Resultantly, the lop-sided situation of an employer against one
employee is absent 1
2. SCOPE OF COVERAGE OF THE ECP.
a. General coverage.
The following shall be covered by the Employees' Compensation
Program (ECP):
1) All employers;
2) Every employee not over sixty (60) years of age;
3) An employee over 60 years of age who bad been paying contributions
to the System (GSIS/SSS) prior to age sixty (60) and has not been
compulsorily retired; and
4) Any employee who is coverable by both the GSIS and SSS and should
be compulsorily covered by both Systems. 2
b. Sectors ofemployees covered by the ECP.
The following sectors are covered under the ECP:
1) All public sector employees including those of government-owned
and/or controlled corporations and local government units covered by
the GSIS;
2) All private sector employees covered by the SSS; and
3) Ovetseas Filipino workers (OFWs), namely:
a. Filipino seafarets compulsorily covered under the SSS.
b. Land-based contract workers provided that their employer, natural
or juridical, is engaged in any trade, industry or business
undertaking in the Philippines; otherwise, they shall not be covered
by the ECP.
1 Samient>v.ECC,G.RNo.l-65680,Mly11, 1988, 161 SCRA312.
2 Article 174 (168}. LmCode; Secfol 2, ~ I, Amended Rules oo ~ • ~ .
 . CH,.l'TER FOUR 305
B"R REvlEWER ON LABOR I.AW SOCIAL WELFARE LEGISLATION

(a) He has been duly reported to the System (GSIS/SSS);

c. Start ofcoverage ofemployees under the ECP.
(b) He sustains an injury or contracts sickness; and
The coverage under the ECP of employees in the private and public
(c) The System has been duly notified of the injury or sickness. 1
sectors starts on the first d<!J of their employment.
2. PERIOD OF ENTITLEMENT.
d. Nature ofcoverage.
The medical services, appliances and supplies are required to be provided
The coverage i$ compulsory in nature.1
to the afflicted employee beginning on the first day of injury or sickness, during the
subsequent period of his disability, and as the progress of his recovery may
b. require.2 The obligation of the SIF to provide medical services shall continue for as
EMPLOYEES' COMPENSATION BENEFITS long as the employee is sick. This duty is not ended even if employment was
terminated.3
1. KINDS OF BENEFlTS.
3. EXTENT OF SERVICES.
The following are the benefits provided under the Labor Code:
The employee is entitled to the benefits only for the ward services of an
1) Medical Benefits2 accredited hospital and accredited physician. However, if the employee chooses
2) Rehabilitation Services.3 accommodations better than ward services, the excess of the total amount of
expenses incurred over the benefits provided under Annex "C" of the Amended Rllles
3) Disability Benefits• 011 Employm' ComptMation shall be borne by the employee.•
a. Temporary total disabi!ityS
The hospital shall provide all the medicines, drugs or supplies necessary
b. Permanent total disability6 for the treatment of the employee at a cost not exceeding the retail prices
c. Permanent partial disability' prevailing in local drug stores.5 In.view of. the enactment of R.A. No. 9502,
otherwise known as 'The Univma!q .h,essible Cheaper and Q"ali!J Medidnts A,t of
4) Death Benefits
2008" and its Implementing Rules and Regulations which provide that the
5) Funeral Benefit' President of the Philippines, upon recommendation of the Secretary of the
Department of Health, shall have the power to impose Maximum Drug Retail
I. Prices (MDRP) over any or all drugs and medicines as enumerated and provided
MEDICAL BENEFITS for in the law, the ECC passed Board Rlsollltion No. 09.()9-134 on September 25,
2009, approving as a policy that all reimbursements of medicines under P.D. 626,
1. CONDITIONS FOR ENTITLEMENT TO MEDICAL SERVICES, as amended, shall be in accordance with the amount that may be prescribed under
APPLIANCES AND SUPPLIES. R.A. No. 9502 and its Implementing Rules and Regulations.
Payments shall be made directly to the providers of such services in such
Any employee is entitled to such medical services,. appliances and supplies
amount as are prevailing in the co=unity for similar services or provided under
as the llllture of his disability and the progress of his recovery may require, subject
to the expense limitation as contained in AnMX ''C" of the Ammtild &lies on the schedule set forth in said Annex ''C, "whichever is less.6
Employees' Co'mpt11Jation, if all of the following conditions are satisfied: The right of the employee to seek reimbursement for medical expenses
docs not only pertain to those incurred for the principal or primary ailment but
1 Arti:le 1741168], W,; See alsoSedion 1, Rule I, Ibid.
Articles 191 [185) to 1961190),ChapterV, Title 11, Book rv, Labor Code.
Article 1961190). Ibid. 1SediJl1 1. RuleVlll,Amended ~ o o ~ • ~.
' Articles 19711911 lo 1991193i Chapter Vl, TIile 11, Book W, Ibid. 1 SediJl'l 2. Rule Vlll,Melded Rules al ~bfees' Canpensaioo.
s Article 197 [191), Ibid. ' l!opl-Suyoc Mnes, ~ V. rua-,, G.R. No. L-18974, Sept 30, 1963.
I Ar1ide 198 [192), Ibid. ' Sectm 3!al.Rule VIII, Ameroed ~ al Enl>bfees' Coolpensatial.
1 Article 199 {193). Ibid. \ ~ 3~). Rule VIII, Ibo.
1 Article 200 (1941, ChaplerVll, Tille 11, Book IV, Ibid. 5 Sed.ial 3~). Rule VIII, l>id.
' SediJl1 1, Rule 'IN, Amended~ oo ~ees· Con1>ensalim
 CHAl'TER FOUR 307
BAR REVIEWER ON [ABOR lAW
306 SOCIAL WELFARE LEGISLATION

extends to those incurred for complications arising therefrom even if the same 3. PERIOD OF ENTITLEMENT.
occurred after the employee had a_lready retired. . Rehabilitation services shall be provided during the period of the disability
4, LOSS OF WAGES OR EARNING CAPACITY NOT REQUIRED. as the nature and progress of the recovery of the PWRDs may require as
determined by the rehabilitation experts. Rehabilitation services shall be suspended
It is worthy to note that Article 191 [185] does not impose as a pre- or terminated upon refusal of the PWRD to continue rehabilitation. 1
requisite for the grant of medical benefits, that the injured or sick employee should
show proof that he suffered loss of wages or earning capacity as a result of such 4. EXTENT OF REHABILITATION SERVICES.
injury or sickness. The law is clear that the injured or sick employee is 'fmmediate!J" Rehabilitation services may be in the form of any of the following:
entitled to be provided during the subsequent period of his disability, with such
medical services and appliances as the nature of his sickness or ~jury and progress a. Medical-surgical management;
of his recovery may require.• The only limitation imposed by law ts ~ the ~~tter of b. Hospitali2ation;
expenses which the ECC may prescribe.2 A ~aimant_who, despite his. illness, c. Necessary appliances and supplies;
continues to work in order to avoid economtc loss ts nonetheless ent1tled to d. Physical restoration;
e. Psychosocial counseling;
medical benefits.3
f. P,sychiatric evaluation;
g. Skills training;
II.
h. Entrepreneurship training;
REHABILITATION SERVICES
i. Hearing impairment rehabilitation;
j. Visual impairment rehabilitation.2
t. DEFINITIONS.
5. TRAINING OF PWRD.
''Perron with l~ork-&/aJed Di.Jabili!J (PWRD)" means a worker who has
suffered from a work-connected disease or injury adversely affecting the earning The PWRD trainee shall be entitled to tuition fees, reimbursement of the·
capacity.4 cost of training materials, and meal and transportation allowances,3 as applicable,
"Rthabilitatiorl' is the process by which there is provided a balanced within the amount prescribed by the Commission (ECC).4
program of remedial treatment, vocational assessment and preparation designed to The Commission shall enter into an agreement with any government or
meet the individual needs of each handicapped employee to restore him to suitable private hospitals/institutions for purposes of utilizing their service facilities for
employment and to help each PWRD to develop his/her mental, vocational or rehabilitation.s
social potential.5
The Commission may establish a rehabilitation facility, as may be
''Rthabi.italion Fadli!J" is an organized service offering one or more types necessary and appropriate, such facility being a part of an existing medical facility
of service for the rehabilitation °:>fa person with disability.6 or in a separate site, offering one or more types of services for tl1e rehabilitation of
2. NATURE AND CONDITION OF ENTITLEMENT. PWRDs. 6

Coverage under this benefit shall be voluntary. Entitlement to 6. LIMITATION OF LIABILITY.

rehabilitation services shall be upon approval of the EC claim for disability benefits The System shall not be responsible for the payment of rehabilitation
by the Systems.7 services when the injury, sickness, disability or death during the rehabilitation

1
Mk:!e191 (185].l.alxJt.ode:Caalesv.ECC, GRNo. L-4W,Feb.27, 1979,88 SCRA 547.
2 Mk:!e 191(185], l.alxJCooe. 1 Seem 3, Rule IX, Id.
3 Coaaesv. ECC, supra. . . 2 Sedial4, Rule IX, kl.
' Sedial 1(a), RulelX,Amendedltieson Ell)b/ees'~ as amended by BoadR~ No. 14-07-19,s. tleal and lranspatl1ix1 ~ was ilcreased ran 1"1 ,800.00 to P2,500.00. (As prtwed undef Boad Resclmi No.
2014, Feauay 19, 2014. . 10-10-158, ()Qj)ef20, 2010).
s Sedial 1(b), ~ IX, kl. Sedon 5, Rule IX, Id.
1 Sedial 1(c), ~ IX, Id. Secfxln 6, Rule IX, Id.
1 Sedial 2, ~ IX, kl. 1 Sedial7.~IX,kl.
 SAR REVIEWER ON LABOR I.AW
308
period of the P ~ is occasioned by any of the foll~wing: (1~ Intoxication; (2)
Willful intent to 101ure oneself or another; and (3) Notonous negligence.I
7. MONITORING OF ACTMTIES AND PROGRESS OF PWRDs.
The Secretariat shall establish a mechanism to monitor the activities and
progress of PWRDs. For this purpose, the Secretariat may conduct home visits for
the successful implementation of the delivery of services/projects of the
rehabilitation program of the Commission. 2
Ill.
DISABILITY BENEFITS
1. DISABILITY, MEANING.
"Di!abiliry" means the loss or damage of a physical or mental function
resulting from an injury or sickness that prevents an employee from performing
lus/her work, or from being engaged in any gainful occuparion.3 In general, as a
basis for compensation, it is the combination of partial or total physical incapacity
and of inability to work, or inability to work with the same ease and competency as
prior to the injury, or the loss, total or partial, of earning power from the injury.4
2. THREE KINDS OF DISABILITY UNDER THE LABOR CODE.
There are three (3) kinds of disability benefits under the Labor Code, as
amended by P.O. No. 626,5 namely:
(!) Temporary total disability (Article 197 [191]);
(2) Permanent total disability (Article 198 (192]); and
(3) Permanent partial disability (Article 199 (193)).
All the foregoing are discussed in mialim herein~below.
The compensation for the disabilities mentioned and described in the law
is not mutually exclusive·. For instance, recovery of compensation for ttmpora,y total
or ptm,/J/t!ntpartialdisability shall not·preclude recovery for ptm,anmt total disab'tlity.
The purpose of the law in providing benefits to the injured or sick
employee during temporary disability is to compensate him for what he might have
earned during the period while his injury or sickness is being medically treated. The
object of the law in providing benefits for pm,,a11t11/ disability is to compensate him
for the actual and permanent loss of physical or mental function of his body.' 1bis •
' Seam 8, IU? IX. Id.
1 Sedm9.~IX,ld.
Arti:le 173 ~i LabaCode.
=·
l 1 Social Seo.,il'f Carmis9:rlv. CA, G.R No. 152058, SEi,it. 'lf, 2004.
' Hatta Ha!aie V. ECC, G.R No. 92803, Mrch 22. 1991, 195 SCRA 580.
I
6
The~~LM.
hsucr Llil'ba'Co., GR. No. L-42175, July 10, 1935, 61 Phi. 592; Garcia v. Phwppine Educaioo ~ y . 62
CHAM'ER FOUR 309
SOCIAL WELFARE LEGISIATION
is as it_should be; otherwise, the social justice policy underlying the enactment of
labor laws would lose its meaning.•
lll•A.
TEMPORARY TOTAL DISABILITY
1. TOTAL DISABILITY, WHEN TEMPORARY.
A total 4isability is temporary if, as a result of the injury or sickness, the
employee is unable to perform any gainful occupation for a continuous period of
not exceeding one hundred twenty (120) days, except when such disability still
requires medical attendance beyond 120 days, but not to exceed 240 days.2
If the disability is the result of an injury or sickness, the peood of
compensability shall be counted from the first day of such injury or sickness. An
employee who later had to stop working due to a compensable illness is also
entitled to umporary total diJability benefits.3 An employee•claimant who retires or is
otherwise separated from employment after the 120 days of TID but before 240
days, may present himself to the System (GSIS/SSS) for another physical and
medical examination to determine if he/she is entitled to additional benefits.'
2. CONDITIONS TO ENTITLEMENT.
An employee shall be entitled to an income benefit for temporary total
disability if~ of the following conditions are satisfied:
1. He has been dulyreported to the System (GSIS/SSS);
2. He sustains the temporary total disability as a result of the injury or
sickness; and
3. The System has been duly notified of the injury or sickness which
caused his disability.
His employer shall be liable for the benefit if such illness or injury
occurred before the employee is duly xeported for covenge to the System
(GSIS/SSS).5 .
3. PERIOD OF ENTITLE~ENT.
The income benefit in the case of temponuy total disability should be paid
beginning on the first day of such disability. If caused by. an injury or sickness, it
should not be paid longer than one hundred twenty (120) consecutive days except
where such injury .or sickness still requires medical attention beyond 120 days but
l
2 Miele 197 1191L Laba Code; Sedioo 2 [aL rue vu, Arrfnded ~ en ~ ~ : ECC Board
i ResciJfm ~ ~ e n Aupst5, 1991
l Fedilov.v.te,GR.No.l-43642,Jal. 17, 1965, 134SCRA56.
j
• ECCBcm1ResciJlxxlNo.~ /Aupst5, 1993.
I Seciier)1,~X,Amenled~en~~
310 BAR REvJEWER ON LABOR I.AW
CHAl'TER FOUR 311
SOCIAL WELFARE LEG ISIATION

not to exceed 240 days from the onset of the disability, in which case, benefit for
temporary Iota/ disability shall be paid. However, the System (GSIS/SSS) may declare
the total a11d ptrma11t11I status at any time after 120 days of continuous temporary total
disability as may be warranted by the degree of acrual loss or impairment of
physical or mental functions as detennined by the System (GSIS/SSS). 1
After an employee l:as fully recovered from an illness as duly certified to
by the attending physician, the period covered by any relapse he suffers or
recurrence of his illness, which results in disability and is determined to be
compensable, shall be considered independent of, and-;separate from, the period
covered by the original disability in the computation of his income benefit for
ttmporary /Qta/ disability.2
4. AMOUNT OF BENEFIT.
Any employee entitled to benefit for temporary total disability shall be
paid an ipcome benefit equivalent to ninety percent (90%) of his average daily
salary credit, subject to the condition that the daily income benefit shall not be less
than P10.00 or more than P200.003 nor paid longer than 120 days for the same
disability, unless the injwy or sickness requires more extensive treatment that lasts
beyond 120 days, but not to e.,:ceed 240 days from onset of disability, in which
case, he shall be paid benefit for temporary /Qtal disability during the extended
period.4
111-B.
PERMANENT TOTAL DISABILITY
1. DISABILITY, WHEN TOTAL AND PERMANENT.
A disability is total and permanent if, as a result of the injury or sickness, the
employee is unable to perform any gainful occupation for a continuous petiod
exceeding one hundred twenty (120) days.5 The fact, however, that the permanently
and totally disabled employee continues to work after such disability does not
deprive hin1 of the benefits provided under the law.6 For what is important
consideration is the inability to do substantially all material acts necessary for the
prosecution of a gainful occupation without serious discomfort or pain and without
material injury or danger to life. In disability compensation, it is not the injury per 1e
which is compensated but the incapacity to work. 1 The test to determine its gravity
is the impairment or loss of one's capacity to earn and not its mere medical
significance.2
2. CONDITIONS TO ENTITLEMENT.
An employee is entitled to an income benefit for permanent Iota/ disability if
all of the following conditions are satisfied:
1) He has been duly reported to the System (GSlS/ SSS);
2) He sustains the permanent total disability as a result of the injury or
sickness; and
3) The System has been duly notified of the injury or sickness which
caused his disability.3
. His employer shall be liable for the benefit if such injury or sickness
occurred before the employee is duly reported for coverage to the System
(GSIS/SSS).4
3. TOTAL DISABILITIES DEEMED PERMANENT.
The following total disabilities shall be considered permanent:
(1) Temporary .total disability lasting continuously for more than 120
days, except as otherwise provided for ttmporary total disability.5
(2) Complete loss of sight of both eyes;
(3) Loss·of two limbs at or above the ankle or wrist;
(4) Peananent complete paralysis of two limbs.
(5) Brain injury resulting in incucable imbecility and insanity, and
(6) Such cases as determined by the System (GSIS/SSS) and approved
by the Commission.6
4. PERIOD OF ENTITLEMENT.
The full monthly income benefit shall be paid for all compensable
months of disability.7 After the benefit under the Employees' Compensation shall
have ceased as provided under the preceding paragraph, and if the employee is
otherwise qualified for benefit for the same disability under another law
administered· by the System, he shall be paid a benefit in accordance with the

Secful 2 [aJ. ~ X. bii

Secful 2(bl,~ X, W.: ECC Resokrial No. 1029,AuJUst 10, 1978.
3 The <YllMt ol daft rioome behefil bl EfTiPO(alY klta cflxbility fTTlJI was roeased from P90.00 ID P200.00, as
prov.led \rider ECC lloiMd Resokool No 96-10-0429, Odooer 10, 1996 a1d ECC Bwd Resootial No. 12-00-21,
Septerrl)er27, 2012.
' Secful3, ~ X. bil.; ECC Resoofm No. 1029,AuJUst 10, 1978.
s Secful 2[b~ ~k! Vil lvlmled Rues (It Erll>biees' Carciensafun: Clystal ~ - Ile.V. NaM!al, GR No. 154798.
1 Bejeflr,ov. ECC, GR No. 84m, Jan. 30, 1992; Clystal 9'4ll)ing. nc. v. Natilidad. GR No. 154798. Oct 20. 2005.
2 Sea!Jul Mrime Cap. v. Dee, G.R No.165156, ~ 2. 2007.
1 Secoon 1[aJ, ~ Xl,Ameoded RiJes(ll Err!)IC7jee5'~.
I • ~ XI, Amended Rues (It EJriilc7fees' Corrc>ensaliOn-
s Tfl11)(BY IDtll cisabiy as prlMled ii Rule X. Ameoded ~ (It Empk1/ee5' Canpensa001.
6 Secoon 1 ~J, RuleXl,Ameoded RJ.des(ll~· ~

J
Oct 20. 2005; GSIS v. Cai'JZ. GR No. 154093, Juy 8, 2003, 405 SCRA 450,454. -
' l,\;kabalv. ECC, G.R. No. L-51533, Nev. 29, 1983. 7 Secoon 2{aJ, Rule XI, Id.

'
•,
312 SAR REVIEWER ON IABOR IAW
provisions of that law. 1bis paragraph applies to contingencies which occurred
prior to May 1, 1978.1
Except as otherwise provided for in other laws, decrees, orders or letters
of instructions, the monthly income benefit shall be guaranteed for 5 years and
shall be suspended under any of the following conditions:
(1) Failure to present himself for examination at least once a year upon
notice by the System; . .
1.1. Compliance with the said requirement shall lift the suspension
and obligation of the System to return the suspended EC PTD
benefits auto:natically arises.2
(2) Failure to submit a quarterly medical report certified by his attending
phys_ician;3
(3) Complete or full recovery from his permanent disability, or
(4) Upon being gainfully employed.4
5. AMOUNT OF BENEFIT.
In the case of the SSS, any employee entitled to peananent total disability
benefit shall be paid by the System a monthly income benefit5 The number of
months of paid coverage shall be the number of monthly contributions remitted
to the System including · contributions other than for Employees'
Compensation if paid before March 31, 1975. The full monthly income benefit
shall be paid for all compensable months of disability.6 The first day preceding the
semester of temporary totai disability shall be considered for purposes of
computing the monthly incotr.e benefit for permanent total disability.7
It bears noting that in 2014, there has been a ten percent (10%) across-
the-board increase in EC pension for all EC permanent total disability pensioner in
the private sector.8 The 10% across-the-board increase has a retroactive application
to September 2013.9
6. AMOUNT OF BENEFIT FOR DEPENDENT CHILDREN.
Each dependent child, but not exceeding five (5), counted from the
youngest and without substitution, shall be entitled to ten percent (10%) of the
1
Sedm21b].IUJXl,ld.
1 ~ pw;iled ulder ECC Board ResoUia1 No.10-02-03, W Fetxuay 26, 2010.
a
3 ~ ~ied 11x1er Seem 5ex Rule r-1 tie An-Ended~ oo fnllk7tees' ~ -
Sedial 2~, IUl XI.Ameooed Rle oo ~ · ~ .
Sedi013(a),IUJXJ, ld.~de&ledil Secral9(a), fqleVlcilheAll'Ended~oo~~-
Sedi013 (b), Rule XI, Id.
I Sedm3(c),IUJXl,ld.
& PerSedm2,E.xe0.MO!dEJNo.167,~May26,2014.
J
9 As pMled u,der Bo.rd P.esdutia1 No. 14-0>-29,daloo .lll1e 6, 2014.
(IIArTER FOUR 3lJ
SOCIAL WELFARE LEGISLATION
monthly in~ome benefit of the employee. 1bis rule, however, shall not apply to
causes of action which accrued before May 1, 1978.1
7. ENTITLEMENT TO THE NEW INCOME BENEFIT UNDER P.O.
1641.
The new amount of the monthly income benefit computed under the
Amended RP/a shall be applicable to all contingencies occurring on or after January
t, 1980. However, for contingencies which occuned before May 1, 1978, the
limitation of P12,000 or 5 years, whichever tomes first, shall be enforced.2
In the case of the SSS, the present monthly income benefit of current
pensioners shall be increased by twenty percen_t (20%) effective January 1, 1980.3
In the case of the GSIS, the monthly income benefit of current
pensioners shall be adjusted and re~omputed to reflect the twenty percent (20%)
increase over the benefit under P.D. 1146 effectiveJanuary 1, 1980.4
8. AGGREGATE MONTHLY BENEFIT PAYABLE.
-Except the benefit to dependent childreo,5 the aggregate monthly benefit
payable, in the case of the GSIS, shall in no cas_e ex~ed the monthly wa~e ~r. s ~
actually received by the ~ployee as of the date of his permanent total disability.
111-C.
PERMANENT PARTIAL DISABILITY
1. DISABILITY, WHEN PARTIAL AND PERMANENT.
A disability is partial and permanent if, as a result of the injury or sic;ness,
the employee suffers a permanent partia/loss of the use of any part of his body.
2. CONDITIONS TO ENTITLEMENT.
An employee shall be entitled to an income _benefit for pemranmt partial
disability (PPD) if all of the following conditions are sausfied:
1. He has been duly reported to the System (GSIS/SSS); . .
2. He sustains the permanent partial disability as a result of the 1.n1ury or
sickness; and .
3. The System has been duly notified of the. injury or sickness which
caused his disability.
~ 4(a), Rule XI, Amended Rukls oo t/l1)1o'/ees' Canpensaooo.
~5(a),RuleXl,ld.
i Id.
i Id.
s ~~4oftisRlAlXI.
~ 6, Rule XI, Id~ See also ECC ResoliDl 1-b. 2819, AuJusl_9, 1984.
7 ~ 2 lcl, Rule VII, An-Ended R!Jles oo frr!>loyees' ~
 84R REV1£WER ON lABOR lAW CHAPTIRFOUR
314 SOCIAL WELFARE LEGISLATION
oaebigcoc 6
His employer shall be liable for the benefit if such injwy or sickness anycoc 3
occurred before the employee is duly reported for coveiage to the System one bud 39
one arm 50
(GSIS/SSS).t one foot 21
one leg 46
For purposes of er.titlement to. income be~efits for permanent P":1ial occcar 10
disability, a covered employee shall condunued to _r:ceivhis: the bene~~!:ovided bomean 20·
hearing of one car 10
thereunder even ifhe is gainfully emp1oye an rece1Vlllg wage ors.......,. hearing of both cars 50
sight of one eye 25
3. PERIOD OF ENTITLEMENT.
The income benefit shall be paid beginning o~ the first month of such S. AMOUNT OF BENEFIT.
disability, but not longer than the designated number of months in accordance with
Any employee entitled to peananent partial disability benefit shall be paid
the schedule found in Article 199(b) [193(b)] of the Labor Code.3
by the System a monthly income benefit for the number of months indicated in the
,\ worker who sustained work-related injuries that resulted to functional schedule embodied in the law (Article199(b) (193(b))) and the Amended Rules. 1 If the
loss and/or physical loss of any part o~his ~od~ ~hall be granted Temporary !otal indicated number of months exceed twelve, the income benefit shall be paid in
Disability (ITD) and Permanent Partial D1sabihty (PPD). benefits_ ~uccess1vely. monthly pension; otherwise, the System may pay income benefit in lump sum or in
Any earlier compensation for TIU that may have been pa1d to an tnJured worker monthly pension.2
shall not be deducted from the PPD benefit that may be later granted to him. 4
In case of permanent partial disability less than the total loss of the
A loss of a wrist shall be considered a loss of the hand, and a loss of an member, the same monthly income shall be paid for a portion of the period
elbow shall be considered a loss of the ann; a loss of an ankle shall be considered a established for the total loss of the member in accordance with the proportion that
loss of the foot, and a loss of a knee shall be considered a loss of the leg, a loss of the partial loss bears to the total loss. If the result is a decimal fraction, the same
more than one joint shall be considered a loss of the whole finger or toe, and a loss shall be rounded off to the next higher integer.3
of only the first joint shall be considered a loss of one-half of the whole finger ~r
toe. Other permanent partial disabilities shall be detennined by the Medical Officer In case of simultaneous loss of more than one member or a part thereof,
of the System.s the same monthly income shall be paid for a period equivalent to the sum of the
periods established for the loss of the member or part thereof but not exceeding
The degree of pennment disability shall be equivalent to the ratio that the 75. If the result is a decimal fraction, the same shall be rounded off to the higher
designated number of compensability beats to 75.6 integer.4
4. SCHEDULE OF INCOME BENEFIT PAYMENT. The new amount of the monthly income benefit computed under the
The income benefit shall be paid beginning with the first month of Amended RH/e.r shall be applicable to all contingencies occurring on or after Januuy
disability, but no longer than the designated number of months in the following 1, 1980. However, for contingencies which occurred befoce May 1, 1978, the
schedule:7 limitation of P12,000.00 or five (5) years, whichever comes first, shall be enforced.5

Complete md fmnBPmt 1:iA.RI

MR/JlJu
In
the case of the SSS, the present monthly income benefit of current
WI 0 hb£Yltq{ pensioners shall be increased by twenty per~t (20%) effective Januuy 1, 1980.6
oncchwnb 10
one index finger 8
one middle finger 6
In the case of the GSIS, the monthly income benefits . of current
one ring finger 5 pensioners shall be adjusted and recomputed to reflect' the twC:Dty percent (20%)
one litdc finger 3
increase over the benefit under P.O. 1146 effective January 1, 1980.1
F.
Sec1icr1 1(a). Rue XII, hnended Rules on ~loyees' ~ -

I
1
2 Secb 1{b), ~ XO, lbij, Sectixl 2Uleleof.
3 Secb 2(a). RtE XII. llid. Secoon 3(al Rule XI~ 1bit.
3 Sedi)n 3 ll>]. Rule XIUlkl.
' Id.; As prMled inter &lard Resdution No. 10-09-114, Series d 2010, Septooter2, 2010.
s Section 2 ~). Rllle Xll llG.
& Section 2ICI, Rllle XII. lbil.
1 Per Sedol 2. rui xe cl Ille MleOded P.ues o n ~ · ~
i ' Sediln 3(cl. Rule XI~ lbif.
s Sec1ioo 3(d). Rule XI~ lbil.
& Id.
 BAR REVIEWER ON I.ABOR I.AW
It bears noting that 6ere has been a ten percent (10%) across-the-board
increase in EC pension for all EC survivorship pensioner in the private sector. 2 The
10% across-the-board increase has a retroactive application to September 2013.l
6. UNLISTED INJURIES AND ILLNESSES.
In cases of injuries o: illnesses not listed in the schedule in Article 199(b)
[! 93(b)) and the Amended F.Jilu,• the benefit shall be an income benefit equivalent to
5 refers to death which is the result of a work-related injury or sickness.
the percentage of the permanent Joss of the capacity for work.
7. LITMUS TEST AND DISTINCTION BETWEEJ'I PERMANENT
TOTAL DISABILITY AND PERMANENT PARTIAL DISABILITY.
In Vicente v. ECC,6 the Supreme Court laid down the litmus test and
distinction between Pmna'nent Total Disability and Permanent Partial Disabili!J, to wit.
"[\X~bile 'per111anenl Iola/ disability' invariably results in an
employee's loss of \l."Ock or inability to perform his usual work,
'ptmtant11/ partial disobi5..j, ' on the other hand, occurs when an employee
loses the use of any particular anatomic:tl part of his body which
disables him to continue with his former work. Stated otherwise, the
test of whether or not ;m employee suffers from 'pumantnJ Iota/ disobili{y'
is a showing of the opacity of the employee to continue performing his
work notwithstanding the disability he incuued. Thus, if by reason of
the injury or sickness he sustained, the employee is unable to perform
bis customary job for more than 120 days and he does not come within
the coverage of Ruic X of the Amended Rules on Employees
Compcnsability (which, in a more detlliled manner, describes what
constitutes temporar/ total disability), ·then the said employee
undoubtedly suffers from 'ptmrt111tnl total diJobi.it,' regardless of whether
or not he loses the use of any part of his body.•~
It bears emphasizing that a person's disability may not manifest fully at
one precise moment in time but rather over a period of time. It is possible that an
injury which at first was -considered to be temporary may later on become
pennanent or one who suffers a partial disability becomes totally and permanently
disabled from the same cause.8
I Id.
Secbl 2, Exeafrle Oder No.167, dall!d May 26, 2014.
As Jl(tllijed tn1ec lmd Resol.ful No. 14-06-29,dated J\lle 6, 2014.
lblerSedi:lo2~-
Noo-Sd'oedued ~ities.
1 GRtii.85024,Jan.23. 1991, 193SCRA 19:l
1 See also Social $early Cormission, 1·. CA. G.R. No. 152058, Sel)L 27, 2004; lja'es v. Gout of Appeals, GR No. 105854,
Pu,j. 26, 1999, 313 SCRA 141; Goozaga v. ECC, GR No. L-62287,Jan. 31, 1984, 127 SCRA 443; IJarcefriov. Seven Up
8a1i1g ~ d the Phippi1es, G.R No. L-30443, Oct 31, 1972. 150-C Phi 133; l.axi:ho v. WCC, GR No. l·
45996, M.Jdl 26, 1979,89 SCAA 147; d!IJ3Slli v. Pn:Ni1ce d Negro; Oriental, GR No. L-43006, Dec. 29, 1978.
• GSISv.CA.GR No. 117572,ai. 29, 1998.285SCRA430citiYJ GSISv.CA, GRNo.116015,J1q31, 1996,260SCRA
133.
C HAl'TER FOUR 317
SOCIAL WELFARE LEGISLATION
IV.
DEATH BENEFIT
1. DEATH; MEANING.
Within the context of the employees' compensation program, the term
"death" means loss of life resulting from an injury or sickness.1 "Compensable death"
2. CONDITION TO ENTITLEMENT.
The beneficiaries of a deceased employee shall be entitled to an income
benefit if all of the following conditions are satisfied:
(1) The employee has been duly reported to the System;
(2) He died as a result of an injury or sickness; and
(3) The System has been duly notified of his death as well as the injury or
sickness whicl1 caused his death. His employer shall be liable for the
benefit if such death occurred before the employee is duly reported
for coverage to the System.2
If the employee has been receiving monthly income benefit for
permanent total disability at the time of his death, the surviving spouse must show
that the marriage has been validly subsisting at the time of his . disability. ln
addition, the cause of death must be a complication ·or natural consequence of the
compcnsafed Permanent Total Disability.l
3. PERIOD OF ENTITLEMENT.
A. For Primary Beneficiaries:
(a) The income benefit shall be paid beginning at the month of death and
shall continue to be paid for as long as the beneficiaries are entitled thereto. With
respect to the surviving legitimate spouse, the qualification is that he/ she has not
remarried For the dependent children, the qualifications are:
1) Unmarried;
2) Not gainfully employed: and
3) Over 21 years of age provided he/she is incapable of self-
support due to a physical or mental defect which is congenital or
acquired during minority.4
1 Moe 173(m)l167(mli l.mCode.
2 Sedxxt 1 lai ~ XIII. Amended Rules on ElrlJk,yees' ~ ; Gau Sherg Phis., Inc. v. Joaqui), GR. No.
144665,Sejx. 8,2004,cm'l:l Bonillav. CA. GR. No. 136453. Sept 21,200), 340 SCAA 760.
3 Sedxxt 1 lb!, Rue Xlll, Id.; As prM!ed iroedlo~d Resolition No. 1~116, dated Sepemef 2, 2010.
' Sedxxt 2 (A) la!,Rule XIII, Id.; As promed iroer Boaid Resouoon No. 12-07-16, dated Jltf ll, 2012.
318 BAR REV1£W1:R ON LABOR LAW
(b) The monthly income benefit shall be guaranteed for five (5) years
which in no case shall be less than Pl 5,000.00. Thereafter, the beneficiaries shall be
paid the monthly income benefit for as long as they are entitled thereto. 1
B. For Secondai;y Beneficiariesi
(a) The income benefit shall be ·sixty (60) times the monthly income
benefit of a primary beneficiary which in no case be less than P15,000.00, which
shall likewise be paid in monthly pension.2
4. AMOUNT OF BENEFIT.
(a) In the case of primary beneficiaries - Th~ monthly income .benefit
shall be equivalent to the monthly income benefit for peananent total disability,
which shall be guaranteed for five years, increased by ten percent for each
dependent child but not exceeding five (5), beginning with the youngest and
without substitution: Provided, That, the aggregate monthly benefit payable in the
case of the GSIS shall in no case exceed the monthly wage or salary actually
received by the employee at the time of his death; and Provitkd, Further, Th.at the
minimum income benefit shall not be less than P15,000.00. The death benefit shall
be paid during the entire period for which they are entitled thereto.
If the employee has been receiving income benefits for permanent total
disability at the time of his death, the primary beneficiaries shall be paid the
monthly income benefit equivalent to eighty percent plus the dependent's pension
equivalent to ten percent (10%) thereof for every dependent child but not
exceeding five (5) counted from the youngest and without substitution.3
(b) In the case of secondacy beneficiaries - The income benefit is
payable in monthly pension which shall not exceed the period of 60 months
and the aggregate income benefit shall not be less than P15,000.00. If the
employee has been receiving monthly income benefit for permanent total disability
at the time of his death, the secondary beneficiaries shall be paid the monthly
pension, excluding the dependent's pension of the remaining balance of the five
year guaranteed period.4 It bears stressing that there has been a ten percent (10%)
across-the-board increase in EC pension for all EC survivorship pensioner in the
private sector.s The 10% across-the-board increase has a retroactive application to
September 2013.6
(c) Qualified wives and children beneficiaries of Muslims.
In relation thereto, the following are the guidelines on the grant of EC
death benefits to qualified wives and children beneficiaries of Muslims:
Saml 2(,4) (b], Rue Xlll, ki; ECC Resok6xl No. 2799, -"!25, 1984.
Secfm 2(8), ~le XID, Id.; Id. . !I 'I.
3 Sectoo 3(a), Rule XJn. Id.
• Sectoo 3(b), Rule XIII, Id.: ECC ResolJtxxl No. 2799, J,zt 25, 1984.
Sectoo 2, ExecuweOde' No. 167, dated May26, 2014.
6 ,1.s prowled lllOOI' Board Resoooon No. 14-06-29, dated JU1e 6, 2014.
CUAl'TER FOUR 319
SOCIAL WELFARE LEGISLATION
1) The basic monthly pension shall be divided equally among the
surv1V1ng wives;
2) Upon the death or re-marriage of any of the wives, her basic monthly
pension shall be equally re-distributed to tJ:ie remaining wives;
3) The qualified dependent children not exceeding five (5) beginning
with the youngest and without substitution, who are entitled to
dependent's pension, shall be counted from among the collective
number of children of the wives of the Muslim and not counted from
the children of each wife of the Muslim.1
(d) Benefits upon the death of a pensioner.
The provision of paragraph (b) of Article 200 [194] of the Labor Code, as
am~ded, applies to death occurring on or after January 1, 1980, regardless of the
date of the onset of the permanent total disability.2
Upon the death of a pensioner as mentioned in the said paragraph (b) of
Article 200 [194], eighty percent (80%) of the monthly income benefit and the
dependents' pension shall be paid to the primary beneficiaries in cases where the
cause of death is a complication or natural consequence of his compensated
Permanent Total Disability.3
This provision does not apply to cases where a member under permanent
partial disability dies during the period that he is receiving monthly income benefit
for permanmtpartial disability.4
Upon the death of a pensioner who is survived hy 1eco11da,y beneficiaries,
the latter are entitled only to the balance of the five (5) year guaranteed period,
provided that the total amount of compensation benefits for the five-year period
shall not be less than Fifteen thousand pesos (PlS,000.00). But if the member
under permanent total disability dies after the five-)'ear guaranteed period, 1econdary
beneficiaries are no longer entitled to any benefits.s
5. ENTITLEMENT TO THE NEW INCOME BENEFIT UNDER P.O.
1641.
The new amount of the monthly income benefit computed under
the Amended &tki shall be applicable to all contingencies occurring on or after
January 1, 1980. However, for contingencies which occurred before May 1, 1978,
the limitation of P12,000 or 5 years, whichever comes first, shall be enforced.
1 P-s ixMled inlet lmd Res0lJbl No. 14-07-34, dated-"! 28, 2014; See also No. I11), Nw. -Cl",~~ kl
Amnled~ooErll>bfees'~(P.escimlNo.00-03-0022datedlladl23, 1990i
2 No. I 111, /vw. "D", ~ Rules t>Amellded Rules oo Enl>byees' ~ [ResiJ1xx1 No. 00-03ro22 daled
i 3
March 23, 1990J.
No.1112), lbkl., as clllEflded by Board Resolu1iJn t-.b. 10-09-116, Series of 2010, Sepietrber2, 2010.
No. II (3), Iii!.
No.11(41 Ii!.
320 BAR REVIEWER ON LABOR LAW
In the case of the SSS, the present monthly income benefit of current
pensioners shall be increased by twenty percent (20%) effective January 1, 1980.
In the case of the GSIS, the monthly income benefit of the current
pensioners shall be adjusted and recomputed to reflect the twenty percent (20%)
increase over the benefit under P.D. 1146 effective January 1, 1980.1
1be new amount of lump sum benefit computed under the Amended RR/e1
shall be applicable to all contingencies occurring on or after May 1, 1980, otherwise
entitlement thereto shall be governed by the foregoing m/es.2
' beneficiaries to the Systems."
6. DEATH BENEFITS, NOT PART OF THE ESTATE OF THE
DECEASED.
The death benefits being paid under the law are not part of the deceased's
estate. TI1ey are not in the nature of inheritance. They are granted by operation of
law as financial compensation and aid for the dt>.ath of the employee.
It must be noted that the dependents mentioned in the law are not
referred to as the "heirs" but rather as "benifiriariu." It may be further observed that
the dependents are not nece&sarily the "heirI" of the deceased, as this term is
understood in civil law.
7. PRESUMPTIVE DEATH.
In 2014, ECC Board Resolution No. 14-07-20 Ouly 28, 2014], was issued
promulgating the Gmdtlines on the Gran/ of EC Benefit! Due lo Calami!J or Fatal E11tnl
Amendingfar thi! Purpose, Paragraph 5 of Board Rmlulion No. 9).()8.()068 [Augur/ 5,
199}}. Accordingly, said Paragraph 5 shall now read as follows:
5. "Guidelines on the Grant of EC benefits for the Beneficiaries of
Missing Persons while in the Performance of Duty during Calamity or Fatal Events
5.1. Coverage. "These guidelines shall apply to all covered workers or
employees' and uniformed personnel who had been reported missing while they.
were in the performance of their duties during calamities or fatal events such as,
but not limited to, police or military operation, earthquake, typhoon, and volcanic
eruption.
5.2. Period of Filing. "The beneficiaries may file their claims for EC death
with funeral benefits within the three year-prescriptive period from the time the
missing person has been presumed dead after the lapse of four years from the
occurrence of the incident.
In lieu of Death Certificate, the Systems may require the submission of
certification from any concerned government institution show.ing that the
1
Sedion4.~leXIII.Mlerded~CJl~·Qrrc>ensatioo.
! SediJl5. ~le XIII. Id.(The~refared kl.ret.eonesfarld i1 Section 4dlh's~le XII~.
CHAl'TER FoUR 321
SOCIAL WELFARE LEGISLATION
c~nc_emed employee or uniformed personnel has been included in the list of
rruss1ng persons due to a calamity or fatal event and/or has been missing for a
period of four years.
. 5.3. Grant of~CJune~al benefits. "EC funeral benefits shall be provided to
the qualified benefioanes despite the absence of burial ceremony.
. . S.4_. Non-Ref~nd of E~ benefits. "If the missing employee appears or without
appeanng his/her eX1Stence ts proved, the EC death with funeral benefits which
have been previously provided shall no longer be returned by the concerned
EC~ _Cim,lar ~o._ 15.()1-20 Oanuary 20, 2015], is a clarificatory Advisory
on the Defuuaon of Missing Persons under EC Board Resolution No. 14-07-20
(1uproj. TI1c following are the series of events which should be considered in the
grant of EC benefits:
1. The word "missing" refers to unknown fate or there is no trace of
whereab_ou_ts of a worker, employee and uniformed personnel while
he/ she 1s r.n the performance of his/her duties during calamities or
fatal events.
2. The w~rker, employee or uniformed personnel was not seen or heard
from after the lapse of four years from the occurrence of the incide·nt.
3. 1:he_di_sappearance o~ the worker, employee or uniformed personnel
gives ose to presumption of death.
4. The death of the worker, employee or uniformed personnel arises out
of and in the course of employment. .
8. JURISPRUDENCE.
. Under the law on employees' compensation, death •is compensable only
when it results from a work-connected injury or sickness. 1 Thus, if the death of the
employee did not occur while in the performance of his duties as a gasoline
attendant, the claimant cannot be exte11-ded the death benefits under the law.2 ·
. In Tolo1a 11. ECC,3 it was pronounced that the employee's widow is not
entttled to death benefits because her husband lud stopped wotking when he
became physically disabled to do his work at the time of his retirement in 1975 and
died on February 14, 1984, or almost nine (9) years after, which is clearly not within
the two-year period required by the old Workmen's Compensation .(\ct. But in
ManuZ!)n v. ECC,4 where the employee died about 4 ½ years after retiring froin the
service due to a stroke, a cardiovascular accident caused by thrombosis, the
Buena<bav.SSS,GRNo.14n45,Apli9,2003.
Luv. Y.te, GR r-b. L-43181, 0d. 27, 1986.145 SCRA 170.
3 GRNo.60500. M?fS, 1985, 136SCRA335.
' GR No. 88573, JtJie 25, 1~. 186 SCRA 738.
322 BAR RIVI EWER ON LABOR I.AW
Supreme Court, in reversing the denial of the claim by the ECG, ruled that the
dependents are entitled to the benefits, although the death occurred after the
retirement, because the cause of death, myocardial infarction, is closely related to the
cause of his compulsory retirement.
In GSIS v. Cuanang, 1 where the employee died a )'Car after retirement, the
Supreme Court held that indeed, if a death which occurred almost 4 ½ years after
retirement was held to be with:n the coverage of the death benefits under P.D. No.
626, as in the Manuz.on case, with more reason should a death which occuned
within one year after retireme:1t be considered as covered under the same law. A
claim for benefit for such death cannot be defeated by the mere fact of separation
from service.2
Upon the death of a covered member during the period that he/she was
receiving pmnantnl partial dis,.bility (PPD) benefits, the remainder of his PPD
benefits shall be paid to his pri:nary beneficiaries. However, the beneficiaries shall be
entitled to the same benefits enjoyed by· the beneficiaries of a permanent total
disability (PTO) pensioner up:>n his death, provided, that the cause of death was
the same illness or injury for which he/she was awarded PPD benefits.
V.
FUNERAL BENEFIT
1. ENTITLEMENT TO FUNERAL BENEFIT.
A funeral·benefit of P20,000.003 shall be paid upon the death of a covered
employee in both the private and public sectors or permanently totally disabled
pensioner to one of the follov.ing: · Beneficiaries shall be detennined at the time of the employee's death. 4
(a) The siµviving spouse; or
(b) The legitimate child who spent for the funeral services; or
(c) Any other person who can show incontrovertible proof or proof of
his having home the funeral expenses.•
2. CONDITION TO ENTITLEMENT.
The EC funeral benefits shall be granted after the SSS or the GSIS has
declared the following in the evaluation of claims·for EC death benefits:
1
GR. No.158846, Ju'le 3. 2004.
l Ciingja'esv.CA,GRNo.105854,AuJ.26, 1999,313SCRA 141.
3 F1.11Erabeoeit was imased kl Twenly 1wsand Pesos (P20,(XXHX)), as pnMled under Exeruwe Onler No. 167. dated
~ 26, 2014, i1 relalioo kl Boir1' ResoUiais Nos. 14-06-29 (Guidelnes i1 tt1e lq>lemertatioo aExerutile Qrde- No. 167
i1 t,e Pri1a1e SecuJ aid 14-06-30 {Gooeiles i1 Ile ~taooo a Execu1ile Order No. 167 i1 tie Pub."c Sedaj, both
dated Juie06. 2014. See also tie eafie,-Boa,j ResdrtxYl No. 13-07-14. Ju~ 2, 2013
' Sedioo 1, Rule XJV,Amended Rt/es on Empkl'fees' ~ ; See also ECC Resooooo No.3682, Jut, 21. 1987.
(HArTER fOUR 323
SOCIAL WELFARE LEG ISLATION
1. Death due to sickness - causal relationship berween rhe death and the
working conditions of the covered member.
2. Death due to injury - causal relationship between the death and
the work-related accident.
3. Death of EC Pennanent Partial Disability (PPD) or Pennanent Total
Disability (PTD) pensioner - the cause of death is a complication or
natural consequence of previously compensated PPD or PID.'
c.
BENEFICIARIES
1. DEFINITION.
The term "benefidan'es" means the dependent spouse until he/she
remarries and dependent children who are the primary beneficiaries. In their
absence,· the dependent parents and_·subject to the restrictions imposed on
dependent children, the illegitimate children and legitimate descendants, who are
the mondmy beneficiaries, provided that the dependent acknowledged natural child
shall be considered as a primary beneficiary when there are no other dependent
children who arc qualified and eligible for monthly income benefit.2
2. GENERAL CLASSIFICATION.
Beneficiaries under the Labor Code may be classified as follows:
1. Primary; or
2 Secondary.3
3. PRIMARY BENEFICIARIES.
The following beneficiaries shall be considered primary.
(A) The legitimate spouse until he/she remarries. The swviving spouse
found not to be living with the covered employee at the time the employee died
should be entitled to employees' compensation benefits provided that the
separation occurred owing to any of the following circumstances:
1
Section 2, Rule XIV, k!.; AspltNided ooder Boa,!~ Nos. 14-06-29 clld 14-06-30, bolhdated J\Jne 6,2014.
2
Arti::!e 173(j) (1670)1 LalxrCode.
3 Section 1lal, Rue~.Amended~ 00 ~·~
• Id.; Qmiquenllf, aMloolJh i1 Olher;.mfdions. pcsturoos dlicra1 'M10 cfied be!l)t! Ole ~ · s deat1 ere coosidered
as depeodirlt, ~ . IJ1der Ile la.Ys a t,e Phippiles, lhey caV10l general)' be so considered si1ce beoefmies ere
delerrriled a tie time of tie deatl of tie ~ee 1-b.Yever. n Vda. de Makabenta v. Davao Stevedae Temm
~.GR.No. L-27489, Ap,i 30, 1970, Ile da.ghtet bom allef tie deatti a lhe errciloYee and ihe'efae a poshlmous
dll!, v.as cooslderoo a16;ial dependent of Ile deceased i!fll)lo'fee. See also Kiig v. Peninsulas Patland Cemeol Co., 216
Wl.335).

324 B"R REVIEWER ON LABOR LAW
1. Refusal of the coveced employee to continue living with the surviving
spouse; or the emr-loyee's abandonment of the said spouse, without
justifiable or valid c;iuse;
2. Attempt of the covered employee against the life of the surviving
spouse, common child/ children of the spouse;
3. Commission of an act of sexual abuse against the surviving spouse,
common child/children or child/children of the spouse by the
covered employee;
4. The covered employee's recurrent co~ssio~ ~f physical violence, or
grossly, abusive conduct, against the sumVlllg spouse, common
child/children or C:.-uld/children of the spouse;
5. The covered employee's infliction of physical violence, or imposition
of moral duress. to compel the surviving spouse, common
child/children or child/children of the spouse to change their religious
or political affiliation;
6. Attempt of the co,ered employee to corrupt, or induce the surviving
spouse, common child/children or child/children of the spouse to
engage in prostitution, or to make them connive with the employee in
such an act of corruption or inducement;
7. Drug addiction or habitual alcoholism of the covered employee;
8. Lesbianism or homosexuality of the covered employee;
9. Contraction of bigamous marriages by the covered employee, whether
in the Philippines or abroad;
10. Sexual in fidelity or perversion of the covered employee;
11. 111c covered empbyee's act of allowing the surviving spouse, co=on
child/children or :h.ild/children of the spouse to be subjected to acts
of lasciviousness; :ind
12. The covered employee's contraction of serious, sexually transmitted
disease extra-maritally. 1
(B) Legitimate, legitimated, legally adopted or acknowledged natural
children, who .are unmarried not gainfully employed, not over 21 years of age, or
over 21 years of age: Provided, :hat he is incapacitated and incapable of self-support
due to physical or mental defect which is congenital or acquired during minority;
Provided,f11rlhtr, that a dependent acknowledged natural child shall be considered as
a primary bentficiary only when there are no other dependent children who are
1 Section 1 [b], Rule YN, Amended Rules on EIT'C)loyees' ~ . as prowled lJ1der 8oad Resdu1icn No. 97.W-
0500, Seplelrbe' 4, 1997 eotitled 'Pricf C(l &m/ilg Spouse.'
C:H,.rTER FOUR 325
SOCIAL WELFARE LEGISLATION
qualified and eligible for monthly income benefit; provided finally, that if there are
two or more acknowledged natural children, they shall be counted from the
youngest and without substitution, but not exceeding five (5).1
4. SECONDARY BENEFICIARIES.
The following beneficiaries shall be considered Jtconda,y.
(1) The legitimate parents wholly dependent upon the employee for
regular support; •
(2) The legitimate descendants and illegitimate children who are
unmarried, n_ot gainfully e~pl~yed, and not over 21 years of age, or over 21 years
of a~e provtded that he is_ tn~apacitate~ and incapable of self-support due to
physical or mental defect which 1s congerutal or acquired during minority.2
5. PIUORITY.
Primary beneficiaries shall have priority claim to death benefit over
secondary beneficiaries. Whenever there are primary beneficiaries no death benefit
i shall be paid to his secondary bcneficiaries.J '
If the deceased employee has no primary beneficiaries at the time of his
death, the death benefit shall be paid to his secondary beneficiaries.•
If the deceased employee has no beneficiaries at the time of his death, ·the
death benefit shall accrue to the Employees' Compensation fund.s
6. MONTHLY INCOME BENEFIT.
. Primary beneficiaries shall be entitled to a monthly income benefit. In
their absence, the secondary beneficiaries shall be entitled to a monthly
income benefit not to exceed 60 months and the death benefit shall not be less
than P15,000.00.6
7. EVIDENCE TO PROVE RELATIONSHIP AND DEPENDENCY.
· A marriage certificate issued by the parish priest who solemnized the
marriage between the surviving spouse and the deceased is sufficient to establish
marriage relationship.7
The baptismal certificates and birth certificates of the children are also
sufficient evidence to prove the relationship of the dependents with the deceased.
1 Secfun 1lb], Rule 'IN, Id.; ECC Resoloon No. 2799,Jut/ 25, 1984.
Secfun 1Jc!, Rule 'IN, Id.
3 Secbl 2[al, !Ul 'IN, kl.
' Secfun 2lbl, Rule 'IN, kl.
5 Secfun 2lcl, ~ 'IN, kl.
6 Sm13, Rule XV, kl.; ECC Resoo1ion No. 2799 daled July' 25, 1984.
lbuanv. lndong, GR No.48576,flv!l. 11, 1989, 176 SCRA316.
 BAR REVIEWER ON lABOll LAW
CHAl'TEll Foull 327
SOCIAL WELFARE LEGISLATION

ii. Parties' Contracts ·

Strict observance of the technical rules of evidence is not properly demanded in
employees' compensation cases.l By partks' ronlratts, there are material contracts that bind the seafarer and
his employer to each_other, namely:
2. (a) The POEA-Standard Employment Contract (SEC) the latest version
POEA-STANDARD EMPLOYMENT CONTRACT of which is enunciated in Memorandum Circular No. 10, Series of
(POEA-SEC) 2010,2 otherwise known as the 2010 Amendtd Standard Terms and
Condilioni Goperning the Ovmeas Employment ofFilipino Seafarm On-Board
1. ORDER OF TOPICAL PRESENTATION. O(tan-Going Shipr issued on October 26, 2010; .
For an orderly discussion, the topics in this section are discussed in the (b) Individual Employment Contract between the seafarer and the
employer,3
following order:
(c) The parties' CBA;4 and/ or
I. MONETARY CLAIMS OF SEAFARERS FOR SICKNESS AND DISABILITY (d) ITF Agreem.cnt.
BENEFITS As part of a seafarer's deployment for overseas work, he and the vessel
11. EXISTENCE AND EXTENT OF SEAFARER'S DISABILITY, HOW
owner or its representative local manning agency are required to execute the first
DETERMINED AND DECLARED . contract above, the POEA-SEC.5 Containing the standard terms and conditions of
111. MONETARY CLAIMS OF SEAFARERS FOR DEATH BENEFITS seafarer's employment, the POEA-SEC is deemed included in the second contract
---·-···-----···-·--·-·--·---··----··-··-······· - the individual contta<:t of employment - in foreign ~cean-going vessels.6
I. Consequently, the rule msofar as the first and second contracts above are
MONETARY CLAIMS OF SEAFARERS concerned is that the terms under the POEA-SEC, considered fundamentally as
FOR SICKNESS AND DISABILITY BENEFITS the law b:tween the parties,7 are to be read in accordance with what the Philippine
~aw provides ~nd thus'. for all legal intents and purposes, they are deemed
mcorporated lO and Integrated with the individual employment contract.&
1. BASES FOR PISABILITY BENEFITS CLAIM.
Resultantly, in resolving disputes regarding disability benefits, their provisions must
a. Legal bases. be "construed and applied fairly, reasonably, and liberally in the seafarer's favor,
because only then can the provisions be given full effect."9
It is settled that the entitlement of a seafarer on overseas employment to
disability benefits is governed by the following:
'Se:m 2 Pt:rix1 d ~ -(a) The inme benei shal be pad begivli,g oo tie first dz{ cf sudl ~ Hca.ised
1) Law; by ~ ilirY « soness It shal not be pail loJy,jer rai 120 coosecuwe days exrept 1111ere sudl tjury oc sid<ness stii
2) Parties' contracts; 10d m
leC1.leS medi:a ~ beya,:I 120days but not [I exceed 240 days ooset ci disabity nm case benei tor
3) Medical fu'i.dings.2 1errp:rlly tlal ~ shal be paid. lb.leYer, Ile System may dedare t.e tltal .m pemmert s1ahJs at cir/ tine after
120daysciaxlliulus IEnl)(RYW cfisabiiy as maybewamedbylledec;)raecf aaiabssociTl>aimoolci piysic:al
i.~ ocmtnalm:tionsasdetemiledbylle9f.;en.
-a,: . .
By la1JJ, the claim for disability benefits is govemed by Articles 197 (191] to ("'21, 1987); ~Mriline, h:. v. Gcm>,Jr.,G.R No.22851)4,Ji:.ne06,2018.
199 (193], Chapter VI (Disability Benefits) of the Labor Code, in relation to Section See also Ile previluS OOlE ~ Onler No. 4, Series ci 20:XI, Amendi1g Ile St!mlird Tenns .m Coodioons
GcM,rrg tie ~ciff4h) Seafcffl'S On Bo.rd Oceal-Qtg Vessels.
2 (a), Rule X3 of the Amended Rules on Employee Compensation (AREC).1 3 This was cited separaletf i1 Garrboa v. l.larlad Tr.ns. h:., G.R No. 232905, Aug. 20, 2018.
4 Pli;ynergy Mariine, h:.v.Gamo,k, G.R No.22B504,Jllle06,2018.
5 SlepeSeaPeisans,h:.v.Maxnr)',&. G.RNo.2re113,Nov.6,2017.
• Id.; Wa'oem M.riimeSeM:es, roe.v. Taia.m, G.R No.160444,Aug.29, 2012
Id. 1 ~ ~ 911) hjetq, h:. v. flmmJ, GR No. 194362, Jlll8 26, 2013; See also OSG Sh~ M.m,iernenl
Oeoowa v. Fleet M.llagemn Selvi:e; Phlippiles. n;., GR No. 229955, "'23, 2018; TJJabi'IJ v. MST Minle M:lnla, roe.v. 111:tje, GR No. 214059, Oct 11, 2011; Jebseos Mmne, roe, v. Rapiz, G.R. No. 218871, Ja1. 11. 2011;
SeM:es (Pills.). k'G., G.R Nos. 202113 ~ 202120, June 06, 2018; Phlsynelgy Mrire, ~c. V. Gcimo. Jr.. GR No. Seai:rest Mmne Mm;jement, r,c, Y. Rooeros, G.R No. 230473, Apii 23, 2018.
228504, m 06, 2018; ~~~ h:. Y. Stleste. G.R No. 213465. Jlll. 08. 2018; Ven!ura. Jr. a Id.; LooosliJ ntemaialal Slipfq, h:. Y. Yamsoo, GR No. 228470, Apii 23, 2018; Slape Sea Pe&mei. Inc. v.
v. ~ Sh~EJOelll Phippiles. roe . G.R. No. 225995, Nov. 20, 2017. Mlbuna'f, Jr.• GR No. 206113, Nov. 6, 2017; C.F. Sh.vp Crew MY\agemenl, Inc. V. Legal Hei1s a Ille late Godoredo
l 0eoowa v. Fleet ManagenentSeM:es ~-roe.. . , Secioo 2(aJ. ~ Xof AREC prMles: Re!isO, GR No. 190534, Foo. 10, 2016.
'RuleX 1 Mae1sk Flipilas Qew11g r,c, V. Rarral, G.R No. 184256, Jai. 18, 2017.
Tef1'4)(B)' TOOll Disablfy

328 BAR JlEVIEWER ON LABOR I.AW
The third contract, the CBA, is the law between the parries because its
provisions arc the product of negotiation and mutual consent. It is a fundamental
doctrine in labor law that the CBA is the contract between both the employer and
the employees. An executed CBA, thus, is a valid and binding contract between the
parries with the force and effect of law.1 A CBA refers to the ne~tiated contract
between a legitimate labor organization and the employer concemJng wages, hours
of work and all other tenns and conditions of employment in a bargaining unit. As
in all contracts, the parties in a CBA may establish such stipulations, clauses, terms
and conditions as they may deem convenient provided these are not contrary to
law, morals, good customs, public order or public policy. '"Thus, where the C~A is
clear and unambiguous, it becomes the law between the parties and compliance
therewith is mandated by the express policy of the law.2
The fourth contract is technically denominated as the International
Transport Workers Federation Standard Co~ective ~~ement (ITF
Agreement) whose provisions on benefits, as held 1n one ca~e, 1£ found to be
more superior and thus favorable to the seafarers, shall prevail over the POEA-
SEC and the parries' CBA. The ITF Standard Collective Agreement dated January
01, 2015 sets out the standard terms and conditions applicable to all seafarers
serving on any ship in respect of which tlfere is in existence a Special
Agreement made between the union, an affiliate of the lntemational Transport
Workers' Federation (the ITF) and the company who is the owner/agent of the
owner of the ship. This agreement is deemed to be incorporated into and to
contain the terms and conditions of employment of any seafarer whether or
not the company has entered into an individual Contract of Employment with
the seafarer. The Special Agreement requires the company (inter alia) to
employ the seafarers on the terms and conditions of this Agreement, and to
enter into individual contracts of employment with each seafarer incorporating
the terms and conditions of this Agreement. · laborer. This is in consonance with the avowed policy of the State to
The interplay of these legal and contractual provisions is best exemplified
in the case of Mamk-Filipinas,4 which involves the principal i_ssue of applicability of
the following contracts: the POEA-SEC, the CBA, and the ITF Agreement. The
entitlement to disahilitv henefits of seafarers on overseas work is a matter governed
not only by medical fu1dings (infra), but also by law and contract.s By contract, the
POEA-SEC and the CBA bind seafarers and their employers.6 An overriding
Aructv.PacifcOcealMw,i"g. n:/frans StrShippi°9 IYjericy Co!poram, G.R No. 220898,Jul)'23, 2018.
kl., Id.
3 Mle,sl(~ Crel'Kg. ri;. v. Mak:se, G.R Nos. 200576 &200626, NOY. 20, 2017.
• Maelsk~ Crel'Kg, 11c. V. Wcse, GR Nos. 200576 &200626, N(N. 20, 2017. This case mo'les a seak.er v.ho
cied d"nll~letwgai dysl\Jlcful. Seplicenia and ~ d u e loO(anegablrus.'
s Id.,co,g TagabJ v. Crossl,a'd t1Eme Savi:es, n:.. G.R. ~ -191899,.ble 22. 2015, 759 SCRA 632
s ld.,cili",,j Vega-av. Harrraia Maritine SeMces, h:., G.R. No. 172933,0d. 6, 2008, 567 SCRA 610.
CHArTER FOUR 329
SOCIAL WELFARE LEGISLATION
instrument, such as the instant ITF Agreement, also forms part of the covenants of
the parties to each other. 1
Insofar as the ITF Agreement is concerned, it was held here that the
following conditions for its applicability must concur, tq wit (1) the seafarer is a
member of a union, (2) which is affiliated with the ITF, (3) that has entered into a
Special Agreement with petitioners. It was, however, established, based on the
records, that while the first requirement of membership with a union2 was satisfied,
none of the pieces of evidence adduced by the parties has depicted with clarity the
relationship of the seafarer's labor union - Singapore Organisation of Seamen -
with the ITF. Furthermore,.none of the documents herein portray that petitioners
entered into any Special 1\greement. In this light, the High Court found grave abuse
of discretion on the part of the CA for awarding the death benefits provided by the
ITF Agreement sans any proof of the applicability thereof. What was thus applied
were the death benefits provided in the CBA and not those provided in the POEA-
SEC, the former being more beneficial to the seafarer because Section 25(5)
thereof grants USD40,000 regardless of whether the seafarer died of a work-related
illness, provided that he died while in the employment of petitioners. In the case at
bar, none of the parties dispute that the seafarer died of multiple organ failure
secondary to septicemia caused by severe infection on 29 May 2007 or during the
tenn of his contract with petitioners.
In Ltgal Heirs of DeOlma,3 it was clarified that beneficial CBA clauses
prevail over the POEA-SEC:
"More importantly, the special clauses in collective
bargaining agreements must prevail over the standard terms and
benefits formulated by the POEA in its Standard Employment
Contract. A contract of labor is so impressed with public interest that
the more beneficial conditions must be endeavored in favor of the
give maximum aid and fuU protection to labor as enshrined in Article
XIII of the 1987 Constitution."4
However, if, conversely, the CBA does not apply to a claimant-seafarer's
case, this does not imply that he is not entitled to disability benefits just because of
such CBA's mapplicability since, aside from the CBA, the POEA-SEC may find
application, such as in the 2018 case of Bumavenlura.s In other words, "[t]he POEA-
SEC and the CBA govern the employment relationship between [Buenaventura]
and the [respondents]. The two instruments arc the· law between them. They are
bound by their terms and conditions, particularly in relation to this case, the
11., citi1g Magsays;r( Maritine Colp. v. Panogainog, GR No. 212049, Juy 15, 2015, 763 SCRA 140.
Relefring 1D the Silg~e O!g~ cl Sean1lnv.lldl has aC8A wilh toe seafare(s ~ . petitmer ~ -
3 LegalHeir.i of Deaunav. Fil-Star tvm1ine Colp.. G.R No. 191563, Jllle 20. 2012.
4Ell1)hasis51Wfied.
s Eumienua V. ~ ~iles ~ n:., G.R No. 224127, AuJ. 15, 2018.
330 BAR REYIEWER ON Lt.SOR Lt.W
mechanism prescribed to determine liability for a disability benefits claim."' In
cases therefore where the disability claim cannot be granted under the CBA, resort
to the POEA-SEC should be made to determine if the claim can be granted
therein. The best illustration of this situation is the 2018 case of Gm.2 The CBA
between AMOSUP and the respondents3 states that '(1) ·only when the disability
grading is at 50% or more, or (2) only when the company-desi~ted physi~i:1°
certifies that the seafarer is medically unfit to continue work - even if the disability
grading is less than 50% - could the seafarer be entitled to total and permanent
disability benefits in accordance with the medical unfitness clause. In the ?re~e_nt
case, even the petitioner's personal physician assessed him'o_nly_at G~de 8 disability
grading. According to the schedule of disability allowances ~dicated_in the POEA-
SEC, this impediment grade tr;uislates to only 33.59%, which definitely falls s_hort
in the 50% requirement of Article 20.1.4 of the C~A. ?n the other h~~• neither
did the company-designated physici~n is~ue a ce~tificatt?n that the petlttoner was
medically unfit to continue performing his seaf~ ~uttes. On these grounds, the
medical unfitness clause of the CBA finds no applicatton.
Nonetheless, the petitioner is not without any benefit to lean back on.
The POEA-SEC provides that seafarers suffering from total and permanent
disability are entitled to 120% of US$50,000.00, or a total of US$60,000.00. Indeed,
the Court of Appeals is correct in applying the provisions of the POEA-SEC rather
than the provisions of the CB.A when it said:
"As correctly argued by Petitioners, the permanent medical
unfitness clause under the parties' CBA awarding a total and permanent
disability benefit of US$95,949.00 does not apply to private respondent
because neither the company doctor nor his own doctor assessed
his disability at 50% or more. Moreover, while the permanent medical
unfitness clause provides .that wy seafarer assc.~sed at less than 50%
disability is entitled to full compensation, the same clause mandates
that the certification must be made by the company doctor which
is not the situation in the present case.''4
In the 2019 case of Toril/os, 5 the Court found that petitioner Torillos did
not meet any accident oh board the ship that could have entitled him to disability
benefit under the CBA. It was held, however, that this finding of inapplicability of
the CBA does not mean that he is no longer entitled to any disability benefit since
his illness is work-related and therefore compensable under the POEA·SEC and
1 em;i Phqlpne H.rJrnonia Shi> hJerq, 1nc. v. [madag, GR No. 194362. Jooe 26, 2013.
Gere v.l;Qb-Emn Crew MmJemenl Plis., Inc., GR Nos. 226656 &226713, ~ 23,2018.
CdlecM ~ lqeelner4 (MOSLf / ANGLOEASTERN) BehYeoo Associalsd Mime ~ .n1 Searei's
Lmn ct Ile ~ .n1 ~ Crew Malagen1Ert (SG) PTE. LTD. Represervfd by Arl,llo-Easlem Crew
~~k'c. . .
Emphasis a i d ~ suppled ii tt-e decisicn lsel; ciaoor1s aniled.
s Tor'ibsv. ~le 1/rine Ccwp)ratioo, G.R Nos. 215004&216165,Jal.10, 2019.
CHAPTER FOUR 331
SOCIAL WELFARE LEGISIATION
relevant labor laws which are deemed written in the contract of employment with
Eastgate.
iii. Medical Findings
Lastly, the medi.al findings of the company-designated physician, the
seafarer's personal physician, and those· of the mutually-agreed third physician,
pursuant to the POEA-SEC, govem.1
2. APPLICABLE LAW IN CASESE INVOLVING THE POEA-SEC.
By express provision of Section 31 of the 2010 POEA·SEC, "[a)ny
unresolved dispute, claim or grievance arising out of or in connection therewith,
including the annexes the(eof, shall be governed by the laws of the Republic of the
Philippines, intemat:ional conventions, treaties and covenants to which the
Philippines is a signatory." This provision signifies that the terms agreed upon by
the parties pursuant to the POEA-SEC are to be read and understood in
accordance with Philippine laws, particularly, Articles 197 (191],2 198 (192]3 and
199 (193]4 of ·the Labor Code and the applicable implementing rules and
regulations in case of any dispute, claim or grievance.5
3. OFW'S BENEFIT CLAIMS VIS-A- VIS BENEFITS IN THE LA RO R
·cooE:
It must he underscored that the claims for disa/Jiliry, /Uath and h1mal
benefits involving OFWs over which the Labor Arbiters of the NLRC have
jurisdiction, are not the same as the claims against the State Insurance Fund under
Title II, Book IV of. ~e Labor Code for the same benefits, over which rhe
Employees' Compensation Commission (ECC) has jurisdiction.
In Inter-Orient, 6 involving the death of a migrant worker suffering from
mental disorders in the hands of a policeman in Bangkok while he was being
repatriated to the Philippines, the Supreme Court debunked the claim of rhe
employer which invoked the ruling in De ]mu v. ECC,1 that it is not liable because
the cause of the death of the worker is not an occupational disease listed by law.
Finding no parallelism with De Juu,, the Highest Court ruled:
"Petitioner's (employer's) reliance on De ]= is misplaced, as the
death and burial benefits being claimed in this case arc not payable by
the Employees' Compeosation Commission and chargeable against
t Jebsen Merine n:.V. Rav'ella, GR No. 200566, Sept. 17, 2014.
2 TEl11)a<IY ~ cisctlitf.
ll'Erm!neltWtis.Dlt)'.
• Psrrmer4 paltia dsallily. .
s New Fqli1) M:1itine ~ l:lc, v. ~.GR.No. m201, NC'>'. 19, 2014, 747 Phl. 626. 640; Magsaysay
MrirneQJpaalinv. tlRC. GR No. 191003, .lt.ne 19, 2013.
1 nb!r-O'ai Mrine En~. k'c. V. NI.RC, G.R ~- 115497, Sept. 10, 1996.
7 G.RNo.L~191,Ma)'27, 1986, 142SCRA92.

BAR. REvlEWlR ON IABOR. IAW
332
the State Insurance Fund. These claims acose from the responsibility
of the foreign employer together with the loal agency for the safety of
the employee during bi:1 repatriation and until his .~val in this
country, i.t., the point of hire. · Though the t~tton . of the
· employment conttact was duly effected in .Dubai, . still, the
responsibility of the foreign employer to sec to it th~t Pineda_ ~the
seaman-employee) was duly repatriated to d)e pomt of ~g,
subsisted. Section 4, Rule VIII of the Rules and Regulations
Governing Overseas Employment clearly provides for the duration of
the mandatory personal accident and life insuiince cov;rlng accidental
health, dismemberment and disability of overseas workers." 1
4. THE LABOR CODE'S CONCEPT OP PTO APPLIES TO CLAIMS OF
SEAFARERS.
Permanent disability transpires when the inability to work continu~
beyond 120 da)'S, regardless of whether or not he los~s the ~e of any part of his
body.2 On the other hand, total disability means the incapacity of~ employee t~
earn wages in the same or similar kind of work that he was ~ed fo~, or 1s
accustomed to perform, or in any kind of work that a person of his mentali.ty and
attainments can do. It does not mean absolute helplessness.3
Accordingly. permanent total disability (PTJ?) means ~e inability to_do
substantially all material acts necessary to the prosec~tlo~ _of a gainful occuJ?itton
without serious discomfort or pain and without material tnJury or danger to life. In
disability compensation, it is not the injury per s, which is comp~ated but the
incapacity to work.' The concept of this kind of disability ~der -~clc 198 (1.92]
of the Labor Code is applicable to the permanent total disability of seafarers.
The ruling in Rtmitfa5 is instructive on this point Petition~ here claims to have
suffered from p1f1Jlanmt total disability as defined under Article 198(c), (1) [192(c),
(1)] of the Labor Code, uiZ::
"Art 198 (192) (c). The following disabilities smll be
deemed total and permanent · p,riod txtttding 120 dtgs, except as otherwise provided for in Rule X of
"(1) Temporary total disability lasting continuously for more
than one hundred twenty days, except as otherwise provided in the
Rulcs;v.x"
Petitioner likewise cited Via11tr and Abaya, Jr.;7 bo~ of which were
decided applying the Labor Code provisions on. ~ability h:nefits. ~~te
respondents, on the other hand, contended that peuuoner erred tn applying the
' lrs-Oient~Enterprises, klc:.v. NlRC,[G.R.No.115497,Sept 10, 1996).
2 ee, PlippileS SWprnanarpne111 Inc. v. Sweille, G.R No.213465, Jarmy08, 2018.
l Id.; I N C ~ tc. v. Rosales, GR No. 195832, Oct 01, 2014.
• kl.; Oflma v. Jebsl!l5 Mlliime. ~-. GR No. 215313, Oct 21, 2015.
5 Remgov. NLRC,G.R. No.15988U411i 12,2006,487 SCRA 190.
6 \fx:enleY. ECC, G.R ~85024,Jal.23. 1991, 193SCRA 190, 195.
1 ~Jr.v.ECC.GRNo.64255.~.16, 1989, 176SCRA507.511.
CHAPTER.FOUR 333
SOCIAL WELFARE LEGISLATION
definition of ')ermanent total dirabili!J" wider the Labor Code and in invoking cases
decided wider the ECC as the instant case involves a contractual claim under the
1996 POEA-SEC.
In affi.aning the contention of the petitioner, the Supreme Court
pronowiced, thus:
"The standacd employment contract for seafarers was
fonnulated by the POEA pursuant to its mandate under E.0. No. 247
to 'secure the best tcrms and conditions of employment of 1-ilipino
contract workers and ensure compliance therewith' and to 'promote and
protect the well-being of Filipino workers overseas.' Section 29 of the
1996 POEA SEC itself provides that '[ajll right.c; and obligations of the
parties to (theJ Contract, including the annexes thereof, shall be
governed by the laws of the Republic of the Philippines, international
conventions, treaties and covenants where the Philippines is a
signatory.' Even without this provision. a contract of labor is so
impressed with public interest that the New Civil Code expressly
subjects it to 'the special laws on labor unions, collective bargaining,
strikes and lockouts, closed shop, wages, working conditions, bouts of
labor and similar subjects."'
Based on the foregoing disquisition in Rtmigio, it was ruled in Kntrel
Shipping, 1 that it is now well-settled that the provisions of the Labor Code ;md
.Amended RN/ts on Emphyeer' Comp111Jatio11 (ARBq implementing Tit1e·n, Book IV of
the Labor Code on disabilities are applicable to the case of seafarers such that the
POEA-SEC is not the sole issuance that governs their rights in the event of work-
related death, injwy or illness.
In WaHmt,2 the High Court cited the consistent application of the
definition of p11111an1nt duabili!J under Sec. 2 (b), Rule VII of the Implementing
Rules ofBook V of the Labor Code, as amended by? .D. No. 626, which provides:
"(b) A disabili!J is total and p,nnantnl if 111 a m11/J oftht itdlltJ or
siduuss the tmploytt is 11nablt to pttfonn tll!J gai'!fol o~n far II tonti11111111
these Rules."
Moreover, it was further explained in Wallm, that the lapse of the 120-day
threshold period is not the benchmark for considering a pennanent disability due
.to injwy or illness; "rather, the true test of whe~er respondent suffered from a
permanent disability is whether there is evidence that he was unable to perform his
custonw:y wotk as messma.-i for more than 120 days,,, It is, therefore, now a well-
Kewel~Co.,lnc.v.MJW,G.RNo.198501,Jan.30,2013.
Wm Mlriline Selvia!s, Inc. v. NlRC, G.R No. 163838, Sept 25, 2008, 566 SCRA 338,349.
334 BAK REVIEWER ON LABOR LAW
settled rule in jurisprudence that the Labor Code concept of pem,anmt fotal disability
is applicable to the case of seafarers.1
5. COMPENSATION AND BENEFITS FOR INJURY OR ILLNESS.
The compensation and benefits for injuries or illnesses suffered by
seafarers are provided for in Section 20 (A) of the 2010Ammdtd Standard Tmns and
unditions Gowming the Overseas Emphymtnt of Filipino Seafarrrs On-Board Octan-Goi11g
Ship.r,2 thus:
"SECTION 20. COMPENSATION AND BENEFITS
"A. COMPENSATION AND BENEFTT'S FOR INJURY OR ILLNESS
"The liabilities of the employer when the seafarer suffers work-related
injwy or illness during the term of bis contract are as follows:
"1. The employer shall continue to pay the seafarer his wages during the
time he is on board the ship;
"2. If the injury or illness requires medical and/or dental treatment in a
foreign port, the employer shall be liable for the full cost of such
medical, serious dental, surgical and ho.,;pital treatment as well as
board and lodging until the seafarer is declared fit to work or to be
repatriated. However, if after repatriation, the seafarer still requires
medical attention arising from said injury or illness, he sball be so
provided at cost to the employer until such time he is declared fit or
the degree of his disability has been established by the company-
designated physician. ·
"3. In addition to the above obligation of the employer to provide
medical attention, the seafarer shall also receive sickness allowance
from bis employer in an amount equivalent to his basic wage
computed from the time be signed off until be is declared fit to work
or the degree of disability has been assessed by the company-
designated physician. The period within which the seafarer shall be
entitled to his sickness allowance shall not exceed 120 days. Payment
of the sickness allowance shall be made oo a regular basis, but not
less than once a month.
"The seafarer shall be entitled to rcimbwsement of the cost of
medicines prescribed by the company-designated physician. In case
treatment of the seafarer is on an out-patient basis as determined by
the company-<lcsigmted physician, the company shall approve the
appropriate mode of transportttion and accommodation. The
reasonable cost of actual traveling expenses and/or accommodatioa
1 See, b- ex.rTl)le, Phll)pile Trcrisrri.me Carers Y. NI.RC, GR. No. 123891, Feb. 28, .ml; Qystal 9lippi,g, toc. Y.
Navxiad. GR I'«>. 154798, Oct. 20, 2005; I ~ Resrutes v. ~ . GR No. 156573, Jtroe 19, 'l.007; Paisoc
Y. Easways Mime, re. GR No. 152273, Sepl 11, 'l.007:lklrela Y. Phl!ll)i,e Trcrisnm-,eQrriers, loc., G.R No. 183008.
Dec. 4, 2009; Orienlal Sh~tCo, Inc. Y. Bastol, GR No. 186289,June 29, 2010.
1 hneooed ~ Toons mC.alditions Governing tie Ovelseas ~ ct ~no Seat.res° Oo-Boail Oceall-
Gorg ~ (POEA ~ Ci-wa- No. 10, Selies ct 2010, Oaile( 26, 2010). ~ . Secoon 20 (B) ct Standald
Toons a'ld Conawls GoYerring te ~ ct FTl)i,o Seafaras 0\ Bo.rd Oooan-Goog Vessds, issued J)1Jsuant b
OOl£ Depmen1 ()Ider No. 4, Series ct 2(00 lMil'/ 31. 2000~
CHArTER FOUR
335
SOCIAL WELFARE LEGISLATION
shall be paid subject to liquidation and submission of official receipts
and/or proof of expenses.
"For this purpose, the seafarer shall submit himself to a post-
employment medical examination by a company-<lc::ignatcd
physician within three working days upon his return except when he
i.~ physically incapacitated to do so, in which case, a written notice 10
the agency within the same period is deemed as compliance. In the
course of the treatment, the seafarer shall also report regularly to the
company-designated physician specifically on the dates as prescribed
by the company:-designated physician and agreed to by the seafarer.
Failure of the seafarer to comply with the mandatory reporting
requirement shall result in his forfeiture of the right to claim the
above benefits.
"If a doctor appointed by the seafarer disagrees with the assessment,
a third doctor may be agreed jointly between the employer and the
seafarer. The third doctor's decision sball be final and binding on
both parties. ·
"4. Those illnesses not listed in Section 321 of this Contract arc
disputably presumed as work-related.
"5. In case a seafarer is disembarked from the ship for medical reasons,
the employer shall bear the full cost of repatriation in the event the
seafarer is-declared (1) fit for repatriation; or (2) fit to work but the
employer is unable to find employment for the seaf.uer on board his
former ship or another ship of the employer. ·
"6. In case of permanent to~ or partial disability of the seafarer caused
by· either injury or illness, the scab.rec shall be compensated in
accordance with the schedule of benefits coumer:ited io Section 322
of his Contract Computation of _bis benefits arising from an illness
or disease shall be governed by the rates and the rules of
compensation applicable at the time the illness or disease was
contracted.
''The disability shall be based solely on the disability gradings
provided under Section 323 of this Contract, and shall not be
measured or determined by the number of days a seafarer is under
treatment or the number of days in which sickness allowance is paid.
"7. It is understood and agreed that the benefits mentioned above shall
be scp:u-ate and distinct from, and will be in addition to, whatever
benefits which the seafarer is entitled to under Philippine laws ~uch
a.~ from the Social Security System, Overseas Workers Welfare
Administration, Employees' Compensation Commission, Philippine
Health In~urance Corporation and Home Dcvclopmenl Mutual
Fund (Pag-IBIG Fund)."
1 Sedioo 32 is entitled 'Schedo.re o( Disabllily Cl ~ b- lnµies Suffered and Diseases lnclldilg Oa:upalional
Oiseascs or IDness Cooh'aded."
2 kl.
l kl.

BAR. REVIEWER ON IABOR lAW
6. REQUISITES FOR COMPENSABILITY OF INJURY OR ILLNESS.
To be entitled to disability benefits, the Court refers to the provisions of
the POEA-SEC, as it sets forth the minimum rights of a seafarer and the
concomitant obligations of an employer.• For disability to be compensable under.
Section 20 (A) of the 2010 POE.A-SBC, twO elements must concur:
(l) The injury or illness must be wotk-related; and . . SEC.
(2) The work-related injury or illness must have existed dunng the
term of the seafarer's employment conttact.z-.
• · defines a work-related illness as "any sickness as a
The same proV1S100 . POEA.SEq
·onal disease listed under Section 32-A of (the ·
result of an occupab u3 h uld b " able linka
"th th din· s set therein satisfied. There s o e a reason ge
W1 e con on d hi
b tw the disease suffered by the employee an s woui...
_,_ "' M whil
ean e, illnesses
n:t ;:tioned under Section 32 of the 2010 PO~-SEC ate disputably presumed
as work-related.s Notwithstanding the presumption of work-relatedness of an
illness under Section 20 (A) (4), the seafarer must still prove by substantial evidence
that his work conditions caused ot, at least, increased the risk of contracting the
disease.6 'Ibis is because awuds of compensation cannot test entirely on bare
assertions and ptesumptions.7 In otder to establish c~mp~abilit>: of a ~on-
occupational disease, reasonable proof o~ work-co_~ectton 1s su~fiaent • direct
causal rdation is not requircd. 8 It is thus this probability of connectton, and not the
ultimate degree of certainty, that is the test of proof of compensation proceed.ings.9
7. REQUISITES FOR COMPENSABILITY OF OCCUPATIONAL
;QISEASE.
In order for an occupational disease and the resulting disa~ility or
death to be compensable, Section 32-A of the 2010 POEA-SEC 10 requires that all
of the following conditions, as fllj)Jxlrlld by mbstantial tvitkna, must be established:
1. The seafarer's wotk must involve the risks described irt the POEA-
SEC;
1 Sc:nraJlaineSeMa!s~. v.Oeleoo,G.RNo.199977,Jcn 25. 2017.
2 Qeraov Ptic)pi1e Trnnariie C5rie1s. "-• G.R No. 222523, Oct.03.2018.
3 1usm1'Q ~- NYK.fl Sl\l) MmJe,nenl Inc., GR. No. 237487, June ll, 2018: See No. 16, D1ritiCXI d Tams. 2010
POEA-SEC; SeacrestMammeM!ria;iemeAt. klC. v. Rcderos, GR~. 230473, Apli 23, 2018.
c ElluelYJav. Scuftfletl Agenoos. n:., G.R No. 208396, M:lith 14, 2018.
s Id., ciq Sec. 20 Vt) (4) of Ile 2010 POrA-SEC 'Mlld1 states: •4_ Those il'liesses not lsted in Secoon 32 of !his Contcld are
dispcEbiy ~ as d-relaled." Seaaest Maritime Mmgement, ~ v. Roderos. supra.
1 Id., cm.I~ Transrraile Qrriers, inC. v. ~ . G.R No. 201793, Sept. 16, 2015; Magat v. lntlmllftt Md1le
Ermprises.lnc.,G.R.No.232892.~04,2018;Del.eoov.MulladTrn,lnc.,G.RNo.215293,Feb.8,2017.
1 Magatv. bmrientM:mneEnteqxises. Ire., G.R No. 232892.~04.2018.
e Id.. ding Grace P/ame ~ Caporcm1 v. Amxri, G.R No. 201536. Sept. m, 2015.
1 ld.,ci'YdGabulas,&°.v.Sa!nna'MarifmaSeNk:es."-. GRth 1188637,0ec:15,2010.
rJ See -&da'l 32 -A. OCCUPATIONAi.. DlSEASES," Amended S1a'ldad Tenll 111d Cordfo\s ~ Ile Overs&
~ of fi1i,o Seafarets On-8oa"d ()Qm(,cq Stips (POEA Memcrcnt11n CiaJlar No. 10, &ries d 2010,
Odcber26,2010).
CHAPTER. FOUR 337
SOCIAL WELFARE LEGISU.TION
2. The disease was contracted as a result of the seafarer's exposure to the
described risks;
3. The disease was conttacted within a period of exposure and under such
other factors necessaty to contract it; and
4. There was no notorious negligence on the part of the seafarer.'
8. CORRELATION OF SECTION 20 (A) AND SECTION 32-A OF PO~-
·
As pointed _out above, Section 20 (A)2 of the POEA-SEC govems the
compensation and benefits for the wotk-related'injw:y or iµness that a seafarer on
board sea-going vessels may have suffered during the teon of his employment
contract This section should be read together with Section 32-A3 of the POEA-
SEC that enumerates the various diseases deemed occupational and, therefore,
compensable. Thus, for a seafarer to be entitled to the compensation and benefits
under Section 20 (A), the disability causing illness or injury must be one of those
listed under Section 32-A.4
Of coutse, the law recognizes that under certain circumstances, certain
diseases not othetwise considered as an occupational disease under the POEA-SEC
may nevertheless have been caused or aggravated by the seafarer's working
conditions. In these situations, the law recognizes the inherent paucity of the list
and the difficulty, if not the outright improbability, of accounting for all the known
and unknown diseases that may be associated with, caused or aggravated by, such
working conclitions.5
Hence, the POEA-SEC provides for a disputable presumption of work-
relatedness for non-POEA-SEC-listed occupational disease and the tesulting illness
or injury which he may have suffered during the tenn of his employment contract.6
9. SEAFARER HAS BURDEN OF PROOF IN DISABILITY CLAIMS.
a. Disputable presumption does not signify an automatic grant of
compensation and/or benefits daim.
The above-mentioned disputable presumption is made in the law to
signify that the non-inclusion in the list of compensable diseases/illnesses does not
translate to an absolute exclusion from disability benefits.7 In other words, the
Id~ Baba v. Ta Human Reswces, Inc., GR No. 184933, Apri 13, 2016.
Sedm 20 (A) of POEA Mernornbn CitlJlat No. 10, Series d 2010, Odooer 26, 2010; Fomet,, Section 20 (8) of
S1amd Team n QJncflfols Govmq lhe En1)k)yn,ent of Fiipilo Seaf;re,s On Bon Ocean,G(q v~. muec1
puisuantl> DOLE~ OnlerNo. 4, Seriesof 200) ~ 31, mll
3 ·"Sedioo 32-A. OCCUPATIONAL DISEASES." POEA Mem:mfum Cira.a No. 10, Series of 2010, OddJer 26, 2010.
C Jebsat Mailine kV. Ravena, G.R No. 200566, Sept. 17, 2014.
5 Id.
s kf.
1 Mi:Klrickp v. NYK.fi 91') Management. Inc., GR No. 204262. Jtme 07, 2017.
338 IIAR R.EYIEWER ON IABOR !AW
disputable presumption does not signify an automatic grant of compensation and/or
benefits claim.1 The seafarer must still prove his entitlement to disability
benefits by substantial evidence of his illness' work-relatedness2 and that the
ailment was acquired during the teem of his contract.3 He must show that he
experienced health problems while at sea, the circumstances under which he
developed the illness,' as well as the symptoms associated v.rith it5
The seafarer cannot solely rely on the disputable presumption.6
Accordingly, the disputable presumption "does not allow him to just sit down and
wait for respondent company to present evidence to,overcome the disputable
presumption of work-relatedness of the illness." Concomitantly, there is still a need
for him to corroborate his claim for disability benefits.
The rule therefore is clear that whoever claims entitlement to the benefits
provided by law should establish his or her right thereto by substantial evidence.7
Thus, the burden is placed upon the claimant-seafarer to present substantial
e\·idcncc, or such relevant evidence which a reasonable mind might accept as
adequate to justify a conclusion that there is a causal connection between the nature
of his employment and his injury or illness, or that the risk of contracting the illness
was increased by his working conditions.8 The onu, probandi fell on the claimant-
seafarer to establish his claim for disability benefits by the requisite quantum of
evidence that would serve as basis for the grant of the relief'l and as such, it cannot
rest on mere speculations, presumptions or conjectures. 10
Thus, in situations where the seafarer seeks to claim the compensation
and benefits that Section 20 (A)11 grants to him, the law requires the seafarer to
prove that:
(1) he suffered an illness;
(2) he suffered this illness during the tenn of his employment contract;
(3) he complied with the procedures prescribed under Section 20 (A);12
1
ld.,ld.
i Id.
3 ScamY Mi1i1ine SeMces h:. V, De Leon, G.R No.199977,Jat 25, 2017.
' ld.,cirg T*v.AIYJl>EaslemCrew~ Plis., re,GR No.209302,Ju~9,2014, 729SCRA 677.
Id., citrg lme-P!ilm MmlgAgeocy, Inc. V. HeiHIGazzilgill, G.R No. 199568, JLne 17, 2015.
6 Quizaa v. DeMc1n Crew~(Phr¢nes), ~. G.R No.185412, NoY. 16, 2011.
1
Guerlemv. Phfwile Tr.rismmeCariels, re. GRNo. 222523, Oct. 03,2018.
~ !.triineCaJ)aali:xlv. ~ . GR No.186180, Mm22. 2010.
Gue!rero v. ~ T ~ Cariels, Inc. Sll)l1l; Mariad T~ Inc. v. lsilro, GR No. 222699, M/ 24, 2017;
&:avna-Mrine Serw:eslnc, V. Deleoo, GR No.1999TT,Ji11. 25, 2017.
'11° Gabtros.St.V, &3vnart,krtime Sefvices, h:., GRNo.188637, Dec 15,2010;
Sedm 20 (A) o1 Ile Ameooed ~ Te,ms aid Coodwls ~ lhe,CNelseas ~ ol Ripilo Seafarefs
Cn-Boa<: ~ Sli~ (POEA ~ Citula" No. 10, Series of 2010, Otti>e' 26, 2010). Foonerly, Soctioo
20(8)ol StandadTeimscrldCalOWISG<M,mj fle~olFipi,oSeaatersOn 8oa't1 ~ Vessels.
69.led ~ I kl DOLE Depmett OrdEr No. 4, SE,ies ol2000 (l,'ey 31, 2000].
11 Id.
CHAmRFOUR
339
SOCIAi- WELFARE lECISL\TION
(4) his illness is one of the enumerated occupational diseases or that his
illness or injury is otherwise work-related; and
(5) he complied v.rith the four (4) conditions enumerated under Section
32-A for an occupational disease or a disputably-presumed worlc-
r~ted disease to be compensable. 1
10. PRINCIPLE OF WORK-RELATEDNESS.
The principle of work-relatedness of an injury or illness means that the
seafarer's injury or illness has a possible connection to one's work, and thus, allows
the seafarer to claim disability benefits therefor. 2
The 2010 POEA-SEC defines a work-related injury as an "injury resulting
in disabili!J or death ariing out of and in the course of employment," and a work-related
ill!!.ill as "a'!Y icknm rem/ting to dirabili!J or death as a result of an ocmpational disease
listed JJntkr Section 32-A ofthis Contract with the conditions set therein satisfied. '5
For illnesses not mentioned under Section 32, the 2010 POEA-SEC 4
creates a disputable presumption in favor of the seafarer that these illnesses are
work-related. However, the presumption does not necessarily result in an automatic
grant of disability compensation. The claimant, on due process grounds, still has
the burden to present substantial evidence that his work conditions caused or at
least increased the risk of contracting the illness.5 1bis is because awards '?f
compensation cannot rest entirely on bare assertions and presumptions. lo order to
establish compeosability of a non-occupational disease, reasonable proof of work-
coMection is sufficient - direct causal relation is not required. Thus, probability,
not · the ultimate degree of certainty, is the test of proof in compensation
proceedings.6 ·
As a general rule, the principle of work-relatedness requires that the
disease in question must be one of those listed as ai:i occupational disease under
Section 32-A of the POEA-SEC. Nevertheless, should it be not classified as
occupational in nature, Section 20 (A),7 paragraph 4 of the 2010 POEA-SEC
provides that such diseases ate disputably presumed as work-related.8 1bis
disputable presumption operates in favor of the employee as the burden rests upon
his employer to overcome the statutoty presumption. Hence, unless contrary
Id.; Q.mla v. Mv1o,v~ Pht., nc. GR No. 219123, Sept. 11, 2017.
Guerrerov. ~ TllflSlllcri1e Cafels, n:, G.R No. 222523, Oct. 03, 2018. ·
Sq)pels lkiled Pm, rev. laJne, G.R No. 217036, AttJ.20, 2018; OSG ~ "'-JEmenl Miria, h:. v. MJnje, G.R
No.214059,0ct.11,2017;0eleoov. Pla.nooTrans, n:., GR No215293, Feb.8,2017.
' See Sedioo 20 (A)(4) d tie 2000 POEME.
Vllllhra. Jr.v. Cl'ewledl St'ipm.rlalJemertPhliwries, Inc., GR No.225995, NOY. 20, 2017.
6 Sq)pels United Pm, rev. l.alJne, GR No. 217036, AttJ, 20, 2018; De Leon V. Mau>ild Trcr,s, nc., GR No 215293.
Feb. 8, 2017; ~ Ma Mame, h:. v. Arnj!. GR No. 229192. Jlif 23, 2018; t/a;Jal V. ntef'ooent "'-'iime
Enblq)rises, Inc., G.R No. 232892, ~ 4. 2018; Leonis Navgalioo Co., ~ - v. Obrero, GR No. 192754, Sept. 7, 2016;
1.eais ~mi Co.,h:.v.Vl1malef, GR No. 179169, M¥ch 3,2010.
1 Foonerly Sedioo 20 (B) ofIle 2000 POEA-SEC.
Veoora, Jr. v. Qev.1ech Sl~Phrippi,es, ~-. G.R No. 225995, Nov. 20, 2017.

340 SAR RE\IIEWER ON LABOR. LAW
evidence is presented· by the seafarer's employer, this disputable presumption
stands. 1
This principle was best discussed in Jebsens Maritime. 2 The 2000 POEA-
SEC3 contract governs the claims for disability benefits by respondent Babol as he
was employed by the petitioners in September of 2006. Pursuant to the said
cont.tact, the injury or illness must be work-related and must have existed during
the term of the seafarer's employment in order for compensability to arise. 4 Work-
relatedoess must, therefore, be established. It is undisputed that Nasopha,yngeal
Cardnoma (NPq afflicted respondent while on board petitioners' vessel. As a non-
D«llj>alional disease, it has the dirp11table presumption of being work-related. This
presumption obviously works in the seafarct's favor. 5 Hence, unless contrary
evidence is presented by the employers, the work-relatedness of the disease must
be sustained.6 In this wise, the petitionCJ:S, as employers, failed to disprove the
presumption of NPC's work-relatedness. They primarily relied on the medical
report issued by Dr. Co Pefia. The report, however, failed to make a categorical
statement confirming the total absence of work relation.
Black's Law Dictionary defines likely as 'J,robab!l and likelihood as 11
"probabii!J. '8 The use of the word likely indicates a hesit2nt and an uncertain tone
in the stated medical opinion and does not foreclose the possibility that
responden~s NPC could be work-related. In other words, as the doctor opined
only a probability, there was no certainty that his condition was not work-related.
There being no certainty, the Court will lean in favor of the seafarer consistent with
the mandate of the POEA-SEC to secme the best terms and conditions of
employment for Filipino workers. Hence, the presumption of NPC's work-
relatedness stays.
11. PRINCIPLE OF WORK-AGGRAVATION.
In the same 2013 case of Jebsens Marilime,9 the principle of work-
aggravation was discussed. Thus, assuming for the sake of argument that rhe
presumption of work-relation was refuted by petitioners, compensability may still
be established on the basis of the theory of work aggravation if, by substantial
' PhWal fJaile hpr:/, Inc. v. Oedace, Jr., G.R No. 199162. ,Mf 04, 2018, ~ ~ Mrime SeM:es V. wel,
G.R No. 195518, Mlld'l 20, 2013, 707 Piil 210, 'OJ-228.
2 Jebsens Marfme, ~ v. Bcmol, G.R No.204076, Dec. 04, 2013.
3 1lis case was decEed oo Ile basis d Ole pwisiJ1 rllhe 2COO POEA-SEC ~ - has been Sl4)EISeded by lhe 2010
PW-SEC, ixqstmt ID Ile Mmled Stnfad Toons alVl Cooci&lns Ga.-eaq Ile CNefseas ~ d Fq)ino
Sectaels Ol-8oird 00m-Gang Ships (POEA Melnrcnbn Ciaa No. 10, Sooes ct 2010, OdDber 26, 2010).
4 C1iYJ ~ Mari!ine Serw:es Md Pril0ess Cruise l.il8S, U:1 v. laller, GR No.195518, March 20, 2013, 694 SCRA
225, ~ Jebsens Martire, Inc. v. lkidag, G.R No. 191491, Dec. 14, 2011, 662 SCRA 670, sn.
5 Qq Jessie V!Rm v. 0SG ~ Mria, Inc. cm'a Witiaelmar ~ Servia!s, GR No. 197205, Sept
26,2012.
6 ClrQ fB.Sa Mdne Corpcratm v. Rc6ete, G.R No. 192686, tb. 23, 2011, 661 SCRA 247. 255.
7 A!h EGbl, p. 534.
e Id.
9 GR No. 204076, Dec. 04, 2013.
CHAPTER FOUR 341
SOCIAL WELFARE LEGISLATION
evidence,1 it can be demonstrated that the working conditions aggravated or at least
contribu~ed in the advanc~~t of respondent's cancer.2 As held in Rosario,l "[t)he
burden 1S on the benefiaanes to show a reasonable connection between the
causative circumstances in the employment of the deceased employee and his death
or permanent total disability."
. . In the 2018 case of LAgne,4 both the NLRC and the CA found Lagne's
rectal illness. to _be compe~~able fo~ perma~ent and total disability, because they
found that his dietary provmon~ while at sea mcreased his risk of contracting colon
cancer because he had no choice of what to eat on board. Suffice it to say, the
strenuous nature of Lagne's job, combined with his poor diet which consists of
mostly carboh~drates ~?
meat, us~y with saturated fat, his advanced age as he
was 55 at the ~~ of hmng~ we find tt reaso~able to conclude that Lagne acquired
or de~oped his illness dunng the tenn of his contract There is a probability that
Lagne s work as an oiler caused or contributed even to a small degree to the
development or aggravation of his rectal illness.
It was, thus, stressed that in determining the compensability of an illness
the Court does not require that the employment be the sole factor in the gro~
development, or acceleration of a claimants' illness to entitle him to the benefits
provided for. It is enough that his employment contributed, even if only in a small
degree, to the development of the disease.s
Indeed, settled is the rule that for illness to be compensable, it is not
necessary that the nature of the employment be the sole and only reason for the
illness suff~ by the seafarer.6 It is sufficient that there is a reasonable linkage
between the disease suffered by the employee and his work to lead a rational mind
to conclude that his work may have contributed to the establishment or, at the very
least, aggravation of any pre-existing condition he might have had. 7
Even assuming that the ailment of the worker was contracted prior to his
employment, this still would not deprive him of compensation benefits. For what
mattCJ:S is that his work had contributed, even in a small degree, to the
development of the disease. Neither is it necessary, in order to recover
compensation, that the employee must have been in perfect health at the time he
contncted the disease. A worker brings with him possible infirmities in the course
1 M hekt i1 Reo/eS v. ECC, GR. No. 93003. M:lrch 3. 1992. 206 SCRA 726, 732, citrg Magisb'ado v. ECC, GR No. 62641,
June 30, 1989. 174 SCRA 605. Substantial Mief1ce men sudl relevalt evidence as areamable mi1d njJht aa.ept as
lllequale ID support aconcbsion.
2 GSIS v. Errmaooel P. Cunlapay, G.R No. 168862. April 30, 2008, 553 SCRA 520; 576 Phi. 482. 492.
3 Resolllkrl i1 P.osai>v. Denklav Mame. GR No. 166906, ~ 16, 2005.
4 Skpslllied Pm. n:. v.1.aJne. GR. No. 217036, Ail:I• 20, 2018.
5 a=. ShapCn!w~ 11¥:. v•.legal Heirsof llelaleGoll:iredo P.ep60, G.R No. 100534. Feb. 10, 2016.
IJsn:itoo v. NYK-FI Sq) ~ h:., GA No. 237487, June 'll, 2018, citi1g .Grieg ~ . Inc v. Gcrtas,
GA No. 228296,M/ 26, 2017.
7 ki,cing ~ Mnna Selvices V. we!, G.R No.195518, Mirdl 20, 2013.
342 SAR REVIEWER ON LABOR l.AW
of his employment, and while the employer is not the insurer of ~e ~~al~ of the
employees, he takes them as he finds them and assumes the risk of liability.
12. INJURY OR ILLNESS MUST OCCUR DURING tERM OF
CONTRACT.
As earlier quoted, Section 20 (A)2 of the 2010 POEA-SEC categorically
reads:
11
The liabilities of the employer when the seafarer suffers
work-related injury ru: illness during the tgm of,his contract are as
· follows: u;y."
Based on this provision, an injwy or illness is_ comp~able when, litst, it
is p,ork.-alalld and, second the injwy or illness existed during tht lmll of the
seafarer's employment con~ct The corre~t approa~ in adjudging ~ s of
seafarers for death and disability benefits ts to detemune whether the claimants
have proven the requisites of compensability3 under Sec?on 32-~ of the 2010
POEA-SEC. , This provision states that for an occupauonal disease and the
resulting disability or death to be compensable, all of the following conditions
need to be satisfied:
(1) The seafarer's work must involve the risks described therein;
(2) The disease was contracted as a result of the seafarer's exposure to
the described risks;
(3) The disease was contracted within a· period of exposure and under ·
such other factors necessary to contnct it; 2.nd
(4) There was no notorious negligence on the part of the seafarer.5
13. WORKING CONDITIONS ALONE NOT SUFFICIENT.
It need not be overemphasized, according to Panganiban,6 that in the
absence of substantial evidence, working conditions cannot be accepted to have
caused or at least increased the risk of contracting the disease, in this case, brief
psychotic disorder. Substantial evidence is more than a mere scintilla. The evidence
must be real and substantial, and not merely apparent; for the duty to ptove work-
1 Seagul $\~ardTranspat. ~v.NLRC, G.R.No. 123619.llleS, 2'm.
2 Sec&xl 20 (A)of OleArnendm Sm'!aldTermsn Coodbs GcNenu1 lleOvaseas~cifq,iloSeares
On-8oad ~ Sqis (POEA Memmm1m Cialllr No. 10, Sas d2010, Oddler 26, 2010). lhis pnMSlcn is
vedJatill lhe sane as ii Ile Cooner pnMSiln d Sdx\ 20 (B) d h! Slaldild Tams n1 Card&m GcMrlq Cle
~ d Fqilo Semas On 8oald Ocea,.Geq Vessels, issued pimm uOOlE Oepasmenl Order No. 4,
Saies d 2000 iMa'f 31, 200J1. TIE is dso lhe same as Ole plMlUS 1996POEA-SEC.
3 Maelsk.fifpilas Crevmd, mV. Malitse, G.R No. 200576, Nov. 20, 2017; Tllfiesa v.N>cast S1tm Co., be., G.R. No.
229n9, Apt1 17, 2017; Jebsens Mlritine, Inc. V. Babol, G.R. No. 204076, Dec. 04, 2013.
• 1h6 prot,m1 s avema&n leprooudioo cllle saneprtMiion d Section 32-Adlle 2000 POEA~ (S!andard Terms
n ~ GcM,nilg Ile Enw,,nentclfi!iln) SeriaretsOn Bocrd 0amGang Vessels.Issued JUS'lcllllo OOlE
Oepatnent On!&' No. 4, S8ies of 2000 {>lay 31, 200J]). .
s Phls)1lelgy Mari&ne. Inc. v. Galano.Jr., G.R No.228504,June06, 2018.
& P~ri>cnv.TaraTrad'ng~lnc.,G.R.No.187032,0ct.18,2010.
CHAM"ER FOUR 343
SOCIAL WELFARE LEGISLATION
causation or work-aggravation imposed by law is real and not merely apparent.
Petitioner in this case, who suffered brief psychotic disorder, pointed out that his
illness was work-related simply because had it been a land-based employment,
petitioner would have easily gone home and attended to the needs of his family.
The Supreme Court, however, did not submit to this argument since this is not the
''work-related" instance contemplated by the provisions of the employment contract
(PO&\. SEq in order to be entitled to the benefits. Otherwise, every seaman
would automatically be entitled to compensation because· the nature of his worlt is
not land-based and the submission of the seaman to the company-designated
physician as to the nature of the illness suffered by him would just be an exercise of
futility. The. fact is that the petitioner failed to establish, by substantial evidence,
that bis brief psychotic disorder was caused by the nature of his work as oiler of the
company-owned vessel. In fact, he failed to elaborate on the nature of his job ot to
specify his functions as oiler of respondent company. It is thus difficult to find any
link between his position as oiler and his illness. The fact that petitioner was a
seaman for 10 years serving 10 to 18-month contracts and never did he have any
problems with his earlier contracts cannot be given less importance. It can only be
sumused that the brief psychotic disorder suffered by him was brought about by a
family problem. His daughter was sick and, as a seafarer, he could not just decide to
go home 2.nd be with his family. Even the psychiatric report prepared by the
evaluating private psychiatrist of petitioner showed that the hospitalization. of
petitioner's yowigest daughter caused him poor sleep and appetite. Later, he started
hearing voices and developed fearfulness. ·
Even in case of death of a seafarer, the grant of benefits in favor of the
heirs of the deceased is not automatic. As in the case of Rivera, 1 without a post-
medical examination or its equivalent to show that the disease for which the
seaman died was contracted during his employment or that his working conditions
increased the risk of contracting the ailment, the employer/s cannot be made liable
for death compensation.
In fact, in Mabuh'!Y Shipping,2 the Court held that the death of a seaman
even during the tean of employment does not automatically give rise to
compensation. Several factors must be taken into account, such as the
circumstances which led to the death, the provisions of the contract, and the right
and obligation of the employer and the seaman with due regani to the provisions of
the Constitution on the due process and equal protectio.n clauses.
14. DISABILITY ARISING FROM ACCIDENT.
Black's Law Dictionary defines ''a«idtnt" as "[a]n unintended and unforeseen
injurious occurrence; something that does not occur in the us~ course of events or
that could not be reasonably anticipated, xxx [a)n wiforeseen and injurious occurrence
filera v. WaDernMariline SeM:es, Inc., G.R No. 160315, Nov. 11, 2005, 474 SRA 714, 723.
Malllmt ~ SeM:es, "- v. NLRC, G.R No. 94167, Jan. 21, 1991, 193 SCRA 141, 145.

344 ~R REvlEWER ON IABOR I.AW
not attributable to mistake, negligence, neglect or misconduct." The Philippine Law
Dictionary defines the word "atcidenl" as "(t]hat which happens by chance or
fortuitously, without intention and design, and which is unexpected, unusual and
unforeseen." 1
R.ajsed as issue in NFD Inttn1afw1U1~2 is whether or not the incident where
respondent figured should be classified as accident or an injury. On May 16, 2003,
when respondent had been on board the vessel M/V Shinrti for seven months as
Third Officer, the Captain ar_d Chief Officer ordered him to carry 25 fire hydrant
caps from the deck to the engine workshop, then back to the deck to refit the caps.
The next day, while carrying a heavy basketful of fire hydrant caps, respondent felt a
sudden snap on his back, with pain that radiated down to the left side of his hips. He
immediately informed the ship captain about his condition, and he was advised to
take pain relievers. As the pain was initially tolerable, he continued with his work_
After a few days, the pain became severe, and respondent had difficulty walking. The
Court held that the snap on the back of respondent was not an accident, but an injury
sustained by respondent from carrying the heavy basketful of fire hydrant caps, which
injury resulted in his disability. The injury cannot be said to be the result of an
accident, that is, an unlooked for mishap, occurrence, or fortuitous event, because the
injury resulted from the performance of a duty. Although respondent may not have
expected the injury, yet, it i~ common knowledge that carrying heavy objects can
cause back injury, as what happened in this case. Hence, the injury cannot be viewed
as unusual under the circumstances, and is not synonymous with th~ term ''a«idwt" as
defined above.
15. NON-COMPENSABILITY OF SELF-INFLICTED INJURY.
Section 20 (D) of the 2010 POEA-SEC is clear, lliZ::
"SECTION 20. COMPENSATION AND BENEFITS
XXX
"D. No compensation and benefits shall be payable in respect
of any injuiy, incapacity, disability or death of the scafu.rec resulting from
his willful or crimin2J act or iotcotional breach of his duties; Provided,
hollltlltr, that the employer can prove that such injury, incapacity,
disability or death is directly attributable to the seafarer."
From the above provision, the on111 probandi falls on the employer to
establish or substantiate its claim that the seafarers injury wis caused by his willful
or intentional act with the requisite quantum of evidence.3 In labor cases, as in
other administrative proceedings, only substantial evidence or such relevant
evidence as a reasonable mind might accept as sufficient to support a conclusion is
1
Ptlisynetgy Mlrimi, klc. v. Gama, Jr_ G.R No. 228504, June 00, 2018; C.F. S!lclJ) Cttw Mi!nagemeol Inc. v. Perez.
G.R No. 194885,J.n 26. 2015.
1 NFD kllemalxlna l,bri"WJ ~ .klc. dlescas.G.R No. 183054, Sept 29, 2010.
3 ~ ~ ~ l i e . Y. Swesie. GR. No. 213465, Jin 08, 2018.
CHAPTER FOUR
SOCIAL WELFARE LEGISlATION 345
required.1 Hence, as held in Carrer-,2 if it can be gleaned from the records tha 1
petitioners never presented any evidence before the Labor Arbiter to support the
conclusion that the seafarer's injury is directly attributable to his willful or criminal
act or intentional breach of duty, as when the accident report, by itself, does not
support the finding that his act was willful or intentional, clearly then, the seafarer
suffered an injury that is work-related during the term of his employment contract
and such is compensable. A willful act differs essentially from a negligent act. The
one is positive and the other one is negative. Intention is always separated from
negligence by a precise line of demarcation. If at all, there was merely inadvertence
or negligence on the part of the seafarer but not a willful or intentional hreach of
duty.3
In Morada!, 4 which was decided under the 1996 POEA-SEC, it was ruled
that self-inflicted injury which was established through substantial evidence is not
compensable pursuant to Section 20 (D) thereof. Respondent here was employed
as \viper for the vessel MV Comma11tkr by petitioner INC Shipmanagement, Inc. for
its foreign principal for a period of 10 months. He was later diagnosed to have
sustained '~hmnal burnr, upper and lower txfrrmilier and abdamtn, 2'-3~ 11%" for which
he W1detwent debridement. Based on evidence, however, it was declared that this
injury was self-inflicted.
19. NON-COMPENSABILITY OF SELF-INFLICTED DEATH.
(NOTE: For a more comprehensive discussion on this topic, please read the annotation
below under the heading: "MONETARY CLAIMS OF SEAFARERS FOR DEATH
BENEFITSj.
II.
EXISTENCE AND EXTENT OF SEAFARER'S DISABILITY,
HOW DETERMINED AND DECLARED
1. PRE-EMPLOYMENT MEDICAL EXAMINATION (PEME); NON-
COMPENSABILITY OF DISABILITY FROM PRE-EXISTING
ILLNESS.
a. Legal basis.
Pwsuant to Section 20 (A) of the 2010 POEA-SEC, the employer is liable
for disability benefits when the seafarer suffers from a work-related injury or illness
during the term of his contract. In this regard, Section 20 (E) thereof mandates the
1 Id., cirg I N C ~ n;. V. Woralas, GR No. 178564,Jal. 15, 2014.
1 C3'eer Plllippines ~~ n:. v. Sweslre, supra. Nob!: Tiis case was deci:led ll1de- tie 200:l POEA-SEC,
v.oose ~ in il5 Section 20 (0) is siniar to Ile 2010 POEA-SEC.
l Id.
' lt..'CSh~emen~rc.v.MB!as,GRNo. 178564,Jal. 15,2014.

S~R REVIEWER ON LABOR I.AW
seafarer to disclose all his pre-existing illnesses or conditions in his PEME; failing
in which shall disqualify him from receiving disability compensation,' viz.:
"SECTION 20. COMPENSATION AND BENEFITS
=
"E. A seafarer who knowingly conceals a pre-existing illness
or £2.!ll!i.li.2n in the Pre-Employment Medical Examination (PEME)
shall be liable for misrepresenration and shall be disqualified from any
compensation and benefits. This is likewise a just cnuse for termination
of employment and imposition of appropriate administrative
sanctions." ' selected/2ccredited by the petitioners, it necessarily follows that the
At the outset, it bears to point out that Section 20 (E) of the 2010 POEA-
SEC speaks of an instance where an employer is absolved from liability when a
seafarer suffers a work-related injwy or illness on account of the latter's willful
concealment or misrepresentation of a pre-existing condition or illness.2 Thus, the
burden is on the employer to prove such concealment of a pre-e.xisting illness or
condition on the part of the seafarer to be discharged from any liability. In this
regard, an illness·shall be considered as pre-existing if prior to the processing of the
POEA contract, any of the following conditions is present, namely:
(a) The advice of a medical doctor on treatment was given for such
continuing illness or condition; or
(b) The seafarer had been diagnosed and has knowledge of such illness or
condition but failed to disclose the same during the PEME, and such
cannot be diagnosed during the PEME.3
b. PEME is not a totally in-depth and thorough examination ofan
applicant's medical condition.
The PEME cannot be a conclusive proof that the seafarer was free from
any ailment prior to his deployment.4 A seafarer only needs to pass the mandatory
PEME in order to be deployed on duty at sea.5 The fact that the seafarer passed the
company's PEME is of no moment The PEME could not have divulged the
seafarer's illness considering that the examinations were not exploratory in nature
and cannot be relied upon to arrive at his true state of health.6 It is not intended to
be a totally in-depth and thorough examination of an applicant's medical condition.
It does not allow the employer to discover any and all pre-existing medical
conditions with which the seafarer is suffering and for which he may be presently
1 Venua, s.v. Qew.ech ~ I Phiippnes,lnc., G.R No. 225995, NoY. 20,2017.
2 St!IJS fJaliine c«paatkn v. Spouses Delamol, GR No.198097. Jutj 30,2014.
Deoccrizav.Fee!Mmjement~~ilc..G.RNo.229955,.>Jlf23,2018.
Id.; See Phisynelgy Mrine, 11c. v. Galalo, Jr., G.R No. 228504, JLroe 6, 2018; See also Item No. 11 (a) and (b).
DemitialaTenns. 2010POEA-SEC.
' TalosiJ v. lniid f'hil)pr,e I.res, h:., G.R No. 198388, Jo.if 28, 2014, ()ooj,eo v. Phlm.n h:.. 'G.R No 184917 &
184932.'krdl 13, 2017.
5 Mir:llidejosv. NYK.fi Ship Mm)emenl he., G.R. No. 204262, June 07. 2017.
1 C.F. 9lap Crew~eme1H',c. v. Castilo, G.R. No.208215,Aprl 19. 2017.
(HAl'TER FOUR 347
SOCIAL WELFARE LEGISLATION
taking medication. 1 It is nothing more than a summary examination of the seafarer's
physiological condition.2 It merely deteanines whether one is 'Jil lo work " at sea or
'Jitfor Jta service;'5 it does not state the real state of health of an applicant.4
For the seafarer therefore to claim that the issuance of a clean bill of
health to him after a PEME means that his illness was acquired during his
employment is a non sequitur. In the case of NYK-FIL Ship Management, In,. v.
NLRC,5 it was held:
"We do not 2gtee with the respondent's claim that by the
issuance of a clean bill of health to Roberto, made by the phy.sicians
illness for which her husband died ~s acquired during his employment
as a fisherm20 for the petitioners.
'The pre-employment medical examination conducted on
Roberto could not have divulged the disease for which he died,
considering the fact that most, if not all, are not so exploratory. The
disease of_ GFR, which is 20 indicator of chronic renal failure, is
measured thru the renal function test. In pre-employment e~ation,
the urine 20alysis (urinalysis), which is normally included measures only
the creatininc, the presence of which canoot conclusively indicate
chronic renal failure."
An honest mistake of claimants in giving account of their state of health
does not negate compensability. 1bis is so because as laypersons, seafarers cannot
be·expected to make completely accurate accounts of their state of health. Unaware
of the nuances of medical conditions, they may, in good faith, make statements that
tum out to be false. These honest misbkes do not negate compensability for
disability arising from pre-existing illnesses shown to be aggravated by their
working conditions. It is only when a seafarer's proper knowledge of pre-existing
conditions and·intent to deceive an employer are established that compensability is
negated.6
c. No concealment ifemployer knows the seafarer's medical history.
But if employer is well aware of the seafarer's medical history, there can
be no concealment to speak of. For instance in Ventura, Jr..1 the Court pronounced
that contrary to the findings of the CA, there was no concealment on the part of
petitioner when he failed to disclose in his 2013 PEME that he was previously
treated for prostatitis in 2011. As culled from the records, respondents were well
Esperev. NFO k11elnaialal ~ .Aljents, klc.. GR No.212098, JU'/ 26, 2017.
NYK-AShip MimJt!mentlrG. v. TheNLRC,GRNo.161104, Sept 27, 2006.
• Estm!al'osealo~av. CA, GR No.175005, P-jlli30, 2008.
I NYK-Fl ~ ~ h:. V. t--1.RC, SUJXa
' Mm1sa1a v.Mmw Naviijalion Phls., o;., GR No. 2WU, Aug. 23,2017.
1 VerlJ.ra. Jr. v. CreY,1ech S111pmcmJen'eotPhiiJ)liles. klc., G.R. No. 225995, Nov. 20, 2017.
348 BAR REVIEWER ON LAB OR LAW
aware of petitioner's past medical history given that the company-designated
physician was able to provide a detailed medical history of the latter in the Medical
Report dated May 2, 2014 which showed all of his past illnesses, the year he was
tteated and where he obtained his treatment Moreover, since petitioner's prosratitis
was shown to have been treated in 2011 with no indication that he was required to
undergo further medical attention or maintenance medication for the same, he
cannot be faulted into believing that he was completely cured and no longer
suffering from said illness. Thi~is further bolstered by the fact that he was rehired
by respondents the following year in 2012 and no longer found to be suffering
from prostatitis during his PEME. Evidently, petitionei;s non-<iisclosure of the
same in his PEME in 2013 did not amount to willful concealment of vital
information and he was in fact, truthful in answering "no" to the query on whether
or not he was "suffering" from any medical condition likely to be aggravated by sea
service or render him unfit for such service on board the vessel
2. THE 120-DAY/240-DAYTREATMENT PERIOD RULE.
a. Significance ofthe period.
Pursuant 10 Section 20 (A) of the 2010 POEA-SEC, when a seafarer
suffers a work-related injury or illness in the course of employment, the company-
designated physician is obligated to arnve at a definite assessment of the fonncr's
fitness or degree of disability within a period of 120 days from repatriation.1
During the said period, the seafarer shall be deemed on temporacy total
disability and shall receive hi.~ basic wage until he is declared fit to work or his
temporary disability is acknowledged hy the company to be permanent, either
partially or totally, as his condition is defined under the POEA-SEC and by
applicable Philippine laws. However, if the 120-<iay period is exceeded and no
definitive declaration is matle because the seafarer requires further medical
attention, then the temporarv total disability period may be extended up to a
maximum of 240 days, subjc::t 10 the right of the employer to declare within this
period that a permanent partial or total disability already exists.2
But before the comr,any-designated physician may avail of the allowable
240-day extended treatment period, he must perform some significant act to justify
the extension of the original 120-day period.3 Otherwise, the law grants the
seafarer the relief of permanent total disability benefits due to such non-
compliance.4 •
Case law thus states that witl1out a valid final and definitive assessment
from the company-designated physician within the 120-day/240-day period, the
~ v . Mula! Tra,s, re., GR No. 232005, PLl:j. 20, 2018.
kl.; See also OOHI.E Phirell MmiY,I NJfrof, klc. V, Doble, G.R Noo. 223730 & 223782, Oa.•04, 2017; Jebsens
llai&ne, re. v. ~ GR No. 218871..an. 11, 2017.
l ld.,arg Talcrocv.Arpaplj Shj:l\li'9 Cocpaafion. GR.No. 223731,PLl:j. 30,2017.
• Id.. Buy ~ P h i s., n:.v.(AA:Jgue, Jr.. GR. No. 211882, J1'y 29, 2015.
CHAl'TER FOUR
SOCIAL WELFARE LEGISLATION 349
law already steps in to consider petitioner's disability as total and pcnn 1
Thus, a temporary to taldibilisa .ty becomes total and permanent by operation an~ of
law. Consequently, in a case ~here it was ~~y ~fter the laps~ of more than six (6)
2
months that the company-designated pbys1ctan issued a certification declarin th
seafarer to be entitled to a disability rating of Grade 10, going beyond the peri!d 0 ;
12? days, without justifiable reason, the Court held that his disability was correct!
ad)lldged to be permanent and total.3 , y
b. Summary ofRules on the periods to assess the seafarer.
The 2015 case of Elb11rg} and later reiterated in a number of cases s
summarized the rules on the periods when the company-designated physi~
must, as a duty, assess the seafarer and issue a .final medical assessment, as follows:
1. The company-designated · physician must issue a final medical
assessment on .the seafarer's disability grading within a period of 120
days from the tune the seafarer reported to him;
2. If. ~e compa_ny-designated physician fails to give his assessment
Wlthin the peood of 120 days without any justifiable reason then the
seafarer's disability becomes permanent and tota~ '
3. If. ~ e compan_y-designated physician fails to give his assessment
wtthin the pe?od of 120 days ~th a sufficient justification (e.g.,
seafarer reqwred further medical treatment or seafarer was
uncooperative~, then the period of diagnosis and treatment shall be
extended to 240 days. The employer has the burden to prove that the
compan)•-designated physician has sufficient justification to extend
the period; and
4. I~ th.e company-designated physician still fails 10 give his assessment
Wlthin tl1e extended period of 240 days, then the seafarer's disability
becomes permanent and total, regardless of any justification.
. . The above_ ~e was further refined in the 2015 case of Mar/aw Navigation
Ph,lipptnu, Inr. u. 0!1a1, where the Court declared - and this is the current rule . as
follows:
(1) that mere inability to work for a period of 120 days does not entitle a
seafarer to permanent and total disability benefits;
k1, Tm-cv. Npajtii~ Capaa(m,supra
kl, Tamil v. ~ Miritime C',apaaooo, G.R No. 220608, Aug. 31, 2016; See aso Phi-lv'al 1.m1e ~ re, v
Dedace, Jr, G.R No. 199162, Juy04, 2018. ' .
3
Caeer Phippines 9lj) Mirlagoom, he.v.kJJJ, GR No. 215595, Apri 26, 2017.
Eb,g ~emertPhils., re. v. QubJue,k., G.R No.211882,Jltf 29, 2015,764 SCRA431.
5
&di.as Gere~· M,Jk>Easlem CIWI Mirlagement Phis., re., GR Nos. 226656 &226713, Apri 23, 2018; Mc1;isaysay
Misti OSK Mnle, re. v. ~ . G.R No.195878, Jal. 10,2018.
' AA~ a ~ is~ case ol Mmv ~alial f'hi4>pi1es. re. v. Osias svpra v.tiere Osias based~
I l e ~ presen\ld, di! not Uy oon-l)t/ IWh lhe ~ meci:a1 ~ - ' ' '
1
G.RNo.215471,l'b,o.23,2015.
350 BAR REVIEWER ON lABOR !AW
(2) that the determination of the fitness of a seafarer for sea duty is
within the province of the company-designated physician, subject to
the periods prescribed by law;
(3) that the company-designated physician has an initial 120 days to
determine the fitness or disability of the seafarer; and
(4) that the period of treatment may only be extended to 240 days if
a sufficient justification exists such as when further medical
treatment is required or when the seafarer is uncooperative. 1
For as long as the 120-day period under the Laber Code and the POEA-
SEC and the 240-day period under the IRR co-exist, the Court must bend over
backwards to harmoniously interpret and give life to both of the stated periods.
Ultimately, the intent of our labor laws and regulations is to strive for social justice
over the diverging interests of the employer and the employee.2
c. Conditions required for the claim for total and permanent
disability benefits to prosper.
In sun1, according to the 2019 case of Torillor,3 in order for a seafarer's
claim for total and permanent disability benefits to prosper, any of the following
conditions should be present:
(a) The company-designated physician failed to issue a declaration as to
his fitness to engage in sea duty or disability even after the lapse of
the 120-day period and there is no indication that further medical
treatment would address his temporary total disability, hence, justify
an extension of the period to 240 days;
(b) 240 days had lapsed without any certification issued by the company
designated physician;
(c) The company-designated physician declared that he is fit for sea duty
within the 120-c.ay or 240-day period, as· the case may be, but his
physician of choice and the doctor chosen under Section 20 (B) (3)•
of rhe POEA-SEC are of a contrary opinion;
(d) The company-designated physician acknowledged that he is partially
permanently disabled but other doctors who he consulted, on his
ov.,n and jointly with his employer, believed that his disability is not
only permanent but total as well;
(e) 1l1e company-designated physician recognized that he is totally and
permanently disabled but there is a dispute on the disability grading;
1 See also Tradectil Snpprg hjencies, nc.v. Dela Cruz, G.R No. 210307, Feb.22.2017; 8r!)hasis SIJl1!lfled.
1 Phiippne Ha1vror.ia Sl1') ¥CJ v. Israel, G.R No. 200258, Oct. 03, 2018; See also Titoo;i v. MST Marine SeM:es
(Phils.). r.c..G.R Nos. 202113 &202120, June 06, 2018. . 2
TCXMlosv. ~aleM,iitime Caporaoon, G.R Nos.215904 &216165, JM. 10, 2019.
• Thisis t,epr(MSion U/ldef lhe 200l POEA-SEC. It isnowdesi;Jnated asSecoon20(A) (3)ottoe 2010 POEA-SEC.
CHAPTER FOUR 351
SOCIAL WELFARE LEGISLATION
(Q The company-designated physician determined that his medical
condition is not compensable or work-related under the POEA-SEC
but his doctor-of-choice and the third doctor selected under Section
20 {B) (3)1 of the POEA-SEC found otherwise and declared him
unfit to work;
(g) The company:designated physician declared him totally and
permanently disabled but the employer refuses to pay hipi the
corresponding benefits; and
(h) The company-designated physician declared him partially and
permanently disabled within the 120-day or 240-day period but he
remains incapacitated to perform his usual sea duties after the lapse
of said periods.
d. The extent ofdisability (whether total or partial) is determined,
not by the number ofdays that one could not work, but by the
disability grading the doctor recognizes.
The CA, in the 2018 case of CF. Sha,p,2 found that since respondent was
unable to work as a seafarer for more than 120 days, he is deemed to have a
permanent and total disability. The Court, however, disagreed. While a seafarer is
entitled to temporuy. total disability benefits during his treatment period, it does
not follow that he should likewise be entitled to permanent total disability benefits
when his disability was assessed by the company-designated physician after his
treatment He may be recognized to have permanent disability because of the
period he was out of work and could not work, but the extent of his disability
(whether total or partial) is determined, not by the number of days that he
could not work, but by the disability grading the doctor recognizes based on
his resulting incapacity to work and eam his wages.J
Certainly, the disability should not be determined by simply counting the
duration of the seafarer's illness. This system would inevitably induce the
unscrupulous to delay treatment for more . than 120 days to avail of the more
favorable award of permanent total disability benefits.4
It is the doctor's findings that should ~revail as he or she is equipped with
the proper discernment, knowledge, experience and expertise on what constitutes
total or partial disability. The physician's declaration serves as the basis for the
degree of disability that can range anywhere from Grade 1 to Grade 14. Notably,
this is a serious consideration that cannot be determined by simply counting the
number of treatment lapsed days. Accordingly, the timely medical assessment of a
company-designated physician is given great significance by the Court to determine
' Id.
C.F.Sh<IJ)CrewMara,iemenl r.c.v.Sanl:>S,G.R.No. 213731,Aug.01. 2018.
3 Ot,J INC ~emenl, Inc. v. Ros.le;, G.R No. 195832, Oct 01, 2014.
' i'lC Shipmanagerret. Inc. v. P.osales, G.R No. 195832,Oct. 01, 2014.

SAil R£\11£WER ON IA8llR !AW
352
whether a seafarer is entitled to disability benefits. Indeed, the ~ere inability. of a
seafarer to work for a period of 120 days is not the sole basts to detcnrune a
seafarer's disability.
In this case, respondent was repatriated in the Phili~pines on January 12,
2012 The next day, or on Ja!lllary 13, 2012, he was ~ediately re~erred to CF
Shatp's company-designated physician.s. He was the~ subJected to different tests
and treatments, which were recorded m several medical reports. It was confirmed
that he had Diabetes Mellitus II and hypertension. On May 4, 2012, res~ond~t
was cleared from the nepbrology standpoint and was ..advised to c~n~ue his
maintenance medications. 11:ereafter, after 118 days from repatnatton, the
company-designated physicians issued a certification stating that respondent's
condition was not work-related and that his final disability grading assessment for
his hypertension and diabetes was Grade 12.
Verily, the company-designated physicians suitably gave the~ medical
assessment of respondent's disability before the lapse of the 120-day peaod. It was
even wuiecessary to extend the period of medical assessment ~o 240 days. ~.fter
rigorous medical diagnosis and treatments, the company-designated phfs1~s
found that respondent only had a partial disability arid ga~e a Grade 1~ .disability
rating. As the medical assessment of the co'.1'1pany~CSJgnated phys.1?ans was
meticulously and timely provided, it must be given weight and credibility by the
Court.
3. POST-EMPLOYMENT MEDICAL EXAMINATION.
a. Mandatory submission for post-employment medical
examination by a company-designatedphysidan.
Section 20 (A) (3) of the 2010 POEA-SEC, reads:
"COMPEN~TION AND BENEFITS FOR INJURY OR ILLNESS
"The liabilities of the employer when the ~cafarcr suffers
work-rdated injury or illnm during the tenn of his contract are as
follows:
XXX
"For this purpose, the seafarer shall submit himself 10.a ~
emvloyment mcdjc:11 examination by ~ company-des1gnatcd
physician within three working d~ys u~n his rctu~ except. when he
is physic.Hy incapacitated to do so, 111 which case, ~ wnnen nobcc 10 the
agency within the same period is deemed as complilnce. In the cour.:e of
the treatment, the ~farer shall also report regularly to the company-
designated physician specifically on the dates as prescribed _by the
company-dc.signated phy$ician and agiccd to by th.e scafar~r. F~ure of
the seafarer 10 compli 11.-ith the mandatory reporung rcqwrement shall
result in hi~ forfeiture of the right to claim the above benefits."
CHAr TER FOUR
353
SOCIAL WELFARE LEGISLATION
It is clear &om the foregoing that for a seafarer's claim for clisability to
prosper, it is mandatory and must be strictly observed that within three (3)
working days from his repatriation, he is examined by a company-
designated physician.1 Non-compliance with this mandatory requirement results
in the forfeiture of the right to claim for compensation and disability benefits.2
Consequently, the complaint filed by a non-compliant seafarer should be clismissed
outright.3
The rationale for this rule is that reporting the illness or injury within
three (3) working days from repatriation fairly makes it easier for a physician to
determine the cause of the illness or injury.4 It would be fairly manageable for the
physician to identify whether the disease was contracted during the term of his
employment or that his working conditions increased the risk of contracting the
ailment5 Ascertaining the real cause of the illness or injury beyond the period may
prove difficult To ignore the rule might set a precedent wilh negative
repercussions, like opening floodgates to a limitless nwnber of seafarers claiming
disability benefits, or causing unfairness to the employer who would have difficulty
dctennining the cause of a claimant's illness because of the passage of time. The
employer would then have no protection against unrelated disability claims.6
b. Exceptions.
'This rule is riot absolute, however. It admits of exception as (1) when-the
seafarer is incapacitated to report to the employer upon his repatriation; and (2)
when the employer inadvertently or deliberately refused to submit the seafarer to a
post-employment medical examination by a company-designated physician.7
In the first instance above, a written notice to the agency within the same
period is deemed as compliance. An example of thi~ c.~ccption is If/a/km Morilime,R
where the claimant, Faustino Inductivo, admittedly did not subject himself to post-
employment.medical examination within three (3) working days from his retum to
the Philippines, as required by the POEA-SEC. Indeed, for a man who was
terminally ill and in need of urgent medical attention, one could not reasonably
expect that he would immediately resort to and avail of the required medical
examination, assuming that he was still capable of submitting himself to such
examination at that time. It is quite understandahle that his immediate desire was to
be with his family in Nueva Ecija whom he knew would take care of him. Surely,
1 Oekaesv. ll.mm HM:me Serw:es& Sh4)1i'gAgerCf, h:., GR No.217345..ki/ 12, 2017.
Mria~&MmiY:l,lnc.v.Milar9,GRNo.217135.JiYI 31. 2018.
k'llela'slt Mnme Enlfrplises, k'lc.v. Q-ee< Ill,~
• Scavra'M.ri&ne Servi:es Inc..V. De Leon, G.R. No.199977. Jell. 25. 2017
s Ebuln,la V. SaMie1:1 ~ - k'lc. G.R. No.20839i,"4a'd114, 2018.
' Wa1em Miriwre Setvi:es. Inc.V. Tanalfclll. G.R. No. 160444. Al.g, 29,2012.
1 De kaes v.Diamnd HM:me SeMces &Sh~ Agerq, klc, G.R No. 217345. Jul-/ 12, 2017.
a WalemMalitime SeM:.es, Inc. v. NtRC, G.R No. 130772, Nov. 19, 1999, 376 Phi. 738.
354 BAR REVIEWER OIi IABOR !AW
CHAPTER FOUR
SOCIAL WELFARE LEGISLATION 355
under the circumstances, he or his surviving heirs after his death cannot be denied
. Th~ seafarer may thus dispute such assessment by seasonably exercisin
the right to claim benefits under the law. his. prerogaove to seek a second opinion and consult a doctor of hi h · ·g
which ca th di . s c 01ce, 1n
Another example is Delalamon,1 where the very same factual circumstances . se e me ca1 report issued by the latter shall be evaluated b th 1 b
in Wa/km Maritime exist. When Margarito was repatriated on September 6, 2006, he tribunal and the court, based on its inherent merit. I In case of diy e a or
b th · . sagreement
was already suffering &om "&na/ bm.jficunq: Diabetu Me//i/1u,· IHD ;:ee_n e findings of the company-designated physician and the seafarer's doctor
B/ood+CBC+Anemia. "Less than a week thereafter, he was confined at the Las Piiias o . 01ce, the employer ~d the seaman may agree jointly to refer the latter to a
Doctor's Hospital for the same ailment of renal insufficiency, but this ti.me third doctor whose deaston shall be final and binding O th 2 B d
·· d . nem. aseon
aggravated by coronary artery disease. He started wtdergoing hemodialysis . Junspru ence, the fin~gs of the company-designate~ physician prevail in cases
treatments in December when his ailment worsened to encl stage renal disease due where the seafarer did not observe the third-doctor refe raJ ·· · th
POEA SEC J H . if . r prov1S1on tn e
to a cyst at the right renal cortical. He became bedridden thereafter witil he passed - . · . owever, the findings of the company-designated physician are
away on September 11, 2007. The medical episodes that transpired after his clea:ly biased in favor of the employer, then courts may give greater weight to th
disembarkation from the vessel show that he was already in a deterionting physical findings of the seafarer's personal physician.• e
condition when he arrived in the Philippines. Thus, it cannot be reasonably
_ On _the part of the labor tribwtals and the courts, they need not adopt the
expected of him to prioritize the errand of personally reporting to the petitioners'
~mP'.1°Y•?es1gnated doctor's. findings_ hook, line and sinker as they may set them
office instead of yielding to the physical strain caused by his serious health
aside if it 1~ sh_own tha! the d1agnos1s 1s attended with clear bias, manifested by the
problems. lack of sc1enufic rclaoon between the diagnosis and the symptoms felt by the
In the second situation above, an example is lnleronenl,2 where the Court seafarer or 1f the final assessment of the company-designated doctor is not
recognized and addressed the unscrupulous practice of employers of deliberately or supported by the medical records of the seafarer.s
inadvertently refusing to refer the seafarer to the company-designated physician to 6. AUTHORITY OF LABOR TRIBUNALS AND COURTS TO MAKE
deny his disability claim. The seafarer here reported to the employer for post- OWN EVALUATION.
employment medical examination within three (3) working days from repatriation.
The employer, however, did not refer him to a company-designated physician Labor authorities like the Labor Arbiter and the NLRC as well as the
because he already signed a quitclaim, releasing it from liability. The Court ruled cou~ts h~ve the power to make their own evaluation of the merits of the medical
that the absence of post-employment medical examination should not be taken dfindings
· 1n case there is a conflict between the medical finding of th
•• c company-
against the seafarer because the employer declined to provide the same. Likewise, es1~ated phys1aan ~d that of the doctor appointed by the seafarer and there was
the quitclaim was declared void due to lack of consideration and unconscionable no ~d doctor appo1nted by both parties whose decision would be binding on
terms. Hence, the Court granted full disability benefits to the seafarer's family. ~em. The_POEA-SEC7 provides that "[i]f a doctor appointed by the seafarer
disagrees with ~e. assessment [of the company-des.ignated doctor], a third doctor
4. FINDINGS OF COMPANY-DESIGNATED PHYSICIAN NOT
may b: agre~~ JOtntly between the Employer and the seafarer," and "[t]he third
AUTOMATICALLY FINAL, BINDING AND CONCLUSIVE.
doctors
D /JJ sdeCISton
• shall be final and binding on both pa...;es"
•u •
A
ccording to
While jurisprudence is replete with pronouncements that it is the a. ~ong, 10 case ~e~ was no third doctor appointed by both parties whose
company-designated physician's findings and evaluations which should form as the deaSton would be b10ding on them, it is up to the labor tribunal and the courts
basis of the seafarer's disability cJaim,l the same, however, are not automatically to evaluate
. and weigh the merits of the medical
. reports of the company-
final, binding or conclusive on the claimant-seafarer, the labor tribunals or the d cstgnated doctor and the seafarer's doctor.'
courts; as their inherent merits would still have to be weighed and duly considered.

1
Sta~ MtfmeCcxpaatial v. ~ Oelalanm, GR. ~- 198097,JLtt 30, 2014.
2 ~ Mnine ~ m v. Remo, GR No. 181112, Jooe 29, 2010.
3 SeaaesWatire~ mv. Rcderos, GR. No. 230473, Api 23. 2018.
• OOHLE Ftoinan MamiY,j f,{Jero/, m v. Doble, GR Nos. 223730 &223?82. Oct 04, 2017; Andlala v . ~ l.lavlilg
/qlq, "'· G.R No. 194758, Oct 24, 2012; See a l s o ~ Misti OSK~ .-C. V. aienavertra, GR. No.
195878, Jan. 10,2018;Tradephl ~ Agencies, .-C. v. Dela C1uz. G.R No. 210307, Feb. 22, 2017.
Tradephi ~ ~ he. v. Dela Quz, supra; GR. No. 210307 Feb. 22 2017
MulladTrcn;pa1,irc.v.Mani}o.Jr, GR.No.'161416,Jooe13 m ' ·
l Nort1 Sea Mime 5eM:es C,ap V. EmJJez, G.R No. 201806, h.g. 14, 2017.
C.F. ~ C - - ~ .-C. v.Castilo, G.R No. 208215,~i19, 2017.
6
Wagsa-jsaof Mai OSKMnle, "- V. ~GR.No. 195878,Jcn 10, 2018
Espere V. NfD ~ma! Mmilg Agents, he., GR No. 212098,Jlif 26 2017 .
SeeSec&n 20 (8) (3)15Ima. . .
: Oilklsalg v. Ea:lle C l a n : ~ ~ nc.. G.R.No.204233.~03.2014.
~ also Balatero V. 5EJiatr ~ (I.trial he., G.R Nos. 224532 & 224565 Jooe 21 2017· 1JmJ Jr v h:lochina
"'"' t,la1c1,1emerOic.•G.RNo.189863, ~ 17,2014. • ' ' ' · ·
 SAR REVIEWER ON LABOR IAW
356
7. RIGHT OF SEAFARER TO SEEKASECOND OPINION.
a. \flhen right to seek second opinion accrues.
At the outset, it bears pointing out that the seafarer has the right to seek a
second opinion once the company-designated physician makes a definitive and final
assessment within the 120-day period; otherwise, no such obligation devolves on
the seafarer to consult his own doctor.
1
This was the pronouncement in the 2018 case of Phil-Ma11. Thus, it was
held that Dedace was under no obligation to consult with.a physician of his choice
under the given circumstances as the duty of a seafarer to consult with his own
physician arises only if the company-designa~ed phy~ic!an was ~hie to i~sue an
assessment within 120 days from the date of his repatrtauon. In this case, smce the
petitioners' company-designated physician, Dr. Cruz, failed to malte an assessment
within the aforesaid period, Dedace's failure to adduce a medical certificate from a
physician of his choice is not fatal to his cause. It is not the issuance of a medical
certificate showing that the seafarer's illness is work-related or that he is totally and
permanently unfit for sea duties which makes the employer liable. A seafarer's
cause of action for total and permanent disability benefits accrues when, among
others, the company-designated physician fails to issue a declaration as to his
fitness to engage in sea duty or disability rating even after the lapse of the 120-day
period and there is no indication that further medical treatment would address his
temporary total disability.2
b. Second opinion must not be.sought while the case is already
pending with the Labor Arbiter or on appeal with the NLRC.
The .second opinion, however, should not be the product of a mere
afterthought, such as when the second opinion was rendered two (2) months after
the filing by the seafarer of his complaint, as in the case of Orazzgas,3 or when the
case was already pending appeal with the NLRC.4 According to Ocangas,
compelling the Court to consider ~e opinion rendered by respondent's physician
of choice, submitted two (2) months after the filing of the complaint, would
undermine the right of the petitioners to refute the findings and avail of the option
to jointly refer with the respondent the disputed diagnosis to a third doctor of the
parties' choice, as agreed upon by the parties under the POEA-SEC.
c. Proofofbad faith ormalice ofcompany-designated physidan,
not required to enable seafarer to seek second opinion.
Further, under the POEA-SEC, the presence of bad faith or malice on the
part of company-designated physicians is not required before a seafarer may seek
1 PhWan M;me~ency. n:.v.Oedace,Jr., G.R No.199162,Jul-/04,2018.
l SeealsoCF.9lcrpO't!W~ nc.vs.Taok,G.RNo. 19367!!,.Allf 18,2012.691 Pli. 521,538.
i Oriental~ eo., nc. v. Ot.rJ;Jas. G.R No. 226766, 'l1 Sept. 21, 2011.
• /ls il toe caseo!Tulabl'Y,lv. MSTMame Ser.tes(Phils.), nc. G.R Nos.202113 &202120,June 06, 2018.
CHArTER FOUR 357
SOCIAL WELFARE LEGISIATION
the opinion of another doctor,I
8. THE THIRD DOCTOR RULE· MANDATORY PROCEDURE IN
JOINTLY ENGAGING A THIRD DOCTOR.
a. Referral to a third-party doctor, when required.
. . The co~flicting findings of the company's doctor and the seafarer's
phy~1Clall o~en_ sttr suits for disability compensation. r\s an extrajudicial measure of
settling
· · tl the1r differences,
· the POE.A-SEC gi·ves the parties the option of agreemg ·
JOm Yon a third doctor whose assessment shall break the impasse and shall be the
final and binding diagnosis.2
While it i~ the company-designated doctor who is given the responsibility
to m~e a conclusive assess?1e.nt on the degree of the seafarer's disability and his
c~paoty to res~e work Within 120/240 days, the parties, however, are free to
disregard_ the findings of the company doctor as well as the chosen doctor of the
seafare~, _m case they_ cannot agree on the disability gradings issued and jointly seek
the op1ruon of a third-party doctor pursuant to Section 20 (A) (3) of the 2010
POEA-SEC3 which states:
"SECTION 20. COMPENSATION AND BENEFITS
"COMPENSATION AND BENEFITS FOR INJURY OR
ll.LNESS
"The liabilities of the employer when !he seafarer suffers
work-related injury or illness during the term of bis contract are as
follows: ·
3. XXX
"If a ?octor appointed by the seafarer disagrees with the
assessment, a third doctor may be agreed jointly between the
Employer and the seafarer. The third doctor's decision shall be
final and binding on both parties."• .
In other words, the referral to a third doctor is mandatory when:
(1) ther~ ~ a valid and timely asmsment by the company-designated
phys1aan; and ·
(2) the appointed doctor of the seafarer refuted such amssmtnl.s
. !he assessment refers to the declaration of fitness to work or the degree
of disability, as can be gleaned from the first paragraph of Section 20 (A} (3). It
presupposes that the company-designated physician came up with a valid, jiM4 and
1 ~ MlsuiOSK Mme, Inc. v. &JenawnbJa. G.R No. 195878,Jan 10, 2018.
CF. ShcrpCrew~ nc.v. Castilo, G.R No. 208215,Apfi 19 2017
3 &Jill v. OSM Mc1it1ne SeM:es. GR No. 223035, Fib. 27, 2017; See~ Nath Sea Mame SeM:es Corp v. Emiuez.
, ~ ~ ~ - 1 4 , 2017; MlJsaySclf Mai OSK Mime, Ir£. v. Buena,oe,lbJra, G.R No. 195878, Jell. 10, 2018.
5 CF. Shcrp Crew~oo-enl. nc.v. Snls, GR No. 213731,Aug. 01. 2018: DOH!£ f'll1lnan Mamn;j ~erq. Inc. v.
IJolle, GR Nos. 223730 &223782, 0d. 04, 2017: Silagc11 v. Soultekl Agencies. Inc., GR No. 202B08, Aug. 24, 2016.
 CHAITTRFOUR 359
BAA REVIEWER ON IABOR IAW SOCIAL WELFARE LEGISIATION

opini?~ of a t~d doctor b~ongs to the employee asking for

d,jiniu assessment on the seafarer's fitness or unfitness to wotk before the disability benefits. He must actively or expressly request for it.2
expiration of the 120-day or 2l.Q-day period. 1 Resultantly, the third doctor-referral
• No period within which third doctor should make a disability
provision does not apply if there is no definite disability assessment from the
assessment. The 120/240-day period in Article 198 (c), (1) [192 (c),
company-designated physician.2 Alternatively put, absent a certification from the
(1)] _of the Labor Code and Rule X, Section 2 of the AREC only
company-designated physician, the seafarer had nothing to contest and the law
3 applies to the company-designated doctor, and not to the thitd
steps in to conclusively characterize his disability as total and permanent doctor.3
b. ConOict-Resolution Procedure for referral to third~party doctor. • The third-party doctor's assessment must be definit~ and
In INC Shipmana&emer.t,4 the Court stated that to definitively clarify how c?nc!1:15ive. The employer and the seafarer are bound by the
disability assessment of the third-party physician in the event that
a conflict situation should be handled, upon notification that the seafarer
they choose to appoint one.4
disagrees with the company doctor's assessment based on the duly. and fully
disclosed contrary assessment from the seafarer's own doctor, the seafarer shall • De~berately concealing o~ delaying the release of the disability
then signify bis intention to resolve the conflic_t by the refeaal of the rating, an act of bad faith. Respondent, in the 2018 case of
conflicting assessments to a third doctor whose ruling, undei the POEA-SBC, Mags'!}S'!J MoP was kept in the datk about his medical condition. It is
shall be final and binding on tl:e parties. Upon notification, the company carries the height of unfairness, bordering on bad faith, for petitioners to
the burden· of initiating the process for the refettal to a third doctor demand from respondent compliance with the third doctor rule when
they and their designated physicians, in the first place, did not fulfill
commonly agreed between the parties.
their obligations undei the law and the POEA:.sEC. Given the
c. Some principles. company-designated physicians' inaction or failure to disclose
respondent's medical progress, the extent of his illnesses and their
• Non-referral to a third physician, whose decision shall be
effect o~ his fitne~s or disability~ ~pendent was justified,in sedqng
considered as final and binding, constitutes a breach of the
the medical expemse of the physician of his choice. ·
POEA-SEC. This referral to a third doctor has been held by the
High Court to be a mandatogy procedure as a consequence of 9. MEDICAL ABANDONMENT AND PREMATURE FILING OF
the provision that it is the company-designated doctor whose COMPLAINT FOR DISABILITY CLAIM.
assessment should prevail. In other woi:ds, the company can
The act of a seafarer in refusing to undergo medical treatment or in
insist on itf disability rating even against a contraty opinion by
refusing to continue his medical treatment with the company-designated physician
another doctor, unless the
seafarer expresses his disagteement by
is ~ed "medi'°I abando~1111ent" which would result in the denial of his disability
asking for 6e referral to a third doctor who shall make his or her
claun. Moreover, the fihng of a complaint for disability claim before the lapse of
determinati:m and whose decision is final and binding on the
the 120-~ay/240-day tre~tment period will result in its dismissal on the ground of
parties. This mle has been followed in a string of cases. 5 Thus, at
prematunty as at that point, the cause of action may be said to have not yet accrued
this point, the matter of referral pursuant to the provision of the
as a mattei of right6
POEA-SEC is a settled ruling.6
• The employer bas no duty to refer to third doctor if there is no The following cases sufficiently illustrate this principle:
request from claimant-seafarer. Clearly, the duty to secure the

1 Hernandez V. ~ Mri5me Coq,orarm, G.R. No. 226103, Jal 24, 2018; MagS!f/SaY M\su OSK Marine, klc. V.
1 Magsa>fscrf~M!me, Inc. v.Ar.lje, G.R No 229192,July 23. 2018. &lenaventura, G.R. No. 195878, Jan. 10. 2018.
2 ~ Ml! Mm!, Inc. V. Anje, ~ra. kl., SeeC.F. Shalp Crew~ Inc. v. SartkJs, G.R No. 213731, Aug. 01, 2018.
3 kl. ciq Kem! ~ Co., n:. v. Lbw. GR No. 198501, Jal. 30, 2013; See dso Phisynelgy Mclitirm, h:. v. Sdv. OSM Mriine Selvi:es, G.R No. 223035, Feb. 'l/, 2017.
Gala'o,Jr., GR No.228504,.ble06,Jl18: TcBOCv. hpai11I ~ Co,pamt. GA No. 22m1,AIJd.30,2017. kl.
4 INC St~ement. Inc. V. Rosales, StJpra Magsaysay~Mme. ~ v.~G.R No. 229192.Jltf 23,2018.
~ &di as bn:i'no v. NYK-R Slip Mn!Qement. n:.. G.R. No. 237487, .llr1e 'D, 2018: Smaest Manme Mwgement Anuat Y. Pacffic Oceill Mirm:J, "1l'lil\S Siar 9ippiVJ fvpr:, Ccxporation, G.R No. 220898, Jllf 23, 2018: Scamw
n:. v. P.odaos, G.R. th 230473.~23. 2018. Milire SeM:es. h:. v. HemMdez,Jr., GR No. 211187,~ 16,2018.
6 INC ~emenf. "- V. RosE, G.R. No. 195832. Oct 01, 2014.
 SAA REVIEWeR ON IAB!)ll lAW
(1) Solpia Marine and Ship Management, Inc. v. Poslraito,1 where the Court
declared that the award of permanent and total disability benefits to respondent
seafarer, Postrano, was not proper as he abandoned his treatment which prevented
the company-designated physician from making any final and de~tive assessment
In this case, Postrano was repatriated on January 1, 2013. Upon his return, he was
referred to the company-designated physician for examination and the latter
prescribed medication for Postrano's condition. _He wa~ _then advised to ~dergo
physical therapy sessions for the bettennent of his conditlOn. After completmg ten
sessions of physical therapy or on March 14, 2013, he reported to the company-
designated physician who further advised him to continu! with sai~ therapy as his
condition was notably improving. He was also asked to report again for a follow-
up. However, Postrano failed to return to the company-designated physician after
completing another secies of physical therapy sessions.. Without the ~al
assessment of the company-designated physician, Postrano 1s deemed suffenng
from temporary total disability. More so, the 120 day-period provided by law had
not yet lapsed.
(2) A11ual v. Pacific Ocean Manning, Inc./Trans Star Shipping A~m7
Corporation,2 where petitioner ,\nuat no longer went back to respondent Paafi~ s
company-designated physician on 30 September 2011. Instead, Anuat filed a claim
against Pacific for total and pennanent disability benefits on 26 October 2011 or
160 days from the onset of his work-connected injury. The Court thus ruled that
Anuat prematurely filed his total and pennanent disability claim. When Anuat filed
his disability claim he was still under medical treatment by Pacific's company-
designated physician. In fact, he was advised by Pacific's company-designated
physician to return on 30 Scpt:::mber 2011 for a medical examination and he chose
not to do so. Notably, the 240-day extended period of medical treatment provided
by Sections 2 and 3(1), Rule X of the Amended Rules on Employees'
Compensation had not yet lap~ed.
(3) CF. Sharp Crew Management, Inc. v. Orveta,3 where for a little over 120
days, or from February 10, 2010 to June 16, 2010, 126 days to be exact, respondent
underwent treatment by the c:>mpany-designated physician. On June 16, 2010, he
was partially diagnosed with "l11mbosarral m11Jmlar spasm with mild spondylasis LJ-U;"
the company physician also concluded that there was no compression fracture, and
respondent was told to return for a scheduled bone scan. However, instead of
returning for further diagno9s and treatment, respondent opted to secure the
opinion of an independent physician of his own choosing who, although arriving at
a fu1ding of permanent total disability, nonetheless required respondent to subject
himself to further Bone Sc:m and Electromyography and Nerve Conduction
Vclocity tests "to dttermine the exact problem on his lumbar spine." Instead of heeding the
1 GR No. 232275, Jlit 23, 2018. . shal disqualy hin from aTf corrc,ensation and benefits. This may liso be a valid ground b' mrina6oo d OOl)bymenl aid
Aroat V. Pacmc Ocs1 MJMng, Inc/Tran; St.r Shwing Ager,cyCOlporatm. G.R No. 220898, Ju~ 23, 2018.
J GR. No. 211 t t t. Sepl 25, 2017.
CHArT£R FOUR 361
. SOCIAL WELFARE LEGISLATION
recommendations of his own doctor, respondent went on to file the labor
complaint In point of law, respondent's filing of the case was premature. Tius is so
because the company-designated physician and his own doctor, Dr. Escutin, are
one in recommending that resp<;>ndent undergo at least a bone scan to determine
his current condition while undergoing treatment, thus indicating that responqent's
condition needed further attention.
10. RULE IN CASE OF CONFLICT OF OPINIONS.
In ~y case, the Supreme Court underscored in Nazam,oi- that "the
bottom.line is this: In a situation where the certification of the company-designated
physician would defeat the OFW's claim while the opinion of the independent
physicians would uphold such claim, the Court adopts the findings favorable to the
OFW. The law looks tenderly on the laborer. Where the evidence may be
reasonably interpreted in two divergent ways, one prejudicial and the other
favorable to him, the balance must be tilted in his favor consistent with the
principle of social justice."2
11. EFFECT OF MISREPRESENTATION ON' DISABILITY CLAIMS.
Misrepresentation on the part of the claimant would defeat the claim for
total permanent disab$ty. Misrepresentation is a question of fact which may be
reversed on appeal by a contrary factual finding. 3 In Ayungo,' petitioner did not
disclose that he had been suffering from hypertension and/or had been ·actually
taking medications therefor (i.e., Lifezar) during his PEME. As the records would
show, the existence of Ayungo's hypertension was only revealed after his
repatriation, as reflected in the Medical Report dated March 26, 2008 and
reinforced by subsequent medical reports issued by Metropolitan Medical Center.
To the Court's mind, Ayungo's non-disclosure constitutes fraudulent
misrepresentation which, pursuant to Section 20 (E) of the 2000 POEA-SEC,5
disqualifies him from claiming any disability benefits from his employer.
11\e same ground of misrepresentation was cited as basis for not awarding
any of the claims for total and peananent disability benefits, sickness allowance,
and reimbursement of medical expenses, of respondent in Ve!Jard.6 Respondent's
claim that his eye ailment, ''right rye-posterior 111b1 capsular cataract" and ''left tyt·
pseudophakia, posterior "1j}Sllk opadfr.atiQn, "was occasioned when paint accidentally hit
his eye for which he suffered pain and that he afterwards experienced blurred
G.R No. 200201.1-b/.19.2014.
Cm,} ~v. KJGS Flee! ~Mria. GR No.182430, Dec. 4, 2009.
OSM~ Phi., rc.v.delaCruz,G.RNo.159146.Jat.28,2005.
• Ayungov. 8ea1iko ShiJn,as1a;jement Capoollion, GR No. 203161, Feb. 26, 2014.
5 Sedioo 20. ~ and Benelis. XXX E. Asealire,- v.llo ~ CllllOOaS a'id does not 01SOOSe past mecfl::al
crolii:.n. disaliitj a-d hisby i, t,e ~ meci:a emilm ~ raJdulert rrislejresenlation aid
rt'j)OSi1ioooflheapp!t)!mle~aidlegasardicJIS.
6 Vel)'ird Toonilals &5hw~ SeMces, re. v. 9Jirez. G.R No. 199344, Mm! 5, 2014.
 BAR RM EWER ON LABOR LAW
vision, was belied by the subsequent finding by a Medical City doctor which he
admitted that it was catmct extnction, not paint droppings, that caused his
ailment
12. SEAFARERS' PROTECTION AGAINST AMBULANCE CHASING
AND EXCESSIVE FEES.
R.A. No. 107061 [November 26, 2015], othecwise known as the "Seafarers
Prot«tion Ad," considers it unlawful for any person to engage in ambulance chasing
or the act of soliciting, personally or through an agent, from seafarers, or their
heirs, the putSuit of any claim against their employers for'"the purpose of recovery
of monetary claim or benefit, including legal interest, arising from accident, illness
or death, in exchange for an amowit or fee which shall be retained or deducted
from the monetary claim or benefit granted to or awarded to the seafarers or their
heiis.2
· When any contract or arrangement between a seafarer or his/her heirs,
and a person who appears for or represents them in any case for recovery of
monewy claim or benefit, including legal interest, arising from accident, illness or
death before the NLRC or any Labor Arbiter, the NCMB, the POEA, the DOLE
or its regional offices, or other quasi-judicial bodies handling labor disputes,
stipulates that the person who appears for or represents them shall be entitled to
fees, such fees shall not exceed ten percent (10%) of the compensation or benefit
awarded to the seafarer or his/her heirs. For purposes of this Act, fees referred to
in this section shall mean the total amount of compensation of the person who
appears for or represents the seafarer, or his/her heirs for services rendered.3
Ill.
MONETARY CLAIMS OF SEAFARERS
FOR DEATH BENEFITS
1. LEGAL BASES.
It is settled that the employment of seafarers, including claims for death
benefits, is govemed by the contracts they sign at the time of their engagement4 As
long as the stipulations in said contracts are not contrary to law, morals, public
onler, or public policy, they have the force of law between the parties.5
Nonetheless, while the seafarer and his employer are govemed by their mutual
1
Enlilled "AN ACT PROTECTING SEAFARERS A ~ AMBUlANCE CHASING ANO IMPOSITION Of EXCESSIVE
FEES,ANDPROVIOING PENAI.TIESlHEREFOR."
2 Sedal3,RANo.10706.
3 Sedxrl 4, kl.
4 Mclfcw NaviJalXln ~ . Inc. v. Heils of Ricardo S. Gae. G.R No. 220168, June 07, 2017: C.F Shap Crew
~ he. v. Legal Hers dlhe late Godofredo Repiso, G.R No.190534, Feb. 10, 2016.
s kl..ki.
CHAPTER. FOUR
SOCIAL WELFARE LEGISU.TION
agreement, the POEA Rules and Regulations require that the POEA-Staodard
Employment Contract be integrated with every seafarer's contract 1
. . Sec~on 20 ~~2 of the ~010 POEA-SEC,3 and a long line of jurisprudence4
explaining this provmon, reqwre that for the seafarer to be entitled to death
benefits, he must have suffered a work-related death during the tenn of bis
contract. The provision reads:
"B. COMPENSATION AND BENEFITS FOR DEATH
"~· In ca.~ of work-related death of the seafarer, during the tenn of
his contract, _the employer shall pay bis beneficiaries the Philippine
currency cqwvalent to the amount of Fifty Thousand US dollars
(US$50,000) and an additional amount of Seven Thousand US dollars
(US$7,~) to each child under the age of twenty-one (21) but not
~ceeding four (4) children, at the exchange rate prevailing during the
bme of payment
"2. Where death is caused by warlike activity while sailing within a
declared war zone or war risk area, the compensation payable sbaU be
doubled. The employer shall undertake appropriate war zone insurance
coverage for this putpose.
"3. It is understood and agreed that the benefits mentioned above shall
be sepaa.te and distina from, and will be in addition to whatever
benefits which the sea&rer is entitled to under Philippine laws from the
Social Security System, Overseas Workers Welfare Administration,
Employee's Compensation Commission. Philippine Health Insurance
. . Coqmmtion and 1:Iome Development Mutual Fund (Pag-IBIG Fund).
"4. The other liabilities of the employer when the seafarer dies as a
result of work-related i,njmy or illness during the term of
employment are as follows:
"a. The employer shall pay the deceased's beneficiary all
outsmnding obligations due the seafarer under this Contract.
"b. The employer shall transport the remains and personal
effects of the seafaret to the Philippines at employer's expense except if
the death occurred in a port where local govemment laws or regulations
do not peanit the transport of such remams. In case death occurs at sea,
the disposition of the remains shall be handled or dealt with in
accordance with the master's best judgment In all cases, the
employer/mastet shall communicate with the manning agency to advise
for disposition of seafarer's remains.
"c. The employer shall pay the beneficiaries of the seafarer
the Philippine currency equivalent to the amount of One Thou:;and US
I ld,.ld.
2
Forme,tf, Sedion 20 (A) d Smdad Teems and Qindlbls GovemivJ lhe ~ d ~ Seatcm On BoiM'd
OceinGorQ Vessels. issued iusuaritlD OOI.EOepnnent Order No. 4, Seres of m) [May 31, 200)),
3
Arn9lded Slaooard Tams and Qnfti:ns ~ Ole CM!rseas ~ d Filpilo Seafarels Co-Bo.Id Ocsao-
Goil Ships (POEA Memaandt.m Cin:u1af No. 10, Series d2010, Oaober 26, 2010).
• Mdne Mlna!Jernent, ~ V. Roshia, G.R No. 168715, Sept. 15, 2010.
 BAR REVIEWER ON LABOR LAW
dollars (USS1 ,000) for burial expenses at the exchange rate prevailing
during the time of payment."
2. REQUISITES.
Clearly from the foregoing, to be entitled to death compensation benefits
from the employer, the death of the seafarer:
(1) must be work-related; fillii
(2) must happen during the term of the employment contract.
Under the Amended POEA Contract, work-nlatedmss is now an important
requirement The qualification that death must be work-related ha~ made it
necessary to show a causal connection between a seafarer's work and his death to
be compensable.1
2.1. JST REQUISITE: DEATH MUST BE WORK-RELATED.
a. Meaning of work-related death.
While the 2010 and the earlier 2000 POEA-SEC do not expressly define
what a "work-related death" means, it is evident from Part B (4) as above-quoted
that the said term refers to the seafarer's death resulting from a work-related
injury or illhess.2 This denotation complements the definitions accorded to the
terms ''work-related injury" and '~ork-related illness" under the 2010 POEA-
SEC as follows:
"Definition ofTerrns:
"For purposes of this contract, the following terms are defined as follows:
XXX
"16. Work-Related Illness . any sickness as a result of an occupational disease
listed under Section 32~ A of this Contract with the conditions set therein
satisfied.
"17. Work-Related Injury - injury arising out of and in the course of
employment.3
What is clear from the foregoing is that work-related injury is one
resulting in disability or death arising out of and in the coutse of employment
Thus, there is a need to show that the injury resulting to disability or death must
arise (1) out of employment; and (2) in the course of employment.4
1 Syv. ~ Trcrsn.nie Cams, klc.. G.R No. 191740, Feb. t 1,2013.
2 See cfiscussiJl oo 11is pan, alttm,ih citi'g sirriar prtMSOl il Pat 4(A) of Ile 200> POEA-sEC, il Coochla J. ~ v.
lhled Ph~ Lnes, Inc., G.R No. 198408, Nov.12, 2014.
1 The darmCX\S acxxlltlEd to Ill! lermS "wort-related ipy" and \lm-relmi ikless" lllder !he 200l POEA-SEC are as
fo'lc:Nls:'Wat-Related lnjury-injlyfiesl ~ ndisal&y ardealh ariiilg wtof in! i'I lhe ~ d ~ and
'Wolk-Related mness - any saness ~ ID cf6abmtf or death l!S a result d c11 oa:upa!mal cf6eaole lsted under
Sectioo 32-AdlhiS ma:iwll tie ard6cns set lherei1 safsled.1 (Sef!Qml v. ~ MilDne Ccrparalb1, G.R
No. til161, Ott. 13, 2014; See aso CcrdlitaJ. Raceris v. lhled Fhflllile l.hs. h:., G.R No. 198408. NOi. 12. 2014).
&,v. AiDpph! TransmalileCalriers, "-• G.R No. 191740, Feb.11, 2013.
CHAITTRFOUR
SOCIAL WELFARE LEGISlATION
As defined under the above-cited Standard Tenns and Conditions, work-
related injury, or in dus case, death, is any injury arising out of and in the course of
employment 1 According to Can11el,2 the legal attribution of the phrase "arising out
of and in the course of employment'' per Iloi!IJ Dode,3 is still apt and relevant,
thus:
"The two components of the coverage formula - 'arising
out or and 'in the course of employment' - are said to be separate
tests which must be independently satisfied; however, it should not be
forgotten that the basic concept of compensation coverage is unitary,
not dual, and is best expressed in the word 'work-connection,'
because an uncompromising insistence on an independent application
of each of the two portions of the test can, in certain cases, exclude
clearly work-connected injuries. The words 'arising out or refer to the
origin or cause of the accident, and are descriptive of its character,
·while the words 'in the course ol' refer to the time, place and
citcumstances under which the accident takes place.4
"As a matter of general proposition, an injuiy or accident is
said to arise 'in the course of employment' when it takes place within
the period of the employment, at a place where the employee
reasonably may be, and while he is fulfilling his duties or is engaged in
doing something incidental thereto."5
As held in More Maritimt, 6 "~]f the injury is the proximate cause of [the
seafarer's) death or disability for which compensation is sought, [his] previous
physical con~tion xxx is unimportant and recovery may be had for injury
independent of any pre-existing weakness or disease."
b. Effect ifillness which caused death not listed as an occupadonal
disease.
As a general rule, the principle of work-relatedness requires that the
disease in question must be one of those listed as an occupational disease under
Section 32-A of the POEA-SEC. Ne\•ertheless, should it be not classified as
occupational in nature, Section 20 (B) paragraph 4 of the POEA-SEC provides that
such diseases are disputably presumed as work-related.7 This disputable
presumption that a particular injury or illness that results in disability, or in some
cases, death, is wock-related stands in the absence of contrary evidence.8 Hence,
even if the illness is not listed under Section 32-A of the POEA-SEC as an
occupational disease or illness, the same shall still be presumed as work-related and
1 McnM Naw,Jabl Phll>Piles, Inc. v. Heils of Ricardo s. Ganat, G.R. No. 220168, June 07, 2017.
2 Ani1a Ccrluel V. ~ Mari!ine Caporation, G.R. No. 100161, Oct 13, 2014.
3 &libDock&B,;iimi'QCo. V. Wakmen'sCompensatiooConmssD\,G.RNo. L-26341,tbv.27, 1968.
4 See mo syv. ~ Tfll1Sl1aile Canes, Inc., G.R. No. 191740, Feb. 11, 2011
5 Errpasessuppied.
s M:xe~Agences. Ire. v. NI.RC, G.R. tG. 124927. Mirf 18, 1999; 366Phi. 646.
1 JebsenS Wmine, h:. v. Babol, GR.tb. 204076, Dec. 4, 2013.
a ~Marltire Ccxporaoonv. Rom, GR No. 192686, Nov. 23, 2011, 661 SCRA247.
 BAR REVIEWER ON LABOR LAW
. • · cumbent on the employer to overcome the presumption.1 This presumption
It 1S Ul uni .d . reasons:
h uld obviously work in the seafarer's favor. Hence, ess contrary evt ence 1s
;r~ted by the employer, the work-relatedness of the disease must be sustained.2
2.2. J,ND REQUISITE: DEATH MUST OCCUR DURING TERM OF
EMPLOYMENT.
a. The death should happen during employment.
Tue genenl rule has been declared in a number of cases,3 that in order to
avail of death benefits, the death of the OFW should ocqu during ~e effectivity of
the employment conmet For emphasis, the d~th of_ a seafater duang the t ~ of
employment makes the empl?fer liable to his ?~
for death co~pensation
benefits.• This is the only condinon for compensability. The employer 1s therefore
liable upon proof that the seafarer died thtring tbe efftdiuity of his employment
contract.5
b. If death happens after terminadon ofemployment, no death
benefits should, as a general rule, be paid.
But if the seafarer dies after the temunation of his contract of
employment, his beneficiaries are not entitled to the death benefits.6 TI1us, in
Medline,1 it was pronounced that the heirs/beneficiaries of Juliano Roslinda, a
seafarer, are not entitled to the death benefits W1der the Standard Employment
Conttact for Seafarers since he did not die while he was Wlder the employ of
petitioners. His contract of employment ceased when he was discharged on January
20, 2000, after having completed his contract thereat He died on August 27, 2001
or 1 year, 7 months and 7 days after the expiration of his contract8
c. When to reckon the terminadon ofemployment ofa seafarer who
died.
Section t 8 of the 2010 POEA-SEC definitively reckons the tennination
of employment of a seafarer in two (2) ways, to 1ViJ:
(A) When the seafarer completes his period of contractual service aboard
the ship, signs-off from the ship and arrives at the point of hire.
1 Ccmia J. Raoo1is v. Wied~ Liles, "-. G.R. th 198408, Nov. 12, 2014.
1 Jebsens Mnne, h=. v. Babol. supra.
3 &!di as lie cases of Gal Shq Phis.. "'v. JcapJil. G.R. th 144665, Sept. 8, 2004: Herrrogenes v. Oseo Shm
SeM:es, "-. G.R No.141505;Aug. 18. 2005, ~ ~ 301; Prudential~ an:I ~ Ccxpcrabt v. Sia.
Ria, GR. No. 166580, Feb. 8, 7007; end l<laveness Maline P/Jfmf, k1c. v. Bnfdarles of Alas, G.R t«>. 168560, Jan.
28,m.
4 Estala ct Posedio Om,Jav. CA, G.R. th 175005, .&'1(130, 2008, 553 SCRA 649, 655-656.
s Escaltha v. leoois ~~.. Inc., G.R. No. 182740, Ju~ 512010.
s EslaladPasedl>Otegav.CA. G.RNo.175005,Apil 30,2008,553 SCRl\649,655-856.
1 MooTneMm,iement.kle.v.P.oshfa,G.RNo.168715,Sept 15,2010.
a See also Sea PcMier ~ Enlelprises. he. v.Ammdo L Salazar, G.R. No. 188595,AurJ. 28, 2013.
CHAl'TERFOUR
SOCIAL WELFARE LEGISLATION
(B) Effective upon arrival at the point of hire for any of the following
1) When the seafarer signs-off and is disembatked for medical
reasons;1
2) When the seafarer signs-off due to shipwreck, ship's sale, lay-up of
ship, discontinuance of voyage or change of ship principa1;2
3) When the seafarer, in writing, voluntarily resigns and signs off
prior to expiration of contract;3
4) When the sea&rer is discharged for just cause.4
On this issue of when to reckon the termination of the employment of a
seafarer, Escartha,5 which was decided under the regime of the 1996 POEA-SEC,
instructs that under Section 1S{B) (1) thereof, the employment of the seafarer is
terminated when he "signs-off a11d is disembarked for medi&al reaso11s pursuant to Section 20
(BJ {4} 'of [the} Contract." Consequently, the seafarer here (Eduardo) was repatriated
for medical reasons; he arrived in the Philippines on June 17, 1999 to undergo
further evaluation and treatment after being diagnosed with ad,,anced f11JCObacleri11m
tubtrt11kJsis, aduanad HIV disease, ,ardiac tflnlrJthmias, and anemia. Eduardo's
employment was therefore tenninated upon his repatriation on June 17,
1999. Thus, when Eduardo died on June 9, 2001, approximately two (2) yearr after
his rtpalriation, his employment with the respondents had long been tenninated.
d. Excepdon when death after termin•don ofemployment is
compensable.
Section 32-A of the POEA-SEC considers the possibility of
compensation for the death of the seafarer occurring after the termination of the
employment contract on account of a work-rrlated illness. But for death Wlder this
provision to be compensable, the claimant must satisfy all of the following
conditions:
(1) The seafarer's work must involve the risks described in the POEA-
SEC;
(2) The disease was contracted as a result of the sea&rer's exposure to the
desaibed risks;
(3) The disease was conttacted within a period of exposure and Wlder
such other factors necessaiy to contract it; and
(4) There was no notorious negligence on the part of the seafuer.6
1 PllslianllD Sedioo 20~)15) of !he 2010 P0EA-SEC (Ccnfract).
2 In aa:adau:e will Secbs 22, 23 cnl 26 of tieCcnnd.
l PllSuanlm Sedbl 19 (G) ofIle Coo.lracl
u
As prowled il SedD'I 33 d Ille CCXllracl
Esradlav. leools NiNgafmCo., "'- G.R No.182740,JIJ/5,2010.
& These condibls In Secfioo 32-A of 818 POF.A-SEC rerran unchmJed nis 2000 and 2010 VErSicris.
368 &\R. REVIEWIR. ON lABOR. lAW
In fulfilling these requisites, substantial evidence must be presented which
is more than a mere scintilla; it must reach the level of relevant evidence as a
reasonable mind might accept as sufficient to support a conclusion. 1
e. Medical repatriadon as an exception.
Expounding further on this second rcqua:ement for death compensability,
the Supreme Court clarified in Canuel 2 that whil~ the general rule ts that ~e
seafarer's death should occur during the term of his employment, the seafarers
death occurring after the termination of his employment due to his medical
repatriation on account of a wo~•related inju~ or illness constitutes an
exception thereto. This is based on a liberal ~onstructton of the 2000 _POEA-S~Cl
as impelled by the plight of the bereaved heus who stand to be depnved of a Just
and reasonable compensation for the seafarer's death, notwithstanding its evident
woi:k-connection.
In essence, according to R.aa/is,4 the work-related death under such
circumstance need not precisely occur during the tenn of his employment as it is
enough that the seafarer's woi:k-related injury or illness which eventually causes his
death had occurred during the term of his employment
The petition in Ca11111/ is a case in point Here, the repatriation of the
seafare~ occurred during the 8th month of his t_-year employment contract Were it
not for his injmy, which had been earlier established as work-related, he would not
have been repatriated for medical reasons and his contract consequently temunated
pmsU211t to the 2000 POEA-SEC.6
Applying the rule on liberal construction, the Court is thus brought to the
recognition that medical repatriation cases should be considered as an exception to
Section 20 of the 2010 POEA-SEC. Accordingly, the phrase "work-related death
of the seafarer, during the term of his contract'' under Part B (1) of the said
provision, should not be strictly and literally construed to mean that the seafarets
work-related death should have precisely occurred during the term of his
employment Rather, it is enough that the seafarer's work-related injury or illness
which eventually causes his death should have occutred during the term of his
employment Taking all things into account, the Court reckons that it is by this
1
SeaPcwerSiqq Enlerpises, ~ v.Amaido L Salam-, G.R No.188595, AurJ. 28, 2013.
2
Mllacanuelv.Magsr,str1Ma'ine~,GRNo.100161,0tt. 13,2014.
3 NaN 21)10 POEA-SEC.
4
Qn:hla J. Race1is v. Ulled Phfl)ln liles, klc.. G.R No. 198408, New. 12, 2014.
5 1 &JCh as il Inter-Om Miriine, lnarpcrclBS v. catdava, G.R No. 201251, June 26, 2013, 700 SCRA 174; lntelooBlt
Ninh.J,tebnldpdjw. .
5
Of relevaiceisPilt1 ctSedixl 18(B)ctlhe2000POEA-SEC, v.tli:hstates:
"SECTION 18. TERMNATIONOF EMPLOYMENT
XXX
'B. The errc>t¥nenl dlhe seaaer is lEO termnaled .-i te seafcr\Y mtM!S at fie pant d hie fee iff/ of I l e ~
reascris:
•1. m Ile seataer s~ and is dislmlat(ed b- med'lcal reasons pusuant b Sedioo 20 (8)15) of this Contract.'
CHAi'TER FOUR 369
SOCIAL WELFARE LEGIStATION
method of construction that undue prejudice to the laborer and his heirs may be
obviated and the State policy on labor protection be championed. For if the
laborer's death was brought about (whether fully or partially) by the work he had
harbored for his master's profit, then it is but proper that his demise be
compensated. Hence, if it has been established that (a) the seafarer had been
suffering from a work-related injury or illness during the tcnn of his
employment, (b) his injwy or illness was the cause for his medical
repatriation, and (c) it was later determined that the injury or illness for
which he was medically repatriated was the proximate cause of his actual
death, although the same occurred after the term of bis employment, the
above-mentioned rule should squarely apply.
As elucidated in Canuel, the foregoing liberal approach was applied in a
catena of cases,1 wherein the Court had previously allowed the recovery of death
benefits even if the seafarers in those cases had died after repatriation, given that
there was proof of a clear causal connection between their wotk and the illness
which was contracted in the course of employment and their eventual ·death. 2 The
converse conclusion was reached in some cases3 since the element of work-
relatedness had not been established. All in all, the sense gathered from these cases,
as pointed out in Ca,me( is that it is crucial to detennine whether the death of the
deceased was reasonably connected with his work, or whether the working
conditions increased the risk of co~tracting the disease that resulted in the
seafarer's death. If the injury or illness is the proximate cause or, at least, increased
the risk of his death for which compensation is sought, r~very may be had for .
said death, or for that matter, for the injury or illness.4 Needlessly, if the death of
the seaman was due to an illness that was not contracted during the tenn of his
employment contact, the employer is not liable for death compensation arising
under the standard fo.tmat contract5
£ Non-medical repatriadon cases where death occurred alter
.repatriation, hence, death benefits denied.
To reinforce the point, a survey of previous Court rulings wherein death
compensability had been denied the heirs of the seafarer actually demonstrates the
significance of the wotk-relatedness element in w~rkers, compensation cases. For
instance, in Cati Sheng,' the illness of the seafarer therein, who was temunated
based on mutual consent, was found to be non-compensable since he died of
chronic renal failure which was not listed as a compensable illness. Likewise, in
Mari&ne Enterprises. h:. v. Remo, G.R No. 181112, June 29, 2010.
2 Seeb'ilsla'lce, WalemMlritineService, 1oc. v. NLRC, G.R.No.130m, Nov. 19, 1999, 318SCRA623. 376 ~ 7~.
3 &r.h as ii Gau hnJ Phis., kx:. v. ~ . GR No. 144665, Sept 8, 2004; Spwies A'fHf, Sr. v. hpaphil ~lll:J
Corp., GR No. 155359,Jcn 31, 2006; ~ v. OscoSlippir:J Selvi:es, Inc., G.R No. 141505. AulJ. 18, 2005.
' r.oocti1a J. RD1is v. lHed PtiiJpile l.ill!S, loo., G.R No. 198408, Nw. 12, 2014.
s SearisMm!Selvbls. lnc.v. NI.RC, GRNo.84812. Ott.5, 1gg), 1WSCRA337.
6 Gau Sheng Phlls., ~ v. Joaquh, G.R No. 144665, Sept 8, 2004.

370 f,AR REVIEWER ON LABOR l>.W
Aya~, Sr., 1 the Court denied the claim for death compensation bec~use the
seafarer therein was repatriated due to an eye injury but subsequently died of a
stroke, whlch was not listed a! a compens~ble illn~s under the t<?EA-SEC. _Death
compensation was also denied to the claunants U1 H m11ogenes, SU1Ce no evidence
was offered to prove the cau~ of the terminati~n o~ the contract of employmen~,
whereas it was found that :he seafarer therCUl clied three (3) years after his
disembarkation of an illness which was not shown to have been contracted during
his employment An identicll ruling was rendered in Prudmtia43 wherein the
seafarer in said case was repatriated due to umbilical hernia but died one (1) year
after of cardiop~onary arcst, which was not, ho~er, established as work-
related. Similarly, death compensation was denied the claimants in Omga,4
considering that the seafarer therein died of lung cancer whlch was not found to be
work-related.5
h. When death occurred during term ofemployment but no death
benefits awarded.
There are cases whe1e no death benefits were granted despite the fact that
the death occurred during the tenn of the employment. The Supreme Court
emphasized in Mabuh~ Shippmg,,6 that the dea~ of a _seaman even durin~ the term
of employment does not automatically give ose . t~ compensation. The
circumstances which led to the death as well as the provis10ns of the contract, and
the right and obligation of the employer and the seafarer must ~e taken into
consideration, in consonance with the due process and equal protection clauses of
the Constitution.
For instance, in Sy,7 petitioner's husband, Alfonso N. Sy, was hired as an
Able Seaman (AB) on board M/V Chekiang on June 23, 2005 and was found dead
on October 1, 2005, with drowning as the cause of death while he was on shore
leave while the vessel was at :he Port of Jakarta, Indonesia. In denying petitioner's
claim for death benefits, the High Court ruled:
"Notably, at the time of the accident, AB Sy was on shore
leave and there was no showing that he was doing an act in relation to
his duty as a seama."1 or engaged in the performancc of any act
incidental thereto. It was not also established that, at the time of the
accident, he was doin~ work which was ordered by his superior ship
officers to be done fo: the advancement of his employer's interest On
the contmy, it was e:;tablished that he was on shore leave when he
drowned and because of the 20% alcohol found in his urine upon
AYHf, Sr. v.~ ~Qxp., G.=t No. 155359,Jan. 31, 2006.
Hlmllgenesv.Osco~SeMoos.n:.,G.RNo.141505. ~- 18,2005.
3 Pruden5al Shppi'g cnt Mlllagenmt Cop. v. Sia. Rita, G.R. No. 166580, Feb.8.2007.
~ V. r.A, GA No. 175005, Aiwi 30, .2008, 576 flti &>1.
5 Excerpt tan If¥! decisol ii cauJ V. Magsa-,saif Mali'ne Coqmtion, G.R No. 190161, Oct. 13, 2014.
Mabuha-f ~ SeM:es, n:.v.NLRC, G.R No. 94167,Jan.21, 1991, 193SCRA 141.
1 S,v.PhqlpheTransmimecarii,s,~.G.RNo.191740,Feb.11,2013.
:l I;:
M
CHArTER FOUR 371
SOCIAL WELFARE LEGISIATION
autopsy of bis body, it can be safely presumed that he just came from a
personal soci21 function which was not ,elated at all to his job as a
seaman. Consequently, his death could not be considered work-related
to be compensable.
"Petitioner argues that AB Sy's death happened in the course
of employment, because if not for his employment he could be
somewhere else and was not on shore leave; and that be would not be
in the riverside of Jalwta, lndooesu and had not answered the call of
nature and fell into the river and drowned.
"We are not pcmwied.
"While AB Sy's employment relationship with respondents
did not stop but continues to be in force even when he was on shore
leave, thei.c contract clearly provides that it is not enough that death
occurred during the term of the employment con~ct, but must be
work-related to be compensable. There is a need tQ show the
connection of AB Sy's death with the performance of his duty as a
seaman. As we found, AB Sy was not in the pcrfonnance of his duty as
a seaman, but was doing an act for his own personal benefit at the time
of the accident. The cause of AB Sy's death at the time he was on shore
leave which was drowning was not brought about by a risk which was
only peculiar to. his employment as a seaman. Io fact, he was in no
different citcumstance with other people walking along the riverside
who arught also drown if no due care to one's safety is exercised.
Petitioner failed to est2blish by substmtial evidence her right to the
entitlement or the benefit provided by law."
i. When death occurred long after the medical repatriation.
Pn1de11tial Shippi11j illustrates this point. Virgilio, respondent's deceased
husband, was repatriated for medical reasons. He arrived in the Philippines on
March 8, 2000 for surgical repair after he was diagnosed with umbilical hemia.
Virgilio's employment was thus terminated upon his repatriation on March 8,
2000. Consequently, when he clied a year later or on March 18, 2001, his
employment with petitioners had long been terminated. Hence,_ ~ponden~ are
not entitled to receive death benefits under the Contract from petltloners. Neither
are petitioners liable for sickness allowance since it appears from the records that
these had already been paid to respondents in June and September 2000, and
Januaty 2001.
3. DEATH CAUSED BY THE SEAFARER HIMSELF, NOT
COMPENSABLE.
a. Legal basis.
Section 20 (D) of the 2010 PO EA-SEC provides:
1 ~ ~ cnt Managemer(Qxp. v. Sia. Ri1a, G.R No. 166580, Feb. 8, 2007.
372 BAR RfVIEWER ON lABOR lAW
"D. No compensation and benefits shall be payable in
respect of any injury, incapacity, disability or death of the seafarer
resulting from his willful or criminal act or intentional breach of his
duties, provided however, that the employer can prove that such
injucy, incapacity, disability or ~ is directly attributable to the
seafarer."
Also, there are decisions1 involving overseas seafarers where the Court
held that Article 178 (172] of the Labor Code on limitations on liability is applicable
to situations contemplated in Section 20 (D), as far as the compensation for
workers covered by the Employees Compensation and State Insurance Fund are
concemed, lo llit.
"Article 178 [172). Limitations of 6abi6g. - The State Inswance
Fund shall be liable for the compensation to the employee or his
dependents except when the disability or death was occasioned by the
employee's intoxication, willful intent to injure or kill himself or another,
notorious negligence, or othecwise provided under this Title."
While the death of a seafarer during the term of his employment makes
the employer liable to the farmer's heirs for death compensation benefits,2 this rule,
however, is not absolute. The employer may be exempt from liability if it can
successfully prove that the seafarer's death was caused by an injury directly
attributable to his deliberate or willful act.3 Hence, the claim of the heirs for
entitlement to any death benefit depends on whether the employer's evidence
suffices to prove that the seafarer committed suicide, and the burden of proof rests
on his employer.4
b. Death by suicide.
In the 2017 case of Seapower Shipping/ a case decided on the basis of the
1989 POE.A-SEC which was in force on July 20, 1995, the date Seapower hired
Sabanal, but whose provision is substantially similar to _the current Section 20 (D}
of the 2010 POEA-SEC as quoted above. Since it is undisputed that Sabanars
death happened during the term of the employment conttact, the burden rests on
the employer to prove by substantial evidence that Sabanal's death was directly
attributable to his deliberate or willful act For its part, Seapower submitted the ship
log entries and master's report to prove that Sabanal suddenly jumped overboard
the MT Montana. The Labor .-\rbiter, NLRC, and Court of Appeals all agree that
the evidence presented sufficiently establish that Sabanal indeed jwliped into the
sea. The Court of Appeals, however, ruled that Sabanal's act was not a willful one
because he was not in his right mental state when he committed the act Evidence
• MdlwN!!VQabl Phiippiles, Inc. v. Heirs JfRkardo S. Gana!, GR. No.220168.June07, 2017.
2 wm Mritime Selvals. ~ v. Pecfrc'4as, G.R. No. 192993. Aug. 11, 2014.
, Id.
• lapilv.Nt.RC,G.R.No.117518,Apri29, '999,306SCRA349,357;366Phil.10.
s Seapower ~ Ent Inc. vs. Hers of Sima. G.R. No. 198544, Jn 19, 2017.
ii.~.
.1111./iBS,.
CHAPTER fOUR 373
SOCIAL WELFARE LEGISLATION
of. insanity or mental sickness may
be presented to negate the requirement of
willfulness as a matter of counter-defense.1 But the burden of evidence is then
shifted to the claimant to prove that the seafarer was of unsound mind.2 The
question, therefore, is whether Elvira3 was able to prove by su~stantial evidence
that Sabanal has lost full control of his faculties when he jumped overboard. Or,
more precisely, whether his unusual behavior prior to the incident is such
substantial evidence.
Elvira did not present any evidence to support her claim that Sabanal was
already insane when he jumped overboard. She only relied on the strange behavior
of Sabanal as detailed by the ship captain in the ship log and master's report.
However, while such behavior may be indicative of a possible mental disorder, it is
insufficient to prove that Sabanal had lost full control of his faculties. In order for
insanity to prosper as a counter-defense, the claimant must substantially prove that
the seafarer suffered from complete deprivation of intelligence in committing the
act or complete absence of the power to discern the consequences of his action.
Mere abnormality of the mental faculties does not foreclose willfulness. In fact, the
ship log shows Sabanal was still able to correct maps and type the declarations of
the crew hours before he jumped overboard. The captain observed that Sabanal did
not appear to have any problems while perfonning these simple tasks, while the
sailor-on-guard reported that Sabanal did not show any signs of unrest immediately
before the incident. These circumstances, coupled. with the legal presumption· of
sanity, tend to belie Elvira's claim that Sabanal no longer exercised any control over
his own senses and mental faculties.
A similar conclusion was reached in Agi/e,4 which also involved a seafarer
jumping overboard. It was thus held that "[s]ince the willfulness may be inferred
from the physical act itself of the seafarer (his jump into the open sea), the insanity
or mental illness required to be proven must be one that deprived him of the full
control of his senses; in othet wonts, there must be sufficient proof to negate
voluntariness.', The Court of Appeals in Agile similarly relied on the unusual
demeanor and actuations by the seafarer a few days before the incident to conclude
that the seafarer was no longer in his right mind, and therefore, his act of jumping
into the open sea cannot be considered willful On petition .for review, the High
Court reversed the Court of Appeals. It was held that the seafarer's strange
behavior alone is insufficient to prove his insanity. Without proof that his mental
condition negated the voluntariness he showed in stepping overboard, the Court of
Appeals' finding of insanity was merely speculative. ·
0q Agle Mrime Resources, h:. v. Sm', G.R. No.191034, Oct. 1, 2014, 737 SCRA 360, 3n.
Id.
Smiarsv.fe.
4 hjlJ Mamme Resoorr.es, btc. V. Saler, G.R. No. 191034, Oct. 1, 2014, 737 SCRA 360, 3n.

BAil REvlEWER ON LABOR I.AW
374
The was also the same conclusion made in Cnwlink, 1 where the seafarer
jwnped into the sea, with the widow raising the counter-defense that her husband
suffered from a psychotic disorder, or Mood Disorder Bipolar Type, to disprove
the willfulness of her husband's act. The High Court, however, foWld the argument
unmeritorious because, other than her bare allegation that her husband was
suffering from a mental disorder, the claimant presented no evidence, witness, or
any medical report to support the claim of insanity.
In the following cases, the death by suicide was likewise hdd not
compensable:
(1) TSM Shipping (Phils.), Inc. u. De Chavez,2 where the seafarer was found
dead inside his cabin bathroom hanging by the shower cord and
covered with blood.
(2) Walltm Maritime Services, Inc. 11. Pedrajas,3 where the seafarer hanged
himself on the Upper Deck B of the vessel with a rope tied to his
neck.
(3) Great Southern Maritime Services Corp. 11. SmigatJ,4 where the seafarer was
found dead inside the bathroom of his hospital room with a belt tied
aroWld his neck.
(4) Maritime Factors, Inc. v. Hindang, 5 where the seafarer's body was foWld
hanging by a strap on his neck in a kneeling position inside the
locker (wardrobe} of his cabin.
The foregoing cases, however, should be contrasted to the cases of
Naess' and Lapitl,1 which upheld the presumption of self-preservation over the
employer's claim of suicide.
In Naess, the Court affirmed the award of death benefits to a seafarer
who "jumped or fell overboard" as he ran towards the deck after fatally stabbing a
co.worker. The Court reasoned out that the parties' contract makes Naess
"unqualifiedly liable to pay compensation benefits for [the seafarer's] death while
in its service." Given this conclusion, the Court only "parenthetically' observed
that the "events surrounding the death of (the seafarer] have not been established
with any degtee of certitude." In short, the employer was liable without
qualifications for death benefits because the employer's liability arises solely from
the fact of the seafarer's death.
t OM!k, n:. v. T ~ . G.R No. 166803, Oct. 11, 2012. 684 SCRA 12, 21.
2 G.R No. 198225, Sept 27, 2017.
l G.R. No. 19'l993,AIJJ.1U)14.
GR No. 183646, Sept 18, 2009, 616 Phi. 758.
GR No.151993. Oct.19.2011.
, Naes,~ Phfippines, Inc. v. NLRC, G.R No. 73441, Sept. 4, 1987.
1 Lapk1 v. M.RC. G.R. No. 117518, ~ril 29, 1999.
CHAPT£1l fOUR 375
SOCIAL WELFARE LEGISLATION
The contract in ·Lapid is different from Naas. It provides that if the death
of the seafarer is due to his own willful act, then the employer is not liable for
death benefits. The seafare_r in this case was found dead while hanging in an
abandoned warehouse. While the employer presented a report stating that the
cause of death was asphyxia by hanging, the employer failed to investigate and,
consequently, to present evidence on the circwnstances surrowiding the seafarer's
death to indicate that it was a suicide rather than a crime. The employer tried to
bolster its theory of suicide by relying on the seafarer's co-employees• assertion
that the deceased had an unidentified family problem. But this claim ran counter to
the seafarer's own letters to his family showing his excitement to go home. The
records are bereft of. any sub~tantial evidence showing that the respondent
employer successfully discharged its burden of pro\ing that the seafarer committed
suicide, so as to evade its liability for death benefits W1der POE.A's Standard
Employment Contract for Filipino Seaman.
c. Death directly attributable to the seafarer.
Death by suicide is not the only case contemplated under the POEA-
SEC that may not merit compensation. There are other situations that could be
cat~rized as ~ delibe.cate and ~ act on a seafarer's own life directly
attnbutable to him. For example, lll Mabuh'!J Shipping, 1 the seaman, in a state of
intoxication, ran amuck, or committed an unlawful aggression against another,
inflicting injury on the latter, so that.in his own defense, the latter fought back and
in the process killed the seaman. The circumstances of the death of the seaman
could be cat~rized as a deliberate and willful act on his own life directly
attributable to him. First he challenged everyone to a fight with an axe. Thereafter,
he retumed to the messhall, picked up and broke a cup and hurled it at an oiler
who suffered injury. Thus provoked, the oiler fought back. The death of the
seaman is at¢butable to his unlawful aggression and is thus not compensable.
The case of Mar/ow,Z also is one in point Around 7 o'clock in the evening
of April 15, 2012, a party was organized for the crewmen of MV Stadt Hamb11,g
while the ship was anchored at Chittagong, Bangladesh. After finishing his shift at
12 midnight;the seafarer, the late Ricardo Ganal (Ganal), joined the party. Around
3 o'clock in the moming of April 16, 2012, the ship captain noticed that Gana) was
already drunk so he directed him to retum to his cabin and take a rest. Ganal
ignored the ship captain's order. Thus, a ship officer, a security \vatchman and a
member of the crew were summoned to escort Gana) to his cahin. The crew
members attempted to accompany him back to his cabin but he refused. Thcv 1hen
tried to restrain him but he resisted and, when he found the chance ro escape. he
ran towards the ship's railings and, without hesitation, jumped overboard and
straight into the sea. The crew members immediately threw life rings into the water
' ~ St1')ping SeM:es, Inc. v. NI.RC (1st DMsion), G.R No. 94167, Jan.21.1991, 271 Phi. 142. 146.
1 MalaN NavrJafJOn Ph~. Inc. v. Heirs of Ricado S. Glll8I, G.R. No. 220168. June 07, 2017.
 BA~ RfVI EWER ON IABOR IAW
towards the direction where he jumped and the ship officer sounded a general
alarm and several alarms there--.Jter. Contact was also made with the coast guard
and the crew members searched for Gana!, to no avail. Gana! was later found dead
and floating in the water. 1be subsequent medico-legal report issued by the
Philippine National Police showed that the cause of his death was asphyxia by
drowning. Subsequently, Ganal's wife, Gemma Boragay (Boragay), for herself and
in behalf of their minor children, filed a claim for death benefits with petitioners,
but the latter denied the claim.
The Supreme Court found that the accident w~ch produced this tragic
result did not arise out of such employment. The occasion where Gana! took
alcoholic beverages was a grill party organized by the ship officers of MV Stadt
Hamburg. It was a social event and Gana! attended not because he was performing
his duty as a seaman, but was doing an act for his own personal benefit
Moreover, Ganal's W was likewise declared as being willful. In
accordance with the ruling in Mab11h~ Shipping (supo], Ganal's act of intentionally
jumping overboard, while in a state of intoxication, could be considered as a
deliberate and willful act on his own life which is directly attributable to him.
Moreover, contrary to respon:lents' contention, petitioners took the necessary
precautions when: (1) the ship captain advised Gana! to proceed to his cabin and
take a rest; (2) Gana! was assisted by no less than three crew members who tried to
persuade him to return to his cabin; (3) when he refused, the crew members tried
to restrain him but he escaped and immediately ran away from them and, without
warning, jumped into the sea. The law does not intend for an employer to be the
insurer of all accidental injuries befalling an employee in the course of the latter's
employment, but only for those which arise from or grow out of the risks
necessarily associated with the workman's nature of work or incidental to his
employment. Ganal's act of jumping overboard was not, in any way, connected
with the perfonnanre of his duties as ship oiler. Neither could petitioners have
reasonably anticipated such act on the part of Gana!. Thus, having proven their
defense, the burden now rests on the shoulders of respondents to overcome
petitioners' defense.
The Court agrees with the Labor Arbiter and the NLRC that there was
no competent proof to show that Ganal's state of intoxication during the said
incident actually deprived him of his consciousness and mental faculties which
would have enabled him to comprehend the consequences of his actions and keep
in mind his personal safety. Respondents failed to present evidence to overcome
the defense of petitioner and ~how that, prior to and at the time that he jumped
overboard, Gana! was deprived of the use of his reas~n or that his will has been so
impaired, by reason of his intoxication, as to characterize his actions as
unintentional or involuntary. Ganal may have become unruly by re,ason of his
inebriation but such recalcitrant behavior does not necessarily prove that his
subsequent act of jumping overboard was not willful on his part. Stated differently,
1
1i
&.&,
CHArTER FOUR.
SOCIAL WELFARE LEGISIATION 377
the fact alone that he refused !o be escorted to his cabin, that he resisted efforts b
other _crew members to restrain him and that he ~imped overboard witho!,
hes1tatlon or warrung does
. . . not prove that he was not full possess1on
i· n · o f h'1s
faculttes as to characteaze his acts as involuntary or unintentional.
4. AMOUNT OF DEATH BENEFITS.
S~ction 20 (B) (1)1 of the 2010 POEA-SEC provides for the following
compensatton and benefits:
1. Philippine currency equivalent of US$50,000; and
2._ Additional a~ount of US$7,000 to each child under the age of 21 but
not exceeding four (4) children, at the exchange rate prevailing during the time of
payment.
3. Where d~th is caused by warlike activity while sailing within a declared
war zone or war nsk area, the compensation payable shaU be doubled. The
employer shall undenake appropriate war zone insurance coverage for this
purpose.
. . 4. Th~_benefits mentioned above shall be separate and distinct from, and
wi1! _be_111 addittonto, whatever benefits which the seafarer is entitled to under
Phili~p~e l~ws from. the Social Security System (SSS), Overseas Workers Welfare
Ad_~stratton (OWWA), Employees' Compensation Commission (ECC)
Philippllle Health Insurance Corporntion (PHIC) and Home Dcvelopme~t Muruai
Fund (HDMF or Pag-IBIG Fund).
5. Th~ other liabilities of the employer when the seafarer dies as a result of
work-related ll1Jury or illness during the term of employment are as follows:
a. Th~ employer shall pay the deceased's beneficiary all outstanding
obliganons due the seafarer u
b. The employer shal_l. tra~sport the remains and personal effects of the
seafarer t? the Philippines at employer's expense except if the death
occu~red Ill a port where local government laws or regulations do not
p~mut_ '.he transport of such remains. In case death occurs at sea, the
dispos1tton of the remains shall be handled or dealt with in accordan
.th h • cr
WI t e mas~er s be_st judgment In all cases, the employer/ master
shall commurucate wtth the manning agency to advise for disposition
of seafarer's remains.
c. The employe~shall pay the beneficiaries of the seafarer the Philippine
currency ~~wvalent of. US_$1,000 for burial expenses at the exchange
rate prevailing dunng the Orne of payment under this Contract.
---000.____
1
&ltitled '8. COM'ENSATtoN AND BENEFITS FOR DEATH.'
 CHAITTR FIVE
379
LABOR RELATIONS

A.
Chapter Five RIGHT TO SELF-ORGANIZATION
LABOR RELATIONS
1.
COVERAGE

TOPICS PER SYLLABUS a.

PERSONS WHO CAN EXERCISE
RIGHT TO SELF-ORGANIZATION
V. '
LABOR RELATIONS 1. PRIVATE SECTOR.
The following are eligible to join, form or assist a labor organization in the
A. Right to self-organization pri~ate sector:
1. Coverage 1) All persons employed in commercial, industrial and agricultural
2. Ineligibility of managerial employees; right of enterprises;1
supervisory employees . 2) Employees of government-owned and/or controlled corporations
3. Effect of inclusion as employees outside of the without original chaners established under the Corporation Code;2
bargaining unit 3) Employees of religious, charitable, medical or educational institutions,
4. Non-abridgement whether operating for profit or not;3
4) Front-line managers, commonly known as supervisory employees [Sec
B. Bargaining unit
discussion below];•
C. Bargaining representative 5) Alien employees [See discussion below];
6) Working children (Sec discussion belowl;
D. Rights of tabor organizations
7) Homeworkers [See discussion belowl;
1. Check off, assessments, and agency fees
8) Employees of cooperatives [Sec discussion belowl; and
2. Collective bargaining
9) Employees of legitimate contractors - not with the principals but with
E. Unfair Labor Practices the contractors [See discussion below].
1. Nature, aspects
2. By employers 2. PUBLIC SECTOR.
3. By labor organizations In the public sector, all rank-and-file employees of all branches,
F. Peaceful concerted activities subdivisions, instrumentalities, and agencies of government, including government-
1. Strikes owned and/ or controlled corporations with original charteQ, can form, join or
2. Picketing
3. Lockouts
4. Assumption of jurisdiction by the DOLE Secretary
5. Injunctions
--------------------·--·---------- '
I Am;le 2S3 [24JI, !..ab« Code.
. 2 Al1icle 254 12441, Labor Code.
3 Article 253 12431, labor Code; Sedi:11 2. ~ I, Book V, ~ kl ~ te Laba Code, as emended Ir/
Depment Order No. 40-03, Series cl 2003, !Feb, 17, 20031 .m fLdlEJ anerdoo b-t ~ O'der No. 40-C-05,
Series c( 2005 [l,'atth 7, 2005; See also Mx:le 243, laxJ Code.
• Article 255 12451. Labor Code; Paper ncWies Capaalm ct te Ph~ v. la,juesma. GR No. 101738, Api 12,
2000t Urned Pepsi-Cola~ U1i:ln llJPSUI v.l.aljuesma, GR. No. 12.226, Mm 25, 1998,288SCRA 15,21-23.

BAR REVIEWER ON lABOR. IAW
380
· called "employees' orminizations" of their own
. labor organizauons t,-
asstst
choosing-•
• RIGHT OF CERTAIN SPECIFIC WORKERS.
3 Homeworkers have the right to form, join or assist organizations of their
a. Supenisors (a.Jc.a. first-line managers).
There is no prohibition in the law or in the implementing rules regarding
the right of supervisory employees to otganize a labor organization or workers•
association of their own. They are, however, not allowed to become members of a
labor union composed of rank-and-file employees. This -is clear W1der A~cle 255
(245) of the Ltbor Code.2 In case there is mixed membe~hip_ of surmsors and
rank-and-file employees in one union, the new rule en~aated ui Artt~e 256 [245-
A]3 of the Labor Code, unlike in the old law, is that 1t ~ot be uivoked as a
ground for the cancellation of the registratioo of the uruon. Th~ employees so
improperly included are automatically deemed removed ~~ ~e list of m~bers
of said union. In other words, their removal from the sa.td list 1s by operation of
law.
b. Alien employees.
For an alien employee to exercise his right to self-organize, the following
requisites should be complied with:
(1) He should have a valid working permit issued by the DOLE; and
(2) He is a national of a country which grants the same or similar rights
to Filipino wo.tkers or which has ratified either ILO Convention No.
87' ot 110 Convention No. 98,5 as certified by the Philippine
Department of Foreign Affairs (DFA).
c. Working children.
Working children have the same freedom as adults to join the collective
bargaining union of their own choosing in accordance with existing law. Un~er
P.D. No. 603,6 it is clearly provided that neither management nor any collecnve
1 Sedrtls 1cm 2, Exeo.M Older No. 1so, .klle 01, 1987; Sedixls 1n 2, ~ 11. Rules n1 Reaula!ixls 1o Govern Ole
Exeitise of Ole RirJhtdGovemment~ b Sef-Orgcllizaticn
2 lllil.
3 Anew provmi nserted im Ile uborCode by Secfon 9 of ReplJ)rc Act No. 9481 (efle(fw oo June 14, 2007).
4 Ullder Miele 2 of B.0 CoovenfM No. 87 (Freedcm of Ass«ialxx'I and Proledm d Ille Right ID Orgalizel of YAli:h lhe
Phq>phes is a signatay, ~ Md en-¢7fels, Yrimlt lfslilcml MlcllsOeYer. WI! have Ole ~ 1o eslabfistl cm
sub¢ CW/ 1o 01e rum a Ile 01garilation coocemed, jib ocganizaoons of their ew1 moosiY:I wilhoot pwmus
au9l(Xil.aljon.I
a
~ ~ 2 11.0 cawenroo No. 98 vitim ltM!lls oo the fu1ht to Organize am1 Cd.e<:INe Barg~.
6 Chrwise krMl as itieClit illd Ycuh Wefare Code.'
CHAPTER FM
U.BOR RElATIONS
bargaining union shall threaten or coerce wotk.ing children to join, continue or
withdraw as members of such union. 1
d. Homeworkers.
own choosing in accordance with law. 2 The registration of homeworkers'
organizations or associations following the requirements prescribed by law will vest
legal personality thereto.l
e. Members or employees ofcooperadves.
Members of a cooperative have no right to form or join labor
organizations for pmposes of collective bargaining for being themselves co-owners
of the cooperative. This prohibition covers employees of the cooperative who are
at the same time members thereot:4 However, insofar as the cooperative's
employees who are not members or co-owners thereof are concemed, they are
entitled to exercise their right to self-organization and collective bargaining as
guaranteed in the Constitution and existing laws. It is the fact of ownership of the
cooperative and not involvement in the management thereof which disqualifies a
member from joining any labor organization within the cooperative. But employee-
members of a coopemtive may withdraw as members of the cooperative for
putposes of joining a labor union.5 .
£ Employees oflegitimate contractors:
An employee of a legitimate job contractor is entitled to all the rights and
privileges due a regular ~ployee as provided in the Labor Code, such as the right
to self-organization, collective bargaining and peaceful concerted activities,
including the right to strike.6 But this right cannot be exercised and invoked against
the principal l>ut only against the independent contractor which employed them.
g. Workers allowed to organize labor organizations only for mutual
aid and protection and not for collective bargaining purposes.
As a general rule, labor organizations are established principally for the
purpose of allowing the employees to engage in collective bargaining with their
employers. However, wo.tkers who have no ·employers with whom they can
collectively bargain are allowed · to otganize labor organizations or workers'
associations for their mutual aid and protection. These workers include tJ111bulant,
1 Mde 111, Cbapter3, Tle Vl,PD.No.603, as anended l,/Presi1alfa Deaee No. 1179\\ffdl kD effecioo 4, ... 15
1977. ""!I '
2 Secl:iln 3, Depat1elt Order No. 5, Feb. 04, 1992.
3 Sed'xln4,lbld.
4 C(q)erawe Rural Baik d Dava, ct,, m V. Fenr-Ca1$, G.R No. 77951, ~ 26. 1988; San Jooe Bettie Savx:e
~ . Inc. v. tiby of Laber, G.R No. n231, Mai/ 31, 1989.
5 Central Ne,Jroo Elettt OJrpr,a!jon v. Seaelary of lab«, G.R No. 94045, Sept 13, 1991.
Section 10{e), Oepa1naltOneNo.174,Sffl!sd2917. .
382 BAR REVIEWER ON LABOR I.AW CHAl'TER. FM
IABOR REIATIONS

inttt'1flittenl and other wor/em, the 11/f-employed, f'J(ral worlem and Ihm without a'!Y definiU b.
employm. 1 PERSONS WHO CANNOT EXERCISE
RIGHT TO SELF-ORGANIZATION
3. SOME PRINCIPLES ON THE RIGHT TO SELF-ORGANIZATION.
1. PRIVATE SECTOR.
• Any employee, whether employed for a definite period or not,_shall, beginning
on the first day of his service, be eligible for membership 1n any labor The following are not eligible to join, form or assist a labor organization
organization. 2 in the private sector: .
• Right to join a union cannot be made subject of a stipulation in an 1) Managerial employees; and
employment contract or CBA.3 2) Confidential employees.
4. SOME PRINCIPLES ON GOVERNMENT EMPLOYEES' RIGHT TO 2. PUBLIC SECTOR.
SELF-ORGANIZATION.
The following are not eligible to join, form or assist a labor organization
• The labor organization in the government sector is technically called an in the public sector:
"employees' organization."4
• Rttfttralion of employees' organizations is made with both Civil Service I) Higb_-levrl emplc,Jm whose functions arc nomully considered as policy-
Commission (CSq and the Bureau of Labor Relations (BLR) of the making or managerial or whose duties ace of a highly confidential
nature;1
Department of Labor and Employment (DOLE). Once registered, it is
2) Members of the Armed Forces of the Philippines;
technically called a "registered employees' organization."5 In the private
3) Police officers;
sector, this is theoretically known as a "legitimate labor organization." 4) Policeme!).;
Canallation of registration of an employees' organization is likewise made by 5) Firemen; and
both the CSC and the BLR. 6) Jail guards.2
• The sole and exclusive bargaining union is called an "accredited employees'
organization."6 In the private sector, this is in principle known as a "sole 2.
and exclusive bargaining agent (SEBA)." INELIGIBILITY OF MANAGERIAL EMPLOYEES;
• The unit where the government employees' organization seeks to operate and RIGHT OF SUPERVISORY EMPLOYEES
represent is called "organizational unit." It is the employer's unit consisting a.
of rank-and-file employees unless circumstances otherwise require} In the MANAGERIAL EMPLOYEE RULE
private sector, this is technically known as "bargaining unit."
• The right to strike is absolutely prohibited in the government sector.8 i LEGAL BASIS.
Article 255_(245) of the Labor Code provides:

1 Mi:!e243,lmCode;FEU&. N'raia~llexa!Rmlam, oc v. Trajm,GR It>. 76273,.lij31, 1987.
2 Mi:le 292(c} fl77(c}L Im Code; No. 10, Basi: AlnerdrnMls lJldec RA. 6715, prepcRd lrt MerTters a lhe ~
Hoose Cainm! Carmlleea eoo,ess.
SoohoolPl'q)pnesFederalmollm(Sf'fl.}v.CaGeja, GR t«l.80882,Ajri 24, 1989, 172 SCRA676.
Sedm 1 fl1 ~ I, ~ .m ~ b Govern lhe Exercise ol lhe RiJhl of GcNemment ~ to Seff.
Ogarmfm.
5 Sedm 1n, fqde I, l>ld.
s Sdx111i,~l,l>ld.
Sedial 9, ExeoJtie Order It>. 180.
CSC ~ Ci"aJlar No. 6, s. 1987, 1AP1i 21. 1987] pl1Xl'llgated b'f lhe Crvi SeMce eoomssm ~ t y
~ al 9(7,'ellm!l't arms .m ~ mn st,Ji'g Sl!ies, derralstra~. mass leaves, )'lalk-<llls cJld other
bmS ci mass acton v.titl 1111 resu't i1 Ile lell'l)OOIY stoppaJe CJ iflSIIJPIXll of Jillie ser.ices. Ami1g tiem to sble CJ
oordu::t toe sail pd1h'l9:I ads is ID ll'ldoorile CJ prejlm:e lhe gMflm!n\ syslem. Exeruive Order It>. 180, µlllE! 1.
1987]. v.hi::h prrNides tie guilelileS on Ile exemse ct Ille ri)ht o/ ~ v.oo.ers ID agarize. i1l)ii::iltf endcxsed sail
CSC Meirl:md\.m Ci'culli No. 6, s. 1987, daEd ~ 21, 1987 jsupraJ lrj stltr,J tt1at Sie CM Serii:e 12,y and ru'ies
"~~e 25? [245). Intlitfbili!J ofMana,,eriai Enrp/qyees toJoin a,ry
Libar 011,am_Z':11on; Righ_l ojSIIJ>t":110,y Emp'4.Jtt1. • Managerial employees
are n~t eligible to JOtn, ass1St or form any bbor organizatioo.
SupeMSOry employees shall oot be eligible for membership io the
co~ective bargaining uoit of the rank-and-file employees but may joio,
assist or form separate collective bargaining units and/ or legitimate
goYell'irl:l arcei1ed adNms .m 5'ies i1 lhe !iOl'e!1llT8l1 seril:.e man be cbserved. (Jacm v. Hon. CA, GR No.
124540. N<w. 14, 1997).
1
Sedm 3, ExeaJWe OrderNo. 180,.klle01, 1987;Sedm 2. Rule II. Rues .nl-,eglAatioos to Go.911 lhe Exertise alhe
R'ljtd Gc,,,etrrnent EJrc)byees to Se'f-Orgarizato.
1
Sedm 4, Exeo..we Order No. 180; Sedm 1, ~ II, bcl.; See also Chaple( 6, 8<xi V Mmsraive Code d 1987
!EJCeartM! OrderNo.2921, ,

BAA REVIEWER ON lABOR lAW
labor organizations of their own. The rank-and-file union and the
supervisors' union openting within the same establishment may join the
same federation or national union/'1
2. TYPES OF MANAGERIAL EMPLOYEES.
There are three (3) types of managerial employees for pmposes of
determining whether they could exercise their right to self-organization:
1) Top Management;
2) Middle Management; or
3) Firrt-IJn, Management (technically known as ..,'mpm,isorr').2
Top Management is composed of a comparatively small_ gr?up of
executives. It is responsible for the ovetall management of the orgaruzatlon. It
establishes operating policies and guides the organization's interactions with its
emironment. Typical titles of top managers are "chief executive officer,"
"president," or "senior vice-president,, Ac~ titles vary from ~ne ~rganiza~on to
another and are not always a reliable gwde to membership m the highest
management classification.
Middle Management refers to more than one level in an organization.
.fvliddle man:igers direct the activities of other m~a~.rs_ and some~e~ ~so those
of operating employees. The middle managers pnnapal responstbilittes are to
direct the activities that implement their organization's policies and to balance the
demands of their superiors with the capacities of their subordinates. A plant
manager in an electronic firm is an example of a middle manager.
First-Line Management is the lowest level in an organization at which
indi"iduals are responsible for the work of others. First-line managers direct
operating employees only; they do not supervise other managers. Examples of
first-line managers are the "foreman" or production supervisor in a manufacturing
plant, the techmcal supervisor in a research department, and the clerical supervisor
in a large office. First-level managers are often called supervisors.
3. NOT ALL MANAGERIAL EMPLOYEES ARE PROHIBITED FROM
FORMING, JOINING OR ASSISTING A ~ON.
Based on the above classification, ''m1J111Jgtrial mp/oyeu" may fall into two
(2) distinct categories: namely:
1) The "managers" per s, composed of top and middle managers; and
2) The "supervisots" composed of first-line managers.
• Aumended 17f Sml 18, RA No. 6715, Mm! 21, 1989 aid Sml 8, RA t-b. 9481 Mth lapsed i1fD lawm Ma'/ 25,
'lfJJ7 n beam! effedHe oo .me 14, 2007; M renunilered pusuat to Sedioo 5, RA No. 10151, June 21, 2011 and
DOLE Depatnent Miraf No. 01, Sedes d 2015 ~ cl Ile Labor Qlde ti lie Ptqlpnes, as hnemed),
6SU8d oo Jutt 21, 2015. . • Tunay na Pagkakaisa ng Manggagawa sa Asia Bn1wely v. Asia 8rewef!, Inc., G.R No. 162025, Aug. 3, 2010;
Paper n!umes Corpcnbl of tie Aippnes v. l.aguesrna. G.R No. 101738, AprB 12, 2000; Uniled Pepst-Cola
Superv1say Unixl [UPSU)v. t.aguesma. G.R. No.122226, Mith 25, 1998, 288 SCRA 15, 21-23.
CHAPTEll FIVE
lABOR RElATlONS
No. 1 above are absolutely prohibited from fo.aning, joining or assisting
any labor unions for pmposes of collective bargaining. 1 Only No. 2 above are so
allowed to fonn a labor union of their own kind.2
b.
SUPERVISORY EMPLOYEE RULE
1. SUPERVISORS MAY ORGANIZE OWN UNION BUT ARE
PROHIBITED FROM JOINING THE RANK-AND-FILE UNION.
The reason for the segregation of supervisory and rank-and-file employees
with respect to the exercise of their right to self-organization is the difference in
their interests. Supervisory employees are more closely identified with the
employer than with the rank-and-file employees. If supervisoty and rank-and-file
employees in a company are allowed to form a single union, the conflicting
interests of these. groups impair their relationship and adversely affect discipline,
collective bargaining and strikes. These consequences can obtain not only in cases
where supervisory and rank-and-file employees in the same company belong to a
single union but also where unions formed independently by supervisory and rank-
and-6.le employees of a company are allowed to affiliate with the same national
federation. 3
c.
CONFIDENTIAL EMPLOYEE RULE
1. WHO ARE CONFIDENTIAL.EMPLOYEES.
Within the context of labor relations, ''confok11tial t111plf!J1ts" are those who
meet the following criteria:
(1) They assist or act in a confidential capacity;
(2) To persons or officers who formulate; detemiine, and effectuate
management policies specifically in the field of labor relations.
The two (2) criteria are cumulative and both must be met if an employee
is to be considered a ''confidmJial ,mpfttyee" that would deprive him of his right to
form, join or assist a labor organization.4
1 This is-deer 11111er Arti:1e 245 cl Ile Laber~ ~ Industries C0qxrab1 d Ile Phlfpp!nes V. laJt!esml, G.R No.
101738, ~ 12, ?000; Unted ~ ~ \ H r ! l\JPSU}v. Laguesna, G.R No. 122226, Midi 25, 1998, 288
SCRA 15, 21-23.
2 PapiJ- 1oous1ms Corplxalkxl d t,e Phqlpines v. ~ St.-a; Un!al Pepsi.Qil &ipeMSay Unm (UPSU] v.
Laguesma, supra.
> LaSalellliverslfMed'r.alCenumlQAlgedM!d'r:ilev.Laguesma,G.RNo.102084,Aug.12.1998,294SCRA 141.
Sugbuanon Rural Bank. Inc. v. Laguesma, GA No. 116194, Feb. 2, 2000.
 BAR REYIEWER ON LABOR LAW
A confidential employee may be a rank-and-file or supervisory employee
but because in the normal course of his duties, he becomes aware of management
policies relating to labor relations, he is not allowed to assist, fonn or join a tank-
and-file union or supervisory union, as the case may be. His exclusion from the
bargaining unit is justified under the "confidential empH!Jee rule. "To allow him to join a
union would give rise to a potential conflict of interest Management should not be
required to handle labor relations matters through employees who are represented
by the union with which the company is required to deal and who, in the nounal
perfoanance of their duties, may obtain advance information on the company's
position with regard to collective bargaining negotiadons, the disposition of
grievances, or othet labor relations mattcrs.1
However, the mere access of an employee to confidential labor relations
infomiation which is merely incidental to his duties and, therefore, knowledge
thereof is not necessary in the perfonnance of said duties, does not make ·such
employee a confidential employee. If access to confidential labor relations
information is to be a factor in the detennination of an employee's confidential
status, such information must relate to the employer's labor relations policies.
Therefore, access to information which is regarded by the employer to. be
confidential from the business standpoint, such as financial information or
technical trade secrets, will not render an employee a confidential employee under
this rule. An employee may not be excluded from an appropriate bargaining unit
merely because he has access to confidential information conceming the employer's
intemal business operations which is not related to the field of labor relations.2
Thus, even a bank cashier who also serves as the secretary of the board of
directors may not be classified as a confidential employee disqualified to join a
wuon. True, the board of directors is responsible for corporate policies, the
exercise of corporate powers and the general management of the business and
affairs of the corporation. As secretary of the bank's governing body, the employee
serves the bank's management, but could not be deemed to have access to
confidential information specificall,v· relating to the bank's labor relations policies,
absent a clear showing on this matter:~
2. DOCTRINE OF NECESSARY IMPLICATION.
The doctrine of necessary implication is the legal basis for the
ineligibility of a confidential employee to join a union. The disqualification of
managerial and confidential employees from joining a bargaining unit of rank-and-
file employees or supervisory employees is already well-entrenched in
jurisprudence. While Article 255 [245) of the Labor Code limits the ineligibility to
1&r1fttue1Corp. &ipecvisasilld~~ Unionv. l,aJuesma, G.R No.110399,Aug.15, 1997.
2 SeeSa! ~uel Corporml &speiviscrs a n d ~ ~ Ulilll v. ~uesma. supa; Na1:Da Ass0ciation dTraSe
Unklns-Repu!D: Planlefs Bank Supelvim Chaple-v. Tooes, G.R No. 93468, Dec. 29, 1994, 239 SCRA 546,560.
s &,glxam ~ Bank, mv. ~ GA No. 116194, Feb. 2, m>.
CHAPTER FM 387
IABOR REIATIONS
join, assist or foan a labor organization to managerial employees, jurisprudence has
ext~ded. ~ prohibition to confidential employees or those who, by reason of
their p0S1tt~ns or nature of work, are required to assist or act in a fiduciary manner
to managerial employees and, therefore, are likewise privy to sensitive and highly
confidential records. I
Article 255 [245] of the Labor Code does not directly prohibit confidential
employees from en~gin~ in union activities. Their disqualification p~oceeds ·
merely from the application of the ''doctrine of ,zecma,y implication" because what
Articl~ 2_55 (245) singles . out as ineligible to join, assist or form any labor
orgamzatton are managerial employees. By necessa_1' implication, confidential
employ~s are similarly disqualified. Th.is doctrine states that what is implied in a
statute IS as much a part thereof as that which is expressed.2
· Simply stated, in ~e collective bargaining process, managerial employees
are supposed to be on the side of the employer to act as its representatives and to
see to it that its. interests are well protected. The empoyer is not assured of such
protection if managerial employees themselves are t:nion members. Collective
b ~ g in such a si~tion can become one-sided. I: is the same reason why the
posttJ.ons of confidential employees are included in the disqualification found in
.Article 255 (245) as if such disqualification was wri~en in the provision. If
confidential employees could unionize in order to bargain for advantages. for
themselves, then they could be govemed by their own motives .rather than the
interest of the employer. Moreover, unionization of confidential employees for the
pmpose of collective bargaining would mean the extension of the law to persons or
individuals who are supposed to act "in the interest of' the employers. It is not
far-fetched that in the course of the collective bargaining negotiations, they might
jeopardize that interest which they are duty-bound to protect.
3. CONFIDENTIAL EMPLOYEES NOT ALLOWED TO JOIN
UNIONS.
Based on jurisprudence, the following arc considered confidential
employees under the confidential employee rule:
1. Accounting personnel and radio and teleg:aph operators;l
2. Division secretaries, all Staff of General ¼nagement, Personnel and
Industrial Relations Department, Secre:aries of Audit, EDP and
Financial Systems;4
3. Legal secretaries who are tasked with, among others, the typing of
legal documents, memoranda and correspondence, the keeping of
1 Slandad Chatered Batt Enl)byees Unioo (SCBE~UBE) v. Slandard Chartefed Bcrlk, GR No. 161933,Apri 22, 2008.
2 amv. CM1 Seiw:e Conmssm, G.R. No. 88979, Feb.7.1992, 206 SCAA 65
3 Goklen Fams, Inc. v. Ferrer-Otieja, G.R. No. 78755, Jtlf 19, 1989, 175 SCRA 471.
' Phifl)s lndusfJial Devetlpineri, nc. v. NLRC, GR No. 88957, nie 25, 1992, Z:O SCRA 339.

BAR REVIEWER ON LABOR LAW
records and files, the giving of and receiving notices, and such other
duties as required by the·legal persoruiel of tlie corporation.1
4. Executive secretaries of the General Manager and the executive
secretaries of the Quality Assmance Manager, Prod~ Development
Manager, Finance Director, Management System Manager, Human
Resources Manager, Marketing Director, Engineering ~ager,
Materials Manager and Production Manager were also considered
confidential employees since they have access to "vital labor
information."2 \, ·
4. CONFIDENTIAL EMPLOYEE~ ALLOWED TO JOIN UNIONS.
Confidential employees are not absolutely prohibited &om j?~g ~o~s.
This is the correct view since confidential employees are allowed to JOLn wuons _m
some cases. For instance, in So11th1n1 Philippine.r,3 the inclusion of the confidential
rank-and-tile employees in the bargaining unit of rank-and-file employees was
upheld by the Supreme Cowt. Much earlier, the ~gh Court proclaimed in ~i/qif,
that confidential rank-and-file employees may JOln the uruon of supemsors,
especially in a situation where 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-a-vis the rank-and-file employees. Such 1dent1ty
of interest has allowed their inclusion in the bargaining unit of supenrisors for
purposes of collective bargaining. They remain employees in relation ~o the
company as their employer. This identity of interest logically calls for their _in~usion
in the same bargaining unit and at the same time fulfills the law's obJecttve. of
insuring to them the full benefit of their right to self-orgmization and to collecttve
bargaining which could hardly be accomplished if the respondent association's
membership were to be broken up into five separate ineffective tiny units.
Jurisprudence, therefore, has established that there is no legal prohibition against
confidential employees who are not performing managerial functions to foan and
join a union. 5
d.
SEPARATION OF UNIONS DOCTRINE
1. INAPPLICABILITY OF THE DOCTRINE
R.A. No. 94816 amended Article 255 [245] by adding the phrase: "The
rank-and-file union and the supervisors' union operating within the same
1 Pier 8Mas1re &S1eved(mJ SeM;es, Inc. v. Rltfan.Canfesor, (GR. No. 110854, Feb. 13, 1995, 241 SCRA 294.
2 M!tro1ab loousmes, Inc. v. Rokfal-Confes«, G.R No. 108855, Feb. 28, 1996, 254 SCRA 182; 324 Pit 416.
l Southern PhifippineS Federalion of labor v. Ferrer-Calleja, G.R No. 80882,A~il 24, 1989, 1n SCRA 676.
Filoil Refinery Corp. Y. Filoo SupeMSOI}' and Confidential Employees Associa!ion, G.R No. L-26736, Au], 18, 1972.
~ San ~ Cap. Supavisas aoo ~ Enl)k7;ees Unm v. l,aJuesrna, G.R No. 110399, Alrj. 15, 1997,; National
Asmtioo of Trade Utm · Repull&: Plallels &rlk &JllEMS(ll'S Chapter v. Torres, G.R No. 93468, Dec. 29, 1994.
' Sedm8ofRA No. 9481 leffedNe.lune 14,2007).
CHAPTER. FIVE
WOil REIATIONS
establishment may join the same federation or national union." By reason of
this amendment, the so-called "nparation of 11nwns u&lrint" enunciated in Alias
LJthogmphit,1and in other related cases no longer applies. This doctrine prohibits
the situation where the supervisory union and the rank-and-file union operating
within the same establishment are both affiliated with one and the same federation
because of the possible conflict of interest which may arise in the areas, inltr alia, of
discipline, collective bargaining and strike. Thus, if the intent of the law is t~ avoid
a situation where supervisors would merge with the rank-and-file or where the
supervisors' labor organization would represent conflicting interests, then a local
supervisors' union should not be allowed to affiliate with the federation with which
the rank-and-file union is also affiliated and where the federation actively
participates in the union activities in the company. The intent of the law is clear
especially where the supervisors will be co-mingling with the rank-and-file
employees whom they directly supervise in their own bargaining unit.2
Likewise affected by the amendatory provision of R.A. No. 9481 is the
ruling in Coastal Subk Bay,3 where the Supreme Court declared that both the
supervisory union and rank-and-file union which have separately affiliated with
different federations with commingling or common set of officers have not
attained the status of legitimate labor organizations. Here, private respondents
CSBTI-RFU,4 a rank-and-file union, and .CSBTI-SU,5 a supervisory union, filed
separate petitions for certification election before the Med-Arbiter. Both private
respondents insist that they are legitimate labor organizations because, on the part
of the rank-and-file union, it was issued a charter certificate by the ALU,6 and on
the part of the su~ory union, it was issued a charter cettificate by the
APSOTEU.7 However, this arrangement, according to the Supreme Court, gives
occasion for possible conflicts of interest among the common officen of the two
federations. For as long as they are affiliated with the APSOTEU and ALU, the
supervisory and rank-and-file unions both do not meet the criteria to attain the
status of legitimate labor organizations, and thus could not separately file their
respective petitions for certification election.
As earlier pointed out, however, in the light of the amendment of Article
255 (245] by R.A. No. 9481, the above ruling in C.Oastal Sllbi& Bay no longer applies
as the law itself now explicitly allows the more. extreme situation of a rank-and-file
union and a supervisors' union operating within the same establishment joining one
and the same federation or national union as affiliates ~ereof.
Alias Utqraphic Selvials, Inc. v. LaJuesma, G.R No. 96566, Jill 6, 19132.
See PepstCola Proclm PhfiA>iles, h:. v. Hon. Seaeay cl laxr, G.R No. 96663, hl!J. 10, 1999; La Salle UnM!l'Sitf
Mm:81 Catter and Conege d tleci:i1e v. l.a!Jue9na, G.R No. 102084, hl!J. 12, 1998.
> Coad &die ea-, lemma, Ire. v. OOLE-Office ct Ile Seaetaly, G.R No. 157117, Nol. 20, 2006.
Coastal Subic Bay Temlilal, Inc. Rank-and-FIie Unioo (CSBTI-RFU).
Coaslii Sub.: Bef Temmal. n:. ~ Unm (CSBTl-SU).
' ~ LaborUnlon (ALU).
1 Assooated~.~.OfficeandTedri3~Unm(APSOTBJ).
390 BAR Rl:VIEWER ON IABOR !AW
3.
EFFECT OF INCLUSION AS MEMBERS OF EMPLOYEES
OUTSIDE OF THE BARGAINING UNIT
l LEGAL BASIS.
Toe following provision in the Labor Code1 addresses the issue of
commingling or mixture of mem~rship in one union, thus:
Article 256 [245-A). Effid of Indmion as Mtmberr of Employm
011/Jitk thl Bargaining Unit - The inclusion as. uaioo members of
employees outside the barg:uniog unit shall not be a ground for the
cancellation of the registration of ~e uoion. Said employee~ are
automatically deemed removed from the list of membmhip of said
union.2
2. PREVAILING RULE.
Previously, it was the doctrine enunciated in Toyota3 that a labor
organization composed of both rank-and-file and supervisory employees is no
labor organization at all. It cannot, for any guise or purpose, be a legitimate labor
organization. Not being one, an organization which carries a rni"Cture ·o f rank-and-
file and supervisory employees cannot possess. any of the rights of ': legitimate
labor organization, including the right to "file· a petition for certification election for
the purpose of collective bargaining. It becomes necessary, therefore, anterior to
the granting of an order allowing a certification election, to inquire into the
composition of any labor organization whenever its status is challenged on the
basis of Article 255 [245) of the Labor Code.4 In the same vein, it was held in
D11nlfip5 that for as long as the supervisors' union counts rank-and-file employees
among its members, it has no legal right to file a petition for certification election
to represent a bargaining unit composed of supervisors.
'The above doctrinal rulings in Toyofd> and D11nlop7 no longer hold sway in
the present altered state of the law, Article 256 [245-A), as quoted above brought
about by the enactment of the amendatory R.A. No. 9481.8 Under this provision,
the inclusion as union members of employees outside the bargaining unit is not a
ground fo~ the cancellation of the registration of the union. 1be employees so
Secfm 9ct RA No. 9481 ilseml Mide 2S6 [24>AJ ilto Ile Lm eooe n'lJJJ7. ·
~ as new plMSlon by Sedioo 9, RA No. 9481 \\lv:tl ~ ml law oo "'8f 25, 'lJJJ7 and bee.me effectile oo
J1.11e 14, 'lJJJJ;,-s reruntered J)IISUalt ti Secbl 5, RA No. 10151, Jooe 21, 2011 and DOLE Depmenl Advisoly No.
01, Seies ct 2015 ~ ciIle l..ib:rCode ct Ile Ptifwr,es, as Mlel'ded), issued en Mj 21, 2015.
3 See ii;o ll'e Heritage 1W Mrilv. Seaetlyctllila a n d ~ G.R No. 172132.Juy 23, 2014.
TO')'Ola Mm~ V. Toyaa Wo1Dr ~Corpaatm 1.m1ml, G.R No. 121084, Feb.19, 1997.
' See aso TO')'Ola I . t u ~ Capaaticn l.m lkaal v. Toyaa Mn ~ Capaam EJl1)loyees and
Wakers Ulm. Tll'Jl)t! Mm~ Cotpaafm, G.R l'h 135806,AuJ.8, 2002. . Seres ct2008 [Oct 30, 2008). This sedm pro'liles: ""Sec.b 6. Prcffioo Grounds b- Calcelam a Registra1!oo. - ~
$ D.inlop~er[Plms.1klc.v.Seaeayctl..abaandErnpklymellt.G.RNo.131248,0ec.11, 1998.
6 registabl. l1'e iler;Jbeenl)byees 00! auunabtj deemed rem:Mid froot tie '51d ~ o l t , e IMO.'
TO')'Ola Mu Phq>pi',es v. Tll'Jl)t! I/on Phippiles Coqxrabl l..m I.ml, G.R No. 121084, Feb. 19, 1997.
1
~ Slazei,;ier (Phis.L klc. V. Seaetilly ctl.m and Err1)b-jment. GR No. 131248, Dec. 11, 1998.
8
Repoolc a Ile Phq>pi,es v. Kawashire Tenb l.tJ, Phippiles, kl!:., G.R No. 160352, Jltt 23, 2008.
CHAl'TER. FIVE
LABOR RELATIONS
391
improperly included are automatically deemed removed from the list of members
of said ~on by o~tion of law.1 Thus, in Charttr ChmtiraP. involving the mixed
membership of supeMSory and rank-and-file employees in the rank-and-file union
it was hdd that the inclusion of supervisory employees in petitioner union does no;
~v~t it of i~ st~tus as a legitimate labor organization. The CA's rdiance on Toyota
ts nusplaced tn view of the subsequent ruling in Kawashi.ma3 where it was explained
at length how and why the Tl!JOfa doctrine no longer holds sway under the altered
state of the law and rules applicable to this case.4
3. EXCLUDED MEMBERS AUTOMATICALLY REMOVED BY
OPERATION OF LAW.
As is now -provided in Article 256 [245-A), any excluded members are
automatically deem~d removed by operation of law from the list of legitimate
members of the uruon concerned. Thus, if supervisory employees are included as
members of a rank-and-file union, they are deemed automatically removed from
the roster of members of said union and via ver1a.
4. MIXED MEMBERSHIP, A PROHIBITED GROUND TO CANCEL
UNION REGISTRATION.
~nder ~e. I':1f>kmmli,rg Ruks5 of the Labor Code, mixed membership is
now deemed a prohibited ground for the cancdlation of union registration. .
4.
NON-ABRIDGEMENr6
(OF RIGHT TO SELF-ORGANIZATION)
1. LEGAL BASIS.
Article 257 [246) speaks of the principle of non-abridgment of the right to
self-organization as follows:
"Article 257 (246). Non-Abridgment of Right to Self.O,ga11ization.
- It shall be unlawful for any person to restr.un, coerce, discriminate
against or unduly interfere with employees and workers in their exercise
of the right to self-organization. Such right shall include the right to
1
See ii;o Secticn 6, ~ 'XN, Book V, rues kl kl\llemenl ttie l..m Code, as ilselted by iRpatnent Onler No. 40-f-03
Seies ct 2008 [Oct 30, 2008j. · '
2
SmimJ ~ sa ainr 0ient;a Sai:latf ct lklioos n tie Philppiles u ~ cm Refoons
{SM:C-SUPER)v. Chate!Oieml::aandCoali9 Capcraicn, G.R No. 1697171, Mith 16, 2011.
3 Rep.lli:cille PhJwi,es, ~ b ' f OOl.Ev. Kawasti'na Textle Mfg., f't'iwiies, klc., supra.
New Section 6, Rule 'XN, Book V, Rules b ~ tie labor Code, as ilserted by Oeparonert Onler No. 40-f-03
i1dusicn as ooiln rrerlJers ct enw,-ees v,oo ae aml:le tie ~ ool shal not be a gnxm b C3lCEI tie IJlicn
' This is OON this wool ",6Jrijgemen!' is speBed il t,e 2019 ~ - Note tlal n Mx:1e '5/ 12461 d tie Labor Cooe flis
mis speBed as "Noo-Aboogrrent.• . ·

BAR REVIEWER ON LABOR LAW
392
fonn, join, or assist labor organizations for the pu~sc of collective
bargaining through representatives of their own choosing and ~o engage
in lawful concerted activities for the t-ame purpose or for thm mutual
1
aid and protection, subject to the provisions of Article 264 of this
Code."
2. MEANING OF RIGHT TO SELF ORGANIZATION.
The right of self-organization-includ~ the right_ to ~rganize or _affiliate
with a labor union or determine which of two or more uruons m an establishment
to join, and to engage in concerted activities with co-workers ~or purposes ~f
· b•.n·o~ining
co11ectlve - 0 - - - ·'-
uu:
-ough representatives of their. own
·
choosuig, or forf their
· From the foregoing disquisition, it is clear that the twin tights to strike
mutual aid and protection, i.,., the protection, promotton, or enhancement o their
rights and interests.2
More aptly, Article 257 [246} describes the legal concept ~f the "ri,J,t ID
s,!f-o,ga,uZfition, 11 which, as a legal proposition. includes two (2) baste rights, namely:
pmpose of
(1) "to form, join, or assist labor organizations for the
collective bargaining through representatives of their own
choosing;" and
(2) "to engage in lawful concerted activities f?r the~ p~ose !JI
for their mutual aid and protection, subJect to the provmons of
Article 279 [264]3 of [the Labor) Code."
No. 1 above is the rudimentary and hombook description of the "right to
self-organization'' but No. 2 needs some dissecting and further expounding.
The term "concerted activities" refers to either or both: (1) a "strike,"
considered the most potent democratic weapon4 of worlrers in the economic wu
between labor and management, andi or (2) a ''picket'~ which is protected under
the freedom of speech and of expression in the Constitution.5 Under this concept,
a strike or picket may be staged for two purposes, namely: (1) C(for the purpose
of collective bargaining"; !JI (2) "for their mutual aid and protection."
I Nownrurbefed a3Mde 279 and entif.ed "Pl'dltlited ~ • (n $b1tes cni ~
z Alal M. Menoozav. Of&:ers of M!lla wss~ Unioo~. G.R No. 201595,Jan. 25, 2016.
, EnfJ!ed"Prddlit!dNiJif'J!!! r,, Sdtes illil.ockoolSI
Jun,xudentia!y, a S1rike, beCaJSe tt is prenised oo '01E! concept o f ~ wzr between labcr aid mngement has
been desated as a'vispal" flat can n breattle ife 10 rs~ lhe tra1_clld as ffB'lters, mt ooe rrust mo ':et
necessadf affed mNgelTll!Jlt am ils menms (Phmco n1usmes, ric. v. PhmX> nitaies Laba~ (PIA).
G.R No. 170830, Aug. 11, 2010, aling Amialion of lndependelt Unioos II lte PhffWne$ v. NI.RC, GR No. 120505,
Mm25, 1999,364 Pha.697, 707). . ·
Sedirxl 4, Altide Ill of Ile 1987 Cons:mioon whi:.h ~:iviles: 'Sec1ioo 4. No law shaD be passed alxi!gl'lg Ile freedool of
speech, rJ expres.goo, rs d the press r, lie IY:)hl d tne ~ peaceabtf ID assentie cnf peffcxl Ile goyemment frx
redress rJ grievatm.'
CHAPTER FIVE 393
LABOR RELATIONS
The Labor _Code's principal provision on ''strikes" and "picketing,"
Article 278 (263],1 reiterates the foregoing two (2) putposes in its paragraph (b),
thus:
"(b) Workers shall have the right to engage in conccned
activities for purposes of collective bargaining Q.C for
their 1!Wll!II
benefit and protection. The right of legitimate labor org-anizations to
strike and picket and of employers to lockout, consistent with the
national interest, shall continue to be recognized and respected.
However, no labor union may strike and no employer may declare a
lockout on grounds involving ~ter..union and intra-union disputes.''2
and to picket are not separate and distinct, stand-alone rights but are part and
parcel of the primordial ~d fundamental .eight to self-orgaruzation. No meaningful
strike or picket can be staged by the workers without their being organized first
into one potent force - as a union. Self-organization therefore is the main key that
could open the door to the valid exercise of the rights _to strike and to picket
Consequently, any act of restraint, coercion, discrimination or interference in the
conduct of a strike or picket would ·necessarily ·violate the employees' lawful
exercise of the.it right to self-organization.
3. OBJECT OP THE aw.
The right to foD11, join, or assist a union is ~pecifically protected by the ·
Constitution3 and such right' shall not be abridged.5 Article 257 [246] emphatically
restates the policy of the State to promote and emphasize the primacy of free
collective bargaining and. negotiations, free trade unionism and free and ·voluntary
otganization of a strong and united labor movement6
4. RIGHT TO UNION MEMBERSHIP.
a. Right to union membership is not absolute.
. An employee cannot invoke an absolute right to union membership. 7
Although the right to self-organization and collective bargaining is duly guaranteed
under the Constitution, it is subject, however, to regulation by the State. For
instance, it is mandated by law that no Jabor organization shall knowingly admit as
member or continue in membership, any individ~ who belongs to a subversive
organization or who is engaged directly or indirectly in any subversive activity.a
t ~•SIJites, Faefn:1 clld LodtCAG."
z lhla-scxmg ~ -
, Sedm 3, Article XIII Olereof.
4 ~ k> Setfal 8, Ar1x:le Ill of Ole Consftml M\th p'Mles: "Secrxxl 8. The~ of Ile peqi1. ~ C10Se
~ il 81e pubf'x: and private sectas, 1D foon unms, assoda1klns, « societies tr IXIJ)0SeS net cantaly 10 la/I shall
l
t'
notbecmlged."
5 S.S. Venues lrdematicxlal, b1c. V. S.S. VenbJres l.m UnXlll, G.R No. 161690, Ju~ 23. 2008.
• See also Altde 218 (211L tmCode.
Local 7, Press &Pmtnj free~ (FFW) v. Tlti)ne, G.R No. L-16093, Nov. 29, 1960, 110 fM 276.
Miele 250(e) f241(e)], Lm Code.
 BAil REViEWER ON I.ABOR I.AW
394
b. Freedom ofchoice.
An employee has the right to join or not to join a labor union.1 A.member
of a labor union may leave and cancel his membership at any time. An employee
who joins a union does not make any commitment or asswne any undertaking to
continue his membership therein for a fixed period of time, much less indefinitely.
In this regard, he is a free agent.2 Tue same may not be said, however, in case there
is a valid union security clause in the CBA such as a closed-shop or union-shop
arrangement between management and the union. In such a case, the employee
concemed is duty-bound to keep his union membership for the duration of the
CBA as a condition for his continued employment. If such membership in the
union which is the collective bargaining agent is validly terminated, he may likewise
be dismissed from his employment The only exception to this is when the
employee objects to such membership on the ground of religious belief.3
c. Right to join a union acquired from .irst day ofemployment.
By express provision of Article 292(c) [277(c)] of the Labor Code, any
employee, whether employed for a definite period or not shall, beginning on his
first day of service, be considered an employee for purposes of membership in any
labor union.
d; Union members who are not employees do not possess the right
to join union.
If the union members are not employees, no right to organize for
purposes of collective bargaining nor to be certified as bargaining agent can be
recognized. The question of whether employer-employee relationship exists is a
primordial consideration before extending labor benefits under the workmen's
compensation, social security, PhilHealth, termination pay and labor relations law.
It is important in the detemunation of who shall be included in the proposed
bargaining unit because it is the Jine q11a non, the fundamental and essential
condition that a bargaining unit be composed of employees. Failure to establish
this jwidical relationship between the union members and the employer affects the
legality of the wiion itself. It means the ineligibility of the union members to
present a petition for certification election as well as to vote therein.•
1
'lmi.n> v. Eiafe Rope Wcxkers lmkn, G.R. No. L-25246, Sept 12, 1974; UST Fa:uly Unb1 (USTFU] v. Blooio, G.R.
No. 131235, Nov. 16, 1999. · ·
2
Basav.FOOAF,G.R.No.L-27113,Nov.19, 1974,61 SCRA93;P81Jkakaisav.Enriquez,G.RNo.L-12999,July26, 1960.
3
Vttcrillov. Eilalde Rope WOlkeis Uniln, supra; De La Sale UllNelSitf v. De La Salle lkweisly ~ Associalioo,
G.R. No. 109002. ~ 12, 3!00.
4
~ Sevq Madli1e Coo1)all)' V. Oibl, G.R. No. 91307, Ja'I. 24, 1991; La Sam~ amf Cgarette FadDly V.
0rect:r d Laber Pam, G.R No. l-55674, July 25, 198.1, 123 ~ 679; Rept.fJt Planters Bank GenOOlf SefVices
l:mpbJees lJnion.Namll Associab dTrade Ulicx1s v. Laguesma, G.R No. 119675, Nov. 21, 1996, 264 SCRA 637,
643.
CHAPTER FIVE
lABOR RElATIONS 395
5. RIGHTS OF UNION MEMBERS UNDER ARTICLE 250 [241].
Article 250 (241] of the Labor Code enumerates the specific legal rights
of a member of a labor union as well as the legal conditions of such membership.
More specifically, these .rights and conditions may be grouped into the following
categories: ·
a. Fiscal dghts.
Financial rights include the following:
(1) Right against arbitmy, oppressive or excessive fees, fines and
forfeitutes;
(2) Right to full and detailed reports on all financial transactions in
accordan~e with the constitution and by-laws of the union;
(3) Right against unauthorized collection of any fees, dues or other
contributions;
(4) Right to claim receipt for every payment of fees, dues or other
contributions;
(5) Right to prevent funds of the organization from being applied for
any purpose or object other than those expressly provided by the
union,s constitution and by-laws or allo":ed expressly by written
resolution adopted by the majority of the members at a general
meeting duly called for the purp(?se;
(6) Right to demand or require that evecy income or revenue as well as
every expenditure of the union shall be recorded or receipted, which
record or receipt shall fonn part of the financial records of the
union;
(7) Right against unauthorized check-off for special assessments,
attomey's fees, negotiation fees or any other extraordinary fees
without an individual written authorization duly s~ed by the
employee; ··
(8) Right to vote on the compens~tion of union officers; and
(9) Right against unreasonable assessments to finance labor relations
seminats and othet labor education activities.
b. Right to infoanation.
Right to infoID1ation includes the following.
(1) Right to require the treasurer and the other officers of the union
responsible for the account of the union as well as for the
collection, management, disbursement, custody or control of the
funds, moneys and other properties, to render a true and correct
accoW1t thereat at least once a year within thirty (30) days after the

396 BAR llEVIEWER ON lABOR lAW
close of its fiscal year and at such other times as may be required by
a resolution of the majority of the members of the union and upon
vacating his office;
(2) Right to require that the account be duly audited and verified by
affidavit and a copy thereof be fumished to the DOLE Secretaty;
(3) Right to inspect the books of accounts and other financial records
of the union and to require full and detailed reports from their
officers and representatives on all financial transactions as provided
for in the constitution and by-laws of the qrganization;
(4) Right to be infonned of the provisions of the constitution and by-
laws, CBA, the prevailing labor relations system and all their rights
and obligations under existing labor laws through the medium of
labor relations seminars or other labor education activities; and
(5) Right to seek investigation of any irregularity.
It must be noted that the law considers it unlawful for any person to make
any statement, report, or record filed or kept pursuant to the provisions of the
Labor Code, knowing such statement, report or record to be false in any material
respect1
c. Polidcal rights.
Political rights include the following:
(1) Right to vote and be voted for as an officer of the unio~ subject to
the qualifications and disqualifications mentioned in Article 250
[241] of the Labor Code;2 and
(2) Right to be appointed to appointive positions in the organization,
subject to the qualifications and disqualifications mentioned in
Article 250 [241) of the Labor Code.
d. Right to participate in decision-making.
Right to participate in decision-making process includes the following:
(1) Right to vote by secret ballot on any question of major policy
affecting the entite membership of the organization; and ·
(2) Right to initiate and participate in impeachment or expulsion
proceedings against an erring officer or member of the union.
·-
J
CHAPTER. FIVE
LABOR RELATIONS
397
5.
HOW A UNION IS ORGANIZED 1
l NEED TO DISCUSS HOW TO ORGANIZE A UNION.
Labor Relations is a complicated subject Since unionism is at its very
core, ~ subject is better understood if its discussion will start with the answer to
the lingering question of how a labor organization is created and established TJius,
after discussing the right to self-otganization above and before delving into· the
other specific topics prescribed in the 2019 Syllab111 under this major topic of
''Labor &lations, "a preliminary discussion on the modes of creating and establishing
a union would certainly prove helpful. •
2. "LABOR ORGANIZATION" AND "UNION," DEFINED.
· A "labor o,ganiz.atiorl' is any union or association of employees which exists
in whole or in part for the purpose of collective bargaining or for dealing with
employers conceming the terms and conditions of employment. 2 It is created for
mutual aid, interest, cooperation, protection or other 13.wful purposes.3 On the
other hand, the tean ''union" is technically defined as any labor organization in the
private sector organized for collective bargaining and for other legitimate
puq,oses.4 These two tenns may, howevet, be used interchangeably. A ''legitimate
labor organiz.ation" refers to any labor organization in the private sector registered or
reported with the DOLE, in accordance with the Labor Code and its implementing
roles. It includes any branch or local thereof. 5
3. TWO (2) BASIC PURPOSES OF A LABOR ORGANIZATION.
Based on the legal definition of the term "labor t111,aniz.ation," there are two
(2) basic purposes of a labor organization, namely:
1. for collective bargaining; and
2. for dealing with the employer.
4. TWO (2) MODES OF CREATING A LABOR ORGANIZATION
Under the Labor Code, there are two (2) modes of creating or establishing
a labor organizatio~ ie., through:
 398 BAR REvlEWER ON LABOR LAW
CHAl'TER Fl\'£
LABOR RELATIONS 399
(1) Independent registration;1 and
(2) Chartering of local chapter/chartered local.2 I.n sum, although the trade union center1 in
this case is a legitimate labor
organization, it has no power to directly create a local chapter/chartered local
s. ONLY FEDERATION OR NATIONAL UNION MAY DIRECTLY
CREATE A LOCAL CHAPTER/CHARTERED LOCAL. 7. DISTINCTIONS.

Under Article 241 [234-Aj, it is clear rhat the authority to directly create a The following are the distinctions between independent registration and
local chapter/chartered local is vested only with the fidtration or Mlional 11nio11, to the chartering:
exclusion of all others. It is only a fat/nation or national unio11 which is empowered to
directly issue a charter certificate indicating the establishment of the local Criteria Independent Chartering
chapter/chartered local.l Reaistration
6. TRADE UNION CENTERS NOT ALLOWED. Documentary Article 240 [234P
,equitements Article 241 (234-AP
(a) Independent labor
Article 240 [234], as amended by R.A. No. 9481, now includes '~rail union Local chapter
11 organizati'>n
«nllr as among the organizations which may xegister as a legitimate labor Unions covered (b) Federation or
organization. But interestingly, Article 241 [234-A), the provision enunciating the (c) National uni>n Chartered local
procedure for chartering of a local chapter/chanered local, does not include •~rad, (d) Industry unioo
union anttr" as among the labor organizations that is empowered, besides the (c) Trade unkm centei'
ftdmttion or national union, co create such local chapter/ chartered local through the A«x1ulres legal personality In two (2) stages:
Acquislllon of legal Ar.quires full legal personality R,st stage: Patfal legal personalil'f which tt
process of chartering. personality upon issuance of aCer!ifk:ate a<XtUires upoo the issuance to It of a Charter
of Registration by the BLR.5 Certificate by a federa!ioo or national union.
Also worth emphasizing is that even in the series of amendments4 to the
&Jk1 mImplement the Lzbor Code, such as Dtpartment Ordn No. 40-F-03, Smi1 of2008,s Second stage: Ful legal ~lity which is
which was issued to implement the amendments introduced by R.A. No. 9481, aooorded to a local chapter/chartered local only
there was no mention of a '~rade union "nttr" as being among the labor upon submission to the DOLE of its Charter
Certificate and the doaunents mentioned in Article
organizations allowed to charter a local chapter/ chartered local. Thus, applying the 241 (234-Ai
Latin maxim exp111Jio 11/UIIJ eJI ex&/mio alteriNs, it was held in San Miguel Corp.,6 that Note: No mepeooent registration ts·required fof It
trade union centers7 are not allowed to charter directly a local chapter/chartered to acquire legal personality. Hence, no similar
locaJ because the pertinent starutes and applicable implementing rules do not grant Cerfificate of Kegistration Is issued. The
such authority thereto. The power granted to labor organizations to directly create subsequent issuance of the Cedilicate of Creation
a local chapter/chartered local through chartering is given only to a fedcation or of Chartered Locel by Iha DOLE Is not material k>
national Wlion. its acquisition ,)f legal personality but the
submlssiln of the documents mentioned in Article
241 (234-A).
Upon Issuance of a Charter Certificate by a
Right to file PCE' Upon issuance of Certificate of federation or natiooal union (First stage above),
Registration bolh or either the k>cal chapter/chartered local
1 and/or the federa&on or national union can file lhe
~ ~111<1« Mete 240 [2341. PCP
2
~JXOlidedllldlrMde241 [234-A).
> Sedxrl 2, OepinrsitOnler No. 40.f-03, Series of 2008, (October 30. 2008) W1i:h amercled Secoon 2, ~ e. rue
RI dBodi Vof te ~ RIES dtlle 1.aba'Code. as ea,u W!nded by ~Onie- No. 408-03 (Fetxlay
16,2004}. . .
' &alas 110S8 llttxiadhy DeparmnQderNo. 40-8-03 februay 16. 2004). Oepatnent OnferNo. 40-C-05 lM1tf17,
20051 Oepafment Orm~ 400-05 ~ 13, 2005). Md ttle most recent Oepam,ent Order No. 40-F-03, Series cl
2008 [Odcber 30, 2008).
5 0ailer 30, 2008. .
' Sill t&Juel Ccrp. ~ l.m-PTG'M:> v. San Mguel PadlagiYJ Products f fllJIO',ees Unioo - POMP, GR No.
171153, Sept 12, 2007.
1
UcellePl!ll"bansqOiwargMqg~ Pi!ipno(POW') il lhis case.
 400 BAR REvlEWER ON lABOR LAW CHAl'TEllfM
401
LABOR REIATIONS
6. association free to serve the interest of all its membets - consistent with the
AFFILIATION AND DISAFFILIATION freedom of association guaranteed in the Constitution.1

l UNION VIS-A-VIS ITS MEMBERS. 5. DISTINCTIONS AS TO AFFILIATION & DISAFFILIATION.

The following are the distinctions between independently registered union
The relationship between the union and its mcmbets is that of principal
and local chapter/chartered local, insofar as their relationship with the federation
and agent, the fo1I11er being the agent while the latter, the principal. Their
or national union is concemed:
relationship is fiduciary in character. The union is but an agent of its members for
the pmpose of securing for them fair and just wages and proper, good working lndee@ndent11 Local ChaQter or Chartered
~ Registered Union
conditions. It includes the obligation to give its members as its principals, all Local
infonnation relevant to the union and labor matters entrusted to it The court has Proper tenn to descn'be
the duty to protect workers from the unfair treatment and unjust exploitation not the relationship with Affiflation Chartering
federation or netionel
only by oppressive employers but also by their own unworthy leaders. Where the union
union leadership is recreant in its duty towards the union members, the courts must Proper denomination of Affifiatei Local Chapter or Chartered LocaP
be vigilant to protect the individual interests of the union members. 1 the union
Nature of contractuel PrincipaJ.Agent Pr!ncipaJ.Agent
2. MOTHER UNION VIS-A-VIS AFFILIATE OR LOCAL relationship with
Ptincipal-Affilia!e Union Principal- Looa1 Chapter/Ch!ltered Loe~
CHAPTER/CHARTERED LOCAL federation or naUonal Agent - Federation or National Union Agent-F~n or National Union
union
ln relation to an affiliate or local chapter/chartered loca~ the federation or Proof of relationship Contract of Afftliatton Charter Certifialte
national union is commonly known as the "mother union." 'This tenn is not Since It Is aaeatfon of the federation or
found in law but oftentimes, the Supreme Court uses this term to describe a Effect of Does not affect in any way its national union, 11s legal personality Is
federation or a national union. affiUationlcha,tering Independent legal personarity dependent upon and cotennlnous with its
association with i1s creator - the
'fbe mother union, acting for and in behalf of its affiliate, has the status of federation or national union
an agent while the affiliate or local chapter/ chartered local remains the principal - Does not affect legal personality Ceases to.have any legal personality
the basic unit of the association free to serve the common interest of all its Effec1 of Disaffiliation since tt has 11s own Independent Except/on: If prior to disaffiliation, It has
reglstratron secured lndeoendent realstratlon
members, subject only to the restraints imposed by the constitution and by-laws of
the association. 2
6. SOME PRINCIPLES ON AFFILIATION.
3. PURPOSE OF AFFILIATION
o Independent legal personality of an affiliate union is not affected by
The putpose of affiliation is to further strengthen the collective bargaining affiliation.4
leverage of the affiliate. No doubt, the pwpose of affiliation by a local union with a ·• The affiliate union is a separate and distinct voluntary association owing its
mother Wlion is to increase by collective action its baigaining power in respect of creation to the will of its members. It does not give the mother union the
the terms and conditions oflabor.3
license to act independently of the affiliate union.5
4. RIGHT TO DISAFFILIATE. • The fact that the affiliate union is not a legitimate labor organization docs not
affect the principal-agent relationship.1
The right of the affiliate union to disaffiliate from its mother federation or
national union is a constitutionally-guaranteed right which may be invoked by the
former at any time. It is axiomatic that an affiliate union is a separate and voluntary 1 Volcsdlel Lm Urix1 v. &reau of Laber Pa1ti111S, G.R. No. L-45824, line 19, 1985, 137 SCRA 42.
2Nt"affi!iata"refelslD:
{1) AA ixlependentlllOl a!lilaledMh afederafm crana&mlrirl;cr
(2) Atical chaplercrc:flarBed b:alNml has been smseqt81fyp\1sd l'ldepermti~ butcrat racisaffilate
mnlhefederalk:n«na&lnalunm"4liilaeatedit (Sedal 1(a),I\Jle l,BookV, ~ID mplementllel.abcrCcde, as
1
HeilsdTecdtdo M. Quzv. CIR. GR.Nos.1.-23331-32,Dec. 27, 1969,30smA 917. ;mended b'f DepaltnentOlder No.~. Seriesci2003, feb.17, m»,
1 Tedvti:a'¥, akx:al~aeated~OlenWldedcta:ahJ tr,anrd\eUlnOl_ urder Arfi:le 241 rz34,A)of l)e lm
Prog~ Deveklp1mtCaporaimv. Secretary, Oepaitnentctl.abcraoo~ GR. No. 96425, Feb.4.1992. Code. amctbepropmJcaled 111•affiliafe"iftt hasra80lli'edm,kd!permllregistal!cxldilsOY«t
Natxm Unoo a Bank Blllb'jees (NUSE) v. Phihaba1k En'Plo),les Assodabl {PBIA), GR. No.174287, Au;iust 12.
Adamm aoo Ac1ansa1 v. CIR. G.R No. L-35120, JIil. 31, 1984.
l
2013, ~ M:llirfarg Sanmt rg irga Mir9,iagawa sa M. Greenfield v. Hoo. Rams. G.R No.113907, Feb. 28, m.
1nstsHotel~klyeesUnmNFLv.WatoormtklsularHoteUlavao, G.RNos.174040-41,Sept22,2010.

402 SAR REVIEWER ON LABOR LAW
• Affiliate union becomes subject of the roles of the federation or national
union.2
• The appendage of the acronym of the federation or national union after the
name of the affiliate union in the registration with the DOLE does not'change
the principal-agent relationship between them. Such inclusion of the acrony_m
is merely to indicate that the local union is affiliated with the federation or
national union at the time .of the registration. It _does not mean that the
affiliate union cannot independently stand on jts own.3
• The fact that it was the federation which negotiated the CBA docs not
make it the principal and the affiliate or local ~on which it represents,
the agent.4 .
• However, if it was the federation which negotiated all the CBAs in the
establishment, the local chapter cannot negotiate the renewal of the CBA
without the consent and participation of the federation. 5
• 'The fact that it was the name of the federation that was particulady mentioned
as the bargaining party in the CBA without specifying the affiliate local union
does not have any effect on the right of the federation to participate in the
bargaining process.6 · • Election protest involving both the mother federation and local union is not a
• It is the local union and not the federation/national union with which it is
affiliated that has the right to administer and enforce the c,BA with the
employer.7
• In case of illegal strike, the local union, not the mother union, is liable
for damages.s
7. SOME PRINCIPLES ON DISAFFILIATION.
• Disaffiliation docs not divest an affiliate uni.on of its legal personality.9
• Disaffiliation of an afftliate union is not an act of disloyalty.1°
• Disaffiliation for purposes of fanning a new union docs not terminate the
status of the members thereof as employees of the company. By said act of
disaffiliation, the employees who are members of the local union did not form
a new union but merely exercised their right to register their local union. The
local union is free to disaffiliate from its mother union. 11
1 F~Pf)eandFamyCapcxmv.~.GRNo.115180Jb1.16.1999.
1 Seealso Waya-g Silnml lYJ ~ ~awa sa M. Greenflekl v.Remis, GR No.113ro7, Feb.28,200:J.
3 Trepeal 1trt Fcxxl Errl)l:)yees Unioo •CGW V. Troitaf ltrtFood Mnet, GR No. 43495-99, Jan. 20, 1990.
' Eisco&JI LmUnioo INAfLUI V. tb'el, G.R. No. 41955, Dec. 29, 19IT.
Aba\1v. ~ .G.Rtt.s.154113.18m8, 187861 & 196156, Dec. 7, 2011,661 SCRA686.
Pclrlmscr1g Kapcsal ~ ~ NB PaMS sa Farney Plastic Naliaial ~ ~ v. laljueslra, G.R No.
111836,Feb.1, 1996,253SCRA96.
1 EJisal.Eiolt.mlmliNAflU]v.tmel,G.R.No.41955,Dec.29, 19IT.
a Fq)ilo Pf)e cm Rx.my Capaati:m. NLRC. GR No. 115180, Nov.16, 1999. ·
9 Ph!~pine Skylanders, Inc. v. NLRC, G.R. No. 127374, Jan. 31, 2002
10 People's Industrial and Commercial Employees and WO!kers O!ganization [FfWI v. People's Industrial and
Commercial Corporalioo, G.R. No. L-37687, Marth 15, 1982, 112 SCRA 440
11 ETISCX>-Elroi l.abocUnoo iNAfLU]v. Na'iel, G. R L-41955, Dec.29, 19n.
CHAl'TER FIVE 403
lASOR RELATIONS
• Disaffiliation should be approved by the majority of the union members. I
• Disaffiliation terminates the right to check-off federation dues. The
obligation to check-off federation dues is terminated with the valid
disaffiliation of the affiliate union from the federation with which it was
previously affiliated.2
• Disaffiliation does not affect the CBA. It does not operate to amend it or
change the administration of the contract.3
• As a general rule, a labor union may disaffiliate from the mother union to form
an ~d~pendent uni_o~ only during the 60-day freedom period prior to the
expuatton of the existtng CBA. It is not, however, legally impossible to effect
the disaffiliation prior to the freedom period, provided that the same is
approved by the majority of the members of the bargaining unit. Under this
situation, the CBA continues to bind the members of the new or disaffiliated
and independent union up to the expiration thercof. 4
• Disaffiliating from the federation and entering into a CBA with the employer
does not constitute an unfair labor practice.5
• Disaffiliation is not a violation of the union security clause.6
bar to disaffiliation.7
• The issue of affiliation or disaffiliation is an inter-union · conflict the
jurisdiction of which properly lies with the Bureau of Labor Relations IBLR)
and not with the Labor Arbiter.8 .
B.
BARGAlNING UNIT
1. BARGAINING UNIT, MEANING.
A "bargaining unit" or more appropriately, "collective bargaining
unit (CBU)," refers to a group of employees sharing mutual interests within a
given employer unit, comprised of all or less than all of _the entire body of
employees in the employer urtit or any specific occupational or geographical
grouping within such employer unit.9 It may also refer to the group or cluster of
Vl;yv. mrg, SI.I'@; lbert'f Cdbl I.ls Wcners !Moo v. lbert'f Cottoo >.Us, ki, GR No. L-33987,Sept. 4, 1975.
Volschel lm Unioov. fmclloll.abaRelaions, GR No.l-45824,JIKle 19, 1985137 SCRA42.
3 Va'kschel Lm lmlv. fmilJ ol l.aba Relations,~
Associa!edWMets lb:X1 PTGWOv. NI.RC, GR Ncs. 87266-69, JtJy 30, 1990.
f'hiW,e Sk)1a-ders, ~ v. NLRC,GR No. 127374, Jan. 31, 2002J.
6 Tropical Hut Employees Union- CGW, v. Tropical Hut Food Ma!1<eL lr.c., G.R. No. l-43495-99 Jan. 20 1990.
1 Phn~pine Skylanders, Inc. V. NLRC, G.R. No 127374, Jan. 31. 2002. • •
8 Id.
9 Sectia1 1, ~le I, Bodi V, Rules D n'!)lemenl ~ Lm Code, as i¥1lE!OOed by Depment Order No. 40-03, Serles of
2003,[Feb.17,20031, ,
 SAR REVIEWER ON LABOR I.AW
·obs or positions within the employer's establishment that supports the labor
~rganization which is applying for registration.
It is a legal collectivity for collective bargaining purposes whose ~embers
have substantially mutual bargaining interests in the tenns ~-d c~ndinons of
employment as will ensure to all employees their collec_tive barga11Ullg nghts. To be
appropriate, a bargaining unit must involve a group10g ~f empl~y~es who have
substantial, mutual interests in wages, hours of work, working condittons and other
subjects of collective bargaining.•
2. NO HARD AND FAST RULE TO DETERMINE A CBU.
There is no hard and fast rule in determining an appropriate bargaining
unit. The test whether the designation of a bargaining _unit is a~propriat~ ~s wh_ether
it will best assure to all employees the exercise of thetr collecnvc bar~g nghts.
There should be a community of interest which should be reflected 1n. groups
having substantial similarity of work and duties or similarity of compensanon and
working conditions, among other criteria.2
3. TESTS TO DETERMINE AN APPROPRIATE CBU.
Based on jurisprudence,3 there are certain tests which may be used in
determining the appropriate collective b;ugaining unit, lo wit. ·
(1) Community or mutuality of interest doctrine;
(2) Globe doctrine;
(3) Collective bargaining history doctrine; and
(4) Employment status doctrine.
3.1. COMMUNITY OR MUTUALITY OF INTEREST DOCTRINE.
Under this doctrine, the employees sought to be represented by the
collective bargaining agent must have community or mutuality of interest in terms
of employment and working conditions as evinced by the type of wo~ they
Perform. It is characterized by similar.icy of employment status same dunes and
. and working condi'ttons.4
responsibilities and substantially similar compensanon
In Sa11 Mig11el Corporatio11 v. Lag11u111a,5 the Supreme Court applied this
principle in the petition of the union which seeks to represent th~ ~ales personnel
in the various Magnolia sales offices in ~orthem Luz?~ Pe?ttoner. took ~e
position that each sales office should constttute one b~gaID!Og urut In disag_r~emg
to this proposition of petitioner, the High Court sa1d: "What greatly militat~s
against this position (o( th~ company) is the meager number of sales personnel m
, ~Slazerger(Phls.i k1c. v.SecretNtc:H..w cm Enl)io',fflent. GR No.131248,Dec.11, 199:8.
llEm:oa(c l.m'AssociatxX'lv. Cebu SleYedori:,;i Co, re.,GR. No. 10021. Feb. 28, 1958.
k18llali:xlal SdlooAfalcedEdiXab'SPSAEJv Ouis1Jnbir9, GR No. 128845..krie 1,200li
S<Yt t,,;guel ~ £n#'eS ~PTGWO v Conlesor. G.R No t 11262, Sept 19, 1996, 262 SCRA81, 98.
1 GR No. 100485, Sept 21 . 1994.
CHAITTR FIVE
lASOR RElATIONS
each of the Magnolia sales offices in Northern Luzon. Even the bargaining unit
sought to be represented by respondent union in the enti,re Northern Luzon sales
I area consists only of approXlm.ately fifty-five (55) employees. Surely, it would not
r.
. be for the best interest of these employees if they would further be fractionalized.
r The adage 'there is strength in number' is the very rationale underlying tl1e
'
fonnation of a labor union." ·
In San Mig11tl Corporation Supmlisort and Exempt Employees U11io11 v.
Lagmma,1 the fact that the three (3) plants comprising the bargaining unit are
located in three (3) different places, namely, in Cabuyao, Laguna, in Otis, Pandacan,
Metro Manila, and in San Fernando, Pampanga, was declared immaterial.
Geographical location can be completely disregarded if the communal or mutual
interests of the employees are not sacrificed. The distance among the three (3)
pl:ints is not productive of _insunnountable difficulties in the administration of
union affairs. Neither arc there regional differences that are likely to impede the
operations of a single bargaining representative.
In Universi!) ofthe Philippines v. Femr-Calleja,2 all non-academic rank-and-file
employees of the University of the Philippines in Dillman, Quezon City, Padre
Faura, Manila, Los.Banos, Laguna and the Visayas were allowed to participate in a
certification election as one bargaining unit.
In St. Jamu School ofQ11ez.on O!J. v. SamaqangM.anu.agawa ta St. Jamu School of
Qutzyn Cit;,3 the Court allowed respondent union to represent only the rank-and-
file employees (consisting of the motor ·poo~ co:1struction and transportation
employees) of petitioner-school's Tandang Sora campus. It debunked petitioner-
school's contention that the bargaining unit should not only be composed of said
employees but must include administrative, teaching and office persoMel in its five
. (5) campuses. The motor pool, construction and tnnsport?,tion employees of the
Tandang Sora campus had 149 qualified voters at the time of the certification
election, hence, it was ruled that the 149 qualified voters should be used to
detennine the existence of a quorum during the election and not all the employees
in petitioner's five (5) campuses.
3.2. GLOBE DOCTRINE.
This principle is based on the will of the employees. It is called Globe
doctrine because this principle was first enunciated in the United States case of
GkJbe Machine and S1ampi11g Co.,4 where it was ruled, in defining the appropriate
bargaining unit, that in a .case where the company's production workers can be
considered either as a single bargaining unit appropriate for purposes of collective
bargaining or as three (3) separate and distinct bargaining units, the determining
1 GR No. 110399,Aulj.15, 1997,277 SCAA370, 380-381.
l GR.No.96189,!Jty14, 1992,211 SCRA451.
l GR. No. 151326, Nov. 23, 2005. .
' 3NI.RB 294 (1937).
406 BAR P.EvlEWER ON LABOR LAW
factot is the desire of the workers themselves. Consequently, a certification
election should be held separately to choose which representative union will be
chosen by the workers.1
In Intemalional S,hool AlliaMe of EJurators ([SAE] ii. Qllisumbing,2 the High
Court ruled here that foreign-hired teachers do not belong to the bargaining unit of
the local-hires because the former have not indicated their intention to be grouped
with the latter for purposes of collective bargaining. Moreover, the collective
.~~ .
bargaining history of the school also shows that these groups were always treated
3.3. COLLECTIVE BARGAINING HISTORY DOCTRINE.
This principle puts premium to the prior collective bargaining history and
affinity of the employees in determining the appropriate bargaining unit How~ver,
the existence of a prior collective bargainin.g history has been held as neither
decisive nor conclusive in the determination of what constitutes an appropriate
bargaining unit.3
It was ruled in National AJsodation of. Fm Tradt Unions v. Mainit Lumber
Devehpmtnl Company Workers Union,• that there is mutuality of interest among the
workers in the sawmill division and logging division as to justify thetr formation of
a single bargaining unit. This holds true despite the histo_ry of said t:"'o divisions
being treated as separate units and notwithstanc,ling thetr geographical distance
from each other.
In San Miguel Corpora/iQn v. lAgutJma,s despite the collective bargaining
history of having a separate bargaining unit for each sales office, the Supreme
Court applied the principle of mutuality or coaµnonality of interests in holding that
the appropriate bargaining unit is comprised of all the sales force in the whole of
Northern Luzon.
3.4. EMPLOYMENT STATUS DOCTRINE.
The determination of the appropriate bargaining unit based on the
employment status of the employees is considered an acceptable mode.6 For
instance, casual employees and those employed on a day-to-day basis do not have
the mutuality or community of interest with regular and permanent employees.
Hence, their inclusion in the bargaining unit composed of the latter is not justified.7
Seeasc, lledlari:a 1Jepamrtlm Ural sa l'tfWile Naliona RatNcrjs v. CIR, G. R No. L-28223, /vJ;J. 30, 1968.
G.R No. 128845, Jllle 1, 2CXXl. · . Seealso 0ooxx:m;; lm Ami.ml v. Cetiu ~ Co, k1c., GR. No. 10321, Feb. 28, 1958, 103 Phi. 1103.
3 SM l,\llJel Capam1 v. laJUESna. ma; Na!mal Assodam a Free Trade lm!S v. Maril IJJrber ~
~Wamlml.ma
GR. No. 79526,Dec.21, 1900.
GR.No.100485.Sept.21, 1994.
I Rol1eroe!g 00 l.m Reiam, pp. 482·510.
Phiippine Land-Air-Sea Labor Uniln v. CIR, G.R No. L-14656, NoY. 29, 1960.
CHAl'TER FIVE
IABOR REIATIONS
The case of Be~w Corporation v. Femr-Callefa,1 best illustrates this mode.
lbis case involves a corporation engaged in piggery and poultry raising, planting of
agricultural crops and operation of supermarts and cinemas. The Supreme Court
ruled that it is beyond question that the employees of the livestock-agro division of
the corporation perform work entirely different from those being performed by
employees in the supeanarts and cinemas. The differences among them lie in their
working conditions, hours of work, rates of pay, including the categories of their
positions and employm~t status. As stated by petitioner in its position paper, due
to the nature of the business in which its livestock-agro division is engaged, very
few of its employees therein are permane_nt, the ovetwhelming majority of whom
are seasonal and casual and not regular employees. Definitely, they have very little
in common ~th the employees of the sup.ermarts and cinemas. To lump all its
employees in its integrated business concerns cannot result in an efficacious
bargaining unit comprised of constituents enjoying a community or mutuality of
interest. Undeniably, the rank-and-file employees of the livestock-agro division
fully constitute a bargaining unit that satisfies both requirements of classification
according to employment status and of substantial similarity of work and duties
which will ultimately assure its members the exercise of their collective bargaining
rights. 2
C.
BARGAINING REPRESENTATIVE
1.
SOLE AND EXCLUSIVE BARGAINING AGENT
(SEBA)
1.MEANING.
"Sole and exclusive bargaining agent (SEBA)" refers to a legitimate
labor union duly certified3 as the sole and exclusive bargaining representative or
agent of all the· employees in a collective bargaining unit (CBU).4 A labor union
certified as SEBA me~s that it shall.remain as such during the existence of the
CBA. ·10 the exclusion of all other labor organizations existing and ope~ting in the
same CBU, and no petition for certification election (PCB) questioning its majority
status shall be entertained nor shall certification election be conducted outside of
the 60-day freedom period immediately before the expiry date of the 5-year term of
G.R No.Tr395, NoY. 29, 1988.
The lrix1 becares ttle SEBA hwj1 '6rf ci Ole kbiYJ ~ c:afii:a!kn eledxn, anserteledxn, nn<Jff etoclial
areil.l'I e!ecm Vcimy racogri6'.n, as amode adesg1a!iY,I aSEBA. has areat, been repeaat and repla:;ed l1f #le
ne11 mode called 'Request b SEBo\ Cril:alion' per arsdnert !rt Sedion 3, llepment Older No. 4(H15, Seies cl
2015 fSeplerrbEJ 01, 20151. enl1!ed "Fimr AA1m1!I 0epa1nent 0roer No. 40, Seres a 2003. ~ #le
kr!llemen&YJ rues llld Regulatioos c1 Boal vof11e t.m Codeatie Phf4,piles,as hnended.'
4 Artkte219(i) [212(i}i;Socoorl 1111,Rl!l!I, Boal V, llil.

408 BAR REvl EWER ON LABOR l.AW
the CBA. 1 Once certified, what is represented by the SEBA are not only its
members but also those who are members of other unions, called "minori!J" unions,
who are included in the CBU.2
2. A NON-CERTIFIED UNION CANNOT COLLECTJYELY BARGAIN.
Under Article 267 [255P of the Labor Code, it is clear that only the labor
organization selected by the majority of the employees in an appropriate CBU
through any of the proper certification election processes can act as the exclusive
rtpruentative or SEBA of all the employees in such unit for purposes of collective
bargaining with the employer. Hence, if the union is adinittedly not the exclusive
representative of the majority of the employees in a CBU, it could not demand
from the employer the right to bargain collectively in their behalf.4
3. RIGHT OF INDffiDUAL EMPLOYEE OR GROUP OF EMPLOYEES
TO BRING GRIVANCES DESPITE E;xISTENCE OF SEBA.
Article 267 [255) 5 recognizes an exception to the SEBA exclusivity rule.
The existence and designation of a SEBA does not have the effect of depriving an
individual employee or group of employees, regardless of whether they are
members or non-members of the SEBA, to exercise their right at any time to
present grievances directly to their employer, with or without the consent,
participation or inteivention of the SEBA. 6 This simply means that a SEBA cannot
force an individual employee or group of employees to use only the union
grievance procedure or machinery in bringing grievances to the employer, although
it may insist on having a representative present at the grievance meeting of the
individual employee or group of employees with the employer. Thus, any employee
or group of employees who want to settle a problem directly with the employer
may do so without getting afoul of the exclusivity rule that generally the SEBA
could invoke. They cannot be accused of committing any anti-union violation or
act of disloyalty against their union.
1 Altide 265 (253-AJ, LaborCode; Trce Unoos of ! h e ~ ~ Six tlcYement [TUPAScfSM) v. La,Juesma. G.R
No. 90013, Sepl 21, 1994.
2 Nafa\al Brewely &Allied fnduSties ~ Union d ttle Phifppites v. San Mguel Brewery, Inc., GR. No. L-18170, Aug. 31,
1963,8 SCRA$15; DaiyQueoo Prockmof Ole Phq)pneS. n:. v. CIR, GR. No. L-35009, Aug. 31. 1977, 78 SCRA439.
3 The fntparaJ,aph d !!is ar1c1e powles: "Miele 267 (2551. ExdusNe Balgaili'g Representaoon ar¥i'Mmls' ~
i1 Poty illd ~ - - The Im agar1izatoo desi,lnafJ!d or selecled IJof lhe ~ of ttle ~ i1 c11
~mlecM bagaiing tnlsha!I be lhe exmwe represenlaM d ! h e ~ i1 such unlftrtie 1XfP0S8 d
~ bagarir,J. Hai\Mr, i l l ~ ~ er group o f ~ shal haw die li;lht at arr, line b pesent
gnevancesb Menl)k7fer."
4 Ftipiile llanOld Ho'.el in! Resort. Inc.~ Dmml Hae11 v. Mria llanorld Hofe! Empbyees Ulm, G.R No.
158075,Jtm30,2006.
5 _Mde 267 (256). &d:JsNe 8ilgailiY:I ~ and watels' Par!qlatiln n Poky am Oecisi0n-MR1J. - The
ltmcxglrizaticx\dess,plalooorsm:tedtl'f llema)rt,of lhe.en'4)byeesi1 c11~c:oledvebagaiq tritshal
be Ile exmwe represmawe d lhe ~ i1 such unl b dle JGPOSe d atiectNe bargaiq. However, an
lndlvklual em~ or group of employees shaD have the right at any time to present grfevances to their employer,
I Miele 267 {2S5), LaborCode.
CHArTER FIVE 409
LABOR REtATIONS
. . . Article 267 [255] has not defined nor described with clarity who the
1.0divid_ual e~ployee and/or group_ of empl~yees ~fe~ed to therein are but it may
~ _logtcally inferred from a reading of this arncle, m correlation with relevant
1unsprudence, that these employees may either be:
(1) Members of the SEBA, as in the case of Tabiott,i or
(2) Non-SEBA members who belong to another union, as in the case of 1
l11J11lar Hotel 2
. However, this right does not authorize the individual employee or
group_ of employ~es to bring their grievances through the CBA's grievance
machinery and, if unsettled, elevate them to voluntary arbitration without
the pa~cip~tion of the SEBA. While Article 267 (255) clearly enunciates the rule
~t an mdivtdual employ~ or group of employees are allowed to bring grievances
dire~tly to the ~~toyer without need to secure the prior consent or patticipation
of_ the SEB~ JtlllSprudence, however, has clarified that they cannot have their
gnevan~ proc~sed. through the grievance machinery and voluntary arbittation
m~sm prov:tded tn the CBA without the participation of ~e SEBA, the reason
being that such processes are contractually granted by the parties thereto - the
employer and the SEBA - hence, their consent, especially that of the SEBA's
should first be secured by the individual employee or group of employees. '
Atlas Farmsl is very ·definitive on this requirement, viZ::
"xxx Pursuant to Article 273 (260) of the Labor Code, the parties
to a CBA shall name or designate their respective representatives to the
grievance machinery and if the grievance is unsettled in that level it
shall automatically be referred to the voluntary acbitt2tors designated in
advanc~ by parties to a CBA. Consequently, only disputes involving
the Y9!2n and the company shall be referred to the grievance
machinecy or voluntatf arbitrators..,4
Resultantly, if the grievance or dispute is between an individual employee
or group of employees ~ut not the SEBA], on the one hand, and the employer
(referred to as company 1n Alias), on the other hand, there is no way it could be
referred to or processed through the grievance machinery or voluntary arbitration
provided in the CBA.
The case of Tabiott5 has reiterated Atlar Farms. The petitionefs in this
case ~r~ membei:5 of INTERCO Employees/Laborers' Union (the union), the
b ~ g agent in respondent company. Without the participation of the wuon,
pettttoners filed a Notice of Preventive Mediation with the NC.MB against
T!tiJuev. k1temafoa ~ ExpcxtQxpcn'ioo, G.R No. 183335, Dec. 23, 2009.
maHolel En1)k7J'ees unmm v. Wamxt lnstdlrHolelDavao. G.R Nos.1140041, Sept. 22,2010.
3 AL!as Farms, "-v. NLRC, G.R. No. 142244, Nov. 18, 2002, 440 Phi. 620.
•~andundelsOOmg~
5 Supra.
410 BAR I\EVIEWER. ON IABOR. IAW
respondent company for violation of the CBA and for fail1m lo ii on the g;ievan«
confirrn«/muting. As the parties failed to reach a settlement before the NCl\IB,
petitioners requested to elevate the case to voluntary arbitration. The NCl\IB thus
set a date for the parties to agree on a Voluntary Axbitrator. However, before they
could finally meet, respondent company presented before the ~CMB, a letter of
the president of the union of which petitioners are members, addressed to
respondent company's plant manager, stating that petitioners '~rr no/ du!J aut~ori'{!d
by [the} board or the o.fficm to repmenl the union, [hm«] ... all act1on1, repme11ta/Jon1 or
agreements made by thm peopk with the management will no/ be honond or rerogniZ!d fry the
union." Respondent company thus moved to dismiss petitiopers' complaint for lack
of jurisdiction. In affirming the position taken by the union president, the Supreme
Court reasoned that the right of any employee or group of employees to, at any
time, present grievances to the employer does not imply the right to submit the
same 10 volw1tary arbitration. in this case, petitioners have not been duly
authorized to represent the union, hence, they cannot present their unsettled
grievances for voluntary arbitration.I
Insular Hotel, 2 reiterated Tabig11e. In this case, the DIHFEU-NFL,3 the
recognized SEBA, entered into a Memoran4um of Agreement (MOA) with the
respondent hotel which superseded the affected provisions of the existing CBA.
The .MOA was executed to effect the re-opening of the hotel which earlier
suspended its operation due to extreme business losses. Individual members of
another union, the IHEU-NFL,4 petitioner in this case, which claimed to be
affiliated also with the same federation, questioned the validity of the MOA by
filing a Notict of Preventive Mediation with the NCMB.
On the issue of the identity of the duly recognized union, the respondent
hotel contended that it is DIHFEU-NFL which is the only recognized bargaining
agent in their establishment, the other union, IHEU-NFL, being a non-entity
since, as certified by the DOLE, it is not a registered labor organization. It was
held, however, that respondent hotel is already estopped from questioning the
same as it did not raise the said issue in the proceedings before the NCMB and the
Voluntary Arbitrator. A perusal of the records revealed that the main theory posed
by respondent hotel was whether or not the individual employees had the authority
to ftlc the complaint, notwithstanding the apparent non-participati~n of the union.
Respondent hotel never put in issue the fact that DIHFEU-NFL was riot the same
as lHEU-N PL. Consequently, it was declared already too late in the day to assert
the same.
Resolving the issue raised by respondent hotel of whether the individual
members of II !EU-NFL h~ve the requisite standing to question the MOA before
1
See alsoAUasFarms. nc.v. NLRC. GR No.142244. N<N. ts, 2002,4401'111.620.
nruta.r l'olE! Etrpbyees ~FL v. Watedlart nsida' Hoel Davao, G.R Nos. 174040-41,Sept 22, 2010.
Oitiao l"&.tlf Holel Free~ Union-Naiooal Federm d l.aba{DIHfEU.NFI.).
• m.ilar 1W 8rployees ~am Fedool!m of Laba (lfElJ.NFL).
I a Id.
CHAl'lcRFM 411
LABOR RELATIONS
the NCMB and the Voluntary Arbitrator, the Supreme Court, invoking its ruling in
Tabigue and the provision of the NCMB Man110I of Froad,m1 which provides that
only a voluntarily recognized2 or certified bargaining representative has the right co
file a notice or request for preventive mediation, declared that the individual
members of the union have no authority to file the Notia of Preventive Mediation
and/ or voluntary arbitration case. Clearly, therefore, the NCMB and the Voluntary
Arbitrator have no jurisdiction to entertain the No!ia of Preventive Mediation ,and the
voluntary arbitration case. In order to acquire legal standing3 to initiate the
complaint which, in this case, was in the nature of a Noli« of Preventive Mediation, the
individual employee or group of employees should be shown to have been duly
authorized to represent the SEBA. Petitioners have not, however, shown by
evidence that they have been duly authorized to represent the SEBA.
4. FIVE (5) MODES.
· The SEBA of the employees in a CBU may be determined through any of
the following modes:
(a) Request for SEBA certification• (which repealed and replaced
''Voluntary &C()gnition'5 as a mode of securing SEBA status);
(b) Certification election;6
(c) Consent.election;?
(d) Run-off election.8
(e) Re-run election.9
Sedm 3, Rule r,J ci tie NCMB Mma of f'roceru'e.
lrrustbended M'VW11aly ~ · as aroode cidest,ina&'g aSEBA has nid'f been repealed a1d rep8:ed by
Ile roode kOOMl as "Request kJ SEBA Certi.'x:am,' per Depment Orm No. 40+15, Series of 2015, issued oo
Seplember07, 2015. P8l1mrtj repeaed is~ VII (Volntay ~ ! . BocllV,Rules lo ~tile I.me.ode,
as amended by llepment Order No. 40-03, Series of 2003, [Feb. 17, 2003J. lli; prtMSioo has been repealed ald
~ IJo{ a 111!11 p!tMSi:xl enti!led, 'REQIST FOR SOlE AND 00..USIVE BARGAINING AGENT' (SEBA)
CERTFICATION', p.,sua,t lo Ille anendmert ilroduced IJo{ Sedm 3 of Seil llepainent Older No. 40+15, Series of
2015.
1 Accadirg kl Jf1ta v. Presiderja Camissim oo Gocxl GoYelrment, G.R tlo. 96541, Aug. 24, 1993, teaa ~ -
means a per.m4 m ~ nerestil the case sun Mte paty hass.stailed aw.I sostail mnµy ac; aresut
of Ille XXX act benJ ~ -Theam "ilterest" is maei;i imst, Ill illerestil issue a1d ti be affeded IJo/ t,e deaee.
as osfrgushedfillm neeitterestil Ille~ iMMl, aa nm mlerlalilaesl ~ . te itterestdte P<l1Y
pliintiff rrust be personal a1d in ooe based oo a desie kl ffl:ble te ClldJmal 19( cl sane !hill a1d lMlated
paltf. (See CaJayan 8ed!i: l'oMlr & Tracing !:arpaly, tic. (CEPALCO) v. CEPALCO ~ • s Laba l.klol-
ASSCICicel l..abaUli:ns-TIJCP, G.R Nos. 211015 &213835, .ltroe 20,2016).·
• lliiisa new rrafe\\lth repea8I ax! replaced 'Vd!m'f ~ ·. per ~IJof Sedal 3, Depamm Older
No. <10-~1s, Series of 201s 15eperw 01. 2015]. entJ1!ed 'Mler ktm,g Depaitnent Older No. 40. Series o12003.
.Alm1d'rg Ille ~ ~ a1d ReglAaklns ci Bocll Vci he Laba Cocl! cl !he PhlWi\eS.as Amerded.'
s Foonerly deroni1a!ed as Sedm 2. fU! VI. Bocll V, ~ kl ~ Ille Laboe Code, as anended by llepmient
Older No.40-03, Series of 2003, [Feb. t7, 2003].
' Id.
7 Id.
9 New Sectxn 1(1!), fU! I,Bocll V, Rules l o ~Ille l.EborCode, as irneoded b y ~ Older No. 40-03, Series
a2003. [Feb. 11. 20031 as Wier .-lded hough111e aneromentitcxxn1d by Secbl 2. Depa1!rffl Older No. <IO-~ 1s,
 BAR REVIEW£R ON lABOR lAW CHAITTRFM
412 LAaOR RELATIONS

These modes are discussed hereunder in seriatim. is, in a way, no longer the employees but the employer that determines and
designates the SEBA when the latter is not supposed to have any iota of role in
a. such deteanination and designation. .
REQUEST FOR SEBA CERTIFICATION
(This Mode Repealed and Replaced "Voluntary Recog_nltlon'1 Although the 2015 issuance1 that repealed ''volNnlatJ rt&Ognition" failed to
explain the .rationale behind it, the foregoing disquisition on the byrtantkr role of the
L NBW MODE OF DETERMINING SEBA. employer in the certification election process is the only logical rationale for such
repeal and its eventual. repJacement by the mode of filing a Rtquut far SEBA
Dtpartmtnl Ordtr No. 40-1-15, Smu of 2015,1 has expressly repealed the
Certijitation by the union desiring to be certified as a SEBA, without need to secure
entire set of !viler applicable to 'Volmttary F.1'1Jgnition" in the Labor Code's
first the CQnsent and voluntu:y recognition of the employer. And under this new
Implementing 'Rslks on Book V and replaced it with the Jreshly:min_t~, mo~e of rule, the DOLE Regional Director is duty-bound to issue such SEBA Ctrlifi,ation
securing the status of a SEBA through a "Request for SEBA Cmifi,alton or sunply
simply on the basis of the requesting union's compliance with the requirements.
"Request"
3. WHERE FILED.
2. JUSTIFICATION FOR THE REPEAL
. Any legitimate labor organization may file a F.equul in the DOLE Regional
It is an iron-clad rule that in an in/tr-union or certification/ representation Office which issued to it its Ctrtiffeate of &t}rlratior or Ctrtifoatt of Creation of
dispute, the employer is a m~e by~tander and shoul~ never be consider~. a party Charttrtd Lota/, 3 as the case may be.4
thereto· it has no conconutant nght to oppose 1n any way the petttton for
certific;tion election (PCE).3 This rule holds true irrespective of whether the PCE
4. DOCUMENTARY REQUIREMENTS FOR THE REQUEST.
is filed by the employer or by a legitimate labor organization.4 If ever one may call The &quut should indicate:
it as participation at all, the employer's role in such proceedings is limited to only two a. The name and address of the requesting legitimate labor organization;
(2) matters, to wit. b. The name and address of tl,te company where it operates;
(1) To be notified or informed of the filing of.the PCE; and c. The bargaining unit sought to be represented;
(2) To submit the list of employees during the pre-election conference, d The approximate number of employees in the bargaining unit; and
should the Med-Arbiter act favorably on the PCE.5 e. The statement of the existence/non-existence of other labor
organizati.on/CBA.s
Being the sole and exclusive concern and domain of the employees,6 the
previous mode of allowing the employer to extend "voluntaty recognition,,, to The Certifoat, of &girtration as duly certified by the president of the
enable a union to become a SEBA is a patently incongruous and self-contradictory requesting union or-Ctrtifoa/4 of Cntltion of Chartmd L«al as duly certified by the
rule that runs diametrically contruy to the autonomous proces~ of choosing the president of the federation of the local chapter/chartered local is required to be
SEBA. For by so allowing the employer to extend "110lsmtary remgnition" to a union, it attached to the F.eq11est.6
5. ACTION ON THE REQUEST.
Series d 2015 (Sepurter07, 2015]. enllled 'FurM M1!rldil Oepcmeit ()da- No. 40, Series d2003, Amencf!IY:1 lhe
~ ~MdRegulamof~Vdllel.mCodeof lhe Fhtlppil8S,asAnl!nded." Within· one (1) day from the submission of the Req11est, the DOLE
I lssJed 00 $eptertbl07, 2015. Regional Director should:
2 Particulartf ils ~ W l'/mdaly Recogt&IL Book V, ~ ID 1n1>1ement lhe lm Code. as amended by Oepartnent
oro«No. 40-03, Series d2003, lfeb. 17,2003i lhs prtMSia1 has been repealed lllCI repal by anewpRMSO'I enffed,
'REQUEST FOR SOlE ANO~ BARGAINING AGENT (SEBA) CERTIFICATION", pnsuantlD the amemnent
ilbrdmS b'/ Sedkx'l 3, DeparmtOderNo. 40+15, Sa1es d 2015 (Seplem>er07, 2015), enflEd "Ftdler MriJJ
Deplm,entO!dert-G.40,Saiescl2003,MmlivJ h ~ Rumn RegulalmcleociVcltelabcrCode
cllheFhlppi,es, mhnended."
3 Attle'B1(258-A)~mBysliltdel),Labcrr.ode.
• kl.
5 Id.
6 The Hai1a,Je Hole Mrda v. Secretay af lm i n t ~ G.R No. 1n132, Ju~ 23, 2014.
7 As de&led tllder tie previ0uS IUls, 'Vdlnaiy recxigrioo" refeis to lhe process by YAlich a ~ Im unicn is
~ reco;irmt by lhe~ as Ile exdusrle bal'gaiq represen1alive or agent ii a balganing unil and repolled
as sud\ ffllh lhe Regooal Offloo, (See SedDt 2. ~ VII, Book Vof Iha. ~les ID Implement the Laboe Code. (See Secoon
1{bbbl. ~ I, Book V, ~ t o ~ Ile labor Code, iii amended by Oepam,ent Oder No. 40-03, Seoos cl 2003,
{Feb. 17, 20030.

BAR REVIEWER ON LABOR. I.AW
414
a. Determine whether the request is compliant with the documentary
requirements as above enumerated1 and whether the bargaining unit
sought to be represented is organized or not; and
b. Request a copy of the payroll for purposes of SEBA certification.2
If he/ she finds it deficient, the DOLE Regional Director should advise
the requesting union or local chapter/chartered 1~ to co~ply within ten (10)
days &om notice. Failure to comply within the prescnbed penod shall be deemed
wit:hdr;nYaJ. of the Rtquest.3
6, THREE SCENARIOS INVOLVING A REQUBS~ POR
CBRTIFICATION.
There are three (3) scenarios conceived under the RN!t1 on this mode,
namely:
(1) Request for certific~tion in unorganized establishment with ruih
2ne (1) legitimate uru~n; . • . . c. Effect ofcerti.ication.
(2) Request for certificatton m unorgamzed establishment with !D2m
lbw one (1) lqitimate labor organization; and
(3) Request for certification in organized establishment
The foregoing scenarios are discussed below.
6,1, FIRSTSCENARIO: Request for certification in UNORGANIZED
establishment with only one (1) legitimate union.
a. Validatio11 process.
If the DOLE Regional Director finds the establishment unorganized
with only one (1) legitimate labor organization in existence therein, he/she
should call a conference within five (5) working days for the submission of the
following:
1. The names of employees in the covered bargaining unit who signify
their support for the SEBA certification, provided that said employees
comprise at least majori~ of the number of employees in the covered
barg.uning unit; and
2. Certification under oath by the president of the requesting union or
local chapter/ chartered local that all documents submitted are true and
correct based on his/her personal knowledge.4
The submission shall be presumed to be true and correct unless contested
under oath h,v any member of the bargaining unit during the validation conference.
1 tie O!ftlied SEBA for areasamle time, YtflGl is usucf/ ane year, i'l lhe absence of "unusual citunstn:es." The cri'led
Rsemh;J ID Ile doo.mentily requirementS menbted il Section 2, Rule Vll, lbkl.
2
Pusua\t ID Seem 4 [REQUEST FOR CERTIFICATION IN UNORGANIZED ESTABLISHMENT wmt ONLY ONE (1)
lEGITIM4TE UNION; VALIDATION PROCEEDINGS] of Rule VII, lbil., (Sedxln 3, Rule VII, Ibid.).
3 ~ .
• Sedicn4,RuleVll, 1bit.
CHAPTER FIVE 415
LABOR RELATIONS
For this pw:pose, the employer or any representative of the employer shall not
be deemed a party-in-interest but only as a bystander to the process of
certification.I
If the requesting union or local chapter/ chartered local fails to complete
the requirements for SEBA certification during the conference, the Rlqutsl should
be referred to the Election Officer for the conduct of certification election.2
b. When SEBA Certi.icadon should be issued.
If the DOLE Regional Director finds the requirements complete, he/ she
should issue, dw;iQg the conference, a Certifitalion as SEBA to the requesting union,
granting the rights and privileges of an exclusive bargaining agent of all the
employees in the covered bargaining unit3
The DOLE Regional Director should cause the posting of the SEBA
Ctrtifi.,ation for 15 consecutive days in at least 2 conspicuous places in the
establishment or covered bargaining unit4
Upon the issuance of the Ctrliji,ation as SEBA, the certified union or local
chapter/chartered local shall enjoy all the rights and privileges of an exclusive
bargaining agent of all the employees in the covered CBU.5
d. Certification year bar rule.
The issuance of the SEBA Ctrtificati.on bars the filing of a petition for
certification election (PCE) by any labor organization for a period of one (1) year
from the date of its issuance. It is only upon the expiration of this 1-year period
that any other legitimate labor organization may file a PCE in the same CBU
represented by the certified SEBA for purposes of challenging the majority status
of the certified SEBA, unless a CBA between the employer and the certified SEBA
has already been executed and registered with the Regional Office.6
6.2. SECOND SCENARIO: Request for certification in UNORGANIZED
establishment with more than one (1) legitimate labor organhation,
If the DOLE Regional Director finds the establishment 11norganiZ!d with
more than one (1) legitimate labor organization, he/ she should refer the same to
, Id.
2 Id., JUSUMl b Rim IX d lhe ~
3 Sedkxl 4.1 .. ~ VII, 1ml
4 Id.
5 Sedkxl 42., ~ VII, Iii!.
& Id., i"I ac:ccrdn'eYiffll ~ XV!l dlheRl&. ltmistbe nctedaiataftel'ceaix:a1m. at8111lb(erisreqti'ed t>bargain wlh
SEBA tr 8lat peood i s ~ pestmec! to represalt Ile majority of Ile employees i'I lhe CSU; Olis prestJnpioo.
however, betanes rebuttable . • such peood. But l l1e SEBA kJses its ~ ~ becaJse d the camission of
UlP by lhe empb/er agailst ~ Ille SEBA can legatf ilsist oo !ll being sud! IM!II a4ler Ile lapse d 018 1-yecr pelkld,
'A11hctltpreµfice ID lhe empbyerbeilg pm5eCllted b-018 UlP ad.
 BAR REVIEWER ON IABOR IAW
416
1
tiIC Elccrion Officer for the conduct .of a certification election in accordance with
2
the &!ts.
6.3. THIIW SCENARIO: Request for certification in ORGANIZED
establishment.
If the Re~onal Director finds the establishment organized, ~e/s_he should
refer the same to the Med-Arbiter (Mediator-Arbiter) for the detemunauon of the
propriety of conducting a certification election.3
7. CONDUCT OF CERTIFICATION ELECTION UNDER THIS
MODE. '
It is clear that under the three (3) scenarios cited above, the 2nd and 3rd
clear!)' involve the conduct of certification election. It is only in the 1st ~t the
conduct of certification election is not the order of the day; there will be
certification election only when the requesting union or loc_al chapter/chartered
local Jai/J to complete the requirements for SEBA cert:1ficauon dunng the
conference in which event, the DOLE Regional Director shall refer the R.tqHesl
directly to tlJe Election Officer, not to the Med-Arbiter (Mediator-Arbiter),' for the
conduct of certification election.s
b.
CERTIFICATION ELECTION
1. DEFINITION AND NATURE.
"Ctrlijicatio11 ekction" refers to the process of determining through sec_ret
ballot the SEBA of the employees in an appropriate CBU for purposes of collecttve
bargaining with the employer. A certification election is conducted only upon the
order of the Med-Arbiter of the BLR.6
Certification election is the most democratic method of determining the
choice of the employees of their bargaining representative.7 It is held to ensure that
the employees are properly represented in the exercise of their right to collective
bargaining with their employer.8 No obstacle must be placed to the holding of a
certification election for it is the statutory policy that it should not be
Sedioo 5, l\ieVil, lli1.
Refelri'g l:ll\ie IXoftiese~.
3
Sedioo6, ~ Vil, lli:I. il cKmdancellifl ~ Viii a-d IX01 Ile ~les.
• tt is siJribrt 1:1 na.e lhat a is Ile fledab'-M>s vdlo has aiJila ~ MI iller-lMI a cenn:atioo
eiedlcn'rep-eset'Ol dsputes. (See Mxle 232 [2261. Lab(( Cooe). The Eledm Olfar meret, caw:ls Ile cer1ful!m
e!edioo.
1 Sedioo 4, ~ Vi~ il retatma i d ~I:> Ride IX ct t,e RtJes.
I SedilJ'I I !hi,Rule I, Book V, Rules I : > ~ ~e Labor Cale, as .mmed by [)epamert Onfer No. 40-03, Series of
2003.[Feb. 17. 20031.
Pt1ippi1e Ames ~k,JeeS' A=iatXJ1 V. Feirer•Caleja, G.R No. 76673, Ju,e 22, 1988.
FOfT.6Fv. Norie1, GR No. L-41937,Jut,,6, 1976; ca.uv. Naiet, G.R No. L-56W2, Sept 21, 1982.
CHAmRFIYE
417
LABOR. RELATIONS
circumvented. 1 It is not a litigation·proceeding in the sense in which this tennis
commonly understood. It is a mere investigation of a non-adversary fact-finding
character in which the DOLE plays the part of a disinterested investigator seeking
merely to ascertain the desires of the employees as to the matter of deteanining
which labor organization will represent the employees in their collective bargaining
with the employer.2 It is not therefore bound by the technical rules of evidence.3 ln
case of doubt, the PCE should be resolved in favor of the holding of a certification
election.4
2. PARTIES THAT MAY FILE A PCE.
A PCE may be filed by:
(I) Any legitimate labor organization, including:
(a) A national union or federation that has issued a charter cerrificate
to its local chapter/chartered local. The former is filing the PCE
for and on behalf of the latter, or
(b) The local chapter/chartered local itself which has been issued a
charter cerrificate by the national union or federation;5 or
(c) An independently registered union.
(2) An employer, when requested to bargain collectively in a bargaining
unit where no registered CBA exists.6
a. On legitimacy requirement.
In Pizz.a HHt,1 it was held that the Labor Code requires that in both
organiZfd and 1morganiz.ed establishments, a PCE m111t be filed by a legitimate labor
organization. The acquisition of rights by any union or labor organization,
particularly the right to file a PCE, first and foremost, depends on whether or not
the labor organization has attained the status of a ktftimate labor organization.8
I Trade Um ct Ile Phqlpnes a-d Al6ed SeM:es Wat! Federa!ioo ct Trade Unixls [I\JPAS-V'ffTU] V. laJuesma, GR
No. 102350, JIJ\e :,:i, 1994.
2 The Heritlge Hotel Mimlv. Seaeta,yol~ a-d 8rC>b',ment. GR No.172132,.Mj23,2014.
Asscmed LaborUni:xls v.Ferrer-Calleja, GR. No.82260, Jtif 19, 1989.
• Naoonal Federa!m of Laborv.The Seaet3y dl.rbor, GR. No.104556, Man:t19, 1998.
1 Artces 241 (234-AI, 268 [256] aid 269 (2571, t.mCode: See aso Secbl 1, rue.vu~ Book v. ~ 1:1 ~ 11e
Labor Cale,as a-nended by Depment Omer No. 40-F-03, Series 012008 (Octi>er30,2008j. issued JQSl«II kl RA No.
9481, aid as rut,enrnended by Secb1 4, Dep;me,t Orner No. 40-~15, Series 012015 [Seplen'be-07, 20151, entiled
1'lJ1her Amend'rg ~ Onfer No. 40, Series d 2003,.Alnen<i-g lhe ~ RtJes a-d RegoJa!ioos a Book V
01 tie Labor Cale cl lhe Phfppiles, as Mlel'l:!ed.•
1 Miele 21c !258~ Labor Code: See aso Secbl 1, l\ie Vin, B<Xi v, RtJes 1:> krf)lernenl Ille t.m Cale, as iJT1enled by
Depment Order No. 40-f-03, Series d 2008 [Ottlber 30, 20081, issuoo ptJSllilll I:> RA No. 9481, a-d as lmr
crrended t/f Se<fu14, Dep.mert Omer No. 40-I-15, Series d 2015 {Sepil!nte,'07,20151.l>o.
1 Progressive OM~ Co1JJ.-!lizza Hvlv. La;iuesma. GR No.115077,~ 18, 1997,271 SCRA593.
T ~ Hkjhlaods l'llematiooal Gott W Inc. v. T ~ H'gl'4ands ~klyees Ulioo-PGlV/0, GR. No. 142000, JM.
22,2003.
 8AR RlVIEWER ON IABOR IAW CHArTER FIVE 419
418 lABOR RELATIONS

In cases where the petition is filed by a national union or federation in local.I The PCE shall be heard and resolved by the Med-Arbiter (Mediator-
letter (b) above, it shall not be required to disclose the names of the local Arbiter).2
chapter/chattered local's officers and members.1 It shall attach to the PCE the 4. ON-LINE FILING OF PCE.
charter certificate it issued to the local chapter/chattered local.2 Needless to state,
the national union or federation, by so filing, is acting as the agent of the local The Implementing &ties, as amended, now provide that at the option of the
chapter/chartered local which, for all legal intents and purposes, is considered the petitioner, a PCE and its supporting documents may be filed on-line,3 that is,
principal It must be noted that a union can file a PCE even during the pendency of through the internet The same &ties, however, do not provide the internet link to
its registration. This was underscored too clearly in the case of U.E. Automotive any website where the on-line filing may be made.4
EmpV[fttI o. Norit~3 where it was ruled that a union's right to file the petition is 5. LABOR OFFICIALS INVOLVED IN ELECTIONS.
guaranteed, even pending the registration process, for as long as no fatal defect
a. Mediator-Arbiter /Jears and resolves PCEs.
exists in its application for registration.
The PCE is heard and resolved by the Mediator-Arbiter5 (or Med-Miter,
b. When employer may .ilc the PCE. as this term is used in the Labor Code).6
When requested to bargain collectively, an employer may petition the b. Election Officer.
BLR for a certification election. If there is no existing certified SEBA in the unit, The actual certification election is conducted by the "Election Office/' who
the Med-Arbiter of the BLR shall, after hearing, order a certification election.4 All is an officer of the BLR or the Labor Relations Division in the DOLE Regional
certification cases shall be decided within twenty (20) working days. The BLR shall Office authorized to conduct:
conduct a certification election within twenty (20) days in accordance with the rules
and regulations prescribed by the DOLE Secretary.s (1) Certification, consent, run-off or re-run elections;
(2) Elections of union officers; and
c. Role ofemployer as bystander. (3) Other forins of elections and refercnda.7
In all cases, whether the PCE is filed by an employer or a legitimate labor 6. CERTIFICATION ELECTION IN TWO (2) KINDS OF
organization, the employer shall not be considered a party thereto 'with a ESTABLISHMENTS.
concomitant right to oppose the PCE. The employer's participation in such
proceedings shall be limited to: Generally, certification election may be conducted in two (2) kinds of
establishments, namely:
(1) being notified or informed of petitions of such nature; and
(2) submitting the list of employees during the pre-election conference (a) Uno'l,aniz.ed establishment; and
should the Med-Arbiter (Mediator-Arbiter) act favorably on the (b) 01!,aniZ!d establishment.
petition.6 The first above is provided in Article 269 [257); while the second, under
3. WHERE TO FILE THE PCE, Article 268 [256).
A PCE should be filed with the DOLE Regional Office which issued the
petitioning union's certificate of registmtion or certificate of creation of chartered
1 Sedion 2, ~le V1l1, Bo:i V, ~ ID n-peinert Ile l.m Code. as .mmed by Depatneri Order t«l. 40-03, Series d
2003, [Feb. 17, 2003i im as tmr MSlded by Sedion 5, ~ Order No 40-~15, Series a 2015 tsePerber 07,
1 See .wes 258 1256) im 269 [257), as arended Ir/ Sedms 23 cm 24, RA No. 6715, Marth 21, 1989 im Secfm 11, 2015). enffed 'FlJtler Mlm1,l llepaltnenl Order No. «l, Series d 2003, /.Jneoorg Ile kt'!)aremJ ~ in!
RA~- 9481, \\Ith lapsed mlawon !Mt 25, 'lJ.'lfT cm becane ellect,oe on Jt.ne 14, 2007; N; rtnrrbered ~ ID RellL!afms d Bo:i Valhe l.mCode dlle ~ as.Mlef1de:l.'
Id. .
a
Sedion 5, RA~- 10151, J111e 21. 2011 in! DOlE llepirlmenl Mifnt No. 01, Series 2015 (Reoocrbem;I of lhe
l.rbrCodecttie f'hrwnes, a s ~ issued oo Jlif 21,2015. Id.
2 MJties 268 [256) Im 269 [2571. LmCode. ' TheVtUJSile attess d Ile ll.aeaJ dl.m Relations lsN!p1tt.dole.!J(H.p,/. Hcweve,, aseardl d tis website rdcales
G.R.~.L413SO,Ncw.25, 1976, 74SCRA72. tiat there is n o ~ lherei1 v.ttere on-me ffrr,i ma'f be mide. LastcKteSSed: Ocilller 09, 2016.
s N; tis 1e1m is used il Ille ~ Rues d lhe La1xr Code.
' Mide2701258~ 1.a1xr Code.
Id. , Secfm 2. ~ vm, Bo:i v. ~ ID n-peinert Ile Laba Code. as cl1'Ellled i,., Depment Order No. 40-03, Series d
Secbl 1, ~ VII, BociV, rues ti ~tlhel.rbrCode, a s ~ byllep;m,erl Oder No.40-F-03, Seriesd 2003, [Feb. 11, 20031 mas Wier"ill'Slded Ir/ Seaai 5. Depmeot Order No. 40-~15, Series a 2015 [Septerrller rJT,
2008 [()ctiler 30, 2008i issued pusu.n b RA No. 9481, and as fur1her cllle!lded by Sedial 4, Depment Oder No. 2015l
7 Secfm 1lol, Rule l m Sections 2-5, ~le XII, Book V,lbil.
40-l-15, Senesa 2015 tsePtember 01. 20151, w.
 SAR IUVIEWER 0111 LABOR LAW CHAl'Tl:R FIVE 421 •
420
lABOR RElATlONS

An ''orgam·~d establishment" ~efers to an enterprise where there exists a make it easy for employees to self-otganize - a policy which is enunciated in the
SEBA,1 regard.less of whether a CBA has been concluded or not by such SEBA Constitution and labor laws.
with the employer.
b•II,
An ''llnorganiz.ed e1tabli1hme11l 11 is a firm or company where there is no CERTIFICATION ELECTION
certified SEBA.2 Therefore, an establishment may still be considered unorganized: IN ORGANIZED ESTABLISHMENTS
(1) Even if there are several unions in existence in one CBU3 for as long 1. REQUISITES.
as not one of them is duly certified as SEBA.
To ascertain the will of the employees in the appropriate CBU, the Med-
(2) Even if one CBU has a certified SEBA but._ the other CBUs do not Arbiter, under Article 268 [256],1 is required to automatica.U,v order the conduct of a
have, hence, only the formec will be consideced organiz,d but the latter certification election by secret ballot il:ran organiZ!d establishment as soon as the
shall remain ,morganiZ!d. following requisites are fully met
The case of LepanlfJ Con.tolidalld Mining Co111J>tnrj 11. The Uj>tlnlo Capataz. (1) That a PCB questioning the majority status of the incumbent
Union,• best illustrates the situation where the supervisocy employees called bargaining agent is filed before the Med-Arbiter within the 60-day
''tapatazµ"_ were historically been mem~ers of ~~ rank-and-file union [Lepanto freedom period;
Employees Union (LEU)], the exclusive bargauung agent of all rank-and-file
(2) That such PCE is verified; and
employees of petitioner's Mine Division. In giving due course to their PCE, it was
(3) That the PCB is supported by the written consent of at least twenty-
declared that the capatn.!J are not rank-and-file employees; hence, they could foan
five percent (25%) of all the employees in the CBU.2
their own union. They were perfonning functions totally different from those
perfocmcd by the rank-and-file employees. The bargaining unit sought to be 1.1. FIRST REQUISITE: FILING OF PCB WITHIN THE 60-DAY
represented by the appellee are the ,apataz. employees of the appellant There is no FREEDOM PERIOD.
other labor organization of ,apataz.u witrun the employer unit except herein
appellant. Thus, appellant is an unorganized establishment in so far as the It is only during the 60-day freedom period -that a PCE may be filed by a
challenging union. It cannot be a day beforr or after this period If it is filed a day
bargaining unit of tapalaZ!J is concerned
ear6er, then it is considered prematurely filed; if it is a day_ afur, then it is considered
b-i. belatedly filed. The 60-day period is strictly obseived in determining the validity of
CERTIFICATION ELECTION the PCE.
IN UNORGANIZED ESTABLISHMENTS 1.2. SECOND REOUISITE:THE PCE MUST BE VERIFIED.
Per Implementing Rllles,3 the PCE is required to be in writing and verified
1. REQUISITES.
under oath by any of the following:
In cases involving a PCE filed ·by a legitimate labor organization in an
(1) By the president of petitioning labor organization, if filed by the
establishment where there is no certified SEBA, hence, unorganiz,d, Article 269
independent union or local chapter/chartered local,-4
[257] 5 is clear that the Med-Arbiter should automatically conduct a certification
(2) By the president or duly authorized r~presentative of the federation or
election upon the filing of such PCE.
national union, if filed by a federation or national union in behalf of its
The conditions and limitations that are required to be observed in the local chapter or affiliate;5 or
filing of PCEs in organiZ!d establishments [in/ml do not apply to certification
elections in 11nD'lfl1U~d establishments. The obvious rationale behind the law is to

1
1 Artide 268 (256) enti!!ed 'Representtg1 Issue in O'gamd Eslatlslmens."
Secfxn 1llJ, Rule I, Book V, Rules to mpsnent lhe Laber Code, as amended by Depalbnent Order No. 40-03, Series cl 2 Trade Unklns of Ille Philppiles and Aried SeN1ces Wcxtl Federallon dTrade U\O'IS (I\JPAS-~ v. Laguesma, G.R.
2003, (Fd,. 17, 200.1). No.102350,June30, 1994.
2~269~~~ • 3 Secti>rl 4, ~ VIII, Book V, Rules ID 1rJ111en1ent Cle lab« Code, as cllllllded by 0eparanent Order No. 40-f.03, Serles of
3 ~Bclgani'wJl)il(C8U). 2008 [OctDber 30, 2008).
c G.R No. 157086, Feb. 18, ZH3. C Id.
5
Alb2691257)enWed"Peti!xx1SitUnlxgalized~5stmenls.· s Id.
422 SAR REYIEWER ON IA8OR IAW CHAl"TU FIVE 423
!ASOR RE!ATIONS
(3) By the president or any corporate officer who is authorized by the · b•ill,
Board of Directors, if filed by the employer (owner).1 DENIAL OF THE PCE
The minimum number of at least 25% of the employees in the CBU
mentioned in the !awl need riot verify the PCE. What is required is merely to. attach 1. GROUNDS.
to the verified PCE the signatures of said number of employees'. The Med-Arbiter may dismiss the PCE on any of the following growids:
1.3. THIRD REQUISITE;THE PCB SHOULD BE SUPPORTED BY (a) The petitioning union or national !WOO or federation is not listed in
WRITTEN CONSENT OF AT LEAST 25% OF ALL EMPLOYEES the DOLE's registry of legitimate laboc unions or that its registration
INTHECBU. certificate has been cancelled with finality;1
a. Purpose ofthe 25% written support. (b) Failure of a local chapter/chartered local or national union/federation
111e reason behind the 25% requirement is to ensure that the petitioning to submit a duly issued Charter Certificate upon filing of the PCE;2
union has a substantial interest in the representation proceedings and that a (Q In an organiZ!d establishment, the failure to submit the 25% consent
considerable number of workers desire their representation by the said petitioning signature requirement to support the filing of the PCE;3
union for collective bargaining purposes. Hence, it becomes. mandatory _for the
Med-Arbiter to order the holding of the certification election upon showmg that (g) Non-appearance of the petitioner for two (2) consecutive scheduled
25% of the workers in the bargaining unit signify their support to the PCE.3 conferences before the Med-Arbiter despite due notice;4 and

b. 25% written consent not strictly enforced. (h) Absence of employer-employee relationship between all the members
of the petitioning union and the establishment where the proposed
·111e 25% written consent requirement' is relevant if it becomes CBU is sought to be represented.5
mandatory to hold a certification election. In all other instances, discretion should
ordinarily be exercised in favor of holding a certification ~ection.5 lbi~ means that (i) Violation of the various Bar Rules [infraj.
the 25% requirement may not be strictly enforced. Compliance therewt?1 need not
be established with absolute certainty. Thus, even if this statutory reqU1Iement has b-iv.
not been strictly complied with, the Med-Arbiter is still empowered to order the BAR RULES
conduct of the certification election for the purpose of ascertaining wiuch of the
contending labor organizations should be chosen as the exclusive SEBA.6 It is a 1. WHEN TO FILE PCE; EXCEPTIONS.
mere technicality which should be employed io determining the true will of the
workers instead of frustrating it. All doubts as to the number of employees actually In the absence of a CBA duly registered in.accordance with Article 237
supporting the holding of a certification election should theref?re ~e resolv~d ~y (231]6 of the Labor Code, a petition for certification dection (PCE) may, as a
going through such procedure. It is judicially settled that a certificatton elec_110~ 1s general rule, be filed at any time7 except when it is prohibited under any of the
the most effective and expeditious means of determining which labor orgaruzatton following bar rules:
can truly represent the working force in the appropriate CBU.7 (1) Contm&t bar rule;
(2) Statutory bar rule;
, Id. (3) Ctrliftcationyear bar rule;
2 Mlde 2681256] entxled "P.epresertllicxl lsrue ii Orgasized Estabishments."
Ptiwr,e Associafun of Free Lm Lmls (Seplmter ~ ) V. Fooer-Calleja, GR No. 79347, Jan. 26, 1989; 1 Sectm 14(a), Rue VIII [Certiicatm EledooLBoofc V ct lhe ~ ., ~ Ile Lm Code, as amended by
Sirnm1g Mangga;j.tNa 1YJ Pacll: MIis, klc. v. t-b'el, GR No. L-56588, Jan. 17, 19&5, 134 $CAA 152. Depmeri ~ No. -IM-03, Series of 2008 [Caloo- 30, 20081. See Sdlll 11, ~ II, n'jllemenli'g ~ of
' Mlde 2691257]. LmCode;AllasFree'Nake!slklalv. Nore!, G.R. No.L..S1005,"'-'f 26, 1981, 104 SCRA565; FFWv. Boofc V, Rule lO,asarended l7j 0.0. No. 9; Samahan rg arga McrggaJawasa Scmna La<assa ~ rg ~
Noriel G.R. Nos. L-47182-83, Oct 30, 1978,86 SCRA 132. Hagi rg Alya1sa (SMtlA UKHA) v. Samia Capaab,,G.R. No. 167141. Mwl 13, 2009.
1 Naliooal Mnes cm Alied Workers Unm IN,AMi\'MJ-UIF] v. ltrla, G.R. No. L-46722, Jllle 15, 1978, 83 SCRA 007.
2 &dal 14(b), Rioo VIII [Certifi:alioo ~J. Boofc Vct t,e Rues" ~enent tie l.mCode, lil.
1 Caifoolia MmtadlJmg Corporam v. ~ GR No. 97020, Jl#le 8, 1992; Eastland MilMacml:J ~ .Inc. v. 3 &dial 14(0, Rule VIII, llo.
Ncool, No.L-45528,Fet>. 10, 1982:Anas Free W<Xkeis Uooo-PSSlU Local V. Noriel, G.R. No. L-519b5. Ma-/ 26, 1981. • Sectm 14(g), Rule VIII, lbil.
, Ooenlal rn Can 1.aw Loot v. Seaellrf of Lm c m ~ GR. No. 116751, /luJ. 28, 1998, 294 SCRA 640; s Sectm 14(h), Rule VIII, lli:l.
Coosddated Fanns, lnc.11 V. t-biel, G.R. No. L-4n52. J\it 31, 1978, 84 SCRA 469,472; Plifwi'le Associam of Free 1 Artx:1e 23712311 riled ·Regiwf ct Unms cm FiectColedNe earganrg Agreements.·
Laocit.kli.Jnsv. BtR. G.RNo. L-42115, Jan. 37, 1976,69 SCRA 132. 1 Sectm 3, Rule VIII. Boo1<. V, Rules D~ tie Lm Code.
 BAR REVIEWER <.lN I.ABOR I.AW
(4) Negotiations bar rule; or
(5) Bargaining dtadl«k bar rule.
These are discussed in striatim below.
I.
Contract Bar Rule
1. REGISTERED CBA CANNOT BE DISTURBED.
Under this rule, the existence of the CBA, the contract referred to therein,
bars the filing of a PCE. Once a CBA is duly registered and validly subsisting, no
PCE or any other action should be entertained that may disturb the aclministmtion
of the duly registered existing CBA. 1 Neither party should tenninate nor modify
such agreement during its lifetime. Inter-union electoral contests are therefore not
allowed.2
2. DURATION OF THE CONTRACT BAR.
For the entire 5-year lifetime of the CBA, no PCE questioning the
majority status of the incumbent SEBA shall be entertained and no certification
election shall be conducted by the DOLE outside of the 60-day freedom period
immediately before the date of expiry of such five-year term of the CBA.
3. PURPOSE OF RULE.
In more specific terms, the reasons for this rule are as follows:
(1) Certification election may only be entertained within the 60-day
freedom period. Any PCE filed before or after the 60-day freedom
period should be dismissed outright.l
(2) When there exists a CBA, it is the duty of both parties to keep the
status quo and to continue in full force and effect the tenns and
conditions of the existing agreement during the 60-day freedom
period and/ or Wttil a new agreement is reached by the parties.'
(3) At the expiration of the 60-day freedom period, the employer should
continue to recognize the majority status of the incumbent bargaining
1
Seclioo 1, l\lk! Vilt, Boak V, rues ID ~Ole LmCode, as arneooed by Depaitner4 Ortler No. 4M-03, Seresd
m [Ottber 30, m1. ssued pJ1SUa1t 10 RA No. 9481, and as bM amended 11f Seam 4, 0epa1rnent 0rt1er No.
40+15, Series d2015 [Seplenm'07, 2015). ·
7 FOill'llexl.mUnaiv.Noriel,GR.No.l-42349,Aug.17, 1976.
3 Sedkxl 3[dl, rue VIQ, Book V, Rules ID ~ I !he lBbor Code, as ameooed l1f DepamlentOrderNo. 40-03, Seres cl
2003,[Feb.17,2003}; TUPASv. ~ . G.R No.L-46499,Aug.19, 1982
• Mx:le 264 (253), Labor Code.
CHAPTER.FM
lABOR ~LATIONS
agent where no PCE challenging such majority status is filed by any
other union. 1
4. EXCEPTIONS.
The mntrad bar rule admits of several exceptions where a PCE may be
validly filed
(1) During the 60-day freedom period immediately prior to the expiry
date of a CBA.
(2) When the CBA is not registered with the BLR or any of the DOLE
Regiooal Offices.
(3) When the CBA, although registered, contains provisions lower than
the standards fixed by law2 or illegal p,r se clauses.3
(4) When the documents supporting the CBA's regisaation are falsified,
fraudulent or tainted with misrepresentation.•
(5) When the CBA is not complete as it does not contain any of the
mandatory provisions which the law requires. Such kind of agreement
cannot promote industri.al peace as it leaves out matters which the
parties should have stipulated.5
(6) When the CBA was extended during its term as when it was
negotiated and entered into prior to the 60-day freedom period. Th~
agreement in this case i~ _deemed hastily entered ~to in order to
frustrate the will of ·t:1te employees in choosing their bargaining
representative.6
(1) When there is a schism in the union resulting in an industrial dispute
wherein the CBA can no longer foster industrial peace. The conduct
of a certification election in such a situation becomes imperative to
clear any doubt as to the real and legitimate representative of the
employees.7
1 Arti3 2691257], Iii.
2 Seedf ~d5edm4, ~XVI. Bodc V, r\destl ~ I l e lrmCode, as amended 17/ Mide 1, Depinm'4
Oidlrth09, Saiesd1997 [21 ~ 19137}.
3 See alh'!ed States ca entiled: Pnpl Prods. Qxp., 134 NLRB 662, 666-67 (1961~ F« 8lQl11lle, acann:t wlh an
llegal '1ltt-a!lgcf due ~ rd bar an eledlon. A "lxlk:ago"clause s a,e IXdlb1iYJ III err4)byer flam c:a,duttq
bushess \\11 some oOler person Ytll ~ lhe uniln has or may have acf1SpUte. &i:fl dalse ls an legal U'lfai' lalla'
imfx:e tnferM.RA Sec!Dl 8(e). Am v.t1 vmm hi prchtibl Ii section 8('oX4)(A) aJansl ooerrq a t ~ ID
"ceasetilg busilesswtl m, dherpe1SCX1°if l1S!S slrkes or?ft/ 00ierpteSSIJ8 IDbm 111~'1 ~lhis type
ddue..
4 See ddpc'CMSilnof Sedixl4, ~ XVI, Bode V, Rum bfnl)lementlhelab0rQxle,asim!lldedhy Mde 1, Oepatnent
0RIEr No. 09, Series of 1997 [21 n 1997).
5 Bddodrv&m.!Trcmtv.Cma,G.R~.L-8049,tlai/9, 1956,99Phl 16.
1 Am:laledTrcmUiioov.Nore,GR.No.L-48367,m 16, 1979.
7 In hi Matta' of Petib\ for Oiea Certiftalklrl or Cerffi:afiJI Elecoon, Firesme Tre and RLdlber Con1)il1)' Employem
Ulm v. Esb"ella. G.R. Nos. L-45513-14, Jai. 6, 1978, 81 SCRA 49, ne l was hekl: "kl die case at ha', lis ~ ~
st amct Olat may have been entered a\1D betM!erl respondent ALU and respondent Coo'\1anY Ydl fostef sfa)lily i'l ttle
 BAR REVIEWER ON ~BOR lAW
426
(8) When there is an automatic renewal provision in the CBA but prior to
the date when such automatic renewal became effective, the employer
seasonably filed a manifestation with the BLR of its intention to
terminate the said agreement if and when it is established that the
SEBA does not represent anymore the majority of the wotlters in the
bargaining unit I
(9) When the CBA does not foster industrial stability anymore, such as
where the identity of the representative is in doubt since the employer
extended direct recognition2 to the unio~ and concluded a CBA
therewith less than one (1) year from the time a certification election
was conducted where the ')to union"vote won. Any 'stability derived
&om such conttact must be subordinated to the employees' freedom
of choice because it does not establish the .kind of industrial peace
contemplated by law. Such situation obtains in a case where the
company entered into a CBA ~th the union when its status as
exclusive bargaining agent of the employees has not been established
yet.3
(1 O) Where the nature of the opemtion substantially changes between the
execution of the CBA and the filing of the PCB. Such changes
include © a merger or consolidation of two or .more operations
creating a new operation with major personnel changes and (u) a
resumption of opeutions after an indefinite period of closing, with
new employees. However, a change in the number of employees due
to a relocation does not affect the· contra.ct bat rule.
(11) Where the CBA is executed before any employees are hired4
S. APPLICABILITY OF THE CONTRACT BAR RULE IN CASES OF
PREMATURELY NEGOTIATED AND CONCLUDED CBAs.
a. Premature renegotiation and conclusion ofCBA.
A CBA is said to have been renegotiated and concluded prematurely if the
same has been done by the employer and the incumbent union which has yet to be
re-certified as the SEBA, prior to the advent of the 60-clay freedom period or
during the pendency of a PCE filed by rival union/ s. It is premature in the sense
that it should have been negotiated and concluded only when the union has already
been re-certified as SEBA.
balganilg llll. ii view rA the a:t 01at aSletantial rumer cl Ile enl)loyees men have resigned flan AW n1 pried
pelwFBJ.Mq rate, l1is is anala'tallllStbefnat,deBlmed tr,meansof am1ffica!D1 electicn•
1
Pl.DT~loyees'lmlv.Phq>pilelmJ!lsln:.eT~Ccrrqmf.G.RNo.L-8138,h,J.20, 1955.
2
tt rrust be nctm t.at \'OUtlaly Rec:oJnibl' as amode of clestJna!i,g aSEBA has dreafy beoo rept'xBI and replaced tr,
lhe 111lde kn!Mn as 'Request kr SEBA Certi:alixl,' per Depment Order No. 40+15, Series of 2015, issued oo
Sepmbe,07,2015. · Oepalnent Order No. 40.f-03, Seriesof2008 [Ocmber30, 2008).
3
Sandlq MiDJgagawasaPennex l$MP.f!ll.U-TUCP)v. Secreaydlm, G.R ~.107792, ~ 2, 1998.
4 E.g1 aire-hie agreernER ii I l l e ~ ndusby.
CHAl'TER FIVE 427
IABOR RELATIONS
b. Effect on prematurely concluded CBA ofPCE filed by rival
1
union/s. ,
The rule, however, is significantly different if thcte is a PCB filed by rival
union/ s during the &ee4om period In this situation, the CBA renegotiated and
concluded prematurely cannot be invoked as a valid bar, under the conttact bar
rule,· against the holding of a certification election. Indeed, a prematurely
concluded CBA, even if ratified unanimously or by a majority of the employees of
the collective bargaining unit (CBU), cannot deprive rival union/ s of the right to be
certified as the new SEBA.I
c. Effec, lino PCB ls filed by dval union/, during freedom period.
The validity of a CBA renegotiated and concluded by the employer and
the ~ting SEBA before the am.val of the 60.day freedom period and even during
such period is unassailable if no PCE is filed by rival union/s. The employer and
the existing SEBA can start their renegotiation for a renewal of the CBA and
accordingly conclude and register it at any time before or during the 60.day
freedom period. The &ct of early renegotiation and conclcsi~ alone will not in any
way invalidate the CBA.
II.
Statutory Bar Rule
1. RECKONING OF 1-YEAR PERIOD.
The Labor Code does not contain any provision on this rule but the Rll/u
Jo Impltmtnl tht Labor Codi'- embqdy a rule that bars the filing of a PCE within a
period of one (1) year &om the date of a valid conduct of a certification, consen~
run-off or rc-run3 election where no appeal on the results thereof was made.4 If
there was such an appeal from the order of the Med-Arbiter, the running of the
one-year period is deemed suspended until the decision on the appeal has become
final and executory. 5
This is called the statutory bar rule which finds its roots from a similar
rule in the United States. Thus, an election cannot be held in any bargaining unit in
I Assmde(I LalJa UniJnS (ALU] V. C8leja, GR. No. 82260,»,
19, 1989.
2 Section 3(a), Rule VIU, Bod( V, ~k> ~llelabcrCode, asammdedt,, ~Order No. 40-03, Seres of
2003, (Feb. 17, 2003~
3 NeNSectol 1(tt), rue I, Bcxllt V, RllmlD ~dlelaba'Cme, asaneooed1Jt0epa1ment0rder No. 40-03, Series
d2003, [Feb. 17, 20031 and as 6dler added ttm,jlhanendmertimxkml brt Secfa12, 0epatnent Order No. 40+
15,Sailsof2015[SeplBlmer07,2015].
Section 14{d), Am VIII (Certilcaticn Eleciln1 Book V cl lhe Rules I D ~ Ole Lm Qxle, as anended tr,
Section 3(a), ~le VIII, Bcxllt v, rues to hl>meitOltl tm Code, manended by Depamlent Order No. 40-03, Series of
2003, {Feb. 17, 2003).
 SAR REVIEWER ON LABOR LAW
which a final and valid election was concluded within the preceding 12-month
period.1
2. THE 1-YEAR PERIOD MAY EITHER BE A "STATUTORY BAR"OR
"CERTIFICATION YEAR BAR."
This 1-year bar may be denominated either as a "staturory bar'' or
"certification year bar," depending on whether or not a SEBA has been certified
as such in the certification, consent, run-off or re-run election. If there was none,
then, it is called the ''.tta/1110,y bar'\ if there was, the_n, it is denominated as the
"«rtijitationytar" bar. Simply stated, if a SEBA is certified, then another bar rule is
set into motion, i.t., the certification year bar rule discussed below.
3. THE 1-YEAR PERIOD, HOW RECKONED.
The 1-year period for 'ita/11!0,y bar" begins to run on the actual date of
the prior election, not from the date the SEBA was certified,2 which is the
reckoning date for another rule - the ''artifi,ation year bar. " If the prior election
results in a vote for "Nu Union," the one-year period runs from the date of that
election.3
4. INAPPLICABILITY TO RE-RUN OR RUN-OFF ELECTION.
In situations where the conduct of a re-mn or mn-ef! election• becomes
necessary, the statutory bar rule does not preclude it nor apply thereto since it is
required to be done and accomplished within a certain period after the failed
certification election, which period incidentally falls within one (1) year thereafter.
Thus, a re-run election should be held:
(1) In case of a lit, within ten (10) days after the posting of the notice of
re-run election;5
(2) In case of failure of tledion, within six (6) months from date of
declaration of failure of election.6
And a run-ofT election is required to be conducted within ten (10) days
from the close of the election proceedings between the labor unions receiving the
two (2) highest number of votes, if there are no objections or challenges which, if
sustained, can materially alter the results.
199 See29 U.S.C.A7159(c)(3).
See~ &tis. Dep\ Sm. klc., 95 M.RB 271,273 (1951): see aso C<mllaB-Mn Co., 86NI.RB101 n. 1(1949).
See Benat1t Corp., 179 MRS 140 (1969).
See RooeflsooBros. Dep\Store, ~ .95 Ill.RB 271,273 (1951); see alsoCoM-Ral-Mafx Co., 86 NLRB 101 n. 1(1949).
New Secoon 18, ~le IX, &xt V, ~les lo lmp!ement lhe Laba Cooe, as previxlstf llTierKJed by Oep.rtment Order No.
40-03, Series ot 2003, feb. 17, 2003), cm as ooded by Secfun 16, Depment Order No. 40-1-15, Seres ot 2015
iSePtenter 07, 2015].
1 This JXO,'isi.'.ln enlil!ed 'Eff€ct ot faiure ot ~ sholid noN be denoni\aled as Secfun 19, Rule IX, Bode v. ~ ID
mpiement toe LabaCooe, by wnieot llere-numbemg oo!ered by Secfun 17, Departnent Orda- No. 40-~15. Seres ot
2015 !Septenber 07, 20151
CIIAl'TER FIVE 429
IASOR REIATIONS
Ill.
Certification Year Bar Rule
1. CERTIFICATION YEAR - THE PERIOD WHEN THE CBA
NEGOTIATION MUST COMMENCE AFTER A UNION HAS BEEN
CERTIFIED AS SEBA.
Although the Labor Code does not contain any provision on when the
CBA negotiation process should start after a union is duly certified as the SEBA of
the employees it seeks to represent in a given bargaining unit, there is, however,
this provision in the Rule1 /Q Implement the Labor Codr when the Med-Arbiter
(Mediator-Arbiter) .may dismiss the PCE if the same is filed within one (1) year
reckoned and counted:
(1 ) From the date the SEBA u rtifualion is issued by the DOLE
Regional Director in cases of Rtq11ulfor SEBA Ctrtiji,ation filed in an
unorganized establishment with only one (1) legitimate labor
organization;2 or
(2) From the date of issuance of certification as SEBA and not from the
date of the conduct of valid certification, consent, run-off or re•
run3 election.•
Note must be made that No. 1 above repealed and replaced ''Vc;>luntary
Recognition" as a mode of designating a SEBAS per E·epartmmt Order No. 40-I-15,
Strit1 of2015.6 Previously, the 1-year period is reckoned frqm the date of recording
of the Voluntary Rec;ognition. However, under this new mode, the same period is
counted &om the issuance of the SEBA certification which shall have the effect of
barring the filing of a PCE by any labor organization. It is only upon expiration of
this 1-year period that any legitimate labor organization may file a PCE in the same
collective bargaining unit (CBU) represented by the certified SEBA, unless a CBA
between the employer and the certified SEBA was executed and registered with the
DOLE Regional Office.7
Note must likewise be made of No. 2 above where a distinction should be
made · between the reckoning of the 1-year statutory bar and _the 1-year
1 Seam 14(d), ~ VIII, Bodi V, ~ ID lmplemert Ile Labor Cooe, as ~ by 0epavnent Orda- No. 40.f-03,
Seres ot 2008 l()ckj)e,- 30, 2008).
2 Seam 42., ~le VII,Deparvre-itOrder No.40+15, Seres ot2015 ~C7. 2015].
3 "Re-nrl electioo. is a • illroduced rro:le ol seleding oc choosi'IJ a SEBA.
• See Secfm 14(d), ~le VIII, 8cxi V, Rules to lmplemert lhe Im Cooe, as ;rrended by 0Epment Onler No. 40.f-03,
Series ot 2008 IOdcber 30, 2008~
s Paoo.Jlarly its RlAe VII [oJ~ Recognitionl, Bode V, Rules to ~le!rent lhe Labor Cooe, as ameooed !rt Depmeot
Orda- No. 40-03, Seres ot2003, (Feb. 17, 2003).
Issued on Sepl2flber 07, 2015.
See Secfm 42., RlAe VII, Depment Order No. 40-~15, Seres ol 2015 ISe!>tenber 07, 2015], entitled 'Flrtlet Amendng
Depa1menl Oroer No. 40, Seres o1 2003, Nnenoog tie lmplementrg Rules cm Reg,,l,aticr,s ot Bode Vol Ile LahaCooe
ol lhe Phl"fwiles,as Amended.'
 CHAITTRflVE
430 BAR REVIEWER ON LABOR LAW
lABOR RElATIONS
431

certification year bar. The 1-year period in the jim11er should be counted from the
date of che election; while tl1e 1-year period in the lotter should.be from the date of
certification of tl1e SEBA. The union will be deprived of its entitlement to the
critical one (1) year as a certified SEBA if this period is reckoned from the actual
date when the certification, consent, run-off or re-run election was conducted. The
union certain!>' is entitled to a full twelve (12) months as SEBA. Until the
cectification is made in its favor, its status as SEBA is not definite.
This rule is better known as the ccrtilication year bar rule1 which is
similar to tlie "certification year'' rule2 in the United States where it is provided
that the collective bargaining negotiations between the employer and the SEBA
should begin within twelve (12) months following the certification of the latter as
SEBA. This rule thus prevents tlie holding of a new certification election until the
pacties have had one year to bargain.3
2. EFFECT OF FAILURE TO COMMENCE CBA NEGOTIATION
WITHIN THE 1-YEAR PERIOD.
1f tlie SEBA fails to commence the collective bargaining process within
said period, its being tlie SEBA mai• be questioned by another union through the
filing of a new PCE.4 'Th.is is best illustrated by the case of KAMPIL-
KATIPUNA.I\.' v. Trajano,5 where tl1e SEBA failed to initiate the collective
bargaining process withm a period of more tlian 4 years thereby enabling another
union to file a new petition for certification election.6
3. INTERRUPTION OF THE RUNNING OF THE 1-YEAR PERIOD.
Where an appeal has been filed from the order of tlie Med-Arbiter
certifying the results of the election, the running of the one (1) year period is
deemed suspended until the decision on the appeal has become final and
executory. 1
IV.
Negotiations Bar Rule
1. THE CBA NEGOTIATION SHOULD BE VALIDLY COMMENCED
WITHIN THE REQUIRED PERIOD.
Under this rule,2 no PCE should be entertained from the moment the
~EBA and tlie ~ploy~r have commenced and sustained negotiations in good faith
in accordance with Article 261 [250]3 of the Labor Code within the period of one
(1) year4 from the date of a valid certification, consent, run-off or re-run elections
or_ from ~e date of issuance of the SEBA Certijitatior, by the DOLE Regional
Director 1n cases of Request for SEBA Certification,6 wbch replaced tlie mode of
"Vohmla,y &cognition. •~
2. ONCE NEGOTIATION COMMENCES, THERE IS NO MORE
PERIOD OF LIMITATION TO RECKON WITH.
Once the CBA negotiations have commenced and while the parties are
engaged in this process, no challenging union is allowed to file a PCE that would
disturb the negotiation proces.s and unduly delay, preempt or forestall the prompt
and timely conclusion thereof. ·
It must be noted that there is no law or rule that imposes a time limitation
or cap as to when the parties should negotiate and conclude a CBA. The parties
have all the freedom and leeway to negotiate tlie CBA's terms and conditions
witliout being constrained by any time restriction. In oilier words, the negotiation
process may last for days, weeks, montl1s, even years, and during the entire
duration thereof, no PCE may be filed by any challenging union/s.

1
Sed'al 14{d), ~ VIII (Cetiocalioo ElecblL Book V ci tie ~ bl ~ Ile lalxJ Code, as cll1el1ded l7f
Depmert Onler No. 40.f-03, Series of 2008 (Oct>ber30, 20081.
2
Tti; is aso kooM1 as lhe 1'relll4tre PrestfTl)lm a~ &war~ The lW Slates~ CM~
Ile 'Cd:a1m Year IU!' il Brooksv. tlRB, 348 U.S. 96 {1954~ .
1
48 hn J1t 2d 991. kl tie same C2ie of 81ncs v. NLRB, 348 U.S. 96 {1954), fle ~ CM hell Id, absent My
lll&Jill cia.mstances such as dellldness a scl1ism, a, ~ has a o.t, kl bcrgan 'Ml!l lhe l.ri:x1 csffied as lhe t

l
~.rJel(brhis~fo<roeyPJJfrom lhedaleace1ltaial.
~ il Ile ·lklll!d Slales, v.M is alb.led ID be lied is a petifm tr dec:ef1n:ab1 elm, in! rd·a petifm llr
ced6:ai:n eeful by mierooi:n. Faa nxre extmsM! clisa.sln aOec:erffi:ali:: Elet1orl, ~ see lhe Nees in!
Coomeril5oo Artx:le 267 (255), pa,til)laltf,tn!erlhe IDpi:ci'lX. DECERTFlCATION', iia).
5
KaisctalllJ ~ f'ic)ro ll(Mf'L-KATIPU'Wl]v. Tr.$ro, GR.No. 75810,Sept 9, 1991,201 OCRA453.
1 Them\ ~ fact in tis case is M tan Felxuay 'l7, 1981 - v.hen Nalb1al Feder.ml ci Laba Um 1
(NAFUJ) was proceined Ille exdJsMl ba-gar,i9 ~ ci al VRON ~ - ID Apii 11, 1985 - 'M18l
KMff. !loo Is pe!ful br certkation eledm a a period ci rrae Im 4 ye.n, no C8A was Mr execuled llld no
demx Mr .wose lrool negotialioos ~ tw=LU irid VIRON restftlg i1 cadabl ~ er lhe ~ a a
vald ~ nai::e.
.~,'
I .
..&. ~-

432 8AR REVIEWER ON IABllR IAW
V.
Bargaining Deadlock Bar Rule
1. CBA DEADLOCK, MEANING.
"Collrcti~-e bargaining dtadhck" refers to a situation where· there is a failure in
the collective bargaining negotiations between the SEBA 3:11d th~ employer
· ;n an imhaJJt or stalemate. I 'This happens when, despite thetrd ·efforts at
resulnng u, r . . respondent CMC before the filing by petitioner CMC-ACE-UFSW of the petition
bargaining in good faith, the parries have failed to r~sol~e the issues an II appears
that there arc no other definite options or plans in s1gµt to break the stando:f·
Simpli• stated there is a deadlock when there is a complete blocking or stoppage in
the negotiation' resulting from the action of equal and opposing . ,orces.
C 2
2. AS ABAR, THERE MUST BE A DEADLOCK IN THE CBA
NEGOTIATION.
Under this rule a PCE may not be entertained when a bargaining
deadlock to which an ~cumbcnt SEBA is a party has been sub~tted to
conciliation, compulsory or voluntary arbitration or has become the subJect of a
valid notice of strike or lockout3
3. RULE APPLIES EVEN IF THERE IS NO ACTUAL DEADLOCK, IF
THE CIRCUMSTANCES ARE SIMILAR TO A DEADLOCK.
The bargaini11g dtadlock bar rule was applied i~ Cap!tol Medical unit~ v.
LJJguuma i even if no actual CBA deadlock occurred Ill this case. After belllg
certified' as the SEBA of the rank-and-file employees of respondent Capitol
Medical Center (CMC), private respondent union, CMC&\-~,5 sub~tted its
CBA proposals but CMC refused to negotiate a CBA, ramng as an ts~ue, the
legitin1acy of CMCEA-AF\V. Because of this, CMCf:A-AFW staged a s~e over
which the DOLE Secretary assumed jurisdiction and issued an order ce~g the
same lO the NLRC for compulsory arbitration where the said case was still pending
at the time the decision in this me was rendered
After more than one year of not having any CBA negotiation _because ~f
the pendency of the said certified case before the NLRC, another uruon, beretn
petitioner CMC-ACE-UFSW,6 filed a petition for certification election among the
regular rank-and-file employees of respondent CMC, citing as one of the grounds,
1 San Mguel Cotpaation v. !',\,RC, GR No. 99266, Mrd12, 1999;TayaJ &P. F. Jadrm:i, Omlnarf of PllqlfAne l.atxi
Terms, p. 36; ~ 2 [!)erifl::n cl Tenmj, NCMI Pmlef oo Stt.e. ~ en! l.rdaA. 2m Ediiln. Decelrbe'
1
1995.
~Medical Center Akce of Coocemed ~ ~ fielvi:e Wmessv. L!ljueSma. GR No.118915,
Feb. 4, 1997, 267 OCRA 503,513.
Sec6ll 14(e), ~ VIII, &xi V, ~ i:> Ul)lemenl he Lab« Code, as ameoded lrf ~ Oller No. 4().f-03,
Series of 2008 [()dooer 30, 2006~
~ Medical eenu Am:e o1 Coocemed Errclb'l'ees v.Hen l.ajuesma. G.R ~ 118915, Feb.4, 1997.
s Capid t.'ed'ical Center~~clllpi1o Woiteis(CWCfMfW). .
Capilll Medical Genier ~oleoncemed ~ Ff1lino fielvi:e Wams (Q.CAC8JFSVv').
CHAITTRFIVE
lAJIOR REIATIONS 433
the fact that more than 12 months have elapsed since the last certification election
was held where respondent CMCEA-AFW was voted as the SEBA and yet, there
has been no CBA negotiation or bargaining de2dlock between respondent
CMCEA-AFW and respondent CMC that could effectively bar its filing of the
petition.
The Supreme Court, unconvinced of this argument, ruled that ~!though
there was no bargaining deadlock between respondent CMCEA-AFW and
for certification election which had been submitted to conciliation or had become
the subject of a valid notice of strike or lockout, what happened in this case is
worse than a bargaining deadlock for CMC employed all legal means to
block the certification of respondent CMCEA-AFW as the bargaining agent
.," of the rank-and-file employees and use it as its leverage for its f~ure to bargain
( therewith. Thus, it can only be concluded that CMC was unwilling to negotiate and
('
reach an agreement with respondent CMCEA-AFW. 3.espondent CMC has not at
any instance shown willingness to. discuss the economic proposals given by
. respondent CMCEA-AFW. If the law proscribes the conduct of a certification
:m
•, · :
. election when there is a bargaining deadlock submitted to conciliation or
arbitration, with more reason should it not be conducted if, despite attempts to
bring an employer to the negotiation table by the cer.ified bargaining agent, there
' was "no reasonable effort in good faith" on the employer to bargain collectively.
,
It is thus only just and equitable that the circumstances in this case should
be considered as similac in nature to a "bargaining deadlock'' when no certification
election could be held. This is also to make sure that llO floodgates will be opened
. for the circumvention of the law by unscrupulous employers to prevent any
certified bargaining agent from negotiating a CBA. Thus, St<tion 3, Rule V, Book V
.... of the Labor Code's Impltmtn'ting Ru/tr should be interpreted liberally so as to
I ~
include a circumstance, e.g., where a CBA could not be concluded due to the failure
of one party to willingly perform its duty to bargain collectively.
4. WHEN THE RULE DOES NOT APPLY.
The case of KAMPII..rl(ATIPUNAN v. Tr,;rjano,2 illustrates the classic
situation where the bargaining deadhck bar rule was not applied. On February 27,
1981, the BLR declared NAFLU3 as the exclusive baigaining representative of all
1 This l)(O',ism reads: "See.3. Wler1 t, fie. - In tie abserx:e cl acdec:M barg;mg ~ swri1Ed ii a:x:onm:e
,. Ytitl Miele 237 [2311 cl lhe Code, a pe,!lbl foc ~ elecflon l1la'f be fied at~ rrne. fb.le;er, no a!f1ifraoon
,~
I
elecflon l1la'f be hek! Yrtil ooe ys fToo1 lhe da2 cl isstm::e d. dednl:ln cl a mal cer1ftab1 etedioo reSli NeiM
l1la'f a reJXIJSElrta!X'.11 ques6:n be erret1ai1ed a, bebe he 1mg cl a pelitioo for crix:atioo eledloo, a ba!)am,i ~
t, v.li:tl irl ilaJTberta CElifled ba'gam,i agtrtis a pelt/ too been sJmlled t, oordatioo a at:IJa5oo oc lal becane
:~,· tie ~ of avald noo:e cl site a kld(out fa cxiec.M bagamg agreerren1 has been <kif regislered il a:x:onm:e
I. witlMde 237 (2311 dlhe Code.a peloo b-cafl:allooetedioo aarrdioo b'hevrixl ca, llf(bea:481ailedn
silt)' (60) d.tts p'ak> tie expiy dae cl Sidi agreement.·
1 Kasalcll ng Mirlggajawa-g Pilpi'o [KAl,f'l-KAWUNAN]v. Trajano, G.R No.75810, Sept 9, 1991,201 SCRA 453.
l Ncblnal Federalbl ol lm lkli:ns (NAFI.U).

434 SAR REVIEWER ON LABOR. I.AW
rank-and-file employees of Viron Gaanents Manufacturing Co., Inc. (VIRON).
More than four (4) years thereafter, or on April 11, 1985, · another union, the
KaiJahan ng Manl,l,agawang Pilipino KAMPIJ..,Katip11na11 _filed with the BLR a PCE
among the employees of VIRON. The petition counted the support of more than
thirty percent (30%) of _the worke~ _at V1RON. NAFLU _opposed th~ petiti~n
contending that at the nine the pennon was_filed on April 11, 1985, tt was tn
process of coUective bargaining with VIRON; that there was in fact a deadlock in
the negotiations which had prompted it to file a notice of strike; and that these
circumstances constituted a bar to the PCE in accordance with Section 3, RP/e V,
Book V of the Labor Code's lmpkmenling RPk,.1 ••
The Supreme Court, however, did not apply the bargaining deadlock bar rule
because of the following:
(1) Prior to the filing of. the PCE in this case, there was no such
"bargaining deadlock ... (which) had been submitted to conciliation or arbitration
or had become the subject of a valid notice of strike or lockout." To be sure, there
are, in the record, assertions by NAFLU that its attempts to bring VIRON to the
negotiation table had been unsuccessful because of ~e latter's recal~trance and
unfulfilled promises to bargain collectively; but there 15 no proof that tt had taken
any action to legaUy coerce VIRON to comply with its starutory duty to bargain
collectively. It could have charged VIRON with unfair labor practice, but it did not
It could have gone on a legitimate strike in protest against VIRON's refusal to
bargain collectively and compel it to do so, but it did not
(2) The stark, incontrovertible fact is that from February 27, 1981 - when
NAFLU was proclaimed the exclusive bargaining representative of all VIRON
employees - to April 11, 1985 - when KAMPIL filed its PCB or a period of more
than 4 years, no CBA was ever executed and no deadlock ever arose from
negotiations between NAFLU and V1RON resulting in conciliation proceedings or
the filing of a valid strike notice.
5. CAPITOL DISTINGUISHED FROM KAISAHAN.
Capitol Medical Cm/tr is strikingly different from Kai!ahan· in that in the
former, there was proof that the certified SEBA had taken an action to legally
coerce the employer to comply with its statutory duty to bargain collectively, i.e.,
charging the employer with unfair labor practice and conducting a strike in protest
against the employer's refusal to bargain. It is thus only just and equitable that the
circumstances therein should be considered as similar in nature to a "bargaining
dtadlock" whe~ no certification election could be held. In the latter case, there was
no proof that for more than 4 years, the bargaining agent had taken any action to
legally coerce the employer to comply with its statutory duty to bargain collectively.
t Sopra.
CHAM'ERflVE
IABOR IUIATION5
435
b-v.
THE DOUBLE MAJORITY RULE
1. PURPOSE OF THE RULE.
The process of certification election requires the application of the double
majority rule for the following twin purposes:
(1) To have a valid certification election; and
(2) To declare the winning union that will be certified as SEBA.
2. FIRST MAJORI'IY:TO BE A VALID CERTlfICATION ELECTION,
AT LEAST A MAJORITY OF ALL ELIGIBLE \'OTERS IN THE
BARGAINING UNIT SHOULD HAVE CAST THEIR VOTES.
The first majority is essential to validate the certification election process
itself. According to Article 268 (256], in order to have t valid certific~tion election,
it is required that at least a majority of all eligible voters in the bargaining unit
must have cast their votes.1 If less than such majority have cast their votes, the
certification election process itself is not valid and, therefore, pot one of the
contending unions therein, ev,en if chosen by the majority of the votes cast, can be
certified as the SEBA to represent the CBU.
3. SECOND MA]ORI'IY: MAJORITY VOTE OF THE VALID VOTES ·
CAST REQUIRED IN ORDER TO BE CHOSEN AS THE SEBA.
After establishing the validity of the certification election process itself,
the next point to ascertain and establish is whether the petitioning union, in a 1ingk-
11nion contest, or any of the unions, in a m11lli-11nion election, has garnered the
majority of the valid votes cast.
Under the same Article 268 [256), it is i:equired that only "the labor
union receiving the maiority of the valid votes cast shall be certified as the
exclusive bargaining agent of all the workers in the un.it',.and under Article
267 (255), it is likewise provided that the labor organization designated or selected
by the majority of the employees in an appropmte CBU is the exclusive
representative of the employees in such unit for putposes of collective bargaining.2
4. HOW TO RECKON THE DOUBLE MAJORITY.
To illustrate the proper reckoning of the double majority, in a bargaining
unit for example composed of 100 employees, the first thing to determine is how
many votes should be validly cast in order to have a valid process of certification
election. The second thing to ascertain is how many votes should a contending
' Ar1i:le 268 (2561,l.alorCode; ~ rg Manggagw.lsa Pocificf'l.lsticv.Lzg,esma, G.R. No. 111245, Jan.31, 19!l7.
2 Isaac Peral v.~ ~ We'fare Associaoon, GR No. L-9831, Oct. 30, H57.

. BAR RivlEWER ON V.BOR v.w
union garner in order to ·be declared winner and thus be proclaimed as the SEBA
of all the employees in the CBU.
Following the rule enunciated in Article 268 [256], in order to have _a valid
certification election process, majority of the 100 employc;es or at least 51
employees should validly cast their votes. In order to win the election, a contending
uniop should be able to garner the majority of the valid votes cast. So, if only 51
employees cast their votes, the majority thereof or, at least,. 26 employ~es sho~d
vote for the winning union. This illusttation is necessary to dispel the notton that tn
a bargaining unit composed of 100 employees, at least Sl employees should vote
for the winning union. As clearly shown in this illu_stration, a vote of 26 would
suffice in order to be certified as the SEBA.
5. ILLUSTRATIVE COMPUTATION.
To illustrate the proper reckoning of the double majority, in a bargaining
unit composed of 100 employees, the first MAJ ORITI to detecmi.ne is how many
votes should be validly cast in order to have a valid process of certification election.
The stcond MAJOR11Y to ascertain is how many votes should a contending union
garner in order to be declared winner and thus be proclaimed as the SEBA of all
the employees in the CBU.
Following the double majority rule enunciated in Article 268 [256], in
order to have a valid certification election process, majority of the 100 employees
or at least 51 employees should validly cast their votes (HRST MAJORITY).
ln order to win the election, a contending union should be able to gamer
the majority of the valid votes cast. So, if only 51 employees cast their votes, the
majority thereof or, at least, 26 employees should vote for the winning union
(SECOND MAJORITY).
'This illustration is necessary to dispel the notion that in a bargaining unit
composed of 100 employees, at least 51 employees should vote for the winning
union in order to be proclaimed the SEBA. As clearly shown in this illustration, the
minimwn vote of 26 would suffice to be certified as such.
6. ''NO UNION" ALWAYS A CHOICE.
It is a basic principle in labor relations that the right to join a union has
the concomitant right not to join one. It is on this basis that "No Union"is always a
choice in all certification elections.
In the event that the petitioning union, in a single-union election, or any of
the participating unions, in a mu//i.union contest, fails to muster the majority of the
valid votes cast and the "No Union" choice wins, no SEB.-\ shall be proclaimed and
no new PCE can be filed within one (1) year from the conduct of the certification
election pursuant to the one-year S/tJtulory Bar Rule.
CHAPTER FM
LABOR RELATIONS
437
b-vi.
CHALLENGING OFVOTES AND PROTEST
1. ELIGIBLE VOTERS.
"Eligible voltr" refers to a voter belonging to the appropriate CBU that is
the subject of a petition for certification, consent, run-off or re-run election.I All
employees who are members of the appropriate CBU three (3) months prior, to the
filing of the petition/request shall be eligible to vote.2
2. ELIGIBILITY OF DISMISSED EMPLOYEES TO VOTE.
An employee who has been dismissed from work but has contested the
legality of the disoµssal in a forum of appropriate jurisdiction at the time of the
issuance of the order for the conduct of a certification election shall be considered
a qualified voter, unless his/her dismissal was declared valid in a final judgment at
the time of the conduct of the certification election.3
In the case of Yokohama Tirr,• the petitioner posits that "employees who
have quit or have been dismissed for just causes prior to the date of the
certification election are excluded from participa_ting in the certification
election." In disagreeing to this posrulation, the Supreme Court, citing the
Implementing Rules,5 ruled that dismissed employees are allowed to vote during the
certification election if the cases they filed contesting their dismissal are still
pending at the time of the election. Thus, without a final judgment declaring the
legality of their dismissal, dismissed employees are eligible or qualified voters.
Indeed, it is now well-settled that employees who have been improperly
laid off but who have a presl!nt, unabandoned right to or expectation of re-
employment, are eligib~e to vote in certification elections.6 Thus, and to repeat, if
the dismissal is under question whereby a case of illegal dismissal and/or unfair
labor pra~tice was filed, the employees concerned could still qualify to vote in the
elcctions.7
3. VENUE OF THE ELECTION.
While the posting of the notice of the certification election is expressly
required to be made in at least two (2) most conspicuous places within the
company premises, there is, however, no provision in the law nor in the Rules
which requires that the certification election be conducted within the company
premises. Being a purely employee-activity, the election should, as a general rule,
1 Sedioo 1[q), ~ I, Book V, ~ ID krl)lelrell Ile labor Code, as anendedlr/ 0epamet O!der No. 40-f-03, Series of
2008 !Od- 30, 2006).
2 Sedioo 6 [fam:rtf Sedioo SJ, Rue IX, Book V, ~ t i ~ Ile labof Code, as anended b'i ~ Oder No.
«lf-03, Seriesa2008 [Oct 30, 2008~cm asbtieranended illd rerurbEfed lrf SetfXlO 10,Oepcnnent0n1ef No. 40-
~15, Series of 2015 [Seplelm 07, 2015).
l Id.
i Ya«lhcma Tre Ph~, n:. v. Y ~ ~ Lool, GR No. 159553, ~ 10, 2007.
l'crticmtf, Sooxlll 5, Rllle IX d Book Vof the IU!s t o ~ Ille Laba Code.
P1fwi1e Fnm .rd Vegetable RllSlries, n:. v. Im~ 0. Tares, G.R. No. 92391, Mt 3, 1992, alilg RDtiertletg oo
Labo,- Relams, p. 548.
1 ~ ~ng\'aMrev.Naiel,GRNo.l•52169,!ne30, 19&?, 98SCRA507.
 B•R llfVIEWER ON IABOR IAW
438 CHAPTER Hve
439
LABOR RELATIONS

necessarily be held in the place of employment of the employees. Holding the
election off premises controlled by the employer may be justified such as when the
employer unreasonably refuses to make its work p~emises a~ailable for t~at
purpose or has shown extreme anti-union _bias. In this even~ty, the Elec~on
Officer may exercise his/her sound discrenon over the selecnon of the elecllon
site. Tue contending unions, for their part, may mutually agree on the venue of the
election.•
4. ELECTION CAMPAIGN.
The F.Nk! do not embody a single provision regulating election campaigns
that may be waged by the candidate-unions. Not bekg encumbered by any
limitation in the law and unless the contrary is mutually agreed upon by the
contending unions, campaigning may be done up to the VCIJ'. ~y of the
representation election itself. In other jurisdictions, howe~er, cam~atgrung may be
validly prohibited in "no-ekction hearing zyne" with the proviso that It does not ~ake
place while employees are standing in line to vote and does not "substantially
impair employee's fair choice."2 . .
That the employer is not allowed to wage any campaign ~st. the
h !ding of the certification election or for or against any of the contending uruons,
isobeyond cavil, it being settled that the employer is a bystander in such electot:11
exercise and such act well constitutes ULP.4 Thus, the act of the employer in
distributing anti-union paraphernalia to employees on ~e ~ay of the election is held
to interfere with employee's free choice, and such ob1ect1onable conduct may be
·the basis for setting aside the election, 5 · ·
5. SECRECY AND SANCTITY OF BALLOTS.
To ensure secrecy of the ballot, the Election Officer, together with the
authorized representatives of the contending unions shall, before the start of the
actual voting, inspect the polling place, the ballot boxes and the pollin~ booths.6 •
No device that could record or identify the voter or othetw1se undenrune
the secrecy and sanctity of the ballot shall be allowed within the ?remises, ~ce~t
those devices brought in by the Election Officer. Any other device found within
1 Ar;ise i1 point is Cooredecalioo of Cffizeris Laba Unioos v. Nooe!. G.R No. L-56902. Sept. 21, ~982, 116 SCAA 694. ~
NoYente- 6, 1980, tree (3) eledol supeMSOCS from the fMis1ry ct Lallo,- aid tJ11)lo',Tnent. Mmd at cltXJOO 7o'ctld< n
lhe rroni"g rs the Redson Texb'e ~ l:xJt Ille'( were not~ by I l e ~ gUcltl _kl enter t,e ~
ixemses i1 ~ ct the he.Ny rail. So, afta- cmsuirg tir0u!Jh Ile poooe Mil ffl ctie!, the~ eledoo ~
deooed kl Id! Ile c:rir.alm ~ ·o.rtsi:le 1toe premses ct the C0l1')<¥lY i1 a sma'I sm oulsile ct lhe imex lxjj'ng.'
They used as ba'a box 'ill "1)ftMSed cmi box.' Toe unioo represe!lla!iles di:I ncx ollject toI l e ~ po&Y,j poce
a,d ba'a box.
2 See Ne,v Yak Rehabiitm:l Mm]Emen1 Ca:e. LLC v. NLRB. 500 F.3d 1070 (D.C. Cr. 2007); 0/emile Transport Co. v.
NLRB, 140 F.3d 259 (O.C. Cr. 1998).
3 Per Ar1ide 271 [25a-Aj, l.abCJ Code.
• 1km Ar1ide 259(a) (248{a)I,LalxJ Code
2Ssm FoodQoop, Kaid Uriled Food cridComnercialWmers lntema!ala Unixl, l.oca 1167. 35HlRB 168, Dec.
29,2011.
& Sedioo 8, [bmetl)' Secoon 7]. ~le IX. Boot V, RiJles kl lmpenenl ~e Lm Code, as ameooed by Oepatrenl Oroer No.
40-03, Series ct 2003, jFeb. 17, 20031,and as Wier emended aid re-runl>Ered by Secoon 12, Depmenl Ode' No. 4o.l-
t5, Series ct 2015 ~ 07, 2015], l>il.
the premises shall be confiscated by the Election Officer and returned to its owner
only after the conduct of the certification election. 1 ·
6. PREPARATION OF BALI,OTS.
TI1c Election Officer is required to prepare the ballots in English and
Filipino or the local dialect. The number of ballots should correspond to the
number of voters in the bargaining unit plus a reasonable number of extra.ballots
for contingencies. All ballots shall be signed at the back by the Election Offiter and
an authorized representative each of the contending unions. A party who refuses or
fails to sign the ballots waives its right to do so and the Election Officer shall enter
the fact of refusal or failure and the reason therefor in the records of the case.2 It
must be noted that, by virtue of the "Employer aJ Bystander" rule, the employer has
no right to sign the ballots.
7. CASTING OF VOTES.
· The voter must put a cross (x) or a check(✓) mark in the square opposite
the name of the chosen union or "No Union" if he/she does not want to be
represented by any union. If the voter inadvertently spoils a ballot, he/she shall
return it to the Election Officer who shall destroy it and give him/her another
ballot.3 Any member of the CBU who is unintentionally omitted in the master ·list
of voters may be allowed to vote if both parties agree; otherwise, he/she will be
allowed to vote but his/her ballot should be segregated.4
8. CHALLENGING -OF VOTES.
a..Grounds.
The following provision of the &iks to Implement the Labor Code contains
the grounds for challenging of votes but surprisingly, it has been ordered deleted by
virtue of Dtpartmml Order No. 40-F-03, Serits of2008:S
"Ao authorized representative of any of the contending
unions and the cmpl2yer may challenge a vote before it is deposited in
the ballot box only on any of the following grounds:
(a) That there is oo employer-employee rdationship between
the voter and the employer; or ·
(b) That the voter is not a member of the appropriate
bargaining unit which petitioner seeks to cepresent. "6
, Id.
2
Secoon 8, ~ IX, Bocl( v. ~ l o ~ lhe Lm Code, as anended by Oepmeol Order No. 40-F-03, Serles of
2008 [Oct 30, 2008).
3 Secoon 10. !loonerl'f Sedioo 9). ~le IX. Book v. rues kl ~ t 1toe Laber Code, as amended by OepmErt Order
No. 40-03, Series ct 2003, feb. 17, 20031. aid as rurthef amended cY1d re-rurbered by Secoon 13, DepmentOrder No.
40-l-tS, Series ct2015 {Seplerrller07, 2015), l>o.
Id.
Issued oo Clalbet 30, 2008. The mrdatD(y p!l1lisioo dele!n;J Dis secfun slates: 'Secoon 10, Rule IX is hereby deleted.'
And Sedioo 11 ct Rule IX has been amended ano re-ronDered ii lt1is v.ise: ·Seem 11, Rule IX is he!eby emended aid
~ as Secbl to ll"der RI.le IX, lo read as fobls: Sedioo 10. Pro::edtre i1 lhe chaJeoge ct voles. -'IX'/ (See
quoloo J)l'O'lisi:Jl ct tis sedioo beb.Y).
6 Sedioo 10, Rute IX, Book V, Ibo.
 BAR REVIEWER ON LABOR LAW
440
While the said deletion is understandable considering that any challenge
that concerns the qualification and eligibility of the voters can no longer be done at
the time of the election itself but during the pre-election conference,t the validity of
the two (2) grounds afore-mentioned has not been rend~rcd nu~t~~. by such
deletion. Not only are they proper to be raised in so challenging·the eligibility of the
voter concerned but their continued validity is recognized in the amendatory Riiks
which make express reference to the same grounds in re~d to resolving "on-thc-
spot questions. •t (Sec discussio~ bclo_w on ~ to~ic). ~s only s~ows that the 2
1 (1) The challenge to the voter should be made and asserted "during the
grounds mentioned therein remain valid despite said sectt~n s deletton.
Moreover the deletion of this section is ob11;ously proper insofar as the
right granted to th~ employer to assert a challenge is concerned. 'Ibis is pursuant
to the same "Employer OJ By1tander" rule.
b. Procedure in challenging ofvotes.
The procedure in the challenging of votes has been cc-crafted° in
Dtpartmenl Order No. -10-F.OJ, Series of2008,3 as follows:
"Section 10. Pcocedure iD the challenge of votes. • The
ballot of the voter who ha.~ been properly challenged during the
PRE-ELECTION CONFERENCES, sh2'1 be pbced in an
envelope which shall be sealed by the Election Offic~ in the_ presence
of the voter and the representatives of the contending uruons. The
Election Officer shall indicate on the envelope the voter's name, the
union challenging the voter, and the ground for the challenge. The
sealed envelope shall then be signed by the Election_ Officer and the .
reprcsen~tives of the contending unions. The Election Officer shall
note all challenges Ill the minutes of the election proceedings and shall
have custody of all envelopes containing the challenged votes. The
envelopes shall be opened and the question of eligibility shall be passed
upon BY THE MEDIATOR-ARBITER only if the number of
segregated votes will materially alter the results of the election."4
c. On-th~spot questions.
The Election Officer shall rille on any on-th~spot question relating to
and raised during the ~ of the election. In I!,2 case, however, shall the
1 See Soool 10, 0epmert 0rm No. 40f-03, Series a 2008 !Ott 30, 2008~ it en1re ixtMSioo is QUCild bebN.
(PrMX!Slf rurbered Sectiln 11, Ride IX, Book V, btA adered re-rurbered t.nder lhls Depatnelt Otder No. -40-F-03,
Seriesa2008). Flltier,lwas heldil~watets· lrolv. NAMA'MJ, GR No. L-18848,>.pi 23, 1963, 7 SCAA730,
o a
that tie~ &ne q.iesm tie isl qBlled vcters is tUi"g lhe ire-eJedial ccrmrxe. kca, no krger be anesl!!d
M"l:l tie aeiialanixtalhe certrolfaiellml.
2 Sectbl 11 (lonneltf Sectbl 12) Ride IX, Book v. Rues to krj)lement the l..abCJ Code, as anended l7t ~ Older
No. 40-03, Series d 2003, !Feb.'17, 20031.aid as re-rurtiered l7t Depment Otder No.4M-03, Series a 2008 [0d. 30,
2008~
l ls9Joo 00 OclJber 30, 2008.
Prl!\10USl'f oonbered Sectb1 11, ~ IX, Book V, but ordered re-numbered lllde- Depmenl Order No. 40f-03, Series a
2008(0d. 30.2008~ ~ ~ - rurrber asegregated~~ matere1y a the resu1s of the eledm.
CHAl'1UflVE 441
LABOR RELATIONS
Election Officer rule on any of the grounds for challenge specified in the
immediately preceding Section 10 quoted above1 because the authority to rule on
such grounds for challenge is vested in the Mediatoc-Arbiter.2
d. Notable ahanges in the Rules.
Based on the foregoing disquisition on the amendments, deletions and
changes in the &tits, it is clear that
PRE-ELECTION CONFERENCES" and not during the election
proper which w:i.s what was provided in the old RMk1, i.e., that the
challenge be made right "beforr {the ballot] iI dtpoJited in the balht box. '5
(2) After being challenged during the jm-ekaion conferences, the
challenged voter will still be allowed to vote in the election although
at the time he/she casts his/her ballot, it shall be pla~ed in ~
envelope which shall be sealed by the Election Officer in the presence
of the voter and the representatives of the contending unions. The
Election Officer shall then follow the procedu.cal steps in processing
challenged votes laid down in Section 10 of Rule IX, as quoted above.
(3) The grounds for challenging a vote remain the same, namely: (a) that
there is no employer-employee relationship between the voter and·the
employer; or (b) that the voter is no·t a member of the appropriate
bargaining unit which petitioner seeks to represent"
(4) The Election Officer, in no case, has authority to rule on questions
of voter eligibility (referring to the said 2 grounds), his/her role being
confined only to taking "note of all challenges in the minutes of the
election proceedings" and to "have custody of all envelopes
containing the challenged votes." . .
(5) It is the Mediator-Arbiter who has the authority to rule on such
questions ofvoter eligibility.4
(6) The l;:Iection Officer shall rule on :any on-the-spot question relating to
and raised during the ~ of the election.
1
Sedx:n 11 (fooneltt Sedx:n 12), Ru\! IX, Book V, Rues b krj)lerrenl te laxr Code, as aneooed 17f llepment Otde!
No. 40-03, Series of 2003, [Feb. 17. 2003). llld as l"&fUTbenld by Oepm-,ent Orm No.40-F-03,Serlesof200810tt 30,
mi.~ tare!ererceb'Secixl 10'n tis jXtMSOl isro lxqeramo2sn:e tis 2008Cepcmm0ile-No.40f.
03 has deleted sad Sedx:n 10 and hasre-rurbered Sectiln 11 b Secfal 10.
2 See Secfi:xl 10 v.lth was prevnJStf IU1ileled Sedx:n 11, rue IX, Book v, aid rerurbered Ln!er Depment Orm
No.40-F-03. Series d 2008 [0d. 30, 2008i
3 As ~ JrO','ded, nSedx:n 10, ~ IX, Book Va tie krj)llmlnfrg Rues. Ila! is: 'NI amizoo ~ of
rJrf a toe c:oomrn;i uoons and I l l e ~ rT1i1f dlalmgea'IOi! bebe ~ i s ~ n11e ~box ,:,;t
• &Jt ioo eoveklpes shal be opened ard Ile QUeStm a eiJiWt shal be passed upon 17f te Meciall1Mie wt l tie
 IIAR Rt-VIEWER ON IABUR IAW
442
9. PROTEST.
a. Requisites for valid invocation ofprotest.
The following requirements, as a matter of procedure, must be complied
with in order that a protest would prosper, lo wit · Thus, in Philippine Ff'llil.r ami Vegetable lndUJlriu, Inc. v. Hon. &iben D. Tomi,2
(1) Any party-in-interest may file a pr~test. with th~ ~lection Officer
based on ':,l!Y i11ue ariiingfrom [the certificanon electlon s] ro11d11c/ orfrom
i/J m 11/h. •! Such protest shall be recorded in the minutes of the
election proceedings. Protests not so raised immediately after the last
ballot cast are deemed waived.2
(2) General reservation to file a protest shall be prohibited. The
protesting party should specify the grounds for protest.3
(3) The protesting party must formaliZ! its protest with the Mediator-
Arbiter, with specific grounds, arguments and evidence, within five
(5) days after ·the close of the election proceedings. If not recorded
in the minutes and formalized within the prescribed period, the
protest should be deemed dropped4 or waived.5
b. Meaning of''party-in-interest."
It must be noted that only a ''part;-in-inteml" or more appropriately, a
"1111i011-i11-inttml" can file a protest For lack of personality, it cannot therefore be
filed by:
(1) a labor union which is not a participant in the certification election.6
(2) a union which has disaffiliated from its mother federation and which
has no independent registration.7
(3) an employer, being legally treated merely as bystandec.8
c. MeaniI1g of"dose of the election pwceedings."
The phrase "clo1e of the election proaedings" as used in the pertinent
Implementing &lies, refers to that period from the closing of the polls to the counting
and tabulation of the votes, as it could not have been the intention of the
Implementing &lies to include in the tean "close ofthe election proaedings", the period for
the final determination of the challenged votes and the canvass thereof, which may
1 Secml 19, ~ VIII, Bcxi V. rues b ~ Ile Laba Code, as aneooed b y ~ Onler No.~ . Series d
2003, feb. 17, 2!Xl3).
2 Socfal 13, ~ "1n, Bcxi v, rues ri l'rpementtie Laba Code. as prMlUStf amin!ed im re-rurbered as SecfD1 12
[bmeltf Sedioo 13]b y ~ Oder No.~ . Series d 2003, feb. 17, 2003].
) k1
k1
See Scrram ~ ~ a M I Sa Pm P'iaslx:v. l.!9uesma, G.R No. 111245.Jill.31, 19137.
GOfl.CCPYkJl(efS lmiv.CR. G.R No. L-3.1015,Sept. 10, 1979, 93 SCRA 116.
1 Reyesv. Opie, G.R No. L-48192, ~ 30, 1979, 89 SCRA 279.
1 SeeAm:te271 (258-AllmCode.
CIIAl'l'ER FIVE
443
tABOR RELATIONS
take a very long p~rio~. Thus, if a protest can be formalized within five (5) days
after a final determtnatton and canvass of the challenged votes have been made it
would result in an undue delay in the affirmation o: the employees' expres;ed
choice of a batgaining representati.ve. 1
the fetiti~ner's protest was declared filed out of time because after filing a
maoifestatlon of protest on December 16, 1988, the election day, it only
formalized the same on February 20, 1989, or more than two (2) months after the
dose of the election proceedings (i.e., December 16, 1988). Declared not
persuasive was petitioner's following arguments: (1) that the term '~lection
proaedingi'' includes not only the casting of votes but necessarily includes the
canvassing ~d appreciatio~ ~f votes cast; (2) that consequently, considering that
the canvassing and _apprectatlon of all the votes cas: were terminated only on
February 16, 1989, It was only then that the electi4n proceedings are deemed closed;
an~ (3) ~ at_when_ the formal protest was filed on February 20, 1989, the five-day
penod within w~ch t? ~e the fonnal protest still subsisted and its protest was
therefore formalized within the reglementary period.
d. \Vhcn 5-dayperiod treated as mere techriicality.
The 5-day period is generally strictly observed. However, in the case of
National Federation of L:zbor v. The Semta,y of Libor,3 it was held that .where a
substantial number of workers were disenfranchised since they were not notified of
the date of the certification ~ection, coupled with the fact that the report of the
Med-~biter confirmed to be true the allegations of fu.ud and irregularities, the 5-
day penod should be treated as a mere technicality which must not be allowed to
prevail over the workers' welfare. As the Supreme Court stressed in LVN Pict11res,
Inc. v. Phil Musicians G"ild,4 it is essential that the employees must be accorded an
opportunity to freely and intelligently determine which labor organization should
act in their behalf.
10. CHALLENGING OF VOTES VS. PROTEST.
The remedy of challenging ofvotes is different from protest in that:
(1) In the fomrer, the grounds that may he invoked concern voter
eligibility,5 hence, are substantive in nature; while in the latter, the
~ Fruis axl Ve;ie!ab!e hilsb'es, "- v. Hal.~ D. Tares, G.R No. 92391, M, 3, 1992.
k1
3 G.R No. 104556, M!'ch 9, 1998, 287 SCAA599,607.
• G.RNos.L-12582axll-12598,Jm.28, 1961, 1SCAA 132.
5 Rsemg b Ile lal:7.mJ 2 grtmls: (a) Thal there is no empk),jer~ relm1sl'4) bet.veetl tie vd!!r im lhe
~ a (b) Tta Ile voter is not a trerriler dlhe apprq,riale bagaililg till v.lit1 petibner seeks b represe,t (See
~ 10, ~ IX, Bcxi V, ~ ri ~ tie Laboo' Code, as anended '1f Depm-,ent Order No.~. Series of
2003, [Feb. 17, 2003i

SAR REVIEWER ON IABOR I.AW
444
grounds that may be asserted involve the conduct and mechanics
of the election, thus, are procedural in character.
(2) 'The Jonntr should be raised during the pre-election conferences but
not during the election proper; while the latter sh~uld be raised and
recorded in the minutes during the election proper and formalized
with the Mediator-Arbiter within five (5) days after the close of the
election proceedings.
11. SPOILED BALLOTS.
"Spoikd haiku" refers to a ballot that is tom, defaced, or contains markings
which can lead another to clearly identify the voter who casts such vote.1 Spoiled
ballots are not reckoned to determine majority. The earlier ruling in A/Jitd Worktr.r
v. CIR,2 that spoiled ballots should be counted to determine the majority does not
possess any relevance anymore, according to PAFW v. BLR3
12. ABSTENTION.
"Ab1tentio11" refer~ to a blank or unfilled ballot validly cast by an eligible
voter. lt is not considered as a negative vote. However, it shall be considered a
valid vote for purposes of determining a valid election.4
13. CONDUCT OF ELECTION AND CANVASS OF VOTES.
a. Opening and dosing ofprecincts.
The election precincts should open and close on the date and time agreed
upon during the pre-election conference. The opening and canvass of votes should
proceed immediately after the precincts have closed. Failure of any party or the
employer or his/her/ their representative/s to appear during the election
proceedings should be considered as a waiver to be present and to question the
conduct thereof.I
b. Canvassingofvotes.
The votes should be counted and tabulated by the Election Officer in the
presence of the representatives of the contending unions. Upon completion of the
canvass, the Election Officer is required to give each representative a copy of the
' Ne.Y Secoon 1(v,w), ~ 1, Bed v, rues kl lfrlllernenl te t.m Code, as .mended by 0epmen Order No. 40-03,
Senesci2003, !feb.17,2003].
Allied~ Association ci toe Pllippi'lesv. C1R, GR Nos. L-22580 inl L-22950, Jtroe 6, 1967, 20 SCRA 364.
3
PAFLU V. Mau oll.mRelations, G.R No.L-43760,Aug. 21, 1976.
' New Secoon 1(a), ~ 1, Bod<. v, Rues k l ~ te t.m Code, as Mll'5lded l1f Dep.rurent Order No. 40-03, Series
a2003. feb. 17. 20031, crid as furfler added l!v0u!lh lhe crneranent introduced by Sedioo 2, Depatrent Older No. 40-1-
1~. Senes a2015 {Sel>milef 01, 201i erAilled 'Firlher hneoorg Depment Order No. 40, Series a 2003, ~
te ~ Rules i!lld Reguali:xls of Bod<.valhe Labor Code ofthe f'lll'wies, as Amended.'
1
Sedioo 14 [bmel1'f Sedioo 15], ~IX.Bod<. V, ~ kl kf1>le!nent Ile Labor Code, as mooed by Oepararet Order
No.40-03, Senes d 2003, lfel>. 17, 2003].
CHAl'TtRFIVI
445
lABOR RElATIONS
minutes of the election proceedings and results of the election. The ballots and the
tally sheets shall be sealed in an envelope and signed by the Election Officer and
the representatives of the contending unions and transmitted to the Med-Arbiter,
together with the minutes and results of the election within twenty-four (24) hours
from the completion of the canvass. Where the election is conducted in more than
one region, consolidation of results should be made within fifteen (15) days from
the conduct thereof. 1
c.
CONSENT ELECTION
1. DEFINITION.
''u11Jt11t tkrtion" refers to the process, voluntarily and mutually agreed
upon by the contending unions, of determining through secret ballot the SEBA of
the e·mployees in an appropriate CBU for purposes of collective bargaining with
the employer. It is conducted with or without the intervention of the DOLE.2
2. CONSENT ELECTION VS. CERTIFICATION ELECTION.
C(}/uent election is but a fonn of «rlijicatidR election. They may be
distinguished from each other in the following manner.
(1) The former is held upon the mutual agreement of the contending
unions; while the latter does not reqiµre the mutual consent of the parties as ii is
conducted upon the order of the Med-Arbiter (Mediator-Arbiter).3
(2) The former may be conducted with or without the control and
supervision of the DOLE; while the faller is always conducted under the control
and supervision of the DOLE.4
(3) The former is being conducted as a voluntary mode of resolving labor
dispute; while the latter, although non-adversarial, is a compulsory method of
adjudicating a labor dispute.
(4) The former is given the highest priority; while the latkr is resorted to
only when the contending unions fail or refuse to submit their representation
dispute through the Jormtr. 5 This is so because under the Impkmenting &k11 as
a111mdtd16 even in cases where a PCE is filed, the Med-Arbiter (Mediator-Arbiter),
during the preliminary conference and hearing thereon, is tasked to determine the
"possibili!J of a ro111ml tlertion." It is only when the contending unions fail to agree to
the conduct of a consent election 9uring the preli.mina[}" conference that the Med-
Sedioo 13 [!ooneflf Secoon 14], Rule IX. Bed V, lbil.
Sedioo 1 lhL Rule ~ Bed V, ~ kl ~ t,e Laba Code, as mooed ttJ Depment Order No. 40-03, Senes a
2003, (Feb. 17, 2003];Algiev.De M!sa. G.R. No. 97622,Oct 19, 1994, 237 SCRA647.
3 See Sedioo 1f,J, Rule I, Bed V, ~ to mplement Ile Laba Code, as mooed l1f Dep.rurent Order No. 40-03, Series
ci2003, {Feb. 17, 2003].
• Id.
1 Sedioo 3, Rule Vin, Bed V, ~ kl kr~>lemerO,e Lm Code.
6 Sedioo 9, ~ VIII, Bed V, ~ kl kr1>lement lhe Lm Code, as mooed by ClepMnert Order No. 40-03, Senes ci
2003, lfeb. 17, 2003].

BAR REVIEWER ON LABOR LAW
Arbiter (Mediator-Arbiter) will proceed with the process of certi~cation electio~ by
conducting as many hearings as he may deem necessary up to tts actual holding:
But in ·no case shall the conduct of the certification election exceed 15 days from
the date of the scheduled preliminary conference/hearing after which time, the
PCB is considered submitted for decision.1 · (2) If all the votes for the contending unions are added up, it will result in
(5) The Jormtr necessarily involves at least two (2) or more contending
unions; while the latter may only involve one (1) petitioner union.
(6) The former may be conducted in the course of the proceeding in the
latter or during its pendency.
d.
RUN-OFF ELECTION
1. ELEMENTS.
A "run-off election" may only be conducted W1der the following elements:
(a) There are three (3) or more unions competing in a certification or
consent election;
(b) None of the contending unions garnered the majority of the valid
votes cast;
(c) But the total number of votes for all contending unions, if added, is at
least fifty percent (50%) of the number of valid votes cast;
(d) If the above three (3) elements are prese~~ a nin.qff ,le~n ~ be
conducted between the labor unions receiving the two (2) highest
number of votes in such certification election or consent election.2
The third union and the others, if any, will no longer be allowed 'to
participate in such election. And for obvious reason, the choice of ''No
Union" should no longer be included in the run-off election.3
2. WHEN TO BE CONDUCTED.
If the above conditions that justify the conduct of a run-off election are
present and there are no objections or challenges which, if sustained, can materially
alter the election results, the Election Officer should mo/11 proprio conduct a run-off
election within ten (10) days from the close of the election proceeding between the
labor unions receiving the two highest number of votes.4
3. ILLUSTRATION.
To illusuatc, in a certification election involving four (4) unions, namely:
Union A, Union B, Union C, and Union D, where there are 100 eligible voters
who validly cast their votes, and the votes they each garnered are as follows: Union
' Sedioo 11, Rule vm.Book v, 1ic.
Mi:le 268 i256L 1..a1x:r Code; Section 1 (ssj, Rule I, 8ool; V, 19.oos ID lrrl)mieot tie l2lxx Code, as ~ by
llepmentW,No. 40-03, Series of 2003, (Feb.17,20031
i Id.
4 Sedioo 1, ~ X. Bod( V, Ibid
CHAl'TER FIVE 447
LABOR RELATIONS
A- 35; Union B - 25; Union C - 10; Union D - 15; and No Union - 15, a run-
off election may be conducted between Union A and Union B because:
(1) Not one of th~ unions mustered the majority vote of 51 votes but
Union A and Union B got the first two highest number of votes;
at least 50% of the valid votes cast (Union A - 35; Union B - 25;
Union C - 10; Union D - 15 for a total of 85 or 85%); and
(3) There are no objections or challenges which, if sustained, can
materially alter the results of the election.
e.
RE-RUN ELECTION
1. BELATED ENUNCIATION OF RULE ON RE-RUN ELECTIONS_.._
1bis mode of choosing the SEBA is not expressly provided in the Labor
Code nor in the original rendering of its implementing rules. It was only in 2015
that an issuance of the DOLE Secretary has introduced this term for the first time
as an amendment to the &ties lo Implemml the ubor Codt and defines it as follows:
"'&!-nm eledion' refers to an election conducted to break a tie
between contending unions, including between 'no union' and one of the
unions. It shall likewise refer to an election conducted after a failure of
election has been declared by the Election Officer and/or aff11II1ed by
the Mediator-Arbiter."1
2. GROUNDS CITED IN THE RULES FOR RE-RUN ELECTION.
Based on the above-quoted Rule, there are two (2) situations that justify
the conduct.of a re-run election, to wit.
(1) To break a tie; or
(2) To cure a failure of election.
3. A THIRD GROUND BASED ON JURISPRUDENCE.
A re-run election is obviously in the nature of a corrective action meant to
cure a seriously defective and distorted certification election. Consequently, a 3rd
ground that may be cited as would justify the conduct of a fair re-run election is
when the certification, consent or run-off election has been invalidated or nullified
due to certain serious irregularities that have been commined during the conduct
thereof, such as, inter alia, disenfranchisement of the voters, lack of secrecy in the
voting, fraud or bribery or acts of terrorism, force, threat and intimidation
employed by any of the contending unions or the employer. Such invalidation
·
1 lJootrsctm;j suppood; New Sectbl 1(~. IUl ~ Book V.Rues lo ~ I Ille Labor Code, as .mended by D:!pment
Orner No. 40-03, Series of2003, (Feb. 17, 2003].
 6AR Rl'Vl[WEIU.)N IAHOR I.AW
would necessitate the conduct of a re-run election among the contending unions to
determine the true will and desire of the employees-electorate.1
Philippine jurisprudence has not exactly denominated the holding of
another certification election after the invalidation of the first as "re-1'111111 election
but the same may well be deemed the correct terminology to descrioe it. Two cases
may be cited as good examples of cases where "re-11111" election was ordered, lo wit.
(1) Conftdmition ofCifiZ!III Labor Unio111 v. Noritf,2 and
(2) National Ftdtralio11 ofLabor v. The Strn/ary ofLobor.3
•
In ori:lering another run-off election in Case No. 1 (u'!ftduatio11) above,
the High Court 'ratiocinated:
"We hold that the certi6catioo election is invalid because of
ccmin irregularities such as that (1) the workers on the night shift
(ten p.m. to six a.m.) and some of those in the afternoon shift were not
able to vote, so much so that out of 1,010 voters only 692 voted and
about 318 failed to vote (p. 88, Rollo); (2) the sea:ecy of the ballot was
not safeguarded; (3) the election supervisors were remiss in 'their duties
and were apparently 'intimidated' by a union representative, and (4) the
participating unions were overzealous in wooing the employees to vote
in their favor by resorting to such tactics as giving free tricycle rides and
T-shirts.
"The purpose of a certification election is to give the
employees 'true reprcscnution in their collective bargaining with an
employer' (5 I C.J.S. 969). That purpose was not achieved in the run-off
election because many employee$ or union members were 1101 able to
vote and the employer, through apathy or deliberate intent, did not
render assistance in the holding of the election."
lo the same vein, the re-run election in Case No. 2 (National Fttkralion of
Labor) above, was ordered by the Court on the basis of the following ratiocination:
'The complaint in this case was that a number of employees
were not able to c.a~t their votes because they were not properly
notified of the date. They could not therefore have filed their protests
within five (5) days. At all events, the Solicitor General suteS that the
protests were not filed within 6ve (5) days, and is a mere technicality
which should not be allowed to prevail over the workers' welfare. As
this Court stressed in Ll/N Pia11m, Inc. ,. PMl Mmuians Gllild,4 it is
essential that the employees must be accorded an opportunity to freely
an~ intelligently determine which labor organization shall act in their
behalf. 1be w~rkers in this case were denied this opportunity. Not only
were a ~u\)stantial number of them disfranchised, there were, in
1
See Coolederam ctCiizens libJUix1s v. ~ GR No. l-56902.SeplefltEr21, 1982,116 SCRA 694.
1
GJU.b.L-56002.Se!t.21, 1982. 116SCRA694.
3 G.R No. 104556, Mrth 9, 1998, 287 SCRA 599,607.
' 1SCAA 132(1961).
CHArTER FIVE 449
IABOR REIATIONS
addition, allegations of fraud and other irregularities which put in
question the integrity of the ele~oo. Workers wrote leners aod made
complaints protesting the conduct of the election. The Report of Med-
Atbiter Pura who investigated these allegations found the allegations of
fraud and irregularities to be true.
"lo one case1 this Court invalidated a certification election
upon a showing of disfranchisement, lack of sca:ccy in the voting and
bribery. We hold the same in this case. The workers' right to self-
organization as enshrined in both the Constirution and Labor Code
would be rendered ougatoi:y if their right to choose their collective
bargaining representative were denied. Indeed, the policy of the Labor
Code favors the holding of a certification election as the most
conclusive way of choosing the labor organization to represent workers
in a collective bargaining unit. lo case of doubt, the doubt should be
resolved in favor of the holding of a certi6cation election."
4. VARIOUS SITUATIONS WHERE A TIE MAY OCCUR.
Based on the above-quoted provision of the Impkmmling &lie!, the tie
contemplated therein which would justify the holding of a re-run election may
occur in any of the following scenarios:
(1) At least 2 unions are involved and a tie in the votes occuned:
(a) Between the 2 contending unions and the "No Union'~ choice did
not garner the majority; or
(b) Between 1 of the 2 unions and the ''No Union"choice.
(2) At least 3 unions are involved and a tie in the votes occuned:
(a) Between and among 2 or more or all of the contending unions and
the ''No Union" choice did not muster the majority; or
(b) Between and among 1 or more of the contending unions and the
"No U11io11" choice.
(3) A tie in the votes occurred between the 2 unions involved in a run-eff
election.
It bears stressing that if the ''No Unio11" choice gamers the majority of the
votes and thus wins the certification or consent election, a tie between and among
the contending unions will no longer matter. This means that the employees in the
CBU do not want any SEBA to represent them. Consequently, no CBA negotiation
will transpire.
1 Citing CoofederalXln d caizeos Laborlkm V. Nooe!, G.R. No. L-569J2. Sepler!Der21, 1982. 116SCRA694.
l tt roost be stessed Illa\ lhe 'No I.ml" dlcice is ~ ale d Ile dllXeS il al CEl1ifca1m ~ . v.itl Ile sole
exreptioo d nn<1'1 ele::ticrG,b- ooviltJs reason.
450 IIAR RIVI EWER ON IABOR IAW
In any of the three (3) situations mentioned and discussed above, the
Eleciion Officer should immediately notify the parties of a re-run election. The
Election Officer should cause the posting of the notice of re-run election within
five (5) days from the certification, consent or run-off election. The re-run election
shall be conducted within ten (10) days after the posting of notice.1
lbe choice receiving the highest votes cast during the re-run election shall
be declared the winner and shall be certified as the SEBA accordingly.2
5. RULE IN CASE OF FAILURE OF ELECTION.
In failure of election, the number of votes cast in the certification or
consent election is Im than tht majori~ of tht n11J11btr oft!igibk votm and there are no
challenged votes that could materially change the results of the electioo.3 For
example, in a CBU composed of 100 employees, the majority of 100, which is 51,
should participate in the election; otherwise, if less than 51 employees have
participated, there is a failure of election.
A failure of election shall not bar the filing of a motion for the immediate
holding of another artiji((Jtifln or ronstnl tk&tion, now to be called re-run election,
within six (6) months from the date of declaration of failure of election.•
6. RUN-OFF ELECTION VS. RE-RUN ELECTION.
These two kinds of election may be distinguished from each other in that
a run-off election is usually required if no choice on the ballot receives a majority of
valid votes cast in an election involving 3 or more labor organizations, provided
that the total number of votes for all contending unions is at least 50% of the
number of valid votes cast5 Consequently, the run-off election will be conducted
between the 2 choices receiving the highest number of votes and the one receiving
the next highest vote number. In certain exceptional cases, however, where all the 3
or more or all the choices receive the same number of votes - no run-off election
should be conducted; the "inconclusive" election should be declared a nullity and a
re-run election should be held instead.
' Nl'HSedion 18, IU! IX. Soct v. ~ kl ~lemert te L.abocCooe, a s ~ an-ended bylle!)am,emOrtla-No.
40-03,Series cl 2003, [Fell. 17, 20031.
kl.
Sedxxl 16 lfoorett Sedxxl 171, rue IX. Bocic. v,~ 1:> n'!)len'et h! LalxJ Code, as mnded b y ~ 01le'
No 40-03, Series cl 2003, jFeb. 17, 2003), ir1d a s ~ by Depcm,ent Order No. 40f-03, Series ct2008 [Od. 30.
200ai
' This !)IWisi::rl ~ 'Effect cl lam of eution' mAd 00/I be denarraed as Secioo 19, fluc IX. Book V, Rules IO
~ tie liilor Code, by YWJe cl fie 1e-~ ocdered by Sedion 17, ~ O'de' No. 40-~15, Series of
2015 !Septenter 07, 2015]
1
Miele 268 ~56L LalxJ Cooe; Sednl 1 lssl IU! I, Book V, fqJies kl hl>',emn h! Lalor Cooe, as cl11ef1ded by
~ Q-de- No. 40-03, Series of 2003, !Fell. 17, 2003t
CHAl'TER FIVE
IABOR REIATIONS 451
D.
RIGHTS OF LABOR ORGANIZATIONS
1. RIGHTS UNDER THE LABOR CODE.
. !he Labor Code enumerates the following rights of legitimate labor
orgaruzanons:
"Article 251 [242). Right, of Ltt}limoft Lzbor Orgoniz.otion1. - A
legitimate labor organization shall have the right:
(a) To act as the rcpcesentative o( its member:; foe the
purpose of collective bargaining;
(b) To be certified as the exclusive representative of all the
employees in an appropriate bargaining unit for purposes
of collective bargaining;
(c) To be furnished by the employer, upon written request,
with its annual audited financial statements, including the
balance sheet and the profit and loss statement, within
thirty (30) calendar days from the date of receipt of the
request, after the union has been duly rccogoized I by the
employer or certified as the sole and exclusive b:\rgaining
repccscotative of the employees in the bacgaioing unit, or
within sixty (60) c3!endar days before the expiration of
the existing collective bargaining agreement, oc du.ring the
collective bargaining negotiation; ..
(d) To owo property, real or pasonal, for the use and benefit
of the labor organization and its members;
(e) To sue and be sued in its registered name; and
(Q To undertake all other activities designed to benefit the
organization and its members, including cooperative,
housing, wdfare and other projects not .contruy to law.
"Notwithst1nding any provision of a general or special law to
the contruy, the income and the properties of legitimate labor
organizations, including grants, endowments, gifts, donations and
contnbutions they may receive from fu.temal and similar organizations,
loc~ or foreign, which ace actually, directly _and exclusively used for
thcu lawful purposes, shall be free from taxes, duties and other
assessments. The exemptions provided herein may be withdrawn only
by a special law expressly repealing this provision."2 .
1
VriJrtary recogniioo as a rroJe ct desqlafrg a SEBA has been repealed il1d ~ by tie latest nm ct ReqJestng
!oc SEM CertifJcafDl as p!wded il Sedicl141., Rufe VII, ~ Order No. 40-~15, Series cl 2015 [Septen'ber 07
2015}. '
1
A s ~ by Sedion 11. RA No. 6715, 1v'arth 21, 1989; As rerumtred J)IISUcn kl Sedion 5, RA 1-b. 10151, m
21, 2011 ir1d OOlE Dep,m,eot AcMsay No. 01, Series d 2015 {Rerurbemg cl tie LalxJ Cooe cl the PhfWiles as
Alrended), issued oo .U, 21, 2015. '

452 BAR REVIEWER ON I.ABOR lAW
2. TOPICS UNDER THE SYLLABUS.
The 2019 Syllabus prescribes only the following two (2) subject matters
under this topic of "RIG I-ITS OF LABOR ORGANIZATIONS,,:
1. CHECK OFF, ASSESSMENTS, AND AGENCY. FEES; and
2. COU.ECTIVE BARGAINING.
These are discussed below in rerialim.
1.
CHECK-OFF, ASSESSMENTS, AND AGENCY FEES
a.
CHECK-OFF
1. CHECK-OFF, MEANING.
Broadly, the tetm "check-off' means a method of deducting by the
~ from the employee's pay at prescribed periods, any amount due for fees,
fines or assessments. 1Strictly speaking, '~htck-ojf' is a process or device whereby the
employer, on agreement with the union certified as the SEBA, or on prior
authorization from its employees, deducts union dues or agency fees from the
latter's wages and remits them directly to the union.2
2. RIGHT TO CHECK-OFF, AVAILABLE ONLY TO THE SEBA.
The right to check off ~f union dues or agency fees as above-described is
available only to the SEBA. The minority union, not being the collective batgaining
agent, has no such right The employer therefore is not under any legal obligation
to check-off any union dues and assessments for the minority union.
3. TWO (2) KINDS OF CHECK-OFF.
Based on the above legal description of this term, ''&httk-ojf'' may thus
refer to two (2) things, to tvit.
. .
(1) Collection of 11nion does, rpetial asrtsJ111mts and fe,s (such as attomey's
fees, negotiation fees or any other exttaordinary fees) 3 by the SEBA
from its members; and
CHAYrER FIVE 453
lAB,PR RElATIONS
(2) Collection of agenq feei &om non-members of the SEBA but covered
by and included ~ the collective ba[gaining unit (CBU) who accept the
benefits provided in the Collective Bargaining Agreement (CBA).
4. PRINCIPAL DISTINCTION.
The 6rst kind mentioned above requires for its validity, the execution by
the employees of individual written authorization which should specifically state the
amount, purpose and beneficiary of the deduction;• but the second kind does not
require any such authorization since the law2 itself recognizes and allows it upon
the non-SEBA member's acceptance of benefits resulting from the CBA.3
S. CHECK-OFF OF AGENCY FEES FROM NON-MEMBERS OF SEBA.
In case a CBA is successfully negotiated and concluded by the SEBA,
check-off &om non-members thereof who accept the benefits flowing from the
CBA is authorized under paragraph [e] of Article 259 (248) of the Labor Code.
Thus, such non-members may be assessed a reasonable a.gmcy fee equivalent to the
dues and other fees paid by members of the SEBA. The individual written
authorization required under the law4 is not necessary to effect such check-off.
6. SOME PRINCIPLES ON CHECK-OFF.
• System of check-off primarily for the benefit of the SEBA and only indirectly
for the individual employees.5
• Check-off is obligatory on the part of employer.6
• Check-off, although an extta burden to the employer, is allowed by law.'
• Employer has the obligation to remit directly to the union whatever it has
checked-off. This is so because the right to union dues deducted pursuant to a
check off pertains to the local union which continues to represent the
employees under the tenns of a CBA, and not to the mother union from
which it has disaffiliated.8
' tid.
2 See3'-1sentence db 3-6elltence ~ [e) d htte259 l248) dOle LmCode.
3 f-ld/Ooss v.
d Datao Qllege, Inc. Joaqtin, G.R No. 110007, Oct 18,.19!16, 263 SCPA 358; 33f Pti 680.
4 ~ ~d Arti! 250 (241) dOle Lab!rQxtevach provm:
•Mx:te 250 (241i ~ and Ccrldl!IXlsdMmlersfllp
ii alab«Olgilmlm.- The fabffl:J ere Ile ~lsaoo axdions o f ~ ii alabcrcxgcriza!ioo: l00( (o) Olla"
lhan ir ll1cl1dalay adivities under Ile Code, oo ~ ~ at!Dmey's fees, negalalioo fees a 'df'tJ oOler
emmfnaly rees ll'Bf be checked atmxn an, anount due 1Da1 ~ \lii11outan lncMfmwftllln dxxl1.ali0n dutf
sl]nalbyU!e~ The1111'10riza!ionstnltlspeci!Df/statelheanmit,ptrposeandbene&:iilyofGlededudm"
5 Gralelv..The ~ Seaeayof labcr ! r i d ~ GR No. 115949. t.lath 16, 200>. 384 Phi 797,804; HdyCross
cl Da.'00 Cdlege, h:. V. Joaquin, supra; AB$-CSN &JpeNisas ~ lJnioo Mem>els V. Af3S.CBN BroadcastnJ
Corp.,G.RNo.106518,MEh11, 1999.
6 kL; See paragraphs ~1 [n] cnt {ol of Mete 25012411 on dleck-off am dues aid specid ~ ni paragraph
(e) of Mx:le 259 ~481 d telmCode on ~fees.
7 A. L hnmen Transpatatkxl Co., Inc. v. Bicd Transpormtioo Empk),Jees Mlblal Assodaloo, G.R. No. L-4941, Ju>,t 25,
1952, 91 Phi. 649.
11 Vol«:hel Laba lkliX'I v. 81.R, GR No. L-45824, Jll1e 19, 1985.
 SAR REVIEWER or,1 lABllR LAW
454
• SEBA has the obligation to infoan the employer of the names of employees
subject of the check-off and the particulars of the deductions to be made. 1
• Employer is not liable to pay to the SEBA for unchecked-off union dues and
assessments.2
b.
ASSESSMENTS
1. RIGHT OF UNION TO COLLECT DUES AND ASSESSMENTS.
. The law strictly prohibits the check-off &om any amount due an
All unions are authorized to collect reasonable amounts of:
1. membership fees;
2. union dues;
3. assessments;
4. fines;
5. contributions for labor edu~ation and research, mutual death and
hospitalization benefits, welfare fund, strike fund and credit and
cooperative undertakings;3 and
6. agency fees. 4
2. REQUISITES FOR VALIDITY OF UNION DUES AND SPECIAL
ASSESSMENTS.
The following requisites must concur in order for union dues and special
assessments for the union's incidental expenses, attomey's fees and representation
expenses to be valid, namely:
(a) Authorization by a written resolution of the majority of all the
members at a general membership meeting duly called for the
purpose;
(b) Secretary's record of the minutes of said meeting; and
(c) Individual written authorizations for check-off duly signed by the
employees concemed.5
3. ASSESSMENT FOR ATTORNEY'S FEES, NEGOTIATION FEES
AND SIMILAR CHARGES.
As far as attorney's fees, negotiation fees or similar charges are concemed,
the rule is that no such fees and charges of any kind arising &om the negotiation or
1 Hct/CrossdDctrcr,CdsJe,n:.v.Jc8'1il,G.RNo.1100J7,0cl 18, 1996,263SCRA358;331 Ph1.680.
2 Id.
3 Mx:les 250(0) [241{o)] in! 292(a) (277{aJ, l>id.; Sedkln 1, ~ XII~ Bod< V, Rules t> ~ Ole Laber r.ode, as
arnemed by Depamnt Oder~ 40-03, Series of 2003, [Feb. 17, 2003i
4 Article 259(e) (248{e)], labor Code.
s Article 241[oL 1.abcr Code: ~ v. The Hoo. SeaeaJy ci 1.m n1 ~ ~ ABS-CBN ~
En1)1ajeeslklDlMerrtersY.ABSCBNBroadcastqCap.,supra.
CHAMl!R FIVE
455
LABOR REIATIONS
conclusion of the CBA shall be imposed on any individual member of the
contracting union. Such fees and charges may be charged only against the union
funds in an amount to be agreed upon by the parties. Any contract, agreement or
arrangement of any sort to the contrary is deemed null and void. 1 Oearly, what is
prohibited is the payment of attomey's fees, negotiatioc. fees or similat charges
when it is effected through forced contributions &om the workers from their own
funds as distinguished &om the union funds. 2
4. INDIVIDUAL WRITTEN AUTHORIZATION, WHEN REQUIRED.
employee who is a member of the union, of any union dues, special assessment,
attomey's fees, negotiation fees or any other extmoi:dina.ty fees other than for
mandatory activities under the Labor Code, without the individual written
authorization duly signed by the employee. Such authorization must specifically
state the amount, pw:pose and beneficiary of the deduction.3 The purpose of the
individual written authorization is to protect the employees from unwarranted
practices that diminish their compensation without their knowledge or consent•
S. INDMDUAL WRITTEN AUTHORIZATION, WHEN NOT
REQUIRED.
In the following cases, individual written authomati.on is not required:
a) Assessment from non-members of the ·SEBA of "al!n&J fau" which
should be equivalent to the dues and other fees paid by members of
the SEBA, if such non-members accept the benefits under the CBA.S
b) Deductions for fees for mandatory activities such as labor relations
seminars and labor education activities.6
c) Check-off for union service fees authorized by law.7
d) Deductions for withholding tax mandated under the National lntemal
Revenue Code (NIRC).
e) Deductions for withholding of wages because of employee's debt to
the employer which is already due.8
Q Deductions made pursuant to a judgment sgainst the work.er under
circwnstances where the wages may be the subject of attachment or
See Md! 241 nre1a1m mr>n:1~ lbl or Mc:Je 222 cite LabcrCode.
GabrEI v. The lm. Seaecary d lab«and EfilllOyment. supa; Vqcov. Traj;rlo, G.R. No. 74453, Mr, 5, 1989; Se1ar
lndusnal SeMals, kc. v. NI.RC, G.R No. 117418, Jan. 24, 1996, 252 SCRA :1!3; Palacd v. Ferrer-CaOeja. G.R No.
85333,Feb.26, 1900, 182SCRA 710.
' Mile241 [oLLabocCode.
• Gavmesv. Trajcm,G.R.No.7!ni7,Sepl 15, 1986, 144SCRA 138.
• s Mk:le259(e) [248(e}t Labort.ode.
6 Micle241 [01 lbxl.
1 RCP1 v. Seaetllyof Ulbct, G.R. No. 77959, Jan. 9, 1989.
8 Miele 1700, ~ Cede.
 BAR RM EWER ON VIBOR U.w
execution but only for debts incurred for food, clothing, shelter and
medical attendance.1
g) Deductions from Wllges ordered by the court.
h) Deductions authorized by law such as for premiums for PhilHealth,
social security, Pag-IBIG, employees' compensation _and the like.
6. MINORITY UNION HAS NO RIGHT TO DEMAND CHECK-OFF
FROM ITS MEMBERS.
The obligation on the part of the employer to undertake the duty to
check-off union dues and special assessments holds and,applies only to the SEBA
and not to any other union/ s (cal!t:d "Minority Union/ r'). Th.is is clear from the
manner by which the Supreme Court described check-off in the case of I-lofy Crou
of Dallt/0 ulk!J, In!. v. Joaq11i1112 that it is on the basis of the agreement with the
union which is recognized as the proper bargaining representative that the
employer is obligated to perform its task of checking off union dues or agency fees.
When stipulated in a CBA, or authorized in writing by the employees concerned -
the Labor Code and its Implementing Rules recognize it to be the duty of the
employer to deduct sums equivalent to the amount of union dues from the
employees' wages for direct remittance to the union, in order to facilitate the
collection of funds vital to the role of the union as representative of the employees
in the bargaining unit if not indeed to its very existence.
7. SOME PRINCIPLES ON UNION DUES AND ASSESSMENTS.
• Check-off for a special assessment is not valid after the withdrawal of the
individual written authorizations.3
• Unlike in authorization for union dues and assessments, dirauthoriz.alion does
not require that it be written individually. The fact that the disauthorizations
were collective in form consisting of randomly procured signatures and under
loose sheets of paper, is of no moment for the simple reason that the
documents containing the disauthorizations have the signatures of the union
members. Such retractions were valid. There is nothing in the law which
requires that the disauthori.zations must be in individual form. 4
• The right of the incumbent SEBA to check off and to collect dues is not
affected by the pcndency of a representation case or an intra-union dispute.5
• Appcoval of the union dues and assessments by the majority of all the
members of the union is required.' The Labor Code7 and the Rules to
I Af1i:le 1708, ll«1.
G.RNo. rnxm,Oct 18, 1996,263SCRA358;3311'111.680.
Pcm:l Y. Femr.caleja, G.R No. 85333, Feb.26, 1900, 182 SCRA 710-711.
Pcm:l Y. Femr-Caleja. ~ . .
See Iii JXO',isi:Xl d Sedal 1, ~ XVIII, Bodi V, ~ kl lrrplemenl ttie Labor Code, as amended by Mde 1,
IJepKl'reiOnler No. 09, SE!iesd 1997 [21 !Joe 1997.
Stelarinamll SeM:cs, he. v. NLRC, G.R t,\J. 117418, Jeri. 24, 1996, 252 SCRA 323; Palaool v. Ca',eja, et., supra.
Mi:le 241 ~ ltmid.
CIIAl'TU FIVE
WOR RELATIONS
457
Implement the Labor Code1 disallow a deduction for special assessment which
was passed by a mere board resolution of the directors, and not by the
majority of all the members of the union.
c.
AGENCY FEES
1. LEGAL BASIS.
The concept of agency fees is provided for under the 3rd sentence of
paragraph [e] of Article 259 [248]2 of the Labor Code which pertinently states:
"(e) xxx Employees of an appropciate bargaining unit who :ire
not members of the rt'Cognizcd 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 Proridtd,_that the individwtl authorization required under
Article 250 [241 ], P'=graph (o) of this Code shall not apply to the non-
members of the recognized collective bargaining agent(.)"
2. NATURE OF AGENCY FEES.
The SEBA which successfully negotiated the CBA with the employer is
given the right to collect a reasonable fee called "agency fee" from its non-
members - who are employees covered by the collective bargaining unit (CBU)
being represented by the SEBA - in case they~ the benefits under the CBA.
It is called 'age/19' fte.s" because by availing of the benefits of the CBA, they, in
effect, recognize and accept the SEBA as their 'agent" as well
To clarify, •~on-SEBA members"refer to members of the minority union/s
who lost in the certification election where the SEBA was certified as such. Simply
put, they are members of union/s other than the union certified as SEBA in the
same CBU.
According to Ho!J Crou of Dav(J() ulkge, !nf. v. Joaquin,3 payment by non-
SEBA members of agency fees to the certified SEBA which successfully negotiated
the CBA in an amount equivalent to the union dues and fees being paid by its
members is recognized under the law.' The non-SEBA members' acceptance of
benefits resulting from the CBA justifies the deduction of agency fees from their
pay and the SEBA's entitlement thereto.
3. CHECK-OFF OF AGENCY FEES.
''Che,k-o.lJ'' of agency fees is a process or device whereby tl1e employer,
upon agreement with the SEBA, deducts agency fees from the wages of non-
1
Sedal 13 !al,~ Vlll, Boal Ill lheled.
1 Mi:le 2591248) is ded 'Ultar Lm Pradx:es d fJrpVJl!IS.'
3 GR~ 110017, Oct 18, 1996, 263 SCRA 358; 331 Pill. 680,692.
• See ttie ea:ier (lJCXed pemert prMion olArtide 2~e) [248(e1J dfle Lm Code.

BAR REVIEWER. ON I.ASOR. I.AW
458
SEBA members who awil of the benefits &om the CBA and remits them directly
to the SEBA. 1 It is the duty of the employer to deduct or '~heek-oj/'' the sum
equivalent to the amount of agency fees &om the non-SEBA members' wagu '2
4. A NON-SEBA MEMBER HAS RIGHT TO ACCEPT OR NOT THE
BENEFITS OF CBA. ' necessacy.1
There is no law that compels a non-SEBA member to accept the benefits
provided in the CBA. He has the freedom to choose between accepting and
rejecting the CBA itself or the benefits flowing therefrom. Consequently, if a non-
SEBA member does not accept or refuses to avail of the CBA-based benefits, he is
not under any obligation to pay the ''agtllfJ ft11" to the SEBA since, in effect, he
does not recognize the status of the SEBA as his agent.
5. LIMITATION ON THE AMOUNT OF AGENCY FEE.
Tue SEBA cannot capriciously fix the amount of agency fees it may
collect from its non-members. Article 259(e) (248(e)] of the Labor Code expressly
sets forth the limitation in fixing the amount of the agency fees, thus:
(1) It should be reasonable in amount; and
(2) It should be equivalent to the dues and othec fees paid by members
of the SEBA.3 A
Thus, any agency fee collected in excess of this limitation is a nullity.
6. NON-SEBA MEMBERS NEED NOT BECOME MEMBERS OF
SEBA.
The employees who are not members of the certified SEBA which
successfully concluded the CBA are not required to become members of the latter.
Their acceptance of the benefits flowing from the CBA and their act of paying the
agency fees do not make them members thereof.
7.ACCRUAL OF RIGHT OF SEBA TO DEMAND CHECK-OFF OF
AGENCY FEES.
The right of the SEBA to demand &om the employer the check-off of
agency fees accrues from the moment the non-SEBA member accepts and receives
the benefits from the CBA. This is the operative fact that would trigger such
liability on the part of such non-SEBA member.4
1 Glmlv. lheHon.Seaelilyofl.aXlrandEmpbymen1, G.RNo.115949,March 16,2000.
2 Oe1 Piar Aam1?f v. Del Piar Acaden\' Errc>lafees lnxl, G.R No. 170112, ~ 30, 2008.
3 See a Sedicxl 4, ~ '1:/N, Book V. ~ t o ~ Ile l.m Code, as amended by Oepatment Older No. 40-03,
Serles d 2003, if=eb. 17, 2003).
4 Iii.
,;
CHAJ'TERFIVE
459
LABOR REI.ATIONS
8. NO INDMDUAL· WRITTEN AUTHORIZATION BY NON-SEBA
MEMBERS REQUIRED TO CHECK.:OFP.
To effect the check-off of agency fees, no individual written authorization
from the non-S~A members who accept the benefits from the CBA 1s
9. THE NON-SEBA MEMBERS WHO PAY AGENCY FEES TO THE
SEBA REMAIN LIABLE TO PAY UNION DUES TO THEIR OWN
UNION.
. The _fact that the non-SEBA members who are members of the minority
umon are paying agency fees to the SEBA does not free them from their obligation
as members to continue paying their union dues and special assessments to their
own union. There is no law that puts a stop to such obligation simply because their
union failed to be certified as the SEBA. Union dues are required for the continued
existence and viability of their union. Hence, they arc obligated to pay two (2) kinds
of dues:
(1) Union dues and special assessments to their own union; and
(2) Agency fee to the SEBA.
· This is clear from a reading of Article 250 [241 )2 which does not qualify
that the right to collect union dues and assessments, on the part of the unio~ and
the obligation to pay the same, on the part of its members, are extinguished the
moment the union is unsuccessful in its quest to become the SEBA of the
employees in the batg2ining unit where it seeks to operate.
But to iterate, the minority union collecting union dues and assessments
from its members does not have the right to ask the employer to check-off the
same from its members' wages. Such right exclusively belongs to the SEBA.
2.
COLLECTIVE BARGAINING
a.
DUTY TO BARGAIN COLLECTIVELY
1. CONSTITUTIONAL FOUNDATION.
The right of all workers to collective bargaining is a right duly guaranteed
under the Constitution. Thus, it is expressly provided in Section 3, Article XIII
thereof that the State, among othei;s, shall guarantee the rights of all workers to
collective bargaining and negotiations.
Del Paat kademyv. Del Piaf Aammy Et'1)bfees Unkxl, G.R. ~ 170112. Apnlll, 2008.
Enti!led"Righs and Coocfifals o f ~ In aLaba'Otganizalioo.'
 SAil REVIEWER ON l.ASOR I.AW
2. LEGAL BASES.
Toe above-stated constitutional mandate is implemented through Articles
261 [250] to 264 [253] and Article 259 [248] of the Labor Code,1 the provisions of
which are discussed below.
2. MEANING OF DUTY TO BARGAIN COLLECTIVELY.
Toe ''du!J to bargain rolkclively" means the performance of a mutual
obligation to meet and convene promptly and c.~peditiously in good faith for the
pwpose of negotiating an agreement with respect to wages, hours.of work and all
other teims 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
compd any party to agree to a proposal or to make any concession.2
The duty does not compel any party to agree blindly to a proposal
nor to make concession. While the law imposes on both the employer and the
bargaining union the mutual duty to bargain co_llectively,_ ~e employer is not under
any legal obligation to initiate collective bargallilllg negottanons.3 .
3. EMPLOYER'S DUTY TO BARGAIN EXISTS ONLY WITH _SEBA.
The duty to bargain collectively does not exist when the majority status of
the employees' representative is not establis~ed. The ei_npl~yer h~s no such d~~ ~o .
bargain with the individual workers or with the ~~nty uruon.4 In ~hrhppine
Diamond Hott/ v. Manila Diamond Hotel E111Plo;w Unron,5 11 was held that Stnce the
respondent union is not the exclusivi: representative of the majority of the
employees of petitioner, it could not demand from petitioner the right to bargain
collectively in their behalf. Petitioner's refusal, therefore, to bargain collectively
with respondent union cannot be considered ULP. ·
4. ULTIMATE GOAL IS TO CONCLUDE A CBA.
Obviously, the ultimate purpose of collective bargaining is to reach an
agreement resulting in a contract binding on the parties; but the failure to reach an
agreement after negotiations continued for a reasonable period does not establish a
lack of good faith. The statutes invite and contemplate a collective bargaining
1 These artides are dencxnilated as ro11ov,s: Altide 261125()]- ProcedJe il <:oledi,oe ~ ; Altide 262 [2511 •Wy
kl 8agail Coi'e:wetf i1 ~ Absence ol Colecfve Balgaili"g Agreements; Altide 263 (252] • ~ al Wy b Bagai1
~ Altide 264 12531 -Wy »lliKgain Co!edimt 'Ml8l There Exists a Cdalive ~ Agreement m
Mcie 25912481 -~r l.lila PradiCes o1 El!1>bye!s.
2 Mide 252, l.lila Code; Kd Loyv. tlRC, GR No. 54334, Jal. 22, 1986, 141 SCRA 179; Ulillld Elf'4)lo'yees Unioo v.
Nooe!, GR No. l~10, Oct 3, 1975,67 SCRA 267; Isaac Pera B<7m;i f.!e/ v. United~ Wela1e Associatm,
GR.No.l-M31,0ct.30, 1957, 102Phi.219.
3 K'xlk Loyv. NlRC, sopra.
• la(as ng MJYJgag~ Makabayan v. ~ En!eqms, G.RNo. L-38258, NOY. 19, 1982
~ OaTml Hcte! and Resa1. Inc. [Mania Oicroond 1-bte! v. Mria llianmd Hae! Ell'l)loyees Unioo, GR No.
158075,.11r,e 30, m.
CHAPTER FIVE
LABOR RELATIONS
contract, but they do not compel one. The duty to bargain does not include the
obligation to reach an agreement•
5. BARGAINING, NOT EQUIVALENT TO ADVERSARIAL
LITIGATION.
. The High Court set the tone of what collective bargaining negotiations
mean 1n Ca/lex &finery E111Pli!Jm AJJOdalion [CREA] u. Bn'/lantu.2 It said that
b ~ g is not equivale!1t to ~ advers~ litigation where tights and obligations
are d_elineated and_ remedies applied. It 1s s1mply a process of finding a reasonable
solution to a conflict and harmonizing opposite positions into a fair and reasonable
compromise.
6'. VIOLATION OF TIJE DUTY TO BARGAIN COLLECTIVELY.
· The duty t~ bargain collectively may well constitute ULP if violated by an
employer, under Article 259(g) [248(g)],3 or by a labor organization, under Article
260(c) [249(c)]4 of the Labor Code.
7. KINDS OF COLLECTIVE BARGAINING.
The Rnlt, I(} Implemtnl the Labor Code.,,as amended,5 enunciate two (2) kinds
of collective bargaining, namely: _..,/?
(1) Singk-mte,priie bargaining involving a CBA negotiation between one
certified SEBA and one employer; and
(2) Muhi-employer bargaining involving a CBA negotiation between and
among several certified SEBAs and cmployers.6
lo No. 1 above, any certified SEBA may demand negotiations with the
empl~y~r re~rding the terms and conditions of employment of employees in the
bargairung urut 1t represents.7The SEBA should submit such intention in writing to
the employer together with its proposals for collective bargaining. The SEBA and
the employer may adopt such procedures and processes they may deem appropriate
and necessary for the early termination and conclusion of their negotiations. 'Ibey
should name their respective representatives to the negotiations, schedule the
number and frequency of the meetings, and agree on the wages, benefits and other
1· '.
1· '..
I U'bl a Fqxo ErrcikJyees-Oru, Food ilXl A!ied nluslJies llflms.Kil.lscrig llayo Uno PJFE-O'MMJJ v. Nestle
Philippi1es, re.. GR Nos. 158930-31. M1ldl 3, 2008.
\: 2 G.R No: 123782, Sept. 16, 1997, 279 SCRA 218, Zl6, 243-244.
PcraJ~(g)otM:te259~48Jstates:·(g)Tovootefledt(kl•calecwettasixesaibedbylhisCodef.r
Parag~ (c) ci M:1e 260 [249] prMles: '(c) To 'IOa1e lhe oofy, a relJse lo tagail ClliledMrj l'll1l1 I l e ~
jX1l'ided lis fle representam cllhe efll)loyees(.r ,
5
Sedi:Jls 3ilXl 5, ~ XVI, BookV, ~ l o ~ lhe Laba Cooe, as amended by Depastnett Orde,- No. 40-03,
Series a2003, [Feb. 11, 2003!.
I Id.
1 Secfm 3. Aile XVI, Book V, llid.

IIAR llEVIEWER ON lABOR lAW
teems and conditions of employment for all the employees covered in the
bargaining unit.1
In No. 2 above, any legitimate labor unions and employers may agxee in
writing to come together for the purpose of collective bargaining1 provided:
(a) Only legitimate labor unions which are incumbent SEBAs may
participate and negotiate in mJ1lli-empkrytr bargauung;
(b) Only employm with counterpart legitimate lab~r ~ons w~ch are
incumbent SEBAs may pa~cipate and n_egooate tn mYlll-empkryer
bargaining; and
(c) Only those legitimate labor unions that pertain to. ~mplo~er uni~s
which consent to mJ1lti-employer bargauung may parucipate in multi-
employer bargaining.2
8. TWO (2) SITUATlONS CONTEMPLATED.
1ne duty to bargain collectively involves rwo (2) situations, namely:
3
1. Duty to bargain collectively in the absence of a CBA; and ·
4
2. Duty to bargain collectively when there is an existing CBA.
b.
DUTY TO BARGAIN COLLECTIVELY
IN THE ABSENCE OF CSA
1. HOW DUTY SHOULD BE ·mscHARGED.
The duty to bargain collectively when there bas yet been no CBA in the
collective bargaining unit (CBU) where the SEBA seeks to operate should be
complied with in the following order. First, in acco~ce with any agxeement _or
voluntary arrangement providing for a more expediuous manner of collective
bargaining; and 1erond!J, in its absence, in accordance with the provisions of the
Labor Code, refcn:ing to Article 261 [250] thereof which lays down the procedure
in collective bargaining.s
2. RATIONALE.
Clearly, the law gives utmost premium and extends due respect to th.e
voluntary arrangement bt!tween the parties on how they will dis~arge th~
respective duties to bargain collectively before resort to the procedure laid down in
1 Secbl 4.Rue XVI. Book v. w
Secbl 5, Rue XVI. Book V, tin
Asp!Mledn~262(2511oflheut.«Codc.
' As ptMled i i ~ 264 (2531 of !he L;bor Code
s Miele 262 [2511, labor Code.
•
•)
C HAl'TER FIVE
WIOR RELATIONS
the Labor Code may be made. In other words, it is only when there is no such
voluntary arrangement that the procedure laid down in Article 261 [250] of the
Labor Code should be followed.
c.
DUTY TO BARGAIN COLLECTIVELY
WHEN THERE EXISTS A CBA
1. CONCEPT.
. Under the Labor ~ode, 1 when there is a CBA, the duty to bargain
collecllvely shall mean that ne1ther 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 pnor to its e.xpiration date. lt shall be
the ?uty of both parties to keep the 1talJ1J quo and to continue in full force and
effect the teans and conditions of the existing agreement during the 60-day period
and/or until a new agreement is reached by the parties.2
2. 60-DAY FREEDOM PERIOD.
. Article 264 [253] clearly states that "(w)hen there is an existing CBA, the
pl!ftles thereto are bound to observe the teems and conditions therein set forth
until its expiration. Neither party is allowed to tenniriate nor modify such
agreement during its lifetime. The only time the pa_rties are allowed-to terminate or
modify the agxeement is within the period of at least sixty (60) days prior to its
expiration date by serving a notice to that effect." This last 60-day period of the 5-
year lifetime of the CBA immediately preceding its expiration is called the "fmdom
period." It is denominated as such because it is the only time when the law allows
the parties to freely serve a notice to terminate, alter or modify the existing CBA. It
is also the time when the majority status of the SEBA3 may be challenged by
another union by filing the appropriate petition for certification election (PCE).4
The twin Picop Rt1omre1 cases5 best illustrate the significance of the
freedom period. Here, the collective bargaining agent, Nagkahiusang Mamumuo sa
PRI-Southem Philippines Federation of Labor [NAMAPRI-SPFL], had a CBA
with petitioner company for a period of 5 years from May 22, 1995 until May 22,
2000. On two occasions, said union, pursuant to the union security clause
(maintenance of membership) in the CBA, demanded from petitioner company to
terminate the employment of respondents due to their acts of disloyalcy to the
union consisting in their signing of an "authorization letter to file a petition for
certification election" by another union (Federation of Free Workers [FFW]) prior
1 Al1icte 264 [253), Ibid.
2 Id.
, SEBA ITlealS "Sae cm excm.-e Bargali1g Age11r
' t.ffi Yad Crewv. PNR, GR No. l·33621, .kif 26. 1976.
1 Refoon:j Ill lhe 2010cased Pi:xlp Reso..rces. Inc. (PRI) v Tafleca, GR No. 160828. Aug. 9, 2010, illCI !he 2011 case of
F'mpResoun:es, ~. (PROV. Oequila, GR No.172666. Dec. 7, 2011.
 BAR R.E\IIEWER ON lA8OR !AW CHArTER. FIVE
IABOll RELATIONS
to the 60-day freedom period. Petitioner company terminated respondents' agreement wo~d govern from the time the old agreement expired to the time a
employment on the basis of ~aid dem_and of the ~on. In holding that the new agreement 1s conclu~ed by the parties. I .
termination pursuant to the uruon secunty clause was illegal, the Supreme Collft
4. KIOK LOY DOCTRINE.
pointed out that while they signed su~ "a~~orization l~tter:': outside. th~' 60_-d~y
freedom period, they actually filed the :etttton for Certtficatton Electto~ . within . . This doctrine is based on the ruling in Kiok Loy v. J\TLRC,2 where the
the freedom period. As per records,· 1t was clear that the actual Petttton for pettnoner, Sweden ~ce Cream Plant, refused to submit any counter-proposal to the
Certification Election of FFW was filed only on May 18, 2000. Thus, it was within CBA proposed by Its em~loy~es• certified SEBA. The High Court ruled that the
the ambit of the freedom period which commenced from Mar~h 21, 2000 until employer had ther~by lost its aght to bargain the terms and conditions of the CBA
May 21, 2000. Strictly speaking, what is prohibited is the filing of a petition for Consequently, all the terms and conditions of the CB_'\ as proposed by the SEBA
certification election outside the 60-day freedom period. •This is not the situation are deemed approved and accepted lock, stock and barrel (LSB) b the errin
in rhis case. If at all, the signing of the authorization to file a certification election was employer. y g
merely preparatory to the filing of the petition for cerrification election, or an
exercise of respondents' right to self-organization. The mere signing of the . ~b~ Kiok Loy case eP,itomizes the classic case of negoti~li?g a CBA in bad
authorization in support of the Petition for Certification Election of FF\XI on faith• conststtng
. r .
of. the
.
employer's refusal to bar~in
i,-•
with the SEBA b)' 1gnonng
· · a11
March 19, 20 and 21, or before the "freedom period," is not sufficient ground to nonces ,or ~cgonattons and req~ests for counter-proposals made to the former by
terminate the employment of respondents inasmuch as the petition itself was the latte~. Such refusal to _send its counter-proposals to the SEBA's proposals and
actually filed during the freedom period. Nothing in the records would show that to bargain on the. economJc terms of the CBA constirutes an un£o;, a.u
labor pracnce
·
(ULP) under Article 259(g) (248(g)]3 of the Labor Code.•
respondents failed to maintain their membership in good standing in the union.
Respondents did not resign or withdraw their membership from the union to 5. OTHER CASES AFTER KIOKLOY.
which they belong. Respondents continued to pay their union dues and never
joined the FFW. 1 1:he ruling that the _CB:A propose~ by the SEBA may be adopted as the
new CBA_1f t~e employer UOJUS~~bly and 1n bad faith refused to counter-propose
3. AUTOMATIC RENEWAL CLAUSE. and negottate lls terms and condittons has been reiterated in the following cases:
Pending the renewal of the CBA and while they are negotiating its 1. Divine Word [!ni1~rsityof Tadoban v. Semta:y of Libor and Employment,5
renewal, the parties are bound to keep the sfatUJ q110 and to treat the teans and where the uruverstty :efused to perform its ~uty to bargain collectively;
conditions embodied therein still in full force and effect not only during the 60-day h~ce, _the High Tnbunal upheld the unilateral imposition on the
freedom period but until a new agreement is negotiated and ultimately concluded un.tVerstty of the CBA proposed by the Divine Word University
and reached by the parties. This principle is otherwise known as the "automati. Employees Unio~.
nnewal da1m"which, being mandated by law, is deemed incorporated in all CBAs.2
2. Genmz/ Milling Corporation v. CA,6 where th~ Supreme Court imposed on
For its part, the employer cannot discontinue the grant of the benefits the employer th~ draft CBA proposed by the SEBA for the last two (2)
embodied in the CBA which just expired as it is duty-bound to maintain the sfaf/lJ years commenctng from the expintion of the 3-year term of the
q110 by continuing to give the same benefits until a renewed CBA is reached by the original CB~. This was because of the employer's refusal to counter-
parties. On the part of the union, it has to observe and continue to abide by its propose to the SEBA's proposals which was declared as a ULP act
undertakings and commitments under the expired CBA until the same is renewed. under Article 259(g) [248(g)]' of the Labor Code.
For example, the union security clause must continue to be in.effect even
after the expintion of the CBA; otherwise, there would be a gap during which no

' l/ilarv. ~ . G.R Nos. l~ , Ajlli 20, 1983;121 SCRA 444.

G.Rllo. l-54334, Jai.22, 1986, 141 SCRA 179, 188.
3
1 SeeasoNamal Ccfgressdlkoioos i1 lhe &,gar ~dlhe ~iles (NACUSIP)-1\JCPv. F~-Ca'leja. GR No. "(g) Tol-iolata lhedutf t>blrgai1 oolecf,w as pesal)ed ll'f Ills Code(.r
89609,J<11.27, 1992. GeneralMlfrl:l Capo'amv.r.A, GR lb. 146728,Feb.11, 2004i
2 AJ1ic:le 26412531 Lm Code; New Pacifx: Trrber & &,ppf/ Co., re. v._NI.RC, G.R. No. 124224, Mrch 17,200), 328 5 GRNo.91915,Se!t 11, 1992,213SCAA759.
SCRA 404; Pe- 8A/Im &~ Sevioos, n:. v. Rotm-Coolesoc, G.R. No. 110854, Feb. 13, 1995, 241 SCRA 6
GR No. 146728, Feb.11, 2004.
1
294:llnmofF~~v.NLRC,G.RNo.91025, Dec.19, 1990. ·(g) Tovoote tie duty klbargan ~ aspesal)ed 17/ 111s Code(.f
 l!AR REVIEWER ON I.A8l)R I.AW
6. SOME PRINCIPLES.
• If UDchallenged during the 60-day freedom period, the ~aj~rity status of
the existing SEBA is deemed uninterrupted and con~umg and _thus
should be respected by the employer. A PCE challe~grng the tnaJonty
f the existing SEBA should be filed \lli.tbin - and not befa~ or after - the
starus o .d . d d PCE .
60-day freedom period. Upon the expiration o~ the sat peno an no_ _1s
filed by a challenging union, the employer 1s duty-bound to connnue lts
recognition of the majority status of the incwnbent SEBA.1 •
• All the tenns and conditions of the CBA arc~deemed automatlcally
renewed. Toe law does not provide for any exception or qualification on
which economic provisions of the existing CBA are to retain thC:X con~~g
force and effect. Therefore, the automatic renewal of the CBA s prov1S1ons
must be understood as encompassing all the terms and conditions thereo£2
d.
COLLECTIVE BARGAINING AGREEMENT (CBA)
1. DEFINITION.
A "Colkctivt Bargainint, At,mment" or 'CBA" for short, refers to the
negotiated contract between a duly certified SEBA3 of workers and the employer
incorporating the agreement reached after negotiations with ~espect to wa~es,
hours of work and all other terms and conditions of employment 10 the appr~pnate
bargaining unit, including mandatory provisions for grievances and arb1traoon
machineries.• It may be executed not only upon the request of the SEBA but also
by the employer.5
2. PRIMARY PURPOSE.
The primary purpos~ of a CBA is the stabiliza_tion o~ labor-m:,nagement
relations in order to create a climate of sound and stable tndustnal peace.
3. THE LAW BETWEEN THE PARTIES.
Toe CBA embodies all the agreements reached after negotiations between
the employer and the SEBA with respect to the terms and ~o~ditions of their
employment relationship.? Consequently, from the moment it 1s perfected and
I Mk;je 268 1256). I.JtJa Code.
2 FcWl'j Associatioo d ~ k1stibM cfled'rotgf v.Hoo. CA, G.R No. 164000, Jll!e 15, 2007.
l SEBA l118illS 'Sae and Exl:IJsi.'e Bagani'g AgEn' . 113856,Sept. 7, 19138; MimweO.tnhJCorporatmv. NLRC, G.llNo.103525, l&ith29, 1996,255 SCRA322.
Sedm 1J]. 1U! 11, NCM3 RMsed Prtx:ecml Gwerlles il toe Conduct d Vou1try M>iraoon ~ [Oct. 15,
2004i See WfStf!fZ11 Uwetsity.f'hilppiles V. W!Sefill ~ilppiles Fmy a1d Slaff Associalial, G.R. No.
181800, Mltt\ 12, 2014; ~Jo.maisls, klc. v. Jcuna ~ lkto1 (JEU), G.R No. 19~\, Jtne 03, 2013.
s Naiooal ut,n d Wates il Hotel Restam a1d Alied kldJSVies (N\/MmlN-APL-PJf), Ptt'ipfjne l'laza Olapter v.
PlfWhe Plaza Hokfrgs, h:, G.R No. 177524, Mt 23, 2014. . Milla ~Carcmfv. Olisll1'lilg, G.R No.127598,Feb. 22, 20CO.
, RM!fav.Espiiu,supa;Kilkl.afv.NlRC,No.L-54334,Jarmy22, 1986, 141 SCRA 179,195.
1 f'amrloo Ncxtti ~ . h;. v. NlRC, GR No. 95940,Juf)' 24, 1996, 259 SCRA 161.
CHAPTER FIVE
IABOR REIATIONS
during its lifetime, it is considered the law between the parties1 and as such, they are
bound not only to the fultillment of what has been expressly stipulated but also to
all consequences which, according to their nature, may be in keeping with good
2
faith and the mandate of the law.l Being the law between the parties, any
violation thereof can be subject of redress in court.4
4. GRANT OF RIGHT TO SELF-GOVERNMENT,.
The CBA is no doubt the ultimate expression of the common intention of
the employer and the employees at having their own self-government In so
enacting the CBA, they are, in effec't, exercising quasi-legislative au~ority as they
craft its terms meant at improving the standards set by law in relation to their
rights, welfare and benefits. The teons of the CB.A, in reality, constitute the
governing law crafted and enacted by them. Resultantly, the law's provisions
affecting their rights, welfare and benefits will no longer be the controlling tenets
but those of the CBA's unless, of course, there is, as between them, serious
disparity and inconsistency that may harm the employees or operate to their
disadvantage, in which event, it is the law's provisions, and not the CBA's which
shall prevail.
5. LIMITATION OF MANAGEMENT RIGHTS AND PREROGATIVES.
A CBA is not simply a document by which the union and the employees
have imposed upon management express restrictions over its otherwise absolute
right to manage the enterpris~. While regulating or restraining the exercise of
~emeot functions, the CBA does not oust management from the performance
of these functions. It is a well-entrenched principle :n labor law as regards the
e.,:ercise by the employer of its management rights and prerogatives that "the power
to grant benefits over and beyond the minimum standards of law or the Labor
Code for that matter belongs to the employer." More specifically, matters of salary
increases are part of management prerogatives.5 According to this principle, even if
the law is solicitous of the welfare of the employees, it must also protect the right
of the employer to exercise what clearly are managemer.t prerogatives.6
Following this principle, petitioner in Dok Phiiippinei7 claims that being the
employer, it has the right to determine whether it will yant a jm mtal" benefit to
its employees and, if so, U!lder wp.at conditions. It contends that to see it otherwise
would amount to an impairment of its rights as an employer. The Supreme Court,
1 $aimq ~ S3 Tq, fam Mnla:uilg-Uml Y.\xke!s d fle l'l1llppi,es [SMTFM-lfM>] V. NlRC, G.R No.
2 Go-fa, h;. V. Gata, h;. Eirl)i:1fees lrolfFW, GR No. 170054, Ja\.21, 2013.
l Supreme Steel c«paa6crl v.Najkakasalg ~ 1Y,1 Supreme hlei:ffl!ent Ul01 (NMS-IND-API.), GR No.
185556, Mimi 28,2011, cirg cm:o v. Ouaooin Foods IJislJi>ufi:ln Cente.-, GP.. No. 161615,Jirully 30, 2009.
Flm'fAssociation dMapua nsllmdTeclmo]f.v. Hoo. CA, GR No. 164000, Jt.ne 15, 2007.
Nlb<tl..a>aams Ptis., h;. v. NlRC, G.R No.L-76959, Oct. 12, 1987,154 SCRA 713.
~ ~pines, h:. V. Pav.is rg Milkabay.rg Obn:m-NFL [PAMA.0-Nfij G.R Ila. 146650,J.vi. 13, 2003.
 IIAR REVIEWER ON IABOR IAW CHAl'TER. FIVE
lABOR REIATIONS
h .ver disaOTeed. It held that the exercise of management prerogatives is not the contemporaneous and subsequent conduct of the parties may be taken into
owe',,- . I 'thCBA or tn 'the account. 1
unlimi.ted. It is subi'ect to the limitations found tn the aw, tn . e f th
generaI principles of fair play and justice. lbis situation consntutes
·· one
d o· e
·
limitattoos. The CBA is the nonn of conduct between pennoner anIi pnvate If rhere is doubt in the interpretation of the provision of the CBA, it
f th
respondent and compliance therewith is mandated by the c.~rcss po cy o e should be resolved in favor of labor,2 as this is mandated by no less than the
3
law. 1 constitution. Additionally, it is well-settled that in reiolving any such doubt or
ambiguity, the following provisions of law should be applied:
6. CBA NOT AN ORDINARY CONTRACT.
(1) Article 1702 of the Civil Code which provides that all labor legislation
While the CBA constitutes the law between the parties, it is not, however, and labor contracts should be construed in favor of the safety and
an ordinary contract to which the principles of law gov~mi.ng or~ary contracts decent living foe the laborer; and
applv.z A CBA, as a labor contract within the contemplauon of ~cl_e 1700 of the (2) Article 4 of the Labor Code which states that all doubts should be
Civil Code which govems the relations betw~~ labor and ca~1tal, is ~ot merdy resolved in favor of labor.4
contraccuaJ in nature but iniprcsscd with public 10terest; thus, tt must yield to the
common good.3 (NOTE: See extensive discussion of this topic In Chapter One [General
Provisions] under the topic of "B. CONSTRUCTION Ill FAVOR OF LABOR").
7. DOUBTS OR AMBIGUITIES IN THE CBA, HOW RESOLVED. 8. BINDING EFFECT OF CBA.
Compliance with the CBA is mandated wider ~e policy. to give
· to labor. 1\s a labor contract within• the contemplanon of Art1cle1 1700d Ratification of the CBA by majority of all the workers in the bargaining
protecnon unit makes the same binding on all employees therein.• A CBA gives rise 10 valid
of the Civil Code, it must be construed liberally rather than n~ow Y ~
enforceable contractual relations against the union members, in matters that affect
1cchru'call y, and the couns must place a practical
. .and
. realistic
. construcnon upon hi it,
h them individually, and a~st the union itself, in matters that affect the entire
giving due consideration to the context in which 1t 1s negonated and purpose w c
membership in general A person who is an employee and at the same time a union
it is intended to serve.4
member, is bound by the CBA, in ooth capacities·as such. lbis is so because the
As a contract and the ~ove~g law be~een ~e parti~, tb.e general.rules CBA is a joil,lt and several contract of the members of the union entered into by
of starutory construction apply 10 the tnterpretatton of its prov1S1o_ns.5 1:hus, if the the union as their:agent'
terms of the CBA are plain, clear and leave no doubt on the tntennon of the
9. AUTOMATIC INCORPORATION CLAUSE - LAW IS PRESUMED
contracting parties, the literal meaning of its stip~tions, as they a.ppear on the face PART OF THE CBA.
of the contract, shall prevail.6 Contracts which are not ambiguous. are to. be
imerpreted according to their literal meaning and not beyond tb.etr o~vious It is well-settled that existing laws and pertinent jurisprudence
intendment.7 Only when the words used are ambiguous and dou?tful or !~ding to automatically foan part of a valid contract. There· is therefore no need for the
sevaal interpreta\ions of the parties' agreement that a re~ort t.o _mterpcetanon and
construction is called for.8 And in making such construcnon, 1t 1s well-settled that

, Seealso E.Razoo, trc. v. SeaeGiy ct Laba "1d ~ G.R No.85867, M1y 13, 1993, 222 SCRA 1.
Da'/aotm,jra8l P a l ~ V. ~ G.R ti>. 102132.1,'afth 19, 1993.
i Cilek 8r!Jbtees l.aba'lklinffWv.Citek Elettat:s, t-c., G.R. No. 190515, t-b.t.15, 2010. 1 C m ~ ~ . ell;, v. Callex [Phis.], t-c., G.R No. 111359, ht]. ·5, 1995; Uiivelsal Texlie Mis v. tlRC,
Cilek Employees Laba Unioo-fFW Y. Cilek Eleaooics, Ire., bid.; P.rbir1co ~ Express, Inc. V. NI.RC, G.R. No. G.R. th 87245,Apli 6, 1900, 184 SCRA273.
2
95940,.llif 24, 1996; Davao iregraled Pa!Slevedcmg SeMl!s Y. Abal1')eZ, G.R No.102132, ~ 19, 1993. Wffilefatt Uwersity-~ v. Wl!Sefi'II U ~ FiDt( ard Stil Associatioo, G.R ti>. 181800, M:rtll
National Im d Wcnets in Hotel Restam and Alied RiJsui!:s (NllMlRAIIMPl-lUF), Phippine Plaza 0iapter V. 12. 2014; ~ ~ ~ V. ~ Mclwa;at,11 rg &ve,ne ~ Im (NMS-INOAPLJ,
~Plaza Hokfry,js, Inc.,GR ti>. 1n524,.kl~23.2014. G.R No. 185556, M:rtll 28, 2011, 646 SCRA 501,521; Fnty Associatol of~ hstiJ.Jte ct Tec.moogy fMfTJ v.
Mxle 1370, CM Code;lkliversfy ct Sri> Tomas Fa:u!'f 1ml v. Urwersly d Scno Tooes, G.R No. 203957, JIXf 30, CA G.R No. 164000,.h.ne 15, 'lfJJ7, 524 SCRA 700, 717.
2014; Phlppne Jruniists,Inc.v.JQ.mal ~ Uni:ln (JEU}, GR No. 192601, Jll'le03, 2013. i Mcie D, SectD, 18 ol Ile CoostlJbl prMles: "Secful 18. The Slale alfrms Im- as apriMy socs ecoocrrt forte. tt
tmdala:) Sleet Co1pam1 v. ~ Free wakers ~ [MII-EREV.ONFljCaJayandeOa>, G.R No.130093, shall praectIle ~ts dv.meis ard ~ lhei'well.rl!.'
~ 4, 2004; Plas1i; lC7,\!l Centercapaatiln V. _NI.RC, G.R No.81176, Apli 19, 1,989. _ • lb'/ Cross ct Oa'lao Conege, tic. v. Ho.y Cross ct Oa'lao FaJt( Im - Kl.MAP!, G.R No. 156008, .uie 'll, 2005;
Wed K'mleftt-Oirt ~ ~ Tr.nspat Ge:leral Wrtets Olgaiza6a, (UKCEU-PTGV,Q) Y. Plasli: TM Cenl!r CapaabJ v. NLRC, G.R th 81176. Aj)li 19, 1989.
5
Kinberfy·Clalk Ptiflpr,es, Ir(., supra; Honda Phl'ippines, Inc. v. Samalm rg Mliay.l1g l/0rggalJ<fN3 sa Hmda. GR. No. Mcie 237123!), Laba Code.
6
145561,Jooe15,2005,499Pli. 174, 180. ~ v.M!x~Co., lnc.,GR thl-20432,0a.30, 1967,21 SCRA561.
 . '

CHAPTER FIVE
BAil REVIEWER ON I.A&Oll I.AW 471
470 LABOR IU:IATIONS

parties to copy or reiterate them in the CBA nor to make any express reference unresolved, the parties may resort to such concerted activities as a strike on th
thereto. They are all presumed to be part of the contract.
1 part of the SEBA, or lock-out, on the part of the employer.• ' e

10. STANDARD STIPULATIONS IN A CBA.
Generally, the stipulations in a CBA may be classified into two (2),
namely:
(1) Non-economic or political; and
(2) Economic or non-political.
The jiril one covers the following provisions that the parties to a CBA
usually stipulate: (a) Coverage or Scop·e of the Agreement; (b) Exclusions; (c)
Rights and Responsibilities of Parties; (d) U~on Security Arrangement; (e) Job
Security (Security of Tenure); (Q Management Rights and Prerogatives; (g)
Company Rules and Regulations; (h) Discipline ofEmployees; (!) Union Dues and
Special Assessments; (J) Agency Fee; (k) Check-Off; 0) Grievance Ma~ery; (m)
Voluntary Arbitration; (n) Labor-Management Council (LMq; (o) No-Strike, No-
Lockout; (p) Waiver and Completeness of Agreement; and (q) Duration and
Effectivity of Agreement.
The second includes: (a) Wage Increases; (b) Allowances; (c) Premiums for
Work on Rest Days, Holidays, etc.; (d) Meal, Rice and other Subsidies; (e) Leave
Benefits; (Q Union Leave; (p) Uniforms; (h) Union Office; (!) Promotions; (j)
Bonuses; (k) Insurance; 0) Hospitalization; (m) Retirement; (n) Excursion; and (o)
Others which have monetary values.
11. THREE (3) CATEGORIES OF CBA SUBJECTS.
"The subjects of CBAs may be classified into three (3) categories, namely:
(a) Mandatory; (b) Permissive or voluntary; and (c) Illegal.
a. Mandato.ry Subiects.
Mandatory subjects of the CBA are those that the parties are compulsorily
required to bargain if either party has made a proposal thereon. Thus, an employer
may not introduce any changes in the mandatory bargaining subjects without
providing the SEBA prior notice of such proposed changes and affording it of the
opportunity to bargain thereover. Neither the employer nor the SEBA can refuse
to bargain over mandatory subjects of bargaining.
It bears emphasizing, however, that despite their being mandatory, the
parties need' not arrive ·at an agreement thereon through negotiations alone; what is
simply required is that they should bargain in good faith on the proposals although
a deadlock may ultimately result therefrom. And if the deadlock remains
1 l a . a s ~ ~ ~ (IJ,t,'! Y. Abiera, G.R t«l. L-~74, Dec. 19. 1970; liberaoon Steanship Co., ric. Y.
ClR, G.R No. L-25389, Jtlle 27, 1968; Davoo ~led Pat Steved<m,J Setvbls v. ,4baquez, G.R t«l. 102132, Mcrch
19, 1993, 220 OCRA 197,204.
Considered mandatory are proposals concerning the terms and conditions
of employment. ~pies_ of m3?datory subjects are wages (all forms of wages),
hours . o~ w~rk, . m~ llm~3 ttme_ bre~,4 overtime and other premiwns,S
comnuss::n~, shift diffetenoals,7 paid holidays,8 incentive pays,9 paid leaves of
absenc.\ fringe benefits,11 separatton/~everance p~y, 12 pensionsU and retirement
b~eli~, 4 11,work schedules,15 proba~onary penod,16 grievance procedure,'7
ar~tttatlon, . labor-management council (LMq,19 no-strike, no-lockout clause,20
uruon secunty clause,21 inter alia.
In addition _to ~e fo~egoing, the CBA is mandatorily required by special
laws to embody certain s11pula11ons, such as the following:
1. Drug-free workplace policy. - Under RA. No. 916522 and its
Implementing &lies and Reg11/atio111,23 it is explicitly required that a provision on drug-
1
See Mx:le 278 1263L. a lhe LabcJ _Code, YAlo1 J)llMdes, ii i1s ~ {c), as fdio,o,s: 1c} 11 case a baigamg
dem:Jcs. lhe dufy certired or fllCOQWld batganrig atJenl ITa'f Ne a notx:e cl strle or the ~ may lile a nooce cl
kx:kcd Yiltl Ile Mnislry at least 30 days before lhe ireooed da1e aierea. ~
2 TmkenRoler BeamJ Co.,70NLRB500(1946).
Id.
Id.
Id.
The Regm-Gml,339 NLRB 353 (2003).
&ritlCabi'let~. Co., 147 NlRB 1506(1964).
1 Silgert.fg. Co., 24 NI.RB 444 (1940).
1 lllby,M:Neil&l.bby,65NLRB873 (1946).
10 Such asseNice ilcenwe leave, vacmi lt?ave, palemi'f leave, malemi)' leaYe, solo pa-enlS' leave, ell:.
11 W.W.Cross&Co.v.NLRB, 174F.2d875(1-Cr.1949);1.alyGewekeFord,344NlRB628(2005).
11 Adans Daiy, lrx:., 137 NI.R8815 (1962).
0
Pensms b' a:t.-e v.<rters are rroodalay txrtbeneffs b-reti'ees are permissie. (Aral CllelOCa &Akal Wooers Local 1
v. Pittsburgh Pla1e GlassCo., 404 U.S. 157 (19710.
"Id..
11 Tnten Roler 8eimg Co., 70 NlRB 500 (1946).
,, Mx:le296[281Lt.mCode.
11 Mii!273[260]. Id~ fiJghes Too Co. v. tlRB, 147 F.2d69 (511 Cir. 1945).
11 Mi:le274[261L'kl.;t-l.Rllv.llal~Wlrd&Co, 133F.2d676(901Cr.1943).
11 Al1x:le 267 [255). LIM Code.
20 Mk:le 278 [263], Id.
Z1 Mii! 259(e) (248(e)1 Id, .
n ~ krX7M1 as I l e ~ ~ Dugs />d. a 'lfl!Z 'llf1d1 was ~ oo JI.Ile 7, 2002. It is
l)(tMded _n it Sedioo 49: t.abcr Ogamtioos aid Ile PlMlle Sec!D'. - Al Im' oooos. federatiorls, assooatioos; or
~a-izmls il ~ ~ I l e respme ~ seda" pams shal idJde il Iler ooledPle balgamg ex~
sinb: agreemenlS, j(int conlniYJ progirns aoo ilbmaliln ~ns fa' the lcborers sinicr 10 Ile programs ~
ooder Sectioo 47 of Ile kt wifl lheerd i1 view a ~ a~~
'11 ~ _be rec,.i'ed Ila I l e ~ dn1J ii>tJse prevention pordes aid prograns be inided as part of Ile Corietwe
Bargat11'9 _NJreemert (CBA).'
.n T h e ~ ~ aid Reg,Jafms pnM:le as lolcms: 'Sedm 49. Labor O!ganaaoons aid 11e f'rMlte Secb'. - Ni
~ ~ · federatials, associatioos, ex agaiiullms i1 cooperatm l"1h lhe raspedM! pmate secb' p.rt1ers shaJ
i1aJde n lher <Xll!ecwe bagainilg or~ siniar agnmienls, j:)i1I coolroilg programs cm iifoonalXJ1 carrpai,ins !:J lhe
 llAll lUVIEWEll ON l,<.BOll V.W
472
fcee
workplace be included in the CBA.1Pursuant thereto, DOLE Dtpartnunl Order
,. · .r D
No. 5J.fJJ, Seriu of 2003,2 promulgated the G11idelinu for the lmfiemenla/J~n O; a ru_g-
F Workplace Policiu and Programs for the Private Se,tor which reqwres that. 111
~ed establishments, the drug-free workplace policies and programs should be
0
included as pact of the CBA.
2. HIV/AIDS education and jnfonnation progtam. - The 1999 Ru/u
and Rtgulations Implt1ntnling RA No. 8504,3 require that "(t)he quality of ~e
HIV/AIDS education and information progwn shall be under the ~ollecllve
B aining Agreement xxx."• This workplace IDV/ AIDS ed~callon and
in~rmation program for all workers is required to be 'developed, implemented,
evaluated and funded by the employer. Further, AIDS education is ~dated
thereunder to be integrated in the ocientation, training, continuing educallon and
other human resource development programs of employees and employers in all
pcivate offices.
b. Permissive or Voluntazy Subl'ects.
Permissive or voluntary subjects of bargaining are those that are n~n-
mandatory in the sense that they are ~~t dire~tly related ~o the work being
erformed by the employees in the bargairung un1t These sub1ects are not rela!ed
~o wages, hours of work and other terms and conditions of ~ploym~~ Be10g
permissive and non-mandatory, the parties may agree to engage 10 bargairung over
these subjects but they are not in any way req~ed to so bargain ~der compu\sion
of law. These subjects may be proposed by e1ther party, but ne1ther_of them can
insist upon their acceptance as condition for cx~cuting and.concludin~ ~c CBA.
Any of the parties, therefore, can refuse to negot1ate them wi~out gett10g ~to ~ y
legal complication such as being charged for,ULP. These ~ub1ects ~ot likewise
be the subject of a bargaining deadlock which may be atcd as valid and lawful
ground for the conduct of a strike by the ~E~A or l?clmut by the employer. But
once the parties choose to negotiate pemuss1ve subJe~ts'. any ~re~~nt reach~d
theccon is enforceable. l\loreovcc, the fact that a perm1ss1ve sub1ect 1s 111cluded 111
one CBA does not make negotiations over that subject mandatory during the next
CBA negotiations.5
Thar a certain subject is mandatory and not permissive or vice-uma !s a
thin gray line issue that may present legal complications: A threshold may be ctted
in that subjects which have an insignificant beanog on th~ employment
relationship arc most likely permissive. The danger of not making a clear-cut
~ sinia1" 11e ~ram; p!ll'lkled iJxler Sectial 47 cJ !his M. v.i'1 tie end il vew d actoow,g a drurJ free
vdqe:e.'
1 See Secta, 49,Mile VI lf'.rticipalion dlhel'l1/ille ;m lm Seders il tie Emoo:ementd lhls Ac1J lhereol.
I ~OOAulJUSI 14,2003by DOLE $eaetaly PamiA. SanlD Taras. , . '
i OhelV,ise kno.\n as tie 'Ptlippi,eAJOS PreYenm aid C:00~ M. of 1998. Itwas 6SUed oo .Apii13. 1999.
Sedoo 15, ~le hlhe!eOI. . HuJhes Tod Co., 147 NlRB 1573 (1964).
Prnr1J P1es$Jne11 Local 252 (Court>us} (RW. Page Cap.}. 219 NLRB 268 (1975).
CHAl'TIR FIVE
473
LABOR REIATlllNS
distinction between these two lies in the possibility that if the employer declines to
bargain over a subject which turns out to be mandat0ry rather than permissive,
then the SEBA may have sufficient ground to initial:! a ULP complaint for the
perceived undue refusal of the employer to negotiate the CBA.
Examples of this kind of subjects, inter alia, are (1) the ground rules that
the parties should observe in the course of the parties' negotiations;1 (2) selection
of the composition of the management and union panels who will negotiate the
CBA;2 (3) SEBA's insistence on bargaining for a unit larger than is covered by its
certification;3 (4) determination of the products to be manufactured; (5) general
business practices; (6) internal union matters,4 such 2s detetmini.og the amount of
union dues and agency fees, amendments to the unioo constitution and by-laws,
changes in the rules governing election of officers, etc.; and (T) ba~c capital
investment decisions which are based on factors other than labor costs.s
c. Illegal Sub,iects.
Illegal or prohibited subjects are those that cannot be made subject of the
collective bargaining negotiations because doing so would run afoul of the law.
Being violative of the law, the parties are prohibited no: only to negotiate them but
to actually stipulate and incorporate them into a CBA, this notwithstanding their
mutual agreement to so make them part of the CBA. And if they are stipulated in a
CBA, they are void and unenforceab_le. Further, th~ pa..--ties cannot invoke. them to
declare a deadlock which may be cited as a ground to support a strike or lockout
And in case a strike or lockout is conducted based on such ground, the same
should be declared patently illegal.
Examples of illegal subjects are those that provide for benefits that are
less than the minimum standacds set by law; discrimination against certain
employees based on sex, serual preference and orientation, race, macital status,
disability, age and religion;6 issues beyond the scope of the appropriate bargaining
unit; yellow dog conditions;7 and other acts considered :is ULPs under the law.
12. BENEFITS FROM THE CBA AND THE LAW, SEPARATE AND
DISTINCT FROM EACH OTHER.
Benefits decived from law, on the one·hand, :ind those from the CBA or
company policy or practice, on the other, are separate and distinct from each other
unless otherwise provided by the law or agreement or policy or practice granting
l\tneoca1 Mld'ral Respo,se,346 NlRB 1004(2006); Vc119uad Fie &Seo.It,,~ .345 Nl.RB 1016 (2005).
Genera Becti:Co. 173 NLRB 253 (1968).
1 Dwls V. L ~ (llA}, 24 t F.2d 278 (2d Cr.1957).
1
lxiversalOi Proouds Co. v. NLRB, 445 F.2d 155 (711 Cr. 1971).
5 FISINa&xlal Mlil1ena'lce Colp. v. NI.RB. 452 U.S. 666 (1981).
Aroc1e 259{bl (248(blL LabocCode.
474 BAR IUVIEWl:R ON IABOR I.AW
them.1 Workers are allowed to negotiate wage increases separately from and
in addition to legislated wage increases. · be!ow th~ ~ w n standards set by law is one of the &1'.ounds for cancellation of
It is pcovided under Article 125 of the Labor Code that no wage order
should be construed to prevent workers in particular firms .or enterprises or
industries &om bargaining for higher wages with their respective employers. This is
usually the case because all CBA negotiations are conducted with the end in view of
effecting improvements and upward changes in wages and other benefits over and
above the rates set by law. Obviously, the parties do not sit down and negotiate a
CBA for the purpose of reducing existing wages and benefits below the minimum
standards fixed and mandated by law..
Parties may validly agree in the CBA to reduce wages and benefits
of employees provided such reduction does not go below the minimum
standards. While the proscription is clear that the parties to the CBA arc not
allowed to stipulate on wages and benefits below the minimum rates or standards
set by law, they are not, however, precluded from negotiating and a&l'.eeing to their
reduction for as long as they do not result in being reduced to the level below the
legal minimum rates and standards.
In the case of l11S11lar Hote42 . it was argued by petitioner union that
reducing wages and benefits runs contrary to Article 1003 of the Labor Code which
enunciates the non-diminution of benefits principle. The Supreme Court, however,
ruled that even assuming O'l}ltn/UJ that Article 100 applies to the case at bar,
respondent hotel, following RiPt1'11,4 is correct that this principle does not pcohibit a
union from offering and a~cing to reduce wages and benefits of the employees.
This is so because the CBAis the end-product of negotiations by the employer and
the SEBA not only with respect to wages, hours of work but to "all other terms
and conditions of employment"5 As such, the parties arc free to enter into any
stipulation that is permissible under the law..And in construing a CBA,. the courts
must be practical and realistic and give due consideration to the context in which it
is negotiated and the purpose which it is intended to serve.6
It must be emphasized that the parties to a CBA are not allowed to
stipulate ~ the minimum standards provided under the law. Entering into a
CBA which contains terms and conditions of employment below legally mandated
minimum standards will not, despite its registration, constitute a bar to the conduct
of a certification election should another union challenge the majority status of the
1
Meycasay.rl Qteges V. Om, G.R No. 81144, ',la'/ 7, 1990.
1
i'lsulir Hoo:! Errj)byeesU1inNR. V. Walelflmt'hsuir Hole! Davao, G.R Ncs. 174040-41, ~ 22, 2010.
1
RPlo.iles as bbYs:'Ma! 100. Proobitial c9ailst efmilaoon er d'rnmbl cJ benefts. - ~ i1 tis Book shal be
COOSt\.Ed kl elmMa er i1 'inf Wirf dinrish ~ or OM ~ benefits berg eioYOO a tie line of
~ d tis Cooe.'
Ri.-era v. Espiru, GR No. 135547, Jifl.23, 2002.
Id.
1
Id~See also Oclavi)v. Rlippile loo,j l)stm T ~ Carp'ifff,GR No.175492, Feb. 27, 2013.
CHAl"lcR FIVE
IABOR REIATIONS 475
SEBA whi~ ~egotiated it. Previously, entering into a CBA providing benefits
wuon registranon under para~ph (f) of Article 247 [239) of the Labor Code. This
&1'.o_und, however, has been deleted by the amendatory provision of R.A. No. 9481,
which took effect on June 14, 2007.
13. EMPLOYEES ENTITL~D TO CBA BENEFITS.
. Who are ~titled to the ~e~efi~ flo~g from the CBA? This question
~o~tlllues to bedevil the _courts as '.t 1s raised 10 many cases to this day. Based on
Junsprudence, the following are entttled to the benefits stipulated in the CBA:
(1) Members of the SEBA;
(2) Non-SEBA members but are covered by the collective bargaining
unit (CBU);I
(3) ~;:"bcrs of the minority union/s who paid agmry flu to the SEBA;2
(4) New ~ployees hired after the conclusion of the CBA and during its
effccttvity or even after its expiration. l
14. ENTITLEMENT OF EXCLUDED EMPLOYEES.
~e employees excluded from the collective bargaining unit (CBU), like
confidential employees or ~erial em.pl~yccs or supervisory employees, in the
case of rank-and-file CBU, or 111a-vma, enntled to the benefits flowing from the
CBA?
The answer is in the negative. But two exceptions may be cited, to wit.
(1) When the CBA bene~ts are ~nted to managerial employees by
reason of company policy or company practice; ·
(2) When adjustments are made to avoid distortion in the levels of wages
or benefits.
In ~e fint, in or?er to make it an enforceable and demandable right, there
should be evidence of CX1stence of such policy or practice; otherwise, the absence
thereof would not justify any claim or demand therefor. For example, in the 2018
case of SITA v. Huliganga,4 Respondent H:uliganga was a managerial employee of
SITA and, as such, he is not entitled to retirement benefits exclusively ~ted to
the rank-and-file employees under the CBA. It must be remembered that under
Article 255 (245) of the Labor Code, managerial employees arc not eligible to join,
assist or form any labor organization. To be entitled to the benefits under the CBA,
1
t-e.vPa::ificrnter &&.wYCo., klc. v.rtRC,G.R No.124224,Mardi 17, 21XXl,328SCRA404.
See Mide 259{e) 1248(e)I. Laicr Code.
ti:f.
• Socie!e lntematmaie de Teleo:mra.roltms Aerooautxµ!s (SITA) v.11JiJarga. GR No. 215504, ~ -20, 2018.

BAR REVIEWER ON IABOR IAW
the employees must be members of the bargaining unit, but not necessarily of the
labor organization designated as the bargaining agent ·
The same ruling was made in another 2018 case, Manila Hotel Corporation 11.
Rosita De Leon, 1 where respondent, a managerial employee, was c;ompulsorily retired
under the retirement plan in the rank-and-file CBA w~ch prescribes that an
employee's retirement is compulsory when he or she reaches the age of 60 or .has
rendered 20 years of service, whichever comes first. Respondent De Leon was only
57 at the time she was compulsorily retired but had already rendered 34 years of
service as Assistant Ccedit and Collection Manager/ Acting General Cashier. As
managerial employee, she is not covered by the CBA. There is nothing in
petitioner's submissions showing that respondent liad assented to be covered by
the CBA's retirement provisions. Thus, in the absence of an agreement to the
conttary, managerial employees cannot be allowed to share in the concessions
obtained ~y the labor union through collective negotiation. Otherwise, they would
be exposed to the temptation of colluding with the union during the negotiations
to the detriment of the employer. Accordingly, the fact that respondent had
rendered more than 20 years of service to petitioner will not justify the latter's act
of compulsorily retiring her at age 57, absent proof that she agreed to be covered
by the CBA's retirement clause.
In the Je&and, certain economic benefits may b~ voluntarily extended to
excluded employees such as increases in wages and other monetary benefits
because a CBA was concluded with the rank-and-file employees. But if so given,
the same cannot, strictly speaking, be considered as having been based on the CBA
but simply as adjustments to prevent distortion in the levels of wages and benefits
among the employees included in the CBU, in particular, and all the employees of
the establishment, in general. Such increases in wages and benefits may not
necessarily be equal to or higher than what the CBA provides. In this case, not
being based on the CBA, the employer can implement such increases based on its
exclusive_ right and prerogative to determine how much the same should be.
15. CBA DEADLOCK.
A ''dladlock" is defined as the "counteraction of things producing entire
stoppage: a state of inaction or of neu-ation caused by the opposition of
peaons or of factions (as in government or a voting body): standstill.''2 There is a
deadlock when thete is a "complete blocking or stoppage resulting from the action
of equal and opposed forces; as, the deadlock of a jury or Iegislature."3 The word is
synonymous· with the word impasst4 which, within the meaning of the American
1 ' See Arfde 276 (c) [263{c)1 lm'Qxle.
G.R.No.219774,Jutt23,2018.
1 !Mine Wx11 l.ffiersilyof Tcd)bm'I v. Seaetary of Labor and ~ GR No. 91915. Sept 11, 1992.
3 Id., dq Websler's New T\Wlltiettl CenhJry Daiooaly, 2nd Ed., p. 465.
' ld.,clnJManC.an1rll'sLegallhesalus, 1980Ed.,p.133.
CHAmRFIVE 477
lABOR REIATIONS
federal labor laws, "presupposes reasonable effort at good faith bargaining which,
despite noble intentions, does not conclude in agreement between the parties:••
· Thusly, there is a deadlock in collective batgaioiog whete there is a failure
in the collective bargaining negotiations between the .SEBA and the employer
resulting in an impam or stalemate on all or some of the issues subject of ~e
negotiation.2 Despite their efforts at bargmning in good faith, the parties have ·failed
to resolve the issues and it appears that there are no other definite options or plans
in sight to break it. Simply stated, there is a deadlock when there is a complete
blocking or stoppage in the negotiation resulting from the action of equal and
opposing forces.3
Either of the parties in the CBA negotiation - the SEBA or the employer
- may declare· a deadlock. There is no law that mandates that only the SEBA or the
employer alone may declare a deadlock. Such declaration, in fact, may be made
separately or jointly by the parties and eithet expressly or impliedly. The filing of a
notice of strike by the SEBA or notice of lockout by the employer, signals the
formal declaration of a CBA deadlock - one of only two (2) grounds allowed under
the law4 that may be invoked in such notice, the other being ULP committed either
by the employer5 or the SEBA.6
In the 2014 case of Piupinas Shell Petrole11111 C.OrJ»ration,1 it was stipulated in
Item 8 of the Ground Rules of the CBA negotiation that a "deadlock can only be .
declared upon mutual consent of h21I! parties." Because the parties have not
agreed on the issue of wage_ increase, thete was a complete stoppage of the on-
going negotiations between the parties and the union consequently filed a Notice of
Strike. Petitioner union contends that despite the said stoppage, there could have
been no deadlock between the parties as the union had not given its consent to it,
pursuant to said Item 8 of the Ground Rules goveming the parties' negotiations
which required mutual consent for a declaation of deadlock. The Supreme Court,
however, disagreed. Under the circumstances of this case, a mutual declarati011
would neither add to nor subtract from the reality of the deadlock then existing
between the parties. Thus, the absence of the parties' mutual declaration of
deadlock does not mean that there was no deadlock. The union's reliance on item 8
of the ground rules governing the parties' negotiations which required mutual
consent for a declaration of deadlock was reduced to irrelevance by the actual facts.
Contrafadllm non valet artJlllllnlllm. There is no argument against facts.
1 ld.,d&lg N.LRB. v. Bcmoft. 635 F.2d492 (1981).
Sm M1dueJ Ccrpcrabv. NlRC, G.R. No. 99266, Mich 2. 1999.
~Mlcfx:alr.enterAliarx:edQn:emed~Flipb1oSeNiceWockersv.lllguesma,supra.
5 SeeAr&:le 2591248]. LabcrCodeenmed"lklfarlmPrcd:esdEnl>b)us. 1
' SeeArt'de 2601249), LabcrCodellllll'.ed"Unfarl..ab« Prac&:es dlab«Organiza5ons."
1 TrbcnJaoSlellRe&lery&rl)!oyeesAm;ia1XX! v. Pfpie Shell PetnmnCaporatkxl,G.R No. 170007.~07,2014.

~~R
478 IUVIEWER ON IAS<lR LAW
Rights of Parties in Case of Deadlock.
ln case of a deadlock in the initial negotiation or re-negotiation or renewal
of the CBA, the law provides that the parties may exercise their respective rights
W1der the Labor Co<le1 wluch include the following:
(1) Submission of the deadlocked issue to conciliation and mediation by
the NCMB.2 This means that the deadlock may be taken cognizance
of motu proprio by the NCMB or through the filing of a notice of
strike by the wtion or notice of lockout by the employer or notice of
preventive mediation by any of the parties.3
(2) Declaration and actual staging of a strike by the union or lockout by
the employer.4
(3) Referral of case to compulsory or voluntary arbitration.
(4) In case of industries indispensable to. the national interest, filing of
petition for assumption of jurisdiction over the labor dispute or
certification thereof to the NLRC for compulsory arbitration.
e.
THE COLLECTIVE BARGAINING PROCESS
1. ESSENTlAL REQUISITES OF COLLECTIVE BARGAINING.
Prior to any collective bargaining negotiations between the employer and
the SEBA, the following requisites must first be satisfied:
1. Employer-employee relationship must exist between the employer and
the members of the bargaining unit being represented by the SEBA.5
2. The majority status of the SEBA must be duly established through any
of the modes sanctioned by law such as SEBA Certiflfalion (which
replaced the mode of 'Voluntary Rt&(Jgnition'),6 or certification, consent,
run-off or re-run election.1 Proof of the majority status of the union
demanding negotiation should be clearly established; otherwise, the
employer has no obligation to engage in collective bargaining
negotiations with it and it has the right to refuse to negotiate until
such official proof is presented.8
Md? 265 (253-AL l.m COOe; Sectial 2, ~ IX, lloclc. v. ~ b ~ ! l e l.m Code.
Nmial Coociia1m aid MEmtion Bo.Id (NCMl).
1
Mile 261(c) ~c)l LmCode.
' GR No.91915,Sept 11, 1W2, 213SCRA 759, 912-913.
' AliedFreeWOO<ersUnoov.~1-.mtima,GRNo. L-22951,Jcri.31, 1967..
SeeSeciin 42. Rule VII, 0epmet OrderNo. 40-~15, Series a2015 iSelJll!rrber07, 2015].
SeeMx:les267125511o21012581,LaborCooe.
1 l.a<asngManggil;lcllY1nJMakabayanV.MmloEnle!pi;es,G.RNo.L-38258,Nw.19, 1982. 118SffiA422.
CHArTER FIVE 479
LABOR RELATIONS
3. The. bargaining unit being sought to be represented by the SEBA
should be validly constituted and established in accordance with law.
4. There should be a lawful written demand to bargain and a clear
statemenl of the proposals by one party to negotiate an agreement and
the equivalent counter-proposals thereto by the other party before the
collective bargaining negotiations process may validly commence. 1
2. COLLECTIVE BARGAINING PROCEDURE IN ARTICLE 261 (2501
MANDATORY.
Under Article 261 [250}2 The Supreme Court, in earlier cases,l held that
the failure of a party to reply to the written notice i;ontaioiog a statement of CBA
proposals served by the other party withjn the period of ten (10) calendar days
mentioned in Article 261 (25014 does not constitute refusal to bargain which is an
unfair labor practice (ULP) of the party concerned. This period was considered
merely procedural in nature and therefore not mandatory.
Recently, however, there has ~een ~ shift in the .interpretation of Article
261 [250]. According to General Milling} the procedure in _collective bargaining
prescribed under the said provision is mandatory because of the basic interest of
the State in ensuring lasting industrial peace. It underscored the fact that the other
party upon whom the written notice containing the proposals was served is
mandatorily required under the law to "mah a rtpfy .therm not later than ten (10)
,akndar d~sfrom re«ipt ofsuch noli«." Consequently, in declaring the employer in this
case guilty ofULP under Article 259(,g) -[248(,g)] of the Labor Code, the High Court
construed its failure to make a timely reply to the proposals presented by the union
as being indicative of its bad faith and utter lack of interest in bargaining with the
union. Its excuse that it felt that the union no longer represented the workers was
held to be mainly dilatory as it turned out to be utterly baseless.
In Coklfo dt San Juan dt utran,6 petitioner school was declared to have
violated Article 261 (250] and to have acted in bad faith because of its failure to
make a timely reply to the proposals presented by the union. More than a month
had elapsed after the proposals were submitted by the union and yet petitioner still
had not made any counter-proposals. This inaction on the part of petitioner
prompted the union to file its second notice of strike. Petitioner could only offer a
feeble explanation that its Board of Trustees had not yet convened to discuss the
matter as its excuse for failing to file its reply. Its refusal to make a counter-
proposal shows a lack of sincere desire to negotiate, rendering it guilty of ULP.
1 Mx:!e261 (250], LmCode; K"d( Ul'fY.lt.RC, G.RNo. L-54334,Jan.22, 1986.
l Ar1x:!e 261 {250] is erB,oo 'Rrocedlre il Colledive llcrgamJ.'
1 SUch aslherufnJ ii Natmall.oolaRestmntWcrters.v. CIR, GR No.L-20044,/,pri30, 1964, 10 SCRA843.
Ar1x:!e 261 [2501 is enli1led 'Proca1lre ii Coledive Bcrgam,i.'
GeneraH,trrg Capaamv. CA. G.R No. 14672B, Feb.11, 2004.
' Coogil de San J~ de Levan v. Assodatial a Enl)loyees aid Focu'ly ol Letran, G.R No. 141471, Sept. 18, 20CO.

SAR RE\IIEW£R ON lABOR lAW
The same holding was made in the earlier case of Kiok ~ v. NLRC,1
where the company's refusal to make any counter-proposal to the union's proposed
CBA was declaJ:cd as an indication of 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. 2
3. STEPS IN THE COLLECTIVE. BARGAINING PROCESS
A. PREUMINARY PROCESS.
The first step in the bargaining process involve_s the act of a party desiring
to negotiate an agreement, of serving a written notice upon the o~er party with a
statement of its proposals. The other party is required to make a reply thereto not
later than ten (10) calendar days from receipt of such notice. It must be noted that
although in almost all cases, the negotiation process is initiated _by_ the_ SEBA,
Article 261 [250] does not foreclose the right of the employer to wnate 1t The
ptovision uses the word "party" which may refer either to the employer or the
SEBA.3
B. NEGOTIATION
This involves the process of meeting, not later than ten (10) calendar days
from the date of request for conference, of the reptesentatives of the employer and
the SEBA, for the puq,ose of discussing and adjusting their diffetenc~? if any, wi~
the end in view of concluding an agreement on the terms and conditions of their
employment relationship. Negotiation may be conducted with the intetvention of
the govemment through the Conciliators-Mediators of the NCMB, in case any
dispute arising therefrom is not settled by the parties among themselves.4
C. SIGNING AND EXECUTION
This involves the signing and execution of a written document, ordinarily
denominated as "CBA" or simply as "Agreement" by the management and SEBA
negotiating panels after a series of negotiations. The document embodies all the
agreements reached by them on each and ever.y issue raised and resolved during the
negotiation process. At this point, although the panel representatives of both
management and the SEBA have affixed their signatures on each and every page of
the CBA and the same have been notarized by a Notary Public, it cannot as yet be
considered as having taken effect since there are still certain mandatory legal
processes that need to be complied with, such as the publication, ratification and
registration processes, as discussed below.
' G.RNo.54334,Jan.22, 1986, 141 SCRA 179, 186.
2 Seealso lbeBammQ>., klc. v. CIR. G.R tbs. l-24134-JS. Jut/ 21, 1977. 78 SCRA 10, 15.
1 R'PMav.Espilu,GRNo.135547,Jan.23,2002.
·
4 Altkles261 (2S0),262(251)and263(2521,lbkl.
CHAl'TERFM
LABOR RELATIONS
D. PUBUCATION.
This involves the posting of a copy of the newly concluded CBA in at
l~t tw~ (2) conspicuous places in the workplace, at least five (5) days prior to the
rattficatton thereof by all the employees comprising the bargaining unit.'
E. RATIFICATION.
This involves the act of ratifying in writing the newly concluded CBA by
at least the majority, not of the members of the SEBA which negotiated it, but of
all the employees covered by and included in the bargaining unit 2
F. REGISTRATION.
This pertains to the registration of the duly ratified CBA with the BLR or
the DOLE Regional Office by submitting five (5) copies thereof together with the
other documentacy requirements and paying the required registration fee. 3
G. JOINT ADMINISTRATION.
This involves the joint administration of the CBA by the employer and
the SEBA during f:be entire life~e thereof which is set by law at five (5) years.4
H. INTBRPRETATION AND APPUCATION.
This concems the interpretation, appli~tion, implementation and
enforcement of the stipulatioos embodied in the CBA to give effect thereto.
4. BASIC PRINCIPLES IN CBA NEGOTIATIONS.
a. Parties must act in good &ith.s
b. Employer and employees should stand on equal footing. 6
c. The· parties have the power to 6x the terms and conditions of their
employment relationship.7 ·
d. The employer has the obligation to make available such up-to-date
financial info.anation on the economic situation of the undertaking which is
normally submitted to relevant govemment agencies as is material and necessary
for meaningful negotiations.8
1 Mcie 237 {2311 Iii!.
2 Ri:I.
, lbi1
• Artide 26.5 (253,AJ, lbi:I.
5 West Hal1fool Eduaillon Assocmr\ v. DeCourcy, 162 Coon. 566, 295 A.2d 526 (1972), repin1ed ii Smitl, E6Nards, crd
Qn, q>. cit, p. 521.
• Royal lnter-Oceanl.iles, lne.v.CIR, GR No.L-11745, Oct 31, 1960.
1 Arlicle130;,QnCode;~Fashlcns,n:.v.NlRC,G.RNo. 117878,Nol.13, 1996.
1 Sec1ion 2, Rule XVI, Book v. Rules ID ~lernent Ole Labor Qxle, a, amended by Depam1enl Orts No. 40-03, Sere of
2003, [Feb. 17, 2003~
 BAA REVIEWER. ON IASOA. lAW
e. Refusal of employer to fumish. financial statements is ULP only when
the request is made in..m:iting as.required in &tide 251(c) (242(c)]; if not in writing,
management cannot be held liable for ULP. 1
£. A proposal not embodied in the CBA is not part thereof. Only
stipulations embodied in the CBA should be binding on the parties thereto. 2
g. The minutes of the CBA negotiation meetings are not part of the
CBA.3
b. Making a promise during the CBA negotiations is not an indication of
bad faith. As held in Top Form,4 because the proposal was never embodied in the
CBA, the promise has remained jus~ that, a promise, the implementation of which
cannot be validly demanded under the law.
i. Adamant stance resulting in an impasse is not an india11m of bad faith.5
j. Parties have no obligation to precipitately agree to the proposals of each
othcr.6
k. Refusal of a party to sign the fully-concluded CB.A is ULP.7
l. No meeting of the minds, no CBA to speak of. For as long as there is
no meeting of the minds between the employer and the union, there can be no
CBA that may be said to have been conduded.8
m. .Allegations of bad faith are wiped out with the signing of the CBA.
With the execution of the CBA, bad faith bargaining generally can no longer be
imputed upon any of the parties thereto. All provisions in the CBA are supposed to
have been jointly and voluntarily ihcotporated therein by the parties. The CBA is
proof enough that the company exerted reasonable effort at good faith bargaining. 9
However, in Standard Charlered Bank, 10 it was held that such signing of the CBA
does not operate to estop the parties from raising charges for ULP against each
other. The approval of the CBA and the release of the signing bonus do not
necessarily mean that the union has waived its claim for ULP against the employer,
or uia-»ersa, during the past negotiations.
I Stmmd Oa1ered Bank En1)kr/ees lJnal [NUBE) V. Corlesor, G.R No.114974,Jllle 16, 2004.
2 Sata1ang ~ s a Tq, fam ~ Waters ct Ille Phr.>Pm{SMTfM.UINPJv. NLRC, G.R tG.
113856,Sept 7, 1998.
3
M hek1 i1 SatnnYJ ~ sa Top Fam ~ W<Xkefs d l i e ~ {SMTfM.UINPJ v.
M.RC. G.R.th 113856,Sept. 7, 1998.
4 ti
5 ld.;tM-ieWcxd lJrwers.lttofTidlbanv.Seaetaydlaboraid Empqment, G.RNo.91915, Sept 11, 1992.
' ljirl ct Fqro ~ - Food and ABied lndusn!s U n ~ M?jo lb) [UFE-IFA-KMU] v. Nesl1e
Plfllpi1es, ~ G.R Nas.1589»31, Milth3, 2008.
1
Rcact.wy~v.Genera1Teanm.320F2d,859. . 2
1 Seellrwerstydt,eklTnco!lm Ccn:epcixl, Inc. v. The~- SOLE, G.R No.146291,Jat 23,2002.
t ~ Mlnggagaw sa Top F a m ~ Waters dlhe ~ {SMTfM.UINPJv. NlRC, G.R No.
113856, Sept. 7, 1998.
10 S!Mdcrdaned Baik 611>1atee5Uniln (NUBE)v. c.odescr, G.R ~.114974,Jllle 16, 2004.
CHAl'TER. FIVE
lABOR RELATIONS
E.
UNFAIR LABOR PRACTICES
!ll!bl
1.
NATURE,ASPECTS
1. WHEN AN ACT CONSTITUTES ULP.
At the outset, it must be clarified that not all unfair acts constitute ULPs.
While an ~ct or deci~o~ of an employer or a union may be unfair, certainly not
every unfair act or decwon thereof may constitute ULP as defined and enwnerated
under Articles 259 [248]1 and 260 [249)2 of the Labor Code.l
. The. act compl~ed of as ULP must have a proximate and causal
connectton with the folloWJng: ·
1. Exercise of the right to self-organization;
2. Exercise of the right to collective bargaining; or
3. Compliance with CBA.
Sans this connection, the unfair acts do not fall within the technical
signification of the teem ''Nnfair laborpraditf. '•
2. THE ONLY ULP WHICH MAY OR MAY NOT BB RELATED TO
THE EXERCISE OF THE ABOVE RIGHTS.
The only ULP which is the exception as it may or may not relate to the
exer~e of the right to self-organiz~tion and collecnve bargaining is the act
descnb~ un~er _paragra?h _(Q_ of Acti~e 259 (248], it., to dismiss, discharge or
otherwtse preJudice or discrurunate against an employee for having given or being
about to give testimony under the Laboe Code.s
3. LABOR CODE.PROVISIONS ON ULP.
There are only five (5) articles in the Labor Code related to ULP, to wit:
1) Article 258 (247] which describes the concept of ULPs and prescribes
the procedure for their prosecution;
2) Article 259 [248] which enumerates the ULPs that may be committed
by employers;
1
Al1icle 259 (248)- Unfairlabor Practices of Employers.
Altlcle 260 (249) • Unfair Labor Practices of labor Otganizatioos.
3
Galaxie Steel WOiters Union GSWU-NAFLU-KMU) v. NLRC, G.R. No. 165757, Oct 17, 2006.
4
AlliedBritlgCcxpcn.tjoov.~G.RNo.144412, NOY.18,2003;SeealsoTU1a'f naPagkakaisang ~awasaAsia
Brewely v. Asa Brewely, Inc., G.R No. 162025, Aug. 3, 2010.
5
Phtom ~Unioov.PhlippileGklba!Cmmmcations, G.R No.144315,Jutf 17,2006.
 BAR REVIEWER ON lABOR lAW
3) Article 260 (249] which enumecates the ULPs that may be committed
by labor organizations;
4) Article 274 [261] which considers violations of the CBA as no longer
ULPs wtless the same are gross in character which means flagrant
aJJ.d/ or malicious refusal to comply with the economic provisions
thereof.
5) Article 278(c) [263(c)] which refers to union-busting, a fomi ofULP;
involving the dismissal &om employment of union officers duly
elected in accordance with the union cons~tion and by-laws, where
the existence of the union is threatened thereby.
4. PARTIES WHO/WHICH MAY COMMIT ULP. ·
A ULP may be committed by an employer or by a labor organization.
Article 259 [248) describes the ULPs that may be committed by the employer;
while Article 260 [249] enumetates those which may be committed by the labor
organization.
On the part of the employer, only the officers and agents of corporations,
associations or partnerships who have actually participated in or authorized or
catified ULPs are criminally liable.1
On the part of the union, only the officers, members of goveming boards,
representatives or agents or members of labor associations or organizations who
have actually participated in or authorized or ratified the ULPs are criminally
liable.2
5. ELEMENTS OF ULP.
Before an employer or labor organization may be said to have committed
ULP, the follo~ing elements must concur:
1) There should exist an employer-employee relationship between the
offended party and the offender; and
2) The act complained of must be expressly mentioned and defined in
the Labor Code as a ULP.
Absent one of the elements aforementioned will not make the act a ULP.
The first requisite is necessary because ULP may only be committed in
connection with the right to self-organization and collective bargaining by
employees. Nec1:ssarily, there must be an employment relationship in order for the
organizational right to be validly and lawfully invoked.
1
Mk:le '-59 f248L taxr Code.
2 Artkfe 260 f249), lbil.
CHAPTER FIVE
lABOR RElATIONS 485
. The second requisite should be present since the Labor Code itself
reqwres that the ULP be "expressly defined by this Code." If an act is not covered
by any of the ULPs expressly mentioned in the law, it cannot be so deemed a ULP
act.
6. ASPECTS OF ULP.
Under Article 258 [247], a ULP has two (2) aspects, namely:
1) Civil aspect; and
2) Criminal aspect.
The civil aspect of ULP includes claims for actual, moral and exemplary
damages, attorney's. fees and other affumative reliefs.1 Generally, these civil claims
should be ~sse~~ ~ ~e labor case before the Labor Arbiters who have original
and exclusive Junsdicbon over ULP cases.2 The criminal aspect, on the other
hand, can only be asserted before the regular courts.
7. BURDEN OF PROOF.
In ULP cases against employers, it is the union which has the burden to
present substantial evidence to support its allegation of ULP committed by the
employer.3 In ULP cases against labor organizations, the burden of proof rests on
~~~ .
2.
ULP BY EMPLOYERS
1. SPECIFIC ULP ACTS BY EMPLOYERS.
Article 259 (248] of the Labor Code enumerates the ULPs that may be
committed by employers, to wit
"Article 259 [248). Unfair Labor Pradias of E,,,ploym. - It shall be
unla~ful for an employer to commit any of the :allowing unfair labor
pracuces:
(a) To_ in~erfere with, res~ or coerce employees in the exercise of
theu nght to self-organization;
(b) To require as a condition of employment that a person or an
employee shall not join a labor organization -0r shall withdraw from
one to which he belongs;
(c) Tu contract our ;;crviccs or functions being performed by union
members when such will interfere with, restmin or coerce
employees in the exercise of their rights to self-organization;
See Arfde 258 (247). tid.
Und« Mx:le 224 1217}. ltil.
, ScheriYJ arc,~ Lalxr lklm (S8.lJlv. SdlelDJ PbJQh ~ G.R No. 142500, Feb. 17, 2005.

BAR REVIEWER ON LABOR IAW
(d) To initiate, dominate, assist or otherwise . in~erfe~e wi~h the
formation or administration of any labor orgamzauon, mcluding the
giviDg of financial or other support to it or its organizers or
supporters;
(e) To discriminate in regard to wages, hours of work and other teans
and conditions of employment in order to encourage or discourage
membership in any labor organization. Not~~ in this Code or in
any other law shall stop the parties from requ1r1Dg membership m a
recognized collective bargaining agent as a condiuon for
employment, except tho,;e employees who are alread~ members_ of
another union at the time of the signing of t~e collecuve barg:umng
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 tjle dues and other fees paid
by members of the recognized collective bargaining agent, if s~ch
non-union members accept the benefits under the collecuve
bargaining agreement: Provided, that the individual ~uthorization
required under Article 25 l [2421, paragraph (o) of this Code shall
not apply to the non-members of the recognized collective
bargaining agent;
(Q To dismiss, discharge or otherwise prejudice or disc~ate ~gainst
an employee for having given or being about to give tesumony
uoder this Code;
(g) To violate the duty to batgain collectively as prescnbed by this
Code;
(h) To pay negotiation or-attorney's fees ~ the ~on or _its offi~s. or
agents as part of the settlement of any issue m collecnve bargauung
or any other dispute; or
(i) To violate a collective b2!gaining·agreement
"The provisions of the preceding paragraph notwithstanding, only the
officers and agents of corporations, associations or partnerships who have
actually participated in, authorized or ratified unfair labor practices shall be
held criminally liable."1
2. ORDER OF TOPICAL PRESENTATION.
For orderly presentation, the topics discussed in this section are as
follows:
I. INTERFERENCE WITH, RESTRAINT OR COERCION OF EMPLOYEES
IN THE EXERCISE OF THEIR RIGHT TO SELF-ORGANIZATION
II. .YELLOW DOG CONTRACT
111. CONTRACTING OUT OF SERVICES AND FUNCTIONS
IV. COMPANY UNION
I As emended b'j 8ata5 f>cmm$8 BbYJ 130,Aug. 21, 1981.
CHAl'TER FIVE
LABOR RELATIONS
V. THREE SEPARATE CONCEPTS TREATED IN PARAGRAPH (E),
ARTICLE 259 [248)
VI. FILING OF CHARGES OR GIVING OF TESTIMONY
VII. CBA-RELATED ULPs
I.
INTERFERENCE WITH, RESTRAINT OR COERCION OF EMPLOYEES IN
THE EXERCISE OF THEIR RIGHT TO SELF-ORGANIZATION
1. THE INSULAR LIFE DOCTRINE: TEST TO DETERMINE
INTERFERENCE, RESTRAINT OR COERCION.
The terms "intttftre," "mtrai,I' and "comt in paragraph (a) of Article 259
(248] are very broad and expansive that any act of management that reasonably
tends to have an influence or effect oo the exercise by the employees of their right
to self-organization may fall within their meaning and coverage.
According to the leading case of Insular Uft,1 the test of the employer's
interftmra with, restraint or romion of employees within the meaning of the law is
whether the employer has engaged in conduct which may reasonably tend to
interfere with the free exercise of the employees' twin rights to self-organization
and collective bargaining. It is not necessary that there be direct evidence that any
employee was in fact resttained, intimidated pr coerced by the statements or threats
of the employer; what matters is that there is a reasonable inference that the anti-
union conduct of the employer does have an adverse effect on the exercise of said
rights.
The significant point to consider, for a charge ofULP to prosper, is that it
must be shown that the employer's act was motivated by ill will, bad faith or fraud,
or was oppressive to labor, or done in a manner contrary to morals, good customs,
or public policy, and, of course, that social humiliation, wounded feelings or grave
anxiety resulted. there&om.2 It bears emphasis, however, that according to
jurisprudence, basic is the principle that good faith is presumed and he who alleges
bad faith has the duty to prove it. By imputing bad faith to the actuations of the
employer, the employee has the burden of proof to present substantial evidence to
support the allegation of ULP. Should he fail to discharge this burden, his bare
allegations desetve no credit.l ·
In accordance with the l11Jt1lar Ufa test, the following acts of petitioners in
T & H Shopfittm! were declared as "all reek[10g) of interference on the part of
lnsucr Life Asst.m::e Co., Lt!., ~ Associml v. nsulir Life AsMn:e Co., GR No. L-25291, ai. 30, 1971.
Tt.nay na PalJkakaisa ng Mcrlggaga,ya saAsia ~ v. Asia ~ .Inc., [GR No. 162025, August3, 2010.
1 Cu1ii v. Essen Tel:amnricaioos f'tlwnes,klc., GR. No. 165381, Feb.9, 2011.
' T&HShopfflfrs Capruil Queen Cap.v. T&HShopb Cap., G.R No. 191714, Feb. 26, 2014.

BAR REVIEWER ON IABOR IAW
!ts
petitioners," namely: (1) sponsoring a field trip to Zambales for e~ployees~ to
the exclusion of union members, a day before the scheduled ceruficauon elecnon;
(2) the active campaign by the s~es officer of _petitioners a~_st the wuon
prevailing as a bargaining agent dunng the field i_np; (3) ~s_corong its employees
after the field trip to the polling center; (4) the connnuous IUllllg'of sub-contractors
performing respondents' functions; (5) assigning wuon members to the _Cabanga~
site. to work as grass cutters; and (6) the enforcement of work on a rotanonal basts
for union members. In declaring petitioners guilty of ULP, the Court held that
indubitably, the above various acts of petitioners, ta~en together, reasona~ly
support an inference that, indeed, such were all orchestrated to restnct
respondents' free exercise of their right to self-organization. Petitioners' undisputed
actions prior and immediately before the scheduled certification election, while
seemingly innocuous, unduly meddled in the affairs of its employees in selecting
their exclusive bargaining representative.
2. TOTALITY OP CONDUCT DOCTRINE.
In ascertaining whether the ace of the employer constitutes inte,fmna with,
mlrainl or coercion of the employees' exercise of their right to self-organization and
collective bargaining, the •~otality of .-onditct dtictrine" may be applied. Because of its
nature and consequences, a finding of ULP should not be made based alone on the
cited ULP act considered in isolation but should be viewed on the basis of the
employer's act outside of the bigger conteKt of the accompanying labor relations
situation. Any perceived act of interference must be examined in terms of the act's
inherent import and effects, in light of the surrounding circumstances, and weighed
on the basis of the totality of the conduct of the entity charged.
The /Q/a/ity of conduct dtictrine means that expressions of opinion by an
employer, though innocent in themselves, may be held to constitute ULP because
of the circumstances under which they were uttered, the history of the particular
employer's labor relations or anti-wuon bias or because of their connection with an
established collateral plan of coercion or interference. An expression which may be
peanissibly uttered by one employer · might, in the mouth of a more hostile
employer, be deemed improper and consequently actionable as a ULP.1 The past
conduct of the employer and like considerations, coupled with an intimate
connection between the employer's action and the union affiliation or activities of
the particular employee or employees taken as a whole, may raise a suspicion as to
the motivation for the employer's conduct. The failure of the employer to ascribe a
valid reason .therefor may justify an inference that his unexplained conduct in
respect of the particular employee or employees was inspired by the latter's union
membership and activities.2
Saram~Mcrgg~salmddro-U,lCv.MRC,GRNo.126195,Jufy 17, 19!l7,275SCRA633.
P.oyill lkodergamen!Corpcmal dlle Phqlpiles v. CIR. G.R No. L-39040, Jooe 6, 1990.
CHArTER FIVE
IABOR REIATIONS
. In ~rmelcraft_,1 petitioner company invoked as reason to justify the
cessatlon of its operanons the fact that it sustained losses in the small amount of
Pl,~03.88 as o~ December 31, 1986. There is no report, however, ~fits operations
dunng the peoo? afte~ that date, that is, during the succeeding seven and a half
mo~th_s before 1t ~~oded to . clo~e its business. Significantly, the company is
capitalized at P3 million. Constdeong such a substantial investment, a loss of the
paltry sum of less than P2,000.00 could hardly be considered serious enough to call
for the closiµ:e of ~e co~pany. !his justification is hardly credible; in fact, it is
preposterous when vtewed m the light of the other rdevant circumstances. The re:tl
reason for the decision of the petitioners to cease op.erations was the establishment
of respo~dent ~armelcraft Employees Union. It was apparently unwelcome to the
corp~ratlon which would ~th~r shut ~own than deal with the union. The company
had m fact s~est~d th.at 11 nugh~ deade not 10 close the business if the employees
were t~ affiliate with another uruon which the management preferred. The act of
the pentioners was ULP prohibited by law.
lI In General Milling,2 the Supreme Court considered the act of the employer
~ ~re~enting _the ~etter_s from February to June 1993, by 13 union members
1•',
signifying th~ resignanon from the union clearly indicative of the employer's
1 pressure on us employees. The records show that the employer presented these
letters to prove that the union no longer enjoyed the support of the workers. Tue
I . fact that the resignations of the wuon members occurred during the pendency of
the case before ~e Labor Arbiter shows the employer's desperate attempt to cast
. doubt ?n the legmm~te ~tatus of the union. The ill-timed letters of resignation from
the uruon members mdicate that the employer had interfered with the cight of its
employees to self-organization. Because of such act, the employer was declared
guilty of ULP.
In Haaenda Fatima,3 the Court upheld the factual findings of the NLRC
and the CA that from the employer's refusal to bargain to its acts of economic
inducements resulting in the promotion of those who withdrew from the union
the use of armed guards to prevent the organizers to come in, and the dismissal of
union o~cial~ ~d m~mbers, one ~ot but conclude th~t the employer did not
want a uruon m its haaenda - a-clear Interference in the right of the workers to self-
organization. Hence, the employer was declared guilty of ULP.
3. JURISPRUDENTIALLY DECLARED ACTS OP ULP INVOLVING
EMPLOYER'S INTERFERENCE, RESTRAINT OR €0ERCION.
Certain specific acts have been jurisprudentially declared as ULP in a
i'
I.
number of cases which invariably involve interference, restraint or coercion by the
employer. These acts may be generally classified as follows:
i1
f.\rmllaalt Colpcxml v. M..RC, GR Nos. 00634-35, JlJle 6, 1900, 186 SCRA 393.
General MfDJ Gapcram V. CA, G.R. No. 1,16728,Feb. 11, 2004.
3 Hocienda Fatimav.Naticml Federa!i:nol&gatt:3leWa1cers-Food cl1d GeneraTra!e, GRNo.149440, J.n 28, 2003.
 BAR REVIEWER ON IABOR IAW CHAl'TERFM
IABOR REIATJONS
491

(l) Dismissals; (Q Di~missal occasioned by the refusal of the employees to give up their
(2) Threats; uruon membership, which dismissal WlS under the pretext of
(3) Questioning and interrogation; retrenchment due to reduced dollar allocations. I
(4) Offers and Promises; (g) Dismissal of an employee because of his act of soliciting signatures for
(5) Espionage and surveillance; the purpose of forming a union. 2
(6) lnterforence in intra-union affairs;
(h) Dismissal of employees because of their refusal to resign from their
(J) Other forms of interference, restraint or coercion.
union and to join the union favorable tc the employer, the latter's
3.1. DISMISSALS. formation having been aided and abetted b:, the company.l
Dismissals that are occasioned by employer's interference, restraint or (i) Dismissal of employees because of their a:t of engaging in valid and
coercion are always ULP. 1 The following acts involving dismissal of employees legal concerted union activities.4
have been judicially declared ULPs: G) Dismissal occasioned by the implausible and unproved allegation of
overpricing of needles the employee was ordered to buy and for
(a) Dismissal of employees after they have organized their union and alleged tampering of rcceipts.5
2
about to start \vith the effort at having it certified as their SEBA.
(k) Dismissal of an employee who had worked for 19 years because he
Consequently, to dismiss union members in order to ensure the defeat
3 had filed money claims against the employer.6
of the union in the certification election is ULP.
(I) Terminating teachers who have attained permanent status because of
(b) Dismissal of union officers which threatens the existence of the union the employer's apprehension that there might be a future strike in the
4
constitutes union-busting, an act ofULP. scho_ol. 1bis is an unwarranted interference with the rights of workers
to self-organization and to engage in concerted activities.
(c) Dismissing the union officers and members on the ground of losses
about two years after it has allegedly sustained them and after the 3.2. THREATS.
dismissed officers and members became more militant when they · The mere issuance of a threat by the employer, even if not actualized, may
demanded improvement in their working conditions.5 already constitute ULP. Examples are as follows:
(d) Effecting discriminatory dismissal where only unionists were
permanently dismissed, even where business conditions justified a lay- (a) Threatening employees with loss of jobs :>r benefits or promotional
off of the employees.6 opportunities if they join or vote for a union or engage in protected
concerted activity.7
(e) The mass lay-off or dismissal of 65 employees due to retrenchment (b) Threatening to close the plant if employee~ select a union to represent
absent any losses or financial reverses. 1bis kind of retrenchment them8 or to discourage union activity or support9
constitutes a lame excuse and a veritable smokescreen of the
(c) Stating to employees that union bargain:.ng is futile or a strike is
employer's scheme to bust the union and thus unduly disturb the inevitable. 10
employment tenure of the employees concemeci7

MriaPenciCo.v.CR,G.R No.L-169J3,Aug. 31, 1965, 14SCRA955.

Uex 1:Jr4>btee$Asrociatialv. CR. G.R No.L-39154, Sept. 9, 1982. .kxlric ~ Corp(JaiDl v. incaYJ,GR tti. L-51494, Aug. 19, 1982, 115 SCM887.
Sam.ml rg MrrJ9aJitNa sa BaooolroU.lC V. M.RC, G.R No. 126195, lit 17, 1997. 3
~ Deveqxrent Coq)aatioov. QR, GR No. L-39546, Nov. 24, 1977, &) SCRA~.
Sammg Mir@aga.va rg Via Mare v.Noriel, G.~ No.L-52169, .Aile 30, 1980, 98 SCRA 507. ' ~ &Mr1gs Bri v.CIR, GR No. L-20303, ~ 27, 1967, 21 SCRA 226.
See Mx:le 278 (263(el] l'>lli:h pem,enltf proviles in pat 'xxx ll)l case of d'srissal fnxn erT'l)loyrnentof unm df1cels Jul/ 5
~ rg ~ sa Canara 9loes v. Caimi 9loes.GR No. L-50985. Jal. 30, 1982.
eloci!d i1 acoirdml v.i1l tie lml CXX1SftJoon and !rt~. v.lli:h llli!'f coosM! lmll bustnj, vdiere fle existence of s Sibalv. Nooe Darreof G'eaterMria, G.R No 75093,Feb. 23, 1900.
na
tie llli:Jl is llvea!ened, lhe 1~toelrqd peood shal <Wt and the m llli!'f take mi irmeoaletf.' See ~ 7
See 'En'l)bferAAloo Ri)hls and Otw;Jatioos,' lkie(! Slates' Na6ooal lm Relafuns Board (NLRB), at
CoilgiJ de San J101 de 1.eba1 V. As&XiaOOn of Empbjees aoo Facut)' of Lelral, G.R No. 141471, Sept 18, 200)_ hllps'lMYrw.ntb~IY,lhls-~igaions; Last~ Odober09, 2016.
Clceai:Ail'ltdm, klc. v. CIR, GR No. l-18704,Jan. 31, 19t>3. B Id.
Sal MJuei Capcmn v. NLRC, GR No.106001,M:rd115, 1996. 9 Matmac Cerblr b' Pub'x: Paq, 1he Nama1 Laboc Re1aoons Board and '\kifar Laba' Practices",by Rooer1 P.1-ultef.
7 People's BriiJ'ldTrustCo. v. PEope'sllri31XfTMICo. frrl)loyl!es Uli>n, GR No. L-39603,Jan. 13, 1976. 10 Id.

BAil RIVIEWEll ON lABOll lAW
492
(d) Threatening the union recruiter with bodily haan when he refused to
yield the demand of the· employer to surrender the union affiliation
fonns. 1
3.3. QUESTIONING AND INTERROGATING EMPLOYEES.
The act may also amount to· ULP even if it is merely in the foan of a
question. The following acts well constitute ULP under this classification:
(a) Interrogating its employees in connection with their membership in
the union or their union activities which hall\pers their exercise of free
choice.2
(b) Questioning employees about their union sympathies or activities in
circumstances that tend to interfere with, restrain or coerce employees
in the exercise of their rights would be treated as ULP.3
3.4. OFFERS AND PROMISES.
The employer's act of making an offer or promise of certain favors or
benefits may also constitute as ULP. The following are illustrative of this kind:
(a) Promising or implementing employee wage increases to discourage
their union activity or supp_o rt4
(b) Offer of reinstatement and attempt to "bribi' the strikers with
"romfortabk rots," "free.roffie and o"aiional movfes," "overtime pqj' for work
perfoo:ned in excess of 8 hours and offer of "arrangement/' for their
families so they would abandon the strike and return to work,
constitute strike-breaking which is a ULP.5
(c) Offer of Christmas bonus to all "hyal' employees made shortly after
the request by the union to bargain; wage increase given for the
purpose of mollifying employees after the employer has refused to
bargain with the union or to induce strikers to return to work;
employer's promise of benefits in return for the striking employees'
abandonment of their strike; and the employer's statement made about
6 weeks after the strike started, to a group of strikers in a restaurant
that if the strikers returned to work, new benefits such as
hospitalization, accident insurance, profit-sharing and a new building
to work in, will be given to them.6
1 Velezv.PAVWal:lmln'slJnlXl, G.R No. L-12639,Api27, 1960, 107 Phi 689.
Scoly'sDep;msltSbev. ~ . GR No. L.a116,Allg. 25, 1956.
kt.
• Maooia:Center n Nie Policy. 'The Namil utx:rRelatioos lloard'and 'Unfarlaba PTD:eS", tr/ Rooett P. ftlrteI.
1 nsula'UeAsSU'irieeCo., Ud., ~Associalioov. riruta.-UfeAswance Co. GR No. L-25291,Jan. 30, 1971.
I Id.
I ',
-:!t.... -
CHAl"TEll FIVE 493
lABOR RELATIONS
(d) Announcement by the employer of benefits prior to the conduct of a
certification election, intended to induce the employees to vote against
the union. 1
3.5. ESPIONAGE AND SURVEILLANCE.
The act of spying and surveilling of employees to determine their
involvement and participation in union organizing, formation and concerted
activities is ULP. Examples are as follows:
(a) When management conducts espionage or surveillance of the meetings
and activities of the union. It is illegal since it shows the opposition of
the employer to the existence of the union, and the furtive nature of
his activity tends to demonstrate spectacularly the state of his anxiety.2
(c) Requesting employees to report on the union activity of others.3
3.6. INTERFERENCE IN INTRA-UNION DISPUTE.
The act of management in meddling with purely internal concerns, issues
and affairs of ~e union is ULP. Fo~ example, petitiooers, in De la Salle Univmiry,4
were declared liable for ULP for which they were orde!ed to pay respondent union
nominal damages in the amount of P250,000 and atto:ney's fees in the amount of
PS0,000 because of their act of temporarily doing the following at the height of an
intra-union dispute involving the election of officers of respondent union:·
(1) Establishing a savings account for the unbn where all collected union
dues and agency fees will be deposited and held in trust; and
(2) Discontinuing normal relations with any group within the union.
including th_e incumbent set of officers.
The said act of petitioners was precipitated by the request of one of the
contending groups in respondent union for them "to please put on escrow all
union dues/agency fees and whatever money considerations deducted from salaries
of concerned co-academic personnel until such time that an election of union
officials has been scheqµled and subsequent elections has been held." Petitioners'
act described above drew respondent union to file a complaint against them for
ULP, claiming that they unduly interfered with its internal affaiis and discriminated
against its members. The Supreme Court agreec. with respondent union's
contention. It thus found the said act of petitioners c1,mstitutive of interference, an
unfair labor practice, because at the time they adopted said action, a valid and
existing CBA had been entered into by the parties. It :hus behooved petitioners to
' Relouisialal'lasocs,n:. 173NlRBNo.218; NlRBv. Ex~PatsCo., 315 U.S.405.
1 V51A CJS Sec. 382, p. 278,
3 Mrlilac Cene' n Nlic Por;y, 'The National labor Re!cfuls Boa-d ir1d 'U1fai utx:r Prat1i:e;", ll'f ROOE!1t P. tblle!,
published m Avg. 24, 1999,oofne ver.;ioo at hl!ps1MYiW.nmilac.ag/2317; L3& aa:essed: FelJrucry 14, 2017.
De la Sale~~ V. De la Sale lJrMmj ~ ~ . G.R No. 177283, /i)li 7, 2009.

494 BAR REVI ~RON LABOR LAW
observe the terms and conditions thereof bearing on union dues and
representation. It is axiomatic in labor relations ·that a CBA entered into by a
legitimate labor organization and an employer becomes the law between the parties,
compliance with which is mandated-by express policy of the law.
In fun Tranport C.O,p. v. NLRC,1 petitioner's failure t~ remit the union
dues it has checked-off to private respondent union, SMART,2 the incumbent
SEBA, was declared an act of interference with the exercise of the employees' right
to self-organize and therefore ULP under Article 259(a) (248(a)].3 The failure to
remit the union dues to SMART because of the disaijiliation by some of its
members who organized another union, RTEA,4 and the voluntacy recognition
extended to RTEA, were clear indications of interference with the employees' right
to self-organization. These acts were ill-timed in view of the existence of a labor
controversy over membership in the union. Such supposed disaffiliation and
voluntary recognition of RTEA are but a lame exc~se that cannot validate those
acts.
But the foregoing cases should be contrasted with the earlier case of
An/la110 Univmity,5 where the act c;,f the university in withholding the union dues
and death benefits was not considered ULP because it was made upon the request
of union members in the light of their gripes against the union and its officers. The
university even deposited the amounts corresponding to the union dues and death
benefits with the DOLE where the parties could settle the issues among
themselves. The university, therefore, cannot be faulted for ULP as it in good faith
merely heeded the request of union members.
3.7. OTHER FORMS OF INTERFERENCE, RESTRAINT OR
COERCION CONSTITUTING ULP.
There are other forms of ULP by means of interference, restraint or
coercion, such as the following:
(a) Indirectly forcing the employees to join another labor union as a
condition for their re-admission for participating in a strike.6
(b) Instructing an employee not to affiliate or join a union.7
(c) Refusal of the employer to reinstate strikers who voluntarily and
unconditionally offered to return to work but did not accept the new
1 Oceani: l'haTrooll fnl>k1jees l.klioo V. '1cmg, GR No. L-50568, NcN. 7, 1979.
GRIG. 188020&1882532,Ji.Jle27,.D16.
2 Sanimlrgl.m;iglr;jclMlsaRen Traispat(SIJARl).
3 This was cled by Ile ~ Crut il lhis decism as At1ide 258 (a} and rd Miele 259(a} l'll1ich is Ile ranurrbemg
nale by Ile DOI..ESeaetry i1 her OepcrtrientM.isocy No. 01, Seres rJ 2015 (Rent!Tbemg rJ Ile Laba Code rifle
~ .as NneRled), isrued oo Ju~21, 2015.
4 Ren Tm;pat~k1jees AssocialilXl (RTEA).
5 ArelmlkwessittEnl)lo','eesavlWake!SlkliooV. CA. G.R No.139940,Sepl 19, 2006.
Macleod &~ r i Ile Phis. v. f'ro;JressM! Federafm alabor, G.R No. L-7887. tv\3)' 31. 1955.
Vsaya, Slevedcresv. CIR. G.R. t-1:l. L-21696, Feb. 25, 1967, 19 SCRA 426.
CHAl'TER FIVE
IABOR RIIATIONS
495
discriminatocy conditions imposed against them because of their
union membership or activities. 1
(d) Th_e act of the purchasers of a business esoblishment in replacing the
uruon members who were negotiating a CBA with the former owner
at the time of the salc.2
(e) The_ ~ t of con~essions and privileges during the pendency of a
certlficatton electton case to members of one of the unions
participating therein.l ·
(Q Suspending union officers who attended the hearing in the petition
for certification election they filed.'
(g) Ceasing operation due to the establishmen: of the union.5 •
{h) Simulated sale in bad faith of business res:>rted to in order to get rid
of the employees who were members of the union.6
~) Engaging in capital reduction to camouflage the fact that it had been
making profit, in order for it to be able to effectuate the mass lay-off
of union members.7
G) The retrenchment of employees who belong to a particular union
with no satisfactory justification why said employees were singled
out8
(k) Asking the employees to disclose the names of the members of the
union.9
Q) Putting on "rota/ion" only the alleged members of the union. ID
(m) Compelling employees to sign an instrument indicating that the
employer observed the labor standards provisions of the law when he
might have not, together with the act of terminating or coercing
those who refuse to cooperate with the en:ployer's scheme.II
(n) The cessation of a company's opemtions shortly after the
organization o~ a labor union and the resumption of business barely a
month after, gives credence to the emplo:,ees' claim that the closure
was meant to discourage union membership and to interfere in union
activities.12
(o) Provoking the union officers into a fight by two recently hired
employees pursuant to a strategy of the company designed to provide
CltxnM!i Cammial Enl)k7,'ees Md la>orels tkli:Xl v. CIR. G.R. No. L-19TT8, Sept. 30, 1964.
Naicra l.m l.hm v. CR, GR. No.L-31276, Sepl 9, 1982. .
f'hifW~Olaritt 9.Yeepstakes Offi:ev. The Associa!ial rJS\Yeepstates Slaff Pewviel, GR No. L-27546, ..V,, 16, 1982.
5 Cam1el:raftCapaaticnV. NLRC, GR Nos. 90634-JS, JIJle 6, 1990.
6 l.mca!a Bip1 Fmy V. CIR, G.R No. L-18065,flath 30, 1962.
1 ~a&Co.,h:.~.Zanora,G.R.No.L-48237,Ji.Jle30, 1987, 151 SCRA355.
9 Balaa1 ~ Md frgileerrg Co., klc. v. NI.RC, GR t-1:l. 78604, M3y9, 198e.
Samiilanrg Mrggagawa sa B.nldi1crlM.C v. NI.RC,GR No. 126195, J\tt 17, 1997, 275 SCRA 633.
10 Sanallan rg Mrlggagawa sa BandclllO-LM.C v. M.RC, suixa
11 M;i>eza v. NI.RC G.R. No. 118506, Api 18, 1997, 271 SCRA 670.
12 ~Capaaoonv.We-Srunwakerslmioo-FSM,G.R.No.156292,JM.11,2005.

BAR REVIEWER ON LABOR I.AW
an apparently lawful cause for their dismissal. The dismissed
employees have not figured in similar incidents before or violated
company rules in their many years with the company. 1
(p) Transferring, laying off or assigning employees more difficult work or
tasks, or otherwise punishing them because · they engaged in
organizing and forming a union.2
II.
YELLOW DOG CONTRACT '
1. GENERAL DESCRIPTION OF A YELLOW DOG CONTRACT.
Paragraph (b]3 of Article 259 [248] describes what is commonly known as
'jello111 dog m11trad. " It is one which e."<acts from workers as a condition of
employment that they shall not join or belong to a labor organization, or attempt to
organize one during their period of employment or that they shall withdraw
therefrom in case they are already members of a labor organization.
2. COMMON STIPULATIONS IN A YELLOW DOG CONTRACT.
A typical yellow dog contract embodies the following stipulations:
(1) A representation by the employee that he is not a member of a labor
organization; . In Shell Oi/,3 the Court ruled that the contracting out of security ~ervices
(2) A promise by the employee that he will not join a union; and
(3) A promise by the employee that upon joining a labor organization, he
will quit his employment.
The act of the employer in imposing such a condition constitutes ULP
under Article 259(b) [248(b)] of the Labor Code. Such stipulation in the contract is
null and void.
Ill.
CONTRACTING OUT OF SERVICES AND FUNCTIONS
1. GENERAL RULE.
Paragraph [c]4 of Article 259 [248] describes when the act of the employer
of contracting out of services or functions being performed by SEBA members is
considered ULP.
1
1/isaylrl 8tyde ~ eo., 1nc. v. Nalional La1xJ unm and c1R, GR No. L-19997, Mlr 19, 1965, 14 SCRA s.
T&H~ (np.K,n Queen (np.V. T&HShoplilte!s (np,G.R. No. 191714, Feb. 26, 2014. .
"(b) To~ as a cm:litioo cl ef111k7ymetll that a persoo a an en1)k)yee shal not jlrl a laba 019~ a shall
vil!mN m ooe ov.toch 11e beblgs(.f
• "(c) To cooract out selVi::es a fuoc6als being perlooood b'f unoo members \\hen such wil illerfere witl, res1rail ex roen:e
flTl)byees ntie exen:ise cl tEi ri_tjs kl self-O!garizaoolf
CHAl'TERFIVI
LABOR RELATIONS
497
As a general rule, the act of an employer in having work or certain
services or functions being perfocmed by SEBA members contracted out is not per
It ULP. This is so because contracting-out of a job, work or service is clearly an
exercise by the employer of its business judgment and its inherent management
rights and prerogatives. Hiring of workers is within the employer's inherent
freedom to regulate its business and is a valid exercise of its management
prerogative subject only to special laws and agreements on the matter and the fair
stan~ards of justic~.. The employer cannot be denied the faculty of promoting
effioency and attallllng economy .by a study of what units are essential for its
operation. It has the ultimate right to determine whether services should be
perfooned by its personnel or contracted to outside agencies. I
f WHEN CONTRACTING-OUT BECOMES ULP.
· It is only when the contracting out of a job, work or service being
perfooned by SEBA members will interfere with, restrain or coerce employees in
the exercise of their right to self-organization that it shall constitute ULP.2 Thus, it
is not ULP to contract out work for reasons of business decline, inadequacy of
facilities and equ!pment, reduction of cost and similar reasonable grounds. The
court usually refuses to substitute its judgment for that of the business decision of
the employer in ascertaining the validity or legality of the motivation for the
contracting out of services.
to an outside private security agency to undertake the wotk of the company security
guards who were re-assigned to other sections of the company, is vio~tive of the
existing CBA. It could have been purely an exercise of management prerogative on
the part of the company if it were not bound by what was stipulated in the CBA to
continue to maintain a security guard section at least du.ring the lifetime of the
agreement.
Another instance where the employer was declared guilty of ULP
consequent to contracting out of services is Di/jtal Ttk(0.'111111mi((ltio11J. 4 In this case,
petitioner closed Digiserv, a department of the company, to outsource its call
center operation. While losses may have been a valid reason to close down its
operations in the light of the decline in the volume of transaction of operator-
assisted call services as supported by Financial Statcmeots for the years 2003 and
2004, during which Digiserv incurred a deficit of P16,3,624.00 and P164,055.00,
respectively, it was, however, made in bad faith. In declaring petitioner guilty of
ULP, the Supreme Court stated that the closure of Digiserv was made after the
DOLE Secretary had issued the first assumption order to enjoin an impending
1 MrilEledfcCorrpanyv.Qlisurbrg,GRNo.127598,Jai.27, 1999.
2 Mi:le2259(c) (248(c)j, 1.mCode; Secoon6 II], DepmertOdeO-b. 1S-02. Seriesd2002,(Feb. 21,2002}.
3 SheGOiWc:rteis lrolv. Shel!Oi ~ o fllef'hr~. Ltl.,G.R No. L-28607, Mrf 31, 1971,39SCRA276,292.
' DgitHelecaTm.ni:am Plllppiles. re.v. lliJilel ~ lki:xl (OEU), G.R Nos. 184903-0 4, Oct. 10, 2012

SAR REVIEWER ON IABOR IAW
strike. When Digiserv effected the dismissal of the affected employees, the union
filed another notice of strike. Significantly, the DOLE Secretary ordered that the
second notice of strike be subsumed by the previous assumption order. ·Ibus, it
was held that bad faith was manifested by the timing of the closure of Digiserv and
the rehiring of some employees to Inter,ictive Techno\ogy Solutions, Inc. (I-tech), a
corporate arm of Digitel. The assumption order directs employees to retum to
work and the employer to reinstate the employees. The existence of the assumption
order should have prompted Digitcl to observe the slat111 q110. Instead, Digitel
proceeded to close down Digiserv. The DOLE Secretary had to subsume the
second notice of strike in the assumption order. Thi~ order notwithstanding,
Digitel proceeded to dismiss the employees.
The timing of the creation of I-tech is dubious. It was incorporated on 18
January 2005 while the labor dispute within Digitcl was pending. 1-tech's primary
purpose was to provide call center/customer contact service, the same service
provided by Digiserv. It conducts its bus~ess inside the Digitel offic~ .at 110 E.
Rodrig11ez ]r. Avenue, Bagumbf!Yan, Quezon Ctty. The forme~ head of Digiserv, Ms.
Teresa Taniega, is also an officer of I-tech. Thus, when Digiserv was closed down,
some of the employees, presumably non-union members, were rehired by I-tech.
Thus, the closure of Digiserv pending the existence of an assumption order
coupled with the creation of a new corporation performing similar functions. as
DigisetV leaves no iota of doubt that the target of the closure are the uruoo
member-employees. These factual circumstances prove that Digitcl terminated the
services of the affected employees to defeat their security of tenure. The
termination of service was not a valid retrenchment; it was an illegal dismissal of
employees. The Supreme Court ruled that the closure of Digiserv to outsource its
operations to I-tech constitutes ULP under Article 259(c) [248(c)] of the Labor
Code. At the height of the labor dispute, occasioned by Digitel's reluctance to
negotiate with the Union, I-tech was formed to provide, as it did provide, the same
services performed by Digiserv, the Union members' nominal employer.
The principal issue in BPIEU-Davao-Ci!J-FUBU 11. BPI,1 is whether or not
the act of respondent BPI to outsource the cashiering, distribution and
bookkeeping functions to BPI Operations Management Corporation (BOMq is in
conformity with the law and the existing CBA. Particularly in dispute is the validity
of the transfer of twelve (12) former FEBTC employees to BOMC, instead of
being absorbed in BPI after the corporate merger. Petitioner union claims that a
union shop agreement is stipulated in the existing CBA. It is unfair labor practice
for employer -to outsource the positions in the existing bargaining unit, citing the
case of Shell Oil2
1 BPI ~ees tnoo-Omo Cly .fUBU (BPIEU-Oavao City.fUBU) v. Sri ol lhe Ph~ lsla"ds (BPI), GR. No.
17491U.t, 24, 2013.
l ShellOiW<rteisU101v.ShellOiCar!)cJlycOiel'hitJpines,Lal.,GR No. L-28607, May31, 1971,39SCRA276,292.
CHAl'TER. FIVE
lABOR RElATIONS
499
A finding of ULP necessarily requires the alleging party to prove it with
substantial evidence. Unfortunately, the union failed to discharge this burden.
Consequently, in ruling that respondent BPI did not commit ULP, the Supreme
Court cited the following ratiocinations:
(1) The union's reliance on the Shell Oil case is misplaced. The rule now is
covered by Article 274 [261]' of the Labor Code. Clearly, only gross violations of
the economic provisions of the CBA are treated as ULP. Otherwise, they are mere
grievances. In the present case, the alleged violation of the union shop agreement
in the CBA, even assuming it was malicious and flagrant, is not a violation of an
economic provision in the agreement
(2) The provisions relied upon by the union were those articles referring
to the recognition of the union as the sole and exclusive bargaining representative
of all rank-and-file employees, as well as the articles on union security, spcciii.cally,
the maintenance of membership in good standing as a condition for continued
employment and the union shop clause. It failed to take into consideration its
recognition of the bank's exclusive rights and prerogatives, likewise provided in the
CBA, which included the hitjng of employees, promotions, transfers, and
dismissals for just cause and the maintenance of order, discipline and efficiency in
its operations.
(3) The union, howe,ver, ins_ists that jobs being outsourced to BOMC were
included in the existing bargaining unit, thus, resulting in a reduction of a number
of positions in such unit. The r~uction interfered with the employees' right to self-
organization beca_use the power of a union primarily depends on its strength in
number. It is incomprehensible how the "reduction of positions in ·the collective
bargaining unit'' interferes with the employees' right to self-organization because
the employees themselves were neither transferred nor dismissed from the service.
BPI stresses that not a. single employee or union member was or would be
dislocated or terminated from their employment as a result of the Service
Agreement Neither had it resulted in any diminution of salaries and benefits nor
led to any reduction of union membership. As far as the twelve (12) former
FEBTC employees are concemed, the union failed to substantially prove that their
ttansfer, made to complete BOMC's service complement, was motivated by ill will,
anti-unionism or bad faith so as to affect or interfere with the employees' right to
self-organization.
(4) It is to be emphasized that contracting out of setvices is not illegal per 1e.
It is an exercise of business judgment or management prerogative. Absent proof
that the management acted in a malicious or arbitrary manner, the Court will not
interfere with the exercise of judgment by an employer. In this case, bad faith
1 Ar1ide 274 (2611 is enffled ·~urisdaioo d Vrixl'ay Mlilralll!S a P.llel d Vdr/:1:>Jy M>lrators' v.me l is fX'O'lided
per1ilelil'f as foll:7Hs: 'ro Alxatf~l)'. villmls d a Cdledile 8crgai1i1g Agreenent. except llxise v.!1idl ere gross in
dla'ader, shal no b'IJE( be reale:! as oofar laba pac&:e cm shal be resewed as grievnes imer tie C.dlec:IMl
Bargaiiilg P<jreemenl Fa puiposes d llis Miele, gross vdalills d Colecwe Bargailw-g P<_j~ shal mean faJriJll
~maicOJs refusa ocarlllf llilll Ile ecamic prtMSicxls d such a;ireemeri'
 BAR REVIEWER ON Lo.BUR l,o.W
500
cannot be attributed to BPI because its actions were authorized by CBP Circular
No. t 388, Series of 1993 issued by the Monetary Board of the then Central Bank of
the Philippines (now Baogko Sentral ng Pilipinas).
IV.
COMPANY UNION
1. COMPANY INITIATED, DOMINATED OR ASSISTED UNION.
Paragraph [d)1 of Article 259 [248] considecs it a ~~ t~ initiate,
dominate, assist or otherwise interfere with the formation or administratton of any
labor organization, including the giving of financial or other supp~rt to it o~ its
organizers or supporters. Such union is called ''<ompany union" as tts fonnatton,
function or administration has been assisted by any act of the employer defined as
ULP under the Labor Code.2
2. A PREJUDICIAL QUESTION.
While generally, the pendency of a ULP case filed against a la~or
organization participating in the certification election does not sta.y ~e hol~g
thereof,3 however, the pendency of a formal charge of c~mpany ~o~allon ~st
one of the wuons wluch is participating in the certificatton electlon ts a preJudioal
question that bars the holding thereof until its final resolution.•
3. SUSPENSION OF CBA FOR A LONG PERIOD.
[f warranted by circumstances, a CBA may be suspended for more than
the usual 5-year lifetime thereof. During the period of suspension, the parties may
mutually agree that the SEBA's status shall continue to be recogruzed as such. The
question is, does this prolonged recogrution tantamount to making the SEBA
company-dominated? 'This poser was answered in the negative in Rivera v. Espiritu,5
where the CBA between the management of Philippine Airlines· (PAL) and the
SEBA, Philippine .Aitlines Employees Association (PALEA), with expiry date of
September 30, 2000, was mutually agre~ by the parties to be suspended until 2008,
to prevent the closure of PAL because of severe financial losses. It was accordingly
stipulated in the agreement of suspension that
"a. PAL shall continue recognizing PAL.EA as the duly
certified-bargaining agent of the regular rank-and-file ground employees
of the Company;"
1 ·(d) Toiltiale,dcwrilie, assst « olherv,ise ille!ferelli1I lhe lon1'01m a ~ d ttrf looa'ocgarizaoon, idlcfrg
lheglmJofhn:iala!'1erSl4)!)00tllaiscxgaizssa~.f
l Artide212(i),l.mCode;Se;fal 1~j.~l,Bcd(V, Ruestl~lhel.mCode.
1 B;rn,av. CIR, G,R. No.l-32853, Se!X,25.1981, 107 SCRA596. .
lk'lel Ct.«: Wcneis lmiv. areau oflm-Relaticns, GR No. l-51337, Milth 22. 1984.
GR ~.135547,.lal. 23, 2002.
CHAl'TER FIVE
501
IASOR REIATIONS
Petitioners allege that the 10-year suspension of the CBA under the PAL-
pALEA agreement virtually installed PALEA as a company union for said period,
ainounting to ULP, in violation of Article 265 [253-A] of the Labor Code
~andating that a SEBA serves for five years only. The Supreme Court, however,
disagreed and pronounced that the PAL-PALEA agreement dated September 27,
!9~8, is. _a valid exercise of the freedom to contract. Under the principle of
tnvtolability of contracts guaranteed by the Constitution, the contract must be
uph~d."
4. ILLUSTRATIVE CASES OF COMPANY UNION.
In Kapiianan 11. Hami/fan;1 there were two unions existing in the company,
namely: Kapiianan ng mga Manll,aga111a ng Alak (NAFLU), and respondent Hamilton
Workers' Union, (Workers' Union). The company preferred the latter union over
the former. It asked the president of the former to dissolve NAFLU and when he
refused, he was dismissed. Subsequently, some members of NA.FLU resigned
therefrom and joined the Workers' Union because otherwise they would be
dismissed by the compll!ly and those who remained affiliated with NAFLU were
allowed to work only two (2) days a week. Later, 52 employees who were members
of NAFLU were also terminated for refusing to join the Workers' Union. Because
of these circumstances, the Supreme Court declared that the Workers' Union is a
company union.
In Octanfr Air Products v. OR,2 several employees were forced by company
officers to join a union. No member of the union had been dismissed despite the
implementation of a retrenchment policy which resulted in the dismissal of other
employees who were officers and members of another union. After the dismissals,
the company hired several laborers. All these circumstances indicate that the union
is company-dominated.
In Philippine Amtrita,1 Cigar v. Philippint Amm'can Cigar and Cigartlte
Manufacturing u.,3 it was pronounced that one indication that the union is
company-dominated is the act of the employer in securing authorization cards from
employees and· by immediately granting the union exclusive recognition as a
bargaining agent and entering into a contract therewith although it was not the duly
authorized representative of the employees. Another is when the union approached
management rather than the employees in getting the union organized and
management extended the requested assistance to the union. The acts of the
company in soliciting membership and allowing union· activities to be held during
working time and coercing employees to join the union under threat of dismissal or
demotion are clear indicia of company domination.
1
~t,\J M;ia ~a.itaNrJAla<v. Haml!oo [lstil'eyQxrc>any, GR No. l-18112, Oct 30, 1962, 6SCRA 367.
l GR~.18704,Jan.31.1963, 7SCRA208.
' ~ Amerbr1 CiJar clld CiJirelle Factory Waters lndepeooeli Union v. f'lllWile America1 CiJar a'ld CiJirette
~ Co.,GR No. l-18364,Feb.28, 1963, 7SCRA 375.

502 BAR REVIEWER \lN IABOR IAW
In Davao Fm l17orkm Fron/ v. OR,1 the following acts of respondent
employer, 7-UP Bottling Company of the Phili~pines at its Davao branch, were
cited as indicia that the union was company-dollllllated: It refused to bargain with
petitioner union; it interf~red with an~ ~oerced !ts m~mbers. to vote for its hand-
picked candidate as_ ~resident of pennoner uruon; It r~q~ed the membe~ of
petitioner union to 101n the Seven-Up Employees A.ssoc~atlon, _a n~wly orgai:uzed
labor union obviously sponsored and favored by It \Vlth which It tmmediatcly
executed a CBA granting the members of such new union fringe benefits while
refusing to bargain with petitioner union regarding the renewal of their just-expired
contract and instead foisting upon petitioner union its unilateral version of a CBA;
and it filed a notice of lock-out and refused entry to members of petitioner union
when the latter refused to accept its unilateral contract version. "These union-
busting and discriminatory acts led petitioner union justifiably to declare a strike
against respondents' unfair labor practices.
V.
THREE (3) SEPARATE-LEGAL CONCEPTS
TREATED IN PARAGRAPH (E), ARTICLE 259 [248]
1. THREE SENTENCES, THREE SEPARATE CONCEPTS.
Paragraph (e) of Article 259 [248] states:
"(e) To discriminate in regard to wages, houcs of work and
other terms and conditions of employment in order to encourage or
discourage membership in any labor organization. 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,
except those employees who are already members of another union at
the time of the signing of the collective bargaining agreement
Employees of an appropru.te 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 250 [241],
paragraph (o) of this Code shall not apply to the non-memben; of the
recognized collective bargaining agent(.]"
The three (3) sentences comprising above paragraph [e] treat of tluee (3)
separate labor law con:cepts,2 lo wit.
1 GR. No.L-29l56,0d.31. 1974,SOSCRA-106.
1 Miele 259(e) ~48(e)J athe Lalor r.ode is stbstmatt based oo aU.S. laH (See NaW Lalor Relab'IS h;1, 29 U.S.
Code§ 158- Ulfai ~ pracoces, Sec.8(a) (3) llerea).
··<"-'
CHArTER FIVE
503
LASOR RELATIONS
1. Discrimination. - This is found in the fir1t sentence thereof which
considers as ULP, to discriminate in regard to wages, hours of wotk
and _other terms and co~di.tions of employm_ent in order to encourage
or discourage membership tn any labor orgaruzarion.
2. Union security clause. - 1bis is embodied in the serond sentence
thereof which stat~ that "(n)othing in this Code or in any other law
shall ~top the . P.artles &om requiring membership in a recognized
collective barga.trung agent as a condition for efI!ployment, except those
employees who are already members of another union at the time of
the signing of the collective bargaining :agreement"
3. Agency fee. - This is described in the third sentence thereof in that
"(e)mployees of an appropriate bargaining :Jn.it who are not members
of the recognized coll~ctive bargaining agent may be assessed a
reasonable fee ~quivalent to the dues and other fees paid by members
of the recognized collective bargaining agent, if such non-union
mem_bers accept th: b<:°efits under the collective bargaining agreement,
provided, that the individual authorization required under Article 251
[242), paragraph (o) of this Code shall not apply to the non-members of
the recognized collective bargaining agent"
" Except for Agenry Fee which has been earlier discussed under the topic
D. RIGHTS OF LABOR ORGANIZATIONS," the first two of the above
concepts are discussed in details below.
y.1,
DISCRIMINATION
1. CONCEPT.
Discrimination has been defined as the failure to treat all persons equally
when no reasonable distinction can be found between those favored and those not
favored. t There is discrimination only when one is denied privileges which are
granted to others under similar conditions and circumst:inces.2 Thus, before a claim
for discrimination can prosper, it must be established that first, there is no
reason~blc distinction or classification that can be obtained between persons
belonging to the same class; and, 1erond, persons belonging to the same class have
not been treated alike.3 It must be stressed, however, that discrimination per se is not
' Btn's law Ddicray, 6th ~ . p. 467; &.gue v. T~ kl1ena!iala {Phi!si nc.,GR Nos. 164ro4 &164784, Jal.
30, 200'J; l'cmlguez v. GS1S Fil!Vf a.rt ~ BcnJ, G.R No. 169570, Ma-th 2, '2fYJ7,ci1i1g Phllppi,e AmericM
Lie Gen. mirance Co. V. Granaje, G.R No. 156963, N<N.11. 2004, 442 SCRA274, 284-285.
2 Ca\ex {Phfippinesf, he. v. PhiippilelalorOig~G.R No. L-5200, ~ 29, 1953, 92 Phi. 1014.
Wise ir1d Co.. n: v.Wise cm Co., n:.En1)1oyees Lmn-NATU, GR No. 87672. 0d. 13, 1989, 178 SCRA 536, 539.
 BAR RE\IIEWER ON IAIOR !AW
504
unlawful, Further, there can be no discrimination where the employees ·concerned
are not similarly situated. 1
2. DISCRIMINATION AND CLASSIFICATION, DISTINGUISHED.
Discrimination should be distinguished from classification. While
discrimination is considered ULP, classification is not because it merely
differentiates the employees in accordance with their respective 'jobs and accords
them the appropriate levels of pay or benefits due them by reason thereof. ·
3. COVERAGE OF PROHIBITION.
What is prohibited as ULP under the law is to discriminate in regard to
wages, hours of work, and other teans and conditions of employment in ·order to
2 unionized depanments.
mcollf'age or diJcol(rage membership in any labor organization.
In the following cases, the employer was declared guilty of discrimination:
· (1) Manila Pencif,l where it was ruled that even assuming that busin~s
conditions justify the dismissal of employees, it is ULP of the employer to dis1111ss
permanently only union members and not non-unionists.
(2) Manila Railroad,• where the non-regularization of long-rim: empl~yees
because of their affiliation with the union while new employees were unmediately
regularized was declared an act of discrimination.
(3) AHS/Philippinu,s where the ernplofer transferred t1:e union p~esid~t
from the main office in Manila to Cebu at the tune when the uruon was still bemg
organized. It was held that the uneven application of its marketing p~ r~~tin~ in
the said transfer of the union president is patently an act of disamunatton
constitutive ofULP.
4. DISMISSING ONLY A FEW BUT NOT ALL OF THE ERRANT
EMPLOYEES, EFFECT.
Employees have no right to continue working upon their own terms while
rejecting the standards desired by their employer. It is not ULP for the employer to
dismiss employees who engage in slowdown. This holds true even if the employer
dismissed only some of the employees who participated in the slowdown where
such dismissal is made to serve as an example to stop th_e slowdown and not for
discriminatory reasons.6
I Id.
1 2 Manila tt:llel Co. v. Pnes Hotel~ Associalioo, G.R No. L-30818,Sepl 28, 1972.
Mk:le 259(e) 124S(eH, lm Cooe.
1 MnaPerdCo.,klc.v.CIR,GRNo.L-16903,Aulj.31, 1965, 14SCRA955.
'-mla RalroadCo. V. Kapiscrm ng ll'gat.wggagifKclsaMria ~ Co., GR No. l-19728,.htf 30, 1964.
~~Unioov.NLRC,G.RNo.73721,Mml30, 1987.
I 48hnlt 2d9J7.
CHAITTR FIVE 505
IABOR RELATIONS
5. DISCRIMINATION IN GRANT OF BONUS.
In Philippine Blooming Mills, 1 a case decided by the NLRC,. the employer
reserved its right under the CBA to grant better bonus to those who are
exceptionally good or efficient. It was held that it is not discriminatory or ULP for
said employer to give such bonus to non-union members, it being clear that many
union members were also given the bonus and it was purely a valid exercise of
management prerogative.
But in Manila Hou/,2 it was enunciated that there was unjust discrimination
when management depaned from its previous practice of dividing equally to all
employees cenain percentage of its net profit as Christmas bonus - giving only to
its employees in the operation where there was no union and not giving any to its
V-2.
UNION SECURITY CLAUSE
1. COVERAGE AND EXCEPTIONS.
The stipulation in a CBA based on the second sentence of paragraph (e] of
Article 259 (248), commonly known as the "11nion JtCllri!J da11Je'; allows the parties
thereto - the employer and the SEBA - to enter into an agreement compajsorily
requiring membership of the covered employees in the SEBA which successfully
negotiated the CBA, as a condition for their continued employment The only
exceptions to this rule where compulsory membership in the SEBA cannot be
enforced are as follows:
1) Religious objectors referring to employees who, at the time the union
security agreement takes effect, are bona-ji!M members of religious
organizations which prohibit their members from joining labor unions
on religious grounds;3
2) Employees already in the service and already members of a union
other than the SEBA at the time the union security agreement took
effect;4
3) Cpn_§dential-employees who are excluded from the rank-and-file or
supervisory bargaining unit;5
4) Supervisory employees who are excluded from becoming members of
the rank-and-file union and vitt-wmr,6 and ·
1 Ptwppine Bklari'9 Mis Empb>fees ~ (PAFLU] v. Plippine Ehrring MIis Co, Inc., NlRC Case No. RS-IV-
295175,June 4, 1976.
1 Vctnmv. Elizale Rq>e Waxers' lml, GR No. L-25246, SE!t 12, 1974, 59 SCRA 54, 68.
• Miele 259(e) 1248(e)J, LmCode; Freenm Shit MroaclmJ Co.V. CIR, GR No. L-16561, J.n 28,1961.
1 ~ Industries, Inc. V. c.onfesoc, G.R. No. 108855, Feb. 28, 1996, 254 SCRA 182, 197.
' Miele 25512451, l..aba' Cooe.
 BAR REVIEWER ON IABOR IAW CHAPTER FIVE 507
506 LABOR RELATIONS

5) Employees excluded from the coverage of the union security clause individual employee will be benefited by that poli07. In the hierarchy of
per express mutual agreement of the parties as stipulated in the CBA.l constirutional values, the right to abstain from joining a labor orgaruzation is
subordinate to the policy of encouraging unionism as an instrument of social
2. PURPOSE. justice.1
The purpose of a union security arrangement is, as the term ",mion 1eturity" 4. VARIOUS FORMS OF UNION SECURITY ARRANGEMENTS.
signifies, to guarantee the continued existence of the SEBA through enforced
membership for the benefit of the workers.2 The employer under this clause Generally, a union security clause may take the form of:
recognizes that the membership of employees in the SEBA which negotiated the 1. Closed shop agreement;
CBA should be maintained and continued as a condition for and retention of 2 Maintenance of membership agreement;
employment The obvious purpose is to safeguard and ensure the union's 3. Union shop agreement;
continued existence and to strengthen and protect it from the fickleness or perfidy 4. Modified union shop agreement;
of its own members. Without this clause, the existence of the SEBA is always 5. Exclusive bargaining agreement;
subject to uncertainty as its members may resign anytime resulting in the 6. Bargaining for members only agreement;
decimation of its ranks. The SEBA becomes gtadually weakened and increasingly
7. Agency shop agreement; or
vulnerable to company machinations. In this securit}' clause therefore lies the 8. Preferential hiring agreement.
strength of the SEBA during the administration and enforcement of the CBA; it is
this clause that provides labor with substantial power in collective bargaining.3 The abqve classification admits of certain modified types which the
parties may agree upon in the CBA depending on the peculiar requirements of the
3. NOT VIOLATIVE OF CONSTITUTION. situation of the parties thereto.
A union security clause in a CBA is not a violation or a restriction of the 4.1. CLOSED-SHOP AGREEMENT.
employee's right to freedom of association guaranteed by the Constitution. It is
unsurprising that significant provisions on labor protection of the 1987 A "clo1ed-1hop" arrangement may be defined as a scheme in which, l:iy
Constitution are found in Article XIII on Social Justice. The consrirutional agreement between the employer and its employees or their representatives, no
guarantee given the right to form unions and the State policy to promote unionism person is allowed to be employed in any departments of the enterprise unless
have social justice considerations. In People's lnd1111rial,4 it was recognized that he/she is, becomes and, for the duration of the agreement, remains a member in
"ll]abor, being the weaker in economic power and resources than capital deserves good standing of a SEBA entirely comprised of or of which the employees in
protection that is actually substantial and material." interest are a part.2 ·

The rationale for upholding the validity of a union security clause in a
CBA, even if it impinges upon the individual employee's right or freedom of
association, is not to protect the union for the union's sake. Laws and
jurisprudence promote unionism and afford certain protections to the certified
SEBA in a unionized company because a strong and effective union presumably
benefits all employees in the bargaining unit since such a union would be in a
better position to demand improved benefits and conditions of work from the
employer. This is the rationale behind the State policy to promote unionism
declared in the Constitution. Nonetheless, settled jurisprudence has already swung
the balance in favor of unionism, in recognition of the fact that ultimately the
Basically, this kind of agreement stipulat_es the undertaking by the
employer not to hire or employ any person who is not a member of the SEBA.
Once employed, it is required that the said person should remain a member of the
SEBA in good standing as a condition for his/her continued employment, at least
during the whole duration of the CBA. 'Ibis requirement for employees to become
members of the SEBA as a condition for their continued employment redounds to
their benefit and advantage because by holding out to loyal members a promise of
employment in the closed shop, the union wields group solidarity. In fact, it is said
that "the ,lortd 1hop ro11lra&I iJ the mo1I priZ!d (J(hie11tmen/ of 11nionimt." It adds
membership and compulsory dues. 3

1 B.n d tie f1i1Wi,e islinls v. BPI Efr!>byees lklm-0.Mlo ~federatioo d Urms il BPI l.nlml:, GR No.
164301,h,j. 10,2010.
l Id; Pi:q> ResMes, k1c. (PRI) Y. Oequla, G.R No. 172666, Dec. 7, 2011.
1 Calex Remy~ Associali:rl [CREAi V. Bricffl!s, G.R NoJ23782, Sept. 16, 19!17. 279 ~ 218. 236.
~•s ~ and Carrnettial ~ .m Wooers Ogmlion v. Peq)le's lndustia and C<mn1,tia1
l'.apcr.tm, G.RNo.L-37687,Mnh 15, 1982, 112SCRA440, 455.
1 Bri a tie ~ ismls v. BPI ~ lxmO?,-ao Olapler.federatm d lklioos il BPI lhbank. G.R No.
16Ql1,Al.g.10,2010.
2 Oell.txm Phq)pines. k1c. v. ~ . G.R No.158620,0a. 11, 2006.
1 Mria Mn!cm EsrpJyees lkll:xlv. NI.RC, G.R No. 76989, Sept. 29, 1987.

,: G:
508 BAR.RIVI EWER ON LABOR LAW
4.2. MAINTENANCE OF MEMBERSHIP AGREEMENT.
There is maintenance of membership arrangement when employees who
are SEBA members as of the effective date of the agreement, or who thereafter
become its members, must maintain their union members.hip as a condition for
their continued employment until they are promoted or transferred out of the
bargaining wut, or ~1e agreement is terminated.' Its role is to protect the SEBA's
current membership. By its express tem1s, it covers and renders continued union
membership compulsory for: (!) those who were already SEBA members at the
time the CBA was signed; and (2) the newly-hired ,employees who will become
regular during the lifetime of the CBA.
1rus form of union security clause is considered the mildest because it
does not require non-members of the SEBA to join the latter but simply stipulates
that those who are its members at the time of the execution of the CBA and those
who may, after its execution, on their own, voluntarily join it, should maintain their
membership in good standing therein for the whole du.ration of the CBA as a
condition for their continued employment until they are promoted or ttaosfcaed
out of the bargaining unit or the agreement is teaninated. Simply put, employees
who are not members of the SEBA at the time of the execution of the CBA are
not, in any manner, required to become its members. Employees hired after the
execution of the CBA are likewise not duty-bound to join it. They may or may not
join it2
4.3: UNION SHOP AGREEMENT.
There is union shop arrangement when all new regular employees are
required to join the SEBA within a certain period as a condition for their continued
employment.3 Its role is to compel membership of those who are not yet_SEBA
members. Under this scheme, the employer is given the freedom to hire and
employ any person who is not a member of the SEBA. Once such person
becomes an employee, he is required to become a member of the SEBA and to
remain as such member in good standing for the whole duration of the effectivity
of the CBA as a condition for his c~ntinued employment
4.4. MODIFIED UNION SHOP AGREEMENT.
Employees under this arrangement who are not SEBA members at the
time of the signing or execution of the CBA are not required to join it However,
any and all workers hi.red or employed after the signing or execution of the CBA
are required to join the SEBA.
1 ?alp Resrutes,nc.(PRJ) v.Oequla, GR No. 172666, Dec. 7J011.
I SeeA!m'g Co..r,ay CI.Jb, klc. v. NLRC,GR No. 170287, Feb. 14,2008.
I PalpResrutes, klc. (PRQv. Ta'ieca, GRNo.160828,Aug.9, 2010.
CHAl'T£R FIVE
LABOR RELATIONS 509
4.5. EXCLUSIVE BARGAINING AGENT AGREEMENT.
The union which negotiated and concluded the CBA with management is
considered and recognized as the SEBA of all the employees covered by the
bargaining unit, irrespective of whether they be members or not of u1e SEBA.
4.6. BARGAINING FOR MEMBERS ONLY AGREEMENT.
Under this arrangement, the union which negotiated and concluded the
CBA with management is recognized as the SEBA only for its own members. I This
kind of union security _is not allowed in our jurisdiction since the SEBA is required
to represent not only tts members but all the employees covered by the collective
bargaining unit (CBU) where such SEBA operates and which it represents.
4.7. AGENCY SHOP AGREEMENT.
Under this scheme, there i~ no requirement for non-members of the
SEBA to become its members. However, it is required that such non-SEBA
members should pay to the SEBA an agency fee as a condition for their contio~ed
employment. The third sentence of Article 259(e) (24~(e)] of the Labor Code
validates this arrangement
4.8. PREFERENTIAL HIRING AGREEMENT.
It _is ~~ principal feature of this arrangement that the employer-gives
preference in hiring to the members of the SEBA under equal circumstances and
qualifications. Once hired or employed, they are required to maintain their
membership in good staµding in the SEBA for the entire duration of the CBA as a
condition for their continued employment.
5. EFFECT OF UNION SECURITY CLAUSE ON NON-SEBA
MEMBERS.
a. Union security applies only to members ofthe SEBA.
The principles applicable to union security discussed in this section
apply only to the members of the SEBA. Other unions in existence in a given
bargaining unit which is being represented by a duly certified SEBA cannot invoke
these union security principles. The reason is that union security is a stipulation in a
CBA; hence, it can only be invoked by the union which is a party thereto and this
could only refer to the SEBA and to no other union/s.
b. Newly-lured employees can be compelled to join the SEBA.
As far as newly-hired employees are concerned, they can, under a union
security arrangement,2 be compulsorily required, within a certain period, to join the
510 BAR REVIEWER ON lAlllll lAW
SEBA after anaining reguhritJ of employment. 1 The other union/s existing and
operating in the bargaining unit where the SEBA operates and which it represents,
not being entitled to the assurance of union security under the CBA, cannot
compel newly-hired employees to join them; only the SEBA can impose such
compulsory membership. Should these new entrants fail to join the SEBA, the
SEBA can recommend to management their termination from employment for
violation of the union security provision in the CBA.
c. Members ofminority union cannot be compelled to join SEBA.
For purposes of enforCf1llent of the u.n.ion security clause and the
determination of validity of termination based on violation thereof, a distinction
should be made between the members of the SEBA and the non-members thereof
who are members of the defeated minority union/ s as reckoned at the time of the
signing of the CBA. This differentiation is necessary because Article 259(e) [248(e)]
of the Labor Code expressly exempts old employees who are already members of
union/s other than the SEBA at the time of the signing of the CBA, from being
included in the coverage of the union security clause.2 The 1eco11d sentence of
paragraph (e) of this article is clear in its exception, thus:
"xxx Nothing in tbis Code or in any other law shall stop the
parties from requiring membership in a recognized collective bargaining
ageot as a conditioo for employment, except those employees who
arc already members of another union at the time of the signing
of the collective bacgaining agrccmcnt.''3 ·
The union security clause therefore does not cover employees who are
members of the union/s4 other than the SEBA.5 Not being so covered, they cannot
be dismissed for violation of said clause.' Indeed, with respect to employees already
working at the time a CBA is made, their discharge for failure to affiliate or
maintain union membership always retains a coercive character inimical to the
individual worker's freedom to join unions of his choice, and for this reason, it has
been viewed with disfavor, contracts providing it being restrictively interpreted.7
d. A contrary stipuladon cannot prevail over dear language of/aw.
gven if there is a stipulation to the effect that the members of the
minority union/s must become members of the SEBA after the signing_of the
CBA, the same cannot bind them and thus must be declared null and void.
1
AsdisoJssed il GereaHllrg Cap. v. Casio, GR No. 149552, ~ 10, 2010.
BPI v. BPI fn¢'1'ees lmH>avao ~.federabl of ll1i:as il BPI Unbank. GR No. 164301, kg. 10, 2010.
&ri,llasis94)pled.
Caled"rrimf lriools.'
0eiev.tecale:l'm.¢fll'icn"
' CaledetaelSa1sal..axrv.MU11.urberCo, WEdWinas'UnixlaooaR. GR No. L-12!m,Apli 29. 1000.
1 Reswioo dated M!ldl 29, 1962 en pt'titicnels' Mltiais l:lr Recaisileratioo in Soo CMos Mring Co. v. CIR, G.R Nos. l·
1!i453anl L-15723, ~ 17, 1961, 1SCRA 734.
~CHAl'TER FIVE
lABOR R£lATI0NS 511
In Frttman,1 a· case decided prior to the advent of the Labor Code, under
the regime of~- No. 875,2 from which the pr~t provision in Article 259(e)
[248(e)] traces 1ts ro~ts, it was held that the union security clause should apply only
to persons to be hired or to employ~es who are not yet members of any labor
organization at the time of .the signing of the CBA. It is inapplicable to those
already in the service who are members of another union. To hold otherwise, i.e.,
that the employees in a company who are members of a minority union may be
compelled to disaffiliate &om their union and join the SEBA, would render
nugatory the right of all employees to self-organization and to form, join or assist
labor organizations of their own choosing, a right guaranteed under the !awl and
the Constitution.•
Citing Fruman, it was held in Talim,s that a closed-shop clause in a CBA
does not apply to persons belonging to another labor union already hired but is
effective only upon those yet to be hired, and that a dismissal of the former for
refusing to comply with the closed-shop contract is unlawful. The dismissal
therefore by the petitioner company, upon demand by the other petitioner, the
Talim Quarry Labor Union, of the 13 employees, er laborers, respondents herein,
for refusing to become members of tl1e Talim Quatry Labor Un.ion, as required by
the union-shop contract, is illegal.'
e. Non-SEBA members can resign from their unions to join SEBA
at any time •during the lifetime ofCBA.
While SEBA members are not allowed to resign, leave or dissociate
themselves therefrom as this mlly result in their expulsion and the ultimate
termination of their employment upon the recommendation of the SEBA, the
san:ie cannot be said of members of the minority union/s existing in the same
bargaining unit where the SEBA operates, since they can resign from their union/ s
at any time d~g the lifetime of the CBA, to join the SEBA, without transgressing
the union security clause in the CBA that may result in their ~missal from
employment The reason is that by joining the SEBA, the avowed objective of the
law is attain_ed since as a result of such membership migration to the SEBA, its
continued existence is further strengthened and amply assured.
t Non-retroactivity ofunion security dause.
As a general rule, a union security provision such as a closed shop
agreement requiring all employees to join the SEBA is not valid.7 Hence, such a
1 Freeman S l i t ~ Co. V. CR, G.R. No. l-16561, Jn 28, 1961, 1 SCAA 353.
as
1 QhewiselroM t i e ~ Pea:e hi
1
See Secfm 3ofIle ct! Rep\mic Ad~-875.
' Miclel0,Secfm1(5], 1935Coosttmt
5 Talm()myCo, nc:-v.Batlla,GRNo.L-15768,Apli29, 1961,1SCRA 130.
1
See also Na6cna looor1Jnmv. Z'4) Vooeticrl BridCo., G.R No. L-15827. Mr,-31, 1961.
1
Sia Cecila Sav.mllsv. CIR, GR Nos.l-1927~74,Feb. 29, 1964, 10 SCPA433.
512 SAR REVIEWER ON LABOR LAW
· ulation in a CBA cannot be cnven retroactive effect as to cover and bind
sop o· . . th . f th
employees who are not members of any labor orgaruzaoon at e ome o e
effectivity of the CBA.
Guijamo v. GR,l has expounded on the non-retroacti:e applica?on of a
union secu.tity clause such as closed-s~op to ~p~oyees alr~ac'ly Ill the seMce at the
time of the CBA's effectivity. The authontatlve doctnne that a clos_ed-s~op
vision in a CBA is not to be given a retroactive effect so as to preclude its being
;;;lied to employees already in the s~ce is_ tracea_bl: to the lea~g case of
unftdtraud Sons of Labor.2 Thereafter, m Han11/ton D.,.ut11/e,y umpa'!J, _th~ Court
minced no words in characterizing a stipulation that would allow a dismtssal of
those already employed as "null and void. ' 4 Nothing. can be cleare~, ther~~ore, than
that the Court looks with disfavor a provision of this character being utilized as an
excuse for the termination of employment. To complete the picture, mention
should be made of Ekgance,s where the Court harked back to Fruman,6 to stress the
point of non-retroactivity.7
g. Exception to the non-reuoactivity rule.
The exception to the non-retroactivity rule is_w~en there e:<ist_s a v':1id
union security clause requiring compulsory membership _m ~e SEBA,_m which
case, an employee who is not a member of any labor orgaruzaoon at the ome _of the
effectivity of the CSA may be compelled to join ir_ and_his refusal to ~o J?ln will
justify his dismissal. This is clear from Juat,8 which mvolved ~e ~smtssal ~f
petitioner, a long-standing employee of respondent Bul~k Pu?licaoons, for his
refusal to join the SEBA, under the following closed-shop sopulaoon Ill the CSA:
"All employees and/or workers who on Janua?' 1'. 1960 ar~ m_embers
of the Union in good standing in accordance with its Conslltullon and
By-Laws and all members who b:'o~e m~bers after _th~t date sh_all,
as a condition of employment, roamtrun theu: membership in the Uruon
for the duration of this Agreement All employees and/or workers
who on fanuary 1. 1961 are not yet members of the Union shall, as
a condition of maintaining their employment. become members
of such union."9
In affirming the validity of the dismissal of petitioner Juat based on the
above-quoted CBA stipulation, the High Court cited Fruman!O and Findlay,1 where it
G.R. Nos. L-28791-93, ~- 27, 1973.
Catedera'3d Sa'Jsctl..mv..Anaka1lllrberCo. G.R. No. L-12503,,6¢ 29, 1960, 107 Phi. 915.
1 ~ Ng MJa ~agawa Ng A1ii: v. Hani1a1 Dis1i1e1y Carj>any, GR No. L-18112, Oct. 30, 1962, 6SCRA 367.
See also Fimf Mia' Trrbef Co. v. Phi. l.and-Ar-5ea Lm Imm, G.R. Nos. L-18217 clld L-18222, Sept 29, 1962.
Eli!JJa"m, n:.v. OR, G.R. No. L-24096, Aj)fi 20, 1971, 38 SCRA 382.
It.
FreerrmShitMirm:trrgCo.v.CIR,G.R.No:L-16561,Jai.28, 1961, 1SCRA353. •
1 See also Big FM! PnnJcts Wa1ces Um{:lP v. CIR, G.R. No. L-17600, Juti- 31, 1963.
Juav. CR,~ Ni::aOOnS en:!~ GR No. L-20764Jbt.28, 1965, 15SCRA 391 (En Bn).
I lblersamg ~led.
CHAPTER FIVE
IABORREIATIONS 513
was pronounced that as a settled doctrine, the closed-shop proviso of a CBA
entered into between an employer and a duly authorized °Iabo.c union applies, and
should be applied, to old employees or workers who are non-members of any labor
union at the time the CBA was entered into. In other words, ~e old employees or
workers can be obliged by his employer to join the labor union which had entered
into a CBA that provides for a closed-shop as a condition for his continuance in his
employment, otherwise, his refusal to join the contracting labor union would
constitute a justifiable basis for his dismissal
Although ]11at, Fruman and Findlay were decided before the Labor Code's
effectivity,2 the principle laid down therein, insofar as this point of law is
concerned, still applies to the present situation. This is so because these cases were
decided.under the regime of R.A. No. 875,3 from which the present-day provision
in Article 259(e) [248(e)] traces its origin. Thus, the prohibition in the JefXJnd
sentence4 of paragraph (e) of Article 259 [248] expressly exempts from being
included in the coverage of the union security clause, only the old employees who
are already members of union/ s other than the SEBA at the tin1e of the signing of
the CBA, but not those who are not yet members of any union.
. V-2-A.
DISMISSAL DUE TO VIOLATION OF UNION SECURITY CLAUSE
1. TERMINATION OF EMPLOYMENT DUE TO VIOLATION OF
UNION SECURITY CLAUSE, A JUST CAUSE.
It is now well-settled that violation of a union security clause is considered
a jUJI ca111e to terminate employment.5 This rule has, once again, been reiterated in
the case of Afabang Countiy Club, Inc. v. NLRC6 Termination of employment by
virtue of a union SeClJ?ty clause embodied in a CBA 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 SEBA gains more numbers and
strengthens its position as against other unions which may want to claim majority
representation.7
1
Frdirt Mier TrrbefCo. v. PLA'lU, GR Nos. L-18217 &L-18222, Sept 29, 1962.
2
The 1.axr Code was~ In! era:ted as PD. No. 442 ll'f Presi:lent Fmimd E. ~ oo Ma-j 1, 1974. I tldt
effettoo Nc71errber1, 1974-siuralhsaftEri1splt)ITUlalm.(SeeAricle 2, PD.No. 442).
OlheMte knoM as lhe ~ Peace Ad.
'xxx Noltig i1 !his Code IY i1 !rrf dhef law shij sq> Ile pafies mTl llqm,g membersl1') i1 a ~ CXliledM!
bargam,i SJenl as acondoful b' ~ except 1hose employees who are alteady members of another union
at the time of the slgni,g ofthecollec:INe bargaining agreement.'
~ Resrutes, '1c. (PRl)v. llequlla, GR No.172666, Dec. 7,2011.
GR No. 170287, Feb.14, 2008.
1 kl.

BAR REVIEWER OH I.ABO._ lAW
2. DISMISSAL MUST BE EXPRESSLY PROVIDED AS PENALTY.
While dismissal may be effected as a consequence of a breach of the
union security clause, the general rule that should prevail is that this clause should
b uictly construed against the existence of the right to dismiss. In other words, if
es . th . nal , ·
there is doubt as to whether termination of employment 1s e pc ty ,or lts
violation, the doubt should be resolved against the dismissal of the violating
employee and in favor of upholding his right to employment The ~ause cannot be
unduly extended beyond the explicit coverage of its terms. Hence, 1t should not be
deemed to authorize by implication the dismissal of employees before the agreement
thereon was made.1 ·•
Violation of the union security clause, to be a valid basis for tenninating
an employment, must be expressly stated therein that ~~ is its co~scq~encc. _A
dismissal founded on this clause which does not expliotly authooze it for its
violation constitutes ULP.
The leading case in this regard is Canftderaled Sons of ~bor _v. A:1~/ean
umber Co.2 Forty-five members of respondent U~t~d Workers_U~on JOtned
another union, herein petitioner, and were thus dismissed for v10lat1on of the
following union security clause:
"That the UNION shall have the C?(clusivc right, and
privilege to supply the COMPANY with s~ch laborers! cmployc~s
and workers as arc necessary in the loggrng, mecharucal, sawmill,
office, logpoods, motor pools, security guards ~~ i.11 d~eots ~ its
many phases of operations, excepting such pOS1t10DS whi~~ are hig~y
technical aod confidential in character and/ or such pos1t1ons which
carry the exercise of authority in the interest of the COMPANY ~b.ich
exercise is not merely clerical or routinary within the cootcmplauon of
the law, and that the COMPANY agrees to employ or hire in any of
its departments only such person or persons who arc members of
the UNION.''
Respondents maintain that since respondent union is thus given "the
exclusive right and privilege to supply the company with such laborers, employees
and workers are as necessary" for the activities specified in the said provision and
the company bad agreed "to employ or hire in any of its departments only such
persons who are members of the union," it follows that such laborers, employees
and workers of the company as may cease to be members of the respondent union
must be expelled from the company. Upon mature deliberation, however, the
Supreme Court opined that respondents' pretense cannot be sustained, thus:
"In order that ao employer may be deemed bound,
under a collective bargaining agreement, 10 dismiss employees
Sa1Ca1ost.ilng Co.v.CIR, G.RNos.L-15453 in1 L-15723, Mm! 17, 1961, 1SCAA 734.
~ Sais d Lalxn Ara.Ml WTter Co, U'kd Wr/Kln l.kla, in! CIR, G.R No. L-12fl03, Apli 29, 1960.
CHAl'TU FIVE
515
IABOR REIATION5
for non-union membership, the stipulation to thjs effect must be
so clear and unequivocal as to lgvc no room for doubt thereon,
An undertaking of this m1ture is so harsh that it must be strictly
construed, and doubts must be resolved against the existence of
'closed shop.' Referring particularly to the above-quoted Article II, we
note that the same esublishes the exclusi;e right of respondent union
to 'supply' laborers etc., aod limits the authority of the company to
'employ or hire' them. In other words, it requires that the laborers,
employees and workers hired or employed by the company be
members of ccspondeot union at the time of the commencement of the
employer-employee relation. Membership in respondent uoion is not a
condition for the continwition of said relation or for the retention of a
laborer or employee engaged either before said agreement or while be
was a member of said uoion."1
This ruling in Conftderattd Sons of1.Abor has been followed and adhered to
in so many c~scs decided thereafter, some of them are as follows:
. . (1~ San Carhi f!1illing Co. v. CIR,2 where, based on the union shop
s~pulallon tn tbe CBA, It was declared that it was ULP to dismiss respondent
Sinforoso Kyamko based on the recommendation of the union which earlier
~elled him, tog~ther with others, for committing an act of disloyalty when he
JOtned another uruon. It was pronounced that "[u]nion shop, as with close_shop
provisions, should be strictly construed against the existence of union shop.
Sometimes harsh and onerous, such provisions should not be extended
beyond the explicit coverage of their terms, and will not be deemed to
authorize by implication the dismissal of employees already working before
the agreement was made."
(2) ICAWO v. Ctntral AZ!'carera dt Pilar,l where petitioners, who were
long-time ·employees of respondent company, were dismissed for violation of the
union shop clause when they created a new union, herein petitioner ICAW04 while
~e CBA between respondent company and respondent union, CAPAWA,s was
still effective. The Supreme Court, citing Conftdera!ld So!II of 1.Abor, declared the
dismissal illegal because there is absolutely nothing in the said clause to show that it
was the intention of the parties that the non-membership of existing employees will
cause their dismissal. There is, likewise, no requirement whatsoever on union
me~bers to remain as such under pain of being dismissed. Conftderattd Son; of1.Abor
reqwres that there should be a cleac and unequivocal statement that the loss of tbe
status of a member of good standing in the union is a cause for dismissal.
I lJndeoomJ suppled.
1 GRNos.L-15453illdl·15723,~ 17, 1961 1SCRA 734.
1 ~~OOJilJral Wmers ()rgar,i1J1blv. Cenl'a AnJ<3l!lc de Pia,-, GR No. L-17422, Feb. 28, 1962.
' ~lioJlual'Nmers Organu.aoon (ICAWO).
s Al5ed Wmers' Assoo.aim-CAPAWA.
 BAil llEVIEWillON IABOll lAW
3. GROUNDS FOR TERMINATION DUE TO VIOLATiON OF UNION
SECURITY CLAUSE.
But in cases where teanination of employment is expressly stipulated
therein as the end-result of such refusal to join the SEBA oi; loss_of membership
status, the SEBA has to back up its recommendation to the employer to terminate
a member-employee's employment with just and valid gt0unds. There a.re no
standard grounds, however, prescribed in the law. They vary from CBA to CBA.
However, there are basically three (3) common grounds that are usually invoked by
the SEBA to justify teanination of employment, lo wit ,
(1) Refusal to become members of the SEBA of:
a) employees who are neither members of the SEBA nor of any other
union/ s al the lime ofthe signing ofthe CBA; or
b) furure, newly-hired employees upon their regularization;
(2) Resignation by its existing members;
(3) Expulsion on the following grounds:
a) Disloyalty to the SEBA;
b) Commission of any acr/s inimical to the interest of the SEBA;
c) Refusal to pay union dues and other assessments;
d) Commission or conviction of a felony, offense or crime as defined
by the Revised Penal Code or any special laws against any union
offictr or member in relation to activities for and in behalf of the
SEBA;
e) Organizing and/or joining another labor organization claiming
jurisdiction similar to that of the SEBA or affiliating with a labor
federation without its approval;
~ Involvement in any violation of the union security agreement or
the SEBA's Constitution and By-Laws; or
g) Participation in a ULP or any derogatory act against the SEBA or
any of its officers or members.1
In case of expulsion of a member or officer, it is required that the norms
of due process should be observed prior to effecting it If the expulsion is attended
by arbitrary ground or process, it may be considered a ULP of the union. This is so
because a member of a SEBA may be expelled only for a valid cause and by
following the procedure outlined in its constitution and by-laws.2
1
Seeb' ilstr,ce Ile izes d Ra'ce Y. NlRC. !GR No.68147, .b1e 30. 1988Laid Qmo Y. NIRC. !GR No. 91086, II.rt
8, 1990, 185 SCRA 177),v.re:e toe p!t)'lisioos thereon 11e QUOled h Ile body of Ile decisb1.
2 ~ ~ IT)Ja M1nglj~ sa llril Ratoad Co.v.~ . GR No. L-9327, Mirth 30, 1957.
,
a
CHAPTER. FIVE
LABOR RELATIONS 517
V-2-B.
DUE PROCESS IN TERMINATION DUE TO
VIOLATION OF UNION SECURITY CLAUSE
1. REQUISITES FOR TERMINATION.
Alabang Country _Club1 has enunciated the following requisites that the
employer should determme, prov_e and comply with prior to terminating the
employment of an employee by vutue of the enforcement of the union security
clause:
(1) The union security clause is applicable;
(2) The SEBA is requesting for the enforcement of such.clause; and
(3) There is sufficient evidence to support the SEBA 's decision to expel
the employee from membership.
_ Once the foregoing requisites are present, the ensuing termination is
considered a/ul ,a111e. The best illustrative case where the above three (3) requisites
are present ts lnguil~ v. FirJt Philippine Scak1, In,. 2 Petitioners and several FPS!
employees, d~g the effe~tivity of the CBA between FPS! and First Philippine
Scales Industnes Labor Uruon (FPSILU), joined another union, the Nagkakaisang
Lakas ng Manggagawa (NLM), which was affiliated with a federation called
KATIPUNAN_ (NLM-KATIPUNAN). Because of this, they were expelled by
FPSILU for disloyalty. In upholding the validity of their dismissal, the Supreme
Court noted that the three (3) requisites mentioned in Alabang Cosmt,y C!Hb were
present, thus:
F'.'rrL Respo~dent ~~I _was justified in applying the Ui;uon Security
Clause, as It ~s a valid p~oviston m the CBA, the existence and validity of which
was not quesnoned by etther party. Moreover, petitioners were among the 93
employees who affixed their signatures to the document that ratified the CBA.
They.cannot now turn their back and deny knowledge of such provision.
Serond FPSILU acted on its prerogative to recommend to FPSI the
dismissal of its members who failed to maintain their membership therewith. Aside
fro~ joining another rival union, FPSII...U .cited other grounds committed by
pennoners and the other employees which tend to prejudice FPSI's interests i.e.
dereli~tion of duty - by failing to call periodic membership meetings and to 'giv;
financial reports; depositing union .funds in the names of Grut:2s and former Vice-
President Yolanda Tapang, instead ofin the name of FPSILU care of the President·
ca~sing damage to FPS! _by deliberately slowing down production, preventing th~
uruon from even attempnng to ask for an increase in benefits from the former; and
1
Alaba,g ewty cu,,nc. v. MRC. GR No. 1102s1, Feb. 14, 2008.
1
G.RNo.165407,Jooe5,2009,588SCRA 471.

BAR Rl,VIEWER ON lASOR lAW
518
poisoning the minds of the rest of the members of the union so that they would be
enticed to join the rival union.
Third. FPSILU's decision to ask for the termination of the employees in
the ''Petisyon" was justified and supported by the evidence on record. Petitioners
Inguillo and Bergante were indisputably focmer ~embers" of FPS~U. In fact,
Inguillo was the Secretary of Finance; the undeclytng ~eason why his salary was
gamished to satisfy the judgment of the Med-A.tb1ter who ordered NLM-
KATIPUNAN to return the union dues it erroneously collected from the
employees. Their then affiliation with FPSILU was also clearly shown by their
signatures in the document which ratified the CrtA. Without a doubt,. th~y
committed acts of disloyalty to the union when they failed not only to maintain
their membership but also disaffiliated from it They aban~oned FPS~U. and _even
joined another union which works against the former's mtere~ts- This ts evident
from the intra-union dispute filed by NLM-K.ATIPUNAN agamst FPSILU. On~
affiliated with NL\-!-KATIPUNAN, Inguillo and Bergante proceeded to recruit
other employees to disaffiliate from FPSILU and even collected onion dues from
them.
A case illustrative of lack of compliance with one of the requisites is the
2010 case of Picop Re1011rru, In,. (PR!) v. Tane,a, 1 where the t~ation _of
employment of respondents was declared illegal because _of non-compliance _with
the third requisite mentioned in Alabang Co11ntry Cl~b. ~e. there was_compliance
with the first and seco11d requisites as there was a valid pro_vis1on on ma111te~ance of
membership as union security clause in the CBA and 10 two (2) occas1~ns, . the
collective bargaining agent (Nagkahiusang Mamumuo sa PRI-Southern Philipp_mes
Federation of Labor [NAM.APRI-SPFL]) demanded from pennoner P1cop
Resources, Inc. (PRJ) to tenninate the employment of respondents due to their acts
of disloyalty to the union, however, the third requisite was not present. The alleged
acts of disloyalty consist in their signing of an "authorization letter to file a
petition for certification election" by another union (F~deration of}•ree ~ock_ers
[FFW]). However, it was established that while they signed such authonzatton
letter" outside the 60-day freedom period, they actually filed the "Petition for
Certification Election" within the freedom period. As per records, it was dear that
the actual Petition for Certification Election of FFW was filed only on May 18,
2000. Thus, it was within the ambit of the freedom period which commenced from
March 21, 2000 until May 21, 2000. Strictly speaking, what is prohibited is the
filing of a petition foe certification election outside the 60-day freedom period. This
is not the situation in this case. If at all, the signing of the auchocization to file a
certificatio~ election was merely preparatory to the filing of the petition for
certification election, or an exercise of respondents' right to self-organization. The
mere signing of the authorization in support of the Petition foe Certification
Election of FFW on March 19, 20 and 21, or before the "freedon'l period," is not
t G.RNo.160828.hJJ.9,2010.
...
CHAPTER FIVE 519
IABOR REIATIONS
sufficient ground to terminate the employment of respondents inasmuch as the
petition itself was actually filed owing the freedom period. Nothing in the records
would show that respondents failed to maintain their membership in good standing
in the union. Respondents did not resign or withdraw their membership from the
union to which they belong. Respondents continued to pay their union dues and
never joined the FFW.
The above Pimp ruling was reiterated in another case involving the same
company, the 2011 case of Picop Reso11ms, IM. (PRI) v. Dtquilla,1 involving the same
incident and factual setting. Quoting e.'Ctensively its earlier 2010 ruling in Pi(op, it
was emphasized in this case that the records are bereft of proof of any
contemporaneous acts of resignation or withdrawal of union membership or non-
payment of union dues on the part of the private respondents. Neither is there
proof that private respondents joined FFW. The fact is, private respondents
remained in good standing with their union, NAMAPRI-SPFL, a point which was
already settled in said earlier 2010 case of Picop.2
2. EMPLOYER'S OBLIGATION TO TERMINATE EMPLOYMENT OF
ERRANT MEMBERS UPON DEMAND BY SEBA.
To avoid the possibility of incurring liability for breaching the union
security clause of the CBA and to protect its own interests, the only sensible option
left to an employer., upon its receipt of a demand from the union for the dismissal
of the employees whom it a~cused of commitiing acts of disloyalty, is to conduct
its own inquiry on the factual and legal bases of rnch demand in order to satisfy
itself that there indeed exist sufficient bases to dismiss them. Thus, the act of the
employer, in Manila Hotel Pavilion,l of issuing notices requiring the 36 employees to
submit their explanations to the charges against tl-.em lodged by the SEBA is the
reasonable and logical first step in a fair investigation. It is important to note that
in this case, the Hotel did not take further steps to terminate the 36
employees. Instead, it arranged for reconciliatory conferences between the
contending unions in order to avert the possibility of dismissing the 36 employees
for violation of the union security clause of the CBA.
In Del Montt,4 respondent Timbal's expulsion from ALU was premised
on the ground of disloyalty to the union which, under Section 4(3), Article II of the
CBA, also stands as a ground for her dismissal fro• petitioner Del Monte. Indeed,
Section 5, Article II of the CBA enjoins Del Monte to dismiss from employment
those employees expelled from A:LU for disloyalty, albtit with the qualification that
it should be "in accordance with law." Article 294 [279) of the Labor Code applies
G.R. No. 172666, Dec.7, 2011.
~ See aso General M1RJ cap.v. easo. GR No. 149552, Mirth 10. 2010, ~ a1so lu;ta!es lhe SGJam vdm
Ile 3rd~ presoi)ed nA1m'1;J Coi.rty OJ> i-; absent
> N\MHW-l-Mria ltllel PMin ~ V. NIRC, GR No. 179402, Sept 30, 2008.
• oe Mri! ~ nc.v. SaldNarand rnta. GR No. 158620.Oct. 1:. 2000.
520 8AR REVIEWER ON IABOR IAW
both to dismissals based on the just or authorized causes under the law or on the
union security clause of tl1e CBA. Hence, in the mattec of detecmining whether a
valid cause exists for termination, whether under Title 1,1 Book Six2 of the Labor
Code or under a valid CBA, substantive due process must be observed as a means
of ensuring that the securiry of tenure of the employees is not jnfringed.
In the case of Cari1io v. NLRC,3 whece petitioner (former president of the
union) was dismissed the next day after ceceipt by respondent company of the
letter from the SEBA recommending his tecmination due to petitioner's expulsion
therefrom, the Supreme Court pronounced that while the .company, under a
maintenance of membership provision of the CBA°: is bound to dismiss any
employee expelled by tl1e SEBA for disloyalty upon its written request, this
undettaking should not be done hastily and summarily. The company is said to
have acted in bad faith in dismissing a worker if it does not afford him the benefit
of a hearing. The right of an employee to be informed of the charges against him
and to a reasonable opportunity to present his side in a controversy with either the
company or his own union is not wiped away by a union security clause or a union
shop clause in a CBA. 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 temp.talion of swift and arbitrary expulsion from
membership and dismissal from his job.4
In Rana v. NLRC,5 where the employer has acted with scandalous haste in
dismissing 125 employees who wece expelled from the union because of alleged
disloyalty but were never accorded due pcocess, both the employer and_the union
were declared guilty of ULP and ordered jointly and severally to pay the employees'
backwages.6
In M. Gmnfield,1 petitioners were union officers who were expelled by the
federation (ULGWP) for allegedly committing acts of disloyalty and/oc inimical to
the interest of the federation and in violation of its constitution and by-laws. Upon
demand of the federation, the company terminated petitioners without conducting
a separate and independent investigation. Respondent company did not inquire into
the cause of the expulsion and whether or not the federation had sufficient grounds
to effect the same. Relying merely upon the federation's allegations, respondent
company terminated petitioners from employment when a separate inquiry could
1 trlffled ,enmamofEinpkJ-,1rell'
z 81li!ed1'ost~'
GR. No.91086, Ma-(8. 1990, 185 SCRA 177.
See also Lilerfy Cotton Mils Wooers Union v Liberty Cot!cn Mis, G.R No. L-33987, Sept. 4, 1975, 66 SCRA 512;
llilab.lJan-Jsm ~ Co., re.[BISCOMj v. PhlWine Associalixl rJ Free Laba Um lf'AFlU}, GR No. L-18782,
Altj. 29, 1963, 8SCRA 700; Sa1)'0 PhfWi1es Wakess Lnoo-PSSlU v. ~ . GR. t«>.101619, !Jt 8, 1992, 211
SCRA361. ' 18782, Aug.29, 1953, 8SCRA 700.
1 G.R.No.68147.June30. 1988,
I
Seealso Mania CadageCo. v. CIR, GR No.L-27079,Aug. 31, 1977, 78 SCRA398.
~ Sana1m ng ~a M.Jxigagcr,va sa M.Greenfleld (MSMG-VM') Y. Rairos, GR No. 113907,Feb. 28, 2000.
CIIAPTERfl\lE 521
IA80R REIATIONS
ha~e revealed if the federation had acted arbitrarily and capriciously in expelling the
wuon officers. Respondent company's allegation that petitioners were accorded
due process is. be~cd by the termination letters received by the petitioners which
state that the disrrussal shall be immedialt!J effective. 1
Respondent employer, in Tropical Hut,2 sent a letter to petitionecs advising
them of the SEBA's recommendation for their dismissal and at the same time
giving them 48 hours within which to comment thereon. When petitione~s failed to
do so, respondent company immediately suspended them and thereafter effected
their _dismissal. According to the Supreme Court, this act of respondent employer is
certainly not 1n fulfillment of the mandate of due process which is to afford the
e~ployees t? be dismissed an opportunity to be heard. An employer can be
adjudged guilty of ULP for having dismissed its employees in line with a closed
shop provision if they were not given a propec hearing.
3. AN EXPELLED UNION MEMBER CANNOT BE DISMISSED BY .
EMPLOYER WITHOUT UNION'S RECOMMENDATION TO
THAT EFFECT.
An employee expelled by ihe union cannot be dismissed by the employer
on the groun? of violation_ of the union security clause without the appropriate
recommendatton of the uruon to tliat effect. The fact of union expulsion alone
would not be a sufficient justification for th~ employer to dismiss .the expelled
employee; the employer should wait for the union recommendation before he
could acrthereon.
. The 3 respondents in M. D. Transit v. dt GuZf11an,3 were expelled by their
uruon and subsequently dismissed by petitioners4 due: 1) to their absence from
work foe 4 consecutive days, in violation of their CBA; and 2) to a communication
of the union to the petitioners, marked as Exhibit 5, urging them to dismiss the
respondents pursuant to the closed shop stipulation in said CBA, in view of their
expulsion from the union. In holding the expulsion by the union and the
subsequent dismissal from employment by petitioners illegal, the High Court
pro_n_ounced that it was established by evidence that respondents were dismissed by
pennonecs before the latter had even received the aforementioned Exhibit 5. Io
fact, the cecord abundantly showed that respondents were not allowed by agents of
petitioners to enter its premises or work for the petitioners since November 9,
1958, despite the fact that said communication o( the union was not written and .
sent until November 10, 1958. The dismissal could not have been made therefore
in pursuance either of the request contained in said communication' or of th~
closed shop provision of the CBA. Moreover, the lower court found, and this was
1
See also BnaJJaJill-lscbela Sx]cr Co., h:. IBISCOMI v. ~ AssocialXX1 rJ Free Laba Lmns !l'AFlU]. GR. No. L-
2 Tropica1 ftA Errpklyees' Uno, · CGW v. Trqii:a1 tt.rt Food II.net Inc., G.R. No. L-43495-99, Jan.20, 1990.
GR. No. L-18810, AjXi 23, 1963,7 SCRA 726.
• PefflKlnesscreM)T~& Taxi Co. ~c.,a'dCAMT~Co.

522 SAR REVIEWER ON LABOR I.AW
amply supported by the evidence or record - that respondents' suspension by the·
president of the union, and their subsequent expulsion by its Board of Directors,
were due to the charges proferred by respondents against the officers of the union,
which led to the discovecy by the DOLE of the alleged shortage in its mutual aid
fwid of over P22,000.00, and the reference of the case to the City.Fiscal of Quezon
City. Thus, both the union and petitioners were guilty of ULP.
4. MEANING OF "INDEPENDENT AND SEPARATE HEARING"IN
TERMINATION BASED ON UNION SECURITY CLAUSE.
The use of the phrase 'forkpendent and 1epardfl hearing" in connection with
the due process required in termination grounded on violation of the union security
clause means that the tmployer is not duty-bound to immediately implement the
recommendation to teaninate made by the SEBA; it has to conduct its own hearing
independent and separate from any hearing as may have earlier been conducted by
the SEBA. As held in M. Gmnfield:1
''\'v'hile respondent company may validly dismiss the
employees expelled by the union for disloyalty under the union security
clause of the collective bargaining agreement upon the recommendation
by the union, this dismissal should not be done hastily and summarily
thereby eroding the employees' right to due process, sdf-organization
and security of tenure. The enforcement of union security clauses is
authorized by law provided such enforccmeot is not characterized by
:ubiuarinm and always with due process. Even on the assumption that
the federation bad valid grounds to expel the union officers, due
process requires that these union officen be accorded a separate
hearing by respondent company."2
The twin requirements of notice and hearing constitute the essential
elements of procedural due process. The law requires the employer to furnish the
employee sought to be dismi~sed with two written notices before termination of
employment can be legally effected: (1) a written notice apprising the employee of
the particular acts or omissions for which his dismissal is sought_in order to afford
him an opportunity to ·be heard and to defend himself 'with the assistance of
counse~ if he desires, and (2) a subsequent notice informing the employee of the
employer's decision to dismiss him. This procedure is mandatory and its absence
taints the dismissal with illegality.3
In the same case of Alabang Co11ntry Clllb,' the question was asked whether
respondents Pizarro, Braza, and Castueras were accorded due process before their
employments were terminated. In ruling that the Club, their employer, substan~ly
complied with the due process requirements before it dismissed them, the Supreme
1 Mllay.r1g Sanimlrgrrga~saM. Gre;enflellv. Rarl:S,G.R No.113007, Feb.28)0CO.
l ~ ~-
l Easyta1 Comulcatais Phlls., oc.
Y. Kiv,i, G.R No. 145901, Dec.15, 2005, 478 SCAA 102, 113-114.
I
1 ~ C<llllby !lb, nc.
v. NLRC, GR No. 170287, Feb. 14, 2008.
CHAl"TERFM
LABOR RELATIONS 523
Court ratiocinated that the CA and the 3 respondents erred in relying on the said
case of M Gmnjitltfl where the members were expel!~ from the SEBA and were
immediately dismissed from the company without affording them any semblance of
due process. Both the union and the company did not conduct administrative
hearings to give the e1t1ployees a chance to explain themselves. In the present case,
the Club has substantially complied with due process. The 3 respondents were
notified that their dismissal was being requested by the SEBA .and their
explanations were heard. Then, the Club, through its President, conferred with
said respondents d ~ the last week of October 2001. The 3 r~spondents were
dismissed only after the Club reviewed and considered the documents submitted by
the SEBA vis-a-viJ the written explanations· submitted by said respondents. Under
these circumstances, it is clear that the Club had afforded the 3 respondents
reasonable opportunity to be heard and defend themselves.
5. UNION DUE PROCESS VS. EMPLOYER DUE PROCESS.
In most cases where the termination of employment based on violation of
the union security clause was declared illegal because the employer approved the
dismissal recommendation of -the SEBA without affording due process to the
expelled member, it is the employer's contention that there is no more need to
afford procedural due process to the employee because the same has already been
given to and complied with by the SEBA prior to his expulsion. In other words,
what the employer ~ormally does is to simply adopt as its own, the due process
observed by the SEBA prior to the expulsion. This contention of the employer is
of course erroneous as it is oblivious of the legal distinction between the required
due process that sho~d be afforded by the SEBA prior to expulsion and the due
process reqill;{ed under the law to be observed by the employer prior to termination
of empl<;.yin"ent
..· . .-.- ..The distinction is not hard to comprehend The due process required to
6e observed by the union prior to its m~qcr's expulsion concerns the
termination of his membership with the union; while the due process that must
be complied with by the employer pertains to the termination of his employment
with the employer. The pwpose being distinct from each other, it is complete
error on the part of the employer ·10 adopt as its own due process what has been
earlier afforded by the SEBA to the erring·employee without conducting its own
indepeildent and separate due process.
Thus, in declaring the i)legality of the dismissal of petitioner in Carino v.
NLRC,2 the Supreme Coit-rt noted in regard to the involvement of the company in
his dismissal, that the company, upon being formally advised in writing of the
expulsion of petitioner Carino from the union, in turn, die! not afford due process
to him; instead, it immediately proceeded to issue a dismissal letter to petitioner
1
GR.No.113007,Feb.28,200l.
1 GR. No.91086, Mly 8, 1990, 185 SCRA 177.
524 BAR REVIEWER ON IASOR I.AW
Cariiio, the tcnnination being made effective the very next day. The company
should have given petitioner Carino an opportunity to explain his side of the
controversy with the union. Notwithstanding the union security clause in the CBA,
the company should have reasonably satisfied itself by its own inquiry that the
union had not been merely acting arbitrnrily and capriciously in impeaching and
expelling petitioner Carino. Had the company taken the trouble to investigate the
acts and proceedings of the union, it could have very easily determined_that the
union had acted arbitrarily in impeaching and expelling from its ranks petitioner
Carino. The company offered the excuse that the union had threatened to go on
strike if its request had not been forthwith granted. ':Assuming that such a threat
had in fact been made, if a strike was in fact subsequently called because the
company had insisted on conducting its own inquiry, the Court corild have declared
that strike illegal. TI1e Court likewise ignored the company's further plea that for it
to inquire into the lawfulness of the acts of the union in this regard could have
constituted interference in the administration of the affairs of the union.
In Ran« v. NLRC,1 where some members of the union were dismissed for
violation of the union security clause consisting in their alleged act of seeking help
from another federation at the time that they were being temporarily l~d off from
work, it was held that such act cannot constitute disloyalty as contemplated in the
CBA. At most, it was an act of self-preservation of workers who, driven to
desperation, found shelter in the other federation whiGh took the cudgels for them.
The dismissed union members were denied due process when they were dismissed
for disloyalty to the union based on the union security clause in the CBA. There
was no impartial tribunal or body vested with authority to conduct disciplinary
proceeding wider the constitution and by-laws and the expelled union members
were not furnished any notice of the charge of disloyalty against them, nor timely
notice of the hearing thereon. Petitioners had no idea that they were charged with
disloyalty. Those who came were not only threatened with persecution but also
made to write the answers to questions as dictated to them by the union and the
company representatives. The Board of Directors of the union acted as prosecutor,
investigator and judge at the same time. The proceedings have been a farce. The
absence of a full blown investigation of the expelled members of the union by an
impartial body provided no basis for the union's accusation of disloyalty.
Employees are entitled to due process before they may be expelled from the union
on charge of disloyalty. The scandalous haste with which respondent corporation
dismissed 125 employees lent credence to the claim that there was connivance
between respondent corporation and respondent union. It is evident that private
respondents were in bad faith in dismissing petitioners. They are guilty of unfair
labor practice.
' G.RNo.68147,J\JleJO, 1988.
CHAl'TER FIVE 525
IASOR REIATIONS
The case of Gell!ral Milling Corp. v. CaJi~, 1 also illustrates the situation
where petitioner GMC dismissed respondents, G.io, el al,2 on the basis of the
recommendation of its officers, Pino, el al, 3 who are also respondents in this case.•
They were originally expelled on the basis of the finding that they have committed
"acts inimical to the interest of the union" in violation of the union security clause.s
In j~stifying its act of immediately ordering the disrrlssal of Casio, et al solely on the
baS1S of the recommendation of Pino, el aL, and without affording :them due
process, petitioner GMC asserted the following defense: ·
(1) As an employer, its only duty was to ascertain that the wi.ion, IBM-
Local 31, accorded CaJio, et al due process; and, it is its finding that the union did
give CaJio, et _al the opportunity to answer the charges against them, but they
refused to avail themselves of such opportunity.
(2) The acts of Pino, et al as o@:ers and l:oard members of the union, in
expelling Casio, et al from the union, enjoy the presumption of regularity in the
performance of official duties. · .
The Supreme Court, however, debunked said arguments and found that
petitioner GMC has illegally dismissed CaJio, et al because not only did GMC fail to
make a detecmination of the sufficiency of evidence to support the decision of the
union to expel <;ano; ·el al, but also to accord the expelled union members
procedural due process, i.e., notice and hearing, prior to the termination of their
employment It thus concluded that the 3rd requisitc6 prescribed in Alabang Country
Club is abseot.7 More particularly, the foregoing 2 arguments were expounded as
follows:
On No. 1 above, this argument was decl:ared to have no basis because
petitioner GMC failed to discharge the onu1 of proving that the dismissal of Cano, el
al was not illegal.8 Irrefragably, GMC cannot dispense with the requirements of
notice and hearing before dismissing CaJio, el al even when said dismissal is
1
General Ml&-g Cap.V. Casi>, G.R No.149552, lklth 10, 2010.
1
a.
Casi>, et llU'e regta en1)k7fees d Gt£. Casi> was eledl!d IBMlocal 31 Presidert ioc a tree-yea- 1e11n i1 .h.rle 1991,
vblehisrorespoodenta \riJ'lstq>se,,r.rds.
1
Respoodools VrgiJ Pno. eta!. v.e-e alicelscm bard lll!ITOOSdlBM-lccal31.
' l ,ru;t be OOEd tia Ile llli:xl. Pa« at Mkx! rg ~ (llM)-l.oca 31 ~ (loca 31), lhe sde cm excmie
l!_agam,i a,ien1 d Ile rcri(~ ~ ci pef1me: Gt£ i1 upi,,:~ Ciy, was rd iT'l)leaded as a party il lhis
case.
s kl Ile present case, Ile CBA betNeett peti6nJGt£ cm llMlocal 31 rdxled amailterm:e ci ~ cm oose<1
~ daJse as CM be gleaned flool Secbls 3and 6ci Mcie R. 8\4-l.oca 31, v,tiere the urial, fr/ \\tllm 18µ!S1, Cal
ask GWC lD lelmilale Ile ~dlhe~erv,tio laled tomail!an its good stlllfr,,i as a Ulklo nenber.
1
Alm'g Co.my CU, ire;ai)es Ile bblD,J recµse: (1) The 1ml smtf daJse i s ~ ; (2) The SEBA is
requesiig kr Ile mt8nenl ci sldl ewe; cm (3) There is sulrcat MeflCe b ~ lhe SEBA's decisi:il lD expel
lhe ~ .frtxn metr08'Ship.
7
I is llllisjxJted flat IBMloc331, tr0lql Gmla, Ile IBM P.egmal Drecir'krl/Jsayas and t.ilcmao, lv.i:e requested
GMC, kl lhe ~ dated'Mwl 10 cm 19, 1992, kl lemme t i e ~ ci Casi>, etal as anecessay ccnsequence
ci their expulsm frtxn lhe 0001. I islhe t1ill reqo..isite-lhat timi is sufficient Mlerlce lD suppa1 lhe deeisbld IBM-local
31 kl expel Casi>, etal.-lltii:.11 appeais kl be lm1g il tlis case.
' a&,g Grea!Souhem Martim!Sevi::es Capontoo. v.Aaila, G.R No. 14!189.Feo.28, 2005,492Phi. 518, 530-531.
526 BAR REVIEWER ON IABOR IAW
pursuant to the closed shop provision in the CBA. 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 CBA. An employee is entitled
to be protected not only from a company which disregards bis 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. 1 In the case
at bar, Casio, ti al <lid not receive any other communication from GMC, except the
Wiineo notice of termination dated March 24, 1992. GMC, by its own admission,
did not conduct a separate and independent investigation to determine the
sufficiency of the evidence supporting the expulsion of Casio, ti al by IBP-Local 31.
It straight away acceded to the demand of IBP-Local 31 to dismiss Casio, ti aL 2
On No. 2 above, it was declared that contrary to the position of GMC,
the acts of Pino, ti al as officers and board members of IBM-Local 31, in expelling
Casio, ti al from the wuon, do not enjoi• the presumption of regularity in the
performance of official duties, because the presumption applies only to public
officers from the highest to the lowest in the service of the Government,
departments, bureaus, offices, and/or its political subdivisions.
6. RULE ON LIABILITY FOR REINSTATEMENT, BACKWAGES AND
DAMAGES.
The latest rule is that good faith will not exonerate the employer and the
SEBA from liability for reinstatement, backwages and damages, in case the
dismissal based on violation of the union security clause is declared illegal.
In the earlier cases of Zip Venetian Blind,3 and Soriano,4 the Supreme Court
affirmed the disallowance ofbackwages or "jinantial aHislance"where the employer
acted in good faith in dismissing the employees on the basis of a closed-shop
agreement, even if the dismissal was held illegal. However, in more recent cases,
like Dt! Monti and O/vido,6 it was ruled that the doctrine laid down in said 1961 case
of Zip Ventlian Blind and 1989 case of Soriano is inconsistent with Article 294 (279]
of the Labor Code, as amended by R.A. No. 6715, which took effect on March 21,
1989 - just five (5) days after Soriano was promulgated. This is so because it is now
provided in the Labor Code that "(a]n employee who is unjustly dismissed from
work shall be entitled to reinstatement without loss of seniority rights and other
p_rivileges and to his full backwages, inclusive of allowances, and to his other
1
QhJCaiiov.NLRC,GRNo.910&3,MayS, 199J, 185SCP.A m, 189.
1
The recads d t1is case a r e ~ bereft d ~ suppoow1g ewlence to substantiate tie m alegalioo d GI£ llat
Casio, et~- weiu:xxirded due~ tl'f lBM-l.ocal 31.
1 Nali:xlall.m'Unolv. l4) Venetoo Bnl. GR Nos. L-15827-28,May 31. 1961,2SCRA509; 112PM407.
Soianov. Atienza, GR No. 68619. Mith 16. 1989, 171 SCRA 284.
Del M:xlte ~ -Inc. V. SaidN1J, GR. No. 158620, Oct. 11. 2006.
CMlov.CA,GR.Nas. 141166-67.0:t 15,2007.
CHArTERflVE
527
LA80R RELATIONS
benefits or their monetary equivalent computed f:om the time his compensation
was withhdd from him up to the time of his actual reinstatement"
Thus, where reinstatement is adjudged, th_!! award of backwages and
other benefits continues beyond the date of the Labor Arbiter's decision ordering
the reinstatement and extends up to the time said order of reinstatement is actually
carried out RA. No. 6715 effectively mitigated previous jurisprudence which had
limited the extent to which illegally disrrussed employees could 'claim for
backwages.1
The fact, therefore, that there has been a finding of illegality of dismissal
will result in declaring the employer and the union liable for all the reliefs provided
in Article 294 (279]. Thus, in both the 2010 case of Picop Ruources, Inc. (PRI) v.
Taiieca/ and 2011 case of Pitop Rtso11rces, inc. (PRI) v. Deqmlla,3 involving the same
incident and factual setting, respondents who were found to have been illegally
dismissed pursuant to the union security clause in the CBA were granted the twin
reliefs of full backwages and reinstatement or, if no longer viable, separation pay
equivalent to one month salary for every year of service in lieu thereof. Moreover,
respondents, having been compelled to litigate in order to seek redress for their
illegal dismissa~ were awarded· attomey's fees equivalent to 10% of the total
monetary award. It is thus well-settled that the employer is liable for reinstatement
and the payment of backwages if it has acted in bad faith in effecting the dismissal
of the employees based on the union security clause in the CBA.4
7. SOLIDARY LIABILITY OF EMPLOYER AND UNION.
The· nature of the liability of the employer and the union for
reinstatement, backwages, damages and other monetary cl.aims in cases of illegal
dismissal arising from purported violation of the union security clause is solidary or
joint and several To illustrate, both the respondent employer and respondent
union were adjudged guilty of ULP in the case of Rizal Labor Urrion v. Rizal Cement
Co.,5 when the union requested the dismissal of 15 employees and the employer
acceded by effecting the dismissal on the ground that the said employees formed
another uruon. The union security clause in the CB.ii, however, merely provided for
a limited closed shop which did not justify the disrrissal. Consequently, respondent
company and union were ordered to reinstate petitioners, and pay jointly and
severally, their backwages from the date of their dismissal until they were
reinstated.6
As explained i'I Ferrerv. NLRC, G.RNo. 100898,Ju~ 5, 1993, 224 SCRA 110,418.
G.RNo.160828,Aug.9,2010.
1 G.RNo.172666,Dec.7,2011.
' Ulerty Cotm Mils Wukeis Lmn v. Ulerty Co!b1 Mils, G.R No. L-33987, Sept. 4, 1975, 66 SCRA 512.
l GR No. L-19n9, Ju~ 30, 1966.
' Seealso Mania ~ ~ v.CIR, G.RNos.l•27079crd L-270ro,Aug.31, 1977.
528 BAR REvlEW£R ON I.ABOR I.AW
8. DISTINCTIVE APPLICATION OF SOLIDARY LIABILITY.
a. On reinstatement. ·
There is no question that, as far as reiostat~ent is concemecl, only the
employer can comply therewith and not the union. Hence, the employer is solely
liable therefor and the joint and solidary principle cannot be"applied thereto.
b. On separation pay in lieu ofreinstatement.
However, in the event that reinstatement is no longer feasible, practicable
or possible, separation pay is granted in lieu thereof.1 In this case, the otherwise
non-monetary reinstatement is converted2 into a monetary award; hence, being this
time monetary in nature, the union may be held solidarily liable with the employer
therefor.
c. On baclovages and damages.
As far as backwages and damages are concerned, since they are both
monetary in character, the employer and the union may be held solidarily liable for
payment thereof.
VI.
FILING OF CHARGES OR GIVING-OF TESTIMONY
l.CONCEPT.
Under paragraph [Ql of Article 259 (248] of the Labor Code, it is an unfair
labor practice for an employer to dismiss, discharge or· otherwise prejudice or
discriminate against an employee for having given or being about to give testimony
under the Labor Code.4 · owing to the non-withdrawal of the charges of the former would be and constitute
2. THE ONLY EXCEPTIONAL ULP.
Jurisprudence is entrenched that Article 259(Q [248(Q] is the only kind of
ULP that need not be related to or connected with the exercise by the employees of
their right to self-organi_zation and collective bargaining5 or observance of a CBA.6
3. MEANING OF "HAVING GIVEN OR BEING ABOUT TO GIVE
TESTIMONY UNDER [THE LABOR] CODE."
The qualifying phrase ''having !}wn or being about to !}ve ll!limony under [the
l.Abor) Codt," despite its clear language, should not be confined merely to the act of
the employee in actually testifying or offering his tesliqi.ony in a labor case, whether
1 I ~ hneR:a1 Oga- a'd ~ Fmy W01t8s nlependelt Uroi V. ~ M1ef'can Ci:)a- all Ci;Jarel!e
Genera Mlng Cap, V, Caso. GR No. 149552. M3'dt 10, 2010.
This is t.e hokfn,i i1 Sessioo Defghts Ice Qean and Fast Foods v. u\ (Slx1h !:Mm}, G.R No. 1n149, Feb. 8, 2010.
'(I) To dismiss, <ischa'ge a otierMse pre¢te a <isaimak! 3:1ailslan ~ krhawlg gr,,oo a berg mtbgM!
lesti1m/ 1P1er llis Cooe1.r
' See aso Secoon 131d], ~ XII, Book Ill, Rules to IIT!)lemer4Ille Looa Code.
1
See PepsH:ola Fti'lpj)iles, loc. v. M:m, GR No. 175002, Feb. 18, 2013; Bisig MMgga;Jcr.va sa ll)'OO v. NUlC, GR No.
151300,0ct 15,2008.
I
1
Phmn Empk7fees Ll1i:lf1 v. fltiwi1e Global Carmri:ams, GR No. 144315, .lif 17, 200'i; Pepsi-Cola Phiippiles,
he. v. lldon. G.R No. 175002, Feb. 18, 2013.
CHAl'TER FIVE 529
lABOR RELATIONS
as a party-in-interest therein or as a witness for himself, for a co-employee, for a
union, for the government or for a third party.
What is material to consider is the fact 6at the sanction imposed on the
employee that constitutes ULP, such as dismissal or discharge, or the prejudice or
discrimination perpetrated against him that Uewise amounts to ULP, was
occasioned by his act of filing a complaint against the employer or of participating
in any- labor case, regardless of its nature and extent and in whatever '.capacity or
purpose the same may have been made by him.
In 114gm-Suyoc, 1 it was declared that ULP was committed by the employer
when it disnµssed the worker who. had testified in the hearing of a certification
election case despite its prior request for him not to testify in the said proceeding
accompanied ~th a promise of being reinstated if be followed the request.2
An example of a ULP involving the fili.;ig of a complaint is the case of
Philippine American Cigar.J The extremely unique nature of this case consists in the
fact that the person dismissed by respondent company was not the employee who
filed the case for ULP bur his brother. Despite this unorthodox situation, the High
Court ruled that the company was guilty ofULP. Although the law' would seem to
refer only to the dismissal of the one who filed charges against the company as
constituting ULP, the legislative intent is to assure absolute freedom of the
employees to establish labor organizations and unions as well as to proffer charges
for violation of laborlaws. ·
If the dismissal of an employee due to die filing by him of said charges
would be and is an und~e restraint upon said freedom, the dismissal of his brother
as much, in fact a greater and more effective, restraint upon the same freedom.
What is prohibited to be done directly shall not be allowed to be accomplished
indirectly.5
Decisions in the United States abound where similar dismissals of
employees on account of union activities of relatives were declared constitutive of
ULP. For instance, the dismissal of a brother,6 o: of 3,11 employee, because of the
union activities of his wife,7 or of a female employee, due to the union activities of
her husband,8 was declared ULP.9
ib:lcn-&rfoc Miles, rev.Baldo, G.R. No. L-1TT39, Dec. 24, 1964.
Seeaso ~ Fastener Capaatioo v. CIR, G.R Nil. l-15834,.lal. 20, 1961.
~Co.,G.R No. L-18364, Feb.28, 1963.
Sedal 4{a] 5d RA No. 875,OOHMcie 259(Q 1248(Q] ol lhelooa Coce.
The~ Crut <ispooed d tlis case by ded.ri'g resp<nlenl F1lfpe .AJneri:al CiJcr & OJ<lette MnJfa<1rln9
Co., Inc., gtmtf ofUP mid oom-g saKl respoodEr(b reilstae t,e lxdte' ~ San Jose].
' Id., citing In Ille Matterol Ouidni::k Oja Wins. Inc. and Federalon ofDjels,Fn!shers, Pmters a1J BleachelsdM'efbl (2
NLRB963). '
1 Id.•~ nt,e Mlttel'dFoo! Mlb"~ and H.C. M:G.riy, 26 MRB, p. 322.
1 Id, ciing lm1 Mlestos &!UberCo. and lklited Texti'.e Wirti,s olkm,AFL, 98 NLRB p. 1055.
' Id., ciling Tetetsmrtoo Lmllispules andColective Ba,gamg (Va. 2,p.859).
530 BAR REVIEW~RON I.A&OR I.AW
4. ULPACT NEED NOT INVOLVE DISMISSAL.
The act of reprisal contemplated under this provision is not limited to the
dismissal or discharge of an employee. 1 Any other act, short of dismissal, but which
tantamount to discrimination or prejudice against an employee by reason of his
filing a labor complaint, or for his being a prospective witness"in a labor case or for
acru..Uy testifying or participating therein may also be considered ULP.
Thus, the terms "discrimination" and "prejudice" in the context of
ULP under this particular provision of, the Labor Code, relate to the employee's
having given or being about to give testimony undet the Labor Code2 and the
employer's retaliatory act may take various forms, such as transf~rring the employee
to a demeaning position or assigning him with more difficult work tasks, or
otherwise punishing him because he has filed ULP or other charges against it or he
has participated in the prosecution/defense of a labor case, either as a party-in-
interest thereto or a witness therein.
VII.
CSA-RELATED ULPs
1. THREE (3) CSA-RELATED ULPs.
Article 259 [248) enunciates three (3) CBA-related ULPs, to wit. .
1) To violate the duty to bargain collectively as prescribed ~ the Labor
Code.3
2) To pay negotiation or attorney's fees to the union or its officers or
agents as part of the settlement of any issue in collective bargaining or
any other dispute.4
3) To violate a CBA.5
Vll·A.
VIOLATION OF THE DUTY TO BARGAIN COLLECTIVELY
(NOTE: The topic of "Duty to Bargain Collectively" is earlier discussed under "D. RIGHTS OF
LABOR ORGANIZATIONS", supra. Only the ULP aspect thereof is discussed hereunder).
1. DUTY TO BARGAIN COLLECTIVELY.
'lbe duty to bargain wllecuvcly devolves upon both the employer and the
SEBA.1· As described in the law, the duty to bargain collectively means the
1
Themns "cismissa" and ·alSC!lalge'~lhe~ meriY,i. (SeeUS Legal atUSlegal.C'OOl:
hllp1/defmoos.uslegcl.c:om'd/alSChagel; Last accessed: Jarmy 12. 2017
GleatPml~e Empbyees Unknv.Great Pacific Li!eAsstralceC<Jporalxxl. G.R.No. 126717, Feb.11, 1999.
~ (g) cJ Mide 259 ~48] cJ h! labcr Code MK:fl p!Mles: '(g) To Wllcftl lhe oJ// b bclgail cdledive,'f as
ixesailedlrt ~ Cooe{.f
' ~ (h) d Mide 259 [2431 d tie l..alxY COde v.lli:h states: '(h) To pay ~ er mre(s lees kl tie lm1 or Is
a!iool; or iljents as pal of tie sel!lemenl d inf issue11 coi!edMl baganilg Cl~ ahe( dispue{.r
1 Pata:J~ (0 of Article 259 [243I d lhe Laba Code ...tli:h pf'O'i(les:'(i) To vi:llatll acoietwe bafgaililg c11reement'
CHAM'ER FIVE 531
LABOR REIATIONS
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 pioposals for adjusting any grievances or questions arising under such
agreement and executjng a contract incorporating such agreements, if requested by
either party; but such duty does not compel any party to make any concession.2 In
the absence of an agreement or other voluntary arrangement providing for.a more
expeditious manneI of collective baigaining, it is the :iuty of the employer and the
representatives of the employees to bargain collectively in accordance with the
provisions of the Labor Code.3
When there is a CBA, the duty to bargain collectively also means that
neither party should 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 which, under the law, is
considered the freedom period within which eithet. party can validly terminate the
CBA. It is the duty of both parties to keep the ;tat,,; q110 and to continue in full
force and effect the terms and conditions of the exiscing agreement du.ring the 60-
day period and/or until a new agreement is reached by the parties.•
2. FAILURE OR REFUSAL TO GIVE COUNTER-PROPOSALS.
The failure of the employer to submit its counter-proposals tq the
demands of the SEBA does not, by itself, constitute refusal to bargain as would
amount to ULP.5 However, it is different if the employer refuses to submit an
answer or reply to the written batgaining proposals of the SEBA. In this case,
unfair labor practice is committed. While the law does not compel the parties to
reach an agreement, it d~s contemplate that both parties will· approach the
negotiation with an open mind and make a reasonable effort to reach a common
ground of agreement.6
In the case of Gtntral Milling,' the Supren:e Court found the petitioner
guilty of ULP under Article 259(g) [248(g)] for refusing to send a counter-proposal
to the SEBA and to bargain anew on the economic terms of the CBA. The
employer anchored its refusal to bargain with and recognize the union on several
letters received by the former regarding the withdrawal of the workers' membership
from the union. This defense was rejected by the Sapreme Court, saying that the
1 SeeAJ!i:les 259(g) 1248(9)1 cm 260(c) [249(c)L respecill!tf, aIlle t.axrCode.
2 Artide 263 [2521. Looor Code; Elizakle Rope Facby, lie.v. CR. GR No. L-·6419, Mly 30, 1963, 8SCRA 67.
.
1 Artide 262 [2511,LooorCode.Thisaltx:le ra:esitsrools from aU.S.law(See Nati:ralaborRe!atmsAct. 29 U.S. Cooe§
158-LWcirlabCI~. Se:.8(a)(S) lhereol). ·
I Artide 2641253), lro.
s ~ Mm! Radi> 00:ers Associmn v. CR, GR Nos. L-10095 llld L-10115, Oct 31, 1957, 102 Phi. 3n
• lookloyv.MRC,GRNo.54334,Jc11.22, 1986.
1 Genera Mfu;J Capcxatioo v. CA. G.R No. 146728,Feb. 11, 2004.
532 SAR. ~IEWER. ON LABOR. I.AW
employer had devised a flimsy excuse by attacking the existence of the ·union and
the status of the union's membership to prevent any negotiation.
Similarly, in the earlier case of Cakuo tk San flli1n dt Lttran,1 the petitioner
school was declared guilty of ULP when it failed to make a timely reply to the
pcoposals of the SEBA more than a month after the same were submitted to it. In
explaining its failure to reply, the school merely offered the feeble excuse that its
Board of Trustees had not yet convened to discuss the matter. Clearly, its actuation
showed a lack of sincere desire to negotiate the CBA thereby rendering it guilty of
ULP.
In the 2016 case of Rtn Tran!porl Corp. v. NLRC,2 petitioner was declared
10 have violated its duty to bargain collectively with private respondent union
SMART,3 the incumbent bargaining agent, because of its refusal to submit to the
latter its CBA counter-proposals on the basis of its position that it has ceased to be
the exclusive bargaining agent of the rank-and-file employees by reason of the
disaffiliation of the majority of its members. In so declaring petitioner guilty of
ULP, the Court noted that it had a duty to bargain collectively with SMART. Under
264 (253)4 in relation to Article 268 (256]5 of the Labor Code, it is during the
freedom period - or the last 60 days before the expiration of the CBA - when
another union may challenge the majority status of the bargaining agent through
the filing of a petition for a certification election. If there is no such ~tition ~ed
during the freedom period, then the employer "shall continue to recognize the
majority status of the incumbent bargaining agent where no petition for
certification election is filed." In the present case, the facts are not up for debate.
No petition for certification election challenging the majority status of SMART was
filed during the freedom period, which was from November 1 to December 31,
2004 - the 60-day period prior to the expiration of the five-year CBA. SMART
therefore remained the exclusive bargaining agent of the rank-and-file employees.
3. FAILURE OF EMPLOYER TO PROVIDE UPDATED FINANCIAL
INFORMATION, WHEN ULP.
During and in the course of the CBA negotiations, tht; SEBA has the
right to request from the employer, copies of the annual audited financial
statements, including the balance sheet and the profit and loss statement.6 The
employer is duty-bound to make available such up-to-date financial information on
Colegi:, de~ JUMde Letranv. Ass0ciafon of Elll>k7feesand Facl.l'tf of Letran, GR !ti. 141471. Sept 18, 200l.
G.R Nos 188020 &1882532. .hJle 27, 2016.
Samaha, 19 ~cM'a sa Rm Tf\¥lSP(Xt (SM4.Rl).
' Mde 264 12531 is enllled UAy I:> 8a'Qi.l Colediiel'f Vvtoen The-e Exists a Conecwe Ba,yam;i Agreement.· This was
aed by tie ~ Cwt il tis deciso1 as Articie 263 .m oci Mde 264 v,tli:11 is I l e ~ rra:Je by toe OOlE
Seaetry il her Deparrnert MMy No. 01, Series ci 2015 (Rerurberrg ci toe Laba Code of Ile Phippiles, as
Mlellded). issued oo »/ 21, 2015. . Smlan! Clmred 8a'lk f:rrpbyees Lro1 [NUBE) Y. Coofesct, G.R ltl.114974, Jooe 16, 2004.
1 Mde 268 [2561i s ~ ~Issue il Organized Estlbisvnents.'
' Ma! 251(c) (242(c)l, Labor Code.
CHAPTER FIVE
533
LABOR RELATIONS
the economic situation of its establishment which is norm.ally submitted to relevant
government agencies that is material and necessary for a meaningful negotiation.•
In cases w?ere th: disclosure ?f ~ome of the infonnation would prejudice
the e~ployer's buSln~s, tts co_mmwucatton may be made conditioned upon a
commttment of the uruon that It would be regarded as confidential to the extent
2
requir~. The employer, ~poµ. receipt of the written request for copies of the
financial statements, has thirty (30) calendar days from receipt thereof within which
to fumish the union therewith.l
It bears emphasis, however, that the refusal of the employer to furnish the
requested information is not ULP if the SEBA failed to put its request in writing as
required in Article 251(c) (242(c)]4 of the Labor Code.s
4. UNILATERAL CHANGES IN WAGES AND TERMS AND
CONDITIONS OF EMPLOYMENT IN THE COURSE OF THE CBA
NEGOTIATIONS.
It is considered a failure and refusal to bargain in good faith if an
employer, without first negotiating with the union, unilaterally makes changes in
wages, hours of work and other terms and conditions of work that arc the subject
of th~ on-going CBA nego_rption._But the situation is different once the employer
has given the SE~A the opporturuty to negotiate over a set of proposals and there
~as been a. deadlock, in which case, the employer bas the liberty to unilaterally
unplement its proposal~. The ~w certainly does not intenq to impose an embargo
upon the employ<;r from introqucing improvements in its employees' benefits until
the CBA is concluded with the SEBA. · ·
5. INTERFERENCE IN CHOICE OF UNION BARGAINING PANEL.
If an employer interferes in the selection of the union's negotiators or
coerces the union to exclude from its panel of nego'tiators, a representative of the
union, and if it can be inferred that the employer adopted the said act to yield
adverse effects on the free exercise of the right to self-organization or on the right
to collective bargaining of the employees, a .ULP under Article 259(a) (248(a)J, in
relation to, Article 253 (243}6 of the Labor Code, is committed.
1
SeeSecfoo 2, fqjeXVI, l!cd V, ~ b kr4>lementtle LlixrCode,as aneooedby Depar1mertOnlerNo.40-03,Series
c/2003, [Felxucry 17,2003). ·
z Id.
i Articie 251(c) 1242(c)LLlixrCode.
• PlBJ~ (c) a ttiis arti:le prrNijes as folir:N,,s: ·(c) To be ftlTlished by Ile en"llklta', l4)(Xl Vlltien request. 'Mlh i1s amua
cWted lim:a slaterrents, ilcLod'rg lhe balaoo! sheet Md Ile ixat Md klss St!enem, Vii1l1i1 lhitf (30) calendar days
from Ile~ of receipt aIle request, after tie lml has been do.if ~rized by lhe M1)klye- ct <8tified as lhe sole .m
ex~ bcrgaili'IJ ~ aIle ef1"!lk1,'ees il toe bclgan'g \d. ct wtii1 sixtf (60) caerm days bebe lhe
1
expilfulalheexistif9 coletvle~a-Jreement. ctruilg tiecdledM! bcrgcilig ~.r
1
Th5 JXowioo ~ 'Miele 253 r,143i ~ and ~ • rghl D ~arilaooo. fJ persoos errpayed i1
<XlO'f1leltia, ildustrial Md a;irbJ!bral enl=rprises Md il reliJiJus. dlarWe, medi:al, ct educa1iooal ilstilu1ic),is, llllelher
 IIAR RfVIEWER ON IABOR IAW
534
Thus, an employer's personal objection to one or more of the union's
representatives does not ordinarily justify his refusal to negotiate. 1bis is so b~cause
both the employer and the SEBA have the freedom and right to ·designate
whomever they respectively choose and designate to r~present them at ~e
bargaining table. The law does not allow either or both parttes ~o refuse to b ~
with each other by reason of perceived or actual conflicts between thcu
representatives. Thus, the right to choose its representatives at such discussions
must be left to the discretion of the SEBA and not to the whim of management1
However, in the case of Standard Chartered. Bank,2 the act of the bank's
Human Resource Maiuger in suggesting the exclusion of the federation president
from the negotiating panel was not considered a ULP. It is not an anti-union
conduct from which it can be infected that the bank consciously adopted such act
to yield adverse effects on the free exercise of the right to self-organization and
collective bargaining of the employees, especially considering that such was
undertaken previous to the commencement of the negotiation and simultaneou~ly
with the manager's suggestion that the bank lawyer~ ~-e _excluded from _its
negotiating panel as well. The records show that after ~e 1runa~on o~ the colle~n~e
bargaining process, with the inclusion of the federation president tn ~e uruon s
negotiating pane~ the negotiations pushed thro~h. If at all, the su~~tlon should
be construed as part of the normal relations and tnnoceot commurucanoos that are
all part of the friendly relations between the union and the bank.
6. EMPLOYER'S ACT OF NEGOTIATING WITH UNION MEMBERS
INDIVIDUALLY, A ULP.
To negotiate or attempt to negotiate with individual wotkers rather than
with the SEBA is ULP. For instance, the act of the employer in notifying absent
employees individually during a strike following unproductive efforts at collective
bargaining that the plant would be operated the next day and that their jobs w~re
open for them should they want to come in has been held to be a ULP, an acttve
interference with the right of collective bargaining through dealing with the
~ployees individually instead of through their collective bargaining
representative.3
In In111/or Lift,4 respondent company through its president, sent two {2)
sets of letters to the individual strikers during the strike. The first contained
~ ilrlffltorrd, shal h.M! illerijllkl sel-<Xg8izalm .n! bbm,p,, ora$im'agailmls cllherOMl
dloa!rg tr l"'J)0SeS cf tdledNe ~ - MDBt. mmitlEnt .n! lxlera'1t winers, s e f ~ ~ nral
u
'IIQkecs .n! tase wilhai Inf defrie ~ ma, bm liixir agnmis tier nu.a ad .n! prob!dicn' (As
mx1ed lrf Ba PcrrmlSa Bilir9 70, May 1, 1980).
I ft Jaism I.a.ray Fd'f, NSlJ,fHlec. 1-h 242 (1972).
Stnm1 Qallnld Bri Etrj>bjees ijii)n INUBEJ Y. Ctdesa, G.R No. 114974, .hJle 16,2004.
1 31Am..ll. 563,cirg NI.RBV. ~ Wcrd &Co. (CA9111 133 F2d 676, 146 A1.R 1045.
tsJta- Ue ~ Co., Ud. Empb/ees Associatioo-NATU V. ms lh A.ssu.n:e Co., Ud., GR No. L-25291, Jan.
ll, 1971,37 SCRA244.
CHAflR FIVE
535
lABOll REIATIONS
promises of benefits to the employees in order to entice them to retum to work;
while the ntond contained threats to obtain replacements for the striking employees
in the event they do not report for work on June 2, 1958. The respqndents
contend that the sending of the letters constituted a legitimate exercise of their
freedom of speech. The Supreme Court, however, disagree~. The said letters were
directed to the striking employees individually - by rcgi.stered special delivery mail at
that - without being coursed through the unions which were representing the
employees in the collective bargaining. Moreover, the sending of these letters is not
protected by_the free speech provisions of the Constitution. The free speech
protection ll{lder the Constitution is inapplicable where the expression of opinion
by the employer or his agent contains a promise of benefit or threats or reprisal 1
Indeed, it is ULP for an employer operating under a CBA to negotiate or
to attempt to negotiate with his employees individually in connection with changes
therein. .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 reprcsentative.2 Such
actions are illegal as constirutiog unwarranted acts of interference. Thus, the act of
a company president in writing letters to the strikers, urging their return to work on
teons inconsistent with their union membership, constirutes interference with the
exercise of his employees' right to collective bargaining.3
7. BARGAINING IN BEHALF OF ITS MEMBERS ONLY.
Respondent union in Philippine Diamond Hote/,4 insists that it could validly
bargain in behalf of 'ftJ membm, "only, relying on paragraph (a) of Article 251 [242]5
of the Labor Code. It was, however, pronounced that respondent's reliance on said
article, a general provision on the rights of legitimate labor organizations, is
misplaced for not every legitimate labor organization possesses the rights
mentioned therein. Article 251(a) [242(a)] must be read in relation to Article 267
[255).6 Thus, on respondent's contention that it was bargaining in behalf only of its
members, the appellate court, affirming the NLRC's observation that the same
would only "fragment the employees" of petitioner, held that "what [respondent]
will be achieving is to divide the employees, more particularly, the rank-and-file
employees of [petitioner] ... the other wotkers who are no/ members are at a serious
disadvantage, because if the same shall be allowed, employees who are non-union
t Clrg31 hn..u-.544; M.Rllv. ~ Cheese Co., hc.,213 F2d70;M.Rllv. GoiJyCo., 211 F2d533, 35A1.R2d422.
Clrg Meb l'hctl SW, Capam Y.Nalim LaborRelatms Boanl,321U.S.332.
Cmg Lgts Plllisltg, CCA.71h, 133 F2d 621.
' f'li4ipile ll8nooo Heel .n! Resat. k'c. !Mania DiMmd Hole!] V. Mria ~ Hotel EmpbJees lkiioo, GR No.
158075, .uie30, 2006.
s lp'Mfes asibs:'Arli:le 251~42). R°l3hlclleglincmim'~.•Alegonate laba agcrizati:xl shat h.M! Ile
rijrt: (a) To acta s ~ clfts rnenters fcrllepo.rpa;e cl toledM! bcrgaoilg. Xn"
• lstates: 'Arli:le 267 (2551. ExdJsile bcrgai,i,g represerlatia1 .n! ~e,s•~ i1 policy .l1d ~ -The
Im' aganaaoon desgnated ex seleded by lhe ~ of tie e!1l)l:1fees il c11 ~ e calec1ile bargailrg lrit shall
be lleexcls,oe~ c lI l e ~ i1 such rifer Ile pu-pose d rolediie b.rgailr9. rJ:/
536 BAR llIVIEW ER ON IABOR IAW
members will be economically impaired and will not be able to negotiate their
tenns and conditions of work, thus defeatiug the very essence and reason of
collective bargaining which is an effective safeguard against the evil schemes of
employers in terms and conditions of work." Petitioner's refusal to bargain then
with respondent union cannot be considered an unfair labor practice to justify the
staging of the strike.1
8. SURFACE BARGAINING.
''S11,face bargaining" is defined as 'going thro11gh the motions of negotiating"
without any legal intent to reach an agreement It is"a form of ULP that may only
be committed by the employer. According to Standard Chartered Bank,2 it involves
the question of whether an employer's conduct demonstrates an unwillingness to
bargain in good faith or is merely hard bargaining. There can be no surface
bargaining, absent any evidence that manag~ent had done acts, both at and away
from the bargaining table, which tend to show that it did not want to reach an
agreement with the union or to settle the differences between it and the union.
Here, admittedly, the parties were not able to agree and thus reached a deadlock.
However, it must be emphasized that the duty to bargain "does not compel either
party to agree to a proposal or require the making of a concession." Hence, the
parties' failure to agree does not amount to ULP under Article 259(g) [248(g)).3
9. BLUE-SKY BARGAINING.
"Blue-Jky bargaining" means making exaggerated or unreasonable
proposals.• This is a kind of ULP which can only be committed by a SEBA.
In the same Standard Chartmd Bank case, the minutes of the meeting show
that the SEBA based its economic proposals on data of rank-and-file employees
and the prevailing economic benefits received by bank employees from other
foreign banks doing business in the Philippines and other branches of the bank in
the Asian region. Hence, it cannot be said· that the union was guilty of ULP for
blue-sky bargaining.
10. BOULWARISM.
Boulwa.cism is a negotiation tactic named after· the former vice president
of General Electric, Lemuel Boulware, who pioneered this strategy.5 It is a labor
law principle in which management opens the negotiation with a generous offer
1 kl.
2
~ Omred B.rt Efr(>k7jees lml [NUlcl v. Ca'lesa, G.R No. 114974, Ju-e 16, 2004.
1
Seealso Nmlal lklm of Resamt Wcners (PTIX:I v. CIR, G.R No. L-20044, Apri 30, 1964.
' Alru ASloirle id Fred Wr,ey,l.ttxJ Relam. 7" Gf6Jn 1991, p. 195. · . • Ile W~ner Actllld Ile Na6ona Laba" RelationsAct, par1DJlatt alxeadl d Ille Wtf kl bagail il gool lali.
s ~ lead v.11 a sHte, Boot.ue is fanous r« dng lhe ~ lklkxl of 8edri:a Wcxl(ers (IIJEW) at Ile ooset of
ll8J()la!xr1s flat toe o:xrcmt hoo .teady Mbaled Ile v«nelS' needs In! was~ bth is 'frst. last In! besl cf.er'
on toet!Ne.
C HAl'TER FIVE
LAIIOR RELATIONS 537
that is not meant to be negotiated.1 In other words, it is an offer which is ultimate
and to which no further revisions will be made. This "take it or leave it'I!. offer or
counter-of~er does n~t constitute proper collective bargaining not only within the
contemplatton of Uruted States laws but also under Philippine law.3 It is considered
ULP4 as essentially, no labor nego~tion has taken place.S
11. CLOSURE OF ·ESTABLISHMENT IN BAD FAITH.
In holding that petitioner is liable for ULP and illegal dismissal, it was
pronounced in St. John Colkge/> that the ~ g of, and the reasons for, the closure
~f the high school.department and its reopening after only one year from the time
It was closed down, show that the closure was done in bad faith for the purpose of
circw:nventing the uni?~'s right to collective bargaining and its members' right to
secunty of tenure. Pettlloner SJCI undetmined the Labor Code's system of dispute
r_esolution by closing down its high school department while the 1997 CBA
negotiations deadlock issues were pending resolution before the DOLE Secretary.
The closure was done·in b!d faith for the purpose of defeating the union's tight to
coll.ective bargaining. Besides, as. found by the Kl.RC, the alleged illegality and
excessiveness of the ~on's demands were not sufficiently ·proved by petitioner
SJCI. Even on the assumption that the union's demands were illegal or excessive,
petitioner SJCI's remedy was to await the resolutiqn by the DOLE Secretary and to
file a ULP case against the uaj.on. However, SJCI did not have the power to take
matters into its own hands by closing down its .high school department in order to
get rid of the union.
In P11refaods u,p.,1 the closure of petitioner's Sto. Tomas farm was
declared to have been made in bad faith. Badges of bad faith are evident from the
following acts of the petitioner: it unjustifiably refused to recognize the Sto. Tomas
Free Workers Union's (STFWU's) and the other unions' affiliation with Purefoods
Unified Labor Organization (PULO); it concluded a new CBA with another union
in another farm during the agreed indefinite suspension of the collective bargaining
negotiations; it surreptitiously transferred and continued its business in a less
hostile environment; and it suddenly terminated the STFWU members but retained
and brought the non-members to its Malvar farm. Petitioner presented no evidence
to support its contention that it was incurring losses or that the subject farm's lease
agreement was pre-terminated. Ineluctably,· the closure of the Sto. Tomas farm
1
See ~ - c o m at http:/IN.wt~.oom'd~lltni; Last a:x:essed: Jnay 29,
2017.
1
Genera EJeaic Co. 150 t-l1lB 192 (1964t ~ T ~ lmd of E«imrl, Wigal Employmrrt Relations
Camissolt.m.~.127(1970),reimfedilStritl,Elt.vads,llld~op.cl,p.544.
1
PhqJpine Natiaa ~ v. lmlde ~ . G.R. No. L-32630, ~ 10, 1979.
' The Na6ona l.alxJ Relations !mil (l'I.R8) d lhe lkiEd Stales has declared fl<xi,,eism as a llP, as I is il l'ii!tm d
' See Busilessllaimy.com. SIV<i- See also US1.ega1.com at http:/l!Emtms.uslega.CX>mbtoowarism' v.t1e1e Ille
aAlxrnedtlismetoodwasdesaiJedas11Q~area ~
St.Jolli Cdleges, nc. v.Sl.kmAcaderwFa:lftaoo ~bjeeslklm, G.R No.167892, Oct 'l/, m .
7
f\mxxfs Colp. V. Nc!Jkakalsang Scrin,g Mangga}cMa rg Plreloods Ranll-and-Re, G.R No. 150896, Aug. 28, 2008.
 BAR llEVIEWER ON LABOR I.AW CHAl'TER FIVE
538 LABOR RELATIONS
539

circumvented the labor organization's right to collective bargaining and violated its except those which are grou in character, are no longer considered as ULPs but
members' right to security of tenure. The sudden tennination of the STFWU merely as grievances that must be resolved through the grievance machinery
members is tainted with ULP because it was done to interfere with, restrain or provided in the CBA. Gross violation of CBA means flagrant and/or malicious
coerce its employees in the exercise of their right to self-organization. Thus, the · refusal to comply with its tconomic provisions.•
petitioner company was held liable for the payment of moral and exemplary
2. ONLY GROSS VIOLATIQN IS ULP.
damages of PS00,000.00 to the illegally dismissed STFWU members.
In other words, (1) ordinary violations of a CBA which involve non-
VII-B. economic provisions thereof; (2) violations of its non-economic provisions, even if
PAYMENT OF NEGOTIATION FEES OR ATTORNEY'S FEES gross in nature; or (3) violations of its economic provisions which are not gross in
character, are no longer treated as ULP. Consequently, they should be resolved as
1. WHEN PAYMENT CONSIDERED ULP. ordinary grievances properly cognizable under the grievance machinery and
voluntary arbitration clause of a CBA.
Article 259(h) [248{h)) of the Labor Code considers.as ULP, the act of the
employer in paying negotiation fees or attomcy's fees to the SEBA or its officers or To emphasize, only grm violauon of a CBA, as defined in Article 274
agents as part of the settlement of any issue in collective bargaining or any other (261), is considered ULP, in which case, the jurisdiction thereover belongs to the
dispute. · Labor Arbiter under Article 224(a) (217(a)] of the Labor Code. If not grou in
2. FEES SHOULD BE PAID FROM UNION FUNDS. nature, the same shall be treated as a grievable iss~ propedy to be adjudicated
Article 228(b) (222(b)] 1 requires that such attorney's fees, negotiation fees under the Grievance Machinet),2 an~, if Wl!esolved, through the process of
or similar charges should be paid from the union funds. These fees cannot be voluntary arbitration.3 This is clearly based on the legislative intendment of the
framers of R.A. No. 6715.• Thus, the purpose of the a~endatory provision
collected from the employees individually.2
distinguishing ''grou" from ordinary violation of the CBA is "to give an expanded
3. COUNTERPART PROVISION IN ARTICLE 260(e) (249(e)]. jurisdiction to Voluntary Arbitrators so that any violation of the CBA, if not gross,
On the part of the union, asking for or accepting attorney's fees or will be subject-to arbitration rather than industrial·strike."5 Consequently; as a mere
negotiation fees from the employer as part of the settlem'ent of any issue in grievable issue, non-gross violation of the CBA will be resolved more speedily
collective bargaining or any other dispute is considered ULP under Article 260(e) through the grievance machinery and voluntary arbitration wl!ich have proven to
[249(e))3 of the ~abor Code. be very effective modes of settling labor disputes. If not so treated as a grievable
issue but as a ULP act, parties are expected to resort to the Ii.ling of complaints for
VII-C. ULP before Labor Arbiters or the Ii.ling of notices of strike or lockout before the
VIOLATION OF THE CBA NCMB based on the ground of ULP and subsequently, if unresolved through the
conciliation and mediation mechanisms of said agen~y, the same will lead to the
1. SIMPLE VIOLATION OF CBA NO LONGER ULP. staging of strikes or lockouts whose effects are obviously grievous and deleterious
to the interest of both the employer and the employees.
Article 259(i) [248Q)] of the Labor Code should be read in relation to
Article 274 [261] thereof. Under the latter article, as amended,4 violations of a CBA, An example of a violation of the CBA which has not been declared gross
in nature and, therefore, not a ULP, is the violacion of a grievance machinery by an
employer. This was the ruling in San Miguel Food.r. 6 This is so because the grievance
1
Mi:le2281222].~andFees.-xxx machinery provision in the CBA is not an economic provision, hence, the Labor
(b) t-«> albre{s lees, nego6alion fees a sirilar ct.rges a atrJ ki1d m-g tan 'ilff Clllee&.-e bclgainhJ aJ1eenen1 shal
a
be il'!)OOed 00 'ilff m1/dJal rrer1Jer lhe oonl'aclilg lriln: PrM!ed, to.Yever, Ila! albney's fees rraf be chalgEd Arbiter has no jurisdiction to decide the issue of such violation. However, in the
agai'6turm fltlds ii an aaruit kl be ac,eoo upon il'f lhe paties. Mf oontract. iJJreenenl a ~ c l 'il1f sat kl same case, violation of the job security provision of the CBA, specifically the
lhe~shal be ru1 a'd voo.
1
Pacii: Ball;iYJ Capaam v. a.r..e.GR No. 56965, March 1, 1984.
1
'Arti:ie 260 (249!. Unfar Lm Practices of Laba()rg.nz.aticJls.• ltshal be unfair labapracticP.for alabaagiriizatioo, its fli:lhlAUendanlS and SlewartlsA.ssociation of lhe f'tllippries V. PhippneAiJlires, he., GR No. 178083,JuJy 22. 2008.
aflc8s, iJJerlls a ~:
XXX
m
lkxler Artk:le !260J.1.a1>a eooe.
lkxlerArtk:le 274 [261L1bit
a
'(e) To ask for a accept ne<Jdiaoon a mney's lees fTtm errpoyers as pat lhe se1lleml!1t c( if'r/ jsg,e i1 colecwe lklokeffettool.mn21, 1989.
balgam,j or 'il1f otier d6f)(Ael.r 5
See Recad dfle Senate, VOOJ!le I, No. 165, p. 5741 re Currrittee hnendmerits kl oo Senate Bil No. 530.
' ~cnmledil'fRANo.6715. 1
San ~Foods, 11:.v. SanMguelCapcxatioo ~Lfiial-f'TV'ruO. G.RNo.168569,0ct.5,2007.
•,C.
<
540 8AR REVIEWER ON lABOR lAW
seniority rule therein provided while, at fust blush, may appear to be non-economic
in nature, has nonetheless been declared therein as being gross in character. The
union in this case charged the employee (S.MFI) foe ULP because it has "appointed
less senior employees to positions at its Finance Department, consequently
intentionally bypassing more senior employees who ar.e deserving. of said
appointment" Following a liberal cons~ction of_~cle 2?4 (261] o~ ~e Labor
Code, the Supreme Court ruled that the JOb seCUrlty issue ts e~onomtc in.nature
since the seniority rule in the promotion of employees has a beaong on salactes and
benefits. Hence, it may not be seriously disputed that the afore-said charge is a
gross or flagrant violation of the seniority rule under the CBA, a ULP act over
which the Laboe Arbiter bas jurisdiction.
3.
ULP BY LABOR ORGANIZATIONS
1. ULPs OF LABOR ORGANIZATIONS.
Article 260 [249] of the Labor Code enwner:ites the following ULPs
that may be committed by labor organizations:
"Article 260 (249J. Unfair Labor Proaiw of Labor O,ganiz.ationJ. · It shall
be unfair labor practice for a labor organization, its officers, agents or
representatives:
·(a) To restrain or coerce employees in the exercise of their right to self-
organization. However, a labor organization sh~ _h_ave the right_to
prescribe its own rules with respect to the acqws1t1on or retennon
of membership;
(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;
(c) To violate the duty, or refuse to bargain collectively with the
employer, provided it is the representative of the employees;
(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;
{e) To ask for or accept negotiation or attorney's fees from clnploycrs
as part of the settlement of any issue in collective bargaining or any
other dispute; or
(~ To violate a collective barginiug agreement
"The provisions of the preceding paragraph notwithstanding, only-the
officers, members of governing boards, r~presentatives or agents or members
CHATTER FIVE
IABOR REIATIONS 541
-of lab?r associa_tioos or _organizations who have actually participated in,
authonzcd or ranfied unfau labor practices shall be held criminally liable."!
2. ORDER OF TOPICAL PRESENTATION.
The m_ajor topics discussed in this section are as follows:
I. RESTRAINT AND COERCION OF EMP_OYEES IN THE EXERCISE OF
THEIR RIGHT TO SELF-ORGANIZATI0:'-1
II. DISCRIMINATION
Ill. VIOLATION OF DUTY OF UNION TO BARGAIN COLLECTIVELY
IV._ FEATHERBEDDING LAW
V. DEMAND OR ACCEPTANCE OF NEGOTIATION FEES OR
ATTORNEY'S FEES
VI. VIOLATION OF THE CBA
-----·-------·-·-·---·---------···-··-··-··-··
I.
RESTRAINT AND COERCION OF EMPLOYEES
IN THE EXERCISE OF THEIR RIGHT TO SELF-ORGANIZATION
1. UNION MAY INTERFERE WITH BUT NOT RESTRAIN .OR
COERCE EMPLOYEES IN THEIR RIGHT TO SELF-ORGANIZE.
Under paragraph (a) of Article 260 [249],2 it is ULP for a labor
organization, its officers, agents or representatives, to restrain or coerce employees
in the exercise of their right to self-organization. Ccmpared to similar provision of
paragraph (a) of Article 259 (248],3 notably lacking i, the use of the word "inte,ferl'
in the exercise of the employees' right to self-organize. 'The _significance in the
omission ·of this tellll lies in the grant of unrestricted license to the labor
-organization, its officers, agents or representatives to interfere with the exercise by
' ' the employees of their right to self-organization. Such interference is not unlawful
since without it, no labor organization can be fonned as the act of recruiting and
convincing the employees to join ids definitely an act of interference. It becomes
unlawful within the c~ntext of pangraph (a] of .Article 260 [249] only when it
amounts to restraint or coercion which is expccssly prohibited thereunder.
1 Asanendedbyl!aasf>cmmsaBicrlg 130,A!JJ.21, 1981.
2 M:le 260(a) 1249(a)I d Ille l.alxr Ccx!e Jll0',1les: '(a) To ~ or= fl1'Clbyees il Ille exettise of fleir rgtt kl sef.
agarmtioo. lb.\teYer, a labor cxgaizabl 9"' hcP/e Ile 11Jhl k l ~ ils 0'Ml rules wifl respect to 1he acquisibl or
relrion d R'lell'imhp(,T
1
'Mi:le 25912481, lM1fai' l.alxr Practes dErrc>b,us.- It sha'I be llllaYifu b- c11 ~ kl amrit ~ d Ile fobw1g
unfar labor pacb!s:
'(a) To iltMere v.1'11, rest-ail orcoerce enl)lorees il 1he exeitise a1hei' 11Jlrt toselkxg~.r
!.
i

542 SAi\ REVIEWER ON LABOR I.AW
2. A UNlON CANNOT PUNISH EMPLOYEES WHO DISAGREE WITH
ITS POLICIES OR VIOLATE ITS RULES.
It is ULP for a union to restrain or coerce any employee in the exercise of
his organization rights. He may_or may not_j~~ a union. He cannot_be coerced ~to
joining a union nor be restrained from 1ouung one. Any coercton or restr:unt
constitutes ULP.
Once a member of the union, he caonot'be punished purely on the basis
of his act of disagreeing with certain policies of the Wl!On against which he feels
strongly. True it is that a union, pursuant to its broad rule-making power in respect
to the acquisition, retention or loss of membership, can prescribe certain penalties
foe the violation thereof, which may ·range from fines, suspension or expulsion
from membership; however, as a matter of general rule, these sanctions are only
internal in application foe the pcopec govemance and administration of the union's
activities and affairs. Most certainly, such act of breaking union policies and rules,
or refusing to comply with the penalties imposed, or voluntarily accepting the
sanctions meted, cannot be used as justification for the eventual dismissal of the
employee from employment; otherwise, such will constitute ULP of the union
since it, in effect, would have coercive and restraining adverse effect on the affected
employee's organizational rights.
A union member, to cite an extreme example, who organizes another
union and initiates the filing of a petition for certification election may, based on
the rules of the union, be expelled from membership in the union but such
expulsion cannot result in giving power to the union to recommend the firing of
the errant member from his job or from harming in any way his status as an
employee. Beyond the imposition of sanctions, the union cannot do anything to
secure the termination of the employee from his employment. Any attempt of the
union in further endangering the employment status of the employee would be
tantamount to ULP.
Even if there is an existing union security clause in the CBA, the dismissal
from employment of the errant employee is not the automatic consequence of his
violation as a union member of union policies and rules. Expulsion from the union
would not ipso facto nor ipso j1m lead to expulsion from the job. Foe there should
foremost be compliance ~~th the pre-requisites: First, it must be cleacly shown that
the act committed by the employee against the union also constitutes a violation of
such clause; and ;econd, that wider such clause, the union is granted the power to
recommend to the employer rhe crrnnt employee's termination of employment and
the employee has agreed to effect it after compliance with due process per the
Alabang Co1mtry C/11b doctcine. 1 The mere existence of such clause in the CBA is no
1 The case of A1roang c,o..ntry Cl.lb, ric. v.NI.RC, GR No. 170287, Feb. 14, 2008, has efUlciated tiefo'lowi'9 requstes
4~- .
I •~
tictlhe employer shaJtl detemine, p!O'le irxl complyv,;tt\ pro lo temioa1i1g ttle ~ o f an l!IT'llkYtee lrfvv\le of
lhe emxrement rJ lhe lll01 seo.riy clause: (11 The uni:ln seaJi!y clalse is ~ ; (2) The SEBA is requesting for the
Cl!Al'TER FIVE
lABOR RElATIONS
543
fool-proof assurance that termination is the immediate consequence and direct
result for its violation. As held in a calnta of cases, a dismissal based on a union
security clause which does not expressly authorize it for its violation constitutes
ULP.1
3. RIGHT TO PRESCRIBE OWN RULES ON ACQUISITION,
RETENTION OR LOSS OF MEMBERSHIP.
. U~dec the same pr~vision, ·a labor organizarion is granted "the right to
prescabe its own rules with respect to the acquisition or retention of
members~p." Althou~h ~ot expressly mentioned in the law, jt is equally the right
of th~ uruon to pces_cabe m the same rules with respect to the loss of membership
~erem through vanous modes allowed by law, such as resignation, expulsion or
unpeachment. These rules ace normally embodied in the Constitution and By-Laws
of the labor organization. Pursuant to this right, the labor organization can
prescribe the proper qualifications for membership as well as the rules and
regulations to QC followed by its members in order to retain their membership in
good standing therein. . ·
4. INTERNAL RULJ;:S UNDER THE CONSTITUTION AND BY-LAWS.
The internal rules prescribed in the union's Constitution and By-Laws
should he strictly observed in all mattei:s involving union affairs. Failure to so
comply ·therewith miy amount to ULP. The 2016 case of Mendoza v. ·MIJ;?EU,2
illustrates this situation. The respondents, who ace all officers of the union, were
charged foe ULP by one of its members, petitioner Mendoza, because they have
twice successively suspended him foe 30 days each for his first 2 offenses for not
paying the required union dues, and subsequently expelled him for his Jtd similar
offense of non-payment of union,dues. The Supreme Court declared respondents
"guilty of unfair labor practices under Article 2~0 [249] (a) and (b) - that is,
violation of petitioner's right to self-organization, unlawful discrimination, and
illegal termination of his union membership" because "[a]s members of the
goveming board of NIWEU, respondents ace presumed to know, observe, and
apply the union's constitution and by-laws. Thus, their repeated violations thereof
and their disregard of petitioner's rights as a union member - their inaction on his
two appeals which. resulted in his suspension, disqualification from running as
MWEU officer, and subsequent expulsion without being accorded the full benefits
of due process - connote willfulness and bad faith, a· gross disregard of his rights
enfatement of Slrll cwse; en! (3) There is 51.ffi:elt evilence ti Sl4ll)al Ile SEBA's decisol tlexpel tieempl:Jyee from
~-
1 SeeCcrlederafed Soosctl.abttv.Anallal wnberCo, lkliledWattts' lm: en! CIR, G.R. No. L-12503,,6;)ct29, 1960;
San Cafos Mirflg Co.V. Clf\ GR NC6. L-15453 iU1d l-15723, M!fth 17, 1961; ~ r i c ulknriwaieis
.
Orgaiizatioo (ICA'M'.l)v.CEnb'alAzucarerade Plr, GR No. L-17422, Feb. 28, 1962.
1
ABM. llendoza v.Oticefs at Mmi w e ~ lk1ioo (Wval), GR l«i. 201595, Jan. 25, 2016.
544 BAR REvlEWER ON IABOR IAW
thus causing untold suffering, oppression and, ultimately, ostracism from
MWEU."1
The failure of ordinary union members to observe internal rules would
justify their expulsion. Bap1is1a v. Villan11elilf' is an exampl!! of this situation.
Petitioners here were former union members of Radio Philippines Network
Employees Union (RPNEU), a legitimate labor organization and the sole and
exclusive bargaining agent of the rank-and-file employees of Radio Philippines
Network (RPN), a government-sequestered corporation involve_d in commercial
radio and television broadcasting affairs; while herein respondents were the union's
elected officers and members. Petitioners were among those who were expelled by
RPNEU, and ultimately dismissed by their employer upon the recommendation of
RPNEU, for violating a provision in its constitution and by-laws3 when they filed a
suit calling for the impeachment of the officers and members of the Executive
Board of RPNEU and various petitions for audit covering the period from 2000 to
2004 before the DOLE, without first resorting to and exhausting all internal
remedies available under said constitution and by-laws. Because of their expulsion,
petitioners cha_rged respondents of ULP under paragraphs (a) and (b) of Article 260
[249] of the Labor Code. The Supreme Court upheld the validity of petitioners'
expulsion and the dismissal of their ULP accusation because they failed to comply
with the e."<Press mandate of RPNEU's constitution and by-laws that before a
party is allowed to seek the intervention· of the court, it is a pre-condition
that he should have availed of all the internal remedies within the
organization. Petitioners have violated this mandate when they filed petitions for
impeachment against their union officers and for audit before the DOLE without
first exhausting all internal remedies available within their organization. This act is a
ground for expulsion from union membership. Thus, petitioners' expulsion from
the union was not a deliberate attempt to curtail or restrict their right to organize,
but was triggered by the commission of an act, expressly sanctioned by the union's
constitution and by-laws.
11.
DISCRIMINATION
1. CONCEPT.
Paragraph (b) of Article 260 (249] enunciates the discrimination
perpetrated by a labor organization as ULP, /Q wit
"Article 260 (249]. Unfair Labor Practice; of Labor
Organizations. • It shall be unfair labor practice for a labor
organization, its officers, agents or representatives:
XXX
Seeaso M0,Tr.nsh.de Gu2!Ml, G.R.No. L-18810,il;ri23, 1963, 7SCAA726.
G.R. No.194709,.llif 31, 2013.
Pm31(, Secfu12.5 of Altide IX lhered.
CHAJ'TER FIVE
LABOR REIATIONS 545
"(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
mad,e m,ilable to other members(.]"
2. KINDS OF DISCRIMINATION.
There are three (3) kinds of discrimination that a union may commit
under said article, thus:
(1) 1:1e _ac~ of the ~on to cause or attempt to cause an employer to
discnm10ate against an employee, in general, irrespective of whether
he or she is a member or non-member of the union.
(2) The discriminatory act of the union against an employee "with
respect to whom membership in such organization has been
denied,"
(3) The discriminatory act of the union against an employee whose
m~bership therein has been terminated based "on any ground
other .than the usual teans and conditions under which
membersp.ip or con~uation of membership is made available to
other members."
21 FIRSTKIND OF UNION DISCRIMINATION.
. It is the basic characteristic of the· first kind of union discrimination
mfutioi.ed above that the union's act which constitutes ULP consists in inducing
or instigating the employer to commit discrimination against an employee who may
·or may not be its member. The purpose is to .ei,courage or discourage union
mem?ership. An example is the act of the union in convincing an employer to
penalize employees who engage in anti-union activities.
The intent and initiative to discriminate should not emanate from the
employer but from the union, its officers, agents or representatives. In fact, the
employer need not be shown to have actually acted on such inducement or
instigation of the union in order to hold the latter liable for ULP. If it is shown that
the employer has yielded and acquiesced to the inducement and instigation of the
union by actually committing the act of discrimination, it may be held liable for
ULP not under Article 260(b) [249(b)], which exclusively speaks of a ULP
committed by a labor organization, but under Article 259(e) (248(e)],1 which is the
counterpart provision for employer ULP insofar as the charge of discrimination is
concerned. That Article 259(e) (248(e)] is the law violated by reason of such
1
~raph {e) pem,eoltf stales: "{e) To disaininae i1 reiJ<fd ti Wi!JeS, ho.Jls d l'tl)(1( ax, ott1el' mns a1d cmcfdions a
~ i1 ooler ti encou-age ocd ' ~ mentersh\l it in/ lii)a' orgmlixl. X1:t
 BAR RfVIEWER ON LABOR I.AW
CHAl'TER FM
IABOR R.EIATIONS 547
discrii:njnatory action of the employer consequent to the union's inducement or em~loyees on union-related grounds. However, if the employee discharged on the
instigation is clear from a reading of the U.S. law1 from which this provision of basts of the recommendation of a union is a religious objector, hence, exempted
Article 260(b) (249(b)) was patterned and copied. • from the coverage of any form of union security clause, the same may be
2.2. SECOND AND THIRD KINDS OF UNION DISCIUMINATION. considered ULP of the labor organization so recommending.I

The discciminatory ULP act under the 2'd and ~ kinds of discrimination 4. EXAMPLES.
mentioned above is perpetrated by the union itself against an employee whose May be cited as examples of this ULP are the following acts of the union
membership therewith has been either: (1) denied by the union; or (2) terminated of causing or attempting to cause an employer:
by the union.2
(1) to demote an employee who incurs the union's hostility.
The first involves an employee who has not become a member of the
wuon because his membership therein has been di1criminatori!J deni«f by the union; (2) to take action against an employee for a reason that is arbitrary,
while the second refers to the case of an employee who is already a member of the discriminatory or in bad faith.
union but whose membership therein is discriminatorify terminated based "on any (3) to tie seniority to union membership.
ground other than the usual terms and conditions under which membership or
continuation of membership is made available to other members." (4) to change an employee's wages, hours, •:>r other leans and conditions
of employment for the worse because he did something to incur
It is noteworthy to clarify that the phrase in Article 260(b) (249(b)] that wyon's hostility, such as opposing a candidate it favors in a union
states: " ... to terminate an employee on any ground other than the usual terms election.
and conditions under which membership or continuation of membership is made
available to other members," should not be construed as referring to the (5) to discharge an employee:
termination of employment by the employer as may be instigated or . (a) for a reason other than his failure to pay periodic dues or initiation
recommended by the wuon but to the termination of membership of a member fees under a union-security agreement or "on any ground other
from the union. Using "employee" instead of "member'' in the provision seems than the usual terms and conditions under which membership or
to suggest, nay, connote that it is the "employment'' rather than the continuation of membership is made available to other members."
"membership" in the wuon which is being terminated. This provision should
have been stated more appropriately in this manner: " ... to terminate a [member] (b) under a wuon-security agreement where the wuon did not afford
on any gxound other than the usual teans and conditions under which membership the employee due process prior to his expulsion and before
securing his discharge.
or continuation of membership is made available to other members."
(c) for failure 10 pay a union fine.
3. EXCEPTION - UNION SECURITY CLAUSE IN THE CBA, NOT
DISCRIMINATORY. (d) because he disagreed with union policy.

Excepted from the coverage of this kind of discriminatory ULP is the Ill.
union security provision of a CBA - a product of murual agreement by the
VIOLATION OF DUTY OF UNION TO.BARGAIN COLLECTIVELY
employer and the SEBA. The law, particularly, Article 259(e) [248(e)], allows a
wuoo which has been dC5ignatcd as SEBA, to bargain collectively for a contract 1.CONCEPT.
that permits it to cause an employer to discharge employees who fail to join or
Paragraph (c) of Article 260 [249]2 provides that it is ULP for a SEBA:
maintain membership in good standing therein as a condition for continued
employment. 1bis certainly is an exception to the general rule that unions may not "(c) To violate the duty, or refuse to bargain collectively with
cause or attempt to cause an employer to discriminate against (or in favor oQ the employer, provided it is the representative of the employees[,!"

1 See tie Naiooa1 Lalla Re1am Pd. 29 U.S. Code § 158. Phq)pi,e laws tat ansiselly alqlted lhe sail lecJal calCl!l)l
a!!is ki1d al!P. Toe list1aw is RA No. 875, 0CherMse krXM!I as 1he ~ Peace Ac!' v.tii:11 was enacted oo .A.Ile
17, 1953, [Seeits Sed014(b)(2)i
I Id.
1
See, kir hsmce, l.aas ng Mn;jgagawar,g ~ [\J,Wi v.ilJJlera, GR No. L-29474. Dec. 19, 1970.
1
Arti:le 260(a) !249(a)I a lhe LEba Code b-aces its rros ~ a U.S. law 11tich p!ll','ijes lhat ~ shal be ULP kir a !Im'
01gcrizaoon a Is a;ienls 'b rel.lse o ba!gail cdlecwetf 'Mtl 1r1 elll)k,yer, pro-med i is tie l'l!jX1!Sefl1af a his
~ Stt>jEdolhe ~ asectbl 159{a) dlhis tillel.f (See Natb1al LEba Rela1i:nsM., 29 U.S. Code§ 158.
1/nfai"!Im' practices, Sec. 8(b) 3) lhereot).

BAR IUVIEWER ON LABOR LAW
548
This is the counterpart provision of Article 259(g) [248(g)] in regard to the
violation by the employer of its duty to bargain collectively.
2. PURPOSE.
The purpose of the law in imposing it as a duty on· the part of the SEBA
10 bargain collectively is to ensure that it will negotiate with management in good
faith in order for them to conclude a mutually beneficial agreement on the tenns
and conditions of their employment relationship.
3. REQUISITES.
The requisites before a union may be·held liable for ULP are as follows:
0 management representative/s. The employer certainly has the sole and exclusive
(1) The union is a duly certified SEBA; and
(2) It commits any of the following:
(a) It violates the duty to bargain collectively; or
(b) It refuses to bargain collectively with the employer.
3.1. FIRSTREQUISITE: THE UNION IS A DULY CERTIFIED SEBA.
At the outset,.it is important to stress that the employer is not in any way
obligated to collectively bargain with a non-SEBA. It has every right to fend off any
effort on the part of a union to negotiate a CBA before it is certified as SEBA
through appropriate certification election proceedings.1
On the other hand, a non-SEBA cann~t comm.it ULP under this
paragraph (c) of Article 260 [249]. This is so because a non-SEBA has no ~uty to
collectively bargain with the employer; only a SEBA has that duty. Once certified as
SEBA, it must engage in collective bargaining with the employer since this is the
very rauon d'itT? of the right to self-organization - to enabl~ workers to bargain in a
collective fashion with their employer. And under the urtifi'°tion Y,ar Bar Rnle, it
has one (1) year from being cexci.fied as SEBA to initiate and commence the CBA
negotiation with the employer.
3.2. SECOND REQUISITE: THE SEBA COMMITS ANY OF THE
FOLLOWING: (1) IT VIOLATES THE DUTY TO BA_RGAIN
COLLECTIVELY; OR (2) IT REFUSES TO BARGAIN
COLLECTIVELY WITH THE EMPLOYER.
(1) Violation ofthe duty to bargain collectively.
As a duly certified SEBA, the union has the duty and responsibility to
represent all the employees in the collective bargaining unit (CBU) equally and
fairly, irrespective of whether they are its members or not. This is the so-called
"d11ty of fair f?J!mentafion" which involves the fundamental •duty- to bargain
collectively for and on behalf of all the ~U-covered employees. The SEBA
• Lakasng Mrwtil~ Makaba'(<rlv.MlteloEnterprises. G.R No. L-38258, NC71.19, 1982, 118SCRA425.
CHAl'TER FIVE
549
IABOR RELATIONS
should discharge this duty by equally representing everyone in the CBU, handling
cases and resolving issues fairly, processing grievances consistently, and observing
due process at all times. If the SEBA violates this duty, it may be cltargcd for ULP
by any aggrieved CBU-covered employee.
(2) Refusal to bargain collectively with the employer.
The act of refusing to discharge the duty to bargain collectively with the
employer includes wide-ranging scenarios. May be cited as an example is when the
SEBA restrains· or coerces the employer in its cltoice of its representative/s to the
collective bargaining negotiations by refusing to bargain with the representative/ s it
has designated for that purpose and insisting on dealing only with :i particular
right to choose the person/s it shall designate as its represenmtive/s at the
negotiating table and the SEBA cannot be allowed to meddle in any manner in that
cltoice. It may further be illustrated by a situation where the SEBA refuses to
engage in good-faith collective bargaining by coming to the bargaining table or
listening to any of the employer's proposals or worse, when it unduly engages in
strikes, boycotts or other concerted coercive actions that transgress its duty to
bargain collectively.
IV.
FEATHERBEDDINGLAW
1.CONCEPT. .
Paragraph (d) of Article 260 (249] considers the following act as ULP:
"(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 arc not performed or not
to be performed, including the demand for fee for union
ncgotiatioos[.]"
This is the jeathmmlding'~ provision in the Labor Code which was
pattemed after a similar provision in the Taft-Hartley Act2 ''F,athuimlding" or
1 Etylrob;icalt)', tie lenn '!eallelbedd'rg' OOJi)atf refefTed mair, persai v.oo is ~ . cxxfdled, ct ~
a
rewanled.The teim oo;iina!ed il the use fea1hers kl ii ~ il beds, provifrg fir rrm cootat. The rro:lem use a
lhe kml il tie lalxr relali:xls se!li'g berJM il tie LWted Stltes raroad ildusby, v.tii:11 used lealhered rMtresses il
sleepi'g m .Ram/ lalxrlrilns, cxrtroote:I v.itl ~ ~'4tlal led kl wjjespreoo ~ so.ght m
preserve~ by ~ ax1B:1s \\tlkil ~ ~ kl axrpmsae Y.akefS kl do ll1le ct no Y.o1t rt v.tli:11
requied C0l1'C)lex il1d ~ work rues so as kl generae aful dirfs work b' an errpoyee v.oo otierwise would
not remain~- (Wetiirn,Webstef's Dt1ioocry a Law, 1•ed, Mlmrn-Webster, Inc., 1996. ISBN ~m~1;
Vosil also lhe Kn<M'edge Encycl:lpedia at ht!pi/,w,w.~ . ~ e / Fea1hert>edd'rg.hbn; Last
visi1ed: Ja'I. 30, 2017).
1 his lhe l..abct MmJemen! Relaticxls M. a 1947, bar kroMl as Ile 'Ta'I-Hafley Id,' v.tth v.as Ma:led oo JIJle 23,
1947. tt .mended tie Na1im Labct Re1atioos Id. 29 U.S. Code§ 158 -Ulfcic 1a1xr pra:n:es, Sec. S{b) ~ lhEred, v.!lm
stales: 'tl cause ct atten1)t kl cause Ill enlJk7ter kl pay ct derPier ct a,ee b pay ct defM?r art rrt:re/ ct dhe,- ting a
VcWe, it the natJre of.ri ~ . ~ser.tes v.!1i:h ire rotpelbrred ct not kl be peoonnedj.f
550 8,._R. REYIEWER. ON IABOR. IAW
''mah-work" refers to the practice, caused and induced by a union, of hiring moce
workers than ace needed to perform a given work, job or task or to adopt work
procedures which is evidently senseless; wasteful, inefficient and without legitimate
justifications since it is meant purely for the purpose of employing additional
workers than are necessary. This is resorted to by the union·as a response to the
laying-off of workers occasioned by their obsolescence because of tlie introduction
of machines, robots1 or new and innovative technological changes and
improvements in the workplace or as required by minimum health and safety
standards, among other reasons. Its purpose is to unduly secure the jobs of the
workers. Because of these lay-offs, the unions are constrained to resort to some
featherbedding practices. Accordingly, they usually request that the technological
changes be introduced gradually, or not at all, or that a minimum number of
personnel be retained despite such changes. They resort to some ways and methods
of retaining workers even though there may be little work left for them to do and
perfoan. It therefore unnecessarily maintains or increases the number of employees
used or the amount of time consumed to work on a specific job, work or
undertaking. By so-increasing the demand for workers, featherbedding obviously
keeps wages higher.2
2. REQUISITES.
The requisites for featherbedding are as follows:
(1) The labor organiz~tion, its officers, agents or representatives have
caused or attempted to cause an employer either:
(a) to pay or agree to pay any money, including the demand for fee
for union negotiations; or
(b) to deliver or agree to deliver any things of value;
(2) Such demand for payment of money or delivery of things of value is
in the nature of an exaction; and ·
(3) The services contemplated in exchange for the exaction are not
actually performed or will not be performed.
On No. 1 above, it is important that the effort at securing payment of
sums of money or delivery of goods or things of value, emanates from and is
initiated by the union.
1
'Featief1leckfrg· is the nsislence by IJlioos on ~ rl. t.mec:eSSc1y wcners, i.e., demand'ng payment kr lllllk no
~ pabmed by v«llkefS beca1se d rradines a n.tots. F ~ drcmaticatf i1aeases Im cost axJ
decreases IXO(b::M/. (See Laba l.alt Gklsscry, Mltt Austi1 Laba Lz,v, https-J~.comlaba,lcP/1-
d'd<Myl; Lasta:x:essed:Octi>er 09, 2016).
1
l ms be naed lllat Secoon 8(bX6J d tie Ta\-Haff,ey N;;. has ow-Ned featlerbeddrg amJ'iilemenls v.lldl is a Ut.P o1
the lllOO maki-g Ile demm ftl pa-,,nenl ct~ lo,- ser.m v.lli::!I ere not pe!looned rt not to be pemmed. ~ .
Ile Jmbim ;rJailst ~ IJlder tis sedioo are made ~ ooty to l)i!'f!11!Jlls fa' v.ro.eis not to w.n.
~ . the agreement prescroiwJ mi'i1rum nurrber d wodteis kl be hied and mai1taned and ottier "lle(e-WCl1(
~ aecxrisileredvafld axJ ielJa. notwitlstrx!ng llep!l>lisioo rl. lhis section.
CHAMcR.flVE
551
IABOR REIATIONS
On No. 2 above, the act of the employer in paying the money or
delivering the things of value demanded by the union, is against its will and is,
therefore, as the law states, 'l'n lhf nttllm ofoaKtion" by the union. ''Exaction''. as a
legal term, means an excessive or harsh demand of a reward or fee for an official
service performed in the normal course of duty. It is taking more fee or pay for the
services than what the law allows, under color of one's official authority. 1 While it
is a form of extortion,2 it should, however, be differentiated from 'exlortion"in that,
in 'extortion," the union extorts more than its du~ when something is due; in
'exaction," the union.exacts what is not due when there is nothing due to it.3
On No. 3 above, although the employer agrees to pay money or deliver
things of value, the employees to whom such payment and delivery are made will
not actually do or perform the contemplated services. Being an exaction, no
services would be rendered in exchange for the money paid or things of value
delivered
3. DEMAND FOR PAYMENT OF STANDBY SERVICES.
A union commits ULP under this provision by causing or attempting to
cause an employer to pay or agree to pay for standby services. Payments for
''ilandint;by," or for the substantial equivalent of "1tanding-by," are not payments for
'~mien pffjormfd"within the meaning of the law. When an employer receives a bona-
fide offer. of competent performance of 'relevant services, it remains for the
•employer, through frc;c; and fair negotiation, to determine whether such offer
should be accepted and what compensation should be paid for the work done.4
It is an exaction which constitutes ULP within the meaning of this law for
a union to demand of the employer for a contract calling for payment of
compensation for the presence of one of its members at a jobsite when no
unionist's work is being done therein, and when the employer indicated that it had
no need for such labor, the union staged a strike to make the employer respond to
such demand. The demand herein is considered not a bona-fide offer of competent
performance _o f relevant services.5
A union's demand that a theater corporation employ maintenance men at
its theater is also an arguable violation of the· mti-featherbedding provision of the.
1
Weam;i ol "exdJI" perUS,ega.can bn1 a ~:/~cxm'&'exmv. Last~; Jooe ll, 2016. NcCe
tlcll 1IJ1e oct ol ex.drg rrmey (J Ile SI.Ill exa::led is also r.aled exmi." See also ~ .c.an at
htlp:/~.ag/exmv. Last accessed:Jt.rre 30, 2016.
See Y ~.com at h~:/MwN.)'0(.llfdmry.am'exadi:n last V<Si!ed:J111e 30, 2016.
See USl..eg,tcan a ~:/~ame/exmv. Last ~ : Jt.rre 30, 2016. The Freelliclicmy.cxxn a
~:/,legakfdXmy.~.am'exml. ~l.istied l!Se t,,,o lelTrs, his: "EXACTKJN, tms. AMU VITroJ
done ll'f ai o'llcer, a by one M10, IJlder and his m, takes ma-e fee a pay ra tis services llill v.11a1 Ile law '11:!Ns.
Bet,,,eeri em1i::rl axJ exadion '1era is !tis difelence; that il the bmer case Ille Ol'fl:er en:wts mere lhan tis due, ~
saneCilg is die kl hin; ii the latl!!r, he exact5 ll!lciis not his due, v.hen there i s ~ due to hi'n. \Vishcrd;Co. Litt. 368."
Last accessed: Jllle 30, 2016.
• NLRBv. Garrble Elleprises, he., 345 US 117 97L E1' 864, 73 SCt560.
s i1temafxra ~dTeareteis, et., 212 NLRB968, 1974 CCH NlRB26867,87 BNA LRRM 1101.

BAR REvlEWER ON IABOR IAW
law where maintenance men employed at other theaters under union compulsion
did little or no actual wotk but were merely present on the premises during working
hows.1
4. DEMAND FOR PAYMENT OF MADE WORK.
Where work is actually done by an employee with the employer's consent,
the union's demand that the employee be compensated fot time spent in doing the
work does not violate the anti-featherbedding ~w.2 The law leaves to collective
bargaining the determination of what wo.tk, if any, including bonafuk ''made
work," shall be included as compensable services and' what rate of compensation
shall be paid for it.3
A musicians' union has been held not to have violated the anti-
featherbedding provision by refusing to permit a union band to perfonn at the
opening game of the baseball season, refusing to permit a union organist to play at
the home games, and picketing the baseball Madium, in order to force the owner of
the baseball team to hire a union band to play at all weekend home games; or by
refusing to give its consent to appearances of travelling bands in a theater unless
the theater manager also employs a local orchestra in connection with certain
programs where the local orchestra is to perform actual and not token services,
even though the theater manager does not need or want to employ the local
orchestra.4 Similarly, a printers' union does not violate the anti-featherbedding
provision by securing payment of wages to printers from newspapers for setting
"bog1'J" - duplicate forms for local advertisements although the newspaper already
has cardboard matrices to be used as molds for metal casting &om which to print
the same advertisements - even though the "bogur" is ordinarily not used but is
melted down immcdiately.5
5. DEMAND FOR PAYMENT OF WORK ALREADY COMPENSATED.
1be anti-featherbedding provision has been held not to bar a union from
demanding payment for work for which the employer has already paid another
person. Hence, a union has been held not guilty of ULP ~ demanding payment to
it of an amount equal to the wages paid by the employer to a non-union employee
for wotk to which the union's members were entitled. If the work is actually done
by employees, there can be no conflict with the anti-featherbedding provision,
1 ~Theam. n:. v. Them:al~e ~ t m . 69Cal2d713, 73Ca1Rpt213,447P2d325.
1 N1RB V. ~ Eslte'prises. oc., 345 US 117, 971 Ed 864, 73 S Ct560; Anm:al ~ Nllshefs Assocla&:n V.
N.RB,345US 100, 97LEd852, 73 SCl552,31 AI..R2d497.
1 Ameibrl ~l'\bfishefSAssocii!lxln v. NLRB,345 US 100, 97L Ed 852, 73 SCt552,31 ALR2d497.
4 MJSicin Unm v. Superor COlXt ix Alcrneda County, 69 Cal 2d 695, 73 Cal Rptr 201, 447 P2d 313; NlRB v. Gcrrble
~ . ~.345US 117,97LEd864, 73 SCt560.
1 AmeQ1 N ~ l'\bfiSherS Associatiln V. NLRB, 345 us 100,97 LEd 852. 73 SCt552. 31 AI..R2d 497.
CHAl'TIR FIVI 553
LABOR RELATIONS
regardless of whether or not the persons receiving payment are the ones who
performed the work. I
V.
DEMAND OR ACCEPTANCE OF
NEGOTIATION FEES OR ATTORNEY'S FEES
t CONCEPT.
Under Paragraph (e) of Article 260 [249], it is ULP for a labor
organization, its officers, agents or representatives:
"(e) To ask for or accept negotiation or attorney's fees from
employers as part of tpc settlement of any issue in collective bargaining
or any other dispute(.)"
2. COUNTERPART PROVISION.
This is the counterpart provision of _Article 259(h) [248(h)] regarding the
payment, on the part of the employer, of negotiation fees or attorney's fees to the
union or its officers or agents as part of the settlement of any issue in collective
bargaining or any other dispute.
3. RATIONALE BEHIND THE PROHIBITION.
The reason for this policy of the law is to prevent undue infh1ence ·by the
employer on the indepen!ience of the union in its decision-making over any issues
it may have with the former. Moreover, it is possible that the matter of fixing the
amount of negotiation fees or attorney's fees alone would present a problem much
complicated than the more substantive issues involving the terms and conditions of
employment and the rights, benefits or welfare of the workers.
4. REQUISITES.
Following are the requisites to hold a union liable for ULP based on this
particular ground:
(1) The union or any of its officers, agents or rcp_resentatives commit
either of the following acts:
(a) to ask for negotiation fees or attorney's fees; or
(b) to accept negotiation fees or attorney's fees;
(2) The negotiation fees or attorney's fees are demanded from, or given
by, the employer as part of the settlement of any issues related to:
(a) collective bargaining; or
(b) any other dispute.
On No. 1 above, there are 2 situations contemplated therein, namely:
· •
1
Rmm V. NlRB (CA2] 195 F2d 900.
554 BAR REVIEWER. ON IABOR I.AW
(a) When the union, its officers, agents or representatives are held guilty
of ULP from the very moment they "ask" for negotiation fees or
attorney's fees from the employer. Under this situation, there is no
need to prove that the employer has succumbed and given in to the
union's demand.
(b) When the union, its officers, agents or representatives are held guilty
of ULP even if they have not asked or demanded from the employer
the payment to them of negotiation fees or attorney's fees for as long
as there is evidence that they have "accepted" negotiation fees or
attorney's fees from the employer. ' private sectors that their right to form unions shall not be abridged.l Towards this
On No. 2 above, in order to be held _guilty of ULP, there is a need to
prove that the union has "asked for'' or "accepted" ~e _payment. to it. of the
negotiation fees or attorney's fees by the employer, as ponopal cons1deratton for
the settlement of any issues affecting labor-management relations, or even if not a
principal consideration, as part of the settlement of any such issues, chief of which
are issues affecting collective bargaining.
VI.
VIOLATION OF THE CBA
lCONCEPT.
Paragraph (Q of Article 260 [249] considers as ULP for a labor ·
organization, its officers, agents or representatives to violate a CBA.
2. COUNTERPART PROVISION.
This is the counterpart provision of Article 259(1) [248(1)] regarding the
employer's act of violating a CBA. But it must be noted that under Article 274
(261} of the Labor Code, simple violation of the CB.A is generally considered no
longer a ULP but merely a grievable issue. It becomes ULP only if the violation is
gross in character which means that there is flagrant and/or malicious refusal to
comply with the economic (as distinguished from non-economic) stipulations in the
CBA. 1bis principle applies not only to the employer but with equal force to the
labor organization as well.
F.
PEACEFUL CONCERTED ACTMTIES
1. PROTECTED CONCERTED ACTIVITIES.
One of the most fundamental elements of a strike ·or picketing is its being
a "concerted" activity of the employees. If not "concerted", an activity cannot
be characterized as a strike or picket. First and foremost among the most
CHAl'TER FIVE
LABOR RELATIONS 555
significant guarantees in the Constitution is the assurance that is given by the State
to workers that "(t]he State [shall] affirm labor as a primary social economic force
Jand] protect the rights of workers and promote their welfare." 1The twin rights to
strike and to picket certainly fall under the ambit of protection of this provision.
The second applies solely to picketing which, under the constitutional
guarantees, is considered part of the twin freedoms of speech and of expression
provided in the Bill of Rights.2
i The third is the State's guarantee to employees in both the public and
end, the State guarantees the rights of all workers to self-organization, then to
engage in collective bargaining and negotiations and s:iould there be conflict, to
conduct peaceful concerted activities, including the right to strike in accordance
with law.• Self-organization indeed is the key to a meacingful exercise of the right
to concerted activities, without which, .they will never be effective nor feasible.
2. EXISTENCE OF INDUSTRIAL OR LABQR DJSPUTE.
The common justification 'for the coµduct of ::oncerted activities, on the
part of the workers, and lockout, on the part of the employer, is the existence of an
industrial or labor dispute. As defined in law,S the term indHJtrial or labor dispute
includes any controversy conceming terms, tenure or co::1.ditions of employment,.or
concerning the association or representation of pers-:ms in .nego.tiating; fixing,
maintaining, changing, or seeking to arrange terms or conditions of employment,
regardless of whether the disputantntand in· the proximate relation of employer
and employee.6
1.
STRIKES
1. ORDER OF TOPICAL PRESENTATION.
The major topics discussed in this section on STRIKES are as follows:
I. NATURE AND CONCEPT OF STRIKE
II. VARIOUS FORMS AND CLASSIFICATION OF STRIKES
Sectm 18,Ar1icle II [DaiYabldP!iq,lesclld Slate P1i:ies1, 1987 Qx\stir,
Sedm 4, Ar1icle Ill [Bi of RijllsJ d Ile 1987 Coosti:J1 fXMles Iha! ')Ip lcrti 3hall be passed ~rg lhe reedan d
speech. d ~ . ct ol lhe press, ct Ile ri;Jht d he people ~ lo aMrb1e clld petilioo Ile gMmment let
reaess d gre.m:es."
1
Sedm8,Ar1icleDl[Bilof~tsL 1987~
' Sedm 3{lalla), Alta? XIII [Sooa ~ clld llmal foJhls11987 CctlstiUm.
5
hleiJapa1Mce,i11acbeexisti"g~dispAeSt.tjeddanoo::edsticectlocl:Ol.(ctacasedactJa1Slli(ectkx:i«xrtis
referred lo as a 'an:iiation case.' (Sectm 1[3J, ~ Ill, NCMB Mrmal d Procedures let Conciiation illd ~
Meootm Cases). .
1
Article 21~ (212(1)!, lm Code, as ill'Slded tr, Secbl 4, RA I-«>. 6715; I-«>. 3, NCMB Pri1ler oo Sbi(e, Mefug clld
locW. 2nd Eaioo, Dec. 1995; ToycCa M:t>r Phis. Cap. Wcrteis Associatm fTMPCWAJ v. M.RC, GR tb. 158786
&158789, Oct 19, 2007.
556 BAR REVIEWER ON IABOR !AW
Ill. PROCEDURAL BUT MANDATORY REQUISITES FOR AVALID STRIKE
IV. UNION-BUSTING
V. STRIKES IN HOSPITALS, CLINICS AND MEDICAL INSTITUTIONS
VI. STRIKE IN THE GOVERNMENT SERVICE
VII. VARIOUS PROHIBITED ACTS PER LAW, RULES AND
JURISPRUDENCE
VIII. LIABILITY RESULTING FROM THE CONDUCT OF STRIKE
A. LIABILITY FOR ILLEGAL STRIKE
B. LIABILITY FOR DEFIANCE OF ASSUMPTION/CERTIFICATION
ORDER OR RETURN-TO-WORK ORDER
I.
NATURE AND CONCEPT OF STRIKE
1. NATURE AND CONCEPT OF STRIKE.
Strike is the most preeminent of the economic weapons of workers which
they unsheathe to force management to agree to an equitable sharing of the joint
product of labor and capital. Undeniably, strikes exert some disquieting effects not
only on the relationship between labor and management but also on the general
peace and progress of society. Our laws thus regulate their exercise within reason
by balancing the interests of labor and management together with the overarching
public interest.1
2. DEFINITION.
"Slriki' means· any temporary stoppage of work by the concerted action
of the employees as a result of an industrial or labor dispute.2
3. ELEMENTS.
Based on this definition, the following are the elements of a strike:
(1) Temporny stoppage of work by th~ employees;
(i) Through their concerted action; and
(2) Occasioned by an industrial or labor dispute.
4. LAW MAY PROHIBIT STRIKE BUT NOT RIGHT TO SELF-
ORGANIZATION.
Pursuant to the mandate of the 1987 Constitution,3 the right to self-
organization is guaranteed to all kinds of workers, both in the private and public
sectors. However, a law may be passed prohibiting selected sectors of labor from
1 ~VMera Uniln v. NLRC. G.R Nos. 95494-97, Sept 07, 1995.
1 Mide219(o) (212(0)1, LaborCode.asamendedby Sectioo 4, RA No.6715.
> Pri:ua1fSedia13,MdeXlllreed.
CHAPTER FIVE
LABOR RELATIONS 557
resorting to strikes. This is so because the right to strike is specifically made subject
to limitation by law.1 For instance, while private sector employees are allowed to
stage a strike under Article 278 (263] of the Labor Code, government sector
employees, although allowed to self-organize, are prohibited from declaring or
conducting a strike.2 The rationale behind this absolute prohibition is that the terms
and conditions of employment in the government service, including any political
subdivision or instrumentality thereof and government-owned and/or controlled
corporations with original charters, are governed by Civil Service Law, rules and
regulations. Consequently, they cannot use strike to secure changes in such terms
and conditions.3
II.
VARIOUS FORMS AND CLASSIFICATION OF STRIKES
i. STRIKE, A COMPREHENSIVE TERM.
The term "stri_kl' is a very broad and comprehensive term. It encompasses
not only concerted worlf stoppages but also slowdowns, mass leaves, overtime
boycott, sitdowns, attempts to damage, destroy or sabotage plant equipment and
facilities, and similar activities.4 It is axiomatic, therefore, that the fact that the
conventional term "strike" was not used by the striking employees to describe their
common course of action is inconsequential since the substance of the situation,
and not its appearance, is deemed conttolling.s
2. CLASSIFICATION OF STRIKES.
A strike may be classified:
1. As to nature:
a. Ltgal strike - one called for a valid purpose and conducted through
means allowed by law.6
b. Ilkgal strike - one staged for a purpose not recogrii?ed by law or, if for
a valid purpose, it is conducted through means not sanctioned by
law.7
to demand higher wages, overtime pay,
c. Er:onomic strike --·one declared
holidl\y pay, vacation pay, etc.8 It is declared for the purpose of
forcing wage or other concessions from the employer which he is not
1 See 2'd ~ ofsaij Sedm 3.
1 Jacnov. CA, G.R No.124540, Ncw.14, 1997, 281 OCRA657.
> Sedl:ri 4, Roo ID, ~ ~ e n ! Regwtms cl Execoove Order No. 180 lo Gole!n Ile Exercised Ile Rij,t of
GM!mient~lo~;Mide291 (276].LmCooe.
4
Secoon 2, P. o. No.823,as ameooed;SordmltCoqxxam v. Gami!I, GR Nos.159460 &159461. Nov.15, 2010.
Gesle v. CA, G.R Nos. 123562-65, NoY. 25, 2004.
No. 2, NCMB Pliner oo ~. Pi:lcetilg and Lod(out, 2nd Editioo, Decsnbe-1995.
kl.
I kl.

BAR Rl:VIEWERON LABOR LAW
558
required bj• law to grant. 1 It is a strike which arose out of a bargaining
deadlock in the CBA negotiations.2
d Unfair labor pradift (ULP) or po.itiml 1trike - one called to protest
against the employer's ULPs enumerated in Article 259 [248} of the
Labor Code, including gross violation of the CBA under Article 274
(261] and union-busting under Article 278(c) [263(c)) of the Labor
Code.3
c. Shwdow11 strik.4 - one staged where the workers do not quit their work
but merely slacked or reduced their normal,work output4
f. Wikkat 1trikt . one declared and staged without the majority approval
of the certified bargaining agent.s It is a spontaneous or
unannounced illegal concerted action by a section or group of
employees without the sanction or authorization of the union or in
violation of the union's constitution and by-laws6 or without
following the proper procedure for striking such as majority approval
of the union members through appropriate union balloting7 It is also
called an •~111/aw 1trikt" or "quickie 1trike. '8
g. Sit-dolVII Jln"k.t - one where the workers stop working but do not leave
their place of work.9
2. As to coverage:
a. General 1tn1u - one which covers and extends over a whole province
or country. In this kind of strike, the employees of various companies
and industries cease to work in sympathy with striking workers of
another company. It is also resorted to for the purpose of putting
pressure on the government to enact certain labor-related measures
such as mandated wage increases or to cease from implementing a
law which workers consider inimical to their interest. It is also
mounted for purposes of paralyzing or crippling the entire economic
dispensation.
b. PartiC11lar 1trik.t - one which covers a particular establishment or
employer or one industry involving one union or federation.
3. As to purpose:
a. Economk J/rike. 10
1 I d . ; ~ 1.mAmiaioo d Ille Phq,pi'les v.MYsnm &Co.• GR Nos. L-17038 aid L-17057, Jltf 31, 1964.
NIJMRA.N.AR.-U: nisa ttEi N11w ~ v.The tbt CA. G.R. Nos. 163942 in! 166295, Nov. 11,2008.
No.2, NCt.llPrinEJoo Srte, P'de&-,;J in! l..cdtrut, 2nd 81b. Oecmber 1995.
ld.;F~v.Mme)'Foods~.G.RNos.178409&178434,J\JleS,2011.
Id.
' No.5,PatyhstudmsNo.46.
1 aisiless ~.can athrp1MW11.busilessdi:tia ay~-strie.hbrl. l.asl aa:essed: Feb. 14, 2017.
aisiless lldimy.lDll, Sl.C)la.
G&STllllSp(XICap.v. nm!e,GR.No.160303,Sept. 13, 2007.
109Jpra.
CHAl'TIR FM 559
IABOR. REIATIONS
b. Unfair laborpraaitt 1trike or politiml Jtrikt.1
4. As to the nature ofthe strikers action:
a. Partial strike - one which consists of unannounced work stoppages,
such as slowdowns, walkouts or unauthorized extension of rest
periods.
b. Sil-MIVII Ilrike.2
c. Shwdown Jtrih.3
5. As to the extent ofthe interest ofstrikers:
a. Primary 1trike - refers to a strike conducted by the workers agmst their
employer, involving a labor dispute directly affecting them.
b. Stronda,y strike - refers to a strike staged by the workers of an employer
involving an issue which does not directly concern or affect their
relationship but rather, by some circumstances, affects the workers,
such as when the employer persists to deal with a third person against
whom the workers have an existing grievance. Workers stage this kind
of strike to secure the economic assistance of their employer to force
the third person to yield to the union on the issues involving it and said
third person.
c. Sympatfry 1trike - refers to a strike where the strikers have no demands or
grievances or labor dispute of their own against their employer but
nonetheless stage the strike for the purpose of aiding, directly or
indirectly, other strikers in other establishments or companies, without
necessarily having any direct relation to the advancement of the strikers'
interest. This is patently an illegal strike.4 An example of a .rympathy
1/rikt is the "wt/gang baya,?' where workers refuse to render work to join
a gt11tral sin.kt which does not involve a labor or industrial dispute
between the strikers and the employer struck against but it is staged in
pursuit of certain ends, such as reduction in the electric power rates,
increase in the legislated wages, etc.
3. LATEST CASE LAW ON FORMS OF STRIKE.
a. Sporting ofclosely cropped hair or cleanly shaven heads.
The sporting by the workers of closely cropped hair or cleanly shaven
heads after their union filed a notice of strike as a result of a CBA deadlock was
considered a form of illegal strike in DUJil Holt/ Nikko.5 The union's concerted
violation of the Hotel's Grooming Standards which resulted in the temporary
1~
2 Suixa
I~
Dee C. Clam &Soos. h:. V. Kaisaial ng Olla ~ s a ~sa ~ - GR Na. L-8149, 99 Phi 1050.
Naim I.ml dwaters i1 Ile 1-W, Resfamax!Arled ~ [WMiRAW-AP\.U] IMil fW Nllw Oiapte,-v.
TheHal. CA. GR. Nos.163942aid 166295,N17-1.11,2008.
560 BAR REvl EWER ON LABOR I.AW
cessation and disruption of the Hotel's operations is an unprotected act and should
be considered as an illegal strike.
b. Slowdown strike.
IIVork 1/owM11111 is a •~trike 011 the il/Jtallment plan," a willful reduction in the
rate of work. by t11e concerted action of the workers for the purpose of restricting
the output of the employer, in relation to a labor dispute. It is an activity by which
workers, without a complete stoppage (?f work, retard production or their
performance of duties and functions to compel management to grant cheir
demands. Such a slowdown is generally condemned'as inherently illicit and
unjustifiable because while the employees "continue to work and remain at their
positions and accept the wages paid to them," they, at the same time, "select what
part of their allotted tasks they care to perform of their own volition or refuse
openly or secretly, to the employer's damage, to do other work." In other words,
they "week on their own terms."1 Simply described, unlike other forms of strike,
the employees involved in a slowdown strike do not walk out of their jobs to hurt
the company. They need only to stop work or reduce the rate of their work. while
generally remaining in their assigned posts.2
c. Mass leave.
The term "maJJ kave"has been left undefined by the Labor Code. Plainly,
ilie legislarure intended that the term's ordinary sense be used. "MaJJ" is defined as
"participated in, attended by, or affecting a large number of individuals; having a
large-scale character," while the term "leave" is defined as "an authorized absence or
vacation from duty or employment usually with pay."3 Thus, the phrase "mau leave"
may refer to a simultaneous availment of authorized leave benefits by a large
number of employees in a company. Simply put, a mass leave involves a large
nwnber of people or workers.
'lbe above definition of "mau kave" was cited in Naranjo,• as basis in
holding that the leaves of absence of .petitioners do not constitute "mass leave"
equivalent to a strike. Here, petitioners, numbering a total of five (5), together with
two (2) other employees, were all absent for various personal reasons on
November 7, 2006 which happened to be the birthday of respondent Carina Mota!,
respondent Biomedica's President. De Guzman was allegedly absent due to loose
bowel movement, Pimentel for an ophthalmology check-up, Bardaje due to
migraine, Cruz for not feeling well, and Naranjo because he had to attend a
meeting at his child's school. Notably, these are the same employees who filed a
letter-complaint to the DOLE against Biomedica for lack. of salary increases, failure
to remit SSS and Pag-IBIG contributions, and violation of the minimum wage law,
' l'epll11..aborames ~lkm-fFWv. tmpill ~ K. G.R No. 142824, Dec. 19, aXl1.
1
Fal~v. M:cilere,FooosCorp<Jalkn,G.R Nos.17840!! &178434,.Mll!S,2011.
1
WE051el's Toro Ne.v ~ Di:txmy [19811.
' ~ v. Borefca Heih Cae. klc., G.R No 193789, Sept 19, 2012.
C IIArTER FIVE 561
LABOR RELATIONS
among other grievances. Later that day, petitioners reported for work after
receiving text messages for them to proceed to Biomedica. They were, however,
refused entry and told to start looking for another workplace. The next day,
November 8, 2006, petitioners allegedly came in for work but were not allowed to
enter the premises. Motel purportedly informed petitioners, using foul language, to
just find other employment. They were all subsequently dismissed for conducting a
strike through mass leaves.
The Supreme Court, however, held that there was no mass leave as to
amount to a strike because only 5 employees are absent Moreover, the absence of
petitioners cannot be considered a strike as this term is understood in law.I In no
way can the absence of 5 employees be considered as "concerted" .which is defined
as "mutually contrived or planned" or "performed in unison." The S petitioners
went on leave for various reasons and were in different ?laces on November 7,
2006 to attend to their personal needs or affairs. They did not go to the company
premises to petition Biomedica for their grievance. To demonstrate their good faith
in availing their leaves, petitioners reported for work. and were at the company
premises in the afternoon after they re~eived text messages asking them to do so.
Tius shows that there was NO intent to go on strike. Moreover, Biomedica did not
prove that the individual absences can be considered as 'temporary stoppage of
work.' Biomedica's allega~on that the mass leave 'paralyzed the company operation
on that day' has remained unproved. It is erroneous therefore to liken the alleged.
mass leave to an illegal strike much less to terminate petitioners' services for it/'
d. Overtime boycott.
Ovtrtime boyroll consists in the act of the workers in refusing to render
overtime work in violation of the CBA; it is resorted to ts a means to coerce the
employer to yield to their demands. The case of Interphil IAbomtories2 has declared
this as a form of illegal strike.
e. Boycott ofproducts or services.
Another form of strike is boycott of products or services of the employer.
1bis involves the concerted refusal to patronize an employer's goods or services
and to persuade others to a like refusaJ.3 An example is Sukothai,4 w~ere ilie
individual respondents were shown to have intimidated and harassed a considerable
number of customers to tum them away and discourage them from patronizing the
restaurant of petitioner; waving their arms and shouting at the passersby, "Huwag
~ongpumll!ok 1a Sukhothai!" and "Nilaoan na =in ng la.:·on angpagkain dy~n!" and
numerous other statements made to discredit the reputation of the establishment
thereby effectively preventing the entry of customers.
, M 219(0) [212{o)I, ct tie Laba Code defiles a strile as "Nrf len'!)(RY ~ ct vm by the COOOOl1ed adioo of
~ a s a re5litd~~crlm'clsplte."
n1eqtii t.ma1aies ~Uim!Wv.-naphl l..abcrabies, "-•G.R. t-b. 142824, Dec. 19, 2001.
1a,yat adckxl ng ManJg~ pBM]v. M..RC, G.R. No.91980, June 27, 1991, 198 SCRA 586.
Stl«llha Cuisi'le cm Restarant v. CA, G.R. No. 150437, Mt 17, 200>.
 562 BAR RfVIEWER ON IABOR I.AW
Ill.
PROCEDURAL BUT MANDATORY REQUISITES
FOR A VALID STRIKE
1. REQUISITES FORA VALID STRIKE.
Because of its potential adverse consequences to the striking workers, the
emplofcr an? the comm~~• a strike enjoys recognition and respect only when it
~or_nplies with the ~onditions laid down by Law1 and pertinent prevailing
Juosprudcnce. Following are the procedural but mandatory requisites for a valid
and legal strike:
. First requisite - It must be based on any or both of the following two (2)
exclusive grounds:
(1) Unfair labor practice (ULP) of die employer;2
(2) Collective bargaining deadlock (CBD).
· Second requisite - A notice of strike must be filed witli the NCMB-
DOLE;3
Third requisite - A notice must be served to the NCMB-DOLE at least
~ty:four ~24) hours prior 10_~e taking of the strike vote by secret balloting,
info~g said office of the decrsron to conduct a strike vote, and the date, place,
and tune thereof and asking it to supervise the t.iking of the strike vote; ·
Fourth r~quisite .- A strike vote must be taken where a majority of the
members of ~e uruon obtatned by secret ballot in a meeting called for the purpose
must approve tt;
Fifth requisite - A strike vote report should be submitted to the NCMB-
DOLE at least seven (l) days before the intended date of the strike;
. S.tXtb.requisite - Except in cases of union-busting, observance of the
cooling-off penod of 15 days, in case of ULP of the employer, or 30 days, in case
:dCBD, reckoned from the filing of the notice of strike (per 2oc1 requisite above);
~c~cnth requisite - The 7-day waiting period or strike ban reckoned after
the subausston of the strike vote report to the NCMB-DOLE (per 5th requisite
above) should be fully observed in all cases.
. All the fo~egoing requisites, although procedural in nature, are mandatory
and fail~e of a uruon or employer to comply therewith would render a strike or
lockout illegaJ.1
; Mi::le 278 126JJ,lm Code;LilongCOJOO V.~ ndusmes. Inc, GR. No. 203332,JtJle 18, al14.•
See Mcie 259 [2481 for ULPs o1 empbye,s,.¼:le 274 [261) v.lli:ll makes,.,,..,. ~ cl a C8A alJLP ,... ...,. ,...,.
Z78(c)~c))kr~. · ,,_
~ f.oocilalm and 1/ediam Bo.rd (NCMlJ a ttie OepatTierita 1.a1xr a n d ~ (D(XE).
1
OiAl'TER FIVE
lABOR RELATIONS
2. ON THE JST REQUISITE: EXISTENCE OF VALID AND FACTUAL
GROUND/S.
The law recognizes only two (2) grounds in support of a valid strike, viZ::
(1) Unfair labor practice (ULP or Political Strikl); and/ or
(2) Collective bargaining deadlock (Economic Strikl).2
No other gtOllfld_s may be invoked in a notice of strike. A strike not
based on any of the two (2) grounds discussed above is illegal.3 Therefore, the
following are not valid grounds:
(a) Violations of CBAs;
(b) Inter-union and internal union disputes;
(c) Issues brought to voluntary or compulsory arbitration;
(d) Legislated wage orders; and
(e) Labor standard cases.4
3. ON J!ID REQUISITE: FILING OF A NOTICE OF STRIKE WITH
NCMB-DOLE.
A "notice ofJtrikl' refers to the notification filed by a duly registered labor
union with the NCMB-DOLE, infoaning the latter of its intention to go on strike
because of the alleged commission by the employer of ULP or because of a
deadlock in the collective bargaining negotiations.5
The notice should state, among others, the names and addresses of the
employer and the union involved, the nature of the industry to which the employer
belongs, the number of union members and workers in the bargaining unit, and
such other relevant data as may facilitate the settlement of the dispuce, such as a
brief statement or enumeration of all pending labor disputes involving the same
parties.
4. ONJRD REQUISITE: SERVICE OF A24-HOUR PRIOR NOTICE TO
THE NCMB-DOLE TO INFORM IT OF THE CONDUCT OF A
STRIKE VOTE BY SECRET BALLOTING,
This third requisite requires that a 24-hour notice be served to the
NCMB-DOLE prior to the taking of the strike vote by secret balloting, informing
it of the union's decision to conduct a strike vote, as well as the date, place, and
time thereof. This requisite was enunciated in Capitol Medjcal Center, Inc. 11. NLRC 6
1 Ptirco nllsties, klc. v. Phm::o l'dJstries lalOI'Assroatoo iPllA~ GR. No. 170830, Aug. 11, 2010.
2 See also Sedol 5, ~ XXll, Bed V, Rules ID ~ Die Lallo! Code, as .rneoded by [)ep.rvrEnl Oder No.40-03,
Series~ 2003, feb.17, 2003.
3 SM Mguel ~ v. NI.RC,G.R No.99266, Mr'd12, 1m.
Aroc1e 278(b) (263(b)l, labcrCode; See also Sedan 5, ~ XXII, B<Xi V, !Us to ~ t lhe Laba Code.
""''"""'"""'
Sm11 (181, ~ ID, NCM8 ~ dl'nx:edlres lorCondiation and Pl?lenwe Meoaoon Cases.
6 GR.l'«l.147080.~26.2005.
 BAR REVIEWER ON I.AaOR I.AW
The purposes of this notice requirement arc as follows:
(a) To inform the NCMB of the intent of the union to conduct a strike
vote;
(b) To give the NCMB amp!~ time to decide on whet!ier 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, ind11ding the tnpH[J", 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.
5. ON tfTH REQUISITE: CONDUCT OF A STRIKE VOTE.
It is a requirement that no labor organization shall dec!are a strike without
the necessary strike vote first having been obtained and reported to the NCMB-
DOLE. A decision to declare a strike must be approved by a majority of the total
union membership in the bargaining unit concerned, obtained by secret ballot in
meetings or referenda called for that purpose. This process is called ''strike vote
balloting. ' 4
The purpose of a strike vote is to ensure that the decision to strike
broadly rests with the majority of the union members in general and not with a
mere minority thereof. At the same time, it is meant to discourage wildcat strikes,
union bossism and e~h corruption.2
6. ON 5I'H REQUISITE: SUBMISSION OF THE STRIKE VOTE
REPORT TO THE NCMB-DOLE.
In every case of strike vqte, the union is required to furnish a report on
the results of the voting to the NCMB-DOLE. Its submission is meant to ensure
that a strike vote was indeed taken and in the event that the report is false, to afford
the members an opportunity to take the appropriate remedy before it is too late.3 It
is a fact, for instance, that many disastrous strikes have been staged based merdy
on the insistence of minority groups within the union. The submission of the
report gives assurance that a strike vote has been taken and that, if the report
concerning it is false, the majority of the members can take appropriate remedy
before it is too late.4
A strike vote should be reported at least seven (T) days before the actual
staging of the intended strike/lockout, subject to the observance of the cooling-off
periods provided under the law.5 The failure of the union to prove that it obtained
1
See Sedxxl 1f,Y,11, ~ ~ Book V, ~ ID l"l)lemen( tie Ullxr C'.ooe, as emended by ~ O!d!J No. 40-03,
Seoosd2003,[Foo.17,20031,
2
No. 12, NCW Priner on Stile, ~ en! loctru, ~ 8aioo, Decenter 1995.
! t-b.13, NCWPrineronStte,P'd:eilgcn! l.ockai.2m Edbt.Oecerrber1995.
' Nab1a Fede-abld ~Woo:els (t.f~ v. CM!jera,GR. No. L-59743, Mr( 31, 1982.
1 Mide 278(1) ~I. l.m Cooe: Sedbl 5, IUl XXII, Book V, ~ kl ~ eie Im Code, as emended by
Oepmm!Oda'No.40-03. Seriesd2003, !l'eb.17, 2003i
CHArTER FIVE
lABOR Rl:lATIONS
the required strike vote among its members and that the results thereof were
submitted to the NCMB would render the strike illegal 1
7. ON(jTH REQUISITE:OBSERVANCE OF THE COOLING-OFF
PERIOD.
The cooling-off periods before a strike may be conducted are as follows:
(1) In case of bargaining dladhd!, the cooling-off period is thirty (30) days;
(2) In case of 1111/air labor pro,ti«, the cooling-off period is fifteen (15)
days.2 ·
The exception to the rule on observance of the cooling-off period is in
cases of union-busting which is considered an unfair labor practice where the said
15-day cooling-off period may be disregarded completely.
In requiring the cooling-off period, the avowed intent of the law is to
provide an opportunity for mediation and conciliation by.the NCMB-DOLE. It is
designed to afford I.he pat:ties the opportunity to amicably resolve the dispute with
the assistance of the Conciliators-Mediators of the NCMB-DOLE.3
s. ON 'JTH REQUISI'J'E: OBSERVANCE OF THE 7-DAY WAITING
PERIOD OR STRIKE BAN,
After the taking of the strike vote, the union, in every case, should
furnish the NCMB-DOLE, the results of the voting at least seven (T) days before
the actual staging of the intended strike or lockout, subject to the cooling-off
periods provided therein.4
The cooling-off period and the 7-day waiting period or strike ban after the
submission of the strike vote report, are meant to be, and should be deemed, both
mandatocy.5 It would indeed be self-defeating for the law to imperati~dy req~e
I.he filing of a strike notice and strike vote report without at the same rune making
the prescribed waiting periods mandatory. 6
a. Purpose ofthe 7-day waitingperiod or strike ban.
The Supreme Court has elucidated on the purpose of the 7-day waiting
period or strike ban in the .!~ding case of NFSW v. Oveftra. 7 It declared herein that
, f'i'lerov. 1-4.RC, GR No. 149610,hlg. 20, 2004.
AJti:1e 278(c) r263(c}~ Ullxr Code; Sedbl 7, IUl XXI~ aldt V, ~lies kl nl)lemett Ile laxr Ccxle, as ~ by
Mi:1e 1. Oepir'men1 Order No. 40-03, Serles ct 2003 [Felmry 17, 20031 No. 6, NCMl Plm!r a, Site, Pae!i'1il 1f1CI
1..ocmA. 2m 8iion, Decmber 1995; Sed!al 5, IUl rl, NCMl t.'a1d d Proonres b' CadarXXl and PrewrM
M!!iaoorlCases;No.3,QilefrlesGM!ri'gl.mRsabls.
1 No.14, NCI£ f'r'mr on Sbi(e, P'dcelnJ ;nl l.ockool. ~ Ed'lixl, Decmber 1995: Nalma Federatia1 of 9.J}arWoo:els
(NF~ v.(Nejera, GR No. L-59743, May31, 1982.
No. 6.NCll8Pr'mron stte, P'dceti:g·n l.cdcd, 2m Elflal. Decmber1995.
, CC8P1 Posmx~ers Lmlv. folRC, GR No. 114521, NcH.'0, 1998.
SeealsoCCBPI Posmx~erslmlv.NlRC, G.R No.114521,NcH. 27, 1998:Coca-ColaMersl'his, Inc. v. tlRC,
GR No. 123491, Na.'. 27, 1998, 299 SCAA410; Gokl Cly inegral8l PatServn!, Inc. V. t-1.RC, sqJ!il.
Na!o1a1 FederalX:ll of SugarWcrters (t,F~ v. (Nejera, GR No. L-59743,llay 31, 1982.
 566 BAR RfVIEWER O N LABOR LAW
the sev~ (!) da)' waiting period is intended to give the NCMB-DOLE an
opportUIUty to veafy whether the projected strike really carries the imprimatur of the
majority of the union members. The need for an assurance that majority of the
union members support the strike caMoc be gainsaid. Strike is usually the lase
weapon of labor to compel capital to concede to its bargaining demands or 10
d_efend itself against unfair labor practices of management. It is a weapon that can
either breathe life to or destroy the union and its members in their struggle with
management for a more equitable due of their labors. The decision to wield the
weapon of strike must therefore rest on a rational basis, free from emotionalism,
unswa~e_d by ~e tempers and tantrums of a few hotheads, and finnly focused on
the legt~te Interest of the union which should not, however, be antithetical to
the public welfare. Thus, our laws require the decision to strike to be the consensus
of ~e majority for while th~ ~jority !s ~ot infallible, still, it is the best hedge
against has_te and error. In ad~tlo°' a maiooty vote assures the union that it will go
to war agamst management wtth the strength derived from unity and, hence, with
better chance to succeed.1 .
b. Waitingperiod/strike ban vs. cooling-offperiod.
. The 7-day waiting period or strike ban is a distinct and separate
tcq\llCemcnt from the ~5-day or 30-<lay cooling-off period prescribed by law. The
latter cannot be substituted for the Cooner. Th.is is clear from the provision of
Arti~e 278(Q ~263(Q] ~hich states that the 7-day requirement is "subject to the
cooling-off penod herCJD provided."2
The cooling-off period, on the one hand, is counted from the time of the
filing of the notice of strike up to the intended or actual staging theceo( In case of
ULP, the cooling:off_period is 15 days; and i.n case of collective bargaining
deadlock, such peood ts 30 days. The 7-day waiting period strike b~ on the other
hand, is reckoned from the time the strike vote report is submitted to the NCMB-
DOLE. Conse~uently, a ~trike is illegal for failure to comply with the prescribed
mandatory cooling-off peaod and the 7-day waiting period or strike ban after the
submission of the report on the strike/lockout vote.3
c. Effect on reckoning of7-day waiting period ifstrike vote is taken
and reported within cooling-offperiod.
.. It_must be ~tressed that the requirements of cooling-off period and 7-day
wruung peood or strike ban must both be complied with, although the labor union
may take a strike vote and report the same to the NCMB-DOLE within the
statutory cooling-off period. 1n this case, the 7-day waiting period or strike ban
' See also ~irm i'ldusres, nc. Y. Phm:o hJustoos labcJ Assooaoon IPllAI.GR No. 170630, Aug. 11.2010; lapcrldcrf
'Mneis lbon v. NlRC, GR Nos. 95494-97,Sept 07, 1995, 248 SCRA95·'
~2ndEdi!ixl,Decerrtler1995.
No. 15 NCWB Plinef co"'-' · C>W.<>tw, ....,.
' .,.,...,,r._._.,,.,.,
: ~ ~~ sa ~ liles,_nc. -NAA.u V. &/pro Liles, he., G.R No. 140992, Mith 25, 2004.
lk'Q1 ol Flipro 8Jl)k7jees V. Nesl'.e Philppiles, Inc., G.R No. 88710-13, Dec. 19, 1900.
CHA.rTER FIVE
IA80R RELATIONS
should be counted not from t.he date of submission of the report bur "from rhe
day following the expiration of the cooling-off period. '4 ,\ contrary view
where both periods ace not observed in their respective full duration would
certainly defeat and render nugatory the salutary purposes behind the distinct
requirements of cooling-off period and the waiting period or strike ban.
Jurisprudence plainly enW1ciates that "the language of the law leaves no
room foe doubt that the cooling-off period and the seven-day strike ban after
the strike-vote report were intended to be mandatory" and therefore should be
observed separately and full)'- Th.is rule was stressed i.n Gold City,Z and reiterated in
Sulpido Linu. 3
Moreover, the NCMB Prim" on Strike, Pitktling and Lockoutl is very clear
on this point, thus:
"In the event the result of the strike/ lockout vote ballot is
filed within the cooling-off period, tbe 7-<lay requirement shall be
counted from the day following the expiration of the cuoling-uff
period."5
In other words, the seven (7) days should be added to the cooling-off
period of fifteen (15) days, in case of ULP, or thirty (30) days, in case of collective
batgaining deadlock and it is only after the lapse of the total number of days after
adding the two (2) peiiods that the strike/lockout may be lawfully and validly
staged.
. For example: the notice of strike grounded on ULP was filed by the union
on March 1, 2017 and the strike vote was taken on March 5, 2017 and its result
was reported to the NCMB-DOLE, two (2) days thereafter or on March 7, 2017 -
all done within the 15-day cooling-off period. As to the issue of when the strike
may validly be mounted, the answer should be only on March 24, 2017 or any day
thereafter but not before this date. The reason is that since ULP is the ground
cited in the notice of strike, the cooling off period is fifteen (15) days that should
be reckoned from March 1, 2017 until March 16, 2017. To be added to this is the
seven [I) days of waiting period which will lapse on March 23, 2017. The union,
therefore, can validly strike not on the last day when the 7 days expired, that is,
March 23, 2017, but only a day thereafter or on March 24, 2017, or on any day
after this date.
The Supreme Court had the chance to scrutinize the validity of a strike
based on the reckoning of both the cooling-off and strike ban periods i.n tlie 20 I0
In accadMcellitlNo.6, M:M6Pmxroo~o. Pidwtilgin1L~.2nd Edition, Dea!mber 1995. i,fra.
Gd:! Cify ln1egrated Pal Servk:e, nc. Y. NI.RC. GR No. 103560,!jJ 6, 1995.
3 &mra-g Mirggaga,Ya sa ~al l.r.es, lnc.-NAFLU V. &J~ l.r.es, Inc., G.R No. 140992, Match 25, 2004.
• 2rd Eadm, Decen1ler 1995.
5 No.6 lhereol; ~ supplied.
568 BAR REVI EWER ON LABOR LAW
case of Phimro lnd,utnet. 1 In holding that the respondents fully satisfied the legal
procedural requisites, the Court noted that it was on March 9, 1995 that
respondent PILA filed with the NCMB, a Notice of Strike on the ground of
bargaining deadlock. Consequently, the 30-day cooling-off period would have
lapsed on April 8, 1995. Seven (7) days after March 9, 1995, or an March 16, 1995,
·PILA conducted a strike vote; a majority of the union members voted for a strike
as its response to the bargaining impasse. On March 17, 1995, or well within the
30-day cooling-off period, PILA filed the strike vote results with the NCMB.
Thiny-five (35) days later, or on April 21, 1995, PILA staged a strike. Based on the
above-quoted rule in the NO.fB Primer, the strike could only be validly staged
starting from April 16, 1995 and onwards, ,:e., after the lapse of seven (T) days from
April 8, 1995. Hence, since tl1e actual strike was launched way after April 16, 1995
or only after five (5) da)'S thereafter, or on April 21, 1995,2 there was clearly full
compliance with the mandatory cequisites.
d. Rundown ofcertain basic prindplcs.
• A strike mounted on the same day the notice of strike is filed3 or the
strike vote report is submitted to the NCMB-DOLE4 is illegal
• Deficiency of even one (I) day, held fatal. 5
• One-day strike without complying with the 7-day strike ban, held
illegal.'
IV.
UNION-BUSTING
1. ELEMENTS OF UNION-BUSTING.
To coostirute union-busting under Article 278(c) [263(c)], there must be:
(1) ;\ dismissal from employment of union officers duly elected
accordance with the union's constitution and by-laws: and
(2) The existence of the union is threatened by such dismissal.
Accordingly, the following dismissals do not constitute union-busting:
Phirconi!sbies,Ire. V. Plffl:o hlJstresl.m Assooali:xl (PlA). G.RNo.17rel>,hlg.11,2010.
l beas ncmg eiat nthe nm1m a fads il Ile decisi:n rendered il tis case, Ile dae a 'Apii 21, 1995" was rererroo b
as Ile dae v.llen 'PK.A S0JE(I a sttte.' HoweY!r, il Ile q,ilDl patdthe decisi:n ~ I was stmdtiat '1le ~
sbile was l.u1dled a1f on Apii 25, 1995."I appe.n flat tie amc:tdiE is Apii 21, 1995, ~ lhat il fie sarre
decision. Ile fadlJal anlea!denls refelled to acer1ail doo.mer(mirt.ed as 'Eldltil 14'v.ti:fl is lhe Cle.mce issued by Ile
l'ulcr9 l!ararg°l'f and ~ Seaetay, inl l was staled tiereil Ila Ile slJt(e cxro.dl!d was tan 'Apii 21 ll Mt 7,
1995, hJs: '6. Clea'ance issued by~ 8acrf,ia-, t.'aio 0. dela P.osa and ~Seamy Pasrual Gesrramo,.r.
Iha!the stte from Apri 21 Ill Jilt 7. 1995 was coodu:.1ed il an adeltj mamenwh no axt'(llarns lledl.r
1
~Telephone Cap. v. ~ Telephone~ Assocla!m [PlTEAi G.R No. 1fi0058, Jlll8 22, 2007.
C Namai i.mn aWorkers il the t-kl1€1, Re.slam and AJied i'1dum!s [MJ,'/HWN-AP\.-ll.f') ~ l1Jlel Nid(o ~(er V.
The Hamble CA. GR. Nos. 163942 ~ 166295, Nw. 11, 2008.
5
CC8P1 PosmxWat~ l.ro\ v. NlRC, G.R No. 114521, Ne,.,. 27, 1998.
1
SanaJmg Mn;gaga,ya sa Su'pi:o Liles, h:. • NAFLU V. &JIJa) l.nes. he, GR No. 140992, Mann 25, 2004.
CHAl'TER FIVE
LABOR REIATIONS
(a) Dismissal of union officers duly elected in accordance with the
constirution and by-laws but the same does not threaten the existence
of the union; and
(b) Dismissal of union officers not elected in accordance with the union's
constitution and by-laws;
(c) Dismissal of appointive union officers; and
(d) Dismissal of ordiruuy union members.
2. UNION-BUSTING, A FORM OF ULP.
The act of union-busting by an employer is an unfair labor practice which
may be invoked as a valid ground for a strike.1
3. DISMISSAL OF UNION OFFICERS, A PRE-REQUISITE.
If there is no dismissal to speak of, there can be no union-busting, as held
in Pilipino Tekpho,ie Carp. v. PILTEA,2 where the second notice of strike filed by the
union merely assailed the ''mau promolio11" of its officers and members during the
CBA negotiations. Surely, promotion is different from dismissal. A promotion
which is manifestly beneficial to an employee should not give rise to a gratuitous
speculation that it was made to deprive the union of the membership of the
benefited employee.3
But if there is dismissal, even if only one union officer 1s 1nvolved, it wi).l
nonetheless constitute union-busting. For instance, in Cokgio tk San ]11an tk LttratJ,4
the dismissal of the union president for insubordination was held as constitutive of
union-busting because it has ~terfered with her right to self-organization. While
admittedly, management has the right and prerogative to discipline its employees
for insubordination but when the exercise of such right and pre,rogati.ve tends to
interfere with the employees' eight to self-organization, it amoun.ts to union-busting
in and is therefore a prohibited act Her dismissal was clearly designed to frustrate the
union in its desire t6"forge a new CBA with the school that is reflective of the true
wishes and aspirations of the union members. Her dismissal for alleged
insubordination was merely a subterfuge to get rid of her which smacks of a pre-
conceived plan to oust her &om the premises of the school It has the effect of
busting the union as it stripped it of its strong-willed leadership.5
In Pepsi-Ca/a Philippi11u, 111,. 11. Mom11,6 petitioner was charged for union-
busting when it terminated several offic~ and members of LEPCEU-ALU,7 due
to retrenchment under a Corporate Rightsizing Program. The respondents cla.imed
Zarboa"'ga WroJ Proclns. nc. v. NI.RC. G.R No. 82C68, 0d. 13, 1989.
Pil)flO Teleplme Cap.v. Pipm Teleptale fnl)i:7feesAssocaial flTEAi, G.R. No. 1fi0058, Ju,e22, 2007.
1 aA1e!i1 Nishr,g CapcJatm v. Smiez, GR No. L-74425, 0d. 7, 1986, 144 SCRA 628, 641.
Coo.lo de San Jua'I de Lemin V. A.ssociation afnl)i:7fees mxl F~aLem, G.R. No. 141471, Se!i 18, 200J.
s Fi;lltAttendMtsand siew.ws~alle~v. PhqlpneAmes, Ire.. G.R No. 1 ~.U/ 22. 2008.
GRNo. 175002,Feb.18,2013.
Ley1e Pepsi,C,ola Eirpl:)ofees lJrioo-Ass(Xialed Labort.non (lfl'CBJ-Al.U.

570 BAI\ REVIEWER ON IAJIOI\ I.AW
that Pepsi's adoption of the retrenchment program was designed solely to· bust
their union so that come freedom period, Pepsi's company union, LEPCEU-
UOEF#49,1 which was also the incumbent bargaining union at that time - would
gamer the majority vote to retain its exclusive bargaining status. Hence, on July 23,
1999, LEPCEU-.ALU went on strike. The Supreme Court, however, declared
petitioner Pepsi not guilty of union-busting because it acted in good faith.
Furthermore, the fact that Pepsi's rightsizing program was implemented on a
company-wide basis dilutes respondents' claim that Pepsi's retrenchment scheme
was calculated to stymie their union activities, much less diminish their
constituency. Therefore, absent any perceived threat to LEPCEU-ALU's existence
or a violation of respondents' right to self- organization, Pepsi cannot be said to
have committed union busting or ULP in this case.2
4. INAPPLICABILITY OF COOLING-OFF PERIOD.
The 15-day cooling-off period applicable to cases where the ground
invoked is ULP does not apply in cases of union-busting; thus, "the union may
take action immediately" after the strike vote is conducted and the results
thereof duly submitted to the NCMB. In other words, in case of union-busting, the
law allows the complete disregard of the 15-day cooling-off period but the
requirement on the 7-day waiting period or strike ban, together with the other
requirements on the filing of a notice of strike, the conduct of a strike vote and the
submission of the results thereof to the NCMB-DOLE, should still be complied
with. Thus, the NCMB Primer on Strike, Picklting and Locko11t3 clearly states:
"In case of dismissal from employment of union officers
which may constitute union-busting. the time requirement for the
filing of the Notice of Strike shall be dispensed with but the strike
vote requirement being mandatory io character shall "in every
c;zse"be complied wich."4
The emphasis on the phrase "in every case' is understandable,
considering the use of the same phrase in the law, Article 278(Q (263(Q], thus:
"la every case, the union or the employer shall furnish the
Minisay the results of the voting at least seven days before the
intended strike or lockout, subject to the cooling-off period herein
provided."5
This view is highlighted in S11kothai,' where it was held that while the
language of the law leaves no room for doubt that the cooling-off period and the
CH111'TII\ FIVE
LABOR RflATIONS
571
seven-day waiting period or strike ban after the submission of the strike-vote report
to the NCMB were intended to be mandatory, however, in case of union-busting,
where the existence of the union is threatened, the 15-day cooling-off period
should be dispensed with. In sum, the other remaining requirements - notice of
strike, strike vote, strike vote report and seven-day waiting period or strike ban -
cannot be dispensed with.
V.
STRIKES IN HOSPITALS, CLINICS
AND MEDICAL INSTITUTIONS
1. DIFFERENT RULE.
In line with the national concem for and the highest respect accorded to
the right of patients to life and health, strikes and lockoi:ts in hospitals, clinics and
similar medical institutions shall, to every extent possible, be avoided and all serious
efforts, not only by labor and management but government as wcll, be exhausted to
substantially minimize, if not prevent, their adverse effects on such life and health,
through the exercise, however legitimate, by labor of its right to strike and by
management to lockout t
2. REQUIREMEN'! FOR MINIMUM OPERATIONAL SERVICE.
In labor disputes adversely affecting the continued operation of such
hospitals, clinics or medical institutions, it shall be the duty of the striking union or
locking-out employer to provide and maintain an effective skeletal workforce of
medical and other health personnel whose movSJl<::nt and services shall be
unhampered l\fid unrestricted as are necessaq,,--~sure the proper and adequate
protection of the life and health of its patients, most especially emergency cases, for
the duration of the strike or lockout2 To operationalize3 this, it is mandated that:
(a) The striking union or employer involved in the lockout is obliged to
maintain an effective skeletal force during the strike or lockout. The
movement of the skeletal force shall be unbmpered and unrestricted.
(b) The striking union or employer involved in the lockout shall ensure
proper and adequate protection of the fife and health of patients
particularly in emergency cases.'
3. MOTU PROPRIOPOWER OP DOLE SECRETARY.
In such cases, the DO!,E Secretary may immediately assume, within
twenty four (24) hours from knowledge of the occurren~ of such a strike or
1 Mide 278{g) 1263(g)i Im Code; Far Earn lnlefsAy-Or. Nora~ '-'edical Fanlaoon !l'filNfWfl v. FE\J.
~~~afil)i'lowaters ~ GR No. 168362. Od. 12. 200>.
1 Mide278{g) [263(g)I, lmCode; SeeSeclioo 17,rue lOOI, Boal Vet the~ bmplementflelmCode.
1 As presa1>ec1 lnler Ile Operablal Guiiel'nes a 0epamien1 Order No. 40-G-03, Series ct 2010, issued by DOLE
Seal'lay~~ooFe!xuay24,2011.
4 See Seclioo 4lielm.

SAR RfVIEWER ON LABOR LAW
572
lockout, jurisdiction over the same or certify it to the NLRC for compulsory
arbitrntion. For this purpose, the contending parties are strictly enjoined to comply
with such orders, prohibitions and/or injunctions as are issued by the DOLE
Secretary or the NLRC, as the case may be, under pain of immediate disciplinary
action, including dismissal or loss of employment status or payment by the locking-
out employer of backwages, d=ages and other affirmative relief, even criminal
prosecution against either or both of them.1
VI.
STRIKE IN THE GOVERNMENT SERVICE
1. CLASSIFICATION OF GOVERNMENT SECTOR EMPLOYEES.
For purposes of the exercise of the rights to self-organization and to
strike, the Labor Code classifies employees in the government sector as follows:
(!) Employees of government-owned and/or controlled corporations
(GOCCs) organized under the Corporation Code (without original
,hartm) and are, therefore, covered by the Labor Code.2
(2) Employees of the government and its political subdivisions or
instrumentalities, including government-owned and/or controlled
corporations (GOCCs) organized with original ,hartm and are,
therefore, covered by the Civil Service Law, rules and regulations.3
They are called civil service4 employees. · (3) SSSEA v. CA5 - The remedy is for. go7emment employees, through
The government employees mentioned ~ No. 1 above possess and enjoy
the rights to self-organization and to strike just like any employees in the private
sector; while those referred to in No. 2 above possess and enjoy only the right to
self-organization but not the right to strike. They are thus absolutely prohibited
from conducting a strike for the purpose of changing the terms and conditions of
their employment.5
2.JUSTIFICATION FOR ABSOLUTE PROHIBITION.
The justification behind this State policy is well articulated in the
following cases:
(1) Jadnlo v. G46 - Although the Constitution vests in the government
teachers the right to organize, to assemble peaceably and to petition
Arocie 278(g) 1263(g)l. lm Code.
See A1i:1e 253 ~4-11 d tie Lm Code.
l See Mde 291 !2]61 (t tie l.m Code.
' The OIi Ser.te BlC001)aSSES al brcrd-es .m ~ d tie goiemnent ilaJd'o;l ~ im'or
omoled ~ (GOCCs) will ~ra dmes. (Sedioo 6, O-¢r 2, &o!il!e A, TIGe I, Book V, ExOOJ!i;e On1er No.
292, ~ kroMl asI l e - ~ Qxle a 1987." issued a, Ju~ 25, 1987).
Sedbl 4, RIAe nl, ~ Rules aid Reg~ d Exeruti,-e Onler No. 180 kl Gcwern tie Exercised Ole R'IJlt of
Gowrrment ~ kl Se!l-0,g~; Mcie 291 [276!, l..abaQxle.
' GRNo.124540,t«H.14, 1997,281 SCAA657.
CHAPTER FIVE
573
LASOR RELATIONS
the government for a redress of grievances, there is no like express
provision granting them the right to su:ke. Rather, the constitutional
grant of the right to strike is restrained by the proviso that its exercise
shall be done in accordance with law." 1 It is clear therefore that in
the absence of a statute, public employees do not have the right to
engage in concerted work stoppages for any purpose.2
(2) AGIV v. Minister of LaboP - The terms a:1.d conditions of employment
in the Government, including any political subdivision or
instrumentality thereof are governed by law, hence, government
workers cannot use the same weapons employed by the workers in
the private sector to secure concessions from their employers.
Subject to the minimum requirements •:>f wage laws and other labor
and welfare legislation, the terms and ::onditions of employment in
the unionized private sector are settled through the process of
collective bargaining. In government employment, however, it is the
legislature and, where properly given delegated power, the
administrative heads of govemment, which fix the terms .and
conditions of employment. And this is effected through statutes or
administrative circulars, rules and regu]ations, not through collective
bargaining agreements.4
their unions or associations, to either petition the Congress for the
benerment of the tenns and conditions of employment which are
within the ambit of legislation or negotiate with the appropriate
government agencies for the improvement of those which are !!Q1
fixed by law. If there be any unresolved grievances, the dispute may
be referred to the Public Sector Labor-Management Council for
appropriate· action. But employees in the civil service may not
resort to strikes, walkouts and other temporary work stoppages,
like workers in the private sector, to pressure the Government
to accede to their demands. As now provided under Sec. 4, &k III
of the &/u and &g11/atioru lo Govtrn the ExmiH of the Right of
Govrmmmt Employees to S elf-Orga,rizatior., which took effect after the
instant dispute arose, '[t]he terms and conditions of employment in
the government, including any political.subdivision or instrumentality
thereof and government-owned and controlled corporations with
t lkldersca'rg s,.wied.
1 GSIS v. Kapisamrg rrga MD;igagawa sa GSIS. G.R. No. 170132, Dec. 6, 20C6.
' Ablce aGovemmeit W!Xke,; v.1Mis1erollabor and Employment. GR Ho. l-60403, Auj. 3, 1983, 124 SCAA 1.
kl.
Social Sea.rity Sysiem En1)loyees Associabl (SSSEA) v.CA, G.R. No. 85279, July 28, 1989, 175 SCRA 686.
574 BAAREvlEWERO~ IABORIAW
original charters are governed by law and employees therein shall not
strike for the purpose of securing changes (thercto).'" 1
3. WHAT CONSTITUTES A STRIKE IN GOVERNMENT SERVICE.
A mass action or protest may actually be consideced a strike if the
circumstances indicate that the elements thereof are present In holding that the
mass action or assembly staged by the petitioners inJatinto v. Hon. C4,2 was actually
a strike, the High Court emphasized that it resulted in the non-holding of classes in
several public schools during the corresponding period. Petitioners further do not
dispute that the grievances for which they sought redicss concerned the alleged
failure of public authorities - essentially, their '~mp"rlm" - to fully and justly
implement certain laws and measures intended to benefit them materially, such as
the immediate release of ?680 Million Secondary Education Fund (SEF), fringe
benefits of teachers under R.,-\. No. 6758;3 clothing allowance of PS00.00 to
Pl ,ODO.OD per teacher under the General Appropriations Act of 1990; DMB Grru!ar
904 311d increase in minimum wage to PS,000.00 for teachers. And probably, to
clothe their action with permissible character, they also raised national issues such
as the removal of the U.S. bases and the repudiation of foreign debt.
In Bagalisa11 v. CA,4 it was held that the fact that the conventional term
"strikt" was not used by the participants to describe their common course of action
was insignificant, since the substance of the situation, and not its appearance, was
deemed controlling. Further, it was held therein that employees in the public
service may not engage in strikes or in concerted and unautho~ed stoppage of
work and that the right of government employees to organize is limited to the
formation of unions or associations, without including the right to strike.5
VII.
VARIOUS PROHIBITED ACTS PER LAW,
RULES AND JURISPRUDENCE
1. PROHIBITED ACTS IN STRIKES.
The right to strike, while constitutionally recognized, is not without legal
constrictions.6 Based on the law, rules and jurisprudence, following is a rundown of
the various acts that are considered prohibited: .
kl.;~suppied.
GR No. 124540. Nol. 14, 1997.
1
See Sedx:,n 17 maof Th6 law is Oil'e'Mse kl10\\!l as lhe ~ and Posiootl Classffi:a!ioo />o. d 1989'
iW(NedcnAugust21, 1989. • 7 ~ knoM1 as~~ Rmlaliza!QIN:J...
' G.R No.124678,Jlt/ 31, 1997.
' CmgMPSTAv.!.aJUQ,J1.,G.RNo.95445Aug.6, 1991.
' Sddmk Caporatxm. Gamie',GR Nos.15946-0 & 159461, Nov. 15, 2010.
CHAPTER FIVE
IABOR REIATIONS 575
1. Declaring and staging a strike without complying with the
procedural but mandatory requisites.1 (NOTE: See discussion of the
seven (7) requisites for a valid strike, supra).
2. Declaring and staging a strike without first having bargained
collectively .2
3. Declaring and staging a strike based on non-strikeable or invalid
grounds. There are only two (2) valid grounds, namely: (1) collective
bargaining deadlock; and (2) urtfair labor practice. All other grounds
therefore are non-strikeable.3 More specifically, the following grounds
are non-stcikeable and, therefore, 'invalid:
(a) Inter-union or intra-l!filon disputes.
(b) Simple violation of CB.A which is now considered simply a grievable
issue. Only gross violation thereof is deemed ULP, which means
that there is flagrant and/or malicious refusal to comply with the
economk provisions thereof by the employ~. Needlessly, it is only
when the violation is grou that it may be cited as a ground in support
of a strike.•
(c) Violation of labor standards . .Article 1285 of the Labor Code
provides the manner by which such issues may be adjudicated and
resolved.6
(d) Legislated wage orders (wage distortion). Under RA. No. 6727,7 a
strike is illegal if based on alleged salary distortion. The legislative
intent is that solution to the problem of wage distortions should be
sought by voluntary negotiation or arbitration, and not by strikes or
concerted activities by the employees. c;;onsequently, a strike staged
based on this ground is illegal.8
4. Declaring and staging a strike for uniawful purpose. This principle
applies even if the strikers had acted in good faith in staging it.9
Examples:
(a) .A strike staged for the purpose of unreasonably demanding the
dismissal of an employee like a factory foreman is illegalI
1
See Toyota M:>tDI' Pti\t Cap.Waker; Asscaaticn v. NI.RC, GR Nos. 158786 &158789 cm 158793-99, Oct 19, 2007.
SeeMiele 278(c) !263(c)l, L.w Cale.
1
No. 21, NCM3 Prine'cn ~e. Pnefrog lr1d L0ckout. 2id Eatm, Dec:erroer 1995.
• See also Sedm 5, ~ XXJI, Bcldl V, Rlres to lrrpemenl Ile labcJ Code, as llllellded ll'f Oepabnent Order No. 40-03,
Seriesd 2003, {Feb, 17, 2003J.
5 Miele 128 is entilled'Vmial ax! Enbteloont Po.Yer.'
1
SedXlC13. ~ V, NCMl Mruidl'rocea.res kirC<ro'iati:n and PreYertw ~'ecia&lo Cases.
1
law at!lJktdng l~a;iawa PBM)v. M.RC, GR No. 91980,JIJle27, 1991, 198 SCRA586.
' Fii:oo Mnlacwriig Caporatioo v. lalas Mlngga;iBIVcl sa Flcmt.akas Mlnggagllfli! Lm Center !IM'-lMLCl GR
No.150166, Ju~ 26, 2004.
 SAR REVIEWER ON LABOR I.AW
(b) A strike staged by a union to compel the employer to extend
recognition to it as the SEBA of the employees in a bargaining '!!.Ut
is illegal.2 A union can only become a SEBA th.rough modes
allowed by law, such as Request for SEBA Certification (in
replacement of Voluntary Recognitio_n)3 or certifica!io~ election and
its variations, such as-consent electton, run-off electton or re-run
election.
(c) If a strike is declared for a trivial, unjust or unreas~nable purp~se ~r
if carried out through uplawful means, the law will not sanctton 1t
and the court will declare it illegal.4 ~ lockout The reason is that once an.issue has already been raised as a
(d) A strike is illegal if staged without giving the employer_reasonable
time to consider and act on the demands made by the uruon.5
(e) A strike is illegal if used as a means to ~umvent valid contractual
commitments or judicial orders lawfully ISSued.6
5. Declaring and staging a strike in violation of the '.'no strike, no
Jockouf' clause in the CBA. This clause may be 10voked by an
employer only when the strike is t&onomic in nature or one which is
conducted to force wage or other concessions from the employer that
are not mandated to be granted by the law itself. It does not bar strikes
grounded on ULP.7
6. Declaring and staging a strike without ~ub~itting th~ iss~es to
the grievance machinery or voluntary arb1trat1on prescnbed m the
CBA or failing to exhaust the steps provided therein. 8
7. Declaring and staging a strike while conciliation. and mediation
proceedings are on-going at the NCMB. The disregard of such
proceedings is a blatant violation of the fviles ~ lmplem:11! l~t Labor
Cotft,9 which explicitly obliges the parties to barga1n collecttvely 10 good
faith and prohibits them from impeding or disrupting the proceeclings. 10
8. Declaring and staging a strike based on issues ~lready br~ught t_o
voluntary or compulsory arbitration. The ranonale behind this
l.uza11.tri1e Depment Unbl v. Roklal, GR No. L-2660, lley 30, 1%0, 86 PM. fJJ7.
Slee! Coqxxatmdlhe ~ v. SC/> Elr!)loyees lml, G.R Nos. 169829-30, Apli 16, 2008.
l l nllStbe rm!, OOMMil', Ila! '1/fUl'ay Recoi;rml' as aroode d desi;Jnafrg aSEBA has area}/ been repealed ~
reimd by tie roode kr10M1 as 'Recµ!stb' SEBA Cel1i'K:atioo.' il ~ v.itl Oepa-bnerrtOrder No. 40-~15, Series
d2015, issuedooSepfflber07,2015.
• l.uza1 flai1e Oep;nrertLl'lioov. Rokm. GR No. L-2660, May 30, 1%0,86 Phi. 507.
' Am:!dav.CIR,GR.No.L-7425,Jui't21, 1955.
/>JJ'Af'v. CIR. GR Nos. L-33705 &L-35200, Apli 15, 19TT, 76 SCRA274.
Mala'(<rY,j ~ rg rrga Mr1gga,3awa sa M Greenfiek! (MSMWM') v. Ranos, GR No. 113!X)7,Feb.28, 2000.
a Secfm 5, ~le XXII, Book V, ~ b krj>lel1leri tie Lab<r Code, as crnellded by Department Order No. 40-03, Series of
2003,[Feb. 17,2003j.ln:ln dFlipro Errl)cyee$ Y. Nestle f'hqlpiles, re, G.R No. 88710-13, Dec. 19, 1900.
1 Parti:u'atf,Secbl 6l"a«Sml_9], BookV, R!Je XXll lllered.
10 Fq)ilo F;,e and Rxmy CapaatiOO v. NI.RC. GR No. 115180, N<:N. 16, 1999.
CHAPTER fl\11:
IABOR REIATIONS 577
prohibition is that once jurisdiction over the labor dispute has been
properly acquired by competent authority, ::hat jurisdiction should not
be interfered with by the application of the coercive processes of a
strike or lockoutI Thus, a strike conducted during the pendency of the
compulsory arbitration proceedings on a labor dispute certified to the
NLRC by the DOLE Secretary for compulsory arbitration is illegal.2
9. Declaring ~d staging a strike during the pendency of a case
involving ~ same ground/s cited in the notice of strike or
ground in a labor proceeding before a competent labor tribuna~ the
same can no longer be invoked as a ground to justify a strike or lockout.
Jurisdiction has already been acquired over said issue by the labor
tribunal which first took cognizance of the case and the adjudication
and resolution thereof are necessarily vested in that tribunal to the
exclusion of all others. A strike or lockout cannot be staged to pre-
empt or circumvent such adjudication and resolution.
10. Declaring and staging a strike in defiance of an assumption or
certification or return-to-work order. Under Article 278(g) [263(g)],
the Labor Secretary's assumption of jurisdiction over the: labor dispute
or his certification thereof to the NLRC for compulsory arbitration.has
the effect of automatically enjoining the intended or impending strike
or lockout and all striking or locked-out employees are required to
immediately return to work and the employer should immediately
resume operations and readmit all workers under the same terms and
conditions before the strike or lockout The defiance by tl1e union, its
officers and ordinary members, of the Labor Secretary's
assumption/certification order.or the return-to-work order, makes the
strike illegal under the law and applicable jurisprudence as it constitutes
a valid ground for dismissal of the defiant workers.
11. Declaring and stagiµ.g a strike in violation of a temporary
restraining order ('l'RO) or an injunction order issued for the
purpose of enjoining the union and/or its members from committing
illegal and prohibited acts in the course of a strike, such as, among
others, the act of obstructing the free ingress to or egress from the
company premises.l
12. Declaring and staging a strike after the conversion of the notice of
strike into a preventive mediation case. After sucl1 conversion, the
notice of strike is deemed dropped from the dockets, as if no notice of
1 TelE.fimn Semi:xmJdas En1)1a,'ees Ulioo-FFW v. CA. G.R Nos. 143013-14, Dec. 18, 2000.
1
Plil)li',e Oiamr,d fW and Rssa1, he. V. Mane Oiamr,d Hotel~ Urioo, G.R No. 158075, June 30, 2000.
i ~ d Rlependent Um il tie Pltiippiles ~ v. NLRC, G.R. No. 1?)505, Mrdl 25, 1999.

SAR R£\IIEWERON l.A&OR I.AW
strike has been filed. Since there is no more notice of strike to speak
about, any strike subsequently staged by the union is deemed not to
have complied with the cequirements of a valid strike.1
13. Declaring and staging a strike prohibited by law, such as the one
staged by employees performing governmental functions who, by law,
are not .allowed to declare. a strike or any concerted activity for the
purpose of changing the terms and conditions ~f their employment.
Such terms and conditions of employment in the government,
including any political subdivision or instrumentality thereof and
government-owned and/or controlled 2'orporations with . original
charters, are governed by Civil Service Law, rules and regulanons and
said employees are not allowed to strike for the purpose of securing
changes therein.2 (NOTE: This is extensively discussed above under the
topic: "VJ. STRIKE IN THE GOVERNMENT SERVICE").
14. Declaring and staging a strike by a minority uoioo.3 ~ is so
because no labor dispute which will justify the conduct of a strike can
exist between the employer and a minority union. To pemi.it the union's ·
picketing activities would be to flaunt at the will of the majority.4
15. Declaring and staging a strike by an illegi~at~ -~on. _Dnder
Article 278(c) [263(c)], only a legitimate labor orgaruzanon IS ~tttled to
file a notice of strike on behalf of its members. Absent a showtng as to
the legitimate sta_tus of the labor organization, the strike it conducted
would have to be considered as illegaLS
16. Declaring and staging a strike in violation of the _Companf Code
of Discipline which prohibits the conduct of illegal strikes or
concerted actions, as exemplified in the 2007 case of Toyota Motor, 6
where the Supreme Couct considered the protest tallies staged by
Toyota's employees in front of the offices of the Bucea_u of Labor
Relations (BLR) and the Office of the DOLE Secretary in Intramuros,
Manila, as blatant violation of Section D, paragraph 6 of Toyota's Code
of Conduct which prohibits ''inciting or parti.ipating in riot,, disordm, al/e!fd
Jirik.es or roncerted a,tionJ Mlrimental to [Toyota's] intem/." The penalty for
the offense under the Company Rules is dismissal. The union and its
members are bound by such company rules, and the February 2001
mass actions and deliberate refusal to render regular and overtime work
No.18, NCMBPri'neroo saie, fld(efng and lockout. 2oo Editkxl, Decefl'be,-1995.
Sml 4, ~ 111, ~ fblles and Reg1Aalioos d ExeotM Order No. 180 kl Golem Ille Exercise of lhe Ritt of
GcwmmEll'4)b,'eesk>~:Mde291 ~761,LmCcxle.
1 1WReslalla'sfnl>kl'lee5&uticrU1iln-PAFLUv.Tooes,GRNo.L-249'33.0ec.18, 1968.26'SCRA435.
tW Restua's ~ &uticr UUln-PAFlU v. Tooes, GR No.L-249'33. Dec. 18, 1968. 26 SCRA 435.
SlaTtrd t.'a1teti,g Cop. v..kill,G.R No.145496, Feb. 24, 2004.
1 TO)ttl Mml'hls. Cap.WOO,c,'SAssocialm V. NLRC,GR Nos. 158786&158789 and 158793-99, Oct. 19,2007.
CHAl''rERflVE
IASOR RflATIONS
579
on said days violated said rules. In sum, the February 2001 strikes and
walk-outs wece illegal as these wece in violation of specific reyuirements
of the Labor Code and a compan)' rule against illcg.u strikes or
concerted actions.
17. Declaring and staging a strike by dismissed employees. Petitioner
union in the same T'!)'Ola case, also posits that strikes were oot
committed on May 23 and 28, 2001 as the rallies held on said dates
could not be considered strikes as the participants were the dismissed
employees who were on payroll reinstatement. It concludes that there
was no work stoppage. In finding this contention as wanting in legal
basis, the High Court asserted that once the DOLE Seccetary assumes
jurisdiction over a labor dispute or certifies a case for compulsory
arbitration to the NLRC, the parties have to revert to the statUJ quo ante
(the state of things as it was before). While it may be conceded that
there was no work disruption in the two Toyota plants, the fact still
remains that the union and its members picketed and performed
concerted actions in front of the company premises. This is a patent
violation of the assumption of jurisdiction and certification order of the
DOLE Secrewy. While there are no worlt stoppages, the pickets and
concerted actions outside the plants conducted by the dismissed
employees have a demor,ilizing and ev~n chilling effect on the woikers
inside the plants and can be considered as veiled threats of possible
trouble to the workers when they go out of the company premises after
~ork and of impending disruption of operations 10 company officials
and even to customers in the days to come. The pictures presented by
Toyota undoubtedly show that the company officials and employees are
being intimidated and threatened by the strikers. In short, the union, by
its mass actions, has inflamed an already volatile situation, which was
explicitly proscribed by the DOLE Secretary's order. The pickets,
therefore, on May 23 and 28, 2001 were unlawful strikes.1
18. Declaring and staging protest rallies in front of government
offices may constitute an illegal strike. Examples are:
(a T(!YOta Motor v. NL.RO - The protest rallies staged by the union from
February 21 to 23, 2001 in front of the offices of the Buceau of
Labor Relations (BLR) and the DOLE Secretary in Intramuros,
Manila, in the guise that they were legitimate exercise of their eight
to peaceably assemble and petition the government ior redress of
grievances, have been declared not as protest action~ but actually
strikes which are illegal for having been undertaken without
1 Id.
1 Toyota tv'otlr Phis. Cop. WO!ke!s Associalioo v. M.RC, GR Nos.158786 &158789 and 158791'r99, Oct. 19, 2007.
 BAR REVIEWER ON IABOR !AW
580
satisfying the mandatory pre-requisites for a valid strike under
Article 278 [263] of the Labor Code.
(c) So.idha11k v. Cami~ - This is similar to Toyota where the protest
actions staged by the employees of petitioner S?lidbank in front of
the Office of the DOLE Secretary in lntramuros, Manila were
declared constitutive of illegal strike. In this case, there was a CBA
deadlock which was assumed by the DOLE Secretary. Subsequently,
the DOLE Secretary resolved all the issues submittc:d to him for his
resolution. Dissatisfied with the Secretary:s ruling, an overwhelming
majority of employees joined the "mass lea~" and 'JJro~est action" at ~e
DOLE Secretary's office while the banks proVl!lcial branches tn
Cebu, Iloilo, Bacolod and Naga followed suit and "boyCQfttd Tr!J'lar
wrk." The union members also picketed the bank's Head Office in
Binondo and Pasco de Roxas branch. As a result of the employees'
concerted actions, petitioner Solidbank's business operations were
paralyzed. The High Court pronounced _that the concerte~ _mass
actions staged by respondents was a strike and not a legittmate
exercise of their right to express their dissatisfaction with the
Secretary's resolution of the economic issues in the deadlocked CBA
negotiations with petitioners. It must be stressed that the co_ncerted
action of the respondents was not limited to the protest rally m front
of the DOLE Office on April 3, 2000. Respondent union had also
picketed the Head Office and Pasco de Roxas_ ~ranch. Considering
that these mass actions stemmed from a bargairung deadlock and an
order of assumption of jurisdiction had already been issued by the
Secretary of Labor to avert an impending strike, there is no doubt
that the concerted work of abandonment/boycott was the result of a
labor dispute. All the elements of strike are evident in the union-
instigated mass actions.
19. Declaring and staging iVelga ng Bayan. Stoppage of work due to
Miga 11g b~an is in the nature of a general strike and an extended
sympathy strike which are illegal since the striking employees have no
labor dispute with their employer but who, on a day they are
~cduled to work, refuse to work and instead join a 'IJlf/ga 11g b(:Jan.2
20. Declaring and staging a strike in bad faith. A strike· staged based
on ULP does not automatically carry the stigma of illegality even if no
· ULP was actually committed by the employer for as long as the
strikers believe in good faith that such ULP was indeed committed.
Indeed, the presumption of legality prevails even if the allegation of
, SddlriCaporati:xlv. G.mer, GR Nos. 159400 &159461, t«lv.15, 2010.
Bil'lex Phils. n:. LaiaUnm [NAFLUJ v. Fie1'ex lnru;maJ c m ~ Cap., G.R. No. 155679, Dec. 19, 200i.
CHAPTER FIVE
581
LABOR RELATIONS
ULP is subsequently found to be untrue provided that the union and
its members believed in good faith in the truth of such averment1
The claim of good faith may be negated by the unique circumstances
obtaining in a case. The following are examples of bad faith strike:
(a) In The Pmi11sula Manila HoteP. case, where the dismissal of one of
the officers of petitioner union which allegedly triggered the
wildcat strike was declared not a suEicient ground to justify the
strike. As the NLRC later found, the dismissal was legal and was
not a case of ULP but a mere exercise of management prerogative
on discipline, the validity of which could have been questioned
through the filing of an appropriate complaint and not through the
filing of a notice of strike or the holding of a strike. Evidently, to
repeat, appropriate remedies under the Labor Code were available
to the s~g employees and they had the option to either directly
file a case for illegal dismissal in the office of the Labor Arbiter or,
by agreement of the parties, 10 submit the case to the grievance
machinery of the CBA so that it may be subjected to voluntary
arbitration proceedings. Petitioners should have availed themselves
of these alternative remedies instead cif resorting to a cL:astic and
unlawful measure, specifically, holding a wildcat strike at the
expense of the Hotel whose operations were consequently
disrupted for two days. Not every claim of good faith is justifiable,
and herein petitioners' claim of good faith should not be
countenanced since their decision to go on strike was clearly
unwarranted.
(b) In Sulpido Line~ case, where the petitioner union claims that the
strike was legal for it was done in good faith, having been staged in
response to what its officers and members honestly perceived as
ULP or ~on-busting committed by the respondent company.
The Supreme Court, however, was unconvinced because it found
the accµsation of union-busting bereft of any proof. Scanning the
records very carefully failed to indicate any evidence to sustain
such charge. Hence, the strike was declared illegal, in the light of
the ruling in Tiu v. NLRC,4 that it is the union which has the
burden to present substantial evidence !O support its allegation of
ULPs having been committed by management. The facts and the
evidence, however, did not establish even at least a rational basis
-!i
·'t.
.-. 1 ~ Sammi ng rrga Mcn;icJa]cfifa sa M. Greenflil (MSM,-llM') v. Rams. GR No. 113ro7. Feb.28. 2001.
NLMffiAIN. ThePenmAaMria~(hterinlklionJl.nla)v.MRC, G.R No.125561, M1rd106, 1998.
~ M:JwsJa-.va sa Sl.;l0J l.i1es, ric.-NAFLU v. ~Liles.Inc., GR No. 140992, Mm 25, 2004.
c Ta1v.NI.RC,G.RNo.123276,Al.g.18, 1997,277SCRA680,687.
 BAR RrvlEW[R ON LABOR LAW
582
why the union would wield a strike based on alleged ULPs it did
not even bother to substantiate during the conciliation
proceedings.
VIII.
LIABILITY RESULTING FROM THE CONDUCT OF'STRIKE
1. ORDER OF TOPICAL DISCUSSION.
The discussion of this topic is divided into the following sections:
A. LIABILITY FOR ILLEGAL STRIKE
8. LIABILITY FOR DEFIANCE OF ASSUMPTION/CERTIFICATION ORDER
OR RETURN-TO-WORK ORDER
A. . strike. This is the most logical consequence for lenotnng!y participating in an illegal
LIABILITY FOR ILLEGAL STRIKE
1. LIABILITY FOR PARTICIPATION IN LEGAL STRIKE.
As a general rule, the declaration or actual conduct of a strike does not
result in the severance of th~ employment relationship nor a renunciation thereof.
The employment relationship is merely suspended during the period of work
stoppage.I An employee who participates in a la~ s~~ is not deemed t? ~ve
abandoned his employment but is merely exerasmg his nght t~ self-orgaruza~on
precisely to protect his rights as an employee and/or to obtain better working
conditions.2 Such participacion should not constirute sufficient ground for the
termination of his employment even if a replacement has already been hired by the
employer during such lawful strike.1
2. LIABILITY FOR PARTICIPATION IN ILLEGAL STRIKE.
Even if the strike started as a lawful strike, if in the course thereo~ illegal
acts are committed by the strikers, the strike becomes illegal and the participants in
the commission thereof become liable therefor and may thus be terminated. This
holds true whether the striker guilty of committing illegal acts is an officer of the
union or an ordinary member thereof. Thus, if the strike is legal at the beginning
and the officers or the ordinary members commit illegal acts during and in the
course of the strike, then they cannot evade personal and individual liability for said
acts.4
1 5 GR Nos.154113, 18m8, 187861 &196156, Dec. 7,2011,661 SCRA686.
RexTaiacabCo.v.aR.«lO.G.138.70Plli.621.
1 No.26, NCMl PrinEr oo Slie, P"tkmJ .rd l.tdru. 2nd Ediiln, IJecent« 1995.
3"~Mide279(a)(264(a)it.mCode. · stte.
Toyota Wotr Phis.Co'p.WakeisAssooatioo v. M.RC, GR Nos.158786 &158789 .rd 158798-99, Oct 19, 2007.
CHAPTER. F IVE
583
lABOR RELATIONS
· a. Union o.iicers and ordinary members, distinction in liability.
Having cited the general rule, the next question is who then should be
held liable for staging an illegal strike? Article 279(a) [264(a)l1 makes a distinction
between ordinary union members and officers as far as the effect of illegal strike on
their employment status is concerned.
1. Union officers.
The mere finding or declaration of illegality of the strike will rcsclt in the
termination of all union officers who knowiw participated in the illeg;il strike.2
Unlike ordinary members, it is not required, for purposes of tennination, that the
officers should be proven to have committed illegal acts during the strike in order
to be held liable therefor.3 Otherwise stated, the ser.ices of a participating union
officer may be terminated not only when he actually commits an illegal act during a
strike, but also if he knowing!y participates in the conduct and staging of an illegal
strike.4
To illustrate how the "k11owing participation" of union officers may be
ascertained and established, the following factors were taken into account in Abaria
v. NI..RC,S which led to the declaration that they knowingly participated in the
illegal strike:
(a) Their persistence in holding picketing aciivities despite "ihe declaration
by the NCMB that their union was not duly registered as a legitimate
labor organization and notwithstanding the letter from the
federation's6 legal counsel informing them that their acts constiruted
disloyalty to the national federation; and
(b) Their filing of the notice of strike and conducting a strike vote despite
the fact that their union has no legal personality to negotiate with their
em ployer7 for collective bargaining purposes.
2. Ordinary union members.
The fate of ordinary union members is different Mere participation in an
illegal strike is not a sufficient ground to terminate their employment The mere
1 Mide 279(a) (264(a)I of te Liboc Cede, as aneooed, pro'liles trl i e ~ ct c11 ilegal sbile D lhe pcr1q)atirYJ
IIOO(EfS: -xxx Mt triln ar.:e., v.ro 1mwrg~ ~ il llega stt.e all ~ Yitrter a triln arm v.ro ~~
~ i1 lhe cxmrissol ct l:ga ~ dmg a slri(e ml'f be declired kl hm lost t i s ~ stab1S: ProYi:led,
That mere pcrlq)atOl ct av.a1(er i1 alav.ful sti<e shal ~ coosti! sufli::lrt gfWld b- tenTraioo ct his errl)k7yment.
Mill la repiaamrthad been tired byte empbfercui"g Slrll IMJ sbile.'
1 l..apcV1da'f Wa1re!s lJnm v. NI.RC, G.R Nos. 95494-97, Sept 7, 1995.
3 f'l1inco hilstries, Inc. V. PhircohiJstries l.mAss0cialloo (PI.AJ,G.R Ne•. 170830.~.11,2010.
• Abalav. NI.RC,GR Nos.154113, 18m8, 187861 &196156, Dec. 7,2011.
1 The~ here is he Namal Federalm ctl.J!bcr'MIDl aealBI by dialei,;i te bca ~ fiat staged lhe ilel]al
I lktroCebu C<Jrvrooiy Hosp,tll, flC. (MCCHQ, ixeseot'( knoi,n as Ille 1/s,fas Caml.rm'f Med°l3 Cerlt!J (VCI,£}.

BAR REVIEWER ON IABOR IAW
finding or declaration of illegality of a striKe will not result in their termination. For
a wuon member to suffer the consequence of loss of employment, it must be
shown by substantial evidence that he has knowingly participated in the commission
of illegal acts during the strike. 1 Obviously, the Labor Code protects ordinary union
members who participated in such an illegal strike from losing their jobs provided
that they did not commit illegal acts in the course thereof.2
b. Reason for the distinction.
The reason for this distinction is that the un_ion officers have the duty to
guide their members to respect the law. If instead of doing so, the officers urged
the members to violate the law and defy the duly constituted authorities, their
dismissal from the service is a just penalty or sanction for their unlawful act. Their
responsibility as main.players in an illegal strike is greater than that of the ordinary
union members and, therefore, limiting the penalty of dismissal only to the former
for participating in an illegal strike is but in order.3
Ordinary union members should not be meted loss of employment on the
c-onsider.itions of (1) compassion; (2) good faith; and (3) security of tenure
provisions under the Constitution.• In Em Philippinu, 5 it was explained that a
member is not responsible for the union's illegal strike even if he voted for the
holding of a strike which became illegal6
c. Soine principles on illegality ofa strike.
• Absent any showing that the employees are union officers, they
cannot be dismissed based solely on the declaration of the illegality
of the strike.7
• For purposes of identifying the union officers, the certifications as
to the names of the union officers issued by the Chief of the Labor
Organization Division of the Bureau of Labor Relations (BLR),
being public records, enjoy the presumption of regularity and
deserve weight an4 probative value. Thus, in the abs_ence of a clear
and convincing evidence that said certifications are flawed, they
should be taken on their face value.8
• The fact that the employees are signatories to the CBA does not in
itself sufficiently establish their status as union officers during the
illegal strike. Neither were their active roles during the bargaining
1 F ~v.~ Foods Capaalm, GR Nos. 178409 &178434, Jtre 8, 2011.
1 G&sTrcr,spa1 r.orp. v.time, GR No. 100303, Sept. 13, 2007.
1 Solimt Capaam v.Ga'ri!J, GR Nos 159460 &159461, Nol. 15, 2010.
' Id. , C.Ak:aniaa &Sa\$, nc. v. CA, GR. No. 155109, Sept 29, 2010.
1 EssoPtiippnes. klc. v . ~ ~a;iawasaEsso(M.e), GR No. l-36545,Jai.26, 19n, 75 SCRA 73, 00.
1 See TC7f01a Mia Phis. r.orp.WormsAssociatx:.o [TMPCWAI v.NLRC, suixa
Gd! City rtqaEd Pat SeM;e, klc. v. NlRC, GR No.103500,Jt.t,, 6, 1995, 245 SCAA627,637.
Coca-Cda 8olllers Pills, klc. v. M.RC, GR No. 123491, Nov. 'll, 1998,299 SCRA 410.
CHAITTR FIVE 585
LABOR RELATIONS
negotiations be considered as evidence of their being uruon
officers. 1
• Only the union officers ruui.ng the period of illegal strike are liable.2
If the emplo~ees acted as union o.fficers after the strike, they may
not be held liable and, therefore, could not be terminated in their
capacity as such.3
• Sho~ stewards are union officers,4 hel}ce, they should be
telllllllatcd upon the declaration of the illegality of the strikc.s
• Wholesale forfeiture of employment status is not allowed. The mere
filing of charges against an employee for a!Jeged illegal acts during a
strike goes not by itself justify his dismissal. The charges must be
proved i.q an investigation duly called for that purpose, where the
employee should be given an opportunity to defend himself. This
holds true even if the alleged ground constitutes a criminal offense.6
3. LIABILITY FOR COMMISSION OF ILLEGAL ACTS.
a. Legality or illegality ofstrike, immaterial.
As far as liability for commission of illegal acts during the strike is
co~cemed, the issue of legality or illegality of the strike is irrelevant. As long as the
uruon o~ficer or member commits an illegal act in the course of the strike, be it
legal or illegal, his employment can be validly terrninated.7 ·
b. Meaningof''illegal acts."
The term "illegal afts" under Article 279(a) [264(a)). may encompass a
number of acts that violate existing labor or criminal laws, such as the following:
(1) Violation of Article 279(e) [264(e)) of the Labor Code which provides
that "[n)o person engaged in picketing shall commit any act of
violence, coercion or intimidation or obstruct the free ingress to or
egress from the employer's premises for iawful purposes, or obstruct
public thoroughfares."
(2) Commission of crimes and other unlawful acts in carrying out the
strike.8
(3) Violation of any order, prohibition, or injunction issued by the
DOLE Secretary or NLRC in connection with the assumption of
Id.
~Wcrters l.mlv. N.RC, 248 SCRA 95, 100.
3 Coca-Cola Botlleis Phils, Inc. v. NLRC, [supra.
' &l1tl Rosa Coca-Cola Plat~ l.mn V. CroH:da Botllels Phis., Inc., G.R Nos. 164302-03, JM. 24, 2007.
6 Telefunken Serriconductors Employees Unioo-FFWv. SOLE, G.R. Nos. 122743 and 127215, Dec. 12, 1997.
T0')'0Ca Mlb'Pllls. Cap.Wcrters ~ [Th'ro,YA)v.1-lRC, G.R. Nos. 158786 &158789, Oct 19, 2007
1 Naxxlal 8reM!fy en! Alied ~ 1.ab«lml V. Sir1 M'guel ~ . Inc., GR No. l-10017, Dec. 27, 1963.
586 BAil RMEWlll ON l.ABOll l.AW
jurisdiction or certification order under Article 278(g) (263(g)] of the
Labor Code.1
lbis enumeration is not exclusive as jurisprudence abounds where the
term "illegal acts" has been interpreted and construed to cover other breaches of
existing laws. Some of the specific illegal acts that have ·been passed upon and
declared as such by the Supreme Court are discussed below.
(1) Employment of unlawful means or commission of prohibited
acts or practices would make the. strike illegal.2 For instance, although a strike
may have been legal at its commencement, however, when the strikers ban:icaded
the gates of the company's plants and blocked the free ingress to and egress from
the company premises, the strike becomes illegal.3
(2) Employment of strike-breaker, scab or blackleg. The term •~trikt-
lmakn;" sometimes derogatorily called a J((Jb, bla,kkg, or knobstick, may refer to any
of the following:
(a) A person who continues to work during a strike or refuses to join a
strike;
(b) A union member who refuses to strike or who rerurns to work before
a strike is ended or settled; · illegal acts are liable. Those who did not participate should not be blamed
(c) A non-employee who is brought into the unionized facility to replace,
temporarily or pem1anently, a union member who cl10se to go on
strike;
(d) A person who obstructs, impedes or interferes by force, violence,
coercion, threats or intimidation with any peaceful picketing by
employees during any labor controversy affecting wages, hours or
conditions of work or in the exercise of their right to self-organization
or collective bargaining.•
(3) "Crossing the picket line" is a term used to describe the act of
working during a strike, whether by strike-breakers, management personne~ non-
unionized employees or members of other unions not on strike. The use of this
term is proper irrespectiv~ of whether it involves actually physically crossing a line
of picketing strikers.
(4) Use of force, viole~ce, coercion, threats or intimidation and
similar acts in the course of a strike. Paragraph (b) of Article 279 [264] is clear in
its proscription that "[n]o person shall obstruct, impede, or interfere with, by force,
violence, coercion, threats or intimidation, any peaceful picketing by employees
1 TClfO(a tlob' Phis. Cap.Wakers Amiatioo (T~Aj V. NLRC, GR tu 158786 Md 158789, 0d. 19, 2007.
1
Phm:o him, ~ Y. Pl1ira> him l.abcr Associaliln [PlAL G.R No. 170830,AulJ. 11, 2010.
1 TClfO(a M:lb' Phis. Cap. WaxersAssociatia, v. I-I.RC, GR. Nos. 158786 &158789 iJ1d 158798-99, Oct 19, 2007.
' Mide219(~~12(~1, 1..abocCode; No. 38, NCMl PrinEroosri<e, F'dceling Mdlockcu. 2nd Eooon, llece1lber 1995.
CHAl'TERFIVE
IABOR REtATIONS
during any labor controversy or in the exercise of the right to self-organization or
collective bargaining, or shall aid or abet such obstruction or interference."
(5) Use of barricades, blockades and obstructions. Article 279(e)
[264(e)],1 expressly provides that no person engaging in picketing shall obstruct the
free ingress to or egress from the employer's premises for lawful purposes, or
obstruct public thoroughfa.tes.2
(6) Use of slanderous, libelous and obscene language during the
strike is a prohibited act.3
5. SOME PRINCIPLES ON ILLEGAL ACTS DURJNG STRIKE.
• Mere substantial evidence required to hold strikers guilty of commission of
illegal acts.•
• Llability for illegal acts should be deteanined on an individual basis. For th.is
purpose, the individual identity of the union members who participated in
the commission of illegal acts may be proved thru affidayjts and photographs.5
Simply referring to them as "strikers," or "complainants in this case" is not
enough to justify their dismissal.6
• Only members who are identified as having participated in the commission of
therefor.7
• To effectively hold ordinary union members liable, those who participated in
the commission of illegal acts must not only be identified but the specific
illegal acts they each committed should be described with particularity.8
• The heated altercations and occasional blows exchanged in the picket line do
not affect or diminish the right to strike.9
• Exchange of hot words in the picket line is not an illegal act that would
impede or diminish the right to strike.10
• If violence was committed by both employer and employees, the same cannot
be cited as a ground to declare the strike illegal. 11
• Dismissal of the criminal case filed by reason of the illegal acts committed in
the course of the strike d~es not extinguish liability under the Labor Code.I
~ anende:l by Ba Pcrrb1risa ~ 227 ~ 1, 19821.
See Sediln 13, rue XX!~ Bcdt-V, ~ ti lf1l)lemrt tie l.abcr Cooe, ~ anende:l by Depclment Order No. 40-03,
Seres ct 2003, Feb. 17, 2003; See also I.Jxrga,p1 v. Phm:o hilstries, ~- GR No. 20333Z Jlll818, 2014.
1 l.k1h!d Seanen's U1ioo dlle f'li4lpinesv. IJ;M!o ~ Associati:ln, GR Nos. L-18778 &L-18TT9, AulJ. 31, 1967.
Phm:o ~ . ~ V. Phm:o hisries l.abcr Am:ia1i11 \PIIAL G.R No. 170830,Ai.g. 11,2010.
s Id.
6 G&STr.llSp(XICap.v.~G.R.No.160303,Sept. 13,2007.
Phm:o ndus1ries, ~ v."Pl-m:o rdusties Labor Amiml lPlAI,511pra.
Solidbank Co!poration Y. Ganief, GR No. 159460, NOY. 15,2010.
9 t&s lie Assul\n:e Co. W. ~ Associa1m v. The hsua' Life Aswance Co, G.R 1-h L-25291, Jal. 30, 1971.
,. Id.
11 Ma1ay;rg ~ rg ,rga MiJlggagiWlil sa MGrerofllld ~lM?} v. Ram:ls. G.R No. 113907. Feb. 28, 2(XX).

8~R REVIEWER ON I.ABOR [J.W
588
B.
LIABILITY FOR DEFIANCE OF ASSUMPTION/CERTIFICATION ORDER
OR RETURN-TO-WORK ORDER
1. LIABILITY FOR ILLEGAL STRIKE VERSUS LIAB~LITY FOR
DEFIANCE OF ASSUMPTION/CERTIFICATION ORDER OR
RETURN-TO-WORK ORDER.
The liability of union officers and or:dinary members for participating in a
strike which has been declared illegal, on the one hand, is different . ~
from their
liability when they defy a return-to-work order issued in relation to th~ assumption
of jurisdiction by the DOLE Secretary of a labor dispute affecting the national
interest or certification thereof to the NLRC for compulsory arbitration, on the
other hand.
While the former makes a clear-cut distinction between the liability of
union officers and ordinary union members who participated in the illegal strike or
in the commission of illegal acts in the course thereof, in the latter, no such
distinction exists as the very act of defiance of such order would result in the
termination of employment, irrespective of whether the defiant worker is a union
officer or an ordinary union member. This is so because once the DOLE Secretary
assumes jurisdiction over a labor dispute or certifies it to the NLRC for
compulsory arbitration, such jurisdiction should not be interfered with by the
application of the coercive processes of a strike.
2. JUSTIFICATIONS FOR TERMINATING DEFIANT
WORKERS. . (2) UFE v. Nestk,J an assumed case involving petitioner Union of Filipro
Tiie following are the justifications:
I. A strike tha1 is undertaken after the issuance by the DOLE Secretary
of an assumption or certification order becomes a prohibited
activity and thus illegal. The defiant striking union officers and
members, as a resul4 are deemed to have lost their employment
status for having knowingly participated in an illegal strike.
2. from the moment a worker defies a retum-to-work order, he is
deemed to have abandoned his job.2
3. By so defying, the workers have forfeited their right to be
readmitted to work3
' C.btara &Sais. i"ic.V. CA. G.RNo.155109, Sept. 29, 2010. .
Miele 278(g) i263(g)l, 1.abaCo:1e; f'Mppi"le Ames, Inc. v. Brimles, G.R No. 119360, Oct. 10, 1~7. 280 SCRA 515.
3 St~ Corporation of the Phiippinesv. SCP Employees Union, G.R. Nos. 169829-30, April 16, 2008.
CIIAl'TER FIVE
lABOR RELATIONS
3. ILLUSTRATIVE CASES.
There is a long chain of cases where not only the union officers but the
ordinary union members who defied the assumption/certification order and/or
return-to-work order were considered as having lost their employment status. Tiie
following may be cited:
(1) Sarmien~ v. T11ia1,1 where all the 44 defiant workers were declared to
have lost their employment status. While the employer, Asian
Transmission Corporation (ATC), has manifested its willingness to
accept most of the workers, and has in fact already done so, it has
balked at the demand of the remaining workers to be also allowed to
retum to work. Its reason is that these persons, instead of complying
with the retum-to-work order, as most of the workers have done,
insisted on staging the restrained strike and defiantly picketed tl1e
company premises to prevent the resumption of operations. By so
doing, ATC submits, these strikers have forfeited their right to be
readmitted, having abandoned their positions, and so could be validly
replaced. The Court agreed with this .position of ATC, thus: "In fact,
the petitioners argue in their pleadings that they were engaged only in
peaceful picketing, which would signify that they had not, on those
dates, returned to work as required and had decided instead to ignore
the said order. By their own acts, they are deemed to have
abandoned their employment and cannot now demand the right
to return thereto by virtue of the very order they have defied."2
Employees and 70 union officers and a member. It was held in this
case that "a strike that is undertaken despite the issuance by the
Secretary of Labor of an assumption or certification order becomes a
prohibited activity and thus illegal, pursuant to the second paragraph
of Article 279 [264] of the Labor Code, as amended. The union
officers and members, as a result, are deemed to have lost their
employment status for having knowingly participated in an illegal act."
It was held here: 'Thus, the NLRC correctly upheld the illegality of
the strikes and the corresponding dismissal of the individual
complainants because of their "brazen disregard of successive lawful
orders of then Labor Ministers Blas F. Opie, Augusto Sanchez and
Labor Secretary Franklin Drilon dated December 11, 1985,January 30,
1986 and February 4, 1986, respectively, and the cavalier treatment of
the provisions oI the Labor Code and the return-to-work orders of the
' Sanrienilv. The Hoo.Judge Q'oodo R Tui:o, G.R. Nos. 75271-73 &L-77567, Ji.ne 27, 1988.
8Tv,asis ~ - The beg<i"g l"d<frg was rea!limed i1 the Supreme CMs ResolCia1 data! Febnay 22, 1989.
Looi of Ffpro fn1,byees v. Nes8e fbwiles, Inc~ G.R Nos. 88710.13, Oec. 19, 1900.
 BAR REVIEWER ON IABOR I.AW
590
Minister (now Secretary) of Labor and Employment, oc Articles 264
and 265 (now renumbered Arts. 278 (263) and 279 [2641) xx.x."
(3) Other relevant cases are:
(a) St. SrholaJtirds College v. Toms.-1
(b) Federation of Fm Workm v. Inciong/
(c) Allied Banking Corporation v. NLRC/
4
(d) National Fedtration of LAbor v. NLRC;
(e) Dt O=rpo v. NLRC;5
(Q Toyota Motor Phils. Corp. Workers Association [[MPCWA} v. NLRC;6
(g) Manila Hott/ Employees Association v. Manila Hotel Corp} and
1
(h) Phihim Emphym Union v. Philippine Ghbal Communicatio11S.
1 GR No. 100158, .me 29, 1992, 210 SCRA 565. Af. lhe defm stiels, bah 111ioo d!icefs and oofray unbl membes.
were al dedired t> haYe kJSIIller erploymert s1alts lJlder lhe i:lllolw1g ratxx:ila1xxl.
2 GR No.L-49983,.6¢20, 1992. The &JpnmeCru1, citiYJ lhe san-emJ il l.rol di:itJro,dedcled aldefiallv.oo;ers
as hM'g bst l1ei' ~stallls. '\rnlxJtkld ewlera ~ llatlhe mr-roual petitiooels ~ ~ il Ile
~sttcestljed.'
1 GR le 116128 &116461, .At)' 12, 1996, 258 SCRA 724. 01 lhe basis dlhe rurgs il Ile Salrrienb, Ll1m d Fqxo, St
Sclmlica's and Federabt d Free~ ca9eS, Ile llDl ms and menters vdlo haYe ~ il lhe sail
~ ?JM,J, v.ee al deemed t> haYe bst tier ~ stalls, as a result d l1ei' defa1ce cl Ile ilS&IT¢n a
C81n3icnader.
• GR No. 113466, Dec. 15, 1997, 283 SCRA 275. Itwas afteged by peti5ooers lhat lhe dismssa d Iha 141 MXkers s based
~ oo a pm,a facie fmQJ Ila! ltief conrri1k!d VWJS l.daY,fu ads 1111le ~ Iller svi(e, as cerofel b)' lhe at,,
Prosealb'sOfti:e. 11 ldlimiY,I lhev.fii'f oflle lfisnissalol alfle 141 v.oo;ers, lwas heij lhatllis ale!Jalioo lsncOue.
Toecismssa 1s pnqiallf based oo llei'rerusal t> rwn ov,o11a112r11e 5eae0y o1 Labalm assunoo)Jisdi:tm OYel'
h! case oo Mm! 11, 1993. 11 fcr:I, deslie lhe mt d PNP persariel hwjl lhe Oistt:t Coomn!er ti ~ fie
v.aters t> aJlllli llifl Iha Rwn-b-V-krt ()der, lhe s'1ce arifnJed tnl M.rth 29, 1993 whEn Ile M:Jters cfsmnlled
Iler pklcl'ls. (See a.so l'lq,le's hime and Omtmial ~ and Wakes Orgaizaoon {ffi'l1 V. People's
~and Carm!ftial ~ GR No. L-37687, Marth 15; 1982, 112 SCRA440).
5 GR No. 101539, Seit 4, 1992. llis is acetfied case t> Ile NI.RC. The W rurber d Lrioo a'll::ess and menters
oo1m msnm h ttis case is 26. The~ Cwt. il alflmi-y,j lhe liRC's rurrg Olat Ile site stl:Jed oo Feooay 6,
1990 was legal, hcMYJ been cadda! i1 defooce d Ile crita!m ooler and ~ . IIDl9 that "Ille Lrilll
ms1rnembets vdlo pa1qlaled i1 sail s\i.e comritled pn:t10led ads (and Olerelcxe] ere deemed ti haYe lost Iler
stRJs of erpklymert,' eel Ile ~ hokfr,g ii lhe sail case cl Uni:xi d Fmpro, and fur1her poocm:ed Ila!
·~)nil,u1Ed Mlerce ~ Ila! lhe hMlua petitixlers dered ! h e ~ ader d Ile Seaetry cl Lm issued
oo Fetxuay 15, 1990. ~ a mall!J cl fcr:I, I was a;, oo Feoruay 23, 1990 vdlen Ile baricades were rerroied and Ile
mail gae d Ole CXl(1l)M)' was qieried. Herice, Ile tmrinatioo d fie ser,,ces ct Ile i1cMiJa petiialers is µ;1ified oo ttiis
gnmlable.'
1
GR Nas. 158786 &158789 and 15879S-99, Oct. 19, 2007. The~ O:u1. usrg as basis, pi;iJes sro,mg Ille ilega
adsaxmi!d by lhe ~ de:wed as vilxl Ile <istrissal d92 oomy lri:n menters vdlo pa1qlaid i1 Ile Mly 23
.m 28, 2001 pmt; and axice1ed mis ii defa'ice a tie rerofcalm ader. 1hese v,oo;ers' ads ii pimJ Md
~ il lhe_Mly 23 and 28, 3Xl1 ra'ties a pi:iets ....e:e pall!nl viJlifuls d lhe AJri 10, 2001 ~ d
~ O r d e r ~ by Ille DOLE Seaetry, l\!l(!I pnmi>ed lhe cam1issi:)n cl ads Iha! mghl lea! lo lhe
'Mxseni"g d an area:tf de!a'llraled situation.' M 278(g) 1263{g)J is dear flat stri<ers v.llo voote lhe
i!SSU11Jticn'cenificati Order ITf!'/ SIAfur oismissal from I\O!k. This was lhe siruatioo nlhe ""1t 23 and 28, 2001 pickets and
C0llCElted actions XXX.'
1
G.R. No. 154591, Milt!I 5, 3Xl7. The nAewas reit!!raled here, his: "Oefm:ed Ile ilSSU11)lioo ooleror a rwn-10 Wirt
ooler by a5'trg ~ - \\!lem alffll offter or a menter, is an ilegal act and, lherefa'e, a'di! !,1lXlld b- loss d
~ slctls.' ~ . ttiis case was disposed by lhe Hijl Coort by ai'frnlr9 Ole CA decisi:x1 "declaliY;J lhe
stri<e aridu:1Ed by j:)etiireJ lvtiEA a, 10 Februaty 1999 as fecJa and, ru;, resutng il Ole loss of errpi:J)lnenl stlbJs a
lhe lffll 0l'fals and meirt>es vdlo pa,oopated nlhe sail sl'ke."
CHArTER FIVE
591
LABOR RELATIONS
4. PERIOD OF DEFIANCE, NOT MATERIAL.
The length of time within which the assumptie:n or certification order or
re~_-10_-~ork order was defied by the strikers is not significant in determining
theu: liability therefor. The following cases are illustrative of this rule:
(a) U11iverri!J of San Agustin Employees' Union-Fr"W v. The CA,2 where the
period of defiance was less than nine (9) heours, i.e., from 8:45 a.~. to
5:25 p.m. on September 19, 2003.
(b) Ftdtralion of Free 117orkers v. Indong,3 where the period of defiance was
only nine (9) days.
(c) Samrimto v. Tuico, 4 where the period of defiance was for five (5)
months.
5. SOME PRINCIPLES ON DEFIANCE.
• The assumption/certification order may be served at any time of the day or
night5
• No practice of giving 24 hours to strikers within which to return to work.
There is no law or jurisprudence recognizing this·practice.6
• The defiant workers, besides being dismissed, may be subject 10 criminal
prosecution as well.7
• The defia~t strikers could be validly replaced.8
• The refusal to acknowledge receipt of the assumption/certification
orders and o!tier processes is an apparent attempt to frustrate the ends of
justice, hence, invalid. The union cannot be allowed to thwart the efficacy of
1 . GR No. 144315, Jut{ 17, 2006. This is ai assumed case. The &Jprerne Cwt ruled Dial ttie fallne d peti1ior1er PE\J's
ollt8'S In! members to tarp'f ime:flatelj 'Mil the DOLE Seaetaly's reun-lD-\1,\n orders dated 19 N<71e!rber and 28
NcNentier 1997 cam be <XX1daled. Ot<m:e cl the rebJrHHm orders d lhe Seaetry coostiUes avaid grwid tor
<isrrissm. lia.YeYer, beca.$! Ile i:lenffies ol lhe im a'll::ess In! menters Wire not kooM!, !he <ispos&? pal d lhe
decml ~ 'tlal lhe Seaetry d l.m is OO!C.1!d ti deerme v.oo im:rq !he Phicom ~ lful mrs
~ il Ile 1ecJa1 stri<e, and vdlo alfa9 Ile Lrioo members arrrii!d 111e1a1 a::ts or defied I l e ~ aders
d 19 NcM,rber 1997 In! 211 N!:Mlrrber 1997." Tile reconls cl tis case shew Ila! oo 22 NcMmlel' 1997, P11kan
IU)lsl1ecf i1 !he~ Oiit ~ a notice t> ~ enl)l7,'ees t> retm D v,oo;. These errpoyees ad rd repat
bade t> vm but camied !her mass mi. i1 fa:t. tey llted lhei' poet re my oo 22 Decenter 1997. Phican
loora'tf noffied t.1te 11ese ~ to exp1an 11 111Vg Yir/ ltief shcud not be disrrissed ta de'y;,g lhe renun-b¥.M
ader. Phicom hekl adrrinistatile he.mgs a, these discipfnay cases. Thereafter, Phla:tn disnissed lhese ~ for
abilldorvnenl d v,oo; ndefiance ol lhe reun-kw.<xlt ader.
2 G.R. No. 169632, Marth 28, 2006.
3 G.R. No. L-49983, April 20, 1992.
G.R. No. 75271-73, June 27, 1988.
Telefunken Semiconduclors Employees Union-FFWv. SOLE, G.R. Nos.122743 and 127215, Dec. 12.1997.
1
Urwersey of San Aguslil Empio'fees' Unoo-FFW v. The CA, G.R No. 169632, March 28. 2006.
1
San .lat de Oios Educatmal Fruidaioo Empklyees Lmn - WW v. San JUcn de Oios Educaxxlal Frux!atbl, klc.
jHospaa']. GR. No. 143341, May 28, 2004.
8 MaroopperMning Co!porationv. Blilantes, G.R No. 119381, Marth 11, 199€.

592 tlAR IUVIEWill ON IABOll !AW
the said orders issued in the national interest through the simple expediency of
refusing to acknowledge receipt thereof.1
2.
PICKETING
1. DEFINITION.
"Pidu1i11j' is a concerted activity of workers consisting in peacefully
marching to and fro before an establishment involve4. in a labor dispute generally
accompanied by the carrying and display of signs, placaros and banners intended to
inform the public about the dispute. 2
While workers have the right to pe2ceful picketing, no person engaged in
picketing is allowed to commit any act of violence, coercion or intimidation or to
obstruct the free ingress to or egress from the employer's premises for lawful
purposes, or to obstruct public thoroughfares. In the same light, no person is
permitted to obstruct, impede or interfere with, by force, violence, coercion, threats
or intimidation, any peaceful picketing by workers during any labor controversy or
in the exercise of their right to self-organization or collective bargaining or shall aid
or abet such obstruction or interference. No employer is allowed to use or employ
any person to commit such acts nor shall any person be employed for such
purpose.3
2. RIGHT TO PICKET PROTECTED BY CONSTITUTION AND LAW.
The r;ight to picket is part of the right guaranteed under the law "to
engage in concerted activities for purposes of collective bargaining or for their
murual benefit and protection."' This right is also duly guaranteed under the
freedom of speech principle in the Constitution.5
3. ABSENCE OF EMPLOYMENT RELATIONSHIP BETWEEN
PICKETERS AND EMPLOYER, EFFECT.
Picketing, if peacefully carried out, cannot be prolubited even in the
absence of employer-employee relationship between the picketers and the employer
being picketed'
4. LIMITATION ON RIGHT TO PICKET.
It is important to stress that the right to peaceful picketing should be
exercised by the wotkers with due respect for the rights of others. Hence,
1
Navalev. CA, G.R No.109957, Feb. 20, 1996, 253 SCRA 705.
2
la.va IWJd rg ~ i f f l l l jEWjv. NI.RC, GR No. 91980, Ji.ne 27, 1995.
Sec. 13, rue XXll, lnlt V, ~ ~ dlabaCode, as .mn:!ed.
~ ~ s a Esoov. EsooSlirldard Easen, tt.. GR~ l•24224, .ktf 30, 1965, 14 SCRA801.
Ile l.eoo v. Nablal Im lhlbl, GR No. L-7586, Jell. 30, 1957.
1
~ Associaloo ct Free labalm'5 [PAFLU} v.QiurtdFrst klslance, G.R No. L-49580, Jat 17, 1983.
CHAPTER FIVE 593
lABOR REIATIONS
comnuss1on by any picketing employee of any act of violence, coercion or
intimidation is prohibited Similarly, stationary picket !lnd the use of means like
placing of objects to constitute permanent blockade or to effectively close points of
entry or exit in company premises are likewise not allowed by law. 1 The strikers
staging the picket cannot also rightfully prevent employees of another company
which is not their employer, from getting in and out of its rented premises since
this will violate the right of innocent bystanders.2_In fact, under the so-called
'Tnnocenl By1/a111kr Rule," such employer is considered an '1nnount bystander" who has
no cmployer-tmployee relationship with the picketing strikers and thus may file for
an injunctive relief with the regular courts to enjoin the conduct of the picket The
NI.RC has no jurisdiction to issue an injunction ordet in favor of the innocent
bystander because of the absence of such relationship.
5. USE OF FOUL LANGUAGE, EFFECT.
In the event the picketers employ discourteous and impolite language in
their picket, such may not result in, or give rise to, libel or action for damages.3
6. INAPPLICABILITY OF MANDATORY REQUISITES FOR STRIKE.
The procedural but mandatory requisites tha: must be complied with
before a valid strike may be staged are not applicable to picketing. The only
requirement to make picketing valid and legal is that it should be peacefully
conducttd. This is articulated in the provision of parag-raph (e) of Article 279 (264]
· of the Labor Code in this wise:
"(e) No person engaged in picketing shall commit any act of
violeoce, coercion or intimidation or obstruct the free ingress to or
egress from the employer's premises for lawful purposes, or obstruct
public thoroughfares."
7. DISTINCTION BETWEEN STRIKE AND PICKETING.
To strike is to withhold or to stop work by the concerted action of the
employees as a result of an industrial or labor dispute. The work stoppage may be
accompanied by picketing by the striking employees outside of the company
compound. While a strike focuses on stoppage of work, picketing focuses on
publicizing the labor dispute and its incidents to infom the public of what is
happening in the company struck against A picket simply means to march to and
from the employer's premises, usually accompanied by the display of placards and
other signs making known the facts involved in a labor dispute. It is a strike
activity separate and different from the actual stoppage of work.
Se®l 11, ~ XIII, Book V, ~les b ~ I l e labaCode; No. 16, Gtilmes Go.oerrilg Laba~
l.in-a-,way l'liblicam, lrc. v. PemmertC<mee\Vm!JS 1km, G.RNo. L-25003, Od.23, 1981.
1 Phqlpr1e Conrne!tialand ~ Bat v. ~ Enl)k7tees Associam, GR No. L-29630, JU')' 2, 1981.

SAR R.EVIEWER ON LABOR LAW
594
According to Phimro lnd11slrits, lnr. v. Phimro lnd11Ilries LAbo,- Assoriation
(PILA), 1 while the right of employees to publicize their dispute falls within the
protection of freedom of expression and the right to peaceably assemble to air
grievances, these rights ate by no means absolute. Protected picketing does not
extend to blocking ingress to and egress from the company premises. That the
picket was moving, was peaceful and was not attended by acrual violence may not
free it from taints of illegality if the picket effectively blocked entry to and exit from
the company premises.
8. APPLICATION OF TOTALITY OF CIRCUMSifANCES DOCTRINE.
In distinguishing between a picket and a strike, the totality of the
circumstances obtaining in a case should be taken into account. For instance,
petitioners in Santa Rosa Co(/1-Cola Plant Emph?)ees Union v. Co(d-Cola Bottkrs Phils.,
Jnc.,2 contend that what they conducted was a mere picketing and not a strike. In
disagreeing to this contention, the High Court emphasized that it is not an issue in
this case that there was a labor dispute between the patties as petitioners had
notified the respondent of their intention to stage a strike, and not merely to
picket. Petitioners' insistence to stage a strike is evident in the fact that an
amended notice of strike was filed even as respondent moved to dismiss the first
notice. The basic elements of a strike ate present in this case: 106 members of
petitioner Union, whose respective applications for leave of absence on September
21, 1999 were disapproved, opted not to report for work on said date, and gaµiered
in front of the company premises to hold a mass protest ac"tion. Petitioners
deliberately absented themselves and instead wore red ribbons and carried placards
with slogans such as: "YES KAMI SA STRIKE," ''PROTESTA KAMI," ''.SAHOD,
KARAPATAN NG MANGGAGAWA IPAGLABAN," "CBA-'IVAG
BABOYIN," "STOP UNION BUSTING. "1ney matched to and fro in front of the
company's premises during working hours. Thus, petitioners engaged in a
concerted activity which already affected the company's operations. The mass
concerted activity obviously constirutes a strike. Moreover, the bare fact that
petitioners were given a Mayor's permit is not conclusive evidence that their
action/activity did not amount to a strike. The Mayor's description of wha r
activities petitioners were allowed to conduct is inconsequential. To repeat, what is
definitive of whether the a·ction staged by petitioners is a strike and not merely a
picket is the totality of the circumstances surrounding the situation.
Petitioner union in another case, l..qk GeothMmal Power- Progmsivt Employees
U11ion-AL[J_-TUCP v. Philippine National Oil Compa11J - Energy Development
Co,por-ation,3 contends that there was no stoppage of work; hence, they did not
strike. Euphemistically, petitioner union avers that it "only engaged in picketing,"
and maintains that "without any work stoppage, [its officers and members] only
1 GR No.170830,hJg.11, 2010.
1 GJUbs. 164302-03, Jal 24, 2007.
1 G.R No. 170351, Mi1d130,2011.
CHArTER FIVE 595
IABOR REIATtONS
engaged in nx protest activity." The Supreme Court, ho·.wevcr, ruled that it was a
strike and not picketing or protest activity that petitioner union staged. It found the
following circumstances in support of such finding:
(1) Petitioner union filed a Notice of Strike on December 28, 1998 with
the DOLE grounded on respondent's purported unfair labor practices, ,:e., "refusal
to bargain collectively, union busting and mass termination." On even date,
petitioner. Union declared and staged a strike.
(2) The DOLE Secretary intervened and issued a Retum-to-Work Order
dated Januaty 4, 1999, certifying the labor dispute to the NI.RC for compulsory
arbitxation. The Order indicated the following facts: (:) filing of the notice of
strike; (2) staging of the strike and taking control over respondent's facilities of its
Lcyte Geothermal Project on the same day petitioner union fil~d the notice of
strike; (3) attempts by the NCMB to forge a murually a-:ceptable solution proved
futile; (4) in the meantime, tl:le strike continued with no settlement in sight, placing
in jeopardy the su_pply of much needed power supply in the Luzon and Visayas
grids.
(3) Petitioner union itself, in its pleadings, used the word '~trike. "
(4) Petitioner union's asseveratigns ate belied by the factual findings of
the NLRC, as affirtned by the CA, thus: ''The failure to c:imply with the mandatory
requisites for the conduct of stp.ke is both admitted·and clearly shown on record.
Hence, it is undisputed that no strike vote was conducted; likewise, the cooling-off
period was not observed and that the 7--day strike ban after the submission of the
strike vote was not complied with since there was no strike vote taken."
In fine, petitioner union's bare contention th~t it did not hold a strike
cannot trump the facrual findings of the NLRC that petitioner wuon indeed struck
against respondent. In fact, and more importantly, petitioner union failed to
comply with the requirements set by law prior to holding a strike.
9. PICKETING AMOUNTING TO NUISANCE, ILLEGAL.
A picketing which is conducted as to unount to a nuisance is unlawful. It
is thus an act of nuisance where the obstruction to the free use of property
substantially interferes with the comfortable enjoyment of life or property or where
the picketing constitutes an unlawful obstruction to the free passage or use, in the
customary manner, of a street.1
10. OBSTRUCTION OF POINTS OF INGRESS A..'\l'D EGRESS.
Peaceful moving picket may constitute obstruction of the points of
ingress and egress which would make the strike illegal. In the same case of Phimco,2
1 31 Am. .llr. § 248, p. 955.
2 ftin:o kxbsffl, i1c. v. Phm:o knJslries Laoo- Associatbl (PILA), G.R No. 178830, hJg. 11, 2010.

SAR I\EVIEWER ON LABOR LAW
it was held that a peaceful moving picket may still be declared illegal if it obstructed
the ingress to and egress from the company premises. As shown by the testimonies
of witnesses which were validated by the photogtaphs taken of the strike area,
while the picket was moving, it was maintained so thse lo the mmpa9 gale! that it
virtually constituted an obstruction, especially when the strilters joined .hands or
were moving in circles, hand-to-shoulder, as shown by the photographs, that, for
all intents and purposes, blocked the free ingress to and egress from the company
premises. In fact, on closer examination, it could be seen that the mponthn/.! were
mnd11ding tht pi,k.et right al tht compal!J gaits. The obstructi.ye nature of the picket was
aggravated by the plactmenl ~f btnches, with strikers standing on top, directly in front
of the open wing of the company gates, cleor!y obstr11tling the entry and exit point1 of the
compa'!J compound.
With a virtual hwnan blockade and real physical obstructions,1 it was pure
conjecture on the part of the NLRC to say that "[t]he non-strikers and their
vehicles were xxx free to get in and out of the company compound undisturbed by
the picket line." Notably, aside from non-strikers who wished to report for work,
company vehicles likewise could not .enter and get out of the factoiy because of the
picket and the physical obstructions the respondents installed. The blockade went
to the point of causing the build-up of traffic in the immediate vicinity of the strike
area, as shown by photographs. This, by itself, renders the picket a prohibited
activity. Pickets may not aggressively interfere with the right of peaceful ingress to
and egress from the employer's shop or obstruct public thoroughfares; picketing is
not peaceful where the sidewalk or entrance to a place of business is obstructed by
picketers parading around in a circle or lying 00. the sidewalk. What the records
revealed belies the NLRC observation that "the evidence xxx tends to show that
what respondents acrually did was walking or patrolling to and fro within the
company vicinity and by word of mouth, banner or placard, informing the public
concerning the dispute."
·· The "peaceful moving picket" that the NLRC noted was based apparently
on the certifications issued by the Mayor and others2 which were presented in
evidence by the respondents to prove that the picket was "peaceful" The basis
thereof was the fact that there was absence of violence during the strike. But the
obstruction of the entry and exit points of the company premises caused by the
respondents' picket was by no means a "petty blocking act', or an "insignificant
obstructive act." While the picket was moving, the movement was in circles, very
close to the gates, with the strikers in a hand-to-shoulder fonnation without a break
in their ~nks, thus preventing non-striking workers and vehicles from coming in
an~ getting out. Supported b}' actual blocking benches and obstructions, what the
uruon demonstrated was a \'cry persuasive and quietly intimidating strategy whose
chief aim was to paralyze the operations of the company, not solely by the work
Berdies Nd makeshftslruCbJres bOll1 ou&1e aid ilSi:fe !he gates.
Issued b)t Ma)tor <!em P.eyes. Fr. AdevlSO, Fr. Fausto and Barcrigay Seaeta1y Gesmnfo.
CHAPTER FIVE 597
IASOR ?-(lATIONS
stoppage of the participating workers, but by excluding the company officials and
non-striking employees from access to and exit from the company premises. No
doubt, the strike caused the company. operations considerable damage, as the
NLRC itself recognized when it ruled out the reinstatement of the dismissed
strikers.
3.
LOCKOUTS
1. DEFINITION.
"uckoul' means the _temporary refusal of an employer to furnish work to
its employees as a result of an industrial or labor dispute.•
2. ELEMENTS.
Based on this definition, the following are the elements of lockout
(1) Temporacy refusal to fumish work by the employer; and
(2) Occasioned by an industrial or labor dispute.
The word "tempormy,, is highlighted because i{ the refusal of the employer
to provide work to his employees is pe.ananent, it would already amount to
tennination of employment due to closure of the establishment, the consequences
and ramifications of which will be totally diffetent fro~ lockout, to wit
{a) Since it is already in the nature of closure of the establishment, the
result is the termination of employment of the locked-out employees;
(b) The validity of the employer's closure action, being peunanent, will
be measured no longer on the basis of its compliance with the
requisites for a valid lockout but on the basis of its compliance with
the requisites for a valid closure; and
(c) The affected employees would be entitled to the separation benefits
in accordance with Article 298 (283], particulatly, those provided for
closure.
3. VARIOUS FORMS OF LOCKOUT.
Lockout consists of shutdowns, mass retrenchment and dismissals
initiated by the employer.2 It, however, may take other forms such as the
cmployds act of excluding employees who are union members.3
4. REQUISITES FORA VALID LOCKOUT.
To be valid, a lockout should comply with the following requisites:
1 Artke 219(.o) (212(p)L Laber Code, as anended brf Sedi>n 4, RA No. 6715; fbal Sri of AJamilos Emplo)'ees lMI
lRBAfU] v. NLRC, GR Nm. 100342-44, Oct. 29, 1999.
1 Sedion 3, P. 0. No. 823, as amended by P.O. No. 849.
, ComJiex Ee:tooi:s Empk7Jees A5s0dabl [CEEA), et. v. NI.RC, GR No. 121315. July 19, 1999.

598 BAil REVIEWER ON lAIIOR. lAW
. First requisite - It must be based on any or both of the following two (2)
exclusive grounds:
(1) Unfair laJ;,or pa.ctice (ULP) of the labor organization;!
(2) Collective bargaining deadlock (CBD).
Second requisite - A notice of lockout must be filed with the NCMB-
DOLE;
Third requisite - A notice must be served to the NCMB-DOLE at least
twenty-four (24) hours prior to the talcing of the lockout vote by secret balloting,
informing said office of the decision to conduct a lockout vote, and the date, place,
and time thereof and asking it to supervise the taking of the lockout vote;
Fourth iequisite - A lockout vote must be taken where a majority of the
members of the Board of Directors of the corporation or association or of the
· partners in a partnership, obtained by secret ballot in a meeting called for the
purpose,mustapproveit;
Fifth requisite • A lockout vote report should be submitted to the
NCMB-DOLE at least seven (7) days before the intended date of the lockout;
Sixth requisite - Obse1Vance of the cooling-off period of 15 days, in
case of ULP of the labor organization, or 30 days, in case of CBD, reckoned from
the date of filing of the notice of lockout (per 2nd requisite above); and
Seventh requisite - The 7-day waiting period reckoned after the
submission of the lockout vote report to the NCMB-DOLE (per 5th requisite
above) should be fully complied with in all cases.
S. CONSEQUENCES OP ILLEGALITY OF LOCKOUT
a. Re1iels available to illegally locked-out employees.
In case of an illegal lockout, any worker whose employment has been
terminated as a consequence thereof shall be reinstated with payment of full
backwages and other beo.efits.2
b. Effect when both parties have acted in pari delicto.
. If both parties have acted in pan diGdo in that the employer is guilty of
ill~ lockout and the union is culpable for illegal strike, the dismissal of the
striking employees is unwarranted and their reinstatement should be ordered as a
matter of cowse. This doctrine in labor cases is not a novel concept. It has been
1
See Al1icle ~ 1249) u ULPs dla:ionrganilaticm..
2
3dparagraph, Arti:fe 279(a) (264(a}L LalxrCode; No. 28, Guideliles GoYemng I.ab« P.ela1ms.
CHAnER.flVE 599
WOR RELATIONS
applied in many cases,1 the latest of which is the 2011 case of A11ta111otive Enune. 2
Both parties here filed clwges against each other, blaming the other party for
violating labor laws. Petitioner AER filed a complaint against respondent Unyon
and its 18 members for illegal concerted activities. It likewise suspended 7 union
members who tested positive for illegal drugs. On the other hand, Unyon filed a
countercharge accusing AER of unfair labor pmcti~ illegal suspension and illegal
dismissal In other words, AER claims that Unyon was guilty of staging an illegal
strike while Unyon claipis that AER committed an illegal lockout. Consequently,
since both ~ and Unyon are at fault or in pan deb, it was ruled that they should
be restored to their respective positions prior to the illegal strike and illegal lockout.
Nonetheless, if reinstatement is no longer feasible, the concerned employees should
be given sepuati.on ~y up to the date set for the retum of the complaining
employees in lieu of reinstatement.3
4.
ASSUMPTION OF JURISDICTION
BY THE DOLE SECRETARY
l ORDER OF TOPICAL DISCUSSION.
The discussi~n of this topic is divided into the following sections:
I. TWO (2) OPTIONS OF DOLE SECRETARY
11. ASSUMPTION OF JURISDICTION
Ill. CERTIFICATION OF LABOR DISPUTE TO NLRC FOR COMPULSORY
ARBITRATION
IV. RETURN-TO-WORK ORDER
I.
TWO (2) OPTIONS OF DOLE SECRETARY
1. DOLE SECRETARY HAS WIDE DISCRETION.
Article 278(g) [263(g)] provides that when in the opinion of the DOLE
Seactary, the labor dispute causes or will likely to cause a strike or lockout in
an industty indispensable to the national interest, he is empowered to do either
of two (2) things:
t Pfiillm lntll.fastill, k& v. tlRC, G.R. No. L-69847, 0d. 18, 1982, 117 SCRA 659; A1qlpite Aifnes, re. v.
&trites, G.R No.119360, Od. 10, 1997, 280 SCRA515; FilsttayWertt Trcnspalalion Co.,"- v. The I-bl Secreta,y
Ccllfesor,G.R.No. 106316,MayS, 1997.
2 AtAano1P1e fn;Jiie Relllifers, b!(AER) v. Progresl>alg lkrf0n Ill ll'GB ~Ir.Ya sa AER, G.R. No. 160138, Ju>/ 13,
2011.
3 See also lhe P.escMcxl dated Jaway 16, 2013 on the Mm! b Pa1ial Recol\Skleration Bed IJof ~ Unyon Ng
M.Ja ~ Sa AER \Un)'an) vdi:h questioned Ole &iprane CMS Ju~ 13, 2011 decision hsoflr as tt fa'led ID
alfcltl ba:kwarJes bfourteen (14)dl5 lll;ffllU'S.
600 BAR REVIEWER ON LABOR LAW
(1) He may assume jurisdiction over the labor dispute and decide it
himself; or
(2) He may certify it to the NLRC for compulsory arbitration, in which
case, it will be the NLRC which shall hear and decide it.1
1bis law is unique in the sense that the very "opinion" of the DOLE
Secretary is conferred with the force and effect of a law. Notably, there are no
criteria set by the law on when the DOLE Secretary should assume jurisdiction
over a labor dispute or when he sho.uld certify it to the NLRC for compulsory
arbitration. The choice is obviously discretionary and hi_s alone to determine.
2. VARIATIONS IN THE OPTIONS.
Having the two (2) options above, the DOLE Secretary may do the
following variations thereof.
(a) Asswne jurisdiction over a labor dispute and at the same time certify it
to the NLRC for compulsory arbitration. This is illustrated by the case of
PASVTL/Pam,al Liner,2 where, on 21 February 1995, upon petition of private
respondent PASVIL, then DOLE Secretary Ma. Nieves R. Confesor, pursuant to
Article 278(g) (263(g)] of the Labor Code, assumed jurisdiction over the dispute
and certified it to public respondent NLRC for compulsoi:y arbitration.
(b) Initially asswne jurisdiction over a labor dispute and later, on a
different date, certify the same labor dispute to the NLRC for compulsory
arbitration. The case of Sulpicio I.i111s3 best exemplifies this situation. On March 1,
1994, petitioner union filed with the NCMB, a notice of strike due to collective
bargaining deadlock. On March 23, 1994, the DOLE Secretary issued an Order
assuming jurisdiction over the labor dispute pursuant to Article 278(g) (263(g)]
of the Labor Co. Meanwhile, on May 20, 1994, petitioner union filed with the
NCMB a second notice of strike alleging that respondent company committed
acts constituting ULP amounting to union busting. Provoked by respondent
company's alleged wifair labor practice/ s, petitioner union immediately conducted
a strike vote. Thus, on May 20, 1994, about 9:30 o'clock in the morning, 167 rank-
and-file employees, officers and members of petitioner, did not report for work
and instead gathered in front of Pier 12, North Harbor at Manila. As a remedial
measure, the DOLE Secretary issued an Order dated May 20, 1994 directing the
striking employees to return to work; and certifying .the labor dispute to the
NLRC for compulsor,y arbitration. On September 29, 1995, the NLRC issued a
Resolution declaring the strike of petitioner's officers and members illegal, with
notice to ·respondent of the option to terminate their (petitioner's officers)
employment.
I See also Mx:le 278(i} (263{i)1 l.aXJ CoJe.
1 PASVU'asaia l.iler, n:.WMers Uli:n-NAFLU Y. tl.RC, G.R No. 124823, Mf 28, 1999.
1 ~ ~a<Ja.va sa &Apa> Liles, h:.-NAFLU v. Supoo Liles, Inc., G.R No. 140992, M1rth 25, 2004.
CIIAl'TER FIVE
LABOR RELATIONS 6o1
II.
ASSUMPTION OF JURISQICTION
1. A POLICE POWER MEASURE.
The power to issue an assumption orde: is an extraordinary authority
~ted ~o the DOLE Sec~e~ry, the exercise of ~ch should be strictly limited to
national lllterest cases.1 It ts Ill the nature of a police power measure.2 This is done
for the promo?~n _of the comn:on good considering that a prolonged strike or
lockout can b_e ~cal to ~e national economy. Th.e DOLE Secretary is mandated
t~ act to ~~ md~tnal peace. Thus, his assuming jurisdiction over a labor
~spute or ~s certification thereof to the NLRC for compulsory arbitration is not
tntended to tmpede the workers' right to strike but to obtain a speedy settlement of
the dispute.3
2. POWER OF THE PRESIDENT OVER NATIONAL INTEREST
CASES.
. . . . Notwithsta?ding. the power granted to the DOLE Secretary to assume
Ju.ttsdiction over national tnterest labor disputes or to certify them to tlie NLRC
for compulsory arbitration, the President of the Philippines shall not be precluded
from doing any of the following:
(1) to dete.anine the industries that., in hi~ opinion, are indispens;ble to
the national interest; or ·
(2) to intervene at any time and asswne jurisdiction over anv such labor
dispute in order to settle or teaninate it4 •
Unlike his alter ego, the DOLE Secretary, the President, while possessed of
the power o~ a~sumption, has no similar power to "certify the [labor dispute] to
the Comm.tss1on [NLRC} for compulsory arbitration," this power being
granted solely to the DOLE Secretary. His role is confined to assuming jurisdiction
thereover, thus: '\[T)he President of the Philippines shall not be precluded from
determining the industries that., in his opinion, are indispensable to the national
interest., and from intetvening at any time and ass;uming jurisdiction over any
such labor dispute in orde~ to settle or terminate the sarne."S
I No. 22, Guilefnes Cl<M!rni'q l..ab(J Relalms,
2
"Pc&:e JX7,YI" has been defned as Ile poNer nlE!el1I ii a9(7,'elmleflt t> ~ I.Ms, v.itin COOSIMx!al rmts,ti promo1e
1t11rader, saletf, healh, nmls Md general wem cl sooet{. The pcli:e power, 11:xJeltier llilh lhe power ot emi1mt
dornan and Ile power cl laxabt, is !rl mererrt power cl gc7/ellYnelt Md :kles net need t> be expresst,, coolered by' Ille
~{Trans-Asia~ Liles, re - lJli:ensed Dtw5 Enl>~ I.ml-Associated l..ab(J lklials {TASLJ.
ALU} Y. C,A, GR No. 145428, Mf 7, 2004; M!rlia Oicrnood Hole! Enl>b,'ees' Uli:xl v. CA; G.R No. 140518 Dec. 16
2004, 447 SCP.A 97). ' '
1
Seel'hlread Wmeis ln:11 ll'™J]v. Caiesa, G.R No. 117169, March 12, 1997, 269 SCRA 293.
Artx:le278(g) 1263{g)], l.abaCode;No.30,NCM3 PrrnerooSlrile. f'deting am Loiout, 2nd &fflx)n, Decsrber 1995.
kl.;kl.
602 SAR REvlEWER ON l.ABOR I.AW
'The President, when he intervenes, may thus personally assume
jurisdiction over the labor dispute and decide it himself or, in the alternative, he
may create a body to discharge his mandate ~der the law. The b~st _example of
Presidential intervention involves the labor dispute between Philippme Airlines
(PAL) and Philippine Airlines Employees Association (PALfu\) in 1998 .w~ch
resulted in a strike, where former President Joseph E. Estrada mtervened by 1ssumg
Admini1trative Order No. 16 creating an Inter-Agency Task Force to aid PAL and its
employees in solving the problem. The Task Fore~ was ~omposed of ?1e
Departments of Finance, Labor and Employmen~ For~ Aff~s, Transportauon
and Communication, and Touris111, together with the Secunoes and Exchange
Commission (SEq. Former Secretary of Finance Edgardo Espiritu, was designated
chairman of the Task Force. It was "empowered to summon all parties concerned
for conciliation [and) mediation [for) the purpose of arriving at a total and complete
solution of the problem." Conciliation meetings were then held between PAL
management and the three unions representing the airline's employees, with the
Task Force as mediator. This resulted in the forging of an agreement which
suspended the CBA for a decade.1
3. GRANT OF POWER FOR THE PROTECTION OF STATE, NOT OF
LABOR NOR OF EMPLOYER.
Having been enacted pursuant to the police power of the State, Article
278(g) [263(g)] requires that the powei:s thereunder b_e exe~cised only ~ l_ab?r
disputes involving ~dustries "indispensable to the naoonal 1ntere~t.2 This _is tn
keeping with the rationale that any work stoppage or_ slowdown 1n a parttcul~
industry can be inimical to the national economy. It 1s clear therefore that said
article was not written to protect labor from the excesses of management, nor was
it written to ease management from expenses, which it normally incurs during a
work stoppage or slowdown. It is an error to view the assumption order of the
DOLE Secretary as a measure to protect the striking workers from any retaliatory
action from the employer because this law was written as a means to be used by the
State to protect itself from an emergency or crisis. It is not for labor, nor is it for
management.3
4. GRANT OF POWER NOT VIOLATIVE OF RIGHT TO STRIKE.
The grant of assumption/certification power under Article 278(g) (263(g))
clearly does not ·interfere with the workers' right to strike but merely regulates it,
when in the exercise of such right, national interests will be affected. The rights
1 See~ v. Espiru, GR No. 135547, JM. 23, 2002; FTlfit Altendaits and ~ Associalm a tie Phllppiles
[FASAPj V. Phqlpile Ames, loc., G.R No. 178083, .M/ 22, 2008 and Resouoon on lhe Fist Mltion fa Reconsideraooo
~ dated Oct. 2. 2009.
1 PliJi!t,e Sd'IXl aaisriess ~ v. Noriel, G.R No. L-80048. hlQ. 1s. 1988. 164 SCRA 402; Samento
v. Tito, GR Nos. 75271-73. June 27. 1988. 162 SCRA 676; Phlippne Annes, n:. v. Secreay a Labor in!
~ G.R No.88210, Jai. 23, 1991, 193 SCRA 223.
Mr,ia IJ0rood Ha£!! En1>17y,!es' U1ioo V. CA, G.R No. 140518, Dec. 16, 2004.
CHAl'TIR FIVE
IABOR RELATIONS
granted by the Cons~tution are not absolute. They are still subject to control and ·
limitation to ensure that they are not exercised arbitrarily. The interests of both the
employers and employees are·intended to be protected and not one of them is
given undue preference.1
5. INDUSTRIES INDISPENSABLE TO NATIONAL INTEREST.
Tb.e determination of specific industries indispensable to the national
interest is left to the discretion of the DOLE Secretary. Past issuances of the
DOLE Secretary have not made nor attempted to mention specifically what the
industries indispensable to the national interest are. It was only in Department Order
No. 40-H-13, Series of2013,2 that an enumeration is made of such industries. Section
2 thereof added a new Se,tion 16 to &tit XXll, Bcok V of the Omnibu, Rulu
Implementing the Labor Code, as amended,3 to read as follows:
"Section 16. Industries Indispensable to the National
Interest: :-- For the guidance of the workus and employers in the filing
~f p~1111on . for assumption of jurisdiction, the following
mdustncs/services are hereby recognized as deemed indispensable 10
the national interest:
a. Hospiial sector;
b. Electric power industry;
c. Water supply services, to ex9ude small water supply
services such as bottling and refilling stations;
cl. Air traffic contro~ and
e. Such other industries as may be recommended by the
National Tripartite Industrial Peace Council (fIPq."
• Obviously, the above enumeration is not exclusive as other companies or
fums or industries may be considered indispensable tD the national interest based
on the appreciation and discretion of the DOLE Secretary, or as may be
recomm~ded by TIP<;:, or because they have already been judicially adjudged as
being indispensable to the national interest Examples are:
(1) PSBA v. Norit/,4 where the Court has declared that the administration
of a school is ·of national int~rest because "xxx ~t] is engaged in the promotion of
the physical, intellectual and emotional well-b'eing of the country's youth." Work
stoppage at a school unduly prejudices the students and entails great loss to all
concemed in terms of time, effort and money. s
1
Pl'llJeadWodlers Looi P'™,'j V. Caiesa, S14Ja.
1 ~ by DOLE Seaelilly Rosanda ~ o n Oc!ooe<21, 2013.
1
~ XXII ICoo::if.1000, Sites cm Locko.rtsl, Boole. Vd lhe ~les ti ~ l lhe Labor Code has been lhe StqeCt d
several amendlllE!llls mas lhe a,es mdx:ed by Depmient Onie.' No. 4C. Series a 2003. Oepment Onie.' No. 40-
G-OJ. Sereso12010 [Matd:l 29,20101. arx1 ~Orner No.40-H-13, Seres a2013 l0clcbel 21. 2013!-
Phippne Schoa of BusilessMnnsratic:.n v. Na'd, GR No. 80048, hlg. 15, 1988, 164 SCRA 402.
5
SeeCoocurri'g Opili:lnoll.t.Juslx:eAtaniJ P ~ i l Phm:ol'lduslres, lnc.v. Mims, G.R No.120751,~
17, 1999, 304 SCRA 747.

SAR l\£VIEWtR ON u.aoR u.w
604
(2) Sarmiento v. Tuiro,1 where an enterprise exporting 90% of its pmduction
and generating more than $12 million do~acs pee year was declared to be of
nation21 interest Any disruption of operations would have.caused the ~elady of
f export consisting of finished products previous1y conurutte to
shi pments o th ·
customCIS abroad, .a delay that would have hampered e economic recovery
program pursued by the govemment2 .
(3) Intmuzlional Pham,(J(t11tital!, Inc. v. Semtary of Labor.3 where_ the
manufacture of drugs and pharmaceuticals has been declared to be of national
interest , issue the assumption or certification order. Petitioner, in Capitol Medi,al Center,•
4
(4) Philippine Airlines, Inc. v. Semtary of Labor and Employment, wh~ce the
· of an aww_:_1:-e that services domestic routes has been deemed to be imbued
operation •
with national interest
(5) Phi/Jread Workm Union (P111t'U) v. unfmor,5 where _the company :vas
considered to be indispensable to the national interest becau~e 1t ~vas responsible
for 22% of the tire production in the Philippines, and work d1sru_pt10~ would have
ted the already worsening unemployment situation but also
not only aggrava £urth • · · th
discouraged foreign and domestic entrepreneurs from er uwesttng in e
country.
6. ASSUMPTION AMOUNTING TO GRAVE ABUSE OF DISCRETION.
Needlessly, the assumption of labor dispute in an industry _whi~ is not
«· di ble to the national interest" amounts to grave abuse of discretion. For
1n spensa .. • Ph· I J..-t · 6
· · d dared that a match factory like the petitioner in 1111ro nwu nts,
1nstance, It was e • . d "• di h~ f() th
though of value, can scarcely be considered as an U:, us try . 1n spe111~ ~ . e
notional inures/' as it cannot be in the same category as genecat1~n : ~~bu_tlo~
of energy or those undertaken by banks, hospitals, and export-ooent Ill ustoes.
Thus, it ~s declared here that the DOLE Secre~ act~d with grav~ abuse of
discretion in assuming jurisdiction over the labor dispute in this case without _any
showing that the petitioner was engaged in an industry indi!pensable to the national
interest.
Llkewise in GIE Directories,1 the Supreme Coun· declared the DOLE
Secretary to be ~thout jurisdiction to take over a labor ~ute invol~~ a
company that produced telephone directories since ~eyroductl~~ and publication
of telephone directories, which is the prin~pal acbVlty_of p~t1t1oner GTE, _c ~
scarcely be described as an industry affecttng the national interest -~TE 1s ·
publishing fum chiefly dependent on the marketing and sale of advertising space
1 GRNo.75271-73,.uie27, 1988, 162SCAA676.~ .
See Ctro.ntg Opilmat.t..lus6::eArBm PilY:lri>M n Phm» lndusties. nc. v. MlirleS, supra.
GR Nos. 92981-83,Jat 9. 199U~ SCAA 59,62.
4 GR. No. 88210,Jal. 23, 19131, 193 SCRA 223,226.
GRNo.117169,Mirdl 12. 1997,269SCAA393,400-401.
~1£Di'edDri25Corpaal01V. ~ GR No.76219, I/at 27, 1991, 197 SCRA452,470-471.
CHAPTER FIVE 605
LABOR RELATIONS
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 expon-
oriented industries." It cannot be regarded as playing as vital a role in
communication as other mass media."
7. PRIOR NOTICE AND HEARING, NOT REQUIRED.
It is well-established that the normal due process requisite of prior notice
and hearing is not required to be complied with before the DOLE Secretary may
maintains that the DOLE Secretary cannot exercise his powers under Article 278(g)
(263(g)} without observing the requirements of due process. Citing lnagnolia Po11lt,y,2
the Supreme Coun held that the discretion to assume jurisdiction may be exercised
by $e DOLE Secretary without the necessity of prior notice or hearing given to
any of the parties. The rationale for his primary asswnprion of jurisdiction can
justifiably rest on his own consideration of the exigency of the situation in relation
to the national intercst.3
8. DOLE SECRETARY MAY ASSUME JURISDICTION EVEN IN THE
ABSENCE OF FORMAL DECLARATION OF CBA DEADLOCK..
In national interest cases involving unresolved issues in the CBA
negotiations, the DOLE Secretary is not precluded from assuming jurisdiction over
the labor dispute or certifying it to the NLRC for compulsory arbitration even in
the absence of foanal declacation of deadlock by cither or both of the parties. 'This
was the holding in Pilipinas Shell Petrok11111 Corporation.• In this case, the labor dispute
between the union and the company concerns unresolved matters related to their
negotiations for a new CBA. The power of the DOLE Secretary to assume
jurisdiction over this dispute includes and extends to all questions and
controversies arising fro~ the said dispute, such as, but not limited to, the union's
allegation of bad faith bargaining. It also includes and extends to the various
unresolved provisions of the new CBA such as compensation, particularly the
matter of annual wage increase or yearly lump sum payment in lieu of such wage
increase, whether or not there was deadlock in the negotiations.
As there is already an existing controversy on the maner of wage increase,
the DOLE Secretary need not wait for a deadlock ~ the negotiations to take
cognizance of the matter. That is the significance of the power of the DOLE
Secretary under Article 278(g) (263(g)] to assume jurisdiction over a labor dispute
causing .or likely to cause a strike or lockout in an industry indispensable· to the
· ~tled'caCene-,rev.Tl'cflY).GRt-n 1556ro,.uie30,2005.
t.laJllia PtxAy 8rl)bJees 1.m1v.Smez. G.R ~- 76227-28. Nol. s.1986. t.!i'w Resdutm.
, Seealso No. 30, NCMI l'rineron $Hie. Pldle!i1g mid loolru. 2nd Edi!xxl. Oecesrbe' 1995.
4 Tam,iaoSlel Reilety ~Association V. Plrpi,as Shel~ Caporcti:x,, GR. No. 1700J7, ~ 07, 2014.
 SAR R{VIEWrn llN V.BOR U.W CHAPTER FIVE
6o6 LABOR RELATIONS

. · 1 E thing considered, therefore, the DOLE Secretary (4) On other pending cases. - The parties to an assumed/certified case,
nanonal interest. very . . di . th I b
under pain of contempt, are required to inform their counsels and the DOLE
commine no a use of discrea·on when she assumed 1uns cnon over e a or
. d b
dispute of the union and the company. Secretary/NLRC Division concerned, as the case may be, of all pending cases that
are related or incident to the assumed/ certified case before it.1
9 ASSUMPTION OR CERTIFICATION IS VALID E~N IF MADE
. BEFORE CONDUCT OF STRIKE OR LOCKOUT. 11. LIABILITY FOR DEFIANCE OF ASSUMPTION/CERTIFICATION
ORDER OR RETURN-TO-WORK ORDER.
The assumpnon · or ccrtifican'on ·power. may be exercised. by the. DOLE
before the actual staging of a strike or lockout since Article 278(g) (NOTE: This is discussed under the topic of "B. LIABILITY FOR DEFIANCE OF
Secretary even . th . t cc of a strike or lockout but only of a labor ASSUMPTION/CERTIFICATION ORDER OR RETURN-TO-WORK ORDERn, supru).
,h\] does not reqwre e eXls en
[263 161 . 'fi .
• . • · t the time of such assumpnon or cern canon.2
dispute involVlllg nanona1intecest, a . . d 12. SUBMISSION OF NATIONAL INTEREST DISPUTE TO
. rdina authority strictly limited to nattonal interest cases and ~te
It 1s an exttao ry "which can justifiably rest on his own VOLUNTARY ARBITRATION MAY BE MADE AT ANYTIME.
to the President or to the DOLE Secretary, . . . ,,3
. . f th
cons1deranon o e e,agency 0 . f the situation in relanon to the nanona1mterest Before or at any stage of the .omp11/Jory arbitration process, the parties
may, by mutual agreement, decide to bring the matter for resolution before an
tO. EFFECT ON STRIKE OR LOCKOUT. accredited Volwitary Arbitrator or Panel of Voluntary Atbitrators of their own
. f inrisdiction or certification to the NLRC of a labor choice, in which case, the notice is deemed automatically withdrawn and dropped
The assumpnon o ,-·
from the docket.2 Although Article 278(h) [263(h)] mentions only ".omp11/Jory
dispute has the following effects:
0
arbitration prowl' thereby giving the impression that voluntary arbitration may only
(1) Qn intended or impend~ f i ~ or _lockout.loclco~J' : be resorted to if the labor dispute is pending with or certified to the NLRC for
• rtifi · th intended or unpending strike or such purpose, there is nothing, however, that can prevent the parties from mutually
assumpnon/ ce canon, e . . th filing of any motion for
· all ·ioined notwithstanding e . agreeing that the labor dispute be submitted for voluntary arbitration, even if the
automattc Y en • . .£i .on order or the non-resolunon of any
reconsideration of the assumpnon/cern canb . d t the Office of the DOLE same is pending with the DOLE Secretary, in case be assumes jurisdiction over the
such motion which may have been duly su mllte o labor dispute, or while the case is still··being conciliated before the NCMB. This
b ~ d taken provision recognizes and breathes life to the constitutional principle of giving the
4
Secretary.
(2) Qn actual strike or lockout. - If a work stoppa_~ as ea y highest preference 10 the use of voluntary modes to settle labor disputes.3
. / rtifi · all striking or locked-out
place at the time of the assumpnon cc canon, ball . ediatel
em lo ees sball immediately return to work and the employer s urun . . y Ill.
p y . d dmit all workers under the same telllls and condinons CERTIFICATION OF LABOR DISPVTE TO NLRC
resume operaaons an rea
prevailing before the strike or lockout5 FOR COMPULSORY ARBITRATION
(3) Qn cases already filed or may be filed. - All cases ~rween the s~e
parties ~cept where the assumption/ certification order specifies otht~s~ 1. ANOTHER OPTION.
inclucfuig the issues submitted for arbitration which are ~eady filed or may ~d ed The other option of certification of the labor dispute to the NLRC,
and are relevant to or are proper incidents of the certified case, are cons1 ere instead of directly assuming jurisdiction thereover, simply means that it is now the
subsumed or absorbed by the assumed/ certified case.6 NLRC which shall hear and decide the labor dispute so certified to it in the exercise
of its original junsdiction. This dispute will then be known technically as a "artijitd
labor disp11tt. "4 The NLRC has its own rules on how it will hear and decide them.

·-1 1 See ~paill}cl!)h d SecfM 3(bl. R1Ae VIII d lhe 2011 ~ IU!s d Proame. See also l!agoo,j 8.Jja-1 Capaatioo

1·
-~·
Reaty lnveslaS crid Cleveq>ers V. Opie, G.R No. 73334, Dec. 8, 1986.
Artide278(h)l263(h)], l..lilaCode;No.20,NCM!PrinerooSfu,Prieilgaldl..odr.aJl,2nd8im,llecen1>er1~.
Sedxln 3, Artide XIII of 1he Co-lsb'hrtioo permty prowles lhat '(f1',e S1a!e shal pranole lhe pirq>le of shared
:;,. respooshiy betM!ell ~ a n d ~ and tie pe{erenial use d\druy nmes i'I ~ ~ niJdiJJ
f.
·).;tJA:
an::iiaoon, and shal er4crce lhei ~ CXXT'4>1iarce flerewih 10 fos1er i1dJsbial peace,'
The cases cetified IO lhe ~ (NtRC) f o r ~ abtatioo IJ1der Art:le 278(g) (263(g~ dfle l..lilaCode are
j
4
~ Celled "c:etlled 1ooa ~ . ' (See Sedxln 2, ~le Vlft, 2011 NI.RC rues of l'roame).
 CKAl'TER. FM 609
BAAREVIEWERON lA80RlAW IABOR llElATIONS
6o8
certification has the effect of automatically enjoining the intended or impending
CCANNOTAMENDDOLESECRETAR~SORDE~ strike. Simply stated, assumption of jurisdiction over a labor dispute, or the
2· NLR d ••, rule is that the NL.RC cannot amend the terms of the
The fun amen= •· · ul certification of the same to the NLRC for compulsory arbitration, always co-exists
s certification order. The NL.RC, when s1tung Ill a comp sory with an order for workers to return to work immediately and for employers to
D~LE. Secrewy' 'fi d . b the DOLE Secretary, is not taking the role of a
rb1uattoo case certl e to It y . ' . l th readmit all of them under the same terms and conditions prevailing before the
~ dicial oun but as an adminisuative body charged Wlth the ~uty to un_p ement e strike or lockout. 1
JUd cf the DOLE Secretary. As the implementing body, its authon~ does not
or er o d • 1 H · been certified to the The return-to-work order is a valid statutory part and parcel of the
• 1 d the power to amend the Secretary's or er. avmg
11\C u e t th full and complete settlement or assumption and certification orders2 given the predictable prejudice a strike or
NL.RC it becomes the proper forum ,or e .
• . U b di b tween the parties as well as 1ssues that are lockout could cause not only to the parties but more especially to the national
adjudicanoo of a 1a or sputes e •
interest Stated otherwise, the assumption of jurisdiction and/or the certification to
relevant to or incidents of the certified case.2
, BROAD AUTHORITY TO DECIDE CERTIFIED CASES. the NLRC has the effect of automatically enjoining the strike or lockout, whether
3. NLRC S ·fi · th NLRC actual or intended, even if the same has not been categorically stated or does not
s·gnificantly the above-described effects of cern canon to e are
1 ' · th tha th th rity of the NLRC to appear in the assumption or certification order.3
similar to those in assumed cases Ill e sense t e au o .
. . la d th rtified case is also broad enough as to mclude cases It is thus not necessary for the DOLE Secretary to issue another order
decide all 15sues re te to e CC • . . . b A b'
over which the law gtants original and exclusive 1unsdicnon to the La or r 1ter. directing the strikers to return to work. The mere issuance of an assumption or
In Sulpido Unu,l the labor dispute was certi~~d to the NL.RC by the certification order automatically carries with it a return-to-work order, even if the
t ul bl.•-tion. The peunooer contends that the directive to return to work is not e.xpressly stated therein.4 It is error therefore for
DOLE Secretary ,or comp sory at u.. . . 6
Labor Arbiter not the NLRC, should have taken cogruzance of the compl3.111t or striking workers to continue with their strike alleging absence of a return-to-work
. trik ;' l t t·-;..~u·on" filed by the respondent The Supreme order since Article 278(g) [263(g)) is clear that once an assumption/certification
"illegal s e. c earance . ,or this opoSt·tion cited the cases o f I ntmtaltona
"th .u,=- · I order is issued, strikes are enjoined or, if one ~ already taken place, .all sti:i.kers
C0 urt, in dis•areeIDg WI pr • .
""t>' /R -cual Uner.s where it was hdd that m the same should immediately return to work.5 Regardless of their motives or the validity of
Pharmareulicals4 and PASV1L as . 'ed d Articl 278(g) (263(g)] the their claims, the striking wotkers must cease and/or desist from any and· all acts
manner that the DOLE Secretary is gi::uit un er ~ . .
authority to assume jurisdiction over a labor dispute, oec~s~arily thisr:tho?: ~ t that tend to undermine this authority of the DOLE Secretary once an
. 1 d and extend to all questions and controversies answ.g there m, m u g assumption/certification order is issued. They cannot, for instance, ignore retum-
11\C u e hich the Labor Arbiter has exclusive jurisdiction. When the DOLE to-work orders, citing unfair labor practices on the part of the company to justify
cases over w b" · th their action.6
Secreta certifies a labor dispute to the NLRC for compulsory ar ltr~uon,_ . e
. ry com1·•·ntly empowered to resolve all questions and controversies ansmg 2. INSTANCES WHEN RETURN-TO-WORK ORDER IS ISSUED
1atter 1s con ,... .. cl · 1 th
therefrom, m . cluding cases oth·-•~•e '"'"~ belonoino- o-1nally and ex us1ve y to c
o...,, 00o- SEPARATELY FROM ASSUMPTION/CERTIFICATION ORDE~
Labor Arbiter.
IV. Alth9ugh deemed statutory part and parce17 of an
RETURN-T0•WORK ORDER assumption/certification order, there are instances where the return-to-work order
is issued separately from the former, viZ;:
t RETURN-TO-WORK ORDER, ALWAYS A; STATUTORY PART OF (a) When at the time the assumption/certification order was issued, no
ASSUMPTION OR CERTIFICATION ORDER. strike has yet been conducted by the union, hence, al that point, there
are no strikers yet who must be ordered to return to work. But if
It is clear under Article 278(g) (263(g)), that the mo~ent ~e DOLE
Secretary assumes jurisdiction over a labor dispute involving nauonal mt~rest or
certifies it to the NLRC for compulsory arbitration, such assumpuon or 1 llntlelsil'f d Sa, hjtd,i ~ · lJnion.fFW v. The CA, GR No. 169632, Mirth 28, 2006.
Samienl:!v. Tum,GR Nos.75271-73, ..uie27, 1988.
No. 32, NCM3Pnreroo S\ie, ~ cl1d Lod<out, 2nd Elilioo, Dec8nber1995.
lkwerstfaSaroTomasv.NI.RC, GR No. 89920, Oct. 18, 1900. • ' Steel Corpaaooocttie fltiWiiesv.SCP~ Urioo,G.R Nos.169829-30.~ 16,2008.
l.l,,,wwvt.ffi;ICoqxxil!alY.Blicrlles,G.RNo.119381,Mml 11, 1996,254SCRA595, 600. s Id.
UQ"'l'l"" a.lpa> Liles, rc.-NAFI.U V. &J\ia>l:ileS, Inc., G.R No.1409l32. Mm\ 25, 2004. ' Mria Ho!.el 8rl)loyees Associam V. MTI1a Ho(e Qxp., GR No. 154591, Mirth 5, 2007.
~ t.'er99~sa re. v Seaetry aLala .rid ~ GR Nos. 92981-33, Jan.9, 1992. 1 Sanienl:!v. Tl.i::o,GRNo. 75271-73,Jllle27, 1988, 162SCRA676,684.
~ -·Ulm-NAFLU v. Nt.RC, GR No. 124823, Jult 28, 199\l, 311 SCRA 444,451-452.
610 BAR REvl£W1:R ON I.A80R I.AW
subsequently, a strike is mounted by the union, a return-to-work order
should be issued pursuant to the earlier assumption/certification
order.I
(b) When at the time the assumption/certification order was issued, there
was already an on-going strike but the issuance o(a separate retutn-to-
work order is necessary in order to emphasize the need for the strikers
to lift their picket and return immediatdy to work. 2
(c) When another return-to-work order is issued in the light of the
defiance by the strikers of the first return-to-worker order.3
(d) When a return-to-work order is issued because the union filed a
second notice of strike and actually conducted a strike after the DOLE
Secretary earlier issued an assumption/certification order on the first
notice of strike.4
3. ACTUAL REINSTATEMENT IS THE NORM TO IMPLEMENT
RETURN-TO-WORK ORDER; PAYROLL REINSTATEMENT,
WHEN PROPER.
a. General rule is actual reinstatement.
As a general rule, the concept of returo-to-wor~ under Article 278(g)
[263(g)] contemplates a.Lua! ceinstatement and not pt!Jroll reinstatement. This !s in
accordance with the intent and spirit of this article.5 'I11e purpose of the law 1s to
bring back the workers to their original work undec the same teems and conditions
prevailing before the strike or lockout.6 Payroll reinstatement, being temporary in
An~ is the c.ase of Mwlppe! ~i'q Corporation v.Brila1tes, GR No. 119381,Mith 11. 1996.
An exaTl)le is lhe c.ase of National Fed!raion of Lmv. NLRC, GR No. 113466, Dec. 15, 1997, 283 SCRA 275, vhre
lhe OOlE Seaeflry, oo MiJch 11, 1993,assumed ~dioo cmr the dispute pursuari k> apetioon ofNFL fil!d oo Jarury
29, 1993. Heikevrisesep.Yalel)'issued aReun-k>-Walt 0111erk> ~e effect wlhil 24 hrus tcrnrece¢11md.
1 See PASVU'asrual 1.m, Inc. WOO.ers 1ml · NAFlU v. NLRC, G.R No. 124823, Ju1t 28, 19913 vhre ~
~ of ttie ftst rehlm-krwoo<er ader, OOlE Secretary Coofesor lound Iha! petitialer 0000 cootnJed to picket end
Imm PASVIL's ~ tler-eb-( ~ he Yml!fS wan&lg k> report ba:11 k> Y.oik tan ~ he ~ -
Resulanly, oo 24 Februay 1995 she reiterated heo- diredile il Ile fXl'IWS rehlm-b-lm oo!er and deplmed lhe Stmn
CooTn.mer of he Novakt1es PofK:e StlOOn to assist nthe orderlf and peace1u en1atemert of her order ilciJdrg the
renM aal bms aoosmm Md tairades to EflSIJe free ilgress k> a egess tan the prerrises of PASVIL See
also Sal Juan De Dios Edocatiooal FMdatioo Err!>loyees UrmAQlOO of Fq,no waters v. Sal Juan De Dios
Eo.ica6ona1 Flltlld.ml, ~ . G.R No. 143341, Mly 28, 2004, 430 SCRA 193, v.liere lhe then OOlE Seoelilly t.'a Nieves
R Ccn1esor had k> ~ irlOl1ef r ~ order becaJse lhe sfurs defied the f i s t ~ order issued l'ltlen
she cdled the c.ase kl Ile NIRC f a ~ crWratioo.
• See P~ Telephooe Colp. v. ~ Telephooe Errpoyees Asmam !PUEAJ, GR. No. 160058, JIJle 22, m,
Yt11ere. oo Jul( 13, 1998, respoodeol lrixl Ned lhe frst Nooce cl Stte and oo A19,1S1 14, 1998, the DOLE Secretly
as.med µisd'doo ~ the laba dispute rased il tis frs1 ~ of Sbike. On Septerrbe- 4, 1998, the !Ml Red a
seanl tm of Me Md oo lhe SclTe dzf cawded a sbi(e. On Septerrber 9, 1998, lhe OOlE Seal!lary d'rec8l lie
sttn;i LOOI olfres and merroers to return tom wlhn t.Yenl'f./ar (24) hours frtxn rece!)I of the Ol1ler and fa Ile
Coo'4)<rrf., aa:ept al 5'i<ers ooder ttie SilTle ems and ardiloos a ~ imr to the sike. The ooioo and its
merrbets COOl)l'el.
1 Nallonal Ulion of waters n11eHote1, Reswlrltand.AJlied lndustties INVMiRAIN-APL-IUFJ Dusi!Hotel Nl(ko e1.4>1erv.
The fbnabla CA, GR Mis.163942 ~ 166295, Nov. 11, 2008.
Maia Oiaroond Hotel Err!)byees" Unoov. The Hoo. CA, G.R No. 140518, Dec 16. 2004.
CHAITTR FIVE
IABOR REIATIONS 611
nature, is certainly not appropriate to implement a retum-to-work order which is in
the nature of a _permanent r~e£ Moreover, there appears to be no legal basis for
such p~yroll remsta~ement since the Labor Code contains only one provisiont
mand~ttng payroll retnstatement but this has nothing to do with the return to work
of strikers or locked-out employees consequent to the assumption or certification
by the DOLE Secretary in national interest cases. ,
b. Special circumstances justify payroll reinstatement.
As with most rule.s, however, the actual reinstatement rule in Article
278(g) [263(g)] is subject to exceptions.2 Consequently, there are a number of cases
w?ere, instead ~f actual reinstatement, payroll reinstatement was ordered by the
High Court to unplement the return-to-work order in national interest cases. But
such departure from the nonn may only be justified in case of existence of certain
special circumstances that render actual reinstatement impracticable or otherwise
not conducive to ~tt~g the purposes of the law.3 'This is best exemplified by the
1990 case of Unrvm1~ of Slo. Tomas v. NLRC,• where, by reason of the special
circumstance tl1at at the time the teachers were ordered to return to work by reason
of the DOLE Secretary's certification of the labor dispute to the NLRC for
c~mpulsory arbitration,5 they could not be given back their academic assignments
since the return-to-work order of the DOLE Secretary was issued in the middle of
the !i'st semester of the academic year. The NLRC, to which the labor dispute was
ce~fied, was therefore faced with a situation where the striking teachers were
~tttled to a r~tum~to-wock or~er, bu~ the university could not immediately
retnstate them smce 1t would be unpracttcable and detrimental to the students to
change teachers at that point. Thus, the Supreme Court declared:
"It was error for the NLRC to order the alternative remedies
of payroll reio$tatement or actual rcinstatemeot However,·the order did
not amount to grave abuse of discretioo. Such cccor is mecely an error of
il!dgmeot which i$ not corrcctiblc by a special civil action for certiorari.
The NLRC was only trying its best to work out a satisfactory ad hoc
solution to a festering and serious problem. Io the light of our rulings on
the impropriety of the substantially equivalent academic assignments and
the need to defer the changes of teachers until the end of the first
semester, the payroll reinstatement will actually minimize the petitioner's
problems in the payment of full backwages.
 SAR REVIEWER ON LABOR LAW
612
>:tX
"Although we pronounce that the _dismfased ~acuity members
must be actually reinstated while the labor '.1i5~ute IS being resolved, we
have to take into account the fact that at this nme, the first semester for
school-year 1990-1991 is about to end. To change the fao.llty members
around the time of final examinations would adverse!~ affect and
prejudice the students whose welfare and interest_ we ~ons1der to be of
· dial importance and for whom both the Uruverstty and the faculty
~=~r must subordinate their claims and desi.ccs. This ~ourt therefore
resolves that the actual reinsutement of the non-relllStated faculty
members, pending resolution of the labor controversy before the NLRC,
may take effect at the start of the second semester of the sc~~lycar
1990-1991 but not later. With this arrangement, the pent:toner's
reasoning that it will be violating·contracts with the faculty members
who took over the dismissed professors' teachii_ig loads becomes moot
. considering that, as it alleges in its petition, it operates on a semestral
basis."
Following the aboye special circumstances rule, payroll reinstatement,
·in Iieu of ac1wu
-··' · tatement to implement a return-to-work order consequent to
reins . .cial · · · th
the DOLE Secretary's assumption order, was also given Judi unpnmatur tn e
2005 case of Universi!J of llllllltJClllate Con«pcion, Inc.· v. The Hon. Semta,y of Labor,•
under the following ratiocination:
"With rcs-pect to the Secretary's Order allowin~ ra_yroll
. i.cistead of actual reinstatement for the mdMdwl
remstatement . d · db b
respondents herein, an amendment to the rrevious 0 r ers ISSue y er
office the same is usually not allowed. Art:tcle 263(g) of the Labor Code
afore;entioned statcS that all workers must immediately return to work
and all employers must readmit all of them under the same terms and
conditions prevailing before the strike_ or lockout The phrase u_nder the
same terms and conditions makes 1t clear that the norm IS actual
reinstatement. This is consistent with the idea that any work stopp~c or
slowdown in that parti,cular industry can be detrimental to the nanonal
interest
"In ordering payroll reinstatement in _lieu of _actual
reinstatement, then Acting Secretary of Labor Jose S. Brillantes said:
•Anent the Unions Motion, we find t1ut sup<;rscdigg
cjrcums12nccs would not warn.QI the physicaJ tt:io• 121cmcnt of
tbs twc)yc (12.) rcnninated cmployccs. Hence, ~cy arc _h~rcby
ordered placed under payroll rcinst2tcmcnt until the validity of
their tcnnination is ftrua.Uy resolved.'
"As an exception to the rule, payroll rcinstat~mcnt must
rest on i_Qccial circumstances that render actual reins~tement
1 GR No. 151379,Jn 14, 2005.
CHAPTER FIVE
613
IABOR REIATIONS
impracticable or otherwise not conducive to atta:iniog the purposes
of the law.
"The superseding circumstances mentioned by the Acting
Secretary of Labor oo doubt refer to the final deci3ion of the panel of
arbitrators as to the confidential nature of the positions of the twelve
p.rinte respondents, thereby rendering their actual and pbysic:i.J
reinstatement i.copracticable and more likely to exacerbate the situation.
The payroll reinstatement in lieu of actual reinstatement ordered
in tlicse cases, therefore, appcus justi.flcd as an exception to the
rule until the validity of their termination is finally resolved. This
Court secs no grave abuse of discretion on the part of the Acting
Secretary of Labor in ordering the &ar!_!c. Furthermore, the issue has
not been raised by any party in this case."1
The peculiar circumstances obtaining in the 2008 case of D11Iit Hotel
Nikko,2 likewise validated the DOLE Secretary's decision to order payroll
reinstatement instead of actual reinstatement It is ob~ously impracticable for the
hotel to actually reinstate the employees" who shaved their heads or cropped their
hairl in the light of the deadlock in.the CBA negotiaticns which led the union to
file a notice of strike, because this was exactly the reason 'why they were prevented
from working in the first place. Further, as with most labor disputes which have
resulted in strikes, there is mutual antagonism, enmity, :111d animosity between the
union and management Payroll reinstatement, most especially in this case, would
have been the only avenue where · further incidents and damages could be
avoided. The DOLE Secretary surely meant only to ensure industrial peace as she
assumed jurisdiction over the labor dispute. In the absence of a clear showing of
grave abuse of discretion on her part, the Court is not ready to substitute its own
findings to those made by the POLE Secretary.
However, if no such special circumstanci;s exist in a given case, the
general rule of actual reinstatement should be affumec and applied. Thus, in the
2004 case of Manila Diamond Hout,• the act of the DOLE Secretary in ordering
payroll reinstatement of the workers in lieu of actual reinstatement was declared as
constituting grave abuse of discretion amounting to lack or CXCf.SS of jurisdiction.
In justifying this ruling, the High Tribunal pointed out the factual distinction
between this case and the 1990 case of UST.S Thus, unlike in the UST case where
the special circumstance that the teachc.!3 ordered to rerum to work could not be
given back their academic assignments since the refuro-to-work order of the
DOLE Secretary was issued in the middle of the first semester of the academic
~ 5LWied.
Namallkmdv.btersnlheHolel,RestmrtaidAlied~(N\1MilWN-APL-UF]l)JS4fWNkkoChapterv.
The~ CA, G.R Nos. 163942 clld 166295, ~.11, 2008.
1
The~ Cwt decmd nlhis case toal lhe !ddlhe~ i1 spaq bad heoos Md am, alWEd har is a
lam dlegal stte.
' Mm IJicmond ~ Ert1Jloyees' lkm v. lhe Hat CA, G.R No. 140518, Dec. !6, 2004.
5 ~of&o.TaresvJlRC,GRNo.89920,0ct 18, 1900, 100SCRA 758.
614 ilAR REVIEWER ON IABOR IAW
year, there was no showing, in this case, that the facts called for payroll
reinstatement as an alternative remedy. The strained relalioMhip between the striking
employees and management is no reason for payroll reinstatement in lieu of actual
reinstatement. The petitioner union correctly pointed out that labor disputes
natur2lly 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. Bitter labor disputes always leave an aftermath of strong emotions and
unpleasant situations. Nevertheless, the government must still perform its function
and apply the law, especially if national interest is invol¥ed, Indeed, the ''tftal breadth
of diJrretion" by the DOLE Secretary once he assumes jurisdiction over a labor
dispute is recognized. However, payroll reinstatement in lieu of actual
reinstatement is a departure from the rule and there must be a showing of special
circwnstances rendering actual reinstatement impracticable, as in the UST case
a:forementiooed, or otherwise not conducive to attaining the purpose of the law in
providing for assumption of jurisdiction by the DOLE Se~retary in a labor dispute
that affects the national interest. None appears to have been established in this
case.
4. SOME PRINCIP~ES.
a. Rerum-to-work order is compulsory in character and not
offensive to involuntary servirude. Returning to work on the part of
the worker is not a matter of option or voluntariness but of obligation.1
It must be discharged as a duty even against the wotker's will The
wotker must return to his job together with his co-wotkcrs so that the
operation of the company can be resumed and it can continue serving
the public and promoting its ioterest.2 This is the real reason such
return can ·be compelled. So imperative is the order in fact that it is not
even considered violative of the constitutional right against involuntary
servitude.3 A retum-to-wotk order is immediately executory in character
and should be strictly complied with by the parties even during the
pcodency of any motion or petition questioning its validity in order to
maintain the statUJ q110 while the determination· is being made-4 The
obligation so imposed must be discharged as a duty more than as a right
that may be waived. While the wotkers may choose not to obey, they
do so at the risk of severing their relationship wi$ their employcr.5
b. Rerum-to-work order is a limitation on employer's exercise of
management prerogatives. Article 278(g) (263(g)] coostirutes a
· limitation or exception to the management prerogative of hiring, firing,
transfer, demotion and promotion of employees. And to the extent that
1 M3a:wEr 1.ttg ~ V. &i.rles, G.R. No. 119381, Mach 11, 1996.
1 ~llv. Tuixl, GR Nos. 75271·73,June 27, 1988, 162 SCRA 676.
1 Kasalan ng ~ Mirgg~sa K.mysa Pipi1as V. Goom:o Sa.v MIi, GR No.L-1573, Madi 29, 1948.
• Sai-nelk>v. Tti:o, G.R Nos. 75271-73,.11.ne 'lf, 1988; No. 23, Gooernes Go.-ernilJ La>ocRelaoons.
~ Transrrissol Copaatmv. NI.RC, GR No. 88725,NoY.22, 1989.
CflArTER.FM
LABOR RELATIONS 615
this article calls for the readmission of all workers under th
;;1d condi~~os
· .. e same terms
~revailing before the strike, the employer is restricted
om exerctS10g Its generally unbounded right to transfer or reassign its
employees.I
c. Issue of legality o~ strike, immaterial in enforcing return-to-work
order. The brazen disregard of the return-to-work order of the DOLE
Secrc~ would r~der the strike illega!.2 Where the return-to-work
?rder ts issued pending the detennination of the legality of the strike it
is not cor~ect to say ~at it ma~ be_enforced only if the strike is legal ~d
may b: d.isr~~ed if ~~ strike ts illegal. Precisely, said the Supreme
Court 10 Asian Transmrs~on Corporation v. NLRC,l the purpose of the
retum-~o-~o~ or~er 1s to maintain the ilat11s q11o while the
detc~?oo ts bemg made. Otherwise, the workers who contend that
~e strike IS legal can refuse to return 10 their work and use a standstill
~ the company operations while retaining the positions they refuse to
discharge or allow management to fill. Worse, they will also claim
payment for wotk not done on the ground that they are still legall
employed ~though acrually engaged in activities inimical to thJ
employer's interest.•
cl. Non-~aiver_of demands upon voluntary return to work. The act of
th~ strikers ~ vo_l!1;°tarily rctum.iog to work does not result in the
wa.tver of thetr on~al demands. Such act of returning to wock only
means that ~ey desisted from the strike which desistance is a personal
act of th_e strik~ and ~o~ ?e used against the union and interpreted
as a waiver by 1t of its oaginal demands for which the strike was
adopted as a weapon.s
e. Non-waiver by employer of illegality of strike. In the same breadth,
a return-to-work or~er do~s not generally have the effect of rendering
as moot
rdin and acadcnuc.the issue
. . of the illegality of the strike•6 However,
acco gt? Tr~IIJ-A_,ria Shrppmg Unes,1 an employer may be coos.idered
to have w:uv~ l!-5 aght _to proceed against tl1e striking employees for
alleged conurusston of illegal acts during the strike when d ·
f; be , unng a
con erence fore the Ch~ of the NLRC, it agreed to reinstate
them and comply fully with the return-to-work order issued by the
DOLE Secretary.&
.'
1
Trn-Asii! Siillil9 Liles k'c.-Ulbrcsed Cr'eNS ·
I.Jni:ln of Flipro ~ V Nesfle . Erriib,ees lktiln V. CA, GR. No. 145428, Jtif 7, 2004.
, G.RNo · ~.o:.,G.RNo.88710-13,Dec.19, 1990.
. 88725, Noi.22, 1989.
See aso St Sdiolasti:a's CoileJev.TOlll!S, G.R No. 100158 ..uie 29 1992
~un!TranspatitmCo,h:.v.CIR,G.RNo.l-10114,NoY.26. 1957 102A1i 4J8
I mmtX) ~ flu~ &Prqect Wate/s lklion V raH ' ' ' . .
Trn-Asiil 91;,,.;,,.,, L' he. U,'--' ,-..'..,_ Suga, Reb'g Cap., G.R tbl. L-7594 .nl l-7596, Sept. 8, 1954.
""."" ~• - """"""'"'"""~lklixlv.CA,G.R.No 145428 Jil(7 2004
See aso Remrist u,a, ct RB. Li1er, 1ic. v. NLRC. G.R No. 120482..m 21. 1991. 266 SCRA 11i. ·

616 BAil REVIEWER ON LABOR LAW
f. Extension of cctum-to-wock order and the admission of all
striking workers by the co~pany, cannot in any way be considered a
waiver that the union officers can use to negate liability for their illegal
actions of defying the first retum-to-work order and for commission of
illegal acts in the course of the strike. 'This holds true especially in a
case like Tri1t111ph Intmzationa/, 1 where the company conditioned its
acceptance of the cetuming strikecs ''without prejudice to whatevec legal
action it may take against those who committed il).egal acts." Moreover,
the extension of the return-to-work ·in this case was made upon request
of the union and the DOLE to accoromo'date employees who were in
the pro~nces who were not notified, and those who were sick.
g. Motion for reconsideration has no effect the immediately
executory nature of a return-to-work order. The reason for this rule
is that a return-to-work order is immediately effective and executory
notwithstanding the filing of a motion for reconsideration.2 It must be
strictly complied with even during the pendency of any petition
questioning its validity.lTo say that the effectivity o_f the ~e~-to-work
order must wait affumance in a motion for recons1deratton 1s not only
to emasculate it but in9eed to defeat its import, for by then, the
deadline fixed for the retum-to-work would, in the ordinary course,
have already passed and, hence, can no longec be affirmed insofar as the
time element is concemed.4 After all, the assumption and/or
certification order is issued in the exercise of the DOLE Secretllry' s
compulsive power of arbitration and, until set aside, must therefore be
immediately complied with.5 Thus, the contention of the strikers that
they honestly believed that the filing of a motion for reconsideration of
the order issued by the DOLE Secretary entitled them to participate in
a strike cannot be sustained.6
5.
INJUNCTIONS
1. PROHIBITION ON INJUNCTION AGAINST STRIKES AND
LOCKOUTS; EXCEPTIONS.
As a general rule, strikes and lockouts that are validly declared enjoy the
protection of the law and cannot be enjoined unless illegal acts are committed or
1 Bagoo,j Pagka<aisa ~ ~a':1""1311:1 T~ k1'iematkxlal V. SOlE, G.R Nos. 167401 llld 167407,JJf 5, 2010.
Telelmn Senitamtxs En1)k,,'eeSlltn-FFWv. Seaelay cilaballld ~ G.R Nos. 122743 llld 127215,
Dec. 12, 1997, 283 SCRA HS; St Sctdas6:a's Collegev. Tares, GR No. 100158,.l!rl8 29, 1~
Phiaxn ~ Ulial v. Phfwr,e~ Catm.ri::aoons, GR No.144315,Ju>f 17, 2006.
4 Phipit.e Mfnes E'JTc)loyees Ass0CW1 v. f'hi4lpile Atiles, Inc., _G.R. No. L.J2740, Mrth 31, 1971.
s St. Sdldasb's College v. Tooes. Sl4)!a.
1 MnJa ~ 8rpl:lyeeS ~ v.1/anla Hael Cap. G.R No. 154591, Mrth 5, 2007.
CHAl'TER FIVE 617
IABOR REIATIONS
threatened to be committed in the course thereof. 'This policy applies even if the
strike appears to be illegal in nature_. The rationale for this policy is the protection
extended to the right to strike under the Constitution and the law. It is basically
treated as a weapon that the law guarantees to employees for the advancement of
their interest and for their,protection.1
However, in some cases, injunctions issued to enjoin the conduct of the
strike itself and not only the commission of illegal or problJiited acts in the course
thereof, were lield to be valid: For instance, in San Mig;lei Corporation v. NLRC,2 the
Supreme Court ruled that injunction may be issued not only against the
commission of illegal acts in the course of the strike but against the strike itself. In
this case, the notice of strike filed by the union has been converted into a p,wentive
mediation case. Having been so converted, a strike can no longer be staged based on
said notice. Upon such convecsion, the legal effect is that there is no more notice of
strike to speak of. When the NCMB ordered the preventiv.e mec!iation, the union
had thereupon lost the notice of strike it had filed. However, the NCMB which
effected the conversion has, under the law, no coercive powers of injunction.
Consequently, petitioner company in the instant case sought recourse from the
NLRC. The NLRC, however, issued a TRO only for the free ingress to and egress
from petitioner's plants, but did not enjoin the conduct of the unlawful strike itself.
It ignored the fatal lack of notice of strike consequent to the conversion thereof
into a preventive mediation case. Article 279(a) (264(a)] of the Labor Code
explicitly states that a declaration of strike without first having filed the required
notice is a prohibited activity, which may be prevented. through an injunction in
accordance with Article 266 (254) of the same Code. Clearly, public respondent
should have granted the injunctive relief_to prevent the grave damage brought
about by the unlawful strike.l
In the earlier case of San Miguel Corporation v. NLR.C,4 where the same
issue of NLRC's duty to enjoin an unlawful strike was raised, the Supreme Court
ruled that the NLRC committed grave abuse of discretion when it denied the
petition for injunction to restrain the union from declaring a strike based on non-
strikeable grounds.
In IBM 11. NLRC,5 it was held that it is the ''legal duty and obligation" of
the NLRC to enjoin a partial strike staged in· violation of the law. Failure to
promptly issue an injunction by the NLRC was likewise held therein to be an abuse
of discretion.
t Qm Remy~ Associam [PAFllJI v. Lucero, G.R No. L-15338, Api 28, 1962, 4SCRA 1196.
l GR.No.119293,June10,2003.
' See also PAL v. Min, G.R No. 88210, .lat. 23, 1991, 193 SCRA 223.
• GR. No. 99266,Mrth 2, 199Ul4 SCRA 1.
s l.zN at 1Wx1 ng ~~ 11!M1V. NI.RC, G.R No. 91980, JtJle 27, 1991, 198 SCRA 586.
 CHArTER FIVE 619
618 BAR REVIEWER ON LABOR LAW
LABOR RELATIONS

In Bulletin Publuhi11g v. Sanchez/ an injunction was allowed against the strike part of the fteedom of speech dyly guaranteed by the Conscirution.1 However,
which was staged to compel the employer to ignore rhe law. The reason is that excepted from this legal proscripcion are the following situacions:
when trade wuoaism and strikes are used in violation of the law, misuse thereof (1) Where picketing is carried out through the use of illegal means;2
can be the subject of judicial intetvention.
(2) Where picketing involves the use of violence and other illegal acts;3
2. REGULAR COURTS ARE PROHIBITED FROM ISSUING (3) Where picketing affects the rights of third parties and injunccion
INJUNCTION AGAINST STRIKES OR LOCKOUT. becomes necessary to protect such rights. 4
It bears stressing that all the cases cited above involve the issuance of 4. INNOCENT BYSTANDER RULE.
restraining order or injunction by the NLRC pUISuant to the exercise of its
In situations where the picket affects not only the employer but also the
injunctive power. In contrast, regular courts are absolutely prohibited to grant
any injunctive relief in cases of strikes or lockouts.· business operations of other establishments owned by third parties, an injunction
may be secured by the latter from the regular courts to enjo,in t!Je picket. Picketing
The Supreme Court has cited in AW-TUCP v. Borrometr the justifications strikers cannot prevent employees of other companies from using the same
for this absolute prohibition: premises being picketed. A picketi.Qg labor union has no right to prevent employees
of another company which is not their employer, from getting in and out of its
(1) Courts of law have no jurisdiction to act on bbor cases or any
rented premises; otherwise, it will be held liable for damages for its acts against an
incidents arising therefrom. This is basic and elementary. Jurisdiction to try and
innocent bystander.5
adjudicate such cases pertains exclusively to the proper labor officials of the
Department of Labor, particularly the Labor Arbiter under Article 224 [217] of the Under the "Inno«nl Bystander RNk," the third-party cmpl9yers or 'fnnocenl
Labor Code. f:lnandm" who have no employer-employee relationship with the picketing strikers,
may apply for injunccion with the regular courts to enjoin the conduct of the
(2) Well-established juri~prudence is to the effect that regular courts have
picket. Because of the absence of such employer-employee relationship, the NLRC
no jurisdiction. The following cases may be cited Silva Pipe v. Filipino Pipe,l Na1io11a/
cannot entertain such application for injunction from "innocent bystanders."
Garment! v. Ca/11ag,4 and a host of other decided cases.5
(3) The reason for such exclusive jurisdiction is that since picketing and
strikes may be mere incidents or consequences of a ULP, it is but proper that a writ
of injunction prayed for in connection with the labor dispute originate from the
pabor) court having jurisdiction over the main case inasmuch as it is that pabor]
court that has cognizance of all relevant facts.' ----oOo----
(4) The respondent judge cannot enjoin acts carried out as a consequence
of the strike without unavoidably ruling on the legality of the strike itself. ("The
strike can continue. It does not mean that this Court has ruled on the legality or
illegality of the said strike.")
3. INJUNCTION IN PICKETING CASES.
As a general rule, injunction cannot be issued against the conduct of
picketing by the workers. Under our constitutional set up, picketing is considered

I G.R ~- 74425, 0d. 7, 1986. 1 M:mav. CIR, G.R No.L-1340, Oct 13, 1947. 79Phi.345.
1
Am:ia!oo lmlkm (Al.lJ.TUCP) v. lbl. Baraneo .rid Belp Capcratxn, G.R No. 75736, Sept. 29. 1988. kl.
St/a P'peWtrurs lk1bl NAT\Jv.F~f'l)e &FruidryCapaaooo, GR No. 33910, Auj.19, 1988. PAFLU v. Baa, GR No. l-9281, Sept. 28, 1956, 99 Phi. 1008; Callex ~ Managersa'td &,leMsors Assooafun v.
Nmlal Gamenl5 .rid Tex1re wctr.ed lkml'AFW v. fm. Hes!oogenes Cam;J, G.R No. l-9104, 99 Phi. 1007 (1956). CIR, GR Nos. L-30032-33, ~ 11, 1972, 44 SffiA 350.
Ciffl.l PAFLUv. Ta,,99Phi.854; Phi.Coominicafms,Beacri:.rld 13edro1'(WakersFederalmv. Nolasco, G.R No. 4 PAFLUv. Cbilel, GR No. L-25878, Mm 28, 1969, 27 SCRA 465.
L-24984,Jti)' 29,1968. . s Philoom ~ union v. ~ Gklbal Comnulk:atb1s, G.R No. 144315, Jltf 11. 2006; ~ f'ubic:atoos.
1 Ciffl.l EJlirl,jer and~, nc. v.Erlir1ge'and ~Enl)klyeesAssociatm-NAlU, supra. Inc. v. Penrooellt Camie waxers Loot, GR No. l-25003, 0d. 23, 1981, 195 Phi. 51.
 CHAl'TER SIX 621
620 roST-EMrLOYMENT

F. Money claims arising from employer-employee relationship

Chapter Six
G. Retirement
POST-EMPLOYMENT

A.
TOPICS PER SYLLABUS EMPLOYER-EMPLOYEE RELATIONSHIP

VI. 1.
POST-EMPLOYMENT TESTS TO DETERMINE EXISTENCE
OF EMPLOYER-EMPLOYEE RELATIONSHIP
A. Employer-employee relationship
1. Tests to determine existence 1. FOUR-FOLD TEST.
2. Kinds of employment 1) Selecrion and engagement of the employee;
a. Regular 2) Payment of wages or salaries;
b. Casual 3) Exercise of the power of dismissal; or
c. Probationary 4) Exercise of the power to control the employee's conduct1
d. Project
No. 4 above, or the so-called ''rontrol Its/" or ''Mean,-and-Method Control
e. Seasonal
Te.rt" is the controlling test It addresses the issue of whether the employer controls
f. Fixed-term
or has reserved the right to control the employee not only as to the result of the
g. Security guards 1
work to be done but also as to the means and methods by which the same is to
h. Floating status2 be accomplished.2 Stated otherwise, an employer-employee relationship exists
3. Legitimate subcontracting vs. labor-only contracting where the person for whom the services are performed reserved the right to
a. Elements control not only the end or result to be achieved bi.:t also the means and
b. Trilateral relationship methods to be used in reaching such end.3 Abseµt th: power to control the
c. Solidary liability employee with respect to the means and methods by which his work was to be
B. Termination by employer accomplished will only mean that there is no employer-employee relationship
1. Just causes between the parties to speak of.4 The element of control is absent where a person
2. Authorized causes who works for another does so more or less at his own pleasure and is not subject
3. Due process to definite hours or conditions of work and, in tum, is compensated according to
a. Twin-notice requirement the result of his efforts and not as to the amount thereof. Consequently, there is in
b. Hearing this situation no employer-employee relationship.5 ·
It should be borne in mind that the power of control refers merely to the
C. Termination by employee
existence of the power and not to the actual exercise thereof. It is not essentw for
1. Resignation versus constructive dismissal
the employer to aaual!J supervise the performance of duties of the employee; it is
D. Preventive Suspension enough that the foaner has a right to wield the power.• To operate against the

E. Reliefs from illegal dismissal

1 The i'dJsi:xl cA lhis tt)li: oodei lhis dassfultiocl rrey not be proper sinre lhere is no such kild cA errc>klymen\ as "seari'f
guatls."
1 The k:9(: ol1ioatilg status· isJilewise m,splai:ed for lhe same reason as that of 'seairity guards."
, ~Gtta!Corrnuli:aoons, he. v. Devera, G.R.No.157214,J111e1, 2005.
2 GaleJo v. Bayel'f>tiiippi'leS, he., GR. No. 179807, J~ 31, 2009, 594 SCRA 736.
J Atma Laid Projects Corporatioo v. NL.RC, GR No. 114733, .m.02, 1997;Tu v. NLRC, GR No. 95845,Feb. 21, 1996.
• Cabaan Pj!SUal Neg1t> Im Associmlv. N..RC, GR No. 100108,Feb. 23, 19!li.
s ~ l3rila1ni:a [Phis.pnc. v. NL.RC, GR No. 87098, t-bi.4, 1996.
I Menciola v.CA, G.R t-«>. 159333, JiJt 31, 20C6; SSS V. CA, G.R No. 100388, Dec. •4,200).
 BAR REvlEWER ON IABOR IAW
622
employer, the power of control need not have been actually exercised. Proof of the
txisttna of such power is enough.1 Certainly, the employer wields control when i~
has the power to h.ice or dismiss as well as to check on the progress and the quality
of wotk of the laborers.2
2. FRANCISCO DOCTRINE: ~TIERED TEST.
While the control test may be the most important index to determine the
existence of the employer-employee relationship, however, in certain cases, the
control test is not sufficient to give a complete pi~e of the relationship between
the parties, owing to the complexity of such a relationship where several positions
have been held by the worker. There are instances when, aside from the
employer's power to control the employee with·respect to the means and methods
by which the work is to be accomplished, economic realities of the employment
relations help provide a comprehensive analysis of the true classification of the
individual, whether as employee, independent contractor, corporate officer or some
other capacity.
Recent jurisprudence adds another test, applied in conjunction with the
control test, in determining the existence of employment relations.3 This is the
two-tiered test enunciated in the 2006 case of Franci1&0 u. NL.RC,' which involves
an inqwry into the following:
(1) The putative employer's power to control the employee with respect
to the means and methods by which the work is to be accomplished
[control test!, and
(2) The underlying economic realities of the activity or relationship
[economic reality test].5
.\s e~clier pointed out, employment relationship under the control test is
determined by asking whether "the person for whom the services are perfonned
reserves the right to control not only the end [to be] achieved but also the manner
and means [to be used in reaching such] end."6 The broader economic reality
rest calls for the determination of the nature of the relationship based on the
circumstances of the whole economic activity.7 Under this test, the proper standard
1
Vnotav.l'-lRC,G.RNo.126586,Feb.2,2000,324 SCRA469
~ f"altml ~ . n:., v.Tr,;ihl, G.R No. 159121, Feb. 3, 2005.
See t i e ~ opim aM-. JuslD! Muro &m ri 11e 2013 case a Re: P.lqJesl a(Ret) Oief Justi:e MEnil v.
PaJJiWlcrl b' Re-Corrjx.t!!m a his Cred1able Selvice b' tie P\npose d Re-Con-j)u1ilg his Retirement Beoefils, A.M
No. 1~9-15-SC, Feb.12.2013 Yttiere lis 2-liered lestis ~<ftsa.lssed.
GRNo.170087,AlxJ.31,iooi.
kl.
• •
These ~ cW1! as ~ (I) The extent k> v.tli::ll t,e ser.i:es pefbmed cW1! M i'lte!lra pal at,e efl1lbte(s
busi'iess; (2) The ex1ert a lhe vmer's i'1Yestneri il ~ -.m faciiies: (3) Toe rare .m degree a cxri1m
exen:ised by lhe erJl)k7ter. (4) The v.al:er's ~ b' l)(tft and Joss: (5) The 81'0.Jlt a ili!ialrle, slcil, j.JdlJment c,
i:resight ~ 1:r toe sucxess a toe dained i'1dependet eneinse; (6) The pemmen:y .n1 dtraion a lhe
CHAmRSIX 623
roST-EMrLOYMENT
of economic dependence is whether the worker is tkpendent on the alkged empk?Jerfar
his ronti1111ed emphymenl in that line ofbunnu1.1 In the United States, the touchstone of
economic reality in analyzing possible employment relationships-for purposes of
the Federal Labor Standards Act is dependcncy.2 By analogy, the benchmark of
economic reality in analyzing possible employment relationships for purposes of
the Labor Code ought to be the economic dependence of the worker on his
employer.
lbis two-tiered test provides a framework of analysis which would take
into consideration the totality of circumstances surrounding the true nature of the
relationship between the parties. lbis is especially appropriate in a case where there
is no written agreement or terms of reference to base the relationship on and there
exists a complexity in the relationship based on the various positions and
responsibilities given to the worker over the period of the latter's employment
Applying this two-tiered test, the Court ruled that petitioner Angelina
Francisco in the case of Frondia,, was an employee of private respondent Kasei
Corporation, where she simultaneously held several positions because she was
under the direct control and supervision of Seiji Kamura, the corporation's
Technical Consultant. She reported for wotk regularly and served in various
capacities as Accountant, Liaison Officer, Technical Consultant, Acting Manager
and Corporate Secretary; with substantially the same job functions, that is,
rendering accounting and tax services to the company and perfonning functions
necessary and desirable for the proper operation of the corporation, such as
securing business permits and other licenses over an indefinite period of
engagement. Under the broader economic reality test, the petitioner can likewise
be said to be an employee of respondent corporation because she had served the
company for six years before her dismissal, receiving check. vouchers indicating her
salaries/wages, benefits, l3ih month pay, bonuses and allowances, as well as
deductions and Social Security contributions from August 1, 1999 to December 18,
2000. When petitioner was designated General Manager, respondent corporation
made a report to the SSS. Petitioner's membership in the SSS as manifested by a
copy of the SSS specimen signature card which was signed by the President of
Kasei Corporation and the inclusion of her name in the on-line inquiry system of
the SSS evinces the existence of an employer-employee relationship between
petitioner and respondent corporation.
Based on the foregoing, it is clear that the two-tiered test gives a complete
picture of the relationship between the parties. Aside from the employer's power to
control the employee, an inquiry into the economic realities of the relationship
helps provide a comprehensive analysis of the true classification of the individual,
~ between the mer~ Ile en1)loyer. .n1 (I) The degree adependency alhe mer upoo tie ~for
liscmnied ~ ri Mine a ~ (Pee Fm:iscov. ti.RC, In).
1 Hafertfv.NseQug ~.821 F2d261 (StiCi'.1987).
2 Weiselv.S~Joo!Venue,"-,602F2d.1185(5'1Cl.1979~
 BAR REVIEWER ON LABOR I.AW
624
whether as employee, independent conuactor, corporate officer or some other
capacity.
Following the broader economic reali~ lul, the Supreme Court found
petitioner in Orozco, 1 who is a columnist in the Philippine D~y Inquirer (PDI), not
an employee of PDI but an independent contractor. Petitioner's main occupation is
not as a columnist for respondent but as a women's rights advocate working in
various women's organizations. Likewise, she herself admits that she also
contributes articles to other publications. Thus, it cannot be said that petitioner was
dependent on respondent PDI for her continued employment in respondent's line
of business. The inevitable conclusion is that petitioner was not respondent PDI's
employee but an independent contractor, engaged to do independent wotk.
3. SOME PRINCIPLES ON EMPLOYER-EMPLOYEE
RELATIONSHIP.
a) There is no uniform test prescribed by law or jurisprudence to
determine the existence of employer-employee relationship.2
b) The existence of the employer-employee relationship is essential in
that it comprises as the jurisdictional basis for recovery under the law.
Only cases arising from said relationship arc. cognizable by the labor
courts.3
c) The relationship of employer and employee is contractual in nature. It
may be an oral or written contract A written contract is not necessary
for the creation and validity of the rdationship.4
d) Stipulation in a contract is not controlling in determining existence of
the relationship. The employment status of a person is defined and
prescribed by law and not by what the parties say it should be.5
e) The mode of paying the salary or compensation of a worker does not
preclude existence of employer-employee relationship. Thus, payment
by commission6 or on a piece-rate basis7 or on a "no work, no pay" 8
basis does not affect existence of employment relationship.
Q Retainer fee arrangement does not give rise to employment
relationship.9
1 CAozlxiv.TheFdlh DMsmalheHooaabk!CrutclAppeals, GR No. 155207, NJ].13, 2008.
Cal1lcr,etm Piece Wo(ke,:s lk1al v. u;iuesma, G.R No. 113542. Feb. 24,1998, 286 SCRM01, 426.
Moorigal ~ Co. V. ~ . G.R Nos. L-17362&L-17367-69,Feb.28, 1963, 7SCRA330.
' ~Mrirav.Emesta~Vda.OeHxl,GRNo.L-10675.~29, 1960, 107Phl.873.
5 ~ v.NlRC,GRNo. 146530,Jin.17,2005.
6 l.azaov. Social SeariyCamlissm, GR No. 138254, Jlif 30, 2004.
1 lartov.NLRC,G.RNo.111042,0ct.26, 1999,317SCRA420. .
CRC ,6~Joculhr.H~ v. NLRC, G.RNo. 1TT664, Dec. 23, 2009.
~ ():baC(mrult.a1i:x1s, h:. v. De Vera, GR No. 157214, June 7, 2005.
CHAl'Tl:R SIX 625
POST-EMPLOYMENT
2.
KINDS OF EMPLOYMENT
1. CLASSIFICATION OF EMPLOYEES.
There are five (5) classifications of employees1 and Article 295 [280]2
provides for four (4) of tbem,3 lo wit:
(a) Regular employees or those who have been engaged to perform
activities which arc usually necessary or desirable in the usual
business or trade of the employer;
(b) Project employees or those whose employment has been fi."<ed for a
specific project or undertaking, the coopletion or termination of
which has been determined at the time of the engagement of the
employee;
(c) Seasonal employees or thos_e who work or perform services which
are seasonal in nature, and the employment is for the duration of the
season; and
(d) Casual employees or those who are not regular, project, or seasonal
employees.4
A · fifth one, fixed-term . employees, must be added to the above
enumeration.5 This, however, is not provided in the Labor Code but recognized
only in jurisprudence.6
a.
REGULAR EMPLOYMENT
1. LEGAL BASIS.
Article 295 [?80] of the Labor Code states:
Article 295 [280]. f.tg,tlar and Cat11al F,mp/q_ynmt. - The provisions
of written agreement to the conrxary notwithswiding and regardless of the
oral agreement of the parties, an employment shall be deemed to be regular
where the employee has been engaged to perfoan activities which are
uswlly necessary or desil2blc in the usu:il business or trade of the employer,
except where the employment 1w been fixed for a specific project or
undertaking the completion or teanination of whicli has been determined
1 0 0 ~ n:.v.~.GRNo. 176419,Nol/.27,2013.
l Miele 295 [280j-Regtsirxf Casual~
3 /Js expressj rerojnized by the H'gh CM il l.e'(e Geahema Po.Yef Pro,iiessile ~ Ln:n-Al.li-TUCP v.
f'tiWi)e Naoona1 Oi Coo'4)ill'f-Energy ~Capaatioo. GR No. 170351, Mrdl 30,201 t.
• Seealso Bencresv. Pandlo, G.R No.151827.~29, 2005;\filav. NLRC, G.R 117043,Jin. 14, 1998.
1 Asia watt Recnl~ lie. v. NI.RC, GR No. 113363, NJ]. 24, 1999, 371 Phi. 745.755-756.
• modatll<noMedge Setw:es, rev. ntrg, G.R No.211892. Dec.06, 2011.

626 BAR REvl EWER ON IA6OR I.AW
at the time of the cng:igcment of the employee or where the wock or
service to be performed is seasorutl in nature and the employment is for the
duration of the season.
An employmem shall be deemed to be casual if it is not covered
by the preceding paagraph: Providtd, Thar any employee who Q2.S rendered
at least one ye:ar of service, whether such service is continuous or broken,
shall be considcml a regular employee with respea to the activity in which
he is cmployt.'CI and his employment shall continue while such activity
exists.I
'Ibe article's title is a misnomer as it speaks 'Only of two (2) kinds of
employment - rrgular and camal • when in fact it enunciates two (2) more kinds of
employment, namely: proj!ct and seasonal
Article 295 [280] is composed of two (2) paragraphs. Its first paragraph
answers the question of who are regular employees.2 Once it is established that the
employees are regular under the first paragraph, there; is no more need to dwell
further on the question of whether or not they have rendered one (1) year of
service under the second paragraph thereof for purposes of determining regularity of
employment.l Th.is is so because the second paragraph of the article demarcates in
unequivocal terms that all other employees who do not fall upder the definitions in
the first paragraph of regular, project and seasonal employees, are deemed casual
employees. Not qualifying under any of the kinds of employees covered by the first
paragraph would necessarily mean that one is a casual employee under the second
paragraph thcreof. 4
Based on Article 295 [280], the law determines the nature of the
employment, regardless of any agreement expressing otherwise. The suptemacy of
the law over the nomenclature of the contract and its pacts and conditions is to
bring life to the policy enshrined in the Constitution to afford full protection to
labor. Thus, labor contracts are placed on a higher plane than ordinary contracts
since these are imbued with public intexest and, therefore, subject to the police
power of the State.5
2. DEFAULT EMPLOYMENT.
At the outset, it bears to emphasize that the default employment in our
jurisdiction is ~ employment This means that an employee is deemed
regular under the following circumstances:
a) By nature of work - When the employee has been engaged to
· perfonn activities which are usually necessary or desirable in the usual
1As rerurbered pt.r.m1l mSecfun 5,RA No. 10151, Jooe 21, 2011.
2 Leyte Geolherma Pa.\e' PrtY,JresSNe En1)k7fees U'mAI..U·T\Jal v. ~ Na!iooal OI Coo-pany -
~ Corporatioo. GR No. 170351, MM:1130, 2011.
l ~ MguelCcwpcraocnv. NI.RC. G.R No. 125606, 0d. 7, 1998.
' ~8Anm&Sle'ledool;! Se!vi::es, he. v. 8odol, GR No. 173849, Sept 28, 2007.
s hm!ala ~ e Se!vi::es. nc.v. lnting, G.R. No. 211892, Dec. 00, 2017.
CHAM"ER SIX 627
POST-EMPLOYMENT
business or ~de ?f ~e employer1 or simpl:r, that the employee's job,
work or servtce 1s directly related to the principal business of the
employer.
b) By period of service - When the employee is allowed to work beyond
the agreed period of probationary, project, seasonal, casual, or fixed-
term employment, irrespective of whether it is just one day or moxe
after the lapse of such period. ·
c) No definitive description of kind of employment - When there is
no definite kind of employment agreed upon by the employer and the
employee.
d) Absence of written contract - When there is no written employment
contract prescribing other kinds of employment. There should be a
written contract of employment if the employer and employee
mutually agree on such kind of employment as probationary, casual,
seasonal, project or fixed-term.
Simply stated, if there is reasonable doubt as to the status of employment,
the default employment should always be regular. This is so because it is the law
itself which presumes such regularity of employment; thus, it follows that an
employee is deemed regular by operation of law the moment the facts in a given
case establish any of the foregoing circumstances.2 ·
. 3. SOME PRINCIPLES ON REGULAR EMPLOYMENT.
a. Written or oral .agreement is immaterial .o deteanine r~arity of
employment The phrase "the provisions of tvrittm agrm11ent to the rontrary
notwithstanding and regarrllm of the oral a!ftttT.lnl of the parties" in Article
295 [280] simply means that irrespective of any written or oral
agreement stating that the employmen:t ts r..ot regular, once the fact is
established that the employee has been engaged to perform activities
which are usually necessary or desirable in the usual business or tcade
of the employer, his employment is regular by reason of its nature.l
b. The phrase "to perform activities _which arc usually necessary or
desirable in the usual business or trade of the employer' includes
performance of peripheral jobs indirectly related to the principal
business of employer.4
c. However, there is a need to execute a written employment contract if
the intention is to stipulate on such other kinds of employment such
energy
1 Miele 295 [280], Labor Code; ~oov.M.RC, GR No. 147816, Mirf9, 2003.
2 SeMdoo V. f'i'LRC, hlooala Phn!)piles, rte, G.R No. 128682, Mrth 18, 1999.
3 Asrociatioo ofTrale l..ools (AT\J) v. Abella, G.R No. 100518, .m.24, 21XXl.
' Romm v. NIRC aid Pimi::o Foods Capooltion, GR No. 122327, All). 19, 1998.
628 BAR REVIEWER ON lA80R LAW
as probationary, project, seasonal, casual or fixed-term, as the case may
be, because the absence thereof will make the relationship that of
regular employment. It is only by proving the terms and conditions of
the contract that the general presumption that the relationship is
regular in nature would be effectively dispelled. Jurisprudence aboun_ds
where the non-presentation of the written contract was held as
evidence that the status of employment is not what it purports to be,
that is, probationary, project, seasonal, casual or fixed-term but regular
employment.
d. 'The doctrine of adhesion1 applies to employment ~ontracts.2 It must
be emphasized, however, that the rule on the interpretation or
construction of contracts of adhesion does not apply when the
stipulations contained in a contract are not obscure or ambiguous.3
Besides, a contract of adhesion is not prohibited per se.4
e. No declaration or appointment paper necessary to make one a regular
employee.5
f. Fixed-period employinent is the exception to the rule that an
employee becomes ·regular by reason of nature of work or period of
employment6 because in fixed-period employment, these factors are
not decisive indicators of regularity of employment The decisive
determinant is the dqy certain 2greed upon by the parties for the
commencement and termination of their employment relationship, a
day certain being understood to be "that which m111t ntcmari!J come,
although it mqy not be known whm. "1
g. The act of hiring and re-hiring the employees over a period of time
without considering them as regular employees proves bad faith on the
pait of the ernployer.8
h. Manner and method of payment of wage or salary is immaterial to the
issue of whether the employee is regular or not9
1
Miele 1Jn ct Ile Ciil Cooe pn7,'ijes:'The i1IErpretalioo ct oosa,e v«xds a ~ il a ama:t shall m fcMr Ole
patyr.ho C3M:f Ile obsruiy." (See SeMlad v. NI.RC, GR. No.128682, Mild! 18, 199'.l).
2
Ra.Yel lmslrial Cap. v. lb1. CA, GR. No. 167714, Mith7, 2007; VmJeva v. NI.RC, GR. No. 127448, Seit 10, 1998.
3
LeYmv.11mre:ialeAweCam Crut. GR. No.L-66614,Jat 25, 1988,157 SCAA283.
~ Coomercial 8armg Corpaafoo V. ~GR.No. 133107, 25 !,lath 1999.
~Seri:xrdxm (Pills.], h:. v. F ~GR. No. 141717, ~ 14, 2004; De leonv. NI.RC, GR. No.70705,hJ,l.
21, 1989, 176SCRA615.
5
1
BrertScnid, h:. v.Zaraa, GR No. 48494, Feb. 5, 1900.
Patanco NCX1h &press, Inc. v. NLRC, GR. No. 100654, llec. 16, 1994; Brent School, " · v. 2an)(la. GR No. 48494,
Feb.5, 1900.
1 ~ v.llRC,G.RNo.111651,1.mll 15, 1996.
9 Col..rroos ~ BusCotporaoon v. M.RC, GR Nos.11485S-59; Sept. 7, 2001; Lllrbov. llRC, G.R No. 111042,
Oct 26, 1999; ViDJJa v. NLRC. G.R. t-.ll.75038, Aug. 23, 1993, 225 SCRA 537.
CHArTERSIX
POST-EMPLOYMENT
b.
CASUAL EMPLOYMENT
1. MEANING OF CASUAL EMPLOYMENT.
As earlier discussed, casual employment is pcovided for under the second
paragraph of Article_295 [280] of the Labor Code. There is casual employment
~vh~e an employee !s ~ngaged_ to perform a job, work or service which is merely
incidental to the pnnapal bustness of the employer, and such job, work or service
is for a definite period made known to the employee at the time of engagement t
The case of Cap11k v. NLRC, Yaknlt Philippir.11, In,.,2 best i!Justra!es casual
employment. Private respondent company is engaged in the manufacture of
cultured milk which is sold under the brand name "Yakn/L " Petitioners were hired
to cut cogon grass and weeds at the back of the factory building used by private
respondents. They were not required to work on fixed schedule and they worked
on any day of the wetk on their own discretion and convenience. The services of
the petitioners were terminated by the private respondent on July 13, 1987. Thus,
petitioners filed a complaint for illegal dismissal with Ge NLRC.
. On the issue of whether petitioners are ca;ual or regular employees of
prtvate respondent company, the Solicitor General opined that the cutting of the
cogo_n grass at the back portion of the building of private respondents may be
conS1dered to be usually necessary or desirable in ilie usual business or trade of
private respondent. The Supreme Court, however, disagreed. The usual business or
trade of private respondents is ¢e manufacture of cultw:ed milk. The cutting of the
cogon grasses in the premises of its factory is hardly necessary or desirable in the
usual business of the ptjvate respondents. [ndeec:, it is alien thereto. Thus,
petitioners are casual employees who cannot be c-:msidered regular employees
under Article 295 (280] of the Labor Code. Nevertheless, they may be considered
regular employees if they have rendered service for at :east one (1) year.
2. SOME PRINCIPLES ON CASUAL EMPLOY\fENT.
a. Casual employee becomes regular after one (1) year of service by operation of
law.3
b. No regular appointment papers necessary for a casual employee to become
regular.4
c. The one (1) year period should be reckoned froo the hiring date.5
d. Repeated rehiring of a casual employee makes him a regular employee. I
1
~le,.
Arti::fe 295 (2801, LalxJCode; Section 5P>J, 8ool( VI,~ toknplerrentttie t.mCode, as crnendoo 1rf Mcie rv,
llepirtnentOdEf No. 10, Seriesa 1997; Cootiv. NLRC, G.R. No. 119253,Aj>i 10, 1997,271 SCRA 114.
2 G.R. No.~ . Nov. 12, 1900.
3
Section 5,iJ. Rule I. 8ool( VI, Rules b fn1llemeot tie LalxJ Code.
' Kinberlyv. ll!bl, GR. Nos. n629 cl1d 78791. Ma-/ 9.1990; Kay~. ~ V. CA, GR. No. 1624n. .llA'j 28, 2005.
Ki'nbel1y-Clar1c [Phis.Lre. v. Seaetry ctuilor, G.R No. 156668, Nw. 23, 2007.

6AR IUVI EWEIH lN lABOR lAW
630
e. The wages and benefits of a casual employee whose status is convened into
2 The distinction between probationary employment and fixed-term
,egular employment should not be diminished.
c.
PROBATIONARY EMPLOYMENT
1. LEGAL BASIS.
Article 296 [281], Labor Code provides:
"Article 296 [Z.SIJ. Probationary Emph.)111tnl. - Probationary
employment sh211 not exceed six (6) months from the ~tc ~c employee
started wocking, unle:;s it is covered by an apprennceship agreement
stipulating a longer period The services o~ an employ~ who has been
cogagcd on 1 probatioll2.l}' basis may be temunatcd for a JUSt cause or when.
he fails to qualify as a regular employee in accordance with ~casooab~e
sWl<Wds made known by the employer to the.employee at the ome _of his
engagement An cmployce who is allowed to worl< after a probanooary
period shall be consideted a ttgti1ar employee."
2. NATURE OF PROBATIONARY EMPLOYMENT.
Regardless of the kind of employment amngcmeot b e ~ the pa~es, ~
employer bas the right to put a newly-hired employee under a probattonary penod or It
may choose not to do so, as part and pared of its power to hire. If the employ~r puts
the employee under probationary employment, the employee would then be gtv~ a
certain period of time within which_to prove _that he deserves to be r ~ed.
Throughout such probationary penod, he will be under constant observatt?n,
evaluation and trial by the employer during which the empl~yer shall det~e
whether or not he is qualified for permanent employment Duong ~e probattonary
period, the employer is given the opportunity to o?serve the skill, competence,
attitude and fitness of the probationary employee while the latter seeks to prove to
the employer that he has the qualifications to meet the reasonable standards for
permanent employment.1
3. PROBATIONARY PERIOD, HOW RECKONED AND COMPUTED.
The Court has prescribed a simple, easy way of reckoning the
probationary period. Thus, if the period is six (6) months, it shall be reckoned 'Jrom
4 Servidati "If the contract was really for a fixed teml, the [employer) should not have
the date ofappointment up w the same cakndar dall ofthe 6a month.[ollorving. ". This m~s
that if a probationary employee is hired on January 1, his probatt~nary peood
expires on July 1 which is the same ,akndar doll of the ~ month fo/lo1J11ng lht dale of
appointment.
1 Tmv.t.a;i~G.RNo.151228,Aug.15,2002;Rtmresv.NlRC,GRNo.12Zl27,Aug.19, 1998:
2 ~ Amerm MmjemenlA.5soeiafm, v.CR, G.R No. L-37200, Apfi 15, 1988.
l De la Cruz. Jr. v. NLRC, G.R No. 145417, Dec.11.2003.
• Cebu Royal Plant [SMC! v. Deputy Mnislef ol Labor, G.R No. L-58639, Aug. 12, 1987; Cas POJitry &JWi
~v.Ro:o,GRNo.150Ci60,Jut(ll,2002.
CHAl'TER SIX 631
roST-EMPLOYMENl'
4. PROBATIONARY VS, FIXED-TERM.
employment lies in the intention of the employer and employee. Both
employments involve fixed period in teuns of duration of employment. However
in probationary employment, the parties mutually intend to make th~
re\ationshi? re~ar aft~r the lapse of the period; while in fixed-term employment,
no such mtenuon eX!sts and the relationship automatically terminates at the
expiration of the period.
5. PROBATIONARY PERIOD CANNOT BE STIPULATED WITHIN
FIXED-TERM EMPLOYMENT.
It m_ust be noted that a probationary p~od cannot be stipulated within
the _fixed penod of employment.1 The cases in point are Villa11J1t110 v. NLR.G and
Servidad v. ~~3 where the one (1) Y.~ employment contracts the employees
executed With th~ etqploy~ lnnodata_ Philippines, Inc., provided that the first six (6)
months thereof 1S probattonary dunng which the employer can tenninate the
employee's services by serving written notice to tlut effect and such termination shall be
imm~te, or at ~tevcr ~te within the six-month period as the employer may
d~e. After working for stx (6) months, the employee was made to sign a 3-month
probanonary employment and later, an extended 3-month probationary employment
good~~ the ~d of the 1-y~ fixed-term. At the .lapse of the 1-year, the empl~yee
was dismissed &om the semce on the ground of alleged termination of contract of
employment The High Court declared. the employees in VillanutVO and Stl'llidad as
regular employees and struck down the employment contracts containing the afore-
quoted stipulation for being "devious, but crude, attempts to circumvent [the
employee's] right to security of tenure=.."
. . In the subsequent 2006 case of Imwdllla Phiippi11U, [Tl(. v. Qugada-LofJtZi4
mvolving the same employer, petitioner herein, it was averred by Innodata that the
present employment contracts it entered into with respondents no longer contain the
so-called "da11blt-bladed" provision previously found objectionable in Villanutva and
Smidad. The Supreme Court, however, obSC1Ved that in a feeble attempt to confoan to
the earlier rulings in Villa111'tVO and Servidad, petitioner has reworded its present
employment contracts but a close scrutiny thereof shows that the double-bladed
scheme to block the acquisition of tenurial security still exists. As pronounced in
been given the discretion to dismiss the [employee] during the one yc:Ar period of
employmentfor rtaions other than thejust and OJl/ho,i~d musu under the LJJhor Cxk. Settled is
the rule that an employer can terminate the services of an employee only for valid and
1 VinJeva v.NLRC, G. R No. 127448, Seft 10, 1998, 356 Pli 638; SeM1ad vJl.RC, G.R No. 128682, Mnh 18 1999
305 SCRA 49, 55; 364 l'ti. 518; IModata Phq>pines, re. v.~ G.R No. 162839, Oct 12, 2006. . '
2 VBUNa v. t-1..RC, G.R No. 127443, Seft 10, 1998, 356 Phi. 638.
1 SerJdcJI v. Nt.RC, G.R No.128682, M!rth 18, 1999, 305 SCRA49, 55; 364 Pt.1. 518.
~ I • GRNo.162839,0ct 12,2006.
 BAil REVIEWER ON lABOll lAW
CHAl'TEllSIX
rOST-EMrLOYMENT 633
just auses which must be shown by clear and convincing evidence. Xxx The language
of the contract in dispute is truly a double-bladed scheme to block the acquisition of the • An employee who is allowed to work even for a day after the b ·
employee of tenwial seauity. lbereunder, (the employer] has two options. It can · d ts
peno · canst·dered a regular employee.I pro anonary
terminate the employee by reason of expiration of contract, or it may ·use '_failure to
• Employm~t is d~ed regular if the employment contract has no stipulation
meet worlc standanis' as the ground for the employee's dismissal. In either case, the on probanonary penod:2
tenor of the conttact jeopardizes the tight of the worker to secucity of tenure
guaranteed by the Constitution." • Employee is :eemed regular absent any written contract to prove probationary
employment _A verbal contract of probationary employment is invalid, hence,
6. IT CANNOT BE STIPULATED THAT AFfER HURDLING the employee ts deemed a regular employee.
PROBATIONARY PERIOD, THE EMPLOYEE J;)OES NOT BECOME
REGULAR BUT MERELY A PROJECT EMPLOYEE. • Repetitive rehiring of a probationary employee means he has become a regular
employee.4
The 2014 case of Malicdtm and Fhru v. Mtuulas lndmtrial Corp.,• is unique.
• Regular workers of previous owner of business may be hired as probatio
Petitioners Malicdem and Hores were repetitively hired by respondent Marulas as employees of new owner.5 nary
extruder operators from 2006 until their termination in 2011 and 2010, respectivcly.2
Their employment contracts were for a period of I year. Every year, they would sign a • Probationary employment cannot be ad injimium.6
Resignation/Quitclaim in favor of Marulas a day after their conttacts ended, and then 8. TERMINATION OF PROBATIONARY EMPLOYMENT.
sign another contract for 1 year. Both claimed to have been illegally dismissed. Marulas
countered that their contracts showed that they were fixed-tCIIIl employees for a a. Sccun·ty oftenure ofprobationary employees.
specific undertaking which was to work on a particular order of a <:'15l?mer for _a
specific period. lbeir severance from employment was due to the expuanon of theu: . Within the ~ ted 6-month probationary period, probationary employees
are entitled to secunty of tenure notwithstanding their limited t d
contracts. 7H . . enure an non-
P~~anent status. ence, dunng theu: probationary employment, they cannot be
In declaring petitioners as regular employees, the Court noted that the 2008 disoussed except under any of the following three (3) grounds:
employment contracts, denominated as "Project Employment Agreement," contain a 1. For a just cause; or
stipulated probationary period of 6 months from its commencement. It was provided 2. For authorized cause; or
therein that in the event that they would be able to comply with the company's
standards and criteria within such period, they shall be reclassified as project employees
3. :<711en the proba_tionary employee fails to qualify as a regular employee
10 accordance With reasonable standards made known by the employer
with respect to the remaining period of the effectivity of the contract The Court
to the employee at the start of the cmploymcnt.8
considered this stipulation invalid because under Article 296 (281], "an employee who is
allowed to work after a probationary period shall be considered a regular employee." b. Requisites ofthe ground offailure to qualify as a regular employee.
When an employer renews a contract of employment after the lapse of the 6-month
probationary period, the employee thereby becomes a regular eµiployee. _ Valid ~ c e of the probationary employer-employee relationship outside
of the _JUSt ~d authorized causes presupposes that the employer had accomplished the
7. SOME PRINCIPLES ON PROBATIONARY EMPLOYMENT. followtng things:'
• The probationary period may be extended but only when the employee agrees
to such extension. Absent such agreement would make the extension invalid,
1
hence, the employee would be considered as having become a regular Mi:!e2!l6(2B!J,l.axrCa!e;~NatniaiBriv.~.G.RNo.1570!0 Jooe 21 2005
employee after the lapse of the original probationary period.3 3
Ara <>.-erseas Capami v.CA. G.R No. 143949_ ~- 9, 2001. · • ·
SalMQue1Qxp.v.OetRosab,G.R~.168194.m168603 llec.13 2005
Octaviano, v. NLRC, G.R No. 88636, Oct. 3 1991 ' ' .
Espila V. fbt CA. G.R No. 164582, Mrth 28: 21XJ7..
Voyoor Visage S!udo, Ille. V. CA, G.R No. 144939 Ma!dl 18 2005
G.R No. 204-400,Feb. 26, 2014. • : =iel>ai.'f klqui"er, hc. Y. l.'a,Jbba)i,Jr., G.R No. i64532,Ju~ 24 '2007
2,iJ Md 6 [cl, Rt.de l &a( \11, ~ l o ~ lhe 1.axrCode ·as ilrendea See as, Cam,- Pacif1: ,...,,...
On Decenter 16, 2010, Fklres was kt1 ra ID repat b \\Q"K cllY"O"e after berg aslled to si_ln a papEr b-f Mooe' HR
Heal ti tie e!fed 111a1 he ~ toe tM!Jle!m a tis O)ltracis slah!s. On FSJIIB)' 1. 2011. Micdern was also W. v.Mm,G.RNo.148931,SEpl 12,2005. ' · ·- "•1•,
' See lhe r;,......., n...:....
l1l'IMaled aner sgni'Y,j a sini!ar docunett .~u"" ..,... ....,aM-. .Aist:e Mm am ii lhe En B.ric ResolJtion da:ed Ap,i 22 ~14 oo lhe Mniri ra
QJ!ii ~ t&ov. Gal!xXllOn, GR tb. 161654,1/ef 5. 200i Recxnsi:leralioo fled b-/ respondent Alca-az ii lhe t2Se a Alillotl 1.abaalllries Ph,Eppa-es , p~
No. 192571. Theagna deciso, was IW001J\la1ed 00~ 23, 2013. . A,n F. .AJcaraz. G.R
634 BAR RfVIEWER ON LABOR I.AW
1) The employer must communicate to the employee that he is being hired
on a probationary basis;
2) The employer must convey to the probationary employee the reasonable
standards to qualify for regularization;
3) The probationary status of the newly-hired employee must be
communicated to him prwrto the commencement of his employment;
4) The employer must convey these reasonable standards at the start of the
probationary employee's engagement and not in the course thereof or
towards its encl; otherwise he becomes a regular employee from day one
of his employment1 ~ not allowed.J
5) The employer must evaluate the performance of the probationary
employee in relation to the duly communicated reasonable standards; and
6) The employee fails to comply with these reasonable standards before the
completion of the probationary periocl.2
These cumulative requirements are demanded .from the employer itself and
cannot be supplied for him by law. These requirements, too, should serve to dispel the
wxoog notion that a probationary employee enjoys lesser rights than a regular employee
under the Labor Code.
c. Procedural due process.
Procedural due process required in the case of the first and second
grounds above are those provided for jUJI ,a,m and authoriZfd ,ause terminations,
respectively.
Due process for the third ground is different and unique in the sense that
it requires simply the service of a written notice of tennination,3 not verbal,'
informing the probationary employee of the termination of his probationary
employment and attaching thereto the result of the performance evaluation
conducted on h.im. :\s clearly pqinted out above, it is a fundamental requirement
that the reasonable standards expected ·o f the employee during his probationary
employment was made known to him at the time of his cngagement.5 Necessarily,
at the termination thereof, the supposed performance evaluation should be
presented to him. As a matter of due process, an employee has the right to know
whether he has met the standards for which his performance was evaluated. Should
he fail, he also has the right to know the reasons therefor.6
Tansoo•s~.klc.v.CA,G.R. No.192881,Nc11.16,2011.
kl.
3 ~ildelSrisiroRosailv.Roj'J,GRNo.170388,Sept.04,2013.
' Tcrnson's En1e!pri5es. Inc. v. CA, G.R. No. 192881, Nov. 16, 2011, 660 SCRA 374.
~Oai/~.n:.v.~.x. GRNo, 164532,Ju~24,2007.
Cdegodel Sanlisino RosaiOV. Rojo, G.R. No.170388,Sept. 04,2013.
CHAPTER SIX
POST-EMPLOYMENT 635
d. Some principles on termination of employment ofprobation
employees. ary
1. T~tion to be valid must be dooe prior to lapse of probationary
penod.1
2. Termination a day or a few days after lapse of probationary period
cannot be done without due process as he has already become a
regul;ir employee by that time.z
3. Peremptory and arbitrary tennination of probationary employees is
4. N? obligation to pay unexpired porti:>n in case of valid termination
pnor to lapse ofprobationary period."
5. A~abon doc~e5 a~plies if dismissal of probationary employee for
a J~t cause ts without due process. Thus, the termination is
considered legal but the employee will be awarded an indemnity in
the form of nominal damages of P30,000.00.6
6. ]aka d?ctrine7 apflies. if dismiss;tl of probationary employee for an
authon.zed cause ts without due process. The amount of indemnity
is higher: PS0,000.00.
d.
PROJECT EMPLOYMENT
1. CONCEPT.
Project employees are those hired:
1) for a specific project or undertaking; and
2) the completion or termination of sue!-. project has been determined
at the time of their engagement.8
2. TWO (2) CATEGORIES OF PROJECT EMPLOYEES.
" In _ord~r to safeguard the rights of workers against the arbitrary use of the
word proJect' to pre~~t employ«:s fro_m attaining the status of regular
employees, employers clawing that thetr workers are project employees should not
Pas.rrbav.NlRC,G.RNo.168421,Jt.neB,2007.
Serl~ Cap.V. Del Rnm:>, GR Nos.168194 !rd 168603, Dec. 13, 2005.
Cebu Marine Beach Resort v. NL.RC, G.R No. 143252, Oct. 23, 3J03.
' kllernatiJnaCah:6:~ Ccm)issmv. M.RC, GR.No. 72222,Jai.30 1989.
Agaboo v. NlRC, GR No. 158693, Na.r.17, 2004.
6
Aberoeoo Cwt,"-Y. ~ . Jr, G.R. No. 149371,Aprt 13, 2005.
JIM Foo:! Process.lg Corporatioo v. Pcm, G.R. 151378, Mrth 28, 2005.
a ~ 29512BO!. LiborCode; Sedial 5[al,~~ Boal VI, rues bi'll)lemeri toe Libor Code, as al1et1ded by~ JV
Oeparrnent Cxdei No. 10, Series a 1997; Sooerolav.Saez. GR lb. 1s122ulit 14, m. •

8AR RIVIEWER ON 1.ABOR I.AW
h d . d ,,, of tht tmp/qymtnl was sptcijitd at tht time thry wm
only prove that t e urallon an . sa1rt " • ,,1
engaged, but also that there was rndecd a proicct.
The twQ (2) categories of project employees on the basis of "project" for
which they have been engaged to perform are as follows:
· ular · b denaking that is within the regular or usual
(1) A parnc JO or un - - . . ..
business of the employer company, but which ts clisttnct _and
separate, and identifiable as such, from the other undertakings
of the company; or ..
· th ·
(2) A particular job or und_en~g at ts l1S!1t within the regular
business of the corporauon.
Elucidating on the foregoing, the Court pronounced in the landmark tn
ba,rtdecision inAUJ-TIJCP v. NLRC-3 . that respondent is a project employee, explained that San Miguel Corporation is not
"xxx (A]s is evident &om the provisio_ns _of Article 280 (now_2?5)
of the Labor Code, quoted earlier, the pone•~ test .for det~g
h th particular employees are propccly charactenzed as pro1ect
w e er , dis11n ' .,,i<hed from •r-•1., employees,' is whether or not
cmpIoyees as b- '-6- 'fi · therein was therefore validly considered a project employee.4
the 'project employees' were assigned to carry out_a 'specs c pr~1ect or
undertaking,' the duration (and scope) of which _were specified at
the time the employees were engaged for that pro1ect. • .
"In the realm of business and industry, we note that pro1ect' could
refer to one or the other of at least 1F9 (2) distinguis~able ~s of
• . . Einlh!, a project could refer to a particular 10b or
ac':;"i that is within the regular or usual business of the
:ployer ~mpany, but which is distinct and separate, and .
identifiable as such, from the other undertakings of the company.
Such job or undertaking begins and ends at determin:d o~ dete~able
times. The typical enmplc of this first type of pro1ect is a parttc~ar
consttuction job or project of a coasttuction comp~Y: A c~aslrl:1cnon
company ordinarily carries out two or more (disn\l~] idenofi~ble
construction projects: ,.g., a twenty-five-storey hotel Ill M~o; _a
residential condominium building in Bagui~ City; and a domesoc 31f
terminal in lloilo City. Employees who are hired for the carryrng out of
one of these separate projects, the scope and duration of which h~ been
determined and made known to the employees at the wnc ~£
employment, are properly treated as 'projm employees_: and thCll
services 1t11y be lawfully terminated at complenon of the pro1ect . Errjlllasis suppfied. Al.lJ.TUCP, ~ -See also'JaJcalas V. NI.RC, G.R No. 100333,Mrch 13, 1997.
'"lbe teem 'project' could also refer 10, s~coadly. ~ parucular _Job
or undertaking that is l1!J1 witlun the rc~r ~usmcss of the curpor_a~on.
Such a job or undcnaking must also be tdenu_fiably separate and disuncc
&om the ordinary or regular business operaoons of the employer. The
1 GM\~ h:.V. ~ G.R Ho. 176419,No,,, 27, 2013. . trmALlJ.TUCP
~Tl.tPv ti.RC G.R. Ho. 100002./lisJ. 2, 19'34: ~ Geotienna f'OM!f ~ ~
FWippine Naml•Oil~-Ensgy~tCorpocatioo, GR No.170351, ~ 30.2011.
3 kHo.11)1)9)2,hJJ.2. 1994,234SCRA678.~.
-~
CHArTERSIX 637
rOST-EMPLOYMENT
job or undertaking also begins and cads at determined or determinable
times.I
Brief e.umples of what may or may not be considered identifiably distinct
from the business of the employer are in order.
In PWT 11. Yla~,Z the Court held that accounting duties were not shown as
distinct, separate and identifiable &om the usual undertakings of therein petitioner
PIDT. Although essentially a telephone company, PLOT maintains its own accounting
department to which respondent was assigned. 1b.is was om: of the reasons why the
Court held that respondent in said case was not a project employee.
On the other hand, in San M~i«I Cmporalion v. NLRC,3 respondent was hired
to repair fumaces, which are needed by San Miguel Corporation to manufacture glass,
an integral component of its packaging and manufacturing business. The Court, finding
engaged in the business of repairing fumaces. Although the activity was necessary to
enable petitioner to continue manufacturing glass, the necessity for such repairs arose
only when a partiatlar fumace reached the end of its life or operating cycle. Respondent
In GMA NellPork, Irr.. "· Pabriga,5 respondents were hired and assigned by
petitioner to the following tasks (1) .Manning of Technical Operations Center;6 (2)
Acting as Traosmitter/VIR men;7 (3) Acting as Maintenance staff;8 2nd (4) Acting as
Cameramen. These jobs and undertakings, according to the Supreme Court, are clearly
within the regular or usual business of the employer company and are not identifiably
distinct or separate from the other undertakings of the company. There is no denying
that the manning of the operations c.cnter to air commercials, acting as
ttansmitter/VfR men, maintaining the equipment, and acting as cameramen are not
undertakings separate or distinct &om the business of a broadcasting company.
Petitioner's allegation that respondents were merely substitutes or what they call pinch-
hitters (which means that they were employed to take the place of regular employees of
petitioner who were absent or on leave) does not change the fact that their jobs cannot
be considered projects within the pwview of the law. Every industty, even public
offices, has to deal with securing substitutes for employees who are absent or on leave.
GR No. 155645, No,,. 24,200i,508 SCRA 31; 537 Phi.840.
l 357 Phi. 954 (19138).
• GtMNell'm, ~ v.Pcmja, G.R. Ho.176419,No.>.27,2013.
s GR No.176419,N<w.27, 2013.
, Pl!lfoorirg te ktol,iig l.rldioos: (a) Responsibe b' 1he arrg cflocalcxmnertials; nt (b) 1.0CJ9nghoonim,g of na1iona
cxmnectials (salelile).
, PerforrrnJ lhe k>llofflJ h.ncfu1s: (a) Prepn ~ u local cirrg; (b) ~ a~ of CXX1Tl1elti:ii;(c) FbJg~ cfstalbl
prano;(d) l.oggllQ cf lralsn'it!:r lm'8: nl (e) ncased power lain. stlt~Qenerab"set t> resure progam.
1 Performo;j lhe ~ functions:(a) Chect~ d equixnem; (b) W.rmrg up ofgenerata; (c) Flog cf ol, fuel, and wate-
in r.dat>r.
638 BAR REVIEWER ON V.BOR V.W
Such tasks, whether perfonned by the usual employee or by a substitute, cannot be
considered separate and distinct from the other undertakings of the company.1
3. LITMUS TEST OF PROJECT EMPLOYMENT.
Tiie litmus test of project employment, as distinguished from regular
employment, is whether or not the project employees were assigned to carry out a
specific project or undertaking, the duration and scope of ~hich were
specified at the time the employees were engaged for that proJect.2 A true
project employee should be assigned to i project which begins and ends at
determined or determinable times and be infonnM thereof at the time of
hiring.l
111e 2017 case of lnnodata Knowkdge Services, Int. v. lnting,4 best illustrates the
litmus test. Records disclose that respondents who are lawyers or law graduates,
sigued employment contracts with petitioner IKSI 5 spe~fically indica~g the
Content Supply Chain Proje~t., also known as the ACT Pro1ect., as the proiect for
which they were being hired, which was expected to be completed aft~r a
maximum of five (5) years. However, sometime in November 2008, IKSI reqwred
respondents to work on another project called "Bloomberg," ~hi~ was not inclu~ed
in the original contracts that they signed and without entenng tnto a new proJect
employment contracts. Such fact was never refuted by IKSI. D~g that time,
respondents were required to read and review decided cases in the Uruted States of
America and they were no longer called Senior or Junior Reviewers, but referred to
as Case Classifiers. Respondents initially opposed working on said project but
eventually agreed, in fear of losing their employment altogether. Months later, they
were again required to work on the ACT Project and reverted to their previous
designation as Document Reviewers.
In holding that respondents have already become regular employees by
petitioner's act of assigning them, even for a short moment, to another project, the
Court ratiocinated, thus:
"Here, while I.KS[ was able to show the presence of a specific
project, the ACT Project, io the contract and the alleged duration of the
same, it failed to prove, however, that respondents were in reality made
to work only for that specific project indicated in their employment
GI/A Net.m, tic. Y. Palxga, GR fb.176419, Na.i. 27,2013.
Alta! 295 !2801, 1.mCode; Onri Haitg SeM::es, tic. v. Benmfo Boo, GR No. 199388, Sept 03, 2014.
3 Gema v. ~ Pmlml, ~ - GR No. 1oooos."14, m .
' IModata Kno,o/,edge SeMces. tic. v. l1trl;J, GR No. 211892, Dec. 06, 2017.
Petmoer moclitl Kno,,,iedge SeMcl!S, k1c. (IKSO is a l:IX1lJil1Y erga:ied il daa ~ . encxxliY,J, mexlng,
~ . typesettn,J, inagirY,j, !rid aher processes h aie capue, car,oenm, and sm:_ie cl data illd ilfamalm. M
ooe &re. Applied ~ TednbJies (ACl), a l:IX1lJil1Y basoo il 1he lknld Stres cl Amlli:a, hied IKSI lo lf!iell
v.mos litijatilo docU'nenls. Oie ID lhe nahJre a the jib, ACT ~ l<SI ID tie lcMyels, <r at east, law graduates, kl
re-.iew vaoous 1a9afal doMoenls, das!l'( sax1 doctJnenls no tie presailed categaies, ard 8lSl1e tiat ootputs a-e
delilered oo :me.F<r h5 pttp05e. lKSI e!YJaged toe serli:es cf respoodents as SEnir and ~rtMeWe!S will acoobact
duaoon o1 five (5) yeas.
CHAPTER SIX
POST-EMPLOYMENT 639
documents and that it adequately infonned them of the duration aod
scope of said project at the time their services were engaged. It is well
se_ttled that a_party alleging a critical fact must support his allegation
with substantial eV1dence, as allegation is 001 evidence. The fact is I.KS!
actually hired respondents to work, not oo!y on the ACT Project, but
on other similar projects such as the Bloomberg Project. When
re_spondc~ts _were required to work on the Bloomberg project,
with~ut stgrung a new contract for that purpose, it was already
oulSlde _of the_ scope of the particu!,ar undenaking for which they
were hired; II was beyond the scope of their employment
~ontracts. T~e fact that the same happened only once is
mconscqucntiaL.What ~atters is that IKSI rcguired rcsponocnts
to work on a proiect which was separate and distinc1 from the one
they had signed_ up for. This act by IKSI indubitably brough1
respondents outside !,he realm of the project employees category."
4. PROJECT EMPLOYMENT VS. FIXED-TERM EMPLOYMENT.
Project e~ployment and fixed-term employment are not the same and
thus_ cannot _be tnterchangeably characterized.1 While the former requires a
p~cular pro1ect, the duration of a fixed-term employment agreed upon by the
parttes may b~ any tl':} ttrtain, which is ,':°dersto~ !o be 111ha1_111hich must neassari!J
come although 1/ mqy no/ be known when. The decmve deterrrunant in fixed-term
employ~ent is not the activity th~t the employee is called upon to perform but· the
day etrtatn agreed upon by the parttes for the commencement and termination of the
employment relationship.2
. Consequently, ~roject emplo~ent contracts should not be ambiguous as
would tn effect result 10 the altemattve availment of project employment and
employme:1t for a fixed te~ s_o a_s to _preclude the regularization of the project
employees sta~s. Any ambtguity tn ~aid contrac~ must be resolved against the
company, espeaally because under Article 1702 of the Civil Code, in case of doubt
all labor contracts shall be construed in favor of the wocker.3 '
5. PROJECT EMPLOYMENT VS. REGULAR EMPLOYMENT.
Regular employment is inconsist~t with project employment. In other
words, a regular employee cannot be at the same time a project employee.4
1. Tiie services of project ~ployees are cot~ous with the project or
any_phase thereof and may be terminated upon the end or completion of the
pr~1ect or p_hase thereof for which they were hired. Regular employees, in contrast,
enioy secuoty of tenure and are legally entitled to remain in the service of their
employer and to hold on to their work or position until their services are
mxlala Ktlo¥.1ooJe SeM:es, Inc. v. l'mg, GR No.211892, Dec. 06, 2017.
mxlatl Ktlo¥.1ooJe SeM:es, klc.v. lrm,i, ~ra; G.W. Netvm, n:. v. Pablga, rup-a
3 Id.
' Magcaasv. NL.RC. G.R No. 100333, Man:h 13, 1997, 269 SCRA.453, 468.
 BAR IUVIEWER ON lAIOR lAW
terminated by any of the modes of termination of service recognized under the
Labor Code.1
2. Due process likewise varies. In case of project emphymmt, if the
termination is brought about by the completion of the project or any phase thereof,
due process is complied with even if no prior notice of termination is served. For
teonination of ngular employment, the due process required would necessarily
depend on the ground cited. If the termination is for just caus~ due process
applicable to Article 297 [282) terminations applies. If due to au?1o~ed cause, due
process applicable to Articles 298 (283] and 299 [28'!] temunat10ns should be
followed. ·
6. ''WORK POOL" PRINCIPLE.
As a general rule, employers may or may not form a "work pool" A "work
pool" refers to a group of workers from whic~ an e~ploye~ like a ~onstruction
company draws the workers it deploys or assigns to its vanous pro1ects or any
phase/s thereof. Members of a "work pool" may consist of.
1. Non-project employees or employees for an indefinite period. If they are
8. SOME PRINCIPLES ON THE INDICATORS.
employed in :r particular project, the completion of the project or of
any phase thereof will not mean severance of employer-employee
relationship.
2. Project employees. These workers in the work pool who are employed
in a particular project or in any phase thereof are considered as such if
they arc free to leave anytime and offer their services to other
employers.2
Mere membership in a "work pool" does not result in the workers'
becoming regular employees by reason of that fact alone.3 However, under
established jurisprudence, a project employee who is a member of a "work pool,"
_. may anain "gular status as a project employee. 1bis kind of employee is known as
"regular project employee."
7. INDICATORS OF PROJECT EMPLOYMENT.
Either one or more of the following circumstances, among others, may be
considered as indicator/s that an employee is a project employee:
1. The duration of the specific/identified undertaking for which the
_worker is engaged is reasonably determinable.
1
5ml 22. llepartnentOtle-No. 19, Series of 1993.
DaaElv.LM.Catrus ErgneeriYJ Cap.,GR No. 176748, Se4t 1. 2010
4
Fipilas Prefooricated ~ S'fs1em$ [Fisysremsl nc. v. PIJente. G.R. No 153332. Mlrd1 18, 2005, 453 SCRA 820.
modcta ~ Servi::es, h:. V. kl&"g, G.R No. 211892, Dec.00, 2017.
CIIAPTER SIX
POST-EMPLOYMENT
2. Such duratio~, as well as the specific worlt/service to be performed,
are defined tn an employment agreement and is made clear to the
employee at the time of hiring.
3. The work/service performed by the employee is in connection with
the particular project or undertaking for wbch he is engaged.
4. The employee, while not employed and awaiting engagement is free to
offer his services to any other employer. '
5. Th~ _terminati~n _of his empl_oyment in the particular
proiect/undertaking 1s reported to the Regional Office of the
Department of Labor and Employment having jurisdiction over the
workplace, wi~ thirty (30). days follo,ving the date of his separation
from work, uStng the prescnbed form on employees' tenninations or
dismissals or suspensions.
6. An und~rtaking in the employ~ent contract by the employer to pay
completion bonus to the project employee as practiced by most
construction companies. I
A. On the FIRST indicator.
1. For p~oses of detennirung duration, there must be a "day artoin" in
the pro1ect employment contract, the absence of which means
~mpl~yee is a regular employee. "lb.is is so becau~e a project employee
1s assigned to a project which begins and cods at determined or
determinable times. 2
2. Although the employment contract may not state a particular date but
if it. did _specify that the termination of the parties' employment
relattonship was to be on a ''dtry certain"• the day when the phase of
work would be completed - the employee cannot be considered to
have been a regular employee. He is a project employee.3
'3. The "duration of the project" provided in the contract of project
employment should not pertain to the duration of the employment
~ but to the duration of the specific project or underuking
which must be reasonably determinable at the time of hiring of the
project employee.4
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
 BAR RE\IIEWERON LABOR LAW
fixed for a specific project or undertaking the completion or
tennination of which has been detennined at the time of the
engagement of the employee.1 The simple fact that the employment as
project employees has gone beyond one (1) year does not detract
from, or legally dissolve, their status as project employees. The fact
that the employees worked for the employer under different project
employment contracts for several years cannot be made a basis to
consider them as regular employees, for they remain project
employees regardless of the number of projects in which they have
worked.2 '
5. One may start as a project employee but he may later become a regular
employee if his services were extended indefinitely.3
B. On the SECOND Indicator
1. A ~ project employment contract is an indispensable requirement
In the cases where the Supreme Court ruled that the project
employees like construction workers have retained their status as
project employees despite their repeated rehiring, the ~ploy~s were
able to produce written employment contracts clearly sttpulattng that
the workers' employment was coterminous4 with the project and that
they were notified of the scope and duntion of the project at the time
of their engagement as project employees.5
2. Failure to present contract of project employment means that
employee is regular. 1bis is so because such a contract, while not
conferring regular status by itself, is evi~ence that the employee was
infooned of the duration and scope of his work and his status as
project employees.6
3. Project employees should be informed of their status as well as the
duration and other details of their engagement as such right at the
inception of the employment relationship. The employees should have
knowing consent to being engaged as project employees and this must
be stipulated in no uncertain terms in the project employment
contract.7
1
Cooaere S<iftms, n:. v. Cabusas, GR No. 1TT812, ble 19, 2013.
Da:l.iiv. LM. Carl.ls Eri;Jneerirg cap, GR No. 176748, Seit 1, 2010.
Pases v. Phqipr,e Natmal Coos1rucioo Gapora!xxl, G.R No. 192394,July 03, 2013.
• Sare:inesspelled as "CX>lEmlil.ts' as in Cooaere S<iftms, nc.v. Callusas, Sl4)ra.
s Hary,n Hea,,y lnoostJi!s aid ConsMm Co, I.kl.v. ba'lez. G.R No. 170181,June 26, 2008.
OITli Halo;i SeM:es, n:. Y. Bematlo Ba,, G.R No. 199388, Seit 03, 2014.
1 Ca-anoiv.Nt.RC,G.RNo. 102973,AIJIJ.24, 1993.
CHAl'l"ER SIX
POST-EMPLOYMENT
4. Repeated renewals ofpro Jonna empioyment contracts, an indication of
regular and not project employment I
5. A co~tract of_employment on a ''projed-to-p:-ojed' basis is valid provided
that_ the. peood was agreed upon knowingly and voluntarily by the
parttes, without any force, duress or improper pressure brought to bear
upon the employee and absent any other circumstances vitiating his
consent, or whe~e it satisfactorily appears that the employer and
employee ~ealt with each oth~r on more or less equal terms with no
moral dominance whatever being exercised by the fonner xxx."2
C. On the THIRD indicator.
I . In order to be considered a project employee, the work or service he
would p~rform s?oul~ be connected with and related to the project or
undertaking spectfied In the contract of employment for which he was
engaged. Assigning _him to another projec: or undertaking not in any
way connected wtth or related to ~ project or undertaking
p~cularly contemplated in the contract c,f employment would make
him regular and not project employee.3
2. 'W'ork poolprinaple" applies. (NOTE: See separate discussion on this principle
above). · ·
D. On the FOURTH indicator.
I. A project employee may acquire the status of a regular employee when
the following factors concur:
(a) Th~re is a continuous (as opposed to nter:mittent) rehiring of the
proiect employee even after cessation of a project for the same
tasks or nature of tasks; and
(b) The tasks performed by the alleged "projr(t employee" are vital,
necessary and indispensable to the usi:al business or trade of the
employer.4
2. Intervals in the employees' employment :ontracts are significant in
that they would bolster the company's position that, indeed, they are
project employees5
E. On the Flfl'H indicator.
I. Report. to DOLE on termination of pro:ect employees is required.
Accordingly, mstead of the notice of tennination to the affected
1
Glory Phippiies, n:. V. Veigara, G.R No. 176627, Aug.24, 2007.
Sclrasv.NLRC.G.RNo. 114671,No.o.24, 1999;Ca-anolv.t-l.RC,G.RNo. 1C2973,Aug.24, 19'33.
> C<xxmY!gas Hotel!leadl Resoov. Visca, G.R No.167045,Aug.29,2008.
MlraJiinol Jr. v NlRC, G.R No. 120969,J.wl. 22, 1998; Seealso nimlv. M.'le, G.R No. 114734,Mm31 2<XX)
1
caseres v. Urwe1sa1 Roona Sug..-MrOJ c:ap.jVRSui,rol G.R N.?. 159343, Sept 2a. 2001. • ·
 BAA RMEWEll ON lABOll lAW
project employees upon completion of the project or any phas,e
~ the law merely requires that the employer should render a
report to the DOLE on the teunination of their project employment.l
i The report should be made within thirty (30) day~ following the date
of the project employee's separation from work, using the prescribed
form on employees' terminations or dismissals or suspensions.
F. On the SIXTH indicator.
1. Completion. bonus is a practice in the construction industry which has
been adopted by other industries.
2. Dtpartmmt Ordtr No. 19, Series of 1993, provides that in the absence of
an undertaking that the completion bonus will be paid to the
employee, the employee may be considered a non-project employee,
hence, regular.
3. The amount of the pro-rala completion bonus may be based on the
industry practice which is at least the employee's one-half (½) month
salary for every 12 months of service.2
9. TERMINATION OF PROJECT EMPLOYMENT.
1) Project employees enjoy security of tenure only during the term of
their project employment.3
2) If the project or the phase thereof in which the project employee is
working has not yet been completed and his services ate terminated
without just or a\ltho~ cause and there is no showing that his
services are unsatisfactory, such termination is considered illegal, hence,
the project employee is entitled to reinstatement to his former posi~on
or substantially equivalent position. If the reinstatement is no longer
possible, the employee is entitled to his salaries for the unexpired
portion of the project employment agreement4
3) Project employees are not, by law, entitled to separation pay if their
seivices are terminated as a result of the completion of the project or
any phase thereof in which they are employed. The reason is that their
services are deemed cotemunous with the project or phase thereof.5
4) Project employees have presumably become regular employees if they
. ate allowed to work beyond the completion of the project or any phase
thereof to which they were assigned or after the ''day «rtain "which they
I G\MNeb\10,k, "-v.P3M.1a,G.R No.176419,Nov.27,2013.
2 See Section 3.4. o f ~ OnlEf No. 19, Serles of 191J3.
3 Tomas Lao Consm!ction, v. NLRC, G.R. No. 116781, Sept 5, 1997.
' Fq)has Prefmricated aMrg 5)sBns [RsystemsJ, Inc. v. Puente, G.R No. 153832, Marth 18, 2005
s Sedion32., DeparttnentOrderNo.19, Seoosof 1993; Saberolav.&iarez, GR No. 151227,Jut, 14. 2008.
CHAmRSIX
l'OST·EMPLOYMENT
and their employer have mutually agreed for its completion. Having
become regular employees, they can no longer be tenninated on the
basis of the completion of the project or any phase thereof to which
they were deployed' but only for just or authorized cause, the absence
of which will make their tennination illegal.2
5) Advance ~otice of t~ation of project employment is not requirecf,3
h~ce, failure to serve 1t upon completion of the project would not
violate ~rocedural due process. Consequently, the Agabon doctrine is
not applicable thereto.•
6) Burden of proof in teanination of project employment rests on the
employer.5
e.
SEASONAL EMPLOYMENT
1. CONCEPT.
_A "11asonal empk?Jtl' is one whose work or service to be performed is
seasonal m nature and the employment is for the duration ,:,f the season.6
2. REGULAR SEASONAL EMPLOYMENT.
Seaso~ employees may attain regularity in thcu: employment as such,
Once they attamed such regularity, they are properly to be called ''regular ieasona/
tmphyees."
. Re~ seasonal workers are called to work from time to time, mostly
dunng ~ season. The nature of their relationship with the employer is such
tha~ dunng off-season, they ~ tem~ru:ily laid off but they are re-employed
dunn~ the season or when theu ~ces may be needed. They are not, strictly
speaking, separated from the semce but are merely. considered as on leave of
absence without pay· until they are re-employed. Their employment relationship is
never severed but only suspended. As such, they can be considered as being in the
regular employment of the employer.7
3. REQUISITES FOR REGULAR SEASONAL EMPLOYMENT.
The requisites in order that a seasonal employee may be deemed to have
attained regularity of employment are as follows:
1
See Daaifaly, LM. CarM Engiieerfng Qrp., G.R. No. 176748, Sept 1, 2010.
2
IMldala Knov.1edge SeMles, Inc. v. hlffd, GR No. 211892, D3c. 06, 2017.
3
Cioa,v. C. E. Constndxl Calporaticn, G.R No.156748, Sept 8, 2004.
' O.M. ~ . Inc. v. Gdres, G.R No. 169170, hlg. 8, 2010.
5
6
Soolhem O:A:abm 0eveqxnent n1 Cooslndal, he. v. NI.RC, G.R No.121582, 0a. 16, 1997, 280 SCRA 853.
Mk:le 295 (280], LaborCode; Secb, 5, Rilfe I, Book Viol !he~ ID lmpenenttoo LatxrCode
1
Abaso1o v. NL.RC. GR No. 118475, Nov. 29, 2000. .
 BAR REVIEWER ON IABOR IAW
1) The seasonal employee should perform work or services that are
seasonal in nature; and
2) They must,have also been employed for more than one (1) season.
Both requisites should concur in order that the employee may be
classified as regular seasonal employee. If the seasonal w~rker_is engaSC<: only
for the duration of one (1) season, then, he does not attaJ.n regulaoty of
employment as a seasonal worker.1
In Hacienda Fatima,2 the fact that the workers repeatedly worked as
sugarcane workers for their employer for several yeaci" is not denied by the latter.
Evidently, they were employed therein for more than one (1) season; therefore, the
general rule of regular employment is applicable. This is so because allh:ough the
employer had shown that the workers performed work that was seas~nal 1n nature,
the former failed to prove that the latter worked only for the duration of one (1)
particular season; hence, they are regular seasonal employees.
f.
FIXED-TERM EMPLOYMENT
1. REQUISITES.
Fixed-term employment is not found in the Labor Code but only created
and recognized by jw:isprudence.3 While the Supreme.Court has reco~~ the
validity of lii:ed-tean employment contracts, it has consistently held that this ts the
excrption rather than the general rule.4 Verily, a fixed-term employment is valid only
under certain circumstances. 5
The two (2) requisites or criteria for the validity of a fixed-term contract
of employment arc as follows:
1. The fixed period of employment was knowingly and voluntarily agreed
upon by the parties, without any force, duress or improper pressure
being brought to bear upon the employee and absent any other
circwnstances vitiating his consent;
Q[
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.6
Hadeoda Fatima v. National Federation of Sugarcane Worileis. G.R. No. 149440, Jan. 28, 2003.
~ .
lmodata Kro.lieoJe Sef'ices, Inc. v. nti9,G.R. No. 211892. Dec. 06, 2017.
Sal t.6;jua Corpam v. Teodosi:>, G.R. No. 163033,Od. 2,2009.
As eruicm:d n111e leait',l caseof!tent Schoo. nc. v. Zarm ind Alegre, G.R. No. 48494, Feb. 5, 1900.
1 ~v. MY. Sirl!liswtS, nc., G.R No. 148102,Jlif 11, 200i.
CIIArTIRS IX
POST-EMPLOYMENT
If any of the foregoing criteria is not present, the fixed-term contract of
employment should be struck down for being illegal•
2. VALIDITY OF FIXED-TERM EMPLOYMENT NOT AFFECTED BY
NATURE OF WORK.
'fhe fact that an employee is engaged to perform activities that are usually
necessa.cy or desirable in the usual trade or business of the employer does not
preclude the fixing of employment for a definite periocl.2 It does not necessarily
foll~w that where the duties of the employee consist of activities usually necessary
o~ desirable in the usual business or trade of the employer, the parties are forbidden
from agreeing on a period of time for the perfonnance of such activities. There is
nothing essentially contradictory between a definite period of employment and the
nature of the employee's duties.3
Thus, it was ruled in Philippi11e Vilhge Hotel v. NLRC,4 that the fact that
private respondents were required to render services necessary or desirable in the
operation of petitioner's business for the duration of the one-month dry-run
operation period, did not in any way impair the validity of their contracts of
employment which specifically stipulated that their employment was only for one
•. (1) month,5
3. ONCE AN EMPLOYEE BECOMES REGULAR, IT CANNOT BE
CIRCUMVENTED BY FIXED-TERM EMPLOYMENT.
Once employees become regular employees, they are entitled to security
of tenure which may not be circumvented by mere stipulation in a subseqyent
~ that their employment is one with a fixed period. While the Supreme
Court has upheld the legality of fixed-term employment, where from the
circumstances it is apparent that the periods have been imposed to preclude
acquisition of tenw:ial security by the employee, they should be struck down or
disregarded as contrary to public policy and morals.6
4. BY CHOICE, AN EMPLOYE~ CAN BE A REGULAR EMPLOYEE
WITH A FIXED-TERM CONTRACT.
In Ftfii v. Eipirilll, 1 the right of a regular employee to opt to have a fixed-tenn
contract has been given judicial imprimaJm: It is therefore not a legal impossibility that an
employee can be a regular employee with a fixed-tenn contract Thus, it was
elucidated: ·
Pure Foods Corporation V. NLRC, G.R. No. 122563, Dec. 12, 1997, 283 SCRA 133.
~ v. CA, G.R t-b.1~.Feb. 15, 2007.
3 f>ayJfrlillV. Genef3Mrrg Capooial_ G.R. No.149329,"7' 12,2004;SeealsoAflA~Cca'iege,Pcrcrajue, V.
hm, G.R. No. 164078, NoJ. 23, 2007; F~ v. SM Mguei Caporation, G.R. No. 150058, Feb. 9, 2007.
G.R No. 105033, Feb. 28, 1994.
Seealso Pallr.rlco Natl B:pre.ss, rev. NIRC, G.R. No. 100654, ~ 16, 1994.
1 MriaWa!erCo.,klc.v.Pma.GRNo.158255,July8.2004.
7 Fuj Televism Nebm, n:. V. Menes.Espii!lJ, G.R. Nos. 20494445, ~ 03, 2014.
 BAR REVIEWER ON IABOR LAW
"Arlene's contract indicating a fixed tam did not automatically
mean that she could never be a regular employee. 'Ibis is precisely what
Article 295 [280] steks to avoid. The ruling in Brrnl remains as the cxcc:ptioo
cather than the general rule.
"Further, an employee can be a regular employee with a
fixed-term contracL The law does not preclude the possibility that a
regular employee may opt to have a fixed-term contrac~ for valid
reasons. This was recognized in Brent For as long as it was the
employee who requested, or bargained, that the contract have a
'definite date oftermination,' or that the fixed-term contract be freely
entered into by the employer and the employee, then the validity of
the fixed-term contract will be uphcld."t
5. SOME PRINCIPLES ON FIXED-TERM EMPLOYMENT.
. (1) In a valid fixed-period employment, lack of notice of termination is of no
consequence because when .the contract specifies the period of its duration,
it terminates on the expiration of such period.2 The expiration of the fixed
term contract simply caused the natural cessation of the fixed-teem
employment3
(2) Employee is deemed regular if contract failed to state the specific fixed
period of employment4 .
(3) Charges for misconduct or other wrongful acts or omissions are rele~t
only in termination prior to expiration of the term: They are not relevant tf
termination is due to expiration of fixed period.5
(4) · Employees allowed to work beyond fixed term become regular employees.6
(5) Rendering work beyond one (1) year would result to regular employment.7
(6) Successive. renewals of fixed-period contracts will result to regular
employment8
(T) 555 Doctrine - The scheme of the employer in hiring workers on a
uniformly fixed 5-month basis and replacing them upon the expjntion of
their contracts with other workers with the same employment status
circumvents their right to security of tenure.9
1 lkmscxmJ~-
2 NeN&melldalCoosnicmv.1"8,GR ltl.171131,.AJI'( 10, 2007.
3 Fooera &aids Plii., nc. v.1.a'g~.GR No.205:m, Mardi 18, 2015.
' Posedal Fl!hi'g v. t-l.RC, GR No. 168052, Feb.20, 200i.
M'ACoolpuuColege, Pircrlaque, v.Austria, GR No.164078,Ncw.23, 2007.
6 Viernes V. NLRC, G.R. No. 108405, Apra 4, 2003.
~ d e j Nate Eleen: CooperaNe, 1oc. v. ~ cm Ganoo, GR No. 1s1s21, Oct 10, 2008.
Phips Semiconductors !Phis.I, nc.v. Fadriquela, G.R No. 141717, Apci 14, 2004.
Pure Foods Coqxlralion v. NLRC, G.R. No. 122653, Dec. 12, 1997: Urwersal Rooila Corp v. ~
164736, Oct. 14, 2005.
CHAPTER SIX
rOST-EMrLOYMENT
(8) Employment on a "dqy-to-dqy bai1 far a temporary period" will result to regular
employment as ir is a contract which has the purpose of circumventing the
employee's security of tenure. 1
(9) Employment on 'OJ thenttd arim" basis may ripen into regular employment.2
(10) Employment on a "por vitye" (per trip) basis may ripen into regular
employment by reason of their continuous hiring :tnd performance of tasks
necessary and desirable in the.usual trade and business of the employer.3
(11) Termination prior to lapse of fixed-term contract should be for a just or
authorized cause.4
(10) Liability for illegal dismissal of fixed-term employee is only for salary for the
unexpired portion of the fi.,ced-term contract.s
6. FIXED-TERM EMPLOYMENT OF OFWs.
(1) OFWs can never acquire regular employment because they can only be
engaged on a fixed-term basis.6 Their employmer.t contracts for indefinite
period are not valid.7 Their employment contracts cease upon expiration
thereof.8
(2) OFWs do not become regular employees by reason ofnature of work.9
(3) Probationary employment of OFWs is a misno~er.10
(4) Series of rehiring of OFWs cannot ripen into regulu employment11
(5) The CBA cannot ove¢de the terms and concfitions prescribed by the
POEA under the Standard Employment Contract (SEC) for OFWs. 12
(6) Hiring of seafarer for overseas employment but assigning him to local vessel
does not affect his status as an OFW.ll
(T) Seafarer hired for overseas deployment but later assigned to domestic
operations ofter the expiration of his overseas contract ceases to be an OFW. 1
Coca-Caa Boalels Phis., nc. v. De la Cruz, GR No. 184977, Dec. 7, 2009.
Phil'.)S Semimluctas [Phi1s.}, nc. v. F ~.GR No. 141717, Apli 14, 2004.
3 Lynvi FIShi'gEnterprises, nc. v.Aooe, GRNo.181974, Feb. 1, 2012. .
• Medrilav. f'liwne v~ Ba1k, i'1fra; GeorgeAnde!soov. NLRC, GR No. 1t1212.JM. 22, 1996.
s Ne,,, &Rise 11et!1 Cooswcm v.P'8, GR No. 171131,Jul-/ 10, 2007.
Seesoon:12002 Resoofa1 i1 ~ v.tlRC, GR No. 110524,Juy 29,2002, 315 SCRAJOO.
PenlacJon International Shipping, Inc. v. Adelantar, G.R. No. 157373, July 27, 2104.
1 RavcrilO v. Esso Easlem Maire, Lil., supra; Mia-es V. N.RC, Sllpra.
9 Gu-Miro v. Adorable, G. R. No. 160952, Aug. 20, 2004.
10 M'lares v. N.RC, GR No. 110524, .Jdf 29, 2002, 385 SCRA 300; See also De la Quz V. Maefsk Flipnas Cce\w9, klc.,
GRNo. 172038,Apri 14,2008.
11 Id.
. GR No. ll De la Quz V. Mlersk Fqims ~ - h:., G.R. No. 172038, Apii 14, 2008.
11 OSM ~i'g Ph!T ippines, Inc.v. NLRC, G.R. No. 138193, Wardl 5, 2003.
·'!

650 SAR REVIEWER ON I.ABOR I.AW
g.
SECURITY GUARDS
1. NEW TOPIC.
The topic of Security Guards is newly introduced ih the 2019 Syllabus.
There is no single provision in the Labor Code on security guards; hence, it is a
source of wonder for the Syllabus to consider this topic under "Kinds ofEmployment"
alongside such topics as regular, casua~ probationary, project, seasonal and fixed-
term employments. Perhaps, the reason for its inclusion therein is for the bar
candidate to be able to address the issue of the employment status of security
guards and other private security personnel in relation to their employer, the
security agency, and to the principal/ client, to whom they have been assigned or
farmed out · contr~ll~-corpo~nons, who or which puts out or farms out a security and/or
2. DEPARTMENT ORDER NO. 150, SERIES OF 2016.
In any case, there is one issuance on security guards which may be
relevant for purposes of preparing for the bar exams and that is, Department Ordtr
No. 150, Smu of 2016, entitled "Rtvistd Guidtlinu Govm1i11g the Emplqyment and
Working ConditioM of SemrifJ Guard! and other Private Semrity Personnel in the Privott
SemrifJ Industry"issued by the DOLE Secretary on February 09, 2016.
More specifically, this Department Orr/er was issued for the purpose of
ensuring compliance with mandated employment benefits and working conditions
for security guards and other private security personnel in the private· security
industry. It applies to all private security, detective, investigative agencies or
operators, their principals or clients, and all companies employing security guards
and other private security personnel.2
Some of its salient provisions, insofar as the employment status of
security guards and other private security personnel is concerned, are cliscu~sed
hereunder.
3. RELEVANf DEFINITIONS.
The following are the terms that are pertinent to the employment status
of security guards:
. "Se'1lrily Gnarl' refer_s to any person who offers or renders personal
sernce to watch or secure a residence, business establishment, building, compound,
any other area or property; or inspects, monitors, or performs body checks or
searches of individuals or baggage and other forms of security inspection.3 On the
other hand, the term "Private Semrity Personnel" is defined as referring to natural
1 Delos Samsv. Jebsen '-Wiflre,Inc., GR No. 154185, Nol. 22, ~-
2 _See ilbtxb:Dy ~ and Sedm 1, Depme\l Order No. 1so. Seres a 2016.
l Secfoo 2(h), Depmenl Order No. 150, Selies CX 2016.
CHAl'TER.SIX
rosT-EMrLOYMENT
persons, inclu~g private. detectives, security consultants and security officers,
emp_loyed by pnvate secunty agency or firm, to render security and/or detective
servtces.1
''S~&llf'i!J Seruia Contraaor (SSC) 11 is sy~o_nymous with "Privott SemritJ Age/19'
(PSA) ~ch refers_ to any ~erson, a~sorunon,. p_artnership, firm, or private
11
corp~ratlon engaged m coo~cnng, rec~tment, trammg, furnishing, or posting of
secunty guard ~d ~ther pnvate secunty personnel to individuals, corporations,
offices and organtzanons, whether private or public, for their security needs as the
Philippine National Police (PNP) may approve.2
. "Prindp~I" r_efers to any individual, company, cooperative, or
establishment, mc~uding govemment agencies and govemment-owned and
detecnve Job, semce, or work to a private Security Service Contractor (SSC).3
''Senna _A_greement" refers co the contract between the pnncipal and the
SSC/PS~ contauung the terms and conditions governing the performance or
complenon of security service, job, or work being farmed out for a definite or
predetermined period.4
'T_rilallral Rtlationship" refers to the relationship in contracting or
subcontracnng_ arrangement where there is a contract for a specific security job
work, or seMce between the principal and the SSC/PS;\, and a contract ·0 r
~ploym~t between the latter and its security guards. There are three (3) parties
10volved 111 these arrangements: the principal who decides to faon out a security
job, work, or service to a security service contractor; the SSC/PSA who has the
cap~city to independently undertake the performance of the security job, work., or
sCCV1ce; and the sc~ty guards an? o_ther private security personnel engaged by the
SSC/PSA to accomplish the secunty Job, work, or service.s
"Solidary Uability" refers to the liability of the principal, in the same
manner and extent that he/she is liable to his/her direct employees, to the extent
of the wor_k p,erfooned under the contract when the SSC/PSA fails to pay the
wages .of his/her employees, as provided for in Article 106 of the Labor Code, as
amended.6
Noticeable from the foregoing definitions is that the important terms and
phrases defin~d in . the said Dep_artmmt Order are all .relevant to the contracting
arrange°:1ent tnvol~g the farrntng out by an SSC/PS:A of security guards and
other pnvate secunty personnel to the principal/client. The usual issue that ripens
1 Secfm 2(n. kt
2 Secfm2(1),ld.
3 Secfm 2.(e), Id.
4 Sectioo 2(j), Id.
5 Sedioo 2(m), Id.
6 Sectioo 2('«), Id.
 BAR REVIEWER ON I.ASOR I.AW
into actual cases in courts involves the employment status of the security guards
and security personnel in relation to the principal/client lnis is one of the crucial
issues that is sought to be clarified by this 2016 issuance.
4. CONTRACTUAL RELATIONSHIPS AMONG THE~ PARTIES.
The SSC/PSA is the direct employer of its security guards and other
private security personnel on duty detail to a principal/client wider a Service
Agreement.• The principal, therefore, is not in any way the employer of the security
guards and other private security personnel assigned or farmed out to it by the ·
SSC/ PSA. In fact, in the trilateral arrangement, there is ho contractual relationship
of whatsoever nature between the principal, on the one hand, and the security
guards and other private security personne~ on the other.
For simplicity's sake, the contractual relationship between and among the
three (3) parties may be summed up as follows:
(1) Between principal/client and SSC/PSA - governed by the Security
Agreement;
(2) Between SSC/PSA and security guards and other private security
personnel - governed by the Employment Contract; · guards and other private security personnel affected by repeated hiring-ftring-rthiring
(3) Between principal/client and security _guards and other private
security personnel - NO CONTRACTUAL RELATIONSHIP
There is only one instance when the principal/client is treated, by
operation of law, as an "indirect" employer of the security guar_ds and other
private security personnel, that is, when the principal/client is held solidarily liable
with the SSC/PSA because the latter failed to pay the wages of its security guards
and other private security personnel. Such solidary liability shall be to the extent of
the work performed by such security guards and other private security personnel
WJder the Service Agreement, in the same manner and extent that the principal is
liable to its direct employees.2
Other instances when the principal/client would be held solidarily liable
with the SSC/PSA, as if the former is a "direct" employer, are:
(1) When the SSC/ PSA is found to be engaged in labor-only
contracting, the principal shall be jointly and solidarity liable with it
in the same manner that the principal is liable to employees directly
hired by him/her.3
Sedioo 3.1, Id.
Sedioo 9.1(a), Id.; See also ld ~ ofMiele 106, Lm Code.
Sedioo 9.1(b), Id. (Nore: nm ere tNO ~I e11er (bl nthee11111amumerSecfoo 9.1.
CHArTERSIX 653
rOST-EMPLOYMENT
(2) When the SSC/PSA is fowid to be an in-house agency, the
principal shall be the direct employer of the security guards and/or
other private security personnel deployed with it1
5. EMPLOYMENT STATUS.
As far as the employment status of the security guards and other private
security personnel viI-a-vis their direct employer, SSC/PSA, is concemed, theY. may
be hired wider any of the following: . ·
(a) Probationary Employment. - The procationar.y period of newly-
hired security guard and other private security personnel in the private security
industry shall not exceed six (6) months. While engaged on erobationary basis, their
services may be terminated for failure to meet reasonable standards or criteria made
known by the SSC/PSA to the security guards and othe: private security personnel
at the time of their engagement or for any just cause contained in the probationary
contract.2
(b) Regular Employment. - Any security guard or other private security
personnel who is allowed to work after the probationary period or in the absence
of a valid probationar.y contract shall be considered a regular employee. Security
scheme for short periods of time, the aggre~te duration of which is at least six (6)
months, shall be considered regular employees.3
(c) Governing Law on Status ofEmployment. - Notwithstanding any
oral or written stipulations to the contrary, the employ:nent contract between the
SSC/PSA and its security guards and other private ~ecurity personnel shall be
governed by the provisions of Articles 2944 (formerly 2'.!9) and 2955 (formerly 280)
of the Labor Code, as renumbered. The SSC/PSA shall provide his/ her security
guards and other private security personnel a copy of the employment contract
duly signed by the parties, which shall contain the terms and conditions of
employment required by law.6
h.
FLOATING STATUS
1. ANOTHER NEW TOPIC.
Another new topic prescribed wider the 2019 SyllabUJ is the so-called
"Floating Status" Doctrine. Also, this topic has been included in the enumeration
thereunder as one of the kinds of employment. ·This may bring about confusion
1 Secoon 9.1(c), Id.
2 Sec1m 32, Id.
3 Secwi3.3, Id.
• Enti1Jed 'Security of Tenure.·
1 EnliUed 'Regular and Casual Employmefll'
1 Secoon5.1. Id. SUch as those prMled by lnler Secfoo 7of Oepcnnent O!der 150.

SAil REVIEWER ON IABOll lAW
654
since this doctrine, in no way, has anything to do with the main topic of "Kind.r of
Empll(jment."
2. LA.CK OF APPLICABLE PROVISION IN THE LABOR CODE.
At the outset, it bears reiterating that although placing-an employee like a
security guard on "foaling" status (or sometimes called temporary "off-detail" status)
is considered a temporary retrenchment measUie, the Supreme Court, in Exocet v.
Strrano,l recognized the fact that there is similarly no provision in the Labor Code
which treats of a temporary retrenchment or lay-off. Neither is there any provision
which provides foe its requisites or its duration. Nevertheless, since an employee
cannot be laid-off indefinitely, the Court has applied Article 301 2 [286] of the Labor
Code by analogy to set the specific period of temporary lay-off to a maximum of
six (6) months. This provision states:
"Article 301 [286]. When Emp/Qymtnl Not Dumtd Ttmrinattd. -
The bona-jiM suspension of the opcntion of a business or undertaking
for a period not exceeding six (6) months, or the fulfillment by the
employee of a military or civic duty shall not terminate employment. ln
all such cases, the employer shall reinstate the employee to his former
position without loss of seniority rights if he indicates his desire to
resume his work not later than one (1) month from the resumption of
oper:itions of his employer or from his relief from the military or civic
duty."l
Clearly &om the foregoing article, the concept of "floating 1tatUI" does not
find any direct connection or relation, except for the six (6)-month period provided
therein which has been held as the defining cut-off period that can be used as a
consonant basis in determining the reasonableness of the length of time when an
employee could be deprived ofwork under this doctrine.•
3. "FLOATING" STATUS DOCTRINE AS APPLIED TO SECURITY
GUARDS. . who are temporarily sidelined from duty while waiting tc be transferred or assigned
Applying Article 301 [286] by analogy, the Supreme Court has consistently
recognized that security guards may be temporarily sidelined by their security
agency as their assignments primarily depend on the contracts entered into by the
latter with third parties.5 This is called the ':footing 1tat11!'' doctrine which is based on
and justified under the said article.6 ·This status, as applied to security guards, 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
ExocetSeany illd Affied SefvicesCapooim v. Nmando o. Semm, GR No. 198538, Sept 29, 2014.
ReleTed bas 'Mide 292' i1 llis case.
3 As rerurllered pJmlt1D Sedm 5, RA No. 10151, JlJle 21, 2011.
' Vaklezv. M.RC, GR~- 125028, Feb.9, 1998, 286 SCRA 87, 92.
1 Leopa,l Secuity and ln'lesU)atial .&IJency V. Qo.iloy, GR No. 186344}eb. 20, 2013.
s ~Seo..rtft,qency,ocv.NLRC,GR~.81493.~i3.1900, 184SCRA74.
CHAl'TERSIX 655
POST-EMPLOYMENT
a new one.1 In security agency parlance, being placed "ojf-dttail" or on 'Jloating"
status means "waiting to be polted. ' 2
4. INSTANCES WHICH JUSTIFY APPLICATION OF DOCTRINE.
"F/qaJing lfallll" takes place under any of the following circumstances:
(1) When the security agency's clients decide not to renew their contracts
with the agency, resuiting in a situation where the available posts
Wlder its existing contracts are less than the number of guards in its
roster; or
(2) When contracts for security services stip-.tlate that the client may
request the agency for the replacement of the guards assigned to it
eyen for want of cause and there are no available posts under the
agency's existing contracts to which the replaced security guards may
be placed.3
As far as No. 2 above is concerned, the Supreme Court has recognized
the fact that clients of the security agency have the right to requ<:st for the removal
of any of the security guards supplied by the latter to the former without need to
justify the same.4 The reason for this is the lack of any employment relationship
between the security guards and the client
Also, under No. 2 above, a relief and transfer otde~ may be issued by the
security agency to the security guard concerned in order to effect it This order in
itself does not sever employment relationship between a security guard and bis
agency. And the mere fact that the transfer would be inconvenient for the former
does not by itself make the transfer illegal.5
5. APPLICABILITY TO <;>THER EMPLOYEES.
While the "floating slatlll" rule is traditionally. applicable to security guards
to a new post or client,6 Article 301 [286] has been applied as well to other
industries when, as a co~equence of the bona-fide suspension of the operation of a
business or undertaking,-an employer is constrained to put employees on 'Jloati11g
slatlll" for a period not exceeding six (6) months.7
Thus, it may also be applied to employees of legitimate contractors or
subcontractors under a valid independent contracting or subcontracting
1 Siwab2a v. ~ . GR No. 182086, ~ -24, 2010.
l Tall!lv. JLFP lnvesl7;!atial Searily ,6/Jenty, oc,GR No. 200942, Feb. 25, 2015.
3 ExccetSeany and AJied SeM:es Capooltioo v. M1lando D.Semm, GR~-198538, Sept. 29, 2014.
4 ~ Seany ,6/Jenty, K v. NLRC and Fbnena Henrosa, G.R No. 81493,.b~ri 3, 1~. 184 SCRA 74.
5 Na1mtme Secuty il'ldAJied SeM::es nc. v. Vaklerama, G.R ~- 186614, Feb. 23, 2011.
6 N'WOO tbJsi1g Phil., kl<:.v. Le)TleS, GR No. 1n816,Au]. 3, 2011.
1 JP\. M;rkefrg Prarotioos v.CA, GR No. 1519fJ6, Jllf 8, 2005.
 8All RFIIEWER. ON IABOI\ IAW
arrangement wider Article 106 of the Labor Code. ~e same foon of disl?cation
and displacement also affects their employees every wne ~ontracts of se~ces are
terminated by their clients or principals. In the meanttme that the dislocated
employees are waiting for their next assignment, ~ey may be p~ced on "off delaif'
or "floating" status following the same concept applicable to secip1ty guards.
For example, in ]PL Marketing Promotions 11. CA,1 ~ - principle was applied
to merchandisers hired by petitioner company which is engaged in the business of
recruitment and placement of workers. After they were notified of the cancellation
of the contract of petitioner with a client where they ~ere assigned and pending
their reassignment to other clients, the merchandisers are deemed to have been
placed under "foaling 1tatu1" for a period of not exceeding six (6) months under
Article 301 [286]. Such notice, according to the Court, should not ~e ~ted ~s a
notice of termination but a mere note informing them of the term111at1on of the
client's service contract with petitioner company and their reassignment to other
clients. The 30-day notice rule wider Article 298 [283} does not therefore apply to
this case.
This was likewise applied to the case of:
(1) a bus driver in Valdez v. NLRCl who was ·placed on floating status
after the air-conditioning unit of the bus he was driving suffered a
mechanical breakdown; and
(2) a Property M:inager in Nippo11 Housing Phil, lnr. v. L!Jnes,3 pending her
assignment to another prnject for the same position.
6. SOME PRINCIPLES ON "FLOATING STATUS" DOCTRINE.
(1) When an employee like a security guard is placed on a "floating" status, he is
not entitled to any salary, financial benefit or financial assistance provided
by law during the 6-month period thereo£ 4
(2) As a general rule, "floating slat11s" beyond 6 months amounts to
illegal/constructive dismissal. This is so because "floating status" is not
equivalent to dismissal so long as such status does not continue beyond a
reasonable time which means six (6) months.5 After 6 months, the employee
should be recalled for work, or for a new assignment; otherwise, he is
deemed terminated.6
GR No. 151966, Juy 8, 2005.
GRNo.12ro28,Feb.9, 1998,286SCRA87.
3 GRNo.177816,ALg.3,2011,655SCRA 77.
' P'dov. ~ . G.R No.169812,Feb. 23,2007
5 l ~ Sea.rtf e n ! ~ IIJenCYV. <Ml-/,G.R. No. 186344, Feb. 20, 2013.
EmemJs Sea.rtt e n ! ~ Systlm. l'lc.v. Dali]. GR. No. 204761,April02, 2014.
CHAPTEI\SIX 657
POST-EMPLOYMENT
(3) The security guard who refused to be re-assigned may be dismissed for
insubordination.1
(4) Multiple "floating Ifatll!" amount to constructive dismissal.2
(5) "Floating statlll" is distinct from preven_!ive suspension. In the case of "floating
status," the employee is out of work because hii employer has no available
wotk or job to assign him to. He is thus left wi:;h no choice but to wait for
at least six (6) months before he could claim having been constructively
dismissed, should his employer fail to assign him to any work or job within
said period. In t,he case of preventive suspepsion, the employee is out of
wotk because he has committed a wrongful act and his continued_presence
in the company premises poses a serious and imminent threat to the life or
property of the e,mployer or of his co-workers. Without this kind of threat,
preventive suspension is not proper. Further, the period of preventive
suspension under the said provisions of the L'lljJkmenting &lies should not
exceed thirty (30) days.3
(6) A complaint filed before the lapse of the 6-montlrperiod of floating status is
prem~ture, the employee not having been deemed constructively dismissed
at that point. Thus, a complaint filed twenty-nir.e (29) days after the security
guard was placed on floating status was declared as having been prematurely
filed.'
(J) However, the filing of a complaint for-constnctive dismissal prior to the
lapse of the 6-month period of "floating 1tal11J" will not be held premature in
cases where the intent to terminate the employee is evident even prior to the
lapse of said period.
(8) No procedural due process is required before an employee is placed under
"floating stat/IS." The reason is that there is no termination of employment to
speak of at that point.5
3.
LEGITIMATE SUBCONTRACTING VS.
LABOR-ONLY CONTRACTING
1. LEGAL BASES.
There are only four (4) provisions in the Labor Code which directly
enunciate the rules on contractualization, to wit:
1. Article 106 - Contrador or Sub.ontractor,1
1 Miele 'lJ71282]. Temilatkxl by efl'4)k)yer. AA efl'4)k)yer rToa/ temli1ale !11 et"l)k7jlr,er4 !CJ 2ITf d Ile lolbwi'YJ causes: a)
SeraJs mscx:rox1 rt wilt.I osooeoience by 111e err!)loyee a 11e ~ aders c1 his efl'4)k)yer rt ~ i1
amecfm will his l\llli; XXX
2 SaMllolav. M.RC, GR I-«>. 182086, N<7.i. 24, 2010.
J Pllov. NI.RC, GR No.169812,Feb. 23, 2007.
• Sdtnan SecuilySeM::es, Inc. v. CA, G.R No.143215,.>Jf 11,2002.
s JA.T. General SeM:es v. NI.RC, G.R No. 148340,Jat 26, 2004.
 SAR llt"VlEWER O N LABOR I.AW
2. Article 107 - lndirul Emplayer,2
3. Article 108 - Po11in,g of Bond-,3and
4. Article 109 - Solidary Liabili!J.4
Department Order No. 174, Series of 2011,5 )5 the prevailing
implementing rules and regulations of ~e above ~llcles. Subse~ue~~y,
Department Circular No. 01, Se,iu of2017,6 was issued to clarify the non-applicability
of Department Oeder No. 174, Series of 2017, to BPO, KPO, LPO, IT
Infrastructure Outsourcing, ApplicaJion Development, Hardware ~d/or Software
Support, Medical Transcription, Animation Servi_ce.s, B:i~ .Office
Operations/Support, and the construction industty. President Ro~o Duterte
issued Exe(l(/ive Orth, No. 51, Seriu of 2018 on May 1, 2018 which seeks to
implement only one (Article 106) of the four articles of the Labor Code on
contractualization.7
2. CLARIFICATION ON USE OF TERMS.
The 2019 Syllab11J~ uses the term "subcontracting" instead of
"contracting'' which is the more appropriate term. To avoid any confusion, there
is a distinction between these two terms, which the; law itself, Article 106 of the
Laboe Code, makes, to wit.
"Article 106. Contractor- or Subcontractor. - Whenever an employer
enters into a contract with another person for the performance of the
fonner's work, the employees of the contractor and of the la_tt_cr's
subcontractor, if any, shall be paid in accordance with the prov1S1ons
of 1his Code.
"In the event that the contractor or subcontractor fails to pay the
wages of his employees in accordance with this Code, the employer
shJII be jointly and severally liable with his contractor or
i!,lQ!;Q!llrJIJ:tO( to such employees to the extent of the work performed
u11Jer the contract, in the same manner and extent that he is liable to
employee~ Jircctly employed by him."
Based on the foregoing, the party which contracts with the principal is the
"contractor''; wb.ile the party which subcontracts with the contractor is called
"subcontractor." •··1be term "contracting'', therefore, should be correlated to the
' Mide 106- Cooum or Sulx:altra<:U.
1
Mide 107 - lncnct ~ -
) illtx:e 108 • Posti1g of Sood.
' Mide 109 • Sdmy Liabilty.
1 lssu8l bot DOLE Secrelaly Sweste H. Bello UI oo Mm 16, 2017.
lsrued bot OOLE~ Sileste H. Belo ii oo J\lle 09, 2017.
As s1iOM1 nAS tit'ie, Olus:,mp~ Mide 106 atie Laior C<lde cf Ile f'hi1Wi,es, As Amended, kl PrOO!d lhe Ri;ht
to Sea.rityof TeNe ol AJ WatersBasedm Social Justice in Ille 1987 f'hi!WneConstlrtm."
1 The Ille of !he ~c is •3 LEGmMA.TE SUBCONTRAC71NG VS. LABOR-OM.YCOt-lTRACTING.'.
·Ak.
CHAl'TER SIX
POST-EMPLOYMENT
"contractor"; while the word "subcontracting'' should be used in relation to the
"subcontractor."
Hf~ever, uncle~ _D.O. No. 174, the foregoing distinction is no longer
underscored 10 the definitton of tenns. Thus, it appears now that the foregoing
tenns may be used interchangeably for they are now defined as follows:
(1) "Contracting" .Q! "Subcontracting'' - refers to an arrangement
whereby a principal agrees to farm out to a contractor the
performance or completion of a specific job or work within definite a
or predetermined period, regardless of whether such job or work is to
be performed or completed within or outside the premises of the
principal.1 .
(2) "Contractor'' - refers to any person or entity engaged in a legitimate
tofllracting 21: mbtonlracting arrangement providing services for a
specific job or undertaking fanned out by principal under a Service
Agreement.2
In the discussion below, only the teans "contracting" and "contractor''
will be used for greater ease and convenience of the reader.
a.
TRILATERAL RELATIONSHIP
1. THREE (3) PARTIES INVOLVED.
''I'rilateral relation1hip11 refers to the relationship in a contracting
arrangement where there is (1) a Service Contract for a specific job, work or
service between the principal and the contractor, and (2) an Employment
Contract between the contractor and its employees. As the te!lD "trilateral"
com1otes, there are three (3) parties involved, kl wit. ·
1) The "Principal" which refers to any natural or juridical entity,
whether an employer or not, who puts out or fanns out a job or work
to a contractor;3
2) The "Conuactor" as defined above;4 and
3) The '!Contractor's Employee" which refers to the employee of the
contractor hired to perform or complete a job or work farmed out by
the principal pursuant to a Service Agreement with the latter.s
Sedixl 3[c1 OepartrrentOrder No. 174, S8ies a2017.
Sedixl JidL lit
l Sedm3(i].llil.
• Sedixl 3[d], li!., ru:(d) "Cor!tract:( • rele!s kl '&ff persoo or enfl'f erga,Jed ii al e g ~ ~ or SIJJcootra:fng
amingementp!Mfng selVi:es foe aspeclJc pi orl.lldel1llkilg lirmed outby pitj)al IIKfer aSeM:e Agreement.
s Sedixl 3{el.Iii.

BAR REVIEWER ON lABOR lAW
660
2. PRINCIPAL.
Under Article 107 of the Labor Code, a "principal" is also referred to as an
"indirrct empk,yer." As defined therein, an '~ndi~ct emphyer" ref~rs to _any person,
pannership, association or corporation who/which contracts W1~ anThindep~nd_ent
contractor for the perfonnance of any work, job, task or ~eMce. e ~
therefore is not the direct employer of the employees supplied by the Contractor
to the principal.
Within the context of a valid contracting arr~gement, a "principal" or
1
'folirect empk,yer" is also known as a •~ta/11l0,y empk,yer" or, simply an ''tmpk,yer. '
3. CONTRACTOR.
The •~ontraclor" or •~11brontraclor" is the "direct emp'rfer" of the employees it
supplies to the principal to perform the pri.ncipal's work, !ob, task or service.
4. CONTRACTOR'S EMPLOYEES.
Tue "contractor's employees" are directly hired by the contractor as its
employees, hence, they have as between them, an employer-employee relationship.
Tuey may thus become regular employees of the contractor.
5. TWO KINDS OF CONTRACTS IN TRILATERAL RELATIONSHIP.
In a trilateral relationship, there are only two (2) kinds of contracts that
should be executed, to wit.
(a) Service Agreement between the principal and the contractor
containing the terms and conditions governing the performance or
completion of a specific job or work being_ farmed ?ut ~y the fo~er
to the latter for a defiiute or prcdetemuned penod. The Servtce
Agreement shall contain the following:
i. The specific description of the job or work being subcontracted,
including its term or duration;
ii. The place or work and terms and conditions governing the
contracting arrangement, to include the agreed -~o~t of the
contracted job or work as well as the standard administrattve fee of
not less than ten percent (10%) of the total contract cost; and
4
iii. A provision on the issuance of the bond/ s,3 renewable every year.
1 Bagii>v. M.RC, G.R Na,. 79004-08. 0d. 4, 1991, 202 SCRA465.
2 5Edxn3(j),llo.
J Thewixnrisdefrled 11 Secfu13(a), Iii, hts: a) 1b1d' - rEfeis k>Olebood um-.Al6:1e 108rJ.Bie LctxrCode Iha!
1ie pmqia1 rN1f req1n frail the coolra(.tr lo be posted equal lo Cle oostd liix:r um- cootact.•
• Sedm , , . Ibo.
CHAl'TER SIX 661
POST-EMPLOYMENT
(b) Employment Contract between the contr~tor/subconuactor and
its employees. Thus, notwithstanding any oral or written stipulations
to the contrary, the contract between til! contractor/subcontractor
and its employees shall be govemed by the provisions of Articles 294
(279)_' _and 295 (?80)2 of the Labor Code, as amended, including the
provisions on general labor standards. It shall include the following
stipulations:
1. The specific description of the job or work to be performed
by the employee; and
u. The place of work and teans and condition of employment,
including a statement of the wage rate applicable to the
individual employee.
The contractor/subcontractor shall infoan the employee of
the foregoing stipulations in writing on or before the first day
of his/her employment.3
6. GOVERNING LAW.
The Employment Contract is governed by -;he Labor Code; while the
Service Agreementis_govemed by die Civil Code.4
7. NO CONTRACTUAL RELATIONSHIP BETWEEN PRINCIPAL .
AND CONTRACTOR'S EMPLOYEES.
It bears noting that there is NO employment contract or any other form
of contract between the ~ and the contractor's employees. Hence, it is
correct to say that there is NO contractual relation~hip between them of
whatsoever nature.
To emphasize, in legitimate contracting -aaangement, tliere exists an
employer-employee relationship only between the contJ:actor and its employees it
supplies to the principal.5 Thus, it is essential that contracts of employment be
executed between the contractor and the contractual employees. There is, however,
no employer-employee relationship between the principal and the contractor's
employ~7s supplied by the contractor to the former. The contractor's employees
rema111 its employees and do not become the employees of the principal by virtue
of the contracting arrangement
Lest it be forgotten, there is one instance where, by operation of law, the
principal is treated as ''indimt" employer in case the contractor fails to pay the
1 Miele 29412791 is !Ylll'r,ed 'Seruity d terore:
1 Miele 295 J2BOI is en~ °Re!Julal aid easua ~ -
3 Sedioo 11, lbd
' SooSecfol 9an:I Sedioo 5(b). ~ . Depatrer(OrderNo. 18-A, Seriesd2011.
5 Sedioo Slat Depatnent O!d€f No. 1S-A, Series d2011.
 BAR REVIEWER ON IABOR IAW CHAPTER SIX 663
662 POST-EMPLOYMENT

wages of its employees supplied to the principal,1but only to the extent o~ the work b.
performed under the contract, in the same manner and extent that he 1s liable to ELEMENTS
employees directly employed by him.2 ·
1. ORDER OF TOPICAL DISCUSSION.
Moreover, it must be pointed out that in some spe~c instances ~here
The discussion of this topic is divided into the following sections:
the principal is held solidarily liable with the contr.1ctor, the foaner, again by
operation of law, is treated as the "dina" employer_of the latter's emp)oyees I. LEGITIMATE JOB CONTRACTING ARRANGEMENT
supplied to the founer, such as, inter alia, when there 1s labor-only ~o~~~ttng or 11.LABOR-ONLY CONTRACTING ARRANGEMENT
when the contractor functions as an in-house agency or when certain illicit forms Ill.
OTHER ILLICIT FORMS OF EMPLOYMENT
of employment are committed. (NOTE: See discussion on sepat3te topic of "Solida,y Liability,• IV.EFFECTS OF LABOR-ONLY CONTRACTING AND ENGAGING IN
infra/. OTHER ILLICIT FORMS OF EMPLOYMENT
8. EFFECT OF TERMINATION OF EMPLOYMENT. V. LEGITIMATE JQB CONTRACTING VS. LABOR-ONLY CONTRACTING
The termination of the contra.tor's tmpfqyet by the contractor .PdPr lo th,
expiratign of the Service Agreement shall be governed by Articles 297 (282],3 298 I.
[283]' and 299 [284]S of the Labor Code.6 LEGITIMATE JOB CONTRACTING ARRANGEMENT
In case the termination of employment is caused by the pre-termination 1. ELEMENTS.
of the Service Agreement not due lg authorized caum under Article 298_ (283],7 the
right of the contractor's employee to unpai? ~es and other ~paid benefits, The Labor Code does not define legitimare contracting arrangement.
including unremitted legal mandatory contnbuttons, e.g., S~S, _PhilHealth, _Pag- However, under Department Order No. 174, Stries of2017_. and relevant jurisprudence,
IBIG ECC shall be home by the party at fault, without pre1udice to the solidacy contracting shall only be allowed if all of the following circumstances concur:
liabili~ of the parties (principal and contractor) to the Service Agreement8 (1) The contractor is engaged in a distinct and independent business and
Where the termination results from the ~ of the Service undertakes to perform the job or work on its own responsibility.
Agreement, or from the completion of the p~e of the job or work fo~ w~ch the according to its own manner and method;
employee is engaged, the latter may opt to watt for re-emplqyment witlii?, three (2) The contractor has substantial capital to ca~ out the job farmed
(3) months to resign and transfer to another contractor-employ~r. Failure of out by the principal on his account, manner and method,
the contractor to provide new employment for the employee shall entitle the latter investment .in the form of tools, equipment, machinery and
to payment of separation benefits as may be provided by law or the Service supervision;.
Agreement, whichever is higher, without prejudice to his/her entitlement to (3) In performing the work farmed out, the contractor is free from the
completion bonuses or other emoluments, including retirement benefits whenever control anf]/or direction of the principal in al! matters connected
applicabl_e. The mere expiration 9( the Service Agreement s)laµ not be deemed as with the perfotmance of the work ggpJ as to the result thereto;
a teqnination of employment of the contractor's employees who are ~ and
employees of the Jattct9 (4) The Service Agreement ensw:es compliance with all the rights and
benefits for all the employees of the contractor under labor laws.1

, Baguov. N.RC, G.R. Nos. ml4-08, Oct. 4, 1991; See Mk:ie 100, Lm Code; See.aso Sec&ln 13, Clepam!nt Older Absence of any of t!i,e foregoing requisites makes the arrangement a
~ -174, Series d 2017, \\fiil ~ tr may d>liJrmt ti pay IJ'4)ail WarJeS llld oiler IJ'4)ail bEnelis tllder Ile labor-only contracting amngement2 ·
Serw:elp!rrst,rdli1Jumi1Bl~l11il'ldal:xycoodums;e.g.SSS,PhiHealh.~BIG,ECC.
2
3
See~ pn.i• d Mk:ia 100, labcJ Code.
.Al&il 297 (2821, died ·roomrtoo b y ~ ·
• .Al&il29812331.8'lti'led 'Cbsu& dBtlills/mertaxl RedmlofPnmel.'
1 .Al&il 299 (1B41 enllBl ·asease ~ Gtwxt tv remrmn•
' Sedb113 Depam,entOnlEJNo.174,Seriesd2017.
1 Sedb18, 0.0. No. 174, Seriesd2017; Alneda V. ~ Glass Phiippi,es. nc. GR No. 1m8.5, ~ 3, 2008; Acevedo
1 ~ 298°[2&3!. Cl:lsl.fe dEs1al{islvn!rt.rd Redudiood Persoonel. (See abcNe b'lul text dlhis cricle's l)l'Mloos). v.M.-anstl' eo., nc., G.R No. 157656, NcN. 11. 2005.
a Seam 13. Oepmert ()Ile!~- 174, Series d2017.
2 Phifl)pile Sd-,oo d Busiless Admiistmn ~ v. N..RC, G.R. No. 114143, Al.g. 28, 1996; Tabas v. Caitma
~ Co., h:., GR No. llOOBO, .lat 26, 1989, 169 SCRA 497.
' Id.

.1k
 SAi< REVIEWER ON lA!Oll LAW
2. TESTS TO DETERMINE EXISTENCE OF LEGITIMATE JOB
CONTRACTING ARRANGEMENT.
Based on the law and jurisprudence, to determine the existence or non-
existence of permissible or legitimate job contracting arrang;ment, the following
tests may be applied:
a) Right ofcontrol test;
b) S11bslanlia/ capital or investment test;
c) Dir?ct rdation lo principal's b111inm test; and
d) Legal rights and bentflts ,ompliance test.
Following these tests, many contractual relationships have been declared
as labor-only contracting arrangements because of their failure to hurdle the same.
2.1. RIGHT OF CONTROL TEST.
The "Right of u11tro/" test basically addresses the issue of whether the
contractor's manner and method of performing the contracted _io?, work or
service are completely~ from the control an~ direction o~ the ponapal ex~!'t
as to the «mil thereof. If the issue is answered tn the ajfimralrve, then this reqwsue
of legitimate contracting arrangement is fully satisfied.
In most cases, despite proof of substantial capital, the Court de_cla~ed a
contractor as a labor-only contractor whenever it is established that the pnnapal -
not the alleged legitimate contractor - actually controls the manner of the
employees' work..' The control over the em?loyees' performance of the wo_ck is, as
the Court ruled in some cases, usually marufested through the power to hire, fire,
and pay the contractor's employces,2 the power to discipline the employ~~s and
impose the corresponding penalty,3 and more importantly, the actual supemston of
the employees' perfonnancc.4
Illustrative cases:
In holding that the contractor has the right of control in _the 2?18 c~se of
CBMI ·v. .AJprec,5 the Court not only took cognizance of the snpulaoons 1n the
several Conlrrzc/J of Services between the contractor (CBMIG) and Pizza Hut (PPF)
which imposed upon the former the obligation to provide the latter the necessary
personnel to perform "kitchen, busing, rider/ delivery, and sanitation services" as
well as the tools and equipment necessary for the rendition of such services but
most imp~rtantly, the following facts: The respondents' employment contracts
IJ;tJov.&II PoiYer MnD;lmg Linml, GR No. 210961. Jan. 24, 2018.
Id., cfr,;i Coca.r.oiallotlers Phis., Inc. v.Agi1o, G.R No. 179546,Feb. 13, 2009.
1 ld.,cfr,;i "'-riaWala'Co.h:. v. Pera, GRNo.158255,July 8, 2004.
ld,cfr,;i ~Ames. h:. v.l..iJai, G.R No. 1-16408, Feb. 29, 2008.
Ca1sclidated~ ~. .-C. v.~,Jr., GR No. 217J,01,.llrle~. 2018.
ReleTi'q t, ):t>toolcltn'Consddated lili',l Mailwice, h:. (CBM).
~ t , ~ P1i1ppi1e Piz2a, lnc..f'izzaHut(PPQ.
CHAM'El<SIX
POST-EMPLOYMENT
665
show that they were hired by CBMI. It was the latter who assigned respondents at
PPI's Marcos Highway Branch after they were briefed of company policies and
their duties. It is also CBMI who pays the responde.nts their salaries, and remits
premiums to PhilHealth and Social Security System. The nature of CBMI's
agre~ent with PPI requires the former to assign employees to perform specific
se!Vlces for the latter. CBMI deploys employees already equipped of the skills
based on the specific service demanded by PPI to be accomplished. Ultimately, the
training necessary to acquire the skills essential to perform the duties of a rider for
Asprec, and as a team member for Bataller, have been provided for by CBMI.
Simply, the manner in which responde.nts perform their task are all dictated by
CBMI, the sole concern of PPI being the result, i.e., what and how many items are
to be prod11ced and where to deliver the same. Noteworthy, CBMI maintains the
sole power to determine respondents' place of assignment and their transfer from
one work assignment to another. CBMI's manner of deployment and its choice as
to who will be assigned for a specific task or location does not require the approval
or acceptance of PPL Moreover, it is evident from how this controversy unfolded
that CBMI maintains the power to discipline the respondents. All these, without
doubt indicate that CBMI possesses the power of control over the respondents;
which in tum supports the conclusion that CBMI carries a business independent of
PPl. 1
In Digital Tek,romm11niralion1 v. DEU,2 besides the lack of substantial
capitalization that indicates labor-only contracting, it was further held that Digitel
Service, Inc. (Digiserv), a non-profit enterprise engaged in call center servicing, was
a labor-only contractor of petitioner Digitel because it does not exercise control
· over the affected employees. The NLRC highlighted the fact that Digiserv shared
the same Human Res9urces, Accounting, Audit and Legal Departments with
Digitel which manifested that it was Digitel who exercised control over the
performance of the affected employees. The NLRC also relied on the letters of
commendation, plaques of appreciation and certification issued by Digitel to the
Customer Service Representatives as evidence of conuol3
2.2. SUBSTANTIAL CAPITAL OR INVESTMENT TEST.
The "Substantial Capital or lnvulmen/" test seeks t~ address the issue of
whether the contractor has substantial capital or investment in the foan of tools,
equipment, machineries, work premises, and other materials which are necessary in
the conduct of its business.4 If the answer is in the a.ffiTJlfalive, then this requisite of
legitimate contracting arrangement is fully complied with.
' See also Mlgov. Sil PoiYer~ Lirmed, GR No. 210961, Ja'l. 24, 2018.
2 Digital Telecoolnllllicallons Phiippiles, Inc. V. Di!J~el Emplo')'ees IJnioo (DEU), G.R. Nos.184003-04, 0d. 10, 2012.
3
See also Nooos Trad'ng Corporatioo v. Buenavis1a, GR No. 182018, 0d. 10, 2012.
i Mria EleclJtCool>a'l'(v. Benarira, G.R No. 145271,JLtt 14, 2005.

666 BAR REVIEWER ON LABOR LAW
Dtpartment Orrltr No. 174, Seriu of 2017 has now fixed the amount of
"111b1tantial capital' as follows:
1. In the case of corporations, partnerships or cooperatives - paid-
up capital stocks/ shares of at least Fi~e Million Pesos
(PS,000,000.00); or
2. In the case of single proprietorship - a net worth of at least Five
Million Pesos (PS,000,000.00).1
Prior to 1his 2017 issuanc~, the threshold ai:nount of substantial capital
was fixed at P3 Million as prescribed under Section 31.1] of Dtparlmenl Ordtr No. 18-
A, Striu of2011 [Nov.14,2011).
Bv clcacly specifying the amount that constitutes '~11b1/anlial capital," cases
in the pas; where this issue was raised should now be qualified by this new
issuance. Cases subsequenl 1u the effectivity of said Department Order No. 174
should take this specific amounts into account · independent contractor. Further, it need not prove that it made investments in the
Tiie Supreme Court had the occasion to rule on the validity of such
threshold amount in the 2018 case of Mago 11. S11n Power Manufacturing Umilld.2 In
holding that the job contractor Qobcrest) ~s a legitimate _contractor, the Court
noted that while the records show that dunng the proceedings before the Labor
Arbiter, Jobcrest had on!)' an authorized capital stock of PB Million, P2 Million of
which was subscribed, and a paid-up capital stock of PS00,000.00, however, as of
December 31, 2011, it had increased its paid-up capital to PB Million, notably more
than the required P3 Million capital under DOLE Department Order No. 18-A,
Series of 2011
Further, the balance sheet submitted by Jobcrcst for the year ending on
December 31, 2010 also reveals that its total assets for the year 2009 amounted to
Pl 1,280,597.94, and P16,825,271.30 for the year 2010, which were comprised of
office fumirure, fixtures and equipment, land, building, and motor vehicles, among
others. As of December 31, 2012, the total assets for the years 2011 and 2012 also
increased to P35,631,498.58 and P42,603,167.16, respectively.
Evidently,Jobcrcst had substantial capital to perform the business process
sen,;ces it provided its principal (Sunpower). It has it_s own office, to which the
petitioners admincdly reported to, possessed numerous assets for the conduct of its
business, and even continuously earned profit as a resulL The Court can therefore
reasonably conclude from Jobcrest's financial statements that it carried its own
business independent from and distinctly outside the control of its principals.
• Sectm 3jl], Oepalnenl ()njef No. 174. Series a 2017.
1 GRNo.210961,Jan. 24,2018
CHAl'l"ERSIX 667
POST-EMPLOYMENT
Per jurisprudence, "substantial capital" and "investment in tools,
equipment, implements, machineries and work premises" should be treated
as two (2) distinct and separate factors in deter:min.ing whether legitimate job
contracting atrangement exists in a certain case.1
Substantial capital alone, without investment in tools, equipment,
premises or machineries, well constitutes one incontrovertible proof that a
contractor is not engaged in labor-only contracting arrangement. In fac~ once a
contractor has duly proved that it has substantial capitalization, it need not prove
that it has investment in tools, equipment, premises or machineries.
Thus, in Neri 11. NLRC,2 having substantial capital in the amount of Pl
Million fully subscribed and paid for and being a big firm which services, among
others, a wuvcrsity, an international bank, a big local bank, a hospital center,
government agencies, e!,c., undoubtedly indicate that it is a highly capitalized
venture and cannot be deemed engaged in labor-only contracting. It is a qualified
form of tools, equipment, machineries and work premises, among others. The law
docs not require both substantial capital and investment in such tools, equipment,
etc. This is clear from the use of the conjunction 'or'.'in the provision of the fourth
(41h) paragraph of Article 106 of the Labor Code. If the intention was to require the
contractor to prove that he has both capital and the requisite investment, then the
conjunction "and" should have been used. But having established ·that it has
substantial capital, it was no longer necessary for the labor contrac'tor to further
adduce evidence to prove that it does not fall within the purview of /abor-011/y" 11
contracting. There is even no need for it to refute petitioners' contention that the
activities they perform are directly related to the principal business of respondent
bank (FEBTC).3
In another case, FilipinOI Synthetic 11. NLRC,4 the Supreme Court ruled that
a contractor which is a going-conccm du)y registered with the Securities and
Exchange Commission (SEC) with substantial capitalization of Pl.6 Million,
P400,000.00 of which is actually subscribed, cannot be considered as engaged in
labor-only contracting being a highly capitalized venture.
In the following cases, both substantial capital and investment in tools,
equipment, etc. were cosnplied with leading the Court to declare that the contractor
is a legitimate job contractor: ·
(a) Wack Wack 11. NLRC,5 where it W2S sufficiently established by
indubitable evidence that Business Staffing and Management, Inc. (BSMI), a
1 Neriv. NlRC, GR Nos. 97008-09. Jui'f 23, 1993, 224 SCRA 7171.
l Neriv.NLRC, GR Nos. 9700&-09,Jui'/23, 1993,224SCRA 7171.
J Id.
• F{pinas S)T1flelic Fber Capaab1 (FILSYN)v. tlRC. G.R. No.113347,.tune 14, 1996.
s Wack-Wadd3oU CM!Jy CU>v. tlRC, GR. No. 149793, Aprt 15. 2005.

BAR. REVIEWER. ON IABOR. IAW
668
corporation engaged in the business as Management Service Consultant, is an
independent contractor engaged in the management of projects, business
operations, functions, jobs and other kinds of business ventures, and has sufficient
capital and resources to undertake its principal busin~!· It had provided
management services to various industrial and commercial business establishments.
Its Articles of Incorporation proves its sufficient capitalization. Moreover, earlier,
the Labor Secretary, in one case,1 has recognized BSMI as an independent
contractor.
(b) Abt/la v. PWT.1 where it was ruled that the security guards supplied
by People's Security, Inc. (PSI) to PLOT are the employees of PSI and not of
PLDT because PSI is a legitimate job contractor as shoym by the following: (1) It is
a registered corporation duly licensed by the Philippine National Police to engage
in security business; (2) It has substantial capital and investment in the form of
guns, ammunitions, communication equipment, vehicles, office equipment like
computer, typewriters, photocopying machines, etc.; and (3) It is servicing clients.
other than PLDT like PCIBank, Crown Triumph, and Philippine Cable, among
others.3
2.3. DIRECT RELATION TO PRINCIPAL'S BUSINESS TEST
The "Dirrrl Rtlatio11 lo Pri11ripal'J Buinm" test seeks to address the issue of
whether the employees recruited, supplied or placed by a contractor are performing
activities which are directly related to the main business of the principal. If this
poser is answered in the affirmative, the contractor is deemed a labor-only
contractor and the employees become direct employees of the principal.
In the following cases, the contractor failed this test and was thus declared
as having engaged in labor-only contracting because its employees recruited,
supplied and placed to the principal were performing activities which are directly
related to tl1e main business of the latter:
(1) NorkiI v. B11mauiJta14 where the contractor's employees worked as
welders and machine operators engaged in the production of steel crates which
were sent to Japan for use as containers of motorcycles that are then sent back to
Norkis Trading. 'Their functions therefore are directly related and vital to Norkis
Trading's business of manufacturing of.Yamaha motorcycles.
(2) Ma11da11e Galleon v. Anda/eJ,5 where the contractor's employees worked
as weavers, grinders, sanders and finishers that are directly related to petitioner's
principal business of rattan furniture manufacturing. Where the contractor's
employees are tasked to undertake activities usually necessary or desirable in the
I fn re f'etimU Cef1ilcatioo EJectol AAmJ t,e Regl.D Rank~ ~ WOfke!S ( A ~ [BJ)
SeM:e; kllematicxlal lnc:apora!ed, Federatm "FreeWaters (FFW;B)Tal Jackson Se!vices ~ Chapter.
2 GR.No.159469,.me8,2005.
l See also Rhone-Poulenc Agrochen',i:als ~ . h:. v. NlRC, G.R Nos. 102633-35, JM.19, 1993.
' N<ro; Tra<frq Gapaation v. aJencr,isti, GR No. 182018, Oct 10, 2012.
• MmaJe Gclleon Trade, klc. v.Mdaes, G.R No. 159668, Mwl 7, 2008.
CHAPTtR. SIX
POST-EMPLOYMENT
usual business or trade of the principal, the; contra,ctor is considered as a labor-only
co~tt:1ctor and such employees are considered as regular employees of the
pnnapal. ·
. (3) Almeda·v: Arabi,l where one of the contractor's employees served as a
quality controller, while the rest were glass cutters. The only excuse offered b
~espond~t -. that petitioners' services were required only when there was ~
increase tn the market's dema?d with which respondent could not cope . only
pr~ves ev~n more that the services rendered by petitioners were indeed part of the
matn bus111ess of respondent It would mean that petitioners supplemented the
regular workforce when the latter could not comply with the market's demand·
necessarily therefore petitioners performed the same functions as the regula:
~orkf~rce. Even res~ondent's claim that petitioners' services were required only
llltermL_~ently, depen~ on the m~et, deserves scant credit. The indispensability
1
of petlttoners servtces was fortified by the length and continuity of their
performance, lasting for periods ranging from 3 to 11 years.
(4) San Afjg11el Carp. v. Aballa,2 where the contractor's employees were
made to pet~orm w~rk ~ctly related to petitioner's aquaculture operations. The
nature of thei.r_work 111 s~p harv~ting, receiving and packing formed an integral
part of the shrimp processmg operattons of SMC. Thi, also holds true with respect
to ~e other workers who were made to perform janitorial and messengerial
se~ces the nature of which has been jurisprudentially recognized and considered
as directly related to the principal business of the employer.
(5) The Gaea-Cola cases, namely:
Coca-Co~ has, over the years, been involved in the issue of regularization
of contractor-supplied workers. Some of the latest cases are as follows:
. . (a) Cac~-Cola v. Ajto,3 ~ere the contractor's employees worked in
pettttoner as salesmen. In the Delivery Agreement between petitioner and the
contractor, it is stated that petitioner is engaged in. the manufacture, distribution a11d
s~le of sof!drinks and other related products. The work of respondents, constituting
dis~button ~~ ~ale of Coca-Cola products, is clearly indispensable to the principal
bustness of pettttoner. The Court also stressed that the repeated rehiring of those
salesmen bolstered the•inqispensability of their work to the business of CCBPI.
(b)° Patq11ing v. Cota-Cola Phi.ippi11es1 T11t.14 where the Court ruled that the
sales route helpers of CCBPI were its regular employees. It was stated here that
s~es route helpers "were part of a complement of three personnel comprised of a
driver, a salesman and a regular route helper, for ever:y delivery truck."S
1 .Arnedav.AmGassPhif!>Piles, tic., GR No. 1m85,Sept.3, :iros.
2 GR No. 149011, Jllie 2.8, 2005; See also Dgital Tel!mrmri:akns Phipftles, Inc. v. OiJlel ~ ln:xl (DEU)
GRNos.184003-04,0ct 10,2012;Babasv.lamzo~COlp,GR~ 186091,Dec.15,2010. .
3 ~ Bofflers Phis., tic. v. ~ib. GR No. 179546, Feb. 13,am.
GR No. 157966,Jal. 31, 2008, 543 OCRA 344.
See also CCBPI v.NOWM, GR No.170024,Jlll818, 2007.
 BAR REvlEWER ON IABOR !AW
(c) Qllinlanar v. Cora-Cola Bottlm, Philippines, lnr.,1 where the route helpers
were tasked to distribute CCBPI's products and were likewise successively
uansferred to agencies after having been initially employed by CCBPI. The Court
decreed therein that said helpers were regular employees of CCBPI
notwithstanding the fact that they were transferred to agencies while working for
CCBPI.
(d) Ungat and Altovtros 11. Cora-Cola Bottltrs Phils., Inr.,2 plant driver and
forklift operator (Lingat), and segregator/mixer (Altoveros), respectively. The
Court, citing the above cases of Agito, Pacquing ~nd Quintanar, ruled that
petitioners are regular employees of CCBPI. The Courl found analogy with Agito
since herein petitioners have worked for CCBPI since 1993 (Llngat) and 1996
(Altoveros) until the non-renewal of their contracts in 2005. Aside &om the fact
that their work involved the distribution and sale of the products of CCBPI, they
remained to be working for CCBPI despite having been transferred from one
agency to another. Hence, such repeated re-hiring of petitioners, and the
performance of the same tllsks for CCBPI established the necessity and the
indispensability of their activities in its business. Citing Pacquing, it was held that it
would be absurd for the Court to hold the route helpers therein as regular
employees of CCBPI without giving the same statuS to its plant driver, including its
segregator of softdrinks, petitioners herein, whose work also had reasonable
connection to CCBPI's business of distribution and sale· of soft drinks and other
beverage products. And in the same vein.as in Quintanar, the transfer of petitioners
&om one agency to another did not adversely affect their regular employment
stlltus. Such was the case because they continued to perform the same tasks for
CCBPI even if they were placed under certain agencies, the last of which was
MDTC.
2.4. LEGAL RIGHTS AND BENEFITS COMPLIANCE TEST.
The "ugal Right! and Bmifi/J Compliance" test addresses the issue of
whether the Service Agreement between the principal and contractor assures the
employees uf the latter farmed out to the former of their entitlement to all labor
and occupational safety and health standards, free exercise of their right to self-
organization, security of tenure, and social and welfare benefits. 3 If answered in the
affirmative, the contracting arrangement is deemed legitimate and permissible.
But the question is how should this element be articulated and reflected in
the Service Agreement? It would seem that a simple stipulation in the Agreement
on such compliance would suffice. Thus, in holding that the job contractor
Qobcrest) waslegitimate in the case of Mago,4 the Court pronounced that the
Service Contract Agreement between Jobcrest and the principal (Sunpower)
G.R.No.210565,.lllle28, 2016, 794 SCRA654.
G.R. No. 205688,.kl/04, 2018. . s As erunerated i1 Seems, bi!.
i CmsddatedaJMng~klc.v.Asprec,Jr.,G.RNo.217301,.ll.rle00,2018.
• "4aJo v. an PoNer ~ un1s1, GR No. 210931, .1at 24. 2018.
CHArTERSIX
POST-EMPLOYMENT
complied with the statutory requirement of ensuring the observance of the
contractual employees' rights under the law when it provided specifically in its
para~ph 7 that Jobcrest is obligated to observe all laws, rules and regulations
perwrung to the employment of its employees. This phrase undoubtedly suffices to
address the legal rights and benefits complianre test. ·
Rights of contractors' employees,
All contrac~ors/subcon°;3~or's employees shall be entitled to security of
tenure and all the nghts and pnvileges as provided for in the Labor Code as
amended, to include the following: '
a) Safe and healthful working conditions;
b) Labor standards such as but not limited to s~ce incentive leave, rest
day~, overtime pay, holiday pay, 13th month pay, and separation pay;
c) Retl.rement benefits under the SSS or retirement plans of the
cop.tractor/subcontractor; d) Social security and welfare benefits; and
e) Self-organization, collective bargaining and peaceful concerted
·activities including the right to strike. I
A finding of violation of the ·Rights of Contractor's Employees2 shall
render the principal the direct employer of the employees of the contractor or
subcontractor, pursuant to Article 109 of the Labor Code, as amended.l In other
words, the absence of any of these elements results in a finding that the
contractor is engaged in labor-only contracting.•
II.
LABOR-ONLY CONTRACTING ARRANGEMENT
1. ABSOLUTE AND TOTAL PROHIBITION.
''Labor-on!J rontrarling" refers to an arrangement where the contractor
merely ru111itJ, sl!/lP!m or.Plaat workers to perform a job or work for a principal, and
the elements5 thereof (iefra] are present.6 A labor-on!J ronlrrulor, therefore, is one who
enter~ into an agreement with the principal employer to act as the agent in the
recruttment, supply, or placement of workers for the latter.7 It is expressly
Sedi:ln 10, Depmenl~ No. 174, Series ci2017.
PerSedi:ln 10, Id.
3 Sedi:ln 12, Id.
' Cooscila!ed8Jt:fn,!Mai1termce,nc.v.A5prec,Jr.,GRNo.217301,.klle00,2018.
6
Sedi:ln 3'1L Ile.
7 lh;jat.n!Ml'leroov. Coca-ColaBolllels Phis. Ile., GR. No. 205688,Jltf04, 2018.
 SAR REVIEWER ON LABOR IAW
672
prohibited under Article 106 of the Labor Code. 1 And in the latest lmpltmmting
Kuks, it is described as both "absolullf/' and '~otal!J" prohibited under the law.2 ·
2. ELEMENTS.
Labor-only contracting has the following elements:
a) i. The contractor or subcontractor docs not have substantial capital,
.Q!
ii. The contractor or subcontractor does ~ot have investments in the
foan of tools, equipment, machineries, supervision and work
premises, among others,
filill
iii. The contractor's or subcontractor's employees recruited and placed
are performing activities which are directly related to the main
business operation of the principal;
Q[
b) Tue contractor oi: subcontractor does not exercise the right to control
over the performance of the work of the employees.3
3. EFFECT OF ABSENCE OP ANY OF THE ELEMENTS.
Note must be made of the words ''and" and '~r" above which are found in
the statement of the elements under D.0. No. 174, Striu of2017. Indeed, as held in
Aboitiz. Halllm,4 in order for one to be considered by law as a labor-only contractor,
all the elements above need not be present. If the contractor enters into an
arrangement characterized by any one of the foregoing elements, it would be a clear
case of labor-only contracting. The clear phrasing of the elements supports this
interpretation. It is thus sufficient that only one of the elements mentioned above
be shown in order to declare a contractor as being engaged in labor-only
contracting. 5
It is therefore not proper to heavily rely only on the contractor's all~d
substantial capital in order to conclude that it was an independent labor conttactor.
1bis is because the possession of substantial capital is only one clement. Labor-only
contracting exists when any of the two elements is present.6 Thus, to determine
1 Tengv.~ G.R No.169704, No/.17, 2010:Supm)r l'adul)OJ CO!poralioov. Baia.lSB'f, G.R No.178909. 0d. 10,
2012.
Seams, 0epmen 0roer No. 174, Series a2011.
kl.; See Miele 100, Laxll Code;~ Aiines, rie. v. UJM, GR No. 146408, Feb. 29, 2008; See a&i Lilgal ax!
NrHemi. v. ~ llctle!s Phis.. re, GR No. 205688, lif 04, 2018.
• Aboiiz Hailers, he. v. Dmapala, G.R No. 148619, Sept 19,2000.
I Awlov. Proder &Garrbk! PMs.•re.,GR No. 160506, June6,2011.
1 o.mma-v. Coca-Coo Bct1lels. ~ . re, G.R No. 210565, Jtrre 28, 2016.
CI-W'TERSIX 673
POST-EMPLOYMENT
whether a person or entity is indeed° a legitimate labor contractor, it is necessary to
prove not only substantial capital or investment in tools, equipment, work
premises, among others, but also that the work of the employee is directly related
to the work that the contractor is required to perform for the principal. I
4. THE LAW PRESUMES LABOR-ONLY CONTRACTING.
The presumption under the law, although disputable, is that the
contractor is engaged i.n labor-only contracnng.2 Ir devolves therefore upon tht:
contractor to prove that he is not so engaged.3 It has tc overcome the burden of
proving that it is compliant with the requisites, such as substantial capita~
investment, tools and the like.4 Employees of the contnccor, for their part, need
not prove that the contractor does not comply with the legal requirements.5
. The DOLE Certificate of Registration and License as private recruitment
and placement agency from the DOLE, while not conclusive evidence of the status
of the contractor as a legitimate job contractor, prevenl the legal presumption of it
being a mere labor-only contractor from arising. 6
The burden of proof is shifted to the principal when it is the principal
which is claiming that the contractor is a legitima~ contractor.7 It is thus
incumbent upon the principal, and not upon the contractor's employees, to prove
that the contractor is an independent conttactor.8
However, in Mago,9 the Court found that there is no such burden resting
on either the princ:ipal (Sunpower) or the job conu:ac;:or Qobcrest) because the
petitioners did not dispute that Jobcrest was a duly-registered contractor under
Section 11 of DOLE Department Order No. 1S-02, the regulation in force at the
time of petitioners' assignment to Sunpower. With such registration, there is no
operative presumption that Jobcrest is a labor-only contractor. 1 Conversely, the °
fact of registration with DOLE does not necessarily :reate a presumption that
Jobcrest is a legitimate and independent contractor. The Court emphasizes,
however, that the DOLE Certificate of Regisu:ation iss:.ied in favor of Jobcrest is
presumed to have been issued in the regular performance of official dut:y. 11 Ia other
words, the DOLE officer who issued the certificate in favor of Jobcrest is
presumed, unless proven otherwise, to have evaluated the application for
Lilgaax! Abelos Y. Qx:a.Cola Bolllers Phis., klc:., GR No. 205688,.Aif 04, 21118.
Vce,cia v. ClassqJe Vnyl Prooocls'Cnporaioo, GR No. 200300, Jal.30. 2017.
Ml.JOY. Soo Power~ LiNed, GR No.210961 ,.lal. 24, 2018.
• ~ Traispcmlm v. Rodrijuez. GR No. 186732, Jtrre 13,2013.
1 Qx:aQila Bolllers Phis., klc:. Y. ~ikl.G.R No. 179546, Feb. 13, 2009.
i Valencia v. ~ Vnyl Prooocls Cap(Jaoon, supra.
1 Gat!enaMeloories Mand Life f'tcll, re.Y. NtRC.GR. No. 160278,Feb.8, 2012, 665 SCRA 293. 306.
a t.9Jov.!il1Power~l.i1Ed,GRNo.210961,JM.24,2018.
i kl.
10 kl.,airl,l DeCaslro V. CA. G.R. No. 204261, Oct 5, 2016.
11 kl.,ar,;i Sasan, Sr. v. NlRC4tl DMsixl, GR No.176240, Oct 17, 2008.

674 IIAR RE\IIEWER ON IABOR I.AW
registration in accordance with the applicable rules and regulations.1 The petitioners
must overcome the presumption of regularity accorded to the official act of
DOLE, which is no less than the agency primariJy tasked with the regulation of job
contracting.2
.•
Ill.
OTHER ILLICIT FORMS OF EMPLOYMENT
1. ADDITIONAL PROHIBITED ARRANGEMEN,:I'S.
In addition to labor-only contracting as described above,3 the same
Dtpartmenl Order No. 174, Striu of2017,4 declared the following as being prohibited
for being contrary to law or public policy:
a) When the principal farms out work to a "Caho". The term "Caho"
refers to a person or group of persons or to a labor group which,
under the guise of a labor organization, cooperative or any entity,
supplies workers to an employer, with or without any monetary or
other consideration, whether in the capacity of an agent of the
employer or as an ostensible independent contractor.5
b) Contracting out of job or work through an "In-house Agency". An
"In-house Agency" refers to a contractor which is owned, managed,
or controlled, directly or indirectly, by the principal or one where the
principal owns/represents any share of stock, and which operates
solely or mainly for the principal.6
c) Contracting out of job or work through an "In-house Cooperative"
which merely supplies workers to the principal. An "In-house
Cooperative" refers to a cooperative which is managed, or controlled
directly or indirectly by the principal or one where the principal or any
of its officers owns/represents any equity or interest, and which
operates solely or mainly for the principal.7
d) Contlllcting out of a job or work by reason of a strike or lo<;kout,
whether actual or imminent
e) Contracting out of a job or .work being performed by union members
and such will interfere with, restrain or coerce employees in the
Id.. See IXlE 00 No. 1S-02, SecfCl'I 12; Ga'aego v.Baye-Phfw,es, t-c., G.R No. 179807,.htf 31, 2009.
Ma? 100, lmCode.
3
PerSedm 5d Depmiert Order No. 174, Series of2017.
4
SeeSecial61iered.
5 s«.bi 3(o), Ile!.
I Sedin3(1),lbcl.
1 Se:tm 3(g), ~ -
OlAl'TEll SIX 675
POST-EMPLOYMENT
exercise of their rights to self-organization as provided in Article 259
(248) 1 of the Labor Code, as amended.
Q Requiring the contractor's employees to perform functions which are
currently being perfoaned by the regular employees of the principal
g) Requiring the contractor's employees to sign, as a precondition to
employment or continued employment, an antedated resignation
letter; a blank payroll; a waiver of labor standards including minimum
wages and social or welfare benefits; or a quitclaim releasing the
principal or contractor from liability as to payment of future claims; or
require the employee to become member of a cooperative.
h) Repeated hiring by the contractor of employees under an employment
contract of short duration.
i) Requiring employees under a contracting arrangement to sign a
contract fixing the period of employment to a tean shorter than the
term of ilie Service Agreement, unless the contract is divisible into
phases for which substantially different skills are required and this is
made known to the employee at the time of engagement.
j) Sud1 other practices, schemes or employment arrangements designed
to circumvent the right of workers to security of tenure.
2. SAME F;FFECT AS LABOR-ONLY CONTRACTING.
Toe foregoing illicit acts do not constitute labor-only contracting but the
effect is similar to labor-only contracting in that the principal is deemed the direct
employer of the contractor's employees.2
IV.
EFFECTS OF LABOR-ONLY CONTRACTING
ANO ENGAGING IN OTHER ILLICIT FORMS OF EMPLOYMENT
In the event that there is a finding that the contractor has engaged in
labor-only contracting and other illicit forms of employment arrangements, the
following are the effects:
1) The labor-only contractor will be treated as the agent or intermediary
of the principal.3 Since the act of an agent is the act of the principal,
representations made by the labor-only contractor to the employees
will bind the principal.
1 l'ilfnJlcn/, ~ (c) tlelool v.ti::h ~ 'Mde 259 [248). LWar l.m Prac&:es d ~ - - It sha'I be
~ b' .11 en'!)brer kl cxrmi air/ d lhe tiklffl,j m ttia pr.m:es: xxx (c) To cxmn out ser.as a 11.ncoons
~ perfooned b-f urioo metrber.; v.tien such v,,1 illlllfere v.itl, reslrai1 a roerce ~ il the exercised !her~
k ) ~.r
sedb17,l>il.
Aps Trcrupooatioo v Rodrguez. G. R No. 186732, ..uie 13, 2013.
 BAR REvlEWER ON l.ABOR !AW
2) The principal will become the direct employer as if it directly
employed the wockers supplied by the labor-only contractor to
undertake the contracted job or service.1 ft will be responsible to them
for all their entitlements and benefits under labor laws. Tbis is so
because a finding that a contractor is a labor-'only contractor is
equivalent 10 a declaration that there is an employer-employee
rc~tionship between the principal and the workers of the labor-only
contractor.2
3) The principal and the labor-only contractor will be solidarily treated as
the employer. This means that the liability of the labor-only contractor
will also be the liability of the principal, u~th equal force and effect.
4) The employees supplied by the labor-only contractor will become the
regular employees of t)le principal, subject to the classifications of
employees under Article 295 [280] of the Labor Code.3
V.
LEGITIMATE JOB CONTRACTING VS. LABOR-ONLY CONTRACTING
1. DISTINCTIONS.
The chief distioctions between legitimate job contracting, on the one
hand, and the prohibited labor-only contracting, on the other, may be summed up
as follows:
1) Io the former, no employer-employee relationship exists between the
contractor's employees and the principal; while in the latter, an
employer-employee relationship is created by law between the
principal and the employees supplied by the labor-only contractor.'
2) In the former, the principal is considered only an "indiru/ rmplaytr, " as
this term is understood under Article 107 of the Labor Code; while in
the latter, the principal is considered the ''direct employer" of the
employees supplied by the labor-only contractor, in accordance with
the last paragraph of Article 106 of the Labor Cude.5
3) In the former, the joint and several obligation of the principal and the
legitimate job contractor is only for a limited purpose, that is, to
ensure that the employees are paid their wages. Other than this
obligation of paying the wages, the pnnc1pal is not responsible for any
claim made by the contractor's employees; while in the latter, the
Art 100, 1..m C'.ode; Sectial 7, Depcnrent Onler No. 174, Series d 2017.
Akalv.Sai~f.(xp(Jatiln. G.R No.1sesJ7, Dec.11, 2008.
l Mania aictoc Carcmf v. l!Mcria, GR No. 145271, J.it 14,2005.
AMn, v. Procter &Garbe Ptis., nc. GR No. 160506, M:rf 9, 2010,
PCI Aumma1 CErm. nc. v.NtRC.~
C HAPTER SIX
POST-EMPLOYMENT
principal becomes solidarily liable with the labor-only contractor to the
latter's employees in the same manner and extent that the principal is
liable to employees directly hired by him/ her, as provided in Article
106 of the Labor Code, as amended. 1
4) lo the farmer, the legitimate job contractor undertakes to perform a
specific job for the principal; while in the latter, the labor-only
contractor merely provides, supplies, recruits and places personnel to
work for the principal.2
2. TOTALITY OF FACTS AND CIRCUMSTANCES.
In order that a labor relationship can be categorized as legitimate job
contracting or as prohibited labor-only contracting, the tot.ahty of the facts and the
suuounding circumstances of the relationship ought to be considered.3 For
instance, ·the express provision in the Agreement that tne contractor was an
independent contractor and there would be no employer-employee relationship
between the contractor and/or its employees, on one hand, and the principal, on
the other hand, is not legally binding and conclusive as contractual provisions a.re
not valid deteaninaots of the existence of such relationship. For it is the totality of
the facts and surrounding circumstances of the case which is determinative of the
parties' relationship.'
3. LEGITIMACY TO BE RESOLVED ON A CASE-TO-CASE BASIS.
Every case is uoi~e and has to be assessed on the basis of its facts and of
the features of the relationship in question. Io other wonts, each case where the
issue of whether or not permissible or legitimate job contracting exists must be
determined by its own facts and all the features of the relationship must be
considered.5
4. STIPULATION IN AGREEMENT.
One crucial issue usually raised in detennining the legitimacy of
contracting arrangements is the validity of the stipulation in the Enrpli!Jmenl Cantracl
between the contractor and its employees as well as in the J"ervia Agmmenf between
the contractor and the principal that no employer-employe! shall exist between the
employees of the former supplied to the latter. However. such stipulation is not
given so much weight since the nature of the relationship between a principal and a
contractor as well as between a principal and the contrac!<)r' s employees supplied
to it by the contractor cannot be the subject of a stipulation in a contract. Tbis is so
, Sedion 21, Depment Order No. 1s-A. Series« 2011 IN~. t4, 20111; CtGCoo Botllin P111s., nc.v. ~- GR No.
179546, Feb.13, 2009.
2 f'CI Aubrati:xl Center, nc, V. NtRC, Sl4X3,
l Ailn V. Pffln Capaafm, GR~- 177592,Jllle09, ;>014.
• Plippi'le Aifnes, nc. v. li)an, GR No. 146408, Feb. 29, 2008.
SMMguelCapcratmv. llAERC ~SeM:es, nc., GRNo. 144672,Jutf t(., 2003.

678 BAR llEVIEWER ON lA!OR !AW
because the existence of an employer-employee relationship cannot be made
subject of an agreement or contract1
Thus, the contractual stipulation on the non-existence of an employer-
employee relationship between the principal and the persormel provided by the
labor-only contractor has no legal effect. While the parties may freely stipulate
terms and conditions of a contract, such contractual stipulations should not be
contrary 10 law, morals, good customs, public order or public policy. A contractual
stipulation to the contrary cannot override factual circumstances firmly establishing
the legal existence of an employer-employee relationship:2
The parties cannot dictate, by the mere expedient of a unilateral
declaration in a contract, the character of its business, i.e., whether as a labor-only
contractor or job contractor, it being crucial that its character be measured in terms
of, and determined by, the criteria set by statute. Thus, notwithstanding that the
agreement or contract between the principal employer and the contractor states
that the latter is an "indtpwdml contraclor" and that the workers hired by it •~hall not,
in any 111anner and 11nder atl)' .imm1la11w, be considmd empk!Jees of the Compa'!J, and thal
the Company has no control or 1upmnsion whatsoever over the condllct ofthe Umfr~r or a'!Y of
if.! workm in mpec/ to how they accomplish their work or pe,form the Contractor11 obligations
11nder !his Agmmenl, "the contractor may still be considered a labor-only contractor.3
c.
SOLIDARY LIABILITY
1. WHEN PRINCIPAL IS TREATED AS DIRECT EMPLOYER AND
THUS SOLIDARILY LIABLE WITH THE CONTRACTOR.
An examination of the pertinent provisions of the Labor Code and its
Implementing Rules enunciated in the latest Departmtnf Orrkr No. 174, Series of2017,
indicates that under the following circumstances, a principal shall no longer be
treated as indirect but direct employer and therefore it shall be deemed solidarity
liable with the contractor:
1) In case of violation of any provision of the Labor Code, including the
failure of the contractor to pay wages of its employees supplied to the
principal;~
2) In case of labor-only comracting;5
Tm v.Cilfoolia ~ Co.. kic:.• GR No. 80680,Jan. 26, 1989, 169 SCRA497.
Lal:as sa ~ ng Kapalircrg Hafl)i ~ At(<lnsa-l'rajbuklod ng Mcf'99~cWclY:l Premo rg &m;iane v. Mr-game
Capolaoon, GR No.162833 June 15. 2007 •
i De tis Sims v. Nl.RC, G.R No 121327. Dec. 20. 2001: See also Booas v. Lorenzo Shj)pir,g Cap., GR No. 186091.
Dec.15, 2010; SiJ1 Mrpl Coipoorooov Seri!lano, GR No. 164257.;l\if 5, 2010. -
• Sedm 3(k) ind Secoon 9, Depwtrnef\t Onler No. 174, Series~ 2017.
1 Sedm5,ld.
CHAl'TER SIX 6 9
roST-EMPLOYMENT 7
3) In case of commission of.any of the following acts prohibited under
Department Order No. 174:
(a) In case of commission of_"othet illicit forms of employment
arrangements" under Sectlon 61 thereof;
(b) In case of violation of the "righ!s of contractor's or
subcontractor's employees" under Section 102 thereof;
(c) In case of violation of the "required contr~cts under the Rul~t•
mentioned in Section 11 3 thereo~ referong to: (1] EmpllJJmenl
Conlrac/ between the contractor and its employee; and [2) Stroite
Agreemtnf between the principal and the contractor;
4) In case the termination of employment is caused by the pre-
t -:nation of the Service Agreement not due to authorized causes
e..,,d..,r, Article 298 the right of the contractor's/ §.Ubconrractor's
une , "cldin
employee to unpaid wages an~ o~er unpaid bene~ts tn u g
unrcmitted legal mandatory contnbullons, e.g., SSS, PhilHealth, Pag-
IBIG, ECC, shall be borne by the parry at fa~t, without pretdice to
the i;olidaty liabili~ of the parties to the Service Agreement.
5) In case the principal ha~ contracted_ with a de~sted contractor, in
which case, the principal shall be considered the direct e~ployer of all
employees under the Service Agreement pursuant to Arncles 106 and
109 of the Labor Code, as amended.5
6) In case of non-compliance with legally mandated wage in~eases
wherein, under R.A. No. 6727,6 the principal is also considered
solidarily liable with the contractor.
2. SOLIDARY LIABILITY OF PRINCIPAL.
In legitimate job contracting arrangement, the te~ •~olidary liability'' ~hall
refer to the liability of the principal, pursuant to the provmons of two (2) a.rodes
of the Labor Code, namely:
(1) Article 106, regarding the liability of the ?rincip~l? in the same
manner and extent that he/she is liable to his/her dim/ employees,
to the extent of the work performed under the contract ~
the contract~r fails to pay the wages of his/her employees.7
(2) Article 109, as direct employer together with the contractor for ,my

680 BAR RfVIEWER ON IABOR !AW
violation of fill)'. provision of the Labor Code. I
. _The solidary liability of the principal under No. 2 above should be
qualified 1n th_e sen~e ~t not all violations of the provisions of the Labor Code
~d ~ther soaal legtsla~ons bf ~~ contractor would make the principal •~olidari&
liabk 1 therefor. Such solidary liability of the principal would only be "to the exte.n t
of ·the work performed under the employment contract" and should 0 n1
. lve. the ':o
1nvo ·1a·
.~ons connected to or related with the employment • contractY
Th~ solidary liability ~e certainly does not cover such liabilities of the contractor
to tts employees not 1n any way related to the "wo'rk performed under the
employment contract." This is clear from Section 9 of Dtpartmenl Order No. 174
thus:
. . "Section 9. So.idary Uabi.ity. In the event of violation of any
pr?V1S1on ~f the ~~?r Code, including the failure to pay wages, there
cxJSts a sotidary liability on the part of the principal and the contractor
for purposes of enforcing the provisions of the Labor Code and other
social legislations, to the extent of the work performed under the
employment contract."2
In ~ther words, once the job contractor, although legitimate, fails to pay
~e wages of 1tS employ~~s supplied to the principal (2nd paragraph, Article 106) or
Violates any of the _proV1s1ons of the Labor Code _(Article 109), the principal would
no lo_ng~r be considered merely_ as ~ indirtel employer but as direct employer for
~e lirruted purpose of co~plymg WI~ the wage requirement or legal provisions
VI~lat~d. ~e1ng ~y legal fiction the dina employer, the principal now becomes
soudari& liable \Vlth .the l~gitimate contractor for the payment of wages and for
purposes of complymg With the legal provisions violated.
~t b~ars ~tressing that the status of the principal as indirect employer holds
true _only tn sttuatt_ons w~ere the job contractor with which it is dealing is legitimate
and 1s ~y ~omplian1 With the requirements of the law and the implementing rules.
Otherwtse, tf. the contractor is a labor-only contractor, then the principal will
never_be co~s1dered an indirect but direct employer of the contractor's employees
s_upplied to It and the above discussion will not apply and thus would be solidarily
liable for all the claims for wages and benefits by the latter.
3. PERTINENT JURISPRUDENCE.
. The phrase "to the extent ofthe work performed under the contract,
m the same manner and extent that he is liable to emiplovees directlv
thi red br him" ~s explained 1n
emrplo
In · the case of R,mwood Promsing, .,Inc. v. NLRC3
s ~ase, the. secunty ~ards farmed out by the security agency to petitioner
were assigned to us other clients. Withal, fairness dictates that the p~titioner should
I Id.
2 ~ 51Wied.
3 GRNo.11647~.21 M3y1998,290SCAA408,427.
CHAPTIRSIX 68l
roST-EMPlOYMENT
not be held liable for wage differen~s incUD:ed while the security guards were
assigned to other companies. Under Articles 106, 107 and 109 of the Labor Code,
should the contractor fail to pay the wages of its employees in accordance with law,
the indirect employer (the petitioner in this case), is jointly and severally liable with
the contractor, but such responsibility should be understood to be limited to the
extent of the work performed under the contract, in the same manner and extent
that he· is liable to the ~mployees directly employed by him. This liability of
petitioner covers the payment of the workers' performance of any work, task, job
or project So long as the work, task, job or project !us bee_n performed for
petitioner's benefit or on its behalf, the liability accrues for such period even if, later
on, the employees are eventually transfeo:ed or reassigned elsewhere. To reiterate,
• the principal's (tndirect employers) liability to the contractor's employees extends
only to the period during which they were working for the petitioner, and the fact
that they were reassigned to another-principal necessarily ends such responsibility.
The principal is made liable to his indirect employees because it can protect itself
from irresponsible contractors by withholding such sums and paying them directly
to the employees or by requiring a bond from the contrac:or for this purpose.
. The said principle in Rosewood was reiterated in GSIS v. NLRCI In this
case, DNL Security Ag~ncy, the direct employer of the private respondent security
guards which assigned_them to petitioner GSIS office in Tacloban City, informed
respondents in February 1993, that its service contract with petitioner was
t~ted. This notwithstµiding, DNL Security Agency instructed respondents to
continue reporting for work to petitioner. Respondents worked as instructed until
April 20, 1993, but without receiving their wages; after wruch, they were terminated
from employment. The High Court ruled that petitioner's liability docs not cover
only the paymer.t of respondents' salary differential and 13'h month pay during the
time they worked for petitioner but additionally, petitioner is solidarily liable with
DNL Security for respondents' unpaid wages from February 1993 until April 20,
1993. While it is true that respondents continued work:ng for petitioner after the
expiration of their contract., based on the instruction of DNL Security, petitioner
did not object to such assignment and allowed respondents to render service. Thus,
petitioner impliedly approved the extension of respondents' services. Accordingly,
petitioner is bound by the provisions of the Labor Code on indirect
employment Petitioner cannot be allowed to deny its obligation to respondents
after it had benefited from their services. So long as the work, task, job, or project
has been performed for petitioner's benefit or on its behalf, the liability accrues for
such services. The principal is made liable to its indirect employees because, aftec
all, it can protect itself from irresponsible contractors r,y withholding payment of
..,
such sums that are due the employees and by paying the employees directly, or by
requiring a bond from the contractor or subcontractor for this purpose.
1 GR. No. 180045, Nov. 17, 2010.
, ..

682 BAR REVl~WER ON LABOR I.AW
4. RIGHT OF CONTRACTOR'S EMPLOYEES TO COLLECT
FROM EITHER OR BOTH THE PRINCIPAL OR
LEGITIMATE CONTRACTOR.
As held in Epanva v. Liao de Cagayan University, 1 l\,S far as the security
guards are concerned, the acrual source ·of the payment of their wage differential
and premium for holiday and rest day work does not matter as long they as
~aid._This is ~e import of petitioner_ Eparwa's and respondent LDCU's solidary
liability. Creditors, such as the secuoty guards, may collect from anyone of the
solidary debtors. Solidary liability does not mean that, -.as between themselves two
solidary debtors are liable for only half of the payment. ' contractor is considered merely an agent of the principal and the latter is
5 TO HOLD PRINCIPAL LIABLE, NO NEED TO PROVE
INSOLVENCY OF THE JOB CONTRACTOR.
The second paragraph of Article 106 of the Labor Code states:
"In the event that the contlllctor or subcontractor /gih to pay
the wages of his employees in accordance with this Code, xxx."2
. According to ~":hpment Bank of tht Philippinu v. NLRC,3 the tetm jails"
m the afore-quoted provision docs not mean that it should be proven first that the
co~tra:tor_ is ins?lvent or is unwilling to pay. There is nothing in said provision
which Justifies this argument The rule is clear that in legitimate job contracting, the
principal is jointly and severally liable with the contractor to pay the wages of the
latter's employees. ·
As held in Del Rosario and Sons 1..oll,ing Enterprim, Inc. u. NLRC,• even in
situations where the principal has not paid adequately the contractor in accordance
\\~th the law, the latter may not successfully el<culpate itself by claiming that it has
no fault since what was paid by the principal was insufficient to defray the wages
and other legally-required benefits of its employees. As an employer, the
contractor/subcontractor is charged with knowledge of labor laws and the
adequacy of the compensation that it demands for contractual services is its main
concern and not any other's.
6. LIABILITY OF PRINCIPAL VIS-A-VIS A LEGITIMATE
CONTRACTOR DISTINGUISHED FROM ITS LIABILITY IN
RELATION TO A LABOR-ONLY CONTRACTOR.
. Based on the_ for~going disquisition, the liability of a principal viJ-ti-viJ a
ltgiumate cont.tactor 1s different from its liability in relation to a labor-only
contractor.
1 , Sal MlJuel capaatXX1v. ~ ntegraEd Se-.tes. nc. G.R. Mo. 144672, iJf 10, 2003.
G.R No. 150402. lb.28, ~-
I En1)1lasis 51.Wied-
3 i Relevant PrO'lis~: Articles 292(b) (277(b)I, 294 [279), 297 [282) and 2981283], La>or Code.
El)aWaSealffl'(MdJriooalSeM:es,klc.v. LireodeCcgayaiUn~-""(l.OCU) GR.Nos 10037°77
G.RNo.L-64204,Mcrf31, 1985, 136SCRA669. . ,..~..., ' ' ..,. ,Jooe l • ·
CltAl'TER SIX
POST-EMl'LOYMENT
In legitimate job contracting, the law Cre3tcs an employer-employee
relationship between the principal and the employees supplied by the job
contractor for a 1imi1£s!. purpose, i.e., to ensure that the contractor's employees arc
paid their wages. The principal becomes solidarily liable with the job contractor
only for the payment of the employees' wages whenever the contractor fails to pay
the same. Other than this, the principal is not responsible for any claim made by
ar: the contractual employees.1 On the other hand, in labor-only contracting, the
starute creates an employer-employee relationship between the principal and the
employees supplied by the labor-only.contractor for a comprehensive purpose,
i.e., to prevent circ~vention of labor laws. Consequently, the labor-only
responsible to the employees of the labor-only contractor as if such employees had
been directly employed by the principal. The principal therefore becomes solidarily
2
liable with the labor-only contractor for fill the rightful claims of the employees.
B.
TERMINATION BY EMPLOYER
1. TWO-FOLD DUE PROCESS REQUIREMENT3
Dismissal of employees requires the observance of the two-fold due
process requisites, namely:
1. Substantive aspect which means that the dismissal must be for any of
the following:
(a) Just causes; or
(b) Authorized causes; and
2. Procedural aspect which means that the procedure in the following
are observed:
(a) Statutorydue process; and
(b) Contractual due process.
2. JUST CAUSES VS. AUTHORIZED CAUSES.
A dismissal based on a just cause means that the employee has
commined a wrongful act or omission; while a disoissal based on an authorized
cause means that there exists a ground which the law itself allows or authorizes to
be invoked to justify the termination of an employee even if he has not committed
any wrongful icl or omission, such as installation of labor-saving devices,
1
redundancy, retrenchment, closure or cessation of business operations' or disease.
Sa, ~uel Capaml V. IMffiC nfelJrael Selvi:eS, R:.; kl.
7 1994
' Article 2981283). Labor Code.
 CHAl'TERSIX 685
POST-EMPLOYMENT
8AR REVIEW<R ON LABOR I.AW
684
(b) Gross and habitual neglect by the employee of his duties;
3. ORDER OF TOPICAL DISCUSSION. (c) Fraud or willful breach by the employee of the trust reposed in
him by his employer or duly authorized representative;
The discussion of the topic of 'Temii11atio11 by Employer" is divided into the
(d) Commission cif a crime or offense by the employee against the
following sections: person of his employer or any immediate member of his family or
1. JUST CAUSES his duly authorized representatives; and
(e) Other causes analogous to the foregoing.
I. SERIOUS MISCONDUCT
11. INSUBORDINATION OR WILLFUL DISOBEDIENCEOF LAWFUL (2) Article 279(a) [264(a)) - (Prohibited Arlivitits) which provides for the
ORDERS termination of the following:
111. GROSS AND HABITUAL NEGLECT OFDUTIES
(a) Union officers who k11owi11t/J participate in an illegal strike and
IV. ABANDONMENT OF WORK
therefore deemed to have lost their employment status.
V. FRAUD
VI. WILLFUL BREACH OF TRUST AND CONFIDENCE (b) Any employee, union officer or ordinary member who k11owi11g!y
VII. COMMISSION OF CRIME OR OFFENSE participates in the commission of illegal acts during a strike
VIII. OTHER ANALOGOUS CAUSES (irrespective of whether the strike is legal or illegal), is also
deemed to have lost his employment status. (NOTE: This is discussed
2. AUTHORIZED CAUSES under "V. LABOR RELATIONS", particularly under the topic of "F. PEACEFUL
CONCERTED ACTMTIES", supra).
I. INSTALLATION OF LABOR-SAVING DEVICE
II. REDUNDANCY (3) Article 278(g) (263(g)) - (National Interest Cases) where strikers who
Ill. RETRENCHMENT violate orders, prohibitions and/ or injunctions as are issued by the
Ill-A. REDUNDANCY VS. RETRENCHMENT DOLE' Secretary or the NLRC, may be imposed immediate
IV. CLOSURE OR CESSATION OF BUSINESS OPERATIONS disciplinary action, including dismissal or loss of employment sutus. I
IV-A. RETRENCHMENT VS. CLOSURE OF BUSINESS {NOTE: This Is discussed under "V. LABOR RELATIONS", particularly under the topic
of "F. PEACEFUL CONCERTED ACTMTIES", sup,a~
V. DISEASE
(4) Article 259(e) [248(e)] • (Uflio11 Security Clause) where violation of the
3. DUE PROCESS union security agreement in the CBA may result in temunation of
a TWIN-NOTICE REQUIREMENT
employment. Under this clause, the bargaining .!llllOn can demand
b. HEARING &om the employer the dismissal of an employee who commits a
---------------------------- breach of union security arrangement, such as failure to join the union
or to maintain his membership in good standing therein. The same
1. union can' alsQ demand the dismissal of a member who commits an act
JUST CAUSES of disloyalty against it, such as when the member organizes a rival
union.2 (NOTE: This is discussed under "V. LABOR RELATIONS", particularly under
1. JUST CAUSES UNDER THE LABOR CODE. the topic of "E. UNFAIR LABOR PRACTICESOF EMPLOYERS", supra).
The just causes in the Labor Code are found in the following provisions 2. JUST CAUSES UNDER PREVAILING JURISPRUDENCE.
thereof: In addition to the just causes mentioned in the Labor Code, just causes
(1) Article 297 (282) - (fennination by the Employer) which provides for arc also found in prevailing jurisprudence,3 some of which are as.follows:
the following groW1ds:
(a) Serious misconduct or willful disobedience by the employee of
the lawful orders of his employer or representative in connection
with his work; 1 See also No. 33, NCIIB Prirer a, ~ . Metirg and LOliOJI, 2nd Editili, Dec. 1995.
l kY,jl.ibv.FrstPhiW/n8Scales, ~.GRNo. t65407,..lne5,2009.
l ~ Y. Frst Philppine Scales, Inc., 54)1a.
1 Ar1icle 29912841, Ibid.
686 SAR REVIEWER ON IAIOR I.AW CHAmRSIX
687
rosT-EMrLOYMENT

1. Violation of Company Rules and Regulations or Code of Conduct or I.

Code of Discipline.1
2. Theft of property owned by a co-employec:,2 as distinguished from
rompany-owned property, which is considered serious misconduct
3. Incompetence, inefficiency or ineptitude.3
4. Failure to attain work quota.4
5. Failure to comply with weight standards of employer.5
6. Attitude problem.' .
3. DISMISSAL BASED ON COMPANY RULES,1~OT ILLEGAL.
If the ground cited is based on the Company Rules and Regulations or
Code of Conduct or Code of Discipline, it is to be expected that its exact
description and phraseology are not found in Article 297 (282] nor in any other
pro\isions of the Labor Code since the latter's description of the grounds is
couched tn general teems.
In Samp111,uila Altlo TrallJj>Ort Corporation v. NLRC,1 the Supreme Court
pronounced that the Court of Appeals erred in ruling that the dismissal of private
respondent, a bus driver of petitioner, was illegal because the "grounds upon which
petitioners based respondent's termination from employment, PiZ:: 'hindi lahat n1,
Jd1edult nailalabas,' [7mababa an1, rrvenue n1, b111, lalfn1, kasama an{ij aJa,va JO byahe' and
'ntaramin1, 11aririnit, no kwen/o lungkiil Jo kanya, nag-1111/oJ n1, tQndJ((/Qf para kllmila Ia hindi
ma1,andang paraan[,]' sxx are not among those enumerated under Article 297 (282] of
tbe Labor Code as just causes for termination of employment" The irregularities or
infractions committed by private respondent in connection with his work as a bus
driver constitute serious misconduct or, at the very least, conduct analogous to
serious misconduct, under the above-cited Article 297 (282) of the Labor Code.
111e requirement in the company rules that: '3. to obey traffic rules and
regulations as well as the company policies. 4. to ensure the safety of the
riding public as well as the other vehicles and motorist (sic)' is so fundamental
and so universal that any bus driver is expected to satisfy the requirement whether
or not he has been so informed. .
4. JUST CAUSES UNDER ARTICLE 297 [282) OF THE LABOR CODE.
"The grounds mentioned in Article 297 [282) shall be discussed herein in
Jerialim.
1
~Ilia ,too Tnr,spoo Corpaa1bw. NlRC, GR No.197384, .IM. 30, 2013.
l .km Ha-codl lle l1slmc:e Cap.V. ()ay\s, GR No.169549, ~ 3, 2008.
l Reyes-Raye! v. ~ Luen Thai Hrif~ Corp. GR No. 174893, .U, 11, 2012.
• Aln;jv.Feflcim,GR.No.165829,Apd25,2012;Unv.M.RC, GRNo.118434,.U,26, 1996,
s Yrcrugu v. Ph~ Aifnes. nc., GR No.168081,Oa. 17, 2008.
' Reyes-Raye! v. ~ l.uel Thai ttti'gs Corp, GR No. 17~, .U, 11, 2012; He.NyW!Mria, k'c. v. The CA, GR
No. 154410,Oc120, 2005.
' GR!t>.197384,Jan.30.2013.
SERIOUS MISCONDUCT1
1. REQUISITES.
For misconduct or improper behavior to be a just cause for dismissal, the
following requisites must concur:
1. It must be llii2m;
2. It must relate to the perfoanance of the employee's~
3. It must show that he has become unfit to continue working for the
employer;2 anc!
4. It must have been performed with wrongful intent3
The 2014 case of lmasen v. .A/a,n,4 added the 4th requisite above which, it
said, is "equally important and required." All the above requisites must concur.s
2. SOME PRINCIPLES ON SERIOUS MISCONDUCT.
• Serious misconduct implies that it must be of such grave and aggravated
character and not merely trivial or unimportant.6
• Simple or minor misconduct would not justify the termination of the services
of an cmployec.7
• The charge for serious misconduct must not be a mere afterthought.&
• There must be a valid company rule or regulation violated.9
• Misconduct must relate to employee's duties and must show his unfitness to
continue ')VOrking for the employer.lo
• Series of irregularities, when put together, may constitute serious misconduct. II
• Acts destructive of tbe morale of co-employees constitute seaous
misconduct. 12
• Committing libel against an immediate superior constitutes serious
misconduct. lJ
• Possession or use of shabu or other drugs is a valid ground to terminate
employment 1
1 Relevant provision: Miele 297(a) (282 (a)~ l.BlxrCode.
2
Y.tMv.MriaElecti:C<X'lJcllY,GRNo.190436,Jat 16,2012.
3
Ttis 4'1 ~ was added i1 rnasm ~ ~ Q:lpcxm, v. Abx1, GR No. 194884, 0c122, 2014.
' Id. •
5
Coca-Cola Botllels, v. Kapisanan ng Malayang M1nggagawa sa Coca-Cola-FFW, G.R No. 148205, Feb. 28, 2005.
~ Natiala Bri:v. Velasoo, GR No. 160096, ~ 11, 21:m.
7
Rai>Camutkaxns alhe~, ~ v.NI.RC, GR No.113178. .kl~ 5, 1996.
a Coca-Oil E,ipcr!Cap.v.Ga:aya,, GR No. 149433, Dec. 15, 2010.
9
Ncr.qo v.Bllmedr.a Heallh Cae, nc., GR No 193789, ~ 19, 2012.
10
WaefrootCebuCJyCasm~ ~ V. l:lelmooledesna;GR No.197556, Mw! 25,2015.
11
~ Y. Mm E1ecti: ~ . GR No. 171023, Dec. 18, 2009.
12 Cbrt, NA. v. NlRC, G.R. No. 1~. Feb. 6, 2008.
13
Taradav. Toshbaklbmabt~lf'hi;1, nc., GRNo.165960,Feo.8,2007.
 SAR REVIEWER ON LABOR LAW
688
• Drug abuse inside the company's premises an~ ~~g ~orking _hours
m 1scitutcs serious misconduct The Court has taken Judicial
. nol!ce of2 SCtcnufic
findings that drug abuse can damage the mental faculues of the user.
• To justify termination, the drug test must be conducted _by authorized drug
. 3 .
tesnng center.
• To be valid, both screening and confirmatory tests should be conducted prior
10
termination.• The screening test must be conducted first before the
confirmatory test5
• Immorality, as a general rule, is not a just ground 't~ t~~ate em_ployment.
The exception is when such immoral conduct is pceiudiaal oc detrimental to
the interest of the employer.6
• Immoral act committed beyond office hours is a valid ground to terminate
employment.7
8
• Sexual intercourse inside company premises constitutes serious misconduct.
More so when it was done during working hours.9
• The act of a 30-ye:u: old lady teacher in falling in love with a 16-yeac old
student is not ~moral:10
• An employee may commit serious misconduct when his letter-explanation uses
accusatory and inflammatory language.11
• Circulating e-mail message may give rise to the charge of serious misconduct if
its contents constitute a wrongful act12
• Fighting is a ground foe te~ation but only ~e instigator or a~~ssor :d
not the victim who was constrained to defend himself should be dism1ssed.
14
• Filing of criminal case by an employee does not indicate his innocence.
. . 15
• Challenging superiors to a fight is a just cause for temunatlon.
16
• Assaulting another employee is a just cause for termination.
' Roquero v. PhTl)pile Ai l.i'oes, ric., G.R No. 152329,Api 22,2003.
1 Jose .i v.Mcllael'narl'tils.,n:., GRNo.169606,N<H.27,200'J.
~ Erl;iile ~ . r,c. (AER) v. PrcgresixrlJ Ulyal lYJ rrga Mang98(Jawa sa AER. G.R Nos. 160138 &
160192,J\tf 13,2011.
• Na:a].Jev.~u,es,h:.,G.RNo.172589,AuJ.8,2010.
1 f'lattltial Bay Resortirld Spav. Oltri::o, G.R No.182216, Doc. 4, 200'J.
Scm,Jf.v.NI.RC,GRNo.115795,Mrdl6, 1998,287 SCRA 117.
1 Navarro III V. Damasco, G.R. No. 101875, July 14, 1995.
• Stanfad fwaosystems, Inc. v. NLRC, G.R. No. L-74187, Jan. 28, 1988.
9 Edlel9rev. VlM!ltMecia, r,c., G.R No. 169231,Feb.15, 2007,544Pti.763,770.
,o Clm-Qlav.~ .GR No. L-49549,A,JJ.30, 1990, 189 SCRA 117.
11 f>mlt.'obPhis.,ric.v.M,jelo,G.RNo.164181,Sepl.14,2011.
12 Plrlzalv. ETSITectrwJies, n:., G.R. t«is.170384-85, Milch 9, 2007.
•
,i ~v.NI..RC,G.R.No.116568,Sept.3, 1999;SupremeS\eel~Cap. v.San1¥,GR No.170811,Apri24, 2007.
11 Flores v. NLRC, GR No. 109362, May 15, 1996, 256 SCRA 735,
,1 l.lJzoo ~ capaam v.aR. GR No. L-18683,0oc. 31, 1965.
16 Havei'oo Shipping Ltd. V. NLRC, G.R. No. 65442, Apri 15, 1985, 135 SCRA 685.
CHAl'TIRSIX
POST-EMPLOYMENT
• Utterance of obscene, insulting or offensive words constitutes serious
misconduct.1
• Disrespectful conduct is not serious misconduct if provoked by superior or
e.\Ilployer.2
• Gambling within company premises is a serious misconduct.3
• Instigating husband to maul her supervisor, a serious misconduct.4
• Rendering service to business rival is a just cause to terminate employment.5
• Selling products of a competitor is a just cause for t=ination.6
• Organizing a credit union by employees in a bank is a serious misconduct. 7
• Deceiving a customer for personal gairt is a just cause for termination.8
• Contracting work in competition with employer constitutes serious
misconduct9
• Employer need not suffer any damages resulting from a serious misconduct
committed by an employee against a custome;.10
• Intoxication which interferes with the employee's work constitutes serious
misconduct.11
• The act of a teacher in pressuring a colleague to change the failing grade of a
student is serious misconduct.12
• Sexual harassment is a just ground to dismiss.13
• Sleeping while on duty is a ground for termination.14
• Dismissal is too harsh a pertalty for eating while at work.15
• Pilferage or theft of company-owned property is a just cause to terminate.16
• Theft of funds or property not owned by employer is not a ground to
terminate.17
1 8:neYe1riaV. Veootek "'8i(a, Inc., G.R No. 169231, Feb.15, 2007.
2 Golden Thread Knitting lnwslries v. NLRC, G.R. No. 119157, March 11, 1999.
3 ~tav.Seaeayd\m,G.RNo.83854,M?/24, 1989.
• Gal.Jsv.Qlaftf Hoose, re., G.R.No.156766, Apri 16, 200'J.
s A8SCllN ~ Uix1 v. Nl.RC,GR No. 111211, J\tf 24, 1997, 276 SW. 123.
1 Eizade kllenlalxml [Phis.~ Inc. v. CA. GR No. L-10553, Feb. 26, 1981, 103 SCRA 247.
1 Aboc v. ~ Bri aid TM! Carl)aly, G,R. Nos. 170542-43, Doc. 13, ;.tl10.
1 BaJba and~ v. Hon. CA, NLRC Md Phiippine Airlites, Inc., G.R. No. 169731, Mirth 28, 2007.
1 Lopezv.NLRC,G.R.No.167385,Dec.13,2005,477SCRA596,602.
'° Pnrdbv. CAP~- n:., G.R No. 1613C6, Feb. 9, 2007.
11 SanyoTraYe!CapaabldlRC,GRNo.121449,0d.2, 1997.
11 Paalav.NLRC,GRNo.114764,.hlle13, 1997,273SCRA457.
13 RA No. 78TT; ~ A e o o s ~ Unied Cap(xalmv. Nl.RC, G.R.No. 124617,Apri 28,2000.
14 FmDanilial Rescuces Cap. v. Pe'8anda aoo 1/daj, G.R No. 166616, Jan. 27,20C6.
11 Tmlcl'f ~ LabocUli:ln V. Nl.RC, G.R No.73352, Dec. 06, 1995.
11 ~ t.aasrg~sat<etiilv.Ken, PhippilesCap. G.R No.171115,AuJ.9,2010.
11 Werra Gd! CU, v. Pehi:l, G.R No.166152, 0d. 4, 2005.
 BAR. RfVIEWfll. ON IA80R !AW
690
1
• Act of falsification is a valid gtoW1d to terminate employment.
• Punching-in of time cards of other employees is a just cause for teanioation.Z
. • 3
• Circulating fake meal tickets is a just cause for temunat10n.
• Using employer's property, equipmenr_and perso;mel in-the personal business
or benefit of the employee is serious m1Sconduct.
II.
INSUBORDINATION
OR WILLFUL DISOBEDIENCE OF LAWFUL OROERS5
1. REQUISITES.
One of the fundamental duties of an employee is to obey all reasonable
rules orders and instructions of _the employer. In order to validly invoke this
grou:id, the following requisites must be complied with, to wit.
1. The employee's assailed conduct must have been willful or inten~onal,
the willfulness being characterized by a wrongful and perverse attttude;
and
2. 1nc order violated must be based on a reasonable and lawful
coqipany rule, regulation or policy . and mad~ known to the
employee and must pertain to the dunes for which he has been
engaged to discharge.6
• Requisites for validity of company rules and regulations.
As far as the second requisite for insubordination or willful diso~edience
is concerned, it is required that there should exist a rule, regulation or policy upon
which the order is based which must be:
1) lawful and reasonable;
2) sufficiently known to the employee; and
3) in connection with the duties for which the employee has been
engaged to discharge.7
An order which is not based on a rule, regulation or policy which does not
satisfy the foregoing three (3) requisites is not lawful and thus may not be invoked
as basis for terminating an employee on the ground ofinsubordination. Needlessly,
absent any of the foregoing elements would make the refusal of the employee to
Ranaan v. JMfne ™3 Ue lnsualCe Co., he., G.R No. 131943, Feb. 22, 2000.
San Miguel Colporation v. NLRC, G.R. No. 82467, June 29, 1989.
lbanieotos v. NLRC, G.R. No. 75277, July 31, 1989. . Id.
i ZencoSak!s,n:.v. NLRC,G.R No. 111110,Aug2, 1994;JoseA. t>ooientosv.NlRC,GRNo.75277,Ju~31, 1989.
~ Relevant provision: Af1ide 297(a) 1282(a)). Labor Code.
TheCoflee ~ and Tealeaf f'lllWileS, k'ic. v.Ro&j P. Arenas, G.R. No. 208908, ~ 11, 2015.
1 Ace Praroion and Maitetilg C,ap. v.UM>ia, G.R No. 171703, Sepl 22, 200i.
CHAl'T£R SIX
POST-EMPLOYMENT
c~mpl~ wi'~ the rule, regulation o_r policy justified and not constitutive of "willful
di.robethm« as would warrant the 1mposition of the penalty of dismissal f, h
refusal. or sue
2. SOME PRINCIPLES ON INSUBORDINATION.
• Employer has pr~~ogative to fonnulate and ioplement company rules and
regulanons or polic1es.1
• Company rules and regulations or policies are presumed valid until amended
?r nullified. Until and unless the rules or orders are declared to be illegal or
tmproper by competent authonty, the employees ignore or disobey them at
their peril.2
• Filing of a case questioning validity of rules and policies does not prevent
employer from enforcing them.3
• Violation of a company policy which oftentimes has been relaxed in its
impl~cntation or .has_been tolerated or acquiesced to by superiors cannot be
a valid ground to temunate.4 But laxity or leniency in the enforcement of rules
and procedures is not an excuse for commission of wrongful acts.5
• The employee's transgressions cannot be rnitigared by the supposed approval
of his actions by his superiors.6
• Making false allegations in complaint does not ccnstitute insubordination.'7
• Failure to answer memo to explain constitutes willful disobedience.a
• Another notice is required in case of teanioation on the ground of failure to
answer memo to explain.9
• Willfulness of conduct may be deduced from the manner the reply is written_ lo
• Refusal to w1dergo random drug testing constitJtes both serious misconduct
and iosubordination. 11
• Making false allegations in a complaint filed with the NLRC does not
constitute insubordination.12
• Prolonged practice, not an excuse for commission of wrongful acts.13
Allem Coopeawe, he. V. Banada,Jr., G.R No. 173489, Feb. 25, 2013.
8erguet Ee::bi: ~ V, Fianza, GR No. 158606,'larth 9, 2004.
3 A1:31t1ra. k. v. CA, q.R. No. 143397, AuJ.6, 2jX)2.
Coca-coo Bolllers Phlippnes, k1c. v.Vital, G.R. No. 154384, Sept 13, 2004.
SM Mguel Copaalm V, NLRC, G.R. Nos. 146121-22,Ajri 16, 2008.
6
!k.n{P!-lwnes) Corporatioo v. Saia, G.R No. 197598, Nol. 21. 2012.
1
Peron Cap. v. NI.RC, G.R No. 154532,Oct 27, 2006.
8
Ace l'rcmolxxl and Mnetilg Cap.v. lAsabia, G.R. No. 171703, Sept 22, 20C6.
10
ePadfic G~ Conm Cena, ric. v. ~ - GR No. 167345, Nov. 23, '1007.
11
Kam()i.nl Its Mesrre; v. KrgSl)(JI Express and Lc;,islic, GR No. 194813,Ajri 25, 2012.
12
Peli"oo Cap.v.NI.RC and Chio C. ManlOs, G.R No. 154532. Oct 27, 2006.
13
Sanlos v. San Miguel Corporation, G.R. No. 149416, March 14. '1003.
 SAR REVIEWER ON IA&OR !AW
• Refusal to render overtime to meet production deadline constitutes
insubordination. 1
, Refusal to comply with a lawful ttansfer constitutes insubordination.2
, Penalty for insubordination or willful disobedience ·•should follow the
RtaJonabk Proportionali!J &ik.3
Ill.
GROSS AND HABITUAL NEGLECT OF DUTIES'
1. REQUISITES.
The following are the requisites:
(1) There must be negligence which is gross and/or habitual in character;
and
(2) It must be work-related as would make him unfit to work for his
employer..
2. SOME PRINCIPLES ON GROSS AND HABITUAL NEGLECT OF
DUTIES.
• Simple negligence is not sufficient to terminate employment
5 is on the employer.9
• The negligence must be gross in character which means absence of that
6
diligence that an ordinarily prudent man would use in bis own affau:s.
• As a general rule, negligence must be both gtoss and habitual to be a valid
ground to dismiss.7
• Habituality may be disregarded if negligence is gross or the damage or loss is
substantial. 8"Habit11al negligence" implies repeated failure to perform one's
9 ABANDONMENT OF WORK'2
duties for a period of time, depending upon the circumstances.
• Negligence is a question of fact. 10
• In the absence of any form of negligence, the dismissal is illegal.u
• Actual damage, loss or injury is not an essential requisite. 12
• Higher degree of diligence is required in the banking industry.13
RB.Mchael Pressv. Geil, GR No.153510, Feb.13, 2008.
San Mguel COip. v. Ponlilas, G.R. No.155178, May 7, 2008.
1 Cd! Ofy l,i,,r,!!ed Port Ser,tes, klc. v. N.RC, GR No. 8600), Sepl 21, 1990.
• Relevant pnl'lision: Artide 297(b) 1282(b)). labor Code.
S. luke's llafa!I Center, rev. Notrb, GR No. 152166, Oct 20, 2010.
Chmzv.Nl.RC,G.RNo.146530,Jc11.17,2005.
1 WanalillaScto:Hlaliav. ~SdlodAm:eciEwcabs QSAE), G.R No.167286,Feb. 5, 2014.
1 Fuentes v. NLRC, G.R. No. 75955, Oct. 28, 1988; Associated Bcrtv.M..RC, GR No.86023,June 29, 1989.
1 Premiere ~elopment 8anlt v. Mania!. G.R. No. 16n16, Malth 23, 2006, 485 SCRA 234,239.
10 School of1he Holy SpiitolQ\lezon Cit)'v. Taguiam, G.R. No. 165565, July 14, 2008.
11 St. I.tie's '-bica Cenle', rev. Ndail, ~ · 11 l.iima v. Careon, G.R No. 143540,Apii 11, 2003, 401 SCRA 303, 309.
II ~ 4343.01 ['21, Depatnernd LalXJ Mala.
1i o,,roco, Jr. v. Equl.ablePCI Bri (now Banco de Oro), G.R No. 188271, AIJJ. 16, 2010.
CHAl'TER SIX
POST-EMPLOYMENT
• Gross negligence may result to loss of trust and confidence,I
• No negligence if the act alleged to be so is in accordance with -standing
company practice.2
• No negligence if the act is in ac;:cordance with management-sanctioned
deviations from the company policy.3
• Absences, if authorized, cannot be cited as a ground to terminate
employment4
• Tardiness or absenteeism, if not habitual, cannot -be cited as a ground to
terminate employments
• Tardiness or absenteeism, if habitual, may be cited as a ground to terminate
employment.6
• ·Tardiness or. absenteeism, if habitual, may ·:ie tantamount to serious
misconduct7
• Absences or tardiness due to emergency, ailment or fortuitous event are
justified and may not be cited as just cause to teani.nate employment.8
• Mere allegation of absences or tardiness is not sufficient; the burden of proof
• Unblemished record belies allegation of gross and habitual neglect.lo
• Unsatisfactory or poor performance, inefficiency and incompetence are
considered just causes for dismissal only if they amount to gross and habitual
neglect of duties.II
IV.
1. CONCEPT.
. . Abandonment is a foan of neglect of duty; hence, a just cause for
temunatton of employment under Article 297(b) (282(b)] of the Labor Code.I
~ .
Rarosv. BPI Faritj SMlgs Bri, K. GR No. 203186, De:. 04, 2013.
3 Ulsa-Tan v. Silins kltemaliona Hotel, GR No.TT457, Feb. 5, 1990, 260 Pill 166.
' Qienla lmforo ~ ~ klc. v. It.RC, G.R No. 111005, .lif, 31, 1995; MJs. Consoldaled Moog ald
IJeveqmeri capaalbl v. NI.RC, G.R No. 75751, Oct 17, 1990, 190 SCRA005.
s GeruOl k:e Coo'4)cll1Y, n:. v. l,9Jl)Mtay, G.R No. 147790, .me 27, mi.
6 Va-oo v. Hoo. CA, GR. No. 146621, Jlif 30, 2004, 435 SCRA543; ~ Geohoonal, Inc. v. NlRC, G.R No. 106370
Sept. 8, 1994; ~ v. tlRC, GR No. 49286, Math 15, 1990; tla\la 8ectt: r ~ v. NlRC G.R No 114129.
Oct.K~ -- , . ,
1 Olmtaov.MnlaEledn:~.G.R.No.171023,08:.18,2009.
a PlDTv. Teves, G.R No. 143511,Nov.15,2010; NcMJrov. Coca-ColaMe!s l'liiS., nc. G.R No. 162583,JooeB, 2007.
9
Eredor M.'l!f1isrg Sgn ~.rev. N.RC. GR No. 16nt8, Jttf 2, 2010.
10 lmlllob' Caporalmv. NL.RC, G.R No. 159738, Dec. 9, 2004.
ll ReleVcJi flro'lisoo:Aitxle 297(b) f282(b)i l.m Code,

SAil REVIEWER ON IABOR !AW
694
2. REQUISITES.
To constitute abandonment, two (2) elements must concur, namely:
1) The employee must have failed to report for wor~ or must have heen
absent without valid or pistifiable reason; and
2) There must have been a clear intention on the part of the employee !Q
sever the employer-employee relationship manifested by some ™
ill,2
3, SOME PRINCIPLES ON ABANDONMENT. '
• Mere absence is not enough to constitute abandonment.3
• Clear intention to sever employment relationship is necessary.4
• An employee who stopped working because of her mistaken belief that she has
been dismissed is not guilty of abandonment.5
• Abandonment is a factual issue.6
7
• Employer has the burden of proof to prove abandonment.
• There is no abandonment when it was the employer who prevented the
workers &om reporting for work.8
• Due process in abandonment cases consists only of the service of two (2)
notices to the employee, viZ:: .
a. First notice directing the employee to explain why he should not be
declared as having abandoned his job; and
b. Second notice to inform him of the employer's decision to dismiss him on
the ground of abandonment. 9
10
• No hearing is required to validly dismiss an employee for abandonment.
• Notices in abandonment cases must be sent to employee's last known addre~s
per record of the _company. Toe employer need not look for the employee s
current whereabouts.11
• Service of the notices of abandonment of work after the six-month period of
"foaling sta/11s" is not valid.1
1 FIJMI' Secull'j &Genera! SeM:es v.Fbes, GR. No. 147961, Sepl 7, 2007.
CRC Agricul1ural Tracfing v. NlRC, G.R. No. 177664, Dec. 23, 2009.
1 New Ever Mai\:eting, Inc. v. CA. G.R. No. 140555, July 14, 2005.
1 CRC Agricultural Tracfing v. NLRC, G.R. No. 177664, Dec.23.2009.
s \kiwde SatesWacehoose (lJbv.NLRC,G.R. No. 154503, Feb. 29, 2008.
1 Premiere Development Bank v. NLRC, GR. No.114695, July 23. 1998.
1 Northwest Tourism Corp. v. Fonner Special Thid Division of ttle Hoo. CA, G.R. No. 150591: June 27, 2005.
1 ~ C)indes Mg.•Colp.v.Rw, G.R.No.173631, Sept. 8, 2010.
9 Krgsize ~ Colp(ratioov. ~ .G.R. Nos. 110452-54, Nol. 24, 1994.
,o idfrtallz Ca1laned..i1es, Inc. v. BclJ6s1a, G.R. No.187693, Jltf 13, 2010.
11 Agmv.NLRC,G.R t-b.158693,No.o.17,2004.
CHAmR SIX 695
roIT-EMrlOYMENT
• Immediate filing of a complaint for illegal dismissal praying for reinstatement
negates abandonment. 2
• Lapse of time bel'.¥een dismissal and filing of a case is not a material indication
of abandonment. Herice, lapse of 2 years and 5 months3 or 20 months4 or 9
months5 or 8 months6 before filing the complaint for illegal dismissal is not an
indication of abandonment. Under the law, the employee has a 4-year
prescriptive period within which to institute his action for illegal dismissal.7
• The fact that an employ!!e filed a complaint for illegal dismissal is not by itself
sufficient indicator that he had no intention of deserting his employment if the
totality of his antecedent acts palpably display the contrary.8
• Filing of a case to pre-empt investigation of the administrative case is
iantamount to abandonment.9
• When what is prayed for in the complaint is separation pay and not
·reinstatement, the filing of complaint does not negate abandonment10
• It is abandonment when what is prayed for in the complaint is separation pay
and it was only in the position paper that reinstatement was prayed for. 11
• Employment in another firm coinciding with the filing of complaint does not
indicate abandon.ment.12
• Offer of reinstatement by employer during proceedings before Labor Arbiter
and refusal by employee does not indicate abandonment but more of a
symptom of strained relations between the parties.13
• An employee may be absolved &om the charge of abandonment of work but
adjudged guilty of AWOL.14 These two grounds a:e separate and distinct from
each othe~.
·• An employee who failed to report for work after the expiration of the duly
approved leave of absence is considered to have abandoned his job.15
, Mig-oov. f:qui1ab1e General Ser,tes, Inc., G.R. No. 185269,Jooe 29, 2010.
~ Cynler~.• Cap. v. Rolo, G.R.No.173631, Sept.8,2010.
Reoo Foods, Inc. v. NI.RC, G.R. No. 116462, 0d. 18, 19135, 249 SCRA 379,387.
Angelesv. Fernandez, G.R No.16021g,.lal.30, 2007.
NS Transport $er/ices, Inc. v. Zela, G.R No. 158499, Apri 4, 2007.
Pda Madi1e Stq> v.~ . G.R. No, 175960, Feb. 19, 2008.
Pare v. NLRC, G.R. No. 128957, NOY. 16, 1999,
1 ~ iua R.ecmstNdioo M:7.u'lm[PRRMlv. Puga-, G.R. No. 169227 JIJ/ 5, 2010.
1 1n1mW Cal1ailef Lines, klc. cm Toou, v. t.'a Teresa Bautil1a, GR No. 187693,lit 13, 2010.
IO Jov. NI.RC, G.R No. 121605,Feb. 2,20CO; Borrbasev. M.RC,GR No. 11~39,.ruoe 30, 1995.245SCRA496. 500.
11 Caflla)'v.NLRC,G.R.No.166411,Al.g.3,2010.
12 NS Transport SeM:lls, ric. v.Zela, G.R. No. 158499, AjXi 4,2007.
11 Ham Traorg Co., re. v. CA. GR.No.148241, Sept. 27, 2002.
" Metro Transit Organization, Inc. v. NLRC, G.R No. 119724, May 31, 1999.
15 Raoo v. Elefalo,G.R. No. L-55629, .My 39, 1981, 106 SCRA 221.
 BAR R!VIEWER ON lABOR lAW
• An employee who failed to comply with the order for his reinstatement is
deemed to have abandoned bis work. 1
• An employee who, after being transferred to a new assignment, did not report
for work anymore is deemed to have abandoned his job.2.• _
• An employee who deliberately absented from work without leave or
peanission from his employer for the purpose of looking for a job elsewhere is
deemed to have abandoned his work.3
• Absence 10 evade arrest is not a valid justification. ;.ro do so would be to place
an imprimatur on the employee's attempt to derail the normal course of the
adminisuation of justice.4
• Employer's insistence un commission of wrongful acts like estafa and/or
qualified theft hr the employees negates the charge of abandonment. Rather, it
strengthens the finding of petitioner's discrimination, insensibility and
antagonism towards the employees which gave no choice to the latter except
5 • Restitution does not have absolutory effect.6
10 forego their employment.
V.
FRAUD6
1. CORRELATION OF FRAUD AND LOSS OF TRUST AND
CONFIDENCE.
Fraud is provided under paragraph (c) of Article 297 [282] of the Labor
Code, thus: "(c) Fraud or willful breach by the employee of the trust reposed in
him by his employer or duly authorized representative."
Fraud is separate and distinct from the other ground provided in the same
paragraph, that is, loss of trust and confidence (willful breach by the employ~ of
the trust repose·d in him by his employer or duly authorized representaf?.ve).7
However, the commission of fraud by an employee against the employer will
necessarily result in the latter's loss of truSt and confidence in the foaner. On the
other hand, the ground of willful breach by the employee of the trust and
confidence reposed in him by the employer may not necessarily involve fraud but
some other acts that would similarly result in the loss of such trust and confidence.
2. REQUISITES.
The following are the requisites of this ground:
1 East~v.CIR,GRNo.L-29'.168,Aug.31, 1971.40SCRA521.
Cdilv. CIR, G.R. No.L-26124 andl-32725, ~ 29, 1971. 39 srnA 75.
Sandoval Sh~yatd v. Clave. G.R. No. L-49875, Nov. 21, 1979, 94 SCRA 472.
' CwJa,,hN\.RC,GRNo.158731.Jai.25,2007.
s RooT(s Frei)hl SeM;ev. Castro.G.R. No. 141637, June 8. 2006. .
Relevant prOYision: Artide 297(c) (282(c)I, Labol Code.
1 SanoolAitoo ~ v Rosales. GR No. 169260. Marth 23. 2011.
CHAl'TER SIX 697
rOST-EMrLOYMENT
1) The employee has committed fraud, an intentional deception and used
dishonest methods for personal gain or to damage the employer; and
2) The fraud is work-related and rendered him unfit to work for his
employer. 1
3. SOME PRINCIPLES ON FRAUD.
• Falsification constitutes not only serious misconduct but fraud under the
Liibor Code.2
• Failure to qeposit collection constitutes fraud.3
• Lack of damage or losses is not necessary in fraud cases. The fact that the
employer did not suffer losses from the dishonesty of the dismissed employee
because of its timely discover:y does not excuse the latter from any culpability.4
• Lack of misappropriation or shortage is immaterial in case of unauthorized
encashmenl of personal checks by teller and cashier.5
VI.
WILLFUL BREACH OF TRUST AND CONFIDENCEt
1. REQUISITES.
For the doctrine of loss of trust and confidence to apply, the following
requisites must concur:
(1) The employee holds a position of trust and confidence;
(2) There exists an act justifying the loss of trust and confidence,& which
means that the act that betrays the employer's trust must be real, i.e.,
founded on clearly established facts;'
(3) The employee's breach of the trust must be willful, i.e., it was done
intentionally, knowingly and purposely, without justifiable excuse;10
and
(4) The act must be in relation to his work which would render him unfit
1 Esguerrav.ValeVe-deCam)'Clb,GRNo.173012,.h.ne13,2012.
2 Pcrticuet/, ~ Mi:!e 297(a) aoo (c) f282(a) am (c)l respe(Mlf, d Ile Lm Code; Sal ~ Capaalioo v. "'-RC,
G.R t-b. 82467. June 29, 1989; Manuel C. Felix v.Enenid1 ~ kd.lstries, nc.. G.R No. 142007.Mardl 28. 2001.
3 Mleguer &Co., nc,loakle ~ v. Tarb0c, G.R. No. 147633, .AJlt28, 2008.
' vtaooevav. NlRC, G. R No. 129413,Jlif27, 1998;Diim:rd M:usCapaalioov. C'J., G.R. No. 151981, !Re. 1,2003.
s Ceotal P;rgasim Electric (',ooperawe, Ile. v. M1carae1J,GR No.145800,Jan. 22, 2003.
6 Goozalesv. NI.RCm Pepsi-Colal'l1nlds, Phis, h:., G.R No. 131653,Mcrth26,2001.
1 RelMilt prO'lision: Article 297{c)(282(c)I, Labor Code.
8 Bagui>Ceobal lJnr.ffiifyv. Ga'lente. GR. No. 188267. !Re. 02, 2013.
9 Bristll Mjers Squbb (Phis.), Ire. v. Balan,GR No.167449, !Re. 17, 2008, 574SCRA, 198,206.
,o Tares v. lual B.ru of Sal Juan. n:.,GR No. 184520, Mml 13, 2013.
 8AR REVIEWU\ON IABOR LAW CHAl'TER SIX
698 rOST· EMPLOYMENT 699

to perform it.I invocation ofloss o( confidence broadly hints the ground as a mere afte th h
b ttr th · b . . r oug t to
u ess an o erw1se aseless dism1ssal of Trajano.
2. GUIDELINES.
3. POSITION OF TRUST AND CONFIDENCE, MEANING.
As a safeguard against employers who indiscriminately use "/011 oftrust and
confidence" to justify arbitrary dismissal of employees, the Court, in addition to the .r;J.
"poition of loot
A J./i' ,,
and conjidtnce" is one where a person is "en/""'
,n,,ed UIII· h
above elements, imposes the following guidelines for the doctrine to apply:2 ro11;,uence
th on ue, call mattm, such as the custody • handling, or care and · of
protection
.e e_mploy~r s mone~, assets or property.1 Loss of confidence, as a just cause for
(1) The loss of confidence must not be simulated; dis~ss~ ts n~ver intended to provide employers with a blank check for
(2) It should not be used as a subterfuge for causes which are illegal,
temunattng _thCJI em~loyees.. Such a vague, all-encompassing pretext as loss of
improper or unjustified; ·· confidence, tf unqualifiedly given the seal of approval by the Court, could readily
(3) It may not be arbitrarily asserted in the face of overwhelming evidence reduce H to barren
to the contrary; and · thiform • the. words of the constitutional guarantee of secuoty · of
~enur~ aVIng s 111 mtnd, loss of confidence should ideally apply only to cases
(4) It must be genuine, not a mere afterthought, to justify eatlier action . u_ivol~g employees occupying positions of trust and confidence or to those
taken in bad faith.3 situations where the employees are routinely charged with the care and custody of
1
The foregoing guidelines have been prescribed by the Supreme Court due the employers money or property.2
to the subjective nature of this ground which m~.kes termination based on loss of The relationship of employer and employee, especially where the latter has
trust and confidence prone to abuse.4 The Court has been very scrutinizing in cases access to the farmer's money or property, necessarily involves trust and
of dismissal based on loss of trust and confidence because the same can easily be c?nfidence.3 Where the rules laid down by the employer to protect its property are
concocted b)' an abusive employer. Thus, when the breach of trust or loss of :1olated by the very employee who is entrusted and expected to follow and
confidence theorized upon is not home by clearly established facts, such dismissal unplement the rules, the employee may be validly dismissed from service.•
on the ground of loss of trust and confidence cannot be countenanced.5 While an
employer is at liberty to dismiss an employee for Joss of trust and confidence, he . As firmly_en~enched in jurisprudence, loss of trust and confidence as a
cannot use the same to feign what would otherwise be an illegal dismissal.6 JUst cause for terrruna~o_n of employment is premised on the fact that an employee
concerned holds a ~osmon where greater trust is placed by management and from
A classic example of a case where the invocation of the doctrine of loss of who~ greater fidelity to duty is correspondingly expected.5 The betrayal of this
trust and confidence was not genuine but a mere afterthought is Manila Jockey Club, trust ts the essence of the offense for which an employee is penalized.6
Inc. v. Trajano.1 The Court had unavoidably noted here that the invocation of loss of
trust and confidence as a ground for dismissing respondent Trajano was made 4. THREE (3) CLASSES OF POSITIONS OF TRUST.
belatedly. In its position paper dated September 2, 1998, petitioner MJCI invoked 'There are three (3) classes of positions of trust:7
the grounds under paragraphs (a) and (b) of Article 297 [282) of the Labor Code to
support its dismissal ofTrajano, submitting then that the unauthorized cancellation (1) Managerial positions;
of the ticket constituted a serious violation of company policy amounting to (2) S1lj)mliJo,y positions; and
dishonesty. The first time that MJCI invoked breach of trust was in its motion for (3) Fiduciazyran.k-and-file positions.a
reconsideration of the decision of the NI.RC. MJCI also thereafter urged the The_.irst ~ass consists of managerial employees or those who, by the
ground of breach of trust in its petition for certiorari in the CA. Such a belated nature of thCJI posittons, are entrusted with confidential and delicate matters and
from whom greater fideli_cy to duty is correspondingly expected. Their primary duty

1 rte lllJSt be.nale llat ~ lhe rrst 2oJ d Ile 4 ~ were cied il WfSejal ~ v. ltlwela
Reyes, GR No. 208321, Jutt 30, 2014, based oo lhe nir9 il M<W Zalcler Phiippi'les, nc. v. ~ G.R No. 169173,
m 5, 2009, 588 SCRA 500; See also PJ. lroilier, nc. v. lbroeizVelayo,G.R No. 198620, Nov. 12. 2014.
2 'lm.ela,.k. v. I-I.RC, G.R No.176893,J\lle 13, 2012.
1 l,laiaJod(~CU,,nc.v.AmeO.Trajm,G.RNo.160982,Jooe26, 2013.
WilYuenRestlrllltv.Jayona,GRNo.159448,Dec.16,2005.
The Coca-Cda Expat Cap. v. Gaa,fcl1. G.R No. 149433, Dec. 15, 2010.
Qn:ade1W Y. CA, G.R No. 1~. Au.I,9, 2001.
1 MriaJod(e'(CU>, nc.Y. Airee 0.Trajm, G.R No.160982, l.ne 26, 2013.
1 BlJer Than !l!eJoi"4Venues Car!);rlyv. Gttza Estebal, G.R No. 192582, Apli 07, 2014.
~ GlmneeandAmmce fmpk)yee Laba'lml and Vab! v.NLRC,GR No.185335 Jllle 13 2012
~ Elb:a!al Co, k'tc. v. lklill dl'II~ flU:a6oo frrc>IJyees, G.R No.L-t3TT8. April 29 1960 107 Phi. 1003
4 Tli.nlil~(Plis.),nc.v.~.n!OplJencia,~ ' ' ·
5 SaidenAi'cai Phif!)l)ilesv.Rosales,G.R No.169260, Math23, 2011.
6 L)'ffliFIShi'gfnterpfises,nc.v.Ari:lla,G.Rtt>.181974,F1!b.1,2012.
7 Abelv.PlllexMrtg CapiJalm, G.RNo. 178976,J\tf31,2009.
1
Wesleyan Llrwelsly~v. Nowela Reyes, GR No. 206321, M,:lO,2014.

700 SAR REvlEWEP. 0111 IABOP. lAW
consists of the management of the establishment in which they are employed or of
a depanment or a subdivision thereof and to other officers or members of the
managerial staff. 1
The second class consists of supervisozy employ~es who, in the interest
of the employer, effectively recommend such managerial actions the exercise of
which is not merely routinary or clerical in nature but requires the use of
independent judgment2
The third class is comprised of fiduciaty rank-and-file employees, such
as cashiers, auditors, propeny custodians, or those whb, in the noanal and routine
exercise of their functions, regularly handle significant amounts of the employers
money or property.3 These employees, though tank-and-file, are routinely charged
with the custody, handling or care and protection of the employe_r's money or
property,4 or entrusted with confidence on delicate matters,5_and are thus classified
as occupying positions of trust and confidence.6
• Supervisoey positions are also reposed with trust and c~nfidence.
Per jurisprudence, only the first and third classifications are geneally
cited as positions of trust and confidence. There is, however, a need to include and
add the steond classification of supervisocy ~ployees because while the Supreme
Court has always applied this doctrine to managerial employees,7 it is likewise well
established that supervisos:y personnel occupying positions of .responsibility and
thus reposed with trust and confidence may be dismissed based on the loss
thereof.8
For example, in Alvarrz "· Goldm Tri Bio,, Int..,9. it was undisputed that at
the time of his dismissal, petitioner was an Outlet Supervisor assigned to three (3)
Dunkin Donuts outlets located at San Roque, Cogeo and Super 8, Masinag, all in
Antipolo City. His position is no doubt supetvisory in nature after having risen
from the ranks since the start of his employment His position is unmistakably one
imbued with trust and confidence as he is charged with the delicate task of
O\'erseeing the operations and manpower of three stores owned by respondent
GTBI. As a supervisor, a high degree of honesty and responsibility, as compared
with ordinaty rank-and-file employees, was required and expected of him. The fact
that he was not charged with the custody of the company's money or property is
inconsequential because he belongs to the first class of employees occupying
positions of trust and not to the fiduciary rank-and-file class.
A.\!arez v. Golden Tri Ille. n:., G.R ~- 202158, ~ 25, 2013.
SeeMicte219(m) (212(m))of lhelab«Code.
3 En:tWcuezv. GokfenTriBtlc,lne., G.R No. 202158,Sept. 25, 2013.
4
M31fnezv. Celtral~Bedoc~, lnc.(cefflCO), G.R No. 192300,.lutf 15,2013
s M,pv.FrstSdd~lndusllils.~G.R~.184011,Sept. 18,2011 ' 3
6 PJ. Uulier, ~ V. Fl0n!elz V-,o, G.R No. 191Q), Nol. 12, 2014
1 Gklbe-Mil:kaycaMlaoo RadoCapaaf.oov. NLRC,G.R No.82511,Man:h3, 1992.
/wareZ v. Golden Tri Bloc, n:., G.R No.202158, Sept 25, 2013.
G.R ~- 202158, Sept 25, 2013.
CHAPTEllSlX 701
POST-EMPLOYMENT
• Two (2) ldnds of rank-and-file employees,
For purposes of the application of this doctrine, the general classification
of rank-and-file employees should further be classified into two (2), to wit:
1) Fiducia.iyrank-and-6le; and
2) Ordinary rank-and-file.
le is only in the 1st class above that this doctrine may be applied because,
as mentioned above, this is the 3td class of positions reposed with trust and
confidence. It is, therefore, clear from the above disquisition that, insofar as the
doctrine of trust and confidence is conceme~ its application is limited to the three
(3) classes• of employees occupying positions of trust and confidence, namely: (1)
managerial; (2) supervisory; and (3)fidudary rank-and-file. Consistently, this doctrine
has not been applied in te~tion of on/jna,y rank-and-file employees.1
The case of Marina Port Stnlias, Int. 11. NLR.0 expounds:
"To be sure, every employee must enjoy some degree of trust
and confidence from the employer as that is one ,eason why he was
employed in the fust place. One certainly does not employ a person he
distrusts. Indeed, even the lowly janitor must enjoy that trust and
confidence in some mcasute if only because he is die one who opens
the office in the morning and closes it at night and in this sense is
entrusted with the care or pro_tection of the employer's property. The
keys he holds ate the symbol of that trust and confidence.
"By th~ wne token, the security guard must also be
considered as enjoying the trust and confidence of bis employer, whose
property he is safeguarding. Like the janitor, he has access to his
property. He too, is charged with its care and protection.
"Notably, however, and like the janitor 2g2in, he is entrusted
only with the physical task of protecting that property. The employer's
trust and confidence in him is limited to that ministerial function. He is
not entrusted, in the Labor Arbitels words, 'with the duties of
safekeeping and safeguarding company policies, management
instructions, and c~mpany secrets such as operation devices.' He is not
privy to these confidential matt~, which are sbated only in the higher
echelons of management It is the persons_ on such. lev~s who, because
they discharge these sensitive duties, may be considered holding
positions of trust and confidence. The security guard4 does not belong
in such category."
1 Aseatier pootedoot.~mesontt tt.'Onnctmedasses.
2 Zenaida 0. Mlndola v. HMS Crelit Ccxpcra!iln, G.R No. 187232, AjXI 17, 2013.
G.RNo.80962Jan.28, 1991, 193~420,426.
aitin ~wrber Co.~- v. NI.RC, G.R No. L-54424,Aug. 31. 1989111dCa'IEtev.M.RC, G.R.No. 130425, Sepl30,
1999, ft was hekttiat aseanity guatl ldts aposlial d trustllld amsence 111d 01Js. he may be legaly ~ fa' kJsS
of Mt Md cxmlence
702 BAR. llEVIEW£R. ON IABOR. IAW
It must be emphasized that it is not the job title but the actual work that
the employee petfoans which is mat~ in d e ~ g the issue ~f wh~~er it is
reposed with trust and confidence.1 For mstance, while an ~ployee .s position was
denominated as Sales Clerk, the nature of her work included mventory and
cashiering, a function that clearly falls withm the sphere of ~-and-file positions
imbued with trust and confidence. Given that she had in her care and custody the
store's property and funds, she is considered as a rank-and-file employee
occupying a position of trust and confidence.2
5. SOME PRINCIPLES ON THE DOCTRINE OF LOSS OF TRUST
AND CONFIDENCE. ._
• Factual evidence of loss of trust must be established. The basis for the
dismissal must be clearly and convincingly established but proof beyond
reasonable doubt is not necessaryl to justify the loss as long as the employer
has reasonable ground _to believe that the employee is responsible for the
misconduct and his participation therein renders him unworthy of the trust
and confidence demanded of his position.'
• Rules on termination of managerial and supervisory employees ~ifferent
from those applicable to r;mk-and-file employees. As a general rule, the
doctrine of trust and confidence is restricted to managerial employees.5 Tus
means that the rules on teanination of employment applicable to managerial
or fiduciaty employees are differ~t from those involving ordinary employees
not holding positions of trust and confidence. In the latter case, mere
accusations by the employer will not be sufficient.6 Thus, with respect to
rank-and-file personne~ loss of trust and confidence as a ground for valid
dismissal requires proof of involvement in the alleged events in question and
that mere uncorroborated assertions and accusations by the employer will not
be sufficient But as regards a managerial employee, the mere existence of a
basis for believing that he has breached the trust of his employer would suffice
for his dismissal.7
• The loss of trust and confidence must have some basis and proof beyond
reasonable doubt is not required. It is sufficient that there must only be some
basis for such loss of confidence oi: that there is i:easonable ground to believe
if not to entertain the moral conviction that the concerned employee is
respon~'ble for the misconduct and that the natw:e of his participation therein
rendered him absolutely unworthy of trust and confidence demanded by his
1 AbeCv.Fllbtliq c«paatioo..,ciiYJ BristDIMjels$qllti>fhG.1 Inc. v. Balm.supra.
2 l!JerTta1BlleJoiltVniresQJ1'81)'v.Gp.afstBbal,G.R.No.192582,~07,2014.
3 Atrcrezv.GoldenTriBoc, klc.,G.R No.202158,Sept.25,2013.
c PJ. Lruk he. V. Naballabor~ Colmissm, G.R. No. 158758, Aprl 29, 2005.
s The Qxa.Caa &pen Corp. V. Qayal, GR. No. 149433, ~ 15, 2010.
a Lansa, TrcKfnJ, he. v. l.earjatb. G.R. No. 73245, Sept 30, 1986.
1 Ak:antara v. The~ camedal aid lndusml Bri. G.R No. 151349, Oct 20, 2010
CHAl'TER.SIX 703
POST-EMPLOYMENT
position. 1 It is thus ·a settled rule that the mere existence of a basis for
believing that a managerial employee has breached the trust of the employer
justifies dismissal.2 In termination for loss of trust and confidence, the fact
that the employer did not suffer losses is of no momentl
• Employer has butden of proo£4
• Dismal perfonnance, poor work attitude, gross negligence and incompetence
of a managerial employee constitute sufficient grounds for dismissal dµe to
loss of trust and confidence. 5
• Dismissal due to fang shlli mismatch is not a valid ground to lose trust and
confidence.6
• Comman~ responsibility of managerial employees is a ground to dismiss. 7
• Confidential employee may be dismissed for loss of trust and confidence.a
• Grant of promotions and bonuses negates loss of trust and confidence.9 ..
• Long years of service, absence of derogatory record and small amount
involved are deemed inconsequential insofar as loss of trust and confidence is
concemed.10
• Dropping of criminal charges or acquittal in a criminal case arising from the
same act does not affect the validity of dismissal based on loss of trust and
confidence. u
• In termination for loss of trust and confidence, the fact that the employer did
not suffer losses is of no moment 12
• The fact that the amount ofloss is insubstantial is inconsequential in dismissal
based on loss of trust and confidence. 13
• Full restitution does not absolve employee of offense which resulted in the
loss of trust and confidence. 14
• Good faith of the employee dismissed for loss of trust and confidence is
inconsequential. 15
t De.leu_v. Hen Rml ~ . G.R. Nos. 164862 &165787, Feb. 18, 2011
2 Rayes,Rayelv.Phflllmelml Thi ttiqsCap., GA No. 174893,.U, 11, 2012.
3 ArQ v. P1ifppi1e NaliJa Bank, G.R. No.178762, Jll1e 16, 2010.
4 Fe6x v. Nl.RC, G.R No. 148256, Nov. 17, 2004.
s Rayes,Rayelv. Pttippnelml Thi tttqsCcxp., GA No. 174893, Ju>,- 11, 2012.
a Wensha~Cn!r,h:.v. Yoog,G.RNo.185122,q.16,2010.
1 Mlaje-Tuazonv.WenphitAlp.,G.RNo.162447,Dec.27,mi.
e PLDTv.lllna,G.R.No.143688,Aug.17,2007.
1 ~ ~ P h i s . . 111:. v. l<n;!, G.R No. 145001, Oec. 15, 2005.
10 B:xlbal,Jr.v.&lpa,U'les,n:.,G.RNo.148410,Jcn 17,2005.
tt Metro TlillSit O!ganlzalm, Inc. v. ~ G.R Ho. 142133, Nov. 19, 2002.
12 ~ V. Phlfppine National Bank, G.R No.178762,June 16, 2010.
a PJ. Uulier, Inc. v. Fbdelz Vefayo, G.R. No. 19883>, Nal. 12. 2014.
w Sala v. San~ Cop., G. R No.149416, Math 14, 2003, 447 Phi 264.
1s 8agli) Cen1ra1 Uwersitf v. Gnnte, G.R. No. 188267, Dec. 02, 2013.
704 SAR R!VIEWER ON l.ABOR I.AW
VII.
COMMISSION OF CRIME OR OFFENSE.1
1. REQUISITES.
The following are the requisites for the v:ilid invocatio1t of this ground:
1) A crime or offense was committed by the employee;
2) It was committed against any of the following persons:
i) His employer;
ii) Any immediate member of his employer'§ family; or
w) His employer's duly authorized representative.
2. SOME PRINCIPLES ON COMMISSION OF CRIME OR OFFENSE.
~ Because of its gravity, work-relation is not necessary. Neither is it necessary to
show that the commission of the criminal act would render the employee unfit
to perfonn lus work for the employer.
• The phrase "immediate mrmbur of the Jami!/' refers to those persons having
family relations under Article 150 of the Family Code, lo wit. ·
(!) Between husband and wife;
(2) Betwttn parents and children;
(3) Among other ascendants and descendants; and
(4) Among brothers an~ sisters, whether of the full or half-blood.2
3. ILLUSTRATIVE CASE.
111e case of Tomda u. To1hibal best illustrates this ground of commission
of a crime ag:tinst the person of a superior. Petitioner Torreda was employed by
respondent Tosluba :1s fin:i.m:e accountant under the Finance and Accounting
Department headed by Kazuo Kobayashi, Vice-President, and Teresita Sepulveda,
Finance Manager. Petitioner accused Sepulveda of committing robbery of P200.00
when the latter ordered rhe forcible opening of the foaner's drawer. Petitioner was
later dismissed on the ground of grave slander committed against Sepulveda. His
charges agains1 Sepulveda wen: found, after investigation, to be unsubstantiated.
Holding that the dismissal was for just cause, the Supreme Court ruled that the
NLRC did not err much less commit grave abuse of its discretion when it based its
ruling on Article 297(a) [282(a)] of the Labor Code on its finding that petitioner
committed serious misconduct for falsely accusing his immediate superior of
robber)'. The false auribution by petitioner of robbery (theft) against Sepulveda was
made in writing; patently then, petitioner committed libel, not grave slander against
1 Relevant provis,on: Mcie 297(d} {282(d)I, Labor Code. .
l $ee ~ Qnler No. 18 W!d by fie OOi.E 5eaetry 00 Wat_ 18, 1994, ~ fle ~ cRI Re!µab1s
~~ RA No. 7658.
1 JeffreyO. Tooooav. Tosli>a klloonation ~{l'hils-1lnc. GRNo.165960,Feb.8,2007.
CIIAl'TER SIX 705
POST-EMPLOYMENT
Sepulveda. The malicious and public imputation in writing by one of a crime on
another is libel under Article 353, in relation to Article 355, of the Revised Penal
Code. There is abUJ1dant evidence on record showing thzt petitioner committed
libel against his immediate superior, Sepulveda, an act constituting serious
misconduct which warrants his dismissal from employment. Petitioner maliciously
and publicly imputed on Sepulveda the crime of robbery of P200.00. As gleaned
from his Complaint dated September 7, 1999, which he filed with the General
Administration, he knew that it was Delos Santos who opened his drawer and bot
Sepulveda. Thus, by his own admission, petitioner was well aware that the robbery
charge against Sepulveda was a concoction, a mere fabrication with the sole
putj,ose of retaliating against Sepulveda's previous acts.
VIII.
OTHER ANALOGOUS CAUSES1
1. ANALOGOUS CAUSES UNDER ESTABLISHED JURISPRUDENCE.
The following may be cited as an~ogous causes:
1) Violation of company rules and regulations.2
2) Theft of property owned by a co-employee, as distinguished from
theft of property owned by the employer.3
3) Incompetence, inefficiency or ineptitude.'
4) Failure to attain work quota.5
5) Failure to comply with weight standards of employer.6
6) "Attitude problem" is analogous to loss of trust and confidence.7
2.
8
AUTHORIZED CAUSES
1. TWO (2) CLASSES.
The authorized causes provided in the Labor Code may generally be
classified into two (2), namely:
Relevant p!CYlsion: Artide 297(e) (282(e)I, Labor Code.
~hnlTrcrlSp(X!Capaablv.tl.RC,G.RNo.197384,Jai.30,2013.
.km Hcm:x:li: lk nsi.ra,ce Cap. v. DiMs, G.R No. 169549, Sept. 3, 2008.
• lnlEmaia1al Schoo Mria v. lntemalkxta School Am:e d Eru:am OSAE), G.R No. 167286, Feb. 5, 2014; Reakla v.
New~ Graphts, klc., G.R No. 192100,Ajlft 25, 2012.
s ~v.Fticmo,G.RNo.185829,P9i25,2012.
1 YraslJ8}.iv. f'tlli!>lileAi'ites,klc.,G.RNo.1~1.0ct 17,2008.
• 1 Reyes-Raye! v. ~r,e luen Thai Hokfrlgs Cap., GR. No. 174893, Juy 11, 2012; See also Hea.yift Mm, lie. V. The
CA. GR No. 154410. Oct 20, 2005. HoweYe-, n!hi$ case aHe.,.yffl, petitiOnels 11M na sha,o,n suTcoolt/ ctea- .n1
cro,mng Mlerlce kl j.JS1fy respoodent~'s teni',alm tr her attllde proli!m. The nm mer6:n ct negalive
reedlm rroot her m merrbels regamg her tiw pemmn:e ra1rg .n1 her wen aulxle i$ na f'ool a her mtllJde
?OOlem- liewise, herfallre b retie petibters' ~ dher negative 4de does nacmut b aarissm. See
a!so NcMlno RI v.Damm>, G.R No.101875,Jlif 14, 1995, 246 SCRA 260,265.
I ReJevnProYisbls: Mieles 2981283).nl2991284), l.mCode.
706 BAA. RfVIEWER ON lABOR I.AW
(1) Business-related causes. - Referring to the grounds specifically
mentioned in Article 298 [283], to wit
a) Installation oflabor-saving device;
b) Redundancy;
c) Retrenchment,
d) Closure or cessation 9f business operations NOT due to serious
business losses or financial reverses; and
e) Closure or cessation of business operations due to serious business
losses and financial reverses.
(2) Health-related causes. - Referring to·· disease under Article 299
[284] of the Labor Code.
2. USE OF MODERN NOMENCLATURES, IMMATERIAL.
The demands and complexities of modem business have spawned a
number of schemes aimed at leaning out the operations of business establishments.
While cutting cost by improving efficiencies and avoiding wast~ remains the
primordial thrust, reduction of personnel is usually done as a matte! of last resort.
These modem schemes of reducing peisonnel are denominated quite differently
from the nomenclatures used in the law. TeDns like ''modmzi!(!llion'~ "mdomalion'~
''toitrpllleriz.ation'~ ''rrorgani~on'~ ''rr-mi111aing'~ · ''stnfJIIIBning'~ ''do1llll!i~ng:
''rightsi~ng'~ ''rrmnslnlding" or ''rrdtsioung of opm,tionr'~ or similar modern
descriptions, are often used to label what tmditionally and legally .are known as
inst211ation of labor-saving device, redundancy or retrenchment
From the standpoint of the iaw, however, the validity of these modem
thrusts and schemes should be measured on the basis of their compliance with the
requisites for authorized cause temunations. As pointed out above, the authorized
causes mentioned in Article 298 [283] are exclusive in nature and thus no other
grounds may be invoked in lieu or in substitution thereof.
For example, if teanination of employment is effected by reason of
''modmuz.ation, " ''asltomation," or ''tomputtriz.ation, " the requisites applicable to
installation of labor-saving device and/ or its twin ground of redundancy should be
fully complied with.
If the reduction of personnel is occasioned by ''n-tn!lnettin&"
urtNJ1116nin&" ''rnonstMting" or umksigning" of operations, the requisites of either
redundancy or retrenchment should be satisfied. Thus, if the same is being
implemented because of existence of redundant positions, then the redundancy
requisites should be complied with; if it is done because of existence of substantial
los~s. or to prevent such losses, then what should apply are the retrenchment
reqwsnes.
3. COMMONALITY OF REQUISITES.
CHAPTER SIX 707
rost-~MPLOYMENT
There are certain reqlJ,isites that are common to the five (5) grounds in
Article 298 [283]. To simplify the discussion, the following five (5) common
requisites are applicable to the said grounds:
1. There is good faith in effecting the termination;
2. The tennination is a matter of last resort, th.ere being no other option
a~ble to the emp~oyer after resorting to cost-cutting measures;
3. Two (2) separate written notices are served on h2tb the affected
employee and the DOLE at least one (1) month ~ to the
intended date of ~tion;
4. Separation pay is paid to the affected employee, to wit
(a) If based on (1) installation of labor-saving device, or (2)
redundancy. - One (1) month pay or at least one (1) month pay
for every year of service, whichever is higher, a fraction of at least
six (6) mooths shall be considered as one (1) whole year.
(b) If based on (1) retrenchment, or (2) closure NOT due serious
bU$iness losses or financial reverses. - One (1) month pay or at
least one-half r12) month pay for every yeu of service, whichever is
higher, a fraction of at least six (6) months shall be considered as
one (1) whole year.
(c) If closur~ is due to serious business losses or financial reverses,
NO separation pay is required to be paid.
(d) In case the CBA ox company policy provides for a higher
sepmtion pay, the s~e must be followed instead of the one
provided in Article 298 [283].
5. Fair and reasonable criteria in ascertaining what positions are to be
affected by the termination, such as, but not limited to: nature of
work; status of employment (whether casual, temporary or regular);
experience; efficiency; seniority; dependability; adaptability; flexibility;
trainability; job performance; discipline; and attitude towards work. 1
Failure to follow fair and reasonable criteria in selecting who to
terminate would render the termination invalid.2
4. REQUISITES UNIQUE TO BACH OF THE GROUNDS.
Each of the five grounds has its own unique requisite/ s that distinguishes it
&om the others. For instance, the requisite of extreme business losses or financial
reverses is distinctively applicable to retrenchment in order for tenpination based
on this ground to be valid and legal Termination due _to r~und~cy does not
require existence of losses or financial reverses to validate 1t. While los~es or
reverses may be considered as a major factor in cases_ of closure or ce~sa~on of
business operations, but their relevance is only in relation to the detemunanoo of
Clliv.Emtem Teleccrrmlni:ali ~ . Inc., G.R No.165381, Feb. 9, 2011.
LantertPavmbrokelS and Je«ety Colp. v. Bi1alri'a, G.R No. 170464,J,.Jf 12, 2010.
 SAR REvlEWERON LABOR I.AW
708
whether the employer is liable for separation pn or not. Consequently, if the
closure or cessation of business operations is due to serious business losses or
financial reverses, the employer is not liable to pay any separation pay.I
I.
INSTALLATION OF LABOR-SAVING DEVICE
1. ADDITIONAL REQUISITE UNIQUE TO THIS GROUND.
In addition to the five (5) common requisites above, the unique requisite
for this ground is that the purpose for such installatio.n of labor saving device/ s
must be valid,2 such as to save on cost, enhance efficiency and other justifiable
economic reasons.
·to adopt such measures as will promote greater efficiency, reduce overhead costs
2. SOME RELEVANT PRINCIPLES.
• 1be installation of these devices is a management prerogative and the courts
will not illterfere with its ex:ercise in the absence of abuse of discretion,
arbitrariness, or malice on the part of management.1
• Redundancy results from installati90 of labor-saving device. The
installation of labor-saving device will result in making the positions being held
by employees who will be adversely affected thereby redundant and
unnecessary.4
• Modernization program through introduction of high-speed machines is
valid.5
• Proof oflosses is not required.
II.
REDUNDANCY
1. ADDITIONAL FACTORS UNIQUE TO THIS GROUND.
In addition to the five (5) common requisites earlier mentioned, any of the
following factors must be present in order for redundancy to be a valid ground to
tenninate employment:
(1) Where the services of employees are in excess of what is reasonably
demanded by the actual requirements of the enterprise.'
(2) Where the position is superfluous because of a number of factors, .
· such as over-hiring of workers, decreased volwne o( business,
1 See Natl Davao l,ug Ccxpaa!ioov. NI.RC, G.R. No. 112546, Man:h 13, 1996, 254 SCRA721.
2 l'hippile Sleet Metal WOO;e,s Ulm v. CIR, GR No. L-2028, .Ajri 28, 1949, 83 Phi. 453.
3 M:IJr',oia Daiy ProciJds Capaalxx1 v. NIRC, GR No. 114952,JcUl. 29, 1996, 252 SCRA 483.
' Saiaro, Jr. v.NLRC aid Pt.DT, GR No. 165594,Apri 23, ';t/J7.
~v. CA, G.R No.142405, Sept. 30, 2004
N°ppoo tb.Jsilg Phi, tic. v. Leynes, G.R No.177816,~. 3, 2011.
CHAl'TER SIX 709
POST-EMrLOYMENT
dropping or' a particular product line or service activity previously
manufactured or undertaken by the entetprise or phasing out of
service activity priorly undertaken by the busµiess. 1
(3) Where there is duplication of work. Indeed, in any well-organized
business enterprise, it would be surppsing to find duplication of work
and two (2) or more people doing the work of one person.2
(4) Where it is validly resorted to as a cost-cutting measure and to
streamline operations so as to make them more viable.J
Time and again, it has been ruled that an employer has no legal obligation
to keep more employees than are necessary for the operation of its business.4 Thus,
the employer has the prerogative to implement reorganization and redundancy and
and enhance prospects of economic gains, albeit always within the framework of
existing laws.s However, if there is no proof that the essential requisites for a valid
redundancy program as a ground for the tennination of the employee are present,
the termination should be declared illegal.6
2. SOME PRINCIPLES ON REDUNDANCY.
• The wisdom, soundness or characterization of service as redundant by the
employer is not subject to review by labor authorities and the courts. TI1e only
exception is when there is a showing that the same was done in violatio~ of
law or attended with arbitrary and malicious actioo.7
• Burden of proof in redundancy rests oil the employer.8
• Evidence oflosses is not required.9
• Elimination of undesirables, abusers and worst performers through
redundancy is not an indication of bad faith.10
• The act of the employer in hiring replacements is not an indication of bad
faith if the positions have no similar job descriptions. 11
• Redundancy to save on labor costs is valid.12
13
• Redundancy resulting from use of high technology equipment is valid.
~~Phi., K v. L!!'Jfl85, supra; AIM ~CdecJev. Gm!, GR No. 166703,liri 14, 2008.
Ca'a(Phls.L K,V.NI.RC,G.R.No.159641,0ct.15,';t/J7.
Maya Farms ~loyees Olgirliuml v. NLRC, GR No. 1~. Dec. 28, 1994.
Mxalesv. Men¢itll Berl<. aoo Trust~- GR No. 182475,!-bl. 21, 2012.
5nm ~ . klc. v. Asbga, G.R. No.148132, Jan. 28, 2.(KJ8.
LanterlPa\',nb(d(efS and Jeweky Cap. V. Bilm. GR No. 170464, ;J/ 12, 2010.
1 SmartConmrli:atioos, Inc. v. Aslolga, G.R. No.148132,Jan.28,2008.
a Coca-Coallotlle(sPhf~.lnc. v. Oelln!w,G.R.No. 163091,0ct.6,2010.
, Seoogue:ov.NLRC, G.R. No. 115394, Sepl27, 1995;Escaealv.NLRC, GR No.99359, Sepl2, 1992, 213SCRA472.
10 Oole Pli!)pi1es. Inc. V. NLRC, G.R. No. 120009, Sept 13, ';f:/J1.
11 Santosv.CA, G.R.No.141947,JulyS.2001 .
12 De Ocampov. NLRC, G.R. No. 101539, Sept. 4, 1992, 213 SCRA 652.
13 Saialo,Jr.v. NlRC and PLOT. GR No 165594,~i23, 2007.
710 BAR REVIEWER ON lAB(lR lAW
• Abolition of positions or departments is valid. 1
• Reorganization through redundancy is valid.2
• Contracting out of abolished positions to independent contractors is valid.J
• Hiring of casuals or contractual employees after redundancy is valid.4
• Advertisement on hiring for new position similar to the alleged redundant
position is evidence that the position is not redundant.5
• Where two or more persons are performing the same work which may be
effectively accomplished by only one, the employer, may terminate the excess
personnel and retain only one.6
• Even if there is a seniority rule, such as the LIFO (Last In, First Out) rule, the
nature of work and experience of the employees should still be taken into
account by the employer.'
• The LIFO or FILO (First In, Last Out) rule has no basis in law.8
• LIFO rule is not controlling as employer has the prerogative to choose who to
teaninate.9
Ill.
RETRENCHMENT
1. RETRENCHMENT, DEFINED.
. .. Retrenchment has been defined as "the termination of employment
llllttated by the employer through no fault of the employees and without prejudice
to the latter, resorted by management during periods of business recession,
industrial depression, or seasonal flucruations; or during lulls occasioned by lack of
work or orders, shortage of materials; or considerable reduction in the volume of
the ~ployer'.s business, conversion of the plant for a new production program or
the 10troducnon of new methods or more efficient machinery, or of automation."10
1
&r1 Mguel Corpaam v. Nl.RC, G.R No. 99266, McJth 2, 1999; Panm:o North i::..,,,,.. he. v. NLRC GR No
106516,Sept.21, 1999. '""f"=•
1 ~ Ha!vesfer Madeo:I, h:. v. lAC, 149 SCRA 641 (1987); See aso Ml Cl,;,;...,;,.es rev Nl.RC GR No
1200J9,Sept 13,2001. "'"'l'I'"' ,
3
Serranov. NLRC, G.R No. 117040, Jan. 27, 2000.
O d e ~ h:. v. Nl.RC, GR No.121XXl9, Sept 13, 2001.
5
SPIT~. h:. v. 1/d:ria K ~ GR No. 191154, >4Xi07, 2014.
1
WINi'e Fie r.o., h:. V. Nl.RC, G.R ~ 82249, Feb. 7, 1991, 193 SCRA 665; See a!so Beem Clamln l'tils.. k1c. v.
Nl.RC, GR. h 159969 &100116, t«Jv. 15, 2005,475 SCRA 123.
1
Maya Fams ~ Orgaizalmv. NLRC, G.R No. 106256, Dec. 28, 1994.
1
Aslcrl Ak:d1a Capailm v. NI.RC, G.R No. 131108, M5tll 25, 1999.
' Dela Sale Uwersly v. De la S. lkwets1't En¢yees Asrociatia1, GR No. 10!XXJ2, Apd 12, 2000.
,o Ma>eV.Asmc:oostudm,G.RNo.183233,Dec.23,2009.
CHArTERSIX 711
POST-EMPLOYMENT
2. ADDITIONAL REQUISITE UNIQUE TO THIS GROUND.
In addition to the five (5) common requisites mentioned earlier, the
unique requisite for this ground is that there should be proof of actual losses or
possible imminent losses that would justify teonination of employment. This is the
most singular distinctive requisite of retrenchment This, in fact, is the only
statutory ground in Article 298 [283) which requires this kind of proof. As stressed
earlier, the grounds of installation of labor-saving device and redundancy-do not
impose this requirement. The other ground of closure or cessation of business
operati_ons may be resorted to with or without losses.1
3. STANDARDS TO DETERMINE VALIDITY OF LOSSES.
The general standards in terms of which the act of an employer in
retrenching or reducing the number of its employees must be appraised are as
follows:
1) The losses expected should be substantial and not merely de minimiI or
insubstantial ;uid inconsequential in extent.
2) The substantial loss apprehended must be reasonably imminent, as
such imminence can be perceived objectively and in good faith by the
employer.
3) Retrenchment must be reasonably necessary and likely to effectively
prevent the expected losses. The employer should have taken other
measures prior or parallel to retrenchment to forestall losses, i.e., cut
other costs than labor costs.
4) The alleged losses, if already realized, and the expected imminent
losses sought to be forestalled, must be proved by sufficient and
convincing evidence through presentation of externally audited
financial statements.2
If above standards are present, the wisdom to retrench cannot be
questioned.3
4. "RETRENCHMENT TO PREVENT LOSSES," MEANING.
Article 298 (283) uses the phrase ."rrtrrn.hment to prrvent loue1." In its
ordinary connotation, this phrase means that retrenchment must be undenaken by
, .
the employer before the losses anticipated are actually sustained or realized. The
. , . . Supreme Court, in a plethora of cases, bas thus interpreted it to mean that the
employer need not keep all his employees until after its losses shall have
materialized.4 This is never the intention of the lawmaker. If such an intent were
Precisal Elettooi::s CapaaliQnv. NI.RC, G.R No. 86657, Oct 23, 1989.
Andradav. NLRC, G.R. No. 173231, Dec. 28, 2007.
NOC-Oum Plm6:x\s, re. Y. I-A.RC, G.R No.110740, Al,J. 9, 2001.
TPI flliWi1es GernertCorp. v. c.;ican VII, G.R No. 149138, Feb. 28, 200i.

712 SAR ll£\IIEWER ON lASOR IAW
expressly written into the law, that law may well be vulnerable to constitutional
attack as unduly taking property from one man to be given to another.1
For instance, in To/0111 u. NLRC,2 petitioner Talaro tried to negate the dire
financial picture besetting respondent compan>·, TSFI, clai.rp.ing that the very
financial statement cited by TSFI showed a net income of P298,725.00, referring to
the period ending on September 30, 2002. Such a claim, however, cannot erase the
fact that the company had suffered substantial accumulated losses of P2,474,418.00
and retained earnings deficit of P?,424,250.00 for the period ending December 31,
2002. For a small com pan)' like TSFI (\\~th only 20 'employees}, the losses it
suffered were not merely de minimiJ in extent but were, at the time Talam was
dismissed, actual and with more losses reasonably imminent. Significantly, the
employer objectively and in good faith perceived the imminence of more losses as
it was based on the report of its external auditor.
5. SOME PRINCIPLES ON RETRENCHMENT.
• Article 298 (283] applies only to permanent retrenchment or lay-off.3
• Cost-reduction or cost-saving measures prior to retrenchment are required. 4
• Retrenchment effected long after the business losses is not valid.5
• Profitable operations in the past do not affect the validity of retrenchment.6
• The fact that there has been economic or other crisis besetting a particular
sector or the country as a whole is not sufficient justification for
retrenchment.7
• Employer bears the burden of proof to show business losses or financial
reverses.8
• Best evidence of losses arc financial statements audited by independent
external auditors (not by internal auditors).9
• Best evidence of losses in a government-controlled CQrporation are financial
statements audited by COA.10 · the completion of its projects is valid. Thus, several departments like the Civil
• Period covered by financial statements is material.U
• Income tax returns arc not valid proof of losses since they are self-serving
documents. 12
Asian Alcohol Corporalion v. NLRC, GR. No. 131108, March 25, 1999.
Taamv. NlRC, The SoftwnFa::by,roe., elC., GR No.175040,/1¢i6, 2010,617 SCRA408.
3 Sebuguero V. NLRC. G.R. No. 115394, Sept 27. 1995.
• l.arbeltf'av.obrol:ers.mJewetyCorp. v. llMTi'a, GR No. 170464,Jtiy' 12, 2010.
s Taggat lndusbies, Inc. v. NLRC, G.R No. 120971, March 10, 1999.
1 ~ v. Phq>pile Tel8]raph cnj Tek!phooe Corp.,G.R No. 172363,Mnh 7, 2008.
1 Centta!AzuccM"eladelaCarotav.NLRC.GR No. 1C0092.Dec.29, 1995.251 SCRA589.
e Ell'CO P1yiiood Corporation v. AbekJas, G.R. No. 148532. Apra14, 2004.
, ~ Enlefprises, n:.v. Cap.roso. GR No. 159919. Au:j. 8.7.<1J7.
IO l'«-OIAhrie Planli!OOnS, nc.v.NLRC, GR No. 110740. Al.g. 9. 7.<1J1.
11 FASAPv. PhJWi,e Ames, nc.,G.R No. 178083, Jtlj 22. 2008
11 Casiniov. S'en Real Estate, nc., Ren'bWHorel, GR No. 162233,M;n:h 10, 2006.
CtlArTER.SIX 713
POST-EMPLOYMENT
• Mere affidavit on alleged losses is not sufficient 1
• Mere notice of intention to implement a retrenchment program is not
sufficient.2
• Rehabilitation receivership presupposes existence c,f losscs.3 However, the fact
that the-employer is U11dergoing rehabilitation rec:eiversryip does not by itself
excuse it from submitting to the labor authorities copies of its externally
audited financial statements to prove the urgency. necessity and extent of its
retrenchment program.4
• Audited financial statements should be presented before the Labor Arbiter or
the NLRC but not belatedly before the Court of Appeals or Supreme Court.5
• Compulsory retirement to prevent further losses is valid.6
• Early Retirement Program (ERP) to prevent further losses and implemented
prior to retrenchment is valid.7
• Rotation of work may be tantamount to constructive dismissal or
retrenchment8
• Retrenchment due to liquidity problem is not valid.9
• Sharp drop in income is not a ground to justify retrenchment A mere decline
in gross inco~e cannot in any manner be considered as serious business
losses. It should be substantial, sustained.and reat.10
• Litany of woes, in the absence of any solid eyidence that they translated into
specific and substantial losses that would necessitate retrenchment, will not
suffice to justify retrenchment.u
• In an enterprise which has several branches nationwide, profitable operations
in some of them will not affect the validity of the retrenchment if overall, the
financial co.ndition thereof reflects losses.12
• The progressive manner of. implementing the streamlining and downsizing of
operations resorted to by a construction company in order not to jeopardize
Works Division, Electro-mechanical Works Division and the Territorial
1 ~ ~ lrdlJslJies, Inc. v. NlRC, GR No.118973, Alg. 12. 1998.
2 Coo'!)0Sie Enlefprises, Inc. V. ~ . G.R No.159919,Alg.8, 7.<1J7.
i Cam Pril1rl:l Hruse, Inc. v. NI.RC, G.R. No. 148372, b1e 27, 2005.
• FASAPv.Phq>pfleAmes, h:., GR No.178083,Jit,22,2008.
s kl.
1 Lopez Sugar Colporalion v. Federation of Free WM:eis, G.R. Nos. 75700-01, Aug. 30, 1990.
Korean Nf Co., Lid.v. Yusoo, G.R No.170369, Jooe 16, 2010.
Uni:ool Saletf ~. Inc. v. ~ . GR No. 154689, NcN.25, 2004.
Hernandez v. PhT~ Bkxxm;1 t.ils Co., NlRCNCR Case No. 3-1223--83, J.Jtf 26, 1985.
10 Larbert Pav.rbrokers ad Je,,ay Colp. v. Bnania. GR No. 170464, Mi 12. 2010.
11 Cen1ra1 Azucarera de la Ca'dav. M.RC, GR. No. 100l92, Dec. 29, 1995. 251 SCRA 589,321 Phi 989,997.
12 Manatld v. f'hi4)pi,e T ~ ird Tele!)hooe Gap, G.R. No. 172363, Mc1dl 7, 2008.
714 IIAR. R!VIEW£R. ON IABOR. IAW
Project Management Offices, among others, were abolished in the early pan·of
1996 and thereafter, the Structural Steel Division by the end of year 1997.1
111:A.
REDUNDANCY VS. RETRENCHMENT ·•
1. NEED FOR CLEAR-CUT DISTINCTIONS.
Before leaving the topics of redundancy and retrenchment, a clear-cut
distinction should be made between these terms since a- reading of some decisions
of the High Court shows that confusion continues to hound employers in
detennining the proper term to be used to describe their personnel reduction
schemes. The improper use of the term will have far serious adverse effects in
terms of legal consequences as well as the amounts of separation pay involved.
For instance, in the casi: of AMA Computer College, Inc. v. Gorrio,Z petitioner
itself apparently is confused as to the real reason why it terminated respondents as
it raised different grounds to justify their dismissal, i.e., before the Labor Arbiter, it
cited retrenchment; before the NLRC, it claimed redundancy; and before the Court
of Appeals, it averred both retrenchment and redundancy. The High Court
observed that although governed by the same provision of the Labor Code,
retrenchment and redundancy are two distinct grounds for termination arising from
different circumstances, thus, they are in no way interchangeable.
In AG & .P v. NLRc.3 private respondent Atlantic Gulf and Pacific
Company of Manila, Inc.'s "redundancy program" was wrongly denominated as
such when it should have been precisely teemed "retrenchment" because it is
primarily intended to prevent serious business losses.4
2. DISTINCTIONS.
Retrenchment and redundancy are two different concepts; they are not
synonymous; thus, they should not be used interchangeably.5
"Red11ndancj' exists when the services of an employee are in excess of
what is required by an enterprise. "&trmhment," on the other hand, is resorted to
primarily to avoid or minimize business losses. Thus, a "Redundanry Program," while
denominated as such, is more precisely termed "rrtrrnthmen(' if it was primarily
intended to prevent serious business losses.6
' Id.
1 GRNo.166703,.A!)li14,2008.
1 Easn!geGolCl.t, he. v. Eas~Gof D.p, rc. Labor~-S4)1J.GR No. 166760, Aug. 22, 2008.
AG &PUnited Rn&AeAssocialmv.f'l RC,GRNo.108259,Noi.29, 1996,332f'td937.
' ~ v.~ Balkil'ldTrusl~,GRNo.182475,Nol.21,2012.
5
Arabi! Y. Jarooe Pm France, h:. (Famest, '-ti Fnance]. GR No. 181719, .A!)li 21, 2014.
5 Allanlx: Gulf and l'if:ifJc ~ o f llril. n;, W, &PI,V. NlRC, G.R No. 127516, Ma-j 28, 1999.
CHAmR. SIX
POST-EMPLOYMENT 715
. R~un~cy does not need to be always triggered by a decline in the
business. Primarily, employers res_ort to redundancy when the functions of an
em~loyee hav~ already become superfluous, duplicitous or in excess of what the
bu~mess _re~U1Ies. Thus, even if a business is doing well, an employer can still
vali~y disnuss an employee ~om the service due to redundancy if that employee's
position has already become 1n excess of what the employer's enterprise requires.•
. In· term~ o: monet~ consequence, the employer stands to pay more
~eparation. ··pay if 1t denominates the perso~el reduction program it is
1mplement1ng as redun~cy and not retrenchment. Under Article 298 [283).
red~dancy would req~re the employer to pay its -employees a separation pay
eqwvalent to at !~st theu:_ one (1).mo_nth pay or to st least one (1) month pay for
every year of sernce, whichever 1s higher; while reuenchment would entail only
half of this amount.
IV.
CLOSURE OR CESSATION OF BUSINESS OPERATIONS
1. CONCEPT.
Closure or_cessation of business is the 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.2 Closure involves two (2) situations:
(a) When NOT due to serious business loss::s or financial reverses; or
(b) When due to serious business losses or financial reverses
It is only in the first that payment of separation pay is required. No such
requirement is imposed in the secondl .
2. SOME PRINCIPLES ON CLOSURE.
• Employer may close its business whether it is suffering from business losses
or not; court cannot order employer to continue its business.4
• Principle of closure under Article 298 [283) applies in cases of both total and
partial closure or cessation of business operations. Management may choose
to close o_nly a branch, a department, a plant, ?r_a shop.s
• Closure of department or section and hiring of workers supplied by
independent contractor as replacements is valid.'
I Mirada V. Ni.RC, supra
1
NortlOavaoMm,iCapaaimv.NLRC,GRNo.112546,Mltll13, 1996,254SCRAn1, m.
Pe'a'ranciaToors clld TIMI Transpat, klc. v. Scrrrienb, GR. No.178397, O:l 20, 2010.
~Appa-el. h:.v. M.RC, GR No.121314, Feb.12, 1998.
1
A.5sociabl o f ~ Secuity Forte of flisi3 (AJSFB] -Al.U v. Hai. CA, anc PICOP, GR No. 140150,Aug. 22, 2005.

BAR REVIEWER ON LABO R LAW
1 instance, in]A.T. Gmeral Sm,i<er u. NLRC,1 while the Court of Appeals defined the
• Closure of a dcParuneot Or section due to losses amounts to retrenchment.
• Relocation of business may amount to cessation of operatioos.2
1
The burden of proving that the closure or cessation of business operations is
bona-fide falls upon the employer.3
1
Closure may constitute an unfair labor practice if.it is .resorted
.. to
• as4 a ruse or
scheme to get rid of employees on account of thctr uruon acnvtttes.
• Closure by reason of enactment of a bw is valid. F,xmtfPk: The closure of the
Philippine Veterans Bank by operation of law (R.i}- No. 7169 _[An Act to
Rehabilitate the Philippine Veterans Banlt Created Under R.A. 3518,
5
Providing the Mechanisms Therefor and for other Pt!!poses} or clo~ure of
the employer's business because a large portion of its estate was acquired _by
th Department of Agrarian Refonn pursuant to the Comprehenstve
~ Refoan Program (CARP) under R.A. No. 6657 ,6 • two separate and independent authocized causes for termination of employment.
• Closure of business to merge or consolidate with another or to sell or dispose
all of its assets is valid.7 .
• Proof of losses is required if ground is serious busin:ess losses or ~aal
should be clear proof of such losses since no separanon pay
reverses. There .
to the employees is required to be paid under the law.
8
. locking-up of the doors of the establishment, usually due to financial losses. C/Qsurr
• Externally audited financial statements necessary only In _closure due to
losses.9 . since business has alreaqy stopped On the other hand, rtlrrnchmmt is a reduction of
• Evidence oflosscs in a closure case should not be presented for the first ttrne
on appeal with the NLRC, Court of Appeals or Supreme Court 10 • •
• For closure to be a valid basis, it must be invoked at the time of tcmunatton
and not after.11
IV-A.
RETRENCHMENT VS. CLOSURE OF BUSINESS
1. PRINCIPAL DISTINCTION.
1n a number of cases, retrenchment has been confused with closure of the
entire business establishment or a department, division or outlet thereof. For
1 Sm Mgue1 Cap.Y. Aba1a, GR No. 140011,Jule 28, 2005.
OlelwerDeco Pri'tTedw:s CcrporalicllY. NlRC, GR No. 122876, Feb. 17, 200!.
JA.T. General SeMcesv. I-I.RC, GR No.1483Ml,Jan. 26, 2004.
• St.JcmCdleges. ~ v. St.JcmAcademf FaaAy a n d ~ Unal, G.R. No.157892, Ott. 27, 2006.
s Caris1a-Oxri1gov. NI.RC, G.R. No. 156761,Ott. 17, 2006.
, Naliooal Fede'imldl..abav. ti.RC.GR. No. 12TT18, Manti 2, 200!.
1 Esprlav.tb'1.CA,G.RNo.164582,Mrth28,2007.
, f-bt1 ~~ Ccrpaablv. t-1.RC. GR No. 112546,~ 13, 1996. 2S4 SCAA721.
, D.lllaS~.lrc.v.Daipnill,G.R.No.154368.~ 15,2005.
10 11e-5ttrnCcrporatmv.Me-SoomWockeisl.Jnion·FSM,G.R No.156292,Jan. 11,2005.
11 Sapia\ v. JB Lile Bi:d e,press, k"c.. GR No. 163TT5,Ott. 19, 2007.
C HArl ER SIX 717
POST-EMPLOYMENT
issue to be the validity of dismissal due to alleged f/Q111rr of b111inm, it cited
jurisprudence relating to nlrrnchmml to support its re;olution and conclusion. 1n
another case, Alabang Country Club In,. u. NLRC,2 the opposite of what the CA did
in ]AT transpired in that it found this case of Alabang one for retrenchment and
not for closure of a department. It resolved the issue using the standards for
retrenchment rather than for closure. Finally, the same issue of confusion over
what principle should apply has occurred in MPCEU-FUR-TIJCP u. Manila Polo
Club, In,.,' a case akin to Alabang, involving as it does the closure of its F & B
Department due to the substantial losses this department suffered over the years.
Similarly, the CA affirmed in lolo the Voluntary Arbitrator's decision holding that
the closure of the F &. B Department was a case of retrenchment.
Thus, in the afore-cited cases, the rule was enunciated and reiterated that
while the two are often used interchangeably and arc i.'lterrclated, they arc actually
.Termination of an employment may be predicated on one without need of
resorting to ·the other. ·
C~rllft ofbllJinm, on one hand, is the reversal of fortune of the employer
whereby there is a complete cessation of business operations and/or an actual
of btninm as an authorized C21.1$C for termination of employment aims to prevent
further financial drain upon an ~player who cannot pay anymore his employees
personnel usually due to poor financial returns so as to cut down on costs of
operations in terms of salaries and wages to prevent bankruptcy of the company. It
is sometimes also referred to as down-sizing. It is an authorized cause for
termination of employment which the law accords an employer who is not making
good in its operations in order to cut back on expenses for salaries and wages by
1 GR. No. 148340, .lat 26, 2004. tt was hetl ntis case lhat lhe issues and ~ n-ae cenleled on cbllJe a
busness ~ ralhEr tm relrendmrt ~ gave rise _, lhe dosl.re is !he ded'ne i1 lhe sae a hwf equipment
becaJse d 11e Nial rurency crisis. Consequd/. JAT ~ SUSl)ellded is 0l)elll001'IS. Ulimaletf, on Dec8rber 14,
1998, JATlied ai EstallsYnert Temmi:ln Repat vdl lhe DOl.E, ·rar,;ng l1e ~ d ils decism _, dose it rusi1ess
opaa&r,sdie "busi1essb;sesmd fnniall'e'lelSeS.
2 GR No. 157611, Aug. 9, 2005, 503 Pti. 937. ri tis case. reaizilg lhaU was ro kn;Jer ~ lo- ACCI I:> m.iltin its
OM'I F & BOepatrent. lhe rra-aJEfflEl1I deooed I:> cease flan t'pel1D"g Ile depmErt ax! I:> ope, Ile sare I:> a
can:tr. La Tasca Restarcrt re (la Tasca)v.ti;tiv.«lkl be~ 1:> operate ls OY,11 l!xxl a i d ~ busi1ess v.m
lleciro. Thisresuled h 1he cbllJedlhe F &Bllepcm,ent\\tiose enw,ees wereEm'inated elfedM! Jcma,y 1. 1995.
T o e ~ is 11at tey l',QJld be paid sep.ram p3'f eqlivaet _, one llmdred bYeflly fM! (125%) pe,cen1 atier
matif mt b- l!o/f!1:f ye;s d seiw:e. ACCI also mnned lhem M La Tasca agreed I:> cbsab al alft'ded enl)byees
~ v.tt1 Ile stails d regis enl)byees M11cu need d 1l1dergooJ a pn:tali:Xlclfy per'od, and lhat al affeded
~ v , r u d receM!lle meS/iar'fl'eywere~franACClat1he linedlhei1e!TT'mtbl.
l MriaPct>W,~'lmn(l,f'C8J)FUR,100'v.Mrial'ooCU>,h:. GRNo. 1n846,Jt.ly 24,2013.llen
AlfjmJ, tis case also i1Y0M!S lhe d051le a Mria Pct>'s F & BDep;ltnert rue 1:> exteme IOsSeS. It res1'ted nIle
mni'lml a 123 en-.,byees grruided on relrerdrneot axt no1 dosl.re. Ac::onrng 1o lhe Sul)'l!llle Crut. 1his case
i1Y0M!S a cbllJe dbusness Lmeltmg, n o t ~
 CHAl'TER SIX 719
SAR REVIEWER ON I.ABOR I.AW r OST-EMPLOYMENT

(1) An employee has been found to be suffering from any disease;

• g off some eroployees . The purpose of retrenchment
lay10 . 1 is to save a financially (2) His continued employment is:
ailing business establishment from eventually collaps1ng. . . (a) prohibited by law; or
, et
Unlikc r r ne chment closure or cessation of bus1ness, as an authonzed (b) prejudicial to his health as well as to the health of his co-
' alidi "d
· 0·on of employment , need not depend for its
cause of terrruna • v .ry on cvt encc employees; and
;~~;ncnt reversal of the employer's fortune. Article 298 [283} (3) A competent public health authority issues a medical certificate
0 f actua1 or u m,~• . rd! f th
· -•nation
authoozes tern~• of employment due to .busmess. closure rega ess o e that the disease is of such nature or at such a stage that it cannot be
2
underlying reasons and motivations therefor, be it financial losses or not. cured within a period of six (6) months even with proper medical
treatmenr.l
V.
DISEASE 2. tST SUBSTANTIVE ELEMENT.
t LEGAL BASIS. The fact alone that an employee is suffering from a disease is not generally
Disease is provided for in Article 299 [284], which states: a sufficient ground to terminate his employment. That a person has a disease does
not per st entitle the employer to terminate his or her services.4 Termination is the
Article 299 [2841, Distast as Ground far Ttr111inatio,r. - An
last resort.5 Even if the disease is a contagious one, like pulmonary tuberculosis
employer may terminate che services of an employee who bas _been
f. d to be suffering from any disease and whose conunued (PTB),6 mere sufferance thereof by an employee does not ipso ja,to make him a sure
e:;loyment is prohibited by law or is prejudici21 to ~ h~th as w~ as candidate for dismissal.7
to the bealch of his co-employees: Providtd, That be IS pa.id sepacatlon 3. 2ND SUBSTANTIVE ELEMENT.
pay equivalent to at least one (\) month salary or to one-h~ r12) month
salary foe every year of service, wbichcvcc is greater, a fracnon of at least Contagious or communicable diseases or infections, like sexually
six (6) months being considered as one (\) whole year. transmitted diseases·or infections (STDs or STis), tuberculosis, hepatitis A, malaria,
2. TWO ASPECTS OF THE REQUISITES. ••
among others, are best examples ·of diseases which would render an ·employee's
3 ."rontin11ed employment pref11didal to his health aJ well aJ to the hea/Jh ofhis ro-empk?Jus." This
. In the 2014 case of Deoftrio v. Inte/Tuhnoloo Philippines, In,., th~ requmtes
'th bef.ore temtlnation of employment due to disease may ground may no.I, however, be solely confined to these kinds of diseases. DeoftrirJ
that must be compIied WI enunciates that the phtllse "prejudicial to his health as well as to the health of
be justified were specifically divided into two, namely:
his co-employees" should be liberally construed to mean ''prejudicial to his
(1) Substantive requisites; and health QI to the health of his co-employees." It is clear, therefore, that the
(2) Procedural requisites. intent of the law is to allow the termination of an employee if he suffers a disease
Toe reason for so distinguishing the two is _to emp~asize the fact that the and his continued employment will either be prejudicial:
law Article 299 (284}, only specifies the substanttve reqU1rements but ?ot the
' d al · unlike· Article 298 (283} where both the substaollve and (1) to his own health; or
proce ur ones - so . . d
procedural requisites are specifically prescabed thereunder. Deoftno ack_now1e ges
this fact in no uncertain terms when it declared: '~e ~bor Code ~d Its are ?,-It ,6.Jti! 299 f284] aierect.
Sedioo 8, ~ I, Bode V1 a
lhe fU!s,kl ~ t,e l.atxreole, kl vi.I: 'Sec. 8. Disease as agam b'<isnissa. •
silent on the procedural due process required in terminabons due to disease. Wierelle errp7J'l!e5lifels lro'n adsease Md tiswinied ~ i s pdW tJf lirNa~ t>tishealtl a
a
kl tie heali his ~ tie ~ shal no11emiiate his erl1lk1fmenl lllless eiere is a certrx:am tJt
cml)etett puti: heaU1 aufm/ lhattie disease is am naue « atsuch astaJe Iha ltcanoa be a.red n aperiod
V-1. a six (6) nmtis Mil 'Mill prq,er meoca treamert. Hlhe <iseasea a.neii can be a.red w.tl1il lhe peood, lhe ~
SUBSTANTIVE REQUISITES shal net lemme lhe en1Jlo','ee blA SM'! ask lhe elll)bfee Ill lake a leave. The en'l)loyef shal reilst!te such ernpqoee to
his 1ooner posibl mneoiatefy upoo lhe restoration arus noona1 health."
1. THREE (3) SUBSTANTIVE ELEMENTS. l Pe- Oeokro V. k1lel Teclm<xJy Phippr,es, Inc., supra.; See also Fuj Telev1sial Nel,yoo(, Inc. Y. Arlene S. EspmJ, G.R
Noo. 204944-45, Dec. 03, 2014.
Based on the Labor Code1 and its Impkmenting Rulu,2 the followin? three 4 kl.
(3) substantive elements, according 10 Deoftrio, may be drawn ther~from, lo 1111t. kl.
a Genera Texlies, n:. V, ttRC, GR No. 102969, Aprl 4, 1995, plA'TI003ly ~ (FIB) was
kl Ile case
pann:oo asa amp,isaisease.
, Sm! Fl.bl Rws., re.v. BemanlOMd Taghc7f,G.R No. 1s!214, Aug.14.2013. 1 Taiv.M..RC,G.R.No.116807,Ajlri14, 1997.
~ Gol W>. n:.v. Easttilge Gol CI.Jb. nc., LIIOO' Lmn-Super. G.R. No. 166700. Aug.22.2008. ' Oedm:> v. lnEI TechnaoJy ~ . re.. GR No. 202996. Jllle 18, 2014
l GR No. 2029'1J.Jiroe 18, 2014.
720 8AR. REVIEWER. ON lA&OR. lAW
(2) to the health of his co-employees.
Consistent with this construction, this provision has been applied in
resolving illegal dismissal cases due to non-contagious diseases such as stroke,
heart attack, osteoarthritis, and eye cataract, among others:, In Balry B111, Inc. v.
MiniJffr ofLabor,1 the labor arbitration's finding was upheld that private respondent
bus driver's continued employment - after he suffered several strokes - would be
prejudicial to his health. In D11/trle v. Kingswoad Troding Co., Ine.,Z the applicability of
Article 299 (284] to heart attacks was recognized. In that case, it was held that
private company's failure to present a certification from a public health authority
rendered petitioner's termination due to a heart attack illegal. This provi~on was
also applied in Sy v. C4,3 to determine whether private respondent, Jaime Sahot,
was illegally dismissed due to various ailments such as presleyopia, hypertensive
retinopathy, osteoarthritis, and heart enlargement, among others. In Man!J Expms,
Inc. v. Pt!)'Onl,, J,.,4 it was ruled that petitioner company's non-presentment of a
certification from a public health authority with respect to respondent's eye cataract
was faul to its defense.
It bears noting that suffering from HfV / AIDS under R.A. No. 8504,
otherwise known as the "Philippine AIDS Pmitnlion and Control Art of 1998, ' 5 will
not justify termination of employment of the ailing employee. Under this law,
termination from work on the sole basis of actual, perceived or suspected HIV
status is deemed unlawful.6 Similarly, DOLE Dpartmml Ordfr No. 102-10, Sfriu of
2010,7 categorically declared that "[w]orkers shall not be terminated from work if
the basis is the actual, perceived or suspected HIV status." Consequently, even if an
employee actually suffers from HIV/AIDS, he/she cannot be dismissed solely on
the basis thereof since the law does not prohibit the continued employment of the
ailing employee. And because of the manner R.A No. 8504 extraordinarily treats
this kind of disease, the ailing employee cannot likewise be dismissed on the
ground that his/her •~011lin11fd mpfrrJnunt is pnj11dirial to his hfalth as 111(/1 as lo the hfa/lh
ofhiJ ro-tmphym." The ailing employee, in fact, is practically untouchable under this
law. And any form of discrimination against him/her will subject the offender to
criminal liability.a
1 GJlth54223,Feb.26, 1988,241 Phl.1017.
t
3
G.R. th 100325, Oct 4, 2007, 561 Phi. 11.
GR.th 142293,Feb.27,2003.~Phl.404.
I GJl No.167462, Ocl 25, 2005.510 Phi. 818.
5
Appro.oed on Fe!xuay 13, 1998.
Sedal 35 tiered. Rease see also Sedm 46, IUl 8 cA Ile Rules .rd Regua1ixls ~ Ille Phippile Ai:1s
PreYen&xi ax! Co1b'ol Ada 1998 (RA 8504), ~ ooApli 13, 1999 by tie Ptlllppile Natim!Ai:ls CMa;
1
Depatnent Order No.102-10, Series a2010, entilled Ile 'G.idelnes for tie ~talllo a HIV aid AIDS l'reYentiCll
.rd Cata i1 lleWm:pa:e Pn1,Jram'&\Jed bybmerOOlE Secooy MmM> D. Roque on Marth 25, 2010.
a Vdati:rl a RA No. 8504 caries IWh It amil penalies, t> v.it 'Sec. 42. Penallies kx cisairincby 1r:ts ax! pokies. • Al
lisaiTinaby <r:1s .rd pddes relelTed Dil llis NJ. shal be ~ v.it1 a penatf a i,c, isa, ,etfor six (6) rr•mis D
br(4) )'eiJ'S aidafllerdexreecing Tei ln.osand pesos {P10.(XXl.OO). ~ alcfilXlll, lcenses/permls dschools,~
.rd ot1e< iisruioos b.n1 gulf acxmn1!ilg ooaimabya:s .rd pofcies deserted ntiisAd s11a1 be IMl:ed.'
CHAl'TER. Sax
POST-EMPLOYMENT 721
4. JRD SUBSTANTIVE ELEMENT.
The third element on presentation of a medical certificate issued b
competent public health authority substantiates the c•:>ntentioo that the empl/ a
has indeed been suffering from a disease that: yee
(1) is prejudicial to his health as well as to ihe health of his co-
employees; and ·
(2) cartnot be cured within a period of si:< months even with proper
medical treatment
Without the medical certificate, there can be no authorized cause for the
employee's dismissal. The absence of this element thus renders the dismissal void
and _illegal Deofmo instruct_s that this 3rd element is not merely a procedural
reqU1Cement ?ut_a sub_stanllve one. The certification from a competent public
he~lth authooty is_ prec1~ely th~ substantial evidence required by law to prove the
~stence of the ~sease itself, Its non-curability within a period of 6 months even
wttlt proper medical treatment, and die prejudice that it would cause to the health
of the sick employee and to those of his co-employees.
An employer must not terminate if disease is curable within 6 months
with proper medical treatment. "l'be employee must be allowed to take a leave of
absence and reinstated after being cured.
The word ''competent" in the legal phrase "~mpetml public hfalth authori~"
re~ers to a government doctor whose medical specialization pertains to the disease
bC10g suf~ered by the employee. For instance, an employee who is sick of
tuberculos1s should co~s~t a govemment-emplo7ed pulmonologist who is
competent to m~e ~ op~on thereon. If the employee has cardiac symptoms, the
competent phystaan m this case would be a cardiologist
. The c~mpany's o~vn physician _engaged by· th~ employer as its employee or
hi.red on a retainer fee baSJs to whom sick workers are referred foe consultation or
treatment, is not the "rompetmt p11blie hfalth authontJ' referred to in the law. Hence a
me~cal certificate issued by the company's own physician is not an acceptable
certlficate for purposes of terminating an employment based on Article 299 (284}.1
As to who should procure the medicai certi&::ate, the Court ruled in Tan v.
.Nl.!lC. 2
that it devolves upon the employer the obligation to obtain a medical
certi.ficate from a competent public health authority that the employee's disC2SC is
at such stage or of such nature that it cannot be cured within 6 months even with
proper medical treatment. It is the employer, and nc,t the employee, who has the
burden of proof to justify that the termination was supported by said certificate.
1
:
1
roya1 P1.'rt (Sal '-'Juel C<Xporali)nJ v.Hon.llel)tiy ~a labor, GR~-58639, Al.g. 12. 1987, 153 SCRA 38
1
G.R. No. 116&J7,Apli 14, 1997, 271 SCRA216.
722 BAR P.fVIEWER ON LABOR IAW CHAl'TER SIX
2
POST-EMPLOYMENT 7 3

Clearly, it is only where there is such prior certification that the employee could be
validly terminated from his job.1
The burden of proving the existence of the medical certificate required
under the law is upon the employer, not the employee.2
V-2.
PROCEDURAL REQUISITES
1. PROCEDURAL ELEMENTS.
Deofmo'l pronounced the rule that due proc'i:ss in tennination due to
disease is similar to due process for just cause termination. Thus, the employer
must furnish the employee two (2) written notices, namely:
(1) The notice to apprise the employee of the ground for which his
dismissal is sought; and
(2) The notice informing the employee of his dismissal, to be issued after
the employee has h;een given reasonable opportunity to ~ and
to be~ on his defense.
This ruling reinforces the State policy of protecting the workers from
being terminated without cause and without affording them the opportunity to
explain their side of the controversy.'
Under this present rule, the employee should be given reasonable
opponunity to answer and to be heard on his defense. Although sufferance of
disease is not to be equated with commission of a wrongful act which is the
principal requisite ofjust ra,m termination, the ailing employee needs to be given
"naSQ/zabk opportunity to answer and Ip be heard on his dtft11Je" before he could be validly
dismissed on the ground of disease. Consequently, once the substantive requisites
for termination due to disease are complied with, the employer should comply with
the other equally important procedural requisites as prescribed in Deoftrio.
. . Comparatively, the authorized grounds under Article 298 (283) such as
10stallat1on
. of .labor-saving. device' redundancy
. , retrenchment or c1osure or
cessatlon of bustness operatlons do not, in any way, involve any contributory cause
on the part of the employee. These grounds are solely caused by the employer
never by the employees. The case of the authorized ground of disease under Articl~
299 F84_], however, is dif~erent as it is the employee who supplies the cause for his
te~atlon; he~ce, there 1s a need for him to be afforded the twin requirements of
notl~e and h~on_g where he shall have the opportunity to defend himself from his
possible temunanon.
2. FUJI RULE: EMPLOYEE HAS RIGHT TO PRESENT
COUNTERVAlUNG MEDICAL CERTIFICATES.
.. S~bsequent to Deoftrio, another 2014 case, Fllji Television Network, Inc.
v. Espm~u, has ~er expounded _on the due process r~uirement in termination
due to disease, this tune, by categoocally specifying the right of the ailing' I
t rvailing'
• emp oyee
~ pr_
ese?t counte evidence in the form of medical certificates to prove that
his distn1ssal dµe to disease is not proper and therefore illegal.
lnde~ a~ording the ailing employee procedural due process in the
~~e~ prescobed tn Deoftrio and F,gi proceeds from the premise that he is not
~~sstble sol_ely on the bas~ of his suffering from a disease. He should not be
disnussed outrtght upon showing alone that he is suffering from a disease. While an
ell),ployee ~ay have become afflicted with a contagious disease such as pulmonary
tubercul?s1s <n:B),
and that under Article 299 [284], an employer may teaninate
the ~ervtces of Its emp~oyee ~o~d to be suffering from any disease and whose
contlnued employment IS prohibited by law or is prejudicial to his health as well as
to that ~f his co-emplo~ees, however, ~e fact that an employee is suffering from
such a disease does not ,psofaao make him a sure candidate for dismissal.
3.
DUE PROCESS

Per Deofmo, the ZUd r~quired notice informing the employee of his a.
dismissal should be "issued t!/kI the employee has been given reasonable opporluni!J to TWIN-NOTICE REQUIREMENT
2!!l1!!f! and to be hfpaJ on his defense." This requirement, in effect, dictates that b.
before an employee may be terminated due to disease, he must firrt be given a HEARING
show-cause notice that would afford him a "reasonable opportunity to answer'' the
charge of his being terminable by reason of his suffering a disease and, St&()ndf;, for (NOTE: These topics will be discussed herein jointly
him to be afforded a "hearing on his dtft111e. " In the Ught of their close interrelation). .

1 See aso Rt EJ1'l)bf SeM:es aid Resams. "'v. Pnno, GR No. 1«186, Apii 1s, 2004; &/ v. CA. GR No. 1 ORDER OF TOPiCAL DISCUSSION.
142293,Feb. 27, 2003; Seeaso ~v. KiYJSNOOd TID'g Co, K, GR No. 160325, Oct 4, 2007.
2 ATC1 C>.-ersees r.apoouxiv. CA, 514X3l.Ta1V. NI.RC, GR No.116807;Apii 14. 1997, 271 SCAA 216; Cebu~ P'a1t The discussion of this topic is divided into the following sections:
[Sal li'i:luel Ca'porafall v. tm. ~ 1ms1ero11.m, SUJXa.
3• Cili'g lhe cases o1 &j v:CA, G.R No. 142293, Feb. 27, 2003, 446 Phi. 404 cm llanlf Express, rev. Payong, Jr. GR.
No.167462, Oct25,2005.510Plt818. 1
' Dedeoov. i"EITeclmb:r/~ t-c..suixa. F" Tele-iisioo Ne!v.lldc, rev.Menes. EspiilJ, GR. Nos. 204944-45,Dec. 03, 2014.

BAR REYIEWER ON IABOR IAW
724
I. STANDARD SITUATIONS IN TERMINATION CASES
11. VARIATIONS IN PROCEDURAL DUE PROCESS
ll•A JUST CAUSE TERMINATION DUE PROCESS
11·8 AUTHORIZED CAUSE TERMINATION DUE PROCESS
11-8•1. DUE PROCESS IN TERMINATION DUE·'fO BUSINESS-
RELATED CAUSES
11·8·2. DUE PROCESS IN TERMINATION DUE TO HEALTH-
RELATED CAUSES
11-C DUE PROCESS IN OTHER FORMS OF ~MPLOYMENT
111. INDEMNITY IN THE FORM OF NOMINAL DAMAGES
I.
STANDARD SITUATIONS IN TERMINATION CASES
1. INTERPLAY OF SUBSTANTIVE & PROCBDURAL DUE PROCESS.
The substantive Gust or authorized cause) and procedural due process
requuemen ts ·m termination of employment can only be better understood da
· andd
· ted by looking at them through the prism of the four (4) stan r
a~pre_aa
s1tuattons provt"ded the Labor Code and enunciated in pertinent jurisprudence.
1n·
Thus, the dismissal is:
1) 1filiA.L if it was done with both substantive and procedural due
process.1
2) ILLEGAL if it was done without substantive due process although
procedural due process was observed.2
3) ILLEGAL if it was done without both substantive and procedural due
process.3
4) LEGAL if it was done with substantive due process but without
procedural due process.•
2. CONTROVERSY OVER THE FOURTH SITUATION.
The first three (3) situations above are based on hombook principles. It is
the fourth situation that has been the subject of changes in doctrinal
pronouncements by the Supreme Court over the Y_eaIS. 1:he. foll~wing doctrines
would explain the changes in the manner the Court views this s1tua11on:
1 f'IIT!lpne Ames, n:.v. NlRC, G.R No.115785,Au!J. 4, 2000.
ACIJ n...esli;jaioo SOClriy /Ji:J!!rof, klc. v.~era. G.R No. 147473,-Mirdl 30, 2004.
i 1..antertPaYt11brokers and Jewelry Corp. v. Binamira, G.R. No. 170464, July 12, 2010.
• Ag.bxiv.NlRC,G.RNo.158693,Nov-. 17,2004.
CHAPTER SIX 725
POST-EMPLOYMENT
(a) Wenphil doctrine;
(b) Se"ano doctnne;
(c) Agabon doctrine; and
(d) Abbott Laborafqriu doctrine.
2.1. WENPHIL DOCTRINE: BELATED DUE PROCESS RULE.
Prior to 1989, the rule was that a dismissal or termination i s ~ if the
employee was not given procedural due process. In the 1989 case of lf/enphil Corp.
v. NLRC, 1 the Court reversed this long-standing rule and held that the dismissed
employee, although not given any notice and heuing, was not entitled to
reinstatement and backwages bl!cause the dismissal was for a just cause, i.e., grave
misconduct and insuborQ!!lation, a just ground for termination under Article 297
(282]. The employee here had a violent temper and caused trouble during office
hours and defying superiors who tried to pacify him. The Court concluded that
reinstating the employee and awarding backwages may encourage him to do even
worse and will render a mockery of the rules of di;cipline that employees are
required to observe.
However, the employer (Wenphil) must nevertheless be held to account
for failure to extend to the employee his right to an inv-..stigaqon before causing his
dismissal. The dismiss~ of an employee must be (1) for just or authorized cause
and (2) after due process. The employer committed an infraction of the serond
requirement; thus, it must be imposed a sanction· for its failure to give ·a formal
notice and conduct an investigation as required by law before dismissing the
employee from employment Considering the citcumstanccs of this case, the
employer must indemnify the employee the amount of Pt,000.00. The measure of
this award depends on the facts of each case and the gravity of the omission
committed by the employer.
The rule thus evolved: where th~ employer had a valid reason to dismiss
an employee but did not follow the due process requirement, the dismissal may be
upheld but the employer will be penalized to pay an indemnity to the employee.
This became known as the Wenphil Rule or Belated Due Pro_cess Rule.
2.2. SERRANO DOci'RINE: INEFFECTUAL DISMISSAL RULE.
In 2000, the rule on the extent of the sanction was changed in the en bane
decision in Serrano v. NLRC.2 The Court held that the violation by the employer of
the notice requirement in termination for just or authorized causes was not a denial
of due process that will nullify the termination. However, the dismissal is declared
ineffectual and the employer must pay full bacbvages from the time of
termination until it is ii;dicially declared that the dismissal was for a just or
authorized cause. The Court, in effect, re-examined the Wenphil doctrine. The
GRNo.80587,Feb.8, 1989, 170SCRA69.
GR No 117040,J.ri.27,2000.
726 BAR REVIEWER ON I.A8OR I.AW
rationale for this re-examination was the significant number of cases involving
dismissals without requisite notices. It was concluded that the imposition of penalty
by way of damages for violation of the notice requirement was not serving as a
deterrent. Hence, instead of penalty, Strrano now requited payment of/11// backwages
from the time ofdiJmiJJa/ until the time the Court find! the diJmiJJal WtIJfar ajust or a11thon'Z!d
ca111e. Semzno thus confronted the practice of employers to dismiss now and pay
later by imposing full backwages as penalty.
For the first time, the Supreme Court distinguished denial of due
process by the State and denial of due process by the employer. It concluded
that the violation by the employee of. the notice requiterftent cannot be considered a
denial of due process as would result in the nullity or illegality of the employee's
dismissal or layoff. The following reasons were cited:
1. The Due Process Clause1
of the Constitution is a limitation on
governmental powers. It does not apply to the exercise of private
power, such as the termination of employment under the Labor Code.
2. The notice and hearing requited under the Due Process Clause applies
before the powers of organized society are brought to bear upon the
individual. This is obviously not the case of termination of
employment under Articles 297 [282] and 298 (283] of the Labor Code
because the employee is not faced with an aspect of the adversary
system. The purpose for the requirement of notice and hearing is not
to comply with the Due Process Clause of the Constitution. 'The time
for notice and hearing is at the trial stage. Then that is the time we
speak of notice and hearing as the essence of procedural due process.
Thus, compliance by the employer \vith the notice requirement before
he dismisses an employee does not foreclose the right of the latter to
question the legality of his dismissal
3. The notice requirement under Articles 297 [282] and 298 [283] of the
Labor Code cannot be considered a requirement of the Due Process
Clause since the employer cannot really be expected to be entirely an
impartial judge of his own cause.
2.3. AGABONDOCTRINE: STATUTORY DUE PROCESS RULE.
About 4 years after Sen-ano, the Supreme Court, in the 2004 m bane
decision in Agabon v. NLRG,2 abandoned Sen-ano an<l reverted to the Wenphil
doctrine. It thus ruled that where the dismissal is for a just cause, as in the instant
case, the lack of statutory due process should not nullify the dismissa~ or render it
illegal, or ineffectual. However, the employer should indemnify the employee for
the violation of his right to sta/11/ory due process. Such indemnity or sanction,
1
Sedal 1,Artk!e DI stres:"Sedioo 1. Nope!SOO shal be deprived olie, liler1y, 11 propertywMw due processoll.ffl.nor
stial?Lrf ~bedelliedtie~prcledxlna11e e.YS.'
1 Agmv.~.G.RNo.158693.~.17,2004.
CHArTERSIX
727
POST-EMPLOYMENT
however, must be stiffer·than that imposed in l'PmphiL Consequently, the sanction
imposed upon the employer in this case was·in the foan of nominal damages in the
higher amount o( P30,000.00. The imposition of this fonn of damages would serve
to de!er employers from future violations of the statut_ory due process rights of
employees. At the very least, it provides a vindication or recognition of this
fundamental right granted to the latter under the Labor Code and its Imple~cnting
Rules.
Clearly, per 4gabon doctrine,1 it is now the prevailing rule that it is not the
constitutional due process provided in the Constitution2 that is requited in
tennination of employment but the ~ due process provided under Article
292(b) (277(b)] of the Labor Code.
More ~uccinctly, "constit11tional dueproms" protects the individual from the
government and assures him of his rights in criminal, civil or administrative
proceedings; while "sta/11/Qry due process" protects employees from being unjustly
terminated without just cause after notice and hearing. Put differently, the Bill of
Rights is not meant to be invoked against acts of private individuals like employers.
Private actions, no matter how egregious, cannot violate the constitutional
guarantees.
In other words, when the employer, in terminating its employee, does not
afford the latter the procedural due process he deserves, it is not the constit11tional
due process that is violated but only the statu/Qry due process provided in the Labor
Code, more specifically, Article 292(b) [277(b)) theceof.3
2.4. ABBOTTLABORATORIES DOCTRINE: CONTRACTUAL DUE
PROCESS RULE.
Just when everybody thought that the Agabon doctrine has finally solved
the lingering question involving the fourth situation where the dismissal is for just
or authorized cause but sans procedural due process, a new doctrine on
conuactual due process, as distinguished from statutOl)' due process, was
pronounced in the 2013 en bant decision in Abbot/ Laboratories, Philippi,,es v. Akaraz/
It was held here that in a situation where there is an existing company policy
enunciating the procedural due process that must be observed in termination of
employment, compliance alone with the statutol)' due process,5 would not
suffice. Additionally, there must be compliance too with the company-prescribed
due process procedure oc the so-called contractual dµe process. Otherwise, the
same con~~quence as in Agabon will ensue, that is, the termination shall be
1
Etm:ia1ed il he 2004 en Im:decism il lhecase ol Agala1 v. f'lRC, G.R r-«>. 158693,lb. 17, 2004.
2
Section 1, Artide Ill [Bal of Rights], 1987 c.onstitlJtion v,li:h ~ M "no peooi sllal be dep?/00 al lie, 1i>efty oc
piq,ertf l'ti1hoA due process ci I.Ni,norshal arrt Jl!'SOO be denied tie equa ~ ol he law.;.'; Per ~ii>oo v. M.RC,
supra.
3
See Krg al Krgs Trnpat. I}:.v:~ G.R l'b. 166208,JLOO 29, 2007.
' Abbott I.JEa'ames,f'hiwres Y. Peale Am F. Abraz. G.R No. 192571, lif 23, 2013.
s SeeMx:te 292(b) (277(b)] alle LmCode. as ill!!!preted il Ole caseol Krg olK'ngs.Transpat Inc. v.~ .supra.
 BAil REVIEWER ON lABOll lAW
C HAmRSIX
POST-EMPLOYMENT 729
considered legal and valid but for lack of ronlrorl11al due process, the employer wiU
be penalized with the payment of indemnity in the form of nominal damages in the no uniform procedural due process that should lie applied 10
. .1U .
specifica.llY, the vanations
· · may be summed up as follows: • cases · More
same amount of P30,000.00 as awarded in Agabon.
In this case, it was found that respondent Alcaraz, 1 who was hired as a (1) Just ca~se temiination due process;
probationary managerial employee, was afforded both ;;ib;tantive and ;tallllory (2) Authonzed c~use termination due process;
proadstral d11t proast, when she was terminated2 for failure to qualify as a regular (3) Due process 10 other foans of termination.
employee. Nonetheless, despite the existence of a sufficient ground to terminate These are discussed be.low in striatim.
Alcaraz's employment and Abbott's compliance with the Labor Code termination
procedure, it was found that petitioner Abbott, breached its contractual ll•A
obligation to Alcaraz when it failed to abide by its own procedure prescribed in its JUST CAUSE TERMINATION DUE PROCESS
company rules in evaluating the performance ofa probationary employee.
1. KING OF KINGS TRANSPORTDOCTRINE.
Veritably, a company policy partakes of the nature of an implied contract
between the employer and ~ployee. Hence, given such nature, company . .Th~ Court has standaniized procedural due process in just cause
personnel policies create an obligation on the part of both the employee and the . temunaaon m _the 2007 case of King ofKing; Tran;port, Inc. v. Mamac.' It proclaimed
employer to abide by the same. While it is Abbott's management prerogative to that the followmg steps should be complied with:
promulgate its own company rules and ev~ subsequently amend them, this right (1) Service of first written notice (show-cause notice).
equally demands that when it docs create iis own policies and thereafter notify its
employee of the same, it accords upon itself the obligation to faithfully implement The first written notice to be se'rved on the employee should:
them. lndee4, a contrary interpretation would entail a disharmonious relationship
a) Con~ the specific causes or grounds for temunation against him;
in the work place for the laborer should never be mired -by the uncertainty of
flimsy rules in which the latter's labor rights and duties would, to some extent, b) Con~ ~ dire~tive that the employee is given the opportunity to
depend. subaut his wntten "explanation within the reasonable period of
FIVE (S) CALENDAR DAYS from receipt of the notice:
II. 1) to enable him to prepare adequately for his defense;
VARIATIONS IN PROCEDURAL DUE PROCESS 2) to study the accusation against him;
1. PROCEDURAL DUE PROCESS VARIES. 3) to consult a union official or lawyer;
4) to gather data and evidence; and
Based on law :md jurisprudence, it is clear that the procedural due process 5) to decide on the defenses he will raise against the complaint.
required to validly terminate an employee depends on the ground invoked. There is
c) C~ntain a detaile_d narration of the facts and circumstances that
will .serve
d . as basts
d for the charge against
. the cmployee. 1..,_: ·
. ms 1s
' RespoodEn Ak:aaz was hioo as IIEoo!I Md RfgJlaby Affairs ~ ~ Am Mm;Jei) or petibler,
• kl a &ilOllh probamry ~ Upa, beilJ lemlina!Ed, she lied a CXX1'4llcint kr ilegal d'ismissal ~
reqwte . 10 or er to enable him to intelligently prepare his
daMJes ~ t.at she shai:l hirle al'ead'f bem ansi:lered !!5 a regulcr aoo not a ~ ~ gile1 explanaaon and defenses. A i;enera! description of the charge wi1J
~s laln kl Jirm her d Ile raamt>le slafmds b- her reg\Jarizalbl upoo h e r ~ as~ ll1da' not suffice.
Miele 296 [281)dh! l.mCode. ~ tis relalia1. she IXJlelded lhafv.tlie her ~anract~ that she was b
be eN:laJed oo a ~ staus. Ile sare cm na•ildicale Ile staoocrds oo v.t1ich her regt.iarizabl Y«xtl be based. d) Specifically_ mention which company mies, if any, are violated
She lrtler ~ 11a1 tie ml/Wal petitilr.n rnalixwf cmwed kl ileJalf oorriss her vdlen: (a) lhey IYeatmed her and/or whi~h among the grounds under Article 297 (282J is being
witti enilalm; (b) she was ordered in kl enter (XJTl)(nf pemises Mn .l she was stil ai ~ l1ered; ~ (c) ~ charged against the employee.
P-Wf l11l011lCed that she areac1y resiJned norderkl lutti? hlr. 0n 11e wmry, pe!imef'S mniled Iha! Ataaz
was vailtf BtTi'lated flan her pnbalxllily enl)l:r,'me!t g;..en her lalre kl satisft Ile ixesaiJed smlri. b- her (2) Conduct o f ~ .
regularizll!XXl m were made kroMl b her at tie rrne ci her engaJelllenl
1 As Ile reaxds st»N, Aaats dsrissal was effedEd lroojl alell!!r dated Ma-f 19, 2005 vdifh she raceived oo IJa, 23,
After s:rving the first notice above, the employer should schedule and
2005 a1d 81Jain oo 11.Jf 'l/, 2005. Stied llel-ei1 vm O'lil remis b- her temilaicn, I.e., Iha .tu~ evakJafm,
ANloll delenTinoo llat she faiEd kl m::et lhe reasooallle stlnd.ws tr her reg~tion ~ her 1oc1t cl frne ~ conduct ~ heanng or conference wherein the employee will be ·ven the
peq>le nena,iement aid decismmal:i'g skis, lfflCh are~ 11 Ile pemrmnce d her ftJmis as RegiAalcly opportuntty to: gi
Alm~- Undeni:bl't, tis v.tb!n noti:e sutfcienly mee!s lhe meria set bUl abM, lhffl!by ieljtirrim;j Ile cause
inl mmerd Al:aaz's ~ as apnxiaicray en1)loyee lllda'lle paran-etets set by lhe LmorCode.
' GR No. 166208, Jtrle 29, 2007.

730 BAR REVIEWER ON lABOR lAW
1) explain and clarify h i s ~ to the charge/s against bi.m;
2) present evidence in suppon of his defenses; and
3) rebut the evidence presented a~st him by the management.
During the hearing or conference, the employe~ should be given the
chance to defend himself personally. with the assistance ·of a representative or
counsel of his choice. Moreover, this conference or hearing could be used by the
parties as an opportunity to come to an amicable settlement.
(3) Service of second written notice (notice oftermination).
.•
After determining that termination of employment is justified, the
employer shall serve the employees a written notice of termination indicating
that:
1) all circwnstances involving the charge/ s against the employee have
been considered; ind
2) grounds have been established . to justify the severance of his
employment. 1
2. THE PEREZ DOCTRINE: NEW GUIDING PRINCIPLE ON THE
HEARING REQUIREMENT;
The above 2007 King of Kings concept of hearing as part of due process
has been significantly changed in 2009 in the en ban& case of Pmz. v. Philippine
Tekgraph and Tekphone Compa,ty,2 now known as the Pmz doctrine. It enunciates the
new guiding principles on the hearing aspect of procedural due process. Thus, a
or
formal hearing conference is no longer mandatory. It becomes mandatory
only under any of the following circumstances:
(1) When requested by the employee in writing; or
(2) When substantial eyidentiacy disputes exist; or
(3) When a comp~ny rule or practice requires it; or
(4) When similar circumstances justify it
The Court has given a new interpretation of the term "ample
opportunity to be heard," thus:
(a) "Ample opportunity to be heard" means any meaningful
opponunity (vubal or writkn) given to the employee to answer the
charges against him and submit evidence in support of his defense,
whether in a hearing, conference or some other fair just and
reasonable way.
' Ki'g "Ki-gs Transpat. Ille. v. M.rnac. 5lV<I; See also Lina l.axl, Inc. v. Cuevas, GR No. 169523, June 16, 2010·
nii.aov. Frst Philppile Scales, lne., GR. No. 165407,June 5, 2009, 588 SCRA 471,491.
2
~ v. Phnppne Telegraph and Telephooe ~ - G.R No. 152048, Apli 7, 2009, 584 SCRA 110.
CHAl'TER SIX 731
POST-EMPLOYMENT
(b) The "ample opportunity to be heard" standard in the Labor Code
prevails over the "hearing or conference" requirement in its
I,11pleme11ting RP/es and Rtg11/ations. This is how the Supreme Coun
resolved the conflict in the following provisions of the Labor Code
and its implementing rules:
1) Under Article 292(b) [277(b)J of the Labor Code, the employer is
required to afford the employee "ample opportunity to be
heard and to defend himself with the assistance of his
representative if he so desires"; while -
2) Under Section 2(d), Rule l, Book VI of the Implementing Rules
of the Labor Code, the employer is required to afford to the
employee a "hearing or conference during which the
employee concerned, with the assistance of counsel, if he so
desires, is given opportunity to respond to the charge,
present his evidence or rebut the e,;dence presented against
him."
The Perez doctri.oe is now the prevailing rule as shown by a catena of
cases1 which cited it after its promulgation.
3. ABANDONMENT IS THE EXCEPTION.
The foregoing due process rule enunciated in King of Kings, as amended )ly
Pmz, does not apply to cases of abandonment While this ground is considered a
just cause analogous to gross neglect of duties under Article 297(b) (282(b)] of ·the
Labor Code, however, the procedural due process applicable thereto is different
from the due process described above. For obvious reason, due process in
abandonment cases does not involve the conduct of hearing. Compliance with the
following two (2) notices suffices, viZ::
1) First notice asking the employee to explain why he should not be
declared as having abandoned his job; and
2) Second notice informing him of the employer's decision to dismiss
him on the ground of abandonment
(NOTE: See extensive discussion of Abandonment under the topic of
"B. TERMINATION BY EMPLOYER", 111.JUST CAUSES", supra).
4. SOME PRINCIPLES ON HEARING REQUIREMENT.
• If employee does not answer the show-cause notice, hearing should still
proceed1 in cases where hearing is mandatory.
1 Lopez v. AllLras Group c t ~ GR No. 191008. Apel 11, 2011; Pn.dmtial Gtaanee ard Asrun:e ~
l.ooa"Unioo ard Valola v. NI.RC, PrudEr«ial Gua'lfllee ard ~ . h:., G.R No. 185335, Jl.ne 13, 2012; Esguerra v.
Vile Verne Crumy Cl.lb, G.R No. 173012, Jltle 13, 2012; ~ v. Phippr.e Luen lha ltltlrYJS Corp., GR No.
, 174893, J"Y 1I, 2012; Su'gaodel Nooe Elecmc Cooperative, rn:. V. llOOZ3ja, GR No. 187722, Jlfle 10, 2013.
- 732 BAil R£\IJEWER ON lABOll lAW
• Outright termination violates due proccss.2
• Investigation still required even if incident was witnessed by many.3
• Meeting, dialogue, consultation or interview is not the hearing required by
law. It may not be a substitute for the actual holding of a hearing.4
.•
• Prior consultation with union is not part of the due process requirement:s
• Cross-examination or confrontation of witnesses is not necessary in company
investigations.6 ·
• Co-conspirator's confession is not sufficient to ~erit dismissal.7
• If a party was not initially given a chance to be heard at the company !eve~
but later was given full opportunity to submit position papers or present his
case and arguments before the Labor Arbiter, this defect is cured.8 But if the
dismissal is not justified, this principle does not apply.9
5. INSTANCES WHERE HEARING IS NOT REQUIRED.
Hearing is not required in the following cases:
1. Termination of project, seaso~ casual or fixed-term employment.
2. Termination of probationary employment on the growid of failure of
the probationary employee to qualify as a regular employee in
accordance with reasonable standards made known to him at the start
of the employment. 10
3. Termination due to abandonment of work. (See above discussion)
4. Termination due to authorized causes .under Article 298 [283)
(installation of labor-saving device, redundancy, retrenchment or
closure of business or cessation of operations). In such cases, there are
no allegations which the employees should refute and defend
themselves from by way of a hearing. 11
S. Termination due to disease under Article 299 [284].12
6. Termination by the employee (resignation) under Article 300 [285).
7. Te~ation after 6 months of bo11a-fitk suspension of operation wider
Article 301 (286]. For purposes of satisfying due process, what. is
' Hap¥,ylbaBri,h:.v.tlRC,GRNo.122075,Jn28, 1998,285SCRA297.
2 Robusta Agro Marine Products, Inc. v. Goromba!em, G.R. No. 80500, July 5, 1989.
3 Wenitil Corpaara,v. tlRC, GR No.ro587, H!b. 8, 1989.
' Manejav.NLRC,G.RNo.124013,June5, 1998.
5 Centuy Tex11e l.fts, Inc. v. NLRC, GR No. TT859, May 25, 1988.
5 Ai:am v. The f'liwle Ccmnertial .nl ~ Sri, GR No. 151349, Oct 20, 2010.
7 Cerll.lyTexlieMls, h:. v. NlRC,GRNo. n859,M?f 25, 1988.
1 l'ep9Cda DisbixJl:noflle PfilW,eS. Ile. v. NI.RC, GR No.1~.AulJ.15, 1995. ·
' Heleoic Philippile Shipping, Inc. v. Siete, G.R No. 84082, Malth 13, 1991.
10 flhliilile Dai)' l"q.ier, n:. v.~.Jr, G.R No.164532,Jtly24, 2007.
" Wl!shieFieCo. v.NlRC, G.R No. 82249,Feb. 7, 1991. . 1989, 178 SCRA 386,394.
12 Agaboo V. NIRC, G.R No. 158693, New. 17, 2004.
CHAl'TER SIX
POST-EMPLOYMENT 733
required is simply that the notices provided under Article 298 [283) be
served to both the affected employees and the Department of Labor
and Employment at least one (1) month before the termination
becomes effective.I
8. Teonination due to retirement under Article 302 [287).
9. Termination due to expiration of tenure made coterminous with
lease.2
10. Termination due to closure or stoppage of work by government
authorities when non-compliance with the law or implementing rules
and regulations poses grave and imminent clanger to the health and
safety of workers in the workplacc.l
11. TeI!Ilfilation of employee who has admi.tted his guilt for the offense
charged.4
11-B
AUTHORIZED CAUSE TERMINATION CUE PROCESS
1. TWO (2) KINDS.
Due process,in authorized cause temµnation is classified into two (2), as
follows:
(a) Termination due to Business-Related Causes, such as: installation of
labor-saving device, redundancy, ret:enchment and closure of
business or establishment.5
(b) Termination due to Health-Related Causes (Disease).6
These are discussed in mialim below.
. 11-B·I.
DUE PROCESS IN TERMINATION DUE TD BUSINESS-RELATED AUTHORIZED CAUSES
1. PROCEDURAL STEPS.
_Procedural due process in termination due tc• any of the authorized cause~
of installation of labor-saving device, redwidancy, retrenchment and closure of
business or establishment is deemed complied with upon the separate and
simultaneous service of a written notice of the intended termination to ·both:
1
Sebuguero v. NLRC, GTI Sportswear Corporation, G.R No. 115394, Sept 27, 1995.
z Hilado v. Locgardo, GR No.L-65863,b1e 11, 1986.
3
lklderAlfde 128 !cl of Ile Lm Code.
' f'h1'iPne Pizza. h:. v. ~ . G. R No. 154315, IM/ 9, 2005; Roche [Rlippi1esj v. ~1.RC. GR No. 83335, Oct 5,
·
s As provided in Article 298 (283], Labor Code.
5 As provided i1 Article 299 (2841, Labor Code.
734 BAR REVIEWER ON IASOR IAW
(1) the employee to be terminated; and
(2) the appropriate DOLE Regional Office,
at least one (1) month before the intended dite of the termination specifying the
ground/ s therefor and the undertaking to pay the separa?on pay required under
Article 298 [283] of the Labor Code or the employment contract or the CBA,
whichever is higher. To iterate, no hearing is required, for obvious reason.
2. THE ONE-MONTH PERIOD, MANDATORY.
The one-month period should be observed not only with respect to the
notice to the employee but also to the notice to the DOLE. The observance of the
period of 1 month mentioned in Article 298 [2831 is mandatory. This means that
the written notices to both the affected employees and the DOLE should be served
separately to them at least one (1) month prior to the intended termination date. It
may, of course, be more than one (1) month but certainly not less than this period.
Notably, said period shall be cowited not only with respect to the service
thereof to the affected employee but also to the DOLE.
There is deprivation of right to statutory due process if notice
requirement is not complied with at least a month p~or to the effecfivity of_ the
termination. Hence, the dismissal, if properly and validly effected for authonzed
cause, would still be declared legal but the employer shall be held liable to pay for
indemnity in the form of nominal damages in the stiffer amount of PS0,000.00, per
]aka doctrine. 1
In the following cases, the notice requirement was violated:
(1) P/aJlimer Ind111trial urporation v. Gopo,2 where the employer was held as
having violated the procedural due process requirement because it
failed to timely serve the notice to the DOLE, although it seasonably
served it on the affe.:ted employee_s.
(2) TPI Philippinu Cement Corp. v. Cajucom VII,3 where the notices to both
the affected employee and the DOLE were served short of the 30-
day requisite. Petitioners sent the separate notices to the respondent
employee and the DOLE, three (3) days short of the 30 days required
bylaw.
(3) ShimiZ}' Phil!. Contractors, Inc. v. Callanta,4 where, although there was
authorized cause to dismiss respondent from the service, petitioner
was declared as having violated the same 30-day prior written notice
rule because it served the notices to the DOLE and respondent
Ja(a F<n!Processrg c«paa1XX1 v. Pm, GR 151378, Mnll 28, 2005.
G.RNo.183300,Feb.16,2011.
3 GR No. 149138, Feb. 28, 2006.
1 GR No.165923, Sepl 29, 2010.
C HArTEI\ SIX
POST-EMPLOYMENT 735
employee, 21 days, in the case of the Jim notice, and 16 days, in the
~se _of the Jt(ond notice, before the intended date of respondent's
disrrussal.
Com~liance with notice requirement is an indication of good faith. I
Ho~ever, barnng the_aff~cted _em_ployee from entering the company premises
dunng the 30-day penod 1s an mdicanon of bad faith, a transgression of the 1-
month prior notice rule.z
3. NOTICE TO DOLE; RATIONALE.
The notice to the DOI:£ ~ ne.c ess~ to enable it to ascertain the verity
and ~th of the ca~se of temunatton.3 It will enable the proper authorities to
detearune after heanng whether the termination of employment under Article 298
(283] is being done in good faith, i.e., for bona filk business reasons or whether to
the_ co~trary, it is being resorted to as a means of evading compliance with the )ust
o~ligattons of the ~player to th~ employees affected.' The DOLE is equipped
with men and machines to detemune whether the planned closure or cessation of
business or retrenchment or redundancy or installation of labor-saving devices is
justified by economic factors. s
The notice is also considered as a substirute for hearing, as held in
Wiltshin File Co., Inc. 11. NLRC6
• Some principles on Notice to DOLE.
a. Notice to DOLE should state the correct number of workers to be
terminated.7
b. Notice to DOLE should contain the details of the personnel
reduction program.s
c. Notice to DOLE should be shown to have been duly received by
DOLE.9
d. Notice to DOLE need not be complied with in case of voluntary
personnel reduction program. If an employee consented to the
retrenchment or voluntarily applied for retrenchment, the required
previous notice to the DOLE ·is not necessary as the employee
1
Coca-Caa Bolllers Phl"Wiles, klc.V. DelVilar, GR No. 163091, Oct.6,2010.
2
~ Tooaan F\1e.Q11i19 &Redryo;j Corpaabl V. NlRC, GR No. 127395, Dec. 10, 1998, 300 SCRA 37, ~-
llaaes v. Me~ Bri illd TrustCatl)all'f,GR No. 182475, N<w.21, 2012.
~ Electats ~~ [CEEAJ, etc., v. NlRC, GR No. 121315,.Jttf 19, 1999.
1
SeooJuen>v. NlRC, G.R No. 115394, Sefx, 27, 1995, 248 SCRA 532.
GRNo.82249,Feb. 7, 1991.
kl.
Ca'!ex [Phls.J, k1c. v. M..RC, GR No. 159641, Oct 15, '/.007.
' kl.
736 B/\R RfVlEWER ON IA8OR I.AW
thereby acknowledged the existence of a valid cause for termination
of his employment.1
e. Notice to DOLE need not be complied with if the case is heard by
a Voluntary Arbitrator. The proceedings had before the Voluntary
Arbitrator where both parties were given the opportunity to be
heard and present evidence in their favor, constitute substantial
compliance with the requirement of the law.2
f. Notice to DOLE is unnecessary if NCMB supervised the
negotiation for the separation package. This fact constitutes
sufficient notice to DOLE.3
4. NOTICE TO THE EMPLOYEE; RATIONALE.
The notice to the employee is required to enable him to contest the
factual bases of the management decision or good faith of the termination before
the DOLE.4 Its purpose is to inform the employee of the specific date of his
termination or closure of business operations, and must be served upon him at
least 1 month before the date of effectivity to give him sufficient time to make the
necessary arrangements5 to ease the impact of the loss of his job and his income.6
Absent compliance with such requirement would taint the dismissal.7
• Some principles on Notice tg EMPLOYEE.
a. Knowledge by the employee of the redundancy program prior to
service of notice is not material The fact that the organizational
realignment was made known to all the employees. prior to the
termination is not significant. The notice should still be served on
the employee to be terminated.8
b. Notice should be served to affected employees personally and
individually.9
c. Posting of notice on the bulletin board or in conspicuous places
within the company premises is 1,1ot sufficient asset does not meet
the requirement of "serving a 'IVfittm notice on the workers" under Article
298 [283].IO
d. A notice sent to the foremen, the section heads, the supervisors and
the department heads instructing them to rea:ench some of the
Sanmv.CA,G.RNo.141947,Jutf5,2001;DaeflhiWileS, rc.v.NLRC, GRNo.1200:l9,Seii 13,2001.
Rewladv.NLRC, GR No.111105,.Jo.rie27, 1995.
l Mmiaf v.~Telegraph and Teleplme Cap., GR No. 172363, Mw1 7, 2008.
1
Wttire FilCo.v.NL.RC, G.R. No. 82249,Feb.7. 1991.
1 Mimrpis v. Tex.n ~ .n::, G.R No. 197011, Joo. 28, 2015.
6 Waa1es v.~ Balk and Trust~. G.R.1-i:>. 182475, !-bi. 21, 2012.
7 Me-Shtrn Corporatioov.Me-Shtrn Wtners lklion-FSM, G.R No. 156292,Joo. 11, 2005.
e Snat Conmri::alms. re. v. AsllXga. G.R No. 148132, Joo. 28, 2008.
9 ~f'liW,es. ric. V. ~Phiippiles, lrc.En1)klyeeslh:rt, G.RNos.173154& 173229,Dec.09,2013.
to Gaallie Steel Wooters lMl [GSVN-NAFI.U-KMJ] v. NlRC, G.R No. 165757, Ott. 17. 2006.
CHhrTER SIX .
POST-EMPLOYMENT 737
workers based· on certain guidelines
. is not the reqwr
· cd nonce
·
contemplated by law. The wntten notice should be served on the
employees themselves, not o_n their sup.ervisors. I
5. ADVANCE PAYMENT OF ONE-MONTH SA.4-RY, EFFECT.
The e[!!ployer may validly pay in advance, upon the service of notice to the
emphyee an1
lo the D?LE, the salary of the employee equivalent to the one (1)
month penod and wtthout requiring hilJ} to report for work within said period.
The law does no_t preclude such procedure and the same is more beneficial to the
employee who ~ then_ have enough, ~peded time to look 'cor a new job during
the 1 month penod he lS no l~gger reqwred to work by his employer. However, it
must be stressed th~t the servtce of separate ~?rices to the affected employees and
to the DOLE a~ least_ 30 days from the effecttvity of the termination for authorized
cause should still be duly complied _with. In other words, the advance payment of
th~ salai,: for 1 month does not dispense with the requirement of the 1-month
pnor notlc:. S_uch l\?vance payment cannot be treated as a rrplamnm/ or ,11hstitute
for the n?tlces req~d un~er the law. The employer paying the advance salaries
should still C01!}ply with said notice requirement 1 month prior to the intended
effectivity of the termination.2
11-B-2.
DUE PROCESS IN TERMINATION DUE TO HEALTH-RELATED AUTHORIZED CAUSES
(DISEASE)
(NOTE: This topic ha~ been discussed very thoroughly under the topic of
_ "V. DISEASE", "V-2. PROCEDURAL REQUISITES", supra)
11-C
DUE PROCESS IN OTHER FORMS OF EMPLOYMENT
1. PROBATIONARY EMPLOYMENT.
. P.robati~nary ~ployment may be terminated prior to the lapse of the
pro~atlonary penod ftµ just or authorized cause; in which case, the appropriate
applicable p_roced~ due pr~cess, as discussed above, should apply. However, if
the ground mvoked 1s the failure of the probationary employee to qualify as a
regular employee based on the reasonable standards made known to him at the
rime of his engagement, a different kind of due proceis is required.
(NOTE: Please see extensive discussion of this topic under the topic of "VI. POST-EMPLOYMENT •
"2. KINDS OF EMPLOYMENT," • C. PROBATIONARY EMPLOYMENT", supra) '
1
Eroco Pt,v,ood Colporaioo V. Abegas, G.R. No. 148532, Apri 14, 2004.
2 Seoalov. NLRC, G.R No.117040,Ma-,4, 2000.

uw
IIAR REVIEWER ON U!Oll
2. DEFINITE-PERIOD EMPLOYMENT.
Procedural due process is not required in termination of the foll9wing:
t. Project employment which automatically tenninates upon completion
of the project; · ·•
2. Seasonal employment which automatically terminates upon the end
of the season;
3. Casual employment which automatically terminates upon the lapse of
the agreed period; ._
4. Fixed-term employment which automatically terminates upon the
expiration of the fixed period.
Ill.
INDEMNITYINTHE FORM OFNOMINAL DAMAGES
1. APPLICATION OF THE AGABONAND ]AKA DOCTRINES.
Termination for a just cause or authorized cause but without affording the
employee procedural due process should no longer be considered illegal or
ineffectuaJI but legal. Consequently, the employee will not be ordered reinstated but
will be awarded an indemnity in the form of nominal damages, the amount of
which will depend on whether the termination is grounded on just cause or
authorized cause, thus:
1. If based on just cause - P30,000.00 per Agabon doctrine.2
2. If based on authorized cause - PS0,000.00 per ]aka doctrine.3
According to )aka, the indemnity is "stiffer" in case of 011/hon'Z!d ,a,m
termination because, unlike in the case ofj111t ca111e termination where the employee
has committed a wrongful act, an employee dismissed based on authorized cause
has not committed any blameworthy act nor any delinquency or culpability on his
part. Instead, the dismissal process is initiated by the employer's exercise of his
management prerogative, i.e., when the employer opts to install labor saving device,
when he decides to cease business operations or when, as in this case, he
undertakes to implement a retrenchment program
• Some principles under the Agabon and ]aka doctrines.
t. The measure of penalty or indemnity is no longer full backwages but
nominal damages.
2. Since the dismissal is considered legal, any award of bad.wages must
be deleted and replaced by award of indemnity. 1
1 Pe! Se!m>v. NLRC, G.R. No. 117040, Jan. 27, 2000.
1 Basedonllecasect~v.M.RC,G.R No.158693,Nov.17,2004.
1 Basedoo Jij(a Food f'rocessiYJ Colpaa!o, v. Pacd. G.R. 151378, March 28, 2005.
CHAl'TEll SIX
739
roST-EMPlOYMENT
3._Amount of nominal damages may be reduced.2 But as far as the
upping of the amount is concemed, a survey of Supreme Court
decisions indicates that there has yet been no decision increasing the
indemnity-beyond what has been prescmed inAgabon and ]aka.
C.
TERMINATION BY EMPLOYEE
1. LEGAL BASIS.
The relevant provision of the Labor Code is Article 300 [285] which
provides:
Article 300 [285). Tmttilll11ion l!J E,,,phy,e. -
(a) An employee may terminate wihout just cause the
employee-employer relationship by serving a written notice on tbe
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 tte relationship without
serving any notice on the employer for any of tbe following just causes:
1. Serious insult by the employer or his representative oo the
honor and person of the emp,loyee;
2. Inhuman and unbearable treatment accorded tbe
employee by the employer or his representative;
3. Commission of a crime or offense ·Jy 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 foregoiog.3
2.CONCEPT.
While normally it is the employer' who :s possessed of the right to
terminate the employer-employee relationship, the Lsbor Code,5 in recognition of
the equality of the parties to such relationship, grants :o an employee the same right
to terminate tl1e employment relationship he has with his employer at any time he
wishes and with or without just cause. Moreover, there is a strong constitutional
basis for allowing employees to resign. The Con;titution6 expressly prohibits
involuntary servitude, thus:
"Section 18. xxx (2) No involuntary servitude in any form
shall exist e~cept as a punishment for a crime -.,.hereof the party shall
have been duly convicted."
1
8ecto System~ Colp. v. NLRC, G.R No. 165282, Oct 5, 2005.
1 ~TrrllerC<Xp.v.Abaloo,G.R'No.164518,MJth30,200i.
3 ~ rerunberad pugmt to Se:oon 5, RA No. 10151,Jire21, 2011.
• lAlder Al1ides 'l!l712821, 298[2831Md2991284)ctlhelaxr Code, he erl1lkr/eris heooegrndsuch 11:11t
5 See Artide 300 {285] Olerea.
& See Se:oon 18(2), Miele Ill (00 of Rghls) lhe'ed.
 . .
740 BAR REVIEWER ON LABOR LAW
3. TWO (2) KINDS OF TERMINATION UNDER ARTICLE 300 [285].
Under Article 300 [285], an employee may terminate his employment in
either of two (2) ways, to wit:
(1) Voluntary resignation - without just cause as provided in paragraph
(a) thereof; or
(2) Involuntary resignation -with just cause under paragraph (b) thereof.
4. PRINCIPAL DISTINCTIONS.
The following are the principal distinctions'-between the two (2) kinds of
termination under paragraph (a) and paragraph (b) of Article 300 [285):
(1) The tei:mination contemplated under the Conner is in the nature of
1/0Utnta,y resignation; while that contemplated under the latter is in the
nature of in110!11nla,y orfomd resignation and/or ,0111/ructive dismis1al.
(2) The termination in the former is without just cause; whjle in the latter,
· it is for just cause. · employee's voluntary resignation.5 Contrarily, there is no valid resignation where it
(3) In the former, the employee resigning is required to tender or submit a
written notice of resignation to the employer at least one (1) month in
advance; while in the latter, no such notice of resignation is necessary
as he/she can terminate the employment relationship as soon as there
is evidence of any of the acts enumerated under paragraph {b) of
Article 300 (285).
(4) In the former, the failure of the employee to serve the notice at least
one (1) month prior to the effectivity date of the resignation wiU make
him/her answerable for damages; while the employee in the latter is
not subject to such adverse consequence.
(5) In the former, there is no illegal dismissal to speak of; while in the
latter, the employee is deemed constructively dismissed.
,.
VOLUNTARY RESIGNATION
(Termination by Employee Without Just Cause)
1. DEFINITION.
Per jurisprudence, "mignation" is defined as the voluntary act of an
employee _who finds himself in a situation where he believes that_personal reasons
cannot be sacrificed in favor of the exigency of the service so much so that he has
no other choice but to dissociate himself from his employment. 1 Viewed
differently, "mignation" is the formal pronouncement of relinquishment of an
office, with the intention of relinquishing the office accompanied by the act of
1 ~v.GadennaPh~lnc.,G.R No. 1TT167.Jan.17,2013.
CHAl'TER SIX
741
POST-EMPLOYMENT
relinquishment.1 In other words, the resignation must show the concurrence of tw0
(2) things, to wit.
(1) The intent to relinquish; and
(2) The overt act of relinquishment.2
Consequently, the acts of the employee before and after the alleged
resignation must be considered in determining whether he or she, in fact, intended
to sever his or her employment.3
To constitute a valid resignation, it must be unconditional and with the
intent to operate as such. It is of course a settled doctrine that the resignation of an
employee is presum~d voluntary, unless established otherwise.4 Thus, the fact that
the employee has prepared her resignation letter in her own handwriting and that
she has signed an undertaking evidencing her receipt of separation pay, when taken
together with her educational attainment and the circumstances surrounding the
filing of the complaint for illegal dismissal, comprise substantial proof of the
was made without proper discernment, such as when an employee's act of writing
and handing in his resignation letter to his employer was a knee-jerk reaction
triggered by that singular moment when he was left with no alternative but to
accede, having be<:n literally forced into it by being presented with the more
unpleasant fate of being tei:minated.6
2. REQUISITES IN RESIGNATION WITHOUT JUST CAUSE.
In case of vol11nta,y resignation without just cause, the following requisites
must concur: ·
(1) The resigning employee should submit a written (not verbal) notice
of tei:mination (commonly known as "mignation letter');
(2) Service of such notice to the employer at least one (1) month in
advance;7 and
(3) Written accep~ce by the employer of the resignation.
The 3rd requisite above is not expressly provided in Article 300 (285]
but is given the character of a mandatory requirement under well-established
jurisprudence.8
1
IntelTedYW])' f'liWi,es, Inc. v. NIBC, GR No.200575, Feb. 5, 2014; Gov. !'.A, GR No. 158922. Mrf 28, 2004.
Zenai1a D. Mendozav. HMS Crecfil Copaalm, GR No. 187232,Api 17, 2013;
Nalicrwide Seclrty cfld Alied SeM:es, Inc. v. Vakler.vra, GR. No. 186614, Feb.23, 2011.
4 St. Mchae!Acalemjv.NLRC,GRNo.119512,Mj13, 1998,292SCRA478.
5 8iJao v. Saua Mbian Ames, GR No. 183915, Dec. 14, 2011, 652 SCRA 540, 549.
' lkbt>Transl0rgam:ioo,lnc.v.N.RC,G.RNo.122046,Jan.16.1998,284SCRA308.
1 Mai 300(a) 1285(a)J, Laba Code.
1 Sl'ie .fie Gap. v. National Federabi dl.aba, GR. No.153148,J\.fy 15, 2005.
742 B~R REVIEWER ON lABOR lAW
3. LIABILITY FOR DAMAGES.
The failure by the resigning employee to comply with the legal
· ent of service of a written notice (resignation letter) at least 30 days from
reqwrem . . . . • ·d b nl · makin
· ff tivity date does not result 1n making his resignatton v91 ut o y tn g
its e 1ec fc · ... J: _ ,M• h f
him liable for damages.' Thus, a resignation made e_,ccttve 1m"!e"':'te!f or s on o
the 30-day period violates the law and may sub1ethct ~e resdi1~ng e~ployee tof
damages, if there exists no just cause to warrant e tmme ate tenrunatton o
employment by the employee.
The law is silent on the form or amount_ of d~ges for _which ~n
employee who violates the one (1) month prior wntten nottce reqw.rement In
Article 300 [285] may be held answerable. lt may be deduced, however, that the
damages contemplated therein refer to actual damages that the employer may have
suffered as a consequence of the undue termination of the employment
relationship by the employee.
·nms, in Almario JJ. Philippine Airli111s, Jm·. 2 the Court a~~ed the right of
the employer to be reimbursed for th_e cost of training a ~~tgrung empl?yee to
higher position. Petitioner here was hired by respondent au:line as a Bo~g 747
Systems Engineer. Later, petitioner, then about 39 years of age_ ~d a B~ctng 737
(B-737) FlrSt Officer at PAL, successfully bid _f?r the hi~her post_ttJn of ~~us 300
(A-300) First Officer. Since said higher posltlon req~e~ additt~n~ traullng, he
underwtnt, at pAL's expense, more than 5 months of tra.uung ~onststtng of gro~d
schooling in Manila and flight simulation in Melbo~e, Australia. After complettng
the training course, petitioner served as A-300 Fust Officer of P4, but after 8
months of service as such, he tendered his resignation, for "perio11al reaso/lJ." In
holding petitioner liable to reimburse PAL for the ~ ~osts, the Sup~me
Court cited, among other grounds, Article 22 of the Civil .Cod~ on uniust
enrichment which recognizes the principle that one may not ennch himself at the
expense of another. Thus, petitioner was ordered to _pay PAL the s~ of
PS59,739.90, to bear the legal interest rate of 6% p~r annum fro~- the filing of
PAL's complaint on February 11, 1997 until the finality of the deaston, the High
Court ratiocinated:
"Admittedly, PAL invested for the training of Almario to
enable him to acquire a higher levd of skill, proficicn~,. O( technical
competence so that he could efficiently discharge the pos•?~n of A-300
First Officer. Given that, PAL expected to recover the trauuog costs by
availing of Almario's services for at least three years. 1:11; exp~cta~on
of PAL was not fully realized, however, due to Almario s tCS1g11at1on
after only cighr months of service following the completion of his
training course. He cannot therefore refuse to reimburse the costs of
tr.lining without violating tlic principle of unjust enrichment."
1 Serranov.NlRC,G.RNo. 117040,Jcn27.200'.l.
l GR No. 170928, Sepl 11, 2007.
CHAl'TERSI)(
POST-EMPLOYMENT 743
The above ruling in Almario was used as basis in allowing the deduction of
the same t.raining cost from the retirement benefits due a pilot in ElttJr v. Philippint
Airlints, l11c. 1 The Court considered PAL's act of sending its crew for training as an
investment which made PAL expect an equitable return in the fonn of service
within a reasonable period of time such that a pilot who decides to leave the
company before it is able to regain the full value of the investment must
proportionately reimburse the latter for the costs of his training. To allow the
petitioner to leave the company before it has fulfilled the reasonable expectation of
service on his pan will amount to unjust enrichment.
4. SOME PRINCIPLES ON VOLUNTARY RESIGNATION:
(A) On the 30-day prior written notice rule.
(1) The 30-day period is for the benefit of the employer and not for the
resigning employec.2 The employer may thus:
(a) Insist on the full observance by the resigning employee of the
entire ~0 days; or
(b) Shorten it to such number of days as it may deem appropriate or
necessary.3 or
(c) Waive it completely and make the resignation effective
immediately.
The employer has the discretion to waive such period. Its purpose is to
afford the employer enough time to hire another employee if needed
and to see to it that there is proper tum-over of the tasks which the
resigning employee may be handling.4
(2) The unilateral extension by the employer of the period beyond 30 days
is not allowed since the 30-day perioq. is the maximum allowed by law.
In order to make the extension valid and legal, the employer should
secure the written consent of the resigning employee to such extension.
It is of course different if it is the resigning employee who voluntarily
sets the effectivity of his resignation beyond the 30-day period. If the
employer consents to the prolonged period, the employee cannot be
heard to complain later on that he was made to serve against his will, in
violation of the period mentioned in Article 300 [285).
(3) The resigning employee is still required to work during the legally
mandated 30-day period or such sh?rter period as may be unilaterally
prescribed by the employer or such cxter..ded period as may be mutually
agreed upon by the resigning employee and the employer. Failure on
1
GR No. 181995,Jtij 16, 2012.
1 Ptm:o roosmes, 11c. v.~c. GR No. 118041, m 11, 1997, mOCRA 286.
l HedlanoYa &gay Vrknez l.avyefs V. Attf. lenyO, Mame, GR No. 198261, Oct. 16, 2013.
• Id.
 SAR REVIEWER ON LABOR LAW
744
the part of the resigning employee to work during such period will
subject him to damage suit
(B) Qn acceptance of resignation.
(1) Written acceptance of resignation is necessary to make it binding and
effective.
(2) Resigning employee may withdraw his resignation any time before
acceptance is made by the employer. Once accepted, however,
withdrawal thereof can no longer be made by the resigning employee,
ex,tpt with the consent or agreement of the e'mployer.1
(3) A duly accepted resignation effectively terminates the employer-
employee relationship.2
(4) The employee cannot claim illegal dismissal if the employer does not
accept withdrawal of the duly accepted resignation.3 To say that the
employee who has resigned is illegally dismissed is to encroach upon
the right of the employer to hi.re persons who will be of service to him.'
Such acceptance of the withdrawal of the resignation is, it must be
emphasized, the employer's sole prerogative.5
(5) Acceptance of resignation should be expressed by the employer in no
uncertain terms. The usual practice of employers of simply noting such
acceptance on the face of the resignation letter and not communi_c a~g
it to the resigning employee is not the acceptance that would be bmding
on the latter. The acceptance should be in writing and must be duly
conveyed to and served upon the resigning employee in order to bind
him. If not duly informed of such acceptance, the resigning employee
may still validly withdraw his resignation anytime. 'The date of
acceptance therefore becomes a critical factor to consider in
· detecmining whether or not the withdrawal of resignation was
seasonably made by the resigning employee. Needlessly, before service
to him of such notice of acceptance by the employer, the resignation
may be withdrawn anytime 6
(C) On voluntariness of resignation,
(1) Resignation of managerial employees is different from that of rank.-and-
file employees. Being managerial employees holding responsible
positions, they are not ordinary laborers or rank-and-file personnel who
~ay not be able to completely comprehend and realize the
1 ~Tcxiay,n::.vJ4RC,GRNo.112965,Jai.30.1997,334Pli854,877.
2 BM3Recatls(Phis,1 llc.v.Apaeci,,.G.RNo.153290,Sept.5,2007.
l ~Mil'line,llc.v.NlRC,GRNo.81087,June19, 1991, 198SCRA318.
' Id.
5 ~ ' G. R Nos.184517 &186641, Oct8,2013(En Batj.
1 I/ail v, Avesco Mlteli'g Coqxraia1. GR No. 1TT414, NoY. 14, 2008.
CHAITTR SIX
745
POST-EMPLOYMENT
c?nsequences o~ their acts. They are educated individuals. Under these
ru~un:istances, tt can hardly be said that they were coerced into
restgnmg from the company. The quitclaim they executed in favor of
the company amounts to a valid and binding compromise agreement.
To _allow them to. repudiate the same will be to countenance unjust
ennchment on theu: part. The Court will not permit such a situation.'
(2) Hefty salary and high corporate perks are not indida of involuntariness
of r~signatio~ Employees resign for various reasons. A big salary is
certainly no ~drance to a voluntary cessation· of employment. Human
resource studies2 reveal that various factors (in and out of the
workplace) affect an employee's employment decision.J
(3) Volunta~ess may ~e infe.rred from the language used. A resignation
letter which contuns words of grati~de and appreciation to the
employer can hardly come from an employee who was forced to
res~.4 qcarly, the employee's use of words of appreciation and
gratltu~e negates the, no.tion that she was forced and coerced to resign.5
Allegatlons of coercton are belied by words of gratitude coming from
an employee who is just forced to resign.6
(4) Words of gratitude may not, however, be considered indicative of
volun!a~ess of re; igna~on in certain cases. While resignation letters
contauung words of grantude may indicate that the employees were not
coe~~ed ~to resignation, this fact alone, according to the 2013 en ban,
deCISl~n Jn _SME Bank, ln(. u. De G11Zf11an,1 is not conclusive proof that
they llltelligently, freely and voluntarily resigned. To rule that
resigna~on letters couched in terms of gratitude are, by thcmsch-cs,
conclusive proof that the employees intended to relinquish their posts
v.:ould open the floodgates to possible abuse. In order to withstand the
test of validity, resignations must be. made voluntarily and with the
intention of relinquishing the office, coupled with an act of
relinquishment8 Therefore, in order to determine whether the
ei:nployees truly intended to resign from their respective posts, the
hrlltxTed1laolY f'hi'Rli,es, h:. v.~ G.R. No. 1fl6507, Jai. 23, 'lIXfl.
The lutm resam, sufJes aled as~ No.~ ii Ile decism ii lhis G.bbe Tebn case refef ti lhe ooes mooe lrt
~ P.~ ii tisboct~ Bell!t'i:x'!l"ed, 22-23Vtllere lwasat,,n:ec! flus: "Avaialllertef eitlel'
be ai ild'ltmal leYel Villable a a ~ leYel vaiallle. hilDial level v.ri.ti!s are hlse liat relale ti a petSOfl's
~ SUQl as tis~ hEJ lllJe, germ, raes and maria stalls. On lhe cm haid, gioop leYel ~ ere those
Ila pef1aal to Ile v.ak envrcnnent a n d ~ cJue. Em'4)les d Ills ere carm.ri::aioo pallsns. leal~
st,'e, pa,ver in! l)Q1i:s aid ~ d cooltl nmagemenl. A pmitar vaiallle a a contilabl of srniar a dissimilar
variables cat i'4Jeme Ill eircti,ee to resgn.'
3
<ib!Telecanv.Crisclogo,G.R.No.174644.~.10,'1IXfl,529SCRA811,818.
Viairmv.CA,G.RNo.175,988.~.24,2007;WIHmEneiees,v.~ G.RNo.160348 Oec.17 2004
Bbaov.Sad~Airiles,G.RNo.183915,Dec.14,2011. ' ' ' .
6
hlla.Jr.v.t.«JI.Pllippiles, llc.,G.R. No.175481,No.i.21, 2012.
a ,..vJLRC, GR No. 63370, Nov. 18, 1985; lld's Lav Di:1mary (Re,tsed Fa.r1h Edfu1, 1968).
 BAR R£v1EWER ON lABOR lAW
tenor of the resignation letters cannot be merely relied upon, but must
take into consideration the totality of circumstances in each particular
case.
(5) Here in SME Bank, the records show that some of the respondent
employees only tendered resignation letters because they were led to
believe that, upon re-application, they would be re-employed by the
new management. As it turned out, they were not rehired by the new
management who bought the majority block of the stocks in the bank.
Their reliance on the representation that they would be re-employed
gives credence to their argument that they' merely submitted courtesy
resignation letters because it was demanded of them, and that they had
no real intention of leaving their posts. They therefore did not
voluntarily resign from their work; rather, they were terminated from
their employment
(6) No weight should be given to the employee's resignation letter which
appears to have been written and submitted at the instance of the
employer. Its foan is of the company's and its wordings are more of a
waiver and quitcwm. More so when the supposed resignation was not
acknowledged before a notary public.I
(T) Resignation letters which are similarly worded and of same tenor are
actually waivers or quitclaims which are not sufficient to show valid
separation from work or to bar the employees from assailing their
termination. They also constitute evidence of forced resignation or that
they were summarily dismissed without just cause.2
(8) The voluntariness of the resignation cannot be said to have been
weakened or reduced in efficacy simply because it was tendered under
threat of being terminated for just cause. For as long as the threatened
administrative action is well supported by evidence, the resignation
proferred by the employee to avoid it should continue to be treated as
having been made voluntarily.3
(9) The act of an employee of terminating employment relationship due to
disease is tantamount to resignation.•
(10) The burden of proof devolves on the employer who alleges
voluntariness of resignation. The case of the employer must stllnd or
1 185269,JI.Ile 29,2010; Cabalen ~ement Co, k'c. Y. OJiarrbao, GR. No. 169494,Jlr.,' 24 '2007
A' Prine Secuty Seiw:es, klc. v. NLRC, GR No. 107320,Jat 19,200l; M:bie Protediie &De!edi.'eAgeotyv. ~ .
GRNo.159195,Mr,UXl.5.
2
Great SQM Mnine Ser,ic:es Qxpotalion v. Acuna, G.R No. 140189, Feb. 28, 2005; !lJe AlxJel M:rlpower .rid
Sea.ritf SeM:es, k'c. v. Hal. CA, GR No.161196,», 28, 2008.
3 GR.No. 148931,Sept.12,m.
£man:in v. I-I.RC, GR No. 154376, Sept 30, 2005, 471 SCAA559, citrg Tr.MS v. Tacoma Ni; Schoa District, 120
Wash. >i)p. 542, 85 P.3d 959, "4atn 9, 2004 !See F<XmJCe 22 D1erea).
4
Waue!v. Yeo HM Qm, G.R No. 169191,June 1, 2011.
CHAM'ERSIX
POST-EMPLOYMENT 747
fall on its own merits and not on the weakness of th 1 ,
defense.1 e emp oyee s
(11) Burden of proof shifts to the employee to prove iovoluntann
·e f
· ·
res1gnaoon.2 ss 0
(D) O_n v~lidity of pving employee the option to resign instead of being
dismissed for Just or authorized cause.
• Giving ~n option to_ an erring employee to volunurily resign rather than
be temunated for ;mt ca111t has been upheld as valid in a number of
3
cas_es. Io Cath'!! Pacific Ainv~1, ud. ·v. Morin,• respondent was asked to
resign voluntarily or else face the adverse consequences of not being
granted regular employment on account of unsatisfactory work
perfog_naoce. H~d he resigned voluntarily before the expiry of the
p~obatlonary p~n~d, he would have brighter prospects of employment
wi_th another au:lin~ or other business entities. However, respondent
reiected the suggestton and opted to file his complaint with the NLRC.
A_ d~ci~ion _of pe_titioner to afford respondent a graceful exit is perfectly
within its discretton.s
In S11thtrland 11. Labrador,6 respondent, a call center agent, has committed
sev~~ ~c~ons ~hi~ were estllblished by evidence d ~ the
adnurustraove mvesogaoon conducted by petitioners. However instead
of being dismissed for just cause, he requested that he be all~wed to
resign . from th~ company effective immediately, to protect his
reputation and his future employment chances, to which petitioners
agr~ed Ho:-1'.ever, he later filed a constructive/illegal dismissal case
agamst petitioners. Raised as one of the issues was whether his
resignation letter . w_as voluntarily executed. The Supreme Court,
however, found this issue moot. This is so because even if respondent
Labrador had not submitted his resignation letter, petitioner Sutherland
~uld still not be ~eld liable for constructive dismissal given the existing
Just cause to ternunate his employment.
(E) On vali~i1t,y of Special Voluntary Resignation (SVR) Program,
(1) Emp!oyers .may_lawfully and effectively reduce their personnel by
offeang res1gnaoon benefits through a Voluntary Resignation Program
Payno v. Oriloo Tradi,g 9,'cJI, G.R No. 175345, ~ -19, 2009; ~ v. Equitable Genera Selvioes, h:., GR No.
1
Blbao v. Sa.d ~ Ames, G!l No. 183915, Dec. 14, 2011;Vam v. CA (Foone- 17'1 ·~ ) , G.R t-.b. 175988,
2
3
~ -24, 2007; DgiEI Teleamn.nrati:ns Phippi,es, k'c. v. Soo.v-o, GR. No. 166039,Jltle 26,2006.
Ima E. Belaunl.ara1 v. NLRC, GR No. 120038, Dec. 23, 1996,265 SCRA BOO.
Wili Ham Enterprises v. Maghlr,q>, GR. No. 160348, Dec. 17, 2004; See alsoOli.wig Kai Shek Colege Y. Rasanda M
6
Torres, GR No. 1 ~, Ajri 02. ~ 14; Mandapa v. Add FOla! Peisonne! Servres, h:., GR No. 180285, », 6, 2010.
Mlelf.m Gbba Servres {l'hlq)nes), k'c. v. libada,GR. No. 193107, Mlftt124, 2014.
 8AR Rl:VIEWER ON I.ABOR I.AW
where employees are afforded the right to voluntarily tenninate the
employment relationship. If made in good faith, such a scheme should
be considered a valid form of teaninating employment. Consequently,
the employer need not comply with the requirement under Article 298
[283] of the ~bor Code that notice be sent tc:5 the Department of
Labor and Employment at least one (1) month prior to the effectivity
of the teanination of employment. The reason is that by applying to
voluntarily resign, the employee thereby acknowledges the existence of
a valid cause for teaninating his employme~t.1
(F) On employment elsewhere.
(1) Assumption of new job with another employer by resigning employee
prior to current employer's acceptance of resignation indicates intent to
relinquish position.2
(2) Employment elsewhere dwing the peodeocy of a case does not amount
to resignation.3
II.
INVOLUNTARY RESIGNATION
(Termination by Employee With Just Cause}
1. INVOLUNTARY RESIGNATION.
The teanination initiated by the employee based on the just causes
described and enumerated in paragraph (b) of Article 300 (285] is in the nature of
involuntary resignation. Thus, an employee may put an end to the employment
relationship without need of serving any notice on the employer by reason of 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; . been illegally terminated or discharged and as such th,e termination is implied to be
(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.'
' M! l'tilwr,es, h:.V. ~c. GR No.1ml9, Sept. 13, 2001; rCemaicra Halttrcre, re V. NLRC, GR No. aono,
Au].10, 1989, 176 SCRA256.
I ~Today,lnc.v.NlRC,GRNo.112965,Jal.30, 1997,267-SCRA202.
Great SouMl Mmne SeviceS Coqxxalion V. Arma, GR. No. 140189, Feb. 28, 2005.
' Astide300(b) ~85(b)J,Ima Code; Sedxrl 11, Rule~ Book VI,rues ID n-plernertlhe tmaCooe.
CIIArTERSI~
rOST-EMrLOYMENT
749
Teanination initiated by an employee is involuntary in character if the just
causes e.,cpressly enumerated above or other similar or analogous circumstances
exist in a given situation. In this instance, the service of a written notice to the
employer commonly called 'mignation letter" becomes unnecessary and immaterial
to determine the validity or legality of the termination.. The law expressly does not
require such notice.
Thus, unlike resignation without just cause under.paragraph (a) of Article
300 (285], where the law requires prior written notice, the employee may teaninate
his employment without serving any notice, verbal or written, to the employer if
such is occasioned by a_ny of the just causes mentioned in paragraph (b) or by any
act, fact or circumstance clearly showing the involuntary nature of the resignation.
Ill.
CONSTRUCTIVE DISMISSAL
1. CONSTRUCTIVE DISMISSAL.
"There is constructive dismissal when any or :ill of the following three (3)
circumstances exist
(1) When continued employment is rend~ed impossible, unreasonable or
unlikely;
(2) When there is a demotion in rank and/or 3 diminution in pay; or
(3) When a clear discrimination, insensibility or disdain by an employer
becomes unbearable to the employee that it could foreclose any choice
by him except to forego his continued employment.1
Verily, the law recognizes and resolves this .sip.iation in favor of employees
in order to protect their rights and interests from the coercive acts of the
employer.2 .Whereas valid termination by the employee under Article 300 [285]
contemplates such act to be voluntary, an employee who is forced to relinquish the
position held through the employer's unfair or unreasonable acts is deemed to have
i11110l11nta,y.3 Indeed, the law on constructive dismissal is a well-settled rule in both
Philippine and foreign jurisdictions.4
2. COMMON DENOMINATOR.
Involuntary and forced resignations are embraced within the general
concept of construcuve dismissal. The common character pervading involuntary or
1
Gnt G. k:o v. Syslems TeclYdcxJy ns~.h:., GR No. 185100,Jt.t,,09, 201t
2 Daoood T~and~ Ong v.Fe4)e llamas, Jr., GR No. 100724, Mm 12,2014.
3 Gklbe Telecoo1, Inc.v.Fklrendo-flre,, G.R No. 150092, Oct. 20, 2003.
• kl.
750 BAR RfVIEWER ON lABOll I.AW
forced resignation or constructive dismissal is the act of •~11itting" from
employment by the employee becaus~ of the attendant j_ust ca~ses, acts, facts or
circumstances which render the continued employment unposstble, wueasonable
or unlikely.I Thus, if there is no cessation of work, there can be no constructive
dismissal.2 •
3. TEST OF CONSTRUCTIVE DISMISSAL.
The test of constructive dismissal is whether a reasonable person in the
employee's position would have felt <;ompelle~· to give. up his position ~~er the
circumstances.3 It is an act amounting to disnussal but made to appear as if 1t were
not. ht fact, the employee who_ is c~ns~c~ely dismissed ~y ~e all~~ to ~e~p
on coming to work.• Construct1ve dism1ssal 1s therefore a dis1111ssal m disgiuse.
. Following above test, it was held in Tuason v. Bank of Commme,6 that
petitioner was constructively dismissed by respondent BOC not only when the
latter has exerted pressure on petitioner to resign from her work but when the
Conner, while on leave, was replaced by another in her post.
In accordance with the same test, the following acts were considered
indicative of constructive dismissal in the case of Globe Tek~m, Inr. v. Florenda-
Fkm:1
"Although respondent continued to have the rank of
supervisor, her functions were reduced to th~sc of a mere ho_usc-to-
house sales agent This amounted to a demouon. She was depnved of
bonu~es allowances and other benefits given to anotbcr of the same or
similar r:ink and position, benefits that she used to receive. Despite her
having complied with company policies, her immediate supe~or, Luzon
Head-Regional Sales Cachola M. Santos, never accom~~hed and
submincd her performance evaluation report thereby depnVlllg her of
salary increases, bonuses and other incen~ves. ~he intolerable,
unreasonable and hostile conditions in the working envuonment set by
Cacbolo M. Santos, Globe Telecom manager, undoubtedly coerced
respondent to relinquish her employment involuntarily, for which she
sought redress through legal means. This is a clear-cut case of
constructive dismissal."
The fact that respondent., in Tan Brothers v. Eiruduo,8 wa~ deprived _of
office space, was not given further work assignment and was not p:ud her salanes
' !Jobie ProtedM! &~ Agencyv.~ . G.R No. 159195, tky 9, 2005.
lkwersoly of Ile 1rmm11!te Cmcep1m v.~C ood Teodool Axalan, GR No. 181146, Jn 26, 2011.
i l.'d&fr.o,paaoon, h:. v. NLRC, GR tb 19342l,June04, 2014.
CRC Agrio.A.ral Tracilg v.NLRC, GR No. lTT664,Dec. 23, 2009, 609 SCRA 138, 149.
Arg v.Sai J<aiui,,s., G.R No. 185549,.AIJ.l. 01. 2013; Gaa-9 v. Malasul}.i, GR No.174173, Mirth 1, 2012.
G.RNo. 192076,Nov.2l,2012. . 1
G.R No. 150092,Ott. 20, 2003 (ResolJtmai IMal ilr~pnxtUJ.ml ai ~ 27, 2002).
a Tan Qoeiers Co!poration of Basm Cil'(v. fsrudero, G.R No. 188711, Jut,, 08, 2013.
CHAl'TER SIX
751
POST-EMPLOYMENT
until she was left with no choice but to stop reporting for work, all combine to
make out a clear case of constructive dismissal.
Petitioner, in another case, Philippine Advertiling Co111ueror1, Inr. v. NLRC, •
argues that private respondent did not suffer any demotion in rank since he has
"retained his rank of Vice President., continued to work in the same office, and
reccived the same salaries, benefits and privileges." In holding that pri~te
respondent was constructively dismissal, the Court emphasized that constructive
dismissal does not always . involve such kinds of diminution; an act of clear
discrimination, insensibility, or disdain by an employer may become so unbearable
on· the part of the employee that it could foreclose any choice by him except to
forego his continued employment.
The fact that an employee continues to report for wo.rk, according to The
Or&hard Go![ and Country Club v. Franciico,2 does not suggest that constructive
dismissal has not occurred not does it operate as a waiver. Constructive dismissal
occurs not when the employee ceases to report for work, but when the
unwarranted acts of the employer are committed to fue end that the employee's
continued employment shall become so intolerable. In these difficult times, an
employee may be left with no choice but to continue with his employment despite
abuses committed against him by the employer, and even during the pendency of a
labor dispute between them. 'Ibis should not be taken against the employee.
Instead, we . must share the burden of his plight, ever aware of the precept that
necessitous men are not free men.
4. VOLUNTARY RESIGNATION VS. CONSTRCCTIVE DISMISSAL.
Voluntary re~ignation is obviously distinct from constructive dismissal.
For instance, an employee who tendered her voluntary resignation and signed the
quitclaim after receiving all the benefits due her for her separation cannot claim
that she was constructively dismissed. The fact o"f her transfer due to a new
secretarial staffing pattern which she objected to, or the alleged hostility on the part
of her employer, cannot render nugatory the voluntar:, nature of her resignation.
She was not eased out much less ~s she forced to resign. This is a case of
voluntary resignation and not constructive dismissal.3
The transfer of the location of an employee's office from under the steps
of the stairs to the kitchen which allegedly caused her mental torture which forced
her to resign does not amount to constructive dismissal but a case of voluntary
resignation. It was not shown that her transfer was prompted by ill will of
•
GR No. 1200)8, Ott. 18, 1996.
GR No. 178125, "9th 18, 2013.
PhTwne\'heless, re ~ v . NlRC,G.R.No.112963,Jlf/20, 1999

SAR REVIEWER ON I.ABOR I.AW
752
management. It merely involved a change in location of the office and not a change
of her position. 1
An indicatio·n that the resignation was voluntary and does not constitute
constructive dismissal is the act of the employee who resigned and took a leave of
absence on the date of effectivity of his resignation and while on leave, he worked
for the release of his clearance and the payment of his 13th month pay and leave
pay benefits. In doing so, he, in fact, performed 3:1! ~at an employee normally does
after he resigns. If indeed he was forced tnto restgrung, he would not have sought
to be cleared by his employer and to be paid the mollies due him. The voluntary
nature of his acts has manifested itsdf clearly and belied his claim of constructive
dismissal.2
An example of a resignation which was deemed indicative of c?nst~~tive
dismissal is Drtamland Houf Resort 11. Johnson.3 Respondent, an Australian ottzen,
worked as Operations Manager for about 3 months with ~etiti~ner hotel but ~e
was not paid his salaries corresponding thereto, prompting him to tender his
resignation letter, the tenor of which reads:
"I hereby'tender my resignation to you, Mr[.] Wes Prentice,
Dreamland Resort, Subic, Zambales, Philippines.
"Since joining Dreamland Resort & Hotel over three months
ago, I have put my heart and soul into the business. I have donated
many hours of my personal time. I have frequently w~rked seven ~ys a
week and twelve to thirteen hours a day. I am now literally penniless,
i:lue totally to the fact that I have lent ~u and your resort/hotel
well over $200,000AU (approx. ·Smillion pesos) and your non-
payment of wages to me from 111 August 2007 as per Employment
Agreement. xxx.4
Toe above statement only goes to show that while it was Johnson who
tendered his resignation, it was due to the petitioners' acts that he was constrained
to resign. The petitioners cannot expect Johnson to tolerate wo~g for them
without any compensation. It is impossible, unreasonable or unlikely that any
employee, such as Johnson, would continue working for an employer who does not
pay him his salaries.
5. ILLEGAL (ACTUAL) DISMISSAL VS. CONSTRUCTIVE
DISMISSAL.
There obviously is a fine distinction between "illegal actual" dismissa~
on the one hand, and "constructive" dismissa~ on .the other, although, in some
1 Admi'al Rea'fy Catim,, ~ ~Hole]v. NI.RC, GR No. 11?()43, way 18, 1999.
l Gov.CA,G.RNo.158922,Mir,'28,2004.
3 G.R No.191455, Mrth 12, 2014.
• emphasis Md imersamg suppled ii the a'gilal lex!d toe decilioo.
CHAITTRSIX 753
POST-EMPLOYMENT
cases,1 the Supreme Court conjoins the words "iDegal ctmstructive" dismissal or
"unlawful constructive" dismissal to underscore 6 e patent illegality of the
dismissal.
"Illegal dismissal" or "actual dismissal" is readily shown by the act of
the employer in openly and expressly seeking and effecting the termination of
employment of an employee; while "constructive dismissal, " being dismissal in
disguise, is not readily shown or indicated by any similar act of the employer that
would openly and expressly show its desire and intent to terminate the
employment relationship. Notably, constructive dismissal does not always involve
forthright dismissal or even diminution in rank, oJmpensation, benefit and
privileges.2
More concretely, the employer in illegal dismissal cases would normally
defend and justify the termination but in constructive dismissal, there being no
open and express dismissal to speak o~ the employer would normally contend that
there was no termination at all.
In terms of evidence, in illegal dismissal cases, documentary, testimonial
and other forms of evidence are adduc~ by the employer to secure affirmation
from the courts of the validity of the termination; in ,ons/111,tive di.rmiJsal, the
employer, who no~y denies the termination, would P.tesent evidence and
advance arguments against the circumstantial evidence being presented by the
employee to prove his constructive dismissal
As far a_s the reliefs under Article 294 [279]3 of the Labor Code are
concerned, the same are available to both cases of illegaiand cons/111clive dismissal.4
6. CONSTRUCTIVE DISMISSAL VIS-A.-VISTRANSFER OF
EMPLOYEE.
a. Conditions when transfer constitutes constructive dismissal.
While transferring an employee from one position to another or from one
workplace to another within the same establishment generally does not amount to
constructive dismissal, however, it may be considered constructive dismissal when
any or all of the following conditions concur:
1 See I« ils1in:e the 2014 cased Gi1y G. l:ov. Syslfms Teclrlc:b.lY lnsrue, h:., GR No. 185100, Jlif 09, 2014,\\hece
lhe q>eniY,I ~ d lhe decisiln sties: "Mien miler enl]tJyee is sax! after ~ ID a posioon v.ilich Ille
empbjer dains has been aiolshed, 'Mile t,e erl"4)bJee 'MlO Im kl Vaca? lhe sane is l'1lnslerred 3)ansl her wi ID a
posfulv.llk:h does not existIn the~ slrudtre.tiere lsevklerdy acased~ <XXlStlJdve asmissct.
2 Hya1! Taxi SeM:1!S, ~ v. Cainoy. G.R No. 143204, JI.re 26, 2001.
Al1tle 2941279i Security of Terua - h cases cf 18,lUB' ~ lhe ~ shal not tenmate the SEMCeS cA an
BTIPlo','ee except fer ajJs1 causeocvdleo amized bylhis TIie. AA enpklyee llf1o is lllj.tstJo/ ~ tan IIO'k ma! be
enlilled ID reilslaenert llitn.t klss d smmt rijhts Md ck ~ Md ID his ltd baa;waJes. i'dJsM! d
aklYalc:es•.m ID his Qher benefits oc M- nmetay ~ ~ from Ile ime his atrpensalicll was ~
from hin ~ ID toe fine dtis ~ ~
• ~ Roche hlema&lnal v. NLRC, GR No. 123825,h.g.31, 1999; ~ SUAied-
754 IIAR REVIEWER ON LABOR I.AW
(1) When the transfer is wu:easonable, inconvenient or prejudicial to the
employee;
(2) When the transfer involves a demotion in rank or diminution of
salaries, benefits and other privileges; or
(3) When the employer performs a clear act., of discrimination,
insensibility, or disdain towards the employee, which forecloses any
choice by the latter except to forego his continued employment. 1
To illustrate, the transfer of the respondent Assistant Vice-President in
the case of The Philippine Amerfran Ufa and General l,u11r~a Co. v. Gramajil from the
Pensions Department to the Legal Department was declared not a legitimate
exercise of management prerogative on the part of petitioner. Before the order to
transfer was made, discrimination, bad faith, and disdain towards respondent were
already displayed by petitioner leading to the conclusion that she was constructively
dismissed.
The case of Star Paplr Corp. v. Espirityl is another good example of transfer
amounting to constructive dismissal. Here, the combined circumstances of the
immediate transfer of respondents to far-off provinces after their refusal to sign the
signature sheet of the docwnent for the ratification of the Addendum to the 1995
CB,\, and petitioner's emphasis on respondents' alleged previous infractions at
work, poin1 to the fact that the transfers arc motivated by ill-will on the part of
petitioner. Petitioner's order for respondents to report for wotk in petitioner's
provincial branches on the very same day that they were served with the Memo of
Transfer is extremely unreasonable as the relocation would unduly inconvenience
not only ·respondents but their respective families. Petitioner therefore failed to
sufficiently prove that respondents' transfer is for a just and valid cause and not
unreasonable, inconvenient, or prejudicial to them, making it liable for constructive
dismissal
In Jarria v. NLRC,4 private respondent, a machinist who had been
employed with the petitioner company for 16 years, was reduced to th_e service job
of transporting filling materials after he failed to report for WQrk for one (1) day on
account of an urgent family matter. This is one instance where the employee's
demotion was rightly held to be an unlawful constructive dismissal because the
employer failed to show substantial proof that the employee's demotion was for a
valid and just cause.
b. The transfer is valid when none ofthe conditions are present.
Needlessly, when all the three (3) conditions afore-mentioned are not
attendant in a given case, the transfer must necessarily be affirmed as valid and
' ~ Ho!el Resortv. Jomsoo,GR No. 191455, t.'ath 12, 2014.
1
GR.No.156963,tbl.11.2004.
1
GRNo.154006,NoY.2.mi.
' Jan:ia Mld!i1e Slq> all AUD SLw,, n:.v. NLRC, G.R No. 118045, Jan. 2, 1997, 266 SCRA 97; 334 P1i 84.
CHAPTUSIX
rosi·-EMPLOYMENT 755
legal. Thus, the employee may not complain that it amounts to a constructive
dismissal. 1
· . . Perk.son v. &binson1 Supermarkll Co,poraJion,2 exemplifies valid transfer.
Petition~~ contends that she was constructivdy dismissed because her transfer from
her ~s1t1on of Category Buyer, a frontline position in the day-to-day business
operations of respondent supermarket, to Provincial Coordinator constitutes a
demotion since the latter position was non-supervisory and clerical in na~e.
Despite several directives, the petitioner refused to tum over her responsibilities to
the new Category Buyer, or to accept her new responsibilities as Provincial
Coordina~or. _Th~ High Court, ho~ever, declared that petitioner was not
constructively dis!lllssed because the ~cumstances show that such transfer was not
unre~son~ble, inconvenient, or prejudicial to her. She failed to dispute that the job
classifications of Category Buyer and Provincial Coordinator are similar or that
they command a similar salary structure and responsibilities. The P~ovincial
Coor~ator'~ po~ition doe~ not involve mere clerical functions but requires the
exer~JSe. of discre~on &on_i ttme to time, as well as independent judgment, since the
Provmctal Coordinator g1Ves appropriate recommendations 10 management and
ensures ~e faithful implementation of policies and programs of the company. It
even has influence over a Category Buyer because of its recommendatory function
that ~ables th~ Category Buyer to make right decisions on assortment, price and
quantiiy of the 11ems to be sold by the_store. Further, it is untenable for petitioner
to contend that the respondents deliberately held her up to mockery and ridicule
when they cut off her email access, sent memoranda to her. clients that she was 00
longer a Category Buyer, and to the various Robinsons branches that she was now
a Provincial Coordinator on floating status and that Padilla was taking over her
position as the new Category Buyer. It suffices to state that these measures are the
logical steps to take for petitioner's unjustified resistance to her transfer, and were
not intended to subject her to public embarrassment .
7. OTHER INSTANGES OF CONSTRUCTIVE DISMISSAL OR
INVOLUNTARY: RESIGNATION.
• If transfer is occasioned by a government directive, there can be no
constructive dismissal to speak of.l
• Denying entry to the workers to their work-area and placing them on shifts
"not by weeks but almost by month" by reducing their workweek to three
days.•
• Barring the employees from entering the premises whenever tl1ey would repor1
for work in the morning without any justifiable reason, and they were made to
Pedcson V. ~ ~etCorporatioo, GR. No. 198534, Jtlf 03, 2013.
GR No.198534.Jut,,03.2013.
3
Bisi)Mrggag.?,,asaTl)'tllv.t'lRC,G.R.No.151300,0a.15,2008.
4
Pasi;JCylilderMg, Cap.v.Rolb.G.R.No.173631.~8,2010.

756 BAR REVIEWER ON LABOR LAW
wait for a certain employee who would arrive in the office at around noon,
after they had waited for a long time and had left.I
• Instructing the employee to go on indefinite leave and asking him to retum to
work only after more than three (3) years from the ~~ he was instructed to
go on indefinite leave during which period his salaries were withheld.2
• Implementing a rotation plan for reasons other than business necessity.3
• Sending to an employee a notice of indefinite suspension which is tantamount
to dismissal 4 ;.
• Demoting a worker or re-assigning him involving a demotion in rank or
diminution of salaries, benefits and other privileges.5
• Reducing the employee's functions which were originally supervisory in nature
and such reduction is not grounded on valid grounds such as genuine business
necessity.6
• Imposing indefinite preventive suspension without actually conducting any
investigation. It was only after almost one (1) year that the employer made
known the findings in its investigation which was conducted ex parte.1
• Threatening a sickly employee with dismissal if he will not retire and
promising employment to his son and daughter. The employee retired and
signed two (2) quitclaims entitled "Receipt and Release" in favor of the
company.8
• Forcing the employee to resign with threat that if he will not resign, he will file
charges against him that would adversely affect his chances for new
employment9
• Asking the employee to choose whether to continue as a faculty member or to
withdmw as a lawyer against the mayor with whom the former owes certain
favors, makes the cessation from employment of said employee not voluntary.
Such act is.in the nature of a contrivance to effect a dismissal without cause.1°
• Asking the employee to file a resignation on the condition or promise that she
would be given priority for re-employment and ~ consideration of
immediately paying her two (2) m~nths' vacation which she desperately
1 New&er~.h:.v.r.A,G.R.No.140555,~14,2005.
2 ~SVmaerrudccr~SeM:es. n:. v.PobYJII\G.R.No.156589,June'O, 2005.
3
llmn SmelyGlass, h:. v. Basn,G.R.No. 154689,Nov. 25,2004.
' OfertiPihkxoEledreCClq)erawe, ~v.NLRC,G.R.t-b.111005,Jut,31, 1995.
5 Gan:iav.NLRC,G.RNo.116568,Sept.3, 1999;0sccrledesma&CoolJlff/v.Nl.RC,G.RNo.110930,Jtt,13, 1995.
6 Gtile Telecxms, "- v. Fbendo.fbes. G.R. No. 150092, Sept. 27, 2002. 390 SCRA 201.
1 C. A1caraa &ScrlS, ~ v. NI.RC, GA No. 73521, Jal. 5, 1994.
a Zurbano.S'.v.Nl.RC,G.RNo.103679,Dec.17, 1993.
t Qiat,mkl1ematb\afTnM!landTcus, ~ v. Nt.RC, G.R. No.100322,Mildl9, 1994.
t0 f&al MEmaria1 Cdeges Fimly Unkln v. NLRC, GR No. 59012-13, Oct. 12. ,989.
•CHAPTER SIX 757
POST-EMPLOYMENT
needed then because ·she wa5 ill. The employer's refusal in bad faith to
reemploy her despite its promis~ to do so amounted to illegal dismissal. l
• Changing the employee,s status from regular to casual constitutes constructive
dismissal2
• Offer made by a labor contractor to reassign its employees to another
company but with no guaranteed working hours and payment of only the
minimum wage. The terms of the redeployment thus became unacceptable for
said employees and foreclosed any choice but to reject the employer's offer,
involving as it does a demotion in status and diminution in pay.3
• Preventing the employee from reporting for work by ordering the guards not
to let her in. This is cleat notice of dismissal 4
• Tansfer of respondent employee from Credit and Collection Manager to
Marketing Assistant which resulted in demotion as it reduced his duties and
responsibilities although there was no corresponding diminution in his salary.
In holding that there was constructive dismissal, the court took note of the
fact that the former position is n;ianagerial while the latter is clerical in nature. 5
• Reducing the number of trips of the drivers and shortening their workdays
which resulted in the dimmution of their pay.6
• Forcing the employee to tender her resignation letter in exchange for her 13th
month pay, the reason being that the employee was fowid by the employer to
have .violated its no-employment-for-relatives-.within-the-third-degree-policy,
she having been imP.regnated by a married co-employee.7
8. SOME PRINCIPLES ON CONSTRUCTIVE DISMISSAL OR
INVOLUNTARY OR FORCED RESIGNATION.
• Mere allegations of tlueat or force do not constitute evidence to support a
finding of forced resignation or constructive dismissal.8
• A threat to sue the employee is not unjust and will not amount to forced
resignation or constructive dismissal. For instance, a threat to file estafa case,
not being an unju$t act, but rather a valid and legal act to enforce a claim,
cannot at all be considered as intimidation. A tlueat to enforce one's claim
1 Reyesv.N.RC, GRNo. 78997,IVJ.31, 1969.
2 9/V. Nl.RC, G.R No. 85385,June 21, 1989.
3 RP. lrrlglasan Ccmuc:fion, n:. v. Areva G.RNo. 156104, June 29, 2004.
c &fdaov. Cmldl Sys1e1n Oratdxl, R.. GA th 171392, Ocl 30, 2006.
s NatisTradff;I Co.. lrc.v.GrikJ.~No.159730,Feb.11,2008.
s .v.JBlllefiXJl&pess,b:,.G.R.No.163775,0d.19,a,7.
1 SlirPll)erQxp.v.Shid.<'miun11:sdt,G.RNo.164774,~ 12,2006.
Mn!apatv.Add Fate Pecsoonef SeMleS, he., G.R. No. 180285, Ju~ 6, 2010.
 BAR REVIEWER ON LABOR LAW
758
through competent authority, if the claim is just or legal, does not vitiate
coosent.1
• Employee who alleges that he was coerced or intimidated into resigning has
the burden to prove such claim.2
• Giving the employee the choice or option between resignation and
investigation is not illegaJ.3
• 'The facts of the case should be considered to determine if there is
constructive dismissal.4 The case should be dismissed if a close scrutiny of
the facts of the case will bear out that the employee indeed failed to state
circumstances substantiating his claim of constructive dismissal.s More so if
the records are bereft of any showing of clear discrimination, insensibility or
disdain on the part of petitioners in transferring respondents - both sewers
on piece-rate basis - to perfocm a different type of sewing job. It is unfair to
charge petitioners with constructive dismissal simply because the respondents
insist that their transfer to a new work assignment was against their will. It
has long been stated that "the objection to the transfer being grounded solely
upon the personal inconvenience or hardship that will be caused to the
employee by reason of the transfer is not a valid reason to disobey an order
of transfer."6
• Voluntary resignation is different from constructive dismissal. An employee
who tendered her voluntary resignation and signed the quitclaim after
receiving all the benefits due her for her separation cannot claim that she was
constructively dismissed.7
D.
PREVENTIVE SUSPENSION
1. LEGAL BASIS.
The Labor Code docs not contain any provmon on preventive
suspensioq. The legal basis for the valid imposition thereof is found in Sections 8
and 9, Ruic XXIII, Book V of the Rules to Implement the Labor Code.8
2. PURPOSE AND JUSTIFICATION.
Preventive suspension may be legally imposed upon an errant employee
only when his alleged violation is the subject of an investigation and it involves a
1 Calirl1a v. t.t.RC, GR No. 105083, h.g.20, 1993, 225 SCRA 526.
2 GMv.GadooMPhnppiies,rc.,GR No. 1n167,Jan.17,2013.
l ~ v . Ml Face Persavlel SeM:es, re., GR No. 180285, July 6, 2010.
1 ~ ~ Recoostudi:xl M,xmert[PRRt.1 V. Pugar, GR No. 169227, Ju~ 5, 2010.
1 Gemna. Jr. v. llank\\;se, Inc., G.R No. 175365, Oct. 23, 2013.
I GR No.1912.81,0ec.05,2012.
1 Concrete Aggregates v. NLRC, G.R. No. 82458, Sept. 7, 1989. ·
1 As anmled byMcie 1, Oepcm,enl Order No. 09, Series ol 1997.
CHAPTER SIX 759
POST-EMPLOYMENT
serious offense/s. Its p~ose is to prevent him from c,using harm or injury to the
company as well as to his fellow employees. It is justified only in cases where the
employee's _continue~ pr~sence in the company premises during the investigation
poses a seaous and unnunent threat to the life or proFerty of the employer or of
the employee's co-workers. Without this threat, preventive suspension is not
. proper}
3. SOME PRINCIPLES ON PREVENTIVE SUSPENSION.
• An employer has the ri_g~t to _preventively suspend the employee during the
pendency of the administranve case against him as a measure of self-
protection.2
• If the basis of the preventive suspension is the employee's absences and
t~rdiness, the _imposition of preventive suspension on him is not justified as
his presence tn the COJI!pany premises does not pose any such serious or
imminent threat to the life or property of the employer or of the employee's
co-workers simply "by incurring repeated absences and tardiness."3
• Th_e grounds ~f violation of the school rules and regulations on the wearing of
uruform, _tardiness or absences, and maliciously spreading false accusations
against the school, do not justify the imposition of preventive suspension.•
• The failure by an employee to attend a meeting called by his supervisor will
not justify his preventive suspension.5 ·
• Preventive suspension does not mean that due pro-:ess may be disregarded.6
• Preventive suspension is not a penalty.7 Preventi~ suspension, by itself, does
not signify that the company has already adjudged the employee guilty of the
charges for which she was asked to answer and explain.8
• Preventive suspen~ion is neither equivalent nor tantamotµ1t to disrnissaJ,9
• Preventive suspension should only be for a maximum period of thirty (30)
days. After the lapse of the 30-day period, the employer is required to reinstate
the worker to his former position or to a substanti.:l.lly equivalent position.
• During the 30-day preventive suspension, the worker is not entitled to his
wages and other benefits. However, if the employer decides, for a justifiable
reason, to extend the period of preventive suspension beyond said 30-day
1 Sedxlns8ard9, RE )0(]11, Bcxi V,Rllles; Astificiov.1-lRC, GR No. 172988, J\tf 26, 2010.
Phffippi'le Nafma Bank v. Velasco, G.R.No.166096,Sept. 11, 2008.
l Vaflaov. Hoo. CA, G.R. No. 146621, July 30, 2004.
• Wocx!ooJe Scllod (now kncw1 as Wo(mjgeColege, rc.Jv. Serro, GR No. ~240, Oct. 29, 2008.
s Mn:akrn ~ Corp. V. Deca'a1, GR No. 158637, Api 12, 2006.
6 RB. Mchael Pressv. Ga.rt, GR No.153510, Feb.13, 2008; Tanalav. NLRC. G.R No. 116588,Jan. 24, 1996.
7 Philippile Airlines, Inc. v. NLRC, G.R. No. 114307, July 8, 1998, 292 SCRA 40.
1 SeealsoAllasFBtiizef Ccrp<mlov. It.RC, GR No. 120030. Ji.r,e 17, 1997, 273 SCRA549.
9 Jo Cilema Corp01a0011 v. Abellafla, G.R No. 132837, June 28, 2001.
 BAR REvlEWIR ON LABOR LAW CHAM1!RSIX
POST-EMPLOYMENT

period, he is obligated to pay the wages and other benefits due the worker
during said period of extension. In such a case, the wotker is not bound to
reimburse the amount paid to him during the extension if the employer
decides to dismiss him after the completion of the investigation. 1
• Extension of period must be justified. During the 30-dat period of preventive
suspension, the employer is expected to conduct and finish the investigation
of the employee's administrative case. The period of thirty (30) days may only
be extended if the employer failed to complete the hearing or investigation
within said period due to justifiable grounds. No extension thereof can be
made based on whimsic~ capricious or unreason~ble grounds. 2
• Preventive suspension lasting long.er than 30 days, without the benefit of valid
extension, amounts to constructive dismissal.3 Similarly, indefinite preventive
suspension amounts to constructive dismissal 4
• Failure to state the duration of the preventive suspension in the notice does
not mean it is indefinite. There is a reasonable and logical presumption that
said suspension in fact has a duration which could very well be not more than
30 days as mandated by law.s
• Salaries should be paid for improperly-imposed preventive suspension.6
• Preventive suspension is different from suspension of operation under Article
301 [286]7 of the Labor Code.8 Pteventive suspension is also different from
"floating status."9
E.
RELIEFS FROM Il,LEGAL DISMISSAL
1. RELIEFS UNDER THE LABOR CODE.
Under Article 294 (279] of the Labor Code, an illegally dismissed
employee is entitled to the following reliefs:
(1) Reinstatement without loss of seniority rights and other privileges;
(2) Full backwagcs, inclusive of allowances; and
(3) Other benefits oi: theit monetary equivalent.
1
Section 9, rue XXlll, Ba V, ~ I D ~ Ile Laber Code, as anended ll'f Mde 1, Oepa1ment Order No. 09,
Seriesd t997l21 m 1997; Seeamfbal BilidSM lsiW(N.E.L 1nc. v. Paez. G.R No.158707,Nov. -o, 2006.
2
Perezv. Phq,pi!e T ~ 111d Teleptme C<rnpaly, G.R t-b.153>48,April 7, 2009, 584 SCAA 110(En Banci
3
~ Taxl&m,es, kv:. v. Camoy, G.R No. 143204, June 26, 2001.
4 is self-executory and must be implemented even during the pendency of the appeal
P'dov.NlRC, GR~ 169812,Feb. 23, 2007;Alcaltara&Soos, lnc.v.NI..RC, G.R. No. 73521,Jmt.5, 1994.
5
~v.Add Face Perscmd SeM:es, R-, G.R No. 180285, Jut, 6, 2010.
5
ProQres.weDeYelo!llnertColpc(alk)n·Alza Hutv. Sannien!D, GR No. 157076, Sept 7, 2007. '
1 Enlilled '\\ten ErrcJb,nmt Not Oeernec1 Temi'laled."
2. OTHER RELIBFS NOT FOUND IN THE LABOR CODE BUT
AWARDED IN ILLEGAL DISMISSAL CASES.
The following reliefs that are awarded in illegal dismissal cases ate not
provided fot in Article 294 [279):
(1) Separation pay in lieu of reinstatement
(2) Indemnity in the form of nominal damages in case of termination
due to just or authorized cause but without affording the employee
procedural due process.
(3) Reliefs to an illegally dismissed employee whose employment is for a
fLmi period consisting of the payment to him/her of his/her salaries
corresponding to the unexpired portion of the employment contract.
(4) Moral and exemplary damages and attomey's fees.
(5) Financial assistance in cases where the employee's dismissal is
declared legal but there are circumstances justifying this award, such
as long years of service, unblemished record of service,
compassionate justice and other considerations.
(6) Legal interest on separation pay, backwages and other monetaiy
awards.
3. ORDER OF TOPICAL DISCUSSION.
The discussion of this topic is divided into the following sections:
I. REINSTATEMENT
11. SEPARATION PAY IN LIEU OF REINSTATEMENT
Ill. BACKWAGES
IV. DISTINCTIONS (BETWEEN REINSTATEMENT, SEPARATION PAY IN
LIEU THEREOF AND BACKWAGES)
I.
REINSTATEMENT
1. LABOR CODE'S PROVISIONS ON REINSTATEMENT.
The Labor Code giants the remedy of i:einstatement in various forms and
situations. Its provisions recognizing reinstatement as a relief are as follows:
1. Article 229 (223] which provides for reinstatement of an employee
whose dismissal is declared illegal by the Labor Arbiter. This form of reinsmement
that may be instituted by the employer. (NOTE: See discussion of this topic under Major
Topic "VIII. Jurisdiction and Reliefs; A. Labor Arbiter", Infra).

a Mri:aunMnnjCorp.v.Deaxm,G.R.No. 158637,~812.2006.
9 Pdov.NLRC,G.RNo.169812,Feb.23,2007.
 BAR REvlEWER. ON lABOR lAW
2. Article 278(g) [263(g)] which provides for automatic retum to work
of all striking or locked-out employees, if a strike or lockout has already taken
place, upon the issuance by the DOLE Secretarr of an_ as~tion o~ certification
order in national interest cases. The employer 1S requued to unmediately resume
operation and readmit all workers under the same terms and_,.conditions prev~g
before the strike or lockout. ·
3. Article 292(b) [277 (b)] which empowers the DOLE Secretu:y to
suspend the effects of tennination pendmg the resolution of the termination
dispute in the· event of a primafatit findmg by the appropriate official of the DOLE
before whom such dispute is pending that the termiktion my cause a serious
labor dispute or is in implementation of a mass lay-of£ ·Such suspension of. the
effects of termination ,vould necessarily results in. the reinstatement of the
dismissed employee while the illegal dismissal case is being heard and litigated.
4. Article 294 (279] which grants reinstatement as a relief to an employee
whose dismissal is declared illegal in a final and executory judgment
5. Article 301 (286) which involves bona-fide suspension of operation for a
period not exceeding six (6) mon!11s or ~~ rendition by an employee of ~tu:y ~r
civic duty. It is requi1ed wider this provtston that the employer should reinstate its
employees upon resumption of its operation ~ch should_ be done before the ~~se
of said six-month period of bonafuk suspension of operatton or after the rendition
by the employees of military or civic duty.
II.
SEPARATION PAY IN LIEU OF REINSTATEMENT
1. LACK OF PROVISION IN THE LABOR CODE.
Article 294 t279) expressly mandates only actual reinstatement and never
the alternative remedy of separation pay in lieu thereof. But jurisprudence clearly
enunciates the award of separation pay in the event actual reinstatement is not
possible nor feasiblt- 1 Undeniably, it is a recourse based on equity that has been
sanctioned by the Supreme Court in a catena of cases.2
2. SPECIFIC INSTANCES.
It is now well-settled that separation pay in lieu of reinstatement should
be awarded in the following situations:
1
Ban Rural Bri, Inc. v. De :·lllZSJIM. G.R No.170904, NOY. 13, 2013; Capiiv. NLRC, GR. No. 117378, Mim\26, 1997.
2 PhlreadTre &~Coll-..-.ation v. Vicente, G.R. No. 142759, Nov. 10, 2004.
CHAPTER SIX 763 •
POST-EMPLOYMENT
(1) Where the continued relationship between the employer and the
employee is no longer viable due to the strained rrhtions and antagonism
between them (Doctrine of Strained Relations).1
(2) When reinstatement proves impossible, impracticable, not feasible or
unwarranted for varied reasons and thus hardly in the best interest of
the parties such as:
(a) Where the employee has already been ~placed perman~tly as
when his position has already been taken over by a regular
employee and there is no substantially equivalent position to which
he may be reinstated.2
(b) Where the dis~ssed employee's position~ n? longer available at
the ~e of reinstatement for reasons not attnbutable to the fault
of the employer.3
(c) When there has been long lapse or passage of time that. the
employee was out of employer's employ from the date of the
dismissal to the final resolution of the case4 or because of the
[ealities of the situation.5
(d) By reason of the injury suffered by the employee. 6
(e) The employee has already reached retirement age under a
Retirement Plan.7
(Q When the illegally dismissed employees are over-age or beyond the
compulsoiy retirement age and their reinstatement would unjustly
prejudice their employer.8
(g) When reinstatement of a security guard can no longer be ordered
because he was past the age qualification for a security guard
license.9
(h) When the general sales agency contract between the employer and
its client has been terminated and reinstatement is no longer
feasible. to
1 Bonbneov. CA, G.R. No. 161596, Feb. 20, 2;013;Alq v. Fm:iano, G.R. No. 185829,~ 25, 2012.
2 San Mgue1 Capoom, v. Teocbsb, GR No. 163033, Oct 2, ~-
3 Tm,ay Dst!By Laber Umn v. N.RC, G.R No. 73352, Dec. 06, 1~.
• SanohFul!ooPhls.,lnc.v.BemantoandTSJhaf,G.R.th 187214,Aug.14,2013.
s Balaquezon BYTUv. Zancxa. G.R. ta. L-46766-7.~ 1, 1980, 97 ~s. maled h Gklbe-Macb'f Calleand Raf'o
Co'poli6ln v. NLRC, GR No. 82511, Mi1tt13, 1992 n Panda'f v. ti.RC, G)t th 67664, Ma'f 20, 1992. The raBX1
t,at,
died by lhe CotJ1 is 1s nd proper ca tis prooa:ted DJm stOJld remail pernmg r« atdllJ ~
heili1g." ~. it Escaoo v. NLRC, G.R No. 160302, Sept. 'II, 2010, ttle bbq factg were ciled: (a) l ~ ~
cisl'Upb am oppl!SSOl upoo t i e ~ {b) "pelfianers PalJslayed Rtl/ trmxe lhan 1s yeas; (c) its nmi1es
had dt!jXedated Md had been replaced\Wllnewer, belll!r01B;md (d) lna.v sold goods ttuwJh ildepeooent dstmulas,
h!reby~ 01epasiblsre1atattosam and cfistlblm.
, Vdllyl.M, Inc. v. RD. GR No. 164820, Malth 28, 3»7.
1 Tares.Jr. v. NLRC, GR No. 172584, Na/. 28, 2008.
a ~v. futill's QmnemalQxp., G.R No.166554, Na/. 'II, 2008.
9 SaVclbza v. NI.RC, GR. No. 182086, Hal. 24, 2010.
10 Asia Pacifc ~ (Phis.], Inc. v. Fmolan. G.R. No. 151370, Dec. 4, 2002.
 IIAR IUvlEWER ON LABOR LAW
(t) Takeover of the business of the employer by another company and
there is no agreement regarding assumption of liability by the
acquiring company. 1
(3) Where the employee decides not to be reinstated as when he does not
pray for reinstatement in his complaint or position paper but asked for
separation pay instead.2
(4) When reinstatement is rendered moot and academic due to
supervening events, such as:
(a) Death of the illegally dismissed employee.3
(b) Declaration of insolvency of the employer by the court.4
(c) Fire which gutted the employer's establishment and resulted in its
total destruction.5
(d) In case the establishment where the employee is to be reinstated
has closed or ceased operations.6
(5) To prevent further delay in the execution of the decision to the
prejudice of private respondent.7
(6) Other circumstances,8 such as (a) when reinstatement is inimical to the
employer's interest;9 (b) reinstatement docs not serve the best interests
of the parties involved;ID (c) the employer is prejudiced by the workers'
continued employment;11 or (d) that it will not serve any prudent
purpose as when supervening facts transpired which made execution
unjust or inequitable.12
3. COMPONENTS.
The amount of separation pay that should be paid in lieu of reinstatement
is not provided under the Labor Code. Jwisprudence, however, dictates that the
following should be included in its computation:
1
Caata v. Cana!oo ~ . GR No. 7t.615, Oct 28, 1986.
1
F. F. Mme Capaafmv. The Hoo. Seam CMsol NIRC, GR No. 152039, Afrl 8, 2005.
3 lneia:11& ielltJI &oadcasfrlg Cap.v. BM&:lai, G.R No. 152843,July 20, 2003.
' Elecru:l(Asia, Inc. vJJeris,GR No.147031,.Aif 27. 2004.
5
Bagag Bay.r, Caporara, v.Opie, GR No.73334, Oec. 8, 1986.
6 Pltev. mx1cia Phis., ric/modata Cap., G.R. No. 178505, Sept. 30, 2008.
1 ~OOJ!ua a i d ~ ~ Cap.'v. S'caza, G.R No. 1n970,Aug. 25, 2010.
Seaa-d Sew::e, Inc. vJlRC,G.R. No. 00500, Oct 5, 1900, 100 SCRA 347.
As C(ed i'1 Escarov. NLRC, GR No.160302, Sept. 27, 2010.
~~Coipaali:nv.lleptAyMnislercilmatld&nplcoJment,G.R. No.L-58927 &L-59870, od.27, 1986.
10
(;eouyTex!il Ws. Inc. v. NLRC, GR.No. TT859, Mi?(25, 1988, 161SCRA528.
11 Gubatv. NLRC, G.R No. 81946,Jufy 13, 1900, 187 SCRA412.
12 Seal.rd Saw:e, Inc. v. NLRC, GR No. 00500, Oct 5, 1990, 100 SCRA 347.
CHAM"ERSIX
POST-EMPLOYMENT
(1) The amount equivalent to at least one (1) month salary or to one (1)
month salary for every year of service, whichever is higher, a fraction
of at least six (6) months being considered as one (1) whole year. 1
(2) Allowances that the employee has been receiving on a regular basis.2
4. PERIOD COVERED.
Separation pay in lieu of reinstatement is computed from the start of
employment up to the time of termination, including the imputed service for
which the employee is entitled to backwages.3 More definitively, it should be
reckoned from the first day of employment until the finality of the decision.'
When the employer has ceased its business operations, the separation pay
in lieu of reinstatement should be computed only up to tl:.e date of closure.5
5. SALARY RATE TO BE USED IN THE COMPUTATION.
The salary rate prevailing at the end of the period ofputative service
should be the basis for computation which refers to the period of imputed
service for which the eqiployee is entitled to backwages.6
6. SOME PRINCIPLES.
.• Award of separation pay in lieu of reinstatement is not proper if there is no
finding of illegality of dismissal. This is so bccau..<e the principal remedy .of
reinstatement may only be granted in case the dismissal is declared illegal.'
• Separation pay, as a substitute remedy, is only proper for reinstatement but not
for backwages.8
• Sepantion pay and backwages are not inconsistent with each other. Hence,
both may be awarded to an illegally dismissed employee.9 The payment of
separation pay is in addition to payment of backwages.10
• Employer does not have the option to choose between actual reinsta1..:meJ11
and separation pay in lieu thereof. Actual reinstatement has the primaq as the
proper relief to which an illegally dismissed employee is enti~ed. Pay~1tnt of
separation pay should be ordered only in the event that there 1s a showlllg that
1 So.Ah East lnenalicraRattrl, Inc. v. Canilg. G_.R No. 186621,Mlth 12. 2014.
2 PlanmProduds,lnc. v. NI.RC, GR.No. 76524,Jat.20, 1989.
l Masaja1a Coocm! Produds v. M.RC, G.R No. 100916, Sept. 3, 1999.
s ~IW>a'c.apaarx:n Md JosephArg v. Baycb ~ . G.R. No. 165160,.Aif 24, 2013.
Masa!Jaia Ccn:re!e Products V. M.RC, G.R No. 100916, Sept. 3,1999.
1 ~ Searly at1d lnvestigalm ~ v. Qut,y, GR No. 186344, Feb. 20, 2013.
Phesdlem ~ Capaati:xiv. Milez, GR No. 161158, Maof 9, 2005.
, St Will's lledi:al eerter, Inc.v. Nolarb, G.R No. 152166, Oct 20,2010.
10 Aliilg v. Fefmlo, G.R No.185829,Afrl 25, 2012.
766 BAR REvlEWERON lABOR. lAW
reinstatement is no longer possible by reason of the justifications allowed
under established jurisprudence.1
• Reinstatement cannot be granted when what is prayed for by employee is
separation pay in lieu thereof.2
• Grant of separation pay in lieu of reinstatement cori;erts the award of
reinstatement into a monetary award; hence, legal interest may be imposed
thereon.3
7. STRAINED RELATIONS RULE
1"be doctrine of "11rai11td "lotion/' or "antipathy and antagoniJm" or
"imlrievabk ulrangemen/' applies when reinstatement will no longer be in the best
interest of both the employee and the employer considering the animosity and
antagonism that exist bcrwcen them brought about by the filing of the labor case.4
However, standing alone, the doctrine of strained relations will not justify an award
of separation pay, a relief granted in instances where the common denominator is
the fact that the employee was dismimd by the employer.s Even in cases of illegal
dismissal, the doctrine of strained relations is not applied indiscriminately as to bar
reinstatement, especially when the employee has not indicated an aversion to
returning ro work or does not occupy a position of trUSt and confidence or has no
say in the operation of the employer's business. Although litigation may also
engender a certain degree of hostility, it has likewise been ruled that the
unclerstandable strain in the parties' relations would not necessarily rule out
reinstatement which would, otherwise, become the rule rather than the exception in
illegal dismissal cases.6
In a plethora of cases, the Supreme Court has been consistent in its
holding that the existence of strained relations between the employer and the
illegally dismissed employee may effectively bar reinstatement of the latter.7
7.1. SOME PRINCIPLES ON STRAINED RELATIONS.
• Strained relations must be proved and demonstrated as a f;tct.8
• Litigation, by itself, does not give rise to strained relations that may justify
non-reinstatement The filing of the complaint for illegil dismissal does not by
itself justify the invocation of the doctrine of strained relations. 9
Jdnm &Jtmsat [Phls.1 re. v..ktrm1 OfJ:e&Sales l.nal- FFW,G.R. No. 172799,.kt)' 6, '11Xff.
SM:Bri, rc.v.DeGumm,G. R.Nos.184517 &186641,0d.8,2013(Enlln).
3
~ ~~ k:e Creanand FastFoodsv. CA (Sixtl Divism), G.R. No. 172149,Feb. 8, 2010, 612 SCRA 10.
' WenshaSpaCenler,rc.v.YIIY:l,GR.~ 185122,lwg.16,2010.
s L.,i SeoJrty and ~mi lqnyv.Oticlf, G.R. No. 186344, Feb. 20, 2013. • Sentilel Security Agency, Inc. v. NLRC, G.R. No 122468, Sepl 3, 1998.
1 M. Cannef CaeJev. Resveda,GR No. 173076, Oct 10,2007;Velascov. lUC, G.R. No.161694,26.Jooe 2005.
Wensha Spa Center, Inc. v. Yung. G.R. No. 185122. At.,g. 16, 201Q.
~oo T ~ Corpcrncm.NlRC, G. R. No. 119500, Aug. 28, 1998.
1 Id.;Capii V. NLRC, G.R. No. 117378, II.Mell 26, 1997. 270 SCRA 488, 495.
CHAl"TER. SIX
rOST-EMrLOYMENT
• No strained relations should arise from a valid aod legal act of asserting one's
right; otherwise, an employee who assertS his right could be easily separated
from the service by merely payu1g his separation pay on the pretext that his
relationship with his employer had already become strained. 1
• Indeed, if the strained relations engendered as a result of litigation are
sufficient to rule out reinstatement, then reinstatement would become the
exception rather than the rule in cases of illegal dismissal2
• The nature of the position is material in detennining the validity of "strained
relations." If the nature of the position requires that trust and confidence be
reposed by the employer upon the employee occupying it as would make
reinstatement adversely affect tl1e efficiency, productivity and performance of
the laner, strained relations may be invoked in order to justify non-
reinstatement. Where the employee, however, has no say in the operation of
his employer's business, invocatiun of this doctrine is not proper.3
• Non-settlement of disputt: after long period of time is not indicative of
strained relations. 4
• The refusal of an employee to bt reinstated is indicative of strained relations.5
• Criminal prosecution confim1s the existence of "strained relations" which
would render the employee's reinstatement highly undesirable.6
• A managerial employee should not be reinstated if ,trained relations exist. 7
• In case of new ownership of the establishment, reinstatement is proper if no
strained relations exist with new owner.8
Ill.
BACKWAGES
1.CONCEPT.
Under Article 294 [279], an employee who is unjustly dismissed is entitled
not only to reinstatement, without loss of seniority rights and other privileges, but
also to the payment of his full backwages, inclusi,e of allowances and other
benefits or their monetary equivalent, computed from the time his compensation
was withheld from him (which, as a rule, is from the time of his illegal dismissal) up
to the time of his actual reinstatemem.9
~Cabl! and Rai? Capaalknv. M.RC, G.R. No. 82511, Mrth 3, 1992, 206 SCRA 701, 709.
Prtdenm Ga:mle f'lirllli',eSv. Bcndesb, GR No. 139847, Mwi 5, 2004.
l Acesite Co!poration V. NLRC, G. R. No. 152308 Jan. 26, 2005.
' Palrneria v. NLRC, G.R. Nos. 113290.91, Aug. :, 1995.
RDS Trucl(rg,v. NLRC, GR. No. 123941.Aug. 27 1998; Cabarulaw.Buat. GR No. 147142, Feb. 14, 2005].
1 GoldenDoruts,lnc. etalv. NLRC,G.R.Nos' ;758-59, Feb 21 . 1994
PI.DTv.Tolenh>,G.R.No. 143171,Sepl.21,200(
~Jwnaists. re. V. Wooqutm. G.R. No. ·: 1430, 'Mt 7, 2004.

BAR REVIEWER ON IAIOR LAW
The raison d' ell? for the payment of backwages is equity. Back:wages
represent compensation that should have been earned by the employee but were
lost because of the unjust or illegal dismissal.1
Simply stated, an employee whose dismissal is foµnd to be illegal is
considered not to have left his office so that he is entitled to all the rights and
privileges that accrue to him by virtue of the office that he held.2 But if the
dismissal is not illegal, an award of back:wages is not proper.3
2. BUSTAMANTE DOCTRINE.
In 1996, the Supreme Court changed the rule4 on the reckoning of
backwages. It announced a new doctrine in the case of Bustamante 11. NLRC,5_which
is now known as the Bustamante doctrine. Under this rule, the term 'Jull back.wages"
was interpreted to mean exactly that, i.e., without deducting from backwages the
earnings derived elsewhere by the concerned employee during the period of his
illegal dismissal.6
3. COMPONENTS OF BACKWAGES.
The components of backw;iges are as follows:
1. Salaries or wages computed on the basis of the wage rate level at the
time of the illegal dismissal and not in accordance with the latest,
current wage level of the employee's position.7
2. Allowances and other benefits regularly granted to and received by
the cmploycc,8 such as:
a) Emergency living allowances and 13th month pay mandated under
rhe law. 9
b) Fringe benefits or their monetary equivalent.ID
c) Transportation and emergency allowances.11
PLDTv. NLRC, GR No. 106947, Feb.11, 1999.
~ v.The 1-m. CA, GR No. 143709,!J~ 2, 2002.
3 Telefunken Semcoo<luctOIS Employees Union-FFWv. Court of Appeals, G.R. Nos. 143013-14, Dec. 18, 2000.
Earier, lhera were tlY0 (2) rules on b ~. Thefrstis toescxalled 'Mero.rylru] rue"v.halrem ti tie rule fist
erumed i1 die cased !.'erruy lru] Co, klc. v. CIR, GR No. L-23357, Aprl 30, 1974, 56 SCRA 694, vdlai nmda!es
t.atil case Ile ~al dismissa dell~ has lasted kr lllcll'/ )US. he is miUed tJ ~ kr a md perm d
me (3) yea;, 'lliticu fultle- ~ a- dedudxns; The MemJy 1ru.J Rw was superseded later by toe "Fener
Oocm' ~ daMI i1 toe cased Fene- v. NI.RC, GR No. 100898, July 5, 1993, 224 SCRA 410,423, l'lti:lt gatled
~ n U but t,e eflllbjer may dedJct err, aiiru1t 'lltli:tl toe~ may 11M ecrned elseY,liere dlrilg tie
peood d hs legal lelmilatm
5 GRNo.111651,Ncw.28, 1W6,265SCRA61.
Seealsol<a-, Proru:ls, '11:.v. CA, G.R. No.162472,July28,2005.
Pl.OT v. NLRC, GR No.106947, Feb. 11, 191J3; General~ Bl>eCoDegesv. NI.RC, G.R. No. 85534, Mith 5, 1993
1 Ev.njelslav.NLRC, GR No. 93915,0cl 11, 1995.
' Espepv. NLRC, G.R No. 112678, t.'adl 29, 19136.
10 f,m;k C<ipaatioov. NLRC, GR No.152308,Jan. 26, 2005.
11 Samsv.NI.RC,G.RNo. 76n1,Sepl.21, 1987;Samov.Nl.RC,GRNo.L-75510,0ct.27, 1987.
CHl\l'TER SIX
roST-EMrLOYMENT
d) Holiday pay, vacation and sick leaves :ind service incentive leaves.'
e) Just share in the service chargcs.2
f) Gasoline, car and.representation allowances.l
g) Any other regular allowances and benefits or their monetary
equivalent.4
4. SOME PRINCIPLES ON BACKWAGES.
• The computation of regular allowances and benefits as part of baclcwages
should be made up to the date of reinstatement 1s provided under Article 294
[279] of the Labor Code or, if reinstatement be not possible, up to the finality
of the decision granting full backwages.5
• Salary increases during period of unemployment are not included as
component in the computation ofbackwages.6
• Dismissed employee's ability to earn is irrelevant in the award of bacb.-wages.7
• The .failure to claim backwages in a complaint for illegal dismissal is a mere
procedural lapse which cannot defeat a right granted under substantive law.
Hence, the illegally dismissed employee may still be a:.varded back:wages
despite said failure. s
• When Labor Arbiter or NLRC failed to award iny back:wages, the same may
be corrected on appeal even if worker did not appeaJ.9
• In case reinstatement is ordered, full back:wages should be reckoned from
the time the compensation was withheld (which, as a rule, is from the time of
illegal dismissal) up to the time of reinstatement, whether actual or in the
payroll. 10
• If separation pay is ordered in lieu of reinstatement, full back:wages
should be computed from the time of illegal dismissal until the fmrui!}'. of the
decision. The justification is that along with tl1e tinality of the Supreme Court's
decision, the issue on the illegality of the dismissal is finally laid to rest. II
• T_he _rule is different if employment is for a definite period. The illegally
disaussed fixed-tenn employee is entitled only to the payment of his salaries
1 St I.ruse CdlelJe d TUl}Je9a00v. NLRC, G.R. No. 74214, hlg.31, 1989; On sew:e i1cenM kliNe, see FEmclldez v.
NI.RC, G.R. No. 105892, Jell. 28, 1998. ·
2 Maranaw Hoolis &Resat Capcraialv. NI.RC, GR No.123880,Feb. 23, 1999.
3 Coostida1ed ~ Baril jCagaycll Vafe'll, rev. NLRC, GR. No.123810, J311_ 20, 1999, 301 SCRA 223.
BuellailyCapcralioov.NLRC,G.R.No.129843,Sept 14, 1999.
5 Fenmlezv.NLRC,GRNo.105892.Jcn.28, 1998,285SCRA 149.
Elµtire ~ Cap. V. Sada; GR No.164n2,.lrle 8, 200l.
Tanas ewro Menuial CQlege, rev. CA, G.R No. 152568, Feb. 16, 2004.
a OelaCruzv.'NLRC,G.RNo.121288,Ncw.20, 1998.
9 Aurora Land Projects Coqioration v. NLRC, G.R. No. 114733, Jan. 2, 1997, 266 SCRA 48.
10 The Coca-Cola Export Corp. v. Gacayan, G.R. No. 149433, Dec. 15, 2010.
11 CRC Agricultural Tra<flng v. NLRC, G.R. No. 177664, Dec. 23, 2009.

710 BAR REv1 r wER ON IABllR IAW
corresponding to the 1111txpirrd portion of his fixed-term employment
contract1
• If the illegally dismissed employee has reached the optional retirement age of
60 years, his backwages should only cover the time when he was illegally
dismissed up to the time when he reached 60 years of age. Under Article 302
[287), 60 years is the optional retirement age.2
• If the employee has reached 65 years of age or beyond, his full backwages
should be computed only up to said age. The contention of the employer that
backwages should be reckoned only up to age 60 cannot be sustained.3 In
Ja(l(lbt v. Silliman Univmily,4 it was declared that since petitioner has already
reached seventy-one (71) years of age at the time the decision in rhis case was
rendered by the Supreme Court, the award of bad.-wages in her favor must be
computed from the time of her illegal dismissal up to her compulsory
retirement age of sixty-five (65).5
• If termination was made effective immediately, the backwages should be
reckoned from the date of the termination letter where such was stated.6
• If employer has already ceased operations, full backwages should be computed
only up to the date of the closure. To allow tl1e computation of the
backwages to be based on a period beyond that would be an injustice to the
employer.7
• If valid retrenchment supervened during the pendency of the case, full
backwages should be computed only up to the effectivity date of the
retrenchment8
• In case the employee dies during pendency of the case, his full backwages
should be computed from the time of his dismissal up to the time of his
death.9
• The period of valid suspension is deductible from hackwages.10
• Backwages should include period of preventive suspension.11
• Employer's offer to reinstate does not forestall payment of full backwages.12
~ TraispatSermls, k'C.v. NI.RC, GR No. 95449, Aa,J.18. \997.
Espqov. NI.RC, GR No.112678,Mardl 29, 1996, 255SCRA430,435.
3 St M'achael's lnstiMe v. Santos, G.R. No. 145280, Dec. 4, 2001.
• G.R. No.156934,Mard116, 2007.
s See also UetllliiiEltll ~ Corp. v. Beoeaal,GR No. 152843, .kJfy 20, zrol.
6 RDSTflW'9,V.NLRC,GRNo.123941,Al,J.27, 1998.
, Plb! v. h1oda!a Phis., rclmodala Cap. G.R No. 178505, Sept 30, 2008.
a ~ t.'o!Dls Plnppi1es Ccl!po(mlv. Ovysler Phippi1es llborilioo, G.R No. 148738,Jl)!le 29, 2004.
' tJexJSeruityandlleledi'lellJEncyV.to[RC,G.RNo.162850,Dec.16,2005.
10 ld.. PI.DTv.Teves,GRNo.143511,tm. 15,2010.
11 atmv.The f'oo. CA, G.R No.14370'3;.kltf 2, 2002.
12 Coodo&i'eCUJ Travel, ~ v.NLRC,GR No. 125671,Jai.26,200:I.
CHAl'TER SIX
771
POST-EMPLOYMENT
• Any amount received during payroll reinstatement is deductible from
backwagcs. 1
5. VARIATIONS IN THE GRANT OF BACKWAGES.
. The dis~ussion above dwells on cases where back:wages are granted in full
Illaccordance with the clear mandate of Article 294 (2791 of the Labor Code.
However, in certain instances, backwages are not granted at all or are granted but
only for a limited amount. The discussion below will point out the variations in the
grant of backwages as follows:
(a) When reinstatement is granted without backwages; or
(b) When reinstatement is granted with limited backw~es.
6. REINSTATEMENT WITHOUT BACKWAGES.
Under the following situations, reinstatement of an illegally dismissed
employee is granted without the accompanying back.wages:
(1) When the dismissal is deemed too harsh a penalty;
(2) When the employer acted in good faith; or
(3) Where there is no evidence that the employer dismissed the
employee-
• Illustrative cases of the FIRST situation above:
(1) ALU-TUCP v. NLRC,2 where reinstatement with no backwages was
ordered because the penalty. of dismissal imposed on the employee for committing
theft of company property was reduced to suspension due to mitigating
circumstances. The justification was that the entire period when the employee was
out of job because of his dismissal should already be considered as the period of
his suspension; hence, he should no longer be entitled to back:wages for the same
period.
(2) Y11pa11gro v. NLRC,3 where, after finding that the employee was illegally
dismissed but at the same time guilty of misconduct, it was ruled that there was no
grave abuse of discretion in the resolution of the NLRC which meted only the
penalty of suspension without backwages.
(3) Pepi-Cola v. NLRC,4 where the employee filed a leave of absence for
one day after he suffered stomach ache and upon the advice of his doctor, he took
a rest for 25 days without prior leave. When he reponcd back for work, he was told
that he had been dismissed for being absent without leave. It was held that while he
1 Glay Phif!)piles. re.v. Veiga-a. GR No. 176627, Al,J. 24, 'NJ7.
Associated llborlkli.'.xls-TUCPv. NI.RC, G.R No.12000, Feb.10.1999.
YupcragcoColrxl MIis, Inc. v. NLRC, GR No. 94156, M, 30, 1990.
' Pepsi-Cola DistJMlls ol t.e Phippiles, Inc. v. NLRC,GR No. 1roi86, Al,J. 15, 1995, 247 SCRA 386.
 llAR REVIEWER ON WOP. IAW
was at fault, be could not be dismissed. He was thus ordered reinstated but he was
denied backwages.
• Illustrative cases of the SECOND situation above;
(1) In [/ogon-StfYO&v. NLRC,1 the employee was_ fo~\i. guilty of br~ch of
trUSt for stealing ore with high gold content However, his dism1ssal was constdered
drastic and unwarranted considering that he had rendered twenty three (23) years
of service without previous derogatory record and he was prematurely suspended
during the pendency of the case. Consequently, he was ordered reinstated but
without granting him any backwages. The High Court ptono~ced_ that "[t)he ends
of social and compassionate justice would therefore be served tf pnvate respondent
is reinstated but without backwages in view of petitioner's good faith."
(2) Finding factual similarity with the foregoing case of lJogon-Sl!JOc, the
Supreme Court, in Pepsi-Cola v. Mo/011,Z deems it appropriate to render the same
disposition insofar as one of the respondents in thl~ case ~as concerned - Saunder
Santiago Remandaban III. This case involves a strike which the DOLE Secretary
certified to the NLRC for compulsory arbitration. A return-to-work ord~r was
issued as a consequence of such certification. However, ~cmandaban _failed to
report for work within twenty-four (24) hours from receipt of the said order.
Because of this he was served with a notice of loss of employment status (dated
July 30 1999) ~vhich be challenged, asserting that his absence on that day was
jusrified because he had to consult a physician regarding_ the. pc~istent and
e.·muciati.ng pain of the inner side of his right foot In ordenng his rCI.Ds~ten_ient
but without backwages, the Supreme Court reasoned that the penalty of disffilssal
is too harsh for his infractions considering that his failw:e to report to work was
cleady prompted by a medical emergency and not by any intention to defy the July
27 1999 return-to-work order. For its part, Pepsi's good faith is supported by the
:--ILR.C's finding that "the return-to-work order of the Secretary was taken lightly
by Remandaban." In this regard, considering Rernandaban's ostensible dereliction
of the said order, Pepsi could not be blamed for sending him a notice of
termination and eventually proceeding to dismiss him.
(3) It was likewise held in Inteurzlld M.imeltaronic.r, Jnr. v. Pione/Ja,3 on
motion for reconsideration by petitioner, thllt the backwages4 should be deleted on
the grounds that (a) the penalty of dismissal was too harsh a penalty to be imposed
against Piooilla for his infractions;5 and (b) petitioner IMI-was in good faith when it
1 11:lgon-SJycc Mnes, re. v. NI.RC, GR No. L-54280, Sept. 30, 1982, 117 SCRA 523,529.
l Pepsi-Cda Pn:dJcts ~ h:. Y. M:iln, G.R. No. 175002, Feb. 18, 2013.
1 GR No.200222,Au<J,28. 2013 (Res0l.rtion a, M:Jlon b' Recoisileratioo).
' ~ was ordered rensted pl.rs ~ e s by Ille rmtof Appeats.
Respa,dent f'm1a has vmed \\i1!l pelfu1et IMI as as JWOOlldion vmer silce Nowrrber 14, 1996, On 1-/gj 5, 2005,
Pmla receNed a rm mn M re:pilJ tin ti eiqm Ille mlErtv.tw:h ocrured Ille~ lldae v.here he was seen
esann;i alcKfo/ kl boall t,e aJ1l)3Tf srume bus a lhe ~ Temilal. Itwas reported by Ille bus rn.:mal Iha! tie lcKfo/
was we.ar,g a ~ kleMfcation C3d (ID)-v.tii:11 serves as a free pass b' SOOUle bus passengeis-MJ1 l she was
µst a~ appica,t at IMI. kl Olis regM!, Pm1la ~ t.i he lel1t his ID kl Ile liKI'/ v.tlo bJned ool kl be tis rel.a!M!. He
CHAPTER.SIX
POST-EMPLOYMENT
m
dismi~sed Pionilla as his dereliction of its policy on ID usage was honestly
perce1ved to be a threat to the company's security. In this respect, since these
concw:ring circumstances trigger the application of the exception to the rule on
backwages as enunciated in the above-cited cases, the Court found it proper to
accord the same disposition and consequently directed the deletion of the award of
backwages in favor of Pionilla, notwithstanding the illegality of his dismissal.
• Illustrative cases of the THIRD situation above;
(1) In Bes/ WearGarmen/1 v. De Ltmos, 1 where the records are bereft of any
showing of clear discrimination, insensibility or disdain on the part of petitioners in
transferring respondents - both sewers on piece-rate basis - to perform a different
type of sewing job which would amount to constructive dismissal. That
respondents eventually disconrinued reporting for work after their plea to be
returned to their former work assignments was their personal decision for which
the petitioners should not be held liable particularly as the latter did not, in fact,
dismiss them. Indeed, there was no evidence that respondents were dismissed from
employment. In fact, petitioners expressed willingness to accept them back to
work. There being no termination of employment by the employer, the award of
backwages cannot be sustained. It is well settled that backwages may be granted
oaly when there is a ~ding of illegal dismissal. In cases where there is no evidence
of dismissal, the remedy is reinstatement but without b:1ckwages.
(2) In Leopard v. Quitoy,2 as well as in the earlier case of SecurirJ and Credit
Inwtigation, Im;. v. NLRC,3 reinstatement without bacL-wages was ordered because
petitioners were found not to have dismissed respondents (security guards) and
that the latter, for their part, have not abandoned their :mployment4
(3) Lto1tt1rda v. NLRC,5 where the Court orcered the reinstatement sans
backwages of the employee (Fuerte) who was dccla_red neither to have abandoned
his job nor was he constructively dismissed. As pointed out by the Court, in a case
where the employee's fajlure to work was ~r~~ioned neither by his abandonment
nor by a termination, the burden of econom1c toss is not rightfully shifted to the
employer. Each party must bear his own loss.
7. REINSTATEMENT WITH LIMITED BACK.WAGES.
While in the aforementioned cases of illegal c.ismissa~ the Supreme Court
ordered the employees' reinstatement but without· backwages, there are also
flllher nina!ed Iha! he risked 1ermJ her tis ID kl sm on Iler ~ expenses. Nevertle!ess, he apoo,Jized foe
his actions.
1 GR.No.191281,Dec.05,2012.
1 ~ Seady cm ~Agentyv. Ol.iDf,GR. No. 186344, Feb.20.2013.
l G.R.No.114316,.lal.26,2001.
• Seeasoledesma,Jr.v.N.RC,G.R.No.174585,0ct.19,2007.
s G.R.Nas.125303& 126937,Jooe16,20CO.
774 BAR REVIEWER ON IABOR IAW
instances where backwages were not awarded in full but merely limited fot the
same reason of good faith on the part of the employet.
• Illustrative cases where award ofbackwages was limited t~ 1 year.;
(a) In San Miguel Corporation v. Javale, Jr.,1 the High' Court affirmed the
consistent findings and conclusions of the Labor .Atbiter, the NLRC, and the Court
of Appeals that the employee was illegally dis~ssed since. he w:is still fit to r~e
his work; but the employer's liability was mittgated by Its evtdent good faith tn
terminating the employee's services based on the term~ of its Health, W~fare and
Retirement Plan. Hence, the employee was ordered reinstated to his fonner
position without loss of seniority and other privilege~ appertaining to him prior to
his dismissal,· but the award of backwag.es was limited to only one (1) year
considering the mitigating circumstance of good faith attributed to the employer.
(b) In Procter a11d qamble Philippines v. Bontkito,2 the ~upreme Co~ while
affinning the illegality of the dismissal of the employee, did not grant him full
backwages because (t agreed with the findings of the NLRC and ~e ~ourt of
Appeals that in view of the employee's absences that were not wholly JIISllfied; he
should be entitled to backwages limited to one (1) year only.3
• Illustrative case where award of backwages was limited to 2 years:
In Do/om v. NLRC,' the employee was terminated for her continuous
absences without permission: Although it was found that the emplo!ee was ind~d
guilty of breach of trust and violation of company rules, the High Co~ ~till
declared the employee's dismissal illegal as it was too severe a penalty cons1denng
that she had served tl1e employer company for 21 years, it was her first offense, and
her leave to study the French language would ultimately benefit the employ~ who
no longer had to spend for translation services. Evert so, other than o~d~nng the
employet:'s reinstatement, the said employee was aw~ed baclc"".ag_es limited. to. a
period of two (2) years, given that the employer acted without malice or bad faith 10
terminating the employee's services.
• Illustrative case where award ofbackwages was limited to 5 years:
In its resolution on the motion for reconsideration filed by the petitioner
in Vfrtory Liner, ln(. v. R.ue,s the High Tribunal reduced and limited the original
award of full backwages to five (5J years in the light of the evident good faith of ~e
employer. While petitioner's argument that respondent had already abandoned his
job in 1994 was not upheld, the Court conceded that petitioner, given the particular
1 GRNo.54244,Jan.27, 1992,205SCRA469.
2 GRNo. 139847,Mw!S,2004.
3 G.R.No.87673.Jan.24, 1992,205SCRA348.
• G.R.No.87673,JM.24, 1992,205SCRA348.
s GR No. 164820,Dec.8,2008.
CHAl'TER SIX 775
roST-EMrLOYMENT
circumstances of this case, had sufficient basis to reasonably and in good faith
deem respondent resigned by 1998.
IV.
DISTINCTIONS
(BETWEEN RBNSTATEMENT,
SEPARATION PAY IN LIEU THEREOF AND BACKWAGES)
1. DISTINCTIONS BETWEEN REINSTATEMENT AND
SEPARATION PAY IN LIEU THEREOF.
Separation pay is proper only when reinstatement is no longer possible,
viable oc feasible. Hence, it is a substitute remedy to reinstatement. Reinstatement
and separation pay cannot be ordered together. As held in LopeZJ Jr. v. NLRO:
"Considering the purpose behind the grant of separation pay; it was grave abuse of
discretion on the part of public respondent NLRC to order payment of separation
pay, as it is inconsistent with the ruling reinstating the private respondertt. Their
inherent inconsistency is self-evident and needs no further elaboration."
In effect, an illegally dismissed employee is entitled to either
reinstatement, if viable, or separation pay if reinstatement is no longer viable plus
backwages.2
2. REINSTATEMENT VERSUS BACKWAGES.
Reinstatement and backwages are separate and distinct reliefs given to an
illegally dismissed employee in order to alleviate the economic damage brought
about by the employee's dismissal.3
TI1e :,ward of one does not preclude or bar the other.4 Both reliefs are
rights granted by substantive law which cannot be defeated by mere procedural
lapses.5
The general rule is that where reinstatement is adjudged, the award of full
back:wages anJ other benefits continues beyond the date of the Labor Arbiter's
decision ordering reinstatement and extends up to the time said order of
reinstatement is actually carried out.6
Reinst~tement restores the employee who ·was unjustly dismissed to the
position from which he was removed, i.e., to his ita/us quo ante dismissal or the state
1 GRNc 109166.Jlt)'OO, 1995.
i ArSevi:esCoq-,e!awev. CA.GRNo.118693,Jutt23, 1998,354Pli.905.
I Reyes v RP Gua1dians Serurity lv}ercj, h:., GR. No. 193756, ~ 10, 2013.
• DeGuzmillv. M.RC, GR No. 130617.Au}.11, 1999,371 Plli.192,202.
5 St. Mchaefs tnm.ite v. SanklS, G.R No. 145280, Dec. 4, 2001; Dela Cruzv. l..tRC,299SCRA 1, 12-13 (1998].
6 1oio La Ff~ l,'y Gm;Joo Cap. v. Hon. CA. G.R No. 170244, NoY. 28, 2007.
 SAR REVIEWER ON IABOR IAW
from which one has been removed or separated;1 while the award of backwages
allows the same employee to recover from the employer that which he had lost by
way of wages as a result of his unlawful dismissal.2 These twin remedies of
reinstatement and payment of backwages make whole the dismissed employee who
can then look forward to continued employment These- two remedies give
meaning and substance to the constitutional right of labor to security of tcnure.l
Though the grant of reinstatement commonly carries with it an award of
backwages, the inappropriateness or non-availability of one does not carry with it
the inappropriateness or non-availability of the other. , The award of one is not a
condition precedent to the award of the other. Backwages may be ordered without
ordering reinstatement; conversely, reinstatement may be ordered without payment
of backwages.4
3. DISTINCTIONS BETWEEN SEPARATION PAY IN LIEU OF
REINSTATEMENT AND BACKWAGES.
Separation pay in lieu of reinstatement and backwages are two (2)
different things. Payment of separation pay in lieu of reinstatement is not
inconsistent with payment of backwages.5
The award of one does not preclude the award of the other as the
Supreme Court has, in proper cases, ordered the payment ofboth.6
The payment of separation pay in lieu of reinstatement is in addition to
payment ofbackwages.7
The two may be distinguished as follows:
1. Separation pay is paid when reinstatement is not possible; while
backwages are paid for the compensation which otherwise the
employee should have eamed had he not been illegally dismissed.8
2. The Janner is computed on the basis of the employee's length of
service; while the latter are based on the actual period when he was
unlawfully prevented from working.9
3. The former is paid as a wherewithal during the period that an employee
is looking for another employment; while the latllr are paid for the loss
lleGuzrratv.tlRC,GR.No.130017,Auj. 11, 1999;Sanlosv.NlRC, 154SCRA 166,171, 172[1987).
Reyes v. RP Qmfms Sea.litf NJerc/,klc.,GR. No.193756, April 10,2013.
, Id.
' ~ v. Coos<idaled ~ System, G.R Nos. 99054-56, May 28, 1993.
5 Cabatm v. ~ GR No. 147142, Feb.14, 2005.
6 Tria:I Sea.dy &Alm SE!vi::es, ~ v.OO!ga, G.R No.160871,Feb.6, 2006.
1 Bonlomeov. CA. G.R No. 161596,Feb. 20, 2013.
• Eqtiable 8anllrg Corp. v.Sadat, G.R No. 164m. ms. 200>.
9 Linv. M.RC, GR. Nos. 79907 irld 79975, t.4ardl 16, 1989, 171 SCRA328, 336.
CHAl'TER SIX
roST-EMrLO'fMENT
m
of eamings during the period between illegal dismissal and
reinstatement.'
4. The former is oriented towards the ~diate future, that is the
transitional period the dismissed employee must undergo b~fore
locating a replacement job; while the faller involve the restoration of
the past income tost. 2
5. Separation pay cannot be paid in lieu of backwages.l
6. The grant of separation pay is a proper substitute only for
reinstatement; it could not be an adequate substitute both for
reinstatement and for backwages.•
Needlessly, payment of bae;kwages ts not inconsistent with either
reinstatement or separation pay in lieu thereof.
F.
MONEY CLAIMS ARISING FROM
EMPLOYER-EMPLOYEE RELATIONSHIP
1. BASES OF EMPLOYEE'S MONEY CLAIMS.
The monetary claims that may be asserted by employees may be based _on
any of the following: · . .
(1) Labor Code;
(2) Othet special laws;
(3) Jurisprudence;
(4) Employment contracts;
(5) Voluntary employer policy or practice; or
(6) Collective bargaining agreements (CBAs).
Examples of No. 1 above are the labor scandards benefits provided
therein, such as claims for overtime, night differential. holidays, rest days, service
incentive leave, service charges, employees' compensation benefits, separation pay
in case of termination due to authorized causes, and retirement benefits.
Examples of No. 2 are the wage increases mandated under R.A. No.
67275 and the regional wage orders issued pursuant thereto, P.D. No. 851 (13"'
Month Pay Law], U. No. 7641 [Retirement Pay Law],6 social security benefits
1 SI.E Bri. nc. v. DeGu~, G. RNos. 184517 &1~1. Od.8, 2013(En ~}.
l.qlez.Jr. V. NL.RC, G.R No.109166,!J~OO. 1995; Gene-.Hexlies, nc.v.NLF.C, G.R No. 102969,Ajri4, 1995.
3 Tailv.leogirdo,G.RNo. 1TNJ,Mayll, 1991, 197SCRA47I.
• SM: Bank. ~ v. Ile Guzman, supra; Cenuy c.ami1g Corp. v. Rani, G.R No. 171630, Au]. 8, 2010.
OtlelV,lsekno\\llaslhe wa;,eRaliaazalilnM.'
• Sgned mi law l7f Presilem Rooo,io !Mene on Fei>ruay07, 2019.
778 6AR llEVIEWERON IA80R IAW
from R.A. No. 11199 [Social Security Act of 2018),1 R.A. No. 11223 [Universal
Heallh Care ,\ct),2 and R.A. No. 9679 [Pag-IBIG Law].3
Examples of No. 3 are the monetary reliefs accorded illegally dismissed
employees that are not found in the Labor Code nor in any other law, such as (I)
separation pay in lieu of reinstatement; (2) indemnity in ie form of nominal
damages in case of teanination due to just or authorized cause but without
affording the employee procedural due process; (3) payment of salaries
corresponding to the unexpired portion of the employment contract in cases of
fixed-term employment; (4) financial assistance in c~ses where ~e employee's ·
dismissal is declared legal but there are circumstances justifying this award, such as
long years of service, unblemished record of service, compassionate justice and
other considerations; (5) legal interest on separation pay, backwages and other
monetary awHds.
Nos. 4, 5 and 6 involve monetary claims arising from the benefits granted
by the employer to the employees, either voluntarily or unilaterally in employment
contram or company policies or practices, or through collective negotiations and
mutual agreements, such as those granted under CBAs. These benefits are varied
and too numerous to enumerate them here; suffice it to state that the bottomline
policy of the law is that these benefits should not be below the minimum standards
and limits provided by law.
2. BURDEN OF PROOF IN MONETARY CLAIMS CASES.
As a general rule, in monetary claims cases, a party who alleges payment as
a defense h ;1s the burden of proving it4 Well-settled is the rule that once the
employee bas set out with particularity in his complaint, position paper, affidavits
and other documents the labor standards benefits he is entitled to (such as his
entitlement to unpaid overtime pay, -premium pay for holiday and rest day and
service incentive leave pay) :ind which he alleged that the employer failed to _pay
him, it becomes the employer's burden to prove that it has paid these money
claims.3 More succinctly, the burden rests on the employer to prove payment,
rather than on the employees to prove non-payment.'
In SU. Inttmational Cablu Specialist u. NLR.C,, petitioners, aside from their
bare allegations that private respondents received wages higher tlu.n the prescribed
minimum, failed to present any evidence, such as payroll or payslips, to support
1
The pnMSOlS cl ~is li!,v ere oo,vpatcl Ile Lalx:rCooe as ls Mile ll2 (287j.
2
~ by PresidentRod190 M!fle on Febnay 20, 2019.
OJlerv.ise kro,o,<, as lhe 'Hane OeYeqxnent M.JlJal Ft.rd lzN a2003, oh!Mise kncw.,i as PalJ-lBK, ~ sa
3 2 Mmri Y. The Red s,slem Catl)alY, llc., G.R No. 229920,,.IJj 04, 2018.
kMJwsal:11.a.Y, Birl:!ko, k'idusliy.l at Gcbyemo) Fund.'
' CMHaJs ~ ~ Capooltion v. Pmi, G.R No. 204651,hJJ. ~. 2014.
5 OeGozrraw.NLRC,G.RNo.167701,0ec. 12,2007. . G.R No. 121004, Jcrt. 28, 1998, 285 SCRA 251,261.
1 Heis o1 Mme1 H. Rmt v. Gregm>Mllletl Urwersily FMdm. G.R No.188659, Feb.13, 2013.
1 G.R No 17216'.li'a'd12,2011.
CHAl'TtRSIX
POST-EMPLOYMENT
their defense of payment. Thus, petitioners utterly failed to discharge the 0n~
probandi..
In uying tp prove payment of 13th month pay, holiday and service
~centive leave pays, pe~tioner, in 011r Hm1J Rtal!J Del/UQpment Co,pomtion v. Parian,1
di~ no~ present any credible document which will show that respondents had been
paid said benefits. Our Haus merely presented a hand-written certification from its
admini~tra ~ve o~ficer that its employees automatically become entitled to five days
of servtce tncenllve leave as soon as they pass probation. This certification was not
eve~ subscribed under_ oath. Our Haus could have at I.east submitted its payroll or
copies of the pay slips of respondents to show payment of these benefits.
However, it failed to do so.
1be rationale for this rule, according to a catena of cases,2 is that the
pertinent personnel files, payrolls, records, remittances and other similar
documents which will show that the monetary claims have been paid are not in the
possession of the worker but in the custody and absobte control of the employer.
Thus, the burden of showing with legal certainty that the obligation has been
discharged with payment falls on the debtor, in accordance with the rule that one
who pleads payment has the burden of proving it
Consequently, if the employer failed to present proof showing that it had
indeed paid the employ~e his monetary claims, the latter is entitled to the same
monetary benefits. And all amounts due shall cam legal interest of six percent (6%)
per annum from the finality of this ruling until full satisfaction.l
The burden of proof, however, may shift to the employee if the employer
de~es the monetary ~ - A good example is Soku v. Power & Telephone S11pp!J
Phil!., Inc., 4 where petmoner asserted that he is entitled to commissions which his
employer denied. Citing LAgati, u. NLRC,5 where it was held that there is no law
which requires employers to pay commissions, the. High Court ruled that it is
incumbent upon petitioner to prove that there was indeed an agreement between
him and his employer for the payment thereof.'
In Salva/oz.a 11. NLR.C,1 petitioner claimed that there was underpayment of
wages and benefits to her bte security guard husband, Gregorio, by his employer,
private respondent Gulf Pacific Security Agency, Inc. It was held, however, that
Gulf Pacific was able to rebut this claim through its ~yroll sheets correspondingly
signed by Gregorio. As the payroll sheets provide a convincing proof of payment
1
G.RNo.204651,hJ].00,2014.
l Mancri V. The Red s,slem ~ • llc., Sl4)ra.
' GR. No.162332,hJ]. 28, 2008.
See also ~ Trm;i Capaatial vJlRC, G.R No. 122400,Sept 25, 199e, 296 SCRA 309,315.
1 GR. No, 182086, Nov. 24, 2010.
.,
SAR REVIEWER ON lABOR lAW
of his salaries and other benefits during his tours of duty as a security guard, the
burden of proof was shifted to Gregorio to prove otherwise, but only with respect
to those salaries and benefits indicated in the said payroll sheets.
G.
RETIREMENT
I.
COVERAGE
1. EMPLOYEES ELIGIBLE FOR RETIREMENT.
The following employees are eligible to avail of retirement benefits under
Article 302 (287] 1of the Labor Code:
1) All employees in the. private sector, rrgarrllw of their position,
designation or status and imtptctive of the method by which their
wages arc paid;2
2) Part-time employees;
3) Employees of service and other job contractors;
4) Domestic workers/ kalambaht:JI or persons in the personal service of
another;3
5) Underground mine wotkers;4
6) Employees of government-owned and/or controlled corporations
5
organized under the Corporation Code (without original_charters).
2. EXCLUSIONS.
Article 302 [287}, as amended, does not apply to the following employees:
1. Employees of the national government and its political subdivisions,
including government-owned and/or controlled corporations, if they
arc covered by the Civil Service Law and its regulation~.
2. Employees of retail, service and agricultural establishments or
operations regularly employing not more than ten (10) employees.
These terms are defined as follows:
a) "Retail establishment'' is one principally engaged in the sale of
goods to end-users for personal or household use. It shall lose its
1 ~ irnended by RA No. 7641 µ.may 7, 19931 .lld RA No. 6558 [February 26. 19981.
2 Secoon 1, Rule 11, lmplementi'l:l Rules ol lhe Retirement Pay Law; Labof Advm-/ on Retmnent Pay Law dated
Oct. 24, 1996, issued by Secretaiy Leonardo A. Quisumbing. · ·
l IJibcr M-iwf 00 ~ ~ l.awdaled Ocl 24, 1996.
4 RA No. 8558.
1 l'osliJO, etal., v. f'tiWile Tuoeratss Societf, Ire., GR No. 155146, Jen 24, 2006.
CHAPTER SIX 781
POST-EMPLOYMENT
retail character qualified for exemption if it is engaged in both
retail and wholesale of goods.
b) "Service establishment'' is one principally engaged in the sale of
service to individuals for their own or household use and is
generally recognized as such.
c) "~c~tural est~blis~cnt/operation" refers to an employer
wh!c~. ts e~gaged m agnculture. This term refers to all ,farming
actt~tt~s m all branches and includes, among others, the
culttva~on and tillage of _soil, production, cultivation, growing and
harvesttng of any agncultural or horticultural commodities
dairying, raising of livestock or poultry, the culture of fish and
other aquatic products in farms or ponds, and any activities
performed by a farmer or on a fatm as an incident to, or in
conjunction with, such farming operations, but does ruu include
the manufacture and/or processing of sugar, coconut, abaca,
tobacco, pineapple, aquatic or other farm products.I
II.
RETIREMENT AGE
1. OPTIONAL OR COMPULSORY RETIREMENT AGE.
Based on Article 302 (287),2 the employers and employees are free to
a~ee and.stipulate on the retirement age, either in a CBA or employment contract.
It 1s only ~ the absence of such_ agreement ~at the rl!tirement age shall be fixed by
law, that 1s, 111 accordance wtth the opttonal and compulsory retirement age
prescnbcd under Article 302 [287).3 This is so because retirement is the result of a
bilateral act of t.he 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 formcr.4
a. Under Article 302 [287].
This article provides for two (2) types of retirement
(1) Optional rrtirrment upon reaching 'the age of sixty (60) years.s
(2) Comp11/so,y relimnenl upon reaching the age of sixty-five (65) years.6
1 5$12. rue 11. 1mp\emen!ilg ~ of the Re6rement Pay LcM; 1.m Miwf oo Rmment 0ou La.Y dated 0c1. 24
1~. ·~ '
2 This prOIWI stales that "(a)ly en'4)k7fee rTli1f be retired upon iea:t,rg tie re&mlent age es'alllished n lhe <Xll'e:we
bagai'm;J ~ICJoltoer apJi:able~conbact'
3 Easlem ~ Liles, roe. v.N#rJ'itJ, GR No. 171587, Oct 13, 2009.
Cen:adov.~ . roc.,GR.No.188154,0cl 13,2010.
Ar1i:le 302 [287], Lallo' Code; Sectioo 4.1, Rlje 11, krfllernoorg ~~dlle Rmrnen!P8'f la.Y.
kl~ Sedal 42, RIJle 11. lbil.

BAR REVIEWER ON IABOR lAW
It is the employee who exercises the option under No. 1 above. 1 Upon
reaching the age of 65, the employee has no more option except to retire because
the law set the age of 65 as the compulsory retirement age.
b. Under retirement plan.
The optio11al and comp11/Jory retirement schemes pro\~ded under Article 302
[287) come into play only in the absence of a retirement plan or agreement setting
forth other fonns of optional or compulsory retirement schemes. Thus, if there is a
retirement plan or agreement in an establishment providing for an earlier or older
age of retirement (but not beyond 65 whi<;h has been declared the comp11/Jory
retirement age), the same shall be conuolling.
2. RETIREMENT AT AN EARLIER AGE OR AFTER RENDERING
CERTAIN PERIOD OF SERVICE.
a. Validity ofemployers' prerogative.
The employer and the employee may mutually agree to grant to the
employer the sole and exclusive right to retire an employee at an earlier age or after
rendering a certain period of service. This agreement may be stipulated in an
employment contract or a CBA. By entering into an employment contra.ct
containing such stipulation, the employee is bound to adhere thereto. In the same
vein, by their acceptance of the CBA, the wuon and its members are obliged to
abide by the commitments and limitations they had agreed to cede to the employer.
It is not repugnant to the constitutional guarantee of security of tenure.2
Cain/a Catholic School v. Cainta Catholic School Emp~m Union [CCSEUJ,3
exemplifies this principle. The Supreme Court upheld the exercise by_the school of
its option to retire employees purs~t to the existing CBA where it is provided
that the school has the option to retire an employee upon reaching the age
limit of sixty (60) or after having rendered at least twenty (20) years of
service to the school, the last three (3) years of which must be continuous.
Hence, die tennination of employment of the employees, arising as it did from an
exercise of a management prerogative granted by the mutually-negotiated CBA
between the school and the union is valid.
In Pantranco North F,xprw, Inc. v. NLRC,' the Supreme Court upheld the
validity of the CBA ;1ipulation that allowed the employee to be compulsorily
retired upon reaching the age of sixty (60) •~, upon tompkting {25) yum of servi« Jo
{Pantranco]."
1
~v.NI.RC,GR.No.120802,>..rie 17, 1997,273SCRA576.
1 ~ v.NLRC,G.R.No.112678,Maich29, 1996,255SCRA430.
3
GR.No.151021.~4,2006.
' GR.No.95940,Ju~24, 1996.259SCRA 161.
CHAl'TIR SIX
POST-EMPLOYMENT
b. To be valid, retirement at an earlier age must be voluntarily
consented to by the employee.
In Alpha J=lbe v. Silliman Univern!J, 1 the Supreme Court ruled that in order
for retirement at an earlier age to be valid, it must be shown that the· employee's
participation in the plan is voluntary. An employer is free to impose a retirement age
of less than 65 for as long as it has the employees' consent Stated convers_ely,
employees are free to accept the employer's offer to lower the retirement age iif they
feel they can get a better deal with the retirement plan, presented by the employer.
Followingjat11/be, the retirement of petitioner in Lourde, Cercado v. Uniprom,
lnc. 2 at the age of 47, after having served respondent company for 22 years,
pursuant to its Employees' Non-untributory Rttirtment Plan, which provides that
employees who have rendered at least 20 years of service may be retired at the
option of the company, was declared illegal because it was not shown that she has
given her consent thereto. Not even an iota of voluntary acquiescence to
respondent's early retirement age option is attributable to petitioner. The assailed
retirement plan was not embodied in a CBA or in any employment contract or
agreement assented to by petitioner and her co-employees. On the contrary, it was
unilaterally and compulsoajy imposed on them.
The same holding was made in the 2018 en bant case of Alfreda F. ½a, Jr.
v. Philippine Viterall:f Baizk,3 where petitioner, who was hired by respondent bank as
its Chief Legal Counsel with a r:mk of Vice President, w:is compulsorily retired
under the following retir_ement policy of the bank:
"Section 2 Ear!, Rttirt11u11t. A Member may, with the approval
of the Board of Directors, retire early oa the first day of any month
coincident with or following his atlllinment of 2f;.C 50 and comp)ction of
at lea,~t 10 years of Credited Semce."
According to petitioner Laya, he was made ~w:are of the retirement plan of
respondent bank only after he had long been employed and was shown a
photocopy of the Retirement Plan Rules and Regulations. His letter of appointment
mentioned, among others, his "Membmhip in the Provulmt Fund Prolflltll/Retiremenl
Pro!fa,n" but the Court considered the mere mention thereof not sufficient to
inform him of the contents or details of the retirement program. To construe from
the petitioner's acceptance of his appointment that he had acquiesced to be retired
earlier than the compulsory age of 65 years would, therefore, not be warranted.
This is because retirement should be the result of the bilateral act of both the
employer and the employee based on their voluntary agreement that the employee
agrees to sever his employment upon reaching a certain age.4
1 G.R. No. 156934, Mirth 16, 2007.
2 G.R. ~ -188154, Oct. 13,2010.
J Al!roooF. l.aya. .k'. v. ~ Vel!ms lmk Md r«ado A. ~.Jr, G.R. No. 205813,Jilt 10, 2018.
• Id.,dlilg Rooina Faims Cebu v. VIia, G.R No. 175869, Ajrl 18, 2016.
784 BAR llEVIEWER ON IABOR !AW
That the petitioner might be well aware of the existence of the retirement
program at the time of his engagement did not suffice. His implied knowledge,
regardless of duration, did not equate to the voluntuy acceptance required by law
in granting an early retirement age option to the employee. The law demanded
more than a passive acquiescence on the part of the employee, considering that his
early retirement age option involved conceding the constitutional right to security
of tcnuce.1 · pnvate sector who did not expressly agree to an cady retirement cannot be retired
Having thus automatically become a member of the retirement plan
through his acceptance of employment as Chief Legal Officer of respondent bank,
the petitioner could not withdraw from the plan except upon his termination from
employment.
Further, the retirement plan, having been established for respondent bank
and approved by its president more than five years prior to petitioner's
employment, was in the nature of a contract of adhesion, in respect to which the
petitioner was reduced to mere submission by accepting his employment, and
automatically became a member of the plan. With the plan being a contract of
adhesion, to consider him to have voluntarily and freely given his consent to the
tenns thereof as to warrant his being compulsorily retired at the age of 60 years is
factually unwarranted.
To stress, company retirement plans must not only comply with the
standards set by the prevailing labor laws but must also be accepted by the
employees as commeosucate to their faithful services to the employer within the
requisite pcriod.2 Although the employer could be free to impose a retirement age
lower than 65 years for as long its employees consented,3 the retirement of the
employee whose intent to retire was not clearly established, or whose retirement
was involuntary is to be treated as a discharge.4
In another 2018 case, Manila Hot,/ urporation v. Rosita Dt Lton,5 the same
ruling was made that an employee, in this case a managerial employee, cannot be
compulsorily retired at an earlier age without her express assent thereto. In this
case, respondent was retired under the retirement provision of the rank-and-file
CBA which provides that an employee's retirement is compulsory when he or she
reaches the age of 60 or has fenderccl 20 years of service, whichever comes first
Respondent was only 57 at the time she was compµlsorily retired but had already
rendered 34 years of service as Assistant Credit and Collection Manager/ Acting
General Cashier. Besides holding that as managerial employee, she is not covered
by the· CBA, the Court noted that there was nothing in petitioner hotel's
submissions showing that respondent had assented to be covered by the CB,\'s
1 Id., cilrg Coo:a!ov. ~ . re., G.R No.188154, Oct 13,2010, 633 SCRA281, 289. .
2
Id.,c:ag OlxM1 v.Phiippile Na!irial !sic, G.R. No. 161176,Jutf 26, 2010, 625 SCRA 542,554.
3 ld.,cfrg .lalJllev. Sihrl ~ . G.R No.156934,MYch 16,2007, 516 OCRA 445,450.
1
ld,cng Pazv. Na1lem Tobaa:oRatyilg, Co. klc., GR No. 199554, Feb.16, 2015,751 SCRA 99, 115.
5 G.R No. 219774, Juy 23, 2016.
CHAl'TIR SIX
POST-EMPLOYMENT
retirement provisions. Thus, in the absence of an agreement to the co trary
n '
managcrial
. emp1oyecs cannot be allowed to share in the concessions obtained by
the labor union through collective negotiation.
Moreover, the rulings in Lzya1 and Ctrradtr were invoked in holding that
r~pondent De Leon_ was in effect, illegally dismissd. All told, an employee in the
from the service before he reaches the age of 65 yeas.3 ''At~tana by the tmphyte of
Q1I tar!J rrlirrmml age option mil.ft be explidt, w"'1,ta,y, frre and 11n&0mptlled. "' 'The km,
tJm:andtd man /~an ~ p0!si11t O((jlliu,ena on Jht part oflht tmphyte, &0nsidering that his tar!J
rrlmmtnt Of} opllon tn1XJl11td '°nmlin1, the ronrlillllional ri1,ht to 1t'11Tiry ofunurr. ''5
c. Retiring at an earlier age wiD amount to illegal dismissal if
employee did not consent thereto.
. In accord~ce with J=lht, Ctrrado, Lqa and De Lon, the employee's
rettrement at an earlier age based solely on a provision of a retirement plan which
was not freely assented to by him would be tantamount to illegal dismissal.
Ill.
YEARS OF SERVICE
1. MINIMUM YEARS OF SERVICE.
Five (5) years is the minimwn years of service that must be rendered by
the employee before he can avail of the retirement benefits upon reaching optional
or compulsory retirement age under Article 302 (287]. But this period bolds true
only "in the absence of a retirement plan or agreement providing for retirement
benefits of employees in the establishment." Hence, the employer and the
employee are free to stipulate a different period in 6e retirement plan, employment
contract or CBA. ·
However, being in the nature of ''mini!11W1t" requirement, the parties
cannot stipulate a period higher than five (5) years since this will run counter to the
intention of the law to grant retirement benefits nc-t upon reaching the "maximum"
but merely the "minim11m" requirement - a ,:ule tlut obviously favors the workers
and therefore deserves to be construed for their benefit
2. COMPONENTS OF THE MINIMUM 5-YEAR SERVICE.
The minimum length of service of at least five (5) years required for
entitlement to retirement pay under Article 302 [287] includes authorized absences
Ntedo F. lzja, s.V. PllliAJileVetercns llcnurid lbtfoA Baboo, s, GR. No. 205813, Jill, 10, 2018.
Id., arg Coo:a!o v. lkl!)IOOl. nc., GR No. 188154,O:t 13,2010,633 S:RA 261,289.
l Id., arg Afredo F.t.aya, Jr. v. PhilAlile Venis Brin lbtfoA Batnl,.K. supra
Id. cfrg Cen:alov. ~ . nc., supra.
Id., cili'IJ Alredo F.laya, Jr. v. Phlfwi1e Vebms Bank axl lbtfo A Babkfo, .I'., supra.

SAR RlVIEWER ON U.BOR !AW
and vacatiollS, regular holidays, and mandatory fulfillment of a military or civic
duty.' In case, however, the business establishment has closed its operations for
sometime, only the period of actual service should be counted and reckoned in
computing the retiring employee's length of service. The period of time when the
business establishment was closed should not be included.1 .,
3.AGE AND SERVICE REQUIREMENTS CUMULATIVE.
In the absence of any retii:ement plan or applicable agreement, an
employee must (1) rctii:c when he is ~t least sixty (60) years of age and (2) serve at
least (5) years in the company to entitle him/her to the retirement benefits
provided under the law.3
Thus, where an employee like the petitioner in Padil/q 11. Rural B011k of
Nab11ntura11, Inc.,4 terminated his employment due to disease5 when he was at 55
· years of age, his claim for retii:ement benefits was not granted and instead, he was
simply awarded financial assistance of P75,000.00, exclusive of the Pl00,000.00
benefit under the Philam Llfc retirement/insurance plans earlier taken out for the
employees by respondent bank in anticipation of its possible closure and the
concomitant severance of its personnel. In the absence of any applicable contract
or any evolved company policy, Padillo should have met the age and tenure
requirements set forth under Article 302 [287] of the Labor Code to be entitled to
the retii:ement benefits provided therein. Unfortunately, while Padillo _was able to
comply with the five (5) year tenure requirement - as he served for twenty-nine
(29) years - he, however, fell short with respect to the sixty (60) year age
requirement given that he was only fifty-five (55) years old.when he ~tiled.
Ill/el Tech110/ogy Philippi11es, Inc. v. NLRC,6 similarly pronounced that if the
retirement plan requires a minimum number of years of service as a pre-requisite to
entitlement to retirement benefits, the employee seeking such benefits should fully
comply therewith.
IV.
AMOUNT OF RETIREMENT PAY
1. SUPERIORITY OF BENEFITS RULE.
Once an employee retii:es, it is not Article 302 (287] that is controlling but
the retii:ement plan under the CBA or other applicable employment contract.7
1
Sedioo 4.4,~ I I , ~ ~cl Ole Re!rement Pay Law.
Sriagov. Bi'lafJaga, Es1a1e, G.R No. L-2268,Ot1. 20. 1950, 87 Phi 538.
Padilov. ~ lmkolNabl.Wan. r.c.,G.R. No.199338,Ji'll. 21,2013.
• G.R.No.199338,Jao.21,2013.
Hyperteosi:J, $,PC>IA !~Accilenl]wihshat1ermmemay klss.
GR No. 200575,Feb.5, 2014. · Retirement Pay Law dated Oc1 24, 1996 issued by Seamy LeamloA. Quisuroog.
' Oxaes v. Urited ~ . ric. G.R No. 152991.Jttf 21, 2008.
CHAl'TER SIX
rOST-EMPLOYMENT
Article 302 (287) becomes relevant only in the matter of ensuring that the
retii:ement benefics are not less than those provided therein.
2. INSTANCES WHEN ARTICLE 302 [287] APPLIES.
Article 302 [287] only applies in a situation where:
(1) There is no CBA 9r other applicable employment contracts providing
for retirement benefits for employees; or
(2) There is a CBA or other applicable employment contracts providing
for retii:ement benefits for employees, but such benefits are below
the requirements set by law.1
The reason for No. 1 above is to prevent the absurd situation where an
employee, who is otherwise deserving, is denied retirement benefits by the
nefarious scheme of employers in not providing for retirement benefits for their
employees. The reason for No. 2 is expressed in the Latin maxim pada privata jmi
publico dmgan non possunt. Private contracts cannot derogate &om the public law. ·
'!4ng .kanmduangpribada q hindi makaJitira sa bolas publiko."2
3. ONE-HALF (1/l) MONTH SALARY. .
In the absence of a retirement plan or agreement providing for
retirement benefits of employees in the establishment, an employee, upon reaching
the optional or compulsory retii:ement age specified in Article 302 [287], shall be
entitled to retii:ement pay equivalent to at least one-rulf (½) month salary for every
year of service, a fraction of at least six (6) months being considered as one (1)
whole year.3
For purposes of determining the minimum retirement pay due an
employee, the term "one-half month salary" shall ir.clude all of the following:
(1) Fifteen (15) days' salary of the emplcyee based on his latest salary
rate. The term •~ala,y" 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 s;une, and ir,cludes the fair and reasonable
value, as determined by the DOLE Secretary, of food, lodging or
other facilities customarily furnished by the employer to his
employees. The tean does Mt include cost-of-living allowances,
profit-sharing payments, and other monetary benefits which are not
Begrv.Phippi,e Ames, nc., GR No. 181995,Jltf 16, 2012.
Tr.rislatioo of 1lil maxm kl l'iflpilO was made by he 9Jp!lllle COJrt ilsefil is d ~ ii 111e case tJ. Oxae. v. United
l.axxallm, h:.,G.R No.152991,Jut/21,2008.
l Alfde 302 [287}, Lab<r Code; Sedilxl 5.1. Rule I~ ~ ~ d Ole Raierrent Pay Law; Laber Mifn'/ oo

788 BAR RfVIEWER ON I.ABOR I.AW
considered as part of or integrated into the regular salaty of the
employees;
(2) The cash equivalent of five (5) days of service incentive leave;
(3) One-twelfth (1/12) of the 131h month pay due the employee; and
(4) All other benefits that the employer and employee may agree upon
that should be included in the computation of the employee's
retirement pay.1
4. "ONE-HALF(½) MONTH SALARY''MEANS 22.5 DAYS.
To dispel any further confusion on the me~g of "one-half [½J month
salary" provided in Article 302 (287], the Court, in Capitol lVirelm, Inc. v. Confcsor,2
simplified its computation by declaring that it means the total of "22.5 days"
arrived at after adding 15 days plus 5 days of SCC\~Ce incentive leave plus 2.5 days
representing one-twelfth [1 /12] of the 13th month pay. Evidently, the law expanded
the concept of "one-half month salary" from the usual one-month salary divided by
two.3
5. FIVE (5) DAYS OF SIL, HOW RECKONED.
The five (5) days of service incentive leave provided under Article 302
(287} as part of the retirement benefit of one-half (½) month salaiy for every year
of service should be paid in full. It should not be computed on the basis of-1/12
of the 5-day service incentive leave.4
6. EXCLUSION OF 1/12 OF 1Jra MONTH PAY AND 5 DA~S OF SIL
Supposing the retiring employee, by reason of the nature of his work, was
not entitled to 13dl month pay or to the SIL pay pumw1t to the exceptions
mentioned in the 13th Month Pay Law and the Labor Code, should he be paid upon
retirement, in addition to the salary equivalent to fifteen (15) days, the additional
25 days representing one-twelfth (1/ 12) of the 13th month pay as well as the five
(5) days representing the service incentive leave for a total of 22.5 days?
This question was answered in the negative in R & E Transporl, Inc. v.
I..atag,s The Court in this case ruled that employees who are not entitled to 13th
month pay and SIL pay while still working should not be paid the entire "22.5
days" but only the fifteen (15) days salary when they retire. In other words, the
additional 25 days representing one-twelfth (1/12] of the l3lh month pay and the
five (5) days of SIL should not be included as part of the retirement benefits.
1
Article 302 l287j, l.m Code; Sedion 52,Rule II, mplemening Rules d tie Reliremert ~ law.
G.RNo. 117174,Nw.13, 1996,264SCRA68, n. ' 2
l.m Mifl:xt rxi Re<iement ~ Lawda~ Oct 24, 1996, issued by Secretly Leooardo A. Ouisllr'bi'YJ.
' ElvqJez Seariy Ser.us, n=.V. Cabdaje, G.R No. 147993, J:11y 21, 2006.
5 G.RNo.155214,Feb.13,2004.
C HArTERSIX
POST-EMPLOYMENT
The employee in this case was a taxi driver who was being paid on the
"boundary" system basis. It was undisputed that ht was entitled to retirement
benefits after working for fourteen (14) years with R & E Transport, Inc. However,
he was held not entitled to the 13th month pay since Section 3 of the Rules and
Regulations Implementing P.D. No. 851 1 exempts fro:n its coverage employers of
those who are paid on purely boundary basis. He was also not entitled to the 5-day
service incentive leave pay pursuant 10 the Rules to Implement the Labor Code2
which expressly excepts field personnel and other employees whose performance
is unsupervised by the employer.3
7. DISTINCTION BETWEEN EMPLOYEES PAID ON "BOUNDARY
SYSTEM" AND THOSE PAID ON "COMMJSS/ON"BASIS.
The said R & E Transporl case should be distinguished from Sm'llno v.
Stvtrino Santo! Transit,• which involves a bus conductor (petitioner) who worked for
14 years for respondent bus company which did not adopt any retirement
scheme. It was held herein that even if petitioner as bus conductor was paid on
commission basis, he falls within the coverage of R.r.. 7641 and its implementing
rules. Th.is means that his retirement pay should include the cash equivalent of the
5-day SIL and 1/ 12 of the 13th month pay for a total of 225 days. The affirmance by
the Court of Appeals of the reliance by the NLRC c,n R & E TrallJj>orl case was
held erroneous. For purposes of applying the law on SIL as well as on retirement,
there is a difference between drivers paid under the ''boundary JJrllm" . and
conductors paid on commission basis. This is so because in practice, taxi drivers do
not receive .fixed wages. They retain only those sums in excess of the ·•'boundary" or
fee they pay to the owners or operators of the vehicles. Conductors, on the other
hand, are paid a certain percentage of the bus's e:.mings for the day. It bears
emphasis that under P.D. No. 851 and the SIL !.aw, the exclusion from its
coverage of workers who are paid on a purely commission basis is only with
respect to field personnel.
The earlier case of Alllo Bus TrallifJOrl Systemr, Inc., v. Baulista,5 clarifies that
an employee who is paid on purely commission basis is entitled to SIL.
8. CONTRIBUTORY OR NON-CONTRIBUTORY PLAN.
a. Right to contributory retirement plan.
Where both the employer and the employee contribute to a retirement
fund in accordance with a CBA or other applicable employment contract, the
employer's total contribution thereto should not be less than the total retirement
1 Granlilg Ille 13" Month Pay.
See Section 1of Rule V, Book III thereof.
l See also Article 82 o/ Ille Labor Code.
G.R. No. 187698, Aug.9, 2010.
GR No.156367, 11.?t 16, 2005,458 SCRA 578,587-588.
790 BAR REYIEWERON IABOR I.AW CHAPTER SIX
POST-EMrLOYMENT 791

benefits to which the employee would have been entitled had there been no such
retirement fund. In case the employer's contribution is less than the retirement
benefits provided under the law, the employer should pay the deficiency.1
b. Right to non-contributory retirement plan. .,
The employees have a vested ·and dernandable right to a non-contributory
retirement plan. It is an existing benefit voluntarily granted to them by their
employer. The latter may not willaterally withdraw, eliminate or diminish such
benefits.2
9. RETIREMENT PAY UNDER LABOR CODE/RETIREMENT PLAN,
SSS, GSIS AND PAG-IBIG, DISTINGUISHED.
The following are the distinctions:
(a) The retirement benefits under the Labor Code,3 retirement policy or
plan of the employer or under a CBA are separate and distinct from
the SSS retirement pay.4
(b) The coverage of the Pag-IBIG Fund5 may be treated as a substitute
retirement benefit for the employee within the purview of the Labor
Code.
(c) GSIS retirement benefits apply to government employees only.
V.
RETIREMENT OF
UNDERGROUND MINE WORKERS
. An u_nderground •mine employee_ ~efers to any person employed to extract
rruneral deposits underground or to work 1r1 excavations or wot.kings such as shafts
winzes, tunnels, drifts, crosscuts, raises, working places whether abandoned or ~
use beneath the earth's surface for the purpose of searching for and extracting
mineral deposits.1
2. DIFFERENT RETIREMENT AGE.
The retirement-age of underground mine workers is as follows:
(a) Optional - Fifty (SO) years of age;2
(b) Compulsory - Sixty (60) years of age.3
3. MINIMUM YEARS OF SERVICE REQUIREMENT.
To be entitled to retirement benefits, the underground mine worker
should have rendered service as such for at least five ·'.5) years, in addition to the
age requirement4 The minimum length of setvice of at least five (5) years required
for entitlement to retirement pay shall include authorized absences and vacations
holidays, and mandatory fulfillment of a military or civic duty.s · '
4. RETIREMENT BENEFITS.
The retirement benefits to which an undetground mine worker is entitled
shall be the retirement benefits provided under Artide 302 [287] of the Labor
Code, as amended.' The components of the retireipent benefits consisting of one-
half (½) month salary are the same as those prescribed in Article 302 [287] as
discussed above.7

1. SPECIAL TREATMENT. VI.

As a manifestation of concern for the welfare of underground mine RETIREMENT OF
workers, Article 302 [287] was amended by RA. No. 8558.6 Department Onkr No. WORKERS PAID BY RESULTS
09, Stritr of 1998 was issued to implement this law.7
1. BASIS OF RETIREMENT BENEFITS.
For covered workers who are paid by results and do not have a fixed
1
Seam 3.3, f\ie 11, ~ flies d h! Rmmertl'3'fLaw. · monthly rate, the basis for the determination of the salary for fifteen (15) days shall
1 Nesre ~ ~ v. ti.RC, GR tl>. 91231, Feb. 4, 1991: Ram,, V. I-I.RC, GR th 80502. tlay 7, 1900; Rep.ti;
Cenfri Copoom, v. lbmllle Panel d M>IJabs, GR th 89766, Feb. 19, 1900; Ta-goo v. l..eoJri), GR No. l· be their average daily sahry (ADS). The ADS is the average salary for the last
57636,Mrf 16, 1983, 122SCRA267. twelve (12) months reckoned from the date ·o f their retirement, divided by the
l Specfi:atjlrderhtide302(287l tmof. number of actual working days in that particular period.s
4
lkllfer Sm, 12-8, RA. No. 8282, ~ linoY,n as te "Soca Seartf NJ. d 1997" ~ kroMl as te "Soca
Sea.ritt IN AA th 1161, as cmmed0-
5 AsPMled ii RA. tl>. n42. l,wcwd ai .u,e 17, 19'341 a¢ml ~shal hM Ole opb1 b tQ te a:,,oerage d
h! l'aJ-ff!1G Ftl1CI asa Sd>S1lm rem811beneft b-te en1)byee an:uned wtil te pu-iewdte LaxiCcxle as I Sedil1 1, fUl lh\ w_
arm:led, prowled M suctr opla1 ooes rd h 1rl/ Wi1/ amvene Ill ~ CBA or oiler ~ agreement. l 5ocoon 2.1, fUl IJ.A, l>i1.
Th.ls, Ile l'arJ-IBIG Ftl1CI an becoosi:lered as aSlbsl.\J'e nmment pilll dlle o:ln1)a1y la- ls en1)bfees ptMfed M l Sedill 22, RI.de l~A, l>ii
sum sdlelTll a'lels benefits m ae nae Olan or a least~ b Ile bEJlells lrder RA. th 7541. f sa.! sdlEm! Mde 302 (2871, as anmled by RA. No. 8558.
!ll1lkles nless rm llfiatlle ~ is enHed b lrderRA No. 7641,I l e ~is ialle b p!If Ile dl'ference. Sedixl 23, ~ II-A, l>i!.
1 lhislawWcl.$~"1Feb.26, 1998. I Sedixl 4.1, ~ IJ.A, l>kl.
1 See Sedixl 8, ~ l~A, IUls PresotiY,J lhe Re6remrt ~ la- lblergrou,d IMe fn1ioyees. Oepmer( Onler No. 1 Sedill 42, fUl II-A, l>i!.
09,Series d 1998[Mr( 4, 1998. a Socfun 5.3, ~ n, l>ll.
792 8AR REVIEWER ON LABOR LAW
VII.
RETIREMENT OF
PART-TIME WORKERS
1. ENTITLEMENT TO RETIREMENT BENEFITS. _.
There can be no question that part-rime workers are also entitled to
retirement pay of ''one-half month 1ala,y" for every year of service under Article 302
(287], as amended by R.A. No. 7641,1 after satisfying the following conditions
precedent for optional retirement:
(a) There is no retirement pl~ between the e~ployer and employee;
(b) The employee should have reached the age of sixty (60) years; and
(c) He should have rendered at least five (5) years of service with the
employer.
2. HOW C0MPUTED.
Applying, therefore, the principles under Article 302 (287], as amended,2
the components of retirement benefits of part-time workers may likewise be
computed at least in proportion to die salary and related benefits due them.
VIII.
RETIREMENT BENEFITS VS. SEPARATION PAY
1. DISTINCTIONS.
Retirement pay and separation pay are two distinct benefits granted under
the law. 'Their distinctions are as follows:
(1) While both retirement pay and separation pay are fixed by law,
retirement pay differs from separation pay in that the former is paid by reason of
retirement; while the laner is required in the cases enumerated in Articles 298 [283)3
and 299 (284] 4 of the Labor Code and as substitute remedy in cases where
reinstatement is no longer feasible nor possible.5
(2) The purpose for the grant of retirement pay is to help the employee
enjoy the remaining years of his life thereby lessening the burden of worrying for
his financial support; it is also a form of reward for the employee's loyalty and
service to the employer.' Separation pay, on the other hand, is designed as a
1
Explanatori Buletin on Part-rime Employment dated Jan. 02, 1996 issued by Acting DOLE Secretary Jose S.
Brilantes.
As amended by RA No. 7641.
Ternim OJe nm:xized caises(ns1allaioo dtooo.' ~ de.ice, redtn:llllC'f, retrendment a'ld des.red busriess
estabistvnentnotrue nserous tiusnessklsses).
' Temi1atm due ncfisease.
~v.M.RC,GRNo.87653,Feb.11, 1992.
.64mv.M.RC.~1.a;Jiinv. ~ .GR No. L-45785, Mart:1121, 1988, 159SCAA91,99.
CHAITTRSI X
POST-EMPLOYMENT
793
wherewithal during the period that an employee is looking for another employment
after his terrnination. 1
2. WHEN BOTH RETIREMENT PAY AND SEPARATION PAY MUST
BE PAID.
There are cases where both retirement pay and separation pay for
authorized cause termination were awarded and ordered paid. The most eloquent
example of this situation is Aquino v. NLRC,1 where the Supreme Court ordered
the payment to the retrenched employees of both the separation pay for
retrenchment embodied in the CBA as well as the retirement pay provided under a
separate Retirement Pla,n. The argument of the company that it has more than
complied with the mandate of the law on retrenchmeqt by paying separation pay
double that required by the Labor Code (at the rate of one [1) month pay instead of
the one-half P/2] month pay per yeat of service) was not favorably considered by
the Supreme Court becaUS!! me employees were not pleading for generosity but
demanding their rights embodied in the CBA which was the result of negotiations
between the company and the ~ployees. The company's counsel should have
made it a point to categorically provide in the Retirement Plan and the CBA that an
employee who had received separation pay would no longer be entitled to
retirement benefits. Or to put it more plainly, collection of retirement benefits was
prohibited if the employee had already received separation pay. This, however, he
failc;d to do.
3. WHEN SEPARATION PAY MAY BE CHARGED TO RETIREMENT
PAY.
Chargeability on one benefit to the other may also be agreed upon by the
employer and the employee. For instance, in Ford Philippinu v. NLRC,3 a case
decided before the advent of R.A. No. 7641,4 the Supreme Court ruled that if it is
provided in the retirement plan of the company that the retirement, death and
disability benefits paid in the plan are considered integrated with and i11 lieu of
termination benefits under the Labor Code, then the retirement fund may be
validly used to pay such termination or separation pay because of closure of
business.
4. WHEN EMPLOYEES ENTITLED TO ONLY ONE FORM OF
BENEFIT.
There are cases where the employee is held to be entitled to only one
benefit In Opriano v. San Miguel Corporation,5 it was ruled that in case the retirement
Id.
G.RNo.87653,Feb.11, 1992.
l F a d ~ S a l m l ~ ~ v.M.RC, G.RNo. 75347,0ec.11,1987.
The Rlhnen!Payl.ail.
GR No. L-24774,hlg. 21, 1968.
 CHAl'TER SIX
794 BAR RfVJEWER ON IABOR IAW
rOIT-EMrLOYMENT
795

plan of the company provides that the employee shall be entitled to either the
retirement benefit provided therein or the separation pay provided by law,
whichever is higher, the employee cannot be entitled to both benefits.1
In the case of Z11tllig Pharma Corporation ,. Sibal,2 re5.Pondents (36 in all),
were terminated on the ground of redundancy. They were properly notified of their
termination and were paid their separation pay in accordance with the CBA3 for
which respondents individually signed Release and Quitclaim in full settlement of
all claims arising from their employment with Zuellig. Controversy arose when
respondents later on filed separate Complaints (whi~h were later consolidated)
before the Labor Arbiter for payment of retirement gratuity and monetary
equivalent of their unused sick leave oq top of the separation pay already given
them. Respondents claimed that they arc still entitled to retirement benefits and
that their receipt of separation pay and execution of Release and Quitclaim do not
preclude them from pursuing such claim. In ruling against respondents, the
Supreme Court declared tha1 tl1e provision in the CBA is an effective bar to the
availment of retirement benefits once the employees have chosen separation pay or
vice versa. Thus, having chosen and accepted redundancy pay, respondents are thus
precluded from seeking payment of retirement pay under the CBA, which
enunciates express prohibition against "do11ble recovery. "
5. ENTITLEMENT OF EMPLOYEES DISMISSED FOR JUST CAUSE
TO RETIREMENT BENEFITS.
a. General rule.
Management discretion may not be exercised arbitracily or capriciously
especially with regards to the implementation of.the retirement plan. As held in
Razon, Jr. v. NLRC,' upon acceptance of employment, a contractual relationship is_
established giving the employee an enforceable vested interest in the retirement
fund. Hence, the dismissed employee is entitled to the retirement benefits provided
thereunder.
b. Cases where just cause termination was dted to validly deny
claim for retirement bene.its.
However, in a number of cases, the Supreme Court ruled that an
employee who is dismissed for cause loses his right to claim for his retirement
benefits.
In San Miguel Corporation v. Lao,• an employee who was dismissed for just
cause was held not entitled to the retirement benefits under the compan •
retirement plan which concededly prohibits the award of retirement benefits to
employee dismissed for just cause, a proscription that binds the parties to it.
~=
Distinguishing Razon and San A1ig11el, the Supreme Court declared that in
Razon, the employer's refusal to give the employee his retirement benefits is based
on the provision~[ the retirement plan giving management wide discretion to grant
or not to grant retuement benefits, a prerogative that obviously cannot be exercised
arbitrarily or ~sically. But in San Miguel, the retirement plan expressly prohibits
the grant of retirement benefits in case of dismissal for just cause. Hence, the
employee is bound by such prohibition.
In the case of PI.DT v. Bolso,2 the same ruling in San Mig11e/ was made.
Thus, it was held in this case that since the employee was dismissed for just cause,
neither he nor his heirs can avail of the retirement benefits.
. _In Phi!tppine .Airlinu, Inc. v. NLRC, 3 it was held that private respondent's
t~atton for cause ren~ered nugatory any entitlement to mandatory or optional
rettrement pay that she llllght have previously possessed."
In Daab~ v. Coca-Cola Bottlers Phils., lnc., 4 the Court relied on the above
ruling in. PhilippineAirlines in denying th~ claim for retirement benefits of petitioner
Daabay in view of his lawful dismissal by Coca-Cola on the grounds of seri~us
misconduct, breach of trust and loss of confidence.
-.---------000----------

' See aso Cruz v. Ph~ Gkbal Coomri:a!xni, 1nc., G.R No. 141868, Mat 28, 2004; Saxroo v. Asscx:ia1xln o1
~ Slipprg Liles, Inc., GR ~ -156317, ,¾xi 26, 2005; 9ml, Jr. v. Nalkra Steel (:a])., G.R No. 150180,
1
Ott 17. 2008; Santos v. Sesvier Phq)pales, n:., G.R No. 1663n. ~ -28, 2008. • GRNo.143136-37,Juy11.2002.
2 G.RNo. 159701,Aug.17,2007.
I GR No.173587,Jut, 15, 2013.
1 G.R No. 123294, Oct 20, 2010, 634 SCRA 18.
l Sedi::n 3\'b), Ar1ide 'tN (Retiremett Gralittl flered.
• GRNo.80502,MiJy7, 1900.185SCRA44. ' G.R No. 1998!Kl,Aug.19, 2013.

-
 CHAPTER SEVEN 797
MANAGEMENT PRIROGATIVE

labor laws discourage interference in employers' judgment concerning the conduct

Chapter Seven of their business.1 The Labor Code and its implementing rules do not vest
MANAGEMENT PREROGATIVE managerial authority in the Labor Arbiters or in the different divisions of the
NLRC, or in the courts. Even as the law is solicitous of the welfare of employees, it
must also protect the right of.employers to exercise what are clearly management
prerogatives. The free will of management to conduct its own business affairs to
TOPICS PER SYLLABUS achieve its purpose cannot be denicd.2
2. LIMITATIONS ON THE EXERCISE OF MANAGEMENT
PREROGATIVES.
VIL 1. Limitations imposed by:
MANAGEMENT PREROGATIVE a) law;
b) CBA;
A. Discipline c) employment contract;
B. Transfer of Employees d) employer policy;
C. Productivity Standard e) employer practice; and
D.Bonus Q general p_rinciples of fair play and justice.l
E. Change of Working Hours 2 It is subject to police power.4
F. Bona Fide Occupational Qualifications 3. Its exercise should be without abuse of clscretion.5
G. Post-Employment Restrictions 4. It should be done in good faith and with due regard to the rights of
labor.6
Ineluctably, the exercise of management prerogatives is not absolute. TI1e
I. prerogatives accorded to management cannot defeat the very purpose for which
MANAGEMENT PREROGATIVE labor laws exist - to balance the conflicting interests of labor and management, not
to tilt the scale in favor of one over the other, but to guarantee that labor and
1. RIGHT OF EMPLOYER TO REGULATE ALL ASPECTS OF management stand on equal footing when bargaining in good faith with each
EMPLOYMENT. other.7

It is a well-recognized principle that employers have the right and A.

prerogative to regulate every aspect of their business, generally without restraint in DISCIPLINE
accordance with their own discretion and judgment.1 Tius privilege is inherent in 1. COMPONENTS.
the right of employers to control and manage their enterprise effectively.2 Such
The right or J?rerogative to discipline covers the following:
aspects of employment include hiring, work assignments, working methods, time,
place and manner of work, tools to be used, processes to be followed, supervision 1) Right to discipline;
of workers, working regulations, transfer of employees, lay-off of workers and the 2) Right to dismiss;
discipline, dismissal and recall of workers.3 3) Right to determine who to punish;
4) Right to promulgate rules and regulations;
Our laws and jurisprudence extend recognition and respect to such
exercise by the employers of their rights and prerogatives. For this reason, courts
often decline to interfere in legitimate business decisions of employers. In fact, 1 Coca-Cola Bottlers Phqipines,lnc. v. Del Vilar, G.R No. 163091, Oct. 6, 2010.
2 Va v.Hoo. CA.. GR No. 146621.!Ay30, 2004.
3 The~reAnm:allifellldGenercH1straiceCo. v. ~ .G.RNo.156963, Nov.11,2004.
' Farrolv. CA., G.R. No. 133259, Feb. 10, 21XXll; Associaed Im lmls-lUCPv. ~C. GR No. 120450, Feb. 10, 1999.
1 Deles,.i. v.NI.RC, GR No.121348, Mml9, 200l;Caslllv.tlRC, GR No.104319,.hlle 17, 1999. s PanlrancoNonhElpress, lnc:v. NLRC, G.R. No. 106516, Sept 21, 1999.
i Mendoza v. Rural Bank oflucbirl, G.R. No. 155421, 07 July 2004. 6 Unicom Safety Glass, Inc. V. Basarle, G.R. No. 154689, Nov. 25, 2004.
3 PhifWi1e Ames, klc. v.NLRC, GR No.115785, Al,J.4, 2000;. 7 Phq)pineAili'les, klc.v.Pascua,GRNo.143258,Al,J.15,2003,409SCRft 195.

BAR R.EVIEWER l)N l.ASOR IAW
5) Right to impose penalty; proportionality rule;
6) Right to choose which p~nalty to impose; and
7) Right 10 impose heavier penalty than what the company rules
prescribe.
2. RIGHT TO DISCIPLINE.
The employer's right to conduct the affau:s of i~ busin~ss _according to !ts
own diseretion and i'udgment includes the prerogative to. lllstill disopline among·its
di · al
I
emp oyees and to impose reasonable penalties, including
. . • hi, uponI ernng
snuss th
employees. Tue employee cannot be compelled to ~~tam In . s emp oy . e
undeserving, if not undesirable, employees.1 The ~nly cnte~on to gwde ~e exercise
of its management prerogative to discipline or dis~s~ ~rnng employees 1s that the
olicies rules and regulations on work-related acnvtnes of the employees must
;!ways be fair and reasonable and the corresponding penalties, when prcscnbed,
should be commensurate to the offense involved and to the degree of the
infraction.2
3. RIGHT TO DISMISS.
The right of the employer to ~smiss its ~rring employees is a measur~ of
self-protection.3 The law, in protecting the nghts of th~ laborer, a~th?nz~s
neither oppression nor self-destruction of the employer.' While the co°:snruuon i_s
committed co the policy of social justice and the protection of the :"orking ~ss, _tt
should not be supposed that every labor disp~te will ~e automatically de~ded in
favor of labor. Management also has its own nghts which, as such,_are enntled to
respect and enforcement in the interest of simple fair play- <?nt of tts concern foe
those with less privilege in life, the Supreme ~o~ has in~ed. more often than
not towards the worker and upheld his cause in his conflicts ~th _the.e~ployec.
Such favoritism, however, has not blin~ed the Court to rule that JU~tice 1s, tn eve1y
case, for the deserving, to be dispensed in the light of the established facts and
applicable law and doctrine.4
.4. RIGHT TO DETERMINE WHO TO PUNISH.
1be employer has wide latitude to determine who among its erring
officers or employees should be punished, to what extent and what proper penalty
to impose.5
5. RIGHT TO PRESCRIBE COMPANY RULES AND REGULATIONS.
The prerogative of an employee to pres:ribe r_easonable rules and
regulations_necessary or proper for the conduct of Its busmess and to provide
Sloe!ra1, ~Y. NtRC,G.RNo. 74229,hlg.11, 1989.
St t,lichaers Institute v. Santos, G.R. No. 145280, Dec. 4, 2001.
1 Reyesv, ~erofl..aboc, GR. No.48705, Feb.9, 1989; f'iixo, lnc..v. NLRC, G.R.No. 70546, Oct. 16, 1986.
PlDT v. Prgo1, GR No. 182622. Seit 8, 2010.
s Scrmov. NI.RC, G.RNo.75510, Oct. 27, 1987.
C HATTEi\ SEVEN
MANAGEMENT PRERQGATIVE
799
certain disciplinary measures in order to implement said rules and to assure that the
same would be COf!lplied with.has been recognized in this jurisdiction.1
6. RIGHT TO IMPOSE PENALTY; REASONABLE
PROPORTIONAµTY RULE.
The employer may lawfully impose appropriate penalties on erring
workers pursuant to its comp~y rules and re~tions.2 However, the "reasonable
proportionality rule" should be observed. This means that infractions committed
by 3!l employee should merit only the corresponding sanction demanded by the
circumstances. The penalty must be commensurate with the gravity of the offense,
the act, conduct or omission imputed to the employee and imposed in connection
with the employer's disciplinary ~uthority.3 Accqrdingly, in determining the validity
of gismissal as a form of penalty, the charges for whic}1 an employee is being
administratively cited must be of such nature that would merit the imposition of
the.said supreme penalty. Dismissal should not be imposed if it is unduly harsh and
grossly disproportionate to the charges.4
7. RIGHT TO CHOOSE WHICH PENALTY TO IMPOSE.
The matter of imposj.ng the appropriate penalty depends on the employer.
It is certainly within the employer's prerogative to impose on the erring employee
what it cqnsidered the appropriate penalty under the circumstances pursuant.to its
company rules and regulations. Like all other business enterprises, its prerogative to
discipline its employees and to impose appropriate penalties on erring workers
pursuant to company rules and regulations must be respected.5
8.RIGHT TO IMPOSE HEAVIER PENALTY THAN \VHAT THE
COMPANY RULES PRESCRIBE.
The employer ~as the right to impose a heavier penalty than that
prescribed in the company rules and regulations if circumstances wacrant the
imposition thereof. The fact that the offense was committed foe the first time or
has not resulted in any prejudice to the company was held not to be a valid excuse.
No employer may rationally be expected to continue in employment a person
whose lack of morals, respect and loyalty to his employer, regard for his employer's
rules, and appreciation of the dignity and responsibility of his office, has so plainly
and completely been bared. Company rules and regulations cannot operate to
altogether negate the employer's prerogative and r~sponsibility to determine and
declare whether or not facts not explicitly set out in the rules may and do constirucc
such serious misconduct as to justify the dismissal of the employee or the
1 Phimco Industries, Inc. Y. NLRC, G.R. No. 118041, June 11, 1997.
2 f'li'Wi1e Ames, ~ v. N.RG,GR No. 115785, hlg.4, 200), 337SCRA 286.
J Mria Meroorial Pclk ~ . Inc.v. PaM!o,G.R No. 167118, June 15, 2006.
' Felix v. NLRC, G.R No. 148256, NoY. 17, 2004.
s China Bcrlking Coq)oratioo v. Booomeo, G.R No. 156515, 0d. 19, 2004.
 C HAl'TEll SEVEN 801
SAil REVIEWER ON U.BOll lAW MANAGEMENT PREROGATIVE
800

iro osition of sanctions heavier than those specific~y and exp~essly prescribed • Even if the employee is performing well in his present assignment,
p · This is dictated by looic otherwise, the rules, literally applied, would result management may reassign him to a new post.1
therClll- .,. • · thi
in absurdity; grave offenses, t.g., rape, would be penalized by mere suspension, . s, • An employee cannot claim any vested right to his position. While an employee
despite the heavier penalty provided therefor by the Labor Code or otherw1se may have a right to security of tenure, this docs not give her such a vested
dictated by common sense.1 • right to her position as would deprive the employer of its prerogative to
1n Cmz. v. Coca-Cola Bollkrs Phils., lnc.,2 a~ttedly, ~ e violation of the change her assignment or transfer her where her service will be most beneficial
company rules committed by petitioner is pwushable wtth the penalty_ ?f to the employer's interest 2 '
·
suspension ,,r0 r the c_t
w~ oftensc
1' ·
However• the Supreme Court affirmed
.
the•validity • The transfer of an employee may constitute constructive dismissal when it
of his dismissal because respondent company has prese_nted evidence showtng that amounts to an involuntary resignation resorted to when continued
petitioner has a record of other violations from as far batk as 1986. employment is rendered impossible, unreasonable or unlikely; when there is a
demotion in rank and/ or a diminution in pay; or when a clear discrimination,
B. insensibility or disdain by the employer becomes unbearable to the employee
TRANSFER OF EMPLOYEES leaving him with no option but to forego with his continued employment.3
• More specifically, the following three (3) conditions must concur in order for
1. TWO (2) KINDS OF TRANSFER. the transfer to be considered as constructive dismissal:
A transfer mt:ans a movement: 1) When the transfer is unreasonable, inconvenient or prejudicial to the
(1) From one position to another of equivalent rank, level or salary, employee;
without a break in the service;3 or 4 2) When the transfer involves a demotion in rank or diminution of salaries,
(2) From one office to another within the same business establishment benefits and other privileges; and
2. OTHER FORMS OF TRANSFER. . 3) When the employer perfonns a clear act of discrimination, insensibility, or
The prerogative to transfer is broad enough to include the following disdain towards the employee, which forecloses any choice by the latter
prerogatives that involve movements of personnel: . . except to forego his continued employment4
(1) Prerogative to reorganize and implement a Job evaluatton prognun; • Transfer made in compliance with a government order docs not amount to
(2) Prerogative to promote; and constructive dismissal.5
(3) Prerogative to demote. • The refusal of an employee to be transferred may be held justified if there is a
'3. SOME PRINCIPLES. showi;tg that the transfer was directed by the employer under questionable
• The exercise of the prerogative to transfer or assign employees fro~ on~ office circumstances. For insunce, the transfer of-employees during the height of
or area of operation to another is valid provided there is no demotton 111 rank their union's concerted activities in the company where they were active
or diminution of salary, benefits and other privileges. The transfer should not participants is illegal.6
be motivated by discrimination or made in bad faith or effected as a fomi of • An employee who refuses to be transferred, when such transfer is valid, is
punishment or demotion without sufficient cause.5 guilty of insubordination or willful disobedience of a lawful order of an
6 employer under Article 297 [282] of the Labor Code.7 For example: The
• The Court cannot look into the wisdom of the transfer of an employee.
dismissal of a medical representative who acceded in his employment
• Commitment made by the employee in the employment contract to be re-
7 application to be as~igned anywhere in the Philippines but later refused to be
assigned anywhere in the Philippines is binding on him. transferred from Manila to a provincial assignment, was held valid. The reason
I
1 Id.; See also~ Lmataies (Phk), nc.v. N.RC, GR No. L-76959, 0d. 12. 1987, 154 SCRA 713.
1 S1anfo«ll.iaosyslems,lnc.v. NLRC,G.RNo.l-74187,Jan 28, 1988. 2 oss Secuit)' &Alied SeM:es. nc.v. N.RC. GR No. 1121s2, Feb.9, 200>.
1 G.R. No. 165586, June 15, 2005. l Faen Ho!e1 v. tlRC, G.R. No. 155264, ~ 6, 2005; ~ v. ~ BndLldlal, G.R No. 155421, .kif 7, 2004.
~Bol!lersPhfwi,eS.nc.v.De!Yb,GRNo 16309:.0:t.6.2010. 4 Tmv. 0.. GRl-b.171764,.lllle8,2007; ~ Y-~ralllndl.ucbal,G.RNo.155421,Jllf7,2004.
t !lJe Daly CapamiV. NlRC.GR No. 129843. Sept 14, 1999 5 Bisi] MirggilJcMI! sa Tl)'COv. N.RC, GR No. 151309, 0d. 15,2008.
Phamacia and Up~.K. v.Abayda. Jr.•G.R No. 172724,Aug 23! 2010. 1 Yuoo Chemical Industries, Inc.V. t.i'listly of Laboe and Employment G.R. No. 75656, ~ 28, 1990.
' Id. 1 Pharmacia and Upjolvl, Inc. V. AR>ayda, Jr.•G.R. No. 172724, Aug. 23, 2010.
• 1 Id.

BAR REVIEWER ON LABOR LAW
802
is that when he applied and was accepted for the job, ~e agreed t~. th~ policy
of the company regarding assignment anywhere tn the Philipptnes as
demanded by his employer's business operation.1
• Refusal 10 transfer due to panntal obligations, additional exptnsts, inconvenien(t,
hardship and anguish is not valid. An employee could not validly refuse ·lawft,tl
orders to transfer based on these grounds.2
• Refusal to transfer to overseas assignment is valid.3
• Refusal to transfer consequent to promotion is.valid.4
5
• Transfer pursuant to the company policy of preventihg connivance is valid.
• Transfer in accordance with pre-determined and established office policy and
practice is valid.6
, Rotation among employees of banks as required in the :Manual of Regulations
for Banks and Other Financial Intermediaries issued by the Bangko Sentral ng
Pilipinas is valid.7
• Transfer due to the standard operating procedure of rotating employees from
tl1e day shift to the night shift is valid.8
• Transfer to avoid conflict of interest is valid.9
, A transfer from one position to another occasioned by the abolition of the
position is valid.10
11
• Reassignment and transfer pending investigation of irregularities is valid.
• Burden of proof in transfer cases is on the cmployer.12
3. PREROGATIVE TO REORGANIZE AND IMPLEMENT AJOB
EVALUATION PROGRAM.
Implementation of a job evaluation progra~ or ~ r~or~~tion ~s valid
for as long as it is not contrary to law, morals or public policy and 1t 1s cam~d out
in good faith. 14 If the purpose of a reorganization is to be achieved, changes 1n the
1 Abbottlaborattxies, Inc. v. NLRC, G.R. No. 76959, Oct 12, 1987. .._
Aliell 13m:g CoqxxaliJl v. CA. GR No. 144412. Nov._18, 2003; HareaMlEIS ~s nl Loan~ , ... v.
NIRC,GR No. 97007, ~26. 1996, 262SCRA406.
l Ale! l3iriiY:l CoqxxaliJl v. CA, GR No. 144412. Nov. 18, 2003t, Oosd1 v. M.RC, GR No. L-61182,Mf 5, 1983, ~
Phi.~ 123SCAA 296.
Dosch v. NLRC, [supra.
Crena, Slagenl Rail flltectaivnentFree 'NcnefSV. Cll, G.R No. L-19879, De:. 17, 1966, 18 SCAA 1068.
, ~ nilslla Seariyh]en:(V. ~ GR No. 1Z7421, De:.8, 1999, 320 SCAA 124, 138.
Alied Banking Corporation Y. CA. G.R. No. 14«12, Nov. 18, 2003.
Caslllv.CIR, GRNos.L-26124 n!L-32725, Mlf 29, 1971,39 SCAA 75.
' ~AssaialbldlJelall11nPTGW0v.~ WebJre f'hi!Jpiles, nc., GR~-162994, ~ 17, 2004.
IO Bef9Jet EJecm CooperiM v. Fianza..GR ~ -158600, ~ 9, 2004.
11 IAWaov.TheCAinl~ CdlegesFanlalm, GR No.164893,MJdl 1, 2007.
12 &&v.C'mech&,sen~ n:..G.RNo.171392.0ct.30.~.
1l NMWJA-NFL v.0.,.,00 &.gar Cen1ra Co.. h:., GR No.145848, fwg. 0, 21.XXi.
14 SCA tt,,giene P1tXiJC1S Cap. ~byeeS A1sociaoor1 v. SCA H)<;liene ~ Gap, G.R No. 182877, f.J,J. 9, 2010.
CHAM'ER SEVEN 803
MANAGEMENT PREROGATIVE
positions and rankings of the employees should be expected. To insist on one's old
position and ranking after a reorganization wc-uld render such endeavor
ineffectual.1
For instance, in Batongbacal 11. Amaated Ban,t,2 involving the dismissal of
an assistant vice-president for refusing to tender his courtesy resignation which the
bank required in line with its reorganization plan, the Court held, among others,
that it is not prepared to preempt the employer•~ prerogative to grant sala.ry
increases to its employees by virtue of the implementation of the reorganization
plan which thereby caused a distortion in salaries, notwithstanding that there is a
semblance of discrimination in this aspect of the bank's organizational setup.
The validity of a job evaluation program was likewise affirmed in SCA
Hygiene v. SC4 fb,gim ProdJirtJ urp.3 Thus, it was pronounced here that a job
evaluation program is valid if the employer has not aced in bad faith and it was not
intended to circumvent the law and deprive the affected employees of the benefits
they are supposed to receive. The job evaluation program was undertaken to
streamline respondent's operations and to place its employees in their proper
positions or groupings. A perusal of the CBA of the parties showed that it merdy
provided the procedure for the implementation of the job evaluation and did not
guarantee any adjustment in the salaries of the employees.
It is hard to accept the claim that an employer would go through all the
expenditure and effort incidental and necessary to a reorgani2ation just to dismiss a
single employee whom they no longer deemed desirable.•
Reorganization does not necessarily give ris~ to promotional increases.5
'Thus, in the same SC4 f-!ygime case, the High Court did not grant any conversion
or promotion increase to the 22 daily-paid rank-and-file employees since what
transpired was only a promotion in nomenclature. Of primordial consideration is
not the nomenclature or title given to the empl-:iyee but the nature of his
functions. Based on the eight new job grade levels which respondent adopted after
the job evaluation, Job Grade Levels 1 and 2 positions are both categorized as.
rank-and-file employees. Said employees continued to occupy the same positions
they were occupying prior to the job evaluation. Moreover, their job titles remained
the same and they were not given additional duties and responsibilities.
There is also no evidence to show that Job Grade Levels 1 and 2
positions are confined only to daily and monthly-paid rank-and-file employees,
respectively, such that when a conversion from Job Grade Level 1 to Job Grade
Level 2 takes place, a promotion automatically ensues. The pronouncement of
hmlav.NLRC,G.R.No.126230,Sepl 18.1997,279SCRA326.
GRNo. 72977.Dec.21, 1988, 168SCAAfiOO.
3 SCA Hygiene Products Cap. En1)bieesAsscxmxlY. SCA Hyg'eoe Products Cap. ~
• Id.
5 Id.

BAR REVIEWER ON IABOR IAW
804
Voluntary Arbitrator Renato Q. Bello that Job Grade Level 2 positions are mostly
occupied by monthly-paid rank-and-file employees 4nplies that some daily-paid
rank-and-file employees also occupy that position. Thus, a mere conversion from
Job Grade Level 1 position to Job Grade f:evel 2 ~osition does. not, of course,
make a daily-paid rank-and-filer a monthly-pa1d one with a cortcorrutant conversion
and promotion increase.
4. PREROGATIVE TO PROMOTE.
Promotion is the advancement from one pqsition to another involving
increase in duties and responsibilities as authorized by law and usually accompanied
by an increase in compensation and benefits.1
a. Transfer vs. promotion. ·
Promotion denotes a scalar ascent of an officer or an employee to
another position, higher either in rank or salary; while transfer involves lateral
movement from one position to another of equivalent level, rank or salary.2
c. Some principles on promotion.
• An employee has the right to refuse promotion. There is no law
which compels an employee to accept a promotion. Promotion is in
the nature of a gift or reward. Any' person may refuse to accept a gift
or reward. Such refusal to be promoted is a valid exercise of such
right and he cannot be punished therefor.3
• An employee cannot be promoted without his consent even if merely
as a result of' a transfer. A transfer that results in promotion or
demotion, advancement or reduction or a transfer that aims to lure
the employee away from his permanent position cannot be done
without his consent.4
• An employee cannot be dismissed because of bis refusal to be
promoted. It cannot amount to insubordination or willful
disobedience of a lawful order of the employer.5
• Employer's decision on whether to promote an employee or not is
valid for as long as it does not appear to have been actuated by bad
faith.6
5. PREROGATIVE TO DEMOTE.
Demotion involves a situation where an employee is relegated to a
subordinate or less important posiµon consisting of a reduction to a lower grade or
1 Coca-Ccia Bomers ~.nc. V. Del Vim, GR No. 163091, 0d. 6,2010.
2 l&resv. Suboo, GR No. L-23281,Au;i.10, 1967, 20 SCRA954, 127 f'hl.370,378.
3 Erasrrov. Home mmce& Gucmt C,apaam, GR No. 139251,~. 29, 2002.
• Pl1ippf1eT~ &Teleplxoe Corpaali:rl v. CA. GR No. 152057, ~ 29, 2003.
~ Ibid.
' t-WMM-NFL v.D.wao ~ CenlJa Co. n:.,GR No. 1458,18, ~- 9, m.
CHAl'TER SMN
805
MANAGEMENT PREROGATIVE
rank with a corresponding decrease in duties and responsibilities and usually
accompanied by a decrease·in salary.I
a. Two (2) forms ofdemotion.
Demotion may either be a form of:
(1) Disciplinary sanction; or
(2) Constructive dismissal.
b. Demotion as dis9plinsuy sanction.
It is a fact that the Labor Code provides only one foan of sanction, that
is, dismissal. In many instance~, _however, dismissal appears to be not the proper
sanction imposable because it is too harsh a penalty considering the gravity of the
offense or in view of the e.~st_!!llce of mitigating circumstances that, if considered,
would justify the imposition of less harsh penalty than dismissal. The law, however,
does not contain any provision on what that less hatsh penalty than dismissal is;
hence, short of dismissing the erring employee, employers usually resort to
demoting him to a position or two lower in rank than ~s current one, with the
corresponding reduction in pay, benefits and privileges. More often than not, the
erring employee who agmits his wrongdoing usually accepts such penalty rather
than be terminated fr()m employ~et1t
Thus, the Court has give its imprimat1'rto.the imposition of demotion as a
penalty. For instance, it was held in one case that the employer has the right to
demote and transfer an employee who has failed to observe proper diligence in his
work and incurred habitual tardiness and absences and indolence in his assigned
work.2
Demotion due to failure to comply with productivity standards was
likewise upheld as valid in the consolidated cases of Leonarda v. NLRC,3 and Fuerle
v. Aqllino.4The employer here claims that the employee was demoted pursuant to a
company policy intended to foster competition among its employees. Under this
scheme, its employees are required to comply with a monthly sales quota. Should a
supervisor like Fuerte fail to meet his quota for a certain number of consecutive
months, he will be demoted, whereupon his supervisor's · allowance will be
withdrawn and be given to th,e individual who takes his place. When the employee
concerned succeeds in meeting the quota again, he is re-appointed supervisor and
his allowance is restored. The Supreme Court said that this arrangement appears to
be an allowable exercise of company rights. An employer is entitled to impose
productivity standards for its workers and in fact, non-compliance may be visited
with a penalty even more severe than demotion.
1
Coca-Cda Bomers Phqipiles, n:. V. Del Viar, GR No. 163091, 0d. 6, 2010; rmv.CA, GR No. 171764,JIJle 8, 2007,
2 kena&ra HirYesa M!deod, n:. v. lAC, G.R No.732B7, Mr, 18, 1987.
3 GR No. 125303, June 16, 200>.
' G.R. No. 126937, Ji.ne 16, 200>.
 BAil llEVIEWEll ON I.ABOll I.AW
806
• Qbservance of due process in demotion c~es.
While due process required by law is applied in dismissals, the same is also
applicable to demotions as the latter likewise affect the employment _o_f a ":'orker
whose right to continued employment under the same !c~s ~~ co~di~ons ts also
protected by law. Moreover, considering that demotion_ 1s, li:lte dis~ss~, also a
punitive action, the employee being dem~ted should, as tn cases of dis~s~als, be
given a chance to contest the same.1 Sunply put, even ~e employers °fht to
demote an employee requires the observance of the twtn-nooce reqU1Ccment.
b. Demotion amounting to constructive dismissal.
In this sense, demotion is being perpetrated by the employer as a fonn of
constructive dismissal of the employee.
As far as the prerogative of transferring of employees is concerned, there
is demotion when the same results in reduction in position, rank or salary as a
result of a transfer.l The case of Coca-Cola v. Dd Villar,4 clearl)' illustrates when
transfer of an employee is tantamount to demotion. Respondent Del Villar was
cransfeaed by petitioner company from the position of Tran!j)Ortalion Stnncts
Managtr to the position of Staff Assistant lo the Co,pora~t P_"rrhasing and Materials
Control Managtr. Petitioner and its officials attempted to Justify the ~sfer of
Villar by alleging his unsatisfactory performance as Transportanon Servtces
Manager. The High Court, however, was unconvinced_- The dism~ performance
evaluations of respondent Del Villar were prepared by his two supenors_- San Juan
and Pineda - after Del Villar already implicated them in his Report dated Januuy 4,
1996 in an alleged fraudulent scheme ~gainst petitioner company. Del Villar was
demoted as readily apparent in his new designation. Formerly, he was the
Transportation Services Manager; then he was made a Staff Assistant - a
subordinate - to another manager, particularly, the Corporate Purchasing and
Materials Control Manager. Moreover, the two posts are not of the same weight in
terms of duties and responsibilities. Del Villar's position as TtanSportation
Services Manager involved a high degree of responsibility, he being in charge of
preparing the budget for all of the vehicles of the Company nationwide. As Staff
Assistant of the Corporate Purchasing and Materials Control Manager, Del Villar
contended that he was not assigned any meaningful work at all. The Company
utterly failed to rebut Del Villar's contention. While Del Villar's transfer did not
result in the red!lction of his salary, there was a diminution in his benefits. The
Company admits that as Staff Assistant of the Corporate Purchasing and Materials
Control Manager, Del Villar could oo longer enjoy the use of a company car,
J.rtiaMm)eShopa-dMo&iw,, h:.v.NLRC, GR t-b.118045, Jal. 2, 19!!7, 266 SCRA97. •
Finn ~ v. NLRC, GR No. 155264, Mi?/ 6, 2005; Jattia Madine Shop .rd Auto S..W,,, klc. v. NI.RC, supra.
i Phippine Wreless, Inc. (PcckeGlell v. M.RC, GR I-kl. 112963,Ju~ 20, 1999.
CocaQ:la BoU1e1s PhfWi1es. Inc. v. Del Vilar, GR No. 163091,Oct. 6, 2010.
CHAl'TEll SEVEN
MANAGEMENT PREROGATIVE
gasoline allowance, and ~ual foreign travel, which Del Villar p,reviously enjoyed
as Transportation Services Manager.
Another illustration of a transfer resulting in demotion is the case of Tht
Orrhard Gof and Co11nlry C/11b v. Francisco,• where cespondent, after being suspended
and made to take a forced leave for- alleged violations, was ultimately transferred
from the position of Club Accountant, in which she headed petitioner Club's
General Accounting Division and four divisions under it, to the position of Cost
Controller/Accountant, a lower ranked position. The Court held that the transfer
amowlted to demotion which thus constitutes constructive dismissal because
Francisco's transfer to the position of Cost Controller was without valid basis and
that it amounted to a demotion in rank. When Francisco was placed on forced
leave and transferred to the Cost Accounting Section, not once was Francisco given
-the opportunity to contest these company actions taken against her. Just when one
penalty has been served by Francisco, another would instantaneously take its place.
And all these happened even while the supposed ca,e against her, the alleged
charge of "betrayal of company trust," was still pending and remained unresolved.
Interestingly, Francisco's transfer was occasioned not by a past infraction or a
present one which has just been committed, but by her :1ct of filing a complaint for
impropriety against Famy.
?el C.
PRODUCTIVITY STANDARD
1.CONCEPT.
The employer has the prerogative to prescribe the standards of
productivity which may be used as:
1. an incentive scheme; and/or
2 a disciplinary scheme.
As an incentive scheme, employees who surpass the productivity
standards or quota are usually given additional benefits.
As a disciplinary scheme, employees may be sanctioned or dismissed for
failure to meet the productivity standards or quota.
• Illustrative cases:
In In/11'71(Jtional School Manila 11. ISAE,2 the teache.t3 was held guilty of gross
inefficiency meriting her dismissal on the basis of the Court's finding that she failed
to measure up to the standards set by the school in teaching Filipino classes.
GRNo.178125,f.larcn 18,2013.
Coca-Coo Bolllefs Phlippines, Inc. V. Dell/Jlar, G.R. No.167286, Feb. 5, 2014.
3 Evin,!elne Sanlos was frst hied l7j Ile SdlOd il 1978 as aill-&ne Spa1ish lcwlguacJe tea::her. &le IIXi a w a
absence clld at lhe line ol her rebJm ID tie SchocA, oo~ one class a Spooish was avaiii>le for her l:l teacn. fuJs, for lhe
school year 1993-1994, Santos ~ 10 m one c1ass a Spri;l1 clld rw otter c.1asses a Flin> that Y,l!le left behild
by arelired le.dlef. 9ibsequent ID llis, she tauglirxt, Ffl)ilo111til he' termilalic:n
 SAR REVIEWER ON U.BOR U.W
808
In R!)iu-Rt!Jel v. Philippine uen,1 the validity of the dismissal of petitioner
who was the Corporate Human Resources (CHR) Director for Manufacturing of
respondent company, on the ground of ine_f~ciency and ineptitu_dc, was affirmed
on the basis of the Court's finding that pentloner, on two occaSions, gave wtong
information regarding issues on leave and holiday pay which_..generated confusion
among employees in the computation of salaries and wages.
In another case, Realda v. New Age,2 petitioner, a machine operator of
respondent company, was dismissed on the ground, among others, of inefficiency.
In affirming the validity of his dismissal, the Supreme Court reasoned:
"xxx (l)he petitionet's failure to observe Gopbfcs, Inc.'s work standards
constitutes inefficiency that is a valid cause for dismissal. Failure to observe
prescribed standards of work, or to fulfill reas°:~Jc work as~en~ due t?
inefficiency may constitute just cause for dismissal. Such ~cfficcncr. IS
understood to mean failure to attain work goals or work quotas, etthec by failing
to complete the same within the allotted reasonable period, or by producing
unsatisfactory results."
In B11iser v. Leogaroo, jr.,3 the petitioners' failure to meet the sales quota
assigned to each of them was deemed a just cause for their dismis~al, regardless of
the permanent or probationary status of their employment F~ure to observe
prescribed standards of work, or to fulfill reasonable work assigruncnts due to
inefficiency, well constitutes a just cause for dismissal.
In fine, according to Aliling v. Feliciano,4 an employee's failure to meet sales
or wotk quotas falls under the concept of gross inefficiency, which in tum is
analogous to gross neglect of duty that is a just cause for dismiss~ under Article
297 (282] of the Labor Code. However, in order for the quota unposed to be
considered a valid productivity standard and thereby validate a dismissal,
management's prerogative of fixing the quota must be exercised in good faith for
the advancement of its interest. The duty to prove good faith, however, rests with
the employer as part of its burden to show that the dismissal was for a just cause.
1l1e employer must show that such quota was imposed in good faith.
2. DOLE TO ESTABLISH STANDARD OUTPUT RATES.
In appropriate cases, the DOLE intervenes, motu proprio or upon the
initiative of any interested party; to establish productivity standards. For instance,
in the case of workers paid by res~ts who are considered "non-time" workers as
their compensation is based not on the basis of the time spent on their work but
according to the quantity, quality or kind of job and the consequent results thereof,
it is subject to more regulations in order to ensure the payment of fair and
, ~v.Phllppr,elJJen ThaiHdd'ngsCap.,GRNo.174893.Jul)' 11,2012.
1 Readav. NewAge~. irx:.. GRt«>.192100.Apri25,2012.
GRt«>.L-63316,Ju~13, 1984, 131 SCRA 151,158.
• GR th 185829,Apri 25, 2012.
CHArTfR SEVEN 809
MANAGEMENT PJUROGATIVE
reasonable wage rates. Thus, on petition of any interested party or upon its own
initiative, the DOLE shall use all available measures, including the use of time and
motion studies and individual/collective bargaining agreement between the
employer and its workers as approved by the DOLE Secretary and consultation
with representatives of employers' and workers' organizations, to determine
whether the employees in any industry or enterprise are being compensated in
accordance with the minimum wage requirements of the rule on wages.1
In the case of homeworkers, at the initiative of the DOLE or upon
pennon of any interested party, the DOLE Secretary or his authorized
representative is mandated to establish the standard .output rate or standard
minimum rate in appropriate orders for the particular work or processing to be
·performed by the homeworkers.2
3. HOW DETERMINED.
The standard output rates or piece rates shall be determined through any
of the following procedures:
a) Time and motion studies;
b) 1\n individual/collective agreement between the employer and its
workers as approved by the DOLE Secretary or his authorized
representative; or
c) Consultation with representatives of employers' and workers'
organizations in a tripartite conference called by the DOLE Secretary.
4. TIME AND MOTION STUDIES.
The time and motion study is the more scientific and preferred method.
The basis for the establishment of rates for piece, output or contract work is the
performance of an ordinary worker of minimum skill or ability.l An ordinary
worker of minimum skill or ability is the average worker of the lowest producing
group representing fifty percent (50%) of the total number of employees engaged
in similar employment in a particular establishment, excluding learners, apprentices
and handicapped workers employed therein.4
In the case of homeworkers, the time and motion studies should be
undertaken by the DOLE Regional Office having jurisdiction over the location of
the premises used regularly by the homeworker/s. However, where the job
operation or activity is being likewise perfoancd by regular factory workers at the
factory or premises of the employer, the time and· motion studies should be
conducted by the DOLE Regional Office having jurisdiction over the location of
1 Sedm 5[a).~ VII-A, Boa( 111, ~~ to~lle L.mCode,as imended by ~CrtuarNo. 3, New. 4,
1992.
2 Sedi:ln 7, ~Oldef No. 5[19.Jie XN, Boa( Ill, RlAes k l ~ tie l.al>a Code.
3 Sedi:ln S(b), Rule VII-A. Bodi m. ~ to ~ementtie LmCode, as imendedbylleraaooJmCm.darNo. 3, New. 4,
1992.
• Sedi:ln 5 lq, Rule VII-A. lkdt 111. l>i:I.
810 BAR RtVIEWER ON lABOll lAW
the main undertaking or business of the employer. Piece rates established through
time and motion studies conducted at the factory or main undertaking of the
employer shall be applicable to the homeworkers perfo~g the same jo~ a~tivity.
The standard piece rate shall be issued by the DOLE Regional Office wtthin one
(1) month after a request has been made at said office. Upon ~/!quest of the DOLE
Regional Office, the Bureau of Working Conditions (BWC) shall provide assistance
in the conduct of such studies. 1
5. ALLOWED TIME.
In incentive wage system, the number of minutes allowed for tool care,
personal needs and fatigue, is added to ·operating time in establishing job standards
or '¼uk" as a basis for determining piece rates or incentive bonus.
6. BASE RATE.
In incentive wage system, the rate for the established task or job standard
production is called ''bau rate." The base rate usually repr~ents the one hund~ed
percent (100%) basis for measuring the incentive_bonus. It ts also used to descnbe
the regular rate for time worked which is the established rate per hour for the
assigned job, exclusive of exttas resulting &om merit or service increase or
overtime, among others.
0.
BONUS
1. GENERAL RULE.
Bonus, as a general rule, is an amount granted and paid ex !folio to the
employee. Its payment constitutes an act of enlightened generosity and self-interest
on the part of the employer rather than as a dem~dable or enforceable obligation.2
It is an amount gtanted and paid to an employee for his industry and loyalty which
contributed to the success of the employer's business and made possible the
realization of profits.3 It is something given in addition to what is ordinarily
received by or strictly due the recipient. 4
It is a gratuity or act of liberality of the giver which the recipient has no
right to demand as a matter of right.5 Its grant is a management prerogative.6 It
cannot be forced upon the employer who may not be obliged to assume the
onerous burden of gtanting bonuses or other benefits aside from the employees'
basic salaries or wages. It is something given in addition to what is ordinarily
ISectioo 7, tJid.
2 Pnmers Sridlhe PhippileS v. NI.RC, GR No. 100701, ~lam 28, 2001.
i UST F.wty tnnv. NI.RC, G.R No. 90445, Oct 2, 1990.
' Pi'tt!tilv.1zja~&9o.,GRNo. 168654,Mrth25,2009.
5 NaJ{nv.Cebul'a1mdCem811Co.,61 O.G.4597. . 1
6 Prcdurers Balk al lhe Phiipp'neS v. M.RC, GR No. 100701, Man:h 28, 2001, 355 SCAA489, 496.
CHAJ'TER SEVEN 811
MANAGEMENT PREROGATIV!:
received by, or strictly due to, the recipient. 1 If there is no profit, there should be
no bonus. If profit is reduced, bonus should likewise be reduced, absent any
agreement making such bonus part of the compensation of the employees.2
2. BONUS; WHEN DEMANDABLE AND ENFORCEABLE.
While bonus does not form part of the wage or salary of the employees, it
becomes demandable and enforceable under any of the following circumstances:
1) When it is stipulated in an employment contract or CBA;
2) When the grant of bonus is a company poli1y or practice;3
3) When it is granted as an additional compensation which the employer
agreed to give without any condition such as success of business or
more efficient or more productive operation and, thus, must be
deemed part ofwage or sawy; hence,_demandable.4
It thus becomes a demandable and enforceable obligation only when it is
made part of the wage or salary or compensation. When considered as part of
the compensation and, therefore, demandable and enforceable, the amount is
usually fixed. But if the amount of bonus is dependent upon the realization of
profits, the bonus is not demandable and enforceable.5
3. FORFEITURE O_F BONUS.
It is valid for an employer to establish as policy that once an employee is
found guilty of an administrative charge, he shall forfeit his bonus in favor of the
employer. In the. case of Rrpubli& Pla11ten B(/flk v. NLRC,6 the Supreme Court
recognized as valid the forfeiture of the 1988 mid-year and year-end bonus of an
employee who was found guilty of an administrative charge in 1988, in accordance
with the existing company policy of the employer.
E.
CHANGE OF WORKING HOURS
1. PREROGATIVE TO CHANGE WORKING HOURS.
Employers. have the freedom and. prerogative, according to their
discretion and best judgment, to regulate and control the time when workers
should report for work and perfonn their respective functions. 7
1 KanajaPoi)!Haelv.NIRC,GRNo. 75289,AIJJ.31, 1989, 1TTSCAA 160.
1 l.uza\ ~ Corporali;Jlv. Crutolridusral Relaoons, GR No.L-17411,Dec.31, 1965.
l Manila Eleen;~ V. Seaefa,y of LalXJ, G.R No. 127598, JiJ\. 27, 1999.
' Aldi Bi] Wedge t,wg Co., klc. v. Alat Bi] Wedge MJ\Ja BeneftAsmalioo, GR No. L-5276, Man:h 3. 1953.
1 Protaciov. lzja~ha-fa&Co.,GRNo. 168654,Man:h25,2009.
& Repubtic Plante,; Bank, now kri<Mn as PNB-Repub!ic Bank V. NLRC, GR. No. 117460, Jc11.6, 1997.
Phippile Ames, 11c. v. NIRC, GR No. 115785, AIJJ. 4, 200.); OSS Secui'f a1d Alied Services, 11c. V. NLRC, G.R No.
112752,Feb.9, 2000,325 SCAA 157.

812 SAR REVIEWER ON lABOR lAW
2. ILLUSTRATIVE CASES.
(1) Sime Darby PilipinaJ, In,. v. NLRC,1 where it was held that management
re~s the prerogative to change the working hours of its employees whenever
exigencies of the service so require. .•
(2) Manila jo,kr} Clnb Employees Labor Union - PTGWO, 11. Manila jo&kg
C/11b, ln&.,2 where the validity of the exercise of the same prerogative to change the
working hours was affirmed in this case. It was found that while Section 1, Article
IV of the CBA provides for a 7-hour work schedule from 9:00 a.m. to 12:00 noon
and from 1:00 p.m. to 5:00 p.m. from Mondays to Satw:days, Section 2, Article XI
thereof expressly reserves to respondent the prerogative to change existing
methods or facilities and to change the schedules of work. Consequently, the
hours of woxk of regular monthly-paid employees were changed from the original
· 9:00 a.m. to 5:00 p.m. schedule to 1:00 p.m. to 8:00 p.m. when horse races are held,
that is; evei:y Tuesday and Thursday. The 9:00 a.m. to 5:00 p.m. schedule for non-
race days was, however, retained. Respondent, as employer, cited the change in the
program of horse races as reason for the adjustment of the work schedule. It
rationalized that when the CBA was signed, the horse races started at 10:00
a.m. When the races were moved to 2:00 p.m., there was no other choice for
management but to change the work schedule as there was no work to be done in
the moming. Evidently, the adjustment in the work schedule is justified.
F.
BONA FIDE OCCUPATIONAL QUALIFICATIONS
I.
THE BFOQ RULE
1.CONCEPT.
One of the more touchy issues in the hiring and rellntion of employees is
whether the employer has the prerogative to impose certain qualifications based on
such criteria as race, sex, age, national origin, civil or marital status, physical
appearance (such as a requirement _on "pleasing personality'' or height and weight)
and the like. The general rule is that employment in particular jobs may not be
limited to petsons that meet any of the said qualifications unless the employer can
show ~t the same are actual qualifications for performing the job. The
qualification is called a bona fide occupational qualification (BFOQ).3
In the United States, there are a few federal and many state job
discrimination laws that contain an exception allowing an employer to engage in an
1 G.R No. 119205, April 15. 1998, 289 SCRA 86.
2 G.R No.167700, Ma"dl 7, 2007.
l YlaU)IJUiv.Ph~Aifnes.lne.,G.RNo.168081.0ct 17,2008,d1ilg81ack'slaw~.6tied.
CHAmllSEVEN 813
MANAGEMENT PREROGATIVE
othetwise unlawful foan of prohibited discrimination wl:en the action is based on a
BFOQ necessary to the normal operation of a business or enterprise.' To
determine if a policy in hiring or job assignment is mscriminatory or legal, the
policy is examiJ:ted to ascertain whether the discrimination is necessary to the
normal business operation and whether that category denied inclusion is uniquely
unsafe. 2 Thus, if religion, sex, or national origin can be shown to be necessary for
the job, then a BFOQ exception can be made.3
General examples of BFOQs are: mandatory retirement ages for bus
drivers and airplane pilots for safety reasons, churche~ requiring .members of its
clergy to be of a certain denomination and may lawfnlly bar from employment
anyone who is not a member. However, for positions at a church such as janitors,
discrimination based on religious denomination would be illegal because religion
has no effect on ~ person's ability to fulfill the duties of the job. Other examples of
bona JIik occupation qualifications include the use of models and actors for the
purpose of authenticity or genuineness, the requirement of emergency personnel to
be bilingual, judged on language competency, not nationil origin. 4
The concept of a BFOQ is not foreign in Philippine jwisdiction. 5 There
are certain laws and pieces of jurisprudence which enunciate BFOQ or otherwise
recognize the existence of circumstances similar thereto.
In Yrtll1ltglli 11•. Philippine AirlilltJ, lnt.,6 the Court has fully taken cognizaQce
of such laws and jurisprudence. Thµs, it debunked petitioner's contention that
BFOQ is a statutory defense and that it does not exist if there is no statute
providing for it I~ so holding, it cited the following lau-s which contain provisions
similar to ·BFOQ:
(1) Constitution;7
(2) Ltbor Code;& and
(3) R.A. No. 7277 or the Magna Carta for Disabled Ptrso111.9
Id., c:ti1Y.145AM1. .!tr. 2d, Job llsatrim, § 269.
1be Definllion cf !he Bona Ffde·Occupal!ooal Qudfk:ation BFOQ: When It'; Legat to Discriminate on tt1e Basis of
Sex and Age by Unda Nap&oski at h11ps-Jlnw.tholldhtco.ccm1J01a.&f~27; Last
Accessed: May 28, 2019.
3 Id.
' Id.
5 Star Paper Colp. V. Sirnbol, G.R. No.164774, Aprl 12, ~-
s Yrasuegti v. ~ Aifr,es, "-. G.R. No. 168081, 0d. 17, 2008.
1 r.mswixl (1987), Art. XII~ Sec. l The Slate sha'I aim fut prmdicxl t> lllxr, klcal Md CM1'S88S, cxgalized nt
unaganized, and promote Uempia,mentnl equatf d eq,qmentoppcnriles b- al. XXX
I MU.3. Dedara!krldBa: Pti.y.- lbe Statesflal ahdpmcfal kl labcr,paxtmlil ell1)byrnent. ensureecpdd
opp0llries regadiess d sex. race or aeed, and regulate tie relaticris betNee1 \'«liters clld employers. The State shal
assrete riah1S dwmrs ID s e t ~ c:dedive balgamj, seam1y dterore. aoo )Jstclld tutmeOll'ldllioos or
vak.
9 APllowd a1 tlardl 24, 1992; See ils Sec. 32. C8:tinila1ioo d ~ - No enltf, \\fleOier putirc or jn/ate sha'I
disaimate a;ianst aquaified disabled person by reasoo of disabay nregn ID;» ~ ~ !he hirilg,

814 SAR. llEVtEWER. ON lABOR. lAW
The Coun further cited the following relevant cases:
(1) Star Paper Corp. v. SimboJ,.t and
(2) D1m,1zn Assodalion of Detailman-PTGWO u. Glaxo We/a,me PhiGppines,
lnc.2
.•
In addition to the foregoing, the latest R.A. No. 10911 [July 21, 2016],
otherwise known as the "Anti-Age Discrimination in EmpH!Jmtnt Att" is another
BFOQ legislation as it expressly prohibits discrimination against any individual in
employment on account of age.3
..
Further, Yramegui itself and the earlier case of PT & T v. NLRC,' are good
examples of cases where the Supreme Court had the opportunity to discuss the
BFOQ exception.
2. MEIORIN TEST.
· Yrasuegui cited the "Meiorin Test" 5 as additional justification for the BFOQ
exception. The Supreme Court of Canada, in one case,6 developed this three-step
test in determining whether an employment policy is justified. Under this tes4 an
employer can justify the impugned standard by establishing on the balance of
probabilities:
1. that the employer adopted the standard for a putpose rationally
connected to the performance of the job;
2. that the employer adopted the particular standard in an honest and
good faith belief that it was necessary to the fulfilment of that
legitimate work-related purpose; and · In PT & T, the employer invoked concealment of civil status as ground to
3. that the standard was reasonably necessaty to the accomplishment
of that legitimate work-related purpose. To show that the standard is
reasonably necessary, it must be demonstrated that it is impossible
to accommodate individual employees sharing the characteristics of
die claimant without imposing undue hardship upon the employer.7
Similarly, in Star Paper Corp. u. Simbol, the Court held that in order to
justify a BFOQ, the employer must prove that
~ctcfs:hageof ~~.p,bai'lrgnl<Olertecms,axdicmamp?de!Jesdempb,,lm.
Xl0C
1 SlarPaper.Qxp.v.Smbol,G.Rth 164nV~xil12.2'm.
0uncanAmjdon of Dela!man-PTGWO v. Gtaxo Welcorre Pllllppites, Inc., G.R.No.162994,Sept.17,2004.
3
This law was - ~Ir/DOLE Depamlent Order No.170, Serles of 2017 lfebruaY 02. 2017).
' Ph!RhTefegraphmidTelephooeCar1)illyv.NLRC,G.R.No.118978,May23, 1997,272SCRA59>,61l
5 Mimdeat\Wtlawimanna~nae)oo. TMteyMmlhadbeooaraestfiu&Jha'farlhraeyeE1Svma11le
BCgowmnnmxu:ed newOnessll!Sls. • ·
' British Columbia FubfJc Service Employee Camnission (BSPSERC) v. The Brnish Cobnbla Gcwemment and
SeNice Employee's Union (BCGSEU),3 SCR 3, 1999 SCC 48
1 kl.
CHAl'TER SEVEN
MANAGEMENT PREROGATIVE
815
(1) The employment qualifica~on is reasonably related to the essential
operation of the job involved; and
(2) There is factual basis for believing that all or substantially all persons
meeting the qualification would be unable to properly perfonn the
duties of the job.l
In short, the test of reasonableness of the company policy is used
because it is parallel to BFOQ.2 BFOQ is valid "provided it ref/eds an inhmnt 4111Jli~
reasonably necessaryfor satiJfaao,yjob pnformana. '5 Tius is otherwise known as the
"Reasonable Business Necessity Rule."
I.
CIVIL STATUS/MARITAL STATUS QUALIFICATION
1. RELEVANT CASES.
As far as the qualification of civil status or marital starus is concemed, the
following cases are relevant
(1) PT & Tu. NLRC,~
(2) Du:mn Arsocialion of Detailman-PTGWO "· Glaxo Wekome Philippines,
Inc., and
(3) Star Paper Corp. u. Simbol6
2. THE PT & T CASE.
terminate the private respondent employee. In the job application form that was
furnished the employee, she indicated in the portion for civil status that she was
single although she had contracted maa:i.age a few mar.tbs earlier, that is, on May
26, 1991. It appears that the employee had made the same representation in the
two successive ~~ver agreements which she signed on June 10, 1991 and July 8,
1991. When peb.ttone.r supposedly leamed about the same later, its branch
supervisor in Baguio City sent to private respondent a memorandum dated Janum:y
15, 1992 requiring her to explain the discrepancy. In that memorandum, she was
reminded about the company's policy of not accepting married women for
employment. In her reply letter dated January 17, 1992, private respondent stated
that she was not aware of PT&T's policy regarding maaied women at the time, and
that all along she had not deliberately hidden her true civil status. Petitioner
' S1tr PapErCcxpcxab V. Srrbd, ii at 242-243, dr.ig Alod, RG. 811 Qlhil, KA, The Rt.oar Bend Dedsi:ln and 1-bN rt
Affem Mri:iptllies' Pelstmel ~ cnl ~ (June 19931 lioois~ Pe.iew, p. 7..
2 kl.at243.
l ~T*,iraphnTeleptvxte~v.NLRC,sq,ra.
• G.R.No.118978,Mi1'f23, 1997,272SCRA596,IK>S.
s G.R. No. 162994, Sept 17. 2004.
, G.R.No.164n4,Aprl12.2006.
 BAR REvlEWER ON .lABOR lAW
nonetheless remained wiconvinced by her explanations. Private respondent was
dismissed from the company effective January 29, 1992. The Court, in declaring the
dismissal of respondent illegal, ratiocinated as follows:
"In the case at bar, pctitionct's policy of not accepting or considering as
disqualified from work any woman worker who contracts marriage runs
afoul of the test of, and the right apost, discrimination, afforoed all
women workers by our labor laws and by no less than the Constitution...
Contrary to petitioner's assertion tln.t it dismissed private r:cspondeot
from employment on account of her dishonesty, the recor:d discloses
clearly that her tics with the company were dissolved principally because
of the company's policy that married women are not qualified for
employment in PT & T, and not merely because of her supposed acts of
dishonesty.,,
3. THE DUNCAN CASE.
In D11n(an, the contract of employment expressly.prohibited an employee
from having a relationship with an employee of a competitor company. It
provides:
"10. You agree to disclose to management any existing or future
relationship you may have, either by consanguinity or affinity with co-
employees or employees of competing drug companies. Should it pose a
possible conflict of interest in management discretion, you agree to resign
voluntarily from the Company as a matter of Company policy."
The Supreme Court ruled that this stipulation is a valid c;xcrcise of
management pmogative. The prohibition against personal or marital relationships
with employees of competitor-companies upon its employc;es is reasonable undec
the circumstances because relationships of that nature might compromise the
interests of the company. In laying down the assailed company policy, the employer
only aims to protect its interests against the possibility that a competitor company
will gain access to its trade secrets, manufacturing fonnulas, marketing strategies
and other confidential programs and information. · might compromise the interests of Glaxo. In laying down the assailed company
4. THE STAR PAPER CASE.
The employees in Star Paper were terminated on various occasions, on the
basis of the following company policy, viZ::
"t. New applicants will oot be allowed to be hired if in case he/she bu [a}
relative, up to !the) 3rd degree of relationship, already employed by the
company.
"2. ln case two of our employees (both singles [sic}, one Dl2le and another
frmale) developed a friendly relationship during the course of their
employment and then decided to get married, one of them should
resign to pre..;erve the policy stated above."
According to the employer, said rule is only intended to carry out its no-
employment-for-relatives-within-the-third-degree-policy which is within the ambit
CHAPnR. SEVEN
MANAGEMENT PREROGATIVE
817
of the pcerogatives of management. The Supreme Court, however, disagreed. It
ruled that said policy failed to comply with the standard of reasonableness which is
being followed in our jurisdiction.
S. APPLICATION OF THE BFOQ RULE.
The requirement that a company policy must be reasonable under the
circumstances to qualify as a valid exercise of management prerogative was upheld
in the said 1997 case of PT & T 11. NLRC1 As pointed out above, the employee
was dismissed in violation of petitioner's policy of disq·~ from work any
woman wotket who contracts marriage. Thus, the Cour. held that the company
policy violates the right against discrimination afforded all women workers under
Article 136 of the Labor Code, but established a permissible exception, viZ::
"(A} requirement that a woman employee must remain unmarried could
be justified as a 'bona fide occupational qualification,' or BFOQ,
where the particular requirements of the job would justify the same, but
not on the ground of a general principle, such as the desirability of
spreading work in the workplace. A requirement of :bat mnue would
be valid provided it reflects an inherent quality reasonably necessary
for satisfactmy job perfonnaoce. Thus, in one case, a no-maaiage rule
applicable to both male and female flight attendants, was regarded as
unlawful since the restriction was not related to the job perfotnW1ce of
thc-tlight attendants/'
In Dll1ltll1I, the High Court passed oo. the validity of the policy of a
pharmaceutical company prohibiting its employees fr.om marrying employees of
any competitor company. It held that Glaxo has a right to guard its ttade secrets,
manufacturing fonnulas, marketing strategies and other confidential programs and
infonnation from competitors. It considered the prohibition against personal or
marital relationships with employees of .competitor companies upon Glaxo's
employees reasonable under the circumstances because relationships of that nature
policy, the Court recognized that Glaxo only aims to protect its interests again~t the
possibility that a competitor company will gain access to its secrets and procedures.
The · cases of PTM and D111tt1Zn instruct that the requirement of
reasonableness must be clearly established to uphold the questioned employment
policy. The employer has the burden to prove the exist~ce of a reasonable
business necessity. The burden was successfully dischuged in D1111&tzn but not in
PTrb'f.
The Coun thus concluded in Star Paptr Corp. that it did not find a
reasonable business necessity in the policy. Petitioners' sole contention that "the
company did not just want to have two (2) or more of its employees related
between the third degree by affinity and/ or consanguinity'' is lame. That the
' G.RNo.118978,Mf/23, 1997,272~596,605.
 BAR REYIEWER ON l.ABOll lAW
second pamgraph was meant to give teeth to the first pamgraph of the questioned
rule is evidently not the valid reasonable business necessity required by the law.
It is significant to note that in Star Paper Corp., respondents were hired
after they were found tit for the job, but were asked to ~.when they married a
co-employee. Petitioners failed to show how the marriage of Simbo~ then a
Sheeting Machine Operator, to Alma Dayrit, then an employee of the Repacking
Section, could be detrimental to its business operations. Neither did petitioners
explain how this detriment will happen in the case of Wdfreda Comia, then a
Production Helper in the Selecting Department, who lll9tried Howard Comia, then
a helper in the cutter-machine. The policy is premised on the mere fear that
employees married to each other will be less efficient If the questioned rule is
upheld without valid justification, the employer can create policies based on an
unproven presumption of a perceived danger at the expense of an employee's right
to security of tenure.
Petitioners contend that their policy will apply only when one employee
marries a co-employee, but they are free to many persons other than co-employees.
The questioned policy may not facially violate .Article 136 of the Labor Code but it
creates a disproportionate effect and under the disparate impact theory, the only
way it could pass judicial scrutiny is a showing that it is reasonable despite the
discriminatory, albeit disproportionate, effect The failure of petitioners to prove a
legitimate business concern in imposing the questioned policy cannot prejudice the
employee,s right to be &ee from arbittary discrimination based upon stereotypes of
married persons working together in one company. · on its employees, most particulady the cabin flight deck crew whq are on board the
Lastly, the absence of a statute expressly prohibiting marital
discrimination in our jurisdiction cannot benefit the petitioners. The protection
given to labor in our jurisdiction is vast and extensive that we cannot prudently
draw inferences from the legislature,s silence that married persons are not
protected under our Constitution and declare valid a policy based on a prejudice or
stereotype. Thus, for failure of petitioners to present undisputed proof of a
reasonable business necessity, the Court ruled tpat the questioned policy is an
invalid exercise of management prerogative.
II.
PHYSICAL APPEARANCE QUALIFICATION
t. THE YRASUEGUI CASE.
The case of Armando G. Yrasuegui 11. Philippint Airlines, In,., 1 is the most
appropriate example of tennination based on BFOQ involving the physical
appearance or attribute of an employee which, in this case, is petitioner's weight
1 Yrasuegii V. Phlippne Am'les, Inc., G.R No. 168081, Ott. 17. 2008.
CffAPTERSEVEN 819
MANAGEMENT PREROGATIVE
~ot s ~ ~es spanning a total period of five (5) years, petitioner, an
111temat1onal flight steward of respondent PAL, was given the opportunity to
reduce his'weight to the acceptable level in accordance with the weight standards
but he failed to measure up therewith. He was thus terminated for Ius continued
obesity. In his illeg21 <fi:smissal case, 9ne of the issues raised is whether petitioner's
dismissal for obesity can be predicated on the BFOQ defense.
Citing Star Paper Corp. and D11n,an, the Court ruled that BFOQ is a proper
defense that justified petitioner's dismissal grounded on his obesity. Verily, the
Court said, there is no merit to the argument that BFOQ .:annot be applied if it has
no supporting statute. Too, the Labor Arbiter, NLRC, and CA are one in holding
that the weight standards of PAL are reasonable. A common carrier, from the
nature of its business and for reasons of public policy, is bound to observe
exttaordinaty diligence for the safety of the passengers it transports. It is bound to
carry• its passengers safely as far as human care and foresight can provide, using the
utmost diligence of very cautious persons, with due regard for all the
circumstances.
The law leaves no room for mistake or oversight on the part of a
common carrier. Thus, it is only logical to hold that the weight standards of PAL
show its effort to comply with the exacting obligations i:nposed upon it by law by
virtue of being a common canier.
The business of PAL is air transportation. As such, it has committed itself
to safely transport its passengers. In order to achieve this, it must necessarily rely
aircraft. The weight standards of PAL should be viewed as imposing strict norms
of discipline upon its employees. In other words, the primary objective of PAL in
the imposition of the weight standards for cabin crew is flight safety. It cannot be
gainsaid that cabin attendants must maintain agility at all times in order to inspire
passenger confidence on their ability to care for the passengers when something
goes wrong. It is not farfetched to say that airline companies, just like all common
curlers, thrive due to public confidence on their safety records. People, especially
the riding public, expect no less that airline companies transport their passengers to
their respective destinations safely and soundly. A lesser performance is
udacceptable.
The task of a cabin aew or flight attendant is not limited to serving meals
or attending to the whims and caprices of the passengers. The most important
activity of the cabin crew is to care for the safety of passengers and the evacuation
of the aircraft when an emergency occurs. Passenger safety goes to the core of the
job of a cabin attendant Truly, airlines need cabin attendants who have the
necessary strength to open emergency doors, the agility to attend to passengers in
cramped working conditions, and the stamina to withstand grueling flight
schedules.
820 BAR R.EVIEWEll ON IABOR IAW
On board an aircraft, the body weight and size of a cabin attendant are
importtnt factors to consider in case of emergency. .Ain:rafts have constricted
cabin space, and narrow aisles and exit doors. Thus, the arguments of respondent
that "[w]hether the airline's flight attendants are overweight or not has no direct
relation to its mission of transporting passengers to their desdnation"; and that.the
weight stmdatds "has nothing to do with airworthiness of respondent's aidines,"
must fail. · age;
Ill.
AGE QUALIFICATION -..
L ANTI-AGB DISCRIMINATION IN EMPLOYMENT ACT.
R.A. No. 10911 Duly 21, 2016), otherwise known as the "Anti-Age
DiJaimination in Employment Act" prohibits discrimination against any individual in
employment on account of age. This law was lately implemented by• DOLE
Department Order No. 170, Series of 2017 [February 02, 2017).
a. Coverage.
The law shall apply to all employers, publishers, labor contractors or
subc9ntractors, and labor organizations, whether or not registered.1
b. Pohibitions.
Under this law, the following are the prohibited disaiminatoty acts related
to employment on account of age:
(a) It shall be unlawful for-an employer to:
(1) Print or publish, or.cause to be printed or published, in any fonn
of media, including the intemet, any notice of advertisement
relanng to employment suggesting preferences, limitations,
specifications and discrimination based on age;
(2) Require the declaration of age or birth date during the application
process;
(3) Decline any employment application because of the individual's
age;
(4} Discriminate against an individual in te,ms of compensation,
terms and conditions or privileges of employment on account of
such individual's age;
(5) Deny any employee's or worker's promotion or opportunity for
tr.lining because of age;
(6) Forcibly layoff an employee or worker because of old age; or
(7} Impose early retirement on the basis of such. employee's or
worker's age. 1
1
Sedxxl4,RANo.10911;Sedkln3,DepatmentOrderNo.170,Seriesof2017.
CHAPTER SEVEN 821
MANAGEMENT PREROGATIVE
(b) It shall be unlawful for a labor contractor or subcontractor, if any,
to refuse to refer for employment or otherwise discriminate against
any individual because of such person's age.
(c) It shall be unlawful for a labor organization to:
(1) Deny membership to any individual because of such individual's
,
(2) Ex~lude &om its membership any individual because of such
individual's age; or
(3) Cause or attempt to cause an employer to discriminate against an
individual in violation of the Rules.
(d) It shall be unlawful for a publisher to print or publish any notice of
advertisement relating to employment suggesting preferences,
limitations, specifications, and discrimination based on age.2
c. Excepdons.
It shall be lawful for an employer to set age limitations in employment if:
(a) Age is a bona Jule occupational qualification {BFOQ) reasonably
necessary ~ the nonnal operation of a particular business or where the
differentiation is based on reasonable factors other than age;
(b) 'The intent is to observe the terms of bona fide seniority system that is
not intended to evade the purpose of the Rules.
(c) The intent is to observe the terms of a bona jidt employee retirement or
a voluntaty early retirement plan consistent with the purpose of the
Rules; Provided, That such retirement or volunwy retirement plan is in
accordance with the Labor Code, as renumbered, and other related
laws; or
(d) The action is duly certified by the DOLE Secretary after consultation
with the stakeholders in accordance with the purpose of the Rules.
For purposes of the foregoing exceptions, an ~ployer who_ invok~
the qualifications as provided her~ shall subnut ~ report _pn_or. to. 1ts
implementation to the DOLE Regional Office which has jurisdictton
over the workplace. The submission of the report shall be a
presumption that the age limitation is in accordance with the Rules
unless proven otherwise by the court.
Failure to submit said report shall give rise to the presumption that the
employer is not allowed to set age limitation. 1
Sedxn5, Id.; Sectx>n4, Id.
Id.; Id.

822 BAR REvlEWER ON lABOR lAW
d. Employment age ofchildren.
The age requirement in the employment of children shall be govemed by
R.A. No. 9231 and its Implementing Rules and Regulations, Article 138 of the
Labor Code as renumbered, and other applicable laws, rules and regulations.
Upon hiring, the employer may require the child or the guardian to show
proof of the child's age for puq,oses of compliance with minimum employable age
under existing laws. 2
G.
POST-EMPLOYMENT RESTRICTIONS
L KINDS OF POST-EMPLOYMENT PROHIBITIONS.
The employer, in the exercise of its prerogative, may insist on an
agreement with the employee for certain prohibitions to take effect after the
teanination of their employer~ployee relationship. The following stipulations in
an employment contract are illustrative of the prohibitions normally agreed upon
by the employer and the employee:
1) Non-Compete Clause;
2) Confidentiality and Non-Disclosute Clause;
3) Non-Solicitation Clause;
4) Non-Recruitment or Anti-Piracy Clause;
5) Inventions Assignm~t Clause (Intellec~ Property Clause).
I.
NON-COMPETE CLAUSE
1. FREEDOM TO CONTRACT.
The employer and the employee are free to stipulate in an employment
contmct prohibiting the employee within a certain period from and after the
tennination of his employment, from:
(1) starting a similar business, profession or trade; or
(2) wotking in an entity that is engaged in a similar business that might
compete with the employer.
The non-compete clause is agreed upon to prevent the possibility that
upon an e~ployee's temiination oc resignation, he might start a business or work
for a competitor with the full competitive advantage of knowing and exploiting
confidential and sensitive information, trade secrets, marketing plans,
customer/client lists, business practices, upcoming products, etc., which he
acquired and gained from his employment with the former employer. Contracts
1 Sectioo 6, kl.; SedilX1 5, Id.
2 Sedicn 6, OepatnentOdtf No.170, Series of 2017.
CHAPTERSMN 823
MANAGEMENT PREROGATIVE
which prohibit an employee from engaging in business in competition with the
employer are not necessarily void for being in restraint of trade.
2. JURISPRUDENCE ON THE NON-COMPETE CLAUSE.
The nature and extent to which a non-compete clause is legally allowed
usually varies from one jurisdiction to another. In the Philippines, several cases
dating back to as early as 1910 have dealt with issues on the validity of "non-
compete" or "non-involvement" stipulations, also known as Covenant Not to
Compete (CNq in an employment contract In order to appreciate the principles
affecting this clause in our jurisdiction, the following cases of significance may be
cited and are worth looking into:
1) Carlos Gsell v. Pedro Koch,i
2) An.re/mo F'""Z!efni v. Carlos Gse/42
3) William 01/endorf u. Ira Abrahamson (F.n Ban&),3
4) G. Martini (Ltd.) 11. ]. M. Ghism,,an (En Bant),4
5) A!fonso de/ Castillo v. Shannon Richmond,"
6) Ratpel P. GJns11/Ja 11. CA, Pamana Phiippines, I11t.,"
1) Yusen Air and Sea Smitt Pbi6ppine1, Jnr. u. Villamor/1
8) Daig B. Till v. Platin11111 Plans Philippinu, ln&.8
Two (2) cases dealing with the issue of jurisdiction over breach of the
non-compete clause have also been decided by the Supreme Court, nam.ely:
1) Dai-Chi El«tronia Mmu{ad11Ting Corporation v. Hon. Vi//am1111J,8 and
2) Portillo 11. Rlldo!fUtlZJ Int. to
3. ILLUSTRATIVE CASE.
The most_ significant case that would broadly d~cribe the historical
development as well as illustrate the legal complications and implications of a non-
compete clause is the 2007 case of D~ B. Ti11 ,. ·Plalilllllll Plans Philippines, In,, 11
where the non-compete clause (called 1'Non-lnvolvement Provision" in this case)
in the employment contract stipulates as follows:
"8. NON-INVOLVEMENT PROVISION - The EMPLOYEE
funher undertakes that during his/her engagement with EMPLOYER and in
1 G.R No. 4907, Man:h 22, 1910.
2 G.RNo.10712.~.10, 1916.
3 GR No. 13228, Sept. 13, 1918.
• GRNo.L-13699,NoY.12, 1918.
s GRNo.21127,Feb.9, 1924.
a G.R No. 145443, .Plath 18, 2005.
1 GR No.154000,hlg.16,2005.
a GRNo.163512,Feb.28,2007.
9 G.RNo.112940,Nov.21, 1994.
io GR No. 196539, Oct 10, 2012.
11 G.RNo.163512,Feb.28,2007.
824 IIAll REVIEmll ON I.ABOll \AW
C2Se of separ:uion from the Company, whether voluo~ or for cause,
be/sbe shall not, for the next 1WO (2) years thereafter, cngigc in oc be
involved with any corpollltion, association or entity, whether directly or
inditectly, engaged in the same business or belonging to the same pre-need
industry as the EMPLOYER. Any breach of the foregoing provision shall
render the EMPLOYEE liable to the EMPLOYER in tho amount of One
Hundred Thou=d Pesos (P!00,000.00) for and as liquidated damages."
Starting on January 1, 1993, petitioner worked for respondent as Senior
Assistant Vice-President and Territorial Operations Head in charge of its
Hongkong and Asean operations under a 5-ycar ,contract of employment
containing the afore-quoted clause. On September 16, 1995, petitioner stopped
reporting for work. lo November 1995, she became the Vice-President for Sales of
Professional Pension Plans, Inc., a corporation engaged also in the pre-need
industry. Consequently, respondent sued petitioner for damages before the RTC of
Pasig City. Respondent alleged, among others, that petitioner's employment with
Professional Pension Plaps, Inc. violated the above-quoted non-involvement clause
in her contract of employment. Respondent thus prayed for Pt00,000 as
compensatory damages; P200,000 as moral damages; Pl00,000 as exemplary
damages; and 25% of the total amount due plus Pl,000 per counsel's court
appearance, as attorney's fees.
Petitioner countered that the non-involvement clause was unenforceable
for being against public order or public policy: First, the restraint imposed was
much greater than what was necessary to afford respondent a fair and reasonable
pcotection. Petitioner contended that the transfer to a rival company was an
accepted practice in the pre-need industry. Since the products sold by the
companies were more or less the same, there was nothing peculiar or unique to
protect Sem11d, respondent did not invest in petitioner's training or improvement.
At the time petitioner was recruited, she already possessed the knowiedge and
expertise required in the pre-need industry and respondent benefited tremendously
from it Third, a strict application of the non-involvement clause would amount to a
deprivation of petitioner's right to engage in the only worlt she knew.
In upholding the validity of the non-involvement clause, the trial court
ruled that acontract in restcaint of trade is valid provided that there is a limitation
upon either time or place. In the case of the pre-need industry, the trial court
found the two-year restriction to be valid and reasonable._
On ·appeal, the Court of Appeals affirmed the trial court's ruling. It
reasoned that petitioner entered into the contract on her own will and volition.
Thus, she bound herself to fulfill not only what was expressly stipulated in the
contract, but also all its consequences that were not against good faith, usage, and
law. The appellate court also ruled that the stipulation prohibiting non-
employment for two years was valid and enforceable considering the nature of
respondent's business.
3
CHAPTER SEVEN
MANAGEMENT PREROGATIVE 825
In affirming the V2lidity of the Non-Involvement Clause, the s
Court ratiocinated as follows: upreme
. "P~tioner avers that the: non-involvement clause is offensive: to public
policy s10ce the res~t imposed is much greater than what is necessary to
afford respondent a &ir and reasonable protection. She adds that since tb
pr~ucts sold in the P,rc-need industry are more or less the same the tran .c c
a rrval com · ~LJ p · · • s,er co
. . pany ~ _accep~ e. ettttoner also points out that respondent did not
IJlvest ID her trauung or Jmprovement. ~t the ~: she joined respondent, she
already ha~ .the knowledge and e.xpcrtJse reqll!Ccd in the pre-need industry.
r~J'lcu_ttoner argues ~ta strict application of the non-involvement clause
wo epnve her of the: aght to engage in the onlv work she knows.
:c~ "R .
espondent counters that the validity of a non-involvement clause bas
sus~ed by the Supreme: Court in a long line: of cases. It contends that
e mclu51on of the two-year non-involvement clause in petitioner's contract of
employment was reai:onable ~d needed since her job gave her access to the
~ompany's confidential markettng stratc:gies. Respondent adds that the 000•
to~olvc:meot clause: merely enjoined her from engaging in pre-need business
akin to that of respondent's within two years from· petitioner's scpmtion fro~
respo,~dent She had not been prohibited from marketing other service plaas.
. As early as 1916, we already bad the occasion to discuss the validity of a
non-involvement ~use. In Fcrnzzini v. Gsell,t we said that such dausc was
unreasonable restrunt o_f ~de and therefore 3g1W1st public policy, lo Frrraz:efni,
:e ern~l_oy~ was prohibited from engaging in acy business or occupation in
e Philippmes for a period of five y~ after the termination of his
~ployment contlllct and must fust get the written permission of his cm lo er
i: h~ were to do so. The Court ruled that while the stipulation wa,~ fud~d
ltnu~~. as ~0 time and &pace, it was not limited as to trade. Such
h uldh" 0 ID I effect forces an
prohjb1t . employee
,. to leave . e Pbili
th · to work
10
- __ ppmes
s 0 lli emp oyer refuse to gm awritten pennisiion.
. "I~ G. Martini, Lid. v. Glaisl!l111an,2 we also declared a similar
Sbpulatton as void /?r bcigg an unre;isonable rcstajor of trade. There, the
employee.~ prohibited from engaging in any business similar to that of bis
employ~ for _a period of one year. Since the employee was employed only in
coanectton with the purchase ~d·export of abaca, among the many bu~inmes
of the employer, the Court constdemi the restraint roo broad since it effective~
preyented the ~p_loyec from working in any other business similar to his
etn~loycr ~~- if bis cmplQJJPent W2s limited only to one of its multifarious
bUSJOcss 2cJM11cs.
. "~owever, in Del Oistillo v. Richmoncl,3 we upheld a similar
Snpulatton as legal reasonable and not contrny to public policy. In the said
we, ~e em_ployee was . restricted ~m. opening, owning or having any
connecttc:" with any o~er drugs_tore within a radius of fouc miles from the
employers place of bustoess dunng the time the employer was op=tiog his
~ FenazziiV. Cabs Gsel, GR. 1-b. 10712, AIJJ. 10, 1916.
G. Marti1I (lii)v.J. MGlaiserrnan, G.R No. l-13699, Nov. 12, 1918 (en Bcric)
Alloosode Casirov. 91a'rm Rlc:lrmnd, GR No. 21127, Feb. 9, 1924. ·
 BAR. REVIEWER. ON IABOR. IAW
826
drugstore. We said that a contract in restraint of trade _is valid provided ~ere is
a limitation upon either time or place and the restraint upon one part}' 1s not
greater than the protection the other paey reqµircs.
"Finally, in Consulta v. Court of .Appeals,! we considered a rum:
involvement clause in accordance with Article 1306 of the Civil Code. \Vhile
the complainant in that case was an indcp:nde~t agent a~d ~dt an_ emp!oy~e,
she was prohibited for one year &om engagmg_directly or m~~dy m actMtJes
of other companies that compete with the_ ~usmcss of her pnnapal. _We_noted
therein that the restrictjon did not pcohibn the agent from engagmg m any
other business, or from being connecteil with any other compa11y, for as long as
the business or company did oot compete with the principal's business.
Further, the prohibitjoo applied onl,v for one year if'.tc~
the tc?™Darion of the
agent's contract and was therefore a reasonable rc:-toctmn designed to prevent
acts prejudicial to the employer.
"Conformably then with the aforementioned pronouncements, a
non-involvement clause is not necessarily void for being in restraint of
trade as long as there are reasonable limitations as to time, trade, and
place,
"Io this case the non-involvement clause has a time limit: twQ years
from the time p~titioner's cmpJoymcnt wjth respondent ends, It is also
limited as to trade, since it only prohibits petitioner from engaging in any
pre-need business akin to respondent's.
"More significantly, since petitioner was the Senior Assistant Vice-
President and Territorial Operations Head in charge of respondent's Hongkong
and Ascan operations, she bad been privy to confidential and highly ~nsi~ve
marketing strategics of respondent's business. To allow her to engage 10 a nval
business soon after she leaves would make respondent's trade secrets
vulnerable especially in a highly competitive marketing enviro~eot. In sum,
we find the non-involvement clause not contrary to public welfare and
not greater than is necessary to afford a fair and reasonable protection to
respondent.
"In any evcot, Article 1306 of the Civil Code provides tha~ _parties to a
contract may establish such stipulations, clauses, terms aod conditions as they
may deem convenient, provided they arc not contrary to law, morals, good
customs, public order, or public policy.
"Article 1159 of the same Code also provides that obligations arising from
contracts have the force of law between the contracting parties and should be
complied with in good faith. Courts cannot stipuhte for the parties nor amend
their agreement where the same docs not contraven~ law, morals, good
customs, public order or public policy, for to do so would be to alter the real
intent of the parties, and W<)uld run contrary to the function of the courts to
give fou:c and effect thereto. Not being contrary to public policy, the non-
involvement cl2use, which petitioner and respondent freely agreed upon, bas
the force of law between them, and thus, should be complied with in good
wth. · to the employer and its subsidiaries and to assign all inventions, improvements,
• ~ P.Coomiv. CA, Panmal'hifppiles, nc., GR No.145443, tMd118, 2005.
CHAl'TER. SEVEN
MANAGEMENT PREROGATIVE
· "Thus, as held by the tri2l court and the Courc of Appeals, petitioner js
bound to pay respondent !"JOO 000 as liquidated dam~. While we have
equir.ably reduced liquidated damages in certain cas~, we cannot do so in this
case, since it appears that even from the start, petitioner had not shown the
least intention to fulfill_the non-involvement clause in good faith." 1
II.
OTHERPOST-EMPLOYMENT PROHIBITIONS
1. CONFIDENTIALITY AND NON-DISCLOSURE CLAUSE.
The confidentiality and non-disclosure clause· reflects the commitment of
the employee that he shall not, ei_ther during the period of his employment with the
employer or at any time thereafter, use or disclose to any person, firm or
corp~ration any infocmation concerning the business or affairs of his employment,
for lus own benefit or to the detriment of the employet. This clause may also cover
Fonner Employer Information and Third Party Information.
2. NON-SOLICITATION CLAUSE.
To protect the legitimate business interests of the employer, including its
business relationships, the employee under this clause, may, directly or indirectly,
be prohibited _from soliciting or approaching, or accept ·any business from ~ny
person or enttty who shall, at any time within . a fixed period preceding the
termination of his employment, have been (a) a client, talent, producer, designer,
programmer, distributor, me.rchandiser, or advertiser of the Company, (b) a party
or prospective party to an agrCC!l!ent with the employer, or (c) a representative or
agent of any client, talent, producer, designer, programmer, distributor,
merchandiser, or advertiser of the employer for the purpose of offering to that
person or entity goods or services which are of the same type as or similar to any
goods or services supplied by the employer at tennination.
3. NON-RECRUITMENT OR ANTI-PIRACY CLAUSE.
This clause prohibits the recruitment by the employee of personnel or
employees of the employer for a certain period a&er his termination of
employment, either on his own account or in conjunction with or on behalf of any
other person. ·
4. INVENTIONS ASSIGNMENT CLAUSE (INTELLECTUAL
PROPERTY CLAUSE).
In industries engaged in research and development and related activities,
this clause requires the employee, within a certain period, to disclose in confidence
 IIAP. REVIEWER ON IABOP. IAW 829

designs, original works of authorship, formulas, processes, compositions of matter,

computer software programs, databases, mask works and trade secrets, U:hether or
Chapter Eight
not patentable, copyrightable or protectible as ~~e secrets . (collecllvely, the JURISDICTION AND RELIEFS
"Inventions"), which the employee may solely or iomtly conceive or develop_ or
reduce to practice, or cause to be conceived or developed o~ reduced to pracnce,
TORICS PER SYLLABUS
during the period of his employment with the employer.
VIII.
------------000------------ JURISDICTION AND RELIEFS
A. Labor-Arbiter
B. National Labor Relations Commission
C. Judicial review of labor rulings
D. Bureau of Labor Relations
E. National Conciliation ·and Mediation Board
F. 001,.E Regional Directors
G. DOLE Secretary
H. Grievance machinery
I. Voluntary arbitration
J. Prescription of actions
1. Money claims
2. Illegal dismissal
3. Unfair labor practice
4. Offenses under the Labor Code
5. Illegal recruitment

.General Table of Jurisdiction

NLRC BLR DOLE VA NCMB
· Supreme Court Supreme Court Supreme Court Supreme Court
Rule45 Rule 45 Rule45 Rule45
Court of Appeals Court of Appeals Court of Appeals Coll1 of Appeals
Rule65 Rule65 Rule 65 Rule43
Motiprl for Motion for Motion for Motion-for
Reconsideration Reconsideration Reconsideration· Reconsideration
Automatic No appeal or
Appeal to Appeal to Appeal to Elevation to certiorari (NCMB is
NLRC BlR Director DOLE Secretary Voluntary not aquasiju<fldal
Arbitrator body)
Med-Arbiter DOLE Director or Grievance 'NCMB Concilialor-
Labor Arbtter or DOLE Regional Med-Arbiter Machinery Mediator
Director
 S,.a REVIEWER ON LABOR I.AW
830
PRELIMINARY CONSIDERATIONS
ON JURISDICTION AND REMEDIES
1. EXISTENCE OF EMPLOYER-EMPLOYEE RELATIONSHIP.
The existence of ~ployer-employee rela~o~hip b'etween the parties-
litigants, or a reasonable causal connection to such relationship1 is ajurisdidwna_lpn-
2 Labor Arbiter or NLRC 111 a sepaute proceeding. For then, given.a situation .where '
rtquisite for the exercise of jurisdiction ovec a labor dispute by the Labor Atbtters
or any othec labor tribunals.
2. THE CAUSE OF ACTION MUST ARISE FROM THE EMPLOYER-
EMPLOYEE RELATIONSHIP.
Even if there is employer-employee relationship, if the cause of action did
not arise out of or was not incurred in connection with the employer-employee
relationship, Labor ·Arbiters have no jurisdiction thereover.3 This is so because not
every dispute between an employer and employee involves ~atters that. only lab~r
tribunals like the Labor Arbiters and the NLRC can resolve in the exerase of their
adjudicatory or quasi-judicial power. Actions between employers and employees
wh~e the employee-employee relationship is merely incidental are within the
exclusive original jurisdiction of the ~ courts.
4
3. REASONABLE CAUSAL CONNECTION RULE.
The '~onabk Camal Co11ntdiol! R.lllt" is a rule to determine "jurisdiction
between labor courts and regular courts. Under· this rule, if thete is a reasonable
causal connection between the claim asserted and the employer-employee relations,
then the case is within the jurisdiction of labor courts.5 In the absence of such
nexus, it is the regular courts that have jurisdiction.6
4. POWER TO DETBRMINE EMPLOYMENT RELATIONSHIP.
Under labor laws, it is not only the Labor Arbiters and the NLRC who ~re
vested with the power to deteanine the existence of employer-employee
relationship.
The' DOLE Secretary and the DOLE Regional Ditectors are
possessed of similar power as held in the 2012 111 ba11& Resolution in Peuplt ~
Broadtasting Stnlia 11. Tht Stmtary.1 In fact, it was held here that the detennination by
the DOLE Regional Director and the DOLE Secreta.ty of the existence of
employer-employee relationship in the exercise of their visitorial and enforcement
power undec Article 128(b) of the Labor Code is to the exclusion of the Labor
Arbiter and the NLRC.
1 Known as "Reasonable causal Connection Rule."
2 My.MfrealJljv.Eb!no,G.RNo.159119,Mantl14,2006.
> Fmdocv. t-1.RC, G. R. No. 116347, Ott 3, 1996, 262 SCRA 632.
• Vi!1anaria, Jr. V. CA. G.R No. 165881, AjXI 19. 2006, citing EWlla V. CA, 455 Phi. 118, 129 (20031.
s Dai-ichi Eledronlcs Manufacturing Colporation v. Wlarama, Jr. G.R. No. 112940, Nov. 21, 1994.
& SanPlijuetc«pcntmv.Efcuban,G.RNo.127639,0ec.3, 1999.
1 . People's 8roadcasq Servi:e v. lhe Smay cl Ile DOLE, G.R. No. 179652, Mirth 6, 2012
CtfAPTEll EIGHT
JURISDICTION ANO RELIEFS
The Med-Arbiter has also the same power. M. Y. San Bisaats, In,. v~
UllJlll1lla, 1 pronowiced that the Med-Arbiter has the authority to determine the
employer-employee relationship because it is q.ecessaty and indispensable in the
exercise of his jurisdiction. It is absurd to suggest that the Med-Arbiter and
Seaetuy of Labor cannot make their own independent finding as to the existence
of such ~tionship and ?1ust have to rely and wait for such a determination by the
there is no separate complaint filed with the Labor Arbiter, the Med-Arbiter and/ or
the Secretaty of Labor can never decide a certification election case or any labor-
management dispute properly b~ugh~ before them as they have no authority to
determine the existence of an employer-employee relationship. Such a proposition
is, to say the .least, anomalous.
. The Social ·Security Commission (SSC) is also vested with this power.
In Rep11blit of Jht Philippinu_11. Ariapro Couperalivt,2 involVUJ.g the issue of coverage of
owners-members of respondeqt Cooper.itive under the Social Security System
(SSS), it was held that it is not only the Labor Arbiter or the NLRC who/which has
the exclusive jurisdiction to detemiine the existence of the employer-employee
relationship. The Social Security Commission (SSq has also that power.
S. EXCEPI'ION OF OFW. cAsES.
. In cases filed by OFWs, the Labor Arbitets may exercise jurisdiction even
absent the employment relationship. In Sanliago ,. CF Sharp Cm, Managemmt, Inc.,3 it
was held that a seafarer who has already signed a POEA-approved employment
contxact but was n~t deployed. overseas and, thecefore, there is no employer-
employee relationship, may file his monetary claims case with the Labor Arbiter.
This is because the jurisdiction of Labor Arbiters is not limited to claims arising
from employer-employee relationships. Under Section 10 of R A. No. 8042
(Mjpt Wot:km and Ouemas Filipinos Ad of 1995), as amended,4 the Labor Arbiter
may exercise jutisdiction over the claims of OFWs arising out of an employer-
employee relatio~~p or J>.Y virtue of @AY law or contract inyolvip,g Filipino
workers for overseas deployment, .including claims for actual, moral, exemplary
and othet fonns of damage.
Sanlia§J was cited in the 2012 case of Bright Maritime Corporation v.
Fantonia/,5 where it was ruled that while respondent seafarer cannot be deemed as
having been illegmly dismissed considering that the employer-employee relationship
has not yet commented, nevertheless, petitioners' act of preventing respondent
1 G.RNo.95011,,4¢22, 1991.
2 G.R.No.172101,Ncv.23,2007.
3 G.R. No. 16241U1ly 10, 2007.
4 As lately amended by Section 7 of RA No. 10022 (MaJCh 8, 2010). But 8\-en before lhls amendment lhls provision
is amt, embodied In Section 10 of RA. No. 8042.
s G.R No. 165935, Fm. 8, 2012.
 CHAPTU. EIGHT
SAR REVIEWER ON lABOR lAW JURISDICTION AND RELIEFS 833
832
6. JURISDICTION OVER CASES INVOLVING LEGISLATED WAGE
from leaving and complying with his contract of employment1 constitutes breach of INCREASES AND WAGE DISTORTION
contract for which petitioner company is liable for actual damages to respondent 7. JURISDICTION OVER ENFORCEMENT OR ANNULMENT OF
for the loss of one-year salary as provided in the· conttact.2 Additionally, respondent COMPROMISE AGREEMENTS
was awarded moral damages in the amount of P30,000.00, exemplary damages of 8. JURISDICTION OVER EXECUTION AND ENFORCEMENT OF
PS0,000.00 and 10% of all recoverable amounts as attomey's 'fees. DECISIONS OF VOLUNTARY ARBITRATORS
6. JURISDICTION OVER OFW CASES FILED BY HEIRS. 9. JURISDICTION OVER CASES OF OVERSEAS FILIPINO WORKERS
(OFWs) ·
The Labor Arbiters have jurisdiction over cases filed by a non-party to 10. OTHER CASES OVER WHICH LABOR ARBITERS HAVE
thee.employer-employee relationship, such as the hem of.an OFW. This was the - JURISDICTION
ruling in Medline Management, Inc. v. Roslinda.3 As heirs, the wife and son of Juliano 11. OTHER CASES OVER WHICH LABOR ARBITERS HAVE NO
Roslinda, the deceased OFW, have the personality to file the claim for death JURISDICTION
compensation, reimbursement of medical expenses, damages and attorney's fees II. REQUIREMENTS TO PERFECT APPEAL TO NLRC
before the Labor Arbiter of the NLRC. Ill. REINSTATEMENT PENDING APPEAL
7. BARANGAY CONCILIATION OF LABOR DISPUTES. IV. REVERSAL OF LABOR ARBITER'S REINSTATEMENT ORDER BY NLRC
Labor cases are not subject to the conciliation proceedings prescribed OR HIGHER COURTS
under P.D. No. 1508 requiring the submission of disputes before the Barang~ 1. ROQUERO DOCTRINE
LNpong TagajJ'!Japa prior to their filing with the court or other govemment offices. 2. GENUINO DOCTRINE
Requiring conciliation of labor disputes before the bmngay courts would defeat 3. GARCIA DOCTRINE
the very salutary pmposes of the law. Instead of simplifying labor proceedings
designed at expeditious settlement or refeml to the proper courts or offices to
decide them finally, the conciliation of the issues before the Banmg"· L,,pong I.
Tagaptgapa would only duplicate the conciliation proceedings and unduly delay the JURISD(CTION
disposition ol labor cases.4 1. VARIOUS POWERS OF THE LABOR ARBITERS.
A. . The Labor Arbiter is an official in the Regional Arbitration Branch of the
LABOR ARBITER Natto~ ~ r Relations Commission (NLRq who hears and decides cases falling
under his original and exclusive jurisdiction as pro:vided by law.
1. ORDER OF TOPICAL DISCUSSION. · . . B~~es their adjudicatoty power to hear and decide cases over which they
have Junsdictton, the Labor Atbitets have (1) contempt power,l and (2) power to
The discussi011 of this topic is divided into the following sections:
conduct ocular inspecdon.2 Previously, they are also possessed of injunctive
I. JURISDICTION power.3 This gnnt of injunctive power, however, was deleted in recent NLRC
1. JURISDlCTION OVER ULP CASES Ru/e.r.4 . ~e Labor Arbiter thus has no more injunctive power.s Only the
2. JURISDICTION OVER ILLEGAL DISMISSAL CASES Commission (NLRq has that power.'
3. JURISDICTION OVER MONEY CLAIMS CASES
3-A. JURISDICTION OF LABOR ARBITER VS. DOLE REGIONAL
DIRECTOR 1 Ar!x:le 218(11), asanendedby RA No. 6715, Mach 21, 1989; Sm! 1, ~ 1)(,2011 NlRC IUlsof Prooodure; Sec6on
4. JURISDICTION OVER CLAIMS FOR DAMAGES 1. rue xxm, Bodt v, ~ to frr4lllmlnt tte 1m Cede. as amended b y ~ Order No. 40-03 Series ,J 2003
(Feb, 17, 2003}. ""I"""'""''• ' UI •

5. JURISDICTION OVER LEGALITY OF STRIKES AND LOCKOUTS
1 lnaliscase, M8Wc68vai'id POEA~ cairactbeM1eerl pelooelsmd respondent
2 Thenmhtf mt~ ii lleaJllra:tis US$670, irdlsNeofal'cMn:e.
3 G.R. No. 168715, Sept 15, 2010.
• Mlxmyav.Es:ayo,G.RNos.82211·12.Mardl21, 1989, 171 SCRA442.
2 Miele 219 of Ile Laber Code.
3 Uooer ttie 1990 New~ d Procedure of !he NtRC, Laber AJlx'fss n exprasst,granted Ile P<7'W Oissue ..i..-;,.,, ii
onfrlary cases. (See Settioo 1, fUt XI llereof). •'I"'""""•
4 The said provisilnil !he 1990NtRC~ lsno~bnl In a!Xl2,2005md2011 versais.
5 .&s C0f1finned ii lain mv. Mrp, A.C. No. 7430, Feb. 15, 2012.
6 Uooer Al1ide 218(e), Lm Code.
834 BAR REVIEWER ON lABOR. I.AW
CHAPTER EIGHT
JURISDICTION ANO RELIEFS 835
2. ORIGINAL AND EXCLUSIVE JURISDICTION. 2) Article 124;1
The jurisdiction conferred by Article 224 [217) upon the Labor Arbiters is 3) Article 128(b);2
both orilinal and exclusive. This means that as a general rule, no other officers or 4) Article 233 [227];
tribunals can take cognizance of, or hear and decide, any,of the cases therein 5) Article 276 (262-A];l and
eo.umerated. · Under other la.w;
3. EXCEPTIONS. 6) Section 10 ofR.A. _No. 8042,4 as amended by R.A. No. 10022s
The following are the exceptions to the exercise of original and exclusive 5. RUNDOWN OF CASES.
jurisdiction of Labor Miters: ..
. . . . More particularly,. Labor Atbiters shall have original and exclusive
1. When the DOLE Secretary or the President exercises his power under J~sdictton to hear and deade the following cases involving all w rk h th
Article 278(g) [263(g)] of the Labor Code to assume jurisdiction over __ , or non-agn·cu1..LUUU:
agncul..LUUU ·-•· o ers, w e er
national inttmt ,mes and decide them himsel£
1. Under ArtjstP. 224 [217J of the Labor Code;
2. When the NLRC exercises its power of compulsory arbitntion over (a) Unfair labor practice cases; ·
similar national intmst ((JSU that are certified to it by the DOLE
(b) Termination disputes;
Secretary pursuant to the exercise by the latter of his certification
power under the same Article 278(g) [263(g)]. (c) If accompanied ~th a_ claim for .reinstatement, those cases that
workeIS may file involving wages, rates of pay, hours of work and
3. When cases arise from the interpretation or implementation of other teans and conditions of employment;
collective bargaining agreements and from the intetprctation or (d) ~ for actual, moral, exemplary and other forms of damages
enforcement of company personnel policies which shall be disposed ansing from employer-employee relations;
of by the Labor Arbiter by referring the same to the grievance
(e) Cases arising from ~y vio~tion of Article 279 [264] of the Labor
machinery and voluntary arbitration, as may be provided in said
C~de, as amended, including questions involving the legality of
agteements. 1 strikes and lockouts;
4. When the parties agree to submit the case to voluntary arbiuation (f) Ex_cept claims .for employees compensation, social security,
before a Voluntary Arbitrator or panel of Voluntary Arbitrators who, P~ealth (Medicare) and maternity benefits, all other claims
under .Articles 274 [261) and 275 [262} of the Labor Code, are also ammg ~m emp!oyer-employee relations, including those of
possessed of original and exclusive jurisdiction to hear and decide person~ In domesuc or household setvice, involving an amount
cases mutually submitted to them by the parties for arbitration and exceeding. Fiv~ Tho~and Pesos (PS,000.00), whether or not
adjudication. accompanied with a claim for reinstatement.
The Labor Arbiters do not have jurisdiction over the cases mentioned 2. = r Article 124 of the Labor Code, as amended by R.A. No.
above which are taken cognizance of by said other labor officials or tribunals under
specific provisions of the Labor Code.
• Disputes involving legislated wage increases and IPllrM distortio ·
4. LAWS CONFERRING JURISDICTION ON LABOR ARBITERS. un rman,~ d blishm ~- 11 Ul
Pvemw,e esta ents not voluntarily settled by the patties
pursuant to R.A. No. 6727. 6 ·
The following laws grant origin.al and exclusive jurisdiction to Labor
Arbiters: ·

Under the Labor Code; 1

AsanendecltrfR:A.No.6727~91989J.ir«Mv . .
1) Article 224 (217];2 2 Asanehded 11/RA No. T1'1J ~2, 1994). i'Miq ~Ctixbc:asesh~ eslltisll1e11s.
l As imporated by Secticl'l26, RA t-b.6715lMcrdJ 21 1989). caes underlieempliln dause dlEreil.

1
See paragraph (c],Mde 224(2171, LabcrCode; Sectxri 1, ~V. 2011 NLRCIU!sdPnx:edura. OGleMteknaM1 as"The t/iJraltWcxkersmd ~ FlpilosNJ.d 1995 •
5' Mrdt 8, 2010. •
AsareooedbyRA. No. 6715 (Mrch 21, 1989). 6 lheWageRamallzabl Id.

SAR REVIEWER ON LABOR LAW
3. :Under Article 1280>.,) of the Labor Code. as amended by R.A. No.
~
• untested cases under the exception clause in Article 128(b) of the
Labor Code.
4. Under Article 233 (227] of the Labor Code;
• Enforcement of compromise agreements when there is non-compliance
by any of the parties thereto, pursuant to Article 233 [227] of the
Labor Code. . a~trattve proce~ befo~ the Labor Arbiter will neither be binding in the
s. Under Article 276 [262-AJ of the Labor Code:
y
• Issuance of writ of exe&11tion to en~orce d~cisions of olunt:uy
Arbitrators or panel of Voluntary Arbitrators, 111 case of thett absence
or incapacity, for any reason. 1
6. Under Section 10 of R.A. No. 8042, as amended by R.A, No.
~ The Labor Arbiters have no jurisdiction 07er simple violation of the
• Money claims arising out of emplo_yer-e~p!oyee relationship or by
virtue of any law or contract, involving Filip~o ~~rkers for overseas
deployment, including claims for death and disability benefits :md for
actual, monl, exemplary and other forms of damages as proV1ded by
R.A. No. 8042, as amended2
7. Other cases as may be provided b.y law.l
All the foregoing shall be discussed hereunder in smalim.
1.
JURISDICTION OVER ULP CASES
t LIMITATIONS ON EXERCISE OF JURISDICTION OVER ULP.
Under Article 258 [247}, a ULP act bas two (2) ~s~t~: the civil ~d
mmilllJ! aspects. Tue Labor Arbiters have jurisdiction only on its avil aspect which
may include claims for actual, moral, exemplaty and other forms of damag~~,
attomey's fees and other affirmative reliefs. It must be noted that recovery of Civil
CHAPTER EIGHT
JURISDICTION AND RELIEFS
liability in the administtative proceeding before the :..abor Arbiters bars recoveiy
under the Civil Code.I
Labor Arbhers have no jurisdiction over the criminal aspect of ULP. The
~ aspect is p~o~erly cogniza?le by the regulat courts. However, it is a pre-
reqwsite that no criminal prosecutton for ULP may be instituted without a final
judgment finding that ULP was committed having been first obtained in the
a~stra~ve procee~~ before the Labor Arbiter. During the pendency of the
administtattve proceedings before the Labor .Atbiter, the running of the
pre~ptiv~ period for ~e criminal offense is inteuupted The final judgment in the
criminal case nor will it be constdered as evidence of guilt of the accused in the
~ case. Its sole probativ~ value is to prove compliance with the said pre-
reqwstte before the corresponding criminal action may be instituted in the regular
cotirts.2
2. JURISDICTION OVER VIOLATIONS OF CHA
CBA. Such violation is now considered simply a grievable issue to be adjudicated
through the grievance machinety in the CBA. But when the violation of the CBA is
gross in character, it is considered ULP, hence, falling under the jurisdiction of the
Labor Arbiter. ·
According to the Supreme Court in Silua 11. NLRC:3 for ULP cases to be
cognizable by the Labor Arbiters, and for the NLRC to exercise its appellate
jurisdiction thereover, the allegations in the complaint should show prima fade the
concurrence of two (2) requisites, namely:
(1) Gross violation of the CBA; and
(2) The violation pertains to the t((JtlOmit provisions of the CBA.
It is clear therefore that if the violation of the CBA is not gross in
character or, even if gross, if the same does not rela:e to the emnomic provisions
thereof, the jurisdiction to hear and decide it is vested with the grievance machinety
under Article 273 [2601 or with the Voluntaty Arbitr-.ltors or Panel of Voluntaty
Atbitmtors under Article 274 [261].
Following the ruling in Silva, it was held in San Migllel Foods, Inc. ,. San
Miguel Corpora.ion EmpltrJees Union-PTWG0,4 that the Labor Arbiter has no
jurisdiction to decide the issue of whether the grievance machinery was violated by
the petitioner company. The grievance machinery pro·1ision in the CBA is not an
1 Artide258 (247]. I.me.ode.
2 1bit.
1 G.R No.110226,Jooe 19.1997,274 SCRA 159.
' G.R.No.168569,0ct.5,2007.
838 BAR RlVIEWER ON lA8OR !AW
CHAmR.EIGHT
JURISDICTION ANO RELIEFS 839
economic provision, hence, the second requisite for a Labor Arbiter to exercise
1) Labor Arbiters;!
jurisdiction over ULP is not present
2) Voluntary Arbitrators or panel of Voluntary Arbitrato .z
However, a different ruling was made in the same Son Miguel Foods case on 3) The DOLE Secretary, in the exercise of his rs, .
the issue of violation of the job security provision of the CBA, specifically the national interest cases;l or assumption power in
seniority rule therein provided. The union charged the employer (SMFI) for mP 4) Th: N~C, in national interest C2ses certified to it fo u!
because it has '"appointed less senior employees to positions at its Finance arbitration by the DOLE Secretary.• r comp sory
Department, consequently intentionally bypassing more senior employees who are
2 SOME PRINCIPLES.
deserving of said appointment." The Supreme Court, following a liberal
construction of Article 274 [261] of the Labor Code, held that the job security issue • ~e _validity of the exercise of jurisdiction b Labor . .
is economic in nature since the seniority rule in the proinotion of employees has a disaussal cases is not dependent on the kind y Arbiters over illegal
bearing on salaries and benefits. Hence, it may not be seriously disputed that the support of the dismissa~ hence wheth or ~a~e o~ the gr?und cited in
afore-said charge is a gross or flagrant violation of the seniority rule under the authorized cause, it is of no cons;quence.~ the disllllSsal JS for JUst cause or
CBA, a ULP act over which the Labor Arbiter has jurisdiction.
• VIn lease ofArcbo_nflict of jurisdiction between Labor Arbiter and th
3. JURISDICTION OVER ULP CASES FILED BY A UNION MEMBER 0 untaty Jttator over termina · e
AGAINST HIS UNION. prevail for the following reasons: tton cases, the former's jurisdiction shall

In the 2016 case of Allan M. Mmtkiza v. Ojfimr of Manila Water Emp~u

Union (Mll7EU), 1 it was held that the Labor Arbiter has jurisdiction over
petitioner's complaint for ULP which he lodged against his union based on his two
(2) successive suspensions for 30 days each for his first 2 offenses, and subsequent
expulsion, for his 3ni offense - all involving his non-payment of his union dues as a
(!) Tenrunab
: ad·on of empl_oymeut is not a grievable issue that must b
su mme to the gnevance machine
adjudi~ation.6 _The jurisdiction thereove?re~;

(2) Even if the CBA "d th . .

1 . .
th:b:~~o~ : ;
exclusive ambit of the Labor Arbiter and not of the Volunton,:::
-, ltrator.
e

7
=
. . p~vi es at temunatton :lisputes are ·evabl the
member of respondents' union. The Court ruled that the nature of petitioners same ts merely discretionary on the part of.th . th gna e, .
. e parties erefo. .
cause of action is not that of an "inter/intra-union dispute"; the respondent union (3) On~ there ts actual termination, jurisdiction is conferred
officers, by their act of twice suspending petitioner and subsequently expelling him Arbiters by operation of law.' upon Labor
from membership therewith, without affording him the right to appeal under the (4) Interpretation of CBA and enforcement of com an ..
union's constitution and by-laws, "are guilty of unfair labor practices under Article are merely corollary to an illegal dismissal case.13 p y personnel polioes
260 (249) (a) and (b) - that is, violation of petitioner's right to self-organization, (5) Article 224 [217] is deemed written into the CBA b . . . .
wtlawful discrimination, and illegal termination of his union membership - which thereo£ u CU1g an t.ntr1ns1c part
case falls \vithin the original and exclusive jurisdiction of the Labor Arbiters, in
accordance with Article 224 [217) of the Labor Code." (6)~e !-3bor Code, in its Article 292(b) (277(b)),12 grants the right to th
dism1ssed employee to ~ntest his teanination with the Labor ArbiteL e
2. (!) Estoppel confers jurisdiction on Labor Arbiters.I
JURISDICTION OVER ILLEGAL DISMISSAL CASES
' Unde-p,rag~qa](2)dArlide224(217].
lhlerAr1Qs 2741261] clld 275 (262].
1. LABOR OFFICIALS WHO MAY TAKE COGNIZANCE OF 3
U1der paragraph 191dMx:le27812631 he IMf lake C0gfizMa? d eni1a!b1 ,.._...,.,.. .
TERMINATION DISPUTES. fleCiJS/Js CM:tv.llidl he has awnedµisdi:too "'.'I"'""' '"" are ilctJded er Slbsl.rne(I n
' Jd.;&d\0:Jli'mc:ases niA:le .
An examination of the Labor Code shows that the following officials have Viixltt decide~- IMf a SOOSlllle Ile issued mri'1abt d ll'l1ploy.m-( Ile ieiJafft d v.t1K1l lhe NlRC IM/
the power to t;tke cognizance of termination disputes in the exercise of their : C. Ak3m &Soos, l'lc. v. CA, GR. Nos.155109, 155135 &179220 ~ 29 2010
respective original and exclusive juri~dictions: 1
Navir_ro II Y. Oootascx,, G.R No. 101875, .Alf 14, 1995. ' ' .
Mwia Y. NI.RC, GR No.124013,J111e 5, 1998, 290 SCRA603.
9
Sirl llqJel Capaa!m Y. NlRC, G.R No. 108001, Mm 15, 1996.
MlsFcrms, hc.v.M.RC,G.R No.142244 Nov 18 2002.
,o M.rlejav.M.RC,514)B. , . ,
11
' GR No. 201595.Jan 25 2016. l.aldl!!xhfustiesv.CA,G.RNo. 150278 Au:19 21Xl7·Sirl""•-'r-,;... NlRC
ll This is Ille Pf1MSi:ln of fle LaborCode 00 ' • ' ' n~u,:, -I"'•""IV. 'Slpa
procedttaf rue process, OOHkno.ln as 's:allk)cy ooe proooss.•
 CHAl'TER. EIGHT 841
BAR REVIEWER ON IABOR. IAW JURJSOICTION AND RELIEFS
840
2 2) Any money claim, regardless of whether accompanied with a claim for
(8) The luase "all othtr labor disp11tes" in Article. 275 [262] does not · reinstatement, exceeditlg the amount of five thousand pesos
3
autoniatially confer jurisdiction on Voluntaty Atb1ttatoa.
(PS,000.00) per claimant.
(9) The State policy of promoting voluntaty arbitration does not foreclose
filing of termination case with Labor Amiter.4 • The money claim in No. 1 above presupposes that it proceeds &om a
(10) Failure of the employ~ to activate grievance• macbineiy confea tennination case, it being accompanied with a claim for reinstatement Hence, it
falls within the jurisdiction of the Labor Arbiter since it is principally a teanination
jurisdiction on Labor Arbttea.5
dispute.
• In other words, a Voluntuy A~bittator will only have juriscli~o°: over illegal
dismiss· al cases when there is ~Pvnt'PAA agreement of the parties m the CBA,
••
The money claim .in No. 2 above does not necessarily arise from or
i.e., the employer and the bargaining agent, to su\lmit the tennmatlon case_ to involve a tennination case but because die amount exceeds PS,000.00, it falls within
voluntaty arbitmtion. Absent the mutual express agreem~t. of the putt~, the jurisdiction of the Labor Amiter. If the amount does not exceed PS,000.00, it
6
Voluntary Arbitrator cannot acquire jw:isdic~on over temUnatton cases, This is the Regional Director of the Department of Labor and Employment or his duly
was the consistent holding of the Supreme Court in the cases of NtgrrJJ Metal authorized hearing officea who have jurisdiction to take cognizance theteo£1
9
Corp. v. Lamt!JO,' Landttx Industries ,,. CA,8 Atlar Fam,s, Int. v. NLRC, and San
2. LABOR ARBITER VS. VOLUNTARY ARBITRATOR IN MONEY
Miguel Corporation 11• NLRC 10 In all these cases, the Supreme ~?urt has
CLAIMS CASES.
categorically declared that termination cases fall under the .originalu and
exclusive jurisdiction of Labor Arbitea and not of Voluntary Arbitrators. The original and exclusive jurisdiction of the Labor Arbiters under Article
• The express agreement must be stated in the CBA or, in its absence, th~re 224(c) (217(c)], over cases for money claims is limited only to those arising from
must be enough evidence on record unmistakably showing that the parties statutes or contracts other than a CBA The Volunwy Arbitrators, wider Article
have agreed to resort to voluntary arbitration.11 274 (261],2 have original and ex,clu.siye jurisdiction over money claims "arising
from the interpretation or i111plementation of the CBA and, those arising
3. from the interpretation or enforcement of compa~y personnel policies."
JURISDICTION OVER MONEY CLAIMS CASES San ]011 v. NLR.C,3 ruled that ·it was correct for the NLRC to hold that the
Labor Arbiter has no jurisdiction to hear and decide the employee•s money claims
1. CLASSIFICATION OF MONEY CLAIMS. (underpayment. of retirement benefits), as the controversy between the parties
involved an issue ''arisingfrom the inurpntation or impltmentation" of a provision of the
Money claims falling within the original and mlusive jurisdiction of the
CBA. The Voluntary Arbitrator or panel of Voluntary Arbitrators has original and
Labor Arbitea may be classified as follows: exclusive jurisdiction over this· controversy W1der 4tticle 274 [261] of the Labor
1) Any money claim, regardless of amount, accompanied with a claim for Code, and not the Labor Arbiter.
reinstatement; or Citing San Jost on the distinction between the jurisdiction of the Labor
Arbiters and the Voluntuy Arbitrators, the Supreme Court, in Del Monte Philippines,
Inc. v. Saldiuar,4 ruled that the Labor Arbiter iri the instant case could not properly
pass judgment on the money claim cited as aoss-cbim by petitioner against the
I lmexnltlStiesV.CA,S\JIX8, union (Association Labor Union [ALU]) since it is a money claim arising from the
2 Mde 275 [262). Jlliscfctxln OB O!het Lab« llsputes.- The Voulby Alblratxr « Panel dVCUl1aly MmaflXS. ~
alJfeanenl r111e pns. sha1 a1so 11ear n1 dedde an a Wxrd'sputes nim.l untarlabcr pa:bscllll ~ CBA, hence, the Voluntuy Arbittator has jurisdiction t~ resolve the same.
dedlcks.
> \Mm v. CA.G.R. No. 138938, Oct 24, 2000, 344 SCRA 268, 281.
, NaYano mv. Dirnm>..,
s Alias Fams, h:. v. tlRC, supa •
a Mnpv. NlRC,Sll)ra; Pcllttn:oNorll Exjxe§, Inc. v. NtRC,GR. No.95940,Jut,24, 1996.
1 G.R.No. 186557,AulJ.25,2010. . 1 Nticle 129, labcN' Code; Brat ~ro Oewlopmert Qxporabt v. de la Serna, G.R No. 82805, Nov. 9, 1989, 179 SCRA
a G.R.No.150278,Aug.9,2007. 269;adiensh!re Memxlal l-biplll. h:. v. Mnisa'oflmaid ~ G.R. No. 74621, Feb. 7, 1990.
9 G.R No. 142244, NC¥. 18, 2002. 2 Mtla274 (26tiJtlisdic&rldVcilltalyMilram«Pa1eld\lcblayArblrabs.
IO G,R No. 108001, Mirdl 15, 1996, 255 ~ 133. . , Sa1Josev.NI.RC,G.R.No.1212271 Aug.17, 1998.
11 Utwersityd 1,e tnmaa11ate CouptDl v. NLRCald TeodcraAxalan, G.R. No. 181146,Jan. 26, 2011. 4 G.R.No.158620,0cl 11,2008.
12 Id.
 BAR R.EvlEWERON lABOR. lAW
3. SOME PRINCIPLES ON JURISDICTION O R MONEY CLAIMS.
. regulations. The labor inspectors shall have access co employer's records and
• Money claims must arise out of employer-em oyee relationship. 1 If not,
jurisdiction is with the regular courts.2
• Award o f ~ benefits even if not prayed for s valid}
• The money claims lodged by an employee are not to be properly offset by his
unpaid subscription of stocks.4
• Cl.aim for notarial fees by a lawyer employed a company is within the
jurisdiction of the Labor Arbiter.5
3•A.
JURISDICTION OF LABOR ARBITER VS. DOLE REGIONAL DIRECTOR
1. INTERPLAY OF JURISDICTION.
There are certain issues and cases where the jurisdiction of the Labor
Arbiter appears to be in conflic~ with_ or closely related to !11~ ~dictio~ of the
DOLE Regional Director.. A discuss1on therefore of the Junsdicttonal mterplay
between these two labor authorities is in oi:der.
2. SMALL MONEY CLAIMS UNDBRARTICLB 129.
Under Article 129 of the Labor Code, it is the DOLE Regional Directors
or the duly authorized hearing officer, who are empowered, in a summary
proceeding, to hear and decide small money claims that does not exceed PS,000.00,
including leg21 interest, provided the following requisites concur.
1) The claim must arise from employer-employee relationship;
2) The claimant does not seek reinstatement; and
3) The aggregate money claim of each employee does not exceed
PS,000.00.6
If the claimant claims reinstatement, then the case is not considered a
purely money claim but an illegal dismissal case. The reason is that reinstatement as
a remedy can only be claimed in an illegal dismissal case. If the total amoW1t of
claim exceeds PS,000.00, the Labor Arbiter has jurisdiction tbereover.
3. VISITORIAL AND ENFORCEMENT POWER UNDER ARTICLE 128.
Article 128 of the Labor Code grants to the DOLE Regional Director, as
the authorized representative of the DOLE Secretary, the power to conduct
1 San Mgis Cofpcralmv. NI.RC, 161 SCRA 719.
2 U!pcllday Agriaft1a1 DevelopmentCofpcmoo v. CA, G.R. No.112139, Jal. 31, 2000.
l Ose; Al:alemtv. DOLE, GR Nos. 83257-58, Dec. 21, 1990, 192 SCPA 612.
4
~v.NLRC,GANo.80039,AJri18, 1989, 172SCRA442. .
5 NrM!lellal'MYJ Savi,Jsand LOiJlAssoclafxxl, Inc. v. M.RC, GR No. 111870, June 30, 1994.
' M. Parirez lnclJslries v. Secretary dlaba nH:rqqment, G.R th 89894, Jan. 3, 1997.
CHAPTER EIGHT 843
JURISDICTION ANO RELIEFS
inspection of establishments to determine compliance with labor laws, rules and
premises at any time of the day or night whenever work is being undertaken
therein, and 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 this Code and of any labor law, wage order or
rules and regulations issued pursuant thereto.
Before the visitorial and enforcement pou-er may be exercised, the
following requisites should concur:
(1) The employer-employee relationship should still exist;
(2) The findings in question were made in the course of inspection by
labor inspectors;1 and
(3) The employees have not yet initiated any claim or complaint with the
DOLE Regional Director under Article 129, or the Labor Arbiter
under Article 224 [217]. The reason is if an action has already been
filed under Article 129 (small money claims of PS,000.00 or less) or
before the Labor Arbiter under Article 224 (217], the DOLE
Regional Director can no longer exetcise :urisdiction thereover.
4. JURISDICTION OVBR CONTESTED CASES UNDER THE
EXCEPTION CLAUSE IN ARTICLE 128(b).
Paraguph (b) of Article 1282 is a very cont:ro~ial provision which must
be discussed in connecti~ with the jurisdiction of the Labor Arbiters. The
provision itself expressly acknowledges the conflict of jurisdiction. Thus, the
opening sentence of pangraph (b) pertinently states:
"(b) Notwithstanding the provisions of Articles 1293 and
224 [217) 4 of this Code to the conttaty, and in cases where the
relationship of employer-employee still exists, the Secrewy of Labor
and Employment or his duly authorized representatives shall have the
power to issue compliance orders to give effect to the labor standards
provisions of this Code and other labor legislation based on the findings
of labor employment and enforcement officetS or industrial safety
engineers made in the course of inspection. The Secretary or his duly
authorized representatives shall issue writs o: execution to the
appropriate authority for the enforcement of their.orders, EXCEPTm
cases where the employer contests the fmdings of the labor
emplQlfflcnt and enforcement officer and raises issues sunportcd
1 ~ ID 111e labcr ~ atd ~ arms er iwstrlal • q11ee1S nae mkoo to i1spect Ula
estatitmen1s umer Mde 128 of Ile LmCode.
i MerlsanmnentbyRA No. 7730 pme2, 1994).
3. · Miele 129-RecoYeryofWa,ies, S'ff1E Mrleyelmm and Oller Beneffls.
4 Mde224 {217)-Juiscfdoo clflelaxrMiasand Clermtnissioo.
- SAR R£\IIEWERON LABOR IAW
by documentary proofs which were not considered jn the course
of inspection."1
1be above highlighted portion of Article 128(b) providing for the
exception grants jurisdiction to Labor Arbiters over c~i1tested cases falling
thereunder.
In interpreting the afore-quoted provision of the exception clause, three·
(3) elements must concur to divest the Regional Directors or their representatives
of jurisdiction thercwider, lo wit. ·
(a) That the employer contests the findings of the labor inspector and
raises issues thereon;
(b) That in order to resolve such issues, there is a need to examine
evidcntiary matters; and
(c) That such matters are not verifiable in the normal course of
inspection. 2
Resultantly, if rhe said elements arc present and therefore the labor
standards case is covered by said exctplio11 dauu, then the Regional Director will
have to endorse the case to the Labor i\rbiters of the NLRC.3
The case of Melioro v. Crralive Crralum, lnc.,4 best illustrates the application
of the exception clause. Here, it was held that the Court of Appeals aptly applied
the ·"exception clause" because at the earliest opportunity, respondent company
regis\ered its objection to the findings of the labor inspector on the ground that
there was no employer-employee relationship between petitionei:s an~ respondent
company. The labor inspector, in fact, noted in his report that "respondent alleged
that petitioners were contractual workers and/or independent and talent wodc.ei:s
without control or supervision and also supplied with tools and apparatus
pertaining to their job." In its position paper, respondent again insisted that
petitioners were not its employees. It then questioned the Regional Director's
jurisdiction to entertain the matter before it, primarily because of the absence of ari
employer-employee relationship. Finally, it raised the same arguments before the
Secretary of Labor and the appellate court. It is, therefore, clear that respondent
contested and continues to contest the findings and conclusions of the labor
inspector. To resolve the issue raised by respondent, that is, the cxistcilce of an
employer-employee relationship, there is a need to examine evidentiary matters.
t 8rf,llasi,suppled,
1
See Ex-Batm Vetercns Seariy fv}ert:f. Inc. v The Seo-Elatyof labor l.agueslra, GR No. 152396, New. 20, 2007; SSK
Pals Capailb1 V. Caras, GR Nc6. 85934-36, Jal. ll, 1~. 181 SCRA 675,678; ~ alla)' G<i! Miles, re. V.
Sec._Dela SEma, G.R No. 86963.,6/JJ, 6, 1999, 370 Phil 872: Bayhaven, Inc. V. Ab.al, G.R Na. 160859, U, 30, 2008;
1987), 1~i ~ 11 a 11e ~1es on lhe ~a~ St.m.rds
Sedbi . Cases n 11e """im
,-,,
3
As hetl i1 Ex-&tm veerais Sea.rtt A;ierct, roe.v. Laguesrna, G.R No. 152396, Nal. 20, 2001.
4
GRNo.171275,Jutj13,2009.
CHArTER EIGHT
JURISDICTION ANO RELIEFS
845
4.
JURISDICTION OVER CLAIMS FOR DAMAGES
1. LABOR ARBITERS HAVE JURISDICTION.
It is now well-settled that claims for damages as well as attorney's fees in
labor cases are cognizable by the Labor Arbiters, to the exclusion of all other
courts. Rulings to the contrary are deemed abandoned or modified accordingly·I
No matter how designated, for as long as the action primarily involves an
employer-employee relationship, the labor court has jurisdiction over any damage
claims.2
2. CLAIMS FOR DAMAGES OF OFWs.
Claims for acrual, moral, exemplary and other forms of damages that may
be lodged by overseas Filipino workers are cognizable by the Labor Arbiters.3
5.
JURISDICTION OVER
LEGALITY OF STRIKES AND LOCKOUTS
1. STRIKES AND LOCKOUTS NOT AFFECTING NATIONAL
INTEREST.
In general, the Labor Arbiter has the power to determine questions
involving the le~ty or illegality of a strike or lockout upon the filiog of a proper
complaint and after due proceedings.4
The employer, in case of a stiike, or the union, in case of a lockout, may
file the proper petition with the Labor Arbiter to seek a declaration of the illegality
thereo£ It shall be the duty of the Labor Arbiter concerned to act on the case
immediately and dispose of the same, subject only to the requirements of due
process.5
2. STRIKES AND LOCKOUTS AFFECTING INDUSTRIES
INPISPENSABLE TO THE NATIONAL INTEREST.
The jurisdiction over national interest cases Qabor disputes affecting
industries indispensable to the national interest) is lodged with either the DOLE
Secretary, in case he assumes jurisdiction thereovcr, or with the NLRC, in case the
DOLE Secretary certifies it thereto for compulsory' arbitration. Under either
situation, all cases between the same parties shall be considered subsumed to, or
Prinerov. ~ Appelale Cwt. G.R No. L-72644, Dec. 14, 1987, 156 OCR>. 435.
Rootguez. k. v. Aglja', Sr., GR t-«J. 159482.Al.g.30, 2005.
Olfa::es I.,......,,_
..,.,...,_ 16' 3 Sedxxl 10, RA No. 8042; Sedio'l 58, ~les a i d ~ ~ RA No.8042.
• No.22. NCI.-Bl'lineron Stile, Me~ crd l.odlru. 2nd Elifm, lleQ,rber 1995.
s No.26, GJi:le&les Go,emiY,j um Relations.
 BAR RE\'lt-WER ON LABOR LAW
absorbed by, the assumed or certified case, as the case may be, and shall be decided
accordingly by the DOLE Secretary• or by the appropriate Division of the NLRC.2
The exception to this rule is when the assumption or certification order specifies
that the cases will not be subsumed or absorbed in the assumed or certified case, in
which event, the Labor Arbiter shall continue to exercise juris~ction thereover.
3. JURISDICTION OVER CRIMINAL CASES ARISING FROM STRIKES
OR LOCKOUTS.
The Labor Arbiter cannot adjudicate issues involving any crimes
co~tted, whether related to a strike or lockout or not Prosecution of crimes or
felonies falls within the jurisdiction of the regular courts of justice.
5-A.
JURISDICTIONAL INTERPLAY
INSTRIKE OR LOCKOUTCASES
1. NECESSITY TO DESCRIBE INTERPLAY OF JURISDICTION.
At the outset, there is a need to discuss and explain the jurisdictional
issues involved in strike or lockout situations because of their seeming complexity.
As distinguished from other labor cases, a labor dispute involving a strike or
lockout is wuque as it involves an interplay of jurisdiction of several labor officials
or tribwutls. Confusion usually arises as to when the said labor officials or tribunals
can properly take cognizance of strike-related or lockout-related issues.
2. A STRIKE OR LOCKOUT IS CROSS-JURISDICTIONAL.
Based on the pertinent provisions of the Labor Code, there is really no
overlap or conflict in the exercise of jurisdiction of the labor officials and tribunals
concerned. Below is an outline of the interplay in jurisdiction among them.
1. Filing of a notice of strike or lockout with NCMB. - A union which
intends to stage a strike or an employer which desires to mount a lockout should
file a notice of strike or notice of lockout, as thecase may be, with the NCMB and
not with any other office. It must be noted, however, that the NCMB, per Tabigue v.
lnlm1ational Copra Exporl Corporation,3 is not a quasi-judicial body; hence, the
Conciliators-Mediators of the NCMB do riot have any decision-making power.
They cannot issue decisions to resolve the issues raised in the notice of strike or
lockout. Their role is confined solely to the conciliation and mediation of the said
issues, although they can suggest to the parties that they submit their dispute to
voluntary arbitration through the Voluntary Arbitrators accredited by the NCMB.
1 In 3SSlrTied cases.
1
ntfflfied cases.; SeeMi:le 278(g) 1263(g)l Labor Code; See alsoSecticn 3~1. ~le VIII, 20111-lRC Rmls af'rocerue.
3
G.R. No. 183335, Dec. 23, 2009; Hots~ l.l'lm-l-f\. V. Wa1Btart ~ 1W Davcrl, GR Nos. 174()40.\1,
Sept 22, 2010.
..
CHAl'TER EIGHT
JURJSDICTtON AND RELIEFS
2. Filing of a complaint to declare the illegality of the strike or
lockout with the Labor Arbiter or Voluntacy Arbitrator or panel of Voluntazy
Arbitrator. • In case a party wants to have the strike or lockout declared illegal, a
complaint should be filed either with the Labor Arbiter under Article 224(a)(S)
[217(a)(5)]1 of the Labor Code or, upon mutual agreement of the parties, with the
Voluntary Arbitrator or panel of Voluntary Arbitrators under Article 275 [262] of
the same Code. The issue of illegality of the strike or lockout cannot be resolved by
the Conciliators-Mediators of the NCMB as earlier pointed out and discussed.
3. Filing of an injunction petition with the Commission (NLRC). -
In case illegal acts violative of Article 279 [264]2 are committed in the course of the
strike or lockout, a party may file· a petition for injunction directly with the
Commission (NLRC) under Article 225(e) [218(e)P of the Labor Code for
purposes of securing a temporary restraining order (TRO) and injunction. The
Labor Arbiters or Voluntary Arbitrators are not possessed of any injunctive power
under the Labor Code. lo other words, the aggrieved party, despite the pendency of
the case for the declaration of the illegality of the strike or lockout witl1 the Labor
Arbiter or Voluntary Arbitrator, as the case may be, may directly go to the
Commission to secure the injunctive relief.
4. Assumption of jurisdiction by the DOLE Secretary. - Under
Article 278(g) [263(g)] 4 of the Labor Code, the DOLE Secretary has the power to
assume jurisdiction over labor disputes which, in his opinion, may cause or likely to
cause a strike or lockout i.o industries indispensable to the national interest (so-
called "national interest'' cases). Once he makes the assumption, he shall decide all
the issues related to the labor dispute himsel~ to the exclusion of all other labor
authorities.
5. Certification of the lab or dispute to the NLRC. - Under the same
provision of Article 278(g) [263(g)] of the Labor C_ode, the DOLE Secretary has
the option of not asswning jurisdiction over the labor dispute in national interest
cases. Instead, he may certify it to the NI.RC for compulsory arbitration, in which
case, it will be the NLRC which shall hear and decide all the issues subject of the
certification order.
In case at the time of the said assumption or certification, there is a
pending case before tl1e Labor Arbiter or Voluntary Arbitrator on tl1e issue of
illegality of the strike or lockout, the same shall b~ deemed subsumed in the
assumed or certified case. Resultantly, it is no longer the Labor Arbiter or the
Voluntary Arbitrator who should decide the said case but the DOLE Secretary, in
the case ofassumed cases, or the NI.RC, in the case of certified cases.
Mcie 2241217) -~ rJ t,e l..li>aMlim aid t,e Garrnissiln.
Artxlel/9(264)-Pllilbled~.
3 Mi:le 225 {2181- Po.Yefs of toe Camissioo.
' Mi:le 278 {2631-S1Jies. f'iit,ti-g .m l..oc:ro.m.
848 BAR REVIEWER ON LABOR LAW
6. Assumption of jurisdiction over a national interest case
President. - The President of the Philippines is not precluded from intervening in
a national interest case by exercising himself the powers of his alter ego. the DOLE
Secretary, granted under Article 278(g) [263(g)) by assuming jurisdiction over the
same for purposes of settling or terminating it ,.
7. Submission of a national interest case to voluntacy arbitration. -
Despite the pendency of the asswned or certified national interest case, the parties
are allowed to submit any issues raised therein to voluntary arbitration at any stage
of the proceeding, by vinue of Article 278(g) [263(g)) 't'hich provides that "(b)efore
or al 09 rtagt oftht compulsory arbitration procus1 the partia may opt to submit their dispute to
110lunta,y arbitration. "
The foregoing interplay explains why Article 278(g) (263(g)] makes
specific reference to the President of the Philippines, the Secretary of Labor and
Employment, the Commission (NLRq or the Voluntary Arbitrator in connection
with the law on strike, lockout and picketing embodied in Article 278 [263]. The
only labor official not so mentioned therein but who has a significant role to play in
the interaction of labor officials and tribunals in strike or lockout cases, is the
Labor Arbiter. This is understandable in the light of the separate express gnnt of
jurisdiction to the Labor Arbiters under Article 224(a)(5) (217(a)(5)] as above
discussed.
6.
JURISDICTION OVER CASES INVOLVlNG
LEGISLATED WAGE INCREASES AND WAGE DISTORTION
1. CASES IN ORGANIZED ESTABLISHMENTS.
In establishments where there are existing collective bargaining
agreements (CBAs) or certified sole and exclusive bargaining agents (SEBAs), R.A.
No. 6727,1 vests upon the Voluntary Arbitrator or panel of Voluntary Arbitrators,
the jurisdiction to hear and decide wage distortion cases1 after the grievance
procedure in the CBA failed to settle the same.2
2. CASES IN UNORGANIZED ESTABLISHMENTS.
In establishments where there are no CBAs or certified SEBAs, the Labor
Arbiters have jurisdiction to hear and decide wage distortion cases after the parties
and the NCMB failed to correct the distortion. 3
3. RULE WHEN MADE SUBJECT OF NOTICE OF STRIKE OR
LOCKOUT.
' Oh!nwsekooYII as Ile 'Wage Ratklnmbl Id."
2
~ 124, 1.mCcxfe, as anended by Sedlon 3, RA. No. 67'0; Sedixl 7, ~ ll ~ ~ c l RA. No.
6727; Sedicrl 1. Rule VII, IU!s of Procedtre oo t.i1inun Y/aJe FIXilg ssued by Ile MWC on 04 Jllle 1900.
3 kl.
CHAPTER. EIGHT 849
JURISDICTION AND ~LIEFS
by the _ Wage dist~rtion is not a proper ground to be invoked in support of a
strike or lockouL Disputes arising &om wage distortion resulting from wage orders
issued by the Regional Tripartite Wages and Productivity Board (RTWPB) which
are alleged in the notice of strike or notice of lockout, should be refened to the
Labor Atbiter if not settled within ten (10) calendar days of conciliation by the
NCMB. 1
7.
JURISDICTION OVER ENFORCEMENT OR ANNULMENT
OF COMPROMISE AGREEMENTS
L LEGAL BASIS.
Article 233 [227] clearly embodies the following provisions on
compromise agreements:
"Article 233 [227]. Compromise Agrrt1111nts. - Any compromise
settlement, including those involving labor standard laws, voluntarily
agreed upon by ~c patties with the assistmcc of the Bureau or the
regional office of the Department of Labor, shall be final and binding
upon the parties. The National Labor Relations Commission or any
court shall not assume jurisdiction over issues involved therein
~ in case of lion.compliance thereof or if there is prims lade
evidence that the settlement was ob~oed through fraud,
misrepresentation, or coercion.,,i
It is ·clear &om the foregoing provision that although the compromise
agreem~t may have been entered into by the parties before the Bureau of Labor
Relations (BLR) or the DOLE Regional Office, it is the Labor Arbiter who has
jurisdiction to take cognizance of the following issues related thereto, to the
exclusion of the BLR and the DOLE Regional Directors:
(1) To enforce the compromise agreement in case of non-compliance
therewith by any of the parties thereto; or
(2) To ~ it if there is prima fatie evidence that the settlement was
obtained through fraud, misrepresentation, or coercion.
A similar provision is found in the 2011 NLRC RR/u of Promb,re,3 where
the jurisdiction of the Labor Atbiters is recognized over the enforcement of
compromise agreements when there is non-compliance by any of the parties
thereto pursuant to Article 233 (227] of the Labor Code.
 BAR REvlEWER. ON WOR. l.AW
850
. 8.
JURISDICTION OVER EXECUTION AND ENFORCEMENT
OF DECISIONS OF VOLUNTARY ARBITRATORS
t. DECISIONS OF VOLUNTARY ARBITRATORS.
Article 276 [262-A]l of the Labor Code prescribes the procedures that
Voluntary Arbitrators should follow in adjudicating cases filed before them. Once a
decision has been rendered in a case and subsequently becomes final and executoi:y,
it may be enforced through the writ of execution. i~S\Jed by_ the s~e Voluntary
Arbitrator who rendered it, addressed to and reqwnng cenain public officers2 to
execute the final decision, order or award.
2. LABOR ARBITERS MAY ISSUE THE WRIT OF EXECUTION.
In situations, however, where the Voluntary Arbitrator who rendered the
decision is absent or incapacitated for any reason, Article 276 [262-A) grants
jurisdiction to any Labor Arbiter in the region where ~e winning. party resides, to
take cognizance of a ~otion for th~ issuance of the wnt of_ ~ecuuon fil~d by su~
party and accordingly issue such wnt addressed to and reqwnng ~e public officers
to execute the final decision, order or award of the Voluntary Arbmator.
9.
JURISDICTION OVER CASES
OF OVERSEAS FILIPINO WORKERS (OFWs)
1. JURISDICTION OVER MONEY CLAIMS OF OFWs.
R.A. No. 8042, as amended,• confers ori!lnal and exclusive jurisdiction upon
Labor Arbiters, to hear and decide all claims arising from employment relationship
or by virtue of any law or contract involving OFWs, including claims for actua~
moal, exemplaty and other forms of damages.
2. JURISDICTION WHEN THERE IS A CBA.
If there is a CBA between the foreign employer and the bargaining union
of the OFWs, the jurisdiction over monetary claims of OF\Vs is vested in the
Volunwy Arbitrator and not in the Labor Arbiter. 5
1 Mlcle 2781262-Al •Prmres.
2 Scd1 as (1) lhe Sd of dle <:arrris5kln (NLRC); (2) a dlJy deputized ofbr; {3) a Specs Sheriff; (4) Ile Sherif ct dle
- ~ er (5) tnf Jd)l'I: dtial Man !he parties may designate il Ole~ a:ireement to execute dll! final
decislCXl, Cider er IMill'd.
3 k1
4
Ollel\\tekno\lafl as 1\91,tJrirtwaters tlld Ovelseas Aipm PIJ. of 1995; anended by RA No. 10022 ( ~ on
M1'ch8,2010i
5
Ace ~a!lon Co~ Inc. v. Fernandez, GR. No. 197309, 0d. 10, 2012; Estate of (May v. Aboi!iz Jebsen ~ . Inc. Md
Gennaateretstic., G.RNo.172642,June 13,2012.
CHAPTIR EIGHT
JURISDICTION AND RELIEFS
3. OFW CASES PALLING UNDER POEAJURISDICTION.
The Philippine Ov~ Employment Administration (POEA) has
ori!inal and ext/mi,;, jurisdiction to hear and decide:
.• (1) All cases which are administrative in character, involving or arising
out of violation of rules and regulations relating to licensing and
registration of recruitment and employment agencies or entities,
including refund of fees collected from workers and violation of the
conditions for the issuance of license to recruit workers. 1
(2) Disciplliwy action cases and other special cases which are
administrative in character, involving employers, principals,
contracting partners and Filipino migrant workers.2
10.
OTHER CASES OVER WHICH
LABOR ARBITERS HAVE JURISDICTION
1. JURISDICTION AS RECOGNIZED IN JURISPRUDENCE.
In accordance with well-entrenched jurisprudence, the issues, claims or
cases of the following fall wider the jurisdiction of the Labor Arbiters:
{a) Employees in govemment-owned and/ or controlled corporations;
(b) Alien parties;
{c) Priests and ministers;
(cl) Employees ~f cooperatives;
(e) Counter-claims of employers against employees.
All the foregoing are discussed below in seriatim.
10-A.
JURISDICTION OVER CASES INVOLVING'EMPLOYEES
OF GOVERNMENT-OWNED ANDIOR CONTROLLED CORPORATIONS
1. PREVAILING RULE.
The hiring and firing of employees of govemment owned and/or
controlled cotporations TPitho11t angina/ charters are cov~ed by the Labor Code and,
therefore, the Labor Arbiters have jurisdiction over illegal dismissal and other cases
that may be filed under this law; while those with orii111Jl charter1 are basically
govemed by the Civil Service Law, rules and regulations and, therefore, jurisdiction
1 Sml 1, RI.de I, Part VI, 2002 P0EA Rua fa lJm.8asoo 0vaseas W<Mkels; Sedicrl 1, Rule 11, Pat V, 2003 POeA
~ bSeafa'els; Sec1ioo 28, OrmbJs Rw!sand Reguaoons ln1)lernentrlg Mgrantwakersnl OYelseas Fq,iloskJ.
ct 1995 daled Feb. 29, 1996.
2 Ibid~ Id.; Id.

BAR R!VIEWEI< ON LABOR LAW
on any of the cases that may be initiated under this law is vested in the Civil Service
Commission (CSC)1
10-8.
JURISDICTION OVER DISPUTES ,.
INVOLviNG ALIEN PARTIES
1. CHOICE OF LAW BY PARTIES.
A basic policy of contract is to protect the expectations of the parties.2
Such party expectations are protected by giving effect to the parties' o~ choi~e of
the applicable law.l The choice of law roust, however, bear some relattonship to
the parties or their transaction.• A manning agency, for instance, cannot be faulted
for complying with the applicable foreign law. By so complying, it has discharged
its monetary obligation to the employee.5
2. WHEN PHILIPPINE LAW PREVAILS.
Pakistan lntemational Airlines Corp. v. Opk,6 is in point. In this case, two
contracts of employment were executed in Manila between Pakistan International
Airlines Corporation and two Filipino flight attendants. Paragraph 10 of the
contracts embodies the stipulation, among others, that the terms thereof shall be
construed and governed by the laws of Pakistan and only the courts of Karachi,
Pakistan shall have jurisdiction to consider any matter arising out of or under the
agreement Prior to the expiration of the contracts, the services of th_e two F~pioo
flight attendants were terminated. They jointly filed a complaint_for illegal
dismissal. One of the issues raised is which law should apply and which court has
jurisdiction over the dispute.
The Supreme Court, in holding that the Philippine law should apply and
that tl1e Philippine court has jurisdiction, declared that petitioner PI.A cannot take
refuge in paragraph 10 of its employment agreement which, firstly, specifics the law
of Pakistan as the applicable law of the agreement and, secondly, lays the venue for
settlement of any dispute arising out of or in connection with the agreement "onf;
[tn] courts of Karachi, Pakistan." The first clause of paragraph 10 cannot be
invoked to prevent the application of Philippine labor laws and regulations to the
subject matter of this case, i.t., the employer-employee relationship between
petitio_ner PIA and private respondents. The relationship is much affected with
public interest and that the otherwise applicable Philippine laws and regulations
cannot be rendered illusory by the parties agreeing·upon some other law to govern
1 Zarboin;laCtfWa!er~v.aJa.G.RNo.104389,M!y27, 1994.
Reese,Oloi:eoll..a,vil Tcxts~CallU, 16Counbia.JooolalofTra1soatiooall.aw, 1, 2111977!.
Frtkev.lsOO!ndtsenCo.•~, 151 F.&Jw,465,467(1957}.
• Asia~ li!e.'Corp.V. ~ - G.R No. 105029-32. Dec.95. 1994.
Orri ~ ~De,oeqlcnef't Gapoom1 v. NI.RC, GR No. 130339, Dec. 22, 1998, 300 OCRA 455.
1 G.R No.61594, Sept. 28, 1900.
CHAl'TER EIGHT
JURISDICTION ANO RELIEFS
their relationship. Neither may petitioner invoke the second clause of paragraph 10,
specifying the Karachi couns as the sole venue foe the senlement of disputes
between the contracting parties. Even a cursor1 scrutiny of the relevant
circumstances of this case will show the multiple and substantive contacts between
law and Philippine courts, on the one hand, and the relationship between the
parties, upon the other. The contract was not only executed in the Philippines, it
was also performed here, at least partially. Private respondents are P~ppinc
citizens and residents, while petitioner, although a fcreign corporation, is licensed
to do business (and is actually doing busiriess in the Philippines) and hence, is a
resident in the Philippines. Lastly, private respondents were based in the
Philippines in between their assigned flights to the Middle East and Europe. All the
above contracts point to the Philippine courts and administrative agencies as the
proper forum for the resolution of the contractual disputes between the parties.
Under these circumstances, paragraph 10 of the employment agreement cannot be
given effect so as to oust Philippine agencies and coum of the jurisdiction vested
upon them by Philippine law.
10-C.
JURISDICTION OVER LABOR CASES
INVOLVING PRIESTS AND MINISTERS
1. WHEN LABOR ARBITERS HAVE JURISDICTION.
The fact that a case involves as parties tliereto the church and its religious
minister does not ipso f(](W give the case a religious significance. If what is involved
is a labor case, say illegal dismissal, the relationshlp of the church, as employer, and
the priest or minister, as employee is a purely secular ma1ter not related to the
practice of faith, worshlp or doctrines of the church. 1-lcnce, Labor Arbiters may
validly exercise jurisdiction over said labor case.
The religious minister in Austria v. Hon. I\1LRC,1 was not excommunicated
or expelled from the membership of the church hut was terminated from
employment based on the just causes provided in Article 297 [282] of the Labor
Code. Indeed, the matter of terminating an employee which is purely secular in
nature is different from the ecclesiastical act of expelling a member from the
religious congregation. As such, the State, through the Labor Arbiter and the
NLRC, has the right to take cognizance of the case to determine whether the
church, as employer, rightfully exercised its management prerogative to dismiss the
religious minister as its employee.
2. ECCLESIASTICAL AFFAIR, MEANING.
An •~«ksiaJlical ajfairi• is one that concerns doctrine, creed, or form of
worship of the church, or the adoption and enforcement within a religious
1 Austia v. Hoo. 1-.\.RC, GR No. 124382, Au:J. 16, 1999.

HAR R£vl EWER tlN I.ABOR I.AW
association of needful laws and regulations for the gove=ent of its membership,
and the power of excluding from such association those deemed unworthy of
membership.I Based on this definition, an ecclesiastical affair involves the
relationship between the church and its members and relates_ to matters of faith,
religious doctrines, worship and govemance of the congrega~on. To be concrete,
examples of these so-called ecclesiastical affairs to which the"Sta~e _cannot '.11~ddle,
are proceedings for excommunication, or~a_non o~ religious ~ s~ers,
administration of sacraments and other acnVI0es with attached religious
significance.2
10-D.
JURISDICTION OVER CASES OF
EMPLOYEES OF COOPERATIVES
1. WHEN LABOR ARBITERS HAVE JURISDICTION.
The Labor Arbiter has jurisdii;tion only over monetary claims and illegal
dismissal cases involving employees of cooperatives but not the claims or
termination of membership of members thereo( Cooperatives organized under
R.A. No. 6938,l are composed of members; hence, issues on the termination of
their membership with the cooperative do not fall within th_e jurisdiction of the
Labor Arbiters but with the Cooperative Development Authonty (CDA).
Petitioner in Perpet11al Help Credit Cooperative, Inc. 11. Fab11rt1da,4 ~ontends_ that
the Labor Arbiter has no jurisdiction to take cognizance of the complaint of pnvate
~spondcnts who are not members but employees of the cooperative. The Supreme
Court ruled that there is no evidence that private respondents are members of
petitioner cooperative and even if they are, the dispute is about paFent of wages,
overtime pay, rest day and termination of employment. Under Arttcle 224 (217] of
the Labor Code, these disputes are within the original and exclusive jurisdiction of
the Labor Arbiters.5
In San Miguel Corp. v. Semillano,6 petitioner asserts that the present case is
outside the jurisdiction of the labor tribunals bcr1use respondent Vicente Semillano
is a member of the Alilgilan Multi-Purpose Coop (AMPCO), not an employee of
petitioner SMC. Petitioner is of the positioi1 that the instant dispute is intra•
(Ooperative in nature falling within the jurisdiction of the Arbitration Committee of
the C~operative Development Authority. ,-\MPCO was contracted by petiti~ner to
supply it with workers to perform the task of segregating bottles, removing dirt
1
Bladl'sLaw llidiooay, 5" Ed., [19791,p.460.
l kl.
l QOieMise kJn,,n as 'The Cooperali'le Code of the Jlliwi,es."
• GR No. 121948, Oct 8, 2001.
PD. No. 1751\.aW ~ t,e C,ooperatiYe ~ t ] was repealed by express prtNisiOO a Al1x:le 127 a RA No.
6938 [Ire Coop(rai,,e Code rJ t,e Phlillllilesl v.tidl was rei fie law il lorte at the line tie ~ il this case was
fik!dv.fflltoeDOLE.
6 GR!t>. 164257,J\tfS,2010.
CHAPTER EIGHT 855
JURISDICTION ANO RELIEFS
therefrom, filing them in designated places, loading and unloading the bottles to
and from the delivery trucks, and to perform other tasks as may be ordered by
SMC's officers. Semillano, together with the other respondents, filed the complaint
for regulacization with petitioner SMC, contending that A.MPCO was a mere labor-
only contractor. The High Court declared in this case that AMPCO was a labor-
only contractor and consequently pronounced that all the respondents, including
Semillano, were regular employees of petitioner. On this issue of jurisdiction, the
High Court held that the Labor Arbiter has jurisdiction because precisely,
Semillano has joined the others in filing this complaint because it is his position
that petitioner SMC is his true employer and liable for all his claims under the
Labor Code.
10-E.
JURISDICTION OVER COUNTER-CLAIMS OF EMPLOYERS
1. EMPLOYERS MAY ASSERT COUNTER-CLAIMS AGAINST
EMPLOYEES FILED BY THE LATTER BEFORE THE LABOR
ARBITERS.
Almost all labor cases decided by labor courts involve claims asserted by
the wotkers. The question that may be propounded is whether the employers can
assert counter-claims against their employees before the Labor Arbiters. The
Supreme Court answered this poser in the af~tive.
In Banez v. Hon. Valdevil/a,1 it was declared that the jurisdiction of Labor
Arbiters and the NLRC is comprehensive enough to include claims for all foans of
damages "arising from the employer-employee relations." ·By this clause,
Article 224 (217]_should apply with equal force to the claim of an tmpft(yer for actual
damages against its dismissed employee, where the basis for the claim arises from
or is necessarily connected with the fact of termination, and should be entered as a
counter-claim in the illegal dismissal case. This is in accord with paragraph 6 of
Article 224(a) (217(a)], which covers "all other claims, arising from employer-
employee relations."
· Banez was cited in Domondon v. NLRC,2 where one of the issues is whether
the Labor Arbiter has jurisdiction to decide an issue on the transfer of ownership
of a vehicle assigned to the employee. It was· argued that only regular courts have
jurisdiction to decide the issue. The Court, however, ruled that since the transfer of
ownership of the vehicle to the employee was conn~ted to his separation from the
employer and arose from the employer-employee relationship of the parties, the
employer's claim feU within the Labor Arbiter's jurisdiction.78
1 GR No.128024, Mi?f9, 2roJ, 331 SCRA584.
2 Oanoodoo Y. NLRC.GR. No. 154376,Sept 30, 2005, 471 SCRA 559.
 SAR REvl~RON IABOR IAW
856
In Milan v. NLRC,1 respondent Solid Mills, Inc. claims that its properties
are in petitioners' possession by virtue of their st1rus as its employees. Respondent
Solid Mills allowed petitioners to use its property as an act of liberality. Put in other
words, it would not have allowed petitioners to use its property had they not been
its employees. The rerum of its properties in petitioners' po$,Session by virtue of
their status as employees is an issue that must be resolved to determine whether
benefits can be released immediately. The issue raised by the employer is, therefore,
connected to petitioners' claim for benefits and is sufficiently intertwined with the
parties' employer-employee relationship. Thus, it is properly within the labor
tribunals' jurisdiction.2
11.
OTHER CASES OVER WHICH
LABOR ARBITERS HAVE NO JURISDICTION
1. LABOR ARBITERS' LACK OF JURISDICTION.
lbe following issues or cases do not fall under the jurisdiction of Labor
Arbiters:
(a) Claims for damages arising from breach of a non-compete clause and
other post-employment prohibitions;
(b) Claims for payment of cash advances, car, appliance and other loans
of employees;
(c) Dismissal of corporate officers and their monetary claims;
(d) Cases involving entities immune from suit;
(e) Cases falling under the doctrine ofjomm non convenienr,
(Q Quasi-delict or tort cases;
(g) Criminal and civil liabilities arising from violations of certain
provisions of the Labor Code;
(h) Constitutionality of CBA provisions.
All the foregoing issues or cases are discussed below smatim.
11-A.
CLAIMS FOR DAMAGES ARISING FROM BREACH OF NON-COMPETE CLAUSE
AND OTHER POST-EMPLOYMENT PROHIBITIONS
1. JURISDICTION IS LODGED WITH THE REGULAR COURTS.
In · case of violation of the non-compete clause and similar post-
employment bans or prohibitions, the employer can assert his claim for damages
l&lv. NLRC. G.R No. 202961, Feb.4,2015.
Id.
CHAPTER EIGHT
JURISDICTION AND RELIEFS
against the erring employee with the regular courts and not with the labor courts,
such breach being civil in nature. 1
11-B.
EMPLOYER'S CLAIMS FOR CASH ADVANCES, CAR. ARPLIANCE AND OTHER
PERSONAL LOANS OF EMP( OYEES
1. LABOR ARBITERS HAVE NO JURISDICTION.
With respect to resolving issues involving loans availed of by employees
from their employers, it has been the consistent ruling of the Supreme Court that
the Labor Arbiters have no jurisdiction thereover but the regular courts.
Where the claim to the principal relief sought is to be resolved not fry
reference to the Labor Code or other labor relations stat11/e or a ,·olkctive bargaining agreement b,11
by the general civil law, the jurisdiction over the disp11te behngs to the reg11lar courts ofjustite a11d
not lo the Labor Arbiter and the NLRC In such situations, resolutions of the dispute
requires expertise, not in labor management relations nor in wage structures and
other teans and conditions of employment, but rather in the application of the
general civil law. Clearly, such claims fall outside the area of competence or
expertise ordinarily ascribed to Labor Arbiters and the NLRC and the rationale for
granting jurisdiction over such claims to these agencies disappears."2
The following loans may be cited:
a. Cash loans/advances are in the nature of simple collection of a sum
of money brought by the employer, as creditor, against the employee,
as debtor. The fact that they were employer and employee at the time
of the transaction does not negate the civil jurisdiction of the trial
court. The case does not involve adjudication of a labor dispute but
. recovery of a sum of money based on our civil laws on obligation and
contract3 ·
b. Car loans ~ch as those granted to sales or medical representatives by
reason of ~e nature of their work. The employer's demand for
payment o_f the employees' amortizations on their car loans, or, in the
alternative, the retum of the cars to the company, is not a labor, but a
civil, dispute. It involves debtor-creditor relations, rather than
employee-employer relations.4
c. Appliance loans conccm the enforcement of a loan agreement
involving debtor-a;editor relations founded on contract and do not in
any way concern employee relations. As such it should be
1 Dai.Qi Ee:t1x1ks ~ Corpaatiai v. Hen ViJnna, G.R No. 112940. N<N. 21, 1994; Pmb V. ~ Lietz,
loc., G.R No. 196539, Oct. 10,2012.
2 Sal!Ji,JuelCopormlv.l'lRC, 161 SCRA719(1988).
l Georg Grof.i1n GM3H &Co. V. Hat lsncri clld Ratma R l..anchi:lebre, G.R No. 1092n, Aug. 10, 1994.
' Locsil II v.1/ekeri Fooo Corpaam, G.R No. 192105, Dec. 09, 2013.

858 SAR REYIEWER ON LABOR I.AW
enforced through a separate civil action in the regular courts and not
before the Labor Arbiter.1
d. Loans from retirement fund also involve the same principle as
above; hence, collection therefor may only be made through the
regular courts and not through the Labor .ru:biters or any labor
tribunals.2
11•C.
DISMISSAL OF DIRECTORS AND CORPORATE OFFICERS
1. CORPORATE OFFICERS UNDER R.A. NO. 11232 [FEB. 20, 2019].
The dismissal of a director or corporate officer is not a labor case but an
inua-corporate dispute cognizable by the Regional Trial Court3 and not by the
Labor Arbiter.
The term "ro,porafl officers" is now defined under Section 24 of the new
law, R.A. No. 11232,4 otherwise known as the "Revised Corporation utk of the
Philippines," thus:
"SEC. 24. urporoit Ojfz«rs. - Immediately after their election, the
directors of a corporation must formally organize and elect: (a) a
president, who must be a director; (b) a treasurer, who must be a
resident; (c) a secretary, who must be a citizen and resident of the
Philippines; and (d) such other officers as may be provided in the
bylaws. If the corporation is vested with public interest, the board shall
also elect a compliance officer. The same person may hold two (?) or
more positions concurrently, except that no one shall act as president
and secretary or as president and treasurer at the same time, unless
otherwise allowed in this Code.
"The officers shall manage the corporation and perform such duties as
may be provided in the bylaws and/or as resolved by the board of
directors."
1n sum, the following are the corporate officers:
(1) President,
(2) Treasurer;
(3) Secretary;
(4) Such other officers as may be provided in the bylaws; and
(5) Compliance Officer, if the corporation is vested with public interest
Hltg~ illdSla'gtallcm'gCorp.,UI.Sta!RefremEntPlirlv. Spooses ~ GR No.178610, Nov. 17, 2010.
Iii.
a a
Under Sedol 5 [52.) RA No. 8799 tie j!.risdictXXl tie Seariies cnl ExdlarY,Je CamiSSKXl (SEC) fNf!J a1 cases
l!'IJTler.D!d irder PD. No. 902-A. has been msfelred t> tie~ a general jlKisdi::bl er tie 8fJIX'0Plil!e Regmal
TrlalCart(RTC~
' AjlpMd by Pl'mll~ IMet1e a, Fellnay 20, 2019.
CHAl'TfR. EIGHT 8
JURISDICTION AND RELIEFS 59
Indeed, the term ''corporate ojf«m" refers only to those exp e 1
· d'th • rss y
menttone ~ e 2019 ~evised Corporation Code and bylaws. All other officers
not so menttoned therein ~e deC?Ued 'empfqym." This is so because corporate
offic~rs are elected or appointed by the directors or stockholders, and those who
are giv~ ~at character either by the 2019 Revised Corporation Code or by the
corporation s by-laws._ Employees are not
Otherwise stated, an "oj/i"" is created by the charter of the corporation
and the ''ro,porak oj/iar" is dected by the directors or stockholders. On the other
hand, an_ 'empfqyee" occupies no office and generally is employed not by the action
of the directors _or stockholders b~t by the managing officer of the corporation
who also ~etemunes the compensatton to be paid to iuch employee.
2. MATLING DOCTRINE.
· · The 2010 case of Malling lnd111irial and Comr.rercial Corp. v. Ricardo R CoroI 1
reprises die general rule that in the case of a regular employee, the Labor Arbit: r
has jurisdiction; otherwise, the RTC exercises the legal authority to adjudicate.2
~e facts o~ this case are q~t~ simple. After his dismissal by l\1alling as its
Vice President for _Financ~ and ~~stration, respondent Cores filed on August
10, 2000, a c_o_mplaint for ill~l.disaussal against Mailing and some of its corporate
officers (pennoners). The pettttoners moved to dismiss the complaint, raising the
ground, among others, that the complaint pertained to the jurisdiction of the SEC
due to the conttovcrsy being intta-corporate inasn:uch as the respondent was a
member of Malling's Board of Directors aside from being its Vice-President for
Fin~ce ~d A~stra_tio~ p~or_ I? his te~ation. The respondent opposed
pettttoners motton to disauss, ms1sttng that his status as a member of Malling's
Board of Directo~s was doubt~, considering that he had not been formally elected
as such; that he did _not_own a smgre share of stock m Malling, considering that he
had been made to stgn in blank an undated indorsement of the certificate of stock
he had been given in 1992; that Malling had taken back and retained the certificate
of stock in its custody; and that even assuming that he had been a Director of
Mailing, he had been removed as the Vice President for Finance and
Administration, not as a Director, a fact that the notice of his termination dated
April 10, 2000 showed.
In ruling that Coros' dismissal was not ar.. intra-corporate dispute but a
labor case, the Court employed the following two-tiered test to determine whether
a dispute constitutes an intra-corporate controversy or not, namely:
(1) The status or relationship of the parties (Relationship Tes~; and
(2) _The nature of the question that is the subject of their controversy
(Nature ofControversy Tes~.
1 GR No. 157802. Oct 13, 2010.
l See Ile ~ p;rag~ d tie decisi:xl il M.11'~.

860 BAil REVIEWER ()N V.Bllll l,\W
This test simply dictates that before the RTC can take cognizance of a
case, the controversy must pertain to any of the following relationships:
a) between the corporation, partnership or association and the public;
b) between the corporation, partnership or association and its
stockholders, partners, members or officers; ·'
c) between the corporation, partnership or association and the State as
far as its franchise, pemiit or license to operate is concerned; and
d) among the stockholders, partners or associates th.:mselves. 1
The fact that in Malling, the parties involved are the corporation and
Cores, its director and stockholder and at the same time its Vice President, does
not necessarily place the dispute within the ambit of the jurisdiction of the RTC.
The better policy to be followed in determining jurisdiction over a case should be
to consider concurrent factors such as the status or relationship of the parties
OR the nature of the question that is the subject of their controversy. In the
absence of any one of these factors, the RTC will not have jurisdiction.
Furthennore, it does not necessarily follow that every conflict between the
corporation and its stockholders would involve such corporate matters as only the
RTC can resolve in the exercise of its judicial powers.
Mat.ing thus prescribes that .the criteria for distinguishing between
.corporate officers who may be ousted from office at will, on one hand, and
ordinary corporate employees who may only be terminated for just cause, on the
other hand, do not depend on the nature of the services performed, but on the
manner of creation of the office. In respondent Coros' case, he was supposedly at
once an employee, a stockholder, and a director of Marling. The circumstances
surrounding his appointment to office must be fully considered to determine
whether the dismissal constituted an intra-corporate controversy or a labor-
termination dispute. It must also be considered whether his status as director and
stockholder had any relation at all to his appointment and subsequent dismissal as
Vice President for Finance and Administratiqn. Obviously enough, the respondent
was not appointed as Vice President for Finance and Administration because of his
being a stockholder or director of Marling. He had started working for Matling on
September 8, 1966, and had been employed continuously for 33 years until his
termination on April 17, 2000, first as a bookkeeper, and his climb in 1987 to his
.last position as Vice President for Finance and Administration had been gradual
but steady.2 Even though he might have become a stockholder of Mailing in 1992,
his promotion to the position of Vice President for Finance and Administration in
1987 was b'y virtue of the length of quality service he had rendered as an employee
1 SeeasoReiesv.Hon.RTC,llraldl142, GR~. 165744,Alg.11,2008,583flll.591. . 1
I The~ is lhe sequence of respoodenl Caos's risn;J fn:rn lhe ms: 196&- Booidleeper, 196S-SeniJr Accru11ant
1969 -Ola Pct:ourlant 1972-0ni:e Supervisa; 1 9 7 ~ Treasire-; 197s-special Assismt for F111ance; 1S80-
.¼ista't Co!rptJdler; 1~rmce .m Adninistrai...e t.maiJer, 1985-Asst. ~ Presilent tor Fnance a-id
~ ; 1987 ID Ajxi 17, 200)-Vr:e l'resileoti'x Fi'lance .rd Adrriiistroocn.
CHAl'T[R EIGHT
861
JURJSDICTION AND RELIEFS
of Mailing. His subsequent acquisition of the status of director/stockholder had no
relation to his promotion. Besides, his status of director/stockholder was
unaffected by his dismissal from employment as Vice President for Finance and
Administration.
. In the 2014 case of CoJ~T? v. Broadcom Asia, lr.c., 1 the Supreme Court, citing
Matli11g, ruled that the Labor Arbiter, not the regular courts, has original jurisdiction
over the illegal dismissal case filed by petitioner Cesare who was an incorporator2
of respondent Broadcom and was holding the position of Assistant Vice President
for Sales (AVP for Sales) and Head of the Technical Coordination at the time of
his termination. The following justifications were cited in support of this mling:
(1) The Nahm of the Conlrovmy Test. The mere fact that a person was a
stockholder at the time of the filing of the illegal dismissal case does not make the
actipn an intra-corporate dispute.
(2) A person, although an officer of the company, is not necessarily a
corporate offa:.er thereof. Prominently cited was Mailings distinction between a
"regular employee" and a "corporate ojfzar" for purposes of establishing the true nature
of a dispute or complaint for illegal dismissal and determining which body has
jurisdiction over it
Further, it was emphasized in this case the two (2) circumstances which
must concur in order for an individual to be considered a corporate .officer, as
against an ordinary employee or officer, namely: (1) the creation of the position
is under the corporation's charter or by-laws; and (2) the election of the
officer is by the directors or stockholders. It is only when the officer claiming to
have been illegally dismissed is classified as such corporate officer that the issue is
deemed an intra-corporate dispute which falls within the jurisdiction of the trial
courts.
(3) 'The Board has no power to create corporate office without amending
the By-Laws.
(4) General Information Sheet (GIS) submitted to SEC neither govems
nor establishes the nature of office.
In the 2018 case of Cacho v. Balagt111,3 respondent Balagtas was elected as
North Star's Executive Vice President and Chief Executive Officer. She filed an
illegal dismissal case against North Star and the -Labor Arbiter awarded her
separation pay, full backwages and P3 M moral damages, P2 M exemplary damages
and 10% attorney's fees. On appeal, the NLRC ruled that Balagtas was a corporate
officer at the time of her dismissal and not a mere employee. Tbe CA reversed it
GR No. 201298, Feb. 5, 2014.
1 Petiti::rier Raul c.Coscre, altt1ough a salesman en..,io,,,ee a¢.raterespoodetlt Daite ~ . was named ai iroporato-
a fw.lab's Broadarn. hawlg been assi,Jned 100stmsas\od\ 'lllhp,nalueof P1.00 per share.
1 GRNo.202974,Feb.7,2018.

l!AR REVIEWER ON lABOR lAW
862
but the SC affumed the NLRC's ruling that what is involved here is an intra-
corporate dispute and not a labor case because:
(1) The Executive Vice President position is one of the corporate offices
provided in petitioner North Star's Bylaws ,(one or more· vice
presidents). __
(2) Respondent Balagtas was appointed by the Board as petltloner North
Star's Executive Vice President.
Another 2018 case, Makaba u. Prohealth Phan'!a Philippines, 1 also reiterates
Matling. Petitioner Malcaba had been employed with respondent ProHealth since it
started its operations in 1997. He was one of its incorporators and a me~~e: of the·
Board of Directors. He held 1 Million shares in the corporanon. He was uunally the
Vice President for Sales then later became its President in 2005 until the time of bis
dismissal.
Both the Labor Arbiter and the NLRC ruled that Malcaba was illegally
dismissed. The CA and the SC, however, held that since he is a corporate officer,
his termination is intra-(orporale in nature and jurisdiction thereover belongs to the
RTC. Any issue on his alleged dismissal is beyond the jurisdiction of the ½'b~r
Arbiter and the NLRC. Consequently, it was pronounced that the Labor Arbiter s
and NLRC's adjudication on his money claims was void for lack of jurisdiction: As
a matter of equity, petitioner Malcaba must, therefore, rerum all amounts r:c~ved
as judgment award pending final adjudica?on _of his_claims._ The C~urt•~ dism1ssal
of petitioner Malcaba's claims, however, 1s without preiudice to his filing of the
appropriate case in the proper forum. He was thus ordered to ~TURN
P4,937,420 awarded to him by the Labor Arbiter by way of separation pay,
backwages and 13th month pay.
11•0,
LABOR CASES INVOLVlNG ENTITIES IMMUNE FROM SUIT
1. NON-SUABILITY FOR LABOR LAW VIOLATIONS.
In our jurisdiction, the generally accepted principles of international law
are recognized and adopted as part of the law of the land.2 !~unity of a State _and
international organizations from suit is one of these uruvers_ally recogruzed
principles. It is on this basis tltat Labor Arbiters or other labor tnbunals have no
jurisdiction over immune entities.3
There are quite a number of cases that may be cited to illustrate this
principle but the following would be the most ideal examples:
1 G.R. No.209085•.ltJle 6, 2018.
l Sml2,Moell, 1987~-
~Asoo FIS!leries ~ Ceiterv. fv:lm., G.R.Nos. 97468-70, Sept 2. 1993, 226 SCRA 49.
CHAl'TIR EIGHT
JURISDICTION AND RELi EFS
In Department of Fonign Affairr v. NLRC,1involving an illegal dismissal case
filed against the Asian Development Bank (ADB), it was ruled that said entity
enjoys immunity from legal process of every form and therefore the suit against it
cannot prosper. And this immunity extends to its officers who also enjoy
immunity in respect of all acts performed by them in their official capacity. The
Charter and the Headquarters Agreement granting these immunities and privileges
to the ADB are treaty covenants and commitments voluntarily assumed by the
Philippine govemment which must be respected.
In l.Asco v. UNRFNRE,2 involving an illegal dismissal case filed against the
respondent which is a specialized agency of the United Nations, the said immunity
rule was asserted and reiterated by the Supreme Court. In dismissing the case, the
High Court said that being a member of the United Nations and a patty to the
Convention on tlte Privileges and Immunities of the Specialized .-\gencies of the
United Nations, the Philippine government adheres to the doctrine of immunity
granted to the United Nations and its specialized agencies. Both treaties have the
force and effect of law.3
The same doctrine was earlier applied in f 111mag Philippinu 11. NLRC,4 a
case involving illegal dismissal of a Filipirto employee of the Joi11t United States
Military Auistana Group to the &pHblic of the Philippines OUSMAG-Philippines). In
upholding the Labor Arbiter's dismissal of the case, the High Court enunciated that
since the employment contract was entered into by JUSMAG in the discharge of its
goumimental functions, JUSMAG being an entity performing a governmental function
on behalf of the United States Government pursuant to the tvlilitary Assistance
Agreement dated March 21, 1947, the illegal dismissal suit is one against the latter,
albeit it was not impleaded in the complaint. Considering that the United States
has not waived or consented to the suit, the complaint against JUS!vL-\G cannot
prosper. JUSMAG is beyond the jurisdiction of Philippine courts.
. 2. EXCEPTION TO THE RULE.
'There is an exceptior to the immunity rule as exemplified by the case of
United Stales v. -Hon. Rodrigo,5 where it was held that when the function of the foreign
entity otherwise immune from suit partakes of tlte nature of a proprietary activity,
such as the restaurant services offered at John Hay Air Station undertaken by the
United States Government as a commercial activity for profit and not in its
governmental capacity, the case for illegal dismissal filed by a Filipino cook working
therein is well within ·the jurisdiction of Philippine courts. The reason is that by
entering into the employment contract with the cook in tlu: discharge of its
proprietaryJl(nctions, it impliedly divested itself of its sovereign immunity from suit.
G.R.No.113191,Se!)l 18, 1996,262SCRA39,43-44.
Lasoov. United Nafals Rewll'i"g Fund for Natural Resootes Expiaation, G.R. Na;. 109095-109107, Feb. 23, 1995.
l Seeaso Wml Heai'h Cllgaizatioov.~ - G.R. t..'o. L-35131, NCN. 29, 1972. 48 SCRA 242
• GR. No. 108813,Dec. 15, 1994.
5 GR. No. 79470,Feb. 26, 19ro, 182 SCRA644, 660.
864 BAR IUVI EWER ON lABOR lAW
3. ESTO PP EL DOES NOT CONFER JURISDICTION OVER AN
IMMUNE ENTITY.
An entity immune from suit cannot be estopped from claiming such
diplomatic immunity since estoppcl does not oper:ite to confer jurisdiction to a
tribunal that has none over a cause of action. 1 ·•
11-E.
DOCTRINE OF FORUM NON CONVENIENS
1. REQUISITES.
This doctrine is an international law principle which has been applied to
labor cases. The following are the requisites for its applicability:
(1) That the Philippine court is one to which the parties may conveniently
resort; .
(2) That the Philippine court is in a position to make an intelligent
decision as to the law and the facts; and
(3) 'That the Philippine court has or is likely to have power to enforce its
decision.2
2. APPLICATION TO LABOR CASES.
a. Case where doctrine was rejected.
Petitioners' invocation of this principle was rejected in Pacific Conmltan/J v.
Schonftld.J Petitioners' insistence was based on the fact that respondent is a
Canadian citizen and was a repatriate. In so rejecting petitioners' contention, the
Supreme Court cited the following reasons that do not warrant the application of
the said principle: (1) the Labor Code does not include forum non convenit11J as a
ground for the dismi~sal of the complaint;' and (2) the propriety of dismissing a
case based on this principle requires a factual detennination; hence, it is properly
considered as a defense.
b. Case where doctrine ivas applied.
This doctrine was applied in the case of The Manila Hotel Corp. v. NLRC.S
where private respondent Marcelo Santos was an overseas worker employed as a
printer in a printing press in the Sultanate of Oman when he was directly hired by
the Palace Hotel, Beijing, People's Republic of China to work in its print shop. This
hotel was being managed by the Manila Hotel International Ltd., a foreign entity
Ellrofllv.NLRC,G.RNo.110187,Sept.4, 1996,261 SCAA399.
Aa:adnJ t> Banko!Amen:a,NT&SA. Bail of America nlmlational, Lil. v. CA, G.R. ~ -120135, !,lath 31, 2003.
1 Pmeoosutns nlerrailXlal Ase.n:. v. Sdme!d. G.R No. 166920, Feb.19, 'lf1J7.
See PHIi.SEC irMlslment Capoo!tial v. CA. GR No. 103493, n,e 19; 1997, 274 SCRA 102.
TheMria HctelC,ap. and tlEria Hole! ntmafx)nal liriledv. 1-lRC, G.R No. 1'1f1J77, Oct 13, 2(XX).
C HAl'TER EIGHT 865
JURISDICTION ANO RHIEFS
registered under the laws of Hong Kong. Later, he was terminated due to
retrenchment occasioned by business reverses brought about by the political
upheaval in China (referring to the Tiananrnen Square incident) which severely
affected the hotel's operations.
In holding that the NI.RC was a seriously inconvenient forum, the
Supreme Court noted that the main aspects of the case transpired in two foreign
jurisdictions and the case involves purely foreign elements. The only link that the
Philippines has with the case is that the private respondent employee (Marcelo
Santos) is a Filipino citizen. The Palace Hotel and MHICL are foreign
corporations. Consequently, not all cases involving. Filipino citizens can be tried
here. Respondent employee was hired directly by the Beijing Palace Hotel, a
foreign employer, through correspondence sent to him while he was working at the
.Sultanate of Oman. He was hired without the intervention of the POEA or any
authorized recruitment agency of the government Hence, the NLRC is an
inconvenient forum given that all the incidents of the case . from the rime of
recruitment, to employment to dismissal • occurred outside the Philippines. The
inconvenience is compounded by the fact that the proper defendants, the Palace
Hotel and MHICL, are not nationals of the Philippines. Neither are they "doing
business in the Philippines." Likewise, the main witnesses, Mr. Shmidt (General
Manager of the Palace Hotel) and Mr. Henk (Palace Hotel's Manager) are non-
residents of the Philippines.
Neither can an intelligent decision be made as to the law goveming the
employment contract as such was perfected in foreign soil. This calls to fore the
application of the principle of lex /q(i ro11/ratlus (the law of the place where the
contract was made). It must be noted that the employment contract was not
perfected in the Philippines. Private respondent employee signified his acceptance
thereof hr writing a letter while he was in the Sultanate of Oman. This letter was
sent to the Palace Hotel in the People's Republic of China. Neither can the NLRC
determine the facts surrounding the alleged illegal dismissal as all acts complained
of took place in Beijing, People's Republic of China. The NLRC was TUJI in a
position to determine whether the Tiananmen Square incident truly adversely
affected the operations of the Palace Hotel as to justify respondent employee's
retrenchment.
Even assuming that a proper decision could be reached by the NLRC,
such would not have any binding effect against the employer, the Palace Hote~
which is a corporation incorporated under the laws of China and was not even
served with summons. Jurisdiction over its person was not acquired. This is not to
say that Philippine courts and agencies have no power to solve controversies
involving foreign employers. Neither could it be said that the Supreme Court does
not have power over an employment contract executed in a foreign country. If the
respondent employee were an "overseas contract worker", a Philippine forum,
866 SAR RfVIEWER ON LABOR I.AW
specifically the POEA, not_the NL.RC_, would protect~- He is not an "overseas
contract worker", a fact which he admlls with conVlcttoo.
11-F.
QUASI-DELICT OR TORT CASES
1. LABOR ARBITERS LACK JURISDICTION.
Damages arising from quasi-delict or tort are often confused with
damages that may be claimed under labor laws and labor agreemen'.s.
Consequently, quasi-delict or tort damages are asserted, though erroneously, m
labor cases filed with the Labor Arbiters. As earlier emphas12ed, however, Labor
Arbiters and the NLRC have no power or authority to grant reliefs in c~s that
do not arise from employer-employee relationship such as those emanaung from
uasi-delict or tort cases per Article 2176 of the Civil Code that have no reasonable
~ausal connection to any of the claims provided in the Labor Code, other labor
statutes, or collective bargaining agreements.
. 2. THE TOLOSA CASE.
Tue best example to cite on this point is the case of Eve&n To~,a_v.
NLRC2 Because of the death of her husband, Captain Virgilio ~o_losa, ~ complamt
for damages was lodged with the Labor Arbiter by ~e _s~~g wife but the
Supreme Court ruled that the Labor Arbiter has no iunsdict10n ~ver the case
because it was established that the same was in the nature of an a_ctt~n based on
quasi-delict or tort, it being evident that the issue presented there10 Involved ~e
alleged gross negligence of Captain Tolosa's shipmates, Pedro G~rate ~d Mano
Asis, with whom Captain Tolosa had no employer-em~loyee relattonsbip. Hence,
this case does not involve the adjudication of a labor dispute, but the recovery of
damages based on quasi-delict Notably, the jurisdiction of labor tribunals is
limited to disputes arising from employer-employee relanons.
11-G.
CRIMINAL AND CIVIL ACTIONS ARISING FROM VIOLATIONS
OF THE PENAL PROVISIONS OF THE LABOR CODE
1. REGULAR COURTS HAVE JURISDICTION.
· The Labor Code has expressly conferred jurisdiction over criminal and
civil cases arising from violations of tl1e Labor Code with tl1e regular courts. The
relevant provisions are as follows:
I kl.
1 GR No. 149578, Apri 10, 2003.
CHAl'TER EIGHT
JURISDICTION AND RELI EFS
1. Article 250 (241) - which provides that criminal and civil liabilities
arising from violations of rights and conditions of union membership
provided for thereunder shall continue to be under the jurisdiction of
ordinary courts.
2. Article 258 [247) - while the jurisdictio::i to hear and decide the
administrative and civil aspects of unfair labor practices is lodged with
the Labor Arbiters, the jurisdiction over the criminal aspect thereof is
vested in the regular courts.
3. Article 287 [272) - Although this article 1 does not mention expressly
that the jurisdiction over the criminal violation of its provision is
vested in the regular court, it, however, mentions the word "co11rt' in
paragraph [a) thereof, obviously referring tu the regular court. Further,
in the Rides lo Implement the Labor Code, as arnended,2 it is provided that
the regular courts shall have jurisdiction over any criminal action
under Article 287 [272) of the Labor Code, as amended, but subject to
the required clearance from the DOLE on cases arising out of or
related to a labor dispute pursuant to the Ministry of Justice3 Cirrular
No. 15, Smesof 1982, and Cirrular No. 9, Seri~, of 1986.4
4. Article 303 (288) - It is provided therein that any provision of law to
the contrary notwithstanding, any criminal offense punished in the
Labor Code shall be under the concurrent jurisdiction of the
Municipal or City Courts and the Courts of First Instance (now
RTCf5
11-H.
CONSTITUTIONALITY
OF LABOR CONTRACT STIPULATIONS
1. THE HALAGUENA DOCTRINE.
In Halaguelia v. Philippine Airlinu, lnc.,6 it was pronounced that it is not the
Labor Arbiter but the regular coun which has jurisdiction LO rule on the
constitutionality of labor contracts such as a CBA Petitioners were female flight
attendants of respondent Philippine Airlines (PAL) and are members of the Flight
Attendants and Stewards Association of the Philippin:es (FASAP), the sole and
Enffled "Penaties.'
k, amended, by Depment Order No. 40-03, Seres rJ 2003, lrid l.rtief a-nerded by Oeparm:nt Order No. 40-G-03,
Seres d2010 (IJath 29, 2010),
J tt,.y Depcrtnent d .Jusoce.
' Sectxxl 19 lfoone!lt Sectxxl 15], ~ XXII, Book V, IM!s lo krplema,t lhe Lm ::OOe,as irllended by Oepment Order
No. 40-G-03, Seres d 2010, jM:rdl 19, 2010], l™)lJSlf amended by Oepcrtnen(Order~-40-03,Seres d 2003, jFeb.
17, 2003).
s Now Regixlal Trial Cruts.
6
GR No.172013, O::t 2, 2009.
868 SAR REVIEWER ON IABOR !AW
exclusive bargaining representative of the flight attendants, flight stewards and
pursers of respondent. 111e July 11, 2001 CBA between PAL and FASAP provides
that the compulsory retirement for female flight attendants is fifty-five (55) and
si.xty (60) for their male counterpart.
Claiming that said CBA provision is discrimim1tory against them,
petitioners filed against respondent a Special Civil Action for Declaratory Relief
with Prayer for the Issuance of Temporary Restraining Order and Writ of
Preliminary Injunction with the Regional Trial Court (RTC) of Makati City.
ln ruling that the RTC has jurisdiction, th~ Supreme Court cited the
following reasons:
(1) 111e case is :in ordinary civil action, hence, beyond the jurisdiction of
labor tribunals.
(2) The said issue cannot be resolved solely by applying the Labor Code.
Ra1htr, 1t requires the application of the Constitution, labor statutes,
law on contracts and the Convention on the Elimination of All
Forms of Discrimination Against Women (CEDAW). The power to
apply and interpret the constitution and CEDAW is within the
jurisdiction of trial courts, a court of general jurisdiction.
(3) Not every conuoversy or money claim by an employee against the
employer or via-versa is within the exclusive jurisdiction of the Labor
Ari.Jun. ,\ccions between employees and employer where the
employer-employee relationship is merely incidental and the cause of
action proceeds from a different source of obligation are within the
exclusive jurisdiction of the regular courts. Here, the employer-
employee relationship between the parties is merely incidental and
the cause of action ultimately arose from different sources of
obhgation, i.e., the Constitution and CEDAW.
II.
REQUIREMENTS TO PERFECT APPEAL TO NLRC
A.
APPEAL IN GENERAL
1. APPEAL, MEANING AND NATURE.
'Ibe term "appeal" refers to the elevation by an aggrieved party to an
agency vested with appellate authority of any decision, resolution or order
disposing the principal issues of a case.rendered by an agency vested with original
jurisdiction, undrn,1ken uy filing a memorandum of appeal.1
' Section 1 lbl, Rule I. Book V, Rules to Implement the Labor Code, as amended by Department Order No. 40-03,
Serie; of 2003, [Feo t7. 20031
CHAl'TER EIGHT 869
JURISDICTION AND RELIEFS
2. GROUNDS FOR APPEAL TO THE COMMISSION (NLRC).
The appeal to the NLRC may be entertained only on any of the follo~g
grounds:
a. If there is a prima fade evidence of abuse of discretion on the part of
the Labor Arbiter; .,
b. If the decision, order or award was secured through fraud or cqercion
including graft and corruption; '
c. If made purely on questions of law; and/or
d. If serious errors in the findings of fact are raised which, if not
corrected, would cause grave or irreparable damage or injury to the
appellant. 1
• NLRC has certiorari power.
TI1e first ground above regarding prima ft1tie evidence of abuse of
discretion on the part of the Labor Arbiter is actually an exercise of certiorari
power by the NLRC. The case of Triad SeC11ritJ & Allied Servicer, l11r. v. Ortega,2
expressly recognized this certiorari power of the NLRC.3 Clearly, according to
Aliza, Jr. v. MOL Philippines, lnr.,4 the NLRC is possessed of the power to rectify
any abuse of discretion committed by the Labor Arbiter.
3. SOME PRINCIPLES ON APPEAL.
• Appeals under Article 229 (223) apply only to appeals from the Labor
Arbiter's decisions, awards or orders to the Commission (NLRq.
• There is no appeal from the decisions, orders or awards of the NLRC. Clearly,
therefore, Article 229 (223) of the Labor Code is not the proper basis for
elevating the case to the Court of Appeals or to the Supreme Court.5 The
proper remedy from the decisions, awards or orders of the NLRC to the
Court of Appeals is a Rule 65 petition for certiorari and from the Court of
Appeals to the Supreme Court, a Rule 45 petition for review on m1wrari.
• Appeal is not a constitutional right but a mere statutozy privilege. Hence,
parties who seek to avail of it must comply with the st.atutes or rules allowing
it.6
• A motion for reconsideration is unavailing as a remedy against a decision of
the Labor Arbiter. The Labor Arbiter should treat the said motion as an
appeal to the NLR(.7
1 Arfldes 129 and 229 12231, l.alxJ Code; Sectioo 2, Rufe VI, 2011 M.RC ~ d Procerue.
2 GRNo.160871,Feb.6,200i.
3 Me!ro DnJ(J Disbiluticxl. Inc. v. ~ DnJ(J COlpaalioo Employees Associalial-fFW, GR No. 142666,Sept 26, 2005.
• GRNo.175481,NoY.21,2012.
5 Tanas aauoo Meroorial Coi!ecJe, re.v. CA. GR No. 152568.Feb. 16, 2004.
6 Philux, Inc. v. NLRC, G.R No. 151854, Sepl 3, 2008. .
7 Millennium Erectors Coqioration v. Magahanes, GR No. 184362, Ncwember 15, 2010.

SAR REVIEWER ON V.BOR V.W
• A "Petition for Relier• should be treated as appeal 1
• Affumative relief is not available to a party who failed to appeal. A party
who does not appeal from a decision of a court cannot obtain affirmative
relief other than the ones granted in the appealed decision.2
.•
B.
PERFECTION OF APPEAL
1. EFFECT OF PERFECTION OF APPEAL ON EXECUTION:
To reiterate, the perfection of an appeal shall stay the execution of the
decision of the Labor Arbiter except execution for reinstatement pending appeal.3
2. PERFECTION OF APPEAL, MANDATORY AND JURISDICTIONAL.
The perfection of appeal within the period and in the manner prescribed
by law is jurisdictional and non-compliance with the legal requirements is fatal and
has the effect of rendering the judgment final and executory, hence, unappealable.4
3. REQUISITES.
The requisites for perfection of appeal to the NLRC are as follows:
(1) Observance of the reglementary period;
(2) Payment of appeal and legal research fee;
(3) Filing of a Memorandum of Appeal;
(4) Proof of service to the other party; and
(5) Posting of cash, property or surety bond, in case of mo_netary
awards.
The foregoing are discussed below in miatim.
C.
REGLEMENT ARY PERIOD
1. THREE (3) REGLEMENTARY PERIODS.
The reglementary period depends on where the appeal to the NLRC
emanates, viZ::
1) Ten (10) calendar days - in the case of appeals from decisions of the
Labor Arbiters under Article 229 [223];
2) Five (5) calendar days - in the case of appeals in contempt cases
decided by Labor Arbiters;1 and
1 New Pacific Tmber &Supp~ Co., Inc.v. NLRC, G.R No. 124224, March 17, 2000.
1 Caieoov. ~ Sea.mt Md Oetec&le~. ~ G.R. No. 179326,.kt, 31, 2013.
3 Sedm3,~Xl,2011 Nl.RC~off'rocedlle.
' Opialov. R.?.ila, G.R No. 196573, Oct 16, 2013.
CHAPTER EIGHT
JURISDICTION AND RELI EFS
3) Five (5) calendar days - in the case of appeals from decisions of the
DOLE Regional Director under Article 129 (small money claims of
PS,000.00 or less).2
The periods provided above are all calendar days and not working days.J
Consequently, Satw:days, Sundays and legal holidays are included in reckoning and
computing the reglementary period.4
2. EXCEPTIONS TO THE REGLEMENTARY PERIOD RULE.
Certain procedural lapses may be disregarded where there is an arrtptabk
mJJon to excuse tardiness in the taking of the appeal.5 It is always within the power
of the court to suspend its own rules or to except a particular case from its
operation, whenever the purposes of justice requite it6 Thus, procedural rules may
be waived, dispensed with or relaxed in the interest of sub_stantial justice. The Court
may ·deign to veer away from the general rule if, on its face, the appeal appears to
be absolutely meritorious.7
The following are the specific instances where the rules on the reckoning
of the reglementary period have not been strictly observed:
1) tQm day (or 5th day) falling on a Saturclay,8 Sunday or holiday,9 in
which case, the appeal may be filed the next working day.
2) Reliance on erroneous notice of decision10 as when the notice
expressly states "working days" and not "calendar days."
3) Filing of petition for extraocdinary remedies from orders or
resolutions of Labor Arbiters or on thud party claims - ten (10)
cak11dor days. 11
4) When NLRC exercises its power to "comet, amend, or waive a'!J error,
defect or irregularity whether i11 mbstance or Jami' in the exercise of its
1 Section 1, ~ IX. 2011 NLRC~ of Procedure; See also A/tide 225(d) (21e(d)j, as amended b-/ RA No. 6715, MTch
21, 1989; SecU>n 1, IU! XXJH,8ool v. Rues t o ~ the LmCooe, as .mnded b-f Oep.ment Order No. 40-03,
Series ct 2003. [Foo. 11. 20031.
Section I, Rule Vl, W.;SeealsollristlM,ffiSq.Jbb jPhils.1 h:. v.Vbia, G.RNo.148156.~ 27,2004.
RJL ~ Ftshrg Corporafm v. tlRC, GR. Nos.L-63550-51,J.n 31, 1984.
' .W, Phq:lpiles, h:. v. NLRC, G.R No. 111934, Apri 29, 1998.
s PAl.h:. v. NlRC,G.R No.1~.0tt.28, 1996;0m,jQm Tr.rj'rgv.M.OC,G.RNo.81471,Apri26, 1989.
Cllnme Seruities Co(Jx:talioo Y. NI.RC, G.R. No. 157907, Nov.25, 2004.
r ger Cmmdioo aoo DeYeqmrt Capaaoon Y. Abay, GR. No. 164141, Foo.26, 2010.
& .W, Phippnes, h:. v. NlRC. GR. No. 111934, Apri 29, 1998, 289SCRA 755; 352 Ri. 593.
' ~GeottlenTia.h:.v.NLRC,G.RNo.106370,Sept.8, 1994.
•° Frestooe rre illd ruibef Corr4)any ah! Phiippnesv.misa. GR No. L-70479,Foo. 21, 1987.
11 ~hlrurent2011 NLRC ~lesolProcedt.re, ttledecisilo little l.axJ Artiwoo a ltd part)'dalmisnotappealable
bu\ ll'8f be eleva:ed ID hl ~ il'd resc:wed ii aax:rdance Mil Rue XII [Emcrifray Rsredies) a tie 2011
NI.RC ~ ct Proc8m. (Section 11 Id]. RlJe XI t.etoo). Consequsltf, sudl e!evafm ID hl Coonissial ll'8f rttf be
ii!it.edb-(~ctfiff;jaapeliti:xllocemonfn.ry~notlals'lmm(10)c.imdard.r,-s!rtrn~ctfleatkroc
rescMoo of the labor M>!er, lullishi,g aC1Yiff lhelecl 10 the adveise p;rty.( Sedi:xl 3, Rule XII, lbil.).
 CHAPTER EIGHT
872 i!AR RfVI EWER ON lA8OR lAW 873
JURISDICTION AND RELIEFS

appetlate jurisdiction, as provided under Article 218(c) of the Labor D.

Code,1 in which case, the late filing of the appeal is excused.
5) When technical rules are disregarded under Article 227 [221].2
6) When there are soine compelling reasons that justify the allowance of
the appeal despite its late filing such as when ,it is granted in the
interest of substantial justice.3
3. SOME PRINCIPLES ON REGLEMENTARY PERIOD.
(1) ·t11e r"glementary period is mandatocy and not a "mere technicality." 4
(2) The failure to appeal within the reglecientary period renders the
judgment appealed from final and executory by operation _o f law.5 Co_nsequently,
the prevailing party is entitled, as a matter of right, to a wnt of execuuon and tl1e
issuance thereof becomes a ministerial duty which may be compelled through the
remedy of mandamus.6
(3) The date of receipt of decisions, resolutions or or~ers by the parties
is of no moment. For purposes of appeal, the reglementary penod shall be counted
from receipt of such decisions, resolutions, or orders by the counsel or
representative of record.7
(4) Miscomputation of the reglementary period will not forestall the
finality of the judgment. It is in the interest of_ everyone that th~ date when
judgments become final and executory should retna111 fixed and_ascertatnable.8
(5) The date of mailing by registered mail of the appeal memorandum is
the date of its filing.9
(6) Motion for extension of time to perfect the appeal is not allowed.10
This kind of motion is a prohibited pleading.u
(7) Motion for extension of time to file the memorandum of appeal is not
allowed.u
(8) Motion for extension of time to file appeal bond is not allowed.1
1 NeNPaooc Tmb!r &Supp,'f Co.. i'ic. v. NLRC, G. R No.124224,M:rdl 17, 2000, 328 SCRA404.
Mx:le 221 12211- r edvlica rues Not Bir«g a1d Pro- Resat \l Ami:able Setrsnert; ecy Far C,cxpootial v. tt.RC, GR
No.95711,~21. 1995,
3 Slrina v. NlRC,GR No. 121147, ..u,e 26, 1998; Vaklemrna v. NIRC, GR No. 98239, Apti 25, 1~.
' Cal)a)' v.NtRC, GR No.166411, Aug. 3, 2010; M:rejtrend Lending Coqxxatioo v. CA, GR No.165580,Feb, 20, 2006.
Ovtri:'e Serulies Coqxmx, V, NI.RC, GR No. 157907, NoY. 25, 2004.
Mwlg ~ Qxporatmleop.r1l Se<uitf &klveslgatXXI ~ency v. M,'!na Macara8_l,G.R No. 198357,Dec. 10, 2012.
, Section 4M. ~ 111, 2011 NLRC ~ a Procerue: Aexo "'9- Cap. v. NI.RC, G.R No. L-55971, Feb. 28. 1985, 135
SCRA 145; Lynx radus#ies Coora:!a, Ire. V, T~ G.R No. 164333,Aug, 24, 2007.
8 v~ i.m Lro1 V. NI.RC, G, R No, L-39686, Jooe 25, 1980, 98 SCRA 314.
9 A=tedArgb-Arneocan TobaccoCa]m!iJnv. NLRC,G.R No.125fi02, Apti 29, 1999, 300 SGRA380.
io Secfu, 1, ~ VI, 2011 NI.RC Rullsof l'roced!Ke.
11 Bristol My-els Squibb(Phis.t Inc. v. Vikxia, G.R No.148156, Sept 27,2004,
,, 9.ra:i,., v.SelllnelWa:dmll &Ptotediv'ehjency, Inc, GR No. 144376, Sept 13, 2006.
APPEAL FEE AND LEGAL RESEARCH FEE
1. MANDATORY AND JURISDICTIONAL.
The payment by the appellant of the prevailing appeal fee and legal
research fee is both mandatory and jurisdictional.2 An appeal is perfected only
when there is proof of payment of the appeal fee.3 It is by no means a mere
technicality.~ If not paid, the running of the reglementary period for perfecting an
appeal will not be tolled.5 ·
2. EXCEPTIONS.
The following are the recognized exceptions to the strict observance of
the rule on appeal fee:
(1) :\•lost persuasive and weighty reasons;
(2) To relieve a litigant from an injustice not commensurate with his
failure to comply with the prescribed procedure;
(3) Good faith of the defaulting party by immediately paying within a
reasonable time from the time of the default;
(4) 1ne existence of special or compelling circumstances;
(5) The merits of the case;
(6) A cau~e not entirely attributable to th.e fault or negligence of the p'arty
favored by the suspension of the rules;
(7) A lack of any showing that the review sought is merely frivolous and
dilatory;
(8) The other party will not be unjustly prejudiced thereby;
(9) Fraud, accident, mistake or excusable negligence without the
appellant's fault;
(10) Peculiar, legal and equitable circumstances attendant to each case;
(11) In the name of substantial justice and fair play;
(12) Importance of the issues involved; and
(13) Exercise of sound discretion by the judge, guided by all the
attendant circumstances.
Thus, there should be an effort, on the pan of the party invoking
liberality, to advance a reasonable or meritorious explanation for his failure to
comply with the rules.6
' Lamzoo v NLRC,G.R. No.1t3600,lk'f28, t999,307SCRA665;367Phi.169, m.
1 Sant Louis~-h:,V, Cotmubias,G.R. No, 187104, Aug, 3, 2010,
1 wmeis a Mtiqve Eleen: Cooperawe, 1nc. v. NlRC, G.R No. 120062, m 8, 2000.
' Acda V, Mristerof Latxx. G.R. No. L-51607, Dec, 15, 1982, 119 SCRA326,
l.una v.M.RC, G.R. No. 116404,M,mi20. 1997,270SCRA227,23f.
' &int LOU6 lJoNerSl!y, loc. v. Cooambias, G.R No. 187104,Aug. 3, 2010.
 BAR RfVIEWIRON IAIOR lAW
CHAPTER EIGHT 875
874 JURISDICTION AND RELIEFS

E. • La<:k of verification in a memorandum of appeal is not a fatal defect It

MEMORANDUM OF APPEAL easily be corrected by rc;quiring an oath.' may

1. REQUISITES.
The requisites for a valid Memorandum of Appeal ~~ as follows:
1) The Memorandum of Appeal should be verified by the appellant
himself in accordance with the Iwlu ofCourt, as amended;1
2) It should be presented in three (3) legibly typewritten or printed
copies;
3) It shall state the grounds telied upon and the arguments in support
thereof, including the relief prayed for;
4) It shall contain a statement of the date the appellant received the
appealed decision, award or order; and
5) It shall be accompanied by:
(t) proof of payment of the required appeal fee and legal research
fee;
(11) posting of a cash or surety bond (1.0 case of monetary awards);
and . filed with the Labor Arbiter.7
(iii) proof of service upon the other parry.2
2. REQUIREMENTS NOT JURISDICTIONAL.
The aforesaid requirements that should be complied ,,~th in a
Memorandum of Appeal are merely a rundown of the contents of rl1e required
appeal memorandum to be submitted by the appellant. 'Ibey are not jurisdictional
4 While it is required that in all cases, the appellant shall furnish a copy of
requiremeots.3 But it must be emphasized that per Navarro 11. NLRC, the
perfection of an appeal includes the filing, within the prescnbcd peaod, of the
Memorandum of Appeal containing, among others, the assignmem of crror/s,
arguments in support thereof, the relief sought and, in appropriate cases, posting of
the appeal bond.
3. SOME PRINCIPLES ON MEMORANDUM OF APPEAL.
• Mete notice of appeal without complying with the other requisites afore-stllted
shall not stop the running of the period fot perfecting an appeaP
• Supplemental appeal need not ·be verified.2 Neither the laws nor the rul
~equire the verificati~n _of_th~ supplemental appeal.3 Furthennore, verificati:;
ts a formal, not a JUOSdicttonal, requirement. It is mainly intended as an
assurance that ~e matters alleged in the pleading are true and correct and not
of mere speculauon.'
• An appeal will be dismissed if signed only by an unauthorized rcprcscntative.s
• Only complainants who signed the memorandum of appeal are deemed to
have ~ppealed the Labor Arbiter's decision. The prevailing doctrine in labor
cases 1s that a Par:tJ' wh? has not appealed cannot obtain from the appellate
court any affirmanve relief other than those granted, if any, in the decision of
the lower tribunal.6
• Certificate of non-forum shopping is no longer provided in the 2011 NLRC
Rules of Procedure. It is only required in the initiatory complaint or petition
F.
PROOF OF SERVICE TO ADVERSE PARTY
1. FAILURE TO SERVE COPY TO ADVERSE PARTY, NOT FATAL.
the M~morandum o~ .Appeal to the other party (appellee),s non-compliance
~erewtth, ho,~ev~r, -'~ not be an obstacle to the perfection of the appeal; nor will
It amount to a iunsdicuonal defect on the NLRC's taking cognizance thereof.9
It has long been settled that mere failure to serve a copy of a
Memorandum of Appeal upon the opposing party does not bar the NLRC from
entertaining an_ appeal.1° It may even be dispensed with since in appeals in labor
~as_es,_ n?n•sCCVJce of. a. copy of appeal memorandum to the adverse party is not a
JUOSdicoonal defect which calls for the dismissal of the appeal. II

• Memorandum of appeal is not similar to motion for reconsideration.6

1 ~ Ereaxs Corpcmion v. lla;iiBleS G.R t-b.184362, NcN.15, 2010.
Looov. Pollerl!R', h:., G.RNo. 189404, Dec. 11, 2013.
Sedi:n 3, rue 1atie NI.RC~ aProcedKe, ruelatial oSedioo 4, ~ 7d Ille 1U!s d Cwt
I SeeSedioo 4°, Rule 7lhereol. a&19 Raf Pasosv. f'hil>pile ~Calstldal C,crporatiln, GR No. 192394,.Mf 3, 2013.
1 Sedm 4(aJ. Rule ~- 2011 tlRC rues o1 Procerue; 8istH.+,.eis Sq.jib lf'hils.J, ric. v. Vb'.a. G.R No. 148156, Sept See No.4, Adtri'listawe Order No. 11-09, Series a2012 jN(7lenter 16, 20121, issued by toe NtRC Olairroo.
27,2004. 1 Sag(Js Cap. V. Hoo. 0., GR No. 157488, Feb. 6, 'lJ1J7.
3 IJEIMJllorreslicEreprisesv.NlRC,GRNo.108731,Dec.10.1997. 1 See Sedioo 1, Rule m 18ed.
' G.Rfb.116464,Mrth 1,2000. Requi'edl.llderAltide 229 (2231,l.alxrCode; Sedm4 (aL (5) (i), 1U! VI, 2011 NLRC ~af'rocem.
s Sedioo 4 ~I,~ VI. 2011 NlRC Rules olf'rocedlre; ~ MyefS Sq\Jilb !Rlis,I. Inc. v. Violla. G.R No 148156. Sept ~V-~,GRt-b.103670,.U,10, 1998,292SCRA266;C.W.TaiMg.v.tlRC,G.RNo.79596, Foo.10, 1989.
10 &me Mrfir9 NJfret, h:. v. NI.RC,GR No. 146703, NcN. 18, 2004.
27,2004.
1 LansM Tra:lrq, h:. V. L~Mlo. G.R No. 73245,Sept 30, 1986. 11 l.&ri.rn Ereaxs Corpcrcilia1 v. M1;ia'laies, GR No.184362, NcN. 15, 2010.

l

BAR REvl EWER ON lABOR lAW
G.
POSTING OF BOND
1. WHEN BOND REQUIRED.
Only in case the decision of the Labor Arbiter or' the DOLE Regional
Director (W1der Article 129 of the Labor Code) involves a monetary award, that
an appeal by the employer may be perfected upon the posting of a bond, which
shall either be in the form of:
(1) cash deposit;
(2) surety bond; or
(3) property bond. 1
The amount of such bond should be equivalent to the monetary award,
exclusive of damages and attorney's fees.2 In other words, only monetary awards
(such as unpaid wages, backwages, separation pay, 13th month· ·pay, etc.) are
required to be covered by the bond. Moral and c.xemplary damages and attorney's
fees are excluded.
2. MANDATORY AND JURISDICTIONAL.
'The provision of Article 229 (223] requiring the posting of a bond is self-
executory and does not need any rule to implement it. The reason for this rule is
1J1at the filing of a bond for the perfection of an appeal is both mandatory and
1unsdicnonal.l
3. SOME PRINCIPLES ON POSTING OF BOND.
(1) 'nic cash or surety bond required for the perfection of appeal should
be posted within the reglementar:y period.4 If a party failed to perfect
his appeal by the non-payment of the appeal bond within the 10-
calcndar day period p'rovided by law, the decision of the Labor Arbiter
becomes final and executory upon the expiration of the said period.5
(2) In case the employer failed to post a bond to perfect its appeal, the
remedy of the employee is to file a motion to dismiss the appeal and
not a petition for mandamus for the issuance of a writ of execution.6
(3) Surety bond must be issued by a reputable bonding company duly
accredited by the Commission (NLRC) or the Supreme Court.1
' PJ!lruJh A/tide 229 12231 expressfy requres lhe pos&-q 'rrl/ a a 'ta'ih cc Sffl/ hoof nceder t> perfect lhe appea, n
UERM-1~1 tlefical Center v. NLRC, G.R No. 110419, Mlld\3, 1997, 269 SCRA 70, lhe posfjr,g areal proped'f
txrd Ill ieu of casilCI' mt)' oo'd was held sulfrient~ loct,e i11£!est of t i e ~shotJlj they fliat, prevai
Seaial 6. ~le VI. 2011 NLRC Rules a Procedure; Roos kl(jllStiaf Cmstrudion, re V. NI.RC, GR No. 172409, Feb. 4,
2008, Bcx)il Esiate v. Babl, G.R. No. 152550, Jt.ne 8, 2005; CJrl,j v. CA, G.R No. 152494, Sept.µ!, 2004.
1 ~ v. NI.RC.GR No. 91935.!Jath4, 1996;AquilovJ.tRC,GRNo.98108,Sept.3, 1993,226SCRA76.
' Ga.lliav NLRC.GR. No.109311. NOY.18, 1999; Lamzoov. NLRC, G.R No. 113600,M!y28, 1999.
I
1 ~ v Velarde, GR No. 140753, Ap(i30, 2003; Baja fstae V. Spooses Balad GR No, 152550, June 8, 2005.
; c:.a.zv Nora,GRNo.89324,0ct.11, 1990.
(IIAl'TER EIGHT
JURISDICTION ANO RELIEFi
(4) 'lbe. bond shall be v~lid and effe_ctive from the date of deposit or
posnng, until the case 1s finally <leaded, resolved or terminated, or the
award satisfieci.2
(5) Posting of a bank guarantee or bank certification is not sufficient
compliance with the bond requirement It is not equivalent to nor can
be considered compliance with the cash, surety or property bond.l
(6) Cooperatives are not exempted from posting bond.4
(1) Government is exempt from posting of bond; government-owned
a·n d/or controlled corporations, however, are not exempt therefrom.s
(8) Bond is not required for the NLRC to entertain a motion for
reconsideration.6 An appeal bond is required only for the perfection of
an appeal of a Labor Arbiter's decision involving a monetary award.7
(9) Bond is not required to file a Rule 65 petition for arliorari.8
4. NON-POSTING OF BOND, WHEN JUSTIFIED.
• No monetary award, no bond required. The rule is clear that when the
judgment of_ the Labor Arbiter does not involve any monetary award, no
appeal bond 1s necessary.9
• There is no duty to post a bond if the monetary award is not specified in
the decision. The Labor Arbiter's decision or order should state the amow11
awarded. If the amount of the monetary award is not contained or ,fixed in the
judgment, the appeal bond is not required to be posted.to
• In case of conflict between the body and the Fallo of the decision, the
latter should prevail.It
5. DELAY IN POSTING OF BOND, WHEN ALLOWED.
The rules on posting of bond have been liberally construed and relaxed
considering the substantial merits of the case and the existence of exceptional
circwnstances justifying the same, such as:12
(1) Fundamental consideration of substantial justice;
{2) Prevention of miscarriage of justice or of unjust enrichment; and
' Attide229 l223J, tmCode; Secoo!l 6, ~ VI. 2011 NLRC !Ulsof Proced11e.
2 Sedm 6, Rule VI, 2011 NI.RC ~ ol Pma!dire.
l fkgenericsl/aietirl;i and Reseatn Colp. v.NLRC. G.R t,,IJ.122725, Sep(. 8, 1999, 313 SCRA 748.
' BaBJtas ~ Coopera!i;e, h:. V. CA, GR No. 159268, Oct 27, 2J06.
s BalaM,,/~ Cocpoomiv. Pac:a1a, GR No. 171673, Ma-/ 30, 2011.
6 Cadafll v. Hoo. CA, GR 1-,\J, 168923, Nol. 28, 2008.
1 See rues ci PlooldtJe ci lhe It.RC, Series a 1999, !lie VI, Secfun 6, nrelatial b Rule VI~ Secfun 14 (Sedioo 15 i, the
2011 NIRC~aProced.rejtierea.
~ v. Equa'a l<ngllt'; Dee:we and $eaJttf N,je!X.)', h:., G.R No. J:'3189,Feb. 13, 2013.
Abav.NIRC,GR No.122627,JJ/28, 1999.
10 Orozcov. TheFl'll EMsmcillte HooorcbleCootol Appeas, GR No. 155207, April29,2005.
" Meodoza,.K. v. Sal Mguel Fcxxls, nc., GR No. 158684. Ml)' 16, 2005.
•z Serrtmtev. CA. Galerade Ma"daue, et al., GR No. 196426, Au;!. 15, 2011.
 BAR REvlEWER ON u\BOR l,\W
(3) Existence of special cucumstances in the case combined with its legal
merits as well as the amount and the issue involved.'
In Stmblanlt v. C4,2 the respondents' failure to post the required appeal
bond within the 10-calendar day reglementary period was efcused because the
High Court found it compelling to ~e o~ the issue of_ whether the petitioners,
who worked as masiador and Itn!tnaador m the cockp!t of respondents, were
employees of the latter. It thus declared that they were not employees but
independent conuactors since their relationship with respondents failed to pass
muster the four-fold test of employment.
In Your Bus Unt v. NLRC,3 the Labor Arbiter's decision failed to state the
exact total amount due which would be the basis of the computation of the .bond,
hence, the failure of the petitioner to post the bond wa~ excused because 1t was
· I d by the notice of the decision which did not menuon that a bond must be
ffi!S e . .d . thi
filed. The lawyer for petitioner relied on such nonce and cons1_ enng
circumstance as an excusable mistake, the Supreme Court allowed petmoner to file
. the bond and appeal from the decision of the Labor Arbiter.
G-1.
MOTION TO REDUCE APPEAL BOND
1.CONCEPT.
The general rule is that the appeal bond that should be posted should be
equivalent to the monetary award of the Labor Arbiter.4 Its reduction is neither
provided in the Labor Code nor in its implementing rules. In practice, however, the
NLRC has allowed the reduction of the bond upon sho,ving of meritorious
grounds.
The validity of this practice has been given judicial imprimatur. It was first
recognized in the case of Star Angd Handicraft v. NLRC,5 where it was observed that
neither the Labor Code nor its implementing rules specifically provide for a
situation where the appellant moves for a reduction of the appeal bond. Inasmuch
as in practice the NLRC allows the reduction of the appeal bond upon motion of
appellant and on meritorious grounds, it follows that a motion to that effect may be
filed within the rcglementary period for appeal. Such motion may be filed in lieu of
a bond which amount is being contested. In the meantime, the appeal is not
deemed perfected and the Labor Arbiter retains jurisdiction over the case until the
1 Phippule >Jc1nes. nc. V. t-.tRC,GR No. 120500, Oct. 28, 1996.
2 ~ a,d Pilir v. CA, Ga11era de Mandaue, GR. No. 196426, Alig. 15, 2011.
l GR No. 93381, Sept. 28, 19£il.190 SCRA 1li0.
' Rariez V. Hoo.CA, GR No. 182626,Dec. 4,2009.
5 GR No. 108914, Sept 20, 1994.
CHAPTER EIGHT
JURISDICTION AND RELIEFS
NLRC has acted on the motion and appellant has filed the bond as fixed b th
NLRC.1 Y e
1bis practice-evolved norm has been enshrined as an established rule in
NLRC Rtso/11/ion No. 01-02, Series of 2002, and carried over to Ste/ion 6, &tit VI of
both the 2005 and the current 2011 NLRC &ties ofPmtdurr.2
2. THE MCBURNIE DOCTRINE: GUIDELINES FOR FILING AND
ACCEPTANCE OF MOTIONS TO REDUCE BOND.
The 2013 m bane decision rendered in the case of Andrew Jamu Mcb11mie v.
E11tah·o Gan{°f)n,3 has enunciated the follo,ving guidelines that must be observed in
the matter of the filing and acceptance of motions to reduce appeal bond, as
provided in Seclion 6, &tk VI of the 2011 NLRC &iles of Prored111T.
(a) The filing of a motion to reduce appeal bond shall be entertained by
s the NLRC subject to the following conditions: (1) there is
meritorious ground; and (2) a bond in a reasonable amount is posted;
(b) For purposes of compliance with condition no. (2) above, a motion
shall be accompanied by the posting of a provisional cash or surety
bond equivalent to ten percent (10%) of the monetary award subject
of the appeal, exd11ri11t of damages and attorney's fees;
(c) Compliance with the foregoing conditions shall suffice to suspend
the running of the 10-day reglementary period to perfect an appeal
from the Labot Arbiter's decision to the NLRC;
(d) The NLRC retains its authority and duty to resolve the motion to
reduce bond and detennine the final amount of bond that shall be
· posted by the appellant, still in accordance with the standards of
merilorio111ground! and rtasonabk amo1111t, and
(e) Io the event that the NLRC denies the motion to reduce bond, or
requires a bond that exceeds the amount of the provisional bond, the
appellant shall be given a fresh period of ten (10) days from notice of
the NLRC order within which to perfect the appeal by posting the
required appeal bond.
This Meb~rnie ruling has completely overhauled the rules on motion to
reduce bond. Before its advent, the issue of what amount to post by way of parual
or provisional bond has continued to hound the party litigants and the courts.
Now, the fixing of "ten percent (10%) of the monetary award subject of the
appea~ exdusivt of damages and attorney's fees" as the "reasonable amounr" that
\
Iii 1
See also Cosioo, Jr. v. NlRC, G.R No. 118432, May 23, 1997, 272 SCRA 583; aiesiao1ira V. Lm Ki1g Guan. GR. No.
I
150147,Jan. 20, 2004, 420 SCRA 359.
1 tfxxllv.Fooipy'lrdlsta Cap.,GR No.159372, Ju!-f 27, 2007.
3 GRNos.178034, 178117, 186984im186985,0ct.17,2013.
 BAR ll£VIEWER ON LABOR !AW
880
should be posted has completely eradicated any and all controversies thereon. In
other words, no more motion for reduction of bond accompanied by said 10%
requirement would be dt!nied outright on the ground of insufficiency or inadequacy
of the partial or provisional bond.
.
What is left for the determination by the NLRC, using its sound judgment
. To implement the reinstatement aspect of a Labor Arbiter's decision
and discretion, are only the issues of (1) the reasonable final amount of the bond;
and (2) what constitute "meritorious grounds." This dete~ation is im?o~ant
since "in all cases, the reduction of the appeal bond shall be iusofied by mentonous
growids and accompanied by the posting of the re.quired appeal bond in a
reasonable amowit." 1
Ill.
REINSTATEMENT PENDING APPEAL
1. PIONEER TEXTURIZING DOCTRINE.
According to the f>ionur Texturizjng doctrine,2 an order of reinstatement
issued by the Labor Arbiter under .Article 229 (223]3 of the Labor Code is self-
executory or immediately executory even pending appeal by ~e employer.4 11us
means that while the perfection of an appeal shall stay the execuoon of the deC1S10n
of the Labor Arbiter the ex«ption is in respect to the execution of the reinstatement
order which should proceed even pending appeal by the employer.s As a
consequence of Pioneer Text11rizjng, the rulings in earlier cases6 that th~ reinstatement
aspect of the Labor Arbiter's decision needs the issuance of a wnt of execunon
before it can be enforced, are deemed abandoned.7
2.REINSTATEMENT PENDING APPEAL, APPLICABLE SOLELY TO
LABOR ARBITER'S ORDER.
By way of distinction, the rule on reinstatement pending appeal applies·
only to the order of reinstatement issued by the Labor Arbiter and to no other.
This means that if the reinstatement order is issued by the NLRC on appeal, or by
the Court of Appeals8 or by the Supreme Court,1 there is a need to secure a writ of
1M:1x1rie Y. Gcr1zoo, GR Nos. 178034, 178117, 186984 !rd 186985, Oct 17, 2013; See a.so &!'a lee f'hiWiles Y.
8mltlda Maca!lalg, GR Nos.180147-180150, 180319 and 180085,Jooe 4, 2014.
2 lbleerTen.rizrg Capam v. NI.RC, GR No.118651, 0d. 16, 1997, 280 SCRA800.
Mx:le 229 [223] l)"OYi:!es n pelt "In ~ e,,et, lhe deciskxl ci Ile libct Mia renstm,g a OISl1md a separated
l!IT"!)Ofee, ilScilr as Ile rei1stltemenl aspect is orcemed, shal i'rrref1a1el'/ be e,,oo/J'Jy, even pendi'YiJ appool. The
~ shal ei!ler be adrrilkld bade kl v.ak lnler Ile mie n !rd ani1ms p!t"lcli1g Jri:J kl tis d ' ~ a
~ or, at lhe qifn1 ci lhe empl(7jef, rreret,, r'ei1s1ated il lhe pa"Jttil The pos&-g ci a bond b'f tie ~ shal not
slat Ileexecuixl b reinstate11at pwdoo herei'l.' · By reasoo ol ~ 45 petifoo for IMNt 0(1 cec1xxlri.
• )dpaBJraphciMx:le229[223]cille libctCode, asarended b'f Sedm 12ofRA. No. 6715, [M3rth 21, 1989).
s See Sed01 3of~ XI, 2011 NlRC Rules ci Procedure. . •
6 Swlas llecasesciMlrlmN~ ResatCapaatioo (CnlyParl( Saa!oo M:rila)v. NL.RC, G.R No. 110027, Nov.
16, 1994, as reaerated ii An:hiles MYltlfacbnrg Cap(xalmv.NlRC, GR No. 107225,m 2, 1995.
1 ~tx:naCoooorTernie SeM:es, klc. flCTSl]v. N.RC, G.R No.115452, Dec. 21, 1998.
a Bymre ci Rule 65 cefl'aari petii:n.
CHAl'TER EIGHT
JURISDICTION AND RELIEF; 881
execution from ~e ~abo~ Arbiter of origin to enforce the reinstatement of the
employee whose dism1ssal 1s declared illegal.2 .
3. TWO (2) OPTIONS OF EMPLOYER.
there are only two (2) options available to the emplor-r, to wit '
1. Actual reinstatement_ - The employee should be reinstated to his
position which he occupies prior to his illegal dismissal under the same
~etms and con~tions prevailing prior to :us dismissal or separation or,
tf no longer available, to a substantially-equivalent position; or
2. Payroll reinstatement. - The employee should be reinstated in the
payroll of the company without requiring him to report back to his
work.3
4_ DUTY OF EMPLOYER TO NOTIFY REINSTATED EMPLOYEE.
It is required4 that in case the decision of the Labor Arbiter includes an
order of reinstatement, it should contain:
(a) :~tatement that the reinstatement aspect is immediately executory;
(b) A directive for the employer to submit :1 report of compliance with.in
ten {10) calendar days from receipt of the said decision.s
Disobedience by the employer of this directive clearly denotes a refusal to
reinstate. The employee need not file a motion for the issuance of the writ of
ex~cution since the Labo~ Arbiter is mandated thereafter to mo/11 proprio issue the
wnt. Wi~ _the ne~ rules_~ place,_there is hardly any difficulty in determining the
employers mtrans1gence tn unmediately complying with the order.'
5. LIABILITY FOR DISOBEYING REINSTATEMENT ORDER.
Under any of the two (2) circumstances described above the Labor
Arbiter shall ~ediatel_y issue ~ writ of execution, e7en pending app~al, directing
the employer to tmmediately reinstate the dismissed employee either physically or
M.Cmle!Cdlegev.Resuena,GRNo.17ll76,0d.10,2007.
Al1x:le ~ [223], l..m Code; laTtxmJa (ly WaaDmtv.!ml, GR No.104389, Mr, 27, 191)4, 232 SCRA 587.
3
See Sectm 19 (Coolenls a Decisoos] ct Rue v!i'JOO!ed'~s Before Labor MxlersJ a tie 2011 NL.RC ~ ct
Pnx:edtre.
1
~ ~raph, Sectm 19, rue vflereci, as rerurbEred by M.RC En Bcr,c Raswtioo No. 11-12. SEliesci 2012.
Ga'Cia illd D..macJo v. Pliippi'le Ames, h:., GR No. 164856, Jan. 20, 2009 [En Baici
882 BAR IUVIEWER ON V.BOR v.W
in the payroll.1 As a consequence of such disobedience, the employer has the
following liabilities,2 to wit.
t. He shall be liable to pay the armied 1alan"e1 of the reinsuted employee
as a consequence of such non-reinstatement in the ~111ount specified in
the decision; and
2. He may be cited for "ro11tempt, in accordance with the 2011 NLRC Rldu
of Proredure,3 for his refusal to comply with the writ of execution
ordering the reinstatement.' This remedy, however, is available only
after the Sheriff shall have served the writ of execution upon the
employer or any other person required by law to obey the same.5
On No. 1 above, the employer should pay the accrued salaries in case of
disobedience because the employee should not be left without any remedy in case
the employer unreasonably delays or refuses reinstatement. The unjustified refusal
of the employer to reinstate an illegally dismissed employee entitles the employee to
the payment of his salaries.6 The entitlement of the dismissed employee to his
~alaries occasioned by the unjustified refusal of the employer to reinstate him
becomes effective from the time the employer failed to reinstate him despite the
issuance of a writ of execution.7
On No. 2 above, the remedy available to the employee whose
reinstatement ordered by the Labor Arbiter was not implemented by the employer
is to file for contempt against the latter and certainly not the institution of a
separate action in the regular court or with the Labor Arbiter. Such recourse will
violate the well-settled principle of m judi.ata. It would give rise to multiplicity of
ac1ions which the law abhors and exerts every effort to eschew.8
6. INSTANCES WHEN WRlT OF EXECUTION STILL REQUIRED.
Under the 2011 NLRC &lu of Procedun,9 there are two
(2) instances when
a writ of execution should still be issued immediately by the Labor Arbiter to
implement his order of reinstatement, even pending appeal, viZ::
1
See 1•pcra:iraphdSecfXXl 12 (falrm/Seailn9), Rue XI.2011 NLRC IU!sdPrcx:8:llre,asnrurllerrobyM.RCEn
B.n:Resol.JtinNo.11-12,Seriesci2012~16,2012j,effedi.oe.Jalla'y11,2013.
lb«l
The ~ proceoof9 shal be i1 accoofirlCe v.i1h Rue IX [ ~ ci lhe 2011 NLRC RJJles d Procedure. See 3"
p;r.,graph d Se::tioo 12 (loonertf Seailn 9), ~ XI, 2011 NI.RC IU!s dProc:erue, as nrurllerro by NLRC En Ba1c
ResoUm No. 11-12. Series d2012 (NcMm>ef 16, 2012(, elledi\'eJinJclY 11, 2013.
• SeeasoClcan1)ov.lbl.Caae,GRNo.110087,0ec.15, 1993.
1 See Jod pcra:iraph ci Sedm 12 (b1red'J SecfXXl 9), Rue XI, 2011 Nl.RC RJJles d Pram.re, as nrurllerro by NLRC En
ll2nc Reswoon No. 11-12. Series ci2012 jNcM!mber 16, 2012~ effedile Jcnay 11, 2013.
s Pmeer TextJnzirg Capaa1m Y. NI.RC, GR No. 118651, 0d. 16, 1997, 280 SCRA 806.
1 Roquerov. PlilippileAi'Liles, Ire., G.RNo.152329,~22,2003.
a MM PhiJwi",es. lrc. v. tlRC, GR No. 73662..k.lle 18, 1987.
i.
1 See Secticxl 12iExeaitial cf Rei,sla1ement PermY,l ~ . Rue XI jExeo.m, ~ d the 2011 NI.RC RJJles d
l'rt:a!cm. It rrust be rmd '1al llis Sedxxl 12 was pre.ioost/ rurbeed Seml 9 ci lhe ~ila vessai d lhe 2011
CHAl'TER EIGHT
883
JURISDICTION AND RELi EFS
(1) When the employer dis~beys the prescribed directive• to submit a
report of compliance within ten (10) calendar days from receipt of
the decision; or
(2) When the employer refuses to reinstate the dismissed employee.
. The Labor Arbiter shall 1110/11 propn"o issue a :orresponding writ to satisfy
the remstatcment wages as they accrue until actual reinstatement or reversal of
the order of reinstatement.2
7. SOME PRINCIPLES ON REINSTATEMENT PENDING APPEAL.
(1) Employer has no way of staying execution of immediate
reinsutement. He cannot post bond to prevent its execution.3
(2) Reinstatement pending appeal applies to all kinds of illegal dismissal
cases, regardless of the grounds thereof.4 .
(3) Reinstatement pending appeal does not apply when the dismissal is
legal but reinstatement is ordered for some reasons like equity and
compassionate justice.s
(4) The failure of employee ordered reinstated pending appeal to report
back to work as directed by the employer does not give the employer
the right to remove him, especially when there is a reasonable
explanation for his failure.6
(5) When former position is already filled up, the employee ordered
reinstated .pending appeal should be reinstated to a subsUntially
equivalent position.7
(6) Reinstatement to a position lower in rank is not proper.s
(7) In case of two successive dismissals, the order of reinsutement
pending appeal under Article 229 [223} issued in the first case shall
apply only to the first case and should not affect the second
dismissal.9
NlRC RJJles d l'roalcbe. l was rerunbered by NI.RC En Baic Resoom No. 11-12, Series a 2012 (NC7lelltei 16,
2012), effectile Jcnay 11,2013.
1
This ~ s iro,ml ltlde< lhe 2"' paa_jraph d Sectioo 19 (bmertt Sedm 18) ri Rue V, 2011 NLRC Rules ci
Procedl.rn, as rerllJ1'lbErnd by NLRC En B.n: Reswtm No. 11-12, Series ri 2012 ~ 16, 2012(. lifedi;e Wlla,y
11,2013.
7
See 2"' ~ d Sectioo 12 (loonet¥ Sectioo 9), Rue XI ci Ile 2011 l'l.RC lli!s d f'rtxecft.re, as nrunbered by
fl.RC En Im: Resttfu1 No. 11·12, Series d 2012 {No,-errber 16, 2012(,efECtive may 11,2013.
l Mx:!e 22912231, Labo,-Code; PmeerTexuizrg c:apaa;oo Y. MRC.~.
' C. Atallata &Soos, h:. v. CA, GR.l«ls. 155109, 155135& 179220,Sepl 2l, 2010.
5 ~ v.ArrmTecmob]YPh~n:.,GR.No.1n026,Ja\.30,~.
~v.CA, GRNo.147806,NCll.12,2002;SeeasoPfizer,n:.v. Velasco,GR No. 1n467,Mrch9, 2011.
l.'ed'riav. C<milaed ~ s,stem (CSS}-DlWX, GRNcs.!m54$,Mcrf 28, 1993, 222 SCRA 707.
1
Pcnrtoll Y. CAP Pllq:>piles, n:., G.R No. 16f~. Feb.9, 2007.
1 Seii!a v. NLRC, GR No. 108878, Sept 20, 1994.
 SAR RfVIEWER ON lABOR !AW
(8) Reinstatement pending appeal is not affected by the reinstated
employee's employment elsewhere.1
(9) Effect of grant of achieveme.nt award during reinstatement
pending appeal. In Gorz.av. Coca-Cola Bott/err Philippinu, In,} it was
pronounced that the act of respondent CCBPI UT giving an award of
a Certificate of Achievement to petitioner for his exemplary· sales
performance during his reinstatement ordered by the Labor Arbiter,l
while respondent's appeal with the NLRC was still pending,
constitutes recognition of petitioner's abilities and accomplishments.
lt indicates that be is a responsible, trustworthy and hardworking
employee of CCBPI. It constitutes adequate proof weighing in his
favor.
(I 0) The issuance of temporary restraining order (fRO) by the Court of
Appeals or by the Supreme Court, as the case may be, merely
suspends the implementation and enforcement of the reinstatement
order but it does not have the effect of nullifying the right of the
employee to his reinstatement and to be paid his reinstatement
wages.4
IV.
REVERSAL OF LABOR ARBITER'S REINSTATEMENT ORDER
BY NLRC OR HIGHER COURTS
1. EFFECT OF REVERSAL OF REINSTATEMENT ORDER WHEN
EMPLOYEE WAS NEITHER REINSTATED TO HIS FORMER
POSITION NO R IN THE PAYROLL.
From the moment an employee is ordered reinstated by the Labor Arbiter
on the basis of the fouling that his dismissal is illegal, up to the time that an
appellate tribunal like the NLRC, CA or Supreme Court, as the case may be,
reverses the said finding, the reinstated employee is generally entitled to his so-
called "reinstatement salaries/wages" and regular allowances, benefits,
incentives and bonuses.5
There is no complication if the employer complies with the reinstatement
order by reinstating the employee to his former position or, alternatively, in the
payroll. But in cases where the employer totally fails or refuses to reinstate the
employee but nonetheless appeals from the Labor Arbiter's adverse decision, tl1ere
Trm Secuit, &Al~ Selvi::es, r.c. v.Or18Ja,GR No. 160871, Feb.6, 2006.
GR No. 180!!72, Jan. 20, 2014.
Issued by lhe 1..m Arbiler JmtJirll 1o Artde 229 !2231 a tie 1..meooe.
• Za!rllo.rga CiyWalerDislrictv. ~ GR No.104389,May 27.1994.
s See, 1or iismce, StM1 Coolrulcalioos, r.c.v. Sarun. GR No. 204646. Ap(i 15, 2015 and Arlyn o. Sago v. NLRC,
GR No.17(XX)1,Ap(i4, 2007,549 Phi.414.
CHArTER EIGHT 885
JURISDICTION ANO RELI EFS
arises the issue of whether the employee would still be entitled to his accrued
reinstatement salaries/wages, allowances and other benefits in the event that the
employer is subsequently successful in having the reinstatement order reversed in
its appeal.
This issue has been the subject of several doctrinal rulings now known as
follows:
(1) Roquero doctrine;
(2) Genuino doctrine; and
(3) Garcia doctrine.
1.
ROQUERODOCTRINE
The Roq/lero doctrine, enunciated in the 2003 case of Roquero v. Philippi11e
Air lines, Inc., 1 declared the rule tliat in cases where an employee is ordered
reinstated by the Labor .Arbitt:r and the t:mploycr fails or refuses to obey tl1e
reinstatement order but initiates an appeal, the employer's success in having the
decision of the Labor Arbiter's decision reversed on appeal will not exculpate him
from the liability to pay the reinstatement wages and benefits of the employee,
reckoned and computed from the time the employee was ordered reinstated by the
Labor Arbiter until the date of reversal on appeal.
In this case of Roq/lero, the dismissal of petitioners Roquero and Pabayo2
· was held valid by the Labor Arbiter.3 On appeal to the NLRC, the Labor Arbiter's
decision was reversed and consequently, petitioners were ordered reinstated.4 They
did not appeal from that decision of the NLRC but filed a motion fo r the issuance
of a writ of execution of die order of reinstatement. The Labor Arbiter granted the
motion but respondent PAL refused to comply with the said order on the ground
that it has filed a Petition for Review before the Supreme Court.; Subsequently, the
t GRNo.152329,April22,2003.
2 FIIXTI lhe evilenre oo reard i, tis case, ~ ;weais Ila! petfule,- Alejand,) Roquero ood anooie- PAI. 001)1:7,'ee, Rene
~ . were cauji red-llaided possessrg .m usi"l,l ~lhM1i'le Hydroctbide or shabu il a raKJ roldoo!ld by
PAI..Sl!1Jit-Jofti::efslrxl NARCOMpersam.
1 nlhe Labor Artmer's decision, lhe osnissal ct Roquero iJld Pooayo was upheij. The Labor Attia kmJ boa! paties at
fall - PAL fir <Wfi'g meais 1o en5ce 001'4)lai,ants Roquero ood Pabayo mo romi1tino lhe ntractm and lhe
CXX'll)0imls fir gr.n,i il D toe ~ and ~ ilaJl,in;i il lhe prohbiled mly. Ncnetoeless,the Lm Arb~er
ctNcrded sep.rllfmpey ood atbney's fees lo l h e ~ .
1 Ymie toe case was oo appeal lli1 lhe NL.RC, CM!)lanants Roquero aic PciJayo were ~ed by ttie RaJillal Trial
Coor! (RTC) 8raldt 114, Pasay cay, ii tie amm case v.hdl craged toan wi11 "crospiacy ta ~ iJld use a a
regulated dluJ il vnaoon a Secion 16, Attoe Ill ct Repubic M. 6425,' 01 lhe grruid of ilsiiJatioo. The NL.RC ruled n
a
fa\« ~ as ~ lilewise found PAI. glJit1 ct f\Stgilln1. Norde'ed reilslatement to 1her foorer posiia1s but
v.i1hout backwaiJes.
5 Be!ae lhe ooventa!le 1998case of St Martil F!Mal Home V. NL.RC, GR. No. 130866, Sept 16, 1998, decisioosof lhe
NL.RC were llrooJhl diedfy kl he Supreme Gout by~ of fQje 65 peitioo f i r ~-v.i1hoo.Jt pas.so,j lnro..9h Ille Court
of Appeals. n occoroance v.iti 1h15 case ct St Mirti1 Funeral Home, PAL'; peti1ic(i was refooea ro Ille Coun of Ap~
(CA). This is tie reasoo vtr, ~ was Ile CA lhat r ~ lhe decisi:Jl of ttie f'.tRC.
886 IIAR R.EvlEWER ON !ABOR !AW
CA reversed the decision of the NLRC and ruled that the dismissal of petitioners
was valid. 1 The Supreme Court later affumed the CA's decision but it held that the
unjustified refusal by PAL to reinstate Roquero who, ~e- Pabayo, has not
amicably settled his case, entitles him to the pa!'°1ent ~f his r~statement wag<:5
effective from the time PAL failed to reinstate him despite the,,tssuance of the wnt
·of execution. Thus, it was mandatory for PAL to actually. reinstate Roquero or
reinstate him in the payroll. Having failed to do so, the former must pay the latter
the salaries he is entitled to, as if he was reinstated, from the_time of the decision of
the NLRC until the finality of the decision of the Supreme Court.2
Following Roquero, it is now the nonn ~t even if the order of
reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory on the part
of the employer to reinstate and pay the wages of the dismissed employee during
the period of appeal until its reversal by the NLRC, or the CA or the Supreme
Court, as the cas~ may be. If the employee has been reinstated.during the app~al
period and such reinstatement order is subsequently reverse~ on appeal ~th
finality, the employee is not required to reimburse whatever salanes he ~as recetv~d
for he is entitled to such, more so if he actually rendered seMces dll!Ulg the srud
period.
In Air Philippi11u Corp. 11. Zamora,3 the Labor Arbi_ter ordered ?1e
reinstatement of respondent Zamora who immediately filed a monon for execution
of the said order of reinstatement The Labor ,-\rbiter granted the motion and
issued a writ of execution directing petitioner Air Philippines Corp. (APC). to
reinstate him to his former position. On appeal, the NLRC reversed the ruling of
the Labor .-\rbiter and held that no dismissal, constructive or otherwise, took place
for it was respondent Zamora himself who voluntarily terminated ~ employment
by not reporting for work and by joining a competitor - Gran~ Ai_r. Responde~t
Zamora filed a Motion for Reconsideration but the NLRC dented 1t. However, It
ordered petitioner APC to pay respondent Zamora his unpaid salaries and
allowances in the total amount of P198,502.30 within 15 days from receipt of its
resolution. Displeased with the modification, petitioner _AP~ soug~t ~ partial
reconsideration of the said resolution but the NLRC dented tt and Justified the
award of unpaid salaries on the ground that the grant of salaries and allowances to
complainant (respondent herein) arose from the order of his reinstat~ent whic~ is
executory even pending appeal by respondent company (petlt:IOner herelll)
questioning the same, pursuant to Article 229 (223) of the Labor Code. In the eyes
1
M'l;l lhe perwq a the case IWh t,e CA, PAL im Pm,o lied atldloo 1D ~ Ile case v.t, respect 1D
~ . il'e' re, volJntat1f entered ilto a~ aJreetTlil!t The rootioo was grnld il aResootioo JllllOU:laled
b-f Ile Foore- Thi'ieenll ~ ct tie CA on JaUJy 29, 2002. The CA later reversoo dle dedsb1 ~ _fle NlRC aoo
reiistared tie deosm c1 t,e labor Al1lier nsctr as t ~ Ile <fsrrsll a Roquero. ~ . ~ deriEd Ile aN8!d cl
separalXXl pay in! atlooley's fees to fllxluero on the ground l1alone v.ho has been d1.t/ lfisrrissed Is l1IXenb1led 1D lhose
be-eis.
I Id.
1 G.RNo. 148247,Aug.7,m .
CHAPTER EIGHT
887
JURISDICTION AND RELIEF!
of the law, complainant was as if actually working from the date respondent
received the copy of the appealed decision of the Labor Arbiter directing his
reinstatement based on his finding that the latter was illegally dismissed from
employment.
In affirming the above grant by the NLRC of salaries and allowances to
respondent Zamora, the Supreme Court ratiocinated, thus: ''The prem.i~e of the
award of unpaid salaries to respondent is that prior to the reversal by the NLRC of
the decision of the Labor Arbiter, the order of reinstatement embodied therein was
already the subject of an alia, writ of execution even pending appeal. Although
petitioner did not comply with this writ of execution, its intransigence made it liable
nonetheless to the salaries of respondent pending appeal There is logic in this
reasoning of the NLRC." 1
- The above ruling in Air Philippine, was reitented in the 2008 case of Tom,,
Jr. v. NLRC.2 111us, it was held that petitioner-employees should not be compelled
to retum the salaries and benefits already received by them on account of the order
for reinstatement adjudged by the NLRC and affirmed by the Supreme Court.
2.
GENUINO DOCTRINE
·n1e Gmuino doctrine traces its origin to the case of Genuino v. NLRC.3
The essence of dus doctrine is that the employee who is reinstated in the payroll, as
distinguished from actual reinstatement, should refund the reinstatement salaries
she received if her dismissal is finally found leg21 on appeal. This doctrine,
however, does not apply if the employee was actually reinstated to her former
position or not reinstated at all pending appeal. =n effect, the Genuino ruling
qualified the earlier Roquero doctrine• on the issu: of whether the • dismissed
employee who is reinstated in the payroll and not actually to his former position
has the obligation to refund what he has received as and by way of salaries during
his payroll reinstatement if and when his dismissal is l:eld valid and legal on appeal.
The Supreme Court had thus taken the V;ew in Gm11i110 that "(ijf 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 he/ she received
while the case was pending appea~ or it can be deducted from the accrued benefits
that the dismissed employee was entitled to receive from his/her employer under
1 Co-g Roquero v. Phiippi,e n Liles, nc., G.R No. 152329, Apri 22, 2003 lfld Ns [Phi.I he. v. t-lRC, G.R No. 90501,
Aug. 5, i991 .
' GR No. 172584, Nt>1 28, 2008.
i 1.mbJ S. Genuino v NlRC, Cilibri, NA, G.R Nos. 14m2•33,Dec. 4, 'l:XI
' Roquero v. flhnwne Ail l.i1es. trc .supra.
888 BAR REVIEWER O N IASOR IAW
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 compensauon received for actual
services rendered without need of refund."
'This refund ruling in Gen11ino has been modified .by the Gama doctrine
enunciated in the 2009 case of Gama v. Philippine Airlines, Inc. 1 [infr1], in that the
employee reinstated in the payroll need not refund_the r~statcment wages he
has received after the decision is reversed by a higher tnbunal or court. The
Court thus ratiocinates:
"Even outside the theoretical trappings of the discussion and
into the ~undane realities of human experience, the 'refund doctrine'
easily demonstrates how a favorable decision by the Labor Arbiter
could harm, more than help, a dismissed employee. The employee, to
make both ends meet, would necessarily have to use up the salaries
received during the pcndeocy of the appeal, only to end up having to
refund the sum in case of a final unfavorable decision. It is mi.cage of a
stop-gap leading the employee to a risky cliffof insolvency."
3.
GARCIA DOCTRINE
The Roq11ero and Gen11ino doctrines have been modified by the Gama
doctrine enunciated in the en bane 2009 case of Gama v. Philippine Airlines, Inc. z In
this case, while respondent Philippine Airlines (PAL) was undergoing rehabilitation
receivership, an illegal dismissal case was filed by petitioners3 against it which was
decided by the Labor Arbiter in their favor thus ordering PAL to, inter alia,
immediately comply with the reinstatement aspect of the decision. On appeal, the
NLRC reversed the ruling of the Labor Arbiter and held that their dismissal was
valid. Resolving the issue of whether petitioners may collect their reinstatement
wages during the period between the Labor Arbiter's order of reinstatement
pending appeal and the NLRC decision overturning that of the Labor Arbiter, now
tlm respondent PAL has terminated and exited from rehabilitation proceedings,
the Supreme Court ruled that the employee may be barred from collecting the
accrued wages, if it is shown that the delay in enforcing the reinstatement pending
appeal was without fault on the part of the employer. It thus enunciated the
following two-fold test to determine the liability of the employer (who did not
reinstate the employee pending appeal) to pay the "m,utatemenl wages" of the
dismissed employee covering the period from the time he was ordered reinstated
by the Labor Arbiter to the reversal of the Labor Arbiter's decision either by the
NLRC, the CA or the High Court, /Q wit.
i
mw>A. ~ cridAretoJ. D.JM;)ov. PhlippileMiles, Inc., G~ t-«l.164856,Jlll. 20, 2009(En&-tj.
I
kl.
i Petliooes here were ca,gtt it the a:t of S11img sMxJ liKrg arai:l at the PAL Tedvlx:al Cente(s Tootcxrn Sedioo.
CIIAl'TER. EIGHT
JURISDICTION AND RELI EFS
889
(1) There must be actual delay or the fact that the order of reinstatement
pending appeal was not executed prior to its reversal; and
(2) The delay must not be due to the employer's unjustified act or
omission. If the delay is due to its unjustified refusal, it may still be
required to pay the salaries notwithstanding the reversal of the Labor
Arbiter's decision.
Petitioners exerted efforts to execute the Labor Arbiter's order of
reinstatement until they were able to secure a writ of execution, albeit issued on
October 5, 2000 after the reversal by the NLRC of the Labor Arbiter's
decision. Technically, there was still actual delay which brings to the question of
whether the delay was due to respondent's unjustified act or omission. It is
apparent that there was inaction on the part of respondent to reinstate them, but
such omission was justified because of its corporate rehabilitation.
It is settled that upon appointment by the SEC1 of a rehabilitation
receiver, all actions for claims before any court, tribunal or board against the
corporation shall ipso jnrr be suspended. As stated early on, during the pendency of
petitioners' complaint before the Labor Arbiter, the SEC placed respondent under
an Interim Rehabilitation Receiver. After the Labor Arbiter rendered his decision
the SEC replaced the Interim Rehabilitation Receiver: with a Permanen;
Rehabilitation Receiver.
Case law recognizes that unless there is a restraining order, the
implementation of the order of reinstatement is ministerial and mandatory. Tb.is
injunction or suspension of claims by legislative fiat partakes of the nature of a
restraining order that constitutes a legal justification for respondent's non-
compliance with the reinstatement order. Respondent's failure to exercise the
alternative options of actual reinstatement and payroll reinstatement was thus
justified. Such being the case, respondent's obligation to pay the salaries pending
appeal, as the normal effect of the non-exercise of the options, did not attach.
B.
NATIONAL LABOR RELATIONS COMMISSION (NLRC)
1. TWO (2) KINDS OF JURISDICTION.
The NLRC exercises two (2) kinds of jurisdiction:
1. Exdnsive origjnal jurisdiction; and
2. Exd11Jive appellate jurisdiction.2
1 Now the µisoJdioo rm< rehiEGllalioo receile!Shj) is kxlged y,jth t,e Regialal Tra Court Ul1der RA No. 8799 !Securities
Reguaoooo Codej.
2 Sedm 1, ~ VII, 2011 NLRC ~ a Procedt,a

890 BAR REVIEWER O N l.A8OR I.AW
2. EXCLUSIVE ORJGINALJURISDICTION.
The NLRC exercises exd,uive and orilfnal jurisdiction over the following
cases:
a. Petition for injunction in ordinary labor disputes to enjoin or
restrain any actual or threatened commission of any or all prohibited
or unlawful acts or to require the perfoanance of a particular act in
any labor dispute which, if not restrained or performed forthwith, may
cause grave or irreparable damage to :my party.1
b. Petition for injunction in strikes or lockouts under Article 279
[264] of the Labor Code.2
c. Certified cases which refer to labor disputes causing or likely to· cause
a strike or lockout in an industry indispensable to the national interest,
certified to it by the Secretary of Labor and Employment for
compulsory arbitration by virtue of Article 278(g) [263(g)) of the
Labor Code.3
d. Petition for extraordinary remedies from orders or resolutions of
Labor Arbiters (mcluding those issued during execution proceedings).4
3. EXCLUSIVE APPELLATE JURISDICTION.
The NLRC exercises exclusive appellate jurisdiction over the following:
a) All cases decided by the Labor Arbiters.5 . decides in his original jurisdiction which are appealable to the
b) Cases decided by the DOLE Regional Directors or hearing officers
involving small money claims under Article 129 of the Labor Code.
c) Contempt cases decided by the Labor Arbitcrs.6
4. JURISDICTION OF LABOR ARBITERS VS. NLRC.
The Commission (NLRC) does not have original jurisdiction over the cases
over which Labor Arbiters have original and exc/11,ive jurisdiction. Thus, if a claim
does not fall within the original and exc/11sive jurisdiction of the Labor Arbiter, the
NL.RC caMot have appellatejnrirdiction thereover.7
Under the Labor Code, the authority to conduct compulsory arbitration is
prinapal!J vested upon Labor Arbiters.8 It is only in the exercise by the NLRC of its
original jurisdiction that it discharges compulsory arbitration; hence, the exercise
1 Mk.1e 218(e), 1..m Cede; Secfun 1. rue X. 2011 NlRC fU!s of Procedure
l Sedm 2, Rue X, 201HlRC ~ci Pnx:edlre.
3 MK:e 278(g) [263(g)j, Laba Cooe;Secoo!l 2,Rule VIII,2011 NLRC Rules of Procedure.
• Rle lOI [lmoomy Remeoiesi 2011 NLRC Rules of Procedure.
I Mo8224(b) ~17(b)I, l.mCooe.
Sedm 1, ~ XX!II, e» v, rues kl ~ t aie t.m eooe,as arrended by Dep.rtrrent Cxder No. 40-03, Series of
2003,Feb. 17, 2003.
Pa1docv.Nl.RC, G. R. No. 116347, Da. 3, 1996, 262SCRA632.
Ph11pJineAirlnes, nc. v. NLRC, G.R No.55159, Dec. 22, 1989.
CHAl'"TER EIGHT
JURJSOICTION AND RELIEFS
by the NLRC of its appellate jurisdiction is not in the nature of compulsory
arbitration. This is so because it is the Labor Arbiter who is clothed with the
authority to conduct compulsory arbitration in cases involving labor disputes falling
under Article 224 [217) of the Labor Code. On appeal, the NLRC merely reviews
the Labor Arbiter's decision; for as an appellate body, it is not, generally, a trier of
facts.1 Hence, the exercise by the Ni.RC of its appellate jurisdiction cannot be
considered as part of the compulsory arbitration process.2
C.
JUDICIAL REVIEW OF LABOR RULINGS
1.
JUDICIAL REVIEW THROUGH
RULE 65 PETITION FOR CERTIORARI
1. THE ONLY MODE TO ELEVATE CASE TO CA.
There is no appeal from the decisions, orders or awards of any of the
following labor officials:
(a) DOLE Secretary;
(b) Commission (NLRC); and
(c) Director of the Bureau of Labor Relations (BLR) in cases decided by
him in his appellate jurisdiction (as distinguished from those he
DOLE Secretary).
The only mode by which a labor case decided by any of them may reach
the Court of Appeals is through a Rule 65 petition for certiorari.
The reason for this rule is that after the lapse of the 10-day period to file a
motion for reconsideration, the decisions, orders or awards of DOLE Secretary,3
the NLRC4 or the BLR Director1 (tn cases which he decided in his appellate
jurisdiction) become final and executory and therefore inappealable.
1 Na_Jka(aisang ~ - sa Sooy v.NI.RC, G.R No. 12149:J, Mly 5, 1997.
Flwwr,e Ames, he. v. NI.RC,GR l'«l.55159, Dec. 22, 1989.
Per Nalxlnal Fma!m cl Laba (NFlj v. 1.aJuesim, GR No. 123426, llath 10, 1999, The decisQi cl lhe DOlE
Secret!y 5M be fila in! exeomy ¥1en (10) dar, ftan notice. Yet, ie i!ie dedsms clfle NLRC vdli.11, trder Al1ide
229 [2231 of #le Laooc Code, becane ftnal clld execuby • ten (10)calenda-dar, lrom receipt tiered by lhe paties, Ile
decisals c1 the oo.e Seaetry a1so becane &1a1 .m exeamy m ten (10) caerm days rrom receipt Meet by tie
paties, .l1d n-ey also be brought to Oie Crut o f ~ by~ cJ. apetilxxl fa- ceifurari ll1der Rule 65 cl #le 1997 Rues of
CM Procedure, t'v'efl beyond 11e 10<alenda' daf peood pwoed nthe l..al:O' eooe aid is ~ n g rutes rut v.i'Oln
lhe reglementry peood set b' Rule 65 petioons under the 1997 Rules of CM Procedtre.
· ' Under Al1ide 229 [22:ll of tie Lm Cooe, lhe decision cJ. the NLRC becnnes f'nal mten (10) caermdays m ~ t
tiereofby Ile parties. fb.1-ever, apaty is not proscroed lrom fiifrJ apetioon fa-rermi v.i1hin apeood of six1)' (60) days
lrorn no1i:e cl Ille deriaJ of his ll'lllioo b' recoosideraoon of tie decisi:x1 cl the NlRC lllder Sedx:n 1, Rue 65 cJ. lhe Rues
ofCrut.
 BAR R£\IIEWER ON LABOR LAW
The only exception to this rule pertains to decisions, orders or awards of
Voluntary Arbitrators or panel of Voluntary Arbitrators which are appealable to the
Court of Appeals by way of an ordinary appeal under a Rule 43 petition for
rcview.2
Certiorari petition may be filed even if labor rulin~ have become final
and cxecutory. 'Thus, if the CA grants the petition and nullifies their decisions on
the ground of grave abuse of discretion amounting to excess or lack of jurisdiction,
such decisions arc, in contemplation of law, null and void ab initio; hence, they
never became final and executory.3
2. NO DIRECT RESORT TO THE SUPREME COURT.
Previous to the ruling in SI. Martin F11nmil Home v. NLRC,4 a labor case is
allowed to be elevated directly to the Supreme Court from the decisions, orders or
awards of DOLE Secretary, the NLRC or the BLR Director, without passing
through the Coun of Appeals, by way of Rule 65 petition for certiorari. With the
advent of the S1. Martin F1111eml doctrine, it is now required that all labor cases
should first pass through the Court of Appeals by way of a Rule 65 petition for
certiorari before they can reach the Supreme Coun through a Rule 45 petition for
review on certioraii.
3. AN INDEPENDENT SPECIAL CIVIL ACTION.
The only grounds that would justify the elevation of labor cases to the
Coun of Appeals are when the same were rencJerea11 WI ou or m excess of
jurisdiction, or (2) with grave abuse of discretion amounting to lack or
excess of jurisdiction.
Section I of Rule 65 states as follows:
"Section I. P,1i1ion for (tf1iorari. - \Vhen any tribunal, board, or officer
exercising judicial functions, has acted without or in excess of its or his
jurisdiction, or \\~th grave abuse of discretion amounting to lack or
excess of jurisdiction, and there is no appeal, or any plain, speedy, and
adequate remedy in the ordinary course of law, a person aggrieved
thereby may file a verified petition in the proper court, alleging the facts with
certainty and prJying thlt judgment be rendered annulling or.modifying the
proceedin~ of ~uch tribunal, board or officer, and granting such incidenttl
reliefs as law and justice may require.
1
The decisa1 d he BIR Drecb- a the Olfce cl Ille OOlE Secretaty [11 cases d .weas tan decisklns of h! BIR
1nm) shal becane fnal in! exeo./ay after ten (10) dct,'S tan receii1I llerea by Ile pates, t.rlless a nmi b- it;
1e:a1SidtranIis 6ed by CITf l)Cltf lherei1 llim lhe sane perod. 01,'y ooe (1) nm tr rax,usi!eraoou d Ile decisa1 ci
Ille BlR a Ille 00:e cl tie DOLE secretary in the exlltise ci Iller ;welate jJisdi:bl wl be alo,<,ed, (Sml 20
lbnet, Sm121L ~ XI, Bed( V, IU!s b tnpeinert Ile laxJ Cale, as arm1ed b y ~ ~ t.:i. 40-03,
Series cl 2003, [Feb. 17. 20031, and a s ~ by Depmient Oller No. 40-f--03, Seriesol'2008 [0d. 30, 2008D.
2 Ashet1 i1 l.umn ~ Bnv. Associa.ial dluzm ~ B.rlk ~ GR 1-b. 120319, Oct. 6, 1995.
i Tcmasaald'olv'em:.rial Calege. oc.v.CA. G.R Jo.kl. 152568, Fe!!. 16,2004.
1 GR No. 130866, Sept 16, 1998. 295 SCRA 494 (En !me).
CHAPTER EIGHT
JURJSOICTION AND RELIEFS
. "The petition shall be accompanied by a certified true copy of the
Judgment, order or resolution subject thereof, copies of all pleadings and
documents relevant and pertinent thereto, and a sworn certification of
non-forum shopping as provided in the third paragraph of Section 3
Ruic 46." '
The phrase "grave abuse of discretion amounting to lack or excess of
jurisdiction" has been defined as the capricious and whimsical exercise of
ju~ent_amounting to or equivalent to lack of jurisdiction.1 There is grave abuse
of discreoon when the power is exercised in an arbitrary or despotic manner by
reason of "passion_ or personal_?ostility, and must be so patent and so gross as to
~o~t to an evasion ~fa pos1ove duty or to a virtual refusal to perform the duty
enJotned or to act at all tn contemplation of law." 2
The jurisdiction of the Coun of Appeals to review a decision of the labor
tribunal in a petition for certiorari does not include the correctness of its evaluation
of the evidence or of its facrual findings which are generally accorded not only
respect but also finality, but 1s confined to issues of jurisdiction or grave abuse of
discretion.3
4, RULE ON PERIOD.
a. Period within which to file certiorari petition is sixty (60) days from
notice of judgment, order or resolution.'
b. In case a Motion for Reconsideration or Motion for New Trial is filed
regardless of whether such motion is required or not, the 60-day period is reckoned
and computed from notice of the denial of said motion.s
c. The 60-day period is reckoned from receipt of the decision by counsel
or representative of record, no.t by litigant-party.6
d. Rule on extension of the 60-day period. In Labao v. Flam,7 some of
the exceptions to the strict application of the 60-day period rule were laid down
~~: _(1) most persuasive and weighty reasons; (2) to relieve a litigant from a~
l!lJusnce not commensurate with his failure to comply with the prescribed
procedure; (3) good faith of the defaulting party by immediately paying within a
reasona~le ~e from the time of the default; (4) the existence of special or
co°:pelling arcumstances; (S)_ the merits .o f the case; (6) a cause not entirely
attnbutable to the fault or negligence of the party favored by the suspension of the
rules; (I) a lack of any showing that the review sought is merely frivolous and
' OooO!estesRarualdelEJedri:Coqi. nc. v.M.RC, GRl-b.128389,Na,,.25, 1999.,3n Phi. 268 273.
fil '
3
SeaPower~ Enterpises, h:.v.CA,G.R.No.138270,.hlie28,2001.
1
Opilaljov.Ravila,G.RNo.196573,0r.t 16,2013.
5
Trazooa V. CA, G.R No. 169712. "9th 13, 2008; See Sedxn 4cl~ 65 ilnniced by AM No. 00-2-msc, fulfler
Anmfrg Sm14, ~le 65 d he 1997 Rules cl CM f'nx:ai.re (elfecile ~ 1, 20CO).
' Sm14(bj.~lll.2011 NI.RCRulesoff'nxerue.
1
laboov.Fb'es,G.RNo.187984,Nw.15,2010.
 BAR Rf\llEWER ON IABOR IAW
dilatory; (8) the other pany will not be unjustly prejudiced thereby; (9) fraud,
accident, mistake or excusable negligence without appellant's fault; (10) peculiar
legal and equitable circumstances attendant to each case; (11) in the name of
substantial justice and fair play; (12) importance of the issues involved; and (13)
exercise of sound discretion by the judge guided b1 all the attendant
circumsmnces. 1 Thus, there should be an effort on the part of the party invoking
liberality to advance a reasonable or meritorious explanation for his/her failure to
comply with the rules.2
5. RULE ON MATERIAL PORTIONS OF THE RECORD.
' Petron, ~e ceruficanoa o? non-forum shopping executed and signed only by the
According to The Heritage Hotel Manila v. PIGI.AS-HERITAGE,3 the
Court of Appeals is correct to dismiss a Rule 65 petition for certiorari for failure to
attach material portions of the record. However, the CA should bend back a little
when the petitioner subsequently attaches the missing materials to its motion for
reconsideration. As. a general rule, petitions for certiorari that lack copies of
essential pleadings and portions of the record may be dismissed but this rule has
not been regarded as absolute. The omission may be cured.'
The CJ\ has three (3) courses of action when the annexes to the petition
are insufficient. It may (1) dismiss the petitioo,S (2) require the submission of the
relevant documents, or (3) order the filing of an amended petition with the required
pleadings or documents. ,\ petition lacking in essential pleadings or portions of the
record may still be given due course, or reinstated if earlier dismissed, upon
subsequent submission of the necessary documents or to serve the higher interest
of justice.6 · petition." 2
6. RULE ON VERIFICATION AND CERTIFICATE OF NON-FORUM
SHOPPING.
a. Rule if co-parties are being sued in their individual capacities.
In,Petro11 Corp. v. l'v'LRC, 1 it was pointed out that the reliance of the Court
of Appeals on the ruling in uq11ias v. Offia of the Ombudsman,8 when it dismissed the
petition is misplaced because, unlike the instant case, the co-parties therein are
being sued in their individual capacities.9 Thus, the certification on non-forum
shopping signed by onlr one of two or more petitionm is defective, unless he was
duly authorized by his co-petitioners.
1
U1I v.Oebs Sam:ls. G.R No. 172574,,¼' 31. 2WJ: Vllena v. ~ G.R No. 167620, Apri 3, 2007.
l ~ Y. Fbres,Sllpra.
3 3
TheHerita;le~Mriaav. PIGI.AS-HERITAGE. G.R No.177024, Oct.JO, 2009.
' A \ - ~ Capam V. ZiJ1m. G.R No. 148247, Al.gust 7. 2006, 498 SCRA59, 69.
s l..asl~dfM!46dlle~dCM
6 9Ja1 v.CA, G.R No.150819,Julf 27, 2006, 496 SCRA 760, 767-768.
' Petal Capcxml aid PeterC. M!i,jrov.N.RC,G.R No. 154532, Oct 27, 2006.
8 G.R No. 139396, Aug. 15, 21XXl. 338 SCR.4 62.
. dEcisol Iran lhe s.rne paty shal be erteltaned
1 Nde '1at Ile petitmers il Loquias are lhe 11\a'/Q', vice-maya, and ttree melrilels of the llUlqial ~ d Sal '-"Juel,
Zartxl.rgadd &I. Thesoo ~ 'M?l1l craged v.itl 1i:laticrl dRA No. 3019 il MvmJS~
CHArTER tlGHT
JURISDICTION ANO RELIEFS 895
b. Rule in case petition is filed by a corporate entity.
. _In the same case of Petron, the Court of Appeals dismissed the petition for
cernoran thereat filed by the petitioners on the ground that the V rifi · d
c -6 · e canon an
e~ canon on No_n-forurn Shopping ~as defective because co-petitioner Peter c.
Maligro w~s not a s1gnat~ry thereto. Maligro was being impleaded in the case as the
fo_rm~r V1sayas Operauons Assistant .Manager of Petroo's Visayas-Mi,ndanao
D1s~ct _Office at L3:1tug, Ce?u City. The Supreme Coun, however, ruled that
constdenng tha~ M~gro denves his standing or personality in the case from
co~ora~on ~e~efited Maligro such that the attachment of said certification to the
ce~o~ pennon should be deemed substantial compliance with the rule on
cert1ficat100 on non-forum shopping.
c. S~cretary's ~erti~cate authorizing a representative or agent to
sigt1 the 1rerificatJon and certification ofnon-forum shopping.
_As a general rule, the Board of Directors or Board of Trustees of a
co!)?orattoo must authorize the person who signs the verification and certification
ag:uns~ n_oo-foru~ shopping of it_s petitio~1~ut such authorization is not necessary
when 1t 1s self-evtdcnt that t~e signatory 1s 1n a position to verify the truthfulness
and.corr~ctness of_the alleganons in the petition such as when the verification and
c~catton wer~ signed by one who, based on the given facts of the case, was "in a
po~t~oo to veofy the truthfulness and correctness of the allegations in the
7. NO BOND REQUIRED IN RULE 65 CERTIORARI PETITION.
Tite requirement of a cash or surety bond as provided under Article 229
(223_) of the Labor Code only applies to appeals from the orders of the Labor
Arb'.ter t_o the NLRC. It does not apply co special civil actions such as a petition for
certtoran under Rule 65 of the Rules of Court. fn fact, nowhere under Rule 65 d
· th • . oes
It state at a bond 1s reqwred for tlte filing of the petition.l
8. MOTION FOR RECONSIDERATION, A PRE-REQUISITE.
The rule on the filing of a ~1ocion for Reconsideration of the decision of
the DOLE Secretary,4 the NLRC> and the BLR Directo~ is mandatory and
lhversitf d Ile Eastv. Pepri) if1d B.iero, G.R No 193897, .m 23, 2013.
Cagaya/1 Vn-J Dug Capcraoo v Qrimssooer of nlemal Rmlle,G.R No. 151413, Feb. 13, 2008.
&n;J-an v. Equa!cr Knghts Detecwe and Seairity ~erq. 1-c., GR No.173189.Feb. 13, 2013.
The ~14 = a Plllraico Se!vice En~ . nc. v. Phh-,co Wirters ~ a GEnine Laber
Org~ ~ AGL~). G.R No. 160962, Feb. 26, 2014, ~ lhe Me on Ille rt1i!llClmy firg d anmi ro.,
5
~ poor IO Ille lll5!1lilioo d aRule 65 petifun foccertiaari fran lhe cfEcisol dllle DOLE Seaetary.
>s ~ 111 Secoon 15, ~ VII of lhe 2011 M.RC Rules d Prtx.am, atj ooe n-am b' recmsi!ercmoo a he NlRC
' Onl'f one (1)_rootion roc reamieralioo rJ eie decism a lhe 81.R o- ttoe Office of the OOlE ~ nlhe exercise a Iller
~ i,.risd'dicn shall be aloM!d. (Secooo 20 ~ Sedioo 211 Rue Xl, Book V, 1M!s l o ~ Ille Laber
 BAil REVIEW£1l ON lABOll lAW
jurisdictional Failure to comply therewith would result in the dismissal of the
Rule 65 certiorari petition. Jurisprudence abounds enunciating the rule that a
motion for reconsideration is a pee-requisite for the filing of a special civil action
for certiorari.1
The reason for this rule is that in labor cases, a moµdn for reconsideration
is 1.he plain and adequate remedy from an adverse decision of the DOLE Secretary,
the NLRC and the BLR Director. It has been long settled that the filing of a
motion foe reconsideration is a condition 1ine qua non to the institution of a special
civil action for certiorari under Rule 65 of the Rulei of Court, subject to well-
recognized exceptions (Sec below for the enumeration of these exceptions). The law
incends to afford cbe tribunal, board or office, an opportunity to rectify the errors
and mistakes it may have lapsed into before resort to the courts of justice can he
had. Certiorari cannot be resorted to as a shield from the adverse consequences of
a party's own omission to file the required motion for reconsideration.2 Failure to
cxhausc administrative remedies is fatal.3
8.1. THE PHILTRANCO DOCTRINE.
A motion for reconsideration should be filed even though it is not
required or even prohibited by the concerned government office. This was the
rule enunciated in Philtranro v. Pl/i'U-AGLO. 4 Thus, while a government office5 may
prohibit altogether the filing of a motion for reconsidention with respect to its
decisions or orders, the fact remains that certiorari inherently requires the filing of a
motion for reconsideration which is the tangible representation of the opportunity
given to the office to correct itself. Unless it is filed, theri: could b_c no occasion to
rectify. Worse, the remedy of certiorari would be unavailing. Simply put, regardless
of the proscription against the filing of a morion for reconsideration, the same may
be filed on the assumption that rectification of the decision or order must be
obtained and before a petition for certiorari may be instituted.
10. EXCEPTIONS TO THE RULE ON FILING OF MOTION FOR
RECONSIDERATION.
It bears to suess that the principle of exhaustion of administrative
remedies when a motion for reconsideration is required, is not an icon-clad rule.
'Ibis principle may be disregarded under the following circumstances:
Code, as a-nended b'f Depatrrelt Order No. 40-03, Saies d2003, !Feb, 17. 2003!,.rd a!i r&runbered !rt DepatTSt
OnJer No. 40-f-03. Series of2008 (Ott 30. 2008D.
1
~ Teqxme Qxpaatioov. NaxxiaTelecoomJ\i:alioCooYnmi, GR No. 138295, Allg. 28, 2003.
l $ea:Jlj ~ ard TllJlSl)(JI. klc. v. M.RC, GR No. 123619, ..uie 8, 2000; See also I . l a ~ ~
ng St?,-fast Alls, lie. v. Nl.RC,GR No. 155300, Aug. 28, 2013.
1 lmmal v. llepment d Laxnxl ~ G.R No. 108951, Mlrch 7, 200:l.
• Pllhm SeM:e ~ . ~ v. Plllranco Waters~ of Germ Lm O!girilmls (PMMGLO),
G.R No. 18@i2, Feb. 26, 2014. A/tt100Jh lhi; case iMWeS a dECism d t,e 00!.E Seael.ry, t,e pmqlkl eoox:iated
teeil ~ apples kl t,e NlRC.
I Oqle!SOO, rwiai or boan!.
CHAl'Hll EIGHT
JURISDICTION AND RWEFS
(1) When there is a violation of due process;
(2) When the issue involved is purely a legal question;
(3) When the administrative action is paten:ly illegal amounting to lack
or excess of jurisdiction;
(4) When there is utoppd on the part of the adminisuative agency
concemed;
(5) When there is irreparable injury;
(6) When the respondent is a department secretary whose acts as,an alter
ego of the President bear the implied and assumed approval of the
latter;
(7) When to require exhaustion of ad.mirustrative remedies would be
unreasonable;
(8) When it would amount to a nullification of a claim;
(9) When the subject matter is a private land in land case proceedings;
(10) When the rule docs not provide a plain, speedy and adequate remedy;
(11) When there are circumstances indicating the urgency of judicial
intervention;
(12) When no administrative review is provided by law;
(13) Where the rule of qualified political ager..cy applies; and
(14) When the issue of non-exhaustion of adminisuative remedies has
been rendered moot.
2.
JUDICIAL REVIEW OF DECISONS
OF VOLUNTARY ARBITRATORS
THROUGH RULE 43 APPEAL
1. DECISIONS, FINAL AND EXECUTORY.
As a general rule, decisions or awards of Voluntary Arbitrators are final
and executory ·after ten (10) calendar days from receipt of a copy thereof by the
parties. 1 The awards of voluntary arbitrators determi.-1e the rights of parties; hence,
their decisions have the same legal effect as judgments of a court.2
2. JUDICIAL REVIEW.
It is well-settled a rule, however, that the findings of fact and law made by
the Voluntary Arbitrator may be reviewed by the court.3 Judicial review is justified
in certain cases.• The Voluntary Arbitrator's decisions or awards may thus be
contested judicially on the following grounds:
•
1 Al1i:le 276 (262-A],l.aborCode; No.107, NCMB PrinerooGrier.n:et,lachoefy and\Jwlay Atbitaoon.
1 Luzm Deveqlmelt Bank v.Assocmin of l.i.lzoo IJeveqxnert ~ fnwees, GR No. 120319,Odooef 6, 1995.
1 Gamenta1 Mrb1e Caporatai V. NIRC, G.R No. l.-43825, Ma)' 9, 1988.
• Uni::ra!t ndusTies ntematiooal ColpaatiCX1 V. CA, G.R No. 134003, Mardi :16, 2001, 407 Phi. 527.

898 BAR REVIEWER ON LAB OR I.AW
(1) Lack or want of jurisdiction;
(2) Grave abuse of discretion;
(3) Violation of due process;
(4) Denial of substantive justice; or
(5) Erroneous interpretation of the law.1 ..
The Supreme Court, in many cases, has taken cognizance of petitions
questioning 'Jina/" decisions of certain administr.itive agencies based on any of the
foregoing grounds.2
3. FACTUAL FINDINGS ACCORDED RESPECT AND FINALITY.
Because of their expertise, the findings of fact of Voluntary Arbitrators •
are accorded not only respect but even finality if they are supported by substantial
evidence, even if not overwhelming or prepondcrant.3 In the case of uklfo de San
Juan de Lttran-Ca!amba v. Vi/fas,• the Supreme Court asserted this rule in affirming
the factual findings of the Volunury Arbitr.ltor as earlier affirmed by the CA. It
held that such factual findings are conclusive on the parties and are not subject to
review.
In the same Light, the Supreme Court, in L1M & LJ!)'m Co,poration v.
Sm1mido,5 affirmed the findings of fact of the Voluntary Arbitr.itor, specifically his
finding that prescription has not as yet set in to bar the respondents' claims for the
monetary benefits awarded 10 them. TI1e Voluntary Arbitrator received the
evidence of the parties first-hand. No compelling reason has been shown to
diverge from his findings, esp~cially since the appellate court affirmed his findings.
'l11at it took some time for [espondents to ventilate their claims was due to the
repeated assurances 1T1J1de by the petitioner that it would review the company
records and detemiine therefrom the validity of said claims, without expressing a
categorical denia.l thereof.
In Abalos v. Phikx Mining Corporolion,6 the High Court refused to disturb
the factual findings of the Voluntary Arbitrator because of the well-settled rule that
it is not its function to assess and evaluate the evidence all over again, particularly
where the findings of both the Voluntary Arbitrator and the CA coincide and there
was absence of a sho\ving of an error of law or of a whimsical or capricious
exercise of their judgment, or a demonstrable lack of basis for their conclusions.7
But as hdd in Mits11bilhi Moton Philippinu Co,poralion u. Chryskr Philippines Labor
Union, 8 if the findings of fact of the CA clash with those of the Voluntary
1
~ Oal7f ~ klc.v.l,lajsafn, GR No. oo-126, l))c. 15, 1989.
1
lklim hlms ~ Ccxpam,v. CA,~ Contnertal MlM! Capcm:inv. NI.RC, Sl4lf3.
1
HoodaPtils., ric. v.5.-lnahalng lv'0layang t..'a-@acJawasaHooda,GRNo.145561,m 15,2005.
• GRNo.13n95,llan:!126,2003.
5 GR No. 140960,Jan. 20, 2003.
' GRNo.140374.tb.27,2002.
1
See also Tele!ooken ~ 8rp)yees UrmfFWv. CA, GR. No. 14301~14, 348 SCRA 569, 579-580 !200)1.
GR No. 148738,Jooe 29. 2004.
CHArTER EIGHT 899
JURISDICTION AND RELIEFS
Arbitrator with contradictory results, as in the case of Zafra v. Hon. CA, 1 the records
of the case as well as the submissions of the parties should be reviewed.
An example where the High Court reviewed the factual setting of the case
is National Stu/ Co,poralion v. CA. 2 After reviewing the facts, it was established that
the award of the 1993 year-end incentive was patently erroneous amounting not
only to grave abuse of discretion but also to a denial of substantial justice. The
Voluntary Arbitrator himself has found that the mid-year incentive pay for 1993
was given by petitioner as an advance payment of the fiscal year-end incentive
award for the same year. Indubitably, to require petitioner to pay again the same
incentive pay at the year-end of 1993 is obviously a great injustice that would be
committed against petitioner.
4. VOLUNTARY ARBITRATOR ACTS IN QUASI-JUDICIAL
CAPACITY.
Although not a part of a government unit or a personnel of the DOLE, a
Voluntary Arbitrator, by the nature of his functions, acts in a quasi-judicial
capacity.3 He is a means by which government acts, or by which a certain
government act or function, are performed. He performs a state function pursuant
to a governmental power delegated to him under the Labor Code.4 The landmark
en bane case of u1zyn Dtvtlopment Bank v. Assodation of u1z.o11 Dtvtlopmtnt Bank
Employm,5 clearly declared that a Volunury Arbitrator, whether acting solely or in a
panel, enjoys in bw the sta111s of a quasi-judicial agency but independent of, and
apart from, the NLRC since his decisions are not appealable to the latter.6
5. ORDINARY APPEAL UNDER RULE 43.
Being a quasi-judicial agency, the decisions and awards of a Voluntary
Arbitrator are appealab\e by way of a petition for review to the CA under Rtvistd
Admi11i.slrati~ Circular No. 1-9S1 which provides for a uniform procedure for
appellate review of all adjudications of quasi-judicial entities and which is now
embodied in Section I, Ride 43 of the 1997 RP/ts ofCivil Proadiirr.
The tn bane rnling in L1zon Dtvtkipmmt Bank,8 in effect, equates the
decisions or awards of a Voluntary Arbitrator to those of a Regional Trial Court
(RTC). Hence, in a petition for certiorari from the awards or decisions of the
Voluntary Arbitr.itor, the CA has concurrent jurisdiction with the Supreme Court.9
1 GR No.139013, ~t 17, 2002. 389 SCRA 200.
2 GR. No. 134468, Avg. 29, 2002.
1 Oceai: fi:: DMsm (FFVv, V. Rorreo, GR No. L-43890, Jttt 16, 1984, 130 SCRA 392;
, I:!.; See also Ludo &llr)'m Capo-aim v. &l:mdo, G.R. No. 140960,Jc11. 20, 2003, 395 SCRA 451,458.
s GRNo.120319,0ct.6, 1995.
SeeArticle2761262-A1 il relalioo kl pars. (b}and(c), Artick! 224 [217). Laba Code, as.rnendedbyRANo. 6715.
Prtlm.Jl]ated oo Ma/ 16, 1995.
, 1..u2oo Ot-.u)pment8a'lk v. A>sociatioo of Luzoo ~ ! l a ' l k Eirpoyees, GR No. 120319, Oalber 6, 1995.
t taf'e!la. Inc. v. VA Rene Ofrenoo.GR No 117811, OCl. 25, 1995.

900 SAR REVI EWER llN IAROR IAW
In Alcantara, Jr. v. CA, 1 it was held that LJl!{PII Devekipmml Bank is still a
good law.2The introduction of tl1e provi$iOn of Seclio11 2, RJJk 42 of the ~viJed &,Its
of Civil Proted1m did not alter the ruling in said case. The reason is that Sulion 2, RJJ/e
42 is nothing more than a reiteration of the exception to the exclusive appellate
jurisdiction of tl1c CA, as provided in Section 9 of Batas P,ambansa B(g. 129, as
amended.3
In Centro Escolar University v. CA,4 the Supreme Court related the
development of Rule 43, as regards the proper appeal of decisions of Vo!W1tary
Arbitrators. It observed that the Labor Code was sile~t as regards the appeals from
the decisions of the Voluntary Arbitrator, unlike those' of the Labor Arbiter, which
may be appealed to the NLRC. The High Court noted, however, that the
Voluntary Arbitrator is a government instrumentality within the contemplation of
Sution 9 of Batas Pambansa B~. 129 which provides for the appellate jurisdiction of
the C.-\. The decisions of the Voluntary Arbitrator are akin to ·those of the RTC
and, therefore, should first be appealed to the CA _before being elevated to the
Supreme Court. Tius is in furtherance and consistent with the original purpose of
Cimilar No. 1-91 to provide a uruform procedure for the appellate review of
adjudications of all quasi-judicial agencies not expressly excepted &om the coverage
of Sc.lion 9 of B.P. B~. 129. Cimdar No. 1-91 was later revised and became RtviJed
Administrative Cirmlar No. 1-95. The Rules of Court Revision Committee
incorporated said Cirmlar in fuile 4J of the f 997 RJJk1 of Civil Proadure. The
inclusion of the decisions of the Voluntary Arbitrator in said RJJ/e was based on the
Court's pronouncements in LJl!{Pn Development Bank.5
The Supreme Court has since reiterated the Lizon Development Bank ruling
in a cateoa of decisions.6
6. PERIOD OF APPEAL, A LINGERING CONTROVERSY.
a. Conflict in periods.
Over the years, tl1ere has been a lingering conflict in the reckorung of the
reglementary period \vitlun which to elevate a case on appeal from the decision of a
Voluntary Arbitrator or Panel of Voluntary Arbitrators to the CA. This conflict
1 GRNo.143397,Aucj.6,2002.
2 PhiT!)pi,e Elem:Capaalioo v.CA, G.R No.168612, Dec, 10, 2014.
1 kl Mmled by RA No. 7!m; See LE!f1e iv Eem: Coopeiaji,e_1nc. v. LEYECO rv ~ I.ml-ALU, GR No.
1sms.0ct.19.2007. · > Id.
' Cenro Esoo'a' l.klivef,ity Facuty ~ Alred WOl1ters-lndependent Unioo v.CA, G.R. No. 165486, M3y 31, 2006. 490 SCRA
61,69-70
1 See flaav.Avesco Malketmg Corpcralioo, GR No. 177414, NCN. 14, 2008, 591 Phil 827,FoolnoleNo.19 t.ereof.
' Sane a '1em .1e Yelow&is Lile EIT¢,yees Unoo (YBlEU) v. Yelb,,/ Bus Lile, Inc. (Yaij, G:R No. 190876, June 15,
2016; Phlippine Ek!cb'c Caporalm v. CA, GR. No. 168612. Dec. 10. 2014; Royal Plai Winers l.kli:xl v. ~
Bo1m PhilppileS, l:lc.-Cebu Fml.G.R No. 198783, Apri 15, 2013, 696 SCRA 357; ScJnam og rrga lkrggagawa sa
Hyatt (SIWASAfl-NlM'rlRA!N) v. Magsalin, GR No. 164939, .lllle 6,2011.
CHArTER EIGHT 901
JURISDICTION ANO RELIEFS
arose from the variance in the periods provided in Article 276 [262-A)1 of the
Labor Code, on the one hand, and tlie Rules of Court, particularly Section 4, Rule
43 thereof, on the other hand.
Article 276 [262-A] provides for a 10-calendar day period. It reads,
insofar as pertinent, as follows:
•~rhe award or decision of tlie Voluntacy Arbitrator or Panel
of Voluntary Arbiuators shall contain the facts and the law on whicb it is
based. It shall be final and executory after ten (10) calendar days
from receipt of the copy of the award or decision by the partics."2
Rule 43, Section 4 of the Rules of Court, on the other hand, provides for
a 15-day reglemeotary period for filing an appeal, thus:
"Section 4. Period of appeal - The appeal shall be taken within
fifteen (15) days from notice of the award, judgmeot, final order or
resolution, or from the date of its last publication, if publication is
required by law for its effecrivity, or of the denial of petitioner's morion
for new trial or reconsideration duly filed in accordance with the
governing law of the court or agency a q110. Only one (1) motion for
reconsideration shall be allowed. Upon proper motion and the payment
of the full amount of the docket fee before the expiration of the
reglementary period, the Court of Appeili may grant an additional
period of fifteen (15) days only within which to file the petition for
review. No further extension shall be granted except for the most
compclliog reason and in no case to exceed fifteen (15) days." 3
b. Conflict in decisions.
It appears that the Supreme Court, for a very long period of time, has not
come up with a definitive ruling on the proper reckorung of the reglementary
period for appeal. Thus, there have been decisions prescribing the 15-day period
under the Rules of Court,4 on the one hand, and 1O-calendar day period under the
Labor Code,5 on the other hand.
1 Arti:le 276 [262-AI is irl ~ = t introduced b'i RA. No. 6715. Pna to t.e effedMty of lhe MleOOITIEl1t oo Mrdl 21,
1989, Miele 262 (1he predecessa PflMS01) sta1!ld !hat vctmlaty alilafun decisioos or ~ wxJd be fina,
~ aid exeartay. Despde such invneoa'8/ exec:utlfy na!lJre d lhe decisiorls aid a.l'cllls d lhe Voonar,
Mlilram, himMr, lhe Court prooo.n:ed n Ocea,c Bi:: DMs01 (FFW) v. P.omero, [G.R No. L-43890. Ju~ 16, 1984,1ll
SCAA 392). ha\ lhe decisoos or~ a lhe Vwt.Jrf M>lram ilvtMlg nteqretatioos of Ian' were v.ilhil he scq>e of
!he Cwfs power of rt'<iew. ·
I ~ S(Wied.
, Toe 1x1a'/ regiementry peood has been UJt,eld by tie ~ Court i'I a kxlg me a cases, such as: Royal Plant
WOlkeis Uoon v. ~ Bct1le!s fbippines, lnc.-CEoo ~ GR No. 198783, A/Xi 15, 2013, 371-372; Silram rg
irga Mcrgga;Jawa sa ffyatt (SAIIASAH-NUWHRAIN) V. Ml;jsain, G.R No. 164939, June 6, 2011; Sailt Ws University,
1nc. v. Cobmias, G.R No. 187104, AucJ. 3, 2010; Sarncml Ng t-tga ~agaNa sa Hyatt-NVM-lRAIN-APL v.
Saargiri, GR No. 149050, Mith 25, 2009.
5 Such as lhecasesof NYK-FIL Sil~ Mlnagemai, he. v. Dcilu, GR No. 225142, Sept 13, 2017; Barooda V. CA. GR No.
161006, Oct. 14, 2015; Phifwi',e Eledoc Copaalioo v. CA. GR No. 168612, Dec. 10, 2014; Coca-Coe Bol!less
 BAR REVIEWER ON I.ASOR I.AW
902
In some of the cases where the 15-day period was held to be the
rcglcmen tary period, the Supreme Court denied petitioners' petitions for review
since petitioners failed to appeal the Voluntary Arbitrator's decision within said
period provided in Rule 43. In these cases, 1 it was pronounced that the CA had no
jurisdiction to entertain the appeal assailing the Voluntary Arbitrator's decision.
And in the cases2 where the 10-calendar day period was asserted as the
proper rcglemeniary period, the Court declared that the decision of the Voluntary
Arbitrator had become final and executory because it was appealed beyond the I 0-
calcndar da)' reglementary period under Article 276 (262-A) of the Labor Code.
6.1. THE GUAGUA DOCTRINE.
a. Clarification ofthe rule on appeal.
Finally, the en bane decision in the 2018 case of Guag/llJ National Colleges v.
G4,3 has hid 10 rest the above conflict. The Court declared that the variable rulings
notwithstanding, the penod now to be followed in appealing the decisions or
awards of the Voluntary Arbitrators or Panel of Arbitrators should be as follows:
(1) ·111<!IO-calendar day period stated in Article 2i6 (262-A) should be
understood as the period within which the party adversely affected by
the ruling of the Voluntary Arbitrators or Panel of Arbitrators may
file a motion for reconsideration; and
(2) Only after the resolution of the motion for reconsideration may the
aggrieved party :ippeal to the CA by filing the petition for review
under Rule 43 of the Rules of Court within 15 days from notice
pursuant to Section 4 of Rule 43.
b. Motion for Reconsideration, an indispensable requirement.
1l1e indispensable pre-requisite requirement before a Rule 43 petition for
review may be filed is the filing of a Motion for Reconsideration with the Voluntary
Arbitrator or Panel of Voluntary Arbitrators who rendered the decision.
In the 2010 ruling in Teng v. Pagahac,4 the Court clarified that the 10-day
period set in Article 276 [262-A) of the Labor Code gave the'aggrieved parties the
opportunity to file their motion for reconsideration, which was more in keeping
with the principle of exhaustion of administrative remedies.
~ . I n c . ~ Force lrol-PTGWO-BAIAIS v. Coca-Cola Botlle!s Phiippiles, Inc., GR No. 155651, Jtty 28,
1 E.xatrp~ aie the cases of AfJA ~College-Santiago City, loc.v. N.ml, GR. No.162739, Feb. 12, 2008; N"ippon
Pai'rt ~ Unm-0!.ALIA V. CA, GR No. 159010, NCI/. 19, 2004; Mri1 Mxil1'Ml Ho1el V. Booomeo G.R No.
138305, Sept. 22, 2004.
2 See ftippne EJecti: C-Orporatio1 v. CA, Sllpfll; Coca-Cd.a Bottlers f'hliJJlties, Inc. Sales Force UrmPTGWO-BAtAIS v.
Coca-Cola Bollle!s f'hiWines, n:.,supra
1 Goagua Nalmal Cd'Eges v. CA, GR. No. 188492, Al.cj. 28, 2018.
' G.R No. 169704, Nov. 17, 2010,635 SCRA 173.
CHAPTER EIGHT 903
JURISDICTION AND RELi EFS
c. Dirccdve to DOLE and NCMB to amend the Procedural Rules.
The Court noted in G11ag11a that despite the clarification made in Teng v.
Pagahac, the DOLE and the NCMB have not revised or amended the Reviled
Procedural Guideli11u i11 the Conduct of Voluntary Mi/ration Proceedings insofar as its
Section 71 o_f Rule VU is concerned. This inaction has obviously sown confusion,
parncularly 1n regard to the filing of the motion for reconsideration as a condition
precedent to the filing of the pe~tion for review in the CA. Consequently, the
DOLE and the NCMB were directed by the Court to cause the revision or
amendment of Section i of Rule VII of the Revised Procedural Guidelines in the Conduct
of Voluntary Arbitratio11 Proceedings in order to allow the filing of motions for
reconsideration in line ,vith Article 276 [262-A) of the Labor Code.
7. PAYMENT OF APPEAL DOCKET FEE WITHIN PRESCRIBED
PERIOD, BOTH MANDATORY AND JURISDICTIONAL.
. Up_on the_ ~iling o~ the petition within the 15-day reglementary period
earlier menuoned, H 1s reqUJied under Section 5 of Rule 43 of the Rules of Court
that the petitioner should pay to the CA clerk of court the docketing and other
lawful fees. Non-compliance with this procedural requirement is considered a
sufficient ground fo r the petition's dismissal. ·
lbus, payment in full of docket fees within the prescribed period is not
only mandatory,. but also jurisdictional 2 It is an essential requirement, without
wluch, the dec1S1on appealed from would become final and executory as if no
appeal has been filed.3
8. ERRONEOUS USE OF RULE 65 INSTEAD OF RULE 43 PETITION.
It is elementary in remedial law that the use of an erroneous mode of
appeal is a valid cause for dismissal of a petition for certiorari.• It has been
repeatedly stressed that the independent action of ~ertiorari unp.er Rule 65 cannot
.be availed of as a substitute for the lost remedy of an ordinary appea~ including
that provided for under Rule 43, especially if such loss or lapse was occasioned by
one's own neglect or error in the choice of remedies.5 This is due to the nature of a
Rule 65 petition for certiorari which lies only where there is "no appeal," and "no
pl~ speedy and adequat~ r=~dy in the ordinary course of law."6 Compliance
with this rule 1s matenal s10ce wtthout an appeal seasonably filed, the questioned
1 Sectioo 7.lv'o!ioos kJ Recoosmaoon.Thedecisioo cllhe l'Olrtlly atblJatDr is notSlb;iect of amoo:J1 kJ recoosi:lera1m.
As ea!f as lhe 1932 case cl Laz;ro v. Elldencia and Meres, (7 Phi. 552, 553], h e ~ Co.r1 has mssed lhal lhe
payrrent ol lhe ~ aroounl cl lhe docket fee is M ilcfispenscble step fix lhe pededioo cl M ~ In Lee v. Rep.bic.
lG.R No. L-15027, JM. 31, 1964, 10 SCRA 55, 67), lhe Crutdeooed llat even l!1oolJh har cl lhe appePate cru1 docket
fee was depooited, no appeal was deemed perlecled l'Alere lhe om ha'f was lendered after lhe peood wm v.tidJ
' pa,l00!1\ shot,tj have been male..
1 Ruby Shelter Bui'idel, and Realty Oeveqlme!1t Coipcmlo v. FOOMM 111, G.R No. 175914,Feb. 10, 2009.
Sebastiillv. M:xales, G.R. No. 141116,Feb. 17, 2003.
5 Sevila TirolY:J Cool)any v. A. V.A Sroma. G.R No. 152456,Apri 28, 2004.
' Sectioo 1. Rule 65. 1997 Rules of Gin Procedure; Replbfic V. CA, supra.

904 BAR REVIEWER ON V.BOR U.W
decision of a Voluntary Arbitrator becomes final and cxecutory after ten (10)
calendar days from notice and may tlms be appropriately executed. 1
9. EXCEPTIONS WHEN RULE 65 PETITION GIVEN DUE COURSE
DESPITE AVAILABILITY OF REMEDY OF APPEAL.
The following are the rc;cognized exceptions when certiorari may be
granted despite the availability of an appeal:
(a) When public welfare and the advancement of public policy dictates;
(b) When the broader interest of justice so requires;
(c) \Xlhen the writs issued are null and void; or
(d) When the questioned order amounts to an oppressive exercise of
judicial authority.2
In Unicraft lnd11s/riu Intemalional Corp. v. The Hon. CA,3 petitioners filed a
petition for certiorari against the Voluntary Arbitrator's decision. Finding that the
Voluntary Arbitrator re~dered an award without giving petitioners an opportunity
to present evidence, therefore, null and void for violation of petitioners' right to
due process, the Supreme Court allowed petitioners' petition for certiorari despite
being tl1e wrong remedy and accordingly decided it on the merits.
In Mora v. Avesco Marketing Corporalio,114 the Court held that petitioner
erred in filing a petition for certiorari against the Voluntary Arbitrator's decision.
Nevenheless, it decided the case on the merits "in the interest of substantial justice
to arrive at the proper conclusion that is conformable to the evideotiary facts."
1n Ytllow BIII u,u
Employm Union (YBLEU) v. Yellow Bus une, Inc.
(YBU),s the petition for certiorari was given due course on the rntiocination that
where the evidentiary facts do not jive with the conclusion of the Panel of
Voluntary Arbitrators, it is a valid reasoning that it is in the interest of justice that
the Court of Appeals gave cognizance to a certiorari petition.
3.
JUDICIAL REVIEW BY THE SUPREME COURT
THROUGH RULE 45 PETITION FOR REVIEW ON CERTIORARI
1. THE ONLY MODE.
Since the Court of Appeals has jurisdiction over the petition for certiornri
under Rule 65 that may be filed before it from the decisions of the NLRC, the
DOLE S~cretary or the BLR Director (111 cases decided by him in his appellate
jurisdiction), any alleged errors committed by it in the exercise of its jurisdiction
Mril ~ HOO?! v. VA Banrmo, GR No. 138305. Sepl 22, 2004.
AM6. ~ Colege-Sama,Jo Cl)', Inc. v. Nacilo, GR No. 162739,Feb. 12, 2008.
1 GRNo.134!Xl3,Mrm26,2001,407Pli527.
' GR No. ln414, Nov.14, 2008, 591 Phi. 827.
1 GR No. 190876, Jooe 15, 2016.
CHArTER EIGHT 905
JURISDICTION ANO R.ILIEFS
would be errors of judgment which are reviewable by means of a timely appeal to
the Supreme Court and not by a special civil action of mtiorari.
_ Such app~al f~om a final disposition of the Court of Appeals is a petition
for review on certloran under Rule 45, and not a special civil action of certiorari
under Rule 65 of the Rules of Court Rule 4S is clear that the decisions final
orders or resolutions of the Court of Appeals in any case, i.e., regardless ~f the
nature of the action _or proceeding involved, may be appealed to the Supreme
Court by filing a petition for ·review which would be but a continuation of the
appellate process over the original case. Under Rule 45, the rcglementary period to
appeal is fifteen (15) days from notice of judgment or denial of the motion for
reconsideration. 1
If the aggrieved party fails to do so within the reglementary period and the
decision accordingly becomes final and executory, he cannot avail himself of the
writ of certiorari, his predicament being the effect of his deliberate inaction. A
petition for certiorari under Rule 65 cannot be a substitute for a lost appeal under
Rule 45; hence, it should be dismissed.2
2. MAY RULE 65 CERTIORARI PETITION BE AVAILED OF FROM CA
DECISION TO THE SUPREME COURT?
1bis poser has been answered both in the affirmative and in the negative.
In answering tlus poser in the affinnativc, it was held in Tomas Claudio
Memorial Colkff, Inc. v. CA,3 that a Rule 65 certiorari petition may be filed if in
issuing the assailed decision and resolution, the CA acted with grave abuse of
discretion, amounting to lack or excess of jurisdiction and there is no plain, speedy
and adequate remedy in the ordinary course of law. A remedy is considered plain,
speedy and adequate if it will promptly relieve tl1e petitioner from the injurious
effect of the judgment and the acts of the lower court.4
The aggrieved party is proscribed from filing a petition for certiorari if
appeal is available, for the remedies of appeal and certiorari are mutually exclusive
and not alternative or successive. The aggrieved party is likewise barred from filing
a petition for certiorari if the remedy of appeal is lost through his negligence.5 A
petition for certiorari is an original action and docs not interrupt the course of the
principal case unless a temporary restraining order or a writ of preliminary
injunction has been issued against the public respondent from further proceeding.6
Asai Tr.mnissm CoJ)orafun v. CA, GR No. 144664, f.'ath 15, 2004.
Malay<fY:I Ml'ggilj3Warg Stajfas!Phis, n:.V. M.RC, GR No. 155300, AuJ. 2Ul13.
i G.R. No. 152568, Feb.16, 2004.
See aso Patib v. Ruool lillz, n:., GR No. 196539, 0d. 10, 2012.
l,Aaay.rg Mangg~awa ng Stajfast Phils, nc. v. NLRC, supra.
6 Sedioo 7, Rule 65, Rules of Crut.
906 SAR RfVIEWER ON LABOR I.AW
In Cirltk Empk,ym Labor Union v. Cirlek Ekclroni(I, lnc.,1 it was conceded
that respondent indeed availed of the wrong remedy of certiorari under Rule 65.
Due, however, 10 the nature of the case, involving workers' wages and benefits, and
the fact that whether the petition was filed W1der Rule 65 or appeal by certiorari
under Rule 45, it was filed within 15 days (the reglementary ~riod under Rule 45)
from petitioner's receipt of the resolution of the CA' Resolu~on denying its motion
for reconsideration, the Court resolved to give it due course. As Almelar v. RTC of
Las PiiiaJ, 2 restates: "Generally, on appeal taken either to the Supreme Court or
the CA by the wrong or inappropriate mode shall be dismissed. Tbis is to
prevent the party from benefiting from one's neglect aqd mistakes. Howeyer, like
most rules, it carries certain exceptions. After all, the ultimate puq,ose of all
rules of procedures is to achieve substantial justice as expeditiously as
possible."3
But in New Ever Marke/in~ inc. v. CA,4 and in the earlier case of San Miguel
Corporation v. The Hon. CA, 5 the Supreme Coun answered the same poser in the
negative because the Rule 65 petition was not proper since an appeal was not only
available but also the speedy and adequate remedy. Hence, for failure of petitioner
to file a timely appea~ the questioned decision of the Court of Appeals had already
become final and executory.6
It is thus clear, according to Tirazona v. CA,1 that in case what is filed is ·a
petition under Rule 65 instead of Rule 45, before the Supreme Court may treat the
petition erroneously filed under Rule 65 as having been filed under Rule 45, the
same must comply with the reglementary period for filing an appeal Tius
requirement is not only mandatory but also jurisdictional such that failure to do so
renders the assailed decision final and execulory and deprives the Supreme Court of
Jurisdiction to alter the final judgment, much less to entertain the appeal.
In Malaya,,g Manggagawa ng St~aJI Phi/J, Inc. v. NLRC,8 petitioner, instead
of filing a Rule 45 petition for review on certiorari from the decision of the CA,
ft.led a Ruic 65 petition for certiorari to the Supreme Court after 52 days from its
receipt of the CA decision. Contrary to petitioner's claim that there was no appeal
or any other plain, speed)• and adequate remedy in the ordinary course of law other
than this petition for certiorari, the right recourse was to appeal to the Coun in the
form of a Rule 45 petition for review on certiorari. For purposes of appeal, the
decision of the CA was a final judgment as it denied due course to, and dismissed,
the petition. Tirns, the decision disposed of the petition of petitioner in a manner
' Crtc!r. Err!>b'fees LmxxUnixrFederatimtFreeWatersv.Cirtelt Eled!ooi:s, lnc., G.R No. 190515,June 6,2011 .
GR No. 179620,.Auj. 26, 2008.
l Seeasot,'a:!riagav.CA,GRNo.142001,Jufy 14,2005.
' GR I-«>. 140555,Juy 14, 2005.
1
GRNo. 146n5,Jai.30,2002.375SCAA311,315.
5
SeealsoAss<xiaoonolkl!egr.ml Searif Forteclllis&J (AISFBj- Al.Uv. Hon. CA, GR No. 140150,Al.g. 22, 2005
G.R No. 169712, Mith 13, m .
1
GR No. 155306,.Auj.28, 2013.
CHArTER EIGHT • 907
JURJSDtcr10N ANO RELIEFS
that left nothing more to be done by the CA in respect to the said case. Petitioner
should have filed an appeal by petition for review on certiorari w1der Rule 45, not a
petition for certiorari W1der Rule 65, in the Supreme Court Where the rules
prescribe a particular remedy for the vindication of rights, such remedy should be
availed of.
3. A PARTY CANNOT FILE A PETITION BOTii UNDER RULE 65
AND RULE 45.
As a general rule, a party cannot file a petition both under Rules 45 and 65
of the Rules of Court because said procedural rules ?ertain to different remedies
and have distinct applications.' In Panganiban v. Tara Trading Shipmanagemenf,
Inc} petitioner denominated his petition as one under Rule 45, but considering the
grounds raised, he filed it as both a petition for review under Rule 45 and a petition
for certiorari W1der Rule 65 of the Rules of Court Tne applicable rule is Rule 45,
which clearly provides that decisions, final orders or resolutions of the CA in any
case, regardless of the nature of the action or p:oceeding involved, may be
appealed to the Supreme Court through a petition for review. This remedy is a
continuation of the appellate process over the original case. Recourse under Rule
65 cannot be allowed either as an add-on or as a substitute for appeal. The
procedural infirmity notwithstanding, the Supreme Court treated this petition as
one filed under Ruic 45 onfy and considered the alleged grave abuse of discretion on
the part of the CA as an allegation of reversible error.~
4. THE NEYPES DOCTRINE (FRESH PERIOD RULE).
Th<; Neypu doctrine, which was enunciated in the en bane ruling in Neypu 11.
CA,4 has standardized the appeal periods to afford litigants fair opportunity to
appeal their cases. For this purpose, the appellant is allowed a fresh period of
fifteen (15) days within which to file the notice of appeal in the Regional Trial
Court, counted from receipt of the order dismissing a motion for a new trial or
motion for reconsideration. This 'fresh period rule' also applies to Rule 43
appeals from quasi-judicial agencies to the Conrt of Appeals and Rule 45
appeals by certiorari to the Supreme Court The new rule aims to regiment or
make the appeal period uniform, to be counted fror:1 receipt of the order denying
the motion for new tri~ motion for reconsideration (whether full or partial) or any
final order or resolution. There is no doub.t, therefore, that this rule applies to labor
cases.5
1 ~ l.'arlmJo sa Pi:ql Resoun:e;, klc..srutlem Plllwnes FE!derabl cl .1..aOO' INMW'RJ,SPFLI V. The
Hon. CA, GR Nos. 1488J9.40, Nov. 2, 2005; G& S Traisport Ccxporaoon v. CA, G.R No. 120287. ~ 28, 2002. b' .ri
excepoon kl tisge,eral Ml.
2 GR No. 187032,Oct 18, 2010.
J Cifng ~ Philppiles, Inc. v. UrwersaCanni,g, he., G.R No.160966, Oct 11, 2005, 472 SCAA355. 359.
• GRNo.141524,Sepl 14,2005.
5 Eizabeth Gagli v. Dejero, GR No. 196036, Oct 23, 2013.
908 BAA REVIEWER ON IABOll lAW
D.
BUREAU OF LABOR RELATIONS
I.
JURISDICTION, IN GENERAL
.•
1. JURISDICTION OF HE BLR.
The jurisdiction of the Bureau of Labor Relations or simply "B11rta11" or
"BLR" is described in Article 232 [226] of the Labor Code as follows:
> examination of financial records and accounts of labor org.umations to
"Article 232 (226]. B11rta11 of Labor &lalioni. - The Bureau of
Labor Relations and the Labor Relations Divisions in the regional
offices of the Depanmenr of Labor, shall have original and exclusive
authority to act, at their own initiative or upon request of either or both
parties, on all inter-union and intra-union conflicts, and all disputes,
grievances or problems arising from or affecting labor-aunagement
relations in all workplaces, whether agricultutll! or non-agricultucal,
except those arising from the implementation or interpretation of
collective bargaining agreements which shall be the subject of grievance
procedure and/ or voluntary arbitration.
"The Bureau shall have fifteen (15) working days to act 011
labor cases before it, subject to extension by agreement of the parties."1
2. LABOR RELATIONS DMSIONS (LRDs) IN REGIONAL OFFICES.
"Labor &la1ions Divinon" (LRD) refers to the following units in the DOLE
Regional Office: (1) Labor Organization and CBA Registration Unit;2 and (2) Med-
Arbiuation Unit3
3. CONCURRENT JURISDICTION OF THE BLR AND THE LRDs.
The BLR and the LRDs in the Regional Offices have concurrent
jurisdiction over the cases described in Article 232 [226]. This contllmnt character is
stressed not only in the provision of this article but in .Article 219 [212] of the
Labor Code which defines the term "B11rta1'' as referring to both the "Bureau of
Labor Relations and/or the Labor Relations Divisions in the regional offices
established under P.O. No. 1, in the Department of Labor."
1
k. arended by Seam 14, RA No. 6715.Mlnil 21, 1989; As rermtered pi.mm! ID Sectioo 5, RA No. 10151, Jr.Ile
21, 2011 ax! DOLE Depatrent Mi&xy No. 01, Series d 2015 (Rerurbemg d Ille Labor Coded Ille Pti!)Pines, as
Nnenied). ~ tnJu~ 21, 2015.
2
The Laba (xgirizaoon .rid C8A Recpatm UM ls il cfarge ct processi'g lhe apii,:;afms b regm!m d ildependent
lllials, tx:a ~ . vmers·associam crd o:>!edM! ~rg ~ (CBAsJ. mantanilg scil recm1s crd a1
aher repal'I and l'lCilelt5 pe!laini'q ID \magnzaoons and v.mers' as50CialiJns. (Seem 1~. Rule I, Book V, ~
kl ~ I Ile labaCode, as amendoo lrf Oepm,ent ()de- No. 40-03, Series d2003, (Feb, 17, i:roJI,),
I The Med-Mlircmn ~ tn te o0ier hinJ, cooduds ~ S and 'deciles certf(afm eledioo Cf representatm r.ases.
ill!Hl'lQl or i l ~ ;m olhe,- rela:ed labCI' relati:lns dilplAes. (Sedxn 1 ldd]. Ru'e I, Book V, lbil.).
CIIAPTER EIGHT 909
JURISDICTION AND RELIEFS
4. AUTHORITY OF BLR UNDER ADMINISTRATIVE CODE OF 1987.
Toe AdminiJtraliw Cock of 198'1' contains the following provision which
has been cited as basis in resolving certain cases falling under the BLR's
jurisdiction,2 thus:
"Section 16. Burtau of Labor RtlatiOfU. - The Bureau of Labor
Relations shall set policies, st2ndards, and procedures on the registration and
supervision of legitimate labor union activities including denial, cancellation
and revocation of labor union pemiits. It shall also set policies, standards
and procedure relatiog to collective bar~g agreements, and the
determine compliance with rdevant bws.
'The Burc:iu shall also provide proper orientation to workers on
their rights and privileges under existing laws and regulations, and develop
schemes and projects for the improvement of the standards of living of
workers and their fumilies."
5. FILLING IN DETAILS IN THE LABOR CODE.
Notably, there are chief ambiguities and o:nissions in the provisions of
the Labor Code and its Implementing Rules that need to be filled up through
supplemental issuances by labor authorities. For instance, as will be discussed
below, the grant of jurisdictional authority to Med-_-\rbite.rs and DOLE Regional
Directors are not clearly laid down in the Labor Code and in its Implementing
Rules. 1bis unfortunate fact has been recognized by the High Court in Barlu.3 It
observed therein that tq fill in the missing details in the Labor Code and its
implementing rules, the &i/u of Promi11n on Mtdiation-Arbitralion was issued on April
IO, I992. In upholding these &ikl validity, it was pronounced that "[w]ithout
doubt, the &lies of Promh1rt on Mtdialion-Arbitralior. did not amend or supplant
substantive law but implemented and filled in details of procedure left VO(IIOUJ or
ambig11011s by the Labor Code and its Implementing Rules."4
II.
LABOR OFFICIALS HAVlNG JURISDICTION OVER ARTICLE 232 (226) CASES
1. LABOR OFFICIALS CONCERNED.
For purposes of clarifying the issue· of jurisdiction over cases mentioned
in Article 232 [226], there is a need to cite first the following labor officials who
exercise such jurisdiction, to wit:
• SeeSedtn 16,~4. TllleVll,BooklVtreied.
Such as tecase ctla ToodeflaWcrti,slmnv. Theim. Seae1cry cl !..ab« clld~l GR No. 96821, Dec.09,
1994. \\llere l was decwed ta, OOEl)Enlern d ~ delegaoon Iran ~e OOl£ Secretry. Ile AA based co the aklre-
QUO(ed provisilcl il t,e Adn'inmtive Code, has power d itso,m ID cooduct exanilaloo cl aa:oo,ts d unros.
1 8.r'esv.Bit!ri>,GR.No. 120220,m16, 1999.
• kl.
910 BAR REVIEWER ON 1.ABOR I.AW
(1) Mediator-Arbiters (Med-Arbiters);
(2) DOLE Regional Directors; and
(3) Bill Director.
2. MED-ARBITER.
The term "Med-Arbitd' refers to an officer in the DOLE Regional Office
or in the BLR authorized to hear and decide rpmmtalion cam, inter-union or intra-
union diJputu and other nlated labor nlations dnputu.1
While the Labor Code refers to this official as ';Med-Arbiter,"2 it should,
however, be construed to mean "Medutor-Arbiter."3 Most recent DOLE
issuances 4 have specifically changed such reference to ''Mediator-Arbiter" in their
provisions. This is but proper since the word "M.ed' 5 obviously is an abbreviation
of the word "Media/or."
Incidentally, Article 232 (226), which is the only provision of the Labor
Code ucating the jurisdiction of the BLR and its Med-Arbiters, never specifically
mentions Med-Arbiters in its provision/ thereby creating the confusion as to which
article of the Code the Med-Arbiters C\:ally derive their jurisdictional authority
from. lt may be implied, however, that the menuon in this article of the LRDs, of
which the Med-Arbiters are part, suffices.7
Indeed, under the law and rules, Med-Arbiters arc not merely ordinary
functionaries in the Bill; they are possessed of certain powers not even available to
1 Sml 1Ii). ~ ~ Book V, ~ lo krpletrent tie Laboc Code, as cVm'ded b'/ 0epatne-t Order No. 40-03, Series c(
2003, [Feb. 17, 20031. Ex~:ed from Ile 1/ed-Mlitets µisadol are cases CNef v.tidl Ile Reginal Oi'ec1lr execises
OOi!ila and excllsiie~ sud\ as~oon b°lrol regstatioo, pe6m ftl'c.n:elatioo of m regislralm and
~ fa examilaoon a lmlS bocA(s d accxiool5.' This is per Se:tion 3, Rlre II [lv'ed-Aroitraf], ~ a Prtx:edure
e n ~ w.!li:h proviles:'SEC. 3..hmfcbl of CleRegiloal D'redor.-The Regooa Oirectushal exercise
OOijilil and exdisM! ¢si:fdioo rNet ~ b' 1.001 regimti:Jn, pe!ioorls fa' =Lml d lrol regislrali:n and
COOl)lai,tsb'examilaoondlmlSbooksdaannts.' Seealso !s'esv. Bi'.ooiJ, GR No.120220,Jt.rie 16, 1999.
1 The 1e1m · ~.e( is osed and ci'.ed i1 tie folo,y'rg articles d tie Laba Cooe: Mdes 230 [224] (Executicn rl
decisiris. 002S a .wards). 268 12561 ~ ~ n ~ establislmenls), 269 1257] (Pelim n
~ mlslvnenl5J, 21212591 (ft;lpea 1nxn cenft:alicn eledicn oroe1S), and 292 (277] {Mscel'aleotJs pw,-isms),
~(i)lheract.~.Mld-M>eisnotre!mklatalnMx:te232(226].
1
No,,,tm,~.ntel.mCodeislheem'~-M>ile('usooa~
4
&JCh as ~ l Order No. <Wf-03, &res ci 2008, issued en OckllJer 30, 2006. This Depabnenl Order was issued by
fie OOlE Seaelaly b fl'!)i,nent lhe ~es i1 lhe Laba Code lilruft about b'/ Ile ammne11ts ilb'odx:oo llerelD by
RA No.9481 [Ellediie.Jl.ne 14, 2007].Ardher issuance is Depment Ordei No. 40-~15, Series a2015 [Sepl8nbe( 07,
2015]. 8lffsl 'fllller Mmfrg IJepme1I ~ No. 40, Series rJ. 2003, Amenoog Cle ~ R1res and
R8)wfxns ct Book Vrl Ile Laba Code ofI l e ~ as Atneooed.'
1
Altwjw,thru apeood lhat\\Wd sgnify flail is an abrogement ct av.oro.
' Nirosjlasma-rded,~isbengrefeTed1onomptMS01Sallel.abaCooe.
1
M. Y. ~ ~ . h:. v. l.acjuesma. GR No. 95011, A!Xi 22, 19'J1, \\t1ere ij was sW: "lklder Mx:!e 226 ct Ile Laba
Cooe, as anenled, lie areau am
d Laba Rela1ials (Bl.R), Cle rre:!-artliler is an ctlicer, has Ile ~ jlrisodioo
xxx. [IJle llR has lhe 00i!i:1al and exON1e µisd"mi 1o, nl!J ala, decxle al lf\Sjllel, ~ a protiens m-g
°'
lnxn a'fedJng labcr-mana;iemert rela1icns in a1 ~ ~ agiil.dbJral a noo-a;iriOJ!bJal. N ~ . neie
exercised~ ;J!iscfdicn rNet laba-mam:Jeirent relalicns, lhe ~ has 1he a.roity, ~ and exws.ve, t>
detemne Ile existence d an ell"!)Uy'IHITlliOyee relati:Jnshjl be~ Ile parties.'
CHl\l'TER EIGHT 911
JURISDICTION AND RELIEFS
Labor Arbiters, such as injunction power. 1 They have the authority to issue writs of
injunction in appropriate cases,2 the detennination of which is addressed to their
sound cliscretion.3 Additionally, they are also granted contempt powers.4
3. DOLE REGIONAL DIRECTOR.
The Regional Directors are the duly authorized representatives of the
DOLE Secretary in the DOLE regional offices. They are in charge of the
administration and enforcement of labor standards ,vithin their respective territorial
jurisclictions.5 Although, like the Med-Arbiters, they are not also specifically
mentioned in said article, it is a known procedwal rule, however, that in addition to
their jurisdiction over cases falling under Articles 1286 and 1297 of the Labor Code,
they also have jurisdiction over certain specified cases contemplated in Article 232
[226] of the same Code such as disputes conceming union registration and
cru;icellation thereof as well as CBA registration or deregistration cases.
4. BLR DIRECTOR.
The BLR is headed by a Director who hem and decides certain specified
cases over which he has either original or appeUate jurisdiction. In many cases, his
name, instead of the BLR, is usually the one imple:1ded as public respondent in
certiorari petitions to the CA or subsequent appeals to the Supreme Court.
Ill.
CASES PROVIDED UNDER ARTICLE 232 [226)
1. GENERAL CLASSIFICATION.
The following are the general classifications of the cases mentioned in
Article 232 (226) falling under the jurisdiction of the said officials, to wit:
(a) Inter-union disputes;
1 lklderlhe 19g) t-lRC rues rlflnx:edlle, L;ixJ Miters were~ gr.mc1 nj..rdrle JlOo'ICI'. HonMt, lllis prtMSixl
is oo bnge(kmlil its 2002, 2005 and 2011 ~ -The reascn behi1d its deleooo is lhat under Mi:le 225(e)(218(e)I d
lhe IJila Code, qum JlO,'ICI' is grcml onlf kl lhe 'Ca1'illmi' \\!th ct,.i,:wy' raers lo Ile M.RC's VcriaJs a,isms
and nab 1he Lm Albes.
1 Sedxxl 5, ~ lM. Book vof 1te Ormllus rues ~ eie Laba Code: 'Sec 5. ily.ndicns. - ~ 1BT!)aa,y
ijn:ms orrestamg ade£ i1 irrtcase i"MM"g agro.r,ilg·a.td a liixl' di;pb! shall be issued b'J arr,- ca.r1et~
entity. 01 lhe ~ hand, tie Olli:e of tie Presilent, lhe Seaew,- of l.ab9r, Ole Conrnission, lhe Labet Mli!er a Med-
Mliter llla'f er,:ii1 irrt etal oct i1voMlg or arisil,) m irrt case perm;i beltJe irrt d sad doces a arms Ythi:lt ard
~ bfT,lft Illa'/ ca.ise !,1-aYe a irepaati! dan,age many d 1he pafes 1o lhe case a ~ afed soda! a
~ stabfit(
1 am, v. Laguesrra. GR No. 1~75, .1111e 9, 19!l7, 273 SCRA 109. art ts issuance shcxid be nacwd.ne wai Cle
gnmds p!Mledby la.v and is deemi1afJoo nlJStbe i1 lte llmllJ p!Mled b'/ law.
4 Sedxxl 4, Rull XVI, Bodi V, ~ b IT!)lement Ille lm Code.
I See Ar1x;te 128, laxlrCode.
' Visilra and enbt8nent l)(7,'le!S a lhe DOLE Secretry and his dutt aLroized repiesentaives, lhe DOLE Regma
!xecbs.
7 See At1x:le 129, I.abet Code, nvoM,g smal mooew,- darns a P5,000 or less.
912 8AR IUVIEWER ON LABOR I.AW
(b) Intra-union disputes;1 and
(c) Other related labor relations disputes.2
Ill-A.
INTER•UNION ANDINTRA•UNION DISPUTES
!. INTER-UNION OR REPRESENTATION DISPUTE.
An "in/tr-union disputt or "rtpmenlation di,putl' is one occurring or carried
on between or among unions.3 It refers to a case involving a petition for
certification election filed by a duly registered labor organization which is seeking
to be certified as the sole and exclusive bargaining agent (SEBA) of the rank-and-
file employees or supervisory employees, as the case may be, in the appropriate
bargaining unit of a company, furn or establishment• If there are two or more
legitimate unions involved, it also refers to any conflict between and among them
concerning the issue of which of them should be certified as the SEBA for
purposes of collective bargaining with the employer. Broadly, it covetS any other
conflict or dispute between legitimate labor unions.s
Note must be made of the latest innovative amendment of the Labor
Code's Implmrmling Ritles introduced by Dtpartment Ordrr No. 40-l-15, Series of2015,'
which has expressly repealed the entire provision7 on ''Vohinta,y Rt&0gnition" of the
Implementing Ritks on Book V and replaced it with the freshly-minted mode of
securing the status of a sole and exclusive bargaining agent through a "Request for
SEBA Certi.icadon" or "Request. "Voluntary recognition is therefore no longer
allowed and is effectively replaced by the &quest mode.
The &quul basically is in the nature of an intrr-unwn or representation
dispute. While it may not involve the actual conduct of a certification election when
it is made in an unorganized establishment with only one (1) legitimate union,
since it would merely require a simple validation process by the DOLE Regional
1 llimlv.Hoo. Ca:m:, G.R No. 168475,.kif 4,2007; BaJtisav.CA, GR. 123375,Feb. 28,2005, 452SCRA406,420.
1 5ml 1(8] (foonel1y Secfun 2), ~ XI, Bocl( V, Rues to l'nplement fle Labo' Ccxle, as emended by llepcltnent Order
No. 40f-03, Series d 2008 iOct 30, 2008J; Arflde 23212261, Labo' Cale; ~ nslndXXls No. 6; Vkrv. Trajim, GR.
No.69188, &,pt. 23, 1986; M. Y. San Bisam, Inc. v. LaJuesma, GR. No.95011,Apd22, 1991.
i llomv. Hoo.~ supra; Baoostiv.CA, St4>ra.
' 5ml 1(!JI,~ ID, NCMl Mn.ad ProceMs b"Coociiabl in! Prevenwe ~Cases;~ 2[Defrtim
d TennsJ, NCM8 Pliner on Stte, P'icl:etrg il1d LociOJ1, 2nd Eoioon, lleca1te( 1995; Oi®lo V. Hoo. cacda:, llil.;
Ba4st!v. CA, bil.
5
5ml 1 !xi. ~ I, Bocl( V, ~ k l ~ lhe t.axr Code, as emended by Depment Onlef No. 40-03, Series of
2003,!Feb. 17, 2003).
I lsrued00 ~ 07, 2015.
1
Patbiat,- ils ~ VI (Vcioolary Recoglitioni Bocl( V, fMes kl ~emit lhe Labo' Ccxle, as irTIErded by 0epmeot
Onlef No. 40-03, Series d 2003, 1Fel1. 17, 2003J.This~ has been repeaed in! replac8l by are,,~ entited,
'REOLEST FOR SOU: N-lD EXCLUSIVE BARGAINING AGENT (SEBA.) CERTIFICAIDN', 1XJSUM1 to tie anendmert
~ by Secoon 3, Depmenl Onlef No. 40+15. Series d 2015 jSeplelrber 07, 2015). eni&!d 'fll1her Alrendrg
0epmert Order No. 40,Series d 2003. Ame!m; lhe ~ Rues in! Reg,jmls d Bod< Vd the Labo' Code
I
d lhe Pliippiles, as Amended.'
CHAl'TER EJGHT
913
JURISDICTION AND RELIEFS
Director of confirming the majority support of the employees composing the
bargaining unit for the requesting union and once validated, the requesting union is
immediately certified as the SEBA without conducting a certification election,
however, certification election will have to be conducted under any of the following
situations:
(1) When the Rtquest is made in an unorganized establishment with
only one (1) legitimate union, and the requesting union or local fai/J to &0mplete the
i?quimnmlijor SEBA crrlifiralion during the validation conference before the DOLE
Regional Director, such &quest should be referred to the Election Officer for the
conduct of certification election; in which case, such certification election should
now be under the jurisdiction of the Mediator-Arbiter.
(2) When the Rtquest is made in an unocganized establishment with
more than one (1,) legitimate labor organization, in which case, the DOLE
Regional Di.rector, before whom &quests are required to be filed, should refer the
&quest directly to the Election Officer for the conduct of a certification election2 in
accordance with the Ritler,3 and
(3) When the Rtquen is made in an otganized establishment, in which
case, the Regional Director should refer the same to the Mediator-Arbiter for the
determination of the propriety of conducting a certification election.•
It is clear from the foregoing discussion that there is a jurisdictional
interplay between the DOLE Regional Director and the Med-Arbiter, a subject
which will be discussed further in the sections below dwelling on the jurisdiction of
these labor authorities.
2. INTRA-UNION OR INTERNAL UNION DISPUTE.
An "i11tra-union dispute" or "internal union dispute" refers to a conflict within
or inside a labor union.5 It may refer to any conflict between and among officers
and/ or members of one particular union, including grievances arising &om any
violation of the rights and conditions of membership, violation of or disagreement
over any provision of the union's constitution and by-laws,' issues over controi
1 Sedixl 4, ~ VII ct t,e Rues i> ITpefneri lhe Labo' Code, as amended by Oepatneli Onlef No. ~15, Series ct
2015 jSepterrber 07, 2015]. Theem, shood be CXll100ded il a:xadne wiDl IM! IX tiered.
1 SediJn 5, ~ VI~ llil.
' ~ to~ IX ct the t.m Code's in1)1esneon,i F~Jles. as amended by llepcltnent OrderNo. 40+15, Series d 2015
(SeptentJer07,201 SJ.
SediJn 6, Rvle VII, tid. noo:m1cr1ce v.ith Rues VIII in! IX. lbil.
Milo V. Hoo. Cacdoc, ~ -cifrg 8aufista Y. CA_ Sllpra
1 Sedi)n 1[bl>],~ I, Book V, llil.; Dioknov. Hon. Caalac, ~ ; Bau'islilv. CA.supra.
914 BAR RIVI EWER ON lABOR I.AW
supervis100 and management of its intemal affairs,1 or disputes arising from
chartering or affiliation of a wuon.2
3. RUNDOWN OF INTER-UNION AND INTRA-UNION CASES.
In accordance with the Labor Code's lmp!tmenting lyilu, as amended in
2015,l the following is a rundown of all possible inter-imion/ ~tra-union disputes:
a) Cancellation of registration of a labor organization filed by its
members or by another labor organization;
b) Conduct of election of union and workers' association officers or
nullification of election of union and worke~s' association officers;
c) Audit/accounts examination of wuon or workers' association funds;
d) Dercgisuation of collective bargaining agreements;
e) Validity/invalidity of union affiliation or disaffiliation;
Q Valiclily/ invali<lity of acceptmcc/non-acceptance for uruon
membership;
g) Validity/invalidity of impeachment/ expulsion of union and workers'
associ.,cion officers and members;
h) ValidilJ/i11validi!J of Request for SEBA Certification' (Replacing
'Vo/Jmlary Rrro1,11ilion" as a mode of securing sole aad exclusive bargaining
agem $larus);
i) Opposition to application for union and CBA registration;
D Violations of or disagreements over any provision in a union or
workers' association constitution and by-laws;
k) Disagreements over chartering or registration of' labor organizations
and collective bargaining agreements;
I) Violations of the rights and conditions of union or workers'
association membership; ·
m) Violations of the rights of legitimate labor organizations, except
interpretation of collective bargaining agreements;5 and
1
Sectm 1~I. RE 111, NCl.tl Mins o1 Proanres 1a Coociml ax1 PreYent.-e Med'a m Cases; Awetnx 2[De{r1001
d T81!5j, NCMI Prineroo ~ P'l:telrg ax! l.oiaJ. 2nd Edlm, Det8rber1995.
2 Sedol1 ~1REl,Book V, llil.;Odmv.Hoo.Ca::da:,suira;Bilmstav.CA,SIV<I,
1 See Section t, ~le XI, Book Val lhe ~ I:> ~ lhe L.ablr Code,as plMlll5ly anerded b y ~Order No.
40f-03, Series cl 2008 !Clctm 30, 20081 v.ti:tl desi;lnated tis sedm as "Sedbl 1(AT, ax! as ll11er ammed by
Sedioo 18, llepms1t Oder No. 40+15, Series al 2015 [Seperber 07, 2015]. enti1ed "FIJ1her hTm:frg llejlment
Ouel" No. 40, Series d 2003, .Am?oof'IJ lhe ~flx.l ~les arxl RegtJlm-os d Book Vd the t.m Code d Ille
~ .asAmooded.'
• 1lis is ii lhe naue al an nter-11101 ~ v.tci miff be OCC:!Si.:ned by the illrixlucm1 of are11 roode al secuing Cle
stabJs a sae lV1d exas,,e baganiJ,j ag8'11 (SEeA). The LaxJ Code'sbnplemenflxJ Illes, pmiiatf i,; RUI£ VII oo
"Vr.lmy RecoJrim' was ac1Ja'lj repeaoo all replaced b-f a ~ re11 prcMS01 en1irled 'REQUEST FOR SCX.E
00 EXQUSM: BAAGANING AGENT (SEBA) CERTIFICATKlfl' 11is was imrlx:ed by Ile anerdalJxy ~ of
Sedioo 3, ~ Oroer No.40-~15, Series al 2015ISefl!elrber 07, 2015), lbi:l. · 1
1
Dilputes (111!: lhe ~a~ d lhe C8A iR cmsi!E'1!d a s ~ issues cx,Jrizable b'f ax! shcud
be JXocessed MU,Jh lhe gnev.n:e rracmeiy a'd volntay abitralm p!Mled ii Cle C8A M . (See Mdes 273 !2601
and 274 [261J, Lroo- Cooe).
I No. 40-f-03, Series of 2008 !()a. 30,2008i
I
CHAl'TER EIGflT • 915
JURISDICTION ANO RELi EFS
n) Such other disputes or conflicts involving the rights to self-
organization, union membership and collective bargaining -
1) Between and among legitimate labor organizations; or
2) Between and among members of a union or workers' association.
111-B.
OTHER RELATED LABOR RELATIONS DISPUTES
1. MEANING OF "OTHER RELATED LABOR RELATIONS
DISPUTES."
"Othtr related labor rtlationi diJpute" refers to any conflict between a labor
union and the employer or any individual, entity or group that is not a labor union
or workers' association. 1
!\fore specifically, it may refer to any of the following:
(a) Any conflict between:
(1) a labor union and an employer, or
(2) a labor union and a group that is not a labor organization; or
(3) a labor union and an individual who is not a member of such
uruon;
(b) Cancellation of registration of unions and workers' associations_filed
by individuals other than their members, or by a group that is not a
labor organization; and
(c) A petition for interpleader involving labor relations.2
2. FIRST SITUATION: Conflict between a labor union and the empl~
In addition to the first two kinds of disputes mentioned in Article 232
[226], that is, inter-union and intra-union conflicts, a 3rd set of disputes is provided
therein as falling under the jurisdiction of the B~ to wit
"Article 232 (226]. BHrtaH ofubor RllalionJ. - The Bureau of
Laboe Relations aod the Labor Relations Divisions in the regional
offices of the Department of Labor, shall have original and exclusive
authority to act, at their own initiative or upon request of either or both
parties, on all inter-unioa and intra;unioo conflicts, and all disputes,
grievances or problems arising from or affecting W2l2.t:
management relations in all workplaces, whether agricultural or
non-agricultural, excep t those arising from the implementation oc
Secfu1 1 JrrJ. ~ I, 8ocll V, ~ ID ~ t Cle l..aba Code, a5 Mleflled b'f Dep.nnent Ouel" No. 40-03, Series d
2003,[Feb. 17, 2003J.
1 Secful 1181(foonetlt Secoon 2), ~ XI, Book V, ~ ID n-penent the Laba Code, as clllel1ded b-f IJepmel1t OfrlEf
916 8AR RfVIEWER ON LABOR LAW
interpretation of collective bargaining agreements which shall be
the subject of grievance procedure and/ or voluntary arbitration."!
The afore-underscored part of this article constitutes the first enumerated
situation of •~thtr relaitd labor relationJ dispute," that is, a conflic·t between a labor
union and the employer2 or more broadly, a labor-managtmen> relations dispute. It is
neither an inter-union or intra-union dispute.
In lA Tondena Worktrs Union v. Stmtary ofl.Abor,3 the union contends that
the intra-union dispute mentioned in Article 232 [226] does not include the
examination of accounts of the union because it, contemplates "intra-union
conflicts affecting labor-management relations." The Supreme Court considered
this argument untenable. It held that conflicts affecting labor-management relations
are apart from intra-union conflicts, as is apparent from the text of said article.
Such examination of union accounts is an intra-union dispute and thus does not fall
under the other classification of disputes in said article concerning labor-
management relations disputes.
An example of a labor-management relations dispute is the matter of
determining the existence of an employer-employee relationship between the
employer and the members of the union/s participating in a certification election
case pending before the Med-Arbiter. Tiiis issue certainly does not fall under the
class of either inter-wuon or intra-union dispute. Since under Article 232 [226], the
BLR has the original and exclusive jurisdiction thcrcover, necessarily, in the
exercise of tlus jurisdiction, its Med-Arbiter has the authority, original and
e,cclusive, to determine the existence of such relationship.4 And once there is a
determination as to tl1e existence of such a relationship, the Med-Arbiter can then
decide the certification election case.s
3. SECOND SITUATION: Conflict between a labor union and a gtoup that
is not a labor organization.
Ordinarily, if the conflict is between two or more legitimate labor
organizations, such is to be correctly denominated as an "inter-union" dispute
which, broadly covers any conflict or dispute between legitimate labor unions.6
But what if one of the contending parties is a group which is not a labor
organization, much less, a legitimate one, as this tetm is understood within the
context of the law?1 How should that dispute be legally denominated?
1 8r¢asis supplied.
Ar1x:le 232 {226], l.lilocCooe; Poky nsbucioos No. 6; Vdlactv. Traja,o, G.R No. 69188, Sept 23, 1986.
G.R No. 96821, Doc. 9, 1994, 239SCRA 117, 124.
• M. Y. San Biscut, Inc. v. La;iuesma, GRNo. 95011,A/rl 22, 1991.
5 Besa v. T~ . [mtrd t.e lllR. GR No. 72409, Dec. 29, 1986, 146 SCRA 501.
• Se<fut 1~1 rue 1, 8()i v. rues o~ 1he 1.axr <:ode, as cl1lEnlEd l7f Oepatre,t Order No. 40-03, Seres d
2003,IFeb. 17,2003].
I
•
CfUl"TER EIGHT 917
JURISDICTION AND REUEf!
Tiiis kind of dispute should be properly termed as "othtr related labor
re/ation1 dispute," the second enumerated situation under this classification.
4. THIRD SITUATION: Conflict between a labor union and an individual
who is not a member of sucrh union.
lf the dispute concerns a labor organization and any of its officers or
members, it appropriately falls under the categorization of "intra-union" dispute.
However, if the individual party is neither an officer nor a member of the labor
union, in no way can it be called an intra-union case. It is proper to be techrucally
denominated as '~thtr related labor relations dispute," the third enumerated situation
under this classification.
5. FOURTH SITUATION: Cancellation of registration of unions and
workers' associations filed by individuals other than their members, or by
a grou11 that is not a labor organization.
The controversy may be correctly designated as "intra union" when the
petition to cancel the registration of a labor union or workers' association is
initiated by its officers and/or members and when it is lodged by another labor
union, it may be appropriately denominated as "inter-union" conflict.
However, a petition to cancel a labor org.inization's registration can be
designated neither as "intra-union" nor "inter-union" if it is filed by individuals
oilier than its officers and/or members or by a group that is not a labor
organization. Tlus kind of conflict should be properly termed as "other relattd labor
relations dispute," the fourth situation under this classification.
6. F/FTHSITUATION: A petition for inteq,lcader involving labor relations.
Witlun the context of labor relations, the term "interpkadtr" refers to a
proceeding brought by a party against two or mo~e parties with conflicting claims,
compelling the claimants to litigate between and among themselves tl1eir respective
rights to the claim, thereby relieving the party s:> filing from suits they may
otherwise bring against it.2
1 k; disli1guished ron otoer kix1s d cxganilafioos, a ~ cxgirizatioo o: a lml is cxgcrized fa the pm,ay ~ of
co1ecwe balgaili"g. (Miele 219(g) (212(g)1 l..atxJ Code; See aso Secoon 1(131, ~ II\ NCMl MnJal of Proreo.tes b'
C01cfiatioo and PreYenwe Med'iatioo Cases). On the ~ ·tmi. a "iajlinate ~ .agaraatioo' rereis 10 ant liba'
cxgcmatbn il the pmate secb' regismd or repa100 Ylill lhe Depamn ol l.liloc and En'!)b,ment il aaxxtl111Ce ~
lhe LatxJCode and i s ~ n,jes, tt ilcules inf brm o: 1x:a1 taro. (See Miele 219(hl [212 (hH. Lm Code;
~ Ill !Regsratioo of l..abC1 Olgmilionsl and N P'ro',isms Co!mm IO t.e Regisb'aoon d Labo: Orqillizalioos and
Wooers' Assotiatioosl il relaoort IO Secoon 1(ee1 Rue I, Bodi Va lhe Ms IO uplernenl Ile lm Cede, as ~
'r1f 0epme10roer No. 40-03, Seres a 2003, [Foo. 11. 200Jt San Mguel Cap. Empbyees lml-PTGWO v. San
Mguel PaoolliY:l PrroJcts Eff1)k7jees lJnioo-Pl},f>, G.R No.171153, Sept.12,2007).
2 Sedioo 1 (zj, Rue I, Book V, ~ kl Ul)lenm fie Labo: Code, as anended l7f DepaiTalt Ol1le,- No. 40-03, Seres of
2003, feb. 17,2003i

918 BAR REVIEWER ON LABOR LAW
IV.
ORIGINAL AND EXCLUSIVE JURISDICTION
OF MED-ARBITERS, DOLE DIRECTORS AND BLR DIRECTOR
Having known the various cases afore-describ~d, a. discussion of the
respective jurisdictions of the Med-Arbiters, DOLE Directors and BLR Director
over these cases may now be made with greater clarity.
1.
MEDIATOR-ARBITER'S
ORIGINAL AND EXCLUSIVE JURISDICTION
The cases falling under the original and exclusive jurisdiction of the
Mediator-Arbiters are as follows:
(1) Inter-union disputes (representation or certification election
conflicts), such as:
(a) Request for SEBA certification when made in an unorganized
establishment with only one 1 or more than one (1) legitimate
union2 or in an organized establishment;1 or
(b) Petition for certification election, consent election, run-off
election or re-run election;
(2) lntra-wuon disputes;
(3) Other related labor relations disputes;•
(4) Injunction cases;5 and
1 kl case lhe Request is made i1 arHmgcrized estabfrshmeotllittl r:Nf r:J'f!. (1) klgbnate unm, and Ile requesiY,l lflioo 01
1oca fails ti ~ Ile requi'ements b' SEeA anfratro dlm;i the VcidatiOl'I oonfererce before lhe DOLE Regmal
Oi'm, il v.tic:11 event. SI.Ch Request slXJil be referred b Ile 8edo1 Ob' for Ile cooduct d cetificaooo eledxxl
(Sectia'I 4, ~ VII d the~ i> lnf,leneol Ile Im Qxle, as iJ)'lellded by Depamrt Q1la' No. 40-~15, Series d
2015(Septerrllec07,2015}.Theeledxxlslntl be oondocllld i1 occoim;e v.i1 Rik IXlhereci.), llilrn necesxnyvml
meai Ila! ruch certi'calm eledxxl shoutl OON be COlldtJded tmer lhe µisdi:tion d lhc lv'edial!J·Mlil!r bl 1\00l!l Ile
Eidial Ofmis <llfy-lxxn! b repat Ile MXXre dlhe eledicx1 pmceeoog. Ce!tlrvf, lhe ~ ~ eledi:xl
c:aviabe conruded lllderthedrectve d Ile DOLE Regmi Orecb'willlolA lhe ~ d Ile M!<iab'•Arllilfr v.no,
lllder lhe iall, is lhe ooe pcssessed d lhe OliJilal aid exdJsive ~risdi:tion rJlfS catiflcatm e!edol case:;, i1clocf1Y,1 lhc
procmiatm d tie v.mlQ SEBA. {See Sedial 21, ~ IX. Bool: V, fGJes to lrrpenent the Im Cooe. as Oldered
resurllered Ir/ Sectia'l 17,Department Order No. 4().~15, Series d 2015~ 07, 2015). This sedia1 was OliJila>t
Mlbered Sedia1 20, per Depa,tnert On1er No. 40-03, Series of 2003, lf'eb. 17, 20031, but ~ was soosequently re-
rurbel'E!:I i> Sectia'l 19,per Oepment On1erNo. 4().f-03, Seriesd2008 (Oct 30,20080.
1
Secfxn s, ~ vu, il rel.ml t> rues Vin and tx. DepmentOrder No.4().~15, Series d 2015 [Seplernber07. 201s1.
3
rue
Secfxn 6. VIL i1 relatioo to fGJes VIII ;m IX, tlil.
' Secfxn 1 [iJ. ~ LBook V, ~ i> lrj)aner( the Lab01 rm.,as cYlleflded by Oep.rtnei1t Order No. 40-03, Series cl
2003, !Feb. 17, 2003J; Secoon 4, fQJkl XI, 8ook Vd t,e fQJles lo ~ Ille LabOI Cale, as anended by Oepam1ent
OderNo. 40f-03, StYies d 2006 !0axle' 30, 2008J. See also Article 226, LabOI Cale; Pok:y nsMms No. 6; Vllaor v.
T~,G.RNo.69t88,SepL23, 1986.
1
"81-M>IM t'0'..e lhe Miatf I D ~ ~ restrariig aders (TROs) cl'ld \\lits d r;,naoo·n ~ cases
Sedio15, rue XVI. 8ook Vd Ile Orilus ~ ~ lhe Im Cale stalEs: "Sec 5. ~ -- No tenl)CJllY
~ 01 reslrani'g OldEr i1 iff/ case ~ 01 gro,m;i art d a· labor dispute Sha.I be isrued i,,, an, coort 01 Olher
enfly. 01 lhe Olher hald, lhe Offioo d lhe Presidecll lhe Seaeiaty of labor. the Comnissoo, lhe labor M>iter 01 Med-
C lv,rnR EIGHT 919
JURISDICTION ANO RELIEFS
(5) Contempt cases.1
On No. l[a] above, the Mediator-Arbiter wi'.l have jurisdiction over a
Request for SEBA Certification if it is made in an organized establishment
as well as in instances where it is made in an unorganized establishment
with more than one (1) legitimate organization. Under this situation, the
DOLE Regional Director, before whom the said &quest is filed, is required to
refer it to the Mediator-Arbiter for the determination of the propriety of
conducting a certification election; consequently, the Mediator-Arbiter ~vould
now have the jurisdiction to take cognizance of the certification election.2
[NOTE: See further discussion on this topic IntheImmediately succeeding
section below, in relation to theoriginal and exclusive jurisdiction of the
DOLE Regional Directors].
2.
DOLE REGIONAL DIRECTOR'S
ORIGINAL AND EXCLUSIVE JURISDICTION
The DOLE Regional Directors have original and exdusive jurisdiction over
numerous cases.1 But not all of them are relevant to or connected with the three (3)
classes of cases4 expressly mentioned in Article 232 [226). Only the following cases
cognizable by them are related thereto or connected therewith by virtue of laws and
rules:
Artn!r may 8lpl1 air/ 01 al ads rr,,QM'1J 01 arisi1g from atry case penao;j before atry ofsaid afces 01 officials vdli'.:h ~ no!
resra,ed btlv.ilh may cause ~ ct ~ dcrnage ID iff/ d Ile ~ b eJe case ct SEfWSiJ affect social 01
ecooorric s1aifity.'
t Secoon 4, Rue XVI, Book V, fGJes i> ~ lheLatxr Code.
z Secoon 6, Rue VIL i1 relab:xl ID rues VIH aid IX. Depm,ent Order No. 4().~ ts. Series d 2015 [Sepk:!rrbef07, 2015].
, Nr lhe cases ClllJfmlle i,,, lhe DOLE Regaa Orecb's .re as k>bls: (a) Vrsbial fnspecooo) cases under Article 37; (bl
Visimal f ~ l aid eriatarall cases lJlder Article 128; (c) Visiooal cases lJlder Arti:le 289 12741. iMllNlg
eminat'oo rA beds d a:oxJl!s d mependent tmlS, b:.a1 ~ kxals cr1d wcxkers' ~ {d)
Oroipafionasa!ety cr1d healtlooatms; (e) Smalrraetclains casesm-g m icwslaldardsvdalxxls il aiaTMt
net exceedi-g PS,OOJ.00 aid net ac:corrprild wlll adain b- ~ lJlder Article 129; (Q Cases related ID ¢.'ale
reavibnent aid plimrent agencies (PRPfts) lor loca ~ suctr as: (1) Appli:aticrls f01 lcense ct denial t.ereof;
(2) ~lailts for suspens01 ct CcllOl!alXll rA li::ense by reasai d miistatrle dle'lses; (3) Coo'!)lai1ts let ileg~
remmn1; aid (4) Petifal b-OOStte c l ~ (9) Cases swri12ed b"vdxtarr .mtrab1 n11er capoo'1y as fl-Ofbl
Vrimry Mlitratas (EVfts) lJlder Deparrnent On1er No. ~7. Series d200i; (h) Uni:xl rogistalxxHelaled cases, such
as: 1) App[catials lor llliln rerJistation d i1depe,-ldent tnOIIS, bca ~ aid llllkers' associaoons; 2) Petiti::11 IOI
dena d applcmlb"rogmtm dsaid lnlOS; 3) Pe!fuls IOll'elO:aOCllacancelatm d r~m d ScililllOlS; (i)
No5ce d meiger, arosadation, af!iam and ~ d narre d sad uni>ns and ct petful IOI denial lhererA; (j) CeA·
related cases, Sidi as: 1) ApJi(am for registraoon d s i l g ~ CliAs rx pe!iool1 1or derl:gisb'alioo tiered; 2)
Petioon !01 denial d regisualioo d si"9kHY\apnse CeAs or deool d dereg6tra!Xlo lherect. aid (k) Request fct SEBA
c:ef1i'fx:a!iOI v.llen madei'l .rl uiag.rized esti>fislmnv.ih onlf me (t) leglinate m .
• These are (1) nle!Wlll arspotes; (2) ilta-1.oon disputes: Md (3) Oro related labareiaoons ~ -

920 BAR REvlEWER ON LABOR LAW
(1) Visitorial cases W1der Article 289 [274),1 involving examination of
books of accounts of independent unions, local
chapters/chartered locals and workers' associations;
(2) Union registration-related cases, such as:
a) Applications for union registration of ind'ependent unions,
local chapters and workers' associations;2
b) Denial of application for registrationl of said unions;4
c) Petitions for revocation or cancellation of registration5 of said
unions;6
(3) Denial of registration of sing/Nnlerprise1 CBAs or petitions for
deregistration thereof;8 and
(4) Request for SEBA certification when made in an unorganized
establishment \\~th only one (1) legitimate union:9
On No. 1 above, it is imperative to point out that although by nature, this
is an intra-union dispute, the rules, however, treat this separately from those
1 ·A."i:Je 289 (2741. Vislonal pon1!!. The Seaeta,y of L1bo: and l:mr,k)yrrer,t er tis dtA-f autaizoo represerlawe is hereby
~ ID ilquie illD the fnancial adN!ies d legitinate iOOOr cxg1rizatixls ~ the liflll!I cA a cm!)lai1t under oalh
aid M:f suppooed by Ille v.litten consent of at least l'M!nty percent (20'/o) d the k:tal merrbershjl cA Ile abcr ag.rizatioo
cm:emeJ .m ti wrrine !her books cl aaxiunlS and ott\er recoois kl delelmi1e ~ e r ~ wit! he
la/I ir1d lo proserute ?ft/ viola!ials cl the law and lhe imn coostiMioo and by-lc!Ns: Prwdcd, That su:.h ~iy er
exarination ~ na be CXXlOOCted <1.mJ the ~ (60}<1ay freedcrn peood ncr lli1!lil lhe ti1y (30) ~ imlea0te~
ixecoong the date of eeful ofoom afrials.' (As crneooed by Sedioo 31, Repuhfch:t No.6715, Mirth 21, 1989).
Sedial 3, ~ 11 of the lled-Mlitratioo ~ states: ·sEc. 3. Jurisdictm of he Regiooaf llrectir.- Toe Regma ~
2
shal exe-tise oo,iilal and exciJsi.le µisdifu1 = application for union registration, petiHons for cancel1ation of
union registration and complaints for examinallon of unions books of accounts.' See also Secfxxl 1, Rue 11, IMls ci
Prcx;ecue oo Mldiati:n-Mlitrafun.
1 See Al1ide 243 [236J ci ~ l.2bcr Code v,och pcil'lides: •M 243 (236i Denia ci ra;Jislra1m; appea. The doosion ci he
Labor Rela!bis OMsm i1 lhe regiooaf offce denying r~istratm ma, b e ~ by h e ~ m ~ lhe Blreau
wh1ten(10) days frtrn rec:eipl of noti:e t.ereo1:
~ Reftm19 ~ ooependen1 unms. b:a chapte!5 a'd wne1S' ~ . as distiJJUi;hed Iran ledera!ixls, natma
Lro\S, i1dus1Jy lfflOOS, ttade unoo centers and heir b::a1 chapre!s'd'ooer lociis, affifates iJ1d menter agarizlmls
v.lm ~ tJr ra;Jislra1m as v.e'I as deria er c.ml1a1m er reYOCalm ci ra;Jistration is rogrila>le by Ile etR
Dim il hisoo,iilal iJ1d ex<iJsive ~ frlra].
1 Specii::aly cited as exrepli:rl ID lled-Mlile's jurisd'dioo is cance'atm ci uni:xl ra;Jistml, per Secfxxl 1 ii]. ~ I, Book
V, Rules b ~ he l2bcrc.ode, as amended by Dep.rtnertt Order No. 40-03, Series ci 2003, f el>. 17, 2003].
• Sedia13. Rule II d he ~ Rules, supra; See also Sedioo 4, Rufe XI, Book Vci the~ lo kf'!)leroont lhe
l..alcrc.ode, as .mended by Oepartmell Order No. 4().F-03, Series ci 2008 [Cldcbe' 30, 2008i
1 As distil;J~ l'ool cases ill'OM,g ~CBAs v.tii::h fal \Iller tie oo,ina j.lisd'di:ln rifle 81.R lxed!J.
' Sedia14 ~ Sedioo SJ, Rule XI, Book V. ~ t o ~ the L1bo: C,ode, as a-nended by DepatT,ent Order No.
40-03, Series ct 2003. jFeb. 17, 20031. !r1d as re-numbered by Departnen1 Order No. 40-f-03, Series ci 2008 [Oct 30,
200ai
1 Sedia14, Rue VII, ~ t Ordel No. ~-1-15, Sefies of 2015 [Seplefrlle( 07, 20151. U1der ttis silml, lhe DOLE
Regi:xlal lxectoc, betire v.hom the Req.Jest for SEBA CeroflcalXl1 is food, shrud reer he Request fer SEBA Cerifx:atiG'l
to Ile 1.'Eam-Arbi!Er for he delemli1ai01 cA toe P't'llOOIY ct cmiJdi"g a CElffi::alxx1 eledm, il v.lli::h case, lhe
llediator-Miter 00// has ~e jurisdi:ful 1:>decide the telfulioo electm issue. (Sedm 6, Rue VII, ii relali:r1 to Rules VIII
in! IX. Oepatnent Order No. 40-~15. Series cl 2015 [Seplember 07. 201SD ~ l1lJSt be made that \\hen he Request !oc
SEBA Ceiffication is made in an l.llO'ganized estalflShmelllwith more hall ooe (1) legitinate lcbcraganiza!m, the~
Artite'lakes o;erfrom the DOLE Regilrla Drecta-il lhemaaercl heai"g and resc1m,J the issllectrertifx:a1i:xl elecooo.
CHArTER EIGHT 921
JURJSDICTION AND RELIEFS
generally applicable to intra-union disputes1 and accordingly vest jurisdiction
thereover in the DOLE Regional Directors and not in the Med-Arbiters.
Barks v. Bitonia2 is clear on this point. It was held herel that while intra-
union conflicts, such as examination of accounts are under the jurisdiction of the
BLR, however, the Ruks of Promiurt on Mediation-Arbitration purposely and expressly
separated or clistinguishe<l examinations of wuon accounts from the.: genus of intra-
union conflicts and provided a different procedure for their resolution.
Consequently, original jurisdiction over complaints for examination of union
accounts is vested not in the Med-Arbiter but in the DOLE Regional Director.
This is apparent from Section 34 thereof.
But there is a need to point out though that the foregoing rule applies
only when the request for examination of books of accounts c;oncems only those
of independent unions, local chapters/chartered locals and workers'
associations. If what is involved are those of federations, national unions,
industry unions or trade union centers, and their local chapters/ chartered
locals, affiliates and member organizations, the jurisdiction thereover is vested
with the BLR Director and not with the DOLE Region~l Director.
On No. 2[a] above, as far as workers' assomtions are concemed, if they
operate in more than one region, the application for registration should be filed
with the BLR or the Regional Offices, but either way, it should be processed by the
BLR.5 This is so in order to have a unified resolution of the. merits of ·the
application by one, single agency.
On No. 4 above, when the Request for SEBA Certification is made in
an unorganized establishment with only one (1) legitimate union, it should be
filed with the DOLE Regional Director who will make an immediate determination
on whether there is majority support by the members of the bargaining unit to the
requesting upion. Once the majority support is confi.rrr:ed and the requesting union
does not fail to complete the requirements for SE3A certification during the
validation conference, the requesting union is immediately certified by the DOLE
Regional Director as the SEBA without conducting a certification election.
As a consequence of this latest change in the Ruk.r, it may be said that the
DOLE Regional Director, in a way, is now empowered to rule on a
"representation" issue which, technically speaking, falls under and is covered by
1 See Sedioo 3, Rule XIII, Book V, Rules to lnl)lsnent t,e Laber Cooe,as .rnen:led by Depar1mert Order No. 40-03, Series
ix 2003, [Feb.17, 2003], his, arequesttirexamalioocilx:dsdiltl)l.l'll; JmUB[llk>Artx:le 289 [2741il the absence of
alegalms pe!1ailrg k> avi:llaoon cAMx:le 250 [2411. slml na bem:oo as ill iltraWXl dispute.
2 G.R. No.120220,J\Xle 16.1999.
1 Citilg La TondenaW<rteis Unioov. Sei:retaty dl.abcr, GR No.96821, ~.9, 1994,239 SCRA 117.
• Sedioo 3, Rule II ix the Me<!M>iratm ~ states: "SEC. 3. Jllisdicm ol tte Regiooa arm.• The Regiooa DreaJr
shal exercise oo,iilat iJ1d exdusNe µiscdion o;er ~ for unioo rngislrali:rl, petitions fer cm:ela1xx1 of m
registralxn and canplaints for examinallon of unions books ofaccounts.'
1 See 2"' ~ . Sedioo 1. ~ Ill, ~ ti ~ the l..alcr Code, as amerded by Oepcmiert Oroer No. 40-03,
Seriesc:A2003, [Feb. 17,2003]; See also Section 1, Rule II, Rulesd Proredlreoo ~~-
 BAR R£\IIEWER ON LABOR I.AW
922
the general class of "inter-union di!pules" that falls within the jurisdiction of the
Mediator-Arbiter. In fact, the very &quest itself speaks of "SEBA Certification," a
relief that is not the consequence of ''Vol/inta,y &cognition" - the original remedy
intended to be replaced by this Rtquul mode.
For it is clear that under the previous repealed.• rule on voluntary
recognition, the DOLE Regional Director never issues a "SEBA Certification";
what is done is the mere recording' of the ''Notice of Voluntary Recognition"
jointly submitted by the employer and the union to the DOLE Regional Office
which issued the rrcognized labor union's certificate of registration or, in the case of
local chapter, where the charter certificate and the other documents required under
Article 24t [234-A) were submitted and filed.2 Since it is crystal clear under existing
laws, rules and jurisprudence that it is the Mediator-Arbiter who has the orijnal and
exdmive jurisdiction to issue a "SEBA Certification" under any of the modes3 of
selecting a SEBA, it is not surprising if the issue of the validity of the exercise of
similar power to issue tl1e SEBA Certification by d1e DOLE Regional Director
would be raised in an appropriate proceeding.
But the rule is quite clear that the Mediator-Arbiter would acquire original
jurisdiction over ilie Request for SEBA Certification under ilie following
situations:
(1) In case ilie Rtquul is made in an unorganized establishment with
only one (1) legitimate union, and the requesting union or local fails lo rompleu the
rrquirtmenls for SEBA mtificalion during ilie validation conference before ilie DOLE
Regional Director, in which event, such Rtquesl should be referred to the Election
Officer' for the conduct of certification election5 which necessarily would mean
that such certification election should now be conducted under me jurisdiction of
, Um tie previ:xJs repeaed p!tMSion. ~ is stated lhat v.11e1e lhe oooce cl wtay reco:irwoo is sufficieot i1 loon. nlMllber
clld ~ a,d 'ntlere lhere is no °'1er regisl!red lalla ll1ial ~ v.ilil lhe ~ ilg uri cm:emed, toe DOLE
Regmal Office, troJJh lhe l.abor RelaOCXlS Divm1 shal. \Whil ten (10) da'js Iran r~t of lhe nooce, recad lhe fad of
vw:/;!J:f rerognitioo il it roster cl legi!Jna!e !aba' u,oos a,d oofff lhe l.ilor uni:n cm:emed. (See the repealed pfO'lisiln
ri Seclion 3, Rule VII, Book V, RI.des kl lrr!)iemelll lhe l.abor Code, as anended by Depm,ent Order No. 40-03, Series of
2003,[Feb. 17,2003D.
'Mere the nooce ex volntry rerogrwoo is ilsu'frieot il bm, oonter and Slbsm:e, lhe DOLE Regooa Offce shal.
wflil lhe sane peood, rdif lhe lcba l.M1 of its frdrgs aid .»iise ~kl~~ with the necessay requremeots. 'Mlere
neilhe! tie ef1"4lk7t« nor lhe liixJ uoioo fared to COfT!)lete lhe requi-err,eoo ro,, wtaty recognition IW!lil lhirtt (30) da'ts
m a
~ the ~ , lhe OOLE RegOlaf Offce shal retixn tie nooce a YOU11a1y re<XXJIOOl bJe!ha' v.ti a1 its
~ doa.rrmts wi!hartpre¢,::e to its re-swrissb1. (Sedm 3, Rule Vll, Book V, l>kf.).
2 Seclion 1, RI.de VII, Book V, RI.des to kfc>enenl lhe Labor Code, as anended by Oepme1t Order No. 40-03, Series of
2003, [Feb. 17, 2003].
1 Besiles f1is roode, the olher ,rodes rJ seearig a desj,jnaliYJ a SEBA are certfx:alm eledioo. coosent e!edxxl, nn-off
e!edioo,aid ialetf, re-run e!ecfm.
' '8ecli:l1 Offcer" m a
kl .ri ofti:e( the &real rJ Laba Relati:xls.a lhe Laba Rela!ioos OMsioo il lhe Regmd Offce
aAhaized kl cadJct rertifr,afro eledi:xls, e!edioo rJ l.001 ofocers and~ lams rJ electials a,d referenda. (Sedioo 1
(o}, Rule ( aid Sedions 2-5, Rule XII, Book v. ~ to lmptement the l.abor Code, as ~ed by Depa1menl Order No.
40-03, Series d 2003, [Feb. 17, 2003D. It is Ile E'ecfu:l 01fK:er Yillo shal have coolrol of lhe prei!ledioo cooferera! aid
I
e!edioo IX()Cee(frgs. (Sedioo 1, Rule IX, Book V, lbil.).
s Sedicn 4, RI.de VII a lhe RI.des kl lrr!)lemer4 lhe l.abor Code, as anended by Depatnent Order No. 40-l-15, Series of
2015 1~11:!rbe'07, 2015). The eledxxl Shook! be cooduded il accord.-x:e with Rule IX lhereol.
I
•CHAl'TER EIGHT 923
JURISDICTION AND RELIEFS
me Mediator-Arbiter to whom the Election Officer is duty-bound to report ilie
outcome of me election proceediog.1 Certainly, ilie ensuing certification election
cannot be conducted under the direction of the DOLE Regional Director wiiliout
ilie participation of the Mediator-Arbiter who, under the law,2 is the one possessed
of the orifinal and exclusive jurisdiction over certification election cases, including the
proclamation of the winning SEBA.l
(2) In case the Req11e1t is made in an unorganized establishment with
more than one (1) legitimate union, in which e\"ent, the DOLE Regional
Director is required to refer the Request directly to the Election Officer for d1e
conduct of a certification election4 which should be in accordance with the &iles5
that state, in its Section 2, Rule VIII, that the "(Req/ieJI) shall be heard and resolved
by the Mediator-Arbiter." Resultantly, it is still the Mediator-Arbiter who should
take cognizance of the &q11e1I which, in this case, is the equivalent of me Petition for
Certification Ekction over which he exercises original jurisdiction.
(3) In case the &q11t1I is made in an organized establishment, in which
case, the Regional Director should refer the same to the Mediator-Arbiter for the
determination of me propriety of conducting a certification election.6
3.
BLR DIRECTOR'S
ORIGINAL AND EXCLUSIVE JURISDICTION
i\t the outset, it must be stressed that reference in the law and pertinent
rules to "BLR", as far as the issue of jurisdiction is concerned, should appropriately
mean "BLR Director." This is as it should be becau;e ''BLR" is a generic tenn
that includes not only the Med-Arbiters and DOLE Regional Directors but the
• Under tie Rules. vmn 24 hros m eie frlal ca-ivass of vctes. lhere being a vald eledioo, the Eledion O!fx:.ei sha!l
lralSrrit lhe reaxds of t.e case to lhe ~ llho shal, llilhil Ile same peioo frcxn receipt d lhe mffi1es and resu~
(j eledxln, is.we irl cntec JXl)dainrg t,e resvlls ex t,e ele:ful and rertJyrg tie uilr1 m rbtaried lhe ~ (j the
vald vctes cast as tie sae and exiiis.ve bargailrg ~ ii lhe sooject bargairing unl. m. (The fXlMSixl ~
1'!1ldMlatm a,d ceit1icati:xl d lhe result d the eledi::n" shcxtf 0011 be dmllilaed as Sedi:x1 21. ~ IX, Book V,
~ ID mplemErt the La!x:t Code, by virtJe d t h e ~ ordered by Secoon 17, Dep.rtT,eot Order No. 40-~15.
Seres of 2015 [September07, 2015]. This section was oriJl:m/ runbered Se:ful 20, per Oepmenl Order No. 40-03.
a
Seres 2003, [Feb. 17, 20031 txit I was~-re-Mteroo kl Secoon 19, per DepMnm Order No. 4M-03.
Series al 2008 (Oct 30, 200ai This latest 2015 rerurbemg was e~ 1uolgh soo Secoon 17 v.hkh stares: "Smls
swseqo.J61kl ilmd ne«~m'or l1lflJrltEred seems .re rarurbered acronf.rgl'f.').
2 ArtiJe 232 12261, Laba Code.
1 See Secoon 21, Rue IX. Book V, rues k l ~ he l.abor Code, as~ rerurberad by Seclion 17, ClepaJtmll
Order No.40-~15, Seriesa 201s (Seple!Tber07, 2015). Tus sedioowasoriJllaitf rurbered Sedi:x120, per Depament
Order No. 40-03, Seres a2003, [Feb. 11, 20031 txit1was Stbsequmt/ rerurrbered kl Secoon 19, per Depmert Order
No.40f.03, Seresof2008 (Oct. 30, 200ai
• Sedal 5, Rue Vll, rues kl inl>lefrent the La!x:t Code, as cm:rd8J by ~ I Order No. 40-~15, Series cl 2015
(Septerrber 07, 2015). .
5 RefEflTQ ID Rule IX of tie ~e; fD krc>enent Ile La!x:t Code, as anended by Dep.mlent Order No. 40-~15, Seres of
2015 [Septerrber 01, 2015).-Note rrust be mooe lhal 'llheo 11e ReqJest 1tr SEBA Ce!tka!ioo is mooe ., ag;nzed
estafilshment, i1'Mlk:11 case, Ile Regim llrm s/XXJkl refer the same ID the Mldiata-Arbiter ftr lhe deteminatm of tie
JX0P(iet)' of aMJdrg a fl!f1ifl:a5oo eledi::n. (Sedm 6, Rue Vil, bil. ii acamincelli1h Rue; VIII clld IX. lbi:l~
' Section 6, Rule VII, nrelatm fD R1Aes VIII mid IX. DepartnentOrder No. 40-~1~. Series d2015 [September07, 2015}.
 8AR REVIEWER ON I.AHOR U.W
924
BLR Director himself. More significantly, there is jurisprudential variance in the
cases cognizable by the BLR Director, in relation to Med-Arbiters and DOLE
Regional Directors, hence, referring to the cases properly falling under the
jurisdiction of the "BLR Director" as such would be more appropriate and less
confusing than simply referring to them as falling under ~,e jurisdiction of the
"BLR."
'The BLR Director exercises two (2) kinds of jurisdiction, namely: original
and appellate.1 The following cases fall under his original jurisdiction:
(1) Complaints and petitions involving the application for registration,
revocation or cancellation of registration of federations, national
unions, industry unions, trade union centers and their local
chapters/chattered locals, affiliates and member organizations;2
(2) Request for examination of books of accounts of said labor
organizations3 under Article 289 (274] of the Labor Code;
(3) Intra-union disputes involving said labor organizations;4
(4) Notice of merger, consolidation, affiliation and change of name
of said unions and or petition for denial thereof;5
(5) Registration of m11/ti-employ~ CBAs or petitions for deregistration
thereof,7
(6) Contempt cases.
As far as No. 3 above is concerned, the 2010 case of A~. Montano v. A~.
VmeltJ,8 is relevant. Petitioner9 here claimed that under the Implementing &ik,,10 it.is
the DOLE Regional Director and not the BLR (Director) who has jurisdiction over
intra-union disputes involving federations which, in this case, pertains to the
election protests in connection with the election of officers of the federation
(Federation of Free Workers (FF\V]). ln finding no merit in petitioner's contention,
Theappeete iJl?ld'dion of tie 81.R Orear isascussed i1 m,er ~ belc7,v,
As o ~ !tan ~ b' carcellatioo of regisb"aoon d ildependent lli:xls, bca ~ aid lllrteis'
assocai:xls, as pn,id8J i, Secful 3, ~ II oftie tJed.Arbaraial ~ v.lli::h s1ates: 'SEC. 3. Jurisoml d Ille~
IA'm.· The RarJma1 [Rm shail exercise a'gra aid exciJsiv'e i,Jf?ld'lful rNeI applicatlon for union registration,
petitions for cancellallon of union registration and complaints for examilll!tion of unions bool<s of accounts.' See
aso Sedi:ln 4, ~ XI, Book Vd tie RI.des k l ~ Ile t..m Code, as il'l1el"ded b'f DepmErt Onle' No. 40-F-03.
Seriesci 2008 IClater 30, 2008] ill1d Sedol 1, ~II,~ of Proced\re oo ~ - may be appealed to the BLR Director and those that may be appealed to the
1 Refe!IDJ kl fedemoos,natial~ unais, rosy IJl1Q1S aid trooe oom renm. as dis{rguished from mependell unoos,
b:a ~ all~· assoc;iati:xls.
• Id.
s Secfu15, ~ IV, Book v, ~es 1o ~ t tie Lala Cooe, as .mrided by Oepmient Onle' No. ~ . Series of
2003, [Feb.17, 2003] andashmer amendedbyDepatrnent Orde- No.MH>-05, Series of 2005, Seit 13, 2005.
A s ~ Iran cases i1l'ding sr,g'e-en\esprise CBAs v.tim faDU!'OO'lhej.risdictiCJlof lhe IXX.ERegi:lnal lliredD'.
Secfu1 4, Rule XI, Book Vcl tie P.tres kl Implement tie l...aba" Code, as anended by Depatnenl Oder No. 40-F-03,
Series cl 2008 !Oater 30, 200ai
1 G.R No. 168583, Jlif 26, 2010.
1 Mimer was elected toe NalXnai Vre Presoolt d FFW i, the Nania Convrixl hekl al &!bi; ln1emaoooal Hae!,
Oloog~ Oy CNel tie SmY,j oppcsilxJl aid protest of respoodei1t /JJfy. Ernesto C. Vert:Eles, a delegate lo t,e cooveoial
m ~ d lklilelsityol tie East Err!>kl'fees Associatioo (UEEA~ y.ti:11 is ai affiiate lJli:rl of FFW.
11 See Secoon 6of Rule xv. i1 re'aro1 IOSedx:n 1cl Rule XN cl Book Vdlhe ~es lo Implement lhelmCooe.
CHArTER EIGHT 925
JURISDICTION AND RELIEFS
the High Court pointed out that Article 232 (226] of the Labor Code clearly
provides that the BLR (Director) and the Regional Directors of DOLE have
concurrent jurisdiction over inter-union and intta-w-uon disputes. Such disputes
include the conduct or nullification of election of union and workers' association
officers. There is, thus, no doubt as to the BLR (Director)'s jurisdiction over the
instant dispute involving member-unions of a federation arising from disagreement
over the provisions of the federation's constitution anc. by-laws. It agreed w!-th the
following observation of the BLR (Director): '
"Ruic XVI lays down the decentralized intra-union dispute settlement
mechanism. Section 1 states that any complaint in this regard 'shall be filed in
the Regional Office where the union is domiciled.' 1be concept of domicile
in labor relations regulation is equivalent to the place where the union seeks
to operate or bas esublished a geographical presence for purposes of
collective bargaining or for dealing with employers concerning teems and
conditions of employment
''The matter of venue becomes problematic when the intra-union
dispute involves a federation, because the geographical presence of a
federation may encompass more than one administrative region.
Pursuant to its authority under Article 232 [2261, this Bureau exercises
~ jurisdiction over intra-union disputes involving federations. It
is well-settled that FFW, having local unions all over the country,
operates in more than one administrative region. Therefore, ~
Bureau maintains original and exclusive jurisdiction over disputes .
arising from any violation of or disagreement over any provision of its
constitution and by-laws/'1 ·
V.
APPELLAT~ JURISDICTION OF THE BLR DIRECTOR
AS DISTINGUISHED FROM THAT OF THE DOLE SECRETARY
1. NECESSITY FOR JURISDICTIONAL DISTINCTIONS.
The distinctions pointed out above between the respective jurisd.ictio_ns of
the Med-Arbiters, DOLE Regional Directors and the BLR Director acquire
significance in determining which of the cases over which they' exercise jurisdiction
DOLE Secretary, both of whom, based on law and jurisprudence, are possessed of
exclusive appellate jurisdiction over certain cases decided by the Med-Arbiters,
DOLE Regional Directors and BLR Director.
The Supreme Court had occasion to distinguish the appellate jurisdiction
of the BLR Director from that of the DOLE Secretary in the case of Abbolt
Laboratoriu Philippines, Inc. v. Abbott Laboratoms Emjiioym Unio11.2 Accordingly, the
1 En¢asis suppood.
1 GR No.131374,Jai. 26, 21XXJ.

926 BAR REvlEWER ON I.ASOll I.AW
appellate jurisdiction of the DOLE Secretary is limited only to the review of
decisions rendered by the BLR Director in the exercise of his exdlllive and orifinal
jurisdiction. The DOLE Secretary has no jurisdiction over decisions of the BLR
Director rendered in the exercise of his appellate jurisdiction over decisions made by
Med-Arbiters and DOLE Regional Dir!!ctors in the exercise•of their respective
crifinal and exd111ive jurisdictions, the reason being that such decisions are final and
inappealable.
1.
APPEALS FROM DECISIONS OF MED-ARBITERS.
1. APPEAL IN GENERAL.
Decisions in the cases falling under the original and exdUJivt jurisdiction of
the Med-Arbiters are appealable as follows:
(l) Inter-union disputes (representation or certification election conflicts)
- to DOLE Secretary1
(a) Req•;est for SEBA certification when made in an unorganized
establishment with only one2 or more than one (1) legitimate
union3 or in an organized establishment - to DOLE Secretary
(b) Petition for certification election, consent election, run-off
election or re-run election• to DOLE Secretary
(2) Intra-union disputes4 - to BLR Director
(3) Other related labor relations disputes • to BLR Director
1 ms
This is bym.iea Artide 21212591 ate 1..meooe. aide is erlled ·.a.wea mn Ceffmll EJectat Orde's' cm 1
im,& as ktlws: 'Artide 259. ~ mn Celfficatia1 Eledi::n Orde's.-Mt pa1y kl ell eltdoo may .wea lhe ader
a ~ ctlhe eedi<rl as derem'irledbylheMed-Artlierdiedy kl teSeaet:ry ctlmaidEn1)1afmer)ta, hlgro..r,d
llatte n.des cm regJarms a pat he!ld est.ttslled by lhe Seaetry ct Ime n ! ~ b" te arox:td lte
eledol hm hem voated. Sxh appea shal be deciled l'lilhil ifml (15) caenda- d.¥;." Pro- kl Ole il!leOCinenl ct
Artide 272 [259) by RA No.6715, lhe decisms ct lte ~ il C81ll:afm eledxrl cases ae appea!iilk! kl t,e llR
l-btl, Oiey ae ~ kl te DOU: &mtay. 1/1' Prine Seariy Savi:es, k'C. v. Hen Seaetry ct Im, G.R tt>.
91987, JiJt 17,·1995). ft rrust be erriilaSizEd 11.i as f.r as i1'a-rirl lfispu\?s ae cxn:emed, Ile decisials ct te 1,'e:1-
Mllas eiereoo reman ~ 1:i 1te BtR (See Sedm 1 111. ~ m. NCM3 MnJa1 a Procedres n Ca1alam
clld f'rtolrile M!lfia&:Jl Cases).
1
il case Ille Request is rm il ell t.roga'izoo estabfistmnwll at,crie{1) legti'nale lrixl, en! t.e ~ uux, a
kx:a lais b ~ Dle requremenls b" 5™ cerlfraja, MYJ Ille va'da!i:n or6ereR:e befae Ile DOU: Rego.II
llrecb-, h v.tli::h Mr4, sucf1 Request stntf be referred kl Ile Elecbl Offx:er tr t,e cmld ct a,ffi:ai:n eledxrl
(Se::fm 4, ~ W d te Rites t> ~ lte Im Code, as anmloo by Depmm Order No. ~~15, Series ct
2015[Seplenter 07, 2015].The elcdia1shaal lie cmclJdlld i, aca:rdara!Mil ~ IXlle!ed.), vdlkh ntnsmt \liQM
ITleal ta such ce1ifi:.fu, elecfm shMl re« be <XmJt1ld lmE!f Ile jmfda1 ct Dle Medab'-Mxl:r I:) 't'IOOll1 Ole
Eledat Ofri:er-ls duty-bMd I:> repat Ille oo.mne ct Ille eledxrl ~ - Ce!trif, Ile mJi-g ceffi::aoon elecbl
c.mabecaw:ledllXlerlteli'ecflectlteOOU:RBji:mlOimv.itwlle~dlhe!ledab"·Mlien.ro,
ll1der 1te icrN, is Ille one~ r/. lhe ~ cl1d exd.rile j.mfdat (HPJ O!ftfi::a!ial elecfm cases, rdJCfrg tie
prod1matia, ct lhe v,mi-g SEBA. (See Sectial 21, RJle IX. Book V, Illes b lll'f)loom 1he Im eooe, as adered
rerurtered by Sedial 17, Oepamt Order No. 404-15, Series ct 2015 ~ 0 7 , 2015]. l1lri secfal was aiifnalY
rurberod Sedial 20, P8" Deparb"nenl Order No. 40-03, Series r/. 2003, [Feb. 17, 2003}, bo.4 i was sibsequenfy re-
ll.llbnd t> Sedial 19.P8" 0epatnentOrder No. 40-F-03,Series ct :iwa ~ 30, 2008D.
3
Sedial5,~le VII, ilrela~ ~ flies VlOa"d IX, ~OrderNo. 40+15, Seriesct2015[Seplmber07, 2015).
' Sedixl I In Rile Ill, NCM8 Maooal ctPro:erues t>r Coo::iiaiia, aid f>reolenlve Meaaoon Cases.
J
I
CHA!'TEll EIGHT 927
JURISDICTION AND RELIEFS
(4) Injunction cases - to BLR Director
(5) Contempt cases • to BLR Director
2. DIFFERENT RULE RE APPELLATE JURISDICTION OVER MED-
ARBITER'S DECISIONS IN INTER-UNION DISPUTES.
While generally, the decisions of the Med-Arbiters arc appealable to the
BLR Director, excepted therefrom are their decisions in inter.union disputcst which
are appealable directly to the DOLE Secretary by virtue of Article 272 [259]2 of the
Labor Code.
3. VARIANCE IN THE RULE ON APPEAL IN UNORGANIZED AND
ORGANIZED ESTABLISHMENTS.
The rule on appeal in certification election cases in unorganized
establishments is different from that of organized establishments, to wit
(1) Appeal in unorganized establishments. • 111c order granting the
conduct of a certification election in an unorganized establishment is not subject to
appeal. Any issue arising from its conduct or fro m its results is proper subject of a
protut. Appeal may only be madt: to the DOLE Secretary in case of denial of the
petition witlt.in ten (10) calendar days from receipt of the decision of denia!.3
(2) Appeal in organized establishments. · The order granting the
conduct of a certification election in an organized establishment and the decision
diJ111iJJing or dtl!Jing the petition for certification election may be appealed to the
DOLE Secretary within ten (10) calendar days from receipt thereof.4
2.
APPEALS FROM DECISIONS OF DOLE REGIONAL DIRECTORS
1. DECISIONS APPEALABLE TO THE BLR DIRECTOR.
Not all decisions, awards or orders rendered by the DOLE Regional
Directors are appealable to the BLR Director. Only decisions in the following cases
relevant and related to labor relations, are appealable to the BLR Director:
(1) Visitorial cases under Article 289 [274], involving examination of
books of accounts of independent unions, local chapters/chartered
locals and workers' associations;5 ·
, ~kroM!as ~aa!lifl::a!m~artrds.
l 9Jpra.
1 Sedm 18 {famer!y Sedm 17). ~ VR~Boal v, d lte Illes kl frrl)lelnent lhe La:xr Code, as amerded by Depatrent
Order tt>.4(}f.-03, Series of2008 (()ilber30, 2008j.
• Id.
I The [lR lliectl)-, l"Q lte DOI£ $eaeay, has Ile ~ ai1lori1y (HPJ decisols ct t,e IXJU: Regilnal 0ra:tas
i1voMng exarrinaticn'; of lJlOl aanflls as pflM1ed ooder ~ II r/. Ille ~ d Procedure a, ~ -
issued 01 Aprt 10, 1992, b v.il: ·sec.3. mddioo ctlhe Regicra Ored!r. •The Regicra Cxm m'I exerose cxiJila
iJld exdJsMl ;.mfcim <Nf!I applc.lfm for lriln rngisO"am, pe!mfls f o r ~ dlllOl rngistiatiat cl1d COOl)lains
la ex.rnila1ia, of IJ1DlS books of &:XXllllls. sec. 4. .mslfdm ct lhe Imai.· XXX •(b) The Imai shal exircise

BAR IUVIEWERON LABOR LAW
(2) Union registration-related cases, such as:
a) Denial of applications• for union registration of independent
unions, local chapters and workers' associations;
b) Revocation or cancellation2 of registration of said unions;
(3) Notice of merger, consolidation, affiliation and. change of name of
said unions and or petition for denial thereof;3.•
(4) CBA-related cases, such as:
a) Application for registration of 1ingk-mttrpriJt4 CBAs or petition for
deregisuation thereof;S
b) Petition for denial of registration of ringlt-t111trpriJe CBAs or denial
of petition deregistration thereo(
As far as No. 1 above is concemed, appellate authority over decisions of
the DOLE Regional Directors involving examinations of union accounts is
expressly conferred on the BLR Director under the Ivi/u of Procedure on Mediation-
ArbitratiM,6 to wit:
"RULE II
MED-AR.BITRATION
"SEC. 3. Jurisdiction of the Regional Director. - The Regional
Director shall exercise original and exclusive jurisdictiou over application
for 11nion rtl}Jlratio11, pttitionJfar CJJnullation of 11nion rrgj1tration and romplain/J for
txa111i11ation ~[1111io11 bookJ o[a({Oun/J.
"SEC. 4. Jurisdiction of the Burcau.-
xxx
"(b) The Bureau shall exercise appellate jurisdiction over all e2ses
orii,,inating from the Regional Director involving 11nion n!i1tratio11 or
canullarion of urtificaru of 111iion rtgi11ration and ,0111plain11 for rxmninatioa of union
booh o[acroJ111/1."1
The language of the law is categorical. Any additional explanation on the
matter is superfluous. l I is thus clear then that the DOLE Secretary has no
appelate prrocoon Mf al cases (XiJilafing frtxn tie Regic:nal arectoc i1voMng lflal registatioo a cancelati:xl ol
~ cJ lri:l1 regmlm il1d ~ fa exannatm dlflal beds d acaxns:
1
See Al1X:le 243 [2361 cJ t1e Labor r.ooe m prov'des: ·M 243 ~36i Dena of regisva!icx1; awea. Toe decisixt cJ lhe
Labor Relatia\s Cxvisial i1 lhe re(Jixlal olfx:e den)iY,j regm!al may b e ~ l7f Ile <Wbrt rix1 ID lhe B.reaJ
a Bl (10) dcrjs Iran recept of notx:e flereof."
1 SeeArti:le 245 fl381 ollhe Labor Code v.!tll prtMdes:'M 24512J8i Calce'la!iCXl d regislration; appea. The ce1mlB d
~ cJ ~ ~ liixragaw.a!ai, vdlete' llaticra or kx:a, shall be c.n:eled l7f lhe aRaJ llhas reasoo kl
believe, after M heam:l, tiat lhe sci! liixr agcrizatxxl to ~er meets one a nxxe d Ile reqlilmenls herei1
r,cesated.'
1 Sedm 5, ~ f!J, llocl( V, ~ kl mpement tie Lm Code, as <ITlel'ded by Oep.rtnent Older No. 40-03, Series of
2003, JFeb.17,20031 il1d as Wle" aroidoo by Depmenl Oder No. 40-0-05, Seriesd 2005, Sept 13, 2005.
' As cfistoJuished Iran cases iMr1nJ ~layer C8As v,!li:h fal imer lhe oo,iilal jlisd"don ol lhe !l.R Dim.
1 Sedm 4 Jbme!1'f Secbi 5!, Rule XI, 8ocl( V, ~ ID ~lement Ile LaborCode, as areided l7f Depa1rnent Older No.
40-03, Series cJ 2003, JFeb. 17, 20031, m as re-ruooered by Depa1rnent Older No. 40f-03,'series a2008 [0d. 30,
200ai
I
I lssJed 01 .A4)(i 10, 1992.
'lt!ks.n!IJlder1ili"gsi.wlied.
'
CHAl'TER EIGHT
JURISOICTtON ANO RELIEFS
929
appellate jurisdiction over decisions of DOLE Regional Directors involving
petitions for examinations of union accounts. 1
2. CASES NOT APPEALABLE TO THE BLR DIRECTOR BUT TO
SOME OTHER LABOR OFFICIALS.
_For greater c~~ in presentation and to avoid any confusion, it is worthy
to mention that the dec1S1ons of the DOLE Regional Directors in the following
cases which are not related to labor relations are appealable to the DOLE Secretary
and not to the BLR Director.
(a) Visitorial (tnspection) cases under Article 37;2
(b) Visitorial (tnspection) and enforcement cases3 under Article 128,
(either routine or initiated through a complaint);4
(c) Occupational safety and health violations;S
(d) Cases related to pn·vale rem,ilmml and plccemenl agentiu (PRPAs) for
local employment, such as:
1) Applications for license or denial thereof,
2) Complaints for suspension or caocellirtion of license by reason of
administrative offenses;
3) Complaints for illegal recruitment; and
4) Petition for closure of agency.6
Additionally, their decisions on small moner claims cases arising from
labor standards violations in an amount not exceeding PS,000.00 and not
1 Ba1esv. Bitooi). G.R No. 120220,Jtlle 16, 1999.
1
"Ar.de 37. Visima PtlM!r. • The Seaetacy of Laba a his ~ atmized rer~ l1lil'f, at~ tine, i1spea lhe
premises, books of aco:oots and records ri inf persoo a ena-, roveied by tlis Tille, reqlJie ii ID subtM report~ on
prescriled fotm5. il1d act 01 YDlatia1 ct inf JXOiisioos a hi Tll!e.' (Refusrrg 1o Tie 1[Realitnenl and P1acena1t a
Wtde,s), Book I, Labor Code).
3
Visimal cases nvooe i1spedi:xl of est.ilislvtms kl delenme CXXT¢TI:e m liixrstn1an!s; vdi! en'.atelrelll cases
nvooe issuanC1! of o:irr¢r,ce ord€!S in! v.,its of exerulion.
' Based on lhe ra ~ h of Mi::le 128(b). Labor Code, v.tiai stl!es: ·1v1 ader issued 17t tie citf auflaized
representawe d Ile Seaetry of Laxir and Empl:,jmert lllder tlis .Aitide l1lil'f :>e iweaed to the le$'. n:t: (As crneoded
l7t Repl.Cic Act No. mo,Jl.fle 2, 1994). Mffonatt, ~ is plOli:led n58:oon t. ~IV.a tie~ oo the Dispositi:x1 of
Labor Stnla1ls cases ntie Regi:x\al 00ces, trus: "Sedal 1. ~ i - Toe ooler a 11e Regaia1 lmcklr sna1 be ma1
a
and executay ~ ~ kl the Seaetry t.m and Eripl:1,,nelt viC1i1 e1 (10) caerwJa- <1ays&an ~ t
lheraol.' The grrmls falle ~ .re p(Mled i158:oon 2llerect, tus: ·Qums b- Ef)p8<i. - The ar}JrieYed im, l1lil'f
-wea to Ile Seaetaiy Ile Oder ol lhe Regiooa llreda oo inf ct Ile ~ gltlU'lds: (a) toere is a /lina fade
evi:lerte ct cEUSe cJ <isaelm on Ile pal ri the Regaial aiectr; ~) Ile Oder was seared llrotql fral.d, ooemoo °"
graft and carupm; (c) tie~ is rm IX.rel'! oo ~ of 12w; and (<O semis emxs il the rnrn;is a fads r.ee
camit!ed v.tiich, l rd cxrreded, waJd cause gfiMl ~ ~ ipy lD Ile cW!lanl.' (See also Sedioo 2. i1
ret4m kl 58:oon3(a), Rule X, 8ocl( ID dthe ~ kl ~ I l e 1.mCode).
5 Sedioo 6(a) ri Rule VI [Health and Safety Cases] athe Rules 01 lhe ~ eJ lalia Stmirds cases nthe Regooal
O!fx:es v.ntfl Jl(Mles: 58:oon 6. Review by the Seamy. - (a) The Seaetry at his C7M1 nlia5ve a upoo the~ d
Ile ~ and/a effl)l:7/ee, l1lil'f IMNI the oolerd lhe Regaial IJi"eair wik:h shal be iTvnedia!ely ma1 and exooJrxy
unless s1ayed by the Seaetry upoo posfug by the ~ ri a raascmble cash a peoommce bond as ~ed by lhe
Rt>gcra [)i;m.' See also Ile 2" ~ ofMde 128(b). t.mr.ooe.
I Sedioo 62, Dep.rtnenl Onfef No. 141-14, Series of 2014, Nov. 20, 2014.
 BAR REvlEWfR ON LABOR lAW
930
accompanied with a claim for reinstatement under Article 129 are appealable to the
NLRC.
3. EXCEPTION WHEN DOLE SECRETARY MAY ENTERTAIN
APPEAL DIRECTLY FROM THE DOLE REGIONAL DIRECTOR'S
DECISION WITHOUT PASSING THROUGH THE ·BLR DIRECTOR.
The rule as shown above is that jurisdiction to review the decisions of the
DOLE Regional Directors O\'er certain cases lies with the BLR Director.1 Hence,
no appeal from the DOLE Regional Director's decision can directly be filed with
the DOLE Secretary who has no appellate jurisdiction thereover.2 However, a
unique deviation was allowed from this rule in the 2011 case of The Heritaf! Hotel
Manila,5 when the BLR Director inhibited himself from taking cognizance of the
appeal from the decision of the DOLE Regional Director because he was a former
counsel of respondent. Under this situation, the DOLE Secretary may legally
assume jurisdiction over the appeal from the decision of the DOLE Regional
Director. The reason is that in the absence of the BLR Director, there is no person
more competent to resolve the appeal than the DOLE Secretaty. The jurisdiction
remained with th: BLR despite the BLR Director's inhibition. When the DOLE
Secretary resolved the appe~ she merely stepped into the shoes of the BLR
Director and perfonned a fW1ction that the latter could not himself perform. She
did so pursuant to her power of supervision and control over the BLR.
4. VALIDITY OF REFERRAL TO BLR OF AN APPEAL
ERRONEOUSLY PILED WITH DOLE SECRETARY.
In the 2014 case of Takata, 4 the 1110111 proprio referral to the BLR Director
by the DOLE Secretary of an appeal erroneously filed before him from the
decision of the DOLE Regional Director ordering the cancellation of respondent
union's registration was held valid. Consequently, by reason of such referral, the
BLR Director can then validly act on it.
3.
APPEALS FROM DECISIONS OF MED-ARBITERS.
1. APPEALS FROM DECISIONS OF BLR DIRECTOR RENDERED IN
HIS ORIGINAL JURISDICTION.
Decisions in the cases falling under the original and ext&siDt jurisdiction of
the BLR Director are all appcalable to the DOLE Secretary, to wit
1
Abbo.'llabaa!Dries~. Inc. v.Abbo.'llaboomies~qees\tm, GRNo.131374,Jat.26,2<XX>.
z Id.
, TheHeritlgeHolel Manilav. Naticm Uniln otWakers i1 !he Hotel,ReslatRlloodAlied ~ 1-tte!Mnla
~Chapler{NllNHRAl~HHMSC).G.RNo.178296,Jat 12.2011.
4 Takala (Phaippnes) Colporatioo v. BureaJ rt Labor Rela!ions and &mtlang l..alca, Mllggagawa ng T~ (SALAMAl),
GRNo.196276,J\lle04,2014.
CHAPTER EIGHT
JURISDICTION ANO RELIEFS 931
{a) Comp~ts and petitio~s invol~g ~e application for registration,
revocanon or cancellanon of registratton of federations national
unions, industry unions, trade union centers and their local
chapters/ chartered locals, affiliates and member organizations·
(b) Request for examination of books of accounts of said la~r
organizations1 under Article 289 [274] of the Labor Code;
(c) Intra-union disputes involving said labor organizations;2
(d) N~tice. of merger, co~~olidation, affiliation and change of name of
said uruons and or pennon for denial thereof;
(e) Registration of multi-emplf!Jtr CBAs3 or petitions for deregistration
thereof; and
(Q Contempt cases. 4
2. AMPLIFICATION OF DISCUSSION ON SPECIAL CASES.
a. Appeals from denial ofapplication for tt:gistration and
revocation or cancellation ofre_gistradon oflabor organizations.
For purposes of appeal, the issue of union registtation involves 2
situations, viZ::
(1) Denial of application for union registnti.on;S and
(2) Revocation or cancellation of union registration.'
· The applicable rules would depend on who has taken origjlflJ/ and exilllJive
jurisdiction over the case, thus: -
(1) If the denial of the registration application or moeation or "11lltllation of
union registration is made by the DOLE Regional Director, in the
exercise of his original and exclusive jurisdiction over cases involving
independent unions, local chapters/ chartered locals and
workers' associations, the same ~ay be appealed to the BLR
.
932 SAR IUVIEWERON lABOA lAW
Director,t whose decision on the matter shall be final and
inappealable;2 or
(2) If the denial of the registration application or revo((Ztion or canllllation of
union registration is made by the BLR Director, in the exercise of his
original and exclusive jurisdiction in cases involving federations,
national unions, industry unions and trade· union centers, the
same is appealable to the DOLE Secretaty,3 whose decision on the
matter shall be final an<l inappealable.4
The reglementary period for appeal to the BLR Director:5 or DOLE
Secretary,6 as the case may be, is ten (10) calendar days from receipt of the decision,
copy furnished the opposing party.
b. Appeals involving denial ofCBA registration or deregistration.
There are two (2) situations involved in the denial of CBA registration
or CBA deregisuation, viZ::
(I) Singlc-enteq,rise CBAs. - The denial by the Regional Director
of the registr:ition of 1ingle-en1erpri1e CBAs or their deregistration
may be appealed 10 the BLR Director within ten (10) days from
receipt of the notice of denial.7
1 Sectm6, Rtre IV [Pro.isioos Camm ID tne Registraoon d t m ~ ~ and Wooers AssociataiL Book Vof tie
~ ti l'r!Jlemenl Ile Laba Code, as arrended by Clepme!lt Cxder No. 40-03, ~ rJ. 2003, fel>. 17, 2003i The
grcxm lhatmay be riled is ei1hef grcm abuse ct oiscretai O'violattxl ct l'1c Rues ID 1n1>anent~ Laba'Cooe. Ea!ief, ft
was P1)'l'ded tn1er Sedoo 4. ~ v. Boolt v(Lz!xr RsatmsJ.a tie rues k l ~ Ile Laber Code. as amended by
DepmentOrderNo. 9dated t.-trf 1, 1997, issued byfooner Secretary of Laba' and late!~ Cw!Associate.Justice
Lecrado A QusunllilJ. tiat Ile deosoo cl l'1c Regooal Offce derrfr,;i Ile appx:a:ia1 ta regislra5on cl a \\Olkers'
associmt v.tiose pace cl q>etaOOn is c:oofoed to aie regma ;..iis(fdm. ()' tie BlreaJ rJ. Laba' Relafals denyi-g aie
reg~ d afe<krnoo, nata1al O' iooJsby uni:lo O' trade IKlkn ceoter may be iweaed ID Ile !l.reaJ O' tie Secreay,
as tie case rre, be, v.to shat deQle tie ,wear w.m l'M:!nty (20) calendcl days tun receipt rJ. Ile rewds ct the case.
(See Nalional Federaoon of Labor v. l.a',luesma. G.R No.123426,""1rd110, 1999).
1 Abbct11..abaames ~ 11c. v.Alllldt 1.axxabies ~ lklol. GR No. 131374.~ 26,200),
Soc!xxl 6, ~ IV [Prw.si:ns Camm ID lhe Regmtal ct Laba' ~aniufuls and WatersA5soeiatai1 Book Vof the
~ kl ~ ttoe Lab<r Code, as anmled by Oepamleot Cxder No. 40-03, ~ o( 2003, [Feb. 17, 2003i
' Abbd!Labaamesl'tq>pi1es, 11c. v . A l l l l d t ~ ~ lliiln.~
1 Sedxxl 16, rue Xl, Boo1t V, Rules kl krpiemenl lhe Labor Code, as arreooed by l:lep.m,ent Order No. 40-03, Seres of
2003,feb.17,2003i
1 Sedol 15, Rule XI, Boolt V, Riles ID ~ n l toe labcJCode,as arrended by()epmnlt O!tlerNo. 40-03, ~ d
2003, (Feb. 17, 2003) and as ieoombered by D!pamlent Older No. 40f-03, ~ 30,2008. f'lwalstt, has p,1)Yidel
i1 Sedm 4, ~ VIII, Boo1t Vd fle Rl1es t> ~rpiernef1 toe Laba Code ~t the deosbn ct te Regma Office O' Ile
[xectlJ of ttie !mau ct Lab<r ~ rrJo/ be ~ Withil ten (10) days frool recept llm by the aggrieved party
ID the Di'eci:J d ~ ~ O' tie ~ o! Labo', as the case rrJo/ be, v.oose decisicxl shal be 1M and exeomy.
(See Natma Federaoon ol l.abor v. l.a',luesma.G.R No. 123426.Maidl 10. 1999).
1 Sedol 5, rue XVII, Boolt V. ~ - , ~ t i e Laber Code, as arrmled by Depment O!tler No. 40-03, ~ d
2003, (Feb. 17. 2003i
I
CHAPTER. EIGHT
933
JURISDICTION AND RELIEFS
(2) Multi-employer CBAs. - The denial bv the BLR Director of the
registration of nr11/ti-emp/q_ytr CBAs or their deregisttation may be
appealed to the DOLE Secretary within the same period t
The Memorandum of Appeal should be filed ~th the Regional Office or
the.BLR, as the case may be. The same should be transmitted, together with the
ennre records of the application to the BLR or the Office of the DOLE Secretary,
as the case may be, within 24 hours from receipt of the memorandum of agpeal.2
The BLR or the Office of the DOLE Secretary, as the case may be, should resolve
the appeal within the same period and in the same maru:er prescribed in the RP!t, to
ltnpltnrtnl the Labor Codt. 3
c. Direct and indirect contempt.
(1) Direct contempt.
,\ person guilty of misbehavior in the presence of or so near the BLR
Director as to obstruct or interrupt the proceedic.gs before him, including
disrespect towards him, offensive personalities towards others, or refusal to be
sworn or to answer as a \vitness or to subscribe an affidavit or deposition when
lawfully required to do so may be summarily adjudged in direct contempt by said
official and punished by a fine not exceeding Pl00.00 or imprisonment not
exceeding one (1) day, or both.4
The person adjudged in direct contempt by the BLR Director may appeal
to the DOLE Secretary. TI1e execution of the judgment is suspended pending the
resolution of the appeal upon the filing by such person of a bond on condition that
he will abide by and perform the judgment should the appeal be decided against
him. The judgment of the DOLE Secretary is immediately executory and
inappcabble.5
(2) Indirect contempt.
Indirect contempt shall be dealt with by th~ BLR Director6 in the manner
prescribed under Sutio11 12, &tit 11 of the &vi1td &/u ?f Co11rt. 7_In Lind Bank ofthe
Philippim v. IJ1/a11a, Sr.,8 it was held that under the above-quoted provision, quasi-
, kl.
l kl
See Sedm6, ~ XVI. Boci V, bk!, ilrela!i:xl b ~XI. Boci VOlelect.
Sedb1 1, rue xxm. Book v. Rules 10 1mp1emern lhe uw Code, as &'JlEOded by Dep;rtnent O!tler No. 40-03, ~ a
2003, (Feb. 17, 2003!.
s Sectm 1. rue XXJ11. Book v. l);:l.
1 Sedol 2, ~ XXIII, Boo1t v. lli:I.
1
This rule pl1M!es as ilb,,,o;: "SEC. 12 Corten¥t ~ ~erMes. - Un~ otherwise pnm!ed by faw, flis
~ Shat apply kl ~ t coovritted clJailst l)S'SOOS, llltities, boaies O' clJEOOeS exercisilg quasij.xf.daf f\rocfals, O'
sha1 have suppeby efECt lo sudl rules as flet may NM! adopled rmuait t aihxily granted b mil by law b prisll
b' ~ The Regi:loa Trici COll1 d tie place v.re-ei1 tie c:onterrcx has been conm'tted shal hitie µisodm M.f
sudl chayes as nw be !'led lhereb-:
1 GRNo. 152611,Al.9.5,2003.
 CtiAr1 ER E1G1r r 935
BAR RfVIEWER ON I.ABUR I.AW
934 JURISDICTION AND RELIEFS

judicial agencies that have the power to cite persons for indirect contempt pursuant VII.
thereto can only do so by initiating it in the proper Regional Trial Court and that it ADMINISTRATIVE FUNCTIONS OF THE BLR AND LRDs
is not within their jurisdiction and competence to decide indirect contempt cases as
these matters are still within the province of the Regional Trial Courts. The BLR .and the Labor Relations Divisions (LRDs) in the DOLE
However, RoboJa v. NLRC,1 clarified that said Rule 71·'does not require Regional Offices have ron.umnt jurisdiction over the following administrative
quasi-judicial authorities2 to initiate indirect contempt proceedings before the trial functions:
court since this mode is to be observed only when there is no law granting them 1. Registration of labor unions;
contempt powers. Since Section t3 and Section z• of &,le XXIII, Book V of the 2. Keeping of registry of labor unions;
&lies to Impkment the Labor Code, as amended,s expressly grant both direct and 3. Maintenance and custody of the files of CBAs and other related
indirect contempt power to the BLR Director, the require~ent in Land Bank does agreements.
not apply. The BLR Director therefore need not initiate any indirect contempt 4. Records of settlement of labor disputes; ar.d
proceeding before the Regional Trial Court. 5. Copies of orders and decisions ofVolunta..--y Arbitrators. 1
VI. It must be noted that it is the registration of the labor organization with
REMEDIES FROM DECISIONS OF the BLR and not with the Securities and Exchange Commission (SEq which
BLR DIRECTOR AND DOLE SECRETARY makes it a legitimate labor organization with rights and privileges granted under the
RENDERED IN THEIR APPELLATE JURISDICTION Labor Code.2

1. APPEALS END WITH BLR DIRECTOR AND DOLE SECRETARY. E.

Notably, the remedy of appeal involved in the cases contemplated under
Article 232 (226] is avaihble only up to the level of either the BLR Director or the
DOLE Secretary, as the case may be. Appeal to the CA from their decisions
rendered in their respective _appellate jurisdictions is not available; the only remedy
being the filing of an original special civil action for certiorari under Rule 65 of the
Rules of Court. 6
In the case of decisions rendered by the BLR Director in his appellate
jurisdiction, they can no longer be appealed to the DOLE Secretary because
another appeal to the DOLE Secretary is not tenable anymore, the BLR Director's
decisions thereon having already become final and executory.7
2. REMEDY FROM CA DECISIONS TO THE SUPREME COURT.
There is only one mode to elevate labor cases from the CA to the
Supreme Court and that is, through Rule 45 petition for review on certiorari.
NATIONAL CONCILIATION AND MEDIATION BOARD3
I.MANDATE.
The NCMB is an agency attached to the DOLE principally in-charge of
the settlement of labor disputes through conciliation, mediation and voluntary
arbitration. It is also charged with the promotion of voluntary approaches to labor
dispute prevention and settlement.•
2. CONCILIATOR-MEDIATOR.
A "Conciliator-Mediator" refers to an officer of the NCMB whose principal
function is to assist in the settlement and disposition of labor-management disputes
through conciliation and preventive mediation, including the promotion and
encouragement of voluntary approaches to labor disputes prevention and
settlement. s

1 Arfde 23712311, l.a>oc Code.

II CebJ ~ · s Associatioo, ric.v.lbt Pl.Ka Ferrer~. G.R. No. 831!Xl. Aug. 4, 1992;See aso fltiwr,e Lm-Sea-
1 Rooosa v.NLRC. Che!ro-Tedvlisdle ~ . nc.. G.R. No. 176085, Feb. s, 2012. 1

Ll<e Ille l.a>ocMl!errx Ile NLRC i1 !his case. \ .Asl.a>oc lklkxl [Pt.ASLUJ v. CIR. GR Nos. L-5664 &l-5698, Sepl 17, 1953, 93 Phi. 747.
\ l ReMrt f'roolisi:ns: (1) Exeo.Aive Order No. l26. !Rea'9m-1:j Ile ~~ d Labo,- .rid fnl>b',men[ .rid kr Oller
Drect CooenlX-
kl<frect ~ Pulposes} (Jarmy 30, 1987) .m (2) ExeartNe Order No. 251[0'ealr9 Ile N::M31{July 25, 1987) Bah we-e issued by
As iYTEllded tJf Dep.m-,ent Order No. 40-03, Seriesof 2003, [Feb. 17, 2003i
r President Corazon c. Aqiro.
' Sedicn 23, Rule XI, Book V, Rules b ~ t t,e Labcx" Code, as amended tJf l)epcrtnEnt Order No. 40-03, Series of I ' Sedicn 1(15!, Rue II~ NC'IB Mniaof Pnx:edires b Cm:ia1m irid Preveofve lle<flalioo Cases.
5 Sedicn 1[k}, Rue I, Book V, ~ I:> lnl)lement Ille Labo,- Code, as 001em!ed by !lep;Jbrelt Order No. 40-03, Series of
2003, [Feb. 17, 2003!;Naliooa Fedetaoon d Laba" [NFL! v. laguesma, GR No. 123426, Marth 10, 1999.
1 .Abbol!Lallaames Phi"!)pi'les, Inc. v..Abbott l.ooo:alaies fnl>loyees Unkxl, GR No. 131374, Jan, 26, 20'.Xl. 2003, [Feb. 17, 20031,

936 SAR REVI EWER ON LABOR LAW
1.
NATURE OF PROCEEDINGS
1. NCMB IS NOT AQUASI-JUDICIAL AGENCY.
According to Tabig11e v. lutemational Copra Exporl Cirpofation, 1 the N CMB,2
is not a quasi-judicial agency. · Generally, there are no marked clistinctions between conciliation and
"Q11asi-j11didalf11nctio11" is a term which applies to the action, discretion, etc.
of public administrative officers or bodies, who arc required to investigate facts or
ascertain the existence of facts, hold hearings, and draw conclusions from them as a
basis for their official action and to exercise discretion of a judicial nature. 3
2. EFFECT OF NOT BEING A QUASI-JUDICIAL AGENCY.
In Tabig11e, the NCMB Director did not grant petitioners' request to submit
the case for voluntary arbitration because the bargaining union of which they are
members, refused to join them in the preventive mediation case they filed with the
NCMB. The bargaining union, being the party to the CBA, is required to give its
consent to the voluntary arbitration case. Petitioners questioned the NCMB
Director's action through a Rule 43 petition with the Court of Appeals. Rule 43 of
the Rules of Court, however, applies only to awards, judgments, final orders or
resolutions of or authorized by any quasi-judicial agency in the exercise of its
q11aJi-j11dicialf11nctionI. Hence, NCMB's decision, not having been rendered by a quasi-
judicial body, cannot be elevated to the Court of Appeals under said rule.
2.
CONCILIATION VS. MEDIATION
1. JURISDICTION OVER CONCILIATION, MEDIATION AND
VOLUNTARY ARBITRATION CASES.
Originally, conciliation, mediation and voluntary arbitration functions are
vested with the Bureau of Labor Relations (BLR). These functions, however, were
all absorbed by the NCMB under the law which created it. 4
2. CONCILIATION AND MEDIATION, MEANING.
Both the tenns "conciliation" and "mediation" refer to a process whereby a
neutral third person usually called Conetliator (in c,,se of conciliation) or Mediator
(111 case of mediation), intervenes in a dispute im·,ilving two or more conflicting
GR No. 183335,Dec.23, 200a.
/>s eooreraled i) Secful 22 ct Exeai1i-ie Oroer No 126 \. he Reoiga11L, l<fi Aa ct lt,e MllSl!y ci t.m and ~ Q.
3 ~BankandTrus1Coolpally,i1c.v.NWPC,GF. No.144322,Fei> 6,2007.
• See Secful 22 ct EJfCible Oroer t-.b. 126, !Reoi-garur,g re Mnistly a Lm ood Empbyment o'llJ n OUiet Purpooesl
pnmigated oo Jan. 30, 1987 by PresKlent c«azoo C Aquil1o. as amended by Section 4 of Exeo.iwe Ortler No. 251
pnxl'lJgaledCXlMf 25, 1987,aeatng t,eNCIII!.
CHArT£R EIGHT
JURISDICTION AND RELIEFS
937
partie~ for the p_urpose of reconciling their differences or persuading them into
adiusong or settling their dispute. The Conciliator or Mecliator normally does not
make or render any decision, his role being confined to the functions afore-
described.
3. DISTINCTION BETWEEN CONCILIATION AND MEDIATION.
mediation. The reason is that in both cases, a neutral third party (called
Conciliator or Mediator) is tasked to assist two or more opposing parties in finding
appropriate resolution to a dispute.
Philippine law and jurisprudence do not embody any specific distinctions
between these two as in fact, there appears to be no universal definition of these
widely accepted alternative modes of dispute resolution.
fn the NC.MB, the hearing officer is called Conciliator-Mediator. There is
no separate classification between conciliators and mediators. When the
Conciliator-Mediator performs his task, he does not make any distinction when he
is acting as Conciliator or as Mediator. However, the following definition and
description of these tean~ are prescribed:
Conciliation - is conceived of as a mild form of intervention by a neutral
third party, the Conciliator-Mediator, relying on his persuasive expertise, who takes
an active role in assisting parties by trying to keep disputants talking, °facilitating
other procedural niceties, carrying messages back and forth between the parties,
and generally being a good fellow who tries to keep things calm and forward-
looking in a tense situation.
Mediation - is a mild intervention by a neutral third party, the Conciliator-
Mediator, whereby he starts advising the parties or offering solutions or alternatives
to the problems with the end in view of assisting them towards voluntarily reaching ·
· their own mutually acceptable settlement of the dispute. 1 ·
In other jurisdictions, the principal distinction between conciliation and
mediation lies on the extent of the power and authority granted to the neutral third
party.
In mediation, the Mediator normally facilitates a deliberation or
discussion of the issues between the parties. He may or may not offer any opinions
on the strength and weaknesses of each party's positions and arguments. Thus,
mediation may be classified into two, namely:
1. Facilitative Mediation where the Mediator does not make or offer
any opinion; or
1 See htlp:/loo.ncrnb.~ llllere tis cfisfnctioo is made by !he NCM3. Last .Accessed: J.m11)' 31,
2019.
 SAR REvlEWER ON IABOR IAW
2. Evaluative Mediation where the Mediator offers an opinion which is
not binding on the parties.
It bears stressing, however, that regardless of which of the 2 methods
above is chosen, the Mediator is not empowered to impose his will on the parties.
In conciliation, the Conciliator is given more po~. ~d authority in that
he may not only offer an opinion on the issues at hand but may actually make a
binding opinion thereon provided the parties stipulate in advance to this effect His
opinion is based on the facts and the law involved in the controversy before him.
It may thus be observed that conciliation is more foanal than mediation
in the sense that the Conciliators opinion, unlike the Mediator's, may be binding
on the parries, although it may be merely temporary in character.
4. PRIVILEGED NATURE OF THE INFORMATION JN
CONCILIATION AND MEDIATION PROCEEDINGS.
Any information and statements made at conciliation proceedings should
be treated as a prhileged communication and thus may not be used as an evidence
in any proceedings. They are inadmissible in evidence. Con~tors and similar
officials are not allowed to testify in any court or body regarding any matters taken
up at conciliation proceedings conducted by them.1
'lbe privileged nature of the communication applies not only in cases of
conciliauon and mediation proceedings before the BLR, its Med-Arbiters or any of
its hearing officers but also in similar proceedings conducted by other labor
officials, such as the Conciliators-Mediators of the NCMB as well as the Labor
Arbiters and the Commissioners of the NlRC.
For instance, in modifying the award of annual salaty increases given by
the DOLE Secretary to the employees under the CBA in the case of Nilsan Motors
PhilippineJ, In'- v. Se£ntary of Lzbor t111d Empluyment,2 the Supreme Court pointed out
that it cannot sanction the award made by the public respondent DOLE Seaewy
based ostensibly on the revelation of the NCMB Administrator that was sourced
from the confidential position given to him by petitioner company. The reason for
this is simple. Article 239 [233) of the Labor Code prohibits the use in evidence of
any confidential information given during conciliation proceedings. The NCMB
Administrator clearly breached this provision oflaw.
1 At!Jcle , .19 [2331, Laba' r.ooe; Sedion 2. Rule XXII, Bodl V, Rules ID kll>lemenl lhe Laber Code. as ameooed by
OepalU1'•.?lll Order No 40-03, Series of 2003, [Feb. 17, 2003~
2 G.R.Nos 158100-91.June21,2006.
CHAPTER EIGHT 939
JUIUSDICTIO_N ANO RELIEFS
3.
PREVENTIVE MEDIATION
1. PREVENTIVE MEDIATION AS A REMEDY.
"Pn111nti111 mtdiaMn," as a remedy, is not found in the Labor Code. But
under the law which created the NCMB, it is expressly stated that one of its
Junctions is to provide preventive mediation to disputing parties. 1 It covers
potential labor disputes that are the subject of a formal or informal request for
conciliation and mediation assistance sought by either or both parties or upon the
initiative of the NCMB to avoid the occurrence of actual labor disputes and in
order to remedy, contain or prevent its degeneration into a full blown c;lispute
through amicable settlement.2
The term "pnventive mediation &aJe'' refers to the potential or brewing labor
qispute which is the subject of a formal or informal request for conciliation and
mediation assistance sought by either or both parties in order to remedy, contain or
prevent its degeneration into a full blown dispute through amicable settlement.
2. HOW TO INITIATE PREVENTIVE MEDIATION.
Preventive mediation proceeding may be initiated in two (2) ways:
(1) By filing a notice or request of preventive mediation, as
distinguished &om a notice of strike/lockout; or
(2) By conversion of the notice of strike/lockout into a preventive
mediation case.
Procedurally, the filing of the notice of preventive suspension is the first
step to submit a case for mediation. It is only after this step that a submission
agreement may be entered into by the parties concemed.3 Moreover, just like in
notices of strike or lockout, only certified SEBAs may file a notice or request for
preventive mediation in cases of bargaining deadlocks and unfair labor practices,
the only two (2) grounds that may be invoked in support of a strike or lockout4
As distinguished from a notice of strike/lockout, "notice of pre111nti11e
mediatiotl' refers to the notification .filed by ~ an employer or a duly registered
labor union with the NCMB-DOLE infomung the latter of its desire to submit the
issues between them for preventive mediation and conciliation. The issues that may
be submitted for preventive mediation may either be strikeable or non-strikeable.
1 Secoon 22, Execuwe 0roer No.126.
2 Sectiln 1 (20), fUe ID, NCtJB Mina dProcmres tr Ccn:liatm and PrwentHe Mediabl cases; See also Seclkln 1
(mm}. Rule l Boat v, ~ b in,e.nent 01e 1.mor <'.ode, as at8lded by Oeplmmt O'tkr No. 4003, SerES cl m,
{Febuay 17, 2003t, Appmm 2 lQemlb d Terms}, NCM3 Pitner on Sllb, P'de&lg and l.oaoot. 2nd Edition.
Oeam>a- 1995.
3 lnsutarHotel ~Unioo-NFlv. wateifrontmutarHotelDavao, G.R.Nos.17404041, Septem)«22,2010.
• Id.; Sedioo 3, fM! IV of ttle NCM3 Mmll of Procedtre.

940 SAR REVIEWER ON l.ABOR I.AW
In cases of striktabk issues, the parties may mutually agree that the same
be treated or converted into a preventive mediation case, in whi~ event, _no s~e
. or lockout may be legally and validly mounted based on the sa'?e ~s~es stnce th~
conversion into a preventive mediation case has the effe~t of dis~stng the notice
of strike/lockout and removing it from the docket of notices of s,rike/lockout
In cases of non-strikeablt issues raised in a notice o( strike or notice of
lockout, the NCMB may, mo/11 proprio, convert the same ~to~ p~entive m~tion
case or, altematively, refer said issues to voluntary arb1tta~on, ~ they are_ m the
nature of unresolved grievances or to the Med-A.(b1ter, if they involve
representation or inter-union disputes.
3. AUTHORITY TO CONVERT A NOTICE OF STRIKE/LOCKOUT
INTO APREVENTIVE MEDIATION CASE.
The NCMB has the authority to convert a notice of s~/lockout filed
by the union/ employer into a preventive mediation case under any of the following
circumstances:
1. When the issues raised in the notice of strike/lockout are not
strikeable in character.
2. When the party which filed the notice of strike/lockout volun~y
asks for the conversion.
3. When both parties to a labor dispute mutually agree to have it
subjected to preventive mediation proceeding.
Such authority is in pursuance of the NC:MB's duty to exert all efforts at
mediation and conciliation to enable the parties to settle their dispute amicably and
in line with the State policy of favoring voluntary modes of settling labor disputes.'
The NCMB introduced this concept of preventive mediation service since
1988. Its distinctive feature lies in the fact that under this mode, disputes are
settled without the pressure of any threat of a strike or lockout Both parties
therefore could deliberate and adjust their differences in a more conducive
atmosphere than when there is a pending strike or lockout notice.
4. GUIDELINES IN THE CONVERSION OF THE NOTICE OF
STRIKE/LOCKOUT TO A PREVENTIVE MEDIATION CASE.
In case of conversion of a notice of strike or lockout into a preventive
mediation cas~ the following guidelines must be followed after such conversion:
(1) Clearly determine whether the issue/s raised in the notice of
strike/lockout is/ are strikeable or not.
CHAITTREIGHT 941
JURJSDICTION AND RELIEFS
(2) If conversion is warranted, a written recommendation from the
Conciliator-Mediator handling the case is required, after close
consultation with the Regional Branch Director.
(3) The written recommendation must be formally endorsed to the
Regional Branch Director II for approval.
(4) The conversion must be done before the cooling-off period expires or
before the union conducts its strike balloting.
(5) Parties conc~ed must be formally notified of the action taken by the
Regional Branch Director through a letter signed by the Conciliator-
Mediator handling the case and approved by the Di.rector II.
(6) The notice should be dropped from the docket of notices of
strike/lockout and to be renumbered as a preventive mediation case
and a conference thereon should be set on specific date/s.1
5. CONVERSION OF NOTICE RESULTS IN ITS DISMISSAL.
Once the notice of strike is converted into a preventive mediation case,
the notice is deemed dcopped from the dockets as if no notice of strike has been
filed. Since there is no more notice of strike to speak about, any strike subsequently
staged by the union after the conversion is deemed not to have complied with the
requirements of a valid strike and therefore illegal. 2 The same rule applies .in the
case oflockout by an employer.3
6. RELEVANT CASES.
A case in point is Philippine Airliner, Jnr. v. Semtary ofLzbor and Employment,4
where the strike was declared illegal for lack of a valid notice of strike in view of the
NC:tvffi's conversion of said notice:: into a preventive mediation case. The Supreme
Court reasoned, thus:
"The NCMB had declared the notice of strike as 'appropmte for
preventive mediation! Tht ~{fed of /hot tk,laraJioR (which PALEA did not ask
to be reconsidered or sc::r a:;ide) was ID drop tht taSt from the do,lut of 111Jlia of
striker, as provided in Rule 41 of the NC.MB Rules, at if Ihm 111t11 no Mlitt of
During lht ptndi,uy of f'rtvtnlivt mtdiatibn pnae,dings no rlrikt (()11/d ht ltgal!J
tlrikt.
dedand. •. The strike which the union mounted, while preventive mediation
proceedings were ongoing, was aptly described by the petitioner as 'an
ambusb.'"5
Sedlm4, ~ V, NctvsMaooalof Procedures ill Coocllatxln and PrevnveMeda!D'I Cases.
No.18, NCMB Pnneroo Sbw!, P'detilg illd Lockoot, 2nd Ecfflioo. Oeoomber 1995.
3 Ibid.
4 G.Rt-b.88210,Jan.23, 1991, 193SCRA223.
s Per DOLE websi'a athtlp:!MwN.dde.gov~; Lastaa:essed: June30, 2014.
 BAR REVIEWER ON LABOR I.AW
942
It is clear, according to San Miguel Corporation v. NLRC,1 that the moment
tbc NCMB orders the preventive mediation in a strike case, the union thereupon
loses the notice of strike it had filed. Consequently, if it still defiantly proceeds with
the strike while mediation is on-going, the strike is illegal.
In the case of NU117HRAIN v. NLRC,2 where tht! petitioner-union
therein sin1ilacly defied a prohibition by the NCMB, the Supreme Court said:
"Petitioners should have complied with the prohibition to strike
ordered by the NCMB when the latter dismissed the notices of strike after
finding that the alleged acts of discrimination of t~ hotel were not ULP
hence not 'suikeable.' The refusal of the petitioners to heed said proscription
of the NCMB is reflective of bad faith."
F.
DOLE REGIONAL DIRECTORS
1. ROLE OF THE DOLE REGIONAL DIRECTORS.
Tut DOLE has a total of 16 Regional Offices nationwide each one of
them is headed by a Regional Director. The DOLE Regional Directors are the duly
''authorized rtpmen/atives" of the DOLE Secretary referred to in Article 128 of the
Labor Code which grants to them both visitorial and enforcement powecs.
They are in charge of the administration and enforcement of labor standards within
their respective territorial jurisdictions.3
1.
JURISDICTION
1. ROLE OF THE DOLE REGIONAL DIRECTORS.
The DOLE has a total of 16 Regional Offices nationwide each one of
them is headed by a Regional Director. The DOLE Regional Directors are the duiy
"authorized reprmntafi/)(j" of the DOLE Secretary referred to in Article 128 of the
Labor Code which grants to them both visitorial and enforcement powers. They
are in charge of the administration and enforcement of labor standards within their
respective territorial jurisdictions.4
1G.RNo. 1t9293,.l\Jne10,2003.
1 G.R. No.125561, Ma-th 6, 1998, 287 SCRA 192.
1 See Sedion 3. Rue 1, Rules oo lhe Disposltion cH.abor Standards Cases in lhe Regiona 01oces [Sept 16, 1987]; Alml v.
De la Cruz. G.R No. 82488, FEb. 28. 1900. 182 SCRA 886; Sal Mlue( Capaalion v. The Hoo. CA. G.R. No. 146775, Ja,
30, 2002.
• See Section 3, Rule 1, Rulesoo lhe Disposition alabor Stmaros Cases in lhe Regiona 01oces [Sept 16, 1987]:Manov.
De la Cruz. G.R No. 82488.Feb. 28, 1900, 182 SCRA 886; Sal~ Capaatioov. The Hoo.CA. GR No. 146775,Jan
30, 2002.
CHAl'TER EIGHT
JURJSDICTION AND RELIEl'S
943
2. JURJSDICTION OF THE DOLE REGIONAL DIRECTORS.
The DOLE Regional Directors have original and exclusi/)( jurisdiction over
the following cases:
(a) Visitorial (inspection) cases under Article 37 1 of the Labor Code
referring 10 the inspection of the premises, books of accowits and
records of any person or entity covered by the Title I [Recroitmen t
and Placement of Workers], Book I, Labor Code.
(b) Visitorial (inspection) and enforcement cases2 under Article 128 l
(either routine or initiated through a complaint); '
(c) Visitorial cases under Article 289 (274],4 involving examination of
books of accounts of independent unions, local
chapters/chartered locals and workers' associations;
(d) Occupational safety and health violations;5
(e) Small money claims cases arising from labor standards violations in
an. amoW1t. not exceeding PS,000.00 and not accompanied with a
claim for rClllstatement under Article 129;
(Q Cases related to private recr11itmrnt and placement agencies (PRPAs) for
Iocal6_employment, such as:
1) Applications for license or denial thereof;7
2) Complaints for suspension or cancellation of license by reason of
administrative offenses;8
3) Complaints for illegal recruitment;9 and
4) Petition for closure of agency;1D
1
-~ 37. VISito(ia power.• The Seaeta,y of Labore< hfi duiJ authorized ~esrotawes may, at~ tine, i'lspect the
a
premises. lxxis ao:ooits and racads a~ peMl e< entt( COv'2red by !tis TII?, requi'e alo submt repats regtafy on
presaibed rons, and a:t on vilJ\:!lion ct ~ provi;ms of ~is r111e: (Refemrl,i 1o Tie 1(Remmieot and P0;ement o1
Wcrtersi.Book I,Labor Code).
1 Vsbial cases iMM! ilspedion ct estilistments ID demnile COO'l)m:e v.ith laboc staooards; v.tre enfaremenl cases
i1Yl:m ~ aC001)lmce onlelsand \\!is of exea.itioo.
3 Alti:e 128 is enti1!ed 'VISilDlial and Ellfoo:emeot Power.'
' Al1i:i! 289 [274] is riled 'VISltorial Power.'
1 See Sedion 22, RA No. 11058 [Al.gust 17, 20181,entitled "An Ad Sb'eogthEl"li"lg ~mce llif10:x:upationa Safety and
Heat't!l Standcrdsandf'rovi:frg Penalies forVdafioos Thereof." See also Sedion6ol~ VI ~and Safety Cases! of
lt,e Rules on ltie Disposml oll..abe<Stmalls Casesil lhe R~ Dfoces.
s As cistinguished mn reauib'nent and pl,arenent of Yd,cers for
lhe PhiippineOverseas Efr!Jlc1jmertMnilisralion (POEA).
= errpl)yment Yilm fats under the ;irisdclion of
1 Sedion s, Depa,i'nent Order No. 141.14, Series a 2014 iRevisro Rules aoo Regulations Goiemi"9 Reavanent anc1
Ptacemeot for Local Err!Jkrymenl), Nov. 20, 2014; See previJus proi5ion er ~is matter i1 Sedion 36. Rule VII, RJles And
''·[ Regulati:x1s Gcvemo,i Ptiva1e Recruttrel1and Pa:emenlAgencyfor Local Efr!Jlo)men~ Jule 5, 1997. See also NaoonaJ
• Federatxn ctl.abC< v. L.a;iuesma, GR No. 123426, Mtrth 10, 1999.
Section 54. il relation to Sedion 51,Oepatnent Order Mi. 141-14, Series ol 2014. !Jo.
Section 45.~ tOrder Ml. 141-14. Series a 2014, Ibo.
i ID Sedion 47, Depa11nent Order No. 141-14, Series cJ 2014, lbiJ.
•I
i
944 BAR REvlEW£R ON LABOR LAW CHAPnR EIGHT
JURISDICTION AND RELIEFS
945
(g) Cases submitted for volunwy arbitmtion in their capacity as Ex- EXPANDED DISCUSSION OF IMPORTANT TOPICS
OJ/ido Voluntary Ai:bittators (EV&) under Dtpartmtnl Onkr No. 83-
07, Smuaf2007. 1 I.
(h) Union registmtion-related cases, such as: VISITORIAL AND ENFORCEMENT POWERS
1) Applications for union registmtion of ind,pendent unio~,
L THREE {3) KINDS OF POWER UNDBRARTICLE 128.
local chapters and workers' associations;2.,
2) Petitions for denial of application for registration3 of said unions;4 Article 1281 of the Labor Code, as amended, basically enunciate_s the tht~
(3) kinds of power which tJie DOLE Secreau:y and/or the Regional Directors, his
3) Petitions for revocation or cancellation of registtation5 of said duly authorized representatives,2 may exetcise in connection with the
unions;' administration and enforcement of the labor rtandards provisions of the Labor Code
© Notice of merger, consolidation, affiliation and change of name of and of any labor law, wage order or rules and regulations issued pursuant thereto.l
said unions and or petition for denial thereof;7
G) CBA-related cases, such as:
1) Application for registtation of ringle-1nttrpris~ CBAs or petition for
deregistration thereof,9
2) Petition for denial of registration of Jingle-enterprise CBAs or denial
of petition for deregist:ration thereof; and
(k) Request for SEBA certification when made in an unorganized
establishment with only one (1) legitimate union. 10

' Issued byfooner OOlE Seaelaly, las Associate Justice of tie Suprerm COOlt, MIO D. &ion oo June 8, 'JJXJ7.
2 Sectioo 3, ~not lhe tled-Mmtim rues states: ·sec.
3. Jlllsdi:Goo or te Regional llrecta'.- The ReJn llrm
st1a1 exercise qilal and exasve prisdx:&Jn CYer ~ tr m regstrabl. petitions ra C/m!Oalioo d unm
regiWciD1 nl ~ a exanham dlmicm beds cl acaiunls." Seealso Sediml 1, RLde U, Rules of Proc:ecue oo
Mecfia!ion.Atlx
3 See Mde 243 (236) d lhe Laber Code vn:fl prowles: "M. 243 l236}. Dena d regislrml: appeal The decisioo rJ the
lJlba RelafD,s CMsulil lhe regixialc&:e denyn;J regstralm rtef be appeaBI bylhe ~111\0l to lhe Bureai
D 81 (10) days mnrecept dram lmol"
' Refeni1J mi1depen:fent urions, klcal ~ and vakeis' ~ as ~ mn federalms, nablal
oo1oos, indlmY ooklns. 1ra1e m carters end ter txa1 chaptetslcharfe bcals, affstes and men1lel agmtionS
vmose applcabl a registratm as we1 as drill or an:e1afi:Jn or rewcatioo d regmation is aigrizabk! by lhe BLR
lled!Jhtisqk,alnl exclJSHejm!i:in (itaJ.
-5 SeeAl&i!245(2381dtiel.mCode~prowtes:•M.245 l'l38iCancellalicrlotregiswlioo;fJ!)pe21. Thecerti:afeof
regtmrx>n of Efl'/le!llmate looaragri:atal, ~national crklcal,shal bean:ened b'f lhe Imai 1ihas raasoo to
beleve. after ooe heailg, llat Ile sail lalxr agcnza:m no triger meets one er nae of dle reqtirert1erm hereil
pmlled."
1 Sedixl3,~ lldOle~ ~~Seealso SedDl4, RuteXI, EkxlltVcllhe ~ ID ~ l h e
l.abcrCode, asanendm by Departmln Oder No. 40-f.03, Series of 2008 [Octm-~. 2008i
7 Secb'l 5, rue N, Boat V, ~ ID kJ1)llment Ile Laber Code. as arended by Oepinnent Order No. 40-03, Series d
2003, fel>. 17, 2003) 11\11 as b'hr anmlal by Depnnem Order No. 40-005, Series of 2005, Sept 13, 2005.
8 Asdistb.llishedtuncases iMltm:)~CBMYR:h falllllderlhecxiJia~ clttie BlR Oirecb'.
9 Sedioo 4[b:meltf Sedioo 5). ~ )Q, Bed v, rues to !n'f)lementlhe LaborCode, as imnfed by Depa1ment Order No.
40-03, Series cl 2003, (Feb. 17, 200.11 aid as l&flUIT1lered Ir/ Oepmtnm Oder No. /M-03, Sns d 2008 (Oct 30,
2008).
10 Undef l!liS su1oo, lhe OOLE Rsjixlal Dim, before \\Mil ;ie Request for SEBA Ce11ibb1 is l!d, shook! refer Ole
Request a SEBA C'A!rtitafxln to lhe M!diatt-Arlxler fcc Dle detm1a.b d lhe irqxiet/ d cooducting a certifx:alXln
eaticrl, in v.tdch cze, te M!dia!or-AdxlernaN has !he jlAisdx:llon to decide !he c:ertilrabl eledioo issue. (Section 6, Rire
VII, nra1a1m 1o rues vm n1 ix. Depatnent O:der No. «H-15, Series cl 201s (Septenter 01, 20151). Nole lllJSt be
made lhat e lhe Request tJr SEBA Cerffi::atm is made il an cmgn.ec1 estmlismm w.lfl nm am one (1)
 BAR REvlEWER ON l.4BOR. 1.4W
The three (3) kinds of power are as follows:
1) Visitorial power,1
2) Enforcement power;2 and
3) Appellat~ power or power of review. 3 ~plo~~t or his duly authorized rcprcsea.tative is hereby empowered
.•
2. WHO EXERCISES THE POWERS?
Nos. 1 and 2 above are exercised under the original jurisdiction of the··
DOLE Regional Directors. The appellate power in No. 3 above may only be
exercised by the DOLE Secretaty in respect to any decision, order or award issued
by the DOLE Regional Directors. ..
3. NATURE OF THE VISITORIAL AND ENFORCEMENT POWERS.
The visito~ and enforcement powers granted to the DOLE' Secretuy
and the DOLE Regional Directors who are his duly authorized representatives, are
quasi-judicial in nature.4
4. SUBJECT OF THE VISITORIAL AND ENFORCEMENT POWERS.
What is being inspected in the. exercise of the visitorial and enforcement
powers granted to the DOLE Secretary or the DOLE Regional Directors under
Article 128 is the employer-establishment and not the employees thereof.
Consequently, in case of a finding of violation of the labor standards, the awards
granted in the inspection case are not confined to employ~es who signed the
complaint inspection but are equally applicable to all those who were employed by
the establishment concerned at the time the complaint was filed, even if they were
not signatories thereto.s
5. GRANT OF ANOTHER VISITORIAL POWER UNDER ARTICLES 37
AND 289 (274].
a. Separateness ofthe grant ofvisitorial power.
Besides the visitorial power granted under Article 128, another visitorial
power is granted to the DOLE Secretary and the DOLE Regional Directors under
Articles 37 and 289 [274) of the Labor Code, to wit
"Article 37. Vuilorid Pollltf. - The Secrcwy 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 Tide,6 require it
Thsis entod'el h pngraph (a) llefed.
3·
This is treated i1 ~ {b) a,d (c) tiereof.
~~II'/ Secfm 31, RA No. 6715, Pkrch 21, 1989.
4 Ths is found ii b ~ parcPJr~ilui Mcie 128(b} ttiereof.
5 Maternity Chidren's Hospital v. SecretalY of Labor, G.R. No. 78909; Jtne 30, 1989.
6 Refemng to Tie I (Reaultment and Placement of WOfkers), Book I, labor Code.
CHAPTER EIGHT 947
JURISDICTION ANO RELIEFS
to submit reports regularly on prcscnbed foam, and act on violation of any
provisions of this Tidc." 1
"Article 289 [274). Visilorilll /JOllltf. - T!le Secretary of Labor and
to mq~Ke mto the fiot?® actiyitics of 1'fjtimate labor organizations upon
the filing of a compl2111t under oath an~ duly supported by the written
c ~ t ~fat least twco~ percent (20%) of the tot2l membership of the labor
oi:gamzation concemed and to examine their books of accounts and other
records to determine complia,ncc or non-coqiliance with the law and to
pms~te aox viotgtiops of the la!l and the union constitution and by-laws:
~rrmtllll, That such inquuy or eumination shall not be conducted during the
mty (~0)-day freedom period nor within the thirty (30) days immediately
preceding the date of election of union officials."2 .
b. Distincdons.
.Article 128 should not b~ confused with Articles 37 and 289 (274] because
the ~urpose .and object of the DOLE Secrewy's exercise of his visitorial power
provided thereunder are completely distinct from each other.
While Artlcl_e 1~ d ~ on the visitorial uid enforcement powers of the
DO~ Secretary to .tnqwre .tnto the employer's compliance with labor standards
p~ed under .labor laws and social legislations, the putposes of the other
arttcles are different, thus: .
(a) Article 37 treats ~f the ~torial p~wer of the DOLE Secretary and
the DOLE Regional Dtrectors .tn relation to recruitment and
placement of workers for both local and overseas employment.
(b} Article 289 [274) treats of the visitorial power of the DOLE Secretary
and the DOLE Regional DirectoIS to inquire into the financial
activities of legitimate labor organizations.
6. ENFORCEMENT POWER UNDER ARTICLE 128(b).
. . . ':5 -~~r stressed, the enforcement power is exercised pwsuant to the
ongtnal 1unsdictton of the DOLE Regional Directors. More particularly this
involves the power: ,
a) To issue compliance orders to give effect to the labor standards
provisions of the Labor Code and other labor legislations;
b) To issue writs of execution to the appropriate authority for the
enforcement of their orders, except in contested cases;3
i
I Id.
2 As amended 17t SeclD131, RA No. 6715, Mardi 21, 1989.
3 Mat 128 lbL t.axr Code.
 BAR REvlEWER ON lABOR lAW
c) To order stoppage of work or suspension of operations of any unit or
department of an establishment when non-complianc~ wi~ the law or
implementing rules and regulations poses grave and unr:runent danger
to the health and safety of workers in the workplace.1
d) To require employers to keep and maintain such employment records
as may be necessary in aid of his visitorial and enforcement powers
under the Labor Code.2
(NOTE: For more discussion on this topic, please refer to the comments
under the topic of "F. DOLE REGIONAL DIRECTORS, n .supra).
7. IT IS THE REGIONAL DIRECTORS, AND NOT THE DOLE
SECRETARY, WHO HAVE ORIGINAL JURISDICTION TO
EXERCISE THE VISITORIAL AND ENFORCEMENT POWERS
UNDER ARTICLES 37, 128 AND 289 [274).
In the instances contemplated under Articles 37, 128 and 289 [274), _it is
the DOLE Regional Directors, the DOLE Secretary's duly authorized
representatives col1'.monly referred to in these three (3) articl~s, who have the
original jurisdiction to exercise the visitorial power granted therein.
8. THE ROLE OF THE DOLE SECRETARY IN THE EXERCISE OF
VISITORIAL AND ENFORCEMENT POWERS IS APPELLATE IN
NATURE.
It is .clear &om the above disquisition that the original jurisdiction over
the exercise of the visitorial and enforcement powers belongs to the DOLE
Regional Ditectors, as the duly authorized representatives of ~e DO~ Secretuy.
The role of the DOLE Secretary is confined to the exerase of his appellate .
jurisdiction over the decisions, orders _an~ a~s of the D?LE Regional Directois
in- cases brought before them for adJud1catton under Articles 128 and 289 [274].
(See the discussion on the appellate jurisdiction of the DOLE Secretary, Infra, which
Includes this topic).
II.
LABOR STANDAROS ENFORCEMENT CASES
t LABOR STANDARDS.
"Labor 1tandards" refer to the minimum requirements prescribed by
existing laws,. rules and regulations and other issuancei; relating to wages, _hours_ of
work, cost of living allowances and other monetary and welfare benefits, including
those s~t by occupational sa fcty and health standards. 3
' Mx:le 128 (cl llit.; Sedixl 3[a) and lb),~ X. Book m, ~les ro ~ tt1t: ..aw Code
2 Micle128(1).Lab«r.ode. .
3 Sedxxl 7, 1U! I, ~ oo Ille Oispos1ioo of Labo( Slandards Gases in Ille RegKJllal Offices !Sept 16, 1987).
CHAPTER EIGHT 949
JURISDICTION ANO RELIEFS
2. SUBJECT OF THE VISITORIAL AND ENFORCEMENT POWERS.
At the outset, it bears to stress that the subject of the visitorial and
enforcement powers granted to the DOLE Secretary or his duly authorized
representatives under Article 128 is the establishment which is under inspection
and not the employees thereof.
Consequently, according to Matmury Child,r,,'s Hospital v. S,mta,y of Labor,•
any awards granted are not confined to employees who signed the complaint
inspection but are equally applicable to all those who were employed by the
establishment concemed at the time the complaint was filed, even if they were not
signatories tJiereto. The reason is that the visitorial and enforcement powers
are relevant to, and may be exercised over, establishments, not over
individual employees thereof, to determine compliance by such
establishments with labor standards laws. Necessarily, in case of an award
from such violation by the establishment, all its existing employees should
be benefited thereby. It must be stressed, however, that such award should not
apply to those who resigned, retired or ceased to be employees at the time the
complaint was filed.
3. ORIGINAL JURISDICTION.
The .DOiE Regional Directors exercise original jurisdiction over the
following:
(a) Cases involving insp,dion of establiJhmmts to determine compliance with
labor standards {Visitorial Power); and
(b) C~ involving isJIIIJIUI of mmp.itmtr 8rder1 and lllrits of exemtio11
(Enforcement Power).
4. VISITORIAL POWER UNDER ARTICLE 128(a).
PUISuant to their visitorial power under Article 128(a), the DOLE
Regional Directors shall have:
(a) access to employer's recotds and premises at any time of the day or
night, whenever work is being undertaken thercin; and
(b) the right:
(1) to copy from said records;
(2) to question any employee and investigate any fact, condition or
matter which may be necessary to detennine violations or which
may aid in the enforcement of the Labor Code and of any labor
' G.R No. 78909, June 30, 1989.
95o BAR. REvlEWER. ON LABOR LAW
law, wage order, or rules and regulations issued pursuant
thereto. 1
5. ENFORCEMENT POWER UNDER ARTICLE 128(b).
The statutory basis of the authority of the DOLE Regional Directors to
administer and enforce laoor standards is found in Article 128(b) of the Labor
Code, as amended.2
Pursuant thereto, the DOLE Regional Director, in wu wbm the employer-
employtt relatio111hip still txiJts, shall have the power:
a) To issue compliance orders to give effect to the labor standards
p[ovisions of the Labor Code and other labor legislations based on the
findings of labor employment and en~oteem~t officers or industrial
safety engineers made in the course of inspection.
b) To issue writs of execution to the apptopriate authority for the
mforcement of their orders, except in cases where the employer
contests the findings of the labor employment and enfo_rcement
officer and s:aises issues supported by documentary proofs which were
not considered in the course of inspection,3 in which case, the
contested case shall fall under the j_urisdiction of the Labor Arbiter to
whom it should be endorsed b.y the Regional Director.•
c) To order stoppage of work or suspension of operations of any unit
or department of an establishmcn~ when non-complianc~ wi_th the law
or implementing rules and regulations poses grave and u:,1111ntn1 dang,r
to the heahh and saftty of tJJOrhrs in the work.place. Within 24 ~om, a
hearing shall be conducted to determio~ whether an. order for the
stoppage of work OI suspension of operations shall be lifted or not In
case the violation is attributable to the fault of the employer, he shall
pay the employees concemed their salaries or ~ges during the period
of such stoppage of work or suspension of opetation.5
d) To require employets, by appropriate regulations, to. ~ ~d
maintain such employment records as may be necessary 111 aid of his
visitorial and enfon:ement powers under the Labor Code.6
1
2
3
5 Id.
CHAPTER EIGHT
JURISDICTION AND RELIEF~ 951
6. REQUISITES FOR V~D EXERCISE OF POWER.
For the valid exercise of the visitorial and enfotcement powers provided
under Article 128, the following three (3) requisites should concur:
1) The employer-employee relationship still exists at the lime of the initiation
ofthe adio,r,1
2) The findings in question were made in tiJe &011rs1 of insptt:tion, regard/us of
whethtr it fllaJ initiated b y ~ or m11tint intJ>ettio,r,2 and
3) The employees have not yet initiated any claim or complaint with the
DOLE Regional Director under Article 129 (small money claims not
exceeding PS,000.00), or the Labor Arbiter, under Article 224 [217]
(money claims exceecling.PS,000.00).
On No. 1above:
• If at the time of the initiation of the action, the employer-employee
relationship had already ,eased to exist, it is not the DOLE Regional
Director but the Labor Atbiter who has ja:isdiction over the same.3
• The .DOLE Regional Director, in the exercise of his vic;irorial and
enforcement powers, has the authority tD make a detennination on
whether employer-employee relationship exists.4 Such detennination
should be .respected in order not to render nugatory the exercise of his
visito.rial and enforcement powers. S1:ch finding of existence of
employer-employee relationship is to the exclusion of the NLRC. It is
subject to judicial review but not review by the NLRC. 5
On~ above:
• The jurisdiction of the DOLE Regional Director, as expanded by the
amendatoty R.A. No. 7730, is not affected whether the case is the result
of .regular inspection under Article 12.i(b) or it originates from a
complaint under
either Atticle 129 or .Article 224 (217]. The DOLE
Regional Director has jurisdiction, desp•e the amount of the money
claims involved. The initiation of a case through a complaint does not
divest the DOLE Regional Di.rector of his jurisdiction under Article
128(b).
Rizal Secuttty &ProtectJve SeJvlces, Inc. v. Hon. Maraan, G.R No. 1249~ Feb. 18, 2008.
See the 2012 En Banc Resciltion In Peq,le's Broadcasting SeM:e (Bombo Radyo Phils., Inc.) v. The Secrelaly of
!he Department of Labor and Emplc,/ment, G.R tG. 179652, Mitt! 6, 2012. which modffied i1s enr May 8, 2009
dedsian. .
Batong &:hay Gokl Miles, lflC. v. Sec. Dela Serna, G.R No. 86963, A1JJ. 8, 1999, 370 Pit 872.
People's Broadcasting Service (Bombo Radyo Phis., Inc.) v. The Secretary of !he Department or labor and
Employment, supra.
952 SAR REVIEWER ON lABOR. I.AW
Onlifh_Jabove:
• Once the complaint ·has already been taken cognizance of by the
DOLE Regional Director under Article 129, or by the Labor Arbiter
under Article 224 [217], jurisdiction attaches theret9 and will not be lost
as a result of the findings made in the cmirst:, of inspection by the
DOLE Regional Director.
• The restrictive effect of Articles 129 and 224 [217) no longer
applies after the amendment of Article pB(b) by R.A. No. 7730.
This means that the visitorial and enforcement powers of the DOLE
Regional Director to order and enforce compliance with labor standard
laws can be exercised even where the individual claim exceeds
PS,000.l The rule therefore that the DOLE Regional Director should
stop his proceeding once the individual claim exceeds PS,000 no longer
holds.2
Ill.
SMALL MONEY CLAIMS CASES
t. JURISDICTION OVER CLAIMS NOT EXCEEDING PS,000.00.
The DOLE Regional Director has original jurisdiction over small money
claims cases arising from labor standards violations in the amount not exceeding
PS,000.00 and not accompanied with a claim for reinstatement under Article 129
of the Labor Code.
Article 129 contemplates the recovery of wages and other monetary
claims and benefits, including legal interest, owing to an employee arising &om
cmployer•employee relations provided the claim does not exceed PS,000.00.
2. REQUISITES.
The following requisites for the valid exercise of jurisdiction over small
money claims must all concur, Jo wit
(1) The claim is presented by an employee;3
(2) The claimant, no longer being employed, does not seek reinstatement;
and
(3) The aggregate money claim of the employee does not exceed
PS,000.00.4
t Cltileo Banig Plaza, Inc. v. SensqJ, G.R No. 146572, Jcn 14, 2005, 448 SCRA 175, 186.
2 VL Enterprises v. Hon. CA, G.R ~ 167512, Math 12. 2007. .
3 Id. . • CnderellaMlteli'QCcxpora5onv.N.RC,G.RNo.11~,June22, 1998.
' A!bay IElecbic Cooperative, Inc. v. Mattinez, Sr., G.R No. 95559, Nov. 9, 1993.
CHAl'TER EIGHT
JURISDICTION AND RELIEFS 953
In the absence of any of the aforesaid three (3) requisites, the Labor
Arbiters have original and exclusive jurisdiction over all claims arising from
employer-employee relations, other than claims for employees' compensation,
social security, PhilHealth and maternity benefits. 1
Onli!J.Jabove:
• Article 129 no longer applies to claims of domestic w9rkers or
kasambahtrJ, (See discussion below). It, however, applies to all ''tmployw" as
may be clearly deduced &om the phrase "owing lfJ an employee xx:x ansing
from employer-employee relations xxx."
On l':&..3above:
• Employment relationship should no longer exist at the time of the
initiation of the complaint for monetary claim under Article 129.
• If the employment relationship still exists at the time of the filing of the
complaint, the case necessarily falls under the coverage of Article 128
where it is a prNequisite that such relationship should still exist at the
time of the initiation of the complaint
• If the employment relationship no longer exists, the complaint falls
under Article 129 for as long as the terminated employee does not raise
the issue of legality of his dismissal or asserts any claim for
reinstateip.ent and merely confines his complaint only on his monetary
claims which should not exceed PS,000.00.
• Once the employer-employee relationship has already ceased and the
legality of the dismissal is raised and reinstatement is sought,
jurisdiction thereover necessarily falls under the Labor Arbiter by virtue
of Article 224 (217] of the Labor Code. And such jurisdiction covers
the recovery of any and all monetary and other benefits consequent to
such dismissal.2
On~above:
• Jurisdiction when the total monetary cwms exceeds PS,000.00 is lodged
with the Labor Arbiter.l This is reg.udless of whether or oot the
monetary claim is accompanied with a claim for reinstatement.4
• The monetaty claims may include unpa:d wages, salary differentials, 13th ·
month pay and other bene.6.ts.5
1 See also Sedkx11 (a}, rue XI, Book Ill,~ ID lmpanent Ile labor Code; Rajah Humaboo Heel, Inc. v. Trajano, G.R
~ 100455,Sep.17, 199.1,226~394. . .
2 QestmtMrq 0Jporab v. Hen Miano, G.R. ta. 75746-48, Dec. 14, 1987.
3 Sectm 1(cJ. ~le XI, Bod( lll ~ ID ~ I l e LabcrCode.
s NRJ IElecbtCooperawe, 1oc. v. Martnez, Sr., R. No. 95559, New. 9, 1983, 'l27 SCRA 600

954 BAR REViEWER ON LABOR I.AW
• When claim does not exceed PS,000.00 but employee pays for
reinstatement, the case falls within the original and exclusive jurisdiction .
of the Labor Arbiter.1
• An action which carries with it a claim for reinstatement is
principally an illegal dismiss·at case and no~ ~ne for monetary
claims. Consequently, since it is an illegal dismissal case, the amount
of any accompanying monetary claims is inconsequential.
3. APPLICATION OF ARTICLE 129 TO CLAIMS ~F KASAM.BAfLOS.
a. The PS,000.00 threshold no longer applies to Kasambahays;
DOLE Regional Director has jurisdiction over all their money
daims regardless ofamount.
The jurisdiction of the DOLE Regional Director or hearing officer under
Article 129 covers '~9 matter involving the nto11t,y of wages and olhtr montlll,y clai111! and
benefits, including legal inlerert, owing to an employee or person employed in domestic or
household service or househeJper under this Code, arising from tmphyer-lmp«rJee
nlations ••• "Accordingly, a distinction is made in the law between money claims of
a househelper whose total amount falls within the threshold figure of PS,000.00
and below and those above it The jurisdiction over the former is lodged with the
Regional Director or hearing officer while th.at of the latter, with the Labor Arbiter.
Although there was no express repeal of this particular provision of
Article 129,2 it appears that this distinction as to the threshold amount of PS,000.00
ceased to have any relevance in the light of the amendatory provision ofSection 37,
Chapter VII of R.A. No. 10361,3 otherwise known as "Domestic Worker.r Ad" or
''Bala! Kmambahtg, "which provides that
ccsEC. 37. M«hanism for Stll!tmtnt of Disp111ts. - All labor-
related disputes shall be elevated to the DOLE Regional Office having
juri!idiction over the workplace without prejudice to the 6ling of a civil
or criminal action in appropriate cases. The DOLE Regional Office sh211
exhaust all conciliation and mediation efforts before a decision shall be
rendered.'"
More specifically, the procedure prescribes that all labor-related disputes
shall be filed before the DOLE Field/Provincial/Regional Office having
MRaritez ndusn!sv. Secretary d Lalxr, G.R No. 89894, Jan. 3. 1997, 266 smA 111.
Sedxxl 44, Mcie X(f'nal Provisllns) of RA No. 10361 exprasstf repealed a1t{me set d ~ fcUld mda'Olaps
Ill d Ile l.m Code, hls: "SEC. 44. RepeafrY;J Clause. - All il1icles or paNSOnS d Chapa Ill {En1)~ of
Hoahdpers) d Presidenlial Decree No. 442, as amended cm renurmered by Rejlmic M. No. 10151 are hereby
expresstf repealed. M law, deereeS, execuwe mlers, issuana!s, rules aoo regulaoons or pas ~ i1c0nsistent Ylilh
tie plMmls of llis Pa. ere hereby ~ a rrxxfmed acx:mhJ~.· No!ably, Article 129 d tie Lm Ccxle was not
expres&'/ l1!pea8t by 115 new t.?N.
, AppMdb,f ResomBsi]oo S.Aquino l!lan.Jcnay 18, 2011
• T h e ~ ~dsaid lilav~lrimrsudlprovisoo. See Seem 1. ~ XI lhereaf.
CHAITTR. EIGHT 955
JURISDICTION ANO RELIEFS
jurisdiction over the workplace and shall go through the thirty-day (30) mandatory
conciliation under the DOLE Single Entry Approach (SEnA) program to exhaust
all efforts for the settlement of the dispute. 1 In case the parties fail to reach a
. settlement, a mandatory conference not exceeding thirty (30) days shall be
conducted by the DOLE Field/Provincial/Regional Office from referral of the
unsettled dispute. The DOLE-Regional Director shall issue a Compliance Order
within ten (10) days from the submission of the case for resolution.2 Any aggrieved
party may file a motion for reconsideration from the Compliance Order withln ten
(10) days from receipt thereof.3
Based on this latest amendment as discussed above, the jurisdiction over
all labor-related disputes involving a Karambahqy, including illegal dismissal, money
claims (regardless of amount) and other labor issues, is now lodged entirely with
the DOLE Regional Director. Albeit Article 129 of the Labor Code was not
expressly repealed by R.A. No. 10361 which gtants jurisdiction to Labor Arbiters
over small money claims of more than the threshold amount of PS,000.00, it
appears that with the all-embracing provision of this new law as above-quoted,
which recognizes the jurisdiction of the DOLE Regional Du:ectors over ''a// hbor-
related disputes" involving Karambahqyr, the Labor Arbiter appears to have no more
jurisdiction thereover.
b. There is no more appeal to the NLR.C in monetary claims cases
ofKssambahsys decided by DOLE Regional Directors.
Notably, too, the appeal to the NLRC in small money claims cases
provided under As:ticle 129 should now exclude the appeal &om decisions of the
DOLE Regional Directors in: claims of l<JJJfJJllbah'!]J, regardless of the amount
thereo£ This is so because die appeal therefrom is now lodged with the DOLE
Seaewy.• Thus, the Implementing Rules of RA. No. 10361 states:
ccsECTION 4. Appeal - The· Re.c.ol~tion on the Morion for
Reconsideration of the DOLE-Regional Director may be appealed to the
Seaewy of Labor and Employment within ten (10) days from receipt
thereof.
"Thereafter, the Order of the Secrewy of labor and
Employment shall be final and executoty."5
4. ARTICLE 128 VS. ARTICLE 129.
There is a whale of difference between Articl~s 128 and 129 of the Labor
Code. While Article 128 speaks of the visitorial and enforcement powers of the
DOLE Secretary or his duly authorized representatives (referring to the DOLE
1 See Sectioo 1, rue )Q (Sel!lernenbUisp of Lab« Relaled-Oispilesi lmpltmenlilg Rules of RA No. 10361.
2 SeeSecoon2.~)Ql~ofl.abor~lld.
, See Sectm 3, Rim XI, Id.
Id., Sectm 4lhered.
SeeSecrm 4, Rue XI ~ o fl..abaf Relaled-OlspuleJ, li11Jlementi'g Ru!es tf RA No. 10361.

956 BAil REVIEWER ON LABOR. LAW
Regional Directors), Article 129 refers to the adjudication· power of the Regional
Directors o~ any duly authorized hearing officers of DOLE.
The nature and subject of the proceedings under Article 128 speak of
inspection of establishments and the issuance of otders to compel compliance with
·labor standan:ls, wage orders and other .labor laws and rekUlations; thus, the
presence of employer-employee relationship is a conditi011' sine (JIIII no11. On the
other hand, Article 129 confers upon the DOLE Regional Directors adjudicative
pow~ that is, the p~wer to hear and decide any claim for recovery of wages,
simple (small) money claims, and other benefits. The said provision deals with
small money claims of employees arising from severed
employer-employee
relations.1
5. DOLE REGIONAL DIRECTORS WEAR TWO (2) HATS: ONE, FOR
ARTICLE 128 AND ANOTHER, FOR ARTICLE 129.
It is obvious from a reading of Articles 128 and 129 that the DOLE
Regional Directors wear two (2) hats thereby giving rise to the confusion as to
when they exercise their adjudicatory power under Article 129 and when they
exercise their twin visitorial and enforcement powers under Article 128 as the duly
authorized representatives of the DOLE Secrewy.
This confusion is underscored in the matter of where to elevate a case on
appeal from the decision of the DOLE Regional Director. If the decision of the
DOLE Regional Director is issued pursuant to Article 128 which basically involves
an inspection case, the appeal should be made to the DOLE Secretary. But if the
decision of the DOLE Regional Director is made in accordance with Article 129
which does not involve an inspection case, the appeal should be made to the
NLRC.
Illustrative of this point is a case decided by the Court of Appeals entitled
Stortk Prruillct Manllja(/llring Corporation ,. Hon. Stmtary of Labor and Emph!Jflltnt. 2
Petitioner in this case contends tJtat although the issues taised stemmed from an
inspection case, the appeal should be made to the NLRC and not to the DOLE
Secretuy because the appeal itself specifically stated that it is being elevated to the
NLRC. Fmding this contention untenable, the Court of Appeals dcc12red that the
order of the Regional Director, being an offshoot of an inspection complaint, is
appealable to the office of public respondent DOLE Seaew:y. The provisions of
Article 129 of the Labor Code find no application in the present case considering
that the instant case stemmed from an inspection complaint duly filed with the
DOLE Regional Office for alleged violations of labor standards. Article 129, as
amended, refers to the adjudicatory power of the DOLE Regional Directors or any
1
Brlienshie Menulal . . . llx:. v. The Hon. Pfflser of Laber ax! ~ G.R. No. 74621, Feb. 7, 1900, 182
SCRA 5; See also~ Prcduct Mnlatuing C'.apcmoo v. tm. Seamy of l.mand fmpla,fflent. CA-G.R. SP No.
92164, Aug. 31, m.
2 CA-0.R SP No. 92164, Aug. 31, 2006.
CHAmllEIGHT
JURISOICTtON AND RELIEFS
957
d~y authorized_ h~g officers.~£ DO~ so much so that any decision/order of
said representanves, 1n _the exercise of the1t adjudi~tory power, should be appealed
to the NLR~. But the instant case does not pertain to the exercise of adjudicatory
power by said labor .officers but to the exercise of their visitorial and enforcement
powers under Article 128.
IV.
OCCUPATIONAL SAFETY AND HEALTH VIOLATIONS
1. THE NEW APPLICABLE LAW - R.A. NO. 11058 AND ITS
IMPLEMENTING RULES.
~n A~st 17, 2018, President Rodrigo Duterte signed into law, R.A. No.
11058, entitled :Alt Ad Strengthming umpliana with Oaupational Sa.fetJ and Health
Standards and Providing Penaltiufar Violations Thmof." On December 6, 2018, DOLE
Secretary Silvestre Bello III issued D,partment Order No. 1!}8, Series of 2018, which
promulgated the Implementing Rules of said law.
2. OCCUPATIONAL SAFETY.AND HEALTH (OSH) STANDARDS.
This law enunciates the Occupational Safety and Health (OSH) Standards
issued by the DO~ Secretary pursuant to Articles 168 (162]1 and 171 (16S),2
Chapter 2, Title I of Book IV of the Labor Code, and such other standards as.may
be issued pursuant to RA. No. 11058.3 ,
'OSH Standards" refer to a set of rules issued by DOLE which mandates
the adoption and use of appropriate practices, means, methods, operations or
processes, and working conditions reasonably necessary to ensure safe and
healthful employment4
3. ENFORCEMENT OF OSH STANDARDS•.
a. Visitorial power.
Pursuant to the visitorial power of the DOLE Secretary under Article 128
of the Labor Code and other applicable laws, the DOLE Secrewy or his
authorized representatives (Regional Directors) shall have the authority to enforce
the mandatory occupational safety and health standards in all. establishments and
conduct, together with representatives from the labor ·and the employer sectors, an
annual spot audit on compliance with OSH stanclards. The Secretary or the
Secretary's duly authorized representatives can enter wodq>laces at any time of the
day or night where work is being perfonned to examine records and investigate
I EllLW'Safet/aldHea11Standalds."
2 Entil1ed • ~ dSafel'f n1 Hea.1l I.M."
3 5eaioo 30), RA No. 11058.
4 Sectioo 3(p~ lnllk!rnentiY:I Rules d RA No. 11058.
 BAR REvlEWER ON IABOR IAW
958
facts, conditions or matters necessary to determine compliance with the provisions
of this Act. 1
No person or entity shall obstruct, impede, delay or otherwise render
ineffective the orders of the DOLE Secretary or the Secretary's duly authorized
representatives issued pursuant to the authority granted unde~ Article 128, and no
lower court or entity shall issue tempomy or peananent injunction or resttaining
order or otherwise assume jurisdiction over any case involving the enforcement
orders.2 ·
The DOLE Secretuy may likewise order stoppage of work or suspension
of opeiations of any unit or department of an establishment when noncompliance
with law or implementing rules and regulations poses gtave and imminent danger
to the health and safety of workers in the wotkplace.3
The procedure for inspecting work premises, notifying employers of
violations, and issuing compliance or stoppage. orders shall be pursuant to the
procedure laid down in Article 128 ~ implemented thtough relevant regulations
issued by the DOLE on administration and enforcement of labor laws. The
inspector or peison authorized by the DOLE to enforce compliance with OSH
standards shall present proper iden~cation upon request, and such inspector or
person shall only act within tlie authority or direction given by the DOLE
Secretary.4
The DOLE Secretmy or the Seaetaty's duly' authorized representatives
shall inspect establishments and workplaces regatdless of the size and nature of
operation. Any kind of self-assessment shall not take the place of labor.inspection
conducted by the DOLE. However, chartered cities may be allowed to conduct
industrial safety inspection of establishments within their jurisdiction in
coordination with the DOLE: ProPidtd, That they have adequate facilities and
competent personnel for the purpose as determined by the DOLE, and subject to
national standards established by the latter.5
b. Stoppage ofwork due to imminent danger.
If stoppage of work due to imminent danger occurs as a result of the
employer's violation or fault, the employer shall pay the workers conccmed their
wages during the period of such stoppage of work or suspension of operations. For
purposes of payment of wages and any other liabilities arising from a work
stoppage order, the employer is presumed a party at fault if the work stoppage
1
Settm22.RAtt>.11058(hJJust17,2018i
2 kl.
3 kl.
' Id.
~ Id.
CHAPTER EIGHT 959
JURISDICTION AND RELIEFS
order is issued secondary to an imminent danger situation which would imperil the
lives of the workers. 1
c. Delegation ofauthority.
The authority to enforce mandatory OSH standards may be delegated by
the DOLE Secretary to a competent govemment authority.2
v.
COMPLAINTS AGAINST PRIVATE RECRUITMENT
AND PLACEMENT AGENCIES (PRPAs) FOR LOCAL EMPLOYMENT
l JURISDICTION OF DOLE REGIONAL DIRECTORS.
The DOLE Regional Directors have original jurisdiction over complaints
against a licensee and/or its authorized representative/ s which are filed in writing
and under oath with the Regional/District/Provincial Office having jurisdiction
over the place .(1) where the Private Recruitment and Placement Agencies
(PRPAs)/BW1ch Office is locat~d, ~r (2) where the prohibited act was committed,
or (3) at complainant's place of residence, at the o.ption of the complainant
provided, that the Regional Office which first acquires jurisdiction over the case
shall do so to the. exclusion of the others.3
It must be emphasized that this jw:isdi:ction of the DOLE Jlegional
Directors covers only complaints against PRPAs engaged in kg! recruitment
Complaints against recruitment/manning agencies engaged in o_yerseas
employment involving the following causes fall under the jurisdiction of the
POEA:
(1) All pre-employment/teeruitment violation cases which are
administrative in character, involving or arising out of violations of
rules and regulations relating to licensing and registration, including refund
of fees collected from OFWs or any violation of the conditions for the
issuance of the license or authority to recruit OFWs,A
1 SedXXl 23, Id.
2 Secoon 24, Id.
3 Section 36, Rule VIL ~ And Reg~ Gcwentg Pl?late Reauiment and PlimnentfvJ«-1:f for Local En,p1ajmen1.
June 5, 1'S7. Tbs va menfoned it Ile erunerabl of Die vaba appeals ID lhe DOLE 8eaeay m by h &,pteme
Coortil tie 1999 case of Naoona!Federafatdl.mv. t.aJuesne, G.R. No.123426, Mvth 10, 1999.
4 Sedion 6. ~ X (Rde of DOLE), Ormbus ~ and Regtdalms ~ Ole tlqatt watas nl 0/elseas
Fifpv1as Id of 1995, as Aroonded by RA No. 10022 issued C11 JiJt 8, 2010; Sml 138, ~ I(Jusfi:tirl), Pat VI
(ReauitnEnl ~ nl ~ ldlxl Cases1 Revised POEA ~ nl ~ Gowmfg tt1e Rsauim!nt
n1 Ef1l)lafment of l.and-8ased OJerseas ~ Wrkers d2016; Sedixl 118, ~ I(.llmtlkrl and Veooe}, Part V
{Recruilment vaams n1 ~ AdlrJn emesi 2016 ~ POtA RIM!S and Regutaoom GoY8mi1g 111e
Recruitment n1 ~ of Semt!1s Issued crt Fe!Juay 26, 2016.
960 BAR. REVIEWER ON l,f.BOR lAW CHAJ'TER EIGHT
JURISDICTION AND RELIEFS 961

(2) Disciplinaiy action cases and _other special ~ which ~
administrative in character, involving employers, pnnapals, conttacnng
partners and OFWs processed by the POEA, tXtlmJing mD119 dabm. 1
And as far as monetary claims of OFWs are concemed, the Labor
Arbiters have jurisdiction per R.A. No. 8042, as amended.1 '
VI.
CASES SUBMITTED TO REGIONAL DIRECTORS FOR VOLUNTARY
ARBITRATION IN THEIR CAPACITY AS EX.OFFICIO VOLUNTARY
ARBITRATORS (EVAs) "
1. LACK OF APPLICABLE PROVISION IN THE LABOR CODE.
DOLE Regional Directors and Assistant Regional Directors are neither
expressly authorized to act as Voluntary Arbitrators under the Labor Code nor
explicitly prohibited from acting as such. This is a voi~ in the law :-"hie? was
appropriately addressed by Department Ortkr No. 83-07, Semi of2007,3 destgnaang all
DOLE Regional Directors and Assistant Regional Directors as Ex-0.lfi&io Vol~tai:y
Arbitrators (EVAs). Its issuance was made in line with the cons~tutional principle
on the preferential use of voluntaty modes in settling disput~ and the mandate of
the DOLE to promote voluntary arbitration as an expeditious and non•litigious
mode of settling labor disputes, and in order to give workplace parties real and
practical altematives in the voluntaty arbitration of disputes.
2. JURISDICTION.
As EVAs, the DOLE Regional Directors and their Assistants have
jurisdiction over the following cases:
(a) All grievances arising from the interpretation or implementation of the
CBA;
(b) All grieV3Jlces arising from the int~retation or enfottement of
company personnel policies which remain unresolved after exhaustion
of the grievance procedure;
(d) Upon_ agreement of the parties, any other labor dispute may be
subnutted to the EVAs for volwitaty arbitr.ation.
3. HOW INITIATED.
Where a grievance remains unresolved despi~ bipartite efforts, either or
both parties may voluntarily bring the grievance to an EVA who has jurisdiction
over the region where the parties operate or work, through a written request
indicating the following.
(a) Issue or issues to be arbitrated;
(b) The names and addresses of the parties involved; and
(c) Such other information that the parties deem vital in the immediate
resolution of the dispute.
4. POWER TO HOLD HEARINGS, RECEIVE EVIDENCE AND ISSUE
WRIT OF EXECUTION.
The EVA shall have the power to hold h~rings, receive evidence and
take the necessary actions to resolve the dispute. The EVA may conciliate or
mediate to obtain a voluntary settlement of the dispute.
The decision or award of the EVA shall be final and executory after ten
(10} calendar d_ays from the parties' receipt of the copy of the decision or award. A
motion for reconsider2tion may be filed before the decision/award lapses to finality
and shall stop the running of the 10-day period for fimlity. No second motion for
reconsider2tion shall be allowed. A motion for reconsideration shall be resolved
within fifteen (15) days after the adverse party files its comment or opposition
thereto. The EVA shall issue a writ of execution .requiring the Sheriff of the
Regional Office or any duly-authorized regional petSonnel to execute the final
decision, order or award.
G.
DOLE SECRETARY
·t. TWO (2) KINDS OF JURISDICTION

(c) Cases referred to them by the DOLE Secrewy under the DOLE,s The DOLE Secretary has the following jurisdiction:
Adminiltmtiue lntmention for Disputl Avoidante (AIDA) initiative
(1) Original and exclusive jurisdiction; and
(provided under DOLE Om1/ar No. 1. Snits of2006);4 and
(2) Appellate jurisdiction.

I.
ORIGINAL AND EXCLUSIVE JURISDICTION
1 llid.; kl~ Id.
2 fta amended !rt RA No. 10022,specicatf Seem 10 thereof. t SPECIFIC CASES.
3 lsSUed by OOl.f Seaetay Mw O. Bm oo June 8, 2007.
' lsSued oo hlgust 11, 2C06 by foorer DOLE Seaeta,y, n<M Associate Juslk:e of Ille Supreme ColDt, Miro 0. &bl. This is The DOLE Secretacy has original jurisdictior: over the following cases:
disa.ml!lldef'lle~clOOtESecreay'sjurisd'dioo.ma.
 CHArTER EIGHT
962 SAR REVIFW{R ON 1/,ao~ v..w JURISDICTION AND RELi EF!

(!). Petition to assume jurisdiction over labo~ disp_utes affecting industries

3. RATIONALE FOR SUSPENDING EFFECTS OF TERMINATION.
indispensable to the national interest (natlonal tnterest cases);1 The obvious purpose behind this rule is to bring the parties back to the
(2) Petition to certify national interest cases to the NLRC for compulsory 1tat111 quo ante /item, that is, their state of relationship prior to the teanination. In this
arbitration;2 way, the workers will be litigating the issue of the validity or legality of their
(3) Petition to suspend effects of teaninarion;3 • termination on more or less equal footing with the employer since they will be
(4) Administrative Intervention for Dispute Avoidance (AIDA) cases;4 immediately reinstated and accordingly not be deprived of their wages while the
(5) Volwnary arbitration cases;' and litigation is on-going..Suspension of the effects of teonioation will necessarily result
(6) Contempt cases.6 in the immediate reinstatement of the terminated employees. An order of
1. > •
reinstatement pending resolution of the case may thus be issued by the DOLE
ASSUMPTION OF JURISDICTION AND CERTIFICATION Secretary pursuant to this power.1
BY DOLE SECRETARY OF NATIONAL INTEREST CASES 4. TERMINATION NEED NOT BE RELATED TO UNIONISM.
(NOTE: This power of the DOLE Secretary is extensively discussed In Chapter Five The termination contemplated under Article 292(b) [277(b)] need not be
under the topic of "F. PEACEFUL CONCERTED ACTIVITIES," supra) related to the exercise of the right to self-organization by the employees so
terminated. Hence, the employees need not be officers or members of a union in
2. order to invoke or apply this power to suspend the effects of teanination of the
POWER TO SUSPEND EFFECTS OF TERMINATION DOLE Secretary. Simply put, it is not a pre-requisite to the valid exercise of th.is
power that the employees so terminated should be officers or members of a union
1. LEGAL BASIS. or that the cause of their termination be related to the exercise of their right to self-
One of the extraordinary powers granted to the DOLE Secretary is his organization. For as long as there is a prima fade finding by the appropriate official
of the DOLE before whom the termination dispute is pending that it may cause a
power under Anicle 292(b) [277(b)] of the Lab~r Code to su_spend the _effects of
serious labor dispute or is in implementation o: a mass lay-off, the DOLE
tennination of rmployment which he may exercise even pending resolunon of the
Secretary may validly suspend the effects of such termination by ordering the
legality or validity thereof in an appropriate proceeding.
immediate reinstatement of the terminated employees pending resolution of the
2. GROUNDS. legality or illegality thereof.
The DOLE Secretary may suspend the effects of termination pending 5. "APPROPRIATE OFFICIALS", MEANING.
resolution of the dispute in the event of a prim.i Jade finding by the appropriate
The Labor Arbiters and the Voluntary Arbitrators or panel of Voluntary
official of the DOLE before whom the dispute is pending that:
Arbitrators, as the case may be, are the "appropnatt ojfitia/J" referred to in Article
I) the termination may cause a serious labor dispute; and/or 292(b) [277(b)] who may make the preliminary determination of the existence of a
2) the termination is in implementation of a mass lay-off.7 prima fade evidence that the teanination will cause a ;erious labor dispute or is being
m'ade in implementation of a mass lay-of£ Such prit:ta fade finding will then become
the basis for the issuance by the DOLE Secret:uy of his order suspending the
Seep.BJ~ (g) d. Mde 278 [2631,tmCode. effects of termination which, as earlier emphasized, would mean the immediate
kl. reinstatement of the terminated employees pending the final resolution of their
See~ (b) d. Mcie 292 (277), ~Code. . · .
This i; areH mn a~ seu1eme11 moo.iced lrf 11ie 00!.f Seaetfy 11m 00!.f Cio.ir No. 1, Series ct m, termination case.
issued oo Au]ust 11, 200i lrf bmer OOLE Secretly Mro D.&bl, lall!r a ~ rneni>e' ct tle lfghest Cout
This was issued nrr.e 'MIil h! oojedM!S d. RA No.9285, oGlerMse knoM1 as toe 'Alemalive ~ ResciJm Md. 6. DISTINGUISHED FROM DOLE SECRETARY'S ASSUMPTION
200f laPPro','ed oo Apri 2. 20041 Exeame Old8' No. 523 da1ed Apri 07, 200i ax! Ile na1da!e ct toe OOLE ti prwde POWER fNNATIONAL INTEREST CASES.
illi.l\Tapea:e.
~ nmda1ed lfXler DOI. ECircular No. 1, Series d. 200i, lad. This power of the DOLE Secretary grant:!d under Article 292(b) [277(b)]
J,s IXwded imer Asftje 231 (225) v.lla1 stm: Mde 231 [2.25]. ~ po,YerS ct lhe ~ d Im. kl h! should be distinguished from his power to assume or certify labor disputes
exellise d. l'is powers lfXler lli; Cooe, toe Secretly d. labor fM/ lxtl 2rr/ person il died a- r6rett ~ a'd
~toe~P8'1al:ieslhefe/!r- :
Mi:le 292(b) 1277(b)). Laboc Code. as amerxled lrf Sedioo 33, RA. No. 6715; No. 30, NCflll Priner oo Stt\e. P'd\e&'l,i
~ l.octcxA. 2nd Edi!i:n, ~ 1995.
1 No.12,&iefo;J ~ooRA6715.
 BAR REvlEWER ON IABOR I.AW
involving industries indispensable to the national interest under Article 278(g)
[263(g)]. The following distinctions may be cited:
First, the exercise of the power to suspend the effects of te.anination
involves only the issue of termination of employment which may cause a serious
labor dispute or is in implementation of a mass lay-off; while the power to asswne
or certify labor disputes is applicable to all labor disputes, irrespective of the
grounds therefor, provided such labor disputes will cause or likely to cause strikes
or lockouts in industries indispensable to the national interest
Second, the former requires the conduct of prefu\unaiy dete.anination of
the existence of p,ima fatit evidence that the texmination may cause a serious labor
dispute or is in implementation of a mass lay-off to be conducted by the
appropriate official of the DOLE before whom the termination dispute is pending;
while the latter does not require such prcliminuy prima fade determination. In fact,
prior notice and hearing are not required before the DOLE Seaeta.ty may issue an
assumption or certification order.I
Third, the "mio11: labor disputl, contemplated under the former may or
may not involve a strike or lockout; while the labor dispute referred to in the latter
will cause or likely to cause a strike or lockout
Fourth, the former may · be exercised in cases of temiination of
employment for as long as any of the two (2) grounds mentioned in Article 292(b)
(277(b)] exists, irrespective of the nature of the business of the employer; while the
latter may only be exercised in industries indispensable to the national interest
Fifth, the remedy under the fonncr is immediate reinstatement pending
resolution of the termination case; while in the latter, the remedy is the automatic
return to work of the strikers or locked-out employees, if the strike or lock~ut is
on-going at the time of the issuance of the assumption/certification order or the
-enjoining of the strike or lockout, if one has not taken place, pending the resolution
of the issues raised in the notice of strike or lockout
The case of Univerri!J of Sto. TomD1 11. NLRC and UST Fa&11/tJ Union,2
illustrates the situation where the DOLE Secretaty ordered both the suspension of
the effects of termination and the return to work of employees pursuant to a
certification order. In this case, all the sixteen (16) officers and directoIS of the
faculty union were terminated on the grounds of grave misconduct, serious
disrespect to a superior and conduct unbecoming a faculty member. As a result of
said dismissal, some faculty members staged mass leaves of absence for several
days, dismpring classes in all levels at rhe university. The faculty union filed a
complaint for illegal dismissal and unfair labor practice with the Labor Arbiter who,
on a prima faae showing that the termination was causing a serious labor dispute,
certified the matter to the DOLE Secretary for a possible suspension o~ the effects
1
Asheij i1 ~ M!dmCenter, Inc. v. T$lo, G.R ~- 155690,June 30;2005.
2 G.R No. 89920, Cd. 18, 1993.
CHAl'TER EIGHT 965
JUIUSDICTION AND RELIEFS
of termination. On this basis, DOLE Secrewy Franklin Drilon issued an otder
suspending the effects of the termination of the union officers and directors and
directing the university "to accept them back to work under the same terms and
conditions prevailing prior to theiJ: dismissaL,, 1.4ter, on- the basis of a petition for
assumption or certification filed by the university, Secretary Drilon· modified said-
order by certifying the labor dispute to the NLRC for compulsoty arbitration
pursuant to Article 278(g) [263(g)] of the Labor Cod::. He accordingly or~ered the
university to readmit all its faculty members, including the 16 union officers and
directors, under the same tenns and conditions prevailing prior to the dispute.
Based on the foregoing, it may be said tha: suspension of the effects of
termination has the same effect as assumption or certification as far as the
reinstatement of the affected employees is concemed.
7. PRELIMINARY DETERMINATION OF PRIMA-PACIEBVIDENCE.
The detennination of whether a prima fade evidence exists that the
termination may cause a serious labor dispute or is in implementation of a mass lay-
off as would justify the suspension of the effects of teanination should be made at
the inception of the labor proceedings. Thus, evidence on this particular point may
be presented prior to the presentation of evidence in the main case. The only
purpose of such presentation is to ascertain and establish whether the tennination
may cause a serious labor dispute or is in implementation of a mass lay-off. Once
evidence is presented upon which the appropriate official before whom the
termination dispute is pending may reasonably and sufficiently make out a prima
Jam finding of such fact, a recommendation to the DOLE Secretary for the
suspension of the effects of termination may then be properly made.
3.
ADMINISTRATIVE INTERVENTION
FOR DISPUTE AVOIDANCE (AIDA)
1. NEW RULE ON DOLE SECRETARY'S ADMINISTRATIVE
INTERVENTION.
A new form of dispute settlement by the DOLE Secretary was introduced
by DOLE Cirrular No. 1, Series of 2006. 1 Called Administrative Intervention for
Dispute Avoidance (AIDA), this is a new adrr.inistrative procedure for the
voluntarv settlement oflabor disputes in line with the objectives of RA. No. 9285,2
Executi~e Order No. 5231 and the mandate of the DOLE to promote industrial
peace.
Issued on August 11, 2006 by bmerOOLE Seaetaly MJro 0. Brien, OOH a € ~ rneniudthe H'ghestQxat.
Oh!rMse knovrnaslhe"Alernawe OisJxlte Rescidkxlldc:l2004' ~ onP¢ 2. 2004).
3 Da!ed~07.mi.
966 SAR REvlEWER ON lABOR lAW
2. NATURE OF ADMINISTRATIVE INTERVENTION.
This recourse is separate from the established dispute resolution modes
of mediation, conciliation and ubitration under the Labor Code, and is an
alternative to other voluntuy modes of dispute resolution such as the voluntary
submission of a dispute to the Regional D~r for mediation; to the NCMB for
preventive mediation, or to the intervention of a regional or'local tripartite peace
council for the same puq,ose.1
3. PARTIES WHO MAY REQUEST INTERVENTION.
Either or both the employer and the certified collective bugaining agent.
(or the representative of the employees where there is no certified bargaining agent)
may voluntarily bring to the Office of the DOLE Seaetat:y, through a Request for
Intervention, any potential or ongoing dispute defined below.2
4. POTENTIAL OR ON-GOING DISPUTE.
A potential or on-going dispute refers to:
(a) a live and active dispute;
(b) that may lead to a strike or lockout or to massive labor unrest; and
(c) is not the subject of any complaint or notice of strike or lockout at
the time a Request for Intervention is made.3
5. PROCEDURE.
.\ll Requests for Intervention should be in writing and filed with the
Office of the DOLE Secretary. A Request for Intervention shall state:
(a) The name and address of the employer;
(b) The name of the certified bargaining agent, or the employee
representative duly designated in writing by a majority of the
employees where there is no collective bargaining agent;
(c) The number of employees affected by the potential or ongoing
dispute; and
(d) A brief description of the potential or ongoing dispute.4
Upon receipt of the Request, the Office of the DOLE Secretary should
forthwith notify the parties and invite them for conference. The conference for
Requests coming from the National Capital Region, Regions m, IV-A or IV-B
shall be held at the Office of the DOLE Secretaty unless the Secretaiy otherwise
1 ~- 1, DOLE Ciruar No. 1, Series d 2006.
2 kl.
3 kl.
• No.2,lbid.
CHAl'TER EIGHT 967
JURISDICTION AND llEUEFS
directs. The conference for R:equests coming from the other regions shall be
{()nd11c1td by Jhe app,opriall Rltfanal Dinaorsfar and on beha!fofthe DOLESemta,y. t
6. PRE-REQUISITE TO INTERVENTION BY DOLE SECRETARY.
The Office of the Secretary or the Regioml Director, in the proper case,
shall proceed to intervene after the parties shall have manifested that
(1) They voluntarily submit their potential or ongoing ~pute to
intervention by the Office of the DOLE Secretary;
(2) There is no pending notice of strike or lockout or any related
complaint in relation to their potential or ongoing dispute;
(3) They shall re&ain from any strike or lockout or. any form of work
stoppage or from filing any related complaint while the Secretaty's
intervention is in effect; and
(4) They shall abide by the agreement readied, whose tenns may be
enforced through the appropriate writs issued by the DOLE Secretary.
All agi:eements settling the dispute should be in writing and signed by the
parties as well as the official who mediated the dispute.2
7. PROHIBITION ON DISCLOSURE OF INFORMATION.
The parties and the officials or employees of the Department of Labor
and Employment who took part in the intervention proceedings are not allowed to
testify in any cow:t or body regarding the disclosures, submissions or positions
made by the parties therein.l
4.
VOLUNTARY ARBITRATION BY DOLE SECRETARY
1. VOLUNTARY ARBITRATION AFTER AIDA.
If the intervention through AIDA fails, either or both patties may avail
themselves of the remedies provided under the Labor Code. Altematively, the
parties may submit their dispute to·the Office of the DOLE Secretai:y for voluntary
arbittation. Such voluntmy ubitration shoul~ be limited to the issues defined in the
parties' submission to voluntaty arbitration agreement and should be decided on
the basis of the parties' position papers and submitted evidence. The Office of the
DOLE Secretmy is mandated to resolve the dispute within sixty (60) days &om the ·
parties' submission of the dispute for resolution. 4
I No. 3; Iii!.
2 No.4,tid.
3 t-l>.5, lbif.
4 No. 6, Ibid.
g68 BAR REYIEWER ON lABOR lAW
2. DOLE SECRETARY DOES NOT ASSUME ROLE OF_VOLUNTARY
ARBITRATOR WHEN HE ASSUMES JURISDICTION OVER A
LABOR DISPUTE.
It was declared in Philtranto Sem,-e Enterprises, In,. v. PW'U-AGL0, 1 that the
DOLE Secretary does not assume the role of a Voluntary &bitrator when he
exercises his extraordinary power of assumption of jurisdiction over a national
interest case..A notice of strike was filed in this case by respondent union which,
after failwe of conciliation and mediation by the NCMB, was refe.tred by the
Conciliator-Mediator to the Office of the DOLE Seaet?IY who thereby assumed
jurisdiction over the labor.dispute. The _easel was resolved by ~e Acting DOLE
Secretatyl in favor of resp~ndent union.' A motion for reconsideration was filed by
petitioner company. The DOLE Seaetary, however, declined to xµle on the motion
citing a DOLE regulation,5 applicable to voluntary arbittation. which provided that
the Voluntary Arbitrators' decisions, ordeis, resolutions or awards shall not be the
subject of motions for reconsideration. The DOLE-Secretary took the position that
when he assumed jurisdiction over the labor dispute, he was acting as a Voluntary
Arbitrator. Petitioner subaequently filed a Rule 65 mtiorari petition with the· CA.
The CA, however, dismissed petitioner company's Rule 65 m1iorari petition on the
ground, among others, that the decision of the DOLE S~~' having been
rendered by him iri his capacity as Voluntaty Arbitrator, is not subject to a Rule 65
mtiorrni petition but to a Rule 43 petition for .review which properly coven
decisions of Voluntary Arbitrators.6 ·
Before the Supreme Court, petitioner asserted that, contrary to the CA's
ruling, the case7 is not a simple voluntaty atbittation case. The chmcter of the
case, which involves an impending strike by petitioner's employees; the nature of
petitioners business as a public transportation company, which is imbued with
public interest; the merits of its case; and the assumption of jurisdiction by the
DOLE Secretary - all these circumstance~ removed the case from the coverage of
1 Ph1nm> Sefw:e Entaprises, ~ v.Phltana> waters U1mAssocia!ion dGeooine l.mOgarilablstpMJ-AGlO),
G.R No. 180!m, Feb. 26, 2014. A!ttwjl llS case iMMS a decisixl cl Ile D0LE Seaelay, Ile priq,e en.n:iated
hnn~~blleNLRC.
2 The case was dockelsd as NCMB-NCR CASE No. NS-02-028-07.
3 AdinJ DOLE Seae1ay Ori> P. Cruz.
4
TbeAarg oa.E Seaeay's decism IX1k!ed lherematanentd 17 relrenChed ~ p u s ~ at«
ref'lefs. . (4) Those rendered by DOLE Regional Directors in simple or small
5 See Seem 7(F'naitf d AwardA)ecism], ~ XIX[Grievne Machi'ey and\lCUllay Alblnbll OepareilOrder No.
40-03, Seoos d 2003 issued en Faay 17, 2003 by mm DOLE Secretaly Palri:iaA SID. Tanas. lponjes: "Section
7. Fnaltf o f ~ - The dedsol, m, readi0l1 er aYllli d Ile mtuy abm'allJ er pnl d vokJnlay
am!racrs sha'I be frlal inf execur:xy after ten (10) calerm da',s mm receptd lhe ~ r1 Ile cr.wn1 « decso:l by Ile
paroos int I shall not be subject d amotiln b recolSideralix L•
6
F« tis ream, acmdilg ID Dle CA lhe peto, is disrniaie pusuat b &,..eme Cwt Ciitls No. 2.00, enilled
"Gooelnes ID be ObseMd in Appeal, kl !he Courtd Appeals il1d kl Ille Supreme CM, \\4th pmmes flit '4.Etroneous
~ - -AA appeal taken kl either Ille &ipreme CoortCX' Ile COlfftof ~ by lhe~ 11 ~p!q)riatemode shal be
disrrad. xxx" . 3
1
Rari1g ID lhecme dodce!ed as ~CASE No. NS-02-02S-07.
CHAITTR. EIGHT 969
JURISDICTION AND RELIEFS
Article 277 (262),1 and instead placed it under Article 278 (263],2 of the Labor
Code. For its part, respondent union argued that the DOLE Secretaty decided the
assumed case in his capacity as VoluntaJ:y Arbitrator; thus, his decision, being that
of a Voluntary Arbitrator, is only assailable Ilia a petition for review under Rule 43.
The Supreme Court, however, pronounced that
"It cannot be said that in taking cognizance of NCMB-NCR CASE No.
NS-02-028-07, the Secrewy of Labor did so in a limited capacity, it., as a
voluowy arbitrator. The fact is undeniable that by refea:ing the case to the
Secretary of Labor, Conciliator-Mediator Aglibut conceded that the case fell
within the covcnge of Atticle 278 (263) of the Labor Code; the impending
strike in Philtranco, a public t:culSportatjon company whose business is
imbued with public intetest, required that the S~tary of Labor assume
jwi~cti.on over the case, which he in fact did. By assuming jurisdiction over
the case, the provisions of Article 278 (263) became applicable, any
representation to the contmy or that he is deciding the case in his capacity as
a volunwy arbitntor notwithst2nding."
Consequently, ili.e Supreme Court reversed and set aside the CA ruling
and reinstated the case and directed the CA "to resolve the same with deliberate
dispatch."
II.
APPELµTE JURISDICTION
1. DECISIONS NOT APPBALABLE TO THE DOLE SECRETARY.
At the outset, it is important to emphasize the decisions, awards or orders
that are not appealable to the Office of the DOLE Secretary, to wit
(1) Those rendered by Labor Arbiters that are appealable to the
Commission (NLRq which has .exclusive appellate jwisdiction
thereover;3 ·
(2) Those rendered by the Commission {NLRC) since they can be
elevated directly to the CA by way of a Rule 65 mtiorari petition;
(3) Those rendered by the BLR Director in the exercise of his appellate
jurisdiction since they can be brought cfu:ectly to the CA under Rule 65
ttrtiorari petition; ·
money ~ s under Article 1291 of the Labor Code since they are
appealable to the NLRC;
1 Miele 275 (262l Jllisdic:t:m OteC otr« labcr displtes. - The VOU\taly Albftratlr er panel of VOUllaly Altiratas, upon
agreement d l1e patils, 51'61 also heir lllll decik! ai oh!r lamdisplfces ilC:ufnJ unfai' laba practes aid bagai1irVJ
deadbdt.
2 Al1i.ie 276 (2631 is enlified 'Sttltes, Pk:keh.J cm t..ocmm.·
Per A11i:1e 224(b) (217 {b)). il relafm ID Mde 229 [223) d lhe Lm r.ode. Arti:le 224{1>) (217 {b}I prrMes: ,tie
Conmssm sha!hiwe exas.ie ~ )lrlsdi:tilnOIPJ alcmesdecifeclby Labor M>ilels."
970 BAR REVIEWER ON lASOR I.AW CHAl'TER EIGHT
971
JURISDICTION AND RELIEFS
(5) Those issued by DOLE Regional Directors in their capacity as Ex- Below is a detailed discussion of the various appeals that may be instituted
Offitio Voluntary Arbitrators (EVAs) since they can be brought directly to and filed with the Office of the DOLE Secretary in the e."<ercise of its appellate
to the CA under Rule 43 of the Rules of Coun; and jurisclictioo.
(6) Those rendered by Voluntary Arbitrators which are appealable directly
to the CA under Rule 43 of the Rules of Court.2 , 3. OFFICES FROM WHICH APPEALS TO DOLE SECRETARY
ORIGINATE.
1.1. APPEAL FROM NLRC TO DOLE SECRETARY AND FROM DOLE
SECRETARY TO THE PRESIDENT, ELIMINATED. Appeals to the DOLE Secretary may originate from any of the following
offices:
'Die original rendering of the Labor Code3 provided that the decisions of
the NLRC are appealable to the DOLE Secretary on specilied grounds.• And the (1) DOLE Regional Directors;
decisions of the DOLE Secretary rendered in his appellate jurisdiction may be (2) Med-Arbiters;
appealed to the President of the Philippines subject to such conditions or (3) BLR Director; and
limitations as the president may direct.' These modes of appeal, however, have (4) Philippine Overseas Employment Administration (POEA).
been completely eliminated. Hence,·thcre is no more appeal from the NLRC to tJ:ie
DOLE Secretary and subsequently to the Office of the President. The current rule II-A.
is that there is no appeal from the NLRC's decisions. The only way to elevate the APPEALS FROM DOLE REGIONAL DIRECTORS
decisions of the NLRC 10 rhe CA is to initiate an original special civil action of
certiorari under Rule 65 of the Revised Rules of Court. 1. CASES Al'PEALABLE TO DOLE SECRETARY.
2. PRESENT-DAY RULES ON APPEALS TO THE DOLE SECRETARY. Not all decisions, awards or orders rendered by the DOLE Regional
Directors are appealable to the DOLE Secretary. .Among the cases enumerated
Though appeals from the NLRC to the DOLE Secretary were eliminated,
earlier as falling under the DOLE Regional Directors' jurisdiction, only decisions
presently, there are several instances in the Labor Code and its implementing and
rendered in the following cases are so appealable:
related rules where appeals to, and exercise of appellate jurisdiction by, the Office
of the DOLE Secretary arc allowed.6 Unfortunately, there is no single provision in (a) Visitorial (tnspection) cases under Article 37;1
the Labor Code or piece of jurisprudence7 which consolidates or comprehensively (b) Visitorial (tnspection) and enforcement cases2 under Article 128,
embodies the rules on appeals to the DOLE Secretary. These appellate rules are (either routine or initiated through a complaint);3
scattered in various provisions of the Labor Code, its implementing rules and a (c) Occupational safety and health violations;1
number of other rules of procedure as well.
1 'Mile 37. VJSiaial PoNer. • The Seamy d l..m a tis rlit amized ~ fr'Jf, at art lire, ilSp8:t eie
fn(llises, books d acax.inls and nmds dart persa, a enlly amred by this Tile, requie l to subml reports reg~ oo
presabed bins, and act on vio1a!ial dart prcMSi:xls ol 1'1il Trtl!.' (Rele!mg b Tie 1{Reauimellt and Placement of
\o\lnersl. Bo:k ~ liixrCode).
I Erllloo 'P.ea7iey tt ~- ~le rrr::J'f!f d.il'G a'O 0tier be'lefit.' ( rxr,.iles: 'hrj decm1 Q' resoiJm tt fle 2 1/ismacases i'MWe nspecbciestatitslvnelis tldeemilecoo1)(alce'Mll lctt>c'samds;v.!iie enfoo:enentcases
Regira Dimrxheam,i dficerptl'Sllilltbthispro,isial fr'Jf b e ~ oo eJesaneg!Mds prtM:ledilMde 229 i'lYave is&m:e cl cxrnpl'lcllCe onle!s !l1d Yd; cl exooifon.
12231 a 1'1il Code, lffl'l we (SJ caenda' days tern~ a a ~ d soo decisi:xl a resd\ml, ti 11e Nafa12.I 1.m 3 Based oo Ile 1ff paag~ cl M:le 128(b), Lm Code, v.hi:h sta1es: 'hi ordEr issued by lhe ckJtj ai#xxized
Relalxrls Carmissm vdli:11 shal resa,,e lhe ~Mhil len (10) cam:l.r days m eie subrrissm of lhe last pleadiY:J ~ of Ile Seaeay d l..m .n:I ~ UlderlisM:le fr'Jf be appeml t, lhe lal!!f. Ii case sax! ordEr
~ a ab¥oo im« Is rules.' iMWeS a nmetry cMatl, a, -weal by the~ rra, b e ~ on~ upon eie postirg of a cash a mt, bood
2 kl aoo:xd.m v.itl ~ 43 d lhe Re'lised ~ aCwt, a5 8UlCialed i1 l.uzm Cllmlopment Bank v. Assodaoon ol issued by a reputlble bal<fn;i cxxrpa,y ddf accredited by the Seae)ay of Laba and ~byment il Ile lmllmt
luzoo~Ballt~. G.RNo.120019, Oct 6, 1995. eqtMlert b Ile mcroetly awad ii eie ordEr appad from.' (As .rrended by Repooic Ad No. mo. m 2. 1994).
l SeeMae 223 (222[ flered. ~ . l is prtM:led il Sedin 1, ~ fl/, of eie Rues oo Ile llsposmt a Labor Standa1ls Cases ii Ile Re<Jiooa
1
ltisptMlechnder Mi:le 229 !'l23]: 'i\til 229122Ji xxx. (a) f !here isaprima fade e'li:leoceof abuse of disaaioo; (b) tt Q!ftes, his: 'Sedion 1. .appeal. - The cxt1er of lhe Regi:xlal Dft!dor shal be inal and exeo.JID!y iness appe.aled ID lhe
nale preff C11 quesfal.$ d i?K, and (c) Wtiera il asha.lDJ lhat Ille na!XXlal searly or soca and ea::mri: slabley is Seaetay d l.m and ~ witln 1en (10) r.alenda' d.¥from ~ lheraol.' The gmJ1ds for lhe appecd c1e
matned. ~ ii Seam 2 lhered, his: 'Gnmts kY appeci.- The al}}ie'loo pcrtf rr.rt <W8.al t, 1'1e Secretry lhe Order dtae
1 Na!Jooal F ~oflalxr v. Lag\Jesma. G.R No. 123426, MJth 10, 1999. Regmal Diredc(Cll in, of'ltie ~ grounds: (a) !here is afXl/00 /aooevldroce of .tusea disaeocn oo tepartalhe
I Id. Regi:xlal llrecu: (b) lhe Order was seaired ltruu;Jh fr.JJd, roercioo or graft illd =pocn; (c) lhe ~ il made puei'/
C11 ~ of lcrN; and (d) serms erttXS ii Ile fnd'nJs of fa:ls were amrittEd lltldl, f ncx lll!'eded, woold caise grave
1
AA erursatxn of tie varoos appeals b Ile OOtE Seaelaty was made i1 the 1999 case of Nania Federafol d l1iba V.
LcrJoesrr,a. ~ ~ . lhis I\J00<1M1 needs to be 1¢ated fl lhe ~ht of lhe latest crne,dments to lhe lm Code a5 irepalil1e ~ iy.Jry ti lhe ~L- (See also Secful 2. i1 relam to Sedxxl 3(a). rue x. Bo:k 111 a tie Rues ti
Y.d a5 JXOOMCaTlenls afie SiJx!Yne Qui il a nttnberof decisilns pronuga1ed fl recent cases. ~ lhe Lm Code).
972 BAR REYIEWER ON lABOll lAW
(d) Cases related to privatt ,:rmlitmmt and plamnent' agenaes (PRPAs) for
local employment, such as:
1) Applications for license or denial thereof,
2) Compla.iilts for suspension or cancellation of license by reason of
administrative offenses;
3) Complaints for illegal recruitment; and
4) Petition for closure of agency.2
2. CASES NOT APPEALABLE TO DOLE SECRETARY.
The decisions of the DOLE Regional Ditecton in the following cases are
not appealable to the DOLE Secrewy but to the labor office or labor official
indicated opposite each one of them:
(a) Visitorial cases under Article 289 [274], involving examination of
books of accounts of independent unions, local chapters/ chartered
locals and workers' associations - to BLR Director'·
(b) Small money claims cases arising &om labor standards violations in
an amount not t:XCeeding PS,000.00 and not accompanied with a
claim for reinstatement under Article 129 - to NLRC•
(c) Cases submitted for voluntuy arbitration in their capacity as Ex-
Offuio Voluntary Arbitrators (EVAs) under Department Ordtr No. 83-
07, Series of2007 -to Court of Appeals5
(d) Union registration-related cases, such as:
1) Denial of application for registration• of said unions - to BLR
Director
CHAPTER EIGHT 973
JURISDICTION ANO RELIEFS
3) Decision on petition for revocation or cancellation of registration
of said unions - to BLR Director
(e) Notice of merger, consolidation, affiliation and chanr,e of name of
said unions - to BLR Director
(f) CBA-related cases -
1) Application for tegistmtion of singk-mttrp~ CBAs or petition for
deregistration thereof - to BLR Director
2) Petition for denial of registration of Jingk-enterprise CBAs !or denial
of petition for deregisttation thereof - to BLR Director
Note must be made as reguds Request for SEBA Certification when
made in an unorganized establishment with only one (1) legitimate union,3
over which the DOLE Regional Director has original jurisdiction to issue the
SEBA Certification being requested. The rule, however, becomes different once the
requesting union fails mt0mplt11 the NJllinments far SEBA ctrlijitation during the
validation conference before the DOLE Regional Director, in which event, such
Request should be referred to the Election Officer' for the conduct of certification
election5 which necessarily would mean that such certification election should now
be conducted under the jurisdiction of the Med-Atbiter (Mediator-Arbiter) to
whom the Election Officer is duty-bound to report the outcome of the election
proceeding.6 Certainly, the ensuing certification election cannot be conducted
W1der the directive of the DOLE Regional Director without the participation of
1 See A1tic1e 243 (236) d lhe l.aba Code Mlk:h prMSes: •M 243 (236]. Denial d regis!ratkln; ~ The del:iskx'I d lhe
laboc Relatxx\s ™5m i1 lhe ragkx1al olfm denyqJ reglstrctm fr&/ b e ~ by I l e ~ unm ID Ile Qireau
\Wtin ten (10) days fran rec:$d rdoe 11ereat•
2 Asdis!DJuishedflanczesadq~CBAsYffllctlfalmderlle~pisdi!Kllldlhe Bl.RDrm.
3 Under lhis si'JJa1oo.lheDOtERegmalDieckr,hebefflQ11118 Request tr SEBA Certi&:abl is med. shoukl refer Ute
Request for SEBA Cel1fmJn ID Iha M!diatr-Mxler fir 118 deta'nildxl d Ile prqxlety of cxrtdtdvJ a cefficm1
eledioo, i1 Vi4lktl case, !he t.efiaf«-Adliler now has lhe juisdx;tion ID deciJe Ille certibfun elecm issue. (Sedm 6, Rule
vu. i1 relation ID~ vm and IX. Oepartnent Order No. 40-1-15. &r.es of 201s (September 01. 201sn. Note ITlJSt be
made tiat v.tien lhe P.eqtJest for SEBA Certifaloo is made n c11 ·tmiganized establishment \Wtl nm tian one (1) ·
legilinate laba agnalm, lhe MecMltiler takes IMlf' fRxn Ile DOLE Rega& OiedDr il Ile matll!r d hecm,J cm
~ ttieissueof certitatixlee:ticrl.
' "Eledm Office( raers to an olfmdlle areau dtmrP.elab\s crlhe labcrRelalicr1s OMsicx1 in aie Regix1al Ob
auhxlzed ID anfud cutifx:am ekdn, efedm ci union of&:ers IJ1d dherbms d eledix\s IJ1d ll!ferm. (Sedioo 1
[o}, Pw I, IJ1d SedD\s 2-6, Rue XI~ Bod( V, ~ b lmpmmtlle LmQxle, as mmnded 17/ Oeplmlent Order No.
40-03, Series d 2003, lfeb. 17, 20031). !tis Ile Bedixl Ob\llbo sfa'I have o:mJI of Ile jXHlecoon cxmmtee ard
eledmprocmfillS, (Sedin1,~IX.BodtV,l>iii . .
5 Sedial 4, ~ VII d Ile RIES b . , . _ De lm Code. as emendal by Depatnent Qdrr No. 40-1-15, Seim of
2015 [Sepe,ter07, 2015). lheea:tlcRstmd beantmd il acmdcn::evdBI IU! IX hm.
• Under tie ~ Nllil 24 tms mm Ile rra caivass Ii \'des, tire~ a vald elecl1'11, lhe ElecfDl O!br shal ·
lriimnitb! reaxds of Ole case ID Ile Med-ArbfterMIOsha1, Wlhh Ile am petd fl1)m receiptcilhe mrues en! results
d e'aeclicxl, m c11 order pcocla!ni'g lie l1l5llls dlte efecl!orl m:I cdJhJ lhe ll1kln Mtil dJfalled lhe mapftf of lhe
viid vaes cast as Ile sde in1 el'dJwe bargaiq agBlt h te djed bargaWng 1rit, xxx. (The piwm1 e1fitled
"Prodamalinand cdl:alkrl ci Ile reddlle etacm1' stml rm be denambaled as Sedicr\ 21, Rm IX. Bcdt v,
~ b lmpkment Ille Laber Code, tr,wm dlle lfflll1bed1 oRfered by Secbt 17, DepnnentOderNo. 40-1-15,
Series of 2015 (SeptlJmer(JI, 2015). ThissecCal ~~ iunbeled Sedm 20, per()epamt Omer No. 40-03,
Series cl 2003, lfeb. 17, 2003]. Id l was su,sequenltf l&fllmaad ID Sectm 19, per Oepa"100t Oder No. 40.f-03,
Series of 2008 tocl 30, 2008i Ths lab!st 2015 r&mmemg was effecled Olrcu.lh S8II Seclixl 17 'Mli:fl stales: -sd,ris
SUbsequentbimted neNpnMSix1sMIMrrerurmedsed!lx1saererurteredaxmf11g~.,.
974 BAR llEVIEWER 0111 lABOR lAW
the Med-Arbiter (Mediator-Arbiter) who, under the law, 1 is the one possessed of
the ori/)nal and txtlN1iue jurisdiction over certification election cases, including the
proclamation of the winning SEBA.2
11-B.
APPEALS FROM MED-ARBITERS
1. ONLY DECISIONS IN INTER-UNION DISPUTES.
Among the cases cognizable by the Med-ArbJters in their orifinal and
exclusive jurisdiction, only decisions in inter-union disputes (representation or
certification election conflicts) are appealable to the DOLE Secretary by virtue of
Article 272 [259)3 of the Labor Code. All the others are appealable to the BLR
Director.4
11-C.
APPEALS FROM BLR DIRECTOR
1. CASES DECIDED BY BLR DIRECTOR IN HIS ORIGINAL
JURISDICTION.
The decisions of the BLR Director rendered in his original jurisdiction
are all appealable to the DOLE Seaetary, thus:
(1) Complaints and petitions involving the application for registration,
revocation or cancellation of registration of federatio~, national
unions, industry unions, trade union centers and their local
chapters/chartered locals, affiliates and member organizations;s
(2) Request for examination of books of accounts of said labor
organi2ations6 under Article 289 (274] of the Labor Code;
(3) Intra-union disputes involving said labor organizations;1
•
CHAl'TER EIGHT 975
JURISDICTION AND RELIEFS
(4) Notice of merger, consolidation, affiliation and change of name of said
unions and or petition for denial thereof;2
(5) Registration of m11lu-t111J>/aynJ CBAs or petitions for their
deregistration;4 and
(6) Contempt cases.5
11-D.
APPEALS FROM POEA
t. APPEALABLE CASES.
Un~er the two (2) distinct 2016 Revised POEA R11ie1 for land-based
OFWs6 and seafarers' and the Omrub111 RM/4J,8 the Office of the DOLE Secretary
has exclusive jurisdiction to act on appeals &om the Otders of the Administration
(PORA), in the following cases over which it has original and exclusive jurisdiction:
(a) All cases which are administmtive in character, involving or arising
out of violations of recruitment .rules and regulations, including
refund of fees collected &om land-based OFWs and seafarers and
any violation of the conditions for the issuance of the license to
recruit OFWs.9
1 Id.
2 Sm, 5, Rule r-1, 80dt V, ~ ID lff1)lernert die lm' Code, as anended tr, ~ t Older No. 40-03, Series d
2003,(Feb.17,2003]andaslllh!r~by0epmtnentOlmNo.400-05,Seriesof2005,Sept.13,2005.
3 ks <fistnAuished from cases iMwi1g ~C8Asvdli:h fal lllderOle )ltd:licn of lhe DOU: Regalal Orectcr.
Sedion 15; ~ XI, Bent V, Rules b ~ l i e lab« Code, as amended by 0epatnent Order No. 40-03, Series of
2003, [Feb. 17, 2003] and ~ ramtered b y ~ Orda- No. 40f03, Odooer 30,2008. See Na5oM Federation of
Lmv. Laguesma, G.R No. 123426, Mm! 10, 1999.
• Secfm 4, Rue >O, 80dt Vof Ole Ruk!s to krpnem Ile Laba' Code, as aminled by .OepiDl'W!llt Order No. 40.f-03,
Se:fes d2008 [Odooer 30, 2008!-
s The pam $1gedi1 d'redcmempl_lrf Ole llR Drmnw, apim b t,e 00lE Seaelay. (See Secbl 1, RuleXXIU,
Boa( V, ~ ID trrc,llment01e l.abcrtAxle, as armnded byDepnmtORkrNo.4003, series ct 2003, lfeb.17, 2003D.
& Sedion 185, RuleVII, Part VI, Revised POEA Ru1es !I'd Regulab\s GcMlmilg lhe Reauilment !I'd ~ of laid-
BasedOverseas Fl\)iloWakers rl2016. .
1 Section 169, ~IX.Part V, !11e2016 Rewed POfA ~ arv:I Regula!klns ~ Ole Rec:nntmt and Enl>kJyrnent
dSeafcrels iss8i oo Fetxuaiy26,2016.
a Section 11, rue X. CmlbJsRtesand~~lleMfdlatWIXkersam CM!seasFfipmsAdd1995,
as Mienled tr,~ Ad~ 10022 issued C11 "t 8, 2010; See also Ormbls rues im Reguatns ~
~ra1watels !I'd <Mneasfii>iaActrl1995dated Feb. 29, 1996.
9 Sedioo 138, rue I(Jllisdi:bt), Part VI (Reautnent Vaabls and~ kfat Cases~ Revised POEA ~les am
Regulaoons ~ tie Recruiment cm Errc>b',ment of und-8ased ~ F!pllo wam cl 2016: Sedol 118.
Ru1e I{Jurisadioo and Venue). Part V(ReaufJnent ~ and ~rnaiy Adklrl cases), 2016 ReYised POEA Rules
n1 RegtEti0ns GoYerni"d 118 Recruim3nt a n d ~ of Seaaers; Sedlon 6, ~le X(Rae d OOl.E), O!Tnibos
~!DIRegldaticm~tle~lil'llwakersandOW!lseasFq,imkid1995,asAmendedll'/Repuh'x:hJ.
No. 10022 mued oo Jll/ 8, 2010; See also Sedkx\ 28. Ormllus RuleS axl ~ ~ Mgtant Workers
am Otelseasfiipms/vJ.d 1995dated Feb. 29, 1996.
 'aAR. REVIEWER ON IABOR IAW
(b) Disciplinaiy action cases against land-based OFWs and seafarers and
principals/employen that are administrative in character, excluding
money claims.1
2. PERIOD TO APPEAL
· The party aggrieved by a decision of the POEA, .Administration may
ap~al the same to the Office of the DOLE Secreta.cy within fifteen (15) calendar
days from receipt of a copy of the decision. Failure of the aggrieved party to perfect
the appeal within the reglementa.cy period shall render the decision of the POEA
Administration final and executoty. The Docket and ~forcement Division shall
not accept an appeal that is filed beyond the reglementaty period of appcal.2 The
period is ten (10) days in case of appeal to the DOLE Secretary of the Order of the
POEA Administrator denying the Motion to Lift a Closure Order or Motion to Re-
open. Any motion filed on the denial of a motion to lift shall be treated as an
appeal.3
3. POEA HAS NO JURISDICTION OVER MONEY CLAIMS CASES.
It must be noted that the POEA ceased to have any jurisdiction over
money claims of OFWs, or those arising out of an employer-employee
relationship or by virtue of any law or contract involving Filipino workers for
overseas deployment, including claims for actual, moral, exemplary and other foans
of damages. The jurisdiction over these claims was transferred to the Labor
Arbiters of the NLRC by virtue of Section 10 of RA. No. 8042, as amended.'
Consequently, appeals from decisions of the Labor Arbiter may be instituted to the
Commission (NLR.q.
H.
GRIEVANCE MACHINERY
t LEGAL BASiS.
The legal basis of grievance machinery is Article 273 [260]-which states:
"Article 273 (260]. Gf111N111tt M«hintry and VolRlllatJ Atbitration. -
The parties to a Collective Bargaining Agreement shall include therein
provisions that will ensure the mutual obseMncc of its terms and
conditions. They shall establish a machinery for the adju.~eot and
1 !Iii.; kt; Id~ Id. ·
2 Sml 186, ~ VI~ Pat VI, R8'fised POEA Rukls n1 Regulalions GoYanilg Ille Reauiment aid EmpbJment ct Land-
Based Olelseas FfJi1o Wmters of 2016 md Sedm 170, ~ IX, Pin V, lhe 2016 ~ POEA FM!s aid RelJulatioos
~ GleRecnanenmd en.,b)mentof Seafaers.
3
Sedklll 92, Rai! XI, Part I~ Revism POEA Rules aoo Reguafms ~ the Recruitment en! ~ of l.a'd-
Based CMrseas fq,m Wmtecs d 2016 and Secml 88, rue X, Part D, !he 2016 Rewed POEA Rules nt 0 -utatms
Govem1YJ Ile Recnnnenllld Emplnynmof Seafaas. ~ 2003, Feb. 17, 2003; Seclklrl 1(gt ~ II, NCMB ReiAsed Pr0c:edld Guileliles II lhe Coodld c:l Vokmly Alblration
' As amended - by RA No. 10022 jMardl 8, 2010].
CHAM"ER EIGHT 977
JURISOtCTIONAND RELIEFS
resolution of gnewnces ~ from me intetpretation 0t implement2tion of
their Collective Bargaining Agreement and th~ arising from the
interpretation or eofmtement of company pc,:sonnel policies.
"All grlevances submitted to the griewnce machinery which are
not settled within seven (1) alendar days from the ~tc of its [sit)
submission shall iutomatictlly be refmed to voluntaq aibit:12tion prescribed
in the Collective Bargaining Agreement.
"For this purpose, parties to a Collective Baigaming Agreement
sb2ll name: and ~ t e in advance a Voluotary Arbitnror or Pand of
Volunmy AmitmOEs, or include in the agiecmcot a procedure for the
selection of such Voluotuy Atbitmtor or Panel of Voluntary Atbittators,
prefen.bly from the listing of qualified Voluntary Atbitratois duly accredited
by the Boaid. In case the parties fail to select a Volunwy Arbitxator or
Panel of Volunwy Arbitrators, the Board shall designate the Vohmtacy
Atbitator or Panel of Voluntary Amit:mtois, as may be oecessal}', pursuant
to the sdcction proccdwe agreed upon in the Colleaive Baigaining
Agreement, which shall aa with the same force and effect as if the
Arbitrator or panel of Arbitntors bas been selected by the parties as
desaibed above."1
I.
GRIEVANCE AND GRIEVANCE PROCEDURE OR MACHINERY
1. GRIEVANCE OR GRIEVABLE ISSUE.
A "grituand' or ''gruvable isme" is any question raised by either the
employer or the union regarding any of the following issues or controversies:
1. The interpretation or application of the CBA;
2. The interpretation or enforcement of company personnel policies;
or
3. Any claim by either party that the other party is violating any
provisions of the CBA or company personnel policies.2
In its technica.l or restricted sense, a grievance is a dispute or controversy
between the employct and the sole and .exclusive bargaining agent (SEBA) arising
from the interpretation or implementation of their CBA and/ or those arising from
the interpretation or enforcement of company personnel policies, for the
adjustment and resolution of which, the parties have agreed to establish a
machinery or a series of steps commencing from· the lowest level of decision-
1 As impoo1ted by Sedkn 26, RA ~- 6715, March 21, 1989; As rerunbera1 p.rsua,t to Sedioo 5, RA No. 10151, June
21. 2011 am OOLE Oep;rttnert Mimy ~- 01, Seres at 2015 {Rl!!unllmJ c:l tie Lab<J Code of fie Philppnes, as
Anl!med), issuedoo.lut,21, ~15.
2 Sedm 1 (ul ~le l ~ v. rues~ kqllenlefll Ile Laber Code. as anended by Oepimlent Order No. l.0-03, Saies of
Proceed'rigs (Oct 15, 2004t No. 4, NM Primer on GrilMrlce tJa:flilery and Voltm!ry Art>walion.
 BAR REvlEWER ON lABOll I.AW
making in the management hierarchy (usually between the shop stcwaro of the
employee or employees aggrieved and the supervisor/ foreman/ manager which
exercises control and supervision over the grievants or who is responsible for
executing the management action that have given rise to the grievance) and usually
terminating at the highest -official of the company. If sqch dispute remains
uruesolved after exhausting the grievance machinety gr procedure, it shall
automatically be referred to voluntary arbitration prescribed in the CBA. t
It must be stressed, however, that in order to be grievable, the violations
of the CBA should be nmple or ordinary and not gro11 in chaucter; otherwise, they
shall be consideted as unfair ·labor practices (ULPs), lhe jurisdiction over which
rightly belongs to the Labor Arbiter under Article 224 (217] of the Labor Code or
concurrently with the Voluntaty Arbittator or Pand of Voluntuy Arbitmtors who
may be mutually chosen and agreed upon by the parties pursuant to Article 275
[262) of the same Code.
Gron violation of the CBA is defined under Article 274 (261) as flagunt
and/ or malicious refusal by a party thereto to comply with the economic
provisions thereof. If what is violated therefore is a non-economic or a political
provision of the CBA, the same shall not be considered· as ULP and may thus be
processed as a grievable issue in accordance with, and following the grievance
machinery laid down in, the CBA.
2. GRIEVANCE MACHINERY.
"Grievann machint,j' refers to the mechanism for the adjustment and
resolution of grievances arising from the interpretation or implementation of a
CBA and those arising from the interpretation or enforcement of company
personnel policies. 2 Additionally, it is also mandated to process, adjust and resolve
violations of the CBA which are not gross in character as discussed above. It is part
of the continuing process of collective bargaining. 3
3. GRIEVANCE PROCEDURE.
"Grievan,e proctdure" is the series of formal steps that parties to a CBA
agreed to take for the adjustment of grievances or questions arising ·out of the
intequetation or implementation of the CBA or company personnel policies,
including voluntary arbitration as the tenninal step. The grievance procedure
provides the parties a fust crack in addressing problems in the CBA admi.nisttation
and its use is an essential requisite before a Voluntaty Arbittator can take
cognizance . of the unresolved grievance. It usually consists of a multi-step
procedure starting from the discussion of the grievance between the employee
and/or the union steward, on the one hand, and the foreman and supervisor, on
No. 5, NCMB Prima, GIWc!nce Machi1ely andVwtfay Albftratm.
~273f260l,tmC'me.
3 Re!u&:Sam.lsBriv. CIR, G.R No.L-20303, Sept 27, 1967,21 SCRA226.
CHAPTER EIGHT 979
JURISDICTION AND RELIEFS
the other hand, and ending with the highest decision-making officials of the
company, reflecting the hierarchy of command or responsibility.I
Legally speaking, the grievance procedure is an appeal procedure and is a
"mllll" provision in every collective agreement. It is that pa,rt of the agreement
which provides for a peaceful way of settling differences and misunderstanding
between the parties.2 The terms ' ~ pt'OttlUll'i' and ' ~ madJint,j' are
sometimes used interchangeably. ·
4. CBA PROVISIONS SUBJECT OF GRIEVANCE MACHINERY.
A CBA contains two (2) kinds of stipulations, to wit
1. Eeonomit or non-poGtital provisions which have direct and measmable
monetary cost consequences such as wage rates, paid leaves,
pensions, health and welfare plans, and other fringe benefits; and
2. Non-emnomk or po/iJka/ provisions whose monetary cost cannot be
directly computed such as the no-strike-no-lockout, union security
clause, management rights clause, check-off clause, grievance
procedure, etc.3
Any viobtion of the ,mnomi& and no11-1&0nomit provisions of the CBA or any
law, rules and regulations as well as customaty practices, may constitute a grievance
and is often referred to as "rights dispute. "1Howe\·er, it must be po~ted out that
when the violation of the CBA consists in the flagrant and/ or malicious refusal to
comply with the emnomit provisions thereof, the same shall be treated as ULP and,
therefore, not a grievable issue that is properly cognizable under the grievance
machinery of the CBA.
5. "COMPANY PERSONNEL POLICIES", MEANING.
What are the personnel policies and what are the matters usually covered
by such policies, whose wrong from enforcement and interpretation may constitute
grievance/ s or other sources of rights disputes?
Personnel policies are guiding principles stated in broad, long-range
tenns that express the philosophy or beliefs of an organization's top authority
regarding personnel matter. They deal with·matters affecting efficiency and well-
being of employees and include, among others, the procedures in the
administration of wages, ben~fits, promotions, ~fers and other personnel
t No. 12, NCMB Priner m G1iMn:e Madmery am VfJnJy Arbhlkln: RI~ m(71, NCMB MnJ8I d PRx:edures b-
Ccnciation and Preven&ve M!diab\.
2 No. 12. Ibid.; See also Sec&lll tlh), ~ 11, NCMB Revised Procedtlal GClkfefines it lhe Condua of Vol!n1aly Mlitraticn
Pmceecfirgs [Oct 1s, ~l
3 No. 9, NCMBPlinermGll!villCeM!dlineryamV<irlay AltJib'alal.
Id. AIYJht, dispute~ lhe exislenc8 d a~ mm, cxn:uled er asllati0n n¥lti:l'I no etratis made tobmj
cmcxlta formal~ i1 ls mns or ID aeate anew me. The dsple relae e1ler b lhe mearing a proper ~ta(oo of
apatialfarpRMSixltiereinwilhreferermfD aspedfcsituaton a1D111~case.
980 BAR. REvlEWER ON LABOR I.AW
movements ~hich are usually not spelled out in the collective agreement The usual
so~ces of gnevances, however, are the rules and regulations governing disciplinary
acuons. 1
1be .~w considers the interpretation and implementation of company
personnel polices ~s one of the frequent causes of irritation 'between labor and
mana~ment and t~us must be treated as a grievable issue p~operly cognizable by
the gnevance machinery. The law contemplates the situation where workers are not
satisfied with _t~e manner by which management interprets and implements its
p~onnel polices or where management has actually .. taken disciplinary action
against an employee pursuant to its peisomel policies. In these cases the law
recognizes the right of the workers affected by the same to file a grievanc; with the
grievance machinery before. the issue becomes an arbittable grievmce that may be
brought for voluntary arbitration before the designated Voluntary Arbitrator or
Panel of Voluntary.Arbitrators. 2
6. GRIEVANCE PROCEDURE/MACHINERY, A "MUST" PROVISION:
A CBA will not be registered with the DOLE if it does not contain a
provision on grievance procedure/machinery which is a "mllll' provision required
of all CBAs. In the event that a CBA without such provision is submitted for
registration, the registrar should advise the parties to include ·a grievance
procedure/machinery therein before it is considered duly registerecl.l
7. CREATION OF GRIEVANCE COMMITIEE.
. In_ the a~sence of any applicable provision in the CB~
committee 1:5 reqwred to be created within ten (10) days from the sjgning thereof:
The committee shall be composed of at least 2 representatives each &om the
membe~ of the bargaining ~t and th~ employer, unless otherwise agreed upon by
the parttes. The representatives from among the members of the bargaining unit
shall be designated by the SEBA.4
8. NO PARTICULAR SET-UP OF GRIEVANCE MACHINERY.
No ~articular set-up for a grievance machinery is mandated by law. Article
273 (~60), :t5 1ncorponted by R.A. No. 6715, provides for only a single grievance
machinery 111 the company to settle grievances. s
1
No. 10, lbi!.; Maneja v. NLRC, G.R No. 124013, Ju'le 5, 1998, 290 SCRA 603; Unkln cl Neslle W0l'«ers Cagaya, de Oro
Fac.uyv.NeslleAlrc,piles,nc.. G.RNo.148303,0ct 17,2002.
7 ~~ Cll Senate Bl 530 Vttlich later beame RA No. 6715, Reard of he Senate, Vd. 1. No. 163-A, pp.
~ Nos. 12 and 14, NCMB Prinec en Grievance Mad1ilely aid Volurely Arbiraoon.
·
'
Sedioo I, rue XIX. Book V, ~les ID lmpenent lhe Laber Code, as amended by Dep.nnent Ort!er No. 40-03 Series of
2001, lfeb. 17, 2003J
~ Ca.'tex Rmefv ~ Associab1 [CREAi V. Bdlantes, G.R No. 123782, Sept 16, 1997, 279 SCRA 218,236, 240.
CHArTill EIGHT 981
JURISDICTION ANO RELIEFS
II.
INITIATION OF GRIEVANCE THROUGH GRIEVANCE MACHINERY
1. COMPULSORY SUBJECT OF GRIEVANCE MACHINERY.
All grievances arising from the implementation or interpretation of the
CBA and/ or interpretation and enforcement of comp~y personnd polipcs are
compulsory subject to the grievance machinery. Ths is clear from Articles 273
[260] and 274 (261) of the Labor Code.1 &:ride 273 f260) ~s emphatic on the d~ty
of the parties t9 a CBA to establish a machinery for the adJustment and resolution
of grievances arising from the interpretation and enforcement of the_ CBA an_d/or
company personnel policies, and for the mandatory use _of the. said ma<:11"1~ry.
Article 274 (261), on the other hand, directs the NLRC, tts Regional Amitratton
Branches and the DOLE Regional Directors not to entertain disputes, grievances
or matters under the exclusive and original jurisdiction of the Voluntary Arbitrator
or Panel of Voluntary Arbitrators and to immediately dispose of and refer the same
to the grievance machinery or voluntary arbitration provided in the CBA.
Moreover, in RN/e XI of the Implemmting 'RN/es of the Codi, .the NCMB
Regional B~ches are enjoined, in case issues arising from the interpretation or
implementation of CBAs or those atlsiiig from the mterpretation or enforcement
of company persomel policies are raised in notices of strikes. or lo~oqts or
requests for p~eventive mediation, to advise the parties to subnut. the· 1Ssue/s to
voluntary arbitration.2
~ grievance 2. RIGHT OF EMPLOYEES TO BRING A GRIEVANCE.
Generally, it is the employees who initiate :a grie~nce. This is recognized
by .Article 267 (255) which provides, among others., that" ... an in~dual employ~e
or group of employees shall have the right at any ~ to present gnevances to theu
employer." Further, the grievance procedure, being .part and parcel of the
·"continuous collective bargaining process,, and the union designated or selected by
the majority of the employees being their exclusive bargaining representative,
unions are generally recognized as having the rigi:t to initiate, file or presen~ a
grievance, either with regard to their rights as ~ons ~~~ the contract, or with
regard to the rights of employees, whether collective or mdividual.3
3. RIGHT OF INDMDUAL EMPLOYEE 0~ GROUP OF EMPLOYEES
TO PRESENT GRIEVANCES DIRECTLY TO THE EMPLOYER.
(NOTE: See the extensive discussion of this topic in
j "C. BARGAINING REPRESENTATIVE", supra).
i
' ' 1
2
3
As amended by RA No. 6715; Seealso No. 8,.NCMB Ptineroo GrievanCE ~ andVolunlay Arblralm
No. 8, NCMB Pliner oo Grevance Machinefy am VOlJnay Arbhlk>n.
~25.lblf.
l

982 BAR REvlEWER ON LABOR IAW
4. RIGHT OF AN EMPLOYER TO INITIATE A GRIEVANCE.
As a g~neral_ rule, employers may not initiate a grievance. However, it
~ould be p~den~ to J.nclude a p·rovision in the CBA granting the employer such
nght,. especially ~ cases ~ere the employer may wish to, use the grievance
machinery to resolve a question over a vague or indefinite provision of the CBA. l
Ill.
DECISIONS OF GRIEVANCE COMMITTEE
1. VALIDITY AND BINDING EFFECT.
. A member o~ the ~EBA who brought his grievable issue for resolution by
the Gnevance C~m.mJttee 1s boun~ by wh_atever ~position the latter may render
thereo~. In O,tavzo v. ~WT,2 the gnevable issue raised by petitioner Octavio before
the G?evance Commmee was resolved in favor of respondent PLOT. Petitioner
Octavi~ then contends ~at the Grievance Committee's resolution has the effect of
amend1ng the CBA without the consent and approval of the employees. Tue
Supr~e ~Ou.rt, however, disagreed and ruled that the resolution is valid and not a
modificatton o~ ~e CBA. ~ther, it only provides for the proper implementation of
the CBA pro~Slon. respecttng ~alaty increases. It is a product of the grievance
proced~ outlined 111 th~ CBA •~f. It was arrived at after the management and.
the wuon through their respective representatives conducted negotiations in
accordance with the CBA. · .
I.
VOLUNTA~Y ARBITRATOR
1.
VOLUNTARY ARBITRATION IN GENERAL
L VOLUNTARY ARBITRATION.
. ." Vol~nta,y arbitra_tio,r refers to the mode of settling labor-management
disputes 111 which the parties select a competent, trained and impartial third
wh0 is ta5ked ~ d~·de on the merits of the case and whose decision is final person
.and
3
executoty. It IS a third-party settlement of a labor dispute involving the mutual
consen~ by the repres_entatives of the employer and the labor union involved in a
labor dispute to subnut their case for arbitration.4
1 Nos.-6 and 25, lbkl.
! =~-(d).~l..q~Telephooe~.G.R.No.175492,Feb.27,2013. , 3 See Sedicxl 3, ~ N, NCMB Revised Procedural Guilelnes h lie Cooduct d Vrillay Albilrafal Proteed'rgs, lssued
2004i U, NCM3 Rtwed Proc8bal Guilernes in d1e Conduct of Volunfaly Mmb1 Proaled'nJs {Oct 15,
4 Appetdx 2(Defnm dTetrr6). NCMB Pliner on Sbme, Pk:teling and Lod«ld, 2nd Editm, Decenter 19'J5.
CHAPTER EIGHT 983
JURISDICTION ANO RELIEFS
2. VOLUNTARY ARBITRATOR.
A "Volnnta,yMitratol' refei:s to:
t. Any person who has been accredited by the National Conciliation and
Mediation Board {'NCMB" or "Board') as such; or
2. Any person named or designated in the CBA by the parties as their
Voluntaty Arbitrator; or
3. One chosen by the parties with or without the assistance of the NCMB,
pursuant to a selection procedure agreed upon in the CBA; or
4. One appoint~d by the NCMB in case either of the parties to the CBA
refuses to submit to voluntary arbitration.
1
This term includes a panel of Voluntal'}' Arbitrators.
Based on the above definition, Voluntary Arbitrators may be classified
into two (2) kinds, namely:
(1) "Permanent Arbitrator" referring to the Voluntary Arbitrator specifically
named or designated in the CBA by the parties as their Voluntaty
Arbitrator; and
(2) "Ad-Hoc .ArbiJrawr" referring to the Voluntary Arbitrator chosen by the
parties in accordance with the established procedure in the CBA or the
one appointed by the NCMB in case there is failure in the selection or
in. case either of the parties to the CBA refuses to submit to voluntary
arbitration.2
3. NO SPECIFIC NUMBER OF VOLUNTARY ARBITRATORS.
Article 273 [260] does not specify the number of Voluntary Arbitrators
that should take cognizance of a case. However, under the NCMB Reviled Proadllral
Gllidelinu,3 it is provided that if the CBA does not ·specify the number of Voluntaty
Arl>ittators, the case should be heard and resolved by a sole Voluntary Albitrator,
unless the parties agxee otherwise. In effect, the parties are afforded the latitude to
decide for themselves the number of Voluntary Arbitrators as they find appropriate
to a particulu situation.4
' Sml 1[e). Rim B, NCfvti Reiised ProcmnlQiif!nesil lhe0niuctof VOU1BY Alb1b'a1!0n Proceecilgs [Oc:t. 15,
ZQ4); See alsoArfde 212{n), LabcrQide; Sedix'l 1, ~~Book V, ~ 1D ~ I l e t.axrQxle. as anended b'/
Depatnent Order No. 4003, SedeS d 2003, [Feb. 11, 20031 Sm\ 1 [27). rue ni Na&i Mmm of FroameS a
~cn!PrevenMMeclataltases.
2 Sdxl 1lei~ B, NCMB Revised Procmral QMerries ii Ile CcmJttdVdJJr#arf Arblnm Pmc:eecfl9 (Oclriler
•
15,2004).
oo Oddler 15, 2004.
• Cm Relinsy ~~(CREA} v. 8iblll!S, G.R No. 123782. Sept 16, 1997, 279 SCRA 21l
 SAR R.EvlEWER ON LABOR LAW
2.
JURISDICTION
1. ORIGINAL AND EXCLUSIVE JURISDICTION.
The Voluntaiy Arbitrator or panel of Vol~tary-'Arbitrators shall ·have
exclusive and original jurisdiction over the following cases:
(1) Unmolued grievan"s arising from the interpretation or implementation
of the collective bargaining agreement (q3A). 1
(2) Unresolved grievantts arising from the interpretation or enforcement of
company personnel poli~es.2
(3) Violarions of the CBA which are not gross in character..S
(4) Other labor disputes, including unfair labor practices and bargaining
deadlocks, upon agreement of the parties.4
(5) National interest cases. 5
(6) Wage distortion issues arising from the application of any wage
orders in organized establishments.'
(7) Unresolved grievances arising from the interp~etation and
implementation of the Productivity Incentive Programs under R.A.
No.6971.7
I.
JURISDICTION OVER UNRESOLVED GRIEVANCES
1. UNRESOLVED GRIEVANCES.
As to what is meant by the term ''llnruolved" grievance, both Articles 273
(260] and 27 4 [261 J are silent on this point. They do not require that a ''dlcition" or
II
..,mlution be made or rendered or an action be taken on the grievance before it
may be considered as ''unmol111d." The grievance that would necessitate its
CHArTER EIGHT
JURISDICTION ANO RELIEFS 985
elevation to a Voluntaiy Arbitrator or panel of Voluntary rubitrators for
adjudication and resolution may be treated as "1111n.rolved" in either of two (2) senses,
namely:
(1) A decision or resolution was rendered thereon through the various
steps of the grievance machinery and either or both parties is/are not
satisfied therewith; or ·
(2) No action at all was taken thereon within the period of sevep (7) days
from its submission for resolution to the last •step of the ·grievance
machinery;
Within said seven (7) days, the law1 requires .that the grievance be
"automatically referred to volunwy arbitration." It is thus clear that the said
period should be re~oned not from the date of the issuance of any decision or
~esolution on the grievance, or more accurately, from the receipt of a copy of the
decision or resolution by the parties to the grievance but from the date the
grievance is submitted for resolution to the last step of the grievance machinery.
No other conclusion can be drawn from the clear provision of Article 273 [260]
except that whether or not a decision or resolution is issued therein, the said period
starts to run from the date of submission for resolution of the grievance to the last
step of the grievance machineiy presaibed in the CBA and not &om the date a
decision or resolution is rendered by and through the grievance machinery.
2. PROCEDURE IN SUBMmlNG UNRESOLVED GRIEVANCES TO
VOLUNTARY ARBITRATION.
When a grievance remains unresolved, either party may serve notice upon
the other of its decision to submit the issue to voluntary arbitration. The notice
should state the issue or issues to be arbitrated and a copy thereof should be
furnished to the NCMB or the Voluntary Atbitrator or Panel of Volwitary
Arbitrators named or designated in the CBA.
If the party upon whom the notice is served fails or refuses to respond
favo[ably within seven (7) calendar days from receipt thereof, the Volwitary
Arbitrator or Panel of Voluntary Arbitrators designated in the CBA should
commence voluntary arbitration proceedings. Where the CBA does not so
designate the particular Voluntaty Arbittator, the NC.MB is mandatec:t to call the
parties and appoint a Voluntary Arbitrator or Panel of Voluntaty Arbitrators who
shall thereafter commence arbitration proc~. .
In instances where the parties failed to select a Voluntary Arbitrator or
Panel of Voluntary Arbitrators, the regional branch of the NCMB shall designate
the Voluntuy Arbitrator or Panel of Voluntary Arbitrators as may be necessary,
 986 BAR REvrEWER ON IABOR !AW
which designation shall h_ave the same force and effect as if the parties have
selected the Volwitary Arbitrator or Panel of Voluntary Arbitrators themselves.•
3. ELEVATION OF GRIEVANCE DIRECTLY TO VOLUNTARY
ARBITRATION WITHOUT PASSING THROUGH GRIEVANCE
MACHINERY. ~ The case of OdatJio3 presents the classic example of an employee who
The elevation of a grievable issue directly to voluntary arbitration without
cowsing ~t thr~ugh the grie~mce machinery appears to be proscribed by the Labor
C~dc which directs the parues to a CBA to establish a grievance machinery .for the
adJ~s~ent a~d r~soluti~n of grievances p~or to their ~evation to voluntary
arb1tratton which 1s considered the last step 111 the grieva,nce procedure. In view,
however, of the State policy to encourage voluntary arbitration of labor-
management ~sp_utes, ~t is submi~ed that a grievance may be brought directly to
volwitary arb1trabon without passmg through the grievance machinery, especially
~hen the latter_ has ~en proven ~o be ineffective in the past, or when the parties
1nadvertently failed to 1nclude a gnevance machineiy provision in their CBA.2
_In Central Pa11gast_itan Elearit Cooperative, Int. 11. M(J((Jraeg,3 the parties
v~lwitarily a~eed to submit th~ issue of illegal dismissal for volunw:y arbitration
without passmg through the gnevance machinery. The Supreme Court ruled that
th~ partie~' ~ctive participation in the voluntary arbittation proceedings, and their
~ur~ to UlSlst ~at the case be remanded to the grievance machinery shows a clear
mtentton on the.i~ part to hav~ the issue of respondents' illegal dismissal directly .
resolved by the ~ oluntary .Arbitrator. The Court, therefore, found it unnecessary
t~ rule on the matter in light of their preference to bring the illegal dismissal
dispute to voluntuy arbitration without passing through the griewnce machinery.
4. PARTY NOT ALLOWED TO GO DIRECTLY TO COURT IN
DISREGARD OF VOLUNTARY ARBITRATION AFI'BR DECISION
-: BY GRIEVANCE COMMITTEE.
. It ~s settled that when parties have validly agreed on a procedure for
resolmg gnevances and to submit a dispute to voluntary arbitration, then that
procedure should be strictly observed. 4
. . More?~er, ccbeforc a party is allowed to seek the intervention of the cow:t,
it 1s a precondinon that he should have availed of all the means of administtative
proces~es afforded him. Henc~ ~ a remedy within .the administrative machinery
can still _be reson_ed to by gtvmg the administrative officer concerned every
opporturuty to decide on a matter that comes within his jurisdiction[, then] such
remedy should ~e exha~sted first before the court's ju4icial power can be sought.
The premature 1nvocanon of [the] court•s judicial intervention is fatal to one•s
; Sedbl 3~ ~ XIX. &di V, NCMB RMed Procedural~ hOle Conduct ciVoutry Arbrim Proc:eecilgs.
No.47,tid.
3
G.R No. 145BOO, Jan. 22, 2003.
4
\ivm>v. CA, G.R. No 138938, Oct 24, 2000, 344 SCPA 268,281.
CHAM'ER EIGHT 987
JURISDICTION AND RELIEFS
cause of action:• 1 Indeed, the widedying principle of the rule on exhaustion of
administrative remedies rests on the presumption that when the administrative
body, or grievance machineiy, is afforded a chance to pass upon the matter, it will
decide the same correctly.2
brought a grievable issue for adjudication by the Grievance Committee but who,
instead of submitting the issue for voluntary arbitration after the Grievance
Committee resolved it against him, filed a case raising the same issue with the
Labor Arbiter. Petitioner here raised before respondent's Union~Management
Grievance Committee the determination of his salary increases as provided in the
CBAs. Thus, his case involves the proper interpremtion and implementation of the
pertinent provisions of the CBAs. And in accordance with the procedure
prescribed therein, the said committee made up of representatives of both the
SEBA and the management convened. Unfortunately, it failed to reach an
agreement. Petitioner's recourse pursuant to the CBA was to elevate his grievance
to the Board of Arbitrators for final decision. Instead., nine (9) months later, he
filed a complaint before the Labor Arbiter. Holding that petitioner Octavio's
recourse to the labor tribunals (Labor Arbiter and NLRq below as well as to the
CA, and, finally, to the Supreme Court, must fail, the High Court pronounced as
follows:
"By failing to question the Committee Resolution through
the proper procedure prescn'bed in the CBA, that is, by mising the
same before a Board of Arbitmto.rs, Ocuvio is deemed to have waived
his right to question the same. Oeady, he departed from the grievance
procedure mandated in the CBA and denied the Board of Atbitcators
the opportunity to pass upon a matter ovci which it has jurisdiction.
Hence, and as coaectly held by the CA, Ocuvio's failure to assail the
validity and enforceability of the Committee Resolution makes the
same binding upon him. On this score alone, Octavio's recourse to the
labor tribunals below, as well as to the CA, and, finally, to thi.~ Court,
must therefore fail!'
II.
JURISDICTION OVER VIOLATION OF CBA
1. SIMPLE VS. GROSS VIOLATION OF CBA.
Paragraph (i) of Article 259 [248] 4 of th~ Labor Code mentions violation
of a CBA by the employer as a foan of ULP. Similarly, paragraph {Q of Article 260
1
OQno v. cacdac, GR No. 168475. ~ 4, 2007, 526 SCRA 440, .\58; ~ Dug OistrlJulkWt. Inc. v. tlelro Drug
Ccrpaa1Xln ~Assoc:iaticnffW, G.R. ~ 142666, Sepl 26, 2005, fi()8 R1il 47, m.
1 Rizal Sea1rity & Protecwe SeM:es, Inc. v. Mnan, G.R. No. 124915, Feb. 18, 2008, 546 SCRA 23, 40; Provim of
Zanboanga Oe! Nortev. CA, G.R No. 109853, Oct 11, 2000, 396 Phl 709, 720.
3 OctMo v. Phi,Jpile l.C(YJ Ois1ance Telephone Qxrclaly, G.R No.175492, Feb. 27, 2013.
~ Entitled Unfai LBbor Pradi:es o f ~ -
988 BAR REYIEWER ON LABOR LAW
(249)1 thereof considetS violation of a CBA by the labor otgatiization as ULP.
These provisions, however, have been· qualified by Article 274 [261)2 in that
"violations of a Collective Baigaining Agreement, except those which are gross in
character, shall no longer be treated as unfair labor practice and shall be resolved as
grievances under the CBA. For purposes of this atticle, ',kmr.r uitJ/ati4n" of CBA shall
mean flagrant an.d/or malicious refusal to comply with the economic provisions of
such agreement"
In other words, (1) ordinaiy violation of a CBA which involves non-
economic provisions there~f; and (2) violation of its economic provisions
which is not gross in character, are no longer treate<i as ULP. Consequently,
they should be resolved as ordinary grievances or grievable issues properly
cognizable under the grievan.ce machinery and voluntaxy arbitration provisions of a
CBA..
Only gross violation of a CBA as defined in Article 274 [261] is
considered ULP, in which .case, the jurisdiction thereover belongs to the Labor
Arbiter under Article 224(a) [217(a)J of the Labor Code. If not gross in nature, the
same shall be treated as a grievable issue properly lo be adjudicated under the
Grievance Machio.ery3 and, if unresolved, th.rough the process of voluntary
arbitration.4
Ill.
JURISDICTION OVER OTHER LABOR DISPUTES
1. ALL KINDS OF DISPUTE ARE ARBITRABLE.
Under Article 275 [262] of the Labor Code, upon agreement of the
parties, ~e Voluntary Arbitrator or panel of Voluntary Arbitrators may also hear
and deode all other labor disputes, including unfair labor practices and
ba~ai~g deadlocks. _For this purpose, before or at any stage of the compulsory
arb1tratton process, parties to a labor dispute may agree to submit their case to
voluntary arbittation.5
IV.
JURISDICTION OVER NATIONAL INTEREST CASES
1. SUBMISSION TO VOLUNTARY ARBITRATION AT ANY STAGE.
Article 278(g) [263(g)] of the Labor Code which involves the DOLE
Secretary's power of assumption of jurisdiction or certification to the NLRC for
1
Entlkldl.Warl.mPra:fa!sofl.ala'O:ganilabls.
2 .blsdiclmofVolrdaryAltlaalascrPlllddVmmtayAltlitralDrs.
3
Uxler Ar!k:le273 l260]. ltm'Code.
4
UnderAlfkle274(261J,l>i:t.
5
~ also Secfa'I 4, ~ XIX, Book V, ~ k>. n,p1ement Ille LabcrQxfe, memended by Oeparment Omer No. 40-03,
Series d 2003, lfeb. 17, 2003t Sedbrl 2, ~ r-1, NCMB Revised Pr0CmJlill Guxleliles il Ile Conduct rA Vau,taiy
~ Pnx:eecqs (Oct 15, 2004).
CHAPTER EIGHT 989
JURJSDICTION AND RELIEFS
compulsory arbitration of labor disputes affecting industries indispensable to the
national interest, also provides that "[b]efore or at any stage of the compulsory
arbitration process, the parties may opt to submit their dispute to voluntaty
arbitration." This means that even if the case has already been assumed by the
DOLE Seaetary or certified to the NI.RC for compulsory arbitration, or even
during its pend~cy thereof: the parties thereto may still withdmw the case from
the DOLE Secretary or NLRC, as the case may be, and submit it to a Voluntary
Arbitrator for voluntary arbitration purposes.
Consequently, once submitted for voluntary arbitration, it.is the Voluntary
Arbitrator who is now mandated to resolve the dispute. His decision rendered
therein shall be final and executocy ten (10) calendar days after receipt thereof by
the parties. 1
V.
JURISDICTION OVER WAGE DISTORTION CASES
1. JURISDICTION DEPENDS ON WHETHER THE
ESTABLISHMENT IS ORGANIZED OR UNORGANIZED.
In ~ establishments, the employer and the SEBA are required to
negotiate to correct the wage distortion. Any dispute arising from such wage
distortion should be resolved through the grievance procedure under the CBA and
if it remains unresolved, du:ough voluntary arbitration.2
In Hl19'1,ani:.,d establishments where there are no CBAs or certified
SEBAs, the employer and the workers should endeavor to correct such distortion
l
J,
I
among themselves. It is required that any dispute arising therefrom should be
settled through the NCMB and if it remains unresolved after ten (10) calendar days
of conciliation, it should be referred to a Labor Arbiter in the appropriate branch
of the NLRC. It is mandatory for the Labor.Arbiter to conduct continuous
hearings and decide the dispute within twenty (20) calendar days from the time said
dispute is submitted to him for compulsory arbitration.3
VI.
JURISDICTION OVER DISPUTES INVOLVING
THE PRODUCTIVITY INCENTIVES PROGRAM
Disputes and grievances arising from the'i.O:terpretation or implementation
of the productivity incentives program under R.A. No. 6971 4 should first be
· 1 Mi:le 278(g) l263(g}L LabcrQide.
2 Mx:1e 124, Im Code, as amended by Sectioo 3, RA tb. a127; Sml 7, Chapter II, lfll)lemelling Rules d RA No.
6727; Seclb11, Rule VI~ ~ d Procewre on~ Wage Fixing isSued by Ille National Wages and Produdivly
Camisml crt 04 Jll1e 1900.
3 Ibid~ kl; Id.; Id.
• oaJeMte kr!OMlm lhe'Prodld,tf lncen!NesM.d 1990." ltwasapproyed oo tb'erlter22, 1!m.
 BAR IUVJEWER. ON lABOR lAW
,
t CHAPTER EICiHT
JURISDICTION AND RELIEFS
991

submitted to the Labor-Management Committee for resolution. If they remain
unresolved within twenty (20) calendar clays &om the time of their submission to
said Committee, the same should be submitted for voluntuy arbittation in line
with the pertinent provisions of the Labor Code. Under this law, the productivity
incentives program is required to designate and include the ~es of the Voluntary
Arbitrators or panel of Voluntary Atbitmtors who were previously chosen and
agreed upon by the Labor-Management Committee.1
VII. . courts should be dismissed. • The case of Union ofNutlt Workers Cag9an
SOME PRINCIPLES ON JURISDICTION
!. IMPORTANT TENETS.
1) Resort to voluntaiy arbitration from grievance machinety is in the
. nature of appeal. ~ Article 274 (261) describes the nature of the
·jurisdiction of Volwitaiy Arbitrato.rs or panel of Voluntary Arbitrators as
''ori/jnal and exrhuiut" when they exercise their power to hear and decide
''llnruo/ved" grievances which are elevated to them after the process of the
grievance machineiy proved unsuccessful. In reality, the exercise of such
power vested upon them is appellate in oanue as may be clearly gleaned
.from the provisions of Article 273 (260], in relation to Atticle 274 [261),
that all grievances which are not settled or resolved within seven ('!)
calendar days from the date of their submission for resolution to the las·t
step of the grievance machinery shall (lllfQmaticalg bt refernd to voluntary
arbitration prescribed in the CBA.2
2) Only grievances that are "unresolved" by the grievance machinery
fall under the "original and exdusive11 jurisdiction of the Voluntary
Arbitrators or panel of Voluntaty Arbitrators. If a grievance therefore
has not been submitted at the first instance to the grievance machinery, the
Voluntary Arbitrators or panel of Voluntary Arbitrators do not have
jurisdiction to hear and decide it Being mandated by law3 to hear and
decide grievances at the first instance, it is the grievance machinery which is
in actuality, exercising ''origjnal and ex,/Juiw" jurisdiction over the same and
not the Voluntary Arbittatocs or panel of Voluntuy Arbitrators who may
only validly acquire jurisdiction .over them if they are "not settled or
resolved within seven (l) calendar days &om the date of the submission for
resolution to the last step. of the grievance machinery." Prior to the
completion of the grievance procedure or grievance machinery, the
grievance cannot uautomatically be referred to voluntary arbitration
prescribed in the CBA."
·P 3) Cases cognizable by Voluntaty Arbitrators in their original
jurisdiction but filed with Labor Atbiters,1 DOLE Regional Offices2
or NCMB1 shout~ be disposed of by referring them to the Voluntary
Arbitrators or panel of Voluntary Arbitrators mutually chpsen by the
parties:'
4) Cases cognizable by Voluntaty Arbitrators but filed with regular
tk Om Fado,y 11. Nertie Philippinu, lnt.,5 presents a unique situation where the
union filed an injunction case (with prayer for the issuance of a temporary
restraining order) with the Regional Trial Court (RTq against the
employer to prohibit the implementation of the "Dt11g Ab1111 Poliq" which
requires the conduct of simultaneous drug tests on all employees from
different factories and plants in keeping with the govemment•s thrust to
eradicate the proliferation of drug abuse. The company asserts that it has
the right (a) to ensure that its employees are of sound physical and mental
health, and (b) to terminate the services of an employee who refuses to
... undergo the drug test. The union challenged the validity of the
impl~entation of the said policy and btanded it as a mere subterfuge to
defeat the employees' constitutional rights. In affirming the ruling of the
RTC and Court of Appeals dismissing the complaint, the Supreme Court
ruled that said policy is in the nature of a ''{l}mJ>m!J personnel poU9" and
therefore any issue pertaining thereto falls under the jurisdiction of the
Voluntary Arbitrators or panel of Voluntary Arbitrators, not the RTC,
under Article 274 [261] of the Labor Code.

1
Seaxin4 ~J aid 9, RA No. 6911: Sedbl 3fol rue 1, m1 Secbl 3lel, ~ iv, ~1es mp1Emenq RA No. 6971.
2 See Mcie 273 ra;oJ. Lm Code; Seda! 4, RLde XIX, Bod< V, IU!S ID b11)lement Die l.alxr Code, as anenJed t7t
OepcnM Ordef No. 40-03, Smes d2003, [Feb. 17, 2003); Sml 1, RIA? r-1, NCM3 RIMSed Pnxmin GJifeEnes il
lleOmddvrutaf ~ ~ ( O c t . 15, 2004J ·
3 Mae 273 (260) d Ile lm Code.
992 BAR REVIEWER ON I.ABOll lAW
I
I
CHAPTER EIGHT
993

5) The well-entrenched rule is that when a case does not involve the
parties to a CBA - the employer and the SEBA - it is not subject to
voluntary arbitration. While individual or group of employees, without
the participation of the SEB~ are granted the right to bring grievance
directly to the employer, they cannot submit the same grievance, if
unresolved by the employer, for voluntary arbitration without the SEBA's
approval and participation. The reason is that it is the SEBA which is the
party to the CBA, and not the individual or group of employees. This rule
was lately affirmed in Tabigm 11. lnlmlalm111JI Copra Export Cmporation. 1
Pursuant to Article 273 [260) of the Labor Codt, it is required that the
parties to a CBA shall name or designate their respective representatives to
the grievance machinery and if the grievance is unsettled in that level, it
shall automatically be refeaed to the voluntary arbitratots so designated in
advance by the parties to _the CBA. Consequently only disputes
involving the union and the company shall be referred to the
grievance machinery or voluntaty arbitrators."
The prominence of this rule is highlighted in teanina~on disputes where
the SEBA is not named a party to the illegal dismissal suit either because it
failed to object to the dismissal of the employee or the suit was initiated by
the employee alone, without the assistance o( the SEBA. Thus, in a number
of cases,2 the Volunwy Arbitrator was held not to have any jwisdiction
thereover because the SEBA did not come into the picture, not having
objected or voiced any dissent to the dismissal of the employees. It is
obvious that arbitration, without the SEBA's active participation on behalf
of the dismissed employees, would be pointless or even prejudicial to their
cause.
3,
PROCEDURES
1. HO~ VOLUNTARY ARBITRATOR ACQUIRES JURISDICTION.
The Voluntary Arbitrator or panel of Voluntary Arbitrators shall exercise
jurisdiction over a specific case only upon receipt of the following:
(1) Submission Agreement duly signed by both parties; or
(2) Oemand or Notice to Arbitta~e when there is re/1110/ to arbitrate by
one pa,ry, or
(3) Appointment or designation as Voluntary Arbitrator by the NCMB
(Board) in either of the following circumstances:
l
JURISDICTION ANO RELIEFS
(a) In the event that the parties failed to select a Voluntary Arbitrator;
or
(b) In the absence of a named Voluntary Atbitrator in the CB.A and
the party upon whom the Notice to Arbittate is served does not
favorably reply within seven (7) days from receipt of such notice.'
2. SUBMISSION AGREEMENT.
.. A ?ubmi.Jsion Agrt_eme"!, refers to a written agreement by the parties
submitttng their case for arbitration, containing a statement of the issues, the name
of their chosen ~oluo.tary Arbi~tor and a stipulation and an undertaking to abide
by and comply with the resolution that may be rendered therein, including the cost
of arbitration.2 The Submission Agreement should contain, among others, the
following stipulations:
(1) An agreement to submit the case to arbitration;
(2) The specific issue/s to be arbitrated;
(3) The O!MI.le/s of the Voluntary Arbitrator or panel of Voluntary
Arbitratots; · . · ·
(4) The names, addresses and contact numbers of the parties;
(5) The agreement to perform or abide by the decision that may be
rendered therein by the Voluntary Arbitrator or panel of Voluntary
Arbitrators.3 . · . .
3. NOTICE T,O ARBITRATE.
A "Noli« lo.ArbiJrate"refers to a formal demand made-by one party to the
• other £or the arbitration of a particular dispute in the event of refusal by one party
in a CBA to submit the same to arbitration.4
If after exhausting the grievance procedure, the grievance remains
unresolved and one patty remses to submit the same to voluntary arbitration, the
following procedure should be observed:
(1) A Notice to Arbitrate should be served upon the refusing or
unwilling party, copy fumished the pennanent Voluntary Arbitrator,
if one is named in the CB.As and the NCMB Regional Branch having
jurisdiction over the workplace;
1
Seakxl 4, Rule IV, NCMB Revised Procedlrai Guk!eliles nthe Concu:t d Vouiay Mftmtm Pl'tlooed'llQS [Oct 15,
2004); No. 54, NCMB Pmuon QiMnce Mil:hileryand Vcmttay~.
2
~ 1m, ~ 11, NCMB Revised Proc:.eclm QiiE&les ii Ole CUlducl cl Vokfflay Mlftrabl Proc:eedn;Js (Oct 15,

' G.R No. 1833lS, Dec. 23, 2009.

J Such as Ule aises d M'fleia v. NI.RC, G.R No. 124013, Ji!le 5, 1998: 290 SCRA 603; Pcrltrcn:o Norll Express, 1nc. v.
NlRC, GR. No. 95940, Ju~ 24, 1996; Md~ Fir111S, Inc. v. NLRC, G.R. No. 142244, Nov. 18, 2002.
3
4
:r
Secb15, ~ IV, lbil .
1@, Rim II, NCMB Revised Procedura Guumes il lhe Cornid cl Vii.my Mli1ra1ion Proteecfrgs [Oct 15,
 994 SAR REVIEWER l'IN L\IOR L\W
(2) After the lapse of the 7-day period within which to respond to the
Notice to Arbitrate, the pennanent Voluntaty Arbitrator shall
immediately commence the arbitration proceedings;
(3) In the absence of a permanent Voluntary Arbitrator named in the
CBA, the NCMB shall appoint a Voluntary ·i\rbittator who shall
immediately commence the arbitration proceedings upon receipt of
such appointment. 1
The Notice to Arbitrate should contain, amo~ others,_the following:
~ i,
(1) The names, addre."ses and contact numbers of the party upon whom
the notice is made;
(2) The arbitration clause of the CBA;
(3) The specific issue/s or dispute/ s to be arbitrated;
(4) The relief sought; ~d
(5) The name, address and contact numbers of the party initiating or
requesting the arbitration.2
4. SUBMISSION AGREEMENT VS. NOTICE TO ARBITRATE.
"Submilsion Aremtnl' is sometimes called a "rtip11/atiotl' or an "agmmenl to
arbitrate." It is used where there is no previous agreement to arbitrate. The
submission agreement which must be signed by both parties, describes an ~sting
dispute. It often names the arbitrator, prescribes the procedure in the hearing and
sometimes contains considerable details of the arbitrator's authority and other
matters which the parties wish to control
. However, a "Demand" or a 'Notia of Inllnl to Arbitrate" or simply a 'Notia
lo Arbitrall,,, is used more in instances where there is an arbitration clause in the
. CBA which, under the law, is required to provide for a grievance procedure and a
· , voluntary arbitration clause with respect to disputes arising from the application or
.- interpretation of the CBA oi: the interpretation or enforcen,.ent of company
personnel policies. Thus, it is perfectly valid to stipulate in the CBA on an
"agreement lo arbitrati' future disputes that may arise under and during the teem
thereo£ If a dispute is covered by such an arbitmtion clause, arbittation may be
initiated unilaterally by one party by serving-npotl'.the other a written demand or
notice of intent to arbitr.tte.3 Sometimes, both the Suhmission Agr,11111111 and the
Nolia lo Arhilratt are used interchangeably.4 Parties to a case may still choose to
execute a submission agreement even if there is already an arbitration clause in the
CBA.5
1 Sedm 6, fMl IV, lbkL
2 Sedioo 7, fU3 IV, lbk1
3 No.55,llid.
4 No. 54, tid.
s 1ntemama1 ShoeCo., 21 lA550,55().551,Rode-, 1953.
CHAPTER EIOHT
JURISDICTION ANO RELIEFS
995
5. PROCEDURES AS PRESCRIBED IN THE LAW.
Article 276 (262-A] of the Labor Code prescribes the following:
"Article Z/6 [262-A). Proadms. - The Voluntuy Arbitrator or panel of
Voluntary Arbitrators shall have the power to hold hearings, receive
evidences and take whatever action is necessaiy to resolve the issue or issues
subject of the dispute, including efforts to effect a voluntary settlement
between parties.
"All parties to the dispute shall be entided to attend the arbitration
proceedings. The attendance of any third party or the exclusion of any
witness from the proceedings shall be detennined by the Voluntary
Arbitrator or panel of Voluntary Arbitrators. Hearing may be adjourned for
cause or upon agreement by the ~es.
"Uoless the parties agree otherwise, it shall be mandatory for the
Voluntary Arbitrator 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 of the Voluntary Arbitrator or panel of
Voluntary Arbitrators shall contain the facts and the law on which it is based.
It shall he final and executory after ten (10) calendar days from receipt of the
copy of the award or decision by the parties.
• "Upon motion of any interested party, the Volunwy Arbitrator or
panel of Volunwy Arbitrators or the Laboe 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 is:iue a writ
of execution requiring either 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. "1
6. NATURE OF PROCEEDINGS.
The proceedings before a Voluntary Arbitrator are non-litigious in nature .
They are not govemed by technical rules applicable to court or judicial proceedings
but they must, at all times, comply with the requirements of due process.2
7. ARBITRATION PROCEDURES.
As a geneml rule, the rules goveming the proceedings before a Voluntary
Arbitrator or panel of Voluntary Aibitr.ttors are subject to legal requirements,3
agreement among the parties4 to a labor ·dispute and their chosen Arbitrator. In the
absence of any agreement on any of the various aspects of the voluntary arbitration
proceedings, the pertinent provisions of the 2004 NCMB F.nirrd Prom/Jira/ Gllidt.ines
1 As imporaled by Sec;1kx126, RA No. 6715, March 21, 1989.
Sedion 1, R.!le VI, 11111. .
Such as lhose prescrbed under RA No. 6715 and Is ~ ~
~ Such as Ule CBA aidOMrelevillt agreements.
996 BAR REvlEWER ON lABOR lAW
in the Condu,1 of Vol1mlmy Arbitration Proaedingr and the &vi!td &Nits of Court shall
apply by analogy or in a directory or suppletory character and effect2
8. LIBERAL CONSTRUCTION OF PROCEDURAL RULES. ,,f•
The said Guidelines should be liberally construed to carry out the objectives
of the Labor Code, to promote voluntary arbitration as a preferred mode of labor
or industrial dispute settlement and as an integral compottent of the collective
bargaining process.3
9. REVISED EXPEDITED PROCEDURES.
In accordance with the State policy of p~moting the expeditious
settlement of labor disputes and as a response to concems over delays in case
disposition, the Tripartite Voluntary Arbimtion Advisory Council (IVAAq
passed several Resolutions• on expedited procedures in· voluntary arbitration
proceedings. The procedures apply to all voluntary arbitration cases handled by a
Voluowy Arbitrator involving simple issue/s wh~ hearings, reception of
ev_idence, submission of post hearing briefs/position papers, if necessary, and
promulgation of decision can be completed within twenty (20) calendar days from
submission of tht case to the arbitrator. However, this procedure does not apply
to cases falling under the Free Legal Aid and Voluntaty Arbitration Services
(FLA VAS) program.
• 28.
10. CONTROL OF ARBITRATION PROCEEDINGS. I
It i~ generally accepted that the conduct of arbitration proceedings is
under the jurisdiction and control of the Voluntary Arbitrator subject to such rules
of procedures that the parties may jointly prescribe or those which appropriate
agencies like the NCMB may legally require.5
C,
11. RELIEFS AND REMEDIES ..
Besides the procedural remedies discussed above, the Voluntary
· ~bitrator or panel of Volunt:uy Arbitrators may grant the same reliefs and
remedies granted by Labor Arbiters under Article 294 [279] of the Labor Code,
such as reinstatement; separation pay in lieu of reinstatement, in case reinstatement
becomes impossible, non-feasible or impractical; full backwages; monetary awards,
moral and exemplary damages and attomey's fees.
1
The NOIB Revised Proca1ural Guidefiles i1 Ole <mfutt cl VciJ1ay Mllraliln Proc:eeci'YilS was mopted ard
~ oo Odlm 15, mt, pJSUalll ID h! rnanlcm of Ile NCMBtnler Exeajye Order No. 126, as IIIEl1ded Ir/
m
&mit.oe Onler. No. 251, ard i1 ader I> ~Altx:fes fl60J ID 'DI (262-8) dGle labcrQide, as anemed by
RA. No. 6715 as ¥tel as ls i11)lernen&v n'8s v.i1in were t.rh!ranended Ir/ OepammtOrderNo. 4003; See atso No.
52,NCM3PrineronGrievim!M!l:hilelyaidVcimlaryAltlffralm.
2 Seclioo 3, Rule ~ NCM:I Revised Procedrral G!Melhes In l1e Conduct dVolmllly Artxtafx:rl Proceedilgs (Oct 15 2004}.
3 Sedkxl2,Rulel,lbkl. · '
4
SJch as ResokJoon No. 1, Series of 1995 ~ust 11, 1995] pam!~ Cle Expecfi!ed Proc:edlles tiVokl!ay ~
cllm !Xsptes. This a; later~ IJIJ Resm!bl No. 1, Seril!$ rl1W/ paroaiym, 1997) llldSJbsecpdf, IP/
Resalrtal No. 2. SEn!s of 1999 (Noverrter 15, 1999J · r1111s Code s11a1 be tied wtit me (3) )'alS tcm tie &ne 11e cue c1 adkln accrued; o'heMise !hey shaft be beYer
5 No. 53, NCtJB PrmerooGfWcl!CeMldlilerynl Vcimlaly Adllra!kn
CHAmREIGHT 997
JURJSDICTION AND ~EFS
J. .
PRESCRIPTION OF ACTIONS1
t. MONEY CLAIMS.
The prescriptive period of money clrums and benefits arising from
employer-employee relationship is three (3) yeus under Article 306 [291] of the
Labor Code, reckoned from the time the cause of action accrued; otherwise, they
shall be forever baaed2
Money claims under Article 306 [291) include those arising from:
1) Law,
2) CBA.3
3) Incremental proceeds from tuition i.a.creases.4
4) Overseas employment of OFWs.5
As far as No. 4 above is concemed, th: Court, in Southeastern Shipping v.
Na11am1, Jr.,6 declared as null and void the 1-yea: p.tescriptlve period in Section 28
of the POEA Standard Employment Contract (SEq because it is Article 306 (291]
of the Labor Code which is the law governing d:.e prescription of money claims of
I OFWs, including those asserted by seafarers. This law prevails over said Section
7. ILLEGAL DISMISSAL.
The prescriptive period of illegal dismissal cases is £ow: (4) years and not
three (3) years. The legal basis is not Article 306 [291] of the Labor Code but
I
Article 1146 of the Civil Code.7 ·
The 3-year prescriptive period in Article 306 [291] 8 solely applies to
money claims but not to illegal dismissal cases which are not in the nature of
money claims.
I Nde crust be made cl fle fat ttlSl it boOI Ole 2011 800 2012 s)1cti U labcJ law,~ ttJe ~ peri:)ds of fie
fdbriq nspeabtf nmixa1: "a M:re/ dams; b. ~eisn&al;c. lllfir Wier~ d. OlfUlses penalizal by
Ole t.mCcxle and IRR Issued pusuartlheretD." kl h! 2013 clld Z>'4 $)tiX. "8ra Is no slniw eoorraafm. Hence, fie
~ pe:lods In CNcases n da:I i'I Ila i'lsfantcflsarSSi:x1.
2 Sm\ 1.~ II, BcQc VI~~ mlrre>kmrtU!e LaxrQide;E. Gwm, '1c. v.NLRC, G.R No.123769, Dec. 22, 1999;
&rrinav.NLRC,G.R.No.121147,JLm26. 1998.
l Calain V. P0EA, G.R. Nos. 104776, 104911-14 clld 105029-32, Dec. ,)6, 1994.
4 lffiecsly cl Pn.1aSim v. Qrlesar, G. R No. 109977, ~ 5, 1957; Cebu lrdm clTechnoklg'f v. Opie. G.R No. l·
58870,,6pl15, 1988, 160SCRA503.
0egarm v. ~ ~ 0rp., G.R. No. 154400. Hai. 22, m; SoutastBn ~ v. NNrra. G.R No. s.
167678, .kine 22, 2010; Mdle ~ Inc. v. Ros1i1ia, G.R. ta. 168715, Sept 15,2)10.
s G.R No. 167678, Jtlle 22, 2010.
caaita v. Camatioo PhffipplneS, G.R t-b. 70615, Feb. 29, 1986; See !!lso PlDT v. Pklgd, G.R. No. 182622, Sept 8, 2010;
~ ~ . Inc. v. N.RC, G.R No. 117963, Feb. 11, 199l: Prerriem Dewqlment Bank v. NI.RC, G.R No.
114695, July 23, 1998; HaplJ'f 1aa1 Banlc, k1c. v. NLRC, G.R. No. 1Z2075,Jcn 28, 1998, 285 SCRA 297.
a Mi:le306(291iMxle'f Oams.-Hnmr,dlinsaisirJfi'an~~re!alb1sa:aui1gcbhJlleelfedMt,
baled.
 BAR REVIEWER ON I.ABOll I.AW CHAl'mt EIGHT 999
JURISDICTION AND RELIEFS
3. UNFAIR LABOR PRACTICE (ULP). and its implementing rules, does not amount to an "offonsl' as this term is
The prescriptive period for criminal complaints involving ULPs is one (1) understood and contemplated under the Labor Code.1
year from the time the acts complained of were committed; otherwise, they shall be 5. ILLEGAL RECRUITMENT CASES.
forever barred.1
The prescriptive period of simple illegal recruitment cases is five (5)
However, before a criminal case for ULP can be •filed with the 2
years.
prosecutors office, it is a pre-requisite that a labor case for ULP involving the same
The prescriptive period of illegal recruitment cases involving economic
set of facts should first be initiated with the competent labor court. It is only upon
sabotage is twenty (20) years.3
a finding of guilt in the labor case and after the decision therein has become final
and executocy that the one-year prescriptive period to prosecute the criminal aspect
of ULP starts to run. During the entire pendency of the labor case, the running of
the said one-year prescriptive period is inteaupted.2 Final judgment is one ~at
finally disposes of the action or proceeding. For instance, if the remedy of appeal
is available but no appeal is made, then, the judgment is deemed final and ---oOo~--
execu,ory. If an appeal is made, then the final judgment rendered by the last
ttibun~ say the Supreme Court, to which the case was devated should be the
reck?ning factor.
May the final decision in the labor case adjudging the respondent therein
guilty of ULP be presented as evidence of his guilt in the criminal case? The answer
is in the negative for the simple reason that in the labor case, the quantum of
evidence used in arriving at the guilty ruling is merely substantial evidence while in ....
the criminal case, a higher degree of proof beyond reasonable doubt is required. i
What then is the evidentiary value of such ~al adverse decision in the I
labor case uis-a-vir the criminal case? Its only- evidentia!y or probative value is to
prove the fact of compliance with the condition sine qua non prescribed by law prior
i
to the filing of the criminal case, ie., that aJina/judgment has been rendered in the I
labor proceeding finding that a ULP act was in fact committed by the respondent
therein.3 Without compliance with ~ pre-requisite, no criminal case for ULP can
be properly initiated.
4. OFFENSES UNDER THE LABOR CODE•
.~

The prescriptive period of alf'triminal offenses penalized under the Labor

Code and its lmpltmtnting &lilts is three (3) years from the time of commission
thereof. 4 Failure to initiate or file the criminal action or complaint within the
prescriptive period shall forever bar such action. 5
It must be emphasized that the act of th~ employer in dismissing an
employee without just or authorized cause, although a violation of the Labor. Code

1
PalaJraph 2, Ma!305 (200t l.alxr (',ode; Sec&xl 2, Roe II, l!odt VII, l\lles I D ~ Ole l.alxJCClde.
2 Id.
l Id.
,l
• Altk:le 305 (2901. Olrenses. - Offenses penalized 1.1tder !his Code and ttle rules and regulations issued pursuant
thereto shaU presaibe ii three (3) yea,s. • 1 See Al1icle 305 (290} !hereof; Ccial1a v. Qlnaloo Ph!qlpiles, n:., G.R No. 70615, Feb. 29, 1986.
All unfair labor practices arising from Book VshaD be filed wi1h lhe appropriate agency Wtlhin one (1) year from Section 12, RA. No. 8042; See atso Secticn 7, rue IV, Onnilus Rum aid RegtAam ~ling !he MQrant
acaual of such unfair labor practice; otherwise, they shall be forever baned.
5 See Artide 305 [290}. Labor Code.
wmersand OVe1seas Fq>i,os/d.ot 1995, as Ameooedby R. A. No. 10022 (Mvch oa. 2010).
3 Id.; Id.
 BAR REVIEWER
ON
LABORLAW

·Annotation
Based on the Topics in the Supreme Court-
Prescribed 2019 Syllabus for Labor Law

By

PROF. JOSELITO GUIANAN CHAN

Legal Practitioner, Professor of Law
& Bar Reviewer

Managing Partner
Chan Robles Law Firm
www.chanrobles.com ~

ChanRobles Internet Bar Review

www.chanroblesbar.com

4th Revised Edition

2019
ii 11.t.R REvlEWER. ON lABOR lAW TABLE OF CONTENTS iii

BAR REYIEWER ON LABOR IAW FOREWORD

4th Revised Edition, 2019 To the 4th Revised Edition
2019
© Philippine Copyright
2012, 2014, 2017 & 2019 Exciting new developments in the field of labor law necessitated
the revision of this book for the fourth time.
by
Notably, the 2019 Syllabus for Labor Law has undergone a major
overhaul not only in terms of re-arranging the prescnoed topics but most
PROF. JOSELITO GUIANAN CHAN significantly, in the introduction of new topics that have not been
mentioned nor made part of the previous syllabi. Utmost are new topics
All Rights Reserved such as Bona Fide Occupational Qualifications (BFOQs), Employment of
Non-Resident Aliens, Disability and Death Benefits not only under the
ISBN 978-621-8079-02-1 Labor Code but under the POEA-Standard Employment Contract
(POEA-SEC), Employment of Security Guards, Doctrine of Floating
Status, and Judicial Review of Labor Rulings.

The enactment of new laws likewise required the revision of

significant parts of the annotation. Some of these laws with great impact
on labor law are:
(a) R.A. No. 11199 [February 07, 2019], otherwise known as the
nsocial Security Act of2018";
(b) R.A. No 11223 [February 20, 2019], otherwise known as the
"Universal Health Care Law"; 1
Aut~orize~iffiliµ"f (c) R.A. No. 11210 [February 20, 2019], otherwise known as the
SerialNo.U_U__ IJ "105-Day Expanded Maternity Leave Law";
(d) R.A. No. 11058 [August 17, 2018], entitled "An Act
Published & Distributed by: Strengthening Compliance with Occupational Safety and
Health Standards and Providing Penalties for Violations
ChanRobles Publishing Company '11tereor; 2 and
22ad Floor, Philippine Stock Exchange. Centre, Tektite East Tower
Exchange Roa~ Ortigas Center, Pasig City (e) R.A. No. 10911 [July 21, 2016], otherwise known as the
M~tro Manila, Philippines "Anti-Age Discrimination in Employm~nt Act.,,
Tel Nos.: (632) 634,ql-4]/42/43/44/45 I Fax No.: (632) 634-07-36
Website: www.chanrobles.com I E-mail: cralaw@chanrobles.com Additionally, new rulings of the Supreme Court as well as new
issuances oflabor agencies were included in this latest edition.
Printed by:

tii6hilltli1ifiilii~t\t~
A Division o/~obles Publishing Company ' The UI text ct RA No. 11223 is allacned a s ~ -c·o Olis book.
2 The U text of RA No. 11058 ls presenled asJPdx "A" cnj lhat of ib ~ ~ Depatmetlt Ordef ~- 198.
Series d 2018, a s ~ "B"b lhis edlioo.
iv IIAR llfvlEWER ON Lt.BOR Lt.W
TABLE Of CONTENTS V

Th_e_ author wi~hes to thank law students and bar reviewees for the
ve~ po_s1t1ve reception they have been giving this book since its fir t
edition m 2012. s To the 3 rd Revised Edition
The author lik~wise _would like to express his gratitude to
profes~ors o_f labor law m vanous law schools nationwide who graciously
prescnbe this book as reference material in the classroom.
. !t is the fervent ~ope and prayer of the authqr that this book, along
with his ~-Volume series en the Labor Code and his annual Last-Minute
Bar _Reuzew Notes, would prove useful to law students and bar
candidates.
J oselito Guianan Chan
Managing Partner
Chan Robles Law Firm
. 22/F, Philippine Stock Exchange Centre
Tektite East Tower, Exchange Road, Ortigas Center
Pasig City, Metro Manila, Philippines
May27,2019
FOREWORD
2017
The issuance of this latest edition of this book becomes imperative
in the light of recent laws, labor issuances and rulings of the Supreme
Court affecting some of the topics prescribed in the Syllabus for labor law
which, earlier this year, was revised by the Supreme Court Bar
Examination Committee for the forthcoming 2017 bar examinations.
The author is grateful for the favorable feedbacks he received from
bar reviewees who have used this book in preparing for the bar
examination in labor law and from undergraduate law students who used
this book as supplement to their cuniculum-prescribed labor law
subjects. ·
The commentaries in this book, though expansive and broad,
remain focused on the topics and sub-topics prescribed in the labor law
syllabus. This, the author believes, is what makes this book unique and
helpful to bar reviewees and law students who are constantly faced with
stressful deadlines and short timelines in their preparation for the
examination in the bar and in the classroom.

This book, together with the updated 3-Volume series by the

author on the Labor Code, would greatly enhance the chances of its
readers in hurdling the labor law examinations.

jOSELITO GUIANAN CHAN

Managing Partner
Chan Robles Law Firm
22/F, Philippine Stock Exchange Centre
Tektite East Tower, Exchange Road, Ortigas Center
Pasig City, Metro Manila, Philippines

July 15, 2017

t
j,
 vi BAR RfVIEWER ON lABOR !AW
FOREWORD
To the 2ad Revised Edition
2014
This latest revision of this book was occasioned by the chief
cba~ges in?"<>~uce~ in the 2013 syllabus for Labor Law which were
replicated zn toto m the 2014 syllabus and presumably in the next
syllabus for subsequent bar examination in this subject.
Structurally, the eight (8) major topical cla~ifications in the 2011
an~ 2012 syll_abi remain unperturbed. However, some topics and sub-
topics were either ~anded or pruned down or merely re-arranged or
relocated.
For better and more effective presentation, the author took the
liberty of re-organ~ing some topics which, in his view, is extremely
necessary. Appropnate notes pointing out the changes are indicated in
the comments of the author.
Additionally and most significantly, the passage of new
amendatoiy laws an~ proi:nuiga~on of new doctrinal pronouncements by
the Sup~eme Court m thIS subJect have made this latest revision very
compellmg. The author has thus expanded in no small measure his
commentaries on eac_h and every topic in the syllabus, in the hope that
law students ~nd revtewees preparing for the bar examinations of 2014
and ~eyond will have a comprehensive reference material in Labor Law
that 1s focused on the syllabus-prescribed topics. •
Notably, this book appears to be thus far the first and only attempt
at annotating and commenting on the Supreme Court-prescribed
syllabus for a b~ subject. Examinees for the 2012 and 2013 bar exams
who had used ~ book had given it their stamp of approval as a worthy
reference matenal for Labor Law. To this, the author expresses his
utmest thanks and smcere appreciation.
. ~efore ending, it bears stressing that unknown to so many
practitioners and ~tudents, the Labor Code has been ordered renumbered
in 2011 ~~ RepubhcAct No. 10151.1 However, until this writing, orilyvery
few dec1S1ons of the Supreme Court have cited the new renumbering
1
Enlilled •~ Ad Allowilg the Empbyment of Nght Workers, 11Jereby Repealing Articles 130 and 131 of
Preslden~I ~ Number Four Hundred Forty-Two, As Amended, Ol181Wise Knovm as the Labor Code cl
the Philippines.• This was approved on June 21, 2011.
;
Ii
TABLE OF CONTENTS vii
scheme prescribed by this law. Labor tribunals have likewise continued
to cite the old numbering·- as if the mandate of R.A No. 10151 does not
exist in our statute books.
This led the author to write to the Office of the Secretary of Labor
and Employment in 2013 to suggest that it come out with a definitive
issuance on this matter in order to provide for a uniform re-numbering of
the affected provisions of the Labor Code. A DOLE Undersecretary
promptly replied that the DOLE will look into this matter. However,
almost a year had passed from that letter, and almost three (3) years
from the enactment of R.A No. 10151, but no such issuance has been
made by the DOLE - the government agency primordially tasked to
implement and enforce the Labor Code. Hopefully, an Explanatory
Bulletin, Circular or similar issuance will be released by the DOLE as
soon as possible to dispel the mix-up.
For purposes of guiding the readers of this book on the
renumbering of the Labor Code, the author is reproducing in full his
paper submitted to the Office of the DOLE Secretacy, entitled
"CLARIFYING THE NEW RENUMBERING OF THE LABOR CODE." A
copy of this material is presented after this Foreword.
However, to avoid confusion, the new renumbering of the Labor
Code will not be used in this edition. One reason for this hesitancy is that
even the 2014 syllabus for Labor Law does not use or make reference
thereto.
JOSELITO GUIANAN CHAN
Managing Partner
Chan Robles Law Firm
22/F, Philippine Stock Exchange Centre
Tektite East Tower, Exchange Road, Ortigas Center
Pasig City, Metro Manila, Philippines
· June 15, 2014
 ..
TABLE OF CONTENTS
ix
BAR REVIEWER ON I.ABOR I.AW
viii
FOREWORD
To the 1st Edition
The dramatic and substantial revision of the format of the 2011 bar
examinations by the Supreme Court triggered the publication of this
book. From the previous open-ended format, the Supreme Court has laid Citing the Renumbered Provisions
down a syllabus for every bar subject in the 2011 bar examinations and in of the Labor Code
the forthcoming examinations this 2012. With the syllabus prescribing
specific major topics and sub-topics for every point of law, preparation
for the bar exams becomes systematic, precise, clear-cut and well- In the light of the renumbering of certain
defined. provisions of the Labor Code, as mandated under
This book seeks to discuss in_ a simple and concise manner, each R.A. No. 10151• and DOLE Deparbnent
topic and sub-topic mentioned in the syllabus for labor law. Pertinent Advisory No. 01, Series of 2015, both the
provisions of law, rules and regulations and other issuances, as well as renumbered and old provisio~s of. the ~ffectet
the applicable jurisprudential precepts, are cited in the discussion of each Labor Code provisions are cited m tlus boo
and every major topic and sub-topic. This manner of presenting the
discussions would, in the humble view of the author, assure the bar alongside each other.
reviewee of a broader and more methodical understanding and
comprehension of the important aspects of the topic under Example:
consideration. 3
The contents of this book are based on the more-than-a-decade of Article 130 [132]
pre-bar and pre-week review lectures of the author on the subject Some
relevant commentaries of the author in his two (2) volumes on'the Labor where "130" is the new renumbering while
Code of the Philippines are likewise cited in this book. For a more "[l32 l" is its counterpart old number.
extended and authoritative discussion on the topics prescn"bed in the
syllabus, his commentaries in these 2 volumes would certainly prove B so resenting together both the new and the old
helpful. ~~be!, the reader would be well guided on the proper
In the light of the introduction of multiple choice questions provision to cite.
(MCQs) in the 2011 bar examinations and in subsequent ones, sample
MCQs for each topic are presented at the end of this book. These MCQs
could well be used by the bar reviewees in honing their skill at answering
this type of questions.
It is hoped that this book would serve as a useful tool of bar
reviewees in hurdling the bar examination in labor law in the
forthcoming bar examinations in 2012 and beyond.
JOSELITO GUIANAN CHAN
Managing Partner
Chan Robles Law Finn
ALLOWING THE EMPLOYMENT Of NlGIIT WORKERS,
22/F, Philippine Stock Exchange Centre t Th6 lirN was ec,ml on June 21 t 2011. tt is entilled ·~~ENTW. DECREE NUMBER FOUR HUNDRED FORTY·
Tektite East Tower, Exchange Road, Ortigas Center THEREBY REPEAUNG ARTICLES 130 ANO 131 Of THE PHIUPPINES.
Pasig City, Metro Manila, Philippines 'MO.~~. OTHERNISE KN0NN ASTI-IE LABOR=issuedbylheOOLESeaaf on!J.tf 21.~15.
2 Enmed~ d lhe 1.ab«Code~~ ~ · ~ affeded by ttle reruntemg under RA No. 10151.
March 19, 2012 3 This a,ttle is entJled "FaciitieS U Women. This IS lhe ,_:,1
 X BAR REVIEWER. ON LABOR lAw
TABLE OF CONTENTS xi
TABLE OF COKrENTS 1-B. 'ILLEGAL RECRUITMENT IN OVERSEAS EMPLOYMENT
1-C.•TYPES OF ILLEGAL RECRUITMENT AND THEIR ELEMENTS
Topics are based on the a. SIMPLE ILLEGAL RECRUITMENT
Supreme Court..prescribed b. ILLEGAL RECRUITMENT INVOLVING
2019 SYLLABUS FOR LABOR LAW ECONOMIC SABOTAGE
1-D. ILLEGAL RECRUITMENT VS. ESTAFA
CHAPTER ONE 2. LIABILITY OF LOCAL RECRUITMENT AGENCY
AND FOR8GN EMPLOYER
GENERAL PROVISIONS ... .. .... ... ... ...... ...... ... ... ... ............ .• •......... .. •. 1 a. SOLIDARY LIABILITY
·················· b. THEORY OF IMPUTED KNOWLEDGE
A. BASIC POLICY ON LABOR.................................................. 1 ·
B. CONSTRUCTION IN FAVOR OF LABOR ........................ 3. TERMINATION OF CONTRACT OF MIGRANT WORKER
C. CONSTITUTIONAL AND CML CODE PROVISIONS ......................................2 WITHOUT JUST OR VALID CAUSE
RELATING TO LABOR LAW............................ I~ GENERAL PRINCIPLES ON TERMINATION OF OFWs
1. CONSTITUTIONAL PROVISIONS .......................... 6 II. MONETARY CLAIMS OF OFWs, IN GENERAL
1-A DECLARATION OF PRINCIPLES AND STATE POLICIES Ill. MONETARY CLAIMS OF OFWs ARISING FROM ILLEGAL DISMISSAL
(Article II of the Constitution) 4. BAN ON DIRECT-HIRING
1-8. BILL OF RIGHTS
{Article Ill of the Constitution) B. EMPLOYMENT OF NON-RESIDENT ALIENS................................................ 102
1-C. SOCIAL JUSTICE AND HUMAN RIGHTS CHAPTER THREE
(Article XIII of the Constitution)
1-D. CONSTITUTIONAL RIGHTS THAT LABOR STANDARDS.......................~ ........................................................... 113
CANNOT BE INVOKED IN
COMPANY-LEVa ADM/NISTRA TJVE CASES A. CONDITIONS OF EMPLOYMENT....................................;........... :.............. 114
A. INAPPLICABILITY OF 1. COVERAGE
RIGHT TO CONSTITUTIONAL DUE PROCESS 2. HOURS OF WORK
B. INAPPLICABILITY OF a. NORMAL HOURS OF WORK; HOURS WORKED
RIGHT TO EQUAL PROTECTION OF THE LAWS b. MEAL PERIODS
C. INAPPLICABILITY OF c. NIGHT SHIFT DIFFERENTIAL
RIGHT TO COUNSEL d. OVERTIME WORK
2. CIVIL CODE PROVISIONS e. COMPUTATION OF ADDITIONAL COMPENSATION
(RA TES ONLY)
CHA~TER TWO e-1. FACILITIES VS. SUPPLEMENTS
PRE-EMPLOYMENT 3. WEEKLY REST PERIODS
·····• ................................................................................36 4. HOLIDAYS
A. RECRUITMENT AND PLACEMENT OF 5. SERVICE INCENTIVE LEAVE
LOCAL AND MIGRANT WORKERS 6. SERVICE CHARGES
(Labor Code and R.A. 8042, 7.13THMONTHPAY
as amended by R.A. 10022) ... ... ... .... .. ... ......... ................... B. WAGES..................................................................................................158
1. ILLEGAL RECRUITMENT ...............:............. .. 36
1. PAYMENTOFWAGES
AND OTHER PROHIBITED ACTIVITIES 2. PROHIBITIONS REGARDING WAGES
1-A 'ILLEGAL RECRUITMENT IN LOCAL EMPLOYMENT 3. WAGE DISTORTION, CONCEPT
a. WAGE ORDER
 xii BAA RlVIEWER ON lABOR I.AW TABLE OF CONTENTS xiii
b. WAGE DISTORTTON a. SOCIAL SECURITY BENEFITS
4. NON•DIMINUTION OF BENEFITS 1.
SICKNESS BENEFIT
C. LEAVES................................... 114 MATERNITY LEA VE BENEFIT
2.
1. SERVICE INCENTIVE LEAVE ...................................... .
RETIREMENT BENEFITS
3.
2 MATERNITY LEA VE 4.
UNEMPLOYMENT INSURANCE
3. PATERNITY LEA VE OR INVOLUNTARY SEPARATION BENEFITS
4. SOLO PARENT LEAVE 5. DISABILITY BENEFITS
5. LEA VE BENEFITS FOR WOMEN WORKERS 6. DEATH BENEFITS
UNDER R.A 9710 and R.A 9262 .• 7. FUNERAL BENEFIT
a. SPECIAL LEAVES FOR WOMEN WORKERS b. EMPLOYEES' COMPENSATION BENEFITS
{R.A. No. 9710) B. GSIS LAW...............................................................................................281
b. LEA VE FOR VICTIMS OF VIOLENCE
1. COVERAGE AND EXCLUSIONS
AGAINST WOMEN AND CHILDREN
(R.A. No. 9262) a: COVERAGE
b. EXCLUSIONS
D. SPECIAL GROUPS OF EMPLOYEES.......................................................... 114 2. DEPENDENTS AND BENEFICIARIES
1. WOMEN a. DEPENDENTS
a. DISCRIMINATION b. BENEFICIARIES
b. ST/PULA TION AGAINST MARRIAGE 3. BENEFITS
c. PROHIBITED ACTS 1. COMPULSORY LIFE INSURANCE
d. SEXUAL HARASSMENT 2. RETIREMENT BENEFIT
2. MINORS 3. SEPARATION BENEFIT
(R.A. No. 7610, as Amended by R.A. No. 9231) 4. UNEMPLOYMENT BENEFIT
3. KASAMBAHAY 5. DISABILITY BENEFITS
(R.A. No. 10361) 6. SURVIVORSHIP BENEFITS
4. HOMEWORKERS 7. FUNERAL BENEFITS
5. NIGHT WORKERS LIMITED PORTABILITY l.AW............ :............................................................300
6. APPRENTICES AND LEARNERS C. DISABILITY AND DEATH BENEFITS...........................................................301
7. PERSONS WITH DISABIUTIES .-;
a. DISCRIMINATION 1. LABOR CODE
b. INCENTIVES FOR EMPLOYERS a. EMPLOYEES' COMPENSATION PROGRAM
b. EMPLOYEES' COMPENSATION BENEFITS
CHAPTER FOUR I. MEDICAL BENEFITS
II. REHABILITATION SERVICES
SOCIAL WELFARE LEGISLATION..................................................................264 Ill. DISABIUTY BENEFITS
A. SSS LAW................................ 264 lll•A. TEMPORARY TOTAL DISABIUTY
1. COVERAGE AND EXCLUSIO~;· ............................................................
111·8. PERMANENT TOTAL DISABILITY
a. COVERAGE 11/·C. PERMANENT PARTIAL DISABILITY
b. EXCLUSIONS IV. DEATH BENEFIT
2. DEPENDENTS AND BENEFICIARIES V. FUNERAL BENEFIT
a. DEPENDENTS c. BENEFICIARIES .
b. BENEFICIARIES 2.. POEA·STANDARD EMPLOYMENT CONTRACT
3. BENEFITS (POEA·SEC)

••
 ...
TABLE OF CONTENTS xv
xiv BAR R.fVIEWER ON IABOR L\W

I. MONETARY CLAIMS OF SEAFARERS FOR II. Statutory Bar Rule

SICKNESS AND DISABILITY BENEFITS Ill. Certification Year Bar Rule
II. EXISTENCE AND EXTENT OF SEAFARER'S IV. NegoUat~nsBarRule
DISABILITY. HOW DETERMINED AND DECLARED V. Bargaining Deadlock Bar Rule
Ill. MONETARY CLAIMS OF SEAFARERS b-v. THE DOUBLE MAJORITY RULE
FOR DEA TH BENEFITS b-vi. CHALLENGING OF VOTES AND PROTEST
c. CONSENT B.ECTION
CHAPTER FIVE d. RUN-OFF ELECTION
LABOR RELATIONS ........................................................ :: ........................... 378
e. RE-RUN ELECTION
D. RIGHTS OF LABOR ORGANIZATIONS........................................................451
A. RIGHT TO SELF-ORGANIZATION ...............................................................379
1. CHECK-OFF. ASSESSMENTS, AND AGENCY FEES
1. COVERAGE
a. PERSONS WHO CAN EXERCISE a. CHECK-OFF
RIGHT TO SELF-ORGANIZA T/ON b. ASSESSMENTS
b. PERSONS WHO CANNOT EXERCISE c. AGENCY FEES
2 COLLECTIVE BARGAJNING
RIGHT TO SELF-ORGANIZATION
2. INEUGIBILITY OF MANAGERIAL EMPLOYEES;
a. DUTY TO BARGAIN COLLECTIVELY
. b. DUTY TO BARGAIN COLLECTIVELY
RIGHT OF SUPERVISORY EMPLOYEES
IN THE ABSENCE OF CBA
a. MANAGERIAL EMPLOYEE RULE c. DUTY TO BARGAIN COLLECTIVELY
b. SUPERVISORY EMPLOYEE RULE
WHEN THERE EXISTS ACBA
c. CONFIDENTIAL EMPLOYEE RULE d. COLLECTIVE BARGAINING AGREEMENT (CBA)
d. SEPARATION OF UNIONS DOCTRINE
e. THE COLLECTIVE BARGAINING PROCESS
3. EFFECT OF INCLUSION AS MEMBERS OF EMPLOYEES
OUTSIDE OF THE BARGAINING UNIT E. UNFAIR LABOR PRACTICES (ULPs) ........................................................483
4. NON-ABRIDGEMENT 1. NATURE, ASPECTS
(OF RIGHT TO SELF-ORGANIZATION) 2 ULP BY EMPLOYERS ·
5. HOW AUNION IS ORGANIZED I. INTERFERENCE WITH, RESTRAINT OR COERCION
6. AFFILIATION AND DISAFFILIATION OF EMPLOYEES IN THE EXERCISE OF THEIR
RIGHT TO SELF-ORGANIZATION
B. BARGAINING UNIT ...........................................................................,,,....403
II. YELLOW DOG CONTRACT
C. BARGAINING REPRESENTATIVE .............................................................. 407 Ill. CONTRACTING OUT OF SERVICES AND FUNCTIONS
1. SOLE AND EXCLUSIVE BARGAINING AGENT IV. COMPANY UNION
(SEBA) V. THREE SEPARATE CONCEPTS TREATED
a. REQUEST FOR SEBA CERT/FICA TION IN PARAGRAPH (E), ARTICLE 259 [248]
(This Mode Repealed and Replaced ·voluntary Recognition, V-1. DISCRIMINATION
b. CERTIFICATION ELECTION V-2. UNION SECURITY CLAUSE
b-i. CERTIFICATION ELECTION V-2-A. DISMISSAL DUE TO VIOLATION OF
IN UNORGANIZED ESTABLISHMENTS UNION SECURITY CLAUSE
b-ii. CERT/FICA T/ON ELECTION V-2-B. DUE PROCESS IN TERM/NATION DUE TO
IN ORGANIZED ESTABLISHMENTS VIOLATION OF UNION SECURITY CLAUSE
b-iii. DENIAL OF THE PCE VI. FILING OF CHARGES OR GIVING OF TESTIMONY
b-iv. BAR RULES VII. CBA-RELA TED ULPs
I. Contract Bar Rule VII-A. VIOLATION OF THE DUTY TO BARGAIN
 xvi BAR RlVIEW£R ON lABOR lAW
COLLECTIVELY
Vll-8. PAYMENT OF NEGOTIA TJON FEES
OR ATTORNEY'S FEES .
V/1-C. VIOLATION OF THE CBA
3. ULP BY LABOR ORGANIZATIONS
I. RESTRAINT AND COERCION OF EMPLOYEES
IN THE EXERCISE OF THEIR RIGHT
TO SELF-ORGANIZATION
II. DISCRIMINATION
Ill. VIOLATION OF DUTY OF UNION TO BARGAIN
COLLECTIVELY
IV. FEATHERBEDDING LAW
V. DEMAND OR ACCEPTANCE OF NEGOTIATION
FEES OR ATTORNEY'S FEES
VI. VIOLATION OF THE CBA
F. PEACEFUL CONCERTED ACTMTIES
1. STRIKES ......................................... ·· ·............ 554
I. NATURE AND CONCEPT OF STRIKE
II. VARIOUS FORMS AND CLASSIFICATION
OF STRIKES
Ill. PROCEDURAL BUT MANDATORY
REQUISITES FOR AVALID STRIKE
IV. UNION-BUSTING
V. STRIKES IN HOSPITALS. CLINICS
AND MEDICAL INSTITUTIONS
VI. STRIKE IN THE GOVERIIMENT SERVICE
VII. VARIOUS PROHIBITED ACTS PER LAW
RULES AND JURISPRUDENCE I c. SOL/DARY UABILITY
VIII. LIABILITY RESULTING FROM THE
CONDUCT OF STRIKE
A. LIABILITY FOR ILLEGAL STRIKE
B. LIABILITY FOR DEFIANCE OF ASSUMPTION/
CERTIFICATION ORDER OR RETURN-TO-WORK ORnER
2. PICKETING
3. LOCKOUTS
4. ASSUMPTION OF JURISDICTION
BY THE DOLE SECRETARY
I. TWO (2) OPTIONS OF DOLE SECRETARY
II. ASSUMPTION OF JURISDICTION
lll. CERTIFICATION OF LABOR DISPUTE TO
NLRC FOR COMPULSORY ARBITRATION
IV. RETURN-TO-WORK ORDER
5. INJUNCTIONS
TABLE OF CONTENTS
xvii
CHAPTER SIX
POST EMPLOYMENT...................................................................................622
A. EMPLOYER-EMPLOYEE RELATIONSHIP..................... :............................. 621
1. TESTS TO DETERMINE EXISTENCE
OF EMPLOYER-EMPLOYEE RELATIONSHIP
2. KINDS OF EMPLOYMENT
• a. REGULAR EMPLOYMENT
b. CASUAL EMPLOYMENT
c. PROBATIONARY EMPLOYMENT
d. PROJECT EMPLOYMENT
e. SEASONAL EMPLOYMENT
f. FIXED-TERM EMPLOYMENT
g. SECURITY GUARDS
h. FLOATING STATUS
3. LEGITIMATE SUBCONTRACT/NG VS.
LABOR-ONLY CONTRACTING
a. TR/LATERAL RELA TJONSHIP
b. ELEMENTS
I. LEGITIMATE JOB CONTRACTING ARRANGEMENT
II. LABOR-ONLY CONTRACTING ARRANGEMENT
Ill. OTHER IWCIT FORMS OF EMPLOYMENT
IV. EFFECTS OF LABOR-ONLY CONTRACTING AND ENGAGING IN OTHER
ILLICIT FORMS OF EMPLOYMENT
V. LEGITIMATE JOB CONTRACTING VS. LABOR-ONLY CONTRACTING
B. TERMINATION SY EMPLOYER .................................................................. 683
1. JUST CAUSES
I. SERIOUS MISCONDUCT
II. INSUBORDINATION
OR WILLFUL DISOBEDIENCE OF LAWFUL ORDERS
u.
Ill. GROSS AND HABITUAL NEGLECT OF DUTIES
JV. ABANDONMENT OF WORK
V. FRAUD
VI. WILLFUL BREACH OF TRUST AND CONFIDENCE
VJI. COMMISSION OF CRIME OR OFFENSE
VIII. OTHER ANALOGOUS CAUSES
2 AUTHORIZED CAUSES
I. INSTALLATION OF LABOR-SAVING DEVICE
II. REDUNDANCY
j Ill. RETRENCHMENT
I
 TABLE OF CONTENTS
xix
BAR REVIEWER 0111 LABOR lAW
xviii
Ill-A. REDUNDANCY VS. RETRENCHMENT VI. RETIREMENT OF WORKERS PAID BY RESULTS
JV. CLOSURE OR CESSATION OF BUSINESS OPERATIONS VII · RETIREMENT OF PART-TIME WORKERS
IV-A. RETRENCHMENT VS. CLOSURE OF BUSINESS VIU. RETIREMENT BENEFITS VS. SEPARATION PAY
V. DISEASE CHAPTER SEVEN
V-1. SUBSTANTIVE REQUISITES
V-2. PROCEDURAL REQUISITES 798
MANAGEMENT PREROGATIVE................................ ·....................................
3. DUE PROCESS
a. TWIN-NOTICE REQUIREMENT ADISCIPLINE
b. HEARING . a. TRANSFER OF EMPLOYEES
I. STANDARD SITUATIONS IN TERMINATION CASES .• C. PRODUCTIVITY STANDARD
II. VARIATIONS IN PROCEDURAL DUE PROCESS D.BONUS
II-A JUST CAUSE TERMINATION DUE PROCESS . E CHANGE OF WORKING HOURS
/1-B. AUTHORIZED CAUSE TERMINATION DUE PROCESS F: BONA FIDE OCCUPATIONAL QUALIFICATIONS
II-B-1. DUE PROCESS IN TERM/NATION DUE G. POST-EMPLOYMENT RESTRICTIONS
TO BUSINESS-RELATED CAUSES CHAPTER EIGHT
11-8-2. DUE PROCESS IN TERMINATION DUE
832
TO HEALTH-RELATED CAUSES JURISDICTION AND RELIEFS........ ·......... ·.......... ·· .. ·.......... ·· ......................... ·
11-C. DUE PROCESS IN OTHER FORMS OF EMPLOYMENT
Ill. INDEMNITY IN THE FORM OF NOMINAL DAMAGES PRELIMINARY CONSIDERATIONS
ON JURISDICTION AND REMEDIES
C. TERMINATION BY EMPLOYEE .................................................................. 763 A. LABOR ARBITER......·......... ,.....................................................................834
I. VOLUNTARY RESIGNATION I. JURISDICTION
(Termination by Employee ~hout Just cause) 1 JURISDICTION OVER ULP CASES
II. INVOLUNTARY RESIGNATION
2: JURISDICTION OVER ILLEGAL DISMISSAL CASES
(Termination by Employee lAnth Just cause)
3_ JURISDICTION OVER MONEY CLAIMS CASES
Ill. CONSTRUCTIVE DISMISSN.. 3-A JURISDICTION OF LABOR ARBITER
D. PREVENTIVE SUSPENSION........................................................................758 VS. DOLE REGIONAL DIRECTOR
E. RELIEFS FROM ILLEGAL DISMISSAL.. ........................................................760 4 JURISDICTION OVER CLAIMS FOR DAMAGES
I. REINSTATEMENT
5. JURISDICTION OVER LEGALITY OF STRIKES AND LOCKOUTS
6 JURISDICTION OVER CASES INVOLVING
II. SEPARATION PAY IN LIEU OF REINSTATEMENT • LEGISLATED WAGE INCREASES AND WAGE DISTORTION
Ill. BACKWAGES
IV. DISTINCTIONS (BETWEEN REINSTATEMENT, 7 JURISDICTION OVER ENFORCEMENT
. OR ANNULMENT OF COMPROMISE AGREEMENTS
SEPARATION PAY IN LIEU THEREOF AND BACKWAGES)
8 JURISDICTION OVER EXECUTION AND ENFORCEMENT
F. MONEY CLAIMS ARISING FROM EMPLOYER-EMPLOYEE . OF DECISIONS OF VOLUNTARY ARBITRATORS
RELATIONSHIP........................................................................................ ng 9. JURISDICTION OVER CASES OF OVERSEAS .
G. RETIREMENT .......................................................................................... 780 FILIPINO WORKERS (OFWs)
10. OTHER CASES OVER WHICH LABOR ARBITERS
I. COVERAGE
HAVE JURISDICTION
II. RETIREMENT AGE f 1. OTHER CASES OVER WHICH LABOR ARBITERS
Ill. YEARS OF SERVICE
HAVE NO JURISDICTION
I~ AMOUNTOFRETIREMENTPAY II. REQUIREMENTS to PERFECT APPEAL TO NLRC
V. RETIREMENT OF UNDERGROUND MINE WORKERS
 xx BAR REVIEWER. ON IABOR. l>.w
Ill. REINSTATEMENT PENDING APPEAL
IV. REVERSAL OF LABOR AREITER'S REINSTATEMENT ORDER
BY NLRC OR HIGHER COW?TS
1. ROQUERO DOCTRINE
2. GENUINO DOCTRINE
3. GARCIA DOCTRINE
B. NATIONAL LABOR RELATIONS COMMISSION (NLRC)
C. JUDICIAL REVIEW OF LABOR RULINGS
· JUDICIAL. REVIEW THROUGH ..................... ··:·· .................... ···· ·891
1 IV. OCCUPATIONAL SAFE7Y AND HEALTH VIOLATIONS
RULE 65 PETITION FOR CERnORARI
2. JUDICIAL REVIEW OF DEC.'SIONS OF VOLUNTARY ARBITRATORS
THROUGH RULE 43 APPE)L
l JUDICMLREWEWBYTHESUPREMECOURT
THROUGH RULE 45 PETITION FOR REVIEW ON CERTIORARI
D. BUREAU OF LABOR RELATIONS
I. JURISDICTION, IN GENERAL . ............................... ··· ..908
II. LABOR OFFICIALS HAVING JURISDICTION
OVER ARTICI.E 232 [226] C4SES
Ill. CASES PROVIDED UNDER ARTICLE 232 [22BJ
Ill-A INTER-UNION AND INTRA-UNION DISPUTES
lll-8. 'OTHER RELATED LABOR REI.A TIONS DISPUTES
IV. ORIGINAL AND EXCLUSIVE JURISDICTION
0F ~ED-ARBITERS, DOLE DIRECTORS AND BLR DIRECTOR
1· wlEDIA TOR-ARBITER'S
ORIGINAL AND EXCLUSIVE JURISDICTION
2· DOLE REGIONAL DIRECTOR'S
ORIGINAL AND EXCLUSIVE JURISDICTION
3. BlR DIRECTOR'S
· ORIGINAL AND EXCLUSIVE JURISDICTION
V. APPELLATE JUR/SDICnON OF THE BLR DIRECTOR
AS DISnNGUISHED FROM THAT OF THE DOLE SECRETARY
1. APPEALS FROM DECl90NS OF MED-ARBITERS
f =ti;:g~~=~f g:~GJ:;f 01REcrORs
VJ. REMEDIE~ FROM DEC/S/CNS OF ·
SLR DIRECTOR AND DOLE SECRETARY
RENDERED IN THEIR APPELLATE JURISDICTION
VII. ADMINISTRA nvE FUNCTIONS OF THE BLR AND LRDs
E. NATIONAL CONCILIATfON AND MEDIATION BOARD
1. NATURE OF PROCEEDINGS . ...................................935
2· CONCILIATION VS. MEDIA T'ON
TABlE OF CONTENTS xxi
3. PREVENTIVE MEDIATION
F. DOLE REGIONAL DIRECTORS...................................................................942
1. JURISDICTION
EXPANDED DISCUSSION OF IMPORTANT TOPICS
I. VISITOR/AL AND ENFORCEMENT POWERS
.............. ··· ..... BB9 II. LABOR STANDARDS ENFORCEMENT CASES
Ill. SMALL MONEY CLAIMS CASES
V. COMPLAINTS AGAINST PRIVATE RECRUITMENT
AND PLACEMENT AGENCIES (PRPAs) FOR LOCAL EMPLOYMENT
VI. CASES SUBMITTED TO REGIONAL DIRECTORS FOR VOLUNTARY
ARBITRATION IN THEIR CAPACITY AS EX-OFFICIO VOLUNTARY
ARBITRATORS (EVAs)
G. DOLE SECRETARY...................................................................................961
/. ORIGINAL AND EXCLUSIVE JURISDICTION
1. ASSUMPTION OF JURISDICTION AND CERT/FICA TION
BY DOLE SECRETARY OF NATIONAL INTEREST CASES
2. POWER TO SUSPEND EFFECTS OF TERMINATION
3. ADMINISTRATIVE INTERVENTION
FOR DISPUTE AVOIDANCE (AIDA)
4. VOLUNTARY ARBITRATION BY DOLE SECRETARY
II. APPELLATE JURISDICTION
II-A APPEALS'FROM DOLE REGIONAL DIRECTORS
/1-8. APPEALS FROM MED-ARBITERS
11-C. APPEALS FROM BLR DIRECTOR
11-D. APPEALS FROM POEA
H. GRIEVANCE MACHINERY..........................................................................976
I. GRIEVANCE AND GRIEVANCE PROCEDURE OR MACHINERY
II. INITIATION.OF GRIEVANCE THROUGH GRIEVANCE MACHINERY
Ill. DECISIONS OF GRIEVANCE COMMITTEE
I. VOLUNTARY.ARBITRATOR .......................................................................982
1. VOLUNTARY ARBITRATION IN GENERAL
2. JURISDICTION
I. JURISDICTION OVER UNRESOLVED GRIEVANCES
II. JURISDICTION OVER VIOLATION OF CBA
Ill. JURISDICTION OVER OTHER LABOR DISPUTES
. IV. JURISDICTION OVER NATIONAL INTEREST CASES
V. JURISDICTION OVER WAGE DISTORTION CASES
VI. JURISDICTION OVER DISPUTES INVOLVING
THE PRODUCTIVITY INCENTIVES PROGRAM
I
I
xxii BAR REVIEWER ON IABOR IAW

VII. SOME PRINCIPLES ON JURISDICTION

3. PROCEDURES
J. PRESCRIPTION OF ACTIONS ....................................................................997
1. MONEY CLAIMS
2. ILLEGAL DISMISSAL
3. UNFAIR LABOR PRACTICE
4. OFFENSES UNDER THE LABOR CODE
5. ILLEGAL RECRUITMENT ...

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