LABOR LAW AND

SOCIAL LEGISLATION

2021 GOLDEN NOTES

FACULTY OF CIVIL LAW
UNIVERSITY OF SANTO TOMAS
MANILA
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 ACADEMIC YEAR 2020-2021
CIVIL LAW STUDENT COUNCIL
LYODYCHIE Q. CAMARAO PRESIDENT
MARIA FRANCES FAYE R. GUTIERREZ VICE PRESIDENT INTERNAL
STEPHEN FLOYD A. GOPEZ VICE PRESIDENT EXTERNAL
KRYSTAL GAYLE R. DIGAY SECRETARY
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GIAN JUSTIN E. VERONA PUBLIC RELATIONS OFFICER
IRIS ABIGAIL C. PORAQUE CHIEF-OF-STAFF

UST BAR-OPS
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COMMITTEE
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PATRICIA MAE D. GUILLERMO SENIOR MEMBER
GLENN MATTHEW C. MANLAPID SENIOR MEMBER
CIARI T. MENDOZA SENIOR MEMBER
MARYLOU RENZI M. OLOTEO SENIOR MEMBER
LOUELLE JUDE B. QUE SENIOR MEMBER
JAMES ROSS L. TAN SENIOR MEMBER

ATTY. AL CONRAD B. ESPALDON

ADVISER
 ACADEMICS COMMITTEE 2021
MARIA FRANCES FAYE R. GUTIERREZ SECRETARY GENERAL
NATHAN RAPHAEL D.L. AGUSTIN ASST. SECRETARY GENERAL
JOHN EDWARD F. FRONDA EXECUTIVE COMMITTEE
ANGEL ISAH M. ROMERO EXECUTIVE COMMITTEE
KIRBY ANNE C. RENIA EXECUTIVE COMMITTEE
KAREN ABBIE C. ASPIRAS EXECUTIVE COMMITTEE
JOSE CHRISTIAN ANTHONY I. PINZON EXECUTIVE COMMITTEE
MARIA FRANCES FAYE R. GUTIERREZ LAYOUT ARTIST
CIARI T. MENDOZA COVER DESIGN ARTIST

LABOR LAW COMMITTEE 2021

KIARA LOUISE T. BALIWAG
LABOR LAW COMMITTEE HEAD

NICOLO B. BONGOLAN ASST. HEAD, LABOR STANDARDS

PATRICIA MAE H. CABAÑA ASST. HEAD, SOCIAL LEGISLATIONS
BEATRICE ROSE V. FANGON ASST. HEAD, LABOR RELATIONS

MEMBERS
BEYA MARIE F. AMARO
JEAN ALMIRA S. BULONG
CAITLIN P. CABURAO
MARY ANN G. CRISOSTOMO
JOHN MATTHEW O. CRUEL
CHRISTIAN JOHN A. DELA CRUZ
IVY MIKHAELA M. FERRIOLS
DANICE GO GAN
LOVELY MAE T. MACARAEG
GEORJHIA CZARINAH Q. MALALUAN
RIZA FLOR S. MOSQUERA
DHEZA C. PEÑARANDA
ANGELICA ROSCEA S. QUIAMBAO
PATRICIA ANN T. RECTO
MONIQUE E. RENS
KHARINA MAR V. SALVADOR
GIAN JUSTIN E. VERONA

ATTY. TEODORO LORENZO A. FERNANDEZ

Adviser
 ACADEMICS COMMITTEE 2020
AYA DOMINIQUE S. CAPARAS SECRETARY GENERAL
MARIA FRANCES FAYE R. GUTIERREZ ASST. SECRETARY GENERAL
RUTH MAE G. SANVICTORES EXECUTIVE COMMITTEE
NICOLE G. AMANTE EXECUTIVE COMMITTEE
JAYSON GABRIEL R. SORIANO EXECUTIVE COMMITTEE
CARA ANGELA N. FLORES EXECUTIVE COMMITTEE
IANA CASSANDRA Y. ESMILE EXECUTIVE COMMITTEE
AYA DOMINIQUE S. CAPARAS LAYOUT ARTIST
CIARI T. MENDOZA COVER DESIGN ARTIST

LABOR LAW COMMITTEE 2020

ALEXANDER J. CAIRO
LABOR LAW COMMITTEE HEAD

KIARA LOUISE T. BALIWAG ASST. HEAD, LABOR STANDARDS

LINCY JANE L. AGUSTIN ASST. HEAD, SOCIAL LEGISLATIONS
RUTH MAE G. SANVICTORES ASST. HEAD, LABOR RELATIONS
CHRISTIAN MIGUEL A. AUSTRIA ASST. HEAD, LABOR RELATIONS

MEMBERS
IANA YSABEL ABELEDA PATRICIA BAUTISTA
CHRISTIAN DANIELLE A. AUSTRIA RIZA FLOR S. MOSQUERA
EVIENNE MARIE CORDERO THERESIANA I. LLENOS
JYRUS CIMATU EUNICE BLANCHE L. MANDI
EDIELLE ANNE S. OBNAMIA GIAN JUSTIN E. VERONA

ATTY. TEODORO LORENZO A. FERNANDEZ

Adviser
 FACULTY OF CIVIL LAW
UNIVERSITY OF SANTO TOMAS

ACADEMIC OFFICIALS

ATTY. NILO T. DIVINA REV. FR. ISIDRO C. ABAÑO, O.P.

DEAN REGENT

ATTY. ARTHUR B. CAPILI

FACULTY SECRETARY

ATTY. ELGIN MICHAEL C. PEREZ

LEGAL COUNSEL
UST CHIEF JUSTICE ROBERTO CONCEPCION LEGAL AID CLINIC

JUDGE PHILIP A. AGUINALDO

SWDB COORDINATOR

LENY G. GADIANA, R.G.C.

GUIDANCE COUNSELOR
 OUR DEEPEST APPRECIATION TO OUR
MENTORS AND INSPIRATION

ATTY. ARNOLD E. CACHO

ATTY. BENEDICT G. KATO

ATTY. ROLAND L. MARQUEZ

DEAN SALVADOR A. POQUIZ

ATTY. CESAR E. SANTAMARIA, JR.

COMM. LEONARD VINZ OCHOA IGNACIO

ATTY. IRVIN JOSEPH FABELLA

For being our guideposts in understanding the intricate sphere of Labor Law and
Social Legislation.
– Academics Committee 2021
 DISCLAIMER

THE RISK OF USE OF THIS BAR

REVIEW MATERIAL SHALL BE
BORNE BY THE USER
 TABLE OF CONTENTS

LABOR LAW ............................................................................................................................................................ 1

CONSTRUCTION IN FAVOR OF LABOR ............................................................................................................. 2
SECURITY OF TENURE ......................................................................................................................................... 4
SOCIAL JUSTICE ..................................................................................................................................................... 4
OTHER CONSTITUTIONAL PROVISIONS ......................................................................................................... 6
NEW CIVIL CODE AND OTHER LAWS ............................................................................................................... 8
DECLARATION OF BASIC POLICY .................................................................................................................... 10
RECRUITMENT AND PLACEMENT ................................................................................................................... 12

RECRUITMENT OF LOCAL AND MIGRANT WORKERS................................................................................ 12

PROHIBITED ACTIVITIES IN RECRUITMENT/PLACEMENT .................................................................................... 19
ILLEGAL RECRUITMENT ............................................................................................................................................................ 22
ELEMENTS OF ILLEGAL RECRUITMENT............................................................................................................................ 22
TYPES OF ILLEGAL RECRUITMENT ...................................................................................................................................... 22
ILLEGAL RECRUITMENT vs. ESTAFA ................................................................................................................................... 24
LIABILITIES....................................................................................................................................................................................... 25
LOCAL RECRUITMENT AGENCY ............................................................................................................................................. 25
FOREIGN EMPLOYER ................................................................................................................................................................... 25
THEORY OF IMPUTED KNOWLEDGE ................................................................................................................................... 25
SOLIDARY LIABILITY ................................................................................................................................................................... 26
PRETERMINATION OF CONTRACT OF MIGRANT WORKER .................................................................................... 26
DIRECT HIRING ............................................................................................................................................................................... 27

EMPLOYMENT OF NON-RESIDENT ALIENS................................................................................................... 31

LABOR STANDARDS ........................................................................................................................................... 34

CONDITIONS OF EMPLOYMENT ...................................................................................................................... 34

COVERAGE/EXCLUSIONS........................................................................................................................................................... 34
HOURS WORKED ............................................................................................................................................................................ 38
MEAL PERIODS................................................................................................................................................................................ 42
NIGHT SHIFT DIFFERENTIAL .................................................................................................................................................. 43
OVERTIME WORK, OVERTIME PAY ...................................................................................................................................... 44
REST PERIODS ................................................................................................................................................................................. 49
HOLIDAY PAY ................................................................................................................................................................................... 51
13th MONTH PAY ........................................................................................................................................................................... 56
SERVICE CHARGES ........................................................................................................................................................................ 61

WAGES.................................................................................................................................................................... 62
FACILITIES vs. SUPPLEMENTS ................................................................................................................................................ 64
NON-DIMINUTION OF BENEFITS .......................................................................................................................................... 69
PAYMENT OF WAGES .................................................................................................................................................................. 72
PROHIBITIONS REGARDING WAGES ................................................................................................................................... 74
WAGE DISTORTION/RECTIFICATION ................................................................................................................................. 78

LEAVES ................................................................................................................................................................... 81
SERVICE INCENTIVE LEAVE (SIL) ......................................................................................................................................... 81
MATERNITY LEAVE ...................................................................................................................................................................... 82
PATERNITY LEAVE ....................................................................................................................................................................... 87
PARENTAL LEAVE/ SOLO PARENT’S WELFARE ACT (R.A. 8972) ........................................................................ 88
SPECIAL LEAVE BENEFIT FOR WOMEN............................................................................................................................. 89
LEAVES FOR VICTIMS OF VIOLENCE AGAINST WOMEN and their CHILDREN (R.A. 9262) ..................... 91
SEXUAL HARASSMENT IN THE WORK ENVIRONMENT ............................................................................. 92
SAFE SPACES ACT .......................................................................................................................................................................... 92
ANTI-SEXUAL HARASSMENT ACT......................................................................................................................................... 94

SPECIAL GROUP OF EES ..................................................................................................................................... 98

WOMEN WORKERS ....................................................................................................................................................................... 98
DISCRIMINATORY ACTS AGAINST WOMEN EE .............................................................................................................. 98
STIPULATION AGAINST MARRIAGE..................................................................................................................................... 99
PROHIBITED ACTS ......................................................................................................................................................................100
EMPLOYMENT OF MINORS .................................................................................................................................................... 101
BATAS KASAMBAHAY............................................................................................................................................................... 106
EMPLOYMENT OF HOME WORKERS ................................................................................................................................ 112
APPRENTICES AND LEARNERS ........................................................................................................................................... 115
RIGHTS OF PERSONS WITH DISABILITY ........................................................................................................................ 120
PROHIBITIONS ON DISCRIMINATION AGAINST PERSONS WITH DISABILITY ............................................120
INCENTIVES FOR ERS ................................................................................................................................................................121

POST-EMPLOYMENT ........................................................................................................................................123

EMPLOYER-EMPLOYEE RELATIONSHIP ......................................................................................................123

TESTS OF EMPLOYMENT RELATIONSHIP...................................................................................................................... 124
KINDS OF EMPLOYMENT ........................................................................................................................................................ 128
REGULAR EMPLOYMENT.........................................................................................................................................................128
PROJECT EMPLOYMENT ..........................................................................................................................................................132
SEASONAL EMPLOYMENT ......................................................................................................................................................134
CASUAL EMPLOYMENT ............................................................................................................................................................135
FIXED TERM EMPLOYMENT ..................................................................................................................................................136
PROBATIONARY EMPLOYMENT ..........................................................................................................................................138
SECURITY GUARDS (D.O. NO. 150-16)...............................................................................................................................143
FLOATING/ RESERVED STATUS (D.O. No. 150-16, Sec. 10.3) ...............................................................................144
CONTRACTING OR SUBCONTRACTING ........................................................................................................................... 144
“LABOR-ONLY” CONTRACTING ........................................................................................................................................... 146
ESSENTIAL ELEMENTS OF LABOR-ONLY CONTRACTING ......................................................................................146

TERMINATION BY EMPLOYER .......................................................................................................................151

JUST CAUSE .................................................................................................................................................................................... 153
AUTHORIZED CAUSES .............................................................................................................................................................. 156
HEARING ..........................................................................................................................................................................................179

TERMINATION BY EMPLOYEE .......................................................................................................................184

RESIGNATION vs. CONSTRUCTIVE DISMISSAL............................................................................................................ 185

RELIEFS FOR ILLEGAL DISMISSAL ................................................................................................................187

PREVENTIVE SUSPENSION..............................................................................................................................193
RETIREMENT ......................................................................................................................................................194
MANAGEMENT PREROGATIVE ......................................................................................................................201
RIGHT TO DISCIPLINE ......................................................................................................................................202
RIGHT TO TRANSFER OF EMPLOYEES .........................................................................................................202
PRODUCTIVITY STANDARD ...........................................................................................................................204
GRANT OF BONUS .............................................................................................................................................204
CHANGE OF WORK HOURS .............................................................................................................................205
BONA FIDE OCCUPATIONAL QUALIFICATION ...........................................................................................206
POST-EMPLOYMENT BAN ...............................................................................................................................206
SOCIAL AND WELFARE LEGISLATION..........................................................................................................208
COVERAGE ...................................................................................................................................................................................... 210
EXCLUSIONS FROM COVERAGE ........................................................................................................................................... 212
BENEFITS ........................................................................................................................................................................................ 213
UNEMPLOYMENT BENEFIT ................................................................................................................................................... 218
DEPENDENTS AND BENEFICIARIES.................................................................................................................................. 219

GSIS LAW (R.A. 8291).......................................................................................................................................223

COVERAGE ...................................................................................................................................................................................... 228
EXCLUSIONS FROM COVERAGE ........................................................................................................................................... 228
DEPENDENTS AND BENEFICIARIES.................................................................................................................................. 229
BENEFITS ........................................................................................................................................................................................ 229

EMPLOYEES’ COMPENSATION PROGRAM ..................................................................................................237

DISABILITY BENEFIT ................................................................................................................................................................ 241
DEATH BENEFITS ....................................................................................................................................................................... 243

POEA STANDARD EMPLOYMENT CONTRACT............................................................................................245

DEATH BENEFITS ....................................................................................................................................................................... 252

SOLO PARENTS WELFARE ACT………………………………………………………………………………………………..256

BENEFITS…………………………………………………………………………………………………………………………………….257

AGRARIAN RELATIONS……………………………………………………………………………………………………………259

UNIVERSAL HEALTH CARE LAW………………………………………………………………………………………………260

LABOR RELATIONS ...........................................................................................................................................263

RIGHT TO SELF-ORGANIZATION ...................................................................................................................263

COVERAGE ...................................................................................................................................................................................... 265
MANAGERIAL EMPLOYEES .................................................................................................................................................... 266
COMMINGLING AND MIXTURE OF MEMBERSHIP ...................................................................................................... 269

BARGAINING UNIT ............................................................................................................................................276

BARGAINING REPRESENTATIVE ...................................................................................................................279

RIGHTS OF LABOR ORGANIZATION .............................................................................................................291

UNION DUES AND SPECIAL ASSESSMENTS ................................................................................................................... 291
AGENCY FEE .................................................................................................................................................................................. 292
COLLECTIVE BARGAINING ..................................................................................................................................................... 293

UNFAIR LABOR PRACTICE ..............................................................................................................................297

NATURE ........................................................................................................................................................................................... 297
ASPECTS OF ULP.......................................................................................................................................................................... 297
ULP COMMITTED BY EMPLOYERS (ULP-ER)................................................................................................................ 297
ULP OF LABOR ORGANIZATIONS (ULP-LO) .................................................................................................................. 302

PEACEFUL CONCERTED ACTIVITIES ............................................................................................................306

STRIKE .............................................................................................................................................................................................. 306
PICKETING ...................................................................................................................................................................................... 309
LOCKOUT ......................................................................................................................................................................................... 310
ASSUMPTION OF JURISDICTION BY THE DOLE SECRETARY................................................................................ 318
INJUNCTION ................................................................................................................................................................................... 332

JURISDICTION AND REMEDIES ......................................................................................................................337

LABOR ARBITER ................................................................................................................................................337
NATIONAL LABOR RELATIONS COMMISSION............................................................................................346
COURT OF APPEALS..........................................................................................................................................353
SUPREME COURT ..............................................................................................................................................354
BUREAU OF LABOR RELATIONS ....................................................................................................................355
NATIONAL CONCILIATION AND MEDIATION BOARD ..............................................................................357
DOLE REGIONAL DIRECTOR ...........................................................................................................................360
DOLE SECRETARY .............................................................................................................................................361
 Labor Law and Social Legislation

LEGEND LABOR LAW

BFOQ - Bona Fide Occupational Qualification
FUNDAMENTAL PRINCIPLES AND POLICIES
BLR - Bureau of Labor Relations
CB - Collective Bargaining
CBA - Collective Bargaining Agreement
LABOR LAW
CE - Certification Election
DOLE - Department of Labor and Employment Labor

Ee - Employee It is the exertion by human beings of physical or

Er - Employer mental efforts, or both, towards the production
IRR - Implementing Rules and Regulations of goods and services. (Poquiz, 2012, p. 1)

LA - Labor Arbiter The State affirms labor as a primary social

LC - Labor Code economic force. It shall protect the rights of
LLO - Legitimate Labor Organization workers and promote their welfare. (1987
LOA - Leave of Absence Constitution, Art. II, Sec. 18)
NCMB - National Conciliation and Mediation
Board Labor Law
NLRC - National Labor Relations Commission
The law that governs the rights and duties of the
NSD - Night Shift Differential employer (Er) and employees (Ee) as to:
OFW - Overseas Filipino Worker
OT - Overtime 1. The terms and conditions of employment,
PCE - Petition for Certification Election and
2. Labor disputes arising from collective
POEA - Philippine Overseas Employment bargaining or other concerted activities
Administration respecting such terms and conditions.
RAB - Regional Arbitration Branch
RD - Regional Director Labor Legislation
RH - Regular Holiday
RTWPB - Regional Tripartite Wages and It consists of statutes, regulations and
Productivity Boards jurisprudence governing the relations between
RW - Regular Wage capital and labor, by providing for certain
RWD - Regular Working Days employment standards and a legal framework
SEBA - Sole and Exclusive Bargaining Agent for negotiating, adjusting and administering
those standards and other incidents of
SEnA - Single Entry Approach employment. (Azucena, Vol. 1, 2016, p. 7)
SIL - Service Incentive Leave
SOLE - Secretary of Labor and Employment Classification of Labor Laws

ULP - Unfair Labor Practice 1. Labor Standards – The minimum

UT - Undertime requirements prescribed by existing laws,
VA - Voluntary Arbitrator rules and regulations as to the terms and
VR - Voluntary Recognition conditions of employment relating to wages,
WD - Wage Distortion hours of work, cost-of-living allowance, and
WRD - Weekly Rest Day other monetary and welfare benefits,
including occupational, safety and health
standards. (Maternity Children’s Hospital v.
Secretary of Labor, G.R. No. 78909, June 30,
1989)

e.g., 13th month pay

2. Labor Relations – Defines and regulates the

status, rights and duties, and the
institutional mechanisms that govern the

1
 Fundamental Principles and Policies

individual and collective interactions of Ers, In case of doubt, all labor legislation and all labor
Ees or their representatives. contracts shall be construed in favor of the
safety and decent living for the laborer. (NCC,
e.g., Collective Bargaining Negotiations Art. 1702)

Social Legislation In case of doubt in the interpretation or

application of laws, it is presumed that the
All laws passed by the State to promote public lawmaking body intended right and justice to
welfare. Social legislation involves laws that prevail. (NCC, Art. 10)
provide specific type of protection or benefits to
society or segments thereof in furtherance of Protection to Labor
social justice. It includes statutes intended to
enhance the welfare of the people even where When the conflicting interests of labor and
there is no Er-Ee relationship. capital are weighed on the scales of social
justice, the heavier influence of the latter must
e.g., GSIS Law, SSS Law, PhilHealth, Agrarian be counter-balanced by the sympathy and
Laws compassion the law must accord the
underprivileged worker.
Labor Legislation vs. Social Legislation
This is in line with the express mandate of the
Labor Legislation Social Legislation Labor Code and the principle that those with less
Governs effects of in life should have more in law. (Eastern
Directly affects Shipping Lines v. POEA, G.R. No. 76633, Oct. 18,
employment
employment 1988)
(e.g., compensation
(e.g., wages)
for injuries)
It is a time-honored rule that in controversies
Refers to labor between a laborer and his master, doubts
statutes like Labor Refers to Social reasonably arising from the evidence, or in the
Relations Law and Security Laws interpretation of agreements and writing, should
Labor Standards Law be resolved in the former’s favor. The policy is to
Focuses on the extend the doctrine to a greater number of
Focuses on the rights
particular part of the employees who can avail themselves of the
of the worker in the
society or segment benefits under the law, which is in consonance
workplace
thereof with the policy of the State to give maximum aid
and protection to labor. (Lepanto Consolidated
NOTE: All labor laws are social legislation, but Mining Co. v. Moreno Dumapis, et. al., G.R. No.
not all social legislation is labor law. Social 163210, Aug. 13, 2008)
legislation as a concept is broader while labor
laws are narrower. (Duka, Labor Laws and Social We need to protect labor because there is no
Legislation, A Barrister’s Companion, 2016, p. 2) doubt that the employer stands on higher
footing than the employee. First of all, there is
SOURCES OF LABOR LAWS greater supply than demand for labor. Secondly,
the need for employment by labor comes from
1. Constitution; vital and even desperate, necessity.
2. Labor Code and other related special Consequently, the law must protect labor, at
legislation (including their respective IRR); least, to the extent of raising him to equal footing
3. Contracts; in bargaining relations with capital and to shield
4. CBA; him from abuses brought about by the necessity
5. Company practices; and for survival. (Daniel Sanchez et. al. v. Harry Lyons
6. Company policies; Construction, Inc., et. al., G.R. No. L-2779, Oct. 18,
1950)
CONSTRUCTION IN FAVOR OF LABOR
Q: Several employees of Novo Jeans filed a
All doubts in the implementation and case of illegal dismissal against Novo Jeans.
interpretation of the provisions of this Code, However, Novo jeans argued that they were
including its implementing rules and able to present the First Notice of
regulations, shall be resolved in favor of labor. Termination of Employment sent to
(LC, Art. 4) employees, asking them to explain their

UNIVERSITY OF SANTO TOMAS 2

2021 GOLDEN NOTES
 Labor Law and Social Legislation
sudden absence from work without proper
authorization. In contrast, the employees
alleged that there were only sample letters of
the Notices, and there was no evidence to
prove that the Notices were sent to them at
their last known addresses. They insist that if
doubt exists between the evidence presented
by the employer and the evidence presented
by the employees, the doubt must be
resolved in favor of the employees,
consistent with the Labor Code's policy to
afford protection to labor. Are the employees
correct?
A: YES. Under the law, where both parties in a
labor case have not presented substantial
evidence to prove their allegations, evidence will
be considered in equipoise. In such a case, the
scales of justice are tilted in favor of labor.
(Charlie Hubilla et al. v. HSY Marketing Ltd., Co.,
et al. G.R. No. 207354, Jan. 10, 2018, as penned by
J. Leonen)
Compassionate Justice
The social justice policy mandates a
compassionate attitude towards the working
class in its relation to management. In calling for
protection to labor, the Constitution does not
condone wrongdoing by the employee.
However, it urges a moderation of the sanctions
that maybe applied to him in the light of the
many disadvantages that weigh heavily on him
like an albatross on his neck.
Labor Law determinations are not only
secundum rationem (according to reason) but
also secundum caritatem (according to charity).
(Zenaida Paz v. Northern Tobacco Redrying Co.,
Inc., G.R. No. 199554, Feb. 18, 2015)
It is disregarding rigid rules and giving due
weight to all equities of the case. (Gandara Mill
Supply and Milagros Sy v. NLRC and Silvestre
Germano, G.R. No. 126703, Dec. 29, 1998)
The law must protect labor, at least to the extent
of raising him to equal footing in bargaining
relations with capital and to shield him from
abuses brought about by the necessity for
survival. (Azucena, Vol. 1, 2016, p. 26)
Q: What is the quantum of evidence required
in labor cases? (2012 BAR)
A: In labor cases, as in other administrative and
quasi-judicial proceedings, the quantum of proof
3
necessary is substantial evidence, or such
amount of relevant evidence which a reasonable
mind might accept as adequate to justify a
conclusion. (Valencia v. Classique Vinyl Products
Corporation, G.R. No. 206390, Jan. 30, 2017)
Burden of Proof
In determining the employee’s entitlement to
monetary claims, the burden of proof is shifted
from the employer or the employee, depending
on the monetary claim sought. (Minsola v. New
City Builders, Inc., G.R. No. 207613, Jan. 31, 2018)
In an illegal dismissal case, the employee has the
burden of proof to first show that he was indeed
dismissed from employment. “Before the
employer must bear the burden of proving that
the dismissal was legal, the employee must first
establish by substantial evidence the fact of his
dismissal from service. (Reyes v. Global Beer
Below Zero, Inc., G.R. No. 222816, Oct. 4, 2017)
Limitation to Protection of Labor
1. Recognition of management rights. The
law also recognizes that management has
rights which are also entitled to respect
and enforcement in the interest of fair play.
(St. Luke’s Medical Center Ees Ass’n v. NLRC,
G.R. No. 162053, March 7, 2007)
2. Principle of Non-Oppression. Neither
capital nor labor shall act oppressively
against the other, or impair the interest or
convenience of the public. (NCC, Art. 1701)
The protection to labor clause in the
Constitution is not designed to oppress or
destroy capital. (Capili v. NLRC, G.R. No. 117378,
March 26, 1997)
The law in protecting the rights of the
employees authorizes neither oppression nor
self-destruction of the employer. (Pacific
Mills Inc. v. Alonzo, G.R. No. 78090, July 26, 1991)
It should be made clear that when the law tilts
the scale of justice in favor of labor, it is a
recognition of the inherent economic inequality
between labor and management. The intent is to
balance the scale of justice; to put the two
parties on relatively equal positions. There may
be cases where the circumstances warrant
favoring labor over the interests of management,
but never should the scale be so tilted if the
result is an injustice to the employer. Justitia
nemini neganda est (justice is to be denied to
 Fundamental Principles and Policies
none). (Philippine Geothermal, Inc. v. NLRC and
Alvarez, G.R. No. 106370, Sept. 8, 1994)
SECURITY OF TENURE
In cases of regular employment, the employer
shall not terminate the services of an employee
except for a just cause or when authorized by
this Title. An employee who is unjustly
dismissed from work shall be entitled to
reinstatement without loss of seniority rights
and other privileges and to his full backwages,
inclusive of allowances, and to his other benefits
or their monetary equivalent computed from the
time his compensation was withheld from him
up to the time of his actual reinstatement. (LC,
Art. 279)
Security of tenure is a right of paramount value.
Precisely, it is given specific recognition and
guaranteed by the Constitution no less. The State
shall afford protection to labor and "shall assure
the rights of workers to. . .security of tenure," so
runs the Constitutional mandate. (Art. II, Sec. 9)
(City Service Corp. Workers Union v. City Service
Corporation, G.R. No. 59407, March 29, 1985)
SOCIAL JUSTICE
The State shall promote a just and dynamic
social order that will ensure the prosperity and
independence of the nation and free the people
from poverty through policies that provide
adequate social services, promote full
employment, a rising standard of living, and an
improved quality life for all. (1987 Constitution,
Art. II, Sec. 9)
The State shall promote social justice in all
phases of national development. (1987
Constitution, Art. II, Sec. 10)
The Aim of Labor Law is Social Justice
Social justice is “neither communism, nor
despotism, nor atomism, nor anarchy,” but the
humanization of laws and the equalization of
social and economic forces by the State so that
justice in its rational and objectively secular
conception may at least be approximated.
Social Justice means the promotion of the
welfare of all the people, the adoption by the
government of measures calculated to insure
economic stability of all the competent elements
of society, through the maintenance of a proper
economic and social equilibrium in the
interrelations of the members of the community,
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
constitutionally, through the adoption of
measures legally justifiable, or extra-
constitutionally, through the exercise of powers
underlying the existence of all governments on
the time-honored principle of salus populi est
suprema lex. (Calalang v. Williams, G.R. No.
47800, Dec. 2, 1940)
The promotion of social justice shall include the
commitment to create economic opportunities
based on freedom of initiative and self-reliance.
(1987 Constitution, Art. XIII, Sec. 2)
Limitations in Invoking the Principle of
Social Justice
1. Social justice does not champion division of
property or equality of economic status.
(Guido v. Rural Progress Adm, L-2089, Oct. 31,
1949) It should not tolerate usurpation of
property, public or private.
2. May only protect the laborers who come to
court with clean hands (Phil. Long Distance
Telephone Co. v. NLRC, G.R. No. 80609, Aug.
23, 1988) and their motives blameless.
(Gustilo v. Wyeth Phils., G.R. No. 149629, Oct.
4, 2004)
3. Never results in an injustice or oppression
of the employer. (Phil. Geothermal Inc. v.
NLRC, G.R. No. 106370, Sept. 8, 1994)
4. If it is used to shield wrongdoings, it cannot
be permitted to be the refuge of scoundrels.
(PNCC v. NLRC, G.R. No. 83320, Feb. 9, 1989)
Q: May social justice as a guiding principle in
labor law be so used by the courts in
sympathy with the working man if it collides
with the Equal Protection clause of the
Constitution? (2003 BAR)
A: YES. The State is bound under the
Constitution to afford full protection to Labor
and when conflicting interests collide and they
are to be weighed on the scales of social justice,
the law should accord more sympathy and
compassion to the less privileged workingman.
(Fuentes v. NLRC, G.R. No. 110017, Jan. 2, 1997)
However, it should be borne in mind that social
justice ceases to be an effective instrument for
the “equalization of the social and economic
forces” by the State when it is used to shield
wrongdoing. (Corazon Jamer v. NLRC, G.R. No.
112630, Sept. 5, 1997)
4
 Labor Law and Social Legislation
Although the policy of the state is to rule in favor
of labor in light of the social justice provisions
under the Constitution, the Court cannot unduly
trample upon the rights of management, which
are likewise entitled to respect in the interest of
fair play [The Philippine Geothermal, Inc.
Employees Union v. Unocal Philippines, Inc. (now
known as Chevron Geothermal Philippines
Holdings, Inc.) G.R. No. 190187, Sept. 28, 2016]
POLICE POWER
While social justice is the aim of labor laws, their
basis is the police power of the State.
Police power is the inherent power of the
Government to enact laws, within constitutional
limits, to promote the order, safety, health,
morals, and general welfare of society. (People v.
Vera Reyes, G.R. No. L-45748, April 5, 1939)
State legislatures may enact laws for the
protection of the safety and health of employees
as an exercise of the police power. (Azucena, Vol.
1, 2016, p. 12)
The right of every person to pursue a business,
occupation, or profession is subject to the
paramount right of the government as a part of
its police power to impose such restrictions and
regulations as the protection of the public may
require. (Ibid.)
Police power itself has to respect the
Constitution. The state, when providing by
legislation for the protection of the public health,
the public morals, or the public safety, is subject
to and is controlled by the paramount authority
of the Constitution of the state, and will not be
permitted to violate rights secured or
guaranteed by that instrument or interfere with
the execution of the powers and rights
guaranteed to the people under their law – the
Constitution. (People v. Pomar, G.R. No. L-220088,
Nov. 3, 1924)
Called "the most essential, insistent and
illimitable" of the powers of the State, police
power is the "authority to enact legislation that
may interfere with personal liberty or property
to promote the general welfare." In the negative,
it is the "inherent and plenary power in the State
which enables it to prohibit all that is hurtful to
the comfort, safety, and welfare of society." x x x
Laws requiring the payment of minimum wage,
security of tenure, and traffic safety have been
declared not violative of due process for being
valid police power legislations. In these cases,
5
the test or standard is whether the law is
reasonable. The interests of the State to promote
the general welfare, on the one hand, and the
right to property, on the other, must be
balanced. (PBOAP, SO-LUBOA, INTERBOA,
CSJDMBOA v. DOLE and LTFRB, G.R. No. 202275,
July 17, 2018)
CONTRACT OF LABOR
It is a consensual, nominate, principal, and
commutative contract whereby one person,
called the employer, compensates another,
called the laborer, worker or employee, for the
latter’s service.
It is a relationship impressed with public
interest in keeping with our constitutional policy
of social justice.
Labor Contracts are Subject to Police Power
of the State
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
“afford full protection to labor.” Thus, labor
contracts 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. (Leyte Geothermal Power
Progressive Employees Union-ALU-TUCP v.
Philippine National Oil Company-Energy Dev’t.
Corp., G.R. No. 170351, March 30, 2011)
The relations between capital and labor are not
merely contractual. They are so impressed with
public interest that labor contracts must yield to
the common good. Therefore, such contracts are
subject to the special laws on labor unions,
collective bargaining, strikes and lockouts,
closed shop, wages, working conditions, hours of
labor and similar subjects. (NCC, Art. 1700)
Prohibitions on Contract of Labor:
1. No law impairing the obligation of
contracts shall be passed. (1987
Constitution, Art. III, Sec. 10)
2. No involuntary servitude in any form shall
exist except as a punishment for a crime
whereof the party shall have been duly
convicted. [1987 Constitution, Art. III, Sec.
18(2)]
3. No contract which practically amounts to
involuntary servitude, under any guise
whatsoever, shall be valid. (NCC, Art. 1703)
 Fundamental Principles and Policies
The CBA Operating as a Source of Labor Law
The CBA is the norm of conduct between ER and
EEs and compliance therewith is mandated by
the express policy of the law. (DOLE Philippines,
Inc., v. PAMAO-NFL, G.R. No. 146650, Jan. 13,
2003, in citing E. Razon, Inc. v. Secretary of Labor
and Employment, G.R. No. 85867, May 13, 1993)
Past Company Practices as a Source of Labor
Law
The following requisites must be present:
1. Voluntary institution by the employer
without any legal compulsion;
2. Should have been done over a long period
of time; and
3. Must be shown to have been consistent and
deliberate.
NOTE: No passage of time is required for a
company policy to become a source of labor law.
OTHER CONSTITUTIONAL PROVISIONS
Constitutional Mandates on Labor Law
1. Article II – Declaration of Principles and
State Policies
Sec. 9 – The State shall promote a just and
dynamic social order that will ensure the
prosperity and independence of the nation
and free the people from poverty through
policies that provide adequate social
services, promote full employment, a rising
standard of living, and an improved quality
of life for all.
Sec. 10 – The State shall promote social
justice in all phases of national
development.
Sec. 14 - The State recognizes the role of
women in nation-building, and shall ensure
the fundamental equality before the law of
women and men.
Law: RA 9710 – Magna Carta of Women
Sec. 18 – The State affirms labor as a
primary social economic force. It shall
protect the rights of workers and promote
their welfare.
Sec. 20 – The State recognizes the
indispensable role of the private sector,
encourages private enterprise and provides
incentives to needed investments.
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
2. Article III – Bill of Rights
Sec. 1 - No person shall be deprived of life,
liberty, or property without due process of
law, nor shall any person be denied the
equal protection of the laws.
Sec. 4 – No law shall be passed abridging the
freedom of speech, of expression, or of the
press, or the right of the people peaceably to
assemble and petition the government for
redress of grievances.
Sec. 8 – The right of the people, including
those employed in the public and private
sectors, to form unions, associations, or
societies for purposes not contrary to law
shall not be abridged.
Law: EO No. 180 S. 1987 providing
guidelines for the exercise of the right to
organize of government employees, creating
a Public Sector Labor Management Council
and for other purposes.
Sec. 10 – No law impairing the obligation of
contracts shall be passed.
Sec. 16 – All persons shall have the right to a
speedy disposition of their cases before all
judicial, quasi-judicial or administrative
bodies.
Sec. 18(2) – No involuntary servitude in any
form shall exist except as a punishment for a
crime whereof the party shall have been
duly convicted.
3. Article XIII – Social Justice and Human
Rights
Sec. 2 – The promotion of social justice shall
include the commitment to create economic
opportunities based on freedom of initiative
and self-reliance.
Sec. 3 – The State shall afford full protection
to labor, local and overseas, organized and
unorganized, and promote full employment
and equality of employment opportunities
for all.
It shall guarantee the rights of all workers to
self-organization, collective bargaining and
negotiations, and peaceful concerted
activities, including the right to strike in
accordance with law. They shall be entitled
to security of tenure, humane conditions of
6
 Labor Law and Social Legislation
work, and a living wage. They shall also
participate in policy and decision-making
processes affecting their rights and benefits
as may be provided by law
The State shall promote the principle of
shared responsibility between workers and
employers and the preferential use of
voluntary modes in settling disputes,
including conciliation, and shall enforce
their mutual compliance therewith to foster
industrial peace.
The State shall regulate the relations
between workers and employers,
recognizing the right of labor to its just
share in the fruits of production and the
right of enterprises to reasonable returns to
investments, and to expansion and growth.
Sec. 13 – The State shall establish a special
agency for disabled persons for their
rehabilitation, self-development and self-
reliance and their integration into the
mainstream of society.
Law: RA 7277 – Magna Carta for Disabled
Person
Sec. 14 – The State shall protect working
women by providing safe and healthful
working conditions, taking into account
their maternal functions, and such facilities
and opportunities that will enhance their
welfare and enable them to realize their full
potential in the service of the nation.
Law: RA 9710 – Magna Carta of Women
Q: Are the constitutional provisions on labor
self-executing?
A: The constitutional mandates of protection to
labor and security of tenure may be deemed as
self-executing in the sense that these are
automatically acknowledged and observed
without need for any enabling legislation.
However, to declare that the constitutional
provisions are enough to guarantee the full
exercise of the rights embodied therein, and the
realization of ideals therein expressed, would be
impractical, if not unrealistic. The espousal of
such view presents the dangerous tendency of
being overbroad and exaggerated. (Agabon v.
NLRC, G.R. No. 158693, Nov. 17, 2004)
Basic Rights of Workers Guaranteed by the
Constitution
7
1. Security of tenure;
2. Living wage;
3. Share in the fruits of production;
4. Just and humane working conditions;
5. Self-organization;
6. Collective bargaining;
7. Collective negotiations;
8. Engage in peaceful concerted activities,
including the right to strike; and
9. Participate in policy and decision-making
processes. (1987 Constitution, Art. XIII, Sec.
3)
Rights of Management
It should not be supposed that every labor
dispute will be automatically decided in favor of
labor. Management also has its own rights which
are entitled to respect and enforcement in the
interest of simple fair play. (Sosito v. Aguinaldo
Development Corporation, G.R. No. 48926, Dec. 24,
1987)
The Secretary of Labor is duly mandated to
equally protect and respect not only the laborer,
but also the management.
Fundamental Management Rights (SPIT)
1. Right to Select employees
2. Right to Prescribe rules
3. Right to reasonable return on Investments
4. Right to Transfer or discharge employees
Management has the right to to regulate all
aspects of employment which include, among
others, work assignment, working methods, and
place and manner of work. (Marsman & Co., Inc.
v. Rodil Sta. Rita, G.R. No. 194765, April 23, 2018)
Restrictions to Management Rights
Management rights are never absolute. The
Constitution says that the right to own and
operate economic enterprises is subject to the
duty of the State to promote distributive justice
and to intervene when the common good so
demands.
Management rights are subject to limitations
provided by:
1. Law;
2. Contract, whether individual or collective;
and
3. General principles of fair play and justice.
 Fundamental Principles and Policies
Balancing of Rights between Labor and
Capital
It should not be deduced that the basic policy is
in favor of labor to prejudice capital. The basic
policy is to balance or to coordinate the rights
and interests of both workers and employers.
(Azucena, Vol. 1, 2016, p. 27)
Arts. 3 and 4 of the LC explicitly recognizes
shared responsibility of the employers and
workers and the right of enterprise to
reasonable returns on investment and to
expansion and growth. (Ibid.)
In employment bargaining, there is no doubt
that the employer stands on higher footing than
the employee. The law must protect labor, at
least, to the extent of raising him to equal footing
in bargaining relations with capital and to shield
him from abuses brought about by the necessity
for survival. (Sanchez, et al v. Harry Lyons
Construction Inc., et al, G.R. No. L-2799, Oct. 19,
1950)
Yet, the Constitution has not overlooked the
rights of capital. The State is mandated to
regulate the relations between workers and
employers.
While labor is entitled to a just share in the
fruits of production, the enterprise has the
right not only to reasonable returns on
investments, but also to expansion and
growth.
NEW CIVIL CODE AND OTHER LAWS
1. New Civil Code (NCC)
a. Art. 19 – Every person must, in the
exercise of his rights and in the
performance of his duties, act with
justice, give everyone his due, and
observe honesty and good faith.
(Principle of Abuse of Rights)
b. Art. 1700 – The relations between
capital and labor are not merely
contractual. They are so impressed with
public interest that labor contracts must
yield to the common good. Therefore,
such contracts are subject to the special
laws on labor unions, collective
bargaining, strikes and lock outs, closed
shop, wages, working conditions, hours
of labor and similar subject.
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
c. Art.1701 – Neither capital nor labor
shall act oppressively against the other,
or impair the interest or convenience of
the public. (Principle of Non-
Oppression)
d. Art. 1702 – In case of doubt, all labor
legislation and all labor contracts shall
be construed in favor of the safety and
decent living for the laborer.
e. Art.1703 – No contract which
practically amounts to involuntary
servitude, under any guise whatsoever,
shall be valid.
f. Art. 1704 – In collective bargaining, the
labor union or members of the board or
committee signing the contract shall be
liable for non-fulfillment thereof.
g. Art. 1708 – The laborer’s wages shall
not be subject to execution or
attachment, except for debts incurred
for food, shelter, clothing and medical
attendance.
h. Art. 1709 – The employer shall neither
seize nor retain any tool or other
articles belonging to the laborer.
i. Art. 1710 – Dismissal of laborers shall
be subject to the supervision of the
Government, under special laws.
2. Revised Penal Code (RPC)
a. Art. 289 Formation, maintenance and
prohibition of combination of capital or
labor through violence or threats – Any
person who, for the purpose of
organizing, maintaining or preventing
coalitions or capital or labor, strike of
laborers or lock-out of employees, shall
employ violence or threats in such a
degree as to compel or force the
laborers or employers in the free and
legal exercise of their industry or work,
if the act shall not constitute a more
serious offense in accordance with the
provisions of the RPC.
3. Special Laws
a. EO No. 180 – Providing guidelines for
the exercise of the Right to Organize of
Government Employees, creating a
8
 Labor Law and Social Legislation
Public Sector Labor-Management
Council, and for other purposes.
b. Social Security System Law (RA 8282)
c. Government Service Insurance Act of
1997 (RA 8291)
d. 13th Month Pay Law (PD 851, as
amended)
e. Retirement Pay Law (RA 7641)
f. Paternity Leave Act (RA 8187)
g. Special Protection of Children Against
Abuse, Exploitation and Discrimination
Act (RA 7610, as amended by RA 9231)
h. Anti-Sexual Harassment Act (RA 7877)
i. Magna Carta for Public Health Workers
(RA 7305)
j. Solo Parents Welfare Act of 2000 (RA
8972)
k. National Health Insurance Act (RA 7875,
as amended by RA 9241)
l. Migrant Workers and Overseas Filipinos
Act of 1995 (RA 8042, as amended by RA
10022)
m. Personal Equity and Retirement
Account (PERA) Act of 2008 (RA 9505)
n. Home Development Mutual Fund Law of
2009 (RA 9679)
o. The Magna Carta of Women (RA 9710)
p. Magna Carta for Disabled Person (RA
7277)
q. Comprehensive Agrarian Reform Law
(RA 6657, as amended by RA 9700)
r. Domestic Workers Actor Batas
Kasambahay (RA 10361)
s. Special Program for Employment of
Students (SPES) (RA 7323, as amended
by RA 9547)
t. Wage Rationalization Act (RA 6727)
u. Limited Portability Law (RA 7699)
v. An Act Allowing the Employment of
Night Workers (RA 10151)
INTERNATIONAL ASPECT OF LABOR LAWS
The Philippines is a member of the
International Labour Organization (ILO)
which is the UN specialized agency which seeks
the promotion of social justice and
internationally recognized human and labour
rights.
The ILO formulates international labour
standards in the form of Conventions and
Recommendations setting minimum standards
of basic labour rights regulating conditions
across the entire spectrum of work-related
issues. (Azucena, Vol. 1, 2016, p. 21)
Tripartism
9
An essential characteristic of ILO is tripartism.
It is composed not only of government
representatives, but also of employers’ and
workers’ organizations. The principle of
tripartism permeates the composition of ILO’s
deliberative bodies and influences in many
respects the contents of ILO instruments. (Ibid.)
International Commitments
Being an ILO member, the Philippines subscribes
to the following fundamental principles on
which the ILO is based:
1. Labor is not a commodity;
2. Freedom of expression and of association
are essential to sustained progress;
3. That poverty anywhere constitutes a
danger to prosperity everywhere; and
4. The war against want requires to be
carried on with unrelenting vigor within
each nation, and by continuous and
concerted international effort in which the
representatives of workers and
employers, enjoying equal status with
those of governments, join with them in
free discussion and democratic decision
with a view of promotion of the common
welfare. (Annex, Declaration Concerning
the Aims and Purposes of ILO)
Furthermore, the Philippines is committed to
pursue programs that will achieve certain
objectives, including:
a. Full employment and the raising of
standards of living;
b. Policies in regard to wages and earnings,
hours and other conditions of work
calculated to ensure a just share of the
fruits of progress to all, and a minimum
living wage to all employed and in need of
such protection;
c. The effective recognition of the right
collective bargaining, the cooperation of
management and labor in the continuous
improvement of productive efficiency, and
the collaboration of workers and
employers in the preparation and
application of social and economic
measures;
d. The extension of social security measures
to provide a basic income to all in need of
such protection. (Azucena, Vol. 1, 2016, p.
22)
LABOR CODE
 Fundamental Principles and Policies
Presidential Decree (PD) No. 442, otherwise
known as the Labor Code of the Philippines, is a
decree instituting a Labor Code, thereby revising
and consolidating labor and social laws to afford
protection to labor, promote employment and
human resources development and ensure
industrial peace based on social justice. It is a
charter of human rights and a bill of obligations
for every working man.
Date of Effectivity
PD No. 442 was signed into law on May 1, 1974
and took effect on Nov. 1, 1974, six (6) months
after its promulgation.
DECLARATION OF BASIC POLICY
The State shall:
1. Afford full protection to labor;
2. Promote full employment;
3. Ensure equal work opportunities
regardless of sex, race, or creed;
4. Regulate the relations between workers
and Er; and
5. Assure the rights of workers to self-
organization, collective bargaining, security
of tenure, and just and humane conditions
of work. (LC, Art. 3)
RULES AND REGULATIONS
Rule-Making Power Granted by the Labor
Code
The DOLE through the SOLE and other
Government agencies charged with the
administration and enforcement of the LC or any
of its parts shall promulgate the necessary IRRs.
(LC, Art. 5)
Limitations to the Rule-Making Power
Granted by the Labor Code
1. It must be issued under the authority of
law;
2. It must not be contrary to law and the
Constitution; and
3. Must not go beyond the law itself.
A rule or regulation promulgated by an
administrative body to implement a law in
excess of its rule-making power is void.
(Azucena, Vol. 1, 2016, p. 30)
An administrative interpretation which takes
away a benefit granted in the law is ultra vires,
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
that is, beyond one’s power. (CBTC Employees
Union v. Clave, G.R. No. 49582, Jan. 7, 1986)
APPLICABILITY OF THE LABOR CODE
GR: All rights and benefits granted to workers
under the LC shall apply alike to all workers,
whether agricultural or non-agricultural. (LC,
Art. 6)
XPNs:
1. Government employees
2. Employees of government-owned and
controlled corporations created by special
or original charter
3. Foreign governments
4. International agencies
NOTE: International organizations and
intergovernmental bodies are not covered
by the Philippines Labor Laws. The
remedy of the aggrieved employee is to
file a complaint before the Department of
Foreign Affairs (DFA). (Duka, Labor Laws
and Social Legislation, A Barrister’s
Companion, 2016, p. 18)
5. Corporate officers / intra-corporate
disputes which fall under PD 902-A and
now fall under the jurisdiction of the
regular courts pursuant to the Securities
Regulation Code.
6. Local water district except where the
NLRC’s jurisdiction is invoked.
7. As may otherwise be provided by the LC.
Test to Determine the Applicability of the LC
to GOCC; ‘Original Charter or Manner of
Creation Test’
When a GOCC is created by a special charter, it is
subject to the provisions of the Civil Service
Law while those incorporated under the general
Corporation Law is subject to the provisions of
the Labor Code. (PNOC-EDC v. Legardo, G.R. No.
58494, July 5, 1989)
Labor Dispute between Government
Employees
It is the Public Sector Labor-Management
Council, not the DOLE, who shall hear the
dispute. (EO No. 180, Sec. 15, June 1, 1987)
Applicability without Employer-Employee
Relationship
10
 Labor Law and Social Legislation

The LC may apply even if the parties are not

employers and employees of each other. It is
not correct to say that employment relationship
is a pre-condition to the applicability of the
Code (e.g., illegal recruitment, misuse of POEA
license). (Azucena, Vol. 1, 2016, p. 33)

Extra-Territorial Application of LC

Whether employed locally or overseas, all

Filipino workers enjoy the protective mantle of
Philippine labor and social legislation, contract
stipulations to the contrary notwithstanding.
This is in keeping with the basic public policy of
the State to afford protection to labor, promote
full employment, ensure equal work
opportunities regardless of sex, race or creed,
and regulate the relations between workers and
employers. For the State assures the basic
rights of all workers to self-organization,
collective bargaining, security of tenure, and
just and humane conditions of work. (PNB v.
Cabansag, G.R. No. 157010, June 21, 2005)

11
 Recruitment and Placement

Private Fee-Charging Employment Agency vs.

RECRUITMENT AND PLACEMENT Private Recruitment Entity

Private Fee-Charging Private Recruitment

Employment Agency Entity
RECRUITMENT OF LOCAL AND
MIGRANT WORKERS Any person or entity Any person or
engaged in the association engaged in
Governing Laws recruitment and the recruitment and
placement of workers placement of workers,
1. Labor Code for a fee which is locally or overseas,
2. Migrant Workers and Overseas Filipinos charged, directly or without charging,
Act of 1995 (RA 8042, as amended by RA indirectly, from the directly or indirectly,
10022) workers or employers any fee from the
or both. [LC, Art. 13 workers or employers.
Recruitment and Placement (c)] [LC, Art. 13(e)]

1. Any act of Canvassing, Enlisting, Definitions

Transporting, Contracting, Hiring, Utilizing,
or Procuring workers (CETCHUP); and
2. Includes Contact services, Referrals,
Advertising or Promising for employment,
locally or abroad, whether for profit or not.
[LC, Art. 13(b)] (CRAP)
Persons Deemed Engaged in Recruitment and
Placement
Any person or entity which, in any manner,
offers or promises for a fee, employment to 2 or
more persons shall be deemed engaged in
recruitment and placement. (LC, Art. 13[b])
Worker is any member of the labor force,
whether employed or unemployed. [LC, Art.
13(a)]
Seafarer refers to any person who is employed
or engaged in overseas employment in any
capacity on board a ship other than a
government ship used for military or non-
commercial purposes. The definition shall
include fishermen, cruise ship personnel and
those serving on mobile offshore and drilling
units in the high seas. [Sec. 1(ss), Rule II, Omnibus
Rules and Regulations Implementing Migrant
Workers Act as amended by RA 10022 (2010)]

The definition of "recruitment and placement"
under Art. 13(b) of the Labor Code includes
promising or advertising for employment,
locally or abroad, whether for profit or not,
provided, that any person or entity which, in any
manner, offers or promises for a fee,
employment to two or more persons shall be
deemed engaged in recruitment and placement.
(People v. Racho, G.R. No. 227505, Oct. 2, 2017)
NOTE: Regardless of the number of persons
dealt with, recruitment and placement are still
constituted. The proviso merely lays down a rule
of evidence that where a fee is collected in
consideration of a promise or offer of
employment to two (2) or more prospective
workers, the individual or entity dealing with
them shall be deemed to be engaged in the act of
recruitment and placement. The words "shall be
deemed" create that presumption. (People v.
Panis, G.R. L-58674-77, July 11, 1990)
Seaman is any person employed in a vessel
engaged in maritime navigation. [LC, Art. 13 (g)]
Overseas employment means employment of a
worker outside the Philippines. [LC, Art. 13(h)]
Overseas Filipino Worker (OFW) is a person
who is to be engaged, is engaged or has been
engaged in a remunerated activity in a State of
which he or she is not a citizen or on board a
vessel navigating the foreign seas other than a
government ship used for military or non-
commercial purposes or on an installation
located offshore or on the high seas. [Sec. 1(jj),
Rule II, Omnibus Rules and Regulations
Implementing Migrant Workers Act as amended
by RA 10022 (2010)]
NOTE: The term “OFW” is to be used
interchangeably with “migrant worker” as
provided in RA 10022.

Emigrant is any person, worker or otherwise,

who immigrates to a foreign country by virtue of
an immigrant visa or resident permit or its

UNIVERSITY OF SANTO TOMAS 12

2021 GOLDEN NOTES
 Labor Law and Social Legislation
equivalent in the country of destination. (LC, Art.
13[i])
Classification of OFWs
1. Land-Based – contract workers engaged in
offshore activities whose occupation
requires that majority of his
working/gainful hours are spent on land;
2. Sea-Based – those employed in a vessel
engaged in maritime navigation. (Azucena,
Vol. 1, 2016, p. 52)
PRIVATE RECRUITMENT
GR: No person or entity other than public
employment offices, shall engage in the
recruitment and placement of workers. (LC, Art.
16)
Reason for the ban on direct hiring: It is a
form of protection for the Filipino workers, so
that they will not fall prey to unscrupulous and
abusive foreign employers who might victimize
them in the absence of government
regularization. (Duka, Labor Laws and Social
Legislation, A Barrister’s Companion, 2016, p. 42)
XPNs:
1. Public employment offices
2. Private employment offices
3. Private recruitment entities
4. Shipping or manning agents or
representatives
5. The POEA
6. Construction contractors if authorized by
the DOLE and Construction Industry
Authority
7. Members of the diplomatic corps (but
hiring must be processed through POEA)
8. Other persons or entities as may be
authorized by the SOLE
9. Name hires (Sec. 1[i], Rule II, Omnibus
Rules and Regulations implementing the
Migrant Workers and Overseas Filipinos
Act of 1995, as amended by RA 10022)
Name Hires
Individual workers who are able to secure
contracts for overseas employment
opportunities with employers without the
assistance or participation of any agency.
(Omnibus Rules and Regulations implementing
the Migrant Workers and Overseas Filipinos Act of
1995, as amended by RA 10022, Rule II)
13
NOTE: Name hires shall pass through the POEA
for processing purposes and should be
registered under POEA for protection.
PHILIPPINE OVERSEAS AND EMPLOYMENT
ADMINISTRATION (POEA)
Principal Functions
1. Protection of the right of Filipino workers
to fair and equitable employment practices.
2. Regulation of private sector participation in
the recruitment and overseas placement of
workers by setting up a licensing and
registration system.
3. Deployment of Filipino workers through
Government to Government hiring.
4. Formulation, implementation, and
monitoring of overseas employment of
Filipino workers taking into consideration
their welfare and domestic manpower
requirements.
5. Shall inform migrant workers not only of
their rights as workers but also of their
rights as human beings, instruct and guide
the workers how to assert their rights and
provide the available mechanism to redress
violation of their rights.
6. Implementation, in partnership with other
law-enforcement agencies, of an intensified
program against illegal recruitment
activities. (Sec. 14, RA 10022)
Power to Terminate or Impose a Ban on
Employment of Migrant Workers
The POEA may at any time terminate or impose
a ban on employment of migrant workers, to do
so, in consultation with the DFA based on the ff.
grounds:
1. In pursuit of the national interest; or
2. When public welfare so requires (Sec. 4, RA
10022)
Minimum Conditions/Provisions of Overseas
Employment Contracts
1. Guaranteed wages for regular work hours
and overtime pay, not lower than the
minimum wage prescribed in:
a. The host country;
b. A bilateral agreement or
international convention ratified by
the host country and the Philippines;
or
c. The Philippines.
 Recruitment and Placement

2. Free transportation to and from the regulations and registration of

worksite or offsetting benefit
3. Free food and accommodation or offsetting
benefit
4. Just/authorized causes of termination of
the contract or services of the worker
NOTE: An agreement that diminishes the
employees’ pay and benefits as contained in a
POEA-approved contract is void unless such
subsequent agreement is approved by the POEA.
recruitment and employment agencies
or entities.
b. Disciplinary action cases and other
special cases which are administrative
in character involving employers,
principals, contracting partners and
Filipino migrants. (Sec. 6, Rule X, IRR, RA
8042)
Grounds for Disciplinary Action of OFWs

Regulatory and Adjudicatory Functions of the Under RA 8042, these are:

POEA
1. Prostitution;
1. Regulatory 2. Unjust refusal to depart for the worksite;
3. Gunrunning or possession of deadly
a. It regulates the private sector weapons;
participation in the recruitment and 4. Vandalism or destroying company
overseas placement of workers through property;
its licensing and registration system; 5. Violation of the laws and sacred practices
b. Formulate and implement, in of the host country and unjustified breach
coordination with appropriate entities of employment contract;
concerned, when necessary, a system 6. Embezzlement of funds of the company or
for promoting and monitoring the fellow worker entrusted for delivery to
overseas employment of Filipino relatives in the Philippines;
workers taking into consideration their 7. Creating trouble at the worksite or in the
welfare and the domestic manpower vessel;
requirements; 8. Gambling;
c. Inform migrant workers not only of 9. Initiating or joining a strike or work
their rights as workers but also of their stoppage where the laws of the host
rights as human beings; country prohibits strikes or similar actions;
d. Instruct and guide the workers how to 10. Commission of felony punishable by
assert their rights; Philippine laws or by the host country;
e. Provide the available mechanism to 11. Theft or robbery;
redress violation of their rights; and 12. Drunkenness;
f. In the recruitment and placement of 13. Drug addiction or possession or trafficking
workers to service the requirements for of prohibited drugs; and
trained and competent Filipino workers 14. Desertion or abandonment.
of foreign governments and their
instrumentalities, and such other DEPLOYMENT OF OFWs
employers as public interests may
require, the administration shall deploy The State shall allow the deployment of OFWs:
only to countries:
1. Where the Philippines has 1. Only in countries where the rights of
concluded bilateral labor Filipino migrant workers are protected.
agreements or arrangements;
2. Guaranteeing to protect the rights 2. To vessels navigating the foreign seas or to
of Filipino migrant workers; and, installations located offshore or on high
3. Observing and/or complying with seas whose owners/Ers are compliant with
the international laws and international laws and standards that
standards for migrant workers. (RA protect the rights of migrant workers.
9422)
3. To companies and contractors with
2. Adjudicatory international operations: Provided, That
they are compliant with standards,
a. Administrative cases involving conditions and requirements, as embodied
violations of licensing rules and in the employment contracts prescribed by

UNIVERSITY OF SANTO TOMAS 14

2021 GOLDEN NOTES
 Labor Law and Social Legislation
the POEA and in accordance with
internationally-accepted standards. (Sec. 3,
RA 10022 amending RA 8042)
Guarantees of the Receiving Country for the
Protection of the Rights of OFWs
1. It has existing labor and social laws
protecting the rights of workers, including
migrant workers;
2. It is a signatory to and/or a ratifier of
multilateral conventions, declarations or
resolutions relating to the protection of
workers, including migrant workers; and
3. It has concluded a bilateral agreement or
arrangement with the government on the
protection of the rights of OFWs. (Sec. 3, RA
10022 amending RA 8042)
Provided, that the receiving country is taking
positive and concrete measures to protect the
rights of migrant workers in furtherance of any
of the guarantees.
NOTE: In the absence of a clear showing that any
of the guarantees exists in the country of
destination of the migrant workers, no permit
for deployment shall be issued by the POEA.
REPATRIATION OF A WORKER
GR: The repatriation of the:
1. Worker and the transport of his
personal belongings shall be the primary
responsibility of the agency which
recruited or deployed the worker overseas.
2. Remains and transport of the personal
belongings of a deceased worker and all
costs attendant thereto shall be borne by
the principal and/or the local agency.
XPNs:
1. If the termination of employment is due
solely to the fault of the worker, the
principal/Er or agency shall not be
responsible for the repatriation of the
former and/or his belongings.
2. In cases of war, epidemic, disaster or
calamities, natural or man-made, and
other similar events, and where the
principal or recruitment agency cannot
be identified, the Overseas Workers
Welfare Administration, in coordination
15
with appropriate international agencies,
shall take charge of the repatriation. (Sec.
15, RA 8042)
Mandatory Repatriation of Underage Migrant
Workers
Underage migrant workers refer to those who
are below 18 or below the minimum age
requirement for overseas employment as
determined by the SOLE. (Sec. 1 [vv], Rule II, RA
10022)
Upon discovery or being informed of the
presence of migrant workers whose ages fall
below the minimum age requirement for
overseas deployment, the responsible officers in
the foreign service shall, without delay,
repatriate said workers and advise the DFA
through the fastest means of communication
available of such discovery and other relevant
information.
Penalty: The license of a recruitment/manning
agency which recruited or deployed an underage
migrant worker shall be automatically revoked
and a fine of not less than P500,000 but not
more than P1,000,000 shall be imposed. (Sec. 9,
RA 10022)
REMITTANCE OF FOREIGN
EXCHANGE EARNINGS
GR: It shall be mandatory for all OFWs to remit a
portion of their foreign exchange earnings to
their families, dependents, and/or beneficiaries
ranging from 50% – 80% depending on the
worker’s kind of job. (Rule VIII, Book III, POEA
Rules; LC, Art. 22)
XPNs:
1. The worker’s immediate family members,
beneficiaries and dependents are residing
with him abroad;
2. Immigrants and Filipino professionals and
Ees working with the UN agencies or
specialized bodies; or
3. Filipino servicemen working in U.S.
military installations. (Resolution No. 1-83,
Inter-Agency Committee for Implementation
of EO No. 857)
Effect of Failure to Remit
 Recruitment and Placement
1. Workers – Shall be suspended or removed
from the list of eligible workers for
overseas employment.
2. Employers – Will be excluded from the
overseas employment program.
3. Private employment agencies – Shall face
cancellation or revocation of their licenses
or authority to recruit. (EO No. 857)
REGULATIONS OF RECRUITMENT AND
PLACEMENT ACTIVITIES
Private Sector Participation in the
Recruitment and Placement of Workers
Private employment sector shall participate in
the recruitment and placement of workers,
locally and overseas, under such guidelines,
rules and regulations as may be issued by the
SOLE. (LC, Art. 25)
Private Sectors that can Participate
1. Shipping or manning agents or
representatives
2. Private recruitment offices
3. Public employment offices
4. Construction contractors if authorized by
the DOLE and Construction Industry
Authority.
5. Persons that may be authorized by the
SOLE
6. Private employment agencies. (Sec. 1, Rule
VII, Book I, IRR of the LC)
Qualifications for Participation
1. Citizenship Requirement
a. Filipino citizens
b. Partnerships or corporations with at
least 75% of the authorized capital
stock is owned and controlled by
Filipino citizens (LC, Art. 27)
2. Capitalization (LC, Art. 28)
a. Local employment
1. A minimum net worth/paid-up
capital of P1 million for single
proprietorship and partnership
/ corporation;
b. Overseas employment
1. A minimum capitalization/paid-
up capital of P5 million for
single proprietorship and
partnership / corporation. (Sec.
2, Rule 1, Part II, Revised POEA
Rules of 2016)
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
3. Not otherwise disqualified by law or other
government regulations to engage in the
recruitment and placement of workers for
overseas employment. (Rule 1, Part II,
Revised POEA Rules of 2016)
4. Payment of registration fees
5. Posting of surety or cash bonds
NOTE: Regulation of the private sector’s
participation in the recruitment and overseas
placement of workers is made by setting up a
licensing and registration system. (Sec. 14, RA
10022)
Q: Rocket Corporation is a domestic
corporation registered with the SEC, with
30% of its authorized capital stock owned by
foreigners and the remaining 70% owned by
Filipinos. Is Rocket Corporation allowed to
engage in the recruitment and placement of
workers, locally and overseas? Briefly state
the basis for your answer. (2015 BAR)
A. NO. Art. 27 of the Labor Code mandates that
pertinently, for a Corporation to validly engage
in recruitment and placement of workers, locally
and overseas, at least 75% of its authorized and
voting capital stock must be owned and
controlled by Filipino citizens. Since only 70%
of its authorized capital stock is owned by
Filipinos, it consequently cannot validly engage
in recruitment and placement of workers, locally
and overseas.
Validity of License to Recruit
1. Local Employment – license shall be valid
for a period of three (3) years from the date
of issuance unless sooner revoked or
cancelled. (DO 141-4, Sec. 12)
2. Overseas Employment – regular license is
valid up to the full term of four (4) years
from the date of issuance of the provisional
license.
Provisional license is issued by the POEA
which is valid for two (2) years. (POEA
Revised Rules 2016) POEA may upgrade the
provisional license during its validity to a
regular license after the recruiter has
deployed at least one hundred workers to its
new principal(s). A provisional license does
not authorize recruitment for domestic
employment.
16
 Labor Law and Social Legislation
Persons and Entities DISQUALIFIED to
Engage in the Business of Recruitment and
Placement of Workers
1. Travel agencies and sales agencies of
airline companies (LC, Art. 26);
2. Officers or members of the board of any
corporation or members in a partnership
engaged in the business of a travel agency;
3. Corporations and partnerships, when any
of its officers, members of the board or
partners, is also an officer, member of the
board, or partner of a corporation or
partnership engaged in the business of a
travel agency;
4. Persons, partnerships or corporations
which have derogatory records, such as but
not limited to those:
a. Certified to have derogatory record
or information by the NBI or by the
Anti-Illegal Recruitment Branch of
the POEA;
b. Against whom probable cause or
prima facie finding of guilt for illegal
recruitment or other related cases
exists;
c. Convicted for illegal recruitment or
other related cases and/or crimes
involving moral turpitude; and
d. Agencies whose licenses have been
previously revoked or cancelled by
the POEA for violation of RA 8042,
PD 442 as amended and their IRRs.
5. Any official or employee of the DOLE,
POEA, OWWA, DFA, and other government
agencies directly involved in the
implementation of RA 8042 and/or any of
his/her relatives within the 4th civil degree
of consanguinity or affinity; and
6. Persons or partners, officers, and directors
of corporations whose licenses have been
previously cancelled or revoked for
violation of recruitment laws. (Sec. 2, Rule I,
2002 Rules and Regulations on the
Recruitment and Employment of Land-Based
Workers)
17
TRAVEL AGENCIES PROHIBITED
TO RECRUIT
Prohibition on Travel Agencies and Sales
Agencies of Airline Companies to Recruit
They are prohibited from engaging in the
business of recruitment and placement of
workers for overseas employment, whether for
profit or not, due to conflict of interest.
Purpose for Prohibiting Travel Agencies
This is so, for travel agencies are under the
supervisory powers of the Department of
Tourism, not the Department of Labor and
Employment. Otherwise, confusion may arise to
the detriment and disadvantage of an overseas
applicant-worker or may lead to exploitation of
the applicant-worker who will be at the
economic mercy of the travel agency or sales
agencies of airline company from the time his
papers are processed to the time he departs.
It cannot be discounted that travel agencies can
facilitate with the airlines for the issuance of the
worker's plane ticket. Moreover, illegal
recruitment activities can be traced to travel
agencies that facilitate papers of job-seekers for
overseas. They do dirty job of legalizing the
travel on tourist-visas and with the assurance
that the same could be converted into work-
visas in the country of employment.
Q: WTTA is a well-known travel agency and
an authorized sales agent of PAL. Since
majority of its passengers are overseas
workers, WTTA applied for a license for
recruitment and placement activities.
It stated in its application that its purpose is
not for profit but to help Filipinos find
employment abroad. Should the application
be approved? (2006 BAR)
A: NO. The application should be disapproved,
because it is prohibited by Art. 26 of the LC: "Art.
26. Travel agencies and sales agencies of airline
companies are prohibited from engaging in the
business of recruitment and placement of
workers for overseas employment whether for
profit or not."
Rule I, Part II POEA Rules and Regulations
Governing the Recruitment and Employment of
Land-Based Workers (2002) disqualifies any
entity having common director or owner of
travel agencies and sales agencies of airlines,
 Recruitment and Placement

including any business entity from the
recruitment and placement of Filipino workers
overseas, whether they derive profit or not.
NON-TRANSFERABILITY OF LICENSE
OR AUTHORITY
1. No license or authority shall be used directly
or indirectly by any person other than the
one in whose favor it was issued or at any
place other than that stated in the license or
authority; nor
2. May such license or authority be
transferred, conveyed or assigned to any
other person or entity. (LC, Art. 29)
NOTE: Any transfer of business address,
appointment or designation of any agent or
representative including the establishment of
additional offices anywhere shall be subject to
the prior approval of the DOLE. (LC, Art. 29)
A: NO, the license may not be sold at public
auction. The LC (Art. 29) provides that no license
to engage in recruitment and placement shall be
used directly or indirectly by any person other
than the one in whose favor it was issued nor
may such license be transferred, conveyed or
assigned to any other person or entity.
It may be noted that the grant of a license is a
governmental act by the DOLE based on
personal qualifications, and citizenship and
capitalization requirements. (LC, Arts. 27-28)
NOTE: Change of ownership or relationship of a
single proprietorship licensed to engage in
overseas employment shall cause the automatic
revocation of the license.
REGISTRATION FEES AND BONDS
Registration Fees

Provincial recruitment and/or job fairs may be The SOLE shall promulgate schedule of fees for
allowed only when authorized by the POEA in the registration of all applicants for license and
writing. authority. (LC, Art. 30)

License vs. Authority Bonds

The business of recruitment and replacement is All applicants for license or authority shall post
regulated by law by requiring them to obtain such cash and surety bonds as determined by
license and authority. the SOLE.

LICENSE AUTHORITY Purpose: To guarantee compliance with

prescribed recruitment procedures, rules and
A document issued regulations, and terms and conditions of
by the DOLE employment as may be appropriate. (LC, Art. 31)
A document issued
authorizing a person
by DOLE authorizing
or association to
a person or entity to FEES TO BE PAID BY WORKERS
engage in
operate a private
recruitment and
employment GR: Any person applying with a private fee-
placement activities
agency. charging employment agency for employment
as a private
assistance shall not be charged any fee.
recruitment entity.
XPNs: When:
NOTE: When one is given a license, one is also
1. Worker obtained work through recruiter’s
authorized to collect fees. Unlike a license, an
efforts; and
authority does not entitle a private
2. Has actually commenced employment.
recruitment entity to collect fees. (Duka, Labor
(LC, Art. 32)
Laws and Social Legislation, A Barrister’s
Companion, 2016, p. 53)
Fees Chargeable to the Worker
Q: A recruitment and placement agency
1. Placement fee in an amount equivalent to
declared voluntary bankruptcy. Among its
one-month basic salary of the worker
assets is its license to engage in business. Is
(Revised POEA Rules, Rule 5, Sec. 51);
the license of the bankrupt agency an asset
2. Documentation costs; and
which can be sold in public auction by the
3. Membership with PhilHealth, Pag-IBIG, and
liquidator? (1998 BAR)
SSS. (Revised POEA Rules, Rule 5, Sec. 50)

UNIVERSITY OF SANTO TOMAS 18

2021 GOLDEN NOTES
 Labor Law and Social Legislation
PROHIBITED ACTIVITIES IN
RECRUITMENT/PLACEMENT
Prohibited Acts in Recruitment and
Placement
1. Overcharging – To charge or accept,
directly or indirectly, any amount greater
than that specified in the schedule of
allowable fees prescribed by the Secretary of
Labor, or to make a worker pay any amount
greater than that actually received by him as
a loan or advance.
2. False Notice – To furnish or publish any
false notice or information or document in
relation to recruitment or employment
3. Misrepresentation to Secure License – To
give any false notice, testimony, information
or document or commit any act of
misrepresentation for the purpose of
securing a license or authority under this
Code.
4. Inducing Worker to Quit – To induce or
attempt to induce a worker already
employed to quit his employment in order to
offer him to another unless the transfer is
designed to liberate the worker from
oppressive terms and conditions of
employment.
5. Inducement Not to Employ – To influence
or to attempt to influence any person or
entity not to employ any worker who has
not applied for employment through his
agency.
6. Recruitment for Harmful Jobs – To engage
in the recruitment or placement of workers
in jobs harmful to public health or morality
or to the dignity of the Republic of the
Philippines.
7. Obstructing Inspection – To obstruct or
attempt to obstruct inspection by the
Secretary of Labor or by his duly authorized
representatives.
8. Contract Substitution – To substitute or
alter to prejudice of the worker,
employment contract prescribed by the
Department 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.
(BLE’s D.O. No. 141-12, Nov. 20, 2014)
19
In Addition to the above-mentioned
Prohibitions (RA 10022, Sec. 5)
1. Misrepresentation in Documentation – To
give any false notice, testimony, information
or document or commit any act or
misrepresentation for the purpose of
documenting hired workers with the POEA,
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 the POEA;
2. Non-submission of Reports – To fail to
submit reports on the status of employment,
placement vacancies, remittance of foreign
exchange earnings, separation from jobs,
departures and such other matters or
information as may be required by the
Secretary under penalty of law;
3. Involvement in Travel Agency – For an
officer or agent of a recruitment or
placement agency to become an officer or
member of the Board of any corporation
engaged in travel agency or insurance or to
be engaged directly or indirectly in the
management of a travel agency or insurance
agency;
4. Withholding of Documents – To withhold
or deny travel documents from applicant
workers before departure for monetary or
financial considerations, or for any other
reasons, other than those authorized under
the Labor Code and its implementing rules
and regulations;
5. Failure to Deploy – to fail to actually deploy
a contracted worker without valid reason as
determined by the DOLE;
6. Failure to Reimburse – To fail to reimburse
expenses incurred by the worker in
connection with his/her documentation and
processing for purposes of deployment, in
cases where the deployment does not
actually take place without the worker’s
fault;
7. Non-Filipino Manager – To allow a non-
Filipino citizen to head or manage a
recruitment agency;
8. Excessive interest – To arrange, facilitate or
grant a loan to an Overseas Filipino Worker
 Recruitment and Placement
with interest exceeding 8% per annum,
which will be used for payment of legal and
allowable placement fees and make the
migrant worker issue, either personally or
through a guarantor or accommodation
party, postdated checks in relation to the
said loan;
9. Specifying a Loan Entity – To impose a
compulsory and exclusive arrangement
whereby an Overseas Filipino Worker is
required to avail of a loan only from
specifically designated institutions, entities
or persons;
10. Non-Renegotiation of Loan – To refuse to
condone or renegotiate a loan incurred by
an OFW after his employment contract has
been prematurely terminated through no
fault of his or her own;
11. Specifying a Loan Entity – To impose a
compulsory and exclusive arrangement
whereby an Overseas Filipino Worker is
required to undergo health examinations
only from specifically designated medical
clinics, institutions, entities or persons,
except in the case of a worker whose
medical examination cost is shouldered by
the principal;
12. Specifying a Training Entity – To impose a
compulsory and exclusive arrangement
whereby an Overseas Filipino Worker is
required to undergo training, seminar,
instruction or schooling of any kind only
from specifically designated institutions,
entities or persons, except for
recommendatory trainings mandated by
principals where the latter shoulder the cost
of such trainings;
13. Violation of Suspension – For a suspended
recruitment/manning agency to engage in
any kind of recruitment activity including
the processing of pending workers'
applications;
14. Collection of Insurance Premium – For a
recruitment/manning agency or a foreign
principal/ Er to pass on the OFW or deduct
from his or her salary the payment of the
cost of insurance fees, premium or other
insurance related charges, as provided
under the compulsory worker's insurance
coverage.
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Q: A crew agreement was entered into by
Nerry Balatongan and Philimare Shipping
and Equipment Supply for the employment of
the former as a seaman on board the vessel
"Santa Cruz” which was approved by the
National Seaman's Board (NSB). While on
board vessel, the parties entered into a
supplementary contract of employment
providing for accident and death benefits.
Balatongan met an accident in Egypt, and
subsequently at the Makati Medical Center.
The medical certificate was issued describing
his disability as "permanent in nature." He
demanded payment for his claim for total
disability, as provided for in the contract of
employment, but his claim was denied. Can
the second contract of employment be
enforced against Philimare despite the
absence of NSB verification or approval?
A: YES. The supplementary contract of
employment was entered into between
petitioner and private respondent to modify the
original contract of employment. The reason
why the law requires that the POEA should
approve and verify a contract under Art. 34(i) of
the Labor Code is to ensure that the employee
shall not be placed in a disadvantageous position
and that the same are within the minimum
standards of the terms and conditions of such
employment contract set by the POEA.
However, there is no prohibition against
stipulating in a contract more benefits to the
employee than those required by law. Thus, in
this case wherein a “supplementary contract”
was entered into affording greater benefits to
the employee than the previous one, and
although the same was not submitted for the
approval of the POEA, the same should still be
considered to be valid and enforceable. (Seagull
Maritime Corp. v. Balatongan, G.R. No. 82252, Feb.
28, 1989)
SUSPENSION AND/OR CANCELLATION OF
LICENSE OR AUTHORITY
Two Kinds of Illegal Recruiter
1. May be a licensee – performs any of the
prohibited practices enumerated under
Sec. 5 or RA 10022
2. May be a non-licensee – any person,
corporation, or entity:
a. which has not been issued a valid
license or authority to engage in
20
 Labor Law and Social Legislation
recruitment and placement by the
SOLE; or
b. whose license or authority has been
suspended, revoked, or cancelled by
the POEA or the SOLE.
Jurisdiction
The SOLE and the Philippine Overseas
Employment Administration (POEA)
Administrator are vested with power to suspend
or cancel any license or authority to recruit
employees for overseas employment. (Azucena,
Vol. 1, 2016, p. 100; LC, Art. 35)
The SOLE has the power under Art. 35 of the LC
to apply the penalties of suspension and
cancellation of license and authority; SOLE also
has the authority, under Art. 36 of the LC, not
only to restrict and regulate the recruitment and
placement activities of all agencies, but also to
promulgate rules and regulations to carry out the
objectives and implement the provisions
governing said activities.
Pursuant to this rule-making power, the SOLE
authorized the POEA to conduct the necessary
proceedings for the suspension or cancellation
of license or authority of any agency or entity for
certain enumerated offenses x x x. (Trans Action
Overseas Corporation v. The Honorable Secretary
of Labor, G.R. No. 109583, Sept. 5, 1997)
Thus, the Court concludes that the power to
suspend or cancel any license or authority to
recruit employees for overseas employment is
concurrently vested with the POEA and the
SOLE. (People v. Diaz, 259 SCRA 441, 1996)
Grounds for Revocation of License
1. Incurring an accumulated 3 counts of
suspension by an agency based on final and
executory orders within the period of
validity of its license;
2. Violations of the conditions of license;
3. Engaging in acts of misrepresentation for
the purpose of securing a license or
renewal; and
4. Engaging in the recruitment or placement
of workers to jobs harmful to the public
health or morality or to the dignity of the
country. (Sec. 3, Rule I, Book VI, Rules and
Regulations Governing Overseas
Employment)
Grounds for Suspension or Cancellation of
License
21
1. Commission of prohibited acts under Art.
34 of LC
2. Publishing job announcements w/o POEA’s
approval
3. Charging a fee which may be in excess of
the authorized amount before a worker is
employed
4. Deploying workers w/o processing through
POEA
5. Recruitment in places outside its
authorized area. (Sec. 4, Rule II, Book IV,
POEA Rules)
Q: Concerned Filipino contract workers in
the Middle East reported to the DFA that XYZ,
a private recruitment and placement agency,
is covertly transporting extremists to
terrorist training camps abroad. Upon being
alerted by the DFA, the DOLE issued orders
cancelling the licenses of XYZ, and imposing
an immediate travel ban on its recruits for
the Middle East. XYZ appealed to the Office of
the President to reverse and set aside the
DOLE orders, citing damages from loss of
employment of its recruits, and violations of
due process including lack of notice and
hearing by the DOLE.
The DOLE in its answer claimed the existence
of an emergency in the Middle East which
required prompt measures to protect the life
and limb of OFWs from a clear and present
danger posed by the ongoing war against
terrorism. Should the DOLE orders be upheld
or set aside? (2004 BAR)
A: The order shall be set aside. A report that
an agency is covertly transporting extremists is
not a valid ground for cancellation of a
Certificate of Registration (Art. 247, LC) and
there is failure of due process as no hearing was
conducted prior to the cancellation. (Art. 245,
LC)
The DOLE order imposing the travel ban should
be upheld because it is a valid exercise of police
power to protect the national interest (Sec. 3,
Art. XIII, 1987 Constitution) and on the rule
making authority of the SLE. (Art. 5, LC; Phil.
Ass’n. of Service Exporters v. Drilon, G.R. No.
81958, June 30, 1988)
REGULATORY AND VISITORIAL POWERS OF
THE DOLE SECRETARY
Regulatory Powers
The Secretary of Labor shall have the power to:
 Recruitment and Placement
1. Restrict and regulate the recruitment and
placement activities of all agencies; and,
2. Issue orders and promulgate rules and
regulations. (LC, Art. 36)
Visitorial Powers
The Secretary of Labor or his duly authorized
representatives may, at any time:
1. Inspect the premises, books of accounts
and records of any person or entity
covered by this Title;
2. Require it to submit reports regularly on a
prescribed form; and
3. Act on violations of any provisions of this
Title. (LC, Art. 37)
NOTE: The proceeding before the SLE or his
agents exercising visitorial powers is summary
in nature. (Servando’s Inc. v. Secretary of Labor
and Employment, G.R. No. 85840, June 5, 1991)
When Visitorial Power of the SOLE may be
Exercised under the Labor Code
1. Inspect books of accounts and records of any
person or entity engaged in recruitment and
placement; require it to submit reports
regularly on prescribed forms and act in
violations of any provisions of the LC on
recruitment and placement. (LC, Art. 37)
2. Have access to Er’s records and premises to
determine violations of any provisions of the
LC on recruitment and placement. (LC, Art.
128)
3. Conduct industrial safety inspections of
establishments. (LC, Art. 171)
SOLE CANNOT Issue Search Warrants or
Warrants of Arrest
Under the 1987 Constitution, only a judge may
issue search warrants or warrants of arrest.
Hence, Art. 38(c) of the LC is unconstitutional
because it gives the SOLE the power to issue
search warrants and warrants of arrest. The
labor authorities must go through the judicial
process. (Salazar v. Achacoso, G.R. No. 81510,
March 14, 1990)
ILLEGAL RECRUITMENT
Any act of canvassing, enlisting, contracting,
transporting, utilizing, hiring, or procuring
workers and includes referring, contract
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
services, promising or advertising for
employment abroad, whether for profit or not,
when undertaken by non-licensee or non-holder
of authority (Sec. 5, RA 10022)
Any recruitment activities, including the
prohibited practices enumerated under Art. 34
of this Code (LC), to be undertaken by non-
licensed or non-holders of authority (Art. 38(a),
LC).
Illegal Recruitment as Economic Sabotage
Deemed to be committed by a syndicate if
carried out by a group of three (3) or more
persons conspiring and/or confederating with
one another in carrying out any unlawful or
illegal transaction, enterprise or scheme (Art.
38(b), LC).
Deemed committed in large scale if committed
against three (3) or more persons individually or
as a group (Ibid.).
ELEMENTS OF ILLEGAL RECRUITMENT
1. The offender undertakes any of the
activities within the meaning of
“recruitment and placement” under Art.
13(b) of the Labor Code, or any of the
prohibited practices enumerated under Art.
34 of the Labor Code; and
2. The offender has no valid license or
authority required by law to enable him to
lawfully engage in recruitment and
placement of workers. (People v Chua, G.R.
No. 187052, 13 Sept. 2012)
3. If committed by a syndicate, carried out
by a group of three or more persons
conspiring and/or confederating with one
another; or
4. If committed by a large scale, if
committed against three or more persons
individually or as a group.
TYPES OF ILLEGAL RECRUITMENT
1. Simple – is committed where a
licensee/non-licensee or holder/non-holder
of authority undertakes either any
recruitment activities defined under Art.
13(b), or any prohibited practices
enumerated under Sec. 5 of RA 10022.
22
 Labor Law and Social Legislation
Prescription of action: Five (5) years (Sec.
12, RA 8042)
Where the illegal recruitment is proved, but
the elements of large scale and syndicate are
absent, the accused can be only convicted of
simple illegal recruitment. (People v.
Sagun, G.R. No. 119076, March 25, 2002)
2. Illegal Recruitment as Economic
Sabotage – it is economic sabotage when
complex illegal recruitment is committed.
a. Syndicated – committed by a
syndicate if carried out by a group of
three (3) or more persons in
conspiracy or confederation with one
another;
b. Large Scale or qualified – committed
against three (3) or more persons
individually or as a group (People v.
Sadiosa, G.R. No. 107084, 15 May 1998)
despite the lack of necessary license
from POEA. (People v. Alzona, G.R. No.
132029, 30 July 2004)
Prescription of action: Twenty (20) years
(Sec. 12, RA 8042)
NOTE: “Illegal recruitment in large scale”
pertains to the number of victims while
“syndicated illegal recruitment” pertains to the
number of recruiters.
Persons Criminally Liable
The persons criminally liable for the above
offenses are the principals, accomplices, and
accessories.
In case of juridical persons, the officers having
control, management or direction of their
business shall be liable. (Sec. 6, RA 8042)
Q: While her application for renewal of her
license to recruit workers for overseas
employment was still pending, Maryrose
Ganda recruited Alma and her 3 sisters, Ana,
Joan, and Mavic, for employment as
housemates in Saudi Arabia. Maryrose
represented to the sisters that she had a
license to recruit workers for overseas
employment and demanded and received
P30,000.00 from each of them for her
services. Her application for the renewal of
her license, however, was denied, and
consequently failed to employ the four
23
sisters in Saudi Arabia. The sisters charged
Maryrose with large scale illegal recruitment.
Testifying in her defense, she declared that
she acted in good faith because she believed
that her application for the renewal of her
license would be approved. She adduced in
evidence the Affidavits of Desistance which
the four private complainants had executed
after the prosecution rested its case. In the
said affidavits, they acknowledged receipt of
the refund by Maryrose of the total amount of
Php 120,000.00 and indicated that they were
no longer interested to pursue the case
against her. Resolve the case with reasons.
(2005 BAR)
A: Maryrose is guilty of large-scale illegal
recruitment. It is large-scale illegal recruitment
when the offense is committed against 3 or more
persons, individually or as a group. [Art. 38(b),
LC] In view of the above, her defense of good
faith and the Affidavit of Desistance as well as
the refund given will not save her because RA
8042 is a special law, and illegal recruitment is
malum prohibitum. (People v. Saulo, G.R. No.
125903, Nov. 15, 2000)
Q: A was approached for possible overseas
deployment to Dubai by X, an interviewer of
job applicants for Alpha Personnel Services,
Inc. (Alpha), an overseas recruitment agency.
X required A to submit certain documents
(passport, NBI clearance, medical certificate)
and to pay P25,000 as processing fee. Upon
payment of the said amount to the agency
cashier, A was advised to wait for his visa.
After five months, A visited the office of Alpha
during which X told him that he could no
longer be deployed for employment abroad.
A was informed by the POEA that while Alpha
was a licensed agency, X was not registered
as its employee, contrary to POEA Rules and
Regulations. Under POEA Rules and
Regulations, the obligation to register
personnel with the POEA belongs to the
officers of a recruitment agency.
a. May X be held criminally liable for
illegal recruitment? Explain.
b. May the officers having control,
management or direction of Alpha
Personnel Services, Inc. be held
criminally liable for illegal recruitment?
Explain. (2010 BAR)
 Recruitment and Placement

A: on a large scale if it is committed against three or

a. NO. X performed his work with the
knowledge that he works for a licensed
recruitment agency. He is in no position to
know that the officers of said recruitment
agency failed to register him as its
personnel. (People v. Chowdury, G.R. No.
129577-80. Feb. 15, 2000) The fault not
being attributable to him, he may be
considered to have apparent authority to
represent Alpha in recruitment for
overseas employment.
more persons individually or as a group.
ILLEGAL RECRUITMENT vs. ESTAFA
NOTE: Illegal recruitment and estafa cases may
be filed simultaneously or separately. The filing
of charges for illegal recruitment does not bar
the filing of estafa, and vice versa.
ILLEGAL
ESTAFA
RECRUITMENT

b. YES. Alpha, being a licensed recruitment Malum prohibitum Malum in se

agency, still has obligations to A for It is not required that Accused defrauded
processing his papers for overseas it be shown that the another by abuse of
employment. Under Sec. 5(m) of RA 10022, recruiter wrongfully confidence, or by
failure to reimburse expenses incurred by represented himself means of deceit
the worker in connection with his as a licensed
documentation and processing for recruiter NOTE: It is essential
purposes of deployment in cases where the that the false
deployment does not actually take place NOTE: It is enough statement or
without the worker’s fault, amounts to that the victims were fraudulent
illegal recruitment. deceived as they representation
relied on the constitutes the very
Proof of Illegal Recruitment misrepresentation cause or the only
and scheme that motive which induces
There is illegal recruitment when one gives the caused them to the complainant to
impression of having the ability to send a worker entrust their money part with the thing of
abroad. It is undisputed that the appellant gave in exchange of what value.
complainants the distinct impression that she they later discovered
had the power or ability to send people abroad was a vain hope of
for work such that the latter were convinced to obtaining
give her the money she demanded to be so employment abroad.
employed. (People v. Goce, G.R. No. 113161, Aug.
29, 1995) Q: Bugo, by means of false pretenses and
fraudulent representation, convinced Dado
It is important that there must at least be a to give the amount of Php 120,000.00 for
promise or offer of employment from the processing the latter’s papers so that he can
person posing as a recruiter, whether locally or be deployed to Japan. Dado later on found
abroad. (People v. Laogo, G.R. no. 176264, Jan. 10, out that Bugo had misappropriated,
2011) misapplied and converted the money for her
own personal use and benefit. Can Dado file
Q: What qualifying circumstances will the cases of illegal recruitment and estafa
convert “illegal recruitment” to economic simultaneously?
sabotage thus subjecting its perpetrators to a
penalty of life imprisonment and a fine of at A: YES. Illegal recruitment and estafa cases may
least P500,000.00? (2005 BAR) be filed simultaneously or separately. The filing
of charges for illegal recruitment does not bar
A: An illegal recruitment is considered to have the filing of estafa, and vice versa. Bugo’s
evolved into economic sabotage when it is acquittal in the illegal recruitment case does not
committed by a syndicate or committed in large prove that she is not guilty of estafa.
scale. Illegal recruitment is deemed to have been
committed by a syndicate when the recruitment Illegal recruitment and estafa are entirely
is carried out by a group of three or more different offenses and neither one necessarily
persons conspiring and/or confederating with includes or is necessarily included in the other. A
one another in carrying out any act under Art. person who is convicted of illegal recruitment
38. On the other hand, it is deemed committed may, in addition, be convicted of estafa under

UNIVERSITY OF SANTO TOMAS 24

2021 GOLDEN NOTES
 Labor Law and Social Legislation
Art. 315, par. 2(a) of the RPC. In the same
manner, a person acquitted of illegal recruitment
may be held liable for estafa. Double jeopardy
will not set in because illegal recruitment is
malum prohibitum, in which there is no necessity
to prove criminal intent, whereas estafa is
malum in se, in the prosecution of which, proof of
criminal intent is necessary. (Sy v. People, G.R.
No. 183879, April 14, 2010)
LIABILITIES
LOCAL RECRUITMENT AGENCY
Liability of the Local Recruitment Agency
GR: A Local Recruitment Agency shall be jointly
and solidarily liable with its principal or
foreign-based employer for any violation of the
recruitment agreement and violation of
contracts of employment. [Sec. 10(a)(2), Rule V,
Book I, IRR]
In applying for a license to operate a private
employment agency for overseas recruitment
and placement, an applicant is required to
submit a verified undertaking. In that document,
the agency assumed all responsibilities for the
proper use of its license and the proper
implementation of the employment contracts
with the workers it recruited and deployed for
overseas employment. (Royal Crown
Internationale v. NLRC, G.R. No. 78085, Oct. 16,
1989)
XPN: Where the workers themselves insisted for
the recruitment agency to send them back to
their foreign employer despite their knowledge
of its inability to pay their wages, the agency is
absolved from liability. (Feagle Construction
Corp. v. Gayda, G.R. No. 82310, June 18, 1990)
Q: Santosa Datuman was deployed to Bahrain
after paying the required placement fee.
However, her employer took her passport
and instead of working as a saleslady, she
was forced to work as a domestic helper
contrary to the agreed salary approved by
POEA. She worked without compensation for
two years because of her employers’
continued failure and refusal to pay her
salary despite demand. When she finally
returned to the Philippines, she filed a
complaint against the local agency that
recruited her. Should the suit prosper?
A: YES. Under Sec. 1 (f), Rule II, Book II of the
1991 POEA Rules and Regulations, the local
agency shall assume joint and solidary liability
25
with the employer for all claims and liabilities
which may arise in connection with the
implementation of the contract, including but
not limited to payment of wages, health and
disability compensation and repatriation.
Private employment agencies are held jointly
and severally liable with the foreign-based
employer for any violation of the recruitment
agreement or contract of employment, to assure
the aggrieved worker of immediate and
sufficient payment of what is due him. This is in
line with the policy of the state to protect and
alleviate the plight of the working class.
(Datuman v. First Cosmopolitan Manpower, G.R.
No. 156029, Nov. 14, 2008)
Liability if the Recruitment or Placement
Agency is a Juridical Being
If the recruitment/placement agency is a
juridical being, the corporate officers, directors
or partners as the case may be, shall themselves
be jointly and solidarily liable with the
corporation or partnership for the claims and
damages. (Becmen Service Exporter and
Promotion v. Cuaresma, G.R. Nos. 182978-79,
April 7, 2009)
FOREIGN EMPLOYER
A foreign corporation which, through unlicensed
agents, recruits workers in the country may be
sued in and found liable by Philippine courts;
e.g., direct hiring by a foreign firm without
participation of POEA. (Azucena, Vol. 1, 2016, p.
104)
THEORY OF IMPUTED KNOWLEDGE
A rule in insurance law that any information
material to the transaction, either possessed by
the one concerned, even though in fact the agent
at the time of the transaction or acquired by him
before its completion, is deemed to be the
knowledge of the principal, at least so far as the
transaction knowledge is not communicated to
the principal at all. (Leonor v. Filipinas Compania,
48 OG 243, Jan. 10, 1950; Rovels Enterprises, Inc.
v. Ocampo, G.R. No. 136821, Oct. 17, 2002)
The Theory of Imputed Knowledge teaches that
the knowledge of the agent is knowledge of the
principal. (Sunace International Management
Services, Inc. v. NLRC, et al., G.R. No. 161757, Jan.
25, 2006)
Q: Sunace International Management
Services (Sunace) deployed to Taiwan
 Recruitment and Placement
Montehermozo as a domestic helper under a
12-month contract effective Feb. 1, 1997. The
deployment was with the assistance of a
Taiwanese broker, Edmund Wang, President
of Jet Crown International Co., Ltd. After her
12-month contract expired on Feb. 1, 1998,
Montehermozo continued working for her
Taiwanese employer for two more years,
after which she returned to the Philippines
on Feb. 4, 2000.
Shortly after her return she filed a complaint
before the NLRC against Sunace, one Perez,
the Taiwanese broker, and the employer-
foreign principal alleging that she was jailed
for three months and that she was underpaid.
Should Sunace be held liable for the
underpayment for the additional two years
that she worked for her Taiwanese employer
under the theory of imputed knowledge?
A: NO, the theory of imputed knowledge
ascribes the knowledge of the agent, Sunace, to
the principal Taiwanese Er, not the other way
around. The knowledge of the principal-foreign
Er cannot, therefore, be imputed to its agent
Sunace. There being no substantial proof that
Sunace knew of and consented to be bound
under the 2-year employment contract
extension, it cannot be said to be privy thereto.
As such, it and its owner cannot be held
solidarily liable for and of Montehermozo’s
claims arising from the 2-year employment
extension. (Sunace v. NLRC, G.R. No. 161757, Jan.
25, 2006)
SOLIDARY LIABILITY
Liability of the Private Employment Agency
and the Principal or Foreign-based Employer
They are jointly and solidarily liable for any
violation of the recruitment agreement and the
contracts of employment.
This joint and solidary liability imposed by law
against recruitment agencies and foreign
employers is meant to assure the aggrieved
worker of immediate and sufficient payment of
what is due him. (Becmen Service Exporter and
Promotion v. Cuaresma, G.R. Nos. 182978-79,
April 7, 2009)
PRETERMINATION OF CONTRACT OF
MIGRANT WORKER
Relief of a Worker When Terminated
Without Valid Cause
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
1. Full reimbursement of his placement fee
with 12% interest per annum;
2. Plus salaries for the unexpired portion of
his employment contract. (RA 10022)
NOTE: The three-month option is declared
unconstitutional for violating the equal
protection clause and the substantive due
process rule in the Constitution. (Serrano v.
Gallant Maritime Services Inc. and Marlow
Navigation Company, Inc., G.R. No. 167614, March
24, 2009)
This shall be given retroactive effect, because an
unconstitutional clause in the law confers no
rights, imposes no duties and affords no
protection. The unconstitutional provision is
inoperative, as if it were not passed into law at
all. (Skippers United Pacific, Inc. v. Doza, et. al,
G.R. No. 175558, Feb. 8, 2012)
However, Sec. 7 of RA 10022 amended Sec. 10 of
the Migrant Workers Act, and once again
reiterated the provision as above quoted.
Nonetheless, the Court in the en banc case of
Sameer Overseas Placement Agency, Inc. v. Joy C.
Cabiles still declared such as unconstitutional
despite its replication. (G.R. No. 170139, Aug. 05,
2014)
Q: Serrano, a seafarer, was hired by Gallant
Maritime and Marlow Navigation Co. for 12
months as Chief Officer. On the date of his
departure, he was constrained to accept a
downgraded employment contract for the
position of Second Officer, upon the
assurance that he would be made Chief
Officer after a month. It was not done; hence,
he refused to stay on as Second Officer and
was repatriated to the Phils. He had served
only 2 months & 7 days of his contract,
leaving an unexpired portion of 9 months &
23 days.
Serrano filed with the LA a Complaint against
Gallant Maritime and Marlow for
constructive dismissal and for payment of his
money claims. The LA rendered a favorable
decision to Serrano awarding him $8,770.00,
representing his salary for 3 months of the
unexpired portion of his contract of
employment applying RA 8042, Sec 10, par. 5:
Money Claims. - In case of termination
of overseas employment without just,
valid or authorized cause as defined by
law or contract, the workers shall be
entitled to the full reimbursement of his
26
 Labor Law and Social Legislation
placement fee with interest of 12% per
annum, plus his salaries for the
unexpired portion of his employment
contract or for 3 months for every year
of the unexpired term, whichever is
less.
Is the subject clause constitutional?
A: NO. The subject clause contains a “suspect
classification” in that, in the computation of the
monetary benefits of fixed-term Ees who are
illegally discharged, it imposes a 3-month cap on
the claim of OFWs with an unexpired portion of
one year or more in their contracts, but none on
the claims of other OFWs or local workers with
fixed-term employment. The subject clause
singles out one classification of OFWs and
burdens it with a peculiar disadvantage.
The clause is a violation of the right of Serrano
and other OFWs to equal protection and right to
substantive due process, for it deprives him of
property, consisting of monetary benefits,
without any existing valid governmental
purpose.
Thus, Serrano is entitled to his salaries for the
entire unexpired period of nine months and 23
days of his employment contract, pursuant to
law and jurisprudence prior to the enactment of
RA 8042. (Serrano v. Gallant Maritime Services &
Marlow Navigation Co., Inc., G.R. No.167614,
March 24, 2009)
Q: Joy was deployed to work for Taiwan
Wacoal, Co. Ltd. on June 26, 1997 for 1 year.
She alleged that Sameer Overseas Agency
required her to pay a placement fee of
P70,000.00. On July 14, 1997, Mr. Huwang of
Wacoal informed Joy, without prior notice,
that she was terminated and was given a
salary from June 26 to July 14, 1997 only. Joy
filed a complaint for illegal dismissal with the
NLRC. She asked for the return of her
placement fee, the withheld amount for
repatriation costs, payment of her salary for
23 months as well as moral and exemplary
damages.
The NLRC ruled that Joy was illegally
dismissed and awarded her three months’
worth of salary, the reimbursement of the
cost of her repatriation, and attorney’s fees.
Should Joy be awarded three months worth
of salary and reimbursement of the cost of
her repatriation?
27
A: NO. Joy is entitled to her salary for the
unexpired portion of her contract, in
accordance with Sec. 10 of RA 8042. Since she
started working on June 26, 1997 and was
terminated from employment on July 14, 1997,
Joy is entitled to her salary from July 15, 1997 to
June 25, 1998.
Furthermore, there is an implied stipulation in
contracts between the placement agency and the
overseas worker that in case the overseas
worker is adjudged as entitled to reimbursement
of his or her placement fees, the amount shall be
subject to a 12% interest per annum. This
implied stipulation has the effect of removing
awards for reimbursement of placement fees
from Circular No. 799’s coverage.
However, if judgment did not become final and
executory before July 1, 2013 and there was no
stipulation in the contract providing for a
different interest rate, other money claims under
Sec. 10 of RA 8042 shall be subject to the 6%
interest per annum in accordance with Circular
No. 799. (Sameer v. Cabiles, G.R. No. 170139, Aug.
5, 2014)
DIRECT HIRING
It occurs when an employer hires a Filipino
worker for overseas employment without going
through the POEA or entities authorized by the
SOLE.
Ban on Direct Hiring
GR: An employer may only hire Filipino workers
for overseas employment through POEA or
entities authorized by DOLE. (LC, Art. 18)
XPNs: Direct hiring by:
1. International organizations (e.g., World
Bank)
2. Name hires – individual workers who were
able to secure contracts for overseas
employment on their own efforts and
representations without the assistance or
participation of any agency. Their hiring,
nonetheless, must be processed through
the POEA.
3. Members of the diplomatic organizations
(e.g., those employed by an embassy)
4. Other Employers as may be allowed by
DOLE such as workers hired by a
relative/family member who is a
permanent resident of the host country.
 Recruitment and Placement
Purposes of the Prohibition on Direct Hiring:
1. To ensure the best possible terms and
conditions of employment for the worker.
2. To assure the foreign employer that he
hires only qualified Filipino workers.
3. To ensure full regulation of employment to
avoid exploitation.
MIGRANT WORKERS
Claims for Compensability of Work-related
death, sickness, disability
Migrant Workers Covered
Each migrant worker deployed by a
recruitment/ manning agency shall be covered
by a compulsory insurance policy which shall
be secured at no cost to the said worker.
Coverage of Policy
1. Accidental death – at least US$15,000
2. Natural death – at least US$10,000
3. Permanent Total Disability – at least
US$7,500
4. Costs of repatriation when employment is
terminated without any valid cause or by
the Ee with just cause
5. Subsistence allowance benefit - at least
US$100 per month for a maximum of 6
months
6. Money claims arising from Er’s liability
7. Compassionate visit
8. Medical evaluation
9. Medical repatriation
Duty of Recruitment/Manning Agency with
the Insurance Provider to Disclose and Assist
It shall be the duty of the recruitment/manning
agency, in collaboration with the insurance
provider, to sufficiently explain to the migrant
worker, before his/her departure, and to at least
one of his/her beneficiaries, the terms and
benefits of the insurance coverage, including the
claims procedure.
In filing a claim with the insurance provider, it
shall be the duty of the recruitment/manning
agency to assist the migrant worker and/or the
beneficiary and to ensure that all information
and documents in the custody of the agency
necessary for the claim must be readily
accessible to the claimant.
Liability of Recruitment/Manning Agency
In case it is shown that the migrant worker has
paid the premium or the cost of the insurance
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
coverage, the licensed recruitment/manning
agency shall lose its license and all its directors,
partners, proprietors, officers and Ees shall be
perpetually disqualified from engaging in the
business of recruitment of overseas workers.
Such penalty is without prejudice to any other
liability which such persons may have incurred
under existing laws, rules, or regulations.
Qualification of Insurance Companies
Only reputable private insurance companies
duly registered with the Insurance Commission
(IC), which are:
1. In existence and operational for at least
five (5) years;
2. With a net worth of at least Five Hundred
Million Pesos (Php 500,000,000.00) to be
determined by the IC; and
3. With a current year certificate of authority
shall be qualified to provide for the
worker's insurance coverage.
Disqualification of Insurance Companies
Insurance companies who have directors,
partners, officers, Ees or agents with relatives,
within the fourth (4th) civil degree of
consanguinity or affinity, who work or have
interest in any of the licensed recruitment/
manning agencies or in any of the government
agencies involved in the overseas employment
program shall be disqualified from providing
this workers' insurance coverage.
NOTE: It shall be the duty of the said directors,
partners, officers, Ees or agents to disclose any
such interest to the IC and POEA.
Rules in Settlement of Money Claims
For the payment of money claims, the following
rules shall govern:
1. After a decision has become final and
executory or a settlement/compromise
agreement has been reached, Labor Arbiter
shall issue a writ of execution mandating
the respondent recruitment/manning
agency to pay the amount adjudged or
agreed upon;
2. The recruitment/manning agency shall
then immediately file a notice of claim with
its insurance provider for the amount of
liability insured;
3. The insurance company shall make
payment to the recruitment/manning
28
 Labor Law and Social Legislation
agency the amount adjudged or agreed
upon, or the amount of liability insured,
whichever is lower. After receiving the
insurance payment, the recruitment/
manning agency shall immediately pay the
migrant worker's claim in full, taking into
account that in case the amount of
insurance coverage is insufficient to satisfy
the amount adjudged or agreed upon, it is
liable to pay the balance thereof;
4. In case the insurance company fails to
make payment, the recruitment/manning
agency shall pay the amount adjudged or
agreed upon;
5. If the worker's claim was not settled within
the aforesaid thirty-day period, the
recruitment/manning agency's
performance bond or escrow deposit shall
be forthwith garnished to satisfy the
migrant worker's claim;
6. The provision of compulsory worker's
insurance under this section shall not affect
the joint and several liability of the foreign
Er and the recruitment/manning agency;
and
7. Lawyers for the insurance companies,
unless the latter are impleaded, shall be
prohibited to appear before the NLRC in
money claims cases.
JURISDICTION UNDER
THE MIGRANT WORKERS ACT
Criminal Actions
Jurisdiction
1. RTC of the place where the offense was
committed; or,
2. RTC of the place where the offended party
actually resided at the time of the
commission of the offense. (Sec. 9, RA
8042)
Money Claims
The NLRC has the original and exclusive
jurisdiction to hear and decide claims arising out
of an Er-Ee relationship or by virtue of any law
or contract Involving Filipino workers for
overseas deployment including claims for actual,
moral, exemplary and other forms of damages.
29
The claims must be commenced within 3 years
from the time the cause of action accrued
otherwise forever barred.
Art. 306 covers claims for overtime pay, holiday
pay, service incentive leave pay, bonuses, salary
differentials, and illegal deductions by an
employer. It also covers money claims arising
from seafarer contracts. (Protective Maximum
Security Agency v. Fuentes. G.R. No 169303, Feb.
11, 2005)
Administrative Actions
The POEA has the original and exclusive
jurisdiction to hear and decide:
1. All cases which are administrative in
character, involving or arising out of
violations of rules and regulations relating
to licensing and registration of
recruitment and employment agencies or
entities; and,
2. Disciplinary action cases and other special
cases which are administrative in
character, involving Ers, principals,
contracting partners and Filipino migrant
workers.
a. It may be filed with the POEA
Adjudication Office or the
DOLE/POEA regional office of the
place where the complaint applied or
was recruited at the option of the
complainant. The office with which
the complaint was first filed shall
take cognizance of the case.
b. Disciplinary action cases and other
special cases, as mentioned in the
preceding Section, shall be filed with
POEA Adjudication Office.
Compromise Agreement
Consistent with the policy encouraging amicable
settlement of labor disputes, Sec. 10 of RA 8042
allows resolution by compromise of cases filed
with the NLRC.
Any compromise/amicable settlement or
voluntary agreement on money claims inclusive
of damages shall be paid within thirty (30) days
from the approval of the settlement by the
appropriate authority. (Sec. 10, RA 8042, as
amended by RA 10022)
PENALTIES FOR ILLEGAL RECRUITMENT
 Recruitment and Placement

PENALTIES UNDER RA 10022

The preliminary investigations of cases under
Offender / Offense Penalty RA 10022 shall be terminated within a period
Life imprisonment of 30 calendar days from the date of their
Illegal recruitment as filing.
+
economic sabotage
Fine of P2M-P5M
If the PI is conducted by a prosecution
Provided: officer and a prima facie case
1. If person illegally is established
recruited is below
18 years of age or Information shall be filed in court within 24
Maximum
2. Illegal recruitment hours from the termination of the
penalty shall be
is committed by a investigation
imposed
non-licensee/non-
(non-bailable) Prescriptive Period for
holder
Illegal Recruitment Cases
12 yrs. & 1 day - 20 Simple Illegal
Any person found Economic Sabotage
yrs. imprisonment; Recruitment
guilty of illegal
or Within 20 years from
recruitment Within 5 years from
Fine of P1M-P2M the time illegal
the time illegal
recruitment
6 yrs. & 1 day - 12 recruitment
Any person found happened. (Sec. 12,
yrs. imprisonment; happened
guilty of the RA 8042)
or
prohibited acts
Fine of P500K - P1M
Jurisdiction of the LA vs. POEA
2-5 yrs.
Licensee/holder of
imprisonment; or JURISDICTION
authority violates
Fine of P10K - P50K;
provisions Labor Arbiter POEA
or both
Original and
4-8 yrs. exclusive jurisdiction
Non-licensee/non-
imprisonment; or over:
holder of authority
Fine: P20K - P100K Original and
violates provisions
or both exclusive jurisdiction 1. All cases which are
Penalty imposed over all claims arising administrative in
Corporation, out of Er-Ee character relating to
upon officer/s
partnership, relationship or by licensing and
responsible for
association, or entity virtue of any law or registration of
violation
contract involving recruitment and
Penalties prescribed OFWs including employment agencies
under RA 10022, claims for:
Alien + 2. Disciplinary Action
Deportation without 1. Actual cases and other
further proceedings 2. Moral special cases, which
3. Exemplary are administrative in
Automatic 4. Other forms of character, involving
revocation of license damages. (Sec. 10, RA Ees, principals,
or authority and all 8042) contracting partners
permits and and Filipino migrant
In every case privileges of the workers. (Rule VII,
recruitment or Book VII, POEA Rules)
manning agency,
lending institutions, Q: A seafarer was prevented from leaving the
training school or port of Manila and refused deployment
medical clinic without valid reason. His POEA-approved
employment contract provides that the
PERIODS
employer-employee relationship shall
Mandatory Period for Resolution of commence only upon the seafarer’s actual
Illegal Recruitment Cases departure from the port at the point of hire.

UNIVERSITY OF SANTO TOMAS 30

2021 GOLDEN NOTES
 Labor Law and Social Legislation
Is the seafarer entitled to relief under the
Migrant Workers’ Act, in the absence of an
employer-employee relationship?
A: YES. Despite the absence of an Er-Ee
relationship, the NLRC has jurisdiction over the
seafarer’s complaint. The jurisdiction of LAs is
not limited to claims arising from Er-Ee
relationships. Sec. 10 of the Migrant Workers Act
provides that the LAs shall have jurisdiction over
claims arising out of an Er-Ee relationship or by
virtue of any law or contract involving Filipino
workers for overseas deployment including
claims for actual, moral, exemplary and other
forms of damages. Since the present case
involves the employment contract entered into
by petitioner for overseas employment, his
claims are cognizable by the LAs of the NLRC.
(Santiago v. CF Sharp Crew Management, G.R. No.
162419, July 10, 2007)
Matters that fall outside the jurisdiction of
the POEA
1. Foreign judgments–claims must be brought
before judicial courts.
NOTE: POEA is not a court. It is an
administrative agency, exercising
adjudicatory or quasi-judicial functions.
2. Torts – claims which fall under the provisions
of the New Civil Code.
EMPLOYMENT OF NON-RESIDENT ALIENS
EMPLOYMENT PERMIT OF NON-RESIDENT
ALIENS
An employment permit may be issued to:
1. A non-resident alien; or
2. The applicant employer after a
determination of the non-availability of a
person in the Philippines who is
competent, able and willing at the time of
application to perform the services for
which the alien is desired.
NOTE: For an enterprise registered in preferred
areas of investments, said permit may be issued
upon recommendation of the Government
agency charged with the supervision of said
registered enterprise. (LC, Art. 40)
Persons Required to Obtain Employment
Permit
31
GR: All non-resident foreign nationals who
intend to engage in gainful employment in the
Philippines and any domestic or foreign
employer who desires to engage an alien for
employment in the Philippines.
XPNs:
1. Members of the diplomatic services and
foreign government officials accredited by
the Philippine government;
2. Officers and staff of international
organizations of which the Philippine
government is a cooperating member, and
their legitimate spouses desiring to work in
the Philippines;
3. Foreign nationals elected as members of
the Governing Board who do not occupy
any other position, but have only voting
rights in the corporation;
4. All foreign nationals granted exemption by
special laws and all other laws that may be
promulgated by the Congress;
5. Owners and representatives of foreign
principals, whose companies are accredited
by the POEA, who come to the Philippines
for a limited period solely for the purpose
of interviewing Filipino applicants for
employment abroad;
6. Foreign nationals who come to the
Philippines to teach, present and/or
conduct research studies in universities
and colleges provided that the exemption is
on a reciprocal basis; and
7. Resident foreign nationals and temporary
or probationary resident visa holders
employed or seeking employment in the
Philippines. (DO 97-09, Series of 2009)
Other Persons Required to Obtain an Alien
Employment Permit
1. Non-resident foreign nationals admitted to
the Philippines on non-working visas and
who wish to seek employment.
2. Missionaries or religious workers who
intend to engage in gainful employment.
NOTE: No alien employees for nationalized
industries such as:
a. Educational institutions;
b. Media; and
c. Public utilities. (Duka, Labor Laws and
Social Legislation, A Barrister’s Companion,
2016, p. 85)
Q: The DOLE issued an alien employment
permit for Earl Cone, a U.S. citizen, as sports
consultant and assistant coach for GMC.
 Recruitment and Placement
Later, the Board of Special Inquiry of the
Commission on Immigration and Deportation
approved Cone’s application for a change of
admission status from temporary visitor to
pre-arranged employee. A month later, GMC
requested that it be allowed to employ Cone
as full-fledged coach. The DOLE Regional
Director granted the request.
The Basketball Association of the Phils.
appealed the issuance of said permit to the
SOLE who cancelled Cone’s employment
permit because GMC failed to show that there
is no person in the Philippines who is
competent and willing to do the services nor
that the hiring of Cone would redound to the
national interest. Is the act of the SLE valid?
A: YES. GMC’s claim that hiring a foreign coach is
an Er’s prerogative has no legal basis. Under Art.
40 of the LC, an Er seeking employment of an
alien must first obtain an employment permit
from the DOLE. GMC’s right to choose who to
employ is limited by the statutory requirement
of an employment permit. (GMC v. Torres, G.R.
No. 93666, April 22, 1991)
PROHIBITION AGAINST TRANSFER
OF EMPLOYMENT
After the issuance of an employment permit, the
alien shall not transfer to another job or change
his Er without prior approval of the SLE. [LC, Art.
41(a)]
Any non-resident alien who shall take up
employment in violation of the provisions of the
Code shall be punished. [LC, Art. 41(b)]
Alien workers shall be subject to deportation
after service of his sentence. (LC, Art. 41)
Duration of the Employment Permit
GR: Minimum of 1 year
XPN: If the employment contract, consultancy
services, or other modes of engagement provides
otherwise, which in no case shall exceed 5 years.
[DOLE D.O. 97-09, Revised Rules for the Issuance
of Employment Permits to Foreign Nationals
(2009)]
Employment of Aliens in Entities Engaged in
Nationalized Activities
GR: Aliens may not be employed or engaged in
nationalized activities
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
XPNs:
1. Secretary of Justice specifically authorizes
the employment of technical personnel;
2. Aliens are elected members of the board of
directors or governing body of
corporations or associations engaging in
partially nationalized activities shall be
allowed in proportion to their allowable
participation or share in the capital of such
entities [Sec. 2(A), Anti-Dummy Law, as
amended by PD 715]; or
3. Enterprises registered under the Omnibus
Investment Code in case of technical,
supervisory or advisory positions, but for a
limited period.
DOCTRINE OF FORUM NON CONVENIENS
Under the rule of forum non conveniens, a
Philippine court or agency may assume
jurisdiction over the case if it chooses to do so
provided:
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. (Manila
Hotel Corp. v. NLRC, G.R. No. 120077, Oct. 13,
2000)
DOCTRINE OF PROCESSUAL PRESUMPTION
GR: Philippine laws apply even to overseas
employment contracts.
This rule is rooted in the constitutional provision
of Sec. 3, Art. XIII that the State shall afford full
protection to labor, whether local or overseas.
Hence, even if the OFW has his employment
abroad, it does not strip him of his rights to
security of tenure, humane conditions of work
and a living wage under our Constitution.
XPN: Parties may agree that a foreign law shall
govern the employment contract subject to the
following requisites:
1. That it is expressly stipulated in the
overseas employment contract that a
specific foreign law shall govern;
32
 Labor Law and Social Legislation

2. That the foreign law invoked must be
proven before the courts pursuant to the
Philippine rules on evidence;
3. That the foreign law stipulated in the
overseas employment contract must not be
contrary to law, morals, good customs,
public order, or public policy of the
Philippines; and
4. That the overseas employment contract
must be processed through the POEA.
In the absence of:
employment contract that was not scrutinized
by the POEA definitely cannot be invoked as it is
an unexamined foreign law.
NOTE: Lacking any one of the four requisites
would invalidate the application of the foreign
law, and the Philippine law shall govern the
overseas employment contract. (International
Personnel & Management Services [IPAMS], Inc. v.
De Vera & Arriola, G.R. No. 205703, March 7,
2016)

1st requisite: or that no foreign law was

expressly stipulated in the employment contract
which was executed in the Philippines, then the
domestic labor laws shall apply in accordance
with the principle of lex loci contractus. This is
based on the cases of Sameer Overseas and PCL
Shipping;

2nd requisite: or that the foreign law was not

proven pursuant to Secs. 24 and 25 of Rule 132
of the Revised Rules of Court, then the
international law doctrine of processual
presumption operates. The said doctrine
declares that "where a foreign law is not pleaded
or, even if pleaded, is not proved, the
presumption is that foreign law is the same as
ours." This was observed in the cases of EDI-
Staffbuilders and ATCI Overseas.

3rd requisite: or that the foreign law stipulated

is contrary to law, morals, good customs, public
order or public policy, then Philippine laws
govern. This finds legal bases in the Civil Code,
specifically Art. 17 and Art. 1306;

4th requisite: or that the overseas employment

contract was not processed through the POEA,
then Art. 18 of the Labor Code is violated. Art.
18 provides that no employer may hire a
Filipino worker for overseas employment except
through the boards and entities authorized by
the Secretary of Labor. In relation thereto, Sec. 4
of RA 8042, as amended, declares that the State
shall only allow the deployment of overseas
Filipino workers in countries where the rights of
Filipino migrant workers are protected.

Thus, the POEA, through the assistance of the

Department of Foreign Affairs, reviews and
checks whether the countries have existing labor
and social laws protecting the rights of workers,
including migrant workers. Unless processed
through the POEA, the State has no effective
means of assessing the suitability of the foreign
laws to our migrant workers. Thus, an overseas

33
 Labor Standards – Conditions of Employment

assign or discipline employees, or to effectively

LABOR STANDARDS recommend such managerial actions. All
employees not falling within this definition are
considered rank and file employees. (PMTI-
ULGWF v. Ferrer-Calleja, G.R. No. 85915, Jan. 17,
CONDITIONS OF EMPLOYMENT 1990)

COVERAGE/EXCLUSIONS 1. Their primary duty consists of the

management of the establishment in which
they are employed or of a department or
GR: Title I, Book III of the Labor Code dealing
sub-division thereof.
with hours of work, weekly rest periods,
2. They customarily and regularly direct the
holidays, service incentive leaves and service
work of two or more employees therein.
charges, covers all employees in all
3. They have the authority to hire or fire
establishments, whether for profit or not. (LC,
employees of lower rank; or their
Art. 82)
suggestions and recommendations as to
hiring and firing and as to the promotion or
XPN: (GF-MOM-WPD)
any other change of status of other
1. Government employees;
employees, are given particular weight.
2. Field personnel;
[Sec. 2(b), Rule I, Book III, IRR]
3. Managerial employees;
4. Officers and members of the managerial
They are employed as such by virtue of their
staff;
special training or expertise, experience or
5. Members of the family of the employer who
knowledge and for positions which require the
are dependent on him for support;
exercise of independent judgment and
6. Workers paid by results (Secs. 1 and 2, Rule
discretion. They are not subject to the rigid
I, Book III, Rules Implementing the Labor
observance of regular office hours, as the true
Code.);
worth of their services do not depend so much
7. Persons in the personal service of another;
on the time they spend in office but more on the
and
results of their accomplishments. For these types
8. Domestic helpers.
of workers, it is not feasible to provide fixed
hourly rate of pay or maximum hours of labor.
The aforementioned employees are not entitled
(NAWASA v. NWSA Consolidated Union, G.R. No. L-
to overtime pay, premium pay for rest days and
18939, Aug. 31, 1964; UPSU v. Laguesma, G.R. No.
holidays, night shift differential pay, holiday pay,
122226, March 25, 1998)
service incentive leave and service charges.
(Poquiz, 2012, p. 171)
Officers or Members of Managerial Staff
Government Employees
1. Their primary duty consists of the
performance of work directly related to
The terms and conditions of their employment
management policies of their employer;
are governed by the Civil Service Law.
2. They customarily and regularly exercise
discretion and independent judgment;
In case of government-owned or controlled
3. They regularly and directly assist a
corporations with original charters, terms and
proprietor or a managerial employee
conditions of employment may be governed by
whose primary duty consists of the
such legislated charters.
management of the establishment in which
he is employed or subdivision thereof; or
Government-owned or controlled corporations
execute under general supervision work
without original charters and created under the
along specialized or technical lines
Corporation Code are governed by the Labor
requiring special training, experience, or
Code. (Poquiz, 2012, p. 172)
knowledge; or execute, under general
supervision, special assignments and tasks;
Managerial Employees
and
4. They do not devote more than 20% of their
A managerial employee is one who is vested
hours worked in a work week to activities
with powers or prerogatives to lay down or
which are not directly and closely related
execute management policies and or to hire,
transfer, suspend, lay off, recall, discharge,

UNIVERSITY OF SANTO TOMAS 34

2021 GOLDEN NOTES
 Labor Law and Social Legislation

to the performance of the work described These are those who:

above. (Sec. 2[c], Rule I, Book III, IRR)
a. Perform such services in the employer's
Officers and members of a managerial staff (such home which are usually necessary or
as project engineers) are considered managerial desirable for the maintenance and
employees for they customarily and regularly enjoyment thereof; or
exercise discretion and independent judgment,
that is, their powers are not subject to b. Minister to the personal comfort,
evaluation, review and final action by the convenience, or safety of the employer as
department heads and other higher executives of well as the members of his employer's
the company. (Franklin Baker Co. of the household. [Sec. 2(d), Rule I, Book III, IRR]
Philippines v. Trajano, G.R. No. 75039, Jan. 28,
1988) NOTE: They are not covered by this Title
because terms and conditions of employment
Test of Supervisory or Managerial Status are governed by the provisions of RA 10361
(Kasambahay Law).
It depends on whether a person possesses
authority that is not merely routinary or clerical A laundrywoman in staff houses of a company or
in nature but one that requires use of within the premises of the business of the
independent judgement. employer, not actually serving the family of the
employer, is a regular employee. She is not
MANAGERIAL EMPLOYEES included in the definition of domestic servants.
Book III, Art. 82 Book V, Art. 219 (M) (Apex Mining Co. Inc. v. NLRC, G.R. No. 94951,
Labor Standards Labor Relations April 22, 1991)
Definition
Refer to those whose Vested with the powers Field Personnel
primary duty or prerogative to lay
consists of the down and execute Field personnel refer to non-agricultural
management of the management policies, employees who:
establishment in and/or to hire, transfer,
which they are suspend, lay-off, recall, 1. Regularly perform their duties away from
employed or of a discharge, assign, or the principal place of business or branch
department or discipline employees. office of the employer; and
subdivision thereof, 2. Whose actual hours of work in the field
and to the other cannot be determined with reasonable
officers or members certainty. (Sec. 27, Rule II, Book III, IRR)
of the managerial
staff. They are exempted from the coverage due to the
nature of their functions which requires
Application performance of service away from the principal
Used only for Used only for purposes place of business. Hence, they are free from the
purposes of Book III of Book V (i.e. forming, personal supervision of the employer and the
(i.e. working joining and assisting of latter cannot determine with reasonable
conditions, rest unions, certification certainty the actual number of hours of work
periods, and benefits) election, and, collective expended for the employer's interest.
bargaining)
The definition of a "field personnel" is not
Inclusion of Supervisors merely concerned with the location where the
Supervisors are Supervisors are not employee regularly performs his duties but also
members of the managerial employees with the fact that the employee’s performance is
managerial staff. In under Book V(Azucena, unsupervised by the employer. In order to
effect, supervisor is a Vol. 1, 2016, p. 217) conclude whether an employee is a field
manager for employee, it is also necessary to ascertain if
purposes of Book III. actual hours of work in the field can be
determined with reasonable certainty by the
employer. In so doing, an inquiry must be made
Domestic Servants/Persons in The Personal
as to whether or not the employee’s time and
Service of Another
performance are constantly supervised by the

35
 Labor Standards – Conditions of Employment
employer. (Autobus Transport Systems Inc. v.
Antonio Bautista, G.R. No. 156367, May 16, 2005)
e.g., Outside sales personnel, agents on
commission basis, or insurance field agents (San
Miguel Brewery v. Democratic Labor Union, G.R.
No. L-18353, July 31, 1963); meter readers,
medical representatives. (Duka, Labor Laws and
Social Legislation, A Barrister’s Companion, 2016,
p. 118)
Rule in case of Drivers/Bus Conductors
It is of judicial notice that along the routes that
are plied by these bus companies, there are its
inspectors assigned at strategic places who
board the bus and inspect the passengers, the
punched tickets, and the conductor's reports.
There is also the mandatory once-a-week car
barn or shop day, where the bus is regularly
checked as to its mechanical, electrical, and
hydraulic aspects, whether or not there are
problems thereon as reported by the driver
and/or conductor. They too, must be at specific
place as specified time, as they generally observe
prompt departure and arrival from their point of
origin to their point of destination. In each and
every depot, there is always the dispatcher
whose function is precisely to see to it that the
bus and its crew leave the premises at specific
times and arrive at the estimated proper time.
These are present in the case at bar. The driver,
the complainant herein, was therefore under
constant supervision while in the performance
of this work. He cannot be considered field
personnel. (Autobus Transport System, Inc. v.
Bautista, G.R No. 156367, May 16, 2005)
Members of the Family
They are exempted from the coverage, for the
support given by the employer may exceed the
benefit for which an employee is entitled under
appropriate labor provisions. To cover them
under Art. 82, may create labor problems that
would eventually break-up the family, which is
the evil sought to be prevented. (Poquiz, 2012, p.
175)
Workers Paid by Results
Workers who are paid by results include those
who are paid on piece-work, "takay," “pakiao” or
task basis.
Payment of this type of worker is determined by
the results of the work performed or the number
of units produced, not the number of hours used
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
in the completion of the job or the time spent in
production. (Poquiz, 2012, p. 175)
Tailors and similar workers hired in the tailoring
establishment, although paid weekly wages on
piece-work basis, are employees and not
independent contractors, and accordingly, as
regular employees paid on piece-rate basis, they
are not entitled to overtime pay, holiday pay,
premium pay for holiday/rest day and service
incentive leave pay. (Villaga v. NLRC, G.R. No.
75038, Aug. 23, 1993)
An employee who is engaged on a task or
contract basis, purely commission basis, or those
paid by results, is not automatically excluded by
that fact alone. To be excluded, the employee
must also fall under the classification of field
personnel.
NORMAL HOURS OF WORK
GR: The normal hours of work of any employee
shall not exceed 8 hours a day. (LC, Art. 83)
NOTE: There is no hard limit on the maximum
hours of work that may be rendered by an
employee. However, work rendered beyond the
eight-hour limit would not be considered
normal. It would be overtime, and thus subject
to additional pay to entitled employees.
XPNs:
1. Health personnel
2. Compressed workweek
NOTE: Department Orders providing for
maximum hours of work for bus drivers, movie
workers, sea farers, where there is a compressed
work week arrangement in place, and children
employees are also subjected to a maximum
number of work hours per day.
Rationale of the 8-Hour Labor
1. To safeguard the health and welfare of the
laborer; and
2. To minimize unemployment by utilizing
different shifts. (Manila Terminal Co., Inc. v.
CIR, G.R. No. L-4148, July 16, 1952)
3. To afford the employees adequate time to
lead richer and more fruitful, meaningful
lives and to be able to participate
intelligently in public concerns.
Normal hours of work may be shortened or
compressed. Neither does it follow that a person
36
 Labor Law and Social Legislation
who does not observe normal hours of work
cannot be deemed an employee.
In Cosmopolitan Funeral Homes, Inc. v. Maalat
(G.R. No. 86693, July 2, 1990), the employer
similarly denied the existence of an Er-Ee
relationship, as the claimant according to it, was
a "supervisor on commission basis" who did not
observe normal hours of work. The Supreme
Court declared that there was an Er-Ee
relationship, noting that "the supervisor,
although compensated on a commission basis,
[is] exempt from the observance of normal hours
of work for his compensation is measured by the
number of sales he makes." (Lazaro v. SSS, G.R.
No. 138254, July 30, 2004)
The eight-hour work requirement does not,
however, preclude the employer in the exercise
of its management prerogatives to reduce the
number of working hours, provided that there is
no diminution of existing benefits. (Poquiz, 2012,
p. 176)
The right to fix the work schedules of the
employees rests principally on their employer.
(Sime Darby Pilipinas, Inc. v. NLRC, G.R. 119205,
April 15, 1998)
Management is free to regulate, according to its
own discretion and judgment, all aspects of
employment, including hiring, work
assignments, working methods, time, place and
manner of work, processes to be followed,
supervision of workers, working regulations,
transfer of employees, work supervision, layoff
of workers and discipline, dismissal, and recall of
workers. (Manila Jockey Club Employees Labor
Union v. MJCI, G.R. No. 167760, March 7, 2007)
Work day
Work day is the 24-hour period which
commences from the time the employee
regularly starts to work.
Illustration: If the worker starts to work 8 am
today, the workday is from 8 am today up to 8
am tomorrow. (Azucena, Vol. 1, 2016, p. 221)
Part-time Work
It is not prohibited to have normal hours of work
of less than eight hours a day. What the law
regulates is work hours exceeding eight – it
prescribes the maximum but not the minimum.
37
Art. 83 does not say that the normal hours of
work is or should be eight hours but that it shall
not exceed eight. (Azucena, Vol. 1, 2016, p. 226)
NOTE: Under Art. 124, as amended by RA 6727,
wage proportionate to part-time work is
recognized. The wage and benefits of a part-time
worker are in proportion to the number of hours
worked. E.g., If an Ee earns P300.00 for an 8-
hour work, he shall then get P150.00 for work
done in 4 hours.
Broken Hours
Minimum normal 8 working hours fixed by law
need not be continuous to constitute the legal
working day. It may mean broken hours of say, 4
hours in the morning and 4 hours in the evening
or variation thereof provided the total of 8 hours
is accomplished within the work day. (Chan, Vol.
1, p. 381)
COMPRESSED WORKWEEK
It is a scheme where the normal workweek is
reduced to less than 6 days but the total number
of work-hours of 48 hours per week shall
remain.
The normal workday is increased to more than
8 hours, but not to exceed 12 hours, without
corresponding overtime premium. The concept
can be adjusted accordingly depending on the
normal workweek of the company. (Department
Advisory Order No. 2, Series of 2004)
Requisites
1. The scheme is expressly and voluntarily
supported by majority of the Ees.
2. In firms using substances, or operating in
conditions that are hazardous to health, a
certification is needed from an accredited
safety organization or the firm’s safety
committee that work beyond 8 hours is
within the limit or levels of exposure set by
DOLE’s occupational safety and health
standards.
3. The DOLE Regional Office is duly notified.
(ibid.)
Valid Compressed Work Week
The validity of the reduction of working hours
can be upheld when the arrangement is:
1. Temporary;
 Labor Standards – Conditions of Employment
2. It is a more humane solution instead of a
retrenchment of personnel;
3. There is notice and consultations with the
workers and supervisors;
4. A consensus is reached on how to deal with
deteriorating economic conditions; and
5. It is sufficiently proven that the company
was suffering from losses.
NOTE: Under the Bureau of Working Conditions’
bulletin, a reduction of the number of regular
working days (RWD) is valid where the
arrangement is resorted to by the Er to prevent
serious losses due to causes beyond his control,
such as when there is a substantial slump in the
demand for his goods or services or when there
is a lack of raw materials. (Linton Commercial v.
Hellera, G.R. No. 163147, Oct. 10, 2007)
Conditions where a "compressed workweek"
schedule may be legally authorized as an
exception to the "8-hour a day" requirement
under the LC (2005 BAR)
1. The Ee voluntarily agrees to it;
2. There is no diminution in their weekly or
monthly take home pay or fringe benefits;
3. The benefits are more than or at least
commensurate or equal to what is due to
the Ees without the compressed work
week;
4. OT pay will be due and demandable when
they are required to work on those days
which should have ceased to be working
days because of the compressed work week
schedule;
5. No strenuous physical exertion or that they
are given adequate rest periods;
6. It must be for a temporary duration as
determined by the DOLE.
Types of Flexible Working Arrangements
1. Reduction of workdays – where the
normal workdays per week are reduced
but should not last for more than six (6)
months.
2. Rotation of workers – where the Ees are
rotated or alternately provided work
within the workweek.
3. Forced leave – where the Ee are required
to go on leave for several days or weeks,
utilizing their leave credits if there are any.
4. Broken-time schedule – where the work
schedule is not continuous but the number
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
of work hours within the day or week is not
reduced.
5. Flexi-holiday schedule – where the Ees
agree to avail themselves of the holidays at
some other days, provided that there is no
diminution of existing benefits as a result of
such arrangement.
Flexible Work Schedule – is 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. [Sec. 3
(e), RA 8972]
The employer shall provide for a flexible
working schedule for solo parents: Provided,
That the same shall not affect individual and
company productivity: Provided, further, that
any employer may request exemption from the
above requirements from the DOLE on certain
meritorious grounds. (Sec. 6, RA 8972)
HOURS WORKED
Working Time
Working time is one during which an employee
is actually working. It may include an instance
when an employee is not actually working but he
is required to be present in the employer's
premises. Thus, the fact that he is required to be
present although not actually doing any work, is
still deemed working time. (Poquiz, 2012, p. 179)
When Hours Worked are Compensable
1. Ee is required to be on duty or to be at a
prescribed workplace;
2. Ee is suffered or permitted to work;
3. Rest periods of short duration during
working hours which shall not be more
than 20 minutes; and
4. Meal periods of less than 20 minutes. (Sec.
7, Rule I, Book III, IRR)
NOTE: Travel time when beneficial to the Er is
compensable. (Rada v. NLRC, G.R. No. 96078, Jan.
9, 1992)
The case of Reotan v. National Rice and Corn
Corporation involves a company circular where
approval of the corresponding department head
should be secured before overtime work may be
performed with pay. The employee performed
overtime services upon the order of his
immediate superior only, without any order or
approval from the department head.
38
 Labor Law and Social Legislation
The SC ruled that hours worked by employee is
still compensable citing Manila Railroad Co. v.
CIR that if the work performed was necessary, or
that it benefited the company or that the
employee could not abandon his work at the end
of his eight hour work because there was no
substitute ready to take his place and he
performed overtime services upon the order of
his immediate superior, notwithstanding the fact
that there was a standing circular to the effect
that before overtime work may be performed
with pay, the approval of the corresponding
department head should be secured, such
overtime services are compensable in spite of
the fact that said overtime services were
rendered without the prior approval of the
Department Head. (Reotan v. National Rice and
Corn Corporation, G.R. No. L-16223, Feb. 27, 1962)
Principles in Determining Hours Worked
1. All hours which the Ee is required to give to
his Er regardless of whether or not such
hours are spent in productive labor or
involve physical or mental exertion.
2. Rest period is excluded from hours worked,
even if Ee does not leave his workplace, it
being enough that:
a. He stops working;
b. May rest completely; or
c. May leave his workplace, to go
elsewhere, whether within or
outside the premises of the
workplace.
3. All time spent for work is considered hours
worked if:
a. The work performed was necessary;
b. If it benefited the Er; or
c. The Ee could not abandon his work
at the end of his normal working
hours because he had no
replacement;
d. Provided, the work was with the
knowledge of his Er or immediate
supervisor.
4. The time during which an Ee is inactive by
reason of interruptions in his work beyond
his control shall be considered working
time:
a. If the imminence of the resumption
of the work requires the Ees
presence at the place of work; or
b. If the interval is too brief to be
utilized effectively and gainfully in
39
the Ees own interest. (Sec. 4, Rule I,
Book III, IRR)
Rules on Hours Worked
A. WAITING TIME
It shall be considered as working time if:
1. Waiting is an integral part of this work;
2. The employee is required or engaged by
the employer to wait; or
3. When employee is required to remain on
call in the employer’s premises or so close
thereto that he cannot use the time
effectively and gainfully for his own
purpose. (Sec. 5, Rule I, Book III, IRR)
NOTE: An employee who is not required to
leave word at his home or with company
officials where he may be reached is not
working while on call. [Sec. 5(b), Rule I, Book III,
IRR]
The controlling factor is whether waiting time
spent in idleness is so spent predominantly for
the employer’s benefit or for the employee’s.
Engaged to Wait v. Waiting to be Engaged
In engaged to wait, waiting is an integral part
of the job; the time spent waiting is
compensable, while in waiting to be engaged,
idle time is not working time; it is not
compensable.
B. PRELIMINARY AND POSTLIMINARY
ACTIVITIES
Preliminary (before work) and postliminary
(after actual work) activities deemed
performed during working hours and
compensable:
1. Where such activities are controlled by
the employer or required by the
employer; and
2. Pursued necessarily and primarily for the
employer's benefit. (31 Am. Jur. 882-883)
Employees are the entitled to portal pay for
time spent on incidental activities before or
after the regular working period. (CCHI, Labor
Law Course, 318)
Thirty-minute assembly time long practiced
and institutionalized by mutual consent of the
parties under the collective bargaining
 Labor Standards – Conditions of Employment
agreement cannot be considered waiting time
of the employees if they are not subject to the
absolute control of the company during this
period. (Arica v. NLRC, G.R. No. 78210, Feb. 28,
1989)
C. TRAVEL TIME
1. Travel from home to work
GR: Normal travel from home to work is
not working time.
XPNs:
a. Emergency call outside his regular
working hours where he is required to
travel to his regular place of business
or some other work site.
b. Done through a conveyance provided
by the Er.
c. Done under the supervision and
control of the Er.
d. Done under vexing and dangerous
circumstance.
2. Travel that is all in a day’s work – time
spent in travel as part of the Ees principal
activity.
e.g., Travel from job site to job site during
the workday, must be counted as working
hours.
Travel from main workplace (5pm) to
jobsite A (6pm) to jobsite B (7pm) to
jobsite C (8pm) to main workplace (9pm) is
compensable.
But, if instead of travelling back to main
workplace, employee decides to go home
from jobsite C, travel time from 8pm is no
longer compensable, because it would
already fall under the category of work to
home travel.
3. Travel away from home
GR:
1. Travel that requires an overnight stay
on the part of the Ee when it cuts
across the Ees workday is clearly
working time.
2. The time is not only hours worked on
regular workdays but also during
corresponding working hours on non-
working days. Outside of these regular
working hours, travel away from
home is not considered working time.
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
XPN: During meal period or when Ee is
permitted to sleep in adequate facilities
furnished by the Er.
D. SLEEPING TIME
Whether sleeping time allowed an employee
will be considered as per his working time
will depend upon the express or implied
agreement of the parties.
In the absence of an agreement, it will
depend upon the nature of the service and
its relation to the working time.
Compensable: If sleeping time is subject to
serious interruption or takes place under
conditions substantially less desirable than
would be likely to exist at the employer’s
home.
Not compensable: If there is an
opportunity for comparatively
uninterrupted sleep under fairly desirable
conditions.
It is compensable working time if the nature
of the employee's work allows sleeping
without interrupting or prejudicing the
performance of his work.
E. POWER INTERRUPTIONS
1. Brownouts of short duration but not
exceeding 20 minutes shall be treated
as worked or compensable hours
whether used productively by the
employees or not; (DOLE Policy
Instruction No. 36, May 1978)
2. Brownouts running for more than 20
minutes may not be treated as hours
worked provided that 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 interest.
(Durabuilt Recapping Plant v.
NLRC, G.R. No. 76746, July 27,
1987)
NOTE: In each case, the employer may extend
the working hours of his employees outside the
regular schedules to compensate for the loss of
40
 Labor Law and Social Legislation
productive man-hours without being liable for
overtime pay. (Chan, Vol. 1, 2017)
Industrial enterprises with one or two
workshifts may adopt any of the workshifts
prescribed for enterprises with three workshifts
to prevent serious loss or damage to materials,
machineries, or equipment that may result in
case of power interruption. (DOLE Policy
Instruction No. 36, May 22, 1978)
The days when work was not required and no
work could be done because of shutdown due to
electrical power interruptions, lack of raw
materials and repair of machines, are not
deemed hours worked. (Durabit Recapping Plant
Company v. NLRC, G.R. No. L-76746, July 27, 1987)
When a CBA contains a reporting time-off
provision wherein employees who have
reported for work but unable to continue
because of emergencies such as typhoons, flood,
earthquake and transportation strike shall also
mean to include brownout or power outrage
because the key element of the provision is that
employees who have reported for work are
unable to continue working because of the
incident. Hence employees who were prevented
to continue their work due to brownout should
also be remunerated. (Supreme Steel Corporation
v. Nagkakaisang Manggagawa ng Supreme
Independent Union, G.R. 185556, March 28, 2011)
Time spent during which an employee is inactive
by reason of interruptions beyond his control is
working time, such as twenty-minute electric
power failure or machine breakdowns. The pay
for this non-productive time is known as idle-
time pay. Where the work is broken or is not
continuous, the idle time that an employee may
spend for rest is not counted as working time.
(NDC v. CIR, G.R. No. L-53961, June 30, 1987)
F. LECTURES, MEETINGS, TRAININGS
PROGRAMS
Attendance at lectures, meetings, trainings
programs and similar activities need not be
counted as working time if the following
criteria are met:
1. Attendance is outside of the employee's
regular working hours;
2. Attendance is in fact voluntary;
3. The employee does not perform any
productive work during
attendance. (Sec. 6, Rule I, Book III, IRR)
G. ATTENDANCE IN LABOR RELATIONS
ACTIVITIES
1. CBA Negotiations - compensable if:
a. There is an agreement for the
compensability in the parties’
Ground Rules.
b. There is an established policy
allowing compensability.
c. When it is done during regular
work hours with the agreement of
the employer.
2. Grievance Meeting
GR: Time spent in adjusting grievance
between employer and employees
during the time the time employees are
required by the employer to be on the
premises is compensable.
XPN: When a bonafide union is
involved and there is a CBA, policy,
practice to contrary.
3. Strikes
GR: Not compensable.
XPN: If there is an agreement to allow
“strike duration pay” provided under
the company policy, practice or CBA.
4. Hearing, Arbitration, Conciliation
Not compensable for it is hardly fair
for an employee or laborer to fight or
litigate against his employer and
eventually consider it as hours worked.
(JP Heilbronn Co. v. National Labor
Union, G.R. No. L-5121, Jan. 30, 1953)
H. SEMESTRAL BREAK OF TEACHERS
Semestral break of teachers is considered as
compensable hours worked for it is a form of
an interruption beyond their control.
(University of Pangasinan Faculty Union v.
University of Pangasinan, G.R. Nos. 64821-23,
Jan. 29, 1993)
NOTE: Payment compensation is given only to
regular full-time teachers. (Duka, Labor Laws
such and Social Legislation, A Barrister’s Companion,
2016, p. 131)
Hours of Work of Health Personnel
41
 Labor Standards – Conditions of Employment
GR: 8 hours for 5 days (40-hour workweek),
exclusive of time for meals.
XPN: Where the exigencies of the service require
that such personnel work for 6 days or 48 hours,
they shall be entitled to an additional
compensation of at least 30% of their regular
wage for work on the 6th day. (LC, Art. 83)
Health Personnel Covered by the 40-Hour
Workweek
1. Those in cities and municipalities with a
population of at least 1 million; or
2. Those in hospitals and clinics with a bed
capacity of at least 100.
NOTE: Art. 83(2) of the LC does not require
hospitals to pay the Ees a full weekly salary with
paid 2 days off. (San Juan de Dios Ees Assoc.-AFW
et al. v. NLRC, G.R. No. 126383, Nov. 28, 1997)
Resident physicians to be on duty beyond the
40-hour workweek limitation
GR: The customary practice of requiring
resident physicians beyond the 40 hours of work
per week is not permissible and violates the
limitation under Art. 83.
XPN: If there is a training agreement between
the resident physician and the hospital and the
training program is duly accredited or approved
by appropriate government agency.
Work Hours of Seaman
Seamen are required to stay on board their
vessels by the very nature of their duties, and it
is for this reason that, in addition to their regular
compensation, they are given free living quarters
and subsistence allowances when required to be
on board.
It could not have been the purpose of the law to
require their employers to pay them overtime
even when they are not actually working;
otherwise, every sailor on board a vessel would
be entitled to overtime for sixteen hours each
day, even if he had spent all those hours resting
or sleeping in his bunk, after his regular tour of
duty.
The correct criterion in determining whether or
not sailors are entitled to overtime pay is not,
therefore, whether they were on board and
cannot leave ship beyond the regular eight
working hours a day, but whether they actually
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
rendered service in excess of said number of
hours.
A laborer need not leave the premises of the
factory, shop or boat in order that his period of
rest shall not be counted, it being enough that he
"cease to work", may rest completely and leave
or may leave at his will the spot where he
actually stays while working, to go somewhere
else, whether within or outside the premises of
said factory, shop or boat. If these requisites are
complied with, the period of such rest shall not
be counted. (Luzon Stevedoring Co. v. Luzon
Marine Department Union, G.R. No. L-9265, April
29, 1975)
Maximum Hours of Work
Certain workers may not be required to work
beyond a certain number of work hours a day.
1. Public Utility Bus drivers and conductors –
12 hours per 24-hour period (D.O. 118-
12);
2. Movie and television industry worker/
talent – shall not exceed 8 hours in a day.
If required to work beyond 8 hours, the
maximum actual hours of work shall not
exceed 12 hours in any 24-hour period;
If aged 60 years old and above – shall not
exceed 8 hours per day;
The hours of work of children in the
industry must be in accordance with RA
9231 and its IRR (DO No. 65-04); (L.A. 004-
16)
3. Seafarers onboard ships engaged in
domestic shipping – 14 hours per 24-hour
period or 77 hours per 7 days (ID.O. 129-
13).
Q: Can the number of hours of work be
reduced by an employer?
A: YES. However, financial losses must be shown
before a company can validly opt to reduce the
work hours of its employees because the
employees would suffer a reduction in pay if
their work hours are unilaterally reduced by the
employer. (Linton Commercial Co., Inc. v. Heller,
G.R. No. 163147, Oct. 10, 2007)
MEAL PERIODS
42
 Labor Law and Social Legislation
Duration
Every Er shall give his Ees not less than 60
minutes or 1 hour time-off for regular meals. (LC,
Art. 85)
As a general rule, employees are entitled to at
least one hour time-off for regular meals which
can be taken inside or outside company
premises.
Non-Compensability of The Meal Period
For a full one-hour undisturbed lunch break, the
employees can freely and effectively use this
hour not only for eating, but also for their rest
and comfort which are conducive to more
efficiency and better performance in their work.
Since the employees are no longer required to
work during this one-hour lunch break, there is
no more need for them to be compensated for
this period. (Sime Darby Pilipinas, Inc. v. NLRC,
G.R. No. 119205, April 15, 1998)
Compensable Meal Period
It is compensable where the lunch period or
meal time:
1. Is predominantly spent for the Er’s
benefit; or
2. When it is less than 60 minutes.
NOTE: Where during a meal period, the laborers
are required to stand by for emergency work, or
where the meal hour is not one of complete rest,
such is considered overtime. (Pan Am v. Pan Am
Ees Association, G.R. No. L-16275, Feb. 23, 1961)
Rest periods or coffee breaks running from 5 to
20 mins shall be considered as compensable
working time. (Sec. 7, Rule I, Book III, IRR)
Compensability of Meal Periods During
Overtime Work
Meal periods provided during overtime work are
compensable; since the 1-hour meal period
(non-compensable) is not given during OT work
because the latter is usually for a short period
and to deduct from the same would reduce to
nothing the Ees’ OT work. Thus, the one-hour
break for meals during OT should be treated as
compensable.
Where Meal Periods Are Shortened:
Compensable or Not Compensable
1. Compensable – At the instance of Er,
when:
43
a. Work is non-manual in nature or does
not involve strenuous physical
exertion;
b. Establishment regularly operates less
than 16 hours a day;
c. Work is necessary to prevent serious
loss of perishable goods; (Place
semicolon)
d. Actual or impending emergency or
there is urgent work to be performed
on machineries and equipment to
avoid serious loss which the Er would
otherwise suffer; (Sec. 7, Rule I, Book
III, IRR)
NOTE: The meal hour was not one of complete
rest, but a work hour, since, for its duration, the
laborers had to be on ready call. (Pan American
World Airways System v. Pan American
Employees Association, G.R. No. L-16275, Feb. 23,
1961)
2. Not Compensable – Ee requested for the
shorter meal time so that he can leave work
earlier than the previously established
schedule.
Requisites:
a. Ees voluntarily agree in writing and
are willing to waive OT pay for the
shortened meal period;
b. No diminution in the salary and other
fringe benefits of the Ees which are
existing before the effectivity of the
shortened meal period;
c. Work of the Ees does not involve
strenuous physical exertion and they
are provided with adequate coffee
breaks in the morning and afternoon;
d. Value of the benefits derived by the
Ees from the proposed work
arrangements is equal to or
commensurate with the compensation
due them for the shortened meal
period as well as the OT pay for 30
min. as determined by the Ees
concerned;
e. OT pay will become due and
demandable after the new time
schedule;
f. Arrangement is of temporary
duration.
NOTE: The implementing rules allow the
mealtime to be less than 60 minutes, under
specified cases but in no case shorter than 20
minutes. (Sec. 7, Rule 1, Book III, IRR)
 Labor Standards – Conditions of Employment
If the so called “mealtime” is less than 20
minutes, it becomes only a rest period and is
considered working time. (Azucena, Vol. 1, 2016,
p. 213)
NIGHT SHIFT DIFFERENTIAL
Every employee shall be paid a night shift
differential of not less than ten percent (10%) of
his regular wage for each hour of work
performed between 10:00 PM and 6:00 AM. (LC,
Art. 86)
GR: All employees are entitled to NSD.
XPNs:
1. Those of the government and any of its
political subdivisions, including GOCCs;
2. Those of retail and service establishments
regularly employing not more than five
(5) workers;
3. Domestic helpers and persons in the
personal service of another;
4. Managerial employees as defined in Book
Three of this Code;
5. Field personnel and other employees
whose time and performance is
unsupervised by the employer including
those who are engaged on task or contract
basis, purely commission basis, or those
who are paid a fixed amount for
performing work irrespective of the time
consumed in the performance thereof.
(Sec 1, Rule II, IRR, LC)
Where the night-time work of an employee
overlaps with overtime work, the receipt of
overtime pay does not preclude the receipt of
night differential pay. The latter is night pay; the
former is payment beyond eight-hour work.
(Poquiz, 2012, p. 185)
Purpose
The philosophy behind the provision is to give
premium to night work when an employee is
supposed to be sleeping. Working at night is
violative of the law of nature for it is the period
for rest and sleep. An employee who works at
night has less stamina and vigor; thus, he can
easily contract a disease.
Work done at night places has a greater burden
on the worker. It is more strenuous and onerous
than work done during the day; therefore it
deserves greater or extra compensation. (Shell
Co. v. NLU, 81 Phil. 315)
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Non-Waivability
GR: Waiver of NSD is against public policy.
(Mercury Drug Co., Inc. v. Dayao, et al., G.R. No. L-
30452, Sept. 30, 1982)
XPN: Waiver is allowed if it will result in higher
or better benefits to Ees.
Burden of Proof of Payment
The burden of proving that payment of NSD has
been made rests upon the party who will suffer
if no evidence at all is presented by either party.
(National Semiconductor (HK) Distribution, Ltd. v.
NLRC and Santos, G.R. No. 123520, June 26, 1998)
Night Differential in Overtime Pay
If work is done between 10PM and 6AM is
overtime work, then the 10% NSD should be
based on the overtime rate.
When the tour of duty of an employee falls at
night time, the receipt of overtime pay will not
preclude the right to night differential pay. The
latter is payment for work done during the night
and the other is payment for the excess of the
regular eight-hour work. (NARIC v. NARIC
Workers Union, 105 Phil. 891)
OVERTIME WORK, OVERTIME PAY
Overtime work is the service rendered in
excess of and in addition to eight hours on
ordinary working days. (Caltex Regular
Employees at Mla. Office v. Caltex Phils., Inc., 247
SCRA 398)
NOTE: It is not enough that the hours worked
fall on disagreeable or inconvenient hours. The
hours worked must be in excess of 8 hours
worked during the prescribe daily work period,
or the forty (40) hours worked during the
regular work week Monday thru Friday.
Overtime pay is the additional compensation of
at least 25% on the regular wage for the service
or work rendered or performed in excess of 8
hours a day by employees or laborers in
employment covered by the Eight-hour Labor
Law. (LC, Art. 87)
Overtime pay is based on regular base pay
excluding money received by employee in
different concepts such as Christmas bonus and
other fringe benefits.
44
 Labor Law and Social Legislation

It is computed by multiplying the overtime the employer or some other causes of

hourly rate by the number of hours in excess of similar nature;
eight. (Azucena, Vol. 1, 2016, p. 246)
4. When the work is necessary to prevent loss
NOTE: Express instruction from the Er to the Ee or damage to perishable goods;
to render OT work is not required for the Ee to
be entitled to OT pay; it is sufficient that the Ee is 5. When the completion or continuation of
permitted or suffered to work. (Azucena, Vol. 1, work started before the 8th hour is
2016, p. 222) However, written authority after necessary to prevent serious obstruction or
office hours during rest days and holidays are prejudice to the business or operations of
required for entitlement to compensation. the employer; or
6. When overtime work is necessary to avail
Rationale for Overtime Pay of favorable weather or environmental
conditions where performance or quality of
Ee is made to work longer than what is work is dependent thereon.
commensurate with his agreed compensation for
the statutory fixed or voluntarily agreed hours of In cases not falling within any of these
labor he is supposed to do. (PNB v. PEMA and enumerated in this Section, no employee may be
CIR, G.R. No. L-30279, July 30, 1982) made to work beyond eight hours a day against
his will. (Sec. 10, Rule I, Book III, IRR)
The reason the law requires additional
compensation for work beyond the normal NOTE: The employee may still refuse to render
working day is to encourage employers to overtime even if compelled, although not
dispense with such work, thus providing without disciplinary consequence for his refusal
employees an opportunity to satisfy their that could constitute insubordination, a potential
mental, moral, and spiritual needs. They may ground for termination of employment.
have more hours to devote to reading,
amusement, and other recreational activities Condition for Entitlement to Overtime Pay
necessary for their well-being. Moreover, they
could share longer hours in the company of their Entitlement to overtime pay must first be
family, attending to spiritual or religious needs. supported by sufficient proof that said overtime
Law on overtime will surely ease unemployment work was actually performed before an
problem, for employers will be constrained to employee may avail of said benefit. (Cagampan v.
employ additional employees to work in other NLRC, 195 SCRA 633)
shifts necessary for the operation of the
business. (Shell Co. v. NLU, G.R. No. L-1309, July An employee is entitled to overtime pay for work
26, 1948) rendered in excess of eight hours, despite the
fact that his employment contract specifies a 12-
GR: The employee may not be compelled to hour workday at a fixed monthly salary rate that
work more than 8 hours a day. is above the legal minimum rate. The provisions
of the pertinent labor laws prevail over the
XPN: Compulsory Overtime. terms of the contract. (Pesala v. NLRC, G.R. No.
1. When the country is at war or when any 105963, Aug. 22, 1996)
other national or local emergency has been
declared by Congress or the Chief Overtime Pay vs. Premium Pay
Executive;
OVERTIME
PREMIUM PAY
2. When overtime work is necessary to PAY
prevent loss of life or property, or in case of Additional Additional compensation for
imminent danger to public safety due to compensation work performed within 8
actual or impending emergency in the for work hours on days when normally
locality caused by serious accident, fire, performed he should not be working (on
floods, typhoons, earthquake, epidemic or beyond 8 hours non-working days, such as
other disaster or calamities; on ordinary rest days and special days).
days (within But additional compensation
3. When there is urgent work to be performed the worker’s for work rendered in excess
on machines, installations, or equipment, in 24-hour of 8 hours during these days
order to avoid serious loss or damage to workday). is also considered OT pay.

45
 Labor Standards – Conditions of Employment
Overtime Pay Rates
OVERTIME PAY RATES
During a
Additional compensation of
regular
25% of the regular wage
working day
Rate of the first 8 hours
worked on
plus at least 30% of the
regular wage (RW):
If done on a special holiday
OR rest day:
30% of 130% of RW
During a
If done on a special holiday
holiday or rest
AND rest day:
day
30% of 150% of RW
If done on a
regular holiday:
30% of 200% of RW
Basis of Computation of Overtime Pay
Regular wage which includes the cash wage only,
without deduction on account of the facilities
provided by the Er. (LC, Art. 90)
Waiver of Overtime Pay
GR: The right to overtime pay cannot be waived.
The right is intended for the benefit of the
laborers and employees. Any stipulation in the
contract that the laborer shall work beyond
eight hours without additional compensation for
the extra hours is contrary to law and null and
void. (Azucena, Vol. 1, 2016, p. 259)
The right of the laborer to overtime
compensation cannot be waived expressly or
impliedly. Where the contract of employment
requires work for more than eight hours at a
specified wage per day, without providing for a
fixed hourly rate or that the daily wages include
overtime pay, said wages cannot be considered
as including overtime compensation required
under the Eight-hour Labor Law. (Manila
Terminal Co. v. CIR, G.R. No. L-9265, April 29,
1957)
XPNs:
1. When the alleged waiver of overtime pay is
in consideration of benefits and privileges
which may be more than what will accrue
to them in overtime pay, the waiver may be
permitted. (Azucena, Vol. 1, 2016, p. 262)
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
2. Compressed workweek (CWW)
arrangement.
Compressed workweek (DOLE Advisory No.
02-04)
Under this scheme, the number of workdays is
reduced but the number of work hours in a day
is increased to more than eight, but no overtime
may be claimed.
Conditions of CWW:
1. Expressly and voluntarily supported by
the majority of the workers affected;
2. In firms using substances, or operating in
conditions that are hazardous to health, a
certification is needed from an accredited
safety organization or the firm’s safety
committee that work beyond eight hours
is within the limits of exposure set by
DOLE’s occupational safety and health
standards;
3. The DOLE regional office is duly notified.
(Azucena, Vol. 1, 2016, p. 265)
Q: Socorro is a clerk-typist in Hospicio de San
Jose, a charitable institution dependent for
its existence on contributions and donations
from well wishers. She renders work 11
hours a day but has not been given OT pay
since her place of work is a charitable
institution. Is Socorro entitled to overtime
pay? Explain briefly. (2002 BAR)
A: YES. Socorro is entitled to OT pay. She does
not fall under any of the exceptions to the
coverage of Art. 82, under the provisions of
hours of work. The LC is equally applicable to
non-profit institutions. A covered Ee who works
beyond 8 hours is entitled to OT compensation.
Q: Danilo Flores applied for the position of
driver in the motor-pool of Gold Company, a
multinational corporation. Danilo was
informed that he would frequently be
working overtime as he would have to drive
for the company's executives even beyond
the ordinary 8-hour work day. He was
provided with a contract of employment
wherein he would be paid a monthly rate
equivalent to 35 times his daily wage, regular
sick and vacation leaves, 5 day-leave with
pay every month and time off with pay when
the company's executives using the cars do
not need Danilo's service for more than eight
46
 Labor Law and Social Legislation
hours a day, in lieu of overtime. Are the
above provisions of the contract of
employment in conformity with, or violative
of, the law?
A: Except for the provision that Danilo shall have
time off with pay when the company's
executives using the cars do not need Danilo's
service for more than 8 hours a day, in lieu of OT,
the provisions of the contract of employment of
Danilo are not violative of any labor law because
they instead improve upon the present
provisions of pertinent labor laws.
Q: The employment contract requires work
for more than 8 hours a day with a fixed wage
inclusive of OT pay. Is that valid?
A: It depends.
1. When the contract of employment
requires work for more than 8 hours at
specific wages per day, without providing
for a fixed hourly rate or that the daily
wages include OT pay, said wages cannot
be considered as including OT
compensation. (Manila Terminal Co. v. CIR,
et al., 91 Phil., 625)
2. In cases of built-in OT pay in Government-
Approved Contracts. When the OT pay
was already provided in the written
contract with a built-in OT pay and signed
by the director of the bureau of
employment services and enforced by the
employer. Non-payment of OT pay by the
employer is valid. (Engineering Equipment
v. Minister of Labor, G.R. No. L-64967, Sept.
23, 1985; Azucena Vol. 1, 2016, p. 264)
Overtime Rate Subject to Stipulation
GR: The premium for work performed on the
employee’s rest days or on special days or
regular holidays are included as part of the
regular rate of the employee in the computation
of OT pay for any OT work rendered on said days
especially if the employer pays only the
minimum OT rates prescribed by law.
XPN: Ees and Er may stipulate in their collective
agreement the payment of OT rates higher than
those provided by law and exclude the premium
rates in the computation of OT pay. Such
agreement may be considered valid only if the
stipulated OT pay rates will yield to the Ees not
less than the minimum prescribed by law.
47
Overtime Pay in a Compressed Workweek
Scheme
Any work performed beyond 12 hours a day or
48 hours a week shall be subject to OT premium.
(Department Advisory No. 02, s. of 2004)
Overtime Pay Integrated in Basic Salary
Built-in Overtime Pay or Composite/Package
Pay
It is not per se illegal, but there should have been
express agreement to that effect. Such
arrangement, if there be any, must appear in the
manner required by law on how overtime
compensation must be determined. (Damasco v.
NLRC, et al., G.R. No. 115755, Dec. 4, 2000)
Requisites for a Valid Built-in Overtime Pay
(Base Pay with Integrated Overtime Pay)
1. A clear written agreement knowingly and
freely entered into by the employee;
2. The mathematical result shows that the
agreed legal wage rate and the overtime
pay, computed separately are equal or
higher than the separate amounts legally
due. (Azucena, Vol. 1, 2016, p. 263)
Overload Work and Overtime Work
Distinguished
Where a teacher is engaged to undertake actual
additional teaching work after completing his
regular teaching load, such additional work is
referred to as overload.
When the overload is performed within eight
hours normal working day, such overload pay is
considered part of the basic pay for the purpose
of computing 13th month pay. "Overload work"
is sometimes misunderstood as synonymous to
"overtime work." The two terms are not the
same.
Overtime work is work rendered in excess of
the normal working hours of eight in a day. On
the other hand, since overload work may be
performed either within or outside eight hours
in a day, overload work may or may not be
overtime work. (DOLE's Explanatory Bulletin on
Inclusion of Teacher's Overload in Computing
13th Month Pay)
UNDERTIME NOT OFFSET BY OVERTIME
 Labor Standards – Conditions of Employment
Where a worker incurs undertime hours during
his regular daily work, said undertime hours
should not be offset against the overtime hours
on the same day or on any other day. (LC, Art. 88;
Azucena, Vol. 1, 2016, p. 268)
Offsetting the overtime with undertime and at
the same time charging said undertime to the
accrued leave is unfair and cannot be done.
(NWSA v. NWSA Consolidated Union, 11 SCRA
766, 778)
It has been held the proper remedy should be to
deduct undertime or absences against the
employee's accrued leave but pay him the
overtime to which he is rightfully entitled. Lastly,
the rule will prevent the anomalous situation
whereby an employee could schedule his
working hours at will thereby destroying the
regular working schedules. (Detective and
Protective Bureau, Inc. v. United Employees
Welfare Association, G.R. No. L-4337, Dec. 29,
1951)
NOTE: Offsetting of undertime work by overtime
work, whether on the same or on another day is
prohibited by jurisprudence and by statute.
(Azucena, Vol. 1, 2016, p. 268)
Q: In lieu of overtime pay, the employee was
given permission to go on leave on some
other day, is that valid?
A: NO. Permission given to the Ee to go on leave
on some other day of the week shall not exempt
the Er from paying the additional compensation
required because it would prejudice the Ee, for
he will be deprived of the additional pay for the
OT work he has rendered and which is utilized
to offset the undertime he may have incurred.
Undertime could be charged against the Ees
accrued leave.
The labor arbiter and the NLRC sanctioned
respondent's practice of offsetting rest day or
holiday work with equivalent time on regular
workdays.
Applying by analogy the principle that overtime
cannot be offset by undertime, to allow off-
setting would prejudice the worker. He would be
deprived of the additional pay for the rest day
work he has rendered and which is utilized to
offset his equivalent time off on regular
workdays. To allow employer to do so would be
to circumvent the law on payment of premiums
for rest day and holiday work. (Lagatic v. NLRC,
G.R. No. 121004, Jan. 28, 1998)
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
EMERGENCY OVERTIME WORK
GR: An Ee may not be compelled to render OT
work; OT work is voluntary.
XPNs: Compulsory OT work in any of the
following situations:
1. When the country is at war or when any
other national or local emergency has been
declared by Congress or the Chief
Executive;
2. When overtime work is necessary to
prevent loss of life or property, or in case of
imminent danger to public safety due to
actual or impending emergency in the
locality caused by serious accident, fire,
floods, typhoons, earthquake, epidemic or
other disaster or calamities;
3. When there is urgent work to be performed
on machines, installations, or equipment, 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 8th hour is
necessary to prevent serious obstruction or
prejudice to the business or operations of
the employer; or
6. When overtime work is necessary to avail of
favorable weather or environmental
conditions where performance or quality of
work is dependent thereon. (Art. 89, LC;
IRR, Sec. 10, IRR, LC)
NOTE: There should be payment of additional
compensation. Employee’s refusal to obey the
order of the employer constitutes
insubordination for which he may be subjected
to disciplinary action.
Q: Is the foregoing enumeration exclusive?
A: YES. In cases not falling within any of these
enumerated in this Section, no employee may be
made to work beyond eight (8) hours a day
against his will. (Sec. 10, Rule I, Book III, IRR)
Q: Is mandatory overtime involuntary
servitude?
A: NO. The employee may still refuse to render
overtime even if compelled, although not
without disciplinary consequence for his refusal
that could constitute insubordination, a potential
ground for termination of employment.
48
 Labor Law and Social Legislation
Petitioner’s attempt to brush aside his refusal to
render overtime work as inconsequential when
Graphics, Inc.’s order for him to do so is justified
by Graphics, Inc.’s contractual commitments to
its clients. Such an order is legal under Art. 89 of
the Labor Code and the petitioner’s unexplained
refusal to obey is insubordination that merits
dismissal from service. (Billy Realda v. New Age
Graphics Inc., G.R. No. 192190, April 25, 2012)
Q: LKG Garments Inc. makes baby clothes for
export. As part of its measures to meet its
orders, LKG requires its employees to work
beyond eight (8) hours everyday, from
Monday to Saturday. It pays its employees an
additional 35% of their regular hourly wage
for work rendered in excess of eight (8)
hours per day. Because of additional orders,
LKG now requires two (2) shifts of workers
with both shifts working beyond eight (8)
hours but only up to a maximum of four (4)
hours. Carding is an employee who used to
render up to six (6) hours of overtime work
before the change in schedule. He complains
that the change adversely affected him
because now he can only earn up to a
maximum of four (4) hours’ worth of
overtime pay. Does Carding have a cause of
action against the company? (2015 BAR)
A: NO. A change in work schedule is a
management prerogative of LKG. Thus, Carding
has no cause of action against LKG if, as a result
of its change to two (2) shifts, he now can only
expect a maximum of four (4) hours overtime
work. Besides, Art. 87 of the Labor Code does not
guarantee Carding a certain number of hours of
overtime work. In Manila Jockey Employees’
Union v. Manila Jockey Club (517 SCRA 707), the
Supreme Court held that the basis of overtime
claim is an employee’s having been “permitted to
work”. Otherwise, as in this case, such is not
demandable.
REST PERIODS
Right to weekly rest day (WRD)
Every Er shall give his Ees a rest period of not
less than 24 consecutive hours after every 6
consecutive normal work-days. (Sec. 3, Rule III,
Book III, IRR)
Rest day not necessarily Sunday or Holiday
All establishments and enterprises may operate
or open for business on Sundays and holidays
provided that the employees are given the
49
weekly rest day and the benefits provided under
the law. (Sec. 2, Rule III, Book III)
Scope of WRD
It shall apply to all Ers whether operating for
profit or not, including public utilities operated
by private persons. (Sec. 1, Rule III, Book III, IRR)
Person who determines the WRD
GR: Er shall determine and schedule the WRD of
his Ee.
XPNs:
1. CBA;
2. Rules and regulations as the SLE provides
3. Preference of Ee based on religious
grounds. – Ee shall make known his
preference in writing at least 7 days
before the desired effectivity of the initial
rest day so preferred. [Sec. 4(1), Rule III,
Book III, IRR]
XPNs to XPN no. 3: Er may schedule the
WRD of his choice for at least 2 days in a
month if the preference of the Ee will
inevitably result in:
a. Serious prejudice to the operations
of the undertaking; and
b. The Er cannot normally be expected
to resort to other remedial
measures. [Sec. 4(2), Rule III, Book
III, IRR]
The employer is mandated to respect the choice
of its employee as to their rest day based on
religion.
Right Of The Employee To Know The
Schedule Of Their WRDs
Er shall make known the rest period by means
of:
1. Written notice;
2. Posted conspicuously in the workplace;
3. At least 1 week before it becomes
effective. (Sec. 5, Rule III, Book III, IRR)
EMERGENCY REST DAY WORK
Employee To Work On His Rest Day
GR: The Ee cannot be compelled by the Er to
work on his rest day.
 Labor Standards – Conditions of Employment

XPNs: It is the additional compensation for work

1. In case of actual or impending emergencies
caused by serious accident, fire, flood,
typhoon, earthquake, epidemic or other
disaster or calamity to prevent loss of life
and property, or imminent danger to public
safety;
2. In cases of urgent work to be performed on
the machinery, equipment, or installation, to
avoid serious loss which the employer
would otherwise suffer;
3. In the event of abnormal pressure of work
due to special circumstances, where the
employer cannot ordinarily be expected to
resort to other measures;
4. To prevent loss or damage to perishable
goods;
NOTE: Instead of ordinary loss, it must be
serious. There must be loss and not just
damage.
rendered by the Ee on days when normally he
should not be working such as special holidays
and WRDs.
Refers to the additional compensation required
by law to be paid for work performed within the
regular eight (8) hours on non-working days
such as rest days and special holidays.
Refers to the regular wage combined with the
additional compensation of 30% under Art. 93
and 100% under Art. 94. (Azucena, Vol. 1, 2016)
Er and Ee Can Agree On The Rate Of Premium
Pay Other Than That Provided By Law
Nothing shall prevent the Er and his Ee or their
representatives from entering into any
agreement with terms more favorable to the Ees;
Provided, it shall not be used to diminish any
benefit granted to the Ees under existing laws,
agreements and voluntary Er practices. (Sec. 9,
Rule III, Book III, IRR)

5. Where the nature of the work requires Rates of Compensation For Rest Day, Sunday
continuous operations and the stoppage of or Holiday Work
work may result in irreparable injury or loss
to the employer; and RATES OF
INSTANCES ADDITIONAL
6. Under other circumstances analogous or COMPENSATION
similar to the foregoing as determined by
the Secretary of Labor and Employment. (LC, + 30% premium pay
Work on a scheduled
Art. 92) of 100% RW (IRR, Book
rest day
III, Rule III, Sec. 7)
Q: Is the list exclusive? Work performed on
Sundays and Holidays
A: YES. No employee shall be required against + 30% premium payof
by an Ee who has no
his will to work on his scheduled rest day except 100% RW (IRR, Book
regular workdays
under circumstances provided in this Section. III, Rule III, Sec. 7)
and rest days
Provided, However, that where an employee
volunteers to work on his rest day under other
Work on a Sunday
circumstances, he shall express such desire in + 30% premium pay
(If Ee’s scheduled
writing, subject to the provisions of Sec. 7 hereof of 100% RW (IRR, Book
rest day)
regarding additional compensation. III, Rule III, Sec. 7)

Ee volunteers to work on his rest day under 1st 8 hrs: + 30% PP of

other circumstances 100% RW

He may be allowed to do so, provided he shall Work performed on

Excess of 8 hrs: + 30%
express it in writing subject to additional any Special Holiday
of hourly rate on said
compensation. [Sec. 6(2), Rule III, Book III, IRR] date. (M.C. No. 10, Series
of 2004)
PREMIUM PAY
Work performed on a 1st 8 hrs: + 50% PP of
Premium Pay Special Holiday and 100% RW
same day is the
scheduled rest day Excess of 8 hrs:+ 30%

UNIVERSITY OF SANTO TOMAS 50

2021 GOLDEN NOTES
 Labor Law and Social Legislation

of hourly rate on said on the working day proceeding the regular

date. (M.C. No. 10, Series holiday.
of 2004)
Persons Entitled to Holiday Pay
Ee is only entitled to
his basic rate. No PP is GR: All Ees are entitled. (Sec. 1, Rule IV, Book III,
required. IRR)
Work performed on a
Reason: Work XPNs: Persons not Entitled to Holiday Pay
Special Working
performed is
Holiday
considered work on 1. Government Ees and any of its political
ordinary working days subdivisions, including GOCCs (with
(IRR, Book III, original charter);
Rule III, Sec. 7) 2. Retail and service establishments
regularly employing less than 10 workers;
NOTE: Holiday work provided under Art. 93 3. Domestic helpers and persons in the
pertains to special holidays or special days. personal service of another;
4. Ee engaged on task or contract basis or
Q: Jose applied with Mercury Drug purely commission basis;
Company for the position of Sales Clerk. 5. Members of the Family of the Er who are
Mercury Drug Company maintains a chain dependent on him for support;
of drug stores that are open every day till 6. Managerial Ee and other members of the
late at night. Jose was informed that he had managerial staff
to work on Sundays and holidays at night 7. Field personnel and other Ee whose time
as part of the regular course of and performance are unsupervised by the
employment. He was presented with a Er; and
contract of employment setting forth his 8. Ee paid fixed amount for performing work
compensation on an annual basis with an irrespective of the time consumed in the
express waiver of extra compensation for performance thereof. (ibid.)
work on Sundays and holidays, which Jose
signed. Is such a waiver binding on Jose? Retail Establishments
Explain. (1996 BAR)
They are engaged in the sale of goods to end
A: NO. The waiver is not binding on Jose. users for personal or household use. (e.g.,
Rights may be waived, unless the waiver is Grocery)
contrary to law, public order, public policy,
morals and customs. The waiver in this case is Service Establishments
void.
They are engaged in the sale of services to
HOLIDAY PAY individuals for their own or household use. (e.g.,
TV repair shop)
Holiday Pay
Exemption of Retail/Service Establishments
Holiday Pay is a one-day pay given by law to an
employee even if he does not work on a regular Minimum Wage Holiday Pay/SIL
holiday. (Azucena, Vol. 1, 2016, p. 277) Applies to Applies to
establishments establishments
The payment of the regular daily wage for any
employing not more employing less than
unworked regular holiday. (Handbook on than ten employees ten employees (1-9
Workers’ Statutory Monetary Benefits, Bureau of
(1-10 employees). employees).
Working Conditions, 2016)
Granted by the LC.
Has to be obtained
It is a premium given to Ees pursuant to the law May be availed
by applying for it
even if he has not been suffered to work on a without the need of a
with the Regional
regular holiday. It is limited to the 12 regular prior application for
Wage Board.
holidays, also called legal holidays listed by law. exemption.
The Ee should not have been absent without pay
Purpose of Holiday Pay

51
 Labor Standards – Conditions of Employment

To secure the payment of undiminished monthly Bonifacio Day November 30

income undisturbed by any work interruption.
In other words, although the worker is forced to Christmas Day December 25
take a rest, he earns what he should earn, that is, Rizal Day December 30
his holiday pay. (JRC v. NLRC, G.R. No. 65482, Dec.
1, 1987) SPECIAL (NON-WORKING) HOLIDAYS

Holiday pay is primarily aimed at benefiting the Ninoy Aquino Day August 21
daily-paid workers whose income is All Saints Day November 1
circumscribed by the principle of "no-work, no
pay." Prior to the enactment of the Labor Code, Feast of Immaculate
daily paid workers were not paid for unworked Conception of Mary December 8
regular holidays. (RA 10966)
Last day of the year December 31
On the other hand, monthly-paid employees do
not suffer any reductions in pay for not working Other holidays
during such holidays. The law on holiday pay is declared by law
thus conceived to be the countervailing measure and ordinance
to partially offset the disadvantages inherent in
the daily compensation system of employment. NOTE: RH falling within temporary or periodic
(Poquiz, 2012, p. 199) shutdown and temporary cessation of work are
compensable. However, if the temporary or
Legal Holiday periodic shutdown and cessation of work is due
to business reverses, the Er may not pay the Ees
It is a day designated or set apart by the during such period.
legislature, for a purpose within the meaning of
the term "holiday" (29 C.J. 762) to commemorate Muslim holidays (MH)
an important event.
1. 'Amun Jadid (New Year) – falls on the first
Regular Holidays (RH) day of the first lunar month of Muharram;

GR: They are compensable whether worked or 2. Maulid-un-Nabi (Birthday of the Prophet
unworked subject to certain conditions. They are Muhammad) – falls on the 12th day of the
also called legal holidays. third lunar month of Rabi-ul-Awwal;

XPN: A legal holiday falling on a Sunday creates 3. Lailatul Isra Wal Mi'raj (Nocturnal
no legal obligation for the employer to pay extra, Journey and Ascension of the Prophet
aside from the usual holiday pay, to its monthly- Muhammad) – falls on the 27th day of the
paid employees. (Wellington Investment and seventh lunar month of Rajab. (Art. 169, PD
Manufacturing Corporation v. Trajano et al., G.R. 1083)
No. 114698, July 3, 1995)
NOTE: Muslim holidays shall be officially
observed in the Provinces of Basilan, Lanao del
REGULAR HOLIDAYS DATE
Norte, Lanao del Sur, Maguindanao, North
New Year’s Day January 1 Cotabato, Sultan Kudarat, Sulu, Tawi-Tawi,
Monday nearest Zamboanga del Norte and Zamboanga del Sur,
Araw ng Kagitingan and in the Cities of Cotabato, Iligan, Marawi,
April 9
Pagadian, and Zamboanga and in such other
Maundy Thursday Movable date
Muslim provinces and cities as may hereafter be
Good Friday Movable date created. Upon proclamation by the President of
the Philippines, Muslim holidays may also be
Labor Day May 1 officially observed in other provinces and cities.
Independence Day June 12
Last Monday of Determination of Eid’l Fitr and/or Eid’l Adha
National Heroes Day
August
The proclamation declaring a national holiday
Eidl Fitr Movable date for the observance of Eid’l Fitr and/or Eid’l Adha
Eidl Adha Movable date shall be issued:

UNIVERSITY OF SANTO TOMAS 52

2021 GOLDEN NOTES
 Labor Law and Social Legislation

1. After the approximate date of the Islamic conditions

holiday has been determined in accordance Additional
with the: Rate is 200%
30% premium
If worked of the regular
pay of 100%
a. Islamic Calendar (Hijra) or rate
RW
b. Lunar Calendar or
c. Upon astronomical calculations Not exclusive;
d. Whichever is possible or convenient Limited to the law or
12 holidays ordinance may
2. The Office of Muslim Affairs shall inform provided in the provide for
the Office of the President on which day the Labor Code other special
holiday shall fall. (Proclamation 295, s. 2011 holidays
by President Benigno Aquino III)
Formula to Compute Wage on Holidays (M.C.
A Christian Ee working within the Muslim No. 10, Series of 2004)
area cannot be compelled to work during
Muslim holiday 1. Regular Holiday
a. If it is employee’s regular workday
All workers, Muslims and Christians, working i. Unworked – 100%
within the Muslim area are entitled to holiday ii. Worked
pay on Muslim holidays. (SMC v. CA, G.R. No. 1. 1st 8 hours – 200%
146775, Jan. 30, 2002) 2. Excess of 8 hours – 200%,
plus 30% of hourly rate on
Muslim Ee working outside the Muslim area said day.
cannot be compelled to work during the b. If it is employee’s rest day
observance of the MH i. Unworked- 100%
ii. Worked
GR: Muslim Ees shall be excused from work 1. 1st 8 hours- 200%, plus
during MH without diminution of salary or 30% of 200%
wages. 2. Excess of 8 hours- 230%,
plus 30% of hourly rate on
XPN: Those who are permitted or suffered to said day
work on MH are entitled to at least 100% basic
pay + 100% as premium of their basic pay. (SMC 2. For declared Special Holidays such as
v. CA, G.R. No. 146775, Jan. 30, 2002) Special Non-Working Day, Special Public
Holiday, Special National Holiday in
Rule as to payment of regular Muslim addition to the 3 nationwide special non-
holidays working days:

There is no distinction between Muslims and a. If it is employee’s regular workday

non–Muslims as regards payment of benefits for Unworked – no pay unless there
Muslim holidays. Muslims throughout the is a favorable company policy,
Philippines are also entitled to holiday pay on practice or CBA granting
Christian holidays declared by law as regular payment of wages on special
holidays. Wages and other emoluments granted days even if unworked.
by law are determined on the basis of the
criteria laid down by laws and certainly not on Worked
the basis of the worker's faith or religion. (SMC v. 1. 1st 8 hours- plus 30% of
C.A., G.R. No. 146775, Jan. 30, 2002) The law on daily wage rate of 100%
holiday pay knows no religion. 2. Excess of 8 hours- Hourly
rate of the basic daily wage x
Regular Holiday vs. Special Holiday 130% x 130% x no. of hours
worked.
REGULAR SPECIAL
HOLIDAY HOLIDAY b. If it is employee’s rest day and
worked
Compensable,
If Not i. 1st 8 hours- 150%
subject to
unworked compensable
certain

53
 Labor Standards – Conditions of Employment

ii. Excess of 8 hours- Hourly rate 1. No pay on regular holidays including

of the basic daily wage x 150% x
130% x no. of hours worked.
3. For those declared as special working
holidays, the following rules shall apply:
a. For work performed, an employee is
entitled only to his basic rate.
b. No premium pay is required since
work performed on said days is
considered work on ordinary
working days.
Important Condition That Should Be Met In
Order To Avail/Receive The Single Holiday
Pay
Christmas and semestral vacations; but,
2. With pay on special public holidays and
other no-class days when classes are
called off or shortened on account of
floods, typhoons, rallies and the like. (Jose
Rizal College v. NLRC, G.R. No. 65482, Dec.
1, 1987)
Whether extension days be ordered or not. In
case of extensions, said faculty teachers shall
likewise be paid their hourly rates should they
teach during said extensions. (ibid.)
In the event extensions are called for, they are
also entitled to their pay for the extended days.

The Ee should not have been absent without pay Field Personnel
on the working day immediately preceding the
RH. Field personnel are not entitled to holiday pay.

Monthly Paid vs. Daily Paid Employees The law requires that the actual hours of work in
the field be reasonably ascertained. Field
Monthly Paid Ees Daily Paid Ees Personnel’s actual hours of work in the field
cannot be determined with reasonable certainty.
One whose wage or (Union of Filipro Employees v. Vivar, Jr., et al., G.R.
salary is being paid No. 79255, Jan. 20, 1992)
One whose wage or
every day of the
salary is being paid Part-Time Worker
month, including rest
only on those days he
days, Sundays, regular
actually worked, If the work is partial, the pay should also be
or special days,
except in cases of partial. (Azucena, Vol. 1, 2016, p. 294)
although he does not
regular or special
regularly work on
days, although he does The amount of holiday pay of a part-timer is to
these days.
not regularly work on be determined on a case-to-case basis. The basis
these days. is any of the following, whichever yields the
Not excluded from
benefit of holiday pay. highest amount:

(In Re: United South Dockhandlers, Inc., Opinion of
the Bureau of Working Conditions, Nov. 23, 1987)
HOLIDAY PAY OF CERTAIN EMPLOYEES
Private School Teachers (Faculty Members of
Colleges and Universities)
1. RH during semestral vacations – not
entitled to holiday pay.
2. RH during Christmas vacation – entitled to
holiday pay.
1. The regular wage per day;
2. The basic wage on the working day
preceding the regular holiday if the
employee is present or on leave with pay
on the last working day immediately prior
to the regular holiday;
3. The average of his basic wages for the last
seven working days for employees who
are paid by results; or,
4. The basic wage on the particular holiday,
if worked. (DOLE Explanatory Bulletin on
Part-Time Employment, Jan. 2, 1996)

Christmas breaks do not represent a break in the Piece-Rate Workers

academic calendar. It is something that falls
within the semester; while a semestral break is a
break in the middle of the academic calendar.
Hourly-Paid Teachers
A piece-rate employee is entitled to holiday pay.
Where a covered employee is paid by results or
output, his holiday pay shall not be less than his

UNIVERSITY OF SANTO TOMAS 54

2021 GOLDEN NOTES
 Labor Law and Social Legislation

average daily earnings for the last 7 actual work
days immediately preceding the regular holiday.
Provided: Holiday pay shall not be less than the
statutory minimum wage rate. (Sec. 8, Rule IV,
Book III)
Seasonal Workers
Seasonal workers may not be paid the required
Holiday pay during off-season where they are
not at work. (Sec. 8, Rule IV, Book III)
The employment relationship is deemed to be
suspended during the off-season for seasonal
workers.
Workers Having No Regular Work Days
If two regular holidays fall on the same day (such
as Maundy Thursday or Good Friday falling on
Araw ng Kagitingan [April 9]), the employees
should be paid 400% of the basic wage for both
holidays provided he worked on that day or was
on leave of absence with pay or was on
authorized absence on the day prior to the
regular holiday.
Holiday pay is a statutory benefit demandable
under the law. Since a worker is entitled to the
enjoyment of 10 paid regular holidays (Art. 94,
LC), the fact that two holidays fall on the same
date should not operate to reduce to nine the 10-
holiday pay benefits a worker is entitled to
receive. (Asian Transmission Corp v. CA, G.R. No
144664, March 25, 2004)

They shall be entitled to holiday pay. (Sec. 8, Rule Double Holiday Pay
IV, Book III)
When two RHs fall on the same day, the
Q: Are the school faculty who according to following rates apply:
their contracts are paid per lecture hour
entitled to unworked holiday pay? MAUNDY
THURSDAY &
A: WED RATE
ARAW NG
1. If during RH – NO. Art. 94 of the LC is silent KAGITINGAN
with respect to faculty members paid by the
Present Unworked 200%
hour who because of their teaching
contracts are obliged to work and consent to LOA w/pay Unworked 200%
be paid only for work actually done (except
300%
when an emergency or a fortuitous event or LOA w/ pay Worked
(at least)
a national need calls for the declaration of
special holidays). (Jose Rizal College v. NLRC, Authorized 300%
Worked
G.R. No. 65482, Dec. 1, 1987) absence (at least)
390%
2. If during special public holidays – YES. The Authorized Worked and (+30% of
law and the IRR governing holiday pay are absence day is Rest Day each 3
silent as to payment on Special Public 100%)
Holidays. Be it noted that when a special
public holiday is declared, the faculty Concept of Successive Regular Holidays
member paid by the hour is deprived of
expected income, and it does not matter that ENTITLED
the school calendar is extended in view of MAUNDY GOOD TO
the days or hours lost, for their income that WED
THURS FRIDAY HOLIDAY
could be earned from other sources is lost PAY
during the extended days. Worked RH RH Yes. Both
LOA
Similarly, when classes are called off or RH RH Yes. Both
w/pay
shortened on account of typhoons, floods, LOA w/o
rallies, and the like, these faculty members RH RH No. Both
pay
must likewise be paid, whether or not Yes. Only to
extensions are ordered. (Jose Rizal College v. LOA w/o
Worked RH holiday pay
NLRC, G.R. No. 65482, 01 Dec. 1987) pay
on Friday.
Rule when Two Regular Holidays Fall on the
Conditions For An Employee To Be Entitled
Same Day (Double Holiday Pay)
To Two (2) Successive Holiday Pays

55
 Labor Standards – Conditions of Employment
On the day immediately preceding the 1st RH, he
must be:
1. Present (worked); or,
2. On LOA with pay. (Sec. 10, Rule IV, Book III,
IRR)
If the Above Stated Conditions Are Not Met
He must work on the 1st RH to be entitled to
holiday pay on the 2nd RH. (ibid.)
CONCEPT OF ABSENCES
Effects of absences on holiday pay; successive
regular holiday
1. All covered employees shall be entitled to
holiday pay when they are on leave of
absence with pay on the workday
immediately preceding the regular holiday.
Employees who are on leave of absence
without pay on the day immediately
preceding a regular holiday may not be
paid the required holiday pay if they do not
work on such regular holiday.
2. Employers shall grant the same percentage
of the holiday pay as the benefit granted by
competent authority in the form of
employee’s compensation or social security
payment, whichever is higher, if the
employees are not reporting for work while
on such leave benefits.
3. Where the day immediately preceding the
holiday is a non-work day in the
establishment or the scheduled rest day of
the employee, he/she shall not be deemed
to be on leave of absence on that day, in
which case he/she shall be entitled to the
holiday pay if he/she worked on the day
immediately preceding the non-work day
or rest day.
4. Where there are two (2) successive regular
holidays, like Maundy Thursday and Good
Friday, an employee may not be paid for
both holidays if he/she absents
himself/herself from work on the day
immediately preceding the first holiday,
unless he/she works on the first holiday, in
which case he/she is entitled to his/her
holiday pay on the second holiday.
(Handbook on Workers’ Statutory Monetary
Benefits, Bureau of Working Conditions,
2016)
Effects of Business Closure on Holiday Pay
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
1. In case of temporary or periodic shutdown
and temporary cessation of work of an
establishment, as when a yearly inventory
or when the repair or cleaning of
machineries and equipment is undertaken,
the regular holidays falling within the
period shall be compensated.
2. The regular holiday during the cessation of
operation of an enterprise due to business
reverses as authorized by the Secretary of
Labor may not be paid by the employer.
(Sec. 7, Rule IV, Book III
Deferment of Holiday Pay (for year 2020)
In various labor advisories issued by the DOLE in
2020, namely, Advisories 13A, 15, 20, 22, 25, 27,
and 29, the DOLE authorized the deferment, not
exemption, of the payment of holiday pay on
account of the national emergency arising from
the COVID-19 situation.
In Advisory 31, the DOLE has ordered the
employers who chose to defer holiday payment
to make payment of those holiday pay on or
before Dec. 31, 2020.
13th MONTH PAY
(P.D. No. 851)
13thMonth Pay or its Equivalent
It is a form of monetary benefit equivalent to the
monthly basic compensation received by an
employee, computed pro-rata according to the
number of months within a year that the
employee has rendered service to the employer.
(DOLE’s BWC issues Q & A on 13th month pay)
Additional income based on wage required by
PD 851 requiring all Ers to pay their Ees a 13 th
month pay which is equivalent to 1/12 of the
total basic salary earned by an Ee within a
calendar year.
Basic Salary
Includes all remunerations or earnings paid by
the employer to an employee for services
rendered including cost-of-living allowances.
It does not include all allowances and monetary
benefits which are not considered or integrated
as part of the regular or basic salary such as:
1. Cash equivalent of unused vacation and
sick leave credits;
56
 Labor Law and Social Legislation
2. Overtime pay;
3. Premium pay;
4. Night Shift Differential;
5. Holiday pay; and
6. Commissions
XPN: If it is an integral part of the basic
salary. (Philippine Duplicators, Inc. v. NLRC,
G.R. No. 110068, Feb. 15, 1995)
These salary-related benefits should be included
in the computation of the 13th moth pay if by
individual or collective agreement, company
practice or policy, the same are treated as part of
the basic salary of the employees.
Time of payment of 13th month pay
Under PD 851, all employers are required to pay
all their rank-and-file employees, a 13th month
pay not later than Dec. 24 of every year.
Absence of CBA provision not a bar in giving
13th month pay
The absence of an express provision in the CBA
obligating the Er to pay the members of a union
13th month pay is immaterial. Notwithstanding
therefore the absence of any contractual
agreement, the payment of a 13th month pay
being a statutory grant, compliance with the
same is mandatory and is deemed incorporated
in the CBA.
Nature of 13th month pay
Such is in the nature of additional income
granted to employees who are not receiving the
same. (Agabon v. NLRC, G.R. No. 158693, Nov. 17,
2004)
It is based on wage but not part of wage. (Central
Azucarera de Tarlac v. Central Azucarera de
Tarlac Labor Union-NLU, G.R. No. 188949, July 26,
2010)
Minimum Period of Service Required
It is imposed as a ‘minimum service
requirement’ that the employee should have
worked for at least one (1) month during a
calendar year. (No. X[A], DOLE Handbook on
Workers Statutory Monetary Benefits)
Persons Covered by PD 851
1. Employees
57
GR: All rank-and-file Ees are covered by PD 851
regardless of the amount of basic salary that
they receive in a month, if their Ers are not
otherwise exempted from paying the 13th
month pay. Such Ees are entitled to the 13th
month pay regardless of said designation of
employment status, and irrespective of the
method by which their wages are paid.
Provided, that they have worked for at least 1
month, during a calendar year. (Revised
Guidelines on the Implementation of the 13th
Month Pay Law)
XPNs:
a. Government Ees;
b. Ees paid purely on commission basis;
c. Ees already receiving 13th month pay;
d. Managers; and
e. Seafarers
NOTE: Managerial employees may receive 13th
month pay if they are granted under an
employment contract or a company policy or
practice. (Chan, Bar Reviewer on Labor Law,
2019)
2. Employers
GR: All Ers are covered by PD 581.
XPNs:
a. The Government and any of its political
subdivisions, including GOCCs;
XPN to XPN: Corporations operating
essentially as private subsidiaries of the
Government.
b. Ers already paying their Ees 13th month
pay or more in a calendar year in its
equivalent at the time of the issuance of
the Revised Guidelines;
c. Ers of those who are paid on purely basis
of:
i. Commission;
NOTE: Bus drivers and conductors who
are paid a fixed or guaranteed minimum
wage in case their commission be less
than the statutory minimum are entitled
to a 13th-month pay equivalent to one-
twelfth of their total earnings during the
calendar year. (Philippine Agricultural
Commercial and Industrial Workers
 Labor Standards – Conditions of Employment
Union v. NLRC, G.R. No. 107994, Aug. 14,
1995)
ii. Boundary; or
iii. Task; and
iv. Fixed amount for performing a
specific work irrespective of the
time consumed in the performance
thereof.
XPN: Where the workers are paid on a
piece-rate basis, in which case, the
employer shall be covered by the
Revised Guidelines insofar as the
workers are concerned.
NOTE: Piece-Rate Workers 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.
d. Distressed Ers:
i. Currently incurring substantial
losses; or
ii. In the case of non-profit institutions
and organizations, where their
income, whether from donations,
contributions, grants and other
earnings from any source, has
consistently declined by more than
40% of their normal income for the
last 2 years, subject to the provision
of Sec. 7 of PD 851.
Domestic workers or kasambahays
Previously, not covered by 13th month pay law
are employers of household helpers and persons
in the personal service of another in relation to
such workers. However, RA 10361 is now
explicit in its commandment that a domestic
worker or kasambahay is entitled to 13th month
pay as provided by law. (Sec. 25, Art. IV, RA
10361, otherwise known as the “Domestic
Workers Act”)
Options of covered Ers
1. Pay 1/2 of the 13th month pay required
before the opening of the regular school
year and the other half on or before the
24th day of December of every year.
2. In any establishment where a union has
been recognized or certified as the CB
agent of the Ee, the periodicity or frequency
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
of payment of the 13th month pay may be
the subject of agreement.
Other types of employment entitled to 13th
month pay
1. Part-time Employee; (Item 5[b], Revised
Guidelines of PD 851)
2. Extras;
3. Casual Employee; and
4. Seasonal Employee. (BWC Opinion, Dec. 19,
1987)
Q: What would be your advice to your client,
a manufacturing company, who asks for your
legal opinion on whether or not the 13th
Month Pay Law covers a casual Ee who is paid
a daily wage? (1998 BAR)
A: I will advise the manufacturing company to
pay the casual Ee 13th Month Pay if such casual
Ee has worked for at least 1 month in a calendar
year. The law on 13th Month Pay provides that
Ees are entitled to the benefit of said law
regardless of their designation or employment
status.
NOTE: Ees are entitled to the 13th month pay
benefits regardless of their designation and
irrespective of the method by which their wages
are paid. (Jackson Building-Condominium Corp. v.
NLRC, G.R. No. 112546, March 14, 1996)
Equivalent forms of the 13th month pay
1. Christmas Bonus
2. Midyear Bonus
3. Profit Sharing Scheme
4. Other Cash bonuses amounting to not less
than 1/12 of its basic salary
NOTE: It must always be in the form of a legal
tender.
Things Not Proper Substitutes For 13th Month
Pay
1. Free rice;
2. Electricity;
3. Cash and stock dividends; and
4. Cost-of-living Allowance. (Sec. 3, PD 85)
Q: Concepcion Textile Co. included the OT
pay, night-shift differential pay, and the like
in the computation of its Ees’ 13 th month pay.
Subsequently, with the promulgation of the
decision of the SC in the case of SMC v. Inciong
(103 SCRA 139) holding that these other
58
 Labor Law and Social Legislation
monetary claims should not be included in
the computation of the 13th Month Pay,
Concepcion Textile Co. sought to recover
under the principle of solutio indebiti the
overpayment of the Ees’ 13th month pay, by
debiting against future 13th month payments
whatever excess amounts it had previously
made.
a. Is the Company's action tenable?
b. With respect to the payment of the 13th
month pay after the SMC ruling, what
arrangement, if any, must the Company
make in order to exclude from the 13 th
month pay all earnings and
remunerations other than the basic
pay? (1994 BAR)
A:
1. NO. The Company's action is not tenable.
The principle of solutio indebiti which is a
civil law concept is not applicable in labor
law. (Davao Fruits Corp. v. NLRC, et al., G.R.
No. 85073, Aug. 24, 1993) After the 1981
SMC ruling, the Supreme Court decided
the case of Philippine Duplicators Inc. v.
NLRC, G.R. No. 110068, Nov. 15, 1995.
Accordingly, management may undertake
to exclude sick leave, vacation leave,
maternity leave, premium pay for regular
holiday, night differential pay and cost of
living allowance.
2. The company should include sales
commissions based on the settled rule.
(Songco v. NLRC, G.R. No. L-50999, March
23, 1990)
Adjudicated Claims
Non-payment of the 13th month pay provided by
PD 851 and the rules of NLRC shall be treated as
money claims cases.
NOTE: Difference of opinion on how to compute
the 13th month pay is non-strikeable and a strike
held on that ground is illegal. (Isalama Machine
Works Corp. v. NLRC, G.R. No. 10016, March 2,
1995)
The following Ees may or may not be entitled
to 13th month pay
1. Ee paid by results – Entitled to 13th month
pay.
NOTE: Ees paid a fixed or guaranteed wage
plus commission are also entitled to the
59
mandated 13thmonth pay, based on their
total earnings during the calendar year, i.e.,
on both their fixed or guaranteed wage and
commission.
2. Those with Multiple Ers – Government
Ees working part time in a private
enterprise, including private educational
institutions, as well as Ees working in 2 or
more private firms, whether full or part
time basis, are entitled to the required 13 th
month pay from all their private Ers
regardless of their total earnings from each
or all their Ers. (Revised Guidelines on the
Implementation of 13th Month Pay Law)
3. Private School Teachers, including
faculty members of universities and
colleges – Entitled regardless of the
number of months they teach or are paid
within a year, if they have rendered service
for at least 1 month within a year.
4. Resigned or Separated Ees – If resigned
or separated from work before the time of
payment of 13th month pay, entitled to
monetary benefits in proportion to the
length of time he started working during
the calendar year up to the time of
resignation or termination of service (Pro-
rated 13th month pay). (Sec. 6, DOLE
Revised Guidelines on 13th Month Pay)
5. Employees who are paid a fixed or
guaranteed wage plus commission are
also entitled to the 13th-month pay, based
on their earnings during the calendar year
(i.e., on both their fixed or guaranteed wage
and commission).
NOTE: In the consolidated cases of Boie Takeda
Chemicals, Inc. v. Dionisio de la Serna, G.R. No.
92174 Dec. 10, 1993, and Philippine Fuji Xerox
Corporation v. Cresenciano Trajano and
Philippine Fuji Xerox Employees Union, G.R. No.
102552 Dec. 10, 1993, the Supreme Court ruled
that commissions, while included in the generic
term wage, are not part of "basic salary/wage"
and therefore should not be included in
computing the 13th month pay. Thus:
In remunerative schemes consisting of a
fixed or guaranteed wage plus commission,
the fixed or guaranteed wage is patently the
"basic salary" for this is what the employee
receives for a standard work period.
Commissions are given for extra efforts
exerted in consummating sales or other
 Labor Standards – Conditions of Employment
related transactions. They are, as such,
additional pay, which this Court has made
clear do not form part of the "basic salary."
(228 SCRA 329 [1993]) (Handbook on
Workers’ Statutory Monetary Benefits,
Bureau of Working Conditions, 2016)
Application of Pro-Ration of 13th Month Pay
GR: Pro-ration of 13th month pay applies only in
cases of resignation or separation from work;
computation should be based on length of
service and not on the actual wage earned by the
worker. (Honda Phils. v. Samahan ng
Manggagawa sa Honda, G.R. No. 145561, June 15,
2005)
XPN: Ees who are paid a guaranteed minimum
wage or commissions earned are entitled to 13th
Month Pay based on total earnings. (Philippine
Agricultural Commercial and Industrial Workers
Union v. NLRC, G.R. No. 107994, Aug. 14, 1995)
14th month pay not legally demandable
The granting of 14th
month pay is a management
prerogative and is not legally demandable. It is
basically a bonus and is gratuitous in nature.
(Kamaya Point Hotel v. NLRC, G.R. No. 75289, Aug.
31, 1989)
XPN: A bonus, however, becomes a demandable
or enforceable obligation when it is made part of
the wage or salary or compensation of the
employee. If it is additional compensation which
the employer promised and agreed to give
without any conditions imposed for its payment,
such as success of business or greater
production or output, then it is part of the wage.
But if it is paid only if profits are realized or if a
certain level of productivity is achieved, it
cannot be considered part of the wage.
XPN to the XPN: Where it is not payable to all
but only to some employees and only when their
labor becomes more efficient or more
productive, it is only an inducement for
efficiency, a prize therefore, not a part of the
wage. (Metro Transit Organization, Inc. v. NLRC,
G.R. No. 116008, July 11, 1995)
Q: ETPI (company) entered into a collective
bargaining agreement with ETEU (union). A
side agreement of the said CBA provided that
company confirms that the 14th, 15th and
16th month bonuses (other than 13th month
pay) are granted. The company then planned
to defer the payment of the 14th, 15th and 16th
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
month bonuses due continuing deterioration
of company’s financial position. The union
opposed and filed a preventive mediation
complaint before the NCMB. May the
company validly postpone the payment of
said bonuses?
A: NO. A reading of the provision reveals that the
same provides for the giving of 14th, 15th and
16th month bonuses without qualification. There
were no conditions specified in the CBA Side
Agreements for the grant of the benefits
contrary to the claim of ETPI that the same is
justified only when there are profits earned by
the company. In fine, the payment of these
bonuses was not related to the profitability of
business operations. Verily, by virtue of its
incorporation in the CBA Side Agreements, the
grant of 14th, 15th and 16th month bonuses has
become more than just an act of generosity on
the part of ETPI, but a contractual obligation it
has undertaken. (ETPI v. ETEU, G.R. No. 185665,
Feb. 8, 2012)
Commission in relation to 13th month pay
a. The salesman’s commissions, comprising a
pre-determined percent of the selling price of
the goods sold by each salesman, were
properly included in the term basic salary for
purposes of computing their 13th month pay.
These commissions are not overtime
payments, nor profit-sharing payments nor
any other fringe benefit. Thus, the salesmen's
commissions, comprising a pre-determined
percent of the selling price of the goods sold
by each salesman, were properly included in
the term "basic salary" for purposes of
computing their 13th-month pay. (Philippine
Duplicators, Inc. v. NLRC, G.R. No. 110068, Feb.
15, 1995)
b. The so-called commission received by
medical representatives of BoieTakeda
Chemicals or by the rank-and-file Ees of Phil.
Fuji Xerox were excluded from the term basic
salary because these were paid as
productivity bonuses. Such bonuses closely
resemble profit sharing, payments and have
no clear, direct, necessary relation to the
amount of work actually done by each
individual Ee. (Boie-Takeda Chemicals, Inc. v.
Dela Serna, G.R. No. 92174, Dec. 10, 1993)
Productivity bonus vs. Sales
Commissions
60
 Labor Law and Social Legislation

A productivity bonus is something extra for Service Charge vs. Tips

which no specific additional services are
rendered by any particular employee and hence SERVICE CHARGE TIPS
not legally demandable, absent a contractual
undertaking to pay it. Voluntary payments
Collected by the
made by the
management from
Sales commissions, on the other hand, such as customers to the Ees
the customers.
those paid in Duplicators, are intimately related for excellent service.
to or directly proportional to the extent or
energy of an employee's endeavors. Tips
Commissions are paid upon the specific results
achieved by a salesman-employee. It is a Tips are handled similarly as service charges.
percentage of the sales closed by a salesman and Pooled tips should be monitored, accounted, and
operates as an integral part of such salesman's distributed in the same manner as the service
basic pay. (Philippine Duplicators, Inc. v. NLRC, charges.
G.R, 110068, Feb. 15, 1995)
A waiter must drop in a tip box the tips he
SERVICE CHARGES received. Otherwise, he commits “tip pocketing”,
a serious offense of dishonesty that may cost him
These are charges collected by hotels, his job.
restaurants and similar establishments
distributed completely and equally among the Rule if Service Charge Is Abolished
covered workers except managerial employees.
(LC, Art. 96 as amended by RA 11360, Sec. 1) If it is abolished, the share of the covered Ees
shall be considered integrated in their wages on
Covered employees the basis of the average monthly share of each
Ees for the past 12 months immediately
GR: All Ees are covered, regardless of their preceding the abolition. (Sec. 5, Rule V, Book III,
position, designation, and employment status, IRR)
irrespective of the method by which their wages
are paid. NOTE: Service charges form part of the award in
illegal dismissal cases.
NOTE: Applies only to hotels, restaurants and
similar establishment collecting service charges. Compliance with Minimum Wage

XPN: Managerial Ees (Sec. 2, Rule IV, Book III, Service charges paid to the covered Ees shall not
IRR) be considered in determining the Er’s
compliance with the increased minimum wage
Distribution (LC, Art. 96 as amended by RA 11360, Sec. 1)

Previously, all service charges collected by

covered employers are required to be
distributed at the rate of 85% for all covered
employees and 15% for management.

RA 11360 amended Art. 96 of the Labor Code

wherein the former provides that all service
charges collected by hotels, restaurants and
similar establishments shall be distributed
completely and equally among the covered
workers except managerial employees. (RA
11360, Aug. 7, 2019)

Frequency of Distribution

The period is not less than once every 2 weeks

or twice a month at intervals not exceeding 16
days. (RA 11360, IRR)

61
 Labor Standards – Wages
WAGES
It is the remuneration or earnings, however
designated, capable of being expressed in terms
of money, whether fixed or ascertained on a
time, task, piece, or commission basis, or other
method of calculating the same, payable by an Er
to an Ee under a written or unwritten contract of
employment:
1. For work done or to be done, or for
services rendered or to be rendered; and
2. Includes fair and reasonable value of board,
lodging, or other facilities customarily
furnished by the Er to the Ee as determined
by SLE.
Fair and reasonable value shall not include any
profit to the employer or to any person affiliated
with the employer. (LC, Art. 97 [f])
Twin Attributes of Wages
1. Cash wage takes the form of ready money
paid by the employer for services rendered
by the employee.
2. Facilities are articles or services
customarily given for the benefit of the
employee and are voluntarily accepted by
him.
NOTE: The term "wages" also covers all benefits
of the employee under the CBA such as
severance pay, educational allowance, accrued
vacation leave earned but not enjoyed, as well as
workmen's compensation awards and unpaid
salaries for services rendered. (PNB v. Cruz, 180
SCRA 206)
Agricultural Work refers to all farming
activities in all its branches and includes among
others, the cultivation and tillage of the soil,
production, cultivation, growing and harvesting
of any agricultural 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 farm as an incident to or in
conjunction with such farming operations, but
does not include the manufacturing and/or
processing of sugar, coconut, abaca, tobacco,
pineapple, aquatic or other farm products. [LC,
Art. 97(d)]
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
“No Work, No Pay” Principle (Fair Day’s Wage
for a Fair Day’s Labor)
GR: If there is no work performed by the
employee, without the fault of the employer,
there can be no wage or pay. Burden of
economic loss suffered by employee shall not be
shifted to the employer.
XPNs: When the laborer was able, willing and
ready to work but was:
1. Prevented by management;
2. Illegally locked out;
3. Illegally suspended;
4. Illegally dismissed;
5. Illegally prevented from working. (Aklan
Electric Coop. v. NLRC, G.R. No. 129246, Jan.
10, 2000)
“Equal Pay for Equal Work” Principle
Persons who work with substantially equal
qualifications, skill, effort and responsibility,
under similar conditions, should be paid similar
salaries.
Employees holding the same position and rank
are presumed to be performing equal work. The
rule equal pay for equal work applies whether
the employee is hired locally or abroad.
(International School Alliance of Educators v.
Quisumbing, G.R. No. 128845, June 1, 2000)
Application of Title
GR: The Title on Wages of the Labor Code
applies to all employees.
XPNs:
1. Farm tenancy or leasehold;
2. Household or domestic helpers, including
family drivers and persons working in the
personal service of another;
3. Home workers engaged in needlework or
in any cottage industry duly registered in
accordance with law; (LC, Art. 98)
4. Workers in any duly registered
cooperatives when so recommended by the
Bureau of Cooperative Development and
upon approval of the SLE;
NOTE: Workers of a registered barangay micro
business enterprise are only exempted from the
Minimum Wage Law, not from the Title on
Wages of the Labor Code. (RA 9178)
62
 Labor Law and Social Legislation

Barangay Micro Business Enterprise refers to Salary

any business entity or enterprise engaged in the
production, processing or manufacturing of
products or commodities, including agro-
processing, trading and services, whose total
assets including those arising from loans but
exclusive of the land on which the particular
business entity's office, plant and equipment are
situated, shall not be more than Three Million
Pesos. (RA 9178)
It denotes a higher degree of employment, or a
superior grade of services, and implies a position
of office and is suggestive of a larger and more
important service. The word “salary” is
understood to relate to position of office, to be
the compensation given for official or other
service. It is subject to execution or attachment.
(Gaa v. CA, G.R. No. L-44169, Dec. 3, 1985)

WAGE vs. SALARY Basic Salary

The term includes remunerations or earnings

WAGE SALARY
paid by the employer to employee, but excludes
(Gaa v. CA, G.R. No. 44169, Dec. 3, 1985) cost-of-living allowances, profit-sharing,
Compensation for payments, and all allowances and monetary
Paid to “white-
manual labor (skilled benefits which have not been considered as part
collared workers”
or unskilled) also of the basic salary of the employee. (Duka, Labor
and denotes a
known as “blue- Laws and Social Legislation, A Barrister’s
higher degree of
collared workers,” Companion, 2016, p. 161)
employment or a
paid at stated times
superior grade of
and measured by the Q: Eden is a general manager of Talisay
services and implies
day, week, month or Water District in Talisay City, Negros
a position or office.
season. Occidental. The Commission on Audit
disallowed a total amount of P 380,208.00
Indicates a
which Eden received as part of her salary as
considerable pay for a Suggestive of a
the Water District's general manager from
lower and less larger and more
2005 to 2006. It found that Eden's salary as
responsible character important service.
general manager "was not in consonance
of employment.
with the rate prescribed under Republic Act
GR: Not subject to No. 6758, otherwise known as the Salary
execution or Standardization Law. Eden argued that Sec.
attachment 23 of the Provincial Water Utilities Act of
1973 gives Talisay Water District board of
XPN: Debts incurred Subject to execution. directors the right to fix and increase his
for food, shelter, salary as general manager and is an
clothing and medical exception to the Salary Standardization Law,
attendance. (NCC, Art. and that he relied on Sec. 23 in good faith
1708) hence, she cannot be ordered to refund the
amount he received. Is Eden's contention
NOTE: The Supreme Court reached the correct?
conclusion that words “wages” and “salary” are
in essence synonymous. (Azucena, Vol. 1, 2016, p. A: NO. Sec. 23 of PD No. 198 does not exempt
305) water utilities from the coverage of the Salary
Standardization Law. However, this does not
The distinction between salary and wage was mean that water utilities cannot fix the
only for the purpose of Art. 1708 of the Civil compensation of their respective general
Code which mandates that laborer's wages shall managers. Sec. 23 of PD No. 198 clearly provides
not be subject to execution or attachment except that a water utility's board of directors has the
for debts incurred for food, shelter, clothing and power to define the duties and fix the
medical attendance. (Gaa v. Court of Appeals, G.R. compensation of a general manager. The
No. L-44169, Dec. 3, 1985) In labor law, the compensation fixed must be in accordance with
distinction is only a matter of semantics. It is the position classification system under the
settled that wage and salary are synonymous. Salary Standardization Law.
Likewise, the term "pay" is also synonymous
with wage and salary. (Equitable PCI v. Sadac, All told, the general manager position of a water
G.R. No. 164772, June 8, 2006) district is covered by the Salary Standardization

63
 Labor Standards – Wages

Law. The Commission on Audit did not gravely
abuse its discretion in disallowing petitioner
Eden's compensation for exceeding the rate
provided in the Salary Standardization Law.
Eden relied on Sec. 23 hence, she received the
disallowed salaries in good faith. She need not
refund the disallowed amount. (Engineer
Manolito Mendoza v. Commission on Audit, G.R.
No. 195395, Sept. 10, 2013, as penned by J.
Leonen)
NOTE: Voluntary and contractual bonuses can
be credited for the purpose of determining
liability for the 13th month pay. To the employer
who acceded and is already bound to give
bonuses to his employees, the additional burden
of 13th month pay would amount to a penalty for
his munificence or liberality. (NSFW v. Ovejera, et
al., G.R. No. 59743, May 31, 1982)
FACILITIES vs. SUPPLEMENTS

Commission BASIS FACILITIES SUPPLEMENT

Extra
A fee paid based on a percentage of the sale Nature Items of expense remuneration
made by an employee or agent, as distinguished or benefits
from regular payments of wages or salary. Forms part of Independent of
Inclusion
the wage wage
Inclusion of Commission in Basic Salary Deductible from Not wage
Deduction
the wage deductible
1. Included in the basic salary – If the For the benefit Granted for the
commission is comprised of a pre- To whose
of the worker convenience of
determined percentage of the selling price benefit
and his family the Er
of the goods.
Facilities as Part of Wages
2. Excluded from basic salary – If the
commission is paid as productivity bonus “Facilities” shall include articles or services for
or closely resemble profit-sharing, or when the benefit of the employee or his family but
it has no clear, direct or necessary relation shall not include tools of the trade or articles or
to the amount of work actually done by service primarily for the benefit of the employer
each individual employee. or necessary to the conduct of the employer’s
business. (Sec. 5, Rule VII-A, Book III, IRR)
Productivity Bonus vs. Sales Commission
Facilities are items of expense necessary for the
PRODUCTIVITY laborer's and his family's existence and
SALES COMMISSION
BONUS subsistence so that by express provision of law,
Generally tied to the they form part of the wage and when furnished
productivity or profit Paid upon the specific by the employer are deductible therefrom, since
generation of the results achieved by a if they are not so furnished, the laborer would
employer salesman-employee spend and pay for them just the same. (Our Haus
corporation Realty Development Corp. v. Parian, G.R. No.
Intimately related to 204651, Aug. 6, 2014)
Not directly
or directly
dependent on the E.g., Rice ration, housing, recreational facilities,
proportional to the
extent an individual medical treatment to dependents, school
extent or energy of
employee exerts facilities, cost of light, water, fuel, meals or
an employee’s
himself snacks (Atok Big Wedge Mutual Benefit Assn. v.
endeavors
Atok Big Wedge Mining Co., 97 Phil. 294; Mayon
Something extra for Hotel v. Adana, G.R. No. 157634, May 16, 2005)
which no specific
A percentage of the
additional services Facilities Exclude Profit
sales closed by a
are rendered by a
salesman and
particular employee; The value of facilities should not be more than
operates as an
hence, not legally the actual cost to the employer of the board,
integral part of such
demandable, absent a lodging, or other facilities customarily furnished
salesman’s basic pay
contractual by him to his employees. The "fair and
undertaking to pay it reasonable value" does not include any profit to
the employer or to any persons affiliated with
the Er.

UNIVERSITY OF SANTO TOMAS 64

2021 GOLDEN NOTES
 Labor Law and Social Legislation
Significance of Determination of Facilities
Beneficial to Employer or Employee
It is significant to determine when articles or
services are beneficial to an employee because
those articles or services which are not of benefit
to the employee cannot be charged against the
cash wage of an employee. Articles or tools of
the trade that are primarily for the benefit of the
employer or necessary to the conduct of his
business cannot be deducted from the
employer's wages because they are not
considered as facilities.
Requirements for Deducting Values for
Facilities
1. Proof must be shown that such facilities are
customarily furnished by the trade;
NOTE: It is important to determine when
facilities are customarily furnished or not,
for the fair and reasonable value of
facilities not customarily furnished cannot
be charged against the cash wage.
For example, a messenger who slept in the
office cannot be charged by the employer
for housing allowance because the office is
not a regular sleeping quarter. On the other
hand, housing quarters are common in a
mining industry; hence, the latter can
charge its employees for housing quarter.
(Mabeza v. NLRC, G.R. No. 118506, April 18,
1997)
2. The provision of deductible facilities must
be voluntarily accepted in writing by the
employee; and,
3. The facilities must be charged at fair and
reasonable value. (ibid.)
NOTE: Where the facilities are given free of
charge by the employer and there is no prior
agreement to deduct the cost of said facilities
from the wages of the employees, the employer
cannot subsequently charge the cost of the
facilities or otherwise avail of the order. [Sec.
2(g), Rule IV, DO 126-13]
Voluntary Acceptance of Facilities
Acceptance of facilities is voluntary, for to
compel the employee to accept such facilities
against his will would be violative of the
fundamental right of employee to the free
65
disposal of his wage guaranteed under Art. 112.
(Mabeza v. NLRC, G.R. No. 118506, April 18, 1997)
Supplements Not Part of Wages
“Supplements” are extra remunerations or
benefits given to or received by laborers over
and above their ordinary earnings or wages.
Since they are not considered as part of wages,
their value cannot be deducted from the cash
wage of an employee.
E.g., Vacation leave pay, overtime pay in excess
of the legal rate, profit-sharing benefits, sick
pension, retirement and death benefits, family
allowances, Christmas bonus, war-risk or cost-
of-living bonuses or other bonuses other than
those paid as reward for extra output or time
spent on the jobs. (Atok Big Wedge Mining Co. v.
Atok Big Wedge Mutual Benefit Assoc., G.R. No. L-
7349, July 19, 1955)
Criterion in Determining Whether an Item is
a Supplement or Facility
The criterion is not so much with the kind of the
benefit or item (food, lodging, bonus or sick
leave) given, but its purpose. (State Marine v.
Cebu Seamen’s Assn., G.R. No. L-12444, Feb. 28,
1963)
If it is primarily for the employee’s gain, then the
benefit is a facility; if its provision is mainly for
the employer’s advantage, then it is a
supplement. Again, this is to ensure that
employees are protected in circumstances where
the employer designates a benefit as deductible
from the wages even though it clearly works to
the employer’s greater convenience or
advantage.
Under the purpose test, substantial
consideration must be given to the nature of the
employer’s business in relation to the character
or type of work performed by the employees
involved. (Our Haus Realty Development Corp. v.
Parian, G.R. No. 204651, Aug. 6, 2014)
Tips Not Part of Wages; Element of
Compulsion in Tipping
Wage is the remuneration directly paid by the
employer to an employee. On the other hand,
tips are paid directly to an employee by the
customer; hence, they fall short of the definition
provided in Art. 97.
 Labor Standards – Wages
Although a tip denotes a voluntary act, it lacks
the essential element of a gift, that is, the free
bestowing of a gratuity without consideration.
Despite its apparent voluntariness, there is an
element of compulsion in tipping. (Ace
Navigation Co., Inc. v. C.A., 338 SCRA 70)
Status of Food and Lodging, or The Electricity
and Water Consumed by a Hotel Worker
These are supplements. Considering, therefore,
that hotel workers are required to work
different shifts and are expected to be available
at various odd hours, their ready availability is a
necessary matter in the operations of a small
hotel.
Furthermore, granting that meals and lodging
were provided and indeed constituted facilities,
such facilities could not be deducted without the
Er complying first with certain legal
requirements. (Mabeza v. NLRC, G.R. No. 118506,
April 18, 1997)
Q: Gamma Company pays its regular
employees P350.00 a day and houses them in
a dormitory inside its factory compound in
Manila. Gamma Company also provides them
with three full meals a day. In the course of a
routine inspection, a DOLE Inspector noted
that the workers' pay is below the prescribed
minimum wage of P426.00 plus P30.00
allowance, and thus required Gamma
Company to pay wage differentials.
Gamma Company denies any liability,
explaining that after the market value of the
company-provided board and lodging are
added to the employees' P350 cash daily
wage, the employees' effective daily rate
would be way above the minimum pay
required by law. The company counsel
further points out that the employees are
aware that their food and lodging form part
of their salary and have long accepted the
arrangement. Is the company's position
legally correct? (2013 BAR)
A: NO. The following requisites were not
complied with:
1. Proof that such facilities are customarily
furnished by the trade
2. The provision of deductible facilities is
voluntarily accepted by the employee
3. The facilities are charged at the fair and
reasonable value. Mere availment is not
sufficient to allow deduction from
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
employee’s wages. (Mayon Hotel &
Restaurant v. Adarna, G.R. No. 157634, May
16, 2005)
Gratuity
It is something given freely or without
recompense; a gift; something voluntarily given
in return for a favor or services.
Gratuity pay is not intended to pay a worker for
actual services rendered. It is a money benefit
given to the workers whose purpose is to reward
them in return for a satisfactory work and
efficient service to the company.
While it may be enforced once it forms part of a
contractual undertaking, the grant of such
benefit is not mandatory so as to be considered a
part of labor standard law unlike salary, cost-of-
living-allowances, holiday pay, leave benefits,
etc., which are covered by the Labor Code.
(Azucena, Vol. 1, 2016, p. 311)
REGIONAL MINIMUM WAGE
Regional minimum wage refers to the lowest
basic wage rates than an employer can pay his
works, as fixed by the Regional Tripartite Wages
and Productivity Boards (RTWBPs), and which
shall not be lower than the applicable statutory
minimum wage rates. [Sec. 4 (k), Rule 1, NWPC
Guidelines No. 01, Series of 2007, June 19, 2007]
STATUTORY MINIMUM WAGE
Statutory minimum wage is the lowest wage
rate fixed by law that an employer can pay his
workers. (IRR, RA 6727,) Compensation which is
less than such minimum rate is considered an
underpayment that violates the law. (Azucena,
Vol. 1, 2016, p. 317)
Purpose
The purpose of minimum wage law is “to set
barrier below which wages may not fall, in order
to develop competition on a high level of
efficient rather than competition on a low level
of wages.”
The minimum must be fair and just. The
"minimum wage" can by no means imply only
the actual minimum. Some margin or leeway
must be provided, over and above the minimum,
to take care of contingencies, such as increase of
prices of commodities and increase in wants,
and to provide means for a desirable
66
 Labor Law and Social Legislation
improvement in his mode of living. (Atok Big
Wedge Mining Co., Inc. v. Atok Big Wedge Mutual
Benefit Association, G.R. No. L-5276, March 3,
1953)
Ability to Pay Immaterial
The employer cannot exempt himself from
liability to pay minimum wages because of poor
financial condition of the company, the payment
of minimum wages not being dependent on the
employer’s ability to pay. (Azucena, Vol. 1, 2016,
p. 319)
Non-Applicability of Estoppel
The acceptance of by an employee of the wages
paid him without objections does not give rise to
estoppel precluding him from suing for the
difference between the amount received and the
amount he should have received pursuant to a
valid minimum wage law.
In other words, the law gives the employee the
right to be paid at least the minimum wage. Such
legal right cannot be waived or given away even
if he does not complain at the time he receives a
wage below the minimum. (Azucena, Vol. 1, 2016,
p. 320)
Minimum Wage Non-Negotiable; Non
Waivable
The minimum wage fixed by law is mandatory;
thus, it is non-waivable and non-negotiable. The
enactment is compulsory in nature in order to
ensure decent living conditions. (PAM Co. v.
PAMEA-FFW, 51 SCRA 98)
XPNs to the Coverage of Minimum Wage
1. Household or domestic helpers, including
family drivers and persons in the personal
service of another;
NOTE: Household or domestic workers are
only exempt from the minimum wage
prescribed by wage orders. RA 10361
otherwise known as “Batas Kasambahay”
prescribes the minimum wage for
household or domestic helpers.
2. Homeworkers engaged in needle-work;
3. Workers employed in any establishment
duly registered with the National Cottage
Industries and Development Authority
provided that such workers perform the
work in their respective homes;
67
4. Workers in any duly registered cooperative
when so recommended by the Bureau of
Cooperative Development and upon
approval of the SOLE. (IRR of LC, Book III,
Rule VII, Sec. 3)
5. Employees of retail and service
establishments regularly employing not
more than 10 employees. (Sec. 4, RA 6727)
6. Workers in a duly registered cooperative
when so recommended by the Bureau of
Cooperative Development and upon
approval of the SLE; (Sec. 2, Rule VII, Book
III, IRR, LC)
7. Workers of a barangay micro business
enterprise (RA 7138)
NOTE: Retail and service establishments must
file an application for exemption with the duly
appropriate Regional Board.
Additional Exemptions
The NWPC Guidelines on Exemption from wage
orders adds categories of exemptible enterprises
such as distressed establishments, new business
enterprises, and establishments adversely
affected by natural calamities.
Wage Orders issued by the wage boards under
Arts. 99 and 122 may provide for other
exemptions from the Minimum Wage Law.
(Azucena, Vol. I, 2016, p. 324)
NATIONAL WAGES AND
PRODUCTIVITY COMMISSION
The NWPC was created by the Wage
Rationalization Act. (RA 6727) This replaced the
National Wages Council.
Powers and Functions of the Commission
The Commission shall have the following powers
and functions:
1. To act as the national consultative and
advisory body to the President of the
Philippines and Congress on matters
relating to wages, incomes and
productivity;
2. To formulate policies and guidelines on
wages, incomes and productivity
improvement at the enterprise, industry
and national levels;
3. To prescribe rules and guidelines for the
determination of appropriate minimum
wage and productivity measures at the
regional, provincial or industry levels;
 Labor Standards – Wages
4. To review regional wage levels set by the
Regional Tripartite Wage and Productivity
Boards to determine if these are in
accordance with prescribed guidelines and
national development plans;
5. To undertake studies, researches and
surveys necessary for the attainment of its
functions and objectives, and to collect and
compile data and periodically disseminate
information on wages and productivity and
other related information, including, but
not limited to, employment, cost-of-living,
labor costs, investments and returns;
6. To review plans and programs of the
Regional Tripartite Wages and Productivity
Boards to determine whether these are
consistent with national development
plans;
7. To exercise technical and administrative
supervision over the Regional Tripartite
Wages and Productivity Boards;
8. To call, from time to time, a national
tripartite conference of representatives of
government, workers and employers for
the consideration of measures to promote
wage rationalization and productivity; and
9. To exercise such powers and functions as
may be necessary to implement this Act.
(LC, Art. 121)
REGIONAL TRIPARTITE WAGE AND
PRODUCTIVITY BOARD
The RTWPB was created by the Wage
Rationalization Act (RA 6727). The intention was
to rationalize wages by:
a. Providing full-time boards to police wages
round-the-clock; and
b. Giving the boards enough powers to
achieve this objective. (Azucena, Vol. 1,
2016, p. 425)
Powers and Functions of the Regional Boards
The Regional Boards shall have the following
powers and functions in their respective
jurisdiction:
1. To develop plans, programs and projects
relative to wages, incomes and productivity
improvement for their respective regions;
2. To determine and fix minimum wage rates
applicable in their regions, provinces or
industries therein and to issue the
corresponding wage orders, subject to
guidelines issued by the Commission;
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
3. To undertake studies, researches, and
surveys necessary for the attainment of
their functions, objectives and programs,
and to collect and compile data on wages,
incomes, productivity and other related
information and periodically disseminate
the same;
4. To coordinate with the other Regional
Boards as may be necessary to attain the
policy and intention of this Code;
5. To receive, process and act on applications
for exemption from prescribed wage rates
as may be provided by law or any Wage
Order; and
6. To exercise such other powers and
functions as may be necessary to carry out
their mandate under this Code. (LC, Art.
122)
Approval of Wage Order
The NWPC prescribes rules and guidelines for
determination of appropriate minimum wage
and productivity measures at the regional,
provincial or industry levels. The NWPC may
review the wage levels set by the RTWPBs. But, a
wage-fixing order by the RTWPB does not need
prior approval by the NWPC. (Azucena, Vol. 1,
2016, p. 427)
The RTWPBs are empowered to:
a. Determine and fix minimum wage rates
applicable in their regions; and,
b. To issue the corresponding wage orders.
However, RTWPB issuances should accord with
guidelines issued by the NWPC. But the LC does
not require NWPC’s approval of wage order.
What it requires is for the Wage Board to
conduct a public hearing over a petition for a
wage order, to decide such petition within 30
days after the last hearing, and to furnish the
Commission a copy of the decision on the petition
or the wage order. Furnishing the NWPC a copy
of the wage order does not mean seeking the
Commission’s approval. (Azucena, Vol. 1, 2016, p.
428)
Approval of Implementing Rules and
Regulations
What needs prior approval is not the wage order
but its implementing rules and regulations
which the Board has to prepare within 10 days
from issuance of the wage order.
68
 Labor Law and Social Legislation
The Secretary of Labor, upon recommendation
of the Commission, may approve the
implementing rules. (NWPC Guidelines)
NON-DIMINUTION OF BENEFITS
GR: Nothing in the Labor Code shall be
construed to eliminate or in any way diminish
supplements, or other employee benefits being
enjoyed at the time of the promulgation of the
Code. (LC, Art. 100)
Benefits being given to Ees cannot be taken back
or reduced unilaterally by the Er because the
benefit has become part of the employment
contract, whether written or unwritten.
XPNs:
1. Correction of error
2. Contingent benefit or conditional bonus
3. Wage order compliance
4. Benefits on reimbursement basis
5. Reclassification of position
6. Negotiated benefits
NOTE: Benefits initiated through
negotiation between employer and
employees, such as those contained in a
CBA are not within the prohibition of Art.
100 because, as products of bilateral
contract, they can only be eliminated or
diminished bilaterally. (Azucena, Vol. I,
2016, p. 332)
7. Productivity incentives
NOTE: If the error is not corrected in a
reasonable time, it ripens into a company policy
and Ees can demand it as a matter of right.
Applicability of the Rule on Non-Diminution
of Benefits
It is applicable if it is shown that:
1. Grant of benefit is based on a policy or has
ripened into a practice over a long period;
2. Practice is consistent and deliberate;
3. Practice is not due to an error in the
construction or application of a doubtful
or difficult question of law; and
4. It is done unilaterally by the employer.
The Non-Diminution Rule, however, applies only
if the benefit is based on an express policy, a
written contract, or has ripened into a practice.
To be considered a practice, it must be
consistently and deliberately made by the
69
employer over a long period of time. (Wesleyan
University-Philippines v. Wesleyan University-
Faculty and Staff Assn., G.R. No. 181806, March
12, 2014)
NOTE: With regard to the length of time, the
Supreme Court held that jurisprudence has not
laid down any rule requiring a specific minimum
number of years. (Sevilla Trading Co. v. Semana,
G.R. No. 152456, April 28, 2004)
However, in Supreme Steel Corp. v. NMS-IND-APL
(G.R. No. 185556, March 28, 2011), the Court held
that “While it is true that jurisprudence has not
laid down any rule requiring a specific minimum
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 less than a year would
certainly not qualify as such.”
Purpose of Non-Diminution of Benefits
The philosophy behind the law is to prohibit
employers from reducing benefits already
enjoyed by employees. A contrary rule will
corrupt the employer's mind to abuse and
exploit employees, prostituting the social justice
and protection to labor clauses enshrined in the
fundamental charter.
Thus, a change of method of payment of wages
from monthly to daily will not be allowed if it
would result in reduction of pay. However, if the
method introduced would augment the worker's
pay it will be valid. Reclassification of position of
employees pursuant to reorganization, without
affecting their compensation is not covered by
the proscription. (Opinion of the Secretary of
Labor, Oct. 7, 1975)
An agreement reducing certain labor standards
benefits such as overtime and premium pay
violates Art. 100. Provisions of existing laws are
deemed part of a contract. (Republic Planters
Bank v. NLRC, 266 SCRA 142)
However, if there is an impelling reasonable
justification of the diminution or reduction
because of an emergency or exigency, or
business losses, such diminution or reduction
would be valid, provided it is duly approved by
the Secretary of Labor and Employment or his
duly authorized representative pursuant to Art.
233. (Poquiz, p. 229)
Bonus
 Labor Standards – Wages
Refers to the payment in excess of regular or
guaranteed wages. It is granted to an employee
for his tangible contribution to the success of the
employer’s business, without which the
employer may not realize bigger profits. The
contribution may be in the form of an
employee’s commitment to the job, his industry
and loyalty. (Metro Transit Org., Inc. v. NLRC, G.R.
No. 116008, July 11, 1995)
GR: The payment of bonus is a management
function, not a demandable and enforceable
obligation, which cannot be enforced upon the
employer who may not be obliged to assume the
onerous burden of granting bonuses or other
benefits aside from the employee’s basic salaries
or wages. (Philippine National Construction
Corporation v. NLRC, G.R. No. 128345, May 18,
1999)
XPN: Bonuses can be demanded as a matter of
right if:
1. Given without any condition; hence, part
of the wage or salary; (Atok Big Wedge
Mining Co., Inc. v. Atok Big Wedge Mutual
Benefit Assn., 92 Phil. 754)
2. Grant thereof is a result of an agreement
such as the CBA; (Gery v. Insular Lumber,
93 Phil. 807)
3. Given on account of company policy or
practice; (Claparols v. CIR, 65 SCRA 613)
4. Grant is mandated by law.
Bonus Treated as Not Part of Wages
Bonus is not considered part of wages if it is paid
only upon realization of profits or amount of
production or output. (Atok Big Wedge Mining
Co., Inc. v. Atok Big Wedge Mutual Benefit Assn.,
92 Phil. 754)
Where the bonus is not payable to all but only to
some employees and only when their labor
becomes more efficient or more productive, it is
only an inducement for efficiency, a prize
therefore, not a part of the wage. (Poquiz, 2012)
Stoplock Gate or Non-chargeability Clause
Having entered into an agreement with its
employees, an employer may not be allowed to
renege on its obligation under a collective
bargaining agreement should, at the same time,
the law grants the employees the same or better
terms and conditions of employment. Employee
benefits derived from law are exclusive of
benefits arrived at through negotiation and
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
agreement unless otherwise provided by the
agreement itself or by law. (Meycauayan College
v. Hon. Drilon, 185 SCRA 50)
Any allowance/wage granted under the
collective bargaining agreement cannot be
credited to similar form of benefit that may
thereafter be ordained by the government
through legislation. Such portion of the contract
is the "stoplock" gate or known in its technical
term as the "non-chargeability" clause.
(Marcopper Mining Corp. v. NLRC, G.R. No.
103525, March 29, 1996)
This doctrine was resounded in this manner: the
CBA provides "It is hereby agreed that these
salary increases shall be exclusive of any wage
increase that may be provided by the law as a
result of any economic change."
The Supreme Court ruled that the above
provision in the CBA is clear that the salary
increases shall not include any wage increase
that may be provided by law as a result of
economic change. The CBA needs no
interpretation as it is not ambiguous. Thus, the
wage increase granted by the petitioner to its
employees under the CBA cannot be considered
as creditable benefit. (Mindanao Steel Corp. v.
Minsteel Free Workers Organization, G.R. No.
130693, 4 March 2004; UKCEU-PTGWO v.
Kimberly Clark Phils, G.R. No. 162957, March 6,
2006)
Benefit Acquired Through Company Practice
An employee can demand as a matter of right
benefits granted by the employer for a
considerable, long period of time as the same
may ripen into a company practice.
If it is a past error that is being corrected, no
vested right may be said arisen nor any
diminution of benefit under Art. 100 of the Labor
Code may be said to have resulted by virtue of
the correction. (Globe Mackay v. NLRC, 163 SCRA
71)
Instances of Violation of the Rule on Non-
Diminution of Benefits
Withdrawal of the following would amount to
diminution of employee’s existing benefits:
1. Enjoyment of the privilege of commutation
of sick leave benefits into cash equivalent as
a company practice; (Davao Integrated Port
70
 Labor Law and Social Legislation
Stevedoring Services v. Abarquez, 220 SCRA
197)
2. Grant of resignation benefits to a Branch
Manager on the basis of company practice of
applying expired CBA concluded by the
supervisory union; (Republic Planters Bank,
v. NLRC, 166 SCRA 197) and
3. Giving of special bonus as the company's
long and regular practice. (Meralco v.
Quisumbing, 302 SCRA 173)
PAYMENT BY RESULTS
Workers paid by result are:
1. Paid based on the work completed; and
2. Not on the time spent in working.
Pay of these workers is calculated not on the
basis of time spent on the job but of the quantity
and quality or the kind of work they turn out.
(Azucena, Vol. 1, 2016, p. 346)
It includes those who are paid on piece work,
“takay” or task basis, who shall be entitled to
receive not less than the prescribed statutory
minimum wage for an eight-hour work or a
proportion thereof for less than eight hours
work. (Art. 124, infra.)
Basis for determining rates for piece, output,
or contract work
The basis for the establishment of rates of piece,
output or contract work shall be the
performance of an ordinary worker of minimum
skill or ability. An ordinary worker of minimum
skill or ability is the average worker of the
lowest producing group representing 50% of the
total number of employees engaged in similar
employment in a particular establishment,
excluding learners, apprentices and handicapped
workers employed therein. (Sec. 8, Rule VII-A,
Book III, IRR, LC)
Categories of Workers Paid by Results
A. As to Presence of Control
1. Supervised (Piece-rate worker) - works
directly under the supervision of the
employer.
2. Unsupervised (Takay or Pakyaw) -
works away from the employer’s
premises.
71
B. As to Rate of Payment
1. Those who are paid PIECE RATES
which are prescribed in Piece Rate
Orders issued by DOLE – Wages or
earnings are determined by simply
multiplying the number of pieces
produced by the rate per piece.
2. Those who are paid OUTPUT RATES
which are prescribed by the Er and
are not yet approved by the DOLE –
The number of pieces produced is
multiplied by the rate per piece as
determined by the Er.
a. If resulting amount is EQUIVALENT
TO OR MORE than the applicable
statutory minimum rate in relation
to the number of hours worked,
worker will receive such amount.
b. If the amount is LESS than the
applicable legal rate, employer is
required by law to pay the difference
between the resulting amount and
the applicable legal minimum rate.
(Azucena, Vol. 1, 2016, p. 318)
Entitlement to Statutory Benefits
GR: All employees paid by result shall receive
not less than the applicable new minimum wage
rates for eight (8) hours work a day.
XPN: A payment by result rate has been
established by the Secretary of Labor.
NOTE: All workers in the private sector,
regardless of their position, designation or
status, and irrespective of the method by which
their wages are paid, are entitled to claim cost-
of-living allowance. (Makati Haberdashery, Inc.
v. NLRC et al., G.R. Nos. 83380-81, Nov. 15, 1989)
Piece-rate employees are entitled to night-shift
differential, holiday pay, service incentive leave,
premium pay, and 13th-month pay.
Furthermore, they are entitled to overtime pay if
their output pay rate is not shown to be in
accordance with the standards prescribed under
the Implementing Rules or by the Secretary of
Labor. (Labor Congress of the Philippines v. NLRC
et al., G.R. No. 123938, May 21, 1998)
Summation: Benefits Payable to Piece-rate
Workers (Supervised)
 Labor Standards – Wages

1. Applicable statutory minimum daily rate XPN: Payment of wages by check or money
2. Service incentive leave of 5 days with pay order shall be allowed if:
3. Night shift differential pay
4. Holiday pay 1. It is customary on the date of the
5. Meal and rest periods effectivity of the Code;
6. Overtime pay (conditional) 2. Necessary because of special
7. Premium pay (conditional) circumstances as specified in the
8. 13th month pay regulation issued by the SLE; or
9. Other benefits granted by law, CBA or 3. Stipulated in the CBA; (LC, Art. 102)
company policy or practice. (Azucena, Vol. 4. Where the following conditions are met:
1, 2016, p. 356) a. There is a bank or other facility for
encashment within a radius of one
NOTE: The wage rates of workers who are paid (1) kilometer from the workplace;
by results may be determined through time and b. The employer or any of his agents
motion studies or consultation with or representatives does not receive
representatives of employers’ and workers’ any pecuniary benefit directly or
organizations in a tripartite called by the DOLE indirectly from the arrangement;
Secretary. (Handbook on Workers’ Statutory c. The employees are given
Monetary Benefits, DOLE, 2016 ed., p. 9) reasonable time during banking
hours to withdraw their wages from
Failure to reach quota the bank which time shall be
considered as compensable hours
Failure to reach the validly determined quota worked if done during working
does not only mean less earnings for the paid- hours; and
by-result worker. Persistent failures may even d. The payment by check is with the
mean demotion or loss of job. (Azucena, Vol. 1, written consent of the employees
2016, p. 357) concerned if there is no collective
agreement authorizing the payment
APPRENTICES / LEARNERS / of wages by bank checks. (IRR, Book
PERSONS WITH DISABILITY (PWDs) III, Rule VIII, Sec. 2)

Minimum wage applicable Time of Payment

Wages of apprentices, learners and handicapped GR: Wages shall be paid:

workers shall in no case be less than 75% of the 1. At least once every two (2) weeks; or,
statutory minimum wage rates. (Sec. 10, IRR, RA 2. Twice a month at intervals not exceeding
6727) sixteen (16) days.

PAYMENT OF WAGES XPNs:

1. On account of force majeure or
circumstances beyond the employer’s
Forms of Payment
control, payment shall be made
immediately after such force majeure or
GR: As a general rule, wages shall be paid in legal
circumstances have ceased;
tender. (IRR of LC, Book III, Rule VIII, Sec. 1)
2. If engaged to perform a task which cannot
No employer shall pay the wages of an
be completed in two (2) weeks shall be
employee by means of:
subject to the following conditions, in the
absence of a CBA or arbitration award:
1. Promissory notes;
2. Vouchers;
a. That payments are made at intervals
3. Coupons;
not exceeding sixteen (16) days, in
4. Tokens;
proportion to the amount of work
5. Tickets;
completed;
6. Chits; or
b. That final settlement is made upon
7. Any object other than legal tender.
completion of the work. (LC, Art. 103)
NOTE: This prohibition applies even when
Place of Payment
expressly requested by the employee.

UNIVERSITY OF SANTO TOMAS 72

2021 GOLDEN NOTES
 Labor Law and Social Legislation
GR: At or near the place of undertaking. (LC, Art.
104)
XPN: Payment in a place other than the
workplace shall be permissible only under the
following circumstances:
1. When payment cannot be effected at or
near the place of work by reason of the
deterioration of peace and order
conditions, or by reason of actual or
impending emergencies caused by fire,
flood, epidemic or other calamity rendering
payment thereat impossible;
2. When the employer provides free
transportation to the employees back and
forth; and,
3. Under any other analogous circumstances;
Provided, that the time spent by the
employees in collecting their wages shall be
considered as compensable hours worked.
NOTE: No employer shall pay his employees in
any bar, night or day club, drinking
establishment, massage clinic, dance hall, or
other similar places or in places where games
are played with stakes of money or things
representing money except in the case of
persons employed in said places. (IRR of LC, Book
III, Rule VIII, Sec. 4)
Requisites of Payment Through Banks
1. Shall be made upon written permission of
the majority of the employees or workers
concerned;
2. With twenty-five (25) or more employees;
and,
3. Located within one (1) kilometer radius to
a commercial, savings or rural bank. (RA
6727, Sec. 7)
NOTE: Payment shall be made within the period
of payment of wages fixed by the Labor Code.
Requisites of Payment Through Automated
Teller Machine (ATM)
1. The ATM system of payment is with the
written consent of the employees
concerned;
2. The employees are given reasonable time
to withdraw their wages from the bank
facility which time, if done during working
hours, shall be considered compensable
hours worked;
73
3. The system shall allow workers to receive
their wages within the period or frequency
and in the amount prescribed under the
Labor Code, as amended;
4. There is a bank or ATM facility within a
radius of one (1) kilometer to the place of
work;
5. Upon request of the concerned Ees, the Er
shall issue a record of payment of wages,
benefits and deductions for a particular
period;
6. There shall be an additional expense and
no diminution of benefits and privileges as
a result of the ATM system of payment; and
7. The employer shall assume responsibility
in case the wage protection provisions of
law and regulations are not complied with
under the arrangement. (DOLE Labor
Advisory, Series of 1996)
Direct Payment of Wages
GR: Wages shall be paid directly to the workers
to whom they are due. (LC, Art. 105)
XPNs:
1. Payment through another person may be
made in cases of force majeure which
renders the payment impossible, provided
that such person is under written authority
given by the worker for the purpose;
2. Where the employer is authorized in
writing by the employee to pay his wages
to a member of his family;
3. Where payment to another person of any
part of the employee's wages is authorized
by existing law, including payments for
the insurance premiums of the employee
and union dues where the right to check-off
has been recognized by the employer in
accordance with a collective agreement or
authorized in writing by the individual
employees concerned; (IRR, Book III, Rule
VIII, Sec. 5; LC, Art. 105) or
4. In case of death of the employee, the
employer may pay the wages to the heirs
without the necessity of intestate
proceedings. When the heirs are of age,
they shall:
a. Execute an affidavit attesting to their
relationship to the deceased and the
fact that they are his heirs to the
exclusion of all other persons.
 Labor Standards – Wages
b. In case any of the heirs is a minor,
such affidavit shall be executed in his
behalf by his natural guardian or next
of kin.
c. Upon presentation of the affidavit to
the employer, he shall make payment
to the heirs as representative of the
Secretary of Labor and Employment.
(IRR of LC, Book III, Rule VIII, Sec. 6)
PROHIBITIONS REGARDING WAGES
1. Non-Interference in Disposal of Wages
Employer shall not limit or interfere with the
freedom of any employee to dispose of his
wages. He shall not force, compel or oblige his
Ees to purchase merchandise, commodities or
other property from any other person, or
otherwise make use of any store services of such
employer or any other person. (LC, Art. 112)
Civil Code Provisions on Non-Interference in
Disposal of Wages
Art. 1705. The laborer's wages shall be paid in
legal currency.
Art. 1706. Withholding of the wages, except for
a debt due, shall not be made by the employer.
Art. 1707. The laborer's wages shall be a lien on
the goods manufactured or the work done.
Art. 1708. The laborer's wages shall not be
subject to execution or attachment, except for
debts incurred for food, shelter, clothing and
medical attendance.
Art. 1709. The employer shall neither seize nor
retain any tool or other articles belonging to the
laborer.
2. Wage Deduction
GR: No employer, in his own behalf or on behalf
of any person, shall make any deduction from
the wages of his employees. (LC, Art. 113)
XPNs:
a. Where the worker is insured with his
consent by the employer; and,
b. For union dues, in cases where the right of
the worker or his union to check off has
been recognized by the employer or
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
authorized in writing by the individual
worker concerned. (LC, Art. 113)
NOTE: Art. 241(o) of the LC provides that
special assessments may be validly
checked-off provided that there is an
individual written authorization duly
signed by every employee.
c. In cases where the employer is authorized
by law or regulations issued by the SLE:
i. Deductions for value of meals and
facilities freely agreed upon;
(Azucena, Vol. 1, 2016, p. 411)
ii. In case where the employee is
indebted to the employer where such
indebtedness has become due and
demandable; (NCC, Art. 1706)
iii. In court awards, wages may be
subject of execution or attachment,
but only for debts incurred for food,
shelter, clothing, and medical
attendance; (NCC, Art. 1703)
iv. Taxes withheld pursuant to the Tax
Code;
v. Salary deduction of a member of a
legally established cooperative; (RA
6938; Sec. 59)
vi. Deductions for SSS, PhilHealth and
Pag-ibig premiums;
vii. Deductions for loss or damage; (LC,
Art. 114)
viii. Deductions made with the written
authorization of the Ee for payment to
a third person; (IRR of LC, Book III,
Rule VIII, Sec 13)
ix. Deductions as disciplinary measures
for habitual tardiness; (Opinion dated
March 10, 1975 of the Labor Secretary)
x. Agency fees. (LC, Art. 259[e])
The law prohibits the employer from making
deductions from the wages of an employee. The
evil sought to be prevented is to forestall the
commission of unwarranted practices of
employers by making unnecessary deductions
without employee's knowledge or authorization.
(Galvadores v. Trajano, 144 SCRA 138)
Deductions for Absences and Tardiness
(Principle of No-Work No-Pay)
Deductions for unpaid absences are allowed. An
employer will not be liable for violation of the
prohibition against wage deduction for absences
or tardiness incurred by the employee.
74
 Labor Law and Social Legislation
Check-off
Check-off is a system by which union dues and
other assessments are deducted from the
employee's wage by the employer upon
authorization from the worker or by mandate of
the law. (Poquiz, 2012, p. 259)
Duration of Check-Off
The employees' check-off authorization even if
declared irrevocable, is good only as the
employees remain members of the union
concerned, because as such members they were
obliged to pay the corresponding dues and
assessments to their union.
The moment they are separated from and left
the union and joined another labor organization,
they were no longer obliged to pay said dues and
assessments. There would be no longer any
reason or occasion for the company to continue
making deductions. (Phil. Federation of
Petroleum Workers v. CIR, L-26346, Feb. 27, 1971)
Compulsory Check-Off
Check-off may be enforced with the consent of
the employer or by authority in writing by the
employees.
When the union and the employer agree, the
attitude of the employees is immaterial. When
the employees duly authorize the check-off, the
employer's consent is unnecessary and its
recognition of the right is obligatory. (A.L.
Ammen Trans. Co. v. BITEMAA, 91 Phil 649)
Agency Fees
It is an amount equivalent to the union dues,
which a non-union member pays to the union
because he benefits from the CBA negotiated by
the union.
(See agency fees under Rights of Labor
Organization)
Deduction to Ensure Employment
The employment contract provides for 25%
deduction from employee's salary representing
the employer's share in procuring job
placement for him. The provision in the
contract was contested, but the employer
argued that the employee was already estopped
in complaining about the deduction. The
Supreme Court declared the employment
75
contract illegal and iniquitous; thus null and
void. (Commando Security Agency v. NLRC, 211
SCRA 645)
Reduction of Workdays: Effect on Wages
In situations where the employer has to reduce
the number of regular working days to prevent
serious losses, such as when there is a
substantial slump in the demand for his goods or
services or when there is lack of raw materials,
the employer may deduct the wages
corresponding to the days taken off from the
workweek, consistent with the principle of “no
work, no pay.” This is without prejudice to an
agreement or company policy which provides
otherwise. (Handbook on Workers’ Statutory
Monetary Benefits, DOLE 2016 ed., p. 9)
3. Prohibition against Deposit Requirement
GR: While deductions from the employees’
wages may be made for cash bonds or deposits,
the employer, however, is not allowed to
unilaterally impose upon its employees the
giving of cash bonds or deposits.
XPN: If the employer proved and established
that it falls under any of the following:
a. That it is engaged in such trades,
occupations or business were the practice
of making deductions or requiring
deposits is a recognized one; or
b. That the cash bond or deposit is necessary
or desirable as determined by the DOLE
Secretary in appropriate rules and
regulations
In the case of Nina Jewelry v. Montecillo (G.R. No.
188169, Nov. 28, 2011), the court ruled that the
petitioners should first establish that the making
of deductions from the salaries is authorized by
law, or regulations issued by the Secretary of
Labor. Further, the posting of cash bonds should
be proven as a recognized practice in the jewelry
manufacturing business, or alternatively, the
petitioners should seek for the determination by
the Secretary of Labor through the issuance of
appropriate rules and regulations that the policy
the former seeks to implement is necessary or
desirable in the conduct of business.
4. Prohibition on withholding of wages
 Labor Standards – Wages
It is unlawful for any person, whether employer
or not, directly or indirectly, to withhold any
amount from the wages of a works. (LC, Art. 116)
Although management prerogative refers to the
right to regulate all aspects of employment, it
cannot be understood to include the right to
temporarily withhold salary/wages without the
consent of the employer. To sanction such an
interpretation would be contrary to Art. 166 of
the Labor Code. (SHS Perforated Materials, Inc. v.
Diaz, G.R. No. 185814, Oct. 13, 2010)
As an exception, employers usually withhold the
release of the last salary and benefits of
terminated or resigning employees prior to or
pending their compliance with certain clearance
procedure.
Clearance procedure 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.
(Milan v. NLRC and Solid Mills, Inc., G.R. No.
202961, Feb. 4, 2015)
Other Prohibitions:
1. Withholding of wages from a worker
through inducement, force, stealth,
intimidation, threat or by any other means
without his consent; (LC, Art. 116)
2. To make deductions from wages for the
benefit of the Er or his representative as
consideration of a promise of Employment
or retention in employment; (LC, Art. 117)
3. Refusal by Er to pay or reduce wages or
benefits in discrimination of any Ee who has
filed any complaint or instituted any
proceedings under the code or has testified
or about to testify; (LC, Art. 118) or
4. Unlawful for any person to make any
statement, report, or record filed or kept
pursuant to the Code knowing such
statement, report or record to be false in any
material aspect. (LC, Art. 119)
Deposit for Loss or Damage
GR: Employer shall not require his worker to
make deposits from which deductions shall be
made for the reimbursement of loss of or
damage to tools, materials, or equipment
supplied by the employer. (LC, Art. 114)
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
XPN: Er is engaged in such trade or business
where the practice of making deductions or
requiring deposits is a recognized one or is
necessary or desirable as determined by the
SOLE.
Requisites for Payment of Loss and Damage
1. It is clearly shown that the employee is
responsible for the loss or damage;
2. The employee is given reasonable
opportunity to show cause why deduction
should not be made;
3. The total amount of such deductions is fair
and reasonable and shall not exceed the
actual loss or damage; and
4. The deduction from the wages of the
employee does not exceed 20% of his
wages in a week. (IRR of LC, Book III, Rule
VIII, Sec. 11)
WAGE STUDIES, WAGE AGREEMENTS AND
WAGE DETERMINATION
Wage Order
This is an order issued by the RTWPB whenever
conditions in the region so warrant after
investigating and studying all pertinent facts and
based on the standards and criteria prescribed
by the Labor Code.
It establishes the minimum wage rates to be paid
by employers in the region, which shall in no
case be lower than the applicable statutory
minimum wage rates.
Frequency of Wage Order
GR: Any wage order issued by the RTWPB may
not be disturbed for a period of 12 months from
its effectivity, and no petition for wage increase
shall be entertained within the said period.
XPN: Supervening conditions, e.g., extraordinary
increase in prices of petroleum products and
basic goods/services, demand a review of the
minimum wage rates as determined by the
Board. The Board shall proceed to exercise its
wage fixing function even before the expiration
of the said period. (NCWP Guidelines No. 001-95)
Effectivity of Wage Order
76
 Labor Law and Social Legislation
A Wage Order shall take effect 15 days after its
publication in at least one (1) newspaper of
general circulation in the region.
NOTE: It is the RTWPB who approves the wage
order, not the NWPC.
METHODS OF MINIMUM WAGE ADJUSTMENT
Salary Ceiling Method
A method of minimum wage adjustment
whereby the wage adjustment is applied to Ees
receiving a certain denominated salary ceiling.
In other words, workers already being paid
more than the existing minimum wage are also
to be given a wage increase. (ECOP v. NWCP, G.R.
No. 96169, Sept. 24, 1991) E.g., Wage order
granting a P30 increase to those earning
P350/day
Floor Wage Method
It involves the fixing of a determinate amount to
be added to the prevailing statutory minimum
wage rates.
E.g.:
– Prevailing minimum wage: P300/day
– Increase: P30
– New minimum wage: P330/day
Two Basic Methods of Payment
1. Time wages – refer to pay by the hour, day
or month, without specifying the amount of
work to be done.
2. Production wages – refer to pay related to
the amount of work the individual or group
performs regardless of the time involved in
its performance. This applies to workers
paid by result. (Beal and Wickersham, The
Practice of Collective Bargaining; Poquiz,
Vol. I)
Standards or Criteria for Minimum Wage
Setting
In the determination of such regional minimum
wages, the Regional Board shall, among other
relevant factors consider the following:
1. The demand for living wages;
2. Wage adjustment vis-a-vis the consumer
price index;
3. The cost of living and changes or increases
therein;
77
4. The needs of workers and their families;
5. The need to induce industries to invest in
the countryside;
6. Improvements in standards of living;
7. The prevailing wage levels;
8. Fair return on the capital invested and
capacity to pay by Ers;
9. Effects on employment generation and
family income;
10. The equitable distribution of income and
wealth along the imperatives of economic
and social development. (LC, Art. 124)
Economically Feasible
a. From Er’s standpoint – a minimum wage is
economically feasible if it will not prevent
the industry from operating efficiently and
prosperously over the long run. (Dir. Harry
Kantor’s analysis of Senate Bill No. 202 and
House Bill No. 1732)
b. From Ee’s standpoint – an economically
feasible minimum wage should be as nearly
adequate to maintain the minimum standard
of living necessary for the health, efficiency
and general well-being of employees.
Q: The Regional Wage Board of Region II
issued a Wage Order granting all Ees in the
private sector throughout the region an
across-the-board increase of P15.00 daily. Is
this Wage Order valid?
A: It depends. The Wage Order is valid insofar
as the mandated increase applies to Ees earning
the prevailing minimum wage rate at the time of
the passage of the Wage Order and void with
respect to its application to Ees receiving more
than the prevailing minimum wage rate at the
time of the passage of the Wage Order. The
Regional Wage granted an across-the-board
wage increase of P15.00 to all Ees in the region.
It did not set a wage level nor a range to which a
wage adjustment or increase shall be added. In
doing so, the Regional Wage Board exceeded its
authority by extending the coverage of the Wage
Order to wage earners receiving more than the
prevailing minimum wage rate, without a
denominated salary ceiling. The Wage Order
granted additional benefits not contemplated by
RA 6727; (MBTC v. NWPC Commission, G.R. No.
144322, Feb. 6, 2007)
Q: Since the Wage Order was declared void
with respect to its application to employees
receiving more than the prevailing minimum
wage rate at the time of the passage of the
 Labor Standards – Wages
Wage Order, should these Ees refund the
wage increase received by them?
A: NO. The Es should not refund the wage
increase provided they received it in good faith,
in the honest belief that they are entitled to such
wage increase and without any knowledge that
there was no legal basis for the same. (MBTC v.
NWPC Commission, G.R. NO.144322, Feb. 6, 2007)
WAGE DISTORTION/RECTIFICATION
Concept
A situation where an increase in prescribed
wage results in the elimination or severe
contraction of intentional quantitative
differences in wage or salary rates between and
among employee groups in an establishment as
to effectively obliterate the distinctions
embodied in such wage structure based on skills,
length of service or other logical bases of
differentiation. (LC, Art. 124)
It is the disappearance or virtual disappearance
of pay differentials between lower and higher
positions in an enterprise because of compliance
with a wage order. (P.I. Manufacturing v. P.I.
Manufacturing Supervisors and Foreman, G.R. No.
167217, Feb. 4, 2008)
NOTE: Wage distortion presupposes an increase
in the compensation of the lower pay class in an
office hierarchy without a corresponding raise
for high level employees in the same region of
the country, resulting in the elimination or
severe diminution of the distinction between the
two groups or classes. (Prubankers Association v.
Prudential Bank & Trust Company, G.R. No.
131247, Jan. 25, 1999)
Elements of Wage Distortion
1. An existing hierarchy of positions with
corresponding salary rates;
2. A significant change or increase in the
salary rate of a lower pay class without a
corresponding increase in the salary rate of
a higher one;
3. The elimination of the distinction between
the 2 groups or classes; and
4. The WD exists in the same region of the
country. (Alliance Trade Unions v. NLRC,
G.R. No. 140689, Feb. 17, 2004)
In mandating an adjustment, the law did not
require that there be an elimination or total
abrogation of quantitative wage or salary
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
differences; a severe contraction is enough.
(Metrobank v. NLRC, G.R. No. 102636, Sept. 10,
1993)
Wage 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
same 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.
(Prubankers Association v. Prudential Bank &
Trust Company, G.R. No. 131247, Jan. 25, 1999)
Causes
Wage distortions have often been the result of:
1. Government decreed increases in minimum
wages;
2. Merger of two companies (with differing
classifications of employees and different
wage rates) where the surviving company
absorbs all the employees of the dissolved
corporation;
3. Wage distortion arose because the
effectivity dates of wage increases given to
each of the two classes of employees (rank-
and-file and supervisory) had not been
synchronized in their respective CBAs.
(Metro Transit Org., Inc. v. NLRC, 67 SCRA
477)
Where a significant change occurs at the lowest
level of positions in terms of basic wage without
a corresponding change in the other level in the
hierarchy of positions, negating as a result
thereof the distinction between one level of
position from the next higher level, and resulting
in a parity between the lowest level and the next
higher level or rank, between new entrants and
old hires, there exists a wage distortion.
(Prubankers Association v. Prudential Bank &
Trust Company, 302 SCRA 74)
Cases NOT Representative of Wage Distortion
1. Where the hierarchy of positions based on
skills, length of service and other logical
bases of differentiation was preserved;
(Prubankers Association v. Prudential Bank
& Trust Company, 302 SCRA 74)
2. A disparity in wages between employees
holding similar positions but in different
regions;
78
 Labor Law and Social Legislation
3. Where the disparity was simply due to the
fact that the employees had been hired on
different dates and were thus receiving
different salaries; (Manila Mandarin
Employees Union v. NLRC, G.R. No. 108556,
Nov. 19, 1996)
4. That an employee was initially hired at a
position level carrying a hiring rate higher
than the rates of others;
5. That an employee failed to meet the cut-off
date in the grant of yearly CBA increase; or
6. That the employee had been promoted
while the others were not.
Q: Bankard, Inc. approved a New Salary Scale
which increased the hiring rates of new
employees. The Bankard Employees Union
pressed the company for the increase in the
salary of its old, regular employees. The
company refused to do so.
The union filed a Notice of Strike on the
ground of discrimination for it claimed that a
wage distortion exists and the company
refused to negotiate to correct the
distortions. Is there a wage distortion
brought about by the New Salary Scale?
A: NO. The union cannot legally obligate
Bankard to correct the alleged “wage distortion”
as the increase in the wages and salaries of the
newly hired was not due to a prescribed law or
wage order. If the compulsory mandate under
Art. 124 to correct wage distortion is applied to
voluntary and unilateral increases by the
employer in fixing hiring rates which is
inherently a business judgment prerogative,
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 of the high productivity of a
particular group or the need to increase the
competitiveness of Bankard’s hiring rate.
An employer would be discouraged from
adjusting the salary rates of a particular group of
employees for fear that it would result to a
demand by all employees for a similar increase,
especially if the financial conditions of the
business cannot address an across-the-board
increase. (Bankard Employees Union-WTU v.
NLRC, G.R. No. 140689, Feb. 17, 2004)
Negotiated Wage Increases to Correct Wage
Distortion; Its Interest and Validity
79
The law recognizes the validity of negotiated
wage increases to correct wage distortion. The
legislative intent is to encourage the parties to
solve the problem of wage distortion through
voluntary negotiations or arbitration, rather
than strikes, lockouts, or other concerted
activities.
Unilateral grant of wage increase on the part of
an employer is recognized as a means of
correcting wage distortions including wage
adjustments under a collective bargaining
agreement. Recognition and validation of wage
increases given by employers after unilaterally
or as a result of collective bargaining
negotiations for the purpose of correcting wage
distortions are in keeping with the public policy
of encouraging employers to grant wage and
allowance increases to their employees which
are higher than the minimum rates of increases
prescribed by statute or administrative
regulation. (ALU v. NLRC, 235 SCRA 395)
To compel employers simply to add on 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 statutory prescribed minimum
rates of increases. Clearly, this would be
counter-productive so far as securing the
interest of labor is concerned. (Metro Bank &
Trust Co. Employees Union v. NLRC, G.R. No.
102636, Sept. 10, 1993)
Settlement of Wage Distortion
The application of wage increases brought about
by Wage Orders issued by the Board may result
in distortions in the wage structure within the
establishment. The employer and the workers
are mandated by law to resolve such wage
distortion problems in the following manner:
ORGANIZED UNORGANIZED
ESTABLISHMENT ESTABLISHMENT
(with union) (without union)
The Er and the
The Er and the union
workers shall
shall negotiate to
endeavor to correct
correct distortion.
the distortion.
Any dispute shall be
Any dispute shall be
resolved through a
settled through the
grievance procedure
NCMB.
under the CBA.
If it remains If it remains
unresolved, it shall be unresolved within 10
dealt with through days it shall be
 Labor Standards – Wages

voluntary arbitration. referred to the NLRC.

1. For those who are required to work every
day including Sundays or rest days, special
The dispute will be The NLRC shall days, and regular holidays.
resolved within 10 conduct continuous
days from the time the hearings and decide EEMR = (Applicable daily rate x 393.50
dispute was referred the dispute within 20 days)/12
to voluntary days from the time the
arbitration. same was referred. Where 393.50:
= 298 ordinary working days
The pendency of the dispute arising from a wage = 24 for 12 regular holidays x 200%
distortion shall not in any way delay the = 67.60 for 52 rest days x 130%; and
applicability of any wage increase prescribed = 3.90 for 3 special days x 130%
pursuant to the provisions of law or Wage order.
(IRR of RA 6727, Chapter III, Sec. 7) 2. For those who do not work and are not
considered paid on Sundays or rest days.
NOTE: Correction of wage distortion may be
done by re-establishing a substantial or EEMR = (Applicable daily rate x 313
significant gap (not precisely the same amount) days)/12
between the wage rates of the differing classes
of Ees. (Azucena, Vol. I, 2016) Where 313:
= 298 ordinary working days
Non-strikeablity of Wage Distortion = 12 regular holidays; and
= 3 special holidays
Wage Distortion is non-strikeable. (Ilaw at
Buklod ng Manggagawa v. NLRC, G.R. No. 91980, 3. For those who do not work and are not
June 27, 1991) It is neither a deadlock in considered paid on Saturdays and Sundays
collective bargaining nor an ULP. or rest days.

EEMR = (Applicable daily rate x 261

DIVISOR days)/12

The divisor assumes an important role in Where 261:

determining whether or not holiday pay is = 246 ordinary working days
already included in the monthly paid employee’s = 12 regular holidays; and
salary and in the computation of his daily rate. = 3 special holidays
(Chartered Bank Employees Association v. Ople,
G.R. No. L-44717, Aug. 28, 1985)

If the divisor used

is:
All the 12 holidays, 52
365
Sundays, and 52
(days in a year)
Saturdays are paid.
12 holidays and 52
313
Sundays (or Saturdays)
(365 – 52 = 313)
are paid.
All the 12 holidays are
261
paid excluding the
(313 – 52 = 261)
Saturdays and Sundays.
249 The 12 holidays are not
(261 – 12 = 249) paid.

DIVISOR TO DETERMINE DAILY RATE

Computation of Estimated Equivalent

Monthly Rate (EEMR)

UNIVERSITY OF SANTO TOMAS 80

2021 GOLDEN NOTES
 Labor Law and Social Legislation
LEAVES
SERVICE INCENTIVE LEAVE (SIL)
It is a 5-day leave with pay for every Ee who has
rendered at least 1 year of service whether
continuous or broken. (LC, Art. 95)
Purpose of the law
The stipulation in the contract for the allowance
of a vacation to Ees is merely a recognition by
management and labor that a short interval of
complete rest and relaxation from daily routine
with the benefit of full pay is essential to the
mental and physical well-being of the workmen.
(Bencio v. Joseph Bouder, Inc., 24 So. 2d 398; A.L.R.
2d 352; Sunripe Coconut Products v. NLU, 97 Phil.
691)
“At least 1 year of service”
Service for not less than 12 months, whether
continuous or broken, reckoned from the date
the Ee started working, including authorized
absences and paid regular holidays unless the
working days in the establishment as a matter of
practice or policy, or that provided in the
employment contract is less than 12 months, in
which case said period shall be considered as
one year. (Sec. 3, Rule V, Book III, IRR)
Right to SIL
GR: Every Ee who has rendered at least 1 year of
service shall be entitled to a yearly SIL of 5 days
with pay. Leave pay means an Ee gets paid
despite absence from work. (Azucena, Vol. 1,
2016, p. 295)
XPNs:
1. Government Ees, whether employed by
the National Government or and any of
its political subdivisions, including those
employed in GOCCs with original
charters or created under special laws;
2. Domestic helpers and persons in the
personal service of another;
3. Managerial Ees, if they meet all of the
following conditions:
a. Their primary duty is to manage the
establishment in which they are
81
employed or of a department or
subdivision thereof;
b. They customarily and regularly direct
the work of two or more Ees therein;
and
c. They have the authority to hire or fire
other Ees of lower rank; or their
suggestions and recommendations as
to hiring, firing, and promotion, or any
other change of status of other Ees are
given particular weight.
4. Field personnel and those whose time and
performance is unsupervised by the Er,
including those who are engaged on:
a. task or contract basis;
b. purely commission basis;
c. or those who are paid a fixed amount
for performing work irrespective of
the time consumed in the
performance thereof;
5. Those who are already enjoying this benefit;
6. Those enjoying vacation leave with pay of at
least 5 days; and
7. Those employed in establishments regularly
employing less than 10 Ees. (IRR of LC, Book
III, Rule V, Sec. 1)
NOTE: Ees engaged on task or contract basis or
paid on purely commission basis are not
automatically exempted from the grant of
service incentive leave unless they fall under the
classification of field personnel.
If required to be at specific places at specific
times, Ees including drivers cannot be said to be
field personnel despite the fact that they are
performing work away from the principal office
of the Ee; as such they are entitled to SIL.
(Autobus Transport Systems v. Bautista, G.R. No.
156367, May 16, 2005)
Teachers of Private Schools on Contract Basis
are Entitled to Service Incentive Leave
The Cebu Institute of Technology teaching
personnel cannot be deemed as field personnel
which refers to “non-agricultural Ees who
regularly perform their duties away from the
principal place of business or branch office of the
Er and whose actual hours of work in the field
cannot be determined with reasonable
certainty.” (Par. 3, Art. 82, LC); (CIT v. Ople, G.R.
No. 70203, Dec. 18, 1987)
 Labor Standards – Leaves
Part-time Workers are Entitled to the Full
Benefit of the Yearly 5-Day Service Incentive
Leave
A part-time worker is entitled to service
incentive leave whether the service within 12
months is continuous or broken or where the
working days in the employment contract as a
matter of practice or policy is less than 12
months. The availment and commutation of the
same can be proportionate to the daily work
rendered and the regular daily salary. (DOLE’s
Explanatory Bulletin on Part-time Employment,
Jan. 2, 1996)
Entitlement of Piece-Rate Workers To SIL
Piece-rate workers are entitled to the full benefit
of the yearly 5-day service incentive leave.
Under PD 851 or the SIL Law, the exclusion from
its coverage of workers who are paid on a purely
commission basis is only with respect to field
personnel. Ees engaged on task or contract basis
or paid on purely commission basis are not
automatically exempted from the grant of SIL,
unless, they fall under the classification of field
personnel. (Serrano v. Severino Santos, G.R. No.
187698, Aug. 9, 2010)
Entitlement of Ees With Salaries Above
Minimum Wage To SIL
Ees with salaries above minimum wage are
entitled to service incentive leave. The difference
between the minimum wage and the actual
salary received by the Ees cannot be deemed as
their 13th month pay and SIL pay as such
difference is not equivalent to or of the same
import as the said benefits contemplated by law.
(JPL Marketing Promotions v. CA, G.R. No. 151966,
July 8, 2005)
Excluded Er; Burden of Proof
One of those excluded from the obligation to
grant SIL are “establishments regularly
employing less than 10 workers.” When an Er
claims that it falls within the exception, it is the
Er’s duty, not of the Ees, to prove that there are
less than 10 Ees in the company. If it fails to
discharge its task, the Er must be deemed to be
covered by the rule, notwithstanding the Ees’
failure to allege the exact number of Ees in the
corporation. (Murillo, et al. v. Sun Valley Realty,
Inc., G.R. No. 67272, June 30, 1988)
Entitlement of Terminated Ees to SIL
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
1. Illegally dismissed Ees – entitled to SIL
until actual reinstatement. (Integrated
Contractor and Plumbing Works, Inc. v.
NLRC, G.R. No. 152427, Aug. 9, 2005)
2. Legally dismissed Ees – the Ee who had
not been paid SIL from the outset of
employment is entitled only to such pay
after a year from commencement of service
until termination of employment or
contract. (JPL Marketing Promotions v. CA,
G.R. No. 151966, July 8, 2005)
Commutability of SIL to monetary equivalent
It is commutable if not used or exhausted at the
end of the year. (Sec. 5, Rule V, IRR) It is aimed
primarily at encouraging workers to work
continuously and with dedication to the
company.
XPN: RA 10361 grants SIL to domestic workers.
Their SIL need not be converted to cash or
carried over to succeeding years. (LC, Art. 139)
Basis for cash conversion
The basis shall be the salary rate at the date of
commutation. The availment and commutation
of the SIL may be on a pro-rata basis.
Prescription of SIL
Applying Art. 306 of the Labor Code in light of
the peculiarity of SIL, the three (3)-year
prescriptive period commences, not at the end of
the year when the Ee becomes entitled to the
commutation of his SIL, but from the time when
the Er refuses to pay its monetary equivalent
after demand of commutation or upon
termination of the Ees’ services, as the case may
be. (Autobus Transport Systems v. Bautista, G.R.
No. 156367, May 16, 2005)
MATERNITY LEAVE
Sec 14-A of RA 8282
Coverage
This benefit applies to all female Ees, whether
married or unmarried.
A covered female Ee, regardless of her civil
status, who has paid at least three (3) monthly
contributions in the twelve (12)-month period
immediately preceding the semester of her
childbirth or miscarriage, is entitled to a daily
maternity benefit equivalent to 100% of her
82
 Labor Law and Social Legislation
present basic salary, allowances and other
benefits or the cash equivalent of such benefits
for 60 days, or 78 days in case of caesarean
delivery.
Being an unmarried woman is not an obstacle
for the grant of such benefits provided she is a
covered Ee. Her plight should be the moving
spirit of the law to grant such benefits to the less
fortunate. (Poquiz, 2012, p. 300)
Self-Employed Members Not Entitled to
Maternity Leave Benefits; Exception
Voluntary or self-employed members of the SSS
are not entitled to maternity leave benefits
because the law requires the corresponding
maternity contributions to be paid by the Ers.
Voluntary or self-employed members have no
Ers to remit such contributions. (Sec. 14-A, RA
8282) However, under Circular 36-V issued by
the SSS dated 24 May 1997, if they have
qualifying contributions using the new
contribution schedule, they shall be entitled to
maternity benefits.
Conditions:
1. The Ee shall have notified her Er 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;
2. The full payment shall be advanced by the
Er within 30 days from the filing of the
maternity leave application;
3. Payment of daily maternity benefits shall
be a bar to the recovery of sickness benefits
for the same compensable period of 60
days for the same childbirth, abortion, or
miscarriage;
4. The maternity benefits provided under Sec.
14-A shall be paid only for the first four (4)
deliveries or miscarriages;
5. The SSS shall immediately reimburse the Er
of 100% of the amount of maternity
benefits advanced to the Ee by the Er upon
receipt of satisfactory proof of such
payment and legality thereof; and
6. If an Ee should give birth or suffer
miscarriage without the required
contributions having been remitted for her
by her Er to the SSS, or without the latter
having been previously notified by the Er of
the time of the pregnancy, the Er shall pay
to the SSS damages equivalent to the
benefits which said Ee would otherwise
have been entitled to.
83
Requirements in order that Maternity
Benefits may be Claimed
1. There is childbirth, or miscarriage;
2. She has paid at least three (3) monthly
contributions immediately preceding the
semester of her childbirth or miscarriage.
Maternity-leave benefits excluded in the
computation of 13th-month pay
Maternity-leave benefits and other benefits
provided by Social Security Act are granted to
Ees in lieu of wages. Thus, the same are excluded
in computing the Ee's 13th month pay for the
calendar year. (Handbook on Workers’ Statutory
Monetary Benefits, p. 37)
105-DAY EXPANDED MATERNITY LEAVE LAW
R.A. No. 11210
Date of Effectivity
The Expanded Maternity Leave Law (EMLL) was
signed into law on Feb. 20, 2019 and took effect
on March 11, 2019.
Applicability
The expanded maternity leave applies to all
qualified female workers regardless of civil
status, employment status, and the
legitimacy of her child. (IRR of RA 11210, Rule
IV, Sec. 1)
Who are covered
Under the new law, maternity leave applies to
all qualified female workers in the:
1. Public sector;
2. Private sector;
3. Informal economy;
NOTE: Informal economy refers to the self-
employed, occasionally or personally hired,
subcontracted, paid and unpaid family
workers in household, incorporated, and
unincorporated enterprises, including
home workers, micro-entrepreneurs and
producers, and operators of sari-sari store
[IRR of RA 11210, Rule II, Sec. 1(i)];
4. Voluntary contributors to the SSS; and
5. National athletes.
Benefits under the EMLL
 Labor Standards – Leaves
The benefits under the new law are as follows:
1. Paid leave benefit granted to a qualified
female worker in the public sector, for the
duration of:
a. 105 days for live childbirth,
regardless of the mode of delivery,
and an additional 15 days paid
leave if the female worker qualifies
as a solo parent under RA 8972 or
the “Solo Parents’ Welfare Act of
2000”; OR
b. 60 days paid leave for miscarriage
and emergency termination of
pregnancy.
2. Paid leave benefit granted to a qualified
female worker in the private sector
covered by the SSS, including those in
the informal economy, for the duration of:
a. Same as those provided under 1(a) or
1(b);
b. Employed female workers shall
receive full pay which consists of:
i. SSS maternity benefit computed
based on their average daily
monthly salary credit; and
ii. Salary differential to be paid by
the employer, if any.
3. An “option” to extend for an additional 30
days without pay in case of live childbirth,
provided that:
a. The employer shall be given due
notice;
b. The same must be in writing;
c. It must be given at least 45 days
before the end of the female worker’s
maternity leave;
d. No prior notice is necessary in the
event of a medical emergency, a
subsequent notice to the employer
shall suffice.
4. Paid maternity leave, allowances, and
benefits granted to female national
athletes;
5. Health care services for pre-natal, delivery,
postpartum, and pregnancy-related
conditions granted to female workers,
particularly those who are neither
voluntary nor regular members of the SSS,
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
as governed by the existing rules and
regulations of the PhilHealth.
Miscarriage and Emergency Termination of
Pregnancy
"Miscarriage" refers to pregnancy loss before
the 20th week of gestation. [IRR of RA 11210,
Rule II, Sec. 1(k)]
"Emergency termination of pregnancy" (ETP)
refers to pregnancy loss on or after the 20th
week of gestation, including stillbirth. [IRR of RA
11210, Rule II, Sec. 1(c)]
Q: Is the option of the 30-day extension
without pay available to all qualified female
workers?
A: NO. The 30-day extension without pay is only
available in cases of live childbirth. Hence, if a
female worker suffers miscarriage or ETP, she is
not entitled to such extension.
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 delivery in a
continuous and uninterrupted manner, not
exceeding 105 days, as the case may be.
The maternity leave can be credited as
combinations of prenatal and postnatal leave as
long as it does not exceed 105 days and provided
that compulsory postnatal leave shall not be less
than 60 days.
Frequency of the Grant
Maternity leave shall be granted to a qualified
female worker in every instance of pregnancy,
miscarriage, or ETP, regardless of frequency.
(IRR of RA 11210, Rule IV, Sec. 4)
Grant of Maternity Leave Benefits after
Termination of Employment.
Maternity leave with full pay shall also be
granted even if the childbirth, miscarriage, or
emergency termination of pregnancy occurs not
more than fifteen (15) calendar days after
the termination of an Ee’s service, as her right
thereto has already accrued. However, such
period is not applicable when the employment of
the pregnant woman worker has been
terminated without just cause. (IRR of RA
11210, Rule IV, Sec. 5)
84
 Labor Law and Social Legislation
Maternity Leave of a Female Worker with
Pending Administrative Case
The maternity leave benefits granted under RA
11210 and its IRR shall be enjoyed by a female
worker in the public sector and in the private
sector even if she has a pending administrative
case. (IRR of RA 11210, Rule IV, Sec. 6)
Maternity Leave for Female Workers in the
Public Sector
Eligibility: Any pregnant female worker in the
government service, regardless of employment
status and length of service
Conditions:
1. She shall give prior notice 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 date of the leave.
2. She shall use the prescribed civil service
form in the filing of the maternity leave
application, supported by a medical
certificate.
Manner of payment: The female worker shall
be entitled to full pay during maternity leave
which shall be paid by the agency. She 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 work-related accountabilities shall
be secured by the female employee.
NOTE: In cases of live childbirth, the female
worker in the public sector has the option to 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. (IRR of RA 11210, Rule V, Sec. 4)
NOTE: Female teachers in the teaching
profession may also avail of maternity leave
even during long vacations, i.e., summer and
Christmas vacations, in which case both the
maternity leave benefits and the proportional
vacation pay shall be granted. (IRR of RA 11210,
Rule V, Sec. 3)
Q: Can local elected and appointed officials,
like barangay officials, avail of the extended
maternity leave?
85
A: YES. The coverage of RA 11210 includes
female workers in the public sector, including
the Local Government Units (LGUs). Their
entitlement to maternity leave benefits is also
granted under the Local Government Code of
1991 and its IRR, and CSC-DBM Joint Circular No.
1, s. 2004 (Leave Benefits of Barangay Officials).
Q: Can contract of service and job order
workers in government avail of maternity
leave under RA 11210?
A: YES. Female contract of service and job order
workers in the government are classified as
female workers in the informal economy. They
can claim maternity leave benefits from the SSS
if they have remitted to the SSS at least three (3)
monthly contributions in the twelve (12)-month
period immediately preceding the semester of
her childbirth, miscarriage, or ETP. (IRR of RA
11210, Rule VII, Sec. 1)
Consecutive pregnancies and multiple
childbirths: In case of overlapping maternity
benefit claims, e.g., one miscarriage followed by
a live childbirth, the female member shall be
granted maternity benefits for the two
contingencies in a consecutive manner. She shall
be paid only one maternity benefit, regardless of
the number of offspring per childbirth or
delivery.
Maternity Leave for Female Workers in the
Private Sector
Conditions:
1. She must have at least three (3) monthly
contributions in the twelve-month period
immediately preceding the semester of
childbirth, miscarriage, or ETP.
2. 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.
NOTE: The 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.
Manner of payment: Full payment of the
benefit shall be advanced by the employer
within 30 days from the filing of the maternity
leave application.
 Labor Standards – Leaves
The SSS shall immediately reimburse the
employer the maternity benefits advanced to
the employed female member, only to the extent
of 100% of her average daily salary credit
(ADSC) for 105 days, 120 days or 60 days, as the
case may be.
NOTE: Average daily salary credit (ADSC) is the
result obtained by dividing the sum of the six (6)
highest monthly salary credits in the twelve-
month period immediately preceding the
semester of contingency by one hundred eighty
(180). [SSS Circular No. 2019-009, Sec. 1 (vi.)]
Salary differential, GR: Employers from the
private sector shall pay for the difference
between the full salary and the actual cash
benefits received from the SSS
XPNs:
1. Those operating distressed
establishments;
2. Those retail/service establishments and
other enterprises employing not more than
10 workers;
3. Those considered as micro-business
enterprises and engaged in the production,
processing, or manufacturing of products
or commodities including agro-processing,
trading, and services, whose total assets
are not more than three million pesos; and
4. Those who are already providing similar or
more than the benefits herein provided
under an existing CBA or company policy.
NOTE: the payment of daily SSS maternity
benefits shall be a bar to recovery of sickness
benefits provided under RA 11199, for the same
period which daily maternity benefits have been
received.
Consecutive Pregnancies and Multiple
Childbirths:
a. In case of the overlapping of two (2)
maternity benefit claims, the female
member shall be granted maternity
benefits for the two contingencies in a
consecutive manner. However, the
amount of benefit corresponding to the
period where there is an overlap shall be
deducted from the current maternity
benefit claim
b. The female member shall be paid only one
maternity benefit, regardless of the
number of offspring per childbirth or
delivery.
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Liability of the Employer: the employer shall
pay to the SSS damages equivalent to the
benefits which she would otherwise have been
entitled to any of the following instances:
a. Failure of the 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. (IRR of RA 11210, Rule VI, Sec.
8)
Maternity Leave for Female Workers in the
Informal Economy
Condition: She must have remitted to the SSS at
least three (3) monthly contributions in the
twelve (12)-month period immediately
preceding the semester of her childbirth,
miscarriage, or ETP
Manner of payment: The SSS shall directly pay
the maternity benefit.
NOTE: In the case of self-employed female
members, including OFWs and voluntary SSS
members, the SSS shall directly pay the
maternity benefit.
Allocation of Maternity Leave Credits
In case of live childbirth, a qualified female
worker entitled to maternity leave benefits may,
at her option, allocate up to seven (7) days of
said benefits to the child’s father, whether or
not the same is married to the female worker.
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 partner, regardless of sexual
orientation or gender identity of the
female worker sharing the same
household.
The option to allocate maternity leave credits
shall not be applicable in case the female worker
suffers miscarriage or ETP. (IRR of RA 11210,
Rule VIII, Sec. 1)
86
 Labor Law and Social Legislation

NOTE: The allocated benefit granted to the Conditions for Entitlement to Paternity Leave
child's father under this law is over and above
that which is provided under RA 8187, or the The male Ee is:
"Paternity Leave Act of 1996." 1. Legally married to, and is cohabiting with
the woman who delivers the baby;
Differences between Maternity Leave under 2. Employed at the time of delivery of his
the SSS and the Expanded Maternity Leave child;
Law 3. Ee of private or public sector;
4. He has notified his Er of the pregnancy of
MATERNITY EXPANDED MATERNITY his legitimate spouse and the expected
LEAVE (Sec. 14-A LEAVE LAW date of such delivery
of RA 8282) (RA 11210)
Minimum of 105 days for NOTE: Delivery shall include childbirth or any
60 days for normal miscarriage.
live childbirth, regardless
delivery
of mode of delivery
Crediting of Existing Benefits
78 days for
60 days for miscarriage
caesarean delivery 1. If the existing paternity leave benefit under
or ETP
the collective bargaining agreement,
Regardless of the civil contract, or company policy is greater than
Child must be
status or legitimacy of the 7 calendar days as provided for in RA 8187,
legitimate
child the greater benefit shall prevail.
Limited to 4 Regardless of frequency
childbirths of pregnancy 2. If the existing paternity leave benefit is less
than that provided in RA 8187, the Er shall
Full pay which consists of adjust the existing benefit to cover the
Daily maternity
basic salary and difference.
benefit equivalent
allowances as may be
to 100% of her
provided under existing NOTE: Where a company policy, contract, or
ADSC
guidelines collective bargaining agreement provides for an
emergency or contingency leave without specific
PATERNITY LEAVE provisions on paternity leave, the Er shall grant
R.A. No. 8187 to the Ee 7 calendar days of paternity leave.
(Handbook on Workers’ Statutory Monetary
Paternity leave Benefits, Bureau of Working Conditions, 2016)

It refers to the benefits granted to a
married male Ee allowing him not to report for
work for 7 days but continues to earn the
compensation on the condition that his spouse
has delivered a child or suffered a miscarriage
for purposes of enabling him to effectively lend
support to his wife in her period of recovery
and/or in the nursing of the newly-born child.
NOTE: The allocated benefit granted to the
child's father under the 105-Day Expanded
Maternity Leave Law is over and above that
which is provided under RA 8187, or the
"Paternity Leave Act of 1996."
Availment of the Paternity Leave may be
After the Delivery

Non-commutation of benefits Paternity leave may be availed after the delivery

In the event that the paternity leave benefit is
not availed of, said leave shall not be convertible
to cash (IRR, RA 8187, Sec. 7).
Concept of paternity leave benefits
without prejudice to an Er’s policy of allowing
the Ee to avail of the benefit before or during the
delivery, provided that the total number of days
shall not be more than seven (7) days for each
covered delivery. (Handbook on Workers’
Statutory Monetary Benefits, p. 38)

Every married male Ee in the private and public Q: Because of the stress in caring for her four
sectors shall be entitled to a paternity leave of 7 (4) growing children, Tammy suffered a
days with full pay for the first 4 deliveries of the miscarriage late in her pregnancy and had to
legitimate spouse with whom he is cohabiting. undergo an operation. In the course of the
operation, her obstetrician further

87
 Labor Standards – Leaves
discovered a suspicious-looking mass that
required the subsequent removal of her
uterus (hysterectomy). After surgery, her
physician advised Tammy to be on full bed
rest for six (6) weeks. Meanwhile, the biopsy
of the sample tissue taken from the mass in
Tammy's uterus showed a beginning
malignancy that required an immediate
series of chemotherapy once a week for four
(4) weeks.
What can Roger, Tammy's second husband
and the father of her two (2) younger
children, claim as benefits under the
circumstances? (2013 BAR)
A: Under RA 8187 or the Paternity Leave Act of
1996, Roger can claim paternity leave of seven
(7) days with full pay if he is lawfully married to
Tammy and cohabiting with her at the time of
the miscarriage.
Q: Mans Weto had been an Ee of Nopolt
Assurance Company for the last ten (10)
years. His wife of six (6) years died last year.
They had four (4) children. He then fell in
love with Jovy, his co-Ee, and they got
married. In October this year, Weto's new
wife is expected to give birth to her first
child. He has accordingly filed his application
for paternity leave, conformably with the
provisions of the Paternity Leave Law which
took effect in 1996.
The HRD manager of the assurance firm
denied his application, on the ground that
Weto had already used up his entitlement
under the law. Weto argued that he has a new
wife who will be giving birth for the first
time, therefore, his entitlement to paternity
leave benefits would begin to run anew.
Whose contention is correct, Weto or the
HRD manager? (2005 BAR)
A: The contention of Weto is correct. The law
provides that every married male is entitled to a
paternity leave of seven (7) days for the first
four (4) deliveries of the legitimate spouse with
whom he is cohabiting. Jovy is Weto's legitimate
spouse with whom he is cohabiting. The fact that
Jovy is his second wife and that Weto had 4
children with his first wife is beside the point.
The important fact is that this is the first child of
Jovy with Weto. The law did not distinguish and
we should therefore not distinguish.
The paternity leave was intended to enable the
husband to effectively lend support to his wife in
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
her period of recovery and/or in the nursing of
the newly born child. (Sec. 3, RA. No. 8187) To
deny Weto this benefit would be to defeat the
rationale for the law. Moreover, the case of Weto
is a gray area and the doubt should be resolved
in his favor.
PARENTAL LEAVE / SOLO PARENT’S
WELFARE ACT (R.A. No. 8972)
Parental Leave – Leave benefits granted to a
solo parent to enable him/her to perform
parental duties and responsibilities where
physical presence is required. (Sec. 3(d), RA
8972)
Parental leave of not more than 7 working days
every year shall be granted to any solo parent Ee
who has rendered service of at least one (1)
year. It should be noted that this is in addition to
the legally mandated leaves, namely, the SIL, the
SSS sick leave, the SSS maternity leave and the
paternity leave. (Sec. 8, RA 8972; Azucena, Vol. 1,
2016, p. 300)
Conditions for entitlement of parental leave
1. He or she must fall among those referred to
as a solo parent;
2. Must have the actual and physical
custody of the child or children;
3. Must have at least rendered service of 1
year to his or her Er whether continuous or
broken;
4. He or she must remain a solo parent;
5. He or she must have a SOLO PARENT ID
issued by the DSWD; and
6. He must notify the Er of the availment
thereof within reasonable period of time.
Persons considered a solo parent entitled to
parental leave
Any individual who falls under any of the ff.
categories:
1. A woman who gives birth as a result of rape
and other crimes against chastity even
without a final conviction of the offender;
Provided, that the mother keeps and raises
the child;
2. Parent left solo or alone with the
responsibility of parenthood due to:
a. Death of spouse;
88
 Labor Law and Social Legislation

b. Detention or service of sentence of In the event that the parental leave is not availed
spouse for a criminal conviction for at of, said leave shall not be convertible to cash
least 1 yr; unless specifically agreed upon previously.
However, if said leave were denied an Ee as a
NOTE: The law applies to the spouses of result of non-compliance with the provisions of
prisioners, whether or not final these Rules by an Er, the aforementioned leave
judgment has been rendered, provided may be used a basis for the computation of
they are in detention for a minimum damages. (Sec. 20, Art. V, IRR of RA 8972)
period of 1 yr.
Termination of the Benefit
c. Physical and/or mental incapacity of
spouse as certified by a public medical A change in the status or circumstance of the
practitioner; parent claiming benefits under this Act, such
d. Legal separation or de facto that he/she is no longer left alone with the
separation from spouse for at least 1 responsibility of parenthood, shall terminate
year as long as he/she is entrusted his/her eligibility for these benefits. (Sec. 3, RA
with the custody of the children; 8972)
e. Nullity or annulment of marriage as
decreed by a court or by a church as Protection against Work Discrimination
long as he/she is entrusted with the
custody of the children; No Er shall discriminate against any solo parent
f. Abandonment of spouse for at least 1 Ee with respect to terms and conditions of
yr; employment on account of his/her being a solo
parent. (Sec. 7, RA 8972)
3. Unmarried mother/father who has preferred
to keep and rear his or her child/children Flexible Work Schedule
instead of:
The Er shall provide for a flexible work schedule
a. Having others care for them or for solo parents: Provided, that the same shall
b. Give them up to a welfare institution; not affect individual and company productivity:
Provided, further, that any Er may request
4. Any other person who solely provides: exemption from the above requirements from
the DOLE on certain meritorious grounds.
a. Parental care and
b. Support to a child or children; In the case of Ees in the government service,
flexible working hours will be subject to the
Provided, that he/she is a duly licensed discretion of the head of the agency. In no case
foster parent by the DSWD or duly shall the weekly working hours be reduced in
appointed legal guardian by the court; and the event the agency adopts the flexible working
hours schedule format (flexi-time). In the
5. Any family member who assumes the adoption of flexi-time, the core working hours
responsibility of head of family as a result of shall be prescribed taking into consideration the
the: needs of the service. (Sec. 16, Art. V, IRR, RA
8972)
a. Death,
b. Abandonment, Crediting of Existing Leave
c. Disappearance or
d. Prolonged absence of the parents or If there is an existing or similar benefit under a
solo parent. company policy, or a collective bargaining
agreement or a collective negotiation agreement,
Provided, that such abandonment, the same shall be credited as such. If the same is
disappearance, or absence lasts for at least greater than the seven (7) days provided for in
1 year. (Sec. 3(a), RA 8972; IRR, RA 897, Sec. RA 8972, the greater benefit shall prevail. (Sec.
6) 21, Art. V, IRR, RA 8972)

Non-Conversion of Parental Leave SPECIAL LEAVE BENEFIT FOR WOMEN

R.A. No. 9710

89
 Labor Standards – Leaves
A woman Ee having rendered continuous
aggregate employment service of at least 6
months for the last 12 months shall be entitled
to a special leave benefit (SLB) of 2 months with
full pay based on her gross monthly
compensation following surgery caused by
gynecological disorders. (Sec. 18, RA 9710,
Magna Carta of Women)
Conditions for Entitlement
Any female employee in the public and private
sector regardless of age and civil status shall be
entitled to a special leave of two (2) months with
full pay based on her gross monthly
compensation subject to existing laws, rules and
regulations due to surgery caused by
gynecological disorders under such terms and
conditions:
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;
3. She has undergone surgery due to
gynecological disorders as certified by a
competent physician. (Sec. 2, D.O. No. 112)
Gynecological Disorders
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, fallopian tubes, ovaries, breast, adnexa
and pelvic floor, as certified by a competent
physician. For purposes of the Act and these
Rules and Regulations, gynecological surgeries
shall also include hysterectomy, ovariectomy,
and mastectomy. (Sec. 7(M), IRR, RA 9710, Magna
Carta of Women)
Gross monthly compensation
Refers to the monthly basic pay plus mandatory
allowances fixed by the regional wage boards.
Frequency of Availment
A female Ee can avail of the special leave benefit
for every instance of surgery due to
gynecological disorder for a maximum total
period of 2 months per year. (Sec. 6, DO 112-A,
DOLE, Series of 2012)
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
NOTE: Special leave benefit (SLB) and SSS
maternity benefit are mutually exclusive, as such
a female Ee may avail the special leave benefit in
case she undergoes surgery caused by
gynecological disorder even on maternity leave.
However, where the woman Ee undergone
surgery due to gynecological disorder during her
maternity leave, she is entitled only to the
difference between the SLB and the maternity
benefit. (Sec. 9, DO 112-A, DOLE, Series of 2012)
SLB vis-a-vis SSS Sickness Benefit
The former is granted in accordance with RA
9710 while the latter is granted in accordance
with the SSS law or RA 1161 as amended by RA
8282. (Sec. 7, DO 112-A, DOLE, Series of 2012)
SLB vis-a-vis Existing Statutory Leaves
The SLB cannot be taken from statutory leaves.
(i.e., 5-day SIL, Leave for Victims of VAWC,
Parental Leave for Solo Parents) The benefit is in
addition to the leave benefits granted by existing
laws. (Sec. 8, DO 112-A, DOLE, Series of 2012)
NOTE: If there are existing or similar benefits
under a company policy or CBA providing
similar or equal benefit to what is mandated by
law, the same shall be considered as compliance
unless the company policy, practice or CBA
provides otherwise. (Sec. 10, DO 112-A, DOLE,
Series of 2012)
Mode of Payment
The SLB is a leave privilege. The woman
employee shall not report for work for the
duration of the leave but she will still receive her
salary covering said period. The employer, in its
discretion, may allow said employee to receive
her pay for the period covered by the approved
leave before or during the surgery. The
computation of her pay shall be based on her
prevailing salary at the time of the surgery. (Sec.
11, D.O. No. 112, as amended)
Non-Commutation of the Benefit
The SLB shall be non-cumulative and non-
convertible to cash unless otherwise provided by
a CBA. (Sec. 12, D.O. No. 112, as amended)
Crediting of Existing Benefit
The existing similar benefits under an company
policy or CBA shall be considered as compliance,
unless the company policy, practice or CBA
90
 Labor Law and Social Legislation

provides otherwise. In case the company policy,
practice or CBA provides lesser benefits, the
company shall grant the difference.
Q: Because of the stress in caring for her four
(4) growing children, Tammy suffered a
miscarriage late in her pregnancy and had to
undergo an operation. In the course of the
operation, her obstetrician further
discovered a suspicious-looking mass that
required the subsequent removal of her
uterus (hysterectomy). After surgery, her
physician advised Tammy to be on full bed
rest for six (6) weeks. Meanwhile, the biopsy
of the sample tissue taken from the mass in
Tammy's uterus showed a beginning
malignancy that required an immediate
series of chemotherapy once a week for four
(4) weeks. What benefits can Tammy claim
under existing social legislation? (2013 BAR)
A: Assuming she is employed, Tammy is entitled
to a special leave benefit of two months with full
pay (Gynecological Leave) pursuant to RA 9710
or the Magna Carta of Women. She can also claim
Sickness Leave Benefit in accordance with the
SSS Law.
LEAVES FOR VICTIMS OF VIOLENCE AGAINST
WOMEN AND THEIR CHILDREN
R.A. No. 9262
Violence against women and their children
refers to any act or a series of acts committed 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 result in or is likely to result in physical,
sexual, psychological harm or suffering, or
economic abuse including threats of such acts,
battery, assault, coercion, harassment or
arbitrary deprivation of liberty. [Sec 3(a), RA
9262]
clerk of court that an action under RA 9262 has
been filed and is pending.
For government Ees, in addition to the
certification, the Ee concerned must file an
application for leave citing RA 9262 as basis.
NOTE: Ee can file for an extended leave from her
employer if the 10-day leave is not enough and
when the necessity arises as specified in the
protection order issued by the barangay or
court.
Penalties for Violation
Any Er who shall prejudice the right of the
person under this section shall be penalized in
accordance with the provisions of the Labor
Code and Civil Service Rules and Regulations.
Likewise, an Er who shall prejudice any person
for assisting a co-Ee who is a victim under this
Act shall likewise be liable for discrimination.
Noncumulative/ Non-Conversion to Cash
The availment of the 10-day leave shall be at the
option of the woman Ee, which shall cover the
days that she has to attend to medical and legal
concerns. Leaves not availed of are
noncumulative and not convertible to cash.
Q: Can an Ee apply for the 10-day leave from
her Er just because of a black eye or any
manifestation of abuse?
A: NO. The 10-day leave under the VAWC may
only be availed of if the victim has applied for
any protection order with the intention to file a
case against the assailant.

Leave Entitlement

It allows the victim of violence, which may be

physical, sexual, or psychological, to apply for
the issuance of a protection order. If such victim
is an Ee, she is entitled to a paid leave of up to 10
days in addition to other paid leaves under the
Labor Code, other laws and company policies.

The Ee has to submit a certification from the

Punong Barangay or Kagawad, prosecutor, or

91
 Labor Standards – Sexual Harassment
SEXUAL HARASSMENT IN THE
WORK ENVIRONMENT
SAFE SPACES ACT
RA No. 11313
Definition of Terms
1. Catcalling refers to unwanted remarks
directed towards a person, commonly done
in the form of wolf-whistling and
misogynistic, transphobic, homophobic,
and sexist slurs;
2. Employee refers to a person, who in
exchange for remuneration, agrees to
perform specified services for another
person, whether natural or juridical, and
whether private or public, who exercises
fundamental control over the work,
regardless of the term or duration of
agreement: Provided, That for the purposes
of this law, a person who is detailed to an
entity under a subcontracting or second
agreement shall be considered an
employee;
3. Employer refers to a person who exercises
control over an employee: Provided, That
for the purpose of this Act, the status or
conditions of the latter’s employment or
engagement shall be disregarded;
4. Gender refers to a set of socially ascribed
characteristics, norms, roles, attitudes,
values and expectations identifying the
social behavior of men and women, and the
relations between them;
5. Gender-based online sexual
harassment refers to an online conduct
targeted at a particular person that causes
or likely to cause another mental,
emotional or psychological distress, and
fear of personal safety, sexual harassment
acts including unwanted sexual remarks
and comments, threats, uploading or
sharing of one’s photos without consent,
video and audio recordings, cyberstalking
and online identity theft;
6. Gender identity and/or expression refers
to the personal sense of identity as
characterized, among others, by manner of
clothing, inclinations, and behavior in
relation to masculine or feminine
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
conventions. A person may have a male or
female identity with physiological
characteristics of the opposite sex in which
case this person is considered transgender;
7. Stalking refers to a conduct directed at a
person involving the repeated visual or
physical proximity, non-consensual
communication, or a combination thereof
that cause or will likely cause a person to
fear for one’s own safety or the safety of
others, or to suffer emotional distress.
8. Cyberstalking is a form of stalking that is
committed through an electronic medium
in which online communication takes place.
(IRR, RA 11313, Sec. 4[c])
9. Homophobic remarks or slurs are any
statements in whatever form or however
delivered, which are indicative of fear,
hatred or aversion towards persons who
are perceived to be or actually identify as
lesbian, gay, bisexual, queer, pansexual and
such other persons of diverse sexual
orientation, gender identity or expression,
or towards any person perceived to or
actually have experienced same-sex
attraction. (IRR, RA 11313, Sec. 4[i])
10. Misogynistic remarks or slurs are any
statements in whatever form or however
delivered, that are indicative of the feeling
of hating women or the belief that men are
inherently better than women. (IRR, RA
11313, Sec. 4[l])
11. Public spaces refer to streets and alleys,
roads, sidewalks, public parks, buildings,
schools, churches, public washrooms,
malls, internet shops, restaurants and cafes,
transportation terminals, public markets,
spaces used as evacuation centers,
government offices, common carriers,
public utility vehicles (PUVs) as well as
private vehicles covered by app-based
transport network services, other
recreational spaces such as, but not limited
to, cinema halls, theaters and spas, bars and
clubs, resorts and water parks, hotels and
casinos, and all other areas, regardless of
ownership, openly accessible or offered to
be accessed by the public. (IRR, RA 11313,
Sec. 4[m])
12. Sexist remarks or slurs are statements in
whatever form or however delivered, that
are indicative of prejudice, stereotyping, or
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 Labor Law and Social Legislation
discrimination on the basis of sex, typically
against women. (IRR, RA 11313, Sec. 4[n])
13. Transphobic remarks or slurs are any
statements in whatever form or however
delivered, that are indicative of fear, hatred
or aversion towards persons whose gender
identity and/or expression do not conform
with their sex assigned at birth. (IRR, RA
11313, Sec. 4[o])
Gender-based Sexual Harassment in the
Workplace
The crime of gender-based sexual harassment
(GBSH) in the workplace includes the following:
1. An act or series of acts involving any
unwelcome sexual advances, requests or
demand for sexual favors or any act of
sexual nature, whether done verbally,
physically or through the use of technology
such as text messaging or electronic mail or
through any other forms of information
and communication systems, that has or
could have a detrimental effect on the
conditions of an individual’s employment
or education, job performance or
opportunities;
2. A conduct of sexual nature and other
conduct-based on sex affecting the dignity
of a person, which is unwelcome,
unreasonable, and offensive to the
recipient, whether done verbally,
physically or through the use of technology
such as text messaging or electronic mail
or through any other forms of information
and communication systems;
3. A conduct that is unwelcome and
pervasive and creates an intimidating,
hostile or humiliating environment for the
recipient: Provided, That the crime of
gender-based sexual harassment may also
be committed between peers and those
committed to a superior officer by a
subordinate, or to a teacher by a student,
or to a trainer by a trainee; (Sec. 18, RA
11313)
NOTE: GBSH in the workplace may also be
committed between peers and by a
subordinate to a superior officer. Workplaces
include all sites, locations, spaces, where
work is being undertaken by an employee
within or outside the premises of the usual
93
place of business of the employer. (IRR, RA
11313, Sec. 18)
Duties of Employers
Employers or other persons of authority,
influence or moral ascendancy in a workplace
shall have the duty to prevent, deter, or punish
the performance of acts of gender-based
sexual harassment in the workplace. Towards
this end, the employer or person of authority,
influence or moral ascendancy shall:
1. Disseminate or post in a conspicuous place
a copy of this Act to all persons in the
workplace;
2. Provide measures to prevent gender-based
sexual harassment in the workplace, such
as the conduct of anti-sexual harassment
seminars;
3. Create an independent internal mechanism
or a Committee on Decorum and
Investigation (CODI) to investigate and
address complaints of gender-based sexual
harassment which shall:
a. Adequately represent the
management, the employees from the
supervisory rank, the rank-and-file
employees, and the union, if any;
b. Designate a woman as its head and
not less than half of its members
should be women;
c. Be composed of members who should
be impartial and not connected or
related to the alleged perpetrator;
d. Investigate and decide on the
complaints within ten (10) days or
less upon receipt thereof;
e. Observe due process;
f. Protect the complainant from
retaliation; and
g. Guarantee confidentiality to the
greatest extent possible;
4. Provide and disseminate, in consultation
with all persons in the workplace, a code of
conduct or workplace policy which shall:
a. Expressly reiterate the prohibition on
gender-based sexual harassment;
b. Describe the procedures of the
internal mechanism created under
Sec. 17(c) of this Act; and
c. Set administrative penalties. (Sec. 17,
RA 11313)
 Labor Standards – Sexual Harassment
NOTE: In case of non-compliance in the public
sector by the employer of their duties, an
employee may file an administrative complaint
with the Civil Service Commission (CSC).
In case the employer is a presidential appointee,
elective official or official of the AFP, an
administrative complaint may be filed with
appropriate offices with such jurisdictions, such
as the Office of the President or Office of the
Ombudsman. (IRR, RA 11313, Sec. 19)
Duties of Employees and Co-workers
Employees and co-workers shall have the
duty to:
1. Refrain from committing acts of
gender-based sexual harassment;
2. Discourage the conduct of gender-
based sexual harassment in the
workplace;
3. Provide emotional or social support to
fellow employees, co-workers,
colleagues or peers who are victims of
gender-based sexual harassment; and
4. Report acts of gender-based sexual
harassment witnessed in the
workplace. (Sec. 18, RA 11313)
The failure of the employer to act on reports
may make the employer liable under Sec. 19
(b) of the law. The failure of the CODI to act
on reports shall be subject to the penalties in
the Code of Conduct to be developed in
accordance with Sec. 32 of these rules. (IRR,
RA 11313, Sec. 21)
Liability of Employers
In addition to liabilities for committing acts of
gender-based sexual harassment, employers
may also be held responsible for:
1. Non-implementation of their duties
under Sec. 17 of the law, as provided in
the penal provisions; or
2. Not taking action on reported acts of
gender-based sexual harassment
committed in the workplace.
Any person who violates subsection (a) of
this section, shall upon conviction, be
penalized with a fine of not less than Five
thousand pesos (P5,000.00) nor more than
Ten thousand pesos (P10,000.00).
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Any person who violates subsection (b) of
this section, shall upon conviction, be
penalized with a fine of not less than Ten
thousand pesos (P10,000.00) nor more than
Fifteen thousand pesos (P 15,000.00). (Sec.
19, RA 11313)
Independent Action for Damages
Nothing shall preclude the victim of work-
related GBSH from instituting a separate and
independent action for damages and other
affirmative relief. (IRR, RA 11313, Sec. 23)
ANTI-SEXUAL HARASSMENT ACT
RA No. 7877
Requisites
1. Act is committed in a work, education, or
training-related environment;
2. The doer, the harasser, is any person who
has authority, influence or moral
ascendancy over another;
3. Doer demands or requests, or requires a
sexual favor from the victim;
4. It does not matter whether such demand
is accepted or not. (RA 7877, Sec. 3)
NOTE: Based on the Congressional deliberations,
Anti-Sexual Harassment Law aims to punish the
harasser without regard to gender. (Azucena,
Vol. 1, 2016, p. 485)
Kinds
1. Quid Pro Quo (this for that) – doer asks for
something in exchange for something.
2. Hostile Environment
Places where sexual harassment is
committed
1. In a work-related or employment
environment.
Elements:
a. The sexual favor is made as a condition
in the hiring or in the employment, re-
employment or continued employment
of said individual, or in granting said
individual favorable compensation,
terms, conditions, promotions, or
privileges; or the refusal to grant the
sexual favor results in limiting,
segregating or classifying the Ee which
in a way would discriminate, deprive or
94
 Labor Law and Social Legislation
diminish employment opportunities or
otherwise adversely affect said Ee (Quid
Pro Quo Sexual Harassment);
b. The above acts would impair the Ees’
rights or privileges under existing labor
laws; or
c. The above acts would result in an
intimidating, hostile, or offensive
environment for the Ee. (Hostile
Environment Harassment).
2. In an education or training environment
Elements:
a. Sexual harassment is employed:
i. Against one who is under the
care, custody or supervision of
the offender;
ii. Against one whose education,
training, apprenticeship or
tutorship is entrusted to the
offender;
b. When sexual favor is made a condition
to the giving of a passing grade, or the
granting of honors and scholarships, or
the payment of a stipend, allowance or
other benefits, privileges, or
considerations; or
c. When sexual advances result in an
intimidating, hostile or offensive
environment for the student, trainee or
apprentice.
The Definition of Sexual Harassment Does
Not Require A Categorical Demand Or
Request For Sexual Favor
While the provision states that there must be a
“demand, request or requirement of a sexual
favor”, it is not necessary that the demand,
request or requirement of a sexual favor be
articulated in a categorical manner. It may be
discerned, with equal certitude, from the acts of
the offender.
Likewise, it is not essential that the demand,
request or requirement be made as a condition
for continued employment or for promotion to a
higher position. It is enough that the
respondent’s acts result in creating an
intimidating, hostile or offensive environment
for the Ee. (Domingo v. Rayala, G.R. No. 155831,
Feb. 18, 2008)
Beso-beso Fashion
95
In the case of Aquino v. Acosta (A.M. No. CTA-01-
1), the Supreme Court absolved Judge Acosta of
liability under sexual harassment law in greeting
complainant with a kiss on the cheek in a ‘beso-
beso’ fashion, where most of the kissing
incidents were done on festive and special
occasions. The Court held that what respondent
judge committed were casual gestures of
friendship and camaraderie, nothing more,
nothing less, and that there is no indication that
respondent was motivated by malice or lewd
design. However, the Court admonished Judge
Acosta not to commit similar acts against
complainant or other female Ees of the CTA,
otherwise, his conduct may be construed as
tainted with impropriety.
Duties of the Er or head of office in a work-
related, education or training environment
a. Prevent or deter the commission of acts
of Sexual Harassment; and
b. Provide the procedures for the
resolution, settlement or prosecution of
acts of Sexual Harassment.
Duty of the Er or Head of Office towards these
end
1. Promulgate appropriate rules and
regulations in consultation with and jointly
approved by the Ees or students or
trainees, through their duly designated
representatives, prescribing the procedure
for the investigation or Sexual Harassment
cases and the administrative sanctions
therefore. (RA 7877, Sec. 4)
NOTE: Administrative sanctions shall not
be a bar to prosecution in the proper courts
for unlawful acts of Sexual Harassment.
The said rules and regulations issued shall
include, among others, guidelines on
proper decorum in the workplace and
educational or training institutions.
2. Create a committee on decorum and
investigation of cases on Sexual
Harassment.
3. The Er or head of office, education or
training institution shall disseminate or
post a copy of this RA 7877 for the
information of all concerned.
 Labor Standards – Sexual Harassment
Liability of the Er, Head of Office, Educational
or Training Institution
Er shall be solidarily liable for damages arising
from the acts of Sexual Harassment committed
in the employment, education or training
environment, provided:
1. The Er or head of office, educational or
training institution is informed of such
acts by the offended party; and
2. No immediate action is taken thereon. (RA
7877, Sec. 5)
An Independent Action For Damages May Be
Filed
Nothing under this Act shall preclude the victim
of work, education or training-related sexual
harassment from instituting a separate and
independent action for damages and other
affirmative relief. (RA, 7877, Sec. 6)
Three-Fold Liability Rule In Sexual
Harassment Cases
An act of Sexual Harassment may give rise to
civil, criminal and administrative liability on the
part of the offender, each proceeding
independently of the others.
Prescription of Action
Any action arising from the violation of the
provisions of this act shall prescribe in three (3)
years. (RA, 7877, Sec. 7)
Q: A Personnel Manager, while interviewing
an attractive female applicant for
employment, stared directly at her for
prolonged periods, albeit in a friendly
manner. After the interview, the manager
accompanied the applicant to the door, shook
her hand and patted her on the shoulder. He
also asked the applicant if he could invite her
for dinner and dancing at some future time.
Did the Personnel Manager, by the above
acts, commit Sexual Harassment? Reason.
(2000 BAR)
A: YES. The Personnel Manager is in a position to
grant or not to grant a favor (a job) to the
applicant. Under the circumstances, inviting the
applicant for dinner or dancing creates a
situation hostile or unfriendly to the applicant's
chances for a job if she turns down the
invitation. (RA 7877, Anti-Sexual Harassment Act,
Sec. 3 [a][3])
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Q: In the course of an interview, another
female applicant inquired from the same
Personnel Manager if she had the physical
attributes required for the position she
applied for.
The Personnel Manager replied: "You will be
more attractive if you will wear micro-mini
dresses without the undergarments that
ladies normally wear." Did the Personnel
Manager, by the above reply, commit an act
of sexual harassment?
A: YES. The remarks would result in an offensive
or hostile environment for the Ee. Moreover, the
remarks did not give due regard to the
applicant’s feelings and it is a chauvinistic
disdain of her honor, justifying the finding of
Sexual Harassment. (Villarama v. NLRC, G.R. No.
106341, Sept. 2, 1994)
Q: Pedrito Masculado, a college graduate
from the province, tried his luck in the city
and landed a job as a utility/maintenance
man at the warehouse of a big shopping mall.
After working as a casual Ee for 6 months, he
signed a contract for probationary
employment for 6 months. Being well-built
and physically attractive, his supervisor, Mr.
Hercules Barak, took special interest to
befriend him.
When his probationary period was about to
expire, he was surprised when one afternoon
after working hours, Mr. Barak followed him
to the men’s comfort room. After seeing that
no one else was around, Mr. Barak placed his
arm over Pedrito’s shoulder and softly said:
“You have great potential to become a
regular Ee and I think I can give you a
favorable recommendation. Can you come
over to my condo unit on Saturday evening so
we can have a little drink? I’m alone, and I’m
sure you want to stay longer with the
company.”
Is Mr. Barak liable for Sexual Harassment
committed in a work-related or employment
environment? (2000 BAR)
A: YES. The elements of Sexual Harassment are
all present. The act of Mr. Barak was committed
in a workplace. Mr. Barak, as supervisor of
Pedrito Masculado, has authority, influence and
moral ascendancy over Masculado.
Given the specific circumstances mentioned in
the question like Mr. Barak following Masculado
96
 Labor Law and Social Legislation

to the comfort room, etc. Mr. Barak was

requesting a sexual favor from Masculado for a
favorable recommendation regarding the
latter's employment. It is not impossible for a
male, who is a homosexual, to ask for a sexual
favor from another male.

97
 Labor Standards – Special Group of Employees

10. RA 9262 or the “Anti-Violence against

SPECIAL GROUP OF EES Women and Children”

State Policy On Non-Discrimination Against

WOMEN WORKERS
Laws protecting women Workers
1. The State recognizes the role of women in
nation-building, and shall ensure the
fundamental equality before the law of
women and men. (1987 Constitution, Art. II,
Sec. 14)
2. The State shall protect working women by
providing safe and healthful working
conditions, taking into account their
maternal functions, and such facilities and
opportunities that will enhance their
welfare and enable them to realize their
full potential in the service of the nation.
(1987 Constitution, Art. XIII, Sec. 14)
Women
The State condemns discrimination against
women in all its forms and pursues by all
appropriate means and without delay the policy
of eliminating discrimination against women in
keeping with the Convention on the Elimination
of All Forms of Discrimination Against Women
(CEDAW) and other international instruments
consistent with Philippine law. The State shall
accord women the rights, protection, and
opportunities available to every member of
society. (RA 9710 or the Magna Carta of Women,
Sec. 2)
The State shall take steps to review and, when
necessary, amend and/or repeal existing laws
that are discriminatory to women within 3 years
from the effectivity of this Act. (RA 9710, Sec. 12)

3. RA 6725 – which explicitly prohibits DISCRIMINATORY ACTS AGAINST WOMEN EE

discrimination against women with respect
to terms and conditions of employment,
1. Discrimination with respect to the terms
promotion, and training opportunities.
and conditions of employment solely on
account of sex.
4. RA 6955 – which bans the “mail-order-
bride” practice for a fee and the export of
a. Discrimination in pay – Payment of a
female labor to countries that cannot
lesser compensation including wage,
guarantee protection to the rights of
salary or other forms of remuneration
women workers.
and fringe benefits, to a female Ee as
against a male Ee;
5. RA 7192 or “Women in Development and
Nation Building Act.” – which affords
b. Discrimination in employment
women equal opportunities with men to
opportunity – favoring a male Ee over
act and to enter into contracts, and for
a female Ee with respect to
appointment, admission, training,
promotion, assignment, transfer,
graduation, and commissioning in all
training opportunities, study and
military or similar schools.
scholarship grants solely on account
of their sexes (LC, Art. 133);
6. RA 7322 – increasing the maternity
benefits granted to women in the private
c. Discrimination in hiring – favoring a
sector.
male applicant with respect to hiring
where the particular job can equally
7. RA 7877 or “Anti-Sexual Harassment Act”
be handled by a woman;
8. RA 8042 or the “Migrant Workers and
d. Discrimination in dismissal – favoring
Overseas Filipinos Act of 1995” – which
a male Ee over a female Ee with
prescribes as a matter of policy, the
respect to dismissal of personnel or
deployment of migrant workers, with
the application of the last in / first out
emphasis on women, only in countries
principle or other retrenchment
where their rights are secure. (Philippine
policy of the Er. (Poquiz, 2012)
Telegraph and Telephone Co. v. NLRC, May
23, 1997)

9. RA 9710 or “the Magna Carta of Women”

UNIVERSITY OF SANTO TOMAS 98

2021 GOLDEN NOTES
 Labor Law and Social Legislation
2. Stipulating, whether as a condition for
employment or continuation of
employment:
a. That a woman Ee shall not get
married; or
b. That upon marriage, such woman Ee
shall be deemed resigned or
separated. (LC, Art. 134)
3. Dismissing, discriminating or otherwise
prejudice a woman Ee by reason of her
being married. (LC, Art. 134)
Standard of Reasonable Test
Under the standard reasonable test, the Er has
the burden of proof to prove the existence of a
reasonable business necessity that would justify
an employment policy. (Star Paper Corp. v.
Simbol, G.R. No. 164774, April 12, 2006)
Expanded Breastfeeding Promotion Act (RA
10028)
Sec. 12. Lactation Periods. - Nursing Ees shall be
granted break intervals in addition to the
regular time-off for meals to breastfeed or
express milk. These intervals, which shall
include the time it takes an Ee to get to and from
the workplace lactation station, shall be counted
as compensable hours worked. The Department
of Labor and Employment (DOLE) may adjust
the same: Provided, That such intervals shall not
be less than a total of forty (40) minutes for
every eight (8)-hour working period.
Q: Can an individual, the sole proprietor of a
business enterprise, be said to have violated
the Anti-Sexual Harassment Act of 1995 if he
clearly discriminates against women in the
adoption of policy standards for employment
and promotions in the enterprise? Explain.
(2003 BAR)
A: When an Er discriminates against women in
the adoption of policy standards for employment
and promotion in his enterprise, he is not guilty
of Sexual Harassment. Instead, the Er is guilty of
discrimination against women Ees which is
declared to be unlawful by the Labor Code.
For an Er to commit Sexual Harassment, he – as
a person of authority, influence or moral
ascendancy – should have demanded, requested
or otherwise required a sexual favor from his Ee
whether the demand, request or requirement for
submission is accepted by the object of said act.
99
STIPULATION AGAINST MARRIAGE
(LC, ART. 134)
It shall be unlawful for an Er to require as a
condition of employment or continuation of
employment that a woman Ee shall not get
married, or to stipulate expressly or tacitly that
upon getting married, a woman Ee shall be
deemed resigned or separated, or to actually
dismiss, discharge, discriminate or otherwise
prejudice a woman Ee merely by reason of her
marriage. (LC, Art. 134)
No-Spouse Employment Policy
It is a policy banning spouses from working in
the same company. Generally, spouses are
allowed to work in the same company, provided
it is not in the same department, where there is
direct supervision or control. In case spouses are
in the same department, one of them may be
reassigned to another department.
NOTE: The XPN of Bonafide Occupational
Qualification BFOQ Rule occurs when the
employer can prove that reasonable demands of
the business require a distinction based on
marital status and there is no better or
acceptable policy which would better
accomplish the business purpose.
There must be a finding of any BFOQ to justify an
Er’s no- spouse employment rule. There must be
a compelling business necessity for which no
alternative exists other than the discriminating
practice.
(See BFOQ under Management Prerogatives)
Importance of the BFOQR
1. To ensure that the Ee can effectively
perform his work
2. So that the no-spouse employment rule will
not impose any danger to business.
Also see discussion on the validity of the rule
against marriage under Rule on Marriage
Between Ees of Competitor-Ees.
Q: Glaxo, a company which has a policy
against Ees having relationships with the Ees
of its competitors, employed Tecson as a
medical representative. Tecson married
Bettsy, a Branch coordinator in one of Glaxo’s
competitors. Tecson was then transferred to
another area but he did not accept such
transfer. Is the policy of Glaxo valid and
 Labor Standards – Special Group of Employees
reasonable so as to constitute the act of
Tecson as willful disobedience?
A: YES. The prohibition against personal or
marital relationships with Ees of competitor
companies upon Glaxo’s Ees is reasonable under
the circumstances because relationships of that
nature might compromise the interest of the
company. Glaxo does not impose an absolute
prohibition against relationships between its Ees
and those of competitor companies. Its Ees are
free to cultivate relationships with and marry
persons of their own choosing. What the
company merely seeks to avoid is a conflict of
interest between the Ee and the company that
may arise out of such relationships.
Furthermore, the prohibition forms part of the
employment contract and Tecson was aware of
such restrictions when he entered into a
relationship with Bettsy. (Duncan Assoc. Of
Detailman-PTGWO v. Glaxo Wellcome Phil. Inc.,
G.R. No. 162994, Sept. 17, 2004)
Q: May a woman worker be dismissed on the
ground of dishonesty for having written
‘’single” on the space for civil status on the
application sheet, contrary to the fact that
she was married?
A: Art. 136 of the Labor Code explicitly prohibits
discrimination merely by reason of marriage of a
female Ee. The policy of not accepting or
disqualifying from work any woman worker
who contracts marriage is afoul of the right
against discrimination provided to all women
workers by our labor laws and by our
Constitution. (PT&T Co. v. NLRC, G.R. No. 118978,
May 23, 1997)
Q: An international flight stewardess of PAL,
was discharged from service, on account of
her marriage. PAL contends that Art. 134 of
the Labor Code applies only to women Ee in
ordinary occupations. Is the termination
legal?
A: NO. The termination is not legal and the
policy of PAL against marriage is patently illegal.
Requiring that prospective flight attendants
must be single and that they will be
automatically separated from the service once
they marry was declared void, it being violative
of the clear mandate in Art. 134 of the Labor
Code with regard to discrimination against
married women. Art. 134 is not intended to
apply only to women employed in ordinary
occupations, or it should have categorically
expressed so. The sweeping intendment of the
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
law be it on special or ordinary occupations.
(Zialcita et. al., v. PAL, RO4-3-3398-76, Feb. 20,
1997)
PROHIBITED ACTS
It shall be unlawful for any Er to:
1. Deny any woman Ee benefits provided by
law.
2. Discharge any woman for the purpose of
preventing her from enjoying any of the
benefits provided by law.
3. Discharge such woman on account of her
pregnancy, or while on leave or in
confinement due to her pregnancy.
4. Discharge or refuse the admission of such
woman upon returning to her work for fear
that she may again be pregnant. (LC, Art.
135)
Discharging a woman due to pregnancy
Art. 135 contemplates the following prohibited
acts in connection with the pregnancy of a
woman Ee:
1. To discharge her on account of her
pregnancy; or
2. To discharge her while she is on leave due
to her pregnancy; or
3. To discharge her while she is confined due
to her pregnancy; or
4. To discharge her upon returning to work
for fear that she may again be pregnant; or
5. To refuse her admission upon returning to
work for fear that she may again be
pregnant. (Sec. 13, Rule XII, Book III, Rules
to Implement the LC)
Series of absences due to pregnancy and its
related ailments not a ground to dismiss Ee
The court agreed that in concluding that
respondent’s sickness was pregnancy-related
and therefore, the petitioner cannot terminate
respondent’s services because in doing so,
petitioner will be violating Art. 137 (now Art.
135) of the LC. (Del Monte Philippines, Inc. v.
Velasco, G.R. No. 153477, March 6, 2007)
Q: Can an Er dismiss an Ee on the ground of
deliberately concealing her pregnancy and
incurring absences without official leave?
A: NO. Her absence was justified considering
that she had just delivered a child, which can
hardly be considered a forbidden act, a
100
 Labor Law and Social Legislation

dereliction of duty; much less does it imply b. Employment does not impair the
wrongful intent on the part of the Ee. (Lakpue child’s normal development; and
Drug, Inc. v. Belga, G.R. No. 166379, Oct. 20, 2005) c. Er-parent or legal guardian
provides the child with the
Penalty for commission of the prohibited acts primary and/or secondary
mentioned education prescribed by the
Department of Education
The offender would be subject to the penalties
provided under Art. 288 of the LC, the general 2. When the child’s employment or
penalty clause under said code. participation in public entertainment
or information through cinema,
Fine: Not less than P1,000 nor more than theatre, radio or television is essential
P10,000; or provided:

Imprisonment: not less than 3 months or more a. Employment contract is

than 3 years, or both, at the discretion of the concluded by the child’s parents
court. or legal guardian;
b. With the express agreement of
Persons covered under the classification of the child concerned, if possible;
certain women workers and
c. The approval of DOLE, the
Any woman who is permitted or suffered to following must be complied with:
work:
i. The employment does not
1. With or without compensation; involve advertisement or
2. In any night club, cocktail lounge, massage commercials promoting
clinic, bar or similar establishment; alcoholic beverages,
3. Under the effective control or supervision intoxicating drinks, tobacco
of the Er for a substantial period of time; and its by-products or
and exhibiting violence
4. Shall be considered as an Ee of such ii. There is a written contract
establishment for purposes of labor and approved by DOLE
social legislation. (Art. 136 of LC) iii. The conditions provided in
the first instance are met
EMPLOYMENT OF MINORS (Sec. 12, Art. VIII, RA 7610)

Rules on Employment of Minor Workers B. Above 15 but below 18 – May be employed

1. No person under 18 years of age is allowed
to be employed in an undertaking which is
hazardous or deleterious in nature.
2. No Er shall discriminate against any person
with respect to terms and conditions of
employment on account of his age.
A. Children below fifteen (15) years of age
shall not be employed except:
1. When the child works directly under
the sole responsibility of his parents or
legal guardian and where only
members of the family are employed,
subject to the following conditions:
a. Employment does not endanger
the child’s safety, health and
morals;
in any non-hazardous work.
C. Above 18 – No prohibition.
Employment Conditions
Such conditions must be strictly followed:
1. The total number of hours worked shall be
in accordance with Sec. 15 of DO No. 65-04;
2. The employment does not endanger the
child’s life, safety, health and morals, nor
impair the child’s normal development;
Normal Development of the child refers
to physical, emotional, mental, and spiritual
growth of a child within a safe and
nurturing environment where he/she is
given adequate nourishment, care and
protection and the opportunity to perform

101
 Labor Standards – Special Group of Employees

tasks appropriate at each stage of water and all kinds of errands after school
development. hours. She gives him rice and Php 30.00
before the boy goes home at 7 every night.
3. The child is provided with at least the The school principal learned about it and
mandatory elementary or secondary charged her with violating the law which
education; and prohibits the employment of children below
4. The Er secures a work permit for the child. 15 years of age. In her defense, the teacher
(Secs. 8 to 12, Ibid.) stated that the work performed by her pupil
is not hazardous, and she invoked the
NOTE: A working child permit is required if a exception provided in the Department Order
child below 15 years of age: of DOLE for the engagement of persons in
domestic and household service. Is her
1. Will be engaged in public entertainment or defense tenable? (2004 BAR)
information regardless of his/her role in a
project. This includes projects which are A: NO. Under Art. 137 of the LC on “minimum
non-profit, advocacy materials or political employable age,” no child below 15 years of age
advertisements; or shall be employed except when he works
2. Is a foreign national and will be engaged in directly under the sole responsibility of his
public entertainment in the PH; parents or guardian, the provisions of the
3. Will be engaged as regular extra or as part alleged department order of DOLE to the
of a crowd and is included in the script or contrary notwithstanding. A mere department
storyboard; order cannot prevail over the express
4. Has been selected for a project after prohibitory provisions of the LC.
undergoing auditions, workshops or VTR
screenings; or Regulation of Working Hours of a Child
5. Has been selected as semi-finalist in a
singing, dance or talent contest for a It includes:
television show. 1. All time during which a child is required
to be at a prescribed workplace; and
A working child permit is NOT required if a 2. All time during which a child is suffered or
child below 15 years of age: permitted to work.

1. Is a spot extra or is cast outright on the day Rest periods of short duration during working
of filming or taping of a project; hours shall be counted as hours worked. (Sec. 3,
2. Will join auditions or VTR screenings; Chapter 1, Ibid.)
3. Is part of the audience of a live television
show unless the child’s participation is Time NOT
Age
expected; Hours of Work allowed to
Bracket
4. Is picked or chosen as contestant from the work
audience of a live television show; Not more than
5. Is a contestant for a television show but has 20 hours per
not yet been selected as a semi-finalist; week
6. Is a recipient of gift-giving activities in (20hrs/week}
television; Between 8pm
7. Is a participant in school-related Below 15 Provided, the and 6am of the
performance; work shall not following day
8. Is a participant in sports activities, be more than 4
trainings or workshops; or hours at any
9. Will be featured in a documentary material. given day
(DOLE Circular No. 2-18) [4hrs/day]
Not be more
Q: A spinster schoolteacher took pity on one
than 8 hours a
of her pupils, a robust and precocious 12- 15 years Between 10pm
day [8hrs/day]
year-old boy whose poor family could barely of age and 6am of the
afford the cost of his schooling. She lives but following day
In no case
alone at her house near the school after her below 18 (Sec. 15, Chapter
beyond 40
housemaid left. In the afternoon, she lets the years 5, Ibid.)
hours a week
boy do various chores as cleaning, fetching
[40hrs/week]

UNIVERSITY OF SANTO TOMAS 102

2021 GOLDEN NOTES
 Labor Law and Social Legislation
Ownership, Usage and Administration of the
Working Child’s Income
The wages, salaries, earnings and other income
of the working child shall belong to him/her in
ownership and shall be set aside primarily for
his/her support, education or skills acquisition
and secondarily to the collective needs of the
family: Provided, That not more than 20% of the
child's income may be used for the collective
needs of the family. (Sec. 12-B, RA 7610)
Trust Fund to Preserve Part of the Working
Child’s Income
The parent or legal guardian of a working child
below 18 years of age shall set up a trust fund
for at least 30% of the earnings of the child
whose wages and salaries from work and other
income amount to at least P200,000.00 annually,
for which he/she shall render a semi-annual
accounting of the fund to the DOLE. The child
shall have full control over the trust fund upon
reaching the age of majority. (Sec. 12-C, RA 7610)
Duty of The Er Before Engaging A Minor Into
Employment
The Er shall first secure a work permit from the
DOLE which shall ensure observance of the
requirements. (RA 7160, Sec. 12)
Issuance Of Work Certificates/ Permits To
Children At Least 15 But Below 18 Years Of
Age - NOT REQUIRED
The issuance of a DOLE Certificate to youth aged
15 to below 18 years of age is not required by
law. No Er shall deny opportunity to any such
youth applying for employment merely on the
basis of lack of work permit or certificate of
eligibility for employment. Any young person
aged 15 to below 18 years of age may present
copy of this DOLE advisory to any Er, job
provider, government authority, or his/her
representative when seeking employment or
anytime during employment. (DOLE Department
Advisory No. 01-08)
Non-Hazardous Work
It is any work or activity in which the Ee is not
exposed to any risk which constitutes an
imminent danger to his safety and health.
Hazardous Workplaces
103
1. Nature of work exposes the workers to
dangerous environmental elements,
contaminants or work conditions;
2. Workers are engaged in construction work,
logging, firefighting, mining, quarrying,
blasting, stevedoring, dock work, deep-sea
fishing, and mechanized farming;
3. Workers are engaged in the manufacture or
handling of explosives and other
pyrotechnic products;
4. Workers use or are exposed to heavy or
power-driven tools.
Q: You were asked by a paint manufacturing
company regarding the possible employment
as a mixer of a person aged 17, who shall be
directly under the care of the section
supervisor. What advice would you give?
Explain briefly. (2002 BAR)
A: The paint manufacturing company cannot
hire a person who is aged 17. Art. 137(c) of the
LC provides that a person below 18 years of age
shall not be allowed to work in an undertaking
which is hazardous or deleterious in nature as
determined by the SLE. Paint manufacturing has
been classified by the SLE as a hazardous work.
Prohibitions on The Employment of Children
In Certain Advertisements
Employment of child models in all commercial
advertisements promoting the following shall be
prohibited:
1. Alcoholic beverage
2. Intoxicating drinks
3. Tobacco and its by products
4. Gambling
5. Violence (Sec. 14, Art. VIII, RA 7610)
6. Pornography
Q: Iya, 15 years old, signed up to model a
clothing brand. She worked from 9am to 4
pm on weekdays and 1pm to 6pm on
Saturdays for two (2) weeks. She was issued
a child working permit under RA 9231.
Which of the following statements is the most
accurate? (2012 BAR)
a) Working permit for Iya’s employment
is not required because the job is not
hazardous;
b) Her work period exceeds the required
working hours for children aged 15
years old;
 Labor Standards – Special Group of Employees
c) To require a 15-year-old to work
without obtaining the requisites
working permit is a form of child labor;
d) Iya, who was engaged in a work that is
not child labor, is a working child.
A: d). Iya, who was engaged in a work that is not
child labor, is a working child. (Sec. 12-A)
Q: Determine whether the following minors
should be prohibited from being hired and
from performing their respective duties
indicated hereunder: (2006 BAR)
a. A 17-year-old boy working as miner at
the Walwadi Mining Corporation.
A: YES. He should be prohibited from being
hired and from performing the duties of a miner
because such constitutes hazardous work under
D.O. No. 04 Series of 1999. Art. 137(c) of LC
expressly prohibits the employment of persons
below 18 years of age in an undertaking which is
hazardous or deleterious in nature as
determined by the SOLE.
b. An 11-year-old boy who is an
accomplished singer and performer in
different parts of the country.
A: NO. He should not be prohibited from being
hired and from performing as a singer. Under
Art. VIII Sec. 12(2) of RA 7619 as amended by
RA 7658, this constitutes an exception to the
general prohibition against the employment of
children below 15 years of age, provided that the
following requirements are strictly complied
with:
1. The Er shall ensure the protection, health
safety and morals of the child;
2. The Er shall institute measures to prevent
the child’s exploitation or discrimination
taking into account the system and level of
remuneration, and the duration and
arrangement of working time; and
3. The Er shall formulate and implement,
subject to the approval and supervision of
competent authorities, a continuing
program for training and skill acquisition
of the child. Moreover, the child must be
directly under the sole responsibility of
his parents or guardian and his
employment should not in any way
interfere with his schooling.
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
c. A 15-year-old girl working as a library
assistant in a girls' high school.
A: NO. She should not be prohibited from
working as a library assistant because the
prohibition in the LC against employment of
persons below 18 years of age merely pertains
to employment in an undertaking which is
hazardous or deleterious in nature as identified
in the guidelines issued by the SLE. Working as a
library assistant is not one of undertakings
identified to be hazardous under D.O. No 04
Series of 1999.
d. A 16-year-old girl working as model
promoting alcoholic beverages.
A: YES. She should be prohibited from working
as a model promoting alcoholic beverages. RA
7610 categorically prohibits the employment of
child models in all commercials or
advertisements promoting alcoholic beverages
and intoxicating drinks, among other things.
e. A 17-year-old boy working as a dealer
in a casino. (2006 BAR)
A: YES. He should be prohibited from working
as a dealer in casino, because Art. 137(c) of the
LC prohibits the employment of persons below
18 years of age in an undertaking which is
hazardous or deleterious in nature identified in
the guidelines issued by the SLE. Working as a
dealer in a casino is classified as hazardous
under D.O. No. 04 Series of 1999 as it exposes
children to physical, psychological or sexual
abuses.
ACT AGAINST CHILD LABOR (R.A. No. 9231)
and CHILD ABUSE LAW (R.A. No. 7610)
Child Labor
Any work or economic activity performed by a
child that subjects him or her to any form of
exploitation or is harmful to his or her health
and safety or physical, mental or psychosocial
development.
Working Child
Any child engaged as follows:
1. When the child is below 18 years of age in a
work or economic activity that is not child
labor; or
2. When the child is below 15 years of age:
104
 Labor Law and Social Legislation

a. In work where he/she is directly 2. Parents or guardians;

under the responsibility of his/her 3. Ascendants or collateral relatives within
parents or legal guardian and where the 3rd degree of consanguinity;
only members of the child’s family are 4. Officer, social worker or representative of a
employed; or licensed child-caring institution;
b. In public entertainment or 5. Officer or social worker of DSWD;
information 6. Barangay chairman of the place where the
violation occurred, where the child is
Instances When the State Can Intervene in residing or employed; or,
Behalf of the Child 7. At least 3 concerned, responsible citizens
where the violation occurred. (Sec. 8, RA
1. When the parent, guardian, teacher or 9231)
person having care or custody of the child
fails or is unable to protect the child Jurisdiction Over Offenses Punishable Under
against abuse, exploitation and RA 9231
discrimination; or
The Family Courts shall have original
2. When such acts are committed against the jurisdiction over all cases involving offenses
child by the said parent, guardian, teacher punishable under this Act. (Sec. 16-A, RA 9231)
or person having care and custody over
the child. (Sec. 2, Art. I, RA 7610) ANTI- AGE DISCRIMINATION IN
EMPLOYMENT ACT
Worst Forms of Labor R.A. No. 10911

1. All forms of slavery (Anti-Trafficking of DOLE No. 170-17 (IRR)

Persons Act of 2003) or practices similar to
slavery such as sale and trafficking of Prohibition of Discrimination in Employment
children, debt bondage and serfdom and on Account of Age
forced or compulsory labor, including
recruitment of children for use in armed It shall be unlawful for Er to:
conflict;
1. Print or publish in any form of media any
2. The use, procuring, offering of a child for notice of advertisement relating to
prostitution, for the production of employment suggesting references,
pornography or for pornographic limitations, specifications and
performances; discrimination based on age;
2. Require the declaration of age or birth date
3. The use, procuring, offering or exposing of during the application process;
a child for illegal or illicit activities, 3. Decline any employment application
including the production and trafficking of because of the individual’s age;
dangerous drugs and volatile substances 4. Discriminate against an individual in terms
prohibited under existing laws; of compensation, terms and conditions and
privileges of employment on account of the
4. Work which, by its nature or circumstances individual’s age;
in which it is carried out, is hazardous or 5. Deny any Ee’s or worker’s promotion or
likely to be harmful to the health, safety or opportunity for training because of age;
morals of children. (Sec. 12-D, RA 9231) 6. Forcibly lay-off an Ee or worker because of
old age;
5. Employing child models in all commercials 7. Impose early retirement on the basis of the
or advertisements promoting alcoholic Ee’s age.
beverages, intoxicating drinks, tobacco and
its by-products and violence. (Sec. 14, RA XPNs: It is lawful for an Er to set age limitations
7610) in employment if:

Persons Who Can File A Complaint For 1. BFOQ;

Unlawful Acts Committed Against Children 2. The intent is to observe the terms of bona
fide seniority system or retirement plan,
1. Offended party;

105
 Labor Standards – Special Group of Employees

provided that such retirement plan is in
accordance with the LC;
3. The action is duly certified by the
Secretary of DOLE.
Penalty: fine or imprisonment.
allows Kiko to live in her house, provides him
with clean clothes, food, and a daily
allowance of 200 pesos. In exchange, Kiko
does routine housework, consisting of
cleaning the house and doing errands for
Soledad.

BATAS KASAMBAHAY One day, a representative of the DOLE and

R.A. No. 10361 the DSWD came to Soledad's house and
charged her with violating the law that
Persons Covered by RA 10361 Otherwise prohibits work by minors. Soledad objects
Known As “Batas Kasambahay” and offers as a defense that she was not
requiring Kiko to work as the chores were
All kasambahay engaged in domestic work, not hazardous. Further, she did not give him
whether on a live-in or live-out arrangement, chores regularly but only intermittently as
such as, but not limited to, the following: the need may arise. Is Soledad's defense
meritorious? (2015 BAR)
1. General househelp;
2. Nursemaid or Yaya; A: YES, Soledad’s defense is meritorious. Sec. 4
3. Cook; (d) of the Kasambahay Law (RA 10361) provides
4. Gardener; that the term “Domestic Worker” shall not
5. Laundry person; include children who are under foster family
6. Working children or domestic workers 15 arrangement, and are provided access to
years and above but below 18 years of age; education and given an allowance incidental to
or education, i.e., “baon”, transportation, school
7. Any person who regularly performs projects and school activities.
domestic work in one household on an
occupational basis (live-out arrangement). Examples of Persons Performing Work
(Sec. 3(d), RA 10361) Occasionally or Sporadically and Not On an
Occupational Basis
Persons NOT Covered By the Batas
Kasambahay 1. A janitress doing irregular laundry work
for a household during rest day;
1. Service providers; 2. A construction worker doing casual
2. Family drivers; gardening job for a household; or
3. Children under foster family arrangement; 3. A hospital nurse or a student doing baby-
and sitting job.
4. Any other person who performs work
occasionally or sporadically and not on an Employable Age for a Kasambahay
occupational and regular basis.
15 years old and above.
Children under Foster Family Arrangement
NOTE: The employment of children 15 but
Children under foster family arrangement are below 18 years of age may be made under the
those who are living with a family or household following conditions:
of relative/s and are provided access to
education and given an allowance incidental to 1. They shall not be allowed to work for
education, i.e., “baon,” transportation, school more than 8 hours a day, and in no case
projects, and school activities; provided, that the beyond 40 hours a week;
foster family and foster care arrangements are in 2. They shall not be allowed to work
compliance with the procedures and between 10 p.m. to 6 a.m. of the following
requirements as prescribed by RA 10165 or the day;
Foster Care Act of 2012. 3. They shall not be allowed to do hazardous
work; and
Q: Soledad, a widowed schoolteacher, takes 4. They shall not be denied access to
under her wing one of her students, Kiko, 13 education and training.
years old, who was abandoned by his parents
and has to do odd jobs in order to study. She

UNIVERSITY OF SANTO TOMAS 106

2021 GOLDEN NOTES
 Labor Law and Social Legislation
The consent of the parent/guardian of working
children is required in the employment
contract.
Er’s Household
Household refers to the immediate family
members or other occupants of the house who
are directly and regularly provided services by
the kasambahay. (Sec. 4(f), Art. I, RA 10361)
Modes of Hiring a Kasambahay
An Er can hire directly or through private
employment agencies registered with the DOLE
regional offices. (Sec. 1, Rule II, IRR of RA 10361)
The Er, whether the kasambahay is hired directly
or through POEA, shall shoulder the expenses for
hiring. The kasambahay shall not be charged of
any cost of the recruitment, placement, or
finder’s fee. (Sec. 2, Rule II, IRR of RA 10361)
NOTE: The Er shall pay the expenses that are
directly used for the transfer of the kasambahay
from place of origin to the place of work. An Er
can be reimbursed of the deployment expenses
when the kasambahay unreasonably leaves the
Er within 6 months from the time he/she started
work.
If a kasambahay is hired thru a Private
Employment Agency (PEA), the agency is
allowed to collect Service Fee from the Er.
Pre-Employment Requirements
Before entering into an employment contract,
the Er has the option to require the following
from a kasambahay:
1. Medical certificate or health certificate
issued by a local government health officer;
2. Barangay and police clearance;
3. NBI clearance; and
4. Duly authenticated birth certificate or, if
not available, voter’s ID baptismal record,
or passport showing the kasambahay’s age.
(Sec. 4, Rule II, IRR of RA 10361)
NOTE: All expenses made pursuant to the
availment of pre-employment requirements,
should be shouldered by the Er. Requirements
are mandatory when the employment of the
kasambahay is facilitated through a private
employment agency.
It is not a requirement for a kasambahay to be
trained and certified by TESDA prior to
107
employment. However, the kasambahay is
encouraged to undergo competency assessment
and be certified by TESDA. Training is not a
requirement for competency assessment.
Contract between the Er and Kasambahay
Should be Written and Should Contain
Conditions Set by Law
The Er and the kasambahay shall enter into a
written contract of employment in a language or
dialect understood by them.
NOTE: The contract need not be notarized. The
Punong Barangay or his/her designated officer
may attest to the contract and serve as witness
to its execution.
Contents of the Employment Contract
1. Duties and responsibilities of the
kasambahay;
2. Period of employment;
3. Compensation;
4. Authorized deductions;
5. Hours of work and proportionate
additional payment;
6. Rest days and allowable leaves;
7. Board, lodging and medical attention;
8. Agreements on deployment expenses, if
any;
9. Loan agreement;
10. Termination of employment; and
11. Any other lawful condition agreed upon by
both parties. (Sec. 5, Rule II, IRR of RA
10361)
Registration of the Kasambahay
The Er is required to register the kasambahay in
the Registry of Domestic Workers in the
barangay where the Er resides. For this purpose,
the DILG, in coordination with the DOLE, shall
formulate a registration system.
NOTE: The registration of the kasambahay is
free of charge.
Domestic Workers Cannot Acquire Regularity
of Employment under RA 10361
GR: All the indicia of regularity of employment
remain absent in the employment of domestic
helpers. (Chan, Vol. 1, 2017)
XPN: The mere fact that the househelper is
working within the premises of the business of
the Er and in relation to or in connection with
 Labor Standards – Special Group of Employees

the business, as in staff houses for its guest or 3. Board, lodging, and medical attendance;
even for its officers and Ees, warrants the 4. Right to privacy;
conclusion that such househelper is and should 5. Access to outside communication;
be considered as a regular Ee. (Remington 6. Access to education and training;
Industrial Sales Corp. v. Castaneda, G.R. 169295- 7. Right to be provided a copy of the
96, Nov. 20, 2006) employment contract;
8. Right to Certificate of Employment;
NOTE: Such case must be based on its factual 9. Right to form, join, or assist labor
antecedents. organization;
10. Right to terminate employment based on
Q: Linda was employed by Sectarian just cause; and
University (SU) to cook for the members of a 11. Right to exercise religious beliefs and
religious order who teach and live inside the cultural practices. (Sec. 1, Rule IV, IRR of RA
campus. While performing her assigned task, 10361)
Linda accidentally burned herself. Because of
the extent of her injuries, she went on Basic Necessities of a Kasambahay
medical leave. Meanwhile, SU engaged a
replacement cook. Linda filed a complaint for 1. At least 3 adequate meals a day, taking
illegal dismissal, but her Er SU contended into consideration the kasambahay’s
that Linda was not a regular Ee but a religious beliefs and cultural practices;
domestic househelp. Decide. (2014 BAR) 2. Humane sleeping condition; and
3. Appropriate rest and basic medical
A: The Er's argument that Linda was not a assistance. (Sec. 13, Rule IV, IRR of RA
regular Ee has no merit. The definition of 10361)
domestic servant or househelper contemplates
one who is employed in the Er’s home to NOTE: For the Kasambahay under live-out
minister exclusively to the personal comfort arrangement, he/she shall be provided space
and enjoyment of the Er’s family. The Supreme for rest and access to sanitary facility.
Court already held that the mere fact that the
househelper is working in relation to or in Though not part of the “basic necessities”
connection with its business warrants the required to be provided by the Er to the
conclusion that such househelper or domestic kasambahay, shampoo, soap, toothpaste etc.
servant is and should be considered as a regular may be provided gratuitously.
Ee. (Apex Mining Co., Inc. v. NLRC, G.R. No. 94951,
April 22, 1991) Here, Linda was hired not to Monthly Minimum Wage of a Kasambahay
minister to the personal comfort and enjoyment
of her Er's family but to attend to other Ees who
MONTHLY
teach and live inside the campus.
MINIMUM WAGE
OTHER
REGION IN CITIES AND
Mandatory Benefits of a Kasambahay MUN.
1ST CLASS
MUNICIPALITIES
1. Monthly minimum wage;
2. Daily rest period of 8 (total) hours; NCR Php 5,000
3. Weekly rest period of 24 (uninterrupted) CAR Php 4,000 Php 3,000
hours I Php 4,500 Php 3,500
4. 5 days annual service incentive leave with II Php 3,400 Php 3,500
pay;
III Php 4,500 Php 4,500
5. 13th month pay;
6. SSS benefit; IV-A Php 3,500 Php 3,000
7. PhilHealth benefit; and IV-B Php 3,500 Php 3,500
8. Pag-IBIG benefit V Php 3,000 Php 2,500
VI Php 4,000 Php 4,000
Other Rights and Privileges of a VII Php 5,000 Php 4,000
Kasambahay
VIII Php 4,500 Php 4,000
1. Freedom from Er’s interference in wage IX Php 3,500 Php 3,000
disposal; X Php 4,000 Php 3,000
2. Standard of treatment; XI Php 3,000 Php 2,000

UNIVERSITY OF SANTO TOMAS 108

2021 GOLDEN NOTES
 Labor Law and Social Legislation
XII Php 3,500 Php 3,000
[Current Monthly Minimum Wage for Domestic
Workers (Kasambahay) as per National Wages
and Productivity Commission website]
The law provides a mechanism for increasing the
minimum wage of the kasambahay. The Regional
Tripartite Wages and Productivity Boards
(RTWPB) may review, and if proper, determine
sand adjust the minimum wage. (Sec. 24, Ibid)
The RTWPB shall coordinate with TESDA on the
wage review and adjustment based on the
kasambahay’s competency level, in line with the
thrust to professionalize the domestic service
sector.
Payment of Wages
Wages shall be in cash and be paid at least once
a month.
NOTE: The Er shall, at all times, provide the
kasambahay with a copy of the pay slip every
pay day containing the amount paid and all
deductions made, if any. The copies of the pay
slip shall be kept by the Er for a period of 3
years. (Sec. 26, Ibid.)
Payment of wages by means of promissory,
voucher, coupon, token, ticket, chit, or anything
other than the cash wage is prohibited.
Daily Rest Period
The kasambahay is entitled to a total daily rest
period of at least 8 hours.
Prohibition of Work Beyond 16 Hours
The Er cannot require the kasambahay to work
beyond 16 hours at any given workday in
return for an equivalent hourly rate. The eight-
hour rest period must be observed.
NOTE: This provision of special law is
inconsistent with Art. 1695 of the Civil Code
which prohibits more than ten (10) hours of
work of a househelper. Nevertheless, applying
the rules on statutory construction, in case of
conflict between a general law and special law,
the special law prevails.
24 Consecutive Hours of Rest in A Week
Kasambahays are also entitled to at least 24
consecutive hours of rest in a week. The Er and
the kasambahay shall agree in writing on the
109
schedule of the weekly rest day. The Er shall
respect the preferred weekly rest day of the
kasambahay on religious grounds. (Sec. 21 Ibid.)
Q: Can the Er shorten the 24-hour rest day
period of the kasambahay?
A: NO. However, the kasambahay and the Er
may agree to shorten the rest day, provided the
Er pays for the hours worked during the
shortened rest day. (Q&A on Batas Kasambahay,
DOLE)
Five-Day Annual SIL
The kasambahay can avail the five (5)-day
annual SIL after 1 year of service.
NOTE: If the kasambahay fails to avail of any of
his/her annual SIL, it shall be forfeited and
cannot be converted to cash.
Other Agreements that the Er and the
Kasambahay can Enter into Relative to the
Latter’s Weekly Rest Day and SIL
1. Offsetting a day of absence with a particular
rest day;
2. Waiving a particular rest day in return for
an equivalent daily rate of pay;
3. Accumulating rest days not exceeding 5
days;
4. Adding the accumulated rest days
(maximum of 5 days) to the five-day SIL;
and
5. Waiving a particular SIL in return for an
equivalent daily rate of pay.
13th month pay
The kasambahay is entitled to 13th month pay
after 1 month of service.
Computation of the 13thmonth Pay
In computing the 13th month pay, the total basic
wage received in a given calendar year shall be
divided by 12. The amount derived shall be paid
not later than December 24 or upon separation
from employment. (Sec. 8, Rule IV, IRR of 10361)
SSS, PhilHealth, and PAG-IBIG
The kasambahay is covered by SSS, PhilHealth
and Pag-IBIG after 1 month of service.
Q: Supposing that in exchange for non-
membership, the kasambahay agrees with
 Labor Standards – Special Group of Employees
the Er to receive the premiums and
contributions in addition to his/her salary. Is
this allowed?
A: NO. Under the SSS, PhilHealth, and PAG-IBIG
laws, the Er has the obligation to register the
kasambahay and deduct and remit the required
premiums and contributions. The Er shall incur
certain liabilities, including criminal prosecution,
if he fails or refuses to comply with his/her
obligations. (Q&A on Batas Kasambahay, DOLE)
In Case Kasambahay Avails of Certain Loan
Privileges from PAG-IBIG Fund Which
Require the Payment of Additional or
Upgraded Contributions
Said additional or upgraded contributions shall
be shouldered solely by the Kasambahay. (Sec. 9,
Art. IV, IRR of RA 10361)
Er’s Liability in Case the Kasambahay Refuses
to Be a Member of SSS, PhilHealth, and PAG-
IBIG
The Er is still liable under the SSS, PhilHealth,
and PAG-IBIG laws in case the kasambahay
refuses membership with those agencies,
because it is mandatory and non-negotiable.
Person Liable to Pay the SSS premium,
PhilHealth and PAG-IBIG Contributions of the
Kasambahay
GR: The Er shall pay the SSS premium, and
PhilHealth and PAG-IBIG contributions of the
kasambahay
XPN: If the wage of the kasambahay is
P5,000.00 or more, the kasambahay will pay
his/her share in the premiums/contributions.
Provisions Protecting Ers of a Kasambahay
1. Prohibition against privileged information;
2. Er may require certain pre-employment
documents prior to engagement;
3. Ers are assured of quality services through
DOLE-TESDA training, assessment, and
certification of kasambahay;
4. Forfeiture of 15-day unpaid salary should
the kasambahay leave the residence of the
Er without any justifiable reason; and
5. Right to terminate the employment on
justifiable grounds.
Grounds for Termination of Contract by the
Kasambahay (VIC-VDO)
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
1. Verbal or emotional abuse of the
kasambahay by the Er or any member of
the household;
2. Inhuman treatment including physical
abuse of the kasambahay by the Er or any
member of the household;
3. Commission of a Crime or offense against
the kasambahay by the Er or any member
of the household;
4. Violation by the Er of the terms and
conditions of the employment contract and
other standards set forth under the law;
5. Any Disease prejudicial to the health of the
kasambahay, the Er, or member/s of the
household; and
6. Other causes analogous to the foregoing.
(Sec. 33, RA 10361)
Grounds for Termination of Contract by the
Employer (MGFC-VDO)
1. Misconduct or willful disobedience by the
kasambahay of the lawful order of the Er
in connection with the former’s work;
2. Gross or habitual neglect or inefficiency by
the kasambahay in the performance of
duties;
3. Fraud or willful breach of the trust
reposed by the Er on the kasambahay;
4. Commission of a Crime or offense by the
kasambahay against the person of the Er
or any immediate member of the Er’s
family;
5. Violation by the kasambahay of the terms
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 Er, or member/s of the
household; and
7. Other causes analogous to the foregoing.
(Sec. 34, Ibid.)
NOTE: Neither the domestic worker nor the Er
may terminate the contract before the
expiration of the term except for grounds
provided for in Secs. 33 and 34 of the Batas
Kasambahay.
The domestic worker and the Er may mutually
agree upon written notice to pre-terminate the
contract of employment to end the employment
relationship. (Sec. 32, Ibid.)
Termination of Contract If the Duration of
Service Is Not Determined In the Contract
110
 Labor Law and Social Legislation
The kasambahay or the Er may terminate the
contract anytime if the duration of service is
not determined in the contract. Either the Er or
the kasambahay may give notice to end the
working relationship 5 days before the
intended date of the termination of service.
Effect of Unjust Dismissal by the Er
The kasambahay shall receive the following if
he/she is unjustly dismissed by the Er:
1. Outright payment of earned wage; and
2. Indemnity benefit in the form of wage
equivalent to 15 days work.
Liabilities of a Kasambahay Who Leaves
His/Her Er without Justifiable Reason
1. Forfeiture of wage equivalent to 15 days
work; and
2. Reimbursement of the deployment
expenses, if the employment contract is
terminated within 6 months from
employment.
Q: Can the Er inspect the belongings of the
kasambahay before he/she leaves the
household in case of termination of
employment?
A: NO. The Er cannot inspect the belongings of
the kasambahay. However, the Er and the
kasambahay can agree in their employment
contract that an inspection can be made before
he/she leaves the household. (Q&A on Batas
Kasambahay, DOLE)
Q: If there is non-payment or underpayment
of wage and other labor-related concerns,
where can the kasambahay seek assistance?
A: The kasambahay can go to a Kasambahay
Desk Officer situated in their respective
barangays or the nearest DOLE field /
provincial / regional office. (Q&A on Batas
Kasambahay, DOLE)
Replacement of a Kasambahay from a
Private Employment
The Er can demand from a private employment
agency the replacement of a kasambahay within
1 month from the day the kasambahay reported
for work on the following cases:
1. The kasambahay is found to be suffering
from an incurable or contagious disease,
111
or mental illness as certified by a
competent or government physician;
2. The kasambahay abandons the job without
justifiable cause, voluntarily resigns,
commits theft or any other analogous acts
prejudicial to the Er or his/her family; or
3. The kasambahay is physically or mentally
incapable of discharging the minimum
requirements of the job, as specified in the
employment contract.
Replacement of Kasambahay by PEAs
Within one (1) month from the day the
Kasambahay reported for work, the Er shall be
entitled to a qualified replacement at no
additional cost of any if the ff. grounds
occurred:
a. The Kasambahay is found to be suffering
from an incurable or contagious disease,
or mental illness as certified by a
competent or government physician;
b. The Kasambahay abandons the job
without justifiable cause, voluntarily
resigns, commits theft or any other
analogous acts prejudicial to the Er or
his/her family; or
c. The Kasambahay is physically or mentally
incapable of discharging the minimum
requirements of the job, as specified in the
employment contract.
NOTE: The Er shall be entitled to a refund of
75% of the deployment expenses or fees paid to
the PEA, if the latter failed to provide a qualified
replacement after a lapse of one (1) month from
receipt of the request for replacement.
Responsibilities of the PEA under the Law
1. Ensure that the kasambahay is qualified as
required by the Er;
2. Secure the best terms and conditions of
employment for the kasambahay;
3. Ensure that the employment agreement
between the kasambahay and the Er
stipulates the terms and conditions of
employment and all the benefits in
accordance with the IRR;
4. Provide a pre-employment orientation
briefing to the kasambahay and the Er
about their rights and responsibilities in
accordance with this IRR;
 Labor Standards – Special Group of Employees
5. Ensure that the kasambahay is not
changed or required to pay any
recruitment or placement fees;
6. Keep copies of employment contracts and
agreements pertaining to recruited
kasambahay which shall be made available
during inspections or whenever required
by the DOLE or local government officials;
7. Assist the kasambahay in filing his/her
complaints or grievances against the Ers;
8. Cooperate with government agencies in
rescue operations involving abused or
exploited kasambahay; and
9. Assume joint and solidary liability with
the Er for payment of wages, wage-related
and other benefits, including monthly
contribution for SSS, PhilHealth, and Pag-
IBIG membership.
Unlawful Acts under the Batas Kasambahay
1. Employment of children below 15 years of
age;
2. Withholding of the kasambahay’s wages;
3. Interference in the disposal of the
kasambahay’s wages;
4. Requiring kasambahay to make deposits for
loss or damage;
5. Placing the kasambahay under debt
bondage; and
6. Charging another household for
temporarily performed tasks.
NOTE: Unlawful acts are punishable with an
administrative fine ranging from P10,000 to
P40,000 to be imposed by the DOLE Regional
Offices.
Other Remedies for Unlawful Acts
The aggrieved party may file the appropriate
civil or criminal action before the regular courts.
Remedy for Abused or Exploited Kasambahay
The law mandates the conduct of immediate
rescue of abused or exploited kasambahay by the
municipal or city social welfare officer or a social
welfare officer from DSWD, in coordination with
the concerned barangay officials. (Sec. 1, Rule X,
IRR of RA 10361)
The law sets out that crimes or offenses
committed under the Revised Penal Code and
other criminal laws shall be filed with the
regular courts.
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Q: Albert, a 40-year-old Er, asked his
domestic helper, Inday, to give him a private
massage. When Inday refused, Albert showed
her Art. 141 of the Labor Code, which says
that one of the duties of a domestic helper is
to minister to the Er’s personal comfort and
convenience. Is Inday’s refusal tenable?
(2009 BAR)
A: YES. Inday’s refusal to give her Er a “private
massage” is in accordance with law because the
nature of the work of a domestic worker must be
in connection with household chores. Massaging
is not a domestic work.
Q: NBC has a rest house and recreational
facility in the highlands of Tagaytay City for
the use of its top executives and corporate
clients. The rest house staff includes a
caretaker, two cooks and a laundrywoman.
All of them are reported to the SSS as
domestic or household Ees of the resthouse
and recreational facility and not of NBC. Can
NBC legally consider the caretaker, cooks and
laundrywoman as domestic Ees of the rest
house and not of NBC? (2000 BAR)
A: NO, they are not domestic Ees. They are the
Ees of NBC because the rest house and
recreational facility are business facilities which
are for use of NBC’s top executives and clients.
(Traders Royal Bank v. NLRC, G.R. No. 127864,
Dec. 22, 1999)
NOTE: A househelp, a laundrywoman, a driver,
houseboy or gardener working in staff houses of
a company who attends to the needs of the
company’s guests is not a househelper or
domestic servant. He is an industrial worker
who must be paid the industrial rate.
EMPLOYMENT OF HOMEWORKERS
Homeworkers
They are those who perform in or about his own
home any processing or fabrication of goods or
materials, in whole or in part, which have been
furnished directly or indirectly, by an Er and
sold thereafter to the latter.
NOTE: DO No. 05-92, DOLE (Feb. 4, 1992)
amended Rule XIV of the IRR.
Industrial Homework
It is a system of production under which work
for an Er or contractor is carried out by a
112
 Labor Law and Social Legislation
homeworker at his/her home. Materials may or
may not be furnished by the Er or contractor.
It differs from regular factory production
principally in that, it is a decentralized form of
production where there is ordinarily very little
supervision or regulation of methods of work.
[Sec. 2(a), DO No. 05-92]
Househelpers vs. Homeworkers (2017 BAR)
HOUSEHELPERS HOMEWORKERS
Performs in or about
his own home any
processing or
fabrication of goods
Minister to the
or materials, in whole
personal needs and
or in part, which have
comfort of his Er in
been furnished
the latter’s home
directly or indirectly,
by an Er and sold
thereafter to the
latter.
Er of a Homeworker
Includes any person, natural or artificial who, for
his account or benefit, or on behalf of any person
residing outside the country, directly or
indirectly, or through an Ee, agent contractor,
subcontractor or any other person:
1. Delivers or causes to be delivered, any
goods, articles or materials to be processed
or fabricated in or about a home and
thereafter to be returned or to be disposed
of or distributed in accordance with his
directions;
2. Sells any goods, articles or materials to be
processed or fabricated in or abut a home
and then rebuys them after such
processing or fabrication, either by himself
or through some other person. [Sec. 2(d),
DO No. 05-92]
Duty of the Er in Case He Contracts With
Another in the Performance of His Work
It shall be the duty of the Er to provide in such
contract that the Ees or homeworkers of the
contractor and the latter’s subcontractor shall be
paid in accordance with the LC.
Liability of the Er If the Contractor or
Subcontractor Fails To Pay the Wages or
Earnings of His Ees
113
Er shall be jointly and severally liable with the
contractor or sub-contractor to the workers of
the latter to the extent that such work is
performed under such contract, in the same
manner as if the Ees or homeworkers were
directly engaged by the Er.
Right of Industrial Homeworkers to Form
Labor Organizations
DO No. 5 (Feb. 4, 1992), replacing Rule XIV of the
IRR Book III of the LC, authorizes the formation
and registration of labor organization of
industrial homeworkers. It also makes explicit
the Ers duty to pay and remit SSS, PhilHealth
and ECC premiums. (Sec. 3, DO No. 05-92)
Payment for Homework
Immediately upon receipt of the finished goods
and articles, the Er is required to pay the
homeworker for the work performed less
corresponding homeworkers’ share of SSS,
MEDICARE and ECC premium contributions
which shall be remitted by the
contract/subcontractor or Er to the SSS with the
Ers’ share.
However, where payment is made to a
contractor or subcontractor, the homeworker
shall likewise be paid immediately after the
goods or articles have been collected from the
workers. (Sec. 6, DO No. 05-92)
Conditions for Payment Of Work
The Er may require the homeworker to redo the
work which has been improperly executed
without having to pay the stipulated rate again.
An Er, contractor, or subcontractor need not pay
the homeworker for any work which has been
done on goods and articles which have been
returned for reasons attributable to the fault of
the homeworker. (Sec. 9, D.O. No. 05-92)
Prohibitions for Homework
The following shall be prohibited as homework:
1. Explosives, fireworks and similar articles;
2. Drugs and poisons; and
3. Other articles, the processing of which
requires exposure to toxic substances. (DO
No. 05-92, Sec. 13)
Conditions for Deduction from
Homeworker’s Earnings
 Labor Standards – Special Group of Employees
GR: The Er, contractor or subcontractor shall
not make any deduction from the homeworker’s
earnings for the value of materials which have
been lost, destroyed, soiled or otherwise
damage.
XPN: Unless the following conditions are met:
1. The homeworker is clearly shown to be
responsible for the loss or damage;
2. The Ee is given reasonable opportunity to
show cause why deductions should not be
made;
3. The amount of such deduction is fair and
reasonable and shall not exceed the actual
loss or damages; and
4. The deduction is made at such rate that the
amount deducted does not exceed 20% of
the homeworker’s earnings in a week. (Sec.
8, DO No. 05-92)
Q: Josie is the confidential secretary of the
Chairman of the Board of the bank. She is
presently on maternity leave. In an
arrangement where the Chairman of the
Board can still have access to her services,
the bank allows her to work in her residence
during her leave. For this purpose, the bank
installed a fax machine in her residence, and
gave her a cellphone and a beeper. Is Josie a
homeworker under the law? Explain. (2000
BAR)
A: NO, she is actually an office worker. She is not
an industrial homeworker who accepts work to
be fabricated or processed at home for a
contractor, which work, when finished, will be
returned to or repurchased by said contractor.
(LC, Art. 155)
NIGHT WORK
R.A. No. 10151
NOTE: RA 10151 inserted Chapter V (Art. 154-
161) under Book 3, Title III of the LC.
Night Work
Night work is at least seven (7) consecutive
hours of work between 10:00pm and 6:00am.
(D.O. No. 119-12)
Night Worker
Any employed person whose work covers the
period from ten o’clock in the evening to six
o’clock the following morning, provided that the
worker performs no less than seven (7)
consecutive hours of work. (D.O. No. 119-12)
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Persons Covered By the Provisions on Night
Work
GR: All persons who shall be employed or
permitted or suffered to work at night.
XPN: Those employed in agriculture, stock
raising, fishing, maritime transport and
inland navigation, during a period of not less
than 7 consecutive hours, including the interval
from midnight (12am) to five o’clock in the
morning (5am), to be determined by the SOLE
after consulting the workers’ representatives/
labor organizations and Ers. (Art. 154, LC as
added by RA 10151 approved on June 21, 2011)
Right of the Workers to Health Assessment
At their request, workers shall have the right to
undergo health assessment without charge and
to receive advice on how to reduce or avoid
health problems associated with their work:
1. Before taking up an assignment as a night
worker;
2. At regular intervals during such an
assignment; and
3. If they experience health problems during
such an assignment which are not caused
by factors other than the performance of
night work. (Art. 155 of LC)
NOTE: Findings of such assessments shall not be
transmitted to others without the workers’
consent and shall not be used to their detriment.
XPN: Finding of unfitness for night work (Art.
155 of LC)
Worker Found to be Medically Unfit for Night
Work
Night workers who are certified as unfit for
night work, due to health reasons, shall be
transferred, whenever practicable, to a similar
job for which they are fit to work.
If such transfer to a similar job is not practicable,
or the workers 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 benefits as other workers who
are unable to work, or to secure employment
during such period. (D.O. No. 119-12)
Separation from Employment of a Worker
Found Medically Unfit For Night Work
114
 Labor Law and Social Legislation
Pursuant to the provisions of D.O. No. 119-12, it
allows the application of Art. 298 to a worker
who is found unfit for night work if his transfer
to another (day time) job is not practicable. Art.
298 authorizes the separation of an Ee suffering
from a disease. For an Ee found unfit for night
work, the Er’s ultimate recourse, therefore, may
be employment termination based on an
authorized cause. (Azucena, Vol. 1, 2016, p. 499)
Temporarily Unfit For Night Work
A night worker certified as temporarily unfit for
night work for a period of not 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.
Employability of Women for Night Work
Measures shall be taken to ensure that an
alternative to night work is available to women
workers who would otherwise be called upon to
perform such work:
1. Before and after childbirth, for a period of
at least 16 weeks, which shall be divided
between the time before and after
childbirth;
2. For additional periods, in respect of which
a medical certificate is produced stating
that said additional periods are necessary
for the health of the mother or child:
a. During pregnancy;
b. During a specified time beyond the
period, after childbirth is fixed
pursuant to number 1, the length of
which shall be determined by the
DOLE after consulting the labor
organizations and Ers.
During the periods referred in Art. 158:
1. A woman worker shall not be dismissed or
given notice of dismissal, except for just or
authorized causes provided for in the Code
that are not connected with pregnancy,
childbirth and childcare responsibilities.
2. A woman worker shall not lose the benefits
regarding her status, seniority, and access
to promotion which may attach to her
regular night work position. (Art. 158 of LC)
115
Pregnant Women and Nursing Mothers May
Be Allowed To Work at Night
They are allowed if a competent physician, other
than the company physician, shall certify their
fitness to render night work, and specify, in the
case of pregnant Ees, the period of the
pregnancy that they can safely work. (Art. 158 of
LC)
Protection of Night Workers
The law protects the night workers by requiring:
1. The provision of certain facilities such as
sleeping or lactation quarters and means of
transport;
2. Conduct of medical examination to
determine fitness for night work; and,
3. Observance of legal process to decide
appropriate action where a worker is found
unfit for night work. Such process includes
transfer of worker to day work, if
practicable, and, only as a last recourse
separation from employment.
Mandatory Facilities
1. Suitable first-aid facilities, including
arrangements where such workers, where
necessary, can be taken immediately to a
place for appropriate treatment.
2. Safe and healthful working conditions and
adequate or reasonable facilities, i.e.,
sleeping or resting quarters in the
establishment, and transportation from the
work premises to the nearest point of their
residence subject to exceptions and
guidelines to be provided by the DOLE.
(Art. 156 of LC)
APPRENTICES AND LEARNERS
Apprenticeship
It is practical training on the job supplemented
by related theoretical instruction involving a
contract between an apprentice and an Er on an
approved apprenticeable occupation.
TESDA Implements the Apprenticeship
Program
Sec. 18 of the TESDA Act of 1994, expressly
empowers the TESDA to implement and
administer the apprenticeship program in
 Labor Standards – Special Group of Employees
accordance with existing laws, rules and
regulations.
Requisites for Employment of Apprentices
1. The Er should be engaged in a business that
is considered a highly technical industry;
2. The job which the apprentice will work on
should be an apprenticeable occupation.
NOTE: It is no longer the SOLE, but the TESDA,
who approves apprenticeable occupations.
(Azucena, Vol. 1, 2016, p. 147)
Apprentice
Any worker who is covered by a written
apprenticeship agreement with an individual Er
or any of the entities recognized under the LC.
GR: Apprenticeship programs shall be primarily
voluntary.
XPNs: Compulsory Apprenticeship:
1. National security or economic development
so demand, the President may require
compulsory training in certain trades,
occupations, jobs or employment levels
where shortage of trained manpower is
deemed critical as determined by the SOLE;
2. Services of foreign technicians are utilized
by private companies in apprenticeable
trades. (Art. 70 of LC)
Apprenticeable Occupation
Any trade, form of employment or occupation
which requires more than three (3) months of
practical training with theoretical instruction
officially endorsed by the tripartite body and
approved for apprenticeship by the TESDA.
On the Job Training (OJT)
It is practical work experience through actual
participation in productive activities given to or
acquired by an apprentice. (IRR, Book II, Rule VI,
Sec. 2[h])
Highly Technical Industries
Highly technical industry refers to a trade,
business, enterprise, industry, or other activity
which utilizes the application of advanced
technology. (IRR, Book II, Rule VI, Sec. 2[j])
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
NOTE: Prior approval by TESDA (formerly
DOLE) of the proposed apprenticeship program
is a condition sine qua non. Otherwise, an
apprentice becomes a regular Ee. (Nitto
Enterprises v. NLRC, 248 SCRA 654)
Qualifications of an Apprentice
1. At least 15 years of age
NOTE: Those below 18 years of age may be
eligible for apprenticeship only in non-
hazardous occupations;
2. Physically fit for the occupation;
3. Possess vocational aptitude and capacity;
4. Possess:
a. The ability to comprehend, and
b. Follow oral and written instructions;
5. The company must have an apprenticeship
program duly approved by the SOLE.
NOTE: Trade and industry associations may
recommend to the SLE appropriate educational
requirements for different occupations.
When Occupation Deemed Hazardous
1. Nature of work exposes worker to
dangerous environmental elemental
contaminants or work conditions
2. Workers are engaged in construction work,
logging, firefighting, mining, quarrying,
blasting, stevedoring, deep-sea fishing, and
mechanized farming
3. Workers are engaged in the manufacture or
handling of explosives and other
pyrotechnic products
4. Workers use, or are exposed to heavy or
power-driven machinery or equipment.
Employers of Apprentices
1. Only Ers in highly technical industries; and
2. Only in apprenticeable occupations
approved by SOLE.
Employment Status of Apprentices
They are contractual workers whose length of
service depends on the term provided for in the
apprenticeship agreement. Thus, the Er is not
obliged to employ the apprentice after the
completion of his training.
Conditions for Employment of an Apprentice
116
 Labor Law and Social Legislation
1. Should be an apprenticeable trade as
determined by TESDA;
2. Prior approval by the DOLE of the
proposed apprenticeship program is a
condition sine qua non before an
apprenticeship agreement can be validly
entered into. (Nitto Enterprises v. NLRC, 248
SCRA 654)
NOTE: One of the objectives of Title II (Training
and Employment of Special Workers) of the LC is
to establish apprenticeship standards for the
protection of apprentices. An apprenticeship
program should first be approved by the DOLE
before an apprentice may be hired, otherwise a
person hired will be considered a regular Ee.
(Century Canning Corp. v. CA, G.R. No. 152894,
Aug. 17, 2007)
Period of Apprenticeship
Apprenticeship must not exceed 6 months.
NOTE:
1. 2 months/400 hours: Trades or occupations
which normally require 1 year or more for
proficiency.
2. 1 month/200 hours: Occupations and jobs
which require more than 3 months but less
than 1 year for proficiency. (IRR, Book II,
Rule VI, Sec. 19)
Status of an Apprentice after the Lapse of the
Period of Apprenticeship
He is deemed a regular Ee. He cannot be hired as a
probationary Ee since the apprenticeship is
deemed the probationary period.
Deductibility of Training Costs
An additional deduction from taxable income of
one-half (1/2) of the value of labor training
expenses incurred for developing the productivity
and efficiency of apprentices shall be granted to
the organizers.
Conditions
1. The apprenticeship program is duly
recognized by TESDA;
2. Deduction shall not exceed ten (10%)
percent of direct labor wage; and
3. The person or enterprise who wishes to avail
itself of this incentive should pay his
apprentices the minimum wage.
117
Compensation of an Apprentice
GR: It starts at not less than 75% of the statutory
minimum wage for the 1st 6 months (except OJT);
thereafter, shall be paid in full minimum wage,
including the full COLA. XPN: Art. 72 of the LC
provides that the SLE may authorize the hiring
of apprentices without compensation whose
training on the job is required:
1. By the school or;
2. By a training program curriculum or;
3. As requisite for graduation or
4. As requisite for board examination.
Rules Regarding Apprenticeship Agreements
Apprenticeship agreements, including the wage
rates of apprentices, shall:
1. Conform to the rules issued by SLE.
2. The period of Apprenticeship shall not
exceed 6 months.
3. Apprenticeship agreements providing for
wage rates below the legal minimum wage,
which in no case shall start below 75% of
the applicable minimum wage, may be
entered into only in accordance with
Apprenticeship programs duly approved by
the SLE.
4. The DOLE shall develop standard model
programs of Apprenticeship. (IRR, Book II,
Rule VI, Sec. 18)
Person to Sign the Apprenticeship
Agreement
1. The Er or his agent, or
2. An authorized representative of any of the
recognized organizations, associations or
groups, and
3. The apprentice.
Apprenticeship Agreement with a Minor
An apprenticeship agreement with a minor shall
be signed in his behalf by:
1. His parent or guardian, or if the latter is not
available,
2. An authorized representative of the DOLE.
Rules on Working Scholars
There is no Er-Ee relationship between students
on one hand, and schools, where there is written
agreement between them under which the
former agree to work for the latter in exchange
 Labor Standards – Special Group of Employees
for the privilege to study free of charge provided
the students are given real opportunities, as may
be reasonable and necessary to finish their
chosen courses under such agreement (IRR,
Book III, Rule X, Sec. 14)
NOTE: The student is not considered an EE, for
the purpose of administering and enforcing the
provisions of the Labor Code on conditions of
employment.
The Supreme Court ruled that Rule X is merely a
guide to the enforcement of the substantive law
on labor. Hence, Sec. 14 Rule X, Book III of the
Rules is not the decisive law in a civil suit for
damages instituted by an injured person during
a vehicular accident against a working student of
a school and against the school itself. An
implementing rule on labor cannot be used by an
Er as a shield to avoid liability under the
substantive provisions of the Civil Code. (Filamer
Christian Institute v. IAC, G.R. No. 75112, Aug. 17,
1992)
Q: Padilla entered into a written agreement
with Gomburza College to work for the latter
in exchange for the privilege of studying in
said institution. His work was confined to
keeping clean the lavatory facilities of the
school. One school day, he got into a fist fight
with a classmate, Monteverde, as a result of
which the latter sustained a fractured arm.
Monteverde filed a civil case for damages
against him, impleading Gomburza College
due to the latter's alleged liability as his Er.
Under the circumstances, could Gomburza
College be held liable by Monteverde as
Padilla’s Er? (1997 BAR)
A: NO. Gomburza College is not liable for the acts
of Padilla because there is no Er-Ee relationship
between them. As provided in the IRR of the LC,
"there is no Er-Ee relationship between students
on one hand, and schools, colleges, or
universities on the other, where students work
with the latter in exchange for the privilege to
study free of charge, provided the students are
given real opportunity, including such facilities
as may be reasonable and necessary to finish
their chosen courses under such arrangement."
Procedure for the Termination of
Apprenticeship
The party terminating shall:
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
1. Serve a written notice on the other at least
5 days before actual termination,
2. Stating the reason for such decision; and
3. A copy of said notice shall be furnished to
the Apprenticeship Division concerned.
Party Who Can Terminate an Apprenticeship
Agreement
1. Either party may terminate an agreement
after the apprenticeship period but only for
a valid cause.
2. It may be initiated by either party upon
filing a complaint or upon DOLE’s own
initiative.
Party Which Appeal the Decision of the
Authorized Agency of the DOLE
It may be appealed by any aggrieved person to
the SLE within 5 days from receipt of the
decision.
NOTE: The decision of the SOLE shall be final
and executory.
Principle of Exhaustion of Administrative
Remedies Applied In Case Of Breach of
Apprenticeship Agreement
Exhaustion of Administrative Remedies is a
condition precedent to the institution of an
action for enforcing application of agreement.
Duty of the Plant Apprenticeship Committee
The plant apprenticeship committee shall have
the initial responsibility for settling differences
arising out of Apprenticeship agreement. [IRR,
Book II, Rule VI, Sec. 32(b)]
Learners
1. They are persons hired as trainees in semi-
skilled and other industrial occupations
2. Which are non-apprenticeable and
3. Which may be learned through practical
training on the job in a relatively short
period of time
4. Which shall not exceed 3 months
5. Whether or not such practical training is
supplemented by theoretical instructions.
(IRR, Book II, Rule VII, Sec. 1[a])
Employment of learners
Learners may be employed when:
118
 Labor Law and Social Legislation

1. No experienced worker is available learnership

2. It is necessary to prevent curtailment of
employment opportunities; and
3. Employment does not create unfair Considered a
competition in terms of labor costs or regular Ee if
impair or lower working standards. pre-
In case termination
Worker not
Contents of a Learnership Agreement of pre- occurs after 2
considered as
termination months of
regular Ee.
Any Er desiring to employ learners shall enter of contract training and
into a learnership agreement with them, which the dismissal is
agreement shall include: without fault
of the Learner.
1. The names and addresses of the learners; Highly technical
2. The duration of the learnership period, Semi-skilled/ industries and
which shall not exceed 3 months; Industrial only in
Coverage
3. The wages or salary rates of the learners occupations industrial
which shall begin at not less than 75% of occupation
the applicable minimum wage; and
There is a list
4. A commitment to employ the learners if
of learnable
they so desire, as regular Ees upon No list
List trades by
completion of the learnership.
TESDA
Employment of Minors as Learners Requires Requires
Written
learnership apprenticeship
agreement
A learner must be at least 15 years of age. agreement agreement

NOTE: Those below 18 years of age shall not PERSONS WITH DISABILITY
work in hazardous occupations. R.A. No. 7277 as amended by R.A. No. 9442
Persons Who May Employ Learners
The Magna Carta for Disabled Persons ensures
equal opportunities for disabled persons and
Only Ers in semi-skilled and other industrial
prohibits discrimination against them.
occupations which are non-apprenticeable may
employ learners.
Persons with Disability (PWD)
Pre-Termination of Learnership Contract;
Those whose earning capacity is impaired by:
Regular Employment
1. Physical deficiency
2. Age
If training is terminated by the Er before the end
3. Injury
of the stipulated period through no fault of the
4. Disease
Learners, they are deemed regular Ees. (IRR,
5. Mental deficiency
Book II, Rule VII, Sec. 4) Provided, they have
6. Illness
already been trained for 2 months.
Qualified Disabled Ee
Learnership vs. Apprenticeship (2017 BAR)
It provides for Equal Opportunity for Employment
BASIS Learnership Apprenticeship by stating that no disabled person shall be denied
Duration of Min: 3 months access to opportunities for suitable employment.
Max: 3 months
training Max: 6 months
A qualified disabled Ee shall be subject to the
With
same terms and conditions of employment and
commitment to
the same compensation, privileges, benefits, fringe
employ the
No commitment benefits, incentives or allowances as a qualified
Commitment learner as a
to hire able-bodied person.
to employ regular Ee if he
desires upon
A qualified individual with disability is an
completion of
individual with disability who, with or without

119
 Labor Standards – Special Group of Employees
reasonable accommodation, can perform the
essential functions of the employment position
that such individual holds or desires.
NOTE: Consideration shall be given to the Er’s
judgment as to what functions of job are
essential, and if an Er has prepared a written
description before advertising or interviewing
applicants for the job. (RA 7277, Sec. 4[1])
Employment of PWD
1. When their employment is necessary to
prevent curtailment of employment
opportunities; and
2. When it will not create unfair competition
in labor costs or lower working standards.
(LC, Art. 79)
Employment Period of PWD
There is no minimum or maximum duration. It
depends on the agreement but it is necessary
that there is a specific duration stated.
Persons with Disability Can Be a Regular Ee
Persons with disability can be a regular Ee if
work is usually or necessarily desirable to the
business. (Bernardo v. NLRC, G.R No. 122917, July
12, 1999)
Persons Who May Employ Persons with
Disability
Ers in all industries: Provided, the disability is
not such as to effectively impede the
performance of job operations in the particular
occupation for which they are hired.
Not All Workers with a Disability are
Considered Disabled Workers
The mere fact that a worker has a disability does
not make him a disabled worker because his
disability may not impair his efficiency or the
quality of his work. If despite his disability he can
still efficiently perform his work, he would be
considered a qualified disabled worker entitled to
the same treatment as qualified able-bodied
workers. (Bernardo v. NLRC, G.R. No. 122917, July
12, 1999)
RIGHTS OF PERSONS WITH DISABILITY
Rights and Privileges of PWD
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
1. Equal opportunity for employment - No PWD
shall be denied access to opportunities for
suitable employment. Five percent (5%) of
all casual emergency and contractual
positions in the DSWD, Health, Education
and other government agencies, offices or
corporations engaged in social development
shall be reserved for PWDs (Sec. 5, Chapter 1,
Title II, RA 7277);
XPN: Bona Fide Occupational Qualification
2. Sheltered employment - The Government
shall endeavor to provide them work if
suitable employment for disabled persons
cannot be found through open employment;
3. Apprenticeship - PWD may be hired as
apprentices or learners if their disability is
not such as to effectively impede the
performance of job operations in the
particular occupations for which they are
hired (LC, Art. 81);
4. Vocational rehabilitation - To develop the
skills and potentials of disabled workers and
enable them to compete in the labor market;
5. Vocational guidance and counselling.
Wage Rate (2013 BAR)
GR: Handicapped workers are entitled to not less
than 75% of the applicable adjusted minimum
wage. (Art. 80, LC)
XPN: All qualified handicapped workers shall
receive the full amount of the minimum wage rate
prescribed herein pursuant to RA 7277. (Wage
Order No. NCR-18, Effective October 4, 2013)
NOTE: Generally, if a PWD is hired as an
apprentice or learner, he shall be paid not less
than 75% of the applicable minimum wage.
XPN: If the PWD, however is hired as a learner and
employed in piece or incentive-rate jobs during
the training period, he shall be paid 100% of the
applicable minimum wage. (Chan, Vol. 1, 2017)
PROHIBITIONS ON DISCRIMINATION
AGAINST PERSONS WITH DISABILITY
The following constitutes acts of discrimination:
1. Limiting, segregating, or classifying a job
applicant with disability in such a manner
120
 Labor Law and Social Legislation

that adversely affects his work INCENTIVES FOR ERS

opportunities;
GR: Using qualification standards,
employment tests or other selection
criteria that screen out or tend to screen
out a PWD;
XPN: Such standards, tests or other
selection criteria are shown to be job-
related for the position in question and are
consistent with business necessity
2. Utilizing standards, criteria, or methods of
administration that:
a. Have the effect of discrimination on
the basis of disability; or
b. Perpetuate the discrimination of
others who are subject to common
administrative control
3. Providing less compensation, by reason of
his disability, that the amount to which a
non-disabled person performing the same
work is entitled;
4. Favoring a non-disabled Ee over a qualified
Ee with disability with respect to
promotion, training opportunities, study
and scholarship grants, solely on account of
the latter’s disability;
GR: Dismissing or terminating the services
of an Ee with disability by reason of his
disability
Incentives of Er Who Are Employing Disabled
Workers
1. Entitled to an additional deduction, from
their gross income, equivalent to 25% of
the total amount paid as salaries and wages
to disabled persons
Provided, however, that such entities
present proof as certified by the DOLE that
disabled persons are under their employ
Provided further, that the disabled Ee is
accredited with the DOLE and the
Department of Health as to his disability,
skills and qualifications.
2. Private entities that improve or modify
their physical facilities in order to provide
reasonable accommodation for disabled
persons shall also be entitled to an
additional deduction from their net taxable
income, equivalent to 50% of the direct
costs of the improvements or
modifications. (RA 7277, Sec. 8)
The financial incentive, if any, granted by
law to SPQ Garments whose cutters and
sewers in its garments-for-export
operations are 80% staffed by deaf and
deaf-mute workers is additional deduction
from its gross income equivalent to 25% of
amount paid as salaries to persons with
disability (2013 BAR).

XPN: The Er can prove that he impairs the Basis: Magna Carta for Disabled Persons
satisfactory performance of the work
involved to the prejudice of the business Persons with Disability vs. Differently Abled
entity; provided, however, that the Er first
sought to provide reasonable PERSONS WITH
accommodations for persons with DIFFERENTLY ABLED
DISABILITY
disability;
Covers all activities or
Covers only workers.
endeavors.
5. Failing to select or administer in the most
effective manner employment tests which Refers to all suffering
accurately reflect the skills, aptitude or from restriction of
other factor of the applicant or Ee with different abilities as a
Earning capacity is
disability that such test purports to result of mental, physical,
impaired by age or
measure, rather than the impaired sensory sensory impairment to
physical, mental
manual or speaking skills of such applicant perform an activity in the
deficiency or injury
or Ee, in any; and manner or within range
considered for human
6. Excluding PWD from membership in labor being.
unions or similar organizations. (Sec. 32, Basis: Loss/ Basis: Range of activity
Chapter I, Title III, RA 7277) impairment of earning which is normal for a
capacity. human being.

121
 Labor Standards – Special Group of Employees

Loss due to injury or Restriction due to

physical or mental impairment of mental/
defect or age. physical / sensory defect.

If hired, entitled to
75% of minimum
If qualified, entitled to all
wage.
terms and conditions as
qualified able-bodied
Subject to definite
person.
periods of
employment.
No restrictions on
Employable only
employment.
when necessary to
prevent curtailment of
Must get equal
employment
opportunity and no
opportunity.
unfair competition.

Q: Ana Cruz has a low IQ. She has to be told at

least three times before she understands her
daily work assignment. However, her work
output is at least equal to the output of the
least efficient worker in her work section. Is
Mr. Cruz a handicapped worker? Explain.
(2000 BAR)

A: NO. Low IQ does not make the worker

“handicapped” in the contemplation of law.

UNIVERSITY OF SANTO TOMAS 122

2021 GOLDEN NOTES
 Labor Law and Social Legislation
POST-EMPLOYMENT
EMPLOYER-EMPLOYEE RELATIONSHIP
Employer is any person, natural or juridical,
domestic or foreign, who carries on in the
Philippines any trade, business, industry,
undertaking or activity of any kind and uses the
services of another person who is under his
orders as regards the employment, except the
Government and any of its political subdivisions,
branches or instrumentalities, including
corporations owned or controlled by the
Government.
The employer may be a natural or juridical
person. It may be a single proprietor, a
partnership or a corporation.
Employee is any person who performs services
for an employer in which either or both mental
and physical efforts are used and who receives
compensation for such services, where there is
an employer‐employee relationship. (RA 8282,
Social Security Law)
Only a natural person can qualify as an
employee. Natural persons may include Filipino
citizens and foreigners.
NOTE: A self-employed person shall be both an
employee and employer at the same time.
Existence of an employment relationship
Employment relationship is determined by law
and not by contract. (Insular Life Assurance Co.
Ltd. v. NLRC, G.R. No. 119930, March 12, 1998)
NOTE: Taxi or jeepney drivers under the
“boundary” system are Ees of the taxi or jeepney
owners/operators; also the passenger bus
drivers and conductors. (Jardin v. NLRC and
Goodman Taxi, G.R. No. 119268, Feb. 23, 2000)
Employer-Employee Relation as a Question
of Law (Stipulation that No Er-Ee
Relationship Exists)
It is axiomatic that the existence of an Er-Ee
relationship cannot be negated by expressly
repudiating it in the management contract and
providing therein that the Ee is an independent
contractor when the terms of the agreement
clearly show otherwise. For, the employment
status of a person is defined and prescribed by
123
law and not by what the parties say it should
be. In determining the status of the management
contract, the Four-Fold Test on employment
has to be applied. (Insular Life Assurance Co. Ltd.
v. NLRC, G.R. No. 119930, March 12, 1998)
Employer-Employee Relation as a Question
of Fact
The existence of an employer-employee
relationship depends upon the facts of each case.
(Social Security System v. CA, G.R. No. 100388,
Dec. 14, 2000)
Q: Romel is working as a pianist in the
restaurant of a hotel for almost 7 years.
During his employment, he was given a time
for his performance fixed at 7-10pm for 3-6x
a week, the manager requires him to
conform with the venue’s motif and is
subjected to the rules and regulations of the
employees of the hotel. His salary was given
every night. His services were terminated as
a cost-cutting measure. He filed for illegal
dismissal. As a defense, the hotel
management alleged that there can be no
illegal dismissal as Er-Ee relationship is
absent. Is the defense of the hotel tenable?
A: NO. Romel is an employee of the hotel. The
issue of whether or not an employer-employee
relationship existed between petitioner and
respondent is essentially a question of fact. The
factors that determine the issue include who has
the power to select the employee, who pays the
employee’s wages, who has the power to dismiss
the employee, and who exercises control of the
methods and results by which the work of the
employee is accomplished. (Legend Hotel v.
Realuyo, G.R. No. 153511, July 18, 2012)
Q: ASIA executed a 1-year contract with the
Baron Hotel for the former to provide the
latter with 20 security guards to safeguard
the persons and belongings of hotel guests,
among others. The security guards filled up
Baron application form and submitted the
executed forms directly to the Security
Department of Baron. The pay slips of the
security guards bore Baron's logo and
showed that Baron deducted the amounts for
SSS premiums, medicare contributions and
withholding taxes from the wages of the
secutiry guards. The assignments of security
guards, who should be on duty or on call,
promotions, suspensions, dismissals and
award citations for meritorious services
were all done upon approval by Baron's chief
 Post-Employment

security officer. After the expiration of the our constitutional framework, as a property
contract with ASIA, Baron did not renew the right. When a person has no property, his job
same and instead executed another contract may possibly be his only possession or means of
for security services with another agency. livelihood and those of his dependents. When a
ASIA placed the affected security guards on person loses his job, his dependents suffer as
"floating status" on "no work no pay" basis. well. The worker should, therefore, be protected
and insulated against any arbitrary deprivation
Having been displaced from work, the ASIA of his job. (Philips Semiconductors, Inc. v.
security guards filed a case against Baron for Fadriquela, G.R. No. 141717, April 14, 2004;
illegal dismissal, OT pay, minimum wage Philippine Geothermal, Inc. v. NLRC, 189 SCRA 211
differentials, vacation leave and sick leave [1990])
benefits, and 13th month pay. Baron denied
liability alleging that ASIA is the Er of the TESTS OF EMPLOYMENT RELATIONSHIP
security guards and therefore, their
complaint for illegal dismissal and payment FOUR- FOLD TEST
of money claims should be directed against
ASIA. Nevertheless, Baron filed a Third Party
Factors determining the existence of an
Complaint against ASIA.
employer-employee relationship
Is there an Er-Ee relationship between the
The four–fold test (indicia of determination):
Baron, on one hand, and the ASIA security
1. Selection and engagement of the employee;
guards, on the other hand? Explain briefly.
2. Payment of wages;
(1999 BAR)
3. Power of dismissal; and
4. Power of control. (Azucena, Vol. 1, 2016 p.
A: YES. As a general rule, the security guards of a
189)
private security guard agency are the Ees of the
latter and not of the establishment that has
It is the so-called “control test” that is the most
entered into a contract with the private security
important element.
guard agency for security services. But under the
facts in the question, Baron Hotel appear to have
Absent the power to control the employee with
hired the security guards, paid their wages, have
respect to the means and methods of
the power to promote, suspend or dismiss the
accomplishing his work, there is no employer-
security guards and the power of control over
employee relationship between the parties.
them, in other words, the security guards were
(Continental Marble Corp., et.al v. NLRC, G.R. No.
under orders of Baron Hotel as regard their
43825, May 9, 1988)
employment. Because of the above-mentioned
circumstances, Baron Hotel is the Er of the
Control test
security guards.
The control test assumes primacy in the overall
Q: Assuming that ASIA is the Er, is the act of
consideration. There is an Er-Ee relationship
ASIA in placing the security guards on
when the person for whom the services are
"floating status" lawful? Why?
performed reserves the right to control not only
the end achieved but also the manner and means
A: YES. It is lawful for a private security guard
used to achieve that end. (Television and
agency to place its security guard on a "floating
Production Exponents Inc. v. Servana, 542 SCRA
status" if it has no assignment to give to said
578)
security guards. But if the security guards are
placed on a "floating status" for more than 6
The power of control refers to the existence of
months, the security guards may consider
power and not necessarily to the actual exercise
themselves as having been dismissed.
thereof. It is not essential for the employer to
actually supervise the performance of duties of
Q: What property right is conferred upon an
the employee; it is enough that the employer has
employee once there is an employer-
the right to wield that power. (Republic v.
employee relationship? Discuss briefly.
Asiapro Cooperative, G.R. No. 172,101, Nov. 23,
(2006 BAR)
2007)
A: Once an employer-employee relationship is
Exclusivity of service, control of assignments
established, such employment is treated, under
and removal of agents under private

UNIVERSITY OF SANTO TOMAS 124

2021 GOLDEN NOTES
 Labor Law and Social Legislation
respondents’ unit, collection of premiums,
furnishing of company facilities and materials as
well as capital described as Unit Development
Fund are but hallmarks of the management
system where there can be no escaping the
conclusion that one is an employee of the
insurance company. (Insular Assurance Co., Ltd.,
v. NLRC, G.R. No. 119930, March 12, 1998)
The control test calls merely for the existence of
the right to control the manner of doing the
work, not the actual exercise of the right. (Dy
Keh Beng v. International Labor and Marine
Union of the Philippines, et al., G.R. No. L-32245,
May 25, 1979; Zanotte Shoes v. NLRC, G.R. No.
100665, Feb. 13, 1995)
Kinds of control exercised by an Er
Not every form of control will have the effect of
establishing an employer-employee relationship.
Thus, a line should be drawn between:
a. Rules that merely serve as guidelines,
which aims ONLY to promote the result. In
such case, no employer-employee
relationship exists.
b. Rules that fix the methodology and bind or
restrict the party hired to the use of such
means or methods. These addresses both
the result AND the means employed to
achieve it and hence, employer-employee
relationship exists. (Insular Life Assurance
Co. v. NLRC, G.R. 84484, 179 SCRA 459, Nov.
15, 1989)
The main determinant therefore is whether the
rules set by the employer are meant to control
not just the results but also the means and
methods. (Orozco v. CA, G.R. 155207, Aug. 13,
2008)
NOTE: However, in certain cases the control test
is not sufficient to give a complete picture of the
relationship between the parties, owing to the
complexity of such a relationship where several
positions have been held by the worker. The
better approach is to adopt the two-tiered test.
(Francisco v. NLRC, G.R. No. 170087, Aug. 31,
2006)
Q: Genesis entered into a Career’s Agent
Agreement with EmoLife Insurance
Company, a domestic corporation engaged in
insurance business. In the Agreement, it
provides that the agent is an independent
contractor and nothing therein shall be
125
construed or interpreted as creating an Er-Ee
relationship. It further provides that the
agent must comply with three requirements:
(1) compliance with the regulations and
requirements of the company; (2)
maintenance of a level of knowledge of the
company's products that is satisfactory to the
company; and (3) compliance with a quota of
new businesses. However, EmoLife insurance
company terminated Genesis’ services.
Genesis filed an illegal dismissal complaint
alleging therein that an Er-Ee relationship
exists and that he was illegally dismissed. Is
he an employee of the Insurance Company?
A: NO. Genesis is not an Ee of EmoLife Insurance
Company. Generally, the determinative element
is the control exercised over the one rendering
the service. The concept of “control” in LC has to
be compared and distinguished with “control”
that must necessarily exist in a principal-agent
relationship. The Er controls the Ee both in the
results and in the means and manner of
achieving this result. The principal in an agency
relationship, e.g., insurance agent, on the other
hand, also has the prerogative to exercise
control over the agent in undertaking the
assigned task based on the parameters outlined
in the pertinent laws.
In the present case, the Agreement fully serves
as grant of authority to Genesis as EmoLife’s
insurance agent. This agreement is
supplemented by the company’s agency
practices and usages, duly accepted by the agent
in carrying out the agency. Foremost among
these are the directives that the principal may
impose on the agent to achieve the assigned
tasks, to the extent that they do not involve the
means and manner of undertaking these tasks.
The law likewise obligates the agent to render
an account; in this sense, the principal may
impose on the agent specific instructions on how
an account shall be made, particularly on the
matter of expenses and reimbursements. To
these extents, control can be imposed through
rules and regulations without intruding into the
labor law concept of control for purposes of
employment. (Gregorio Tongko v. ManuLife
Insurance Company, G.R. No. 167622, June 29,
2010)
Q: Ador is a student working on his master's
degree in horticulture. To make ends meet,
he takes on jobs to come up with flower
arrangements for friends. His neighbor, Nico,
is about to get married to Lucia and needs a
 Post-Employment
floral arranger. Ador offers his services and
Nico agrees. They shake hands on it, agreeing
that Nico will pay Ador P20,000.00 for his
services but that Ador will take care of
everything. As Ador sets about to decorate
the venue, Nico changes all of Ador's plans
and ends up designing the arrangements
himself with Ador simply executing Nico's
instructions. Is there an employer-employee
relationship between Nico and Ador? (2015
BAR)
A: YES. With Ador simply executing Nico’s
instruction, Nico, who now has control over
Ador’s work, has become the employer of Ador.
In Royale Homes Marketing Corp. v. Fidel
Alcantara (G.R. No. 195190, July 28, 2014) the
Supreme Court held that control is the most
important determinant of employer-employee
relationship.
ECONOMIC DEPENDENCY
(TWO-TIERED TEST)
This two-tiered test would provide us with a
framework of analysis, which would take into
consideration the totality of circumstances
surrounding the true nature of the relationship
between the parties. This is especially
appropriate in this case where there is no
written agreement or terms of reference to base
the relationship on and due to the complexity of
the relationship based on the various positions
and responsibilities given to the worker over the
period of the latter’s employment. (Francisco v.
NLRC, G.R. No. 170087, Aug. 31, 2006)
Elements
1. The putative Er’s power to control the Ee
with respect to the means and methods by
which the work is to be accomplished
(Four-fold test);
2. The underlying economic realities of the
activity or relationship (economic reality
test).
Proper standard for economic dependence
The proper standard is whether the worker is
dependent on the alleged Er for his continued
employment in that line of business.
The determination of the relationship between
Er and Ee depends upon the circumstances of
the whole economic activity, such as:
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
1. The extent to which the services
performed are an integral part of the Er’s
business;
2. The extent of the worker’s investment in
equipment and facilities;
3. The nature and degree of control
exercised by the Er;
4. The worker’s opportunity for profit and
loss;
5. The amount of initiative, skill, judgment,
or foresight required for the success of the
claimed independent enterprise;
6. The permanency and duration of the
relationship between the worker and Er;
and
7. The degree of dependency of the worker
upon the Er for his continued employment
in that line of business. (Francisco v. NLRC,
G.R. No. 170087, Aug. 31, 2006)
Absence of Name in the Payroll
The Supreme Court held in the case of Opulencia
Ice Plant v. NLRC (G.R. No. 98368, Dec. 15, 1993),
that the absence of the complainant’s name in
the payroll disapproved of his being an
employee is incorrect. Thus, SC stated that “if
only documentary evidence would be required
to show that relationship, no scheming employer
would wish to come out with any trace of
illegality he has authored considering that it
should take much weightier proof to invalidate a
written instrument.” Since the Er-Ee relationship
in this case was sufficiently proven by
testimonial evidence, the absence of time sheet,
time record or payroll become inconsequential.
(Azucena, 2016, p. 196)
Mode of Compensation; Not Determinative Of
Er-Ee Relationship
Piece-rate, boundary, and pakyaw are merely
methods of pay computation and do not prove
whether the payee is an employee or not. (1
Azucena, Vol. 1, 2016, p. 197)
Q: Africa, et al. are engaged as garbage truck
drivers to collect garbage from different
cities and transport the same to the
designated dumping site. They filed separate
cases against Expedition for illegal dismissal
for having been prevented from entering the
premises of Expedition without cause or due
process. They claimed that they were regular
employees; were required to work a
minimum of 12 hours a day, seven days a
week, even on holidays, and were not paid
126
 Labor Law and Social Legislation
the minimum wage, holiday or premium pay,
overtime pay, SIL pay and 13th month pay.
Expedition denied that respondents were its
employees claiming that respondents were
not part of the company’s payroll but were
being paid on a per trip basis. They claimed
that respondents were not under their direct
control and supervision as they worked on
their own. Are the respondents employees of
Expedition?
A: YES. Applying the four-fold test, Africa, et al.
were engaged/hired by Expedition as garbage
truck drivers. It is undeniable that they receive
compensation from Expedition for the services
that they rendered to the latter. The fact that
they were paid on a per trip basis is irrelevant
because this was merely the method of
computing the proper compensation due to
them. Also, Expedition’s power to dismiss was
apparent when work was withheld from
respondent. Finally, Expedition has the power of
control over respondents in the performance of
their work. (Expedition Construction Corp., et. al
v. Africa, G.R. No. 228671, Dec. 14, 2017)
Boundary-Hulog System
Under the boundary-hulog scheme, a dual
juridical relationship was created: that of
employer-employee and vendor-vendee. The
boundary system is a scheme by an
owner/operator engaged in transporting
passengers as a common carrier to primarily
govern the compensation of the driver, that is,
the latter’s daily earnings are remitted to the
owner/operator less the excess of the boundary
which represents the driver’s compensation.
Under this system, the owner/operator
exercises control and supervision over the
driver. (Villamaria v. CA and Bustamante, G.R. No.
165881, April 19, 2006)
The boundary-hulog contract between the
jeepney owner and the jeepney driver does not
negate the employer-employee relationship
between them. (Azucena, 2016, p. 202)
Q: To ensure road safety and address the
risk-taking behavior of bus drivers, the
LTFRB issued Memorandum Circular 2012-
001 requiring all Public Utility Bus (PUB)
operators to secure Labor Standards
Compliance Certificates under pain of
revocation of their existing certificates of
public convenience or denial of an
application for a new certificate. The DOLE
127
likewise issued Department Order (D.O.) No.
118-12 elaborating on the part-fixed-part-
performance-based compensation system
referred to in the said memorandum
circular. Petitioners assail the
constitutionality of the department order
and memorandum circular, arguing that
these issuances violate petitioners' rights to
non-impairment of obligation of contracts,
due process of law, and equal protection of
the laws. Respondents counter that the
department order and memorandum
circular are valid issuances promulgated by
the DOLE and the LTFRB in the exercise of
their quasi-legislative powers. Are the
department order and memorandum
circular constitutional?
A: YES. Department Order No. 118-12 and
Memorandum Circular No. 2012-001 are in the
nature of social legislations to enhance the
economic status of bus drivers and conductors,
and to promote the general welfare of the riding
public. D.O. No. 118-12 was issued to grant bus
drivers and conductors minimum wages and
social welfare benefits. Further, petitioners
repeatedly admitted that in paying their bus
drivers and conductors, they employ the
boundary system or commission basis, payment
schemes which cause drivers to drive recklessly.
Not only does D.O. No. 118-12 aim to uplift the
economic status of bus drivers and conductors;
it also promotes road and traffic safety.
(Provincial Bus Operators Association of the
Philippines v. DOLE and LTFRB, G.R. No. 202275,
July 17, 2018, as penned by J. Leonen)
Labor union and unregistered association as
employer
The mere fact that the respondent is a labor
union does not mean that it cannot be
considered an employer of the persons who
work for it. Much less should it be exempted
from the very labor laws which it espouses as
labor organization. (Bautista v. Inciong, G.R. No.
L-52824, March 16, 1988)
Application of the four-fold test and the two-
tiered test
Present Philippine law recognizes a two-tiered
test. The first tier of the test is the four-fold test.
The second tier is the economics of the
relationship test. But the latter test is used if and
only if there is going to be harshness in the
results because of the strict application of the
 Post-Employment
four-fold test. (Francisco v. NLRC, G.R. No.
170087, Aug. 31, 2006)
Art. 295 Presupposes Employment
Relationship
Art. 295 applies where the existence of
Employer-Employee relationship is not the issue
of the dispute. If the issue is whether or not the
claimant is an employee, the tests of
employment relationship shall be resorted to.
Art. 295 limits itself to differentiating four kinds
of employment arrangement: regular, project,
seasonal, and casual. The article presupposes
that employment relationship exists between
the parties. (Azucena, Vol. 2, 2016, p. 755)
KINDS OF EMPLOYMENT
1. As to tenure
a. Permanent – who is appointed to a job
for an undefined and indefinite period.
– Also called “regular” employee
– One who is doing a job which is
“necessary or desirable” to the
usual business of the employer
– May be terminated only because
of “just” or an “authorized cause”
according to Art. 294
b. Temporary/Probationary – one who
stays on the job for a defined or pre-
agreed period. (Azucena, Vol. I, 2016 p.
210)
2. As to Labor Code Book VI
a. Regular
b. Project
c. Seasonal
d. Casual
e. Probationary
f. Fixed-term
3. On the basis of salary component
a. Monthly-paid – where the salary
covers all the days of the month
including the rest days and holidays
b. Daily-paid – salary only covers the
day or days actually worked
NOTE: Daily-paid or monthly-paid refers to the
inclusiveness of the salary, not the frequency or
intervals of payments.
REGULAR EMPLOYMENT
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Those who are hired for activities which are
necessary or desirable in the usual business of
the employer. (Abad, Jr., 2015, p. 92)
Types of regular employment
1. As to nature of work – An employment
shall be deemed to be regular where the
Ee has been engaged to perform activities
which are usually necessary or desirable
in the usual business or trade of the Er,
the provisions of written agreements to
the contrary notwithstanding and
regardless of the oral agreements of the
parties. (IRR, Book VI, Rule I, Sec. 5 [a])
2. As to length of service – Any Ee who has
rendered at least one (1) year of service,
whether such service is continuous or
broken, shall be considered a regular Ee
with respect to the activity in which he is
employed and his employment shall
continue while such activity exists. (IRR,
Book VI, Rule I, Sec. 5 [b])
NOTE: Regularization is not a management
prerogative; rather, it is the nature of
employment that determines it. It is a mandate
of the law. (PAL v. Pascua, G.R. No. 143258, Aug.
15, 2003)
What determines regularity or casualness is not
the employment contract, written or otherwise,
but the nature of the job. (Policy Instruction No.
2)
The practice of entering into employment
contracts which would prevent the workers
from becoming regular should be struck down as
contrary to public policy and morals. (Universal
Robina Corp. v. Catapang, G.R. No. 164736, Oct.
14, 2005)
Tests to determine regular employment
1. The primary standard of determining
regular employment is the reasonable
connection between the particular activity
performed by the Ee to the usual trade or
business of the Er. The test is whether the
former is usually necessary or desirable in
the usual business or trade of the Er. (De
Leon v. NLRC, G.R. No. 70705, Aug. 21, 1989)
NOTE: The connection can be determined
by considering the nature of the work
performed and its relation to the scheme of
the particular business or trade in its
128
 Labor Law and Social Legislation
entirety. (Highway Copra Traders v. NLRC,
G.R. No. 108889, July 30, 1998)
2. Also, the performance of a job for at least a
year is sufficient evidence of the job’s
necessity if not indispensability to the
business. This is the rule even if its
performance is not continuous and merely
intermittent. The employment is
considered regular, but only with respect
to such activity and while such activity
exists. (Universal Robina Corp. v. Catapang,
G.R. No. 164736, Oct. 14, 2005)
The status of regular employment attaches to
the casual Ee on the day immediately after the
end of his first year of service. The law does not
provide the qualification that the Ee must first
be issued a regular appointment or must first be
formally declared as such before he can acquire
a regular status. (Aurora Land Projects Corp. v.
NLRC, G.R. No. 114733, Jan. 2, 1997)
Repeated rehiring and the continuing need for
the employee’s services are sufficient evidence
of the necessity and indispensability of his
services to the employer’s business or trade.
(Baguio Country Club Corporation v. NLRC, 206
SCRA 643, Sept. 4, 1992)
Seafarers are Not Regular Employees
Seafarers cannot be considered as regular Ees.
The contract which they sign every time they are
hired governs their employment. Their
employment is terminated when the contract
expires. Their employment is fixed for a certain
period of time. (Ravago v. Esso Eastern Maritime
Ltd., G.R. No. 158324, March 15, 2005)
In case of OFWs, Art. 295 of the LC does not
apply.
Q: L. Natividad Poultry Farms is a business
engaged in livestock and poultry production
which employed several workers as livestock
feed mixers or as maintenance personnel.
The workers filed complaints for illegal
dismissal against L. Natividad, asserting that
they are regular employees, having been
continuously employed by L. Natividad for a
period ranging from more than one (1) year
to 17 years. They stress that L. Natividad
provided all the tools, equipment, and
materials they used as maintenance
personnel and then gave them specific tasks
and supervised their work.
129
The Court of Appeals ruled that petitioners
cannot be considered as regular employees
because there was no reasonable connection
between the nature of their carpentry and
masonry work and respondents' usual
business in poultry and livestock production,
sale, and distribution. Are the petitioners
regular employees of L. Natividad?
A: YES. The necessity or desirability of the work
performed by an employee can be inferred from
the length of time that an employee has been
performing this work. If an employee has been
employed for at least one (1) year, he or she is
considered a regular employee by operation of
law. x x x Likewise, if an employee has been on
the job for at least one (1) year, even if the
performance of the job is intermittent, the
repeated and continuous need for the
employee's services is sufficient evidence of the
indispensability of his or her services to the
employer's business.
Thus, even if the Court of Appeals is of the
opinion that carpentry and masonry are not
necessary or desirable to the business of
livestock and poultry production, the nature of
their employment could have been characterized
as being under the second paragraph of Art. 280.
Thus, petitioners' service of more than one (1)
year to respondents has made them regular
employees for so long as the activities they were
required to do subsist. (Mario Abuda, et al. v. L.
Natividad Poultry Farms, G.R. No. 200712, July 4,
2018, as penned by J. Leonen)
Q: Various camera operators were engaged
by and rendered services directly to GMA
Network, Inc. and received compensation for
such. They were subsequently dismissed by
GMA which led them to file a complaint for
“illegal dismissal, non-payment of
salary/wages, and regularization,” claiming
that they were regular employees of GMA
because as camera operators, they
performed functions that were necessary and
desirable to its business as a television and
broadcasting company. They also claimed
that they were illegally dismissed for lack of
just or authorized cause. On the other hand,
GMA argues that they were not their
employees, and that even if they were, they
could not have attained regular status
considering their failure to render “at least
one year of service” as required by law.
 Post-Employment
a. Is there an employer-employee
relationship between the camera
operators and GMA?
Assuming the existence of an employer-
employee relationship, were the camera
operators regular employees of GMA?
A:
a. YES. To determine the existence of an
employer-employee relationship, case law
has consistently applied the four-fold test,
to wit: (a) the selection and engagement of
the employee; (b) the payment of wages;
(c) the power of dismissal; and (d) the
employer’s power to control the employee
on the means and methods by which the
work is accomplished, this being deemed as
the most crucial and determinative
indicator of the presence or absence of an
employer-employee relationship.
In applying the four-fold test in this case,
(a) the camera operators were engaged by
and rendered services directly to GMA; (b)
they received compensation for their
services; (c) they were dismissed by GMA;
and (d) they were subject to GMA’s control
and supervision on the following grounds:
(a) their recordings and shoots were never
left to their own discretion and craft; (b)
they were required to follow the work
schedules which GMA provided to them; (c)
they were not allowed to leave the work
site during tapings, which often lasted for
days; (d) they were also required to follow
company rules like any other employee; (e)
they were provided the equipment they
used during tapings; and (f) they were
assigned supervisors to monitor their
performance and guarantee their
compliance with company protocols and
standards.
b. YES. Under Art. 295 of the Labor Code,
there are two ways to attain regular
employment status: (1) employment shall
be deemed to be regular where the
employee has been engaged to perform
activities which are usually necessary or
desirable in the usual business or trade of
the employer, notwithstanding the
provisions of written agreement and
regardless of the oral agreement of the
parties; and (2) any casual employee who
has rendered at least one year of service,
whether such service is continuous or
broken, shall be considered a regular
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
employee with respect to the activity in
which he is employed and his employment
shall continue while such activity exists.
Only casual employees performing work
that is neither necessary nor desirable to
the usual business and trade of the
employer are required to render at least
one year of service to attain regular status.
Employees who perform functions which
are necessary and desirable to the usual
business and trade of the employer attain
regular status from the time of
engagement. Here, the camera operators
were never casual employees because they
performed functions that were necessary
and desirable to the usual business of GMA;
hence, they did not need to render a year’s
worth of service to be considered
employees. (Henry Paragele, et al. v. GMA
Network, Inc., G.R. No. 235315, July 13, 2020,
as penned by J. Leonen)
Temporary Employee becoming Regular
Employees
An employment may only be said to be
‘temporary’:
1. Where it has been fixed for a specific
undertaking the completion of which has
been determined at the time of the
engagement of the employee; or
2. Where the work or services to be
performed is seasonal in nature and the
employment is for the duration of the
season
Contract of perpetual employment
It deprives management of its prerogative to
decide whom to hire, fire, and promote and
renders inutile the basic precepts of labor
relations.
It is contrary to public policy and good customs,
as it unjustly forbids the employer from
terminating the services of an employee despite
the existence of a just or valid cause.
Since the relation between capital and labor are
not merely contractual, impressed as they are
with so much public interest that the same
should yield to common good. (Philippine
Telegraph and Telephone Co. v. NLRC, G.R. No.
118978, May 23, 1997)
130
 Labor Law and Social Legislation
Mode of compensation is not determinative
of regular employment
While the Ees mode of compensation was on a
“per piece basis” the status and nature of their
employment was that of regular Ees. (Labor
Congress of the Phils v. NLRC, G.R. No. 123938,
May 21, 1998)
Q: Moises was employed by La Tondeña at
the maintenance section of its Engineering
Department paid on a daily basis through
petty cash vouchers. His work consisted
mainly of painting company building and
equipment and other odd jobs relating to
maintenance. After a service of more than 1
year, Moises requested that he be included in
the payroll of regular workers, instead of
being paid through petty cash vouchers.
Instead, La Tondeña dismissed Moises and
claimed that Moises was contracted on a
casual basis specifically to paint certain
company buildings and that its completion
terminated Moises’ employment. Can Moises
be considered as a regular Ee?
A: YES. The law demands that the nature and
entirety of the activities performed by the Ee be
considered. Here, the painting and maintenance
work given to Moises manifests a treatment
consistent with a maintenance man and not just
a painter, for if his job was only to paint a
building there would be no basis for giving him
other work assignments in-between painting
activities. It is not tenable to argue that the
painting and maintenance work of Moises are
not necessary in La Tondeña’s business of
manufacturing liquors; otherwise, there would
be no need for the regular maintenance section
of the company’s engineering department. (De
Leon v. NLRC, G.R. No. 70705, Aug. 21, 1989)
Q: A total of 43 Ees who are deaf-mutes were
hired and re-hired on various periods by Far
East Bank and Trust Co. as money sorters and
counters through a uniformly worded
agreement called “Employment Contract for
Handicapped Workers.” The company
disclaimed that these Ees were regular Ees
and maintained among others that they are a
special class of workers, who were hired
temporarily under a special employment
arrangement which was a result of overtures
made by some civic and political
personalities to the Bank. Should the deaf-
mute Ees be considered as regular Ees?
131
A: YES. The renewal of the contracts of the
handicapped workers and the hiring of others
leads to the conclusion that their tasks were
beneficial and necessary to the bank. It also
shows that they were qualified to perform the
responsibilities of their positions; their disability
did not render them unqualified or unfit for the
tasks assigned to them.
The Magna Carta for Disabled Persons mandates
that a qualified disabled Ee should be given the
same terms and conditions of employment as a
qualified able-bodied person. The fact that the
Ees were qualified disabled persons necessarily
removes the employment contracts from the
ambit of Art. 80. Since the Magna Carta accords
them the rights of qualified able-bodied persons,
hence, they are covered by Art. 295 of the LC.
(Bernardo v. NLRC, G.R. No. 122917, July 12,
1999)
NOTE: The repeated rehiring of workers and the
continuing need for their services clearly attest
to the necessity or desirability of their services
in the regular conduct of the business or trade of
the company. (Magsalin & Coca-Cola v. N.O.W.M.,
G.R. No. 148492, May 9, 2003)
Q: Metromedia Times Corp. entered, for the
fifth time, into an agreement with Efren
Paguio, appointing him to be an account
executive of the firm. He was to solicit
advertisements for “The Manila Times.” The
written contract between the parties
provided that, “You are not an employee of
the Metromedia Times Corp. nor does the
company have neither any obligations
towards anyone you may employ, nor any
responsibility for your operating expenses or
for any liability you may incur. The only
rights and obligations between us are those
set forth in this agreement. This agreement
cannot be amended or modified in any way
except with the duly authorized consent in
writing of both parties.” Is Efren Paguio a
regular Ee of Metromedia Times
Corporation?
A: YES. He performed activities which were
necessary and desirable to the business of the
Er, and that the same went on for more than a
year. He was an account executive in soliciting
advertisements, clearly necessary and desirable,
for the survival and continued operation of the
business of the corp.
The law, in defining their contractual
relationship, does so, not necessarily or
 Post-Employment
exclusively upon the terms of their written or
oral contract, but also based on the nature of the
work of Efren has been called upon to perform.
A stipulation in an agreement can be ignored as
and when it is utilized to deprive the Ee of his
security of tenure. (Paguio v. NLRC, G.R. No.
147816, May 9, 2003)
Q: Super Comfort Hotel employed a regular
pool of “extra waiters” who are asked to
report for duty when the Hotel’s volume of
business is beyond the capacity of the
regularly employed waiters to undertake.
Pedro has been an “extra waiter” for more
than 10 years. He is also called upon to work
on weekends, on holidays and when there
are big affairs at the hotel. What is Pedro’s
status as an Ee under the LC? (2008 BAR)
A: Pedro has acquired the status of a regular Ee.
Pedro was engaged to perform activities which
are necessary or desirable in the usual business
or trade of the Er. Moreover, Pedro has been
“extra waiter” for more than 10 years. Under the
law, any Ee who has rendered service for at least
one year, whether such service is continuous or
broken, shall be considered a regular Ee with
respect to the activity in which he is employed
and his employment shall continue while such
activity exists. (LC, Art. 295)
PROJECT EMPLOYMENT
Project
A "project" has reference to a particular job or
undertaking that may or may not be within the
regular or usual business of the Er. In either
case, the project must be distinct, separate and
identifiable from the main business of the Er,
and its duration must be determined or
determinable. (PAL v. NLRC, G.R. No. 125792, Nov.
9, 1998)
Project employment
Project employment is employment that has
been fixed for:
1. Specific undertaking – a specific project
or undertaking the completion; or
2. Time-bound – termination of which has
been determined at the time of
engagement of the Ee. (IRR, Book VI, Rule I,
Sec. 5[a])
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
The period is not the determining factor, so that
even if the period is more than 1 year, the Ee
does not necessarily become regular.
NOTE: Where the employment of a project Ee is
extended long after the supposed project has
been finished, the Ees are removed from the
scope of project Ees and considered as regular
Ees.
Repeated hiring on a project-to-project basis is
considered necessary and desirable to the
business of the Er. The Ee is deemed regular.
(Maraguinot v. NLRC, G.R. No. 120969, July 22,
1998)
Q: Herma Shipyard, Inc., (HERMA) is engaged
in the business of shipbuilding and repair.
Several of its employees occupy various
positions. In support of their employment is
a contract of employment denominated as
Kasunduang Paglilingkod, which classifies
them as a project-based employee only, the
employees were informed at the time of their
engagement that their status is only a project
employee and their duration of specific
project or undertaking.
However, under Paragraph 10 of their
employment contract, it allows the extension
of the employees’ employment until the
completion of the specific work. Is the
extension agreement under the employment
contract violation of the second requisite of
project employment that the completion or
termination of such project or undertaking
be determined at the time of engagement?
A: NO. It is enough that Herma Shipyard gave
the approximate or target completion date in the
project employment contract. Given the nature
of its business and the scope of its projects
which take months or even years to finish,
Herma Shipyard cannot be expected to give a
definite and exact completion date. It can only
approximate or estimate the completion date.
What is important is that the employees were
apprised at the time of their engagement that
their employment is coterminous with the
specific project and the purpose of the extension
is only to complete the same specific project, and
not to keep them employed even after the
completion thereof. (Herma Shipyard Inc. v.
Oliveros et al., G.R. No. 208936, April 17, 2017)
Indicators of project employment in
construction industry (D.O. No. 19, Series of
1993)
132
 Labor Law and Social Legislation
Either one or more of the following
circumstances, among others, may be
considered as indicators that an Ee is a project
Ee. (Hanjin Heavy Industries v. Ibañez, G.R. No.
170181, June 26, 2008)
1. The duration of the specific/identified
undertaking for which the worker is
engaged is reasonably determinable;
2. Such duration, as well as the specific
work/service to be performed, is defined in
an employment agreement, and is made
clear to the Ee at the time of hiring;
NOTE: Absent any other proof that the
project Ees were informed of their status as
such, it will be presumed that they are
regular Ees.
3. The work/service performed by the Ee is in
connection with the particular project/
undertaking for which he is engaged;
4. The Ee, while not employed and awaiting
engagement, is free to offer his services to
any other Er;
5. The termination of his employment in the
particular project/undertaking is reported
to the DOLE Regional Office having
jurisdiction over the workplace within 30
days following the date of his separation
from work, using the prescribed form on
Ee’s terminations, dismissals or
suspensions;
6. An undertaking in the employment
contract by the Er to pay completion bonus
to the project Ee as practiced by most
construction companies.
Requisites in determining whether an Ee is a
project Ee
1. Designation of named Ees as “Project Ees”;
2. The project Ee was assigned to carry out a
specific project or undertaking;
3. The duration and scope of which were
specified at the time the Ee was engaged
for that project (Imbuido v. NLRC, G.R. No.
114734, May 31, 2000);
4. The Ee must have been dismissed every
after completion of his project or phase;
5. Report to the DOLE of Ee’s dismissal on
account of completion of contract. (Policy
Inst. No. 20; D.O. 19 [1997])
133
Employees in the construction industry
Two types of employees in the construction
industry:
Project Employees - those employed in
connection with a particular construction
project or phase;
Non-project Employees - those employed by a
construction company without reference to a
particular project.
NOTE: In the case of Exodus International
Construction Corporation v. Guillermo Biscocho,
et al., (G.R. No. 166109, 23 Feb. 2011), when one
project is completed, employees were
automatically transferred to the next project.
There was no employment agreement given to
the employees which clearly spelled out the
duration of their employment, the specific work
to be performed and that such is made clear to
them at the time of hiring. As such, they are
regular employees falling under the
classification of non-project employees.
Work Pool
Members of a work pool from which a
construction company draws its project
employees, if considered employee of the
construction company while in the work pool,
are non-project employees or employees for an
indefinite period.
If they are employed in a particular project, the
completion of the project or any phase thereof
will not mean severance of employer-employee
relationship.
Requisites to acquire regular Ee status of
project Ee or a member of work pool
The following must concur to acquire regular Ee
status:
1. There is a continuous rehiring of project
Ee’s even after cessation of a project; and
2. The tasks performed by the alleged
“project Ee” are vital, necessary and
indispensable to the usual business or
trade of the Er. (D.M. Consunji, Inc. v.
JAMIN, G.R. No. 192514, April 18, 2012)
The length of time during which the Ee was
continuously re-hired is not controlling, but
merely serves as a badge of regular employment.
 Post-Employment
“Day certain” rule
It states that a project employment that ends on
a certain date does not end on an exact date but
upon the completion of the project.
Q: Diosdado, a carpenter, was hired by
Building Industries Corporation (BIC), and
assigned to build a small house in Alabang.
His contract of employment specifically
referred to him as a "project employee,"
although it did not provide any particular
date of completion of the project. Is the
completion of the house a valid cause for the
termination of Diosdado’s employment?
(2009 BAR)
A: YES. The completion of the house should be a
valid cause for termination of Diosdado’s
employment, although the employment contract
may not state a particular date.
However, if it did not specify that the
termination of the parties’ employment
relationship was to be on a “day certain” – the
day when the phase of work would be completed
– the Ee can be considered to have been a
regular Ee. (Filipinas Pre-Fabricated Building
Systems, v. Puente, G.R. No. 153832, March 18,
2005)
NOTE: To satisfy due process requirements,
under DOLE D.O. No. 19, Series of 1993, the
employer is required to report to the relevant
DOLE Regional Office the fact of termination of
project Ees as a result of the completion of the
project or any phase thereof in which one is
employed.
Entitlement to separation pay
GR: Project Ees are not entitled to separation
pay if their services are terminated as a result of
the completion of project.
XPN: If the projects they are working on have
not yet been completed when their services are
terminated; project Ees also enjoy security of
tenure during the limited time of their
employment. (De Ocampo v. NLRC, G.R. No.
81077, June 6, 1990)
Q: Roger Puente was hired by Filsystems,
Inc., initially as an installer and eventually
promoted to mobile crane operator, and was
stationed at the company’s premises. Puente
claimed in his complaint for illegal dismissal,
that his work was continuous and without
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
interruption for 10 years, and that he was
dismissed from his employment without any
cause.
Filsystems on its part averred that Puente
was a project Ee in the company’s various
projects, and that after the completion of
each project, his employment was
terminated, and such was reported to the
DOLE. Is Roger Puente a regular Ee?
A: NO. Puente is a project Ee. The contracts of
employment of Puente attest to the fact that he
was hired for specific projects. His employment
was coterminous with the completion of the
projects for which he had been hired. Those
contracts expressly provided that his tenure of
employment depended on the duration of any
phase of the project or on the completion of the
construction projects. Furthermore, the
company regularly submitted to the labor
department reports of the termination of
services of project workers. Such compliance
with the reportorial requirement confirms that
Puente was a project Ee.
The mere rehiring of Puente on a project-to-
project basis did not confer upon him regular
employment status. (Filipinas Pre-Fabricated
Building Systems, Inc. v. Puente, G.R. No. 153832,
March 18, 2005)
In the case of Alcatel v. Relos, while the
employee performed tasks that were clearly
vital, necessary and indispensable to the usual
business or trade of the company, he was not
continuously rehired after the cessation of every
project. The company rehired the employee after
a lapse of 33 months such rehiring in various
capacities was done entirely within the
framework of one and the same project. (Alcatel
v. Relos, G.R. No. 164315, July 3, 2009)
SEASONAL EMPLOYMENT
Seasonal employment
Employment where the job, work or service to
be performed is seasonal in nature and the
employment is for the duration of the season.
[IRR, Book VI, Rule I, Sec. 5 (a)]
An employment arrangement where an Ee is
engaged to work during a particular season on
an activity that is usually necessary or desirable
in the usual business or trade of the Er.
134
 Labor Law and Social Legislation
NOTE: For Seasonal Ees, their employment
legally ends upon completion of the project or
the season. The termination of their employment
cannot and should not constitute an illegal
dismissal. (Mercado v. NLRC, G.R. No. 79869, Sept.
5, 1991)
One year duration on the job is pertinent in
deciding whether a casual Ee has become
regular or not, but it is not pertinent to a
Seasonal or Project Ee. Passage of time does
not make a seasonal worker regular or
permanent. (Mercado v. NLRC, G.R. No. 78969,
Sept. 5, 1991)
During off-season, the relationship of Er-Ee is
not severed; the Seasonal Ee is merely
considered on LOA without pay. Seasonal
workers who are repeatedly engaged from
season to season performing the same tasks are
deemed to have acquired regular employment.
(Hacienda Fatima v. National Federation of
Sugarcane Workers-Food and General Trade, G.R.
No. 149440, Jan. 28, 2003)
Seasonal Ees as regular Ees
Seasonal Ees can be considered regular Ees. The
fact that Seasonal Ees do not work continuously
for one whole year but only for the duration of
the season does not detract from considering
them in regular employment. Seasonal workers
who are called to work from time to time and
are temporarily laid off during off-season are not
separated from service in that period, but
merely considered on leave until re-employed.
If the Ee has been performing the job for at least
a year, even if the performance is not continuous
and merely intermittent, the law deems
repeated and continuing need for its
performance as sufficient evidence of the
necessity if not indispensability of that activity
to the business. Hence, the employment is
considered regular, but only with respect to such
activity and while such activity exists. (Benares v.
Pancho, G.R. No. 151827, April 29, 2005)
It is not enough that they perform work or
services that are seasonal in nature. They must
have also been employed only for the duration of
one season.
Q: Carlito Codilan and Maximo Docena had
been working for the rice mill for 25 years,
while Eugenio Go, Teofilo Trangria and
Reynaldo Tulin have been working for 22, 15,
and 6 years respectively.
135
The operations of the rice mill continue to
operate and do business throughout the year
even if there are only two or three harvest
seasons within the year. This seasonal
harvesting is the reason why the company
considers the workers as seasonal
employees. Is the company correct in
considering the Ees as seasonal Ees?
A: NO. The fact is that big rice mills such as the
one owned by the company continue to operate
and do business throughout the year even if
there are only two or three harvest seasons
within the year. It is a common practice among
farmers and rice dealers to store their palay and
to have the same milled as the need arises. Thus,
the milling operations are not seasonal.
Finally, considering the number of years that
they have worked, the lowest being 6 years, the
workers have long attained the status of regular
Ees as defined under Art. 295. (Tacloban
Sagkahan Rice Mill v. NLRC, G.R. No. 73806,
March 21, 1990)
Entitlement to separation pay
When the business establishment is sold which
effectively terminates the employment of the
seasonal Ees, the latter would be entitled to
separation pay.
NOTE: “Month pay” shall be understood, in this
regard, average monthly pay during the season
they worked. (Abad, Jr., 2015, p. 135)
CASUAL EMPLOYMENT
Casual employment
It is an employment where the Ee is engaged in
an activity which is not usually necessary or
desirable in the usual business or trade of the Er,
provided: such employment is neither Project
nor Seasonal. (LC, Art. 295) He performs only an
incidental job in relation to the principal activity
of the Er.
NOTE: But despite the distinction between
regular and casual employment, every Ee shall
be entitled to the same rights and privileges, and
shall be subject to the same duties as may be
granted by law to regular Ees during the period
of their actual employment.
An Ee is engaged to perform a job, work or
service which is merely incidental to the
business of the Er, and such job, work or service
 Post-Employment

is for a definite period made known to the Ee at dismissal was illegal. (Capule, et al. v. NLRC, G.R.
the time of engagement. [IRR, Book Vi, Rule I, Sec. No. 90653, Nov. 12, 1990)
5 (b)]
Project Ee vs. Casual Ee
Employment is casual when it is irregular,
unpredictable, sporadic and brief in nature, PROJECT EE CASUAL EE
and outside the usual business of the
employer. (Caro v. Rilloraza, 102 Phil. 70, Sept. Employed for a Engaged to perform a
specific project or job, work or service
30, 1957)
undertaking where which is incidental to
the completion or the business of the Er
Casual Ee becoming a regular Ee
termination of which and the definite period
If he has rendered at least 1 year of service, is determined at the of his employment is
time of his made known to him at
whether such service is continuous or broken,
engagement. the time of his
he is considered as regular Ee with respect to
the activity in which he is employed and his engagement.
employment shall continue while such activity
exists. His work need not be His continued
incidental to the employment after the
A casual Ee is only casual for 1 year, and it is the business of the Er lapse one year makes
passage of time that gives him a regular status. and his employment him a regular Ee.
(KASAMMA-CCO v. CA, G.R. No. 159828, April 19, may exceed one year
2006) without necessarily
making him a regular
The purpose is to give meaning to the Ee.
constitutional guarantee of security of tenure Job is coterminous No termination report
and right to self-organization. (Mercado v. NLRC, with a specific project required.
G.R. No. 79868, Sept. 5, 1991) or phase thereof. It is
required that a
Q: Yakult Phils. is engaged in the termination report be
manufacture of cultured milk. The workers submitted at the
were hired to cut cogon grass and weeds at nearest employment
the back of the factory building used by office upon
Yakult. They were not required to work on completion of the
fixed schedule and they worked on any day of project or phase.
the week on their own discretion and
convenience. The services of the workers
were terminated by Yakult before the
expiration of the 1-year period. FIXED TERM EMPLOYMENT

May casual or temporary Ees be dismissed by Term employment

the Er before the expiration of the 1-year
period of employment?
A: YES. The usual business or trade of Yakult
Phils. is the manufacture of cultured milk. The
cutting of the cogon grasses in the premises of
its factory is hardly necessary or desirable in the
usual business of the Yakult.
The workers are casual Ees. Nevertheless, they
may be considered regular Ees if they have
rendered services for at least 1 year.
When, as in this case, they were dismissed from
their employment before the expiration of the 1-
year period they cannot lawfully claim that their
A contract of employment for a definite period
terminates by its own terms at the end of such
period. (Brent School v. Zamora, G.R. No. L-48494,
Feb. 5, 1990)
Term employment is not a circumvention of the
law on security of tenure if it follows the
requisites laid down by the Brent ruling.
(Romares v. NLRC, G.R. No. 122327, Aug. 19,
1998)
The defined period must be genuine condition of
the job and not merely to avoid regular status of
the Ee. (Azucena, 2016, Vol. I, p. 211)
Decisive determinant in term employment

UNIVERSITY OF SANTO TOMAS 136

2021 GOLDEN NOTES
 Labor Law and Social Legislation
It is the day certain agreed upon by the parties
for the commencement and the termination of
their employment relation.
Fixed term employment
It is an employment where a fixed period of
employment was agreed upon:
1. Knowingly and voluntarily by the parties;
2. Without any force, duress or improper
pressure being brought to bear upon the Ee
and business of Er. (Philips Semiconductor
v. Fadriquela, G.R. No. 141717, April 14,
2004)
Fixed-term employment vs. Project
Employment
Both employments are time bound or for a
certain period as agreed upon at the time of
engagement, however in project employment,
the employee is tasked to do specific
undertaking, which is not present in fixed-term
employment.
Brent Doctrine
Art. 295 of the Labor Code does not prohibit an
employment contract with a fixed period,
provided it is entered into by the parties without
any force, duress of improper pressure being
brought to bear upon either party, particularly
the employee and absent any other
circumstances vitiating consent. Such
employment for a defined period is allowed even
where the duties of the employee consist of
activities usually necessary or desirable in the
usual business of the employer. There can of
course be no quarrel with the proposition that
where from the circumstances it is apparent that
periods have been imposed to preclude
acquisition of tenurial security by the employee,
they should be struck down or disregarded as
contrary to public policy, morals, etc.
Overseas Seafarers are contractuals
The employment of overseas seafarers is
governed by the POEA Standard Employment
Contract for Filipino Seamen. Their employment
is governed by the contracts they sign every
time they are rehired and their employment is
terminated when the contract expires. It is an
accepted maritime industry practice that
employment of seafarers is for a fixed period
only.
137
Domestic Seafarers are not contractual
Seamen employed in domestic shipping are
entitled to security of tenure, can become
permanent employees and can be terminated
only for just or authorized causes.
Domestic seafarers are covered by the Labor
Code, including its Book VI.
Q: Darrell was hired as an athletic director in
Amorita School for a period of five years. As
such, he oversees the work of coaches and
related staff involved in intercollegiate or
interscholastic athletic programs. However,
he was not rehired upon the expiration of
said period. Darrell questions his
termination alleging that he was a regular Ee
and could not be dismissed without valid
cause.
a. Is he a regular Ee?
b. Will Rene automatically become a
regular Ee if he is rehired by the school
for another definite period of
employment?
A:
a. NO. Darrell was not a regular Ee but an Ee
under a fixed- term contract. While it can
be said that the services he rendered were
usually necessary and desirable to the
business of the school, it cannot also be
denied that his employment was for a
fixed term of five years. The decisive
determinant in fixed-term employment
should not be the activities that the
employee is called upon to perform, but
the day certain agreed upon by the parties
for the commencement and termination of
their employment relation. (Brent School
Inc. v. Zamora, G.R. No. 48494, Feb. 5, 1990)
b. NO. The decisive determinant in term
employment is the day certain agreed
upon by the parties for the
commencement and termination of their
employment relationship, a day certain
being understood to be that which must
necessarily come, although it may not be
known when and not whether the work is
usually necessary and desirable to the
business of the Er.
Q: Does the “Reasonable Connection Rule”
apply in fixed term employment for a fixed-
term Ee to be eventually classified as a
regular Ee?
 Post-Employment

A: NO. It should be apparent that this settled and PROBATIONARY EMPLOYMENT

familiar notion of a period, in the context of a
contract of employment, takes no account at all
of the nature of the duties of the Ee; it has
absolutely no relevance to the character of his
duties as being usually necessary and desirable
to the usual business of the Er, or not.
Probation is the period during which the
employer may determine if the employee is
qualified for possible inclusion in the regular
force. (Holiday Inn Manila v. NLRC, G.R. No.
109114, Sept. 14, 1993)

Q: Dean Jose and other Ees are holding It is usually a six-month period during which the
administrative positions as dean, employer observes the performance and
department heads and institute secretaries. conduct of the employee. If he passes the agreed
In the implementation of the Reorganization, standard, he will be retained as a regular
Retrenchment and Restructuring program employee, if he fails, his tentative employment
effective Jan. 1, 1984, Dean Jose and other ends.
Ees were retired but subsequently rehired.
Their appointment to their administrative Probationary employment
positions as dean, department heads and
institute secretaries had been extended by Employment where the Ee, upon his
the company from time to time until the engagement:
expiration of their last appointment on May
31, 1988. Were Dean Jose and other Ees 1. Is made to undergo a trial period
illegally dismissed? 2. During which the Er determines his fitness
to qualify for regular employment
A: NO. Petitioners were dismissed by reason of 3. Based on reasonable standards made
the expiration of their contracts of employment. known to the Ee at the time of engagement.
Petitioners' appointments as dean, department (IRR, Book VI, Rule I, Sec 6)
heads and institute secretaries were for fixed
terms of definite periods as shown by their NOTE: In all cases involving employees engaged
respective contracts of employment, which all on probationary basis, the employer shall make
expired on the same date, May 31, 1988. The known to the employee the standards under
validity of employment for a fixed period has which he will qualify as a regular employee at
been acknowledged and affirmed by the SC. the time of his engagement. (IRR, Book VI, Rule I,
(Blancaflor v. NLRC, G.R. No. 101013, Feb. 2, Sec. 6[d])
1993)
Characteristics of probationary employment
Q: Lina has been working as a steward with a
Miami, U.S.A.-based Loyal Cruise Lines for the 1. It is an employment for a trial period;
past 15 years. She was recruited by a local
manning agency, Macapagal Shipping, and 2. It is a temporary employment status prior
was made to sign a 10-month employment to regular employment;
contract every time she left for Miami.
Macapagal Shipping paid for Lina’s round- 3. It arises through a contract with the
trip travel expenses from Manila to Miami. following elements:
Because of a food poisoning incident which
happened during her last cruise assignment, b. The Ee must learn and work at a
Lina was not re-hired. Lina claims she has particular type of work;
been illegally terminated and seeks c. Such work calls for certain
separation pay. If you were the Labor Arbiter qualifications;
handling the case, how would you decide? d. The probation is fixed;
(2014 BAR) e. The Er reserves the power to
terminate during or at the end of the
A: I will dismiss Lina's complaint. Lina is a trial period;
contractual employee and the length of her f. And if the Ee has learned the job to
employment is determined by the contracts she the satisfaction of the Er, he becomes
entered into. Here, her employment was a regular Ee.
terminated at the expiration of the contract.
(Millares, et al. v. NLRC, 385 SCRA 306, 318 Rules on probationary employment
[2002])

UNIVERSITY OF SANTO TOMAS 138

2021 GOLDEN NOTES
 Labor Law and Social Legislation
1. Er shall make known to the Ee at the time
he is hired, the standards by which he will
qualify as a regular Ee;
2. Probationary employment must have been
expressly agreed upon; without such
explicit agreement, the employment is
considered regular;
3. An Ee allowed to continue work after the
probationary period shall be considered a
regular Ee;
4. During the probationary period, the Ee
enjoys security of tenure; his services can
only be terminated for just or authorized
causes.
Q: Alcaraz signed an employment contract
with Abbott for the position of Medical and
Regulatory Affairs Manager which stated that
she was to be placed on probation for a
period of six (6) months. In line with this, she
received an email containing Abbott’s
organizational chart and a job description of
her work. Further, during Alcaraz’s pre-
employment orientation, she was briefed on
her duties and responsibilities as Regulatory
Affairs Manager. Abbot has a procedure
which requires that the employee’s
performance must be discussed and
reviewed with the employee two times. Later
on, Alcaraz was terminated for allegedly
failing to meet the regularization standards
for the said position.
Alcaraz filed a complaint for illegal dismissal
and damages against Abbott and its officers.
She claimed that she should have already
been considered as a regular and not a
probationary employee given Abbott’s
failure to inform her of the reasonable
standards for her regularization upon her
engagement as required under Art. 295 of
the Labor Code.
Further, she claims that her performance
was not discussed with her in line with the
procedure of Abbot. Was Alcaraz sufficiently
informed of the reasonable standards to
qualify her as a regular employee?
A: YES. An employer is deemed to have made
known the standards that would qualify a
probationary employee to be a regular employee
when it has exerted reasonable efforts to apprise
the employee of what he is expected to do or
accomplish during the trial period of probation.
In this case, Abbott clearly conveyed to Alcaraz
her duties and responsibilities as Regulatory
Affairs Manager prior to, during the time of her
139
engagement, and the incipient stages of her
employment. Hence, Alcaraz was validly
terminated from her employment.
Nonetheless, despite the existence of a sufficient
ground to terminate Alcaraz’s employment and
Abbott’s compliance with the Labor Code
termination procedure, it is readily apparent
that Abbott breached its contractual obligation
to Alcaraz when it failed to abide by its own
procedure in evaluating the performance of a
probationary employee. Since this procedure
was not followed, the dismissal was therefore
procedurally infirm rendering Abbot liable for
nominal damages. (Abbott Laboratories v.
Alcaraz, G.R. No. 192571, July 23, 2013)
Period of probationary employment
GR: It shall not exceed 6 months.
XPNs:
1. Covered by an Apprenticeship or
Learnership agreement stipulating a
different period;
2. Voluntary agreement of parties (especially
when the nature of work requires a longer
period)
NOTE: By voluntarily agreeing to such an
extension, the Ee waived any benefit
attaching to the completion of the period if
he still failed to make the grade during the
period of extension (Mariwasa Mfg. Inc. v.
Hon. Leogardo, G.R. No. 74246, Jan. 26,
1989);
3. The Er gives the Ee a second chance to pass
the standards set (Mariwasa
Manufacturing, Inc. v. Leogardo, Jr., G.R. No.
74246, Jan. 26, 1989);
4. When the same is required by the nature of
the work, e.g., the probationary period set
for professors, instructors and teachers is 3
consecutive years of satisfactory service
pursuant to DOLE Manual of Regulations
for Private Schools;
5. When the same is established by company
policy.
NOTE: Period of probation shall be reckoned
from the date the Ee actually started working
[IRR, Book VI, Rule I, Sec.6(b)]. Probationary Ees
may be dismissed for cause before end of the
probationary period.
After the lapse of the probationary period (6
months), Ee becomes regular.
 Post-Employment
Purpose of the probation period
The purpose of the probation period is to afford
the Er an opportunity to observe the fitness of a
probationary Ee at work.
Instances when extension of probationary
period is allowed
Extension is allowed only when:
1. Nature of the job requires extensive
training; or
2. If it is a company policy that the period of
probationary employment should be an
extended period.
NOTE: The extension of period should always be
reasonable; Such that, the nature of the work so
requires and that it is the amount of time
required for an ordinary worker to learn the job.
Essence of the prohibition on double or
successive probation
The evil sought to be prevented is to discourage
scheming Ers from using the system of double or
successive probation to circumvent the mandate
of the law on regularization and make it easier
for them to dismiss their Ees. (Holiday Inn
Manila v. NLRC, G.R. No. 109114, Sept. 14, 2003)
Q: Michelle Miclat was employed on a
probationary basis as marketing assistant by
Clarion Printing House but during her
employment she was not informed of the
standards that would qualify her as a regular
Ee. 30 days after, Clarion informed Miclat
that her employment contract had been
terminated without any reason. Miclat was
informed that her termination was part of
Clarion’s cost-cutting measures. Is Miclat
considered as a regular Ee and hence entitled
to its benefits?
A: YES. In all cases of probationary employment,
the Er shall make known to the Ee the standards
under which he will qualify as a regular Ee at the
time of his engagement. Where no standards are
made known to the Ee at that time, he shall be
deemed a regular Ee. In the case at bar, she was
deemed to have been hired from day one as a
regular Ee. (Clarion Printing House Inc., v. NLRC,
G.R. No. 148372, June 27, 2005)
Obligation of the Er to his probationary Ees
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
There is obligation on the part of Er to inform
standards for regularization at the time of
engagement. The failure to inform has the effect
that upon the expiry of the probationary
employment, with or without the period
provided for in the contract, the worker is
deemed to be regular.
Q: Middleby Phils. Corp. hired Alcira as
engineering support services supervisor on a
probationary basis for six months.
Apparently unhappy with Alcira’s
performance, Middleby terminated his
services. Alcira contends that he was already
a regular Ee when his employment was
terminated. According to Alcira’s
computation, since Art. 13 of the NCC
provides that 1 month is composed of 30
days, 6 months totaling 180 days, then his
180th day would fall on Nov. 16, 1996 making
him a regular Ee before his termination. Is
the contention of the petitioner in the
computation of six months correct?
A: NO, the computation of the 6-month
probationary period is reckoned from the date of
appointment up to the same calendar date of the
6th month following. In short, since the number
of days in each particular month was irrelevant,
Alcira was still a probationary Ee when
Middleby opted not to “regularize” him on Nov.
20, 1996. (Alcira v. NLRC, G.R. No. 149859, June 9,
2004)
NOTE: In Mitsubishi Motors v. Chrysler Phils.
Labor Union, G.R. No. 148738, June 29, 2004, the
SC ruled in this wise:
“Applying Art. 13 of the NCC, the
probationary period of 6-months consists of
180 days. This is in conformity with Art.
13(1) of the NCC. The number of months in
the probationary period, 6, should then be
multiplied by the number of days within a
month, 30; hence, the period of 180 days. As
clearly provided in the last par. of Art. 13, in
computing a period, the first day shall be
excluded and the last day included. Thus, the
180 days commenced on May 27, 1996, and
ended on Nov. 23, 1996. The termination
letter dated Nov. 25, 1996 was served on
Paras only on Nov. 26, 1996. He was, by then
already a regular Ee of the company under
Art. 295 of the LC.”
How to resolve the conflict between the
Alcira and Mitsubishi Motors case:
140
 Labor Law and Social Legislation
1. Statutory Construction – The latter case
prevails (Mitsubishi Motors); or
2. Rule more favorable to the Ee – Use the
computation which would amount to
granting the subject Ee regular
employment status (based on Constitutional
and statutory provisions for the liberal
interpretation of labor laws).
Instances when a probationary Ee is deemed
to be a regular Ee
1. If he is allowed to work after a
probationary period. (LC, Art. 295)
2. If no standards, under which he will qualify
as a regular Ee, are made known to him at
the time of his engagement. (IRR, Book VI,
Rule I, Sec. 6[d])
Grounds for terminating probationary
employment
1. Just/authorized causes
2. When he fails to qualify as a regular Ee in
accordance with reasonable standards
made known by the Er to the Ee at the time
of his engagement. (ICMC v. NLRC, G.R. No.
72222, Jan. 30, 1989; LC, Art. 295)
NOTE: If Pre-termination of probationary
contract is due to the valid causes, the Er is not
liable to pay the monetary value of the
unexpired portion of the employment.
While probationary Ees do not enjoy permanent
status, they are afforded the security of tenure
protection of the Constitution. Consequently,
they cannot be removed from their positions
unless for cause. Such constitutional protection,
however, ends upon the expiration of the period
stated in their probationary contract of
employment. Thereafter, the parties are free to
renew the contract or not. (CSA v. NLRC, G.R. No.
87333, Sept. 6, 1991)
Limitations on the Er’s power to terminate a
probationary employment contract
1. The power must be exercised in
accordance with the specific requirements
of the contract;
2. If a particular time is prescribed, the
termination must be within such time and
if formal notice is required, then that form
must be used;
3. The Er’s dissatisfaction must be real and in
good faith, not feigned so as to circumvent
the contract or the law; and
141
4. There must be no unlawful discrimination
in the dismissal.
NOTE: The probationary Ee is entitled to
procedural due process prior to dismissal from
service.
Q: Ron Cruz was employed as gardener by
Manila Hotel on “probation status” effective
Sept. 22, 1976. The appointment signed by
Cruz provided for a 6-month probationary
period. On Mar. 20, 1977, or a day before the
expiration of the probationary period, Cruz
was promoted to lead gardener position. On
the same day, Cruz’ position was “abolished”
by Manila Hotel allegedly due to economic
reverses or business recession, and to
salvage the enterprise from imminent danger
of collapse. Was Cruz illegally dismissed?
A: YES. There is no dispute that as a
probationary Ee, Cruz had but limited tenure.
Although on probationary basis, however, Cruz
still enjoys the constitutional protection on
security of tenure. During his tenure of
employment, therefore, or before his contract
expires, Cruz cannot be removed except for
cause as provided for by law.
What makes Cruz’ dismissal highly suspicious is
that it took place at a time when he needs only
but a day to be eligible as a regular Ee. That he is
competent finds support in his being promoted
to a lead gardener in so short span of less than 6
months. By terminating his employment or
abolishing his position with but only one day
remaining in his probationary appointment, the
hotel deprived Cruz of qualifying as a regular Ee
with its concomitant rights and privileges.
(Manila Hotel Corp. v. NLRC, G.R. No. L-53453, Jan.
22, 1986)
Period of probationary employment of
private school teachers
The probationary employment of academic
teaching personnel shall not be more than a
period of 6 consecutive semesters or 9
consecutive trimesters of satisfactory service, as
the case may be. (The Manual of Regulations for
Private Higher Education, Sec. 117)
NOTE: An academic teaching personnel, who
does not possess the minimum academic
qualifications under Secs. 35 and 36 of the
Manual of Regulations for Private Higher
Education shall be considered as a part-time Ee,
and therefore can not avail of the status and
 Post-Employment
privileges of a probationary employment. A part-
time Ee cannot acquire a regular permanent
status, and hence, may be terminated when a
qualified teacher becomes available. (Manual of
Regulations for Private Higher Education)
Full-time Teacher
One whose total working day is devoted to
school, no other regular remunerative
employment and is paid on a regular monthly
basis regardless of the number of teaching
hours.
In college, the normal teaching load of a full-time
instructor shall be eighteen (18) hours a week.
Professors and instructors are independent
contractors. They are compensated for their
services by wages and salaries, rather than share
of profits; they cannot substitute others to do
their work without the consent of the university
and can be laid off if their work is unsatisfactory.
All these indicate that the university has control
over their work and that they are, therefore,
employees and not independent contractors.
(Feati University v. Hon. Jose S. Bautista, and Feati
University Faculty Club-PAFLU, G.R. No. L-21278,
Dec. 27, 1966)
Requirement of full-time academic personnel
or teacher
1. Who possess at least the minimum
academic qualifications prescribed by the
Department under this Manual for all
academic personnel;
2. Who are paid monthly or hourly, based on
the regular teaching loads as provided for
in the policies, rules and standards of the
Department and the school;
3. Whose total working day of not more than
8 hours a day is devoted to the school;
4. Who have no other remunerative
occupation elsewhere requiring regular
hours of work that will conflict with the
working hours in the school; and
5. Who are not teaching full-time in any other
educational institution.
All teaching personnel who do not meet the
foregoing qualifications are considered part-
time.
The legal requisites for acquisition by a
teacher of permanent employment
1. The teacher is a full-time teacher;
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
2. Must have rendered 3 consecutive years of
service;
3. Such service must be satisfactory
Q: Colegio de San Agustin (CSA) hired Gela
Jose as a grade school classroom teacher on a
probationary basis for SY ‘84 – ‘85. Her
contract was renewed for SY’s ‘85-‘86 and
‘86-‘87. On Mar. 24, ‘87, the CSA wrote the
Gela that "it would be in the best interest of
the students and their families that she seeks
employment in another school or business
concern for next school year."
Notwithstanding the said notice, the CSA still
paid Gela her salary for April 15 to May 15,
1987. On April 6, 1987, Gela wrote the CSA
and sought reconsideration but she received
no reply. Thereafter, she filed a complaint
for illegal dismissal. Was Gela illegally
dismissed?
A: NO. The Faculty Manual of CSA underscores
the completion of three years of continuous
service at CSA before a probationary teacher
acquires tenure. Hence, Gela cannot claim any
vested right to a permanent appointment since
she had not yet achieved the prerequisite 3-year
period under the Manual of Regulation for
Private Schools and the Faculty Manual of CSA.
In the instant case where the CSA did not wish to
renew the contract of employment for the next
school year, Gela has no ground to protest. She
was not illegally dismissed. Her contract merely
expired. (CSA v. NLRC, G.R No. 87333, Sept. 6,
1991)
Q: During their probationary employment,
eight employees were berated and insulted
by their supervisor. In protest, they walked
out. The supervisor shouted at them to go
home and never to report back to work.
Later, the personnel manager required them
to explain why they should not be dismissed
from employment for abandonment and
failure to qualify for the positions applied
for. They filed a complaint for illegal
dismissal against their Er. As the Labor
Arbiter, how will you resolve the case?
(2006 BAR)
A: As the LA, I will resolve the case in favor of
the 8 probationary Ees due to the following:
1. Probationary Ees also enjoy security of
tenure. ( Biboso v. Victoria Milling, G.R. No.
L-44360, March 31, 1977)
2. In all cases involving Ees on probationary
142
 Labor Law and Social Legislation
status, the Er shall make known to the Ee
at the time he is hired, the standards by
which he will qualify for the positions
applied for.
3. The filing of the complaint for illegal
dismissal effectively negates the Er’s
theory of abandonment. (Rizada v. NLRC,
G.R. No. 96982, Sept. 21, 1999)
4. The order to go home and not to return to
work constitutes dismissal from
employment.
5. The 8 probationary Ees employment were
terminated without just cause and without
due process.
In view of the foregoing, I will order
reinstatement to their former positions without
loss of seniority rights with full back wages, plus
damages and attorney’s fees.
Q: UST has a CBA with the Union. The CBA
requires a master’s degree for a professor to
be tenured. The CBA, however, also provides
that “If he does not finish his degree in five (5)
semesters, he shall be separated from service
at the end of the fifth semester; however, if he
is made to serve the University further, in
spite of the lack of a master's degree, he shall
be deemed to have attained tenure”. Is the
stipulation conferring tenureship in spite of
the lack of master’s degree valid?
A: NO, when the CBA was executed between the
parties in 2006, they had no right to include
therein the provision relative to the acquisition
of tenure by default, because it is contrary to,
and thus violative of the 1992 Revised Manual of
Regulations for Private Schools that was in effect
at the time. As such, said CBA provision is null
and void, and can have no effect as between the
parties. "A void contract is equivalent to nothing;
it produces no civil effect; and it does not create,
modify or extinguish a juridical relation."
It cannot be said either that by agreeing to the
tenure by default provision in the CBA, UST is
deemed to be in estoppel or have waived the
application of the requirement under CHED
Memorandum Order No. 40-08. Such a waiver is
precisely contrary to law. Moreover, a waiver
would prejudice the rights of the students and
the public, who have a right to expect that UST is
acting within the bounds of the law and provides
quality education by hiring only qualified
teaching personnel.
As the Court held in Escorpizo v. University of
Baguio, a school CBA must be read in
143
conjunction with statutory and administrative
regulations governing faculty qualifications.
Such regulations form part of a valid CBA
without need for the parties to make express
reference to it. While the contracting parties
may establish such stipulations, clauses, terms
and conditions, as they may see fit, the right to
contract is still subject to the limitation that the
agreement must not be contrary to law or public
policy. (Son v. UST, G.R. No 211273, April 18,
2018)
SECURITY GUARDS
D.O. NO. 150-16
Security Service Contractor (SSC) or Private
Security Agency (PSA) refers to any person
engaged in contracting, recruitment, training,
furnishing or posting of security guard and other
private security personnel to clients for the
latter’s security needs.
Employment Status (D.O. No. 150-16, Sec. 3)
The SSC/PSA is the employer of the security
guards and other private security personnel on
duty detail to a principal or client under a
Service Agreement. The DOLE Regional Office
concerned can order the parties to submit a copy
of the service agreement.
The contract between the SSC/PSA and its
security guards and other private security
personnel shall be governed by Art. 294 and 295
of the LC. The SSC/PSA shall provide his/her
security guards and other private security
personnel a copy of the employment contract.
Liabilities of SSC/PSA (D.O. No. 150-16, Sec. 9)
The SSC/PSA and its principal or client shall be
jointly and solidarily liable with each other in
any of the following circumstances:
1. When the SSC/PSA fails to pay the wages of
its security guards and other private
security personnel, the principal shall be
considered an “indirect employer’ and shall
be solidarily liable with the SSC/PSA to the
extent of the work performed but such
security guards and other private security
personnel.
2. If there are wage increases/adjustments
after the execution of the Service
Agreement, the increase shall be borne by
the principal and the Service Agreement
shall be deemed amended accordingly
(automatic crediting provision). In the event
 Post-Employment
the principal fails to pay, the SSC/PSA shall
be jointly and solidarily liable with the
principal. The immediate recourse of the
security guards and other private security
personnel is with the SSC/PSA their
employer.
NOTE: When the SSC/PSA is found to be either a
labor-only contracting or an in-house agency,
the principal shall be considered the direct
employer of the security guards and/or other
private security personnel.
Floating/ Reserved Status (D.O. No. 150-16,
Sec. 10.3)
Security guard and/or other private security
personnel may be placed in a work pool or on
reserved status due to lack of service assignment
after the expiration or termination of the Service
Agreement with the principal where he/she is
assigned or due to the temporary suspension of
security service operations or due to valid relief
from the current place of work and no
assignment is available.
No security guards and/or private security
personnel can be placed in a work pool or on
reserved status in any of the following:
a. After expiration of the service contract, if
there are other principals, he/she can be
assigned;
b. As a measure to constructively dismiss the
security guard;
c. As an act of retaliation for filing any
complaint against the employer for
violation of labor laws.
If after a period of six (6) months, the SSC/PSA
cannot provide work /give assignment to the
reserved security guard, the latter can be
separated from service and shall be entitled to
separation pay. An assignment of the security
guard and other private security personnel as a
reliever for less than one-month shall not be
considered as an interruption of the six (6)
months period.
CONTRACTING OR SUBCONTRACTING
Governing laws:
1. Arts. 106-109, Labor Code
2. DOLE D.O. No. 18-A, s. 2011
3. DOLE D.O. No. 174, s. 2017
4. DOLE D.O. No. 01, s. 2017 (Clarifying D.O. No.
174)
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Job Contracting or Subcontracting
This refers to an arrangement whereby a
principal agrees to put out or farm out to a
contractor or subcontractor the performance or
completion of a specific job, work or service
within a definite or predetermined period,
regardless of whether such job, work or service
is to be performed or completed within or
outside the premises of the principal. (Sec. 3 (c),
D.O. No. 18-A; Petron Corporation v. ARMZ
Caberte et. al, G.R. No. 182255, June 15, 2015).
NOTE: Contracting and subcontracting
arrangements are expressly allowed by law and
are subject to regulation for the promotion of
employment and the observance of the rights of
workers to just and humane conditions of work,
security of tenure, self-organization, and
collective bargaining. Labor-only contracting as
defined herein shall be prohibited. (Sec. 1, D.O.
No. 18-A)
TRILATERAL RELATIONSHIP
In legitimate contracting, there exists a trilateral
relationship under which there is a contract for a
specific job, work or service between the
principal and the contractor or subcontractor,
and a contract of employment between the
contractor or subcontractor and its workers.
(Azucena, Vol. I, 2016, p. 365)
There are three parties involved in these
arrangements:
1. Principal (Contractee) –it refers to any
employer, whether a person or entity,
including government agencies and
government-owned and controlled
corporations who/which puts out or farms
out a job, service or work to a contractor.
2. Contractor or subcontractor –It refers to
any person or entity, including a
cooperative, engaged in a legitimate
contracting or subcontracting agreement
providing either services, workers or
combination of services to a principal
under a Service Agreement;
3. Contractual workers –Includes one
employed by a contractor to perform or
complete a job, work or service pursuant to
a Service Agreement with a principal.
ELEMENTS OF LEGITIMATE JOB
CONTRACTING OR SUBCONTRACTING
144
 Labor Law and Social Legislation
A person is considered engaged in legitimate job
contracting or subcontracting if the following
conditions concur:
1. The contractor or subcontractor carries on
a distinct and independent business and
undertakes to perform the job, work or
service on its own account and under its
own responsibility according to its own
manner and method, and free from the
control and direction of the principal in all
matters connected with the performance of
the work except as to the results thereof;
2. The contractor or subcontractor has
substantial capital or investment; and
3. The Service Agreement ensures
compliance with all the rights and benefits
for all the employees of the contractor or
subcontractor under the labor laws. (D.O.
No. 174, Sec. 8, s. 2017)
NOTE: The agreement between the
principal and the contractor or
subcontractor assures the contractual
employees' entitlement to all labor and
occupational safety and health standards,
free exercise of the right to self-
organization, security of tenure, and social
welfare benefits. (Petron Corporation v.
ARMZ Caberte et. al, G.R. No. 182255, June
15, 2015)
Substantial Capital refers to paid-up capital
stocks/shares of at least PHP 5 Million in the
case of corporations, partnerships and
cooperatives. PHP 5 Million net worth in the
case of a single proprietorship. (Sec. 3, [L], DOLE
D.O. No. 174 S. 2017)
The law does not require both substantial capital
and investments, it is sufficient that either of
the two is complied with. (Neri v. NLRC, G.R. Nos.
97008-09, July 23, 1993)
Burden of proof to prove that he/it has
substantial capital or investment rests on the
contractor himself. (Guarin v. NLRC, G.R. No.
86010, Oct. 3, 1989)
NOTE: In legitimate Job Contracting, the
principal is jointly and severally liable with the
contractor for the payment of unpaid wages. (LC,
Arts. 106, 107 & 109)
Independent Contractor
145
Those who undertake “job-contracting.” They
exercise independent employment, contracting
to do a piece of work according to their own
methods and without being subject to control of
their employer except as to the result of their
work. (Villuga v. NLRC, G.R. No. 75038, Aug. 23,
1993)
NOTE: Independent contractors often present
themselves to possess unique skills, expertise
or talent to distinguish them from ordinary
employees. (Sonza v. ABS-CBN, G.R. No. 138051,
June 10, 2004)
Indirect or Statutory Employer is one who
enters into a contract with an independent
contractor for the performance of any work,
task, job, or project not directly related to the
employer’s business. (Baguio v. NLRC, G.R. Nos.
79004-08, Oct. 4, 1991)
NOTE: There is no Er-Ee relationship exists
between the owner of the project and the
employees of the independent contractor.
(Baguio v. NLRC, G.R. Nos. 79004-08, Oct. 4, 1991)
The principal employer is considered only an
indirect employer. (PCI Automation Center, Inc. v.
NLRC, G.R. No. 115920, Jan. 29, 1996)
What is contracted is the performance and
completion of a designated job, and not just the
supplying of people to do the job.
Major Laws Applicable to Work Relationship
1. Between the Principal and Contractor –
The Civil Code and pertinent Commercial
Laws
2. Between Contractor and his Employees
– the Labor Code and Special Labor Laws.
NOTE: Between the principal and the
contractor’s employees, no employer-employee
relationship exists; the contractor, being himself
a businessman, is the employer. But the
contractor may in turn become a contractee if he
contracts with a contractor.
Employer-employee relationship may be
declared to exist between the principal and the
contractor’s workers where the contracting
arrangement is not legitimate.
PROHIBITIONS ON CONTRACTING/
SUB-CONTRACTING
Er-Ee relationship may be declared to exist
between the principal and the contractor’s
 Post-Employment
workers where the contracting agreement is not
legitimate. (Azucena, Vol. I, 2016, p. 366)
The contracting is not lawful, not legitimate if it
is:
1. Labor-only contracting; or
2. If the agreement is otherwise considered
unlawful for being against public policy.
NOTE: In any of these situations, the contracting
agreements will have to be disregarded for the
purpose of establishing an Er-Ee relationship;
the person for whom the workers work will have
to be declared as the employer. (Azucena, Vol. I,
2016, p. 366)
“LABOR-ONLY” CONTRACTING
Labor-only contracting
Labor-only contracting refers to an arrangement
where the contractor, who does not have
substantial capital or investment in the form of
tools, equipment, machineries, work premises,
among others, supplies workers to an employer
and the workers recruited are performing
activities which are directly related to the
principal business of such employer. (LC, Art.
106)
It is a prohibited act, an arrangement where the
contractor or subcontractor merely recruits,
supplies or places workers to perform a job,
work or service for a principal.
NOTE: In labor-only contracting, there is really
no contracting and no contractor. There is only a
representative to gather and supply people to
the principal. (Azucena, Vol. I, 2016, p. 365)
A finding that a contractor is a “labor-only”
contractor is equivalent to declaring that there is
an ER-EE relationship between the principal and
the employees of the “labor-only” contractor.
(San Miguel Corp. v. MAERC Integrated Systems,
G.R. No. 144672, July 10, 2003)
ESSENTIAL ELEMENTS OF LABOR-ONLY
CONTRACTING
1. The contractor or subcontractor does not
have substantial capital or investment to
actually perform the job, work or service
under its own account and responsibility;
and
2. The employees recruited, supplied or
placed by such contractor or subcontractor
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
are performing activities which are directly
related to the main business of the principal.
(Sasan v. NLRC, G.R. No. 176240, Oct. 17,
2008)
NOTE: A finding that a contractor is a labor-only
contractor, as opposed to permissible job
contracting, is equivalent to declaring that there
is an employer-employee relationship between
the principal and the employees of the supposed
contractor, and the labor-only contractor is
considered as a mere agent of the principal, the
real employer. (Allied Banking Corporation v.
Reynold Calumpang, G.R. No. 219435, Jan. 17,
2018)
Confirming Elements
To have labor-only contracting, the essential
element of supplying workers to another is not
enough. To it must be added either one of two
confirming elements:
One. Lack of substantial capital or
investment and performance of activities
directly related or usually necessary or
desirable to the principal’s main business; or
Two. The contractor does not exercise control
over the performance of the employees.
(Azucena, Vol. I, 2016, p. 369)
NOTE: If the essential element is absent, there
can be no LOC. And even, if the essential element
is present, but confirming element one or two is
absent, there is still no LOC. (Azucena, Vol. I,
2016, p. 369)
In-House Agency
Refers to a contractor or subcontractor engaged
in the supply of labor which:
1. Is owned, managed or controlled by the
principal; and
2. Operates solely for the principal owning,
managing or controlling it.
NOTE: Contracting out a job, work or service
through an in-house agency is contrary to law or
public policy. (DOLE D.O. No. 174 s. 2017)
Job Contracting vs. Labor-only Contracting
LABOR-ONLY
JOB CONTRACTING
CONTRACTING
The Er/principal is The Er/principal is
merely an indirect treated as direct
146
 Labor Law and Social Legislation

employer, by employer of the No. 174, s. 2017, contracting or

operation of law, of contractor’s subcontracting arrangement in the private
his contractor’s employees in all security industry shall be governed by DO
employees. instances. (contractor No. 150, s. 2016.
= agent of the
employer) 4. Other Contractual Relationships. DO No.
The statute creates 174. S. 2016 does not contemplate to cover
The law creates an contractual relationship such as in contract
an Er-Ee relationship
Er-Ee relationship for of sale or purchase, contract of lease,
for a comprehensive
a limited purpose. contract of carriage, contract
purpose.
The principal The principal growing/growership agreement, toll
becomes solidarily becomes solidarily manufacturing, contract of management,
liable. The liability liable with the operation and maintenance and such other
however, does not contractor not only contracts governed by the Civil Code and
extend to the for unpaid wages but special laws.
payment of also for all the
backwages or rightful claims of the Effect of Failure to Register by the
separation pay of employees under the Independent Contractor with DOLE:
employees who are Labor Code and
illegally dismissed. ancillary laws. A Certificate of Registration shall be effective for
(2) two years, unless cancelled after due
Allowed by law Prohibited by law process. Failure to register shall give rise to the
presumption that the contractor is engaged in
Presence of Absence of labor-only contracting. (Sec. 14, D.O. No. 174,
substantial capital or substantial capital or Series 2017)
investment. investment.
Rights of Contractor’s Employees
DOLE D.O. No. 174 s. 2017
1. Safe and healthful working conditions;
Issued by the Secretary of Labor and 2. Labor standards such as but not limited to
Employment implementing and interpreting service incentive leave, rest days, overtime
Arts. 106 to 109 of the LC. Effective March 16, pay, holiday pay, 13th month pay, and
2017. separation pay as may be provided in the
Service Agreement or under the Labor
Non-applicability of D.O. No. 174 s. 2017 Code;
3. Retirement benefits under the SSS or
retirement plans of the contractor, if there
D.O. 174, Series of 2017 is not applicable to
trilateral relationship which characterizes is any;
4. Social security and welfare benefits;
contracting or subcontracting arrangement.
Including: 5. Self-organization, collective bargaining and
peaceful concerted activities; and
6. Security of tenure.
1. BPO/KPO. It does not contemplate to cover
information-technology enabled services
involving an entire or specific business NOTE: Generally, the contractor is presumed
to be a labor-only contractor, unless such
process such as Business Process
Outsourcing (BPO) or Knowledge Process contractor overcomes the burden of proving that
it has the substantial capital, investment, tools
Outsourcing (KPO). (DOLE D.O. No. 01, s.
2017) and the like. However, where the principal is the
one claiming that the contractor is a legitimate
contractor, as in the present case, said principal
2. Construction Industry. Licensing and
exercise of regulatory powers over the has the burden of proving that supposed status.
construction industry is lodged with the (Alilin v. Petron Corp., G.R. No. 177592, June 9,
Philippine Constructors Accreditation Board 2014)
(PCAB) of the Construction Industry
Contractor or Subcontractor to Furnish A
Authority of the Philippines (CIAP).
Bond
3. Private Security Agency. Except for the
registration requirement as provided in DO

147
 Post-Employment
An employer or indirect employer may require
the contractor or subcontractor to furnish a
bond equal to the cost of labor under contract,
on the condition that the bond will answer for
the wages due the employees should the
contractor or subcontractor, as the case may be,
fail to pay the same. (LC, Art. 107)
NOTE: Where the employer fails to require the
posting of the bond, he must be liable for
whatever the contractor may have incurred to
his employees, without prejudice to its right of
reimbursement from the contractor for
whatever amount paid. (Baguio v. NLRC, G.R. Nos.
79004-08, Oct. 4, 1991)
Extent of employer’s liability in invalid
contracting
Where the contracting is found to be labor-only
contracting, the liability is immediately and
directly imposed upon the principal. The
principal shoulders all the obligations of an
employer, not just the payment of wages. The
liability becomes direct and total as that of a
directly hiring employer.
Extent of principal’s liability in legitimate
contracting
The contractor or sub-contractor shall be
considered the employer of the contractual
employee for purposes of enforcing the
provisions of the Labor Code and other social
legislation.
The principal shall be solidarily liable with the
contractor in the event of any violation of any
provisions of the Labor Code, including the
failure to pay wages. (D.O. No. 18-02 s. 2002)
For wages and money claims
In the event that the contractor or subcontractor
fails to pay the wages of his employees in
accordance with the Code, the employer shall be
jointly and severally liable with the contractor or
subcontractor to such employees to the extent of
the work performed under the contract, in the
same manner and extent that he is liable to
employees directly employed by him. (LC, Art.
107)
NOTE: Where no ER-EE relationship exists
between the parties and no issue is involved
which may be resolved by reference to the Labor
Code, other labor statutes or any collective
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
bargaining agreement, it is the Regional trial
Court that has jurisdiction.
For other violations
The court has interpreted the liability of the
principal under Art. 109 as a qualified or limited
liability.
Liability
1. For failure to pay the minimum wage or
the service incentive leave or other
benefits - the principal is equally liable
with the contractor as if the principal were
the direct employer.
2. With punitive character - such as an
award for backwages and separation pay
because of an illegal dismissal of the
contractor’s employee, the liability should
be solely that of the contractor, in the
absence of proof that the principal
conspired with the contractor in the
commission of the illegal dismissal.
NOTE: The contractor’s liability for underpaid
wages and unpaid overtime work could be
enforced against the surety bond posted by the
contractor as required by the principal. The
law’s aim in imposing indirect liability upon the
principal is to assure payment of monetary
obligations to the workers. This aim is
accomplished through the principal’s requiring
the posting of a bond. After satisfying from the
bond the unpaid wages and overtime pay, the
contractor cannot recover from the principal if
the principal has already handed over to the
contractor the amount covering the wages or the
pay increase mandated by a wage order.
(Rosewood Processing, Inc. v. NLRC, G.R. Nos.
116476-84, May 21, 1998)
Q: Petrotech, a subcontractor of Liquigaz,
engaged the services of Independent Testing
Consultants (ITC) to conduct non-destructive
testing on Liquigaz's piping systems. ITC
conducted the agreed tests. It later billed
Petrotech. However, despite demand,
Petrotech refused to pay. ITC filed a
Complaint for collection of a sum of money
with damages against Petrotech, Liquigaz,
and Noell Whessoe plus legal interest.
It joined Noell Whessoe as a defendant,
alleging that it was Liquigaz's contractor that
subcontracted Petrotech. Liquigaz contended
that ITC had no cause of action against it
148
 Labor Law and Social Legislation
since there were no contractual relations
between them and that any contract that ITC
had was with its subcontractors. Noell
Whessoe, on the other hand, denied that it
was Liquigaz's contractor and that its basic
role was merely to supervise the
construction of its gas plants. It argued that
any privity of contract was only with
Petrotech.
Thus, it asserted that Petrotech alone should
be liable ITC. Noell Whessoe later documents
showing that Liquigaz engaged Whessoe
Projects Limited (Whessoe UK), a limited
company organized under the laws of the
United Kingdom, for the construction of its
storage facilities. Whessoe UK, in turn,
engaged Noell Whessoe, a separate and
distinct entity, to be the construction
manager for the Mariveles Terminal
Expansion Project. The documents further
stated that Whessoe UK had already paid in
full its contractual obligations to Petrotech.
Can Noell Whessoe, Inc. be held solidarily
liable with respondents Liquigaz Philippines
Corporation and Petrotech Systems, Inc. for
unpaid fees to respondent Independent
Testing Consultants, Inc.?
A: NO. There was insufficient evidence proving
that Whessoe UK and petitioner were two (2)
separate and distinct entities. Petitioner failed to
prove that for the Mariveles Terminal Expansion
Project, it was a separate and distinct entity
from Whessoe UK. Therefore, it cannot set up
the defense of privity of contract (Art. 1729) to
escape liability. Under Art. 1729, ITC had a cause
of action against Liquigaz and petitioner, even if
its contract was only with Petrotech. However,
Art. 1729, while serving as an exception to the
general rule on the privity of contracts, likewise
provides for an exception to this exception.
The contractor is solidarily liable with the owner
and subcontractor for any liabilities against a
supplier despite the absence of contract
between the contractor and the supplier, except
when the subcontractor has already been fully
paid for its services. Here, there was
"uncontroverted evidence that PETROTECH had
already been paid for its services. Since Whessoe
UK and petitioner should be considered the
same entity for the purposes of the Mariveles
Terminal Expansion Project, Whessoe UK's full
payment to Petrotech would serve as a valid
defense against petitioner's solidary liability.
149
Thus, petitioner still cannot be held solidarily
liable with Liquigaz and Petrotech for any
remaining receivables from respondent
Independent Testing Consultants. Any remaining
obligations to it should be solidarily borne by
the owner, Liquigaz, and the subcontractor,
Petrotech. (Noelle Whessoe, Inc. v. Independent
Testing Consultants, Inc., G.R. No. 199851, Nov. 7,
2018, as penned by J. Leonen)
Effect of registration or non-registration
Labor contractors are mandatorily required to
register with DOLE. Failure to register presumes
that the non-registrant is an LOC. However, this
is a disputable presumption. Although
unregistered, the contractor may prove that it is
a legitimate contractor.
The fact of being registered is not conclusive
proof of being a legitimate contractor. Neither
does the registration presume the registrant to
be a legitimate contractor, actual conduct of
the relationship proves independent
contractorship.
Q: Luningning Foods engaged the services of
Lamitan Manpower, Inc., a bona fide
independent contractor, to provide “tasters”
that will check on food quality. Subsequently,
these “tasters” joined the union of rank-and-
file employees of Luningning and demanded
that they be made regular employees of the
latter as they are performing functions
necessary and desirable to operate the
company’s business. Luningning rejected the
demand for regularization. On behalf of the
“tasters”, the union then filed a notice of
strike with the DOLE.
In response, Luningning sought a restraining
order from the RTC arguing that the DOLE
does not have jurisdiction over the case since
it does not have an employer-employee
relationship with the employees of an
independent contractor. If you were the RTC
judge, would you issue a restraining order
against the union? (2014 BAR)
A: YES. There is no labor dispute in the instant
case. Since Lamitan Manpower is a bona fide
independent contractor, there is no employee-
employer relationship between the Luningning
and the tasters.
Q: Linis Manpower, Inc. (LMI) had provided
janitorial services to the POEA since March
2009. Its service contract was renewed every
 Post-Employment

three months. However, in the bidding held
in June 2012, LMI was disqualified and
excluded. In 2013, six janitors of LMI
formerly assigned at POEA filed a complaint
for underpayment of wages. Both LMI and
POEA were impleaded as respondents.
Should POEA, a government agency subject to
budgetary appropriations from Congress, be
held liable solidarily with LMI for the
payment of salary differentials due to the
complainant? Cite the legal basis of your
answer. (2014 BAR)
As principal, Star Crafts will always be an
employer in relation to the workers supplied by
its contractor. Its status as employer is either
direct or indirect depending on whether the
contractor is legitimate or not. Thus, even if
People Plus were a legitimate job contractor, still
Star Crafts will be treated as a statutory
employer for purposes of paying the workers’
unpaid wages and benefits.

A: YES, but only to the extent of work performed

under the contract. As what the second
paragraph of Art. 106 of the Labor Code
provides. The fact that POEA is a government
agency is of no moment. In U.S.A v. Ruiz (G.R. No.
L-35645, May 22, 1985), the Supreme Court ruled
that the State may be sued if the contract it
entered into is pursuant to its proprietary
functions.

Q: Star Crafts is a lantern maker based in

Pampanga. It supplies Christmas lanterns to
stores in Luzon, Metro Manila, and parts of
Visayas, within the months of August to
November being the busiest months. Its
factory employs a workforce of 2,000
workers who make different lanterns daily
for the whole year. Because of increased
demand, Star Crafts entered into a
contractual arrangement with People Plus, a
service contractor, to supply the former with
I00 workers for only 4 months, August to
November, at a rate different from what they
pay their regular employees. The contract
with People Plus stipulates that all
equipment and raw materials will be
supplied by Star Crafts with the express
condition that the workers cannot take any
of the designs home and must complete their
tasks within the premises of Star Crafts. Is
there an employer-employee relationship
between Star Crafts and the 100 workers
from People Plus? Explain. (2015 BAR)

A: YES. People Plus is a labor-only-contractor

because it is not substantially capitalized.
Neither does it carry on an independent
business in which it uses its own investment in
the form of tools, equipment, machineries, or
work premises. Hence, it is just an agent or
recruiter of workers who perform work directly
related to the trade of Star Crafts. Since both the
essential element and the conforming element of
labor-only contracting are present, Star Crafts
becomes the employer of the supplied worker.

UNIVERSITY OF SANTO TOMAS 150

2021 GOLDEN NOTES
 Labor Law and Social Legislation
TERMINATION OF EMPLOYMENT
Coverage of Termination of Employment
Applies to all establishments or undertakings
whether for profit or not. (LC, Art. 293, as
renumbered)
Termination is a broader concept that is used to
denote dismissal or lay-off. It may also imply
complete severance of employer-employee
relationship.
On the other hand, dismissal is a form of ending
an employer-employee relationship initiated
either by the employee or employer.
e.g., Just cause or authorized cause dismissal.
Lay-off is a termination initiated by the
employer without prejudice to reinstatement or
recall of an employee who has been temporarily
separated brought about by adverse economic
conditions.
SECURITY OF TENURE
No worker shall be dismissed except for a just or
authorized cause provided by law and after due
process. (LC, Art. 294, as renumbered)
The policy of the State is to assure the right of
workers to security of tenure. (1987 Constitution,
Art. XIII, Sec. 3) The guaranty is an act of social
justice.
Security of Tenure is the right not to be
removed from one’s job without valid cause and
valid procedure. It extends to regular as well as
nonregular employment. (Kiamco v. NLRC, G.R.
No. 129449, June 29, 1999)
MANAGEMENT RIGHTS
The right to stay on the job against the right to
remove the employee from the job are two
differing rights. Labor relations endlessly
requires balancing the rights and interests of
both the employer and the employee.
Basic Rights of the Employer
1. Right to manage people;
2. Right to discipline;
3. Right to transfer employees;
151
4. Right to demote; and
5. Right to dismiss.
See also the discussion under Management
Prerogative.
Right to Dismiss
It is management prerogative to transfer,
demote, discipline and even to dismiss an
employee to protect its business, provided it is
not tainted with unfair labor practice. (Petrophil
Corporation v. NLRC, et al., G.R. No. L-64048, Aug.
29, 1986)
A company has the right to dismiss its erring
employees if only as a measure of self-protection
against acts inimical to its interest. (Filipro, Inc. v.
NLRC, G.R. No. 70546, Oct. 16, 1986)
Power to Dismiss Not Absolute
GR: An employer can dismiss or lay-off an
employee for just and authorized causes
enumerated under Art. 297 and Art. 298 of the
LC.
XPN: The right of an employer to freely
discharge his employees is subject to regulation
by the State, in the exercise of its paramount
police power. (Manila Electric Company v. NLRC,
G.R. No. 78763, July 12, 1989)
NOTE: The employer is bound to exercise
caution in terminating the services of his
employees especially so when it is made upon
the request of a labor union pursuant to the CBA.
Dismissal must not be arbitrary and capricious.
(Rance, et al., v. NLRC, G.R. No. 68147, June 30,
1988)
The right of employers to shape their own work
force is recognized; however, this management
prerogative must not curtail the basic right of
employees to security of tenure. There must be a
valid and lawful reason for terminating the
employment of a worker. Otherwise, it is illegal
and would be dealt with by the courts
accordingly. (Alert Security and Investigation
Agency, Inc. v. Pasawilan, G.R. No. 182397, Sept.
14, 2011)
TERMINATION BY EMPLOYER
2-Fold Requirement for Lawful Dismissal
 Termination of Employment
1. Substantive – legality or illegality of the
act of dismissal (just and authorized
causes)
2. Procedural – legality or illegality of the
manner of dismissal (due process; notice
and hearing)
JUST CAUSE vs. AUTHORIZED CAUSE
Authorized cause dismissal is a form of
terminating Er-Ee relationship with a liability on
the part of the employer to pay separation pay as
mandated by law. It does not necessarily imply
delinquency or culpability on the part of the
employee. Instead, the dismissal process is
initiated by the employer's exercise of his
management prerogative such as installation of
labor-saving devices, closure of business or
implementing a retrenchment program. (Jaka
Food v. Pacot, G.R. No. 151378, March 28, 2005).
On the other hand, a just cause dismissal
implies that the employee has committed, or is
guilty of, some violation against the employer,
that is, the employee has committed some
serious misconduct, is guilty of fraud against the
employer or he has neglected his duties such as
abandonment. Thus, the employee himself
initiated the dismissal process. Payment of
separation pay, as a rule, is not required in just
cause dismissal. However, where the employee
is dismissed for causes other than serious
misconduct or those reflecting on his moral
character, separation pay may be allowed as a
measure of social justice. (2 Poquiz, Labor
Standards, 2012).
Q: Aldovino and her co-applicants applied for
work at Gold and Green Manpower, a local
manning agency. Eventually, they were hired
as sewers for Dipper Semi-Conductor, a
Taiwan-based company. Their respective
employment contracts provided an eight (8)-
hour working day, a fixed monthly salary,
and entitlement to overtime pay, among
others. Once Aldovino and her co-workers
arrived in Taiwan, Gold and Green Manpower
took all their travel documents, including
their passports. They were then made to sign
another contract that provides that they
would be paid on a piece-rate basis instead of
a fixed monthly salary. Because they were
paid on a piece-rate basis, they received less
than the fixed monthly salary stipulated in
their original contract. When Aldovino and
her co-workers inquired, Dipper Semi-
Conductor refused to disclose the schedule of
payment on a piece-rate basis.
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Aldovino and her co-workers filed a
Complaint against their employers, Dipper
Semi-Conductor and Sage International
before a local court in Taiwan. The parties
met before the Bureau of Labor Affairs for a
dialogue. There, Dipper Semi-Conductor
ordered Aldovino and her co-workers to
return to the Philippines as it was no longer
interested in their services. All of them
returned to the Philippines.
They eventually filed before the Labor
Arbiter a case for illegal termination,
underpayment of salaries, human trafficking,
illegal signing of papers, and other money
claims. Respondents argued that petitioners
were not illegally dismissed and that they
voluntarily returned to the Philippines. Were
petitioners illegally dismissed?
A: YES. Under the Labor Code, employers may
only terminate employment for a just or
authorized cause and after complying with
procedural due process requirements. Arts. 297
and 300 of the Labor Code enumerate the causes
of employment termination either by employers
or by employees. In illegal dismissal cases, the
burden of proof that employees were validly
dismissed rests on the employers. Failure to
discharge this burden means that the dismissal
is illegal.
A review of the records here shows that the
termination of petitioners' employment was
effected merely because respondents no longer
wanted their services. This is not an authorized
or just cause for dismissal under the Labor Code.
Employment contracts cannot be terminated on
a whim. Furthermore, petitioners were not
accorded due process. A valid dismissal must
comply with substantive and procedural due
process: there must be a valid cause and a valid
procedure. The employer must comply with the
two (2)-notice requirement, while the employee
must be given an opportunity to be heard. Here,
petitioners were only verbally dismissed,
without any notice given or having been
informed of any just cause for their dismissal.
With their right to substantive and procedural
due process denied, petitioners were illegally
dismissed from service. (Julita M. Aldovino et al.,
v. Gold and Green Manpower et al. G.R. No.
200811, June 19, 2019, as penned by J. Leonen)
Q: Joy was deployed to work for Taiwan
Wacoal, Co. Ltd. on June 26, 1997 for one
year. Sameer Overseas Placement Agency
152
 Labor Law and Social Legislation
claims that on July 14, 1997, Mr. Huwang
from Wacoal informed Joy, without prior
notice, that she was terminated and that she
should prepare for immediate repatriation.
Hence, Joy filed a complaint with the NLRC
claiming that she was illegally dismissed.
The NLRC declared that Joy was illegally
dismissed, ruling that Sameer Overseas
Placement Agency failed to prove that there
were just causes for termination. Sameer
Overseas Placement Agency counters that
there was just cause for termination because
there was a finding of Wacoal of Joy’s
inefficiency, negligence in her duties, and
failure to comply with the work
requirements of her foreign employer.
Therefore, it claims that Joy’s dismissal was
valid. Was Joy illegally dismissed?
A: YES. Security of tenure for labor is guaranteed
by our Constitution. With respect to the rights of
overseas Filipino workers, we follow the
principle of lex loci contractus. By our laws,
overseas Filipino workers (OFWs) may only be
terminated for a just or authorized cause and
after compliance with procedural due process
requirements. Joy’s dismissal less than one year
from hiring and her repatriation on the same day
show not only failure on the part of Sameer
Overseas Placement Agency 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. The abruptness of the termination
negated any finding that she was properly
notified and given the opportunity to be heard.
Her constitutional right to due process of law
was violated. (Sameer Overseas Placement
Agency v. Joy Cabiles, G.R. No. 170139, Aug. 5,
2014, as penned by J. Leonen)
JUST CAUSE
It is a termination initiated by the employee.
This is an exercise of management prerogative;
however, it must not be exercised with abuse of
discretion.
Basis
As a measure of self-protection against acts
inimical to its interest, a company has the right
to dismiss its erring employees. An employer
cannot be compelled to continue employing an
employee guilty of acts inimical to the
employer's interest, justifying loss of confidence
153
in him. (Yabut v. Meralco, G.R. No. 190436, Jan. 16,
2012)
Procedural Requirements of Dismissal for
Just Causes:
1. Notice (two-notice rule) – the employer is
required to furnish an employee who is to
be dismissed with 2 written notices before
such termination:
a. Pre-notice – the notice to apprise the
employee of the particular acts or
omissions for which dismissal is
sought and is considered as the
proper charge;
NOTE: The first written notice to be
served on the employees should contain
the specific causes or grounds for
termination against them, and a directive
that the employees are given the
opportunity to submit their written
explanation within a reasonable period.
This should be construed as a period of at
least five (5) calendar days from
receipt of the notice to give the
employees an opportunity to study the
accusation against them, consult a union
official or lawyer, gather data and
evidence, and decide on the defenses they
will raise against the complaint. (King of
Kings Transport Inc. v. Mamac, G.R. No.
166208 June 29, 2007)
b. Post-notice – the notice informing
the employee of the employer’s
decision to dismiss him which notice
must come only after the employee is
given a reasonable period from
receipt of the first notice within which
to answer the charge, and ample
opportunity to be heard and defend
himself.
2. Hearing (opportunity to be heard) – the
worker may answer the allegations against
him in the notice of dismissal within a
reasonable period from receipt of the
notice of dismissal with the ample
opportunity to be heard.
3. Judgement/Decision to Dismiss – it
should be in writing and should clearly
state all the reasons for dismissal.
Under the Perez Doctrine, the two-notice-and-a-
hearing rule was not imposed because hearing
 Termination of Employment
may now be dispensed. The Supreme Court held
that what is important is that the parties are
given the opportunity to be heard unless they
request in writing for a hearing. What is
required is that the complainant is given the
opportunity to be heard. (Perez v. Philippine
Telegram and Telephone Company, G.R. 152048,
April 7, 2009)
Where the employer had a valid reason to
dismiss the employee, but failed to comply with
the procedural due process requirement, the
dismissal may be upheld but the employer will
be penalized to pay an indemnity to the
employee. (Wenphil Corp. v. NLRC, G.R. No. 80587,
Feb. 8, 1989)
The above-cited doctrine was reinstated in the
case of Agabon v. NLRC, In cases involving
dismissals for cause but without observance of
the twin requirements of notice and hearing, the
better rule is to abandon the Serrano doctrine
and to follow Wenphil by holding that the
dismissal was for just cause but imposing
sanctions on the employer. Such sanctions,
however, must be stiffer than that imposed
in Wenphil. (Agabon v. NLRC, G.R. No. 158693,
Nov. 17, 2004)
NOTE: The burden of proving that the
termination was for a valid or authorized cause
shall rest on the Er. (LC, Art. 292[b])
Indemnity in the Form of Nominal Damages
An employer is liable to pay indemnity in the
form of nominal damages to an employee who
has been dismissed if, in effecting such dismissal,
the employer fails to comply with the
requirements of due process.
The violation of the petitioners' right to
statutory due process by the private respondent
warrants the payment of indemnity in the form
of nominal damages. The amount of such
damages is addressed to the sound discretion of
the court, taking into account the relevant
circumstances. (Agabon v. NLRC, G.R. No. 158693,
Nov. 17, 2004)
Just Causes for Termination
1. Serious misconduct or willful
disobedience by the Ee of the lawful orders
of his Er or representative in connection
with his work;
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
2. Gross and habitual neglect by the Ee of
his duties;
3. Fraud or willful breach by the Ee of the
trust reposed in him by his Er or duly
organized representative;
4. Commission of a crime or offense by the
Ee against the person of his Er or any
immediate member of his family or his duly
authorized representative;
5. Other causes analogous to the foregoing.
(LC, Art. 297, as renumbered)
SERIOUS MISCONDUCT
It is an improper or wrong conduct; the
transgression of some established and definite
rule of action, a forbidden act, a dereliction of
duty, willful in character, and implies wrongful
intent and not mere error in judgment. To be
serious within the meaning and intendment of
the law, the misconduct must be of such grave
and aggravated character and not merely trivial
or unimportant. (Villamor Golf Club v. Pehid, G.R.
No. 166152, Oct. 4, 2005)
Elements:
1. It must be serious or of such a grave and
aggravated character;
2. Must relate to the performance of the Ees’
duties;
3. Ee has become unfit to continue working
for the Er. (Philippine Aeolus Automotive
United Corp. v. NLRC, G.R. No. 124617, April
28, 2000)
Examples:
1. Sexual harassment;
2. Fighting within the company premises;
3. Uttering obscene, insulting, or offensive
words against a superior;
4. Falsification of time records;
5. Gross immorality.
Q: Delos Reyes was a university professor
and the president of the university’s Faculty
and Employees Union, a duly registered labor
union. An administrative complaint for grave
misconduct was filed against him for using
expletives at Paula Mae, a minor student at
the university, when the latter was holding
the doorknob on her way out of the faculty
room, while he held the doorknob on the
other side. When Paula Mae stepped aside,
Delos Reyes allegedly exclaimed the words
“anak ng puta” and walked on without any
154
 Labor Law and Social Legislation
remorse, causing emotional trauma to Paula
Mae.
Delos Reyes denied the accusations against
him and filed a counter-complaint against
Paula Mae for maligning and tarnishing his
established reputation in the university. A
hearing was held and later, Delos Reyes was
issued a Notice of Dismissal.
a. Was Delos Reyes validly dismissed?
b. Did his dismissal constitute unfair labor
practice?
A:
a. YES. A teacher exclaiming "anak ng puta"
after having encountered a student is an
unquestionable act of misconduct.
However, whether it is serious misconduct
that warrants the teacher's dismissal will
depend on the context of the phrase's use.
While uttering an expletive out loud in the
spur of the moment is not grave
misconduct per se, the refusal to
acknowledge this mistake and the attempt
to cause further damage and distress to a
minor student cannot be mere errors of
judgment. Petitioner's subsequent acts are
willful, which negate professionalism in his
behavior. They contradict a professor's
responsibility of giving primacy to the
students' interests and respecting the
institution in which he teaches. In the
interest of self-preservation, petitioner
refused to answer for his own mistake;
instead, he played the victim and sought to
find fault in a student who had no ill motive
against him. Indeed, had he been modest
enough to own up to his first blunder,
petitioner's case would have gone an
entirely different way.
b. NO. In Great Pacific Life Employees Union v.
Great Pacific Life Assurance Corporation,
this Court discussed that if the unfair
treatment does not relate to or affect the
workers' right to self-organize, it cannot be
deemed unfair labor practice. A dismissal
of a union officer is not necessarily
discriminatory, especially when that officer
committed an act of misconduct. In fact,
union officers are held to higher standards.
In this case, it is clear that petitioner's
dismissal, which was brought about by his
personal acts, does not constitute unfair
labor practice as provided under the Labor
155
Code. Dismissing him was not meant to
violate the right of the university
employees to self-organize. Neither was it
meant to interfere with the Union's
activities. Finally, petitioner cannot raise
the defense that he was the Union's
president; this does not make him immune
from liability for his acts of misconduct.
(Adamson University Faculty and Employees
Union, et al. v. Adamson University, G.R. No.
227070, March 9, 2020, as penned by J.
Leonen)
Q: Escando, upset at his transfer to the
washer section, repeatedly uttered “gago ka”
and threatened bodily harm to his superior
Mr. Andres. Is the utterance of the obscene
words and threats of bodily harm gross and
willful misconduct?
A: YES. The repeated utterances by Escando of
obscene, insulting, or offensive words against a
superior were not only destructive of the morals
of his co-Ees and a violation of the company
rules and regulations, but also constitute gross
misconduct, which is one of the grounds
provided by law to terminate the services of an
Ee. (Autobus Workers Union v. NLRC, G.R. No.
117453, June 26, 1998)
Q: Samson made insulting and obscene
utterances towards the General Manager
saying, “Si EDT bullshit yan, sabihin mo kay
EDT yan” among others during the Christmas
party. Are the utterances towards the
General Manager gross misconduct?
A: The alleged misconduct of Samson when
viewed in its context is not of such serious and
grave character as to warrant his dismissal.
Samson made the utterances and obscene
gestures at an informal Christmas gathering and
it is to be expected during this kind of
gatherings, where tongues are more often than
not loosened by liquor of other alcoholic
beverages, that Ees freely express their
grievances and gripes against their Ers. Ees
should be allowed wider latitude to freely
express their grievances and gripes against their
Er. Ees should be allowed wider latitude to freely
express their sentiments during these kinds of
occasions, which are beyond the disciplinary
authority of the Er. (Samson v. NLRC, G.R. No.
121035, April 12, 2000)
Q: Cheryll Leus was a non-teaching personnel
employed in St. Scholastica’s College
Westgrove (SSCW). Cheryll and her boyfriend
 Termination of Employment
conceived a child out of wedlock. SSCW
dismissed her on the ground that her
pregnancy out of wedlock constitutes
disgraceful and immoral conduct and ran
counter to the moral principles that SSCW
stands for and teaches its students. Does
pregnancy out of wedlock (without a legal
impediment to marry) constitute immoral
conduct as a ground for dismissal
contemplated by law?
A: NO. It is an immoral conduct if such does not
conform to what society generally views as
respectable or moral. Substantial evidence must
be presented to prove that such conduct is
considered immoral. The two-step process to
determine whether the conduct is immoral:
1. Consideration of the totality of the
circumstances surrounding it; and
2. Assessment of said circumstances based
on the prevailing norms of conduct.
Pre-marital sexual relations between two
consenting adults who have no impediment to
marry each other, and, consequently, conceiving
a child out of wedlock, does not amount to a
disgraceful or immoral conduct. (Leus v. SSCW,
G.R. No. 187226, Jan. 28, 2015)
A teacher engaging in an extra-marital affair
with another married person is a serious
misconduct, if not an immoral act. But a teacher
falling in love with her pupil and, subsequently,
contracting a lawful marriage with him, though
there is a disparity in their ages and academic
level cannot be considered as a defiance of
contemporary social mores. (Chua-Qua v. Clave.
G.R. No. 49549; Aug. 30, 1990)
Q: Jose and Erica, former sweethearts, both
worked as sales representatives for Magna, a
multinational firm engaged in the
manufacture and sale of pharmaceutical
products. Although the couple had already
broken off their relationship, Jose continued
to have special feelings for Erica. One
afternoon, Jose chanced upon Erica riding in
the car of Paolo, a co-employee and Erica's
ardent suitor; the two were on their way
back to the office from a sales call on Silver
Drug, a major drug retailer. In a fit of
extreme jealousy, Jose rammed Paolo's car,
causing severe injuries to Paolo and Erica.
Jose's flare up also caused heavy damage to
the two company-owned cars they were
driving. As lawyer for Magna, advise the
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
company on whether just and valid grounds
exist to dismiss Jose. (2013 BAR)
A: Jose can be dismissed for serious misconduct,
violation of company rules and regulations, and
commission of a crime against the employer’s
representatives. For misconduct to be serious
and therefore a valid ground for dismissal, it
must be of grave and aggravated character and
not merely trivial or unimportant and connected
with the work of the employee.
Q: Assuming this time that Magna dismissed
Jose from employment for cause and you are
the lawyer of Jose, how would you argue the
position that Jose's dismissal was illegal?
(2013 BAR)
A: The offense committed by Jose did not relate
to the performance of his duties. For misconduct
or improper behavior to be a just cause for
dismissal, it:
a. must be serious;
b. must relate to the performance of the
employee’s duties; and
c. must show that the employee has become
unfit to continue working for the
employer.
On the basis of the forgoing guidelines, it can be
concluded that Paolo was not guilty of serious
misconduct: Paolo was not performing official
work at the time of the incident. (Lagrosas v.
Bristol Myers Squibb, G.R. No. 168637/170684
[2008]) Additionally, there was no compliance
with the rudimentary requirements of due
process.
Q: Rivera, a bus conductor of Genesis, was
dismissed on account of a discrepancy in the
amount he declared on bus ticket receipts.
He reported and remitted the amount of
P198.00 instead of the admittedly correct
amount of P394.00 worth of bus ticket
receipts. He averred that it was an honest
mistake, which he was unable to correct
because the bus encountered mechanical
problems.
Contending that this termination was
arbitrary and not based on just causes for
terminating employment, he filed a
complaint for illegal dismissal. Genesis
claimed that Rivera's misdeclaration of the
amount in the bus ticket receipts and failure
to remit the correct amount clearly violated
Genesis' policies and amounted to serious
misconduct, fraud, and willful breach of
156
 Labor Law and Social Legislation
trust; thereby justifying his dismissal. Was
Rivera terminated with just cause?
A: NO. Absent any other supporting evidence,
the error in a single ticket issued by petitioner
can hardly be used to justify the inference that
he has committed serious misconduct or has
acted in a manner that runs afoul of his
employer's trust. Terminating his employment
on these unfounded reasons is manifestly unjust.
The social justice suppositions underlying labor
laws require that the statutory grounds
justifying termination of employment should not
be read to justify the view that bus conductors
should, in all cases, be free from any kind of
error. Not every improper act should be taken to
justify the termination of employment. (Rivera v.
Genesis Transport Service Inc., and Moises, G.R.
No. 215568, Aug. 3, 2015, as penned by J. Leonen.)
WILLFUL DISOBEDIENCE
There is willful disobedience when there is
wanton disregard to follow orders of the
employer. Willful is characterized by a wrongful
perverse mental attitude rendering the
employee’s act inconsistent with the proper
subordination.
The employee’s disobedience must relate to
substantial matters, not merely to trivial or
unimportant matters. Disobedience to be
considered willful must be resorted to without
regard to its consequences. (DOLE Manual; BLTB
Co. v. CA 71 SCRA 470; Family Planning Org. of the
Phil. Inc. v. NLRC, G.R. No. 75907, March 23, 1992)
Requisites:
1. The Ees assailed conduct must have been
willful or intentional, the willfulness being
characterized by a wrongful and perverse
attitude; and
2. The disobeyed orders, regulations, or
instructions of the Er must be:
a. Reasonable and lawful
b. Sufficiently known to the Ee
c. In connection with the duties which
the Ee has been engaged to
discharge. (Cosep v. NLRC, G.R. No.
124966, June 16, 1998; Realda v. New
Age Graphics, G.R. No. 192190, April
25, 2012)
Valid Transfer
157
GR: Management has the right to transfer or
reassign an employee. The right of the employer
to transfer the employees in the interest of the
efficient and economic operation of its business
cannot be seriously challenged.
XPN: Where the transfer is vitiated by improper
motive and is merely a disguised attempt to
remove or punish the employee sought to be
transferred. (Associated Labor Unions v. NLRC,
G.R. Nos. 76916-17, March 31, 1983)
Invalid Transfer
The right to transfer personnel should not be
used as a subterfuge by the employer to rid
himself of an undesirable worker. Nor when the
real reason is to penalize an employee for his
union activities and thereby defeat his right to
self-organization. (Pocketbell Philippines, Inc. v.
NLRC, et al., G.R. No. 106843, Jan. 20, 1995)
In case of a constructive dismissal, the employer
has the burden of proving that the transfer and
demotion of an employee are for valid and
legitimate grounds such as genuine business
necessity. Particularly, for a transfer not to be
considered a constructive dismissal, the
employer must be able to show that such
transfer is not unreasonable, inconvenient, or
prejudicial to the employee; nor does it involve a
demotion in rank or a diminution of his salaries,
privileges and other benefits. Failure of the
employer to overcome this burden of proof, the
employee's demotion shall no doubt be
tantamount to unlawful constructive dismissal.
(SIMIFRU v. Baya, G.R. No. 188269, April 17, 2017)
Disobeying an Order to Transfer
The requisites for willful disobedience must be
observed before dismissing an employee who
disobeys an order transferring him from one job
or one location to another. (Azucena, Vol. II,
2016, p. 829)
NOTE: The refusal to obey a valid transfer order
constitutes willful disobedience of a lawful order
of an employer. Employees may object to,
negotiate, and seek redress against employers
for rules or orders that they regard as unjust or
illegal. However, until and unless these rules or
orders are declared illegal or improper by
competent authority, the employees ignore or
disobey them at their peril. But transfer should
not result to demotion of rank, which is
tantamount to constructive dismissal. (Manila
 Termination of Employment
Pavilion Hotel v. Henry Delada. G.R. No. 189947;
Jan. 25, 2012)
Disobedience of an Inconvenient Transfer
GR: Inconvenience to the employee does not
necessarily invalidate a transfer order.
NOTE: The transfer from one city to another
within the country is valid as long as there is no
bad faith on the part of the employer.
(Homeowners Savings and Loan Association, Inc.
v. NLRC, et al., G.R. No. 97067, Sept. 26, 1996)
XPN: Inconvenience caused by
unreasonableness of the transfer order makes
the order itself invalid, and disobedience thereof
is not a reason to dismiss the worker.
NOTE: The reasonableness and lawfulness of a
rule, order or instruction depend on the
circumstances availing in each case.
Reasonableness pertains to the kind or
character of directives and commands and to the
manner through which they are made. (Escobin
et al. v. NLRC et al., G.R. No. 118159, April 15,
1998)
Q. Is refusal to a promotion by an Ee an act of
insubordination or willful disobedience?
A. NO. There is no law that compels an Ee to
accept a promotion because a promotion is in
the nature of a gift or reward, which a person
has the right to refuse. The exercise of the Ee of
the right to refuse a promotion cannot be
considered in law as insubordination or willful
disobedience. (PT&T Corp. v. CA, G.R. No. 152057,
Sept. 29, 2003)
Q: Escobin’s group were security guards
based in Basilan. They were placed in
floating status and were asked to report for
reassignment in Metro Manila by PISI. Upon
failure to report or respond to such
directives, they were ordered dismissed from
employment by PISI for willful disobedience.
Did the failure to report to Manila amount to
willful disobedience?
A: NO. The reasonableness of the rule pertains to
the kind or character of directives and
commands and to the manner through which
they are made. In this case, the order to report to
the Manila office fails to meet this standard. The
order to report to Manila was inconvenient,
unreasonable, and prejudicial to Escobin’s group
since they are heads of families residing in
Basilan and they were not given transportation
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
money or assurance of availability of work in
Manila. (Escobin v. NLRC, G.R. No. 118159, April
15, 1998)
Q: ICT Marketing Services, Inc. hired
respondent Mariphil as its Customer Service
Representative (CSR) and assigned her to its
Capital One account. Later, Mariphil became
a regular employee. Later on, Mariphil wrote
to ICT’s Vice President complaining about
supposed irregularities in the handling of
funds entrusted to ICT by Washington
Mutual. However, no action appears to have
been taken on her complaint. Mariphil was
then transferred to the Bank of America
account where she was required to attend a
training seminar for six days. On the third
day of training, Mariphil was unable to
attend.
When she reported for training the next day,
Mariphil was informed that she could not be
certified to handle calls for Bank of America
due to her failure to complete the training.
From then on, she was placed on "floating
status" and was not given any work
assignment. After a month, the HR Manager
tendered her resignation from work,
effective upon receipt of the letter. Hence,
Mariphil filed a complaint for constructive
dismissal against ICT. Did ICT constructively
dismissed Mariphil?
A: YES. In causing respondent's transfer,
petitioner clearly acted in bad faith and with
discrimination, insensibility and disdain; the
transfer was effected as a form of punishment
for her raising a valid grievance related to her
work. Furthermore, said transfer was obviously
unreasonable, not to mention contrary to
experience, logic, and good business sense. This
being the case, the transfer amounted to
constructive dismissal. The managerial
prerogative to transfer personnel must be
exercised without grave abuse of discretion,
bearing in mind the basic elements of justice and
fair play. (ICT Marketing Services, Inc. v. Mariphil
L. Sales. G.R. No. 202090, 9 Sept. 2015)
GROSS AND HABITUAL NEGLIGENCE
It implies a want or absence of or failure to
exercise diligence that an ordinary prudent man
would use in his own affairs. However, such
neglect must not only be gross but must also be
habitual in character. (DOLE Manual)
158
 Labor Law and Social Legislation
Degree of Negligence as a Just Cause for
Termination
GR: Gross and habitual negligence.
a. Gross neglect has been defined as the
want or absence of or failure to exercise
slight care or diligence, or the entire
absence of care. It evinces a thoughtless
disregard of consequences without
exerting any effort to avoid them. (NBS v.
Court of Appeals. G.R. No. 146741; Feb. 27,
2002)
b. Habitual neglect implies repeated failure
to perform one’s duties over a period of
time, depending upon the circumstance.
(JGB and Associates v. NLRC, G.R. No.
10939, March 7, 1996)
XPN: An employee who was grossly negligent in
the performance of his duty, though such
negligence committed was not habitual, may be
dismissed especially if the grossly negligent act
resulted in substantial damage to the company.
(LBC Express v. Mateo. G.R. No. 168215; June 9,
2009)
Q: Antiola, as assorter of baby infant dress for
Judy Phils., erroneously assorted and
packaged 2,680 dozens of infant wears.
Antiola was dismissed from employment for
this infraction. Does the single act of
misassortment constitute gross negligence?
A: NO. Such neglect must not only be gross but
also habitual in character. Hence, the penalty of
dismissal is quite severe considering that Antiola
committed the infraction for the first time. (Judy
Phils. v. NLRC, G.R. No. 111934, April 29, 1998)
Failure in Performance Evaluations
As a general concept, “poor performance” is
equivalent to inefficiency and incompetence in
the performance of official duties. The fact that
an Ee’s performance is found to be poor or
unsatisfactory does not necessarily mean that
the Ee is grossly and habitually negligent of his
duties. Gross negligence implies a want or
absence of or failure to exercise slight care of
diligence or the entire absence or care. He
evinces a thoughtless disregard of consequences
without exerting any effort to avoid them.
(Eastern Overseas Employment Center Inc. v. Bea,
G.R. 143023, Nov. 29, 2005)
159
“Unsatisfactory Rating” can be a just cause for
dismissal only if it amounts to gross and habitual
neglect of duties. (Azucena, Vol. 2, 2016, p. 858)
Requisites of Poor Performance as a Ground
for Termination
1. Employer must prove that it has set
standards of performance expected of the
employee;
2. These standards must be reasonable and
in connection with the employee’s work;
and
3. There must be proof that the employee
failed to meet the standards despite the
given reasonable opportunity to meet the
same.
Inefficiency as a Just Cause for Dismissal
Failure to observe prescribed standards of work
or to fulfill reasonable work assignments due to
inefficiency may constitute just cause for
dismissal. Such inefficiency is understood to
mean failure to attain work goals or work
quotas, either by failing to complete the same
within the allotted reasonable period, or by
producing unsatisfactory results (Buiser v.
Leogardo, G.R. No. L-63316, July 31, 1984). This
ground is considered analogous to those
enumerated under Art. 297 (Skippers United
Pacific v. Magud, G.R. No. 166363, Aug. 15, 2006).
Q: Gamido was a quality control inspector of
VH Manufacturing. Gamido was allegedly
caught by the company Pres. Dy Juanco of
sleeping and was dismissed from
employment. Did Gamido’s act of sleeping on
the job constitute a valid cause of dismissal?
A: NO. Sleeping on the job as a valid ground for
dismissal only applies to security guards whose
duty necessitates them to be awake and watchful
at all times. Gamido’s single act of sleeping
further shows that the alleged negligence or
neglect of duty was neither gross nor habitual
(VH Manufacturing v. NLRC, G.R. No. 130957, Jan.
19, 2000).
Some Forms of Neglect of Duty
1. Habitual tardiness and absenteeism
2. Abandonment:
a. Failure to report for work or absence
without justifiable reason
b. Clear intention to sever Er-Ee
relationship manifested by some
 Termination of Employment
overt acts (Labor et. al v. NLRC, G.R.
No. 110388, Sept. 14, 1995).
Abandonment as a Just Cause for
Termination
It means deliberate and unjustified refusal of an
employee to resume his employment.
Requirements for a Valid Finding of
Abandonment
Two (2) factors must be present:
1. The failure to report for work, or absence
without valid or justifiable reason; and
2. A clear intention to sever Er-Ee
relationship, with the 2nd element as the
more determinative factor, being
manifested by some overt acts (Sta.
Catalina College v. NLRC, G.R. No. 144483,
Nov. 19, 2003).
How to Prove Abandonment
Abandonment is proven when the Er must show
that the Ee deliberately and unjustifiably refused
to resume his employment without any intention
of returning. There must be a concurrence of the
intention to abandon and some overt acts from
which an Ee may be deduced as having no more
intention to work. The law, however, does not
enumerate what specific overt acts can be
considered as strong evidence of the intention to
sever the Ee-Er relationship (Sta. Catalina
College v. NLRC, G.R. No. 144483, Nov. 19, 2003).
NOTE: In case of abandonment, the ER is still
required under the law to notify the employee of
his termination. There is still a need to observe
the two-notice rule and opportunity to be heard
requirement (New Puerto Commercial v. Lopez,
G.R. NO. 169999, July 26, 2010).
Q: Mejila, a barber at Windfield Barber Shop,
had an altercation with a fellow barber,
which resulted in his subsequent turning
over the duplicate keys of the shop to the
cashier, took away all his belongings
therefrom, and worked at different
barbershop. Mejila then filed an illegal
dismissal case but did not seek
reinstatement as a relief. Did Mejila commit
abandonment?
A: YES. Mejila’s acts such as surrendering the
shop’s keys, not reporting to the shop anymore
without any justifiable reason, his employment
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
in another barber shop, and the filing of a
complaint for illegal dismissal without praying
for reinstatement clearly show that there was a
concurrence of the intention to abandon and
some overt acts from which it may be inferred
that the Ee concerned has no more interest in
working (Jo v. NLRC, G.R. No. 121605, Feb. 2,
2000).
Q: The Ees averred that they were underpaid
and filed a complaint for money claims
against the Er before the LA. As a result of
their complaint, they were relieved from
their posts and were not given new
assignments despite the lapse of six months.
On the other hand, the Er maintains that the
Ees were not dismissed but were merely
transferred to a new post and voluntarily
abandoned their jobs when they failed to
report for duty in the new location. Upon
termination, the Ee moved to file a joint
complaint for illegal dismissal. Is there a
valid indication of abandonment from work?
A. NO. For abandonment of work to fall under
Art. 297 of the LC, as amended, as gross and
habitual neglect of duties there must be the
occurrence of two elements: first, there should
be a failure of the Ee to report for works without
a valid or justifiable reason and second, there
should be a showing that the Ee intended to
sever the Er-Ee relationship, the second element
being the more determinative factor as
manifested by overt acts.
The Er cannot simply conclude knowledge that
an Ee is ipso facto notified of a transfer when
there is no evidence to indicate that the Ee had
knowledge of the transfer order. Hence, the
failure of an Ee to report for work at the new
location cannot be taken against him as an
element of abandonment. In addition to these
tests for valid transfer, there should be proper
and effective notice to the Ee concerned. It is the
Er’s burden to show that the Ee was duly
notified of the transfer. Verily, an Er cannot
reasonably expect an Ee to report for work in a
new location without first informing said Ee of
the transfer. (Alert Security and Investigation
Agency, Inc. et al v. Saidali Pasawilan, et al., G.R.
No. 182397, Sept. 14, 2011)
Q: Leron was hired as a weaver by Demex. He
is paid on a piece-rate basis and is contracted
through job orders. He worked from Monday
to Saturday, but there were times when he
was required to work on Sundays. Leron
received his wages at the end of every week
160
 Labor Law and Social Legislation
but he never received standard benefits such
as 13th month pay, service incentive leave,
rest day pay, holiday pay, and overtime pay.
Later, Leron was dismissed, thus, he filed a
complaint for illegal dismissal. Demex
justifies Leron’s dismissal on the ground of
abandonment, arguing that Leron’s
unauthorized absences, non-compliance with
the return-to-work notices, and alleged act of
crumpling the first return-to-work notice are
indicators of his intention to sever his
employment. Was there a valid dismissal?
A: NO, the dismissal was invalid because
Demex’s evidence does not clearly establish a
case of abandonment. It failed to prove the
second element of abandonment. Abandonment
of work has been construed as "a clear and
deliberate intent to discontinue one's
employment without any intention of returning
back." To justify the dismissal of an employee on
this ground, two (2) elements must concur,
namely: "(a) the failure to report for work or
absence without valid or justifiable reason; and,
(b) a clear intention to sever the employer-
employee relationship."
Mere failure to report to work is insufficient to
support a charge of abandonment. The employer
must adduce clear evidence of the employee's
"deliberate, unjustified refusal . . . to resume
employment,'' which is manifested through the
employee's overt acts. (Demex v. Leron, G.R. No.
204288, Nov. 8, 2017, as penned by J. Leonen)
Gross Negligence vs. Habitual Neglect
The former connotes want of care in the
performance of one’s duties while the latter
implies repeated failure to perform one’s duties
over a period of time, depending upon the
circumstances. (Azucena, Vol. II, 2016, p. 847)
FRAUD OR WILLFUL BREACH OF TRUST
Fraud
Fraud, in its general sense, is deemed to
comprise anything calculated to deceive,
including all acts, omissions, and concealment
involving a breach of legal or equitable duty,
trust, or confidences justly reposed, resulting in
damage to another, or by which an undue and
unconscientious advantage is taken of another.
Deceit is a species of fraud. (Galvez v. CA, G.R. No.
187919, April 25, 2012).
Willful Breach of Trust
161
A breach is willful if it is done intentionally,
knowingly, and purposely without justifiable
excuse, as distinguished from an act done
carelessly, thoughtlessly, heedlessly and
inadvertently (Austria v. NLRC, G.R. No. 124382,
Aug. 6, 1999). But loss of trust or confidence can
be based on gross negligence. (School of the Holy
Spirit of Quezon City v. Taguiam, G.R. No. 165565,
July 14, 2008).
Requisites of Fraud or Willful Breach of Trust
1. There must be an act, omission, or
concealment;
2. The act, omission, or concealment involves
a breach of legal duty, trust, or confidence
justly reposed;
3. It must be committed against the employer
or his/her representative; and
4. It must be in connection with the
employee’s work.
Loss of Confidence
There is loss of confidence when the employer
has reasonable ground or has basis to believe
that the employee is responsible for the
misconduct and the nature of his participation
renders him unworthy of the trust and
confidence demanded by his position. Proof
beyond reasonable doubt it not required.
(Jerusalem v. Keppel Monte Bank, G.R. No. 169564,
April 6, 2011).
Loss of Trust And Confidence As A Just Cause
For Termination:
1. It applies only to cases involving:
a. Ees occupying positions of trust and
confidence (confidential and
managerial Ee’s) – To this class
belong managerial Ees, i.e., those
vested with the powers or prerogatives
to lay down management policies
and/or to hire, transfer, suspend, lay-
off, recall, discharge, assign or
discipline Ees or effectively
recommend such managerial actions.
Position of trust and confidence is
one where a person is entrusted with
confidence on delicate matters, or with
the custody, handling, or care and
protection of the employer’s property.
(Pandoy v. NLRC, G.R. No. 67664, May
20, 1992) and/or funds. (Gonzales v.
NLRC, 355 SCRA 197)
 Termination of Employment
NOTE: The mere existence of a basis
for the loss of trust and confidence
justifies the dismissal of the managerial
Ee because when an Ee accepts a
promotion to a managerial position or
to an office requiring full trust and
confidence, such Ee gives up some of
the rigid guaranties available to
ordinary workers. (Cecilia T. Manese v.
Jollibee Foods Corporation, G.R. No.
1704 54, Oct. 11, 2012)
b. Ees routinely charged with the care
and custody of the Er’s money or
property – To this class belong
cashiers, auditors, property custodians,
etc., or those who, in the normal and
routine exercise of their functions,
regularly handle significant amounts of
money or property. (Mabeza v. NLRC,
G.R. No. 118506, April 18, 1997)
2. The loss of trust and confidence must be
based on willful breach.
A breach is willful if it is done intentionally,
knowingly, and purposely without justifiable
excuse, as distinguished from an act done
carelessly, thoughtlessly, heedlessly, or
inadvertently. (De la Cruz v. NLRC, G.R. No.
119536, Feb. 17, 1997)
3. The act constituting the breach must be
“work-related” such as would show the Ee
concerned to be unfit to continue working
for the Er. (Gonzales v. NLRC, G.R. No.
131653, March 26, 2001)
4. It must be substantial and founded on
clearly established facts sufficient to
warrant the Ee’s separation from
employment. (Sulpicio Lines Inc. v. Gulde, G.R.
No. 149930, Feb. 22, 2002)
5. Fraud must be committed against the Er or
his representatives,
e.g.:
a. Falsification of time cards
b. Theft of company property
c. Unauthorized use of company vehicle
NOTE: The treatment of rank-and-file personnel
and managerial Ees in so far as the application of
the doctrine of loss of trust and confidence is
concerned is different. As regards managerial
Ees, such as Caoile, mere existence of a basis for
believing that such Ee has breached the trust of
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
his Er would suffice for his dismissal. (Caoile v.
NLRC, G.R. No. 115491, Nov. 24, 1998)
Guidelines for the Doctrine of Loss of
Confidence to Apply
1. Loss of confidence should not be simulated
(reasonable basis for loss of trust and
confidence);
2. Not used for subterfuge for causes which
are improper and/or illegal or unjustified;
3. Not arbitrarily asserted in the face of
overwhelming evidence to the contrary;
4. Must be genuine, not a mere afterthought
to justify earlier action taken in bad faith;
and
5. The Ee involved holds a position of trust
and confidence. (Ramos v. Court of Appeals,
G.R. No. 145405, June 29, 2004)
Q: Mary June CELIZ worked as Chief of Sales
concurrent with her position as Senior
Operations Manager with CORD, INC. Celiz
then asked that she be allowed to resign.
However, upon clearance, the Accounting
Department said that CELIZ need to account
the unliquidated advances amounting to
P713,471.00. She liquidated her advances,
but her accounting fell short of P445,272.93.
Upon her failure to account her advances,
CORD, INC. dismissed CELIZ for serious
breach of trust and confidence. CELIZ filed for
illegal dismissal. Is the dismissal of CELIZ due
to breach of trust and confidence valid?
A: YES. The dismissal of CELIZ due to breach of
trust and confidence was valid. In cases of
dismissal for breach of trust and confidence,
proof beyond reasonable doubt of an employee's
misconduct is not required. It is sufficient that
the employer had reasonable ground to believe
that the employee is responsible for the
misconduct, which renders him unworthy of the
trust and confidence demanded by his position.
The Court, upon review of the records of the
case, found that contrary to CELIZ’s contention,
there was substantial evidence showing that the
subject cash advances were properly attributed
to CELIZ and that she failed to liquidate the
same. In short, there was just cause to dismiss
her from the service. (Celiz v. Cord Chemicals,
Inc., G.R. No. 200352, July 20, 2016)
An employee’s attitude problem is a valid
ground for termination. It is a situation
analogous to loss of trust and confidence that
must be duly proved by the employer, still there
162
 Labor Law and Social Legislation
must be substantial evidence. (Azucena, Vol. II,
2016, p. 851)
Q: Mac was employed as a part-time teacher
and comptroller of Elysen College. A
committee was created to formulate a new
"ranking system for non-academic
employees for school year 2020-2021. He
then directed to arrange a salary adjustment
schedule for the new ranking system to the
committee organized.
Later, he obtained his employee ranking slip
which showed his evaluation score and the
change of his rank "from office head to
middle manager-level IV', this was prepared
however without prior approval from the
Human Resource Department. On July 25,
2020, Elysen College notified Mac of its
decision to terminate his services for serious
misconduct and loss of trust and confidence.
Upon receipt of the termination letter that
reads "For this reason, you are advised to
explain or show cause why your employment
with Elysen College will not be terminated for
Serious Misconduct due to intentional
misclassification/miscomputation of your
salary and some employees named
hereunder, thereby causing prejudice not
only to the school but also to said employees
as well", Mac immediately filed before
Executive Labor Arbiter. Was Mac illegally
dismissed?
A: NO. Mac was validly dismissed based on loss
of trust and confidence. Mac was not an ordinary
rank-and-file employee. His position of
responsibility on delicate financial matters
entailed a substantial amount of trust from
respondent. The preparation of the payroll is a
sensitive matter requiring attention to detail.
The alleged misconduct for loss of trust and
confidence is sufficient to warrant the dismissal
of fiduciary rank-and-file employees. However,
"mere existence of a basis for believing that [the]
employee has breached the trust [and
confidence] of [the] employer" is sufficient for
managerial employees.
A formal hearing only becomes mandatory in
termination cases when so required under
company rules or when the employee requests
for it. "To be heard" does not mean verbal
argumentation alone inasmuch as one may be
heard just as effectively through written
explanations, submissions or pleadings. In this
case, respondent complied with all the
163
requirements of procedural due process in
terminating petitioner's employment, it
furnished a show cause memo stating the
specific grounds for dismissal and required him
to answer the charges by submitting a written
explanation. (Yolando Bravo v. Urios College Now
Father Saturnino Urios University, G.R. No.
198066, June 7, 2017, as penned by J. Leonen)
COMMISSION OF A CRIME OR OFFENSE
This refers to an offense committed by the Ee
against the person of his Er or any immediate
member of his family or his duly authorized
representative and thus, conviction of a crime
involving moral turpitude is not analogous
thereto as the element of relation to his work or
to his Er is lacking.
Requisites
1. There must be an act or omission
punishable/prohibited by law; and
2. The act or omission was committed by the
employee against the person of the
employer, any immediate member of
his/her family, or his/her duly authorized
representative. (Sec. 5.2 [f], D.O. No. 147-15)
NOTE: A criminal case need not be actually filed.
Commission of acts constituting a crime itself is
sufficient. (National Labor Union, Inc. v. Standard
Vacuum Oil Company. G.R. No. L-48170, Oct. 10,
1941)
Conviction not a Condition Sine Qua Non
The conviction of an employee in a criminal case
is not indispensable to warrant his dismissal by
his employer. (Starlite Plastic Industrial
Corporation v. NLRC. G.R. No. 78491, March 16,
1989)
Ratio: The quantum of evidence needed is
merely substantial evidence to terminate an
employee under these grounds.
ANALOGOUS CASES
For an act to be included in analogous cases of
just causes of termination, it must be due to the
voluntary and/or willful act or omission of the
Ee. (Nadura v. Benguet Consolidated, G.R. No. L-
17780, Aug. 24, 1962)
Requisites
 Termination of Employment
1. There must be an act or omission similar to
those specified just causes; and
2. The act or omission was voluntary and/or
willful on the part of the employees. (Sec.
5.2 [g], D.O. No. 147-15)
E.g.:
1. Violation of company rules and regulations
2. Immorality, Drunkenness or Fighting inside
the premise
3. Gross inefficiency
4. Illegally diverting Er’s products
5. Failure to heed an order not to join an
illegal picket
6. Violation of safety rules and code of
discipline
7. Theft of company property
To fall within the ambit of “analogous cases” the
act or omission must have an element similar to
those found in the specific Just cause
enumerated under Art. 297. (International Rice
Research Institute v. NLRC, G.R. No. 97239, May
12, 1993)
Qualification under D.O. No. 147-15
D.O. No. 147-15 amends the IRR of Book IV. The
last sentence in Sec. 5.2 (g) states, “No act or
omission shall be considered as analogous cause
unless expressly specified in the company rules
and regulations or policies.”
NOTE: However, nowhere does the Labor Code
require analogous acts or omissions to be
“expressly specified in company rules and
regulations or policies.” Moreover, the
requirement appears unreasonable, if not
impossible. To demand an express specification
of all analogous cases is to demand anticipation
of all things similar. But these cannot all be
preconceived or predefined. (Azucena, Vol. II,
2016, p. 862).
Past offenses
Previous offenses may be so used as a valid
justification for dismissal from work ONLY if the
infractions are related to the subsequent
offense upon which the basis the termination of
employment is decreed. (Stellar Industrial
Service Inc. v. NLRC, G.R. No. 117418. Jan. 24,
1996)
Doctrine of Incompatibility
Where the Ee has done something that is
contrary or incompatible with the faithful
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
performance of his duties, his Er has a just cause
for terminating his employment. (Manila
Chauffeur’s League v. Bachrach Motor Co., G.R. No.
L-47071, June 29, 1940)
Doctrine of Commensurate Penalty/
Proportionality Rule
In this regard, it is a hornbook doctrine
that infractions committed by an employee
should merit only the corresponding penalty
demanded by the circumstance. The penalty
must be commensurate with the act, conduct or
omission imputed to the employee and must be
imposed in connection with the disciplinary
authority of the employer. (Sagales v. Rustans
Commercial Corporation, G.R. No. 166554, Nov.
27, 2008)
Factors that can be considered:
1. Length of service
2. Gravity of the offense
3. Nature of the position
4. Nature of the business
5. First offense rule
6. Totality of infractions
7. Principle of charity, compassion and
understanding
8. Principle of equity
Totality of Infractions Doctrine
The totality of infractions or the number of
violations committed during the period of
employment shall be considered in determining
the penalty to be imposed upon an erring
employee. The offenses committed by an
employee should not be taken singly and
separately. Fitness for continued employment
cannot be compartmentalized into tight little
cubicles of aspects of character, conduct and
ability separate and independent of each
other. While it may be true that an employee was
penalized for his previous infractions, this does
not and should not mean that his employment
record would be wiped clean of his infractions.
After all, the record of an employee is a relevant
consideration in determining the penalty that
should be meted out since an employee's past
misconduct and present behavior must be taken
together in determining the proper imposable
penalty. (Cebu People’s Multi-Purpose
Cooperative v. Carbonilla, G.R. No. 212070, Jan. 27,
2016)
Q: Mapili works as a bus conductor for
Philippine Rabbit Bus Lines, Inc. While on
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 Labor Law and Social Legislation
duty en route from Manila to Pangasinan, a
PRBLI field inspector caught Mapili
extending a free ride to a co-employee’s wife.
Noting that this was already the third time
that Mapili committed the said violation, the
company terminated his employment. Is
Mapili illegally dismissed?
A: NO. It is apparent that the bus conductor is
aware that the infraction he committed
constituted a grave offense but he still persisted
in committing the same out of gratitude to the
passenger. Hence, there was a deliberate intent
on the part of the petitioner to commit the
violation. An employee’s propensity to commit
repetitious infractions evinces wrongful intent,
making him undeserving of the compassion
accorded by law to labor; thus, dismissal of said
employee would be justified. (Jerry Mapili v.
Philippine Rabbit Bus Lines, Inc., G.R. No. 172506,
July 27, 2011)
Guidelines to Determine The Validity Of
Termination
Validity of termination per se is determined by
compliance with two-notice rule, hearing
(opportunity to be heard), and the presence of a
just or authorized cause.
AUTHORIZED CAUSES
Authorized causes – initiated by the employer’s
exercise of management prerogative, who shall
be liable to pay separation pay as mandated by
law. It does not usually require delinquency or
culpability on the part of the employee.
Authorized causes of termination by the Er:
1. Installation of labor-saving devices
2. Redundancy
3. Retrenchment
4. Closing or cessation of operation of the
establishment or undertaking
5. Disease
INSTALLATION OF LABOR-SAVING DEVICES
(AUTOMATION)
Automation – is a management prerogative of
replacing manpower with machine power in
order to effect more economy and greater
efficiency in method of production.
Requisites for a valid automation:
165
1. Written notice to the employee and to the
DOLE at least one (1) month before the
intended date of termination;
2. Payment of separation pay of at least one
(1) month for every year of service;
3. Good faith in the discharge of employees;
and
4. Reasonable criteria to be used in
implementing automation.
Robotics is the switch from ‘men’ employment
to ‘mechanical’ employment.
Reduction of the number of workers in a
company’s factory made necessary by the
introduction of machinery in the manufacture of
its products is justified. There can be no question
as to the right of the manufacturer to use new
labor-saving devices with a view to affecting
more economy and efficiency in its method of
production. (Philippine Sheet Metal Workers’
Union v. CIR. G.R. No. L-2028; April 28, 1949)
REDUNDANCY
It is the superfluity in the performance of a
particular work. It exists where the services of
an Ee are in excess of what is reasonably
demanded by the actual requirements of the
enterprise. (Wiltshire File Co., Inc. v. NLRC, G.R.
No. 82249, Feb. 7, 1991)
Redundancy in an Er’s personnel does not
necessarily or even ordinarily refer to
duplication of work. The characterization of
services as no longer necessary or sustainable
and therefore properly terminable, was an
exercise of business judgment on the part of the
Er. The Er has no legal obligation to keep in its
payroll more Ees that are necessary for the
operation of its business. (Wiltshire File Co., Inc.
v. NLRC, G.R. No. 82249, Feb. 7, 1991)
NOTE: A position is redundant when it is
superfluous. Superfluity is the outcome of some
factors:
1. Over-hiring of workers
2. Decline in volume of business
3. Closure of a particular line of an economic
activity previously engaged by the
employer.
Requisites of redundancy:
1. There must be superfluous positions or
services of employees;
 Termination of Employment
2. The positions or services are in excess of
what is reasonably demanded by the actual
requirements of the enterprise to operate
in an economical and efficient manner;
3. There must be good faith in abolishing
redundant positions;
4. There must be fair and reasonable criteria
in selecting the employees to be
terminated; and
5. There must be an adequate proof of
redundancy such as but not limited to the
new staffing patter, feasibility studies/
proposal, on the viability of the newly
created positions, job description and the
approval by the management of the
restructuring.
Requisites of a Valid Redundancy
1. Written notice served on both the Ees and
the DOLE at least 1 month prior to
separation from work
2. Payment of separation pay equivalent to at
least 1 month pay or at least 1 month pay
for every year of service, whichever is
higher.
3. Good faith in abolishing redundant position
4. Fair and reasonable criteria in ascertaining
what positions are to be declared
redundant:
a. Less preferred status, e.g., temporary
Ee
b. Efficiency and
c. Seniority (DAP v. Court of Appeals. G.R.
No. 165811; Dec. 14, 2005)
Q: Matiere SAS hired Acosta as Technical
Assistant. Under the Employment Agreement
Acosta was tasked to: (1) Prepare reports
regarding Woodfields Consultants, Inc. (WCI)
consultants; (2) Be the intermediary between
the operators in WCI and the management;
(3) Attend coordination meetings; (4)
Evaluate billings; (5) Follow the SIT and
prepare reports; and (7) Site visits.
Later, Matiere SAS sent a letter to
Acosta informing him that his employment
contract will end on July 31, 2013 due to the
cessation of the company’s delivery
operations and the diminution of activities
and that it cannot find any reinstatement at
the office. He also received a calculation of
his separation pay. On June 26, 2013, Matiere
SAS informed DOLE that it would have to
terminate five (5) of its workers which
includes Acosta. Matiere SAS also filed an
Establishment Employment Report, citing
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
redundancy and the completion of delivery of
supplies as its reasons for dismissing its
employees.
Acosta filed a complaint to NLRC for illegal
dismissal alleging that the declaration of
redundancy of his position was not based on
fair and reasonable criteria pointing out that
he, the most senior engineer, was dismissed
while the other engineers remained. Was
Acosta validly dismissed on the ground of
redundancy?
A: NO. Redundancy is recognized as one (1) of
the authorized causes for dismissing an
employee under the Labor Code as provided
under Art. 298.
For the implementation of a redundancy
program to be valid, the employer must comply
with the following requisites: (1) written notice
served on both the employees and the
Department of Labor and Employment at least
one month prior to the intended date of
retrenchment; (2) payment of separation pay
equivalent to at least one month pay or at least
one month pay for every year of service,
whichever is higher; (3) good faith in abolishing
the redundant positions; and (4) fair and
reasonable criteria in ascertaining what
positions are to be declared redundant and
accordingly abolished.
Matiere SAS complied with the first and second
requisites; notifying both Acosta and DOLE at
least a month prior planned redundancy and
providing Acosta computation of his separation
pay. However, the third and fourth requisites are
wanting. To establish good faith, the company
must provide substantial proof that the services
of the employees are in excess of what is
required of the company, and that fair and
reasonable criteria were used to determine the
redundant positions. Here, Matiere SAS' only
basis for declaring Acosta's position redundant
was that his function, which was to monitor the
delivery of supplies, became unnecessary upon
completion of the shipments.
However, upon careful scrutiny, the
Employment Agreement itself contradicts
Matiere SAS' allegation. Under Acosta's job
description listed in his tasks as a technical
assistant, there was no mention of monitoring
shipments. If his work pertains mainly to the
delivery of supplies, it should have been
specifically stated in his job description. There
was no basis for respondents to consider his
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 Labor Law and Social Legislation
position irrelevant when the shipments had
been completed.
Matiere SAS also failed to show that they used
fair and reasonable criteria in determining what
positions should be declared redundant.
Although Acosta was among the five (5)
employees dismissed, he cannot be similarly
situated with the other employees since his duty
is not limited to the monitoring of deliveries.
Accordingly, this Court declares petitioner to
have been illegally dismissed. (Manuel Acosta v.
Matiere SAS and Philippe Gouvary, G.R. No.
232870, June 3, 2019, as penned by J. Leonen)
Redundancy in Bad Faith
The employee was terminated on the ground of
redundancy. But it was found out that the
employer had been hiring new employees while
it was firing the old ones, negating the claim of
redundancy. (General Milling Corp., v. V.L. Viajar,
G.R. No. 181738, Jan. 30, 2013)
Q: Pantoja was assigned at SCA Corporation’s
Paper Mill No. 4, the section that
manufactures the company’s industrial paper
products. In a Notice of Transfer, SCA
informed Pantoja of its reorganization plan
and offered him a position at Paper Mill No. 5
under the same terms and conditions of
employment in anticipation of the eventual
closure and permanent shutdown of PM No. 4
due to financial difficulties brought about by
the low volume of sales and orders. However,
Pantoja rejected the offer of transfer. A
notice of termination of employment was
sent to Pantoja as his position was declared
redundant by the closure of PM No. 4. SCA
informed the DOLE of its reorganization and
partial closure. Petitioner filed a complaint
for illegal dismissal assailing his termination
as without any valid cause. Was the
petitioner illegally dismissed?
A: NO. Exercising its management prerogative
and sound business judgment, SCA decided to
cut down on operational costs by shutting down
one of its paper mill. The abolishment of PM No.
4 was a business judgment arrived at in the face
of the low demand for the production of
industrial paper at the time. Despite an apparent
reason to implement a retrenchment program as
a cost-cutting measure, SCA, however, did not
out rightly dismiss the workers affected by the
closure of PM No. 4 but gave them an option to
be transferred to posts of equal rank and pay.
SCA did not proceed directly to retrench. This is
167
an indication of good faith on SCA’s part as it
exhausted other possible measures other than
retrenchment. (Dannei Pantoja v. SCA Hygiene
Products Corporation, G.R. No. 163554, April 23,
2010)
NOTE: The losses which the company may suffer
or is suffering may be proved by financial
statements audited by independent auditor.
(Asian Alcohol Corporation v. NLRC, G.R. No.
131108, March 25, 1999)
RETRENCHMENT
It is the reduction of personnel usually due to
poor financial returns as to cut down on costs of
operations in terms of salaries and wages to
prevent bankruptcy of the company. (2 Poquiz,
2018, p. 560)
Cutting of expenses includes the reduction of
personnel; it is a management prerogative, a
means to protect and preserve the Er’s viability
and ensure his survival. To be an authorized
cause it must be effected in good faith and for
the retrenchment, which is after all a drastic
recourse with serious consequences for the
livelihood of the Ee is or otherwise laid-off. (2
Poquiz, 2018, p. 552)
NOTE: The kind of losses contemplated under
the Labor Code is actual or
anticipated/impending losses. There is NO
prohibition for the ER to embark on
retrenchment program if he could perceive that
its economy will go down the drain. (2 Poquiz,
2018, p. 554)
Preventive Retrenchment is Allowed
“To prevent losses” justifies retrenchment. Such
phrase means that retrenchment or termination
of the services of some employees is authorized
to be undertaken by the employer sometime
before the losses anticipated are actually
sustained or realized. It is not the intention of
the lawmaker to compel the employer to stay his
hand and keep all his employees until sometime
after losses shall have been materialized. (Lopez
Sugar Corporation v. Federation of Free Workers,
et al., G.R. Nos. 75700-01. Aug. 30, 1990)
Standards of Preventive Retrenchment
1. The losses expected should be substantial
and not merely de minimis in extent; The
substantial loss apprehended must be
reasonably imminent;
 Termination of Employment
2. It must be reasonably necessary and
likely to effectively prevent the expected
losses; and
3. Alleged losses if already realized, and the
expected imminent losses sought to be
forestalled, must be proven by sufficient
and convincing evidence. (Lopez Sugar
Corporation v. Federation of Free Workers,
et al., G.R. Nos. 75700-01. Aug. 30, 1990)
Causes of Retrenchment
1. Lack of Work
2. Business Recession
3. Fire
4. Conservatorship
Requisites of a Valid Retrenchment
1. Written notice served on both the Ee and
the DOLE at least 1 month prior to the
intended date of retrenchment;
2. Payment of separation pay equivalent to at
least one month pay or at least 1/2 month
pay for every year of service, whichever is
higher;
3. Good faith in effecting retrenchment;
4. Proof of expected or actual losses;
5. To show that the employer first instituted
cost reduction measures in other measures
in other areas of production before
undertaking retrenchment as a last resort;
and
6. The Er used fair and reasonable criteria in
ascertaining who would be retained among
the Ees, such as status, efficiency, seniority,
physical fitness, age, and financial hardship
of certain workers. (FASAP v. PAL, G.R. No.
178083, Oct. 2, 2009)
Criteria In Selecting Employees To Be
Retrenched
There must be fair and reasonable criteria to be
used in selecting Ees to be dismissed such as:
1. Less preferred status;
2. Efficiency rating;
3. Seniority (Phil. Tuberculosis Society, Inc. v.
National Labor Union, G.R. No. 115414,
Aug. 25, 1998)
“Last In First Out” (LIFO) Rule
It applies to termination of employment in the
same line of work. What is contemplated in the
LIFO rule is that when there are two or more Ees
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
occupying the same position in the company
affected by the retrenchment program, the last
one employed will necessarily be the first one to
go. (Maya Farms Employees Organization v.
NLRC, G.R. No. 106256, Dec. 28, 1994)
LIFO Rule Mandatory
GR: In cases of installation of labor-saving
devices, redundancy and retrenchment, the LIFO
rule shall apply.
XPN: When an employee volunteers to be
separated from employment. (DOLE D.O. No.
147-15, Series of 2015)
Q: Due to mounting losses, the former
owners of Asian Alcohol Corporation sold its
stake in the company to Prior Holdings. Upon
taking control of the company, Prior
Holdings, to prevent losses, implemented a
reorganization plan and other cost-saving
measures including the retrenchment of 117
Ees some of which are members of the union
and the majority held by non-union
members.
Some retrenched workers filed a complaint
for illegal dismissal alleging that the
retrenchment was a subterfuge for union
busting activities. Was the retrenchment
made by Asian Alcohol valid and justified?
A: YES. Even though the bulk of the losses were
suffered under the old management and
continued only under the new management,
ultimately the new management of Prior
Holdings will absorb such losses. The law gives
the new management every right to undertake
measures to save the company from bankruptcy.
(Asian Alcohol Corp. v. NLRC, G.R. No. 131108,
March 25, 1999)
Redundancy vs. Retrenchment
REDUNDANCY RETRENCHMENT
Does not involve Involves losses,
losses or the closing closures or cessation
or cessation of of operations of
operations of the establishment or
establishment. undertaking due to
serious business
losses or financial
reverses.
In preventive
retrenchment,
retrenchment may be
168
 Labor Law and Social Legislation

undertaken by the
employer before a. Written notice served on both the Ees
losses are actually and the DOLE at least 1 month prior
sustained. to the intended date of closure
b. Payment of separation pay equivalent
Evidence to Prove Losses to at least one month pay or at least
1/2 month pay for every year of
Alleged losses if already realized and the service, whichever is higher, except
expected imminent losses must be proved by when closure is due to serious
sufficient and convincing evidence. business losses
c. Good faith
Evidence presented in NLRC Proceedings must d. No circumvention of the law
have modicum of admissibility. e. No other option available to the Er

CLOSURE OF BUSINESS Test for the validity of closure or cessation of

establishment or undertaking
It must be done in good faith and not for the
To be a valid ground for termination the
purpose of circumventing pertinent labor laws.
following must be present:
A change of business ownership does not create
1. There must be a decision to close or cease
an obligation on the part of the new owner to
operation of the enterprise by the
absorb the employees of the previous owner,
management;
unless expressly assumed. Labor contracts being
2. The decision was made in good faith; and
in personam, are generally not enforceable
3. There is no other option available to the
against a transferee. (Fernando v. Angat Labor
employer except to close or cease
Unit, 5 SCRA 248)
operations. (Sec. 5.4 .(d), D.O. No. 147, Series
of 2015)
Closure contemplated is a unilateral and
voluntary act on the part of the Er to close the
Payment of separation pay in case of closure
business establishment.
Payment of separation pay is required only
Two (2) Kinds of Closure:
where closure is neither due to serious business
losses nor due to an act of Government. (North
1. Partial Closure – although grounded on
Davao Mining Corp v. NLRC, G.R. No. 112546, Mar.
economic losses, partial closure is a form of
13, 1996; NFL v. NLRC, G.R. No. 127718, March 2,
retrenchment.
2000)
Requirements:
Basis for computation: latest salary rate, unless
reduced by the employer to circumvent the law,
1. Written notice to the EE and to the
in which case, it shall be based on the rate before
DOLE at least 1 month before the
its deduction. (IRR of LC, Book IV, Rule I, Sec. 10)
intended date of termination
2. Separation pay equivalent to at least
There is no obligation to pay separation pay:
½ month pay for every year of service.
3. Cessation of business is bonafide in
1. When the closure of the business is due to
character.
serious business loss
2. Total Closure due to economic reverses
2. Where closure of business is by compulsion
or losses
of law because closure of business is not
attributed to Er’s will (e.g., the land where
Requirements:
the building is situated was declared
covered by the Comprehensive Agrarian
1. Written notice to the EE and to the
Reform Law)
DOLE at least 1 month before the
intended date of termination.
Q: Galaxie Steel Corp. decided to close down
2. Cessation of business is due to serious
because of serious business loses. It filed a
economic reverses or losses.
written notice with the DOLE informing its
Requisites:

169
 Termination of Employment
intended closure and the termination of
employment. It posted the notice of closure
on the corporate bulletin board.
a. Does the written notice posted by
Galaxie on the bulletin board
sufficiently comply with the notice
requirement under Art. 298 of the LC?
b. Are Galaxie Ees entitled to separation
pay?
A:
a. NO. In order to meet the purpose, service of
the written notice must be made
individually upon each and every Ee of the
company.
However, the Supreme Court held that
where the dismissal is for an authorized
cause, non-compliance with statutory due
process should not nullify the dismissal, or
render it illegal, or ineffectual. Still, the Er
should indemnify the Ee, in the form of
nominal damages, for the violation of his
right to statutory due process. (Galaxie
Steel Workers Union v. NLRC, G.R. No.
165757, Oct. 17, 2006)
b. NO. Galaxie had been experiencing serious
financial losses at the time it closed
business operations. Art. 298 of the LC
governs the grant of separation benefits "in
case of closures or cessation of operation"
of business establishments "not due to
serious business losses or financial
reverses." Where, the closure then is due to
serious business losses, the LC does not
impose any obligation upon the Er to pay
separation benefits. (Galaxie Steel Workers
Union v. NLRC, G.R. No. 165757, Oct. 17,
2006)
Obligation of a Transferee to absorb the Ees
of the Old Corporation
GR: There is no law requiring a bona fide
purchaser of assets of an on-going concern to
absorb in its employ the Ee’s of the transferor.
XPNs:
1. When the transaction between the parties
is colored or clothed with bad faith.
(Sundowner Dev’t Corp. v. Drilon, G.R. No.
82341, Dec. 6, 1989)
2. Where the transferee was found to be
merely an alter ego of the different merging
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
firms. (Filipinas Port Services, Inc. v. NLRC,
G.R. No. 97237, Aug. 16, 1991)
3. Where the transferee voluntarily agrees to
do so. (Marina Port Services, Inc. v. Iniego,
G.R. No. 77853, Jan. 22, 1990)
Merger of Corporations
The merger of a corporation does not operate to
dismiss the employees of the corporation
absorbed by the surviving corporation. This is in
keeping with the nature and effects of a merger
as provided under law and the constitutional
policy protecting the rights of labor. The
employment of the absorbed employees
subsists. Necessarily, these absorbed employees
are not entitled to separation pay. (The
Philippine Geothermal, Inc. Employees Union v.
Unocal Philippines, Inc. [now known as Chevron
Geothermal Philippines Holdings, Inc.] G.R. No.
190187, Sept. 28, 2016)
Piercing the Veil of Corporate Fiction
Q: The Dutch Movers, Inc., (DMI), informed
their employees that it would cease its
hauling operation for no reason and it did
not file any notice of business closure before
the DOLE. Their employees filed an illegal
dismissal case against DMI. Thus, employees
prayed that officers named in DMI’s Article of
Incorporation be impleaded and be held
solidarily liable with DMI in paying the
judgment awards.
However, spouses Smith, officers named in
the AOI, merely lent their names to spouses
LEE, alleged owner, to assist them in
incorporating DMI and after such
undertaking; spouses SMITH transferred
their rights in DMI in favor of spouses LEE.
Now, spouses LEE contends that DMI had a
separate and distinct personality from the
officers comprising it. Hence, they cannot be
held personally liable for the judgment
awards. Is the contention of spouses LEE
tenable?
A: NO. As a general rule, a corporation has a
separate and distinct personality from its
stockholders, and from other corporations it
may be connected with.
However, such personality may be disregarded,
or the veil of corporate fiction may be pierced
attaching personal liability against responsible
170
 Labor Law and Social Legislation

person if the corporation’s personality, is used to Is the reduction of

defeat public convenience, justify wrong, protect personnel for the
fraud or defend crime, or is used as a device to It is the reversal of purpose of cutting down
defeat the labor laws. fortune of the Er on costs of operations in
whereby there is a terms of salaries and
Here, petitioners should be held personally complete cessation of wages resorted to by an
liable for having controlled DMI and actively business operations Er because of losses in
participated in its management, and for having to prevent further operation of a business
used it to evade legal obligations to respondents. financial drain upon occasioned by lack of
an Er who cannot work and considerable
While it is true that one’s control does not by pay anymore his Ees reduction in the volume
itself result in the disregard of corporate fiction; since business has of business.
however, considering the irregularity in the already stopped.
incorporation of DMI, then there is sufficient
basis to hold that such corporation was used for In the case of
an illegal purpose, including evasion of legal retrenchment, however,
duties to its employees. (Dutch Movers Inc., et al. for the closure of a
v. Lequin, et al., G.R. No. 210032, April 25, 2017) business or a
One of the
department due to
Q: Crisologo was employed by petitioner NEC prerogatives of
serious business losses
System Integrated Construction Phils., Inc. management is the
to be regarded as an
(NESIC) as Manager of Communication decision to close the
authorized cause for
Facilities. A cost-cutting measure was entire establishment
terminating Ees, it must
implemented, specifically terminating all or to close or abolish
be proven that the
project and contractual employees and a department or
losses incurred are
withheld some of the employees’ benefits. section thereof for
substantial and actual
economic reasons,
or reasonably
Notwithstanding with the cost cutting such as to minimize
imminent; that the same
measures NESIC still incurred financial losses expenses and reduce
increased through a
an announced retrenchment which causes capitalization.
period of time; and that
respondent’s dismissal. He however the condition of the
voluntarily sign quitclaim and receipt of company is not likely to
separation pay. Upon learning that NESIC improve in the near
employed other person to fill the vacancy in future.
the company respondent filed a case for
Does not obligate the LC provides for the
illegal dismissal. Will the case prosper? Er for the payment of payment of separation
separation package if package in case of
A: NO. Not all waivers and quitclaims are invalid there is closure of retrenchment to
as against public policy. If the agreement was
business due to prevent losses.
voluntarily entered into and represents a
serious losses.
reasonable settlement, it is binding on the
parties and may not later be disowned simply
because of a change of mind.
Disease
It is only where there is clear proof that the
waiver was wangled from an unsuspecting or It must be incurable within 6 months and the
gullible person, or the terms of settlement are continued employment is prohibited by law or
unconscionable on its face, that the law will step prejudicial to his health as well as to the health
in to annul the questionable transaction. (NEC of his co-Ees with a certification from the public
System Integrated Construction Phils., Inc. v. health officer that the disease is incurable within
Crisologo, G.R. No. 201535, Oct. 5, 2015) 6 months despite due to medication and
treatment.
Closure vs. Retrenchment
Disease as a ground for dismissal
CLOSURE RETRENCHMENT
When the Ee suffers from a disease, and:

1. His continued employment is prohibited

by law or prejudicial to his health or to the

171
 Termination of Employment
health of his co-Ees. (IRR, Book VI, Rule I,
Sec. 8)
2. With a certification by competent public
health authority that the disease is
incurable within 6 months despite due
medication and treatment. (Solis v. NLRC,
G.R. No. 116175, Oct. 28, 1996)
NOTE: The requirement for a medical
certification cannot be dispensed with;
otherwise, it would sanction the unilateral and
arbitrary determination by the Er of the gravity
or extent of the Ee’s illness and thus defeat the
public policy on the protection of labor. (Manly
Express v. Payong, G.R. No. 167462, Oct. 25, 2005)
Procedure in terminating an Ee’s
employment on the ground of disease
1. The Er shall not terminate his employment
unless:
a. There is a certification by a competent
public health authority;
b. That the disease is of such nature or at
such a stage that it cannot be cured
within a period of 6 months even with
proper medical treatment.
NOTE: In terminating employment on the
ground of disease, the employer must
comply with the twin-notice rule.
In Sy v. CA and Manly Express, Inc. v. Payong,
Jr., promulgated in 2003 and 2005,
respectively, the Court finally pronounced
the rule that the employer must furnish the
employee two written notices in
terminations due to disease, namely:
a. The notice to apprise the employee of
the ground for which his dismissal is
sought; and
b. The notice informing the employee of
his dismissal, to be issued after the
employee has been given reasonable
opportunity to answer and to be heard
on his defense.
These rulings reinforce 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. (Deoferio v.
Intel Technology, G.R. No. 202996, June 18,
2014)
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
2. If the disease or ailment can be cured within
the period, the Er shall not terminate the
Ee’s employment but shall ask the Ee to take
a leave. The Er shall reinstate such Ee to his
former position immediately upon the
restoration of his normal health. (IRR, Book
VI, Rule I, Sec. 8)
HIV-positive Status and AIDS, not a Ground
for Termination
Discrimination in any form from pre-
employment to post-employment, including
hiring, promotion or assignment, based on the
actual, perceived or suspected HIV status of an
individual is prohibited. Termination from work
on the sole basis of actual, perceived or
suspected HIV status is deemed unlawful. (RA
8504, Sec. 35)
Disability, not a Ground for Termination
GR: Dismissing or terminating the services of a
disabled employee by reason of his disability is
not a valid ground.
XPN: The employer can prove that he impairs
the satisfactory performance of the work involve
to the prejudice of the business entities;
provided, however, that the employer first
sought provide reasonable accommodations for
disabled persons.
Entitlement to reinstatement
An Ee suffering from a disease is entitled to a
reinstatement, provided he presents a
certification by a competent public health
authority that he is fit to return to work. (Cebu
Royal Plant v. Deputy Minister, G.R. No. L-58639,
Aug. 12, 1987)
Medical Certificate as mandatory
requirement
The requirements of a medical certificate are
mandatory. Only where there is a prior
certification from a competent public authority
that the disease afflicting the Ee sought to be
dismissed is of such nature or at such stage that
it cannot be cured within 6 months even with
proper medical treatment that the latter could
be validly terminated from his job. (Tan v. NLRC,
G.R. No. 116807, April 14, 1997)
Q: Anna Ferrer has been working as a
bookkeeper at Great Foods, Inc., which
operates a chain of high-end restaurants
172
 Labor Law and Social Legislation
throughout the country, since 1970 when it
was still a small eatery at Binondo. In the
early part of the year 2003, Anna, who was
already 50 years old, reported for work after
a week-long vacation in her province. It was
the height of the SARS scare, and
management learned that the first confirmed
SARS death case in the Phils, a “balikbayan”
nurse from Canada, is a townmate of Anna.
Immediately, a memorandum was issued by
management terminating the services of
Anna on the ground that she is a probable
carrier of SARS virus and that her continued
employment is prejudicial to the health of
her co-Ees. Is the action taken by the Er
justified? (2004 BAR)
A: The Er’s act of terminating the employment
of Anna is not justified. There is no showing that
said Ee is sick with SARS, or that she associated
or had contact with the deceased nurse. They
are merely town mates. Furthermore, there is
no certification by a competent public health
authority that the disease is of such a nature or
such a stage that it cannot be cured within a
period of 6 months even with proper medical
treatment. (IRR, Book VI, Rule 1, Sec. 8)
Other authorized causes
1. Total and permanent disability of Ee
2. Valid application of union security clause
3. Expiration of period in term of
employment
4. Completion of project in project
employment
5. Failure in probation
6. Relocation of business to a distant place
7. Defiance of return-to work-order
8. Commission of Illegal acts in strike
9. Violation of contractual agreement
10. Retirement
Steps required in termination of an Ee’s
employment for authorized causes:
1. Written Notice to DOLE 30 days prior to
the intended day of termination.
Purpose: To enable it to ascertain the
veracity of the cause of termination.
2. Written notice to Ee concerned 30 days
prior the intended date of termination.
3. Payment of separation pay – Serious
business losses do not excuse the Er from
173
complying with the clearance or report
required in Art. 298 of the LC and its IRR
before terminating the employment of its
workers. In the absence of justifying
circumstances, the failure of the Er to
observe the procedural requirements
under Art. 298 of the LC taints their
actuations with bad faith if the lay-off was
temporary but then serious business losses
prevented the reinstatement of
respondents, the Er’s should have
complied with the requirements of written
notice.
When Notice is Not Needed
When an employee:
1. Consented to his retrenchment; or,
2. Voluntarily applied for retrenchment.
The employee, thereby, acknowledged the
existence of a valid cause for termination of his
employment. (Santos v. Pepsi Cola, et al., G.R. No.
141947, July 5, 2001)
Separation Pay
Separation pay refers to the amount due to the
Ee who has been terminated from service for
causes authorized by law such as the installation
of labor-saving losses or the closing or cessation
of operation of the establishment or
undertaking.
Purpose for providing separation pay
Separation pay is intended to provide the Ee
with the wherewithal during the period he is
looking for another employment. (Gabuay v.
Oversea Paper Supply, G.R. No. 148837, Aug. 13,
2004)
Instances when Ee is entitled to separation
pay
1. When the termination of employment is
due to causes authorized by law (Art. 298,
LC)
2. When the severance of employment is
caused by a disease, particularly when the
Ee is found to be suffering from any disease
and whose continued employment is
prohibited by law or is prejudicial to his
health and of his co-Ees (LC, Art. 299)
3. When the termination from service has
been declared illegal, but his reinstatement
to his former position is no longer feasible
for some valid reason (Gabuay v. Oversea
 Termination of Employment

Paper Supply, G.R. No. 148837, Aug. 13,
2004)
4. In case of pre-termination of employment
contract in job-contracting arrangement
(D.O 18-02, Rules Implementing Art. 106 –
109, LC)
5. Where separation pay is awarded as a
measure of social or compassionate justice
(PLDT v. NLRC, G.R. No. L-80609, Aug. 23,
1988)
No. 06-20 Guidelines on the Payment of Final Pay
and Issuance of Certificate of Employment)
Issuance of Certificate of Employment
The employer shall issue a certificate of
employment within three (3) days from the time
of the request by the employee. (ibid.)
Enforcement Mechanism

Rules on separation pay with regard to each Any issue or claim dispute arising our or relating
cause of termination: to the payment of final pay, or issuance of
certificate of employment, shall be filed before
CAUSE OF the nearest DOLE Regional/Provincial/Field
SEPARATION PAY Office, which has jurisdiction over the
TERMINATION
workplace, for conciliation and subject to DOLE’s
Equivalent to at least 1
existing enforcement mechanism. (ibid.)
month pay or at least 1
Automation month pay for every year
Acceptance of Separation Pay is Not a Bar to
of service, whichever is
Question the Illegality of Dismissal
higher
Equivalent to at least 1 A dismissed employee who has accepted his
month pay or at least 1 separation pay is not necessarily estopped from
Redundancy month pay for every year assailing the illegality of his dismissal. In fact, he
of service, whichever is filed the complaint for illegal dismissal with
higher prayer for reinstatement a month after his
separation from service — a fact which strongly
Equivalent to 1 month pay indicates that he never waived his right to
Retrenchment or at least ½ month pay reinstatement. (Solis v. NLRC. G.R. No. 116175,
for every year or service Oct. 28, 1996)
Closures or Equivalent to at least 1
cessation of month pay or at least 1 Purpose of the two notices served to the Ee
operation not due month pay for every year and the DOLE 1 month prior to termination
to serious of service. (if due to severe
business losses/ financial losses, no 1. To give the Ees some time to prepare for
financial reverses separation pay the eventual loss of their jobs and their
Equivalent to at least 1 corresponding income, look for other
month pay or at least ½ employment and ease the impact of the loss
Disease month pay for every year of their jobs.
of service, whichever is
higher 2. To give the DOLE the opportunity to
ascertain the veracity of the alleged cause
of termination. (Phil. Telegraph & Telephone
NOTE: A fraction of at least 6 months shall be
Corp. v. NLRC, G.R. No. 147002, Aug. 15,
considered one (1) whole year.
2005)
There is no separation pay when the closure is
NOTE: Notice to both the Ees concerned and the
due to an act of the Government.
DOLE are mandatory and must be written and
given at least 1 month before the intended date
Time of Payment and/or Release of Final Pay
of retrenchment – and the fact that the Ees were
already on temporary lay-off at the time notice
To effectively harmonize the management
should have been given to them is not an excuse
prerogative of the employer and the right of an
to forego the 1-month written notice. (Sebuguero
employee, the Final Pay shall be released within
v. NLRC, G.R. No.115394, Sept. 27, 1995)
thirty (30) days from the date of separation or
termination of employment, unless there is a
Q: DAP Corp. ceased its operation due to the
more favorable company policy, individual or
termination of its distribution agreement
collective agreement thereto. (Labor Advisory

UNIVERSITY OF SANTO TOMAS 174

2021 GOLDEN NOTES
 Labor Law and Social Legislation
with Int’l Distributors Corp. which resulted in
its need to cease its business operations and
to terminate the employment of its Ees.
Marcial et al. filed a complaint for illegal
dismissal and for failure to give the Ees
written notices regarding the termination of
their employment.
On the other hand, DAP claims that their Ees
actually knew of the termination therefore
the written notices were no longer required.
Are written notices dispensed with when the
Ees have actual knowledge of the
redundancy?
A: The Ees’ actual knowledge of the termination
of a company’s distributorship agreement with
another company is not sufficient to replace the
formal and written notice required by law. In the
written notice, the Ees are informed of the
specific date of the termination, at least a month
prior to the date of effectivity, to give them
sufficient time to make necessary arrangements.
In this case, notwithstanding the Ees knowledge
of the cancellation of the distributorship
agreement, they remained uncertain about the
status of their employment when DAP failed to
formally inform them about the redundancy.
(DAP Corp. v. CA, G.R. No. 165811, Dec. 14, 2005)
WHEN EMPLOYMENT NOT DEEMED
TERMINATED
An employment is not deemed terminated
when:
1. There is a bona fide suspension of the
operation of a business or undertaking for
a period not exceeding six (6) months; or,
2. The fulfilment by the employee of a
military or civic duty. (Art. 301, LC)
BONA FIDE SUSPENSION OF THE OPERATION
OF A BUSINESS OR UNDERTAKING
Requisites:
1. It must be for a period not exceeding six
months;
2. The employer shall reinstate the employee
to his former position without loss of
seniority rights; and,
3. That the employee indicates his desire to
resume his work not later than one month
from the resumption of operations of his
employer.
175
Obligation of the Employer Upon Resumption
of Work
1. Notify the employees of the resumption of
operation; and,
2. Reinstate the employees to prior position.
Obligation of the Employee Upon Receipt of
Notification
Notify employer not later than one month of
desire to return.
NOTE: If employee does not notify employer of
one’s desire to return, the employee shall be
deemed to have voluntarily resigned and shall
not be entitled to separation pay.
Employee Not Reinstated After the
Resumption of Operations
This amounts to constructive dismissal. Thus,
the employee is entitled to the following:
1. Reinstatement to his position or to a
substantially equivalent position; and
2. Backwages inclusive of allowances and
other benefits or their monetary
equivalent.
Written Notice of Suspension
The employer must serve a written notice of
suspension individually addressed to the
employees affected stating:
1. The reason why the employer is
suspending operations;
2. The date that the employer expects to
resume operations; and
3. That the employees must indicate, within
one month from resumption of operations,
their desire to resume working with the
employer.
EFFECT ON EMPLOYMENT STATUS
Compensation of Employees During the 6-
month Suspension
Employees are not entitled to their wages and
benefits during the 6-month period. The reason
is, within the said period, the employer-
employee relationship is deemed suspended.
Effect of Suspension of Work Exceeding 6
Months
 Termination of Employment
When the bona fide suspension of the operation
of a business or undertaking exceeds six (6)
months, the employment of the employee shall
be deemed terminated. (International Hardware,
Inc. v. NLRC, G.R. No. 80770, Aug. 10, 1989)
Even assuming that the closure was due to a
reason beyond the control of the employer, it
still has to accord its employees some relief in
the form of severance pay. (Mayon Hotel &
Restaurant v. Adana, G.R. No. 157634, May 16,
2005)
Q: An accidental fire gutted the JKL factory in
Caloocan. JKL decided to suspend operations
and requested its employees to stop
reporting for work. After six (6) months, JKL
resumed operations but hired a new set of
employees. The old set of employees filed a
case for illegal dismissal. If you were the
Labor Arbiter, how would you decide the
case? (2014 BAR)
A: I will rule in favor of the old employees. JKL
factory merely suspended its operations as a
result of the fire that gutted its factory. Art. 301
of the Labor Code states that an employer may
bona fide suspend the operation of its business
for a period not exceeding six (6) months. In
such a case, there would be no termination of the
employment of the employees, but only a
temporary displacement. (Sebuguero v. NLRC,
245 SCRA 532 [1995])
After six months, the employees should either be
recalled to work or permanently retrenched
following the requirements of the law, and that
failing to comply with this would be tantamount
to dismissing the employees and the employer
would thus be liable for such dismissal.
(Sebuguero, et al. v. NLRC, G.R. 115394, Sept. 27,
1995)
FULFILLMENT BY THE EMPLOYEE OF A
MILITARY OR CIVIC DUTY
In case of mandatory fulfilment by the employee
of a military or civic duty, the payment of wages
of the employee as well as the grant of other
benefits and privileges while he is on military or
civic duty shall be subject to special laws and
decrees and to the applicable individual or CBA
and voluntary employer practice or policy. (Sec.
12, Rule I, Book VI, IRR)
TEMPORARY LAY-OFF
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Retrenchment is used interchangeably with the
term lay-off.
There is no specific provision of law which treats
of a temporary retrenchment or lay-off and
provides for the requisites in effecting it or a
period or duration therefor. However, Art 301
may be applied but only by analogy to set a
specific period that employees may remain
temporarily laid-off or in floating status.
The temporary lay-off wherein the employees
cease to work should not last longer than six
months. After six months, the employees should
either be recalled to work or permanently
retrenched following the requirements of the
law, and that failing to comply with this would
be tantamount to dismissing the employees and
the employer will be liable for such dismissal.
(Sebuguero, et al., v. NLRC, et al., G.R. No. 115394,
Sept. 27, 1995)
Floating Status
The floating status of an employee should last
only for a legally prescribed period of time.
When that floating status of an employee lasts
for more than six (6) months, he may be
considered to have been illegally dismissed
from the service. Thus, he is entitled to the
corresponding benefits for his separation. (Agro
Commercial Security Services Agency, Inc. v.
NLRC, G.R. Nos. 82823-24, July 31, 1989)
SEPARATION PAY
Separation Pay prescribed under the Labor
Code
1. When termination is due to authorized
causes:
a. Under Art. 298 (Closure of
Establishment and Reduction of
Personnel), such as:
i. Installation of labor-saving
devices;
ii. Redundancy;
iii. Retrenchment;
iv. Closing or cessation of business
operations; and
b. Under Art. 299 (Diseases Ground
for Termination), when termination
is due to the disease of an employee
and his continued employment is
176
 Labor Law and Social Legislation
prejudicial to himself or his co-
employees.
2. Under Art. 301 (When Employment Not
Deemed Terminated) – after the lapse of
six (6) months in cases involving bona fide
suspension of the operation of business or
undertaking or after the lapse of ‘floating
status.’
3. Under Art. 147 when the employer
terminates without just cause.
NOTE: Under Batas Kasambahay, if the domestic
worker is unjustly dismissed, the domestic
worker shall be paid the compensation already
earned plus the equivalent of fifteen (15) days
work by way of indemnity. (Chan, 2014)
Separation Pay prescribed under RA 7610
In case the violation of its provisions has
resulted in the death, insanity or serious
physical injury to a child employed in such
establishment or that the firm or establishment
has employed a child for prostitution or obscene
or lewd shows or if there is imminent danger to
the life and limb of the working child in
accordance with the occupational health and
safety and health standards, the employer shall
pay all employees affected by the closure their
separation pay and other monetary benefits
provided by law. (Sec. 21 D.O. No. 65, s. 2004
Four Kinds of Separation Pay
1. As employer’s statutory obligation in cases
of legal termination due to authorized
causes;
2. In lieu of reinstatement, where
reinstatement is ordered but is not feasible;
3. As an employment benefit granted in the
CBA or company policy; and
4. As financial assistance, as an act of social
justice, even in case of legal dismissal, at
court’s discretion.
When pronounced:
a. Granted by the Er unilaterally by way of a
voluntary policy or practice or through
negotiated agreement such as CBA;
b. PLDT Doctrine - Separation pay as a
measure of social justice shall be allowed
only if the employee is validly dismissed
for:
177
i. causes other than serious
misconduct; or
ii. other offense reflecting on his moral
character. (PLDT v. NLRC and
Marilyn Abucay, G.R. No. L-80609,
Aug. 23, 1988)
Q: As per standard operating procedure, the
guard on duty found six Reno canned goods
wrapped in nylon leggings inside Nenita's
fabric clutch bag. She was given ample time
to explain her side, often with the assistance
of the NLM-Katipunan. However, she failed to
give a valid explanation for her action. As
such, she was dismissed. Reno Foods filed a
complaint-affidavit against Nenita for
Qualified Theft. The NLM filed a complaint for
illegal dismissal and money claims against
petitioner with the NLRC.
The NLRC affirmed the findings of the Labor
Arbiter that Nenita is guilty of serious
misconduct but added an award for financial
assistance in the form of a separation pay
equivalent to one-half month pay for every
year of service. Is the NLRC correct in
granting financial assistance to an employee
who was validly dismissed of theft of
company property?
A: NO. Despite the fact that Nenita is acquitted in
the criminal case filed against her due to
reasonable doubt, it would not exculpate her for
her wrongdoings. For jurisprudence dictates
that conviction is not necessary to find just cause
for employment termination, especially when it
is not a full acquittal but one that is only based
on reasonable doubt. Further, jurisprudence has
classified theft of company property as a serious
misconduct which denies an erring employee the
award of a separation pay. . A dishonest
employee cannot be rewarded with separation
pay or any financial benefit after his culpability
is established in two decisions by competent
labor tribunals, which decisions appear to be
well-supported by evidence. To hold otherwise,
even in the name of compassion, would be to
send a wrong signal not only that "crime pays"
but also that one can enrich himself at the
expense of another in the name of social justice.
(Reno Foods, Inc. v. Nagkakaisang Lakas Ng
Mangagawa-Katipunan, G.R. No. 164016, March
15, 2010)
c. Toyota Doctrine –Dismissals based on
other grounds under Art. 297 like willful
disobedience, gross and habitual neglect
of duty, fraud or willful breach of trust,
 Termination of Employment
and commission of a crime against the
employer or his family, separation pay
should not be conceded to the dismissed
employee. (Toyota Motor Phils. Corp
Workers Association v. NLRC, G.R.
No.158786, Oct. 19, 2007)
XPN: In analogous causes for termination
like inefficiency, drug use, and others, the
NLRC or the courts may opt to grant
separation pay anchored on social justice.
(Ibid.)
d. PAL Doctrine – Reversion to PLDT
doctrine’s social justice exception.
The grant of separation pay as a matter of
equity to a valid dismissed employee is
not contingent on whether the ground
relied upon is akin to serious misconduct
or invokes willful or wrongful intent on
the part of the employee. (PAL, Inc. v.
NLRC, G.R. No. 123294, Oct. 20, 2010)
e. Solidbank Doctrine –In granting financial
assistance in labor cases, application of
social justice and compassion has been
generally used in instances when an
employee has been dismissed for a just
cause under Art. 297 of the LC and not
when an employee has been dismissed for
an authorized cause under Art. 298.
(Solidbank Corp. v. NLRC, G.R. No. 165951,
March 30, 2010)
The reason is that the Er is only required under
the law to pay his Ees separation pay in
accordance with Art. 298 of the LC the amount of
which is statutorily determined. (Chan, 2014)
The Court should refrain from adding more than
what the law requires. (Solidbank Corp. v. NLRC,
G.R. No. 165951, March 30, 2010)
Termination Based on Authorized Cause
If the termination is based on all of the
authorized causes, notices should be given to all
Ees affected and to the DOLE at least one (1)
month before the intended date of termination.
Notice is to individual employees, not to a group.
(Azucena, 2016)
Purpose of notice and hearing
The requirement of notice is intended to inform
the Ee concerned of the Er’s intent to dismiss
him and the reason for the proposed dismissal.
Failure to comply with the requirement of the 2
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
notices makes the dismissal illegal. The
procedure is mandatory. (Loadstar Shipping Co.
Inc. v. Mesano, G.R. No. 138956, Aug. 7, 2003) In
the absence of which, any judgement reached by
management is void and inexistent. (Ruffy v.
NLRC, G.R. No. 84193, Feb. 15, 1990) And for non-
compliance with the due process requirements
in the termination of a person’s employment, a
company is sanctioned to pay a certain amount
as damages. (King of Kings v. Mamac, G.R. No.
166208, June 29, 2007)
Q: SPI posted, in conspicuous places within
the company premises, notices of its
permanent closure and cessation of business
operations due to serious economic losses
and financial reverses. Is there a sufficient
notice of closure a provided for under the
Labor Code?
A: NONE. The mere posting on the company
bulletin board does not, however, meet the
requirement under Art. 297 of "serving a written
notice on the workers." The purpose of the
written notice is to inform the employees of the
specific date of termination or closure of
business operations, and must be served upon
them at least one month before the date of
effectivity to give them sufficient time to make
the necessary arrangement. In order to meet the
foregoing purpose, service of the written notice
must be made individually upon each and every
employee of the company. (Sang Woo
Philippines, Inc v. Sang Woo Philippines
Employees Union, G.R. No. 173154/G.R. No.
173229, Dec. 9, 2013)
Q: Should there exist a valid and just cause,
may the Er depart from giving the Ee the
right to be heard?
A: NO. Art. 292(b) of the LC mandates that an Er
who seeks to dismiss an Ee must “afford the
latter ample opportunity to be heard and to
defend himself with the assistance of his
representative if he so desires.” Expounding on
this provision, the SC held that “ample
opportunity” connotes every kind of assistance
that management must accord the Ee to enable
him to prepare adequately for his defense
including legal representation. (U-BIX Corp. v.
Bravo, G.R. No. 177647, Oct. 31, 2008)
Procedure to be observed by the Er for the
termination of employment based on any of
the just causes for termination
178
 Labor Law and Social Legislation
1. A written notice should be served to the Ee
specifying the ground/s for termination and
giving the said Ee reasonable opportunity to
explain.
This first written notice must apprise the Ee
that his termination is being considered due
to the acts stated in the notice. (Phil. Pizza
Inc. v. Bungabong, G.R. No. 154315, May 9,
2005)
2. A hearing or conference should be held
during which the Ee concerned, with the
assistance of counsel, if the Ee so desires, is
given the opportunity to respond to the
charge, provide for his evidence, and present
the evidence offered against him.
The “ample opportunity to be heard” under
the LC is paramount over the “hearing or
conference” standard in the IRR of LC.
3. A written notice of termination – If
termination is the decision of the Er, it
should be served on the Ee indicating that
upon due consideration of all the
circumstance, grounds have been
established to justify his termination.
Single notice of termination does not comply
with the requirements of the law. (Aldeguer
&Co., Inc. v. Honeyline Tomboc, G.R. No.
147633, July 28, 2008)
Trial-Type Hearing When Mandatory
GR: The LC does not require a formal or trial
type proceeding before an erring employee may
be dismissed. (Skipper’s United Pacific, Inc. v.
Maguad, G.R. No. 166363, Aug. 15, 2006)
XPN: Instances when formal hearing is
mandatory:
1. When the employee himself requests;
2. When it is a company practice;
3. When it involves substantial evidentiary
disputes; or
4. When similar circumstances justify it.
(Perez v. Philippine Telegraph & Telephone
Company, G.R. No. 152048, April 7, 2009)
Q: Respondent Honrado, an employee of
petitioner PLDT, was found to have solicited
money from Spouses Mueda in a manner
contrary to the company’s policy. After
receiving a notice regarding the issue, a
formal hearing was conducted against him.
179
Honrado simply denied the accusation
against him in the hearing. When his counsel
asked the officers of PLDT to show the
alleged receipt evidencing the accusation
against Honrado, PLDT refused.
Subsequently, Honrado was dismissed from
service. Is there a valid basis for the
dismissal of Honrado despite the refusal of
PLDT to show the receipt signed by Honrado?
A: YES. There was a valid basis for the dismissal
of Honrado despite the refusal of PLDT to show
the receipt signed by Honrado. A valid dismissal
requires that the employee must be afforded due
process and that the dismissal must be for a
valid cause. The denial of PLDT to show the
receipt did not deprive Honrado of his right to
due process. The fact that Honrado was served a
written notice for his termination and was given
a formal hearing with the assistance of counsel
satisfies the requirement of due process.
Honrado was given ample opportunity to air his
side but despite this, no counter-statement was
given. (PLDT v. Honrado, G.R. No. 189366, Dec. 8,
2010)
DUE PROCESS: HEARING;
OPPORTUNITY TO BE HEARD
Coverage of opportunity to be heard
The first written notice to be served on the Ees
should contain the specific causes or grounds for
termination against them, and a directive that
the Ees are given the opportunity to submit their
written explanation within a reasonable period.
Under the Omnibus Rules, reasonable
opportunity means every kind of assistance that
management must accord to the Ees to enable
them to prepare adequately for their defense.
This should be construed as a period of at least
five (5) calendar days from receipt of the
notice to give the Ees an opportunity to study
the accusation against them, consult a union
official or lawyer, gather data and evidence, and
decide on the defenses they will raise against the
complaint.
To enable the Ees to intelligently prepare their
explanation and defenses, the notice should
contain a detailed narration of the facts and
circumstances that will serve as basis for the
charge against the Ees. A general description of
the charge will not suffice. Lastly, the notice
should specifically mention which company
rules, if any, are violated and/or which among
 Termination of Employment
the grounds under Art. 297 is being charged
against the Ees.
After serving the first notice, the Ers should
schedule and conduct a hearing or conference
wherein the Ees will be given the opportunity to:
1. Explain and clarify their defenses to the
charge against them;
2. Present evidence in support of their
defenses; and
3. Rebut the evidence presented against them
by the management. During the hearing or
conference, the Ees are given the chance to
defend themselves personally, with the
assistance of a representative or counsel of
their choice. Moreover, this conference or
hearing could be used by the parties as an
opportunity to come to an amicable
settlement.
After determining that termination of
employment is justified, the employers shall
serve the employees a written notice of
termination indicating that: (1) all
circumstances involving the charge against the
employees have been considered; and (2)
grounds have been established to justify the
severance of their employment. (King of Kings v.
Mamac, G.R. No. 166208, June 29, 2007)
Q: The illegal dismissal case was referred to
the LA. Is a formal hearing or trial required
to satisfy the requirement of due process?
A: NO. Trial-type hearings are not required in
labor cases and these may be decided on verified
position papers, with supporting documents and
their affidavits. The holding of a formal hearing
or trial is discretionary with the labor arbiter
and is something that the parties cannot demand
as a matter of right. It is entirely within his
authority to decide a labor case before him,
based on the position papers and supporting
documents of the parties, without a trial or
formal hearing.
The requirements of due process are satisfied
when the parties are given the opportunity to
submit position papers wherein they are
supposed to attach all the documents that would
prove their claim in case it be decided that no
hearing should be conducted or was necessary.
(Shoppes Manila v. NLRC, 419 SCRA 354)
NOTE: It is not necessary for the affiants to
appear and testify and be cross-examined by the
counsel for the adverse party. It is sufficient that
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
the documents submitted by the parties have a
bearing on the issue at hand and support the
positions taken by them. (C.F. Sharp & Co. v.
Zialcita, 495 SCRA 387)
The essence of due process is simply an
opportunity to be heard, or as applied to
administrative proceedings, an opportunity to
explain one’s side or an opportunity to seek a
reconsideration of the action or ruling
complained of. (PLDT v. Bolso, 530 SCRA 550)
The burden of proof in termination cases
The burden of proof rest upon the Er to show
that the dismissal of the Ee is for a just cause,
and failure to do so would necessarily mean that
the dismissal is not justified, consonant with the
constitutional guarantee of security of tenure.
Due process refers to the process to be followed;
burden of proof refers to the amount of proof to
be adduced. In money claims, the burden of
proof as to the amount to be paid the Ees rests
upon the Er since he is in custody of documents
that would be able to prove the amount due,
such as the payroll.
Degree of proof required
In illegal dismissal cases, the Er is burdened to
prove just cause for terminating the employment
of its Ee with clear and convincing evidence to
give flesh and blood to the guaranty of security
of tenure granted by the Constitution to Ees
under the LC. (Duty Free Phils. Services, Inc. v.
Tria, G.R. No. 174809, June 27, 2012)
Guidelines in determining whether the
penalty imposed on Ee is proper
1. Gravity of the offense
2. Position occupied by the Ee
3. Degree of damage to the Er
4. Previous infractions of the same offense
5. Length of service (ALU-TUCP v. NLRC, G.R.
No. 120450, Feb. 10, 1999); (PAL v. PALEA,
G.R. No .L-24626, June 28, 1974)
Q: Felizardo was dismissed from Republic
Flour Mills-Selecta Ice Cream Corporation for
dishonesty and theft of company property for
bringing out a pair of boots, 1 piece
aluminum container and 15 pieces of
hamburger patties. Is the penalty of dismissal
commensurate with the offense committed?
180
 Labor Law and Social Legislation
A: There is no question that the Er has the
inherent right to discipline its Ees which
includes the right to dismiss. However, this right
is subject to the police power of the State. As
such, the Court finds that the penalty imposed
upon Felizardo was not commensurate with the
offense committed considering the value of the
articles he pilfered and the fact that he had no
previous derogatory record during his 2 years of
employment in the company.
Moreover, Felizardo was not a managerial or
confidential Ee in whom greater trust is reposed
by management and from whom greater fidelity
to duty is correspondingly expected. (ALU-TUCP
v. NLRC, G.R. No. 120450, Feb. 10, 1999)
Hearing is not an indispensable part of due
process
Sec. 2(d), Rule I of the IRR of Book VI of the LC
provides that the so-called standards of due
process outlined therein shall be observed
“substantially,” not strictly. This is a recognition
that while a formal hearing or conference is
ideal, it is not an absolute, mandatory or
exclusive avenue of due process. (Perez v. PT&T,
G.R. No. 152048, April 29, 2009)
Liability for Nominal Damages When Due
Process is Not Observed
It was held that when dismissal is for just or
authorized cause but due process was not
observed, the dismissal should be upheld.
(Agabon v. NLRC, G.R. No. 158693, Nov. 17, 2004)
The Er, however, should be held liable for non-
compliance with the procedural requirements of
due process in the form of damages.
Q: Integrated Pharma, engaged the services
of Rowena as "Clinician," tasked with the
duty of promoting and selling Integrated
Pharma's products.
Rowena received a memorandum from her
immediate supervisor stating the charges
against her relative to her failure to remit
her collections and to return the CareSens
POP demonstration unit to the office, at a
specified time, habitual tardiness, and her act
of deliberately misdeclaring or overstating
her actual travelling expense. In the same
memorandum, she was required to submit a
written explanation within 24 hours.
181
Rowena, however, refused to accept said
memorandum. Subsequently, Rowena
received through registered mail another
memorandum, but already denominated as
Termination of Employment. Rowena thus
filed a complaint for illegal dismissal. Is the
dismissal valid despite Rowena not being
accorded due process?
A: YES. If the dismissal is based on a just cause
under Art. 297 of the Labor Code, as in this case,
the employer must give the employee two
written notices and conduct a hearing. The first
written notice is intended to apprise the
employee of the particular acts or omissions for
which the employer seeks her dismissal; while
the second is intended to inform the employee of
the employer's decision to terminate him.
In the present case, Integrated Pharma
presented two first written notices charging
Rowena with various offenses. Both notices,
however, fell short of the requirements of the
law. Integrated Pharma did not afford Rowena
ample opportunity to intelligently respond to the
accusations hurled against her as she was not
given a reasonable period of at least five days to
prepare for her defense.
Failure to comply strictly with the requirements-
of procedural due process for dismissing an
employee will not render such dismissal
ineffectual if it is based on a just or an
authorized cause.
The employer, however, must be held liable for
nominal damages for non-compliance with
the requirements of procedural due process.
(Santos v. Integrated Pharmaceutical, Inc., G.R.
No. 204620, 11 July 2016)
Procedural Due Process under Art. 297-
299 of the LC as applied in the Agabon Case
Art. 297 Art. 298 Art. 299
The Er must The Er must Er may
give the Ee a give the Ee terminate the
notice and the services of
specifying the DOLE his Ee.
grounds for written
which notices 30
dismissal is days prior to
sought a the
hearing or an effectivity of
opportunity his
to be heard separation.
and after
hearing or
opportunity
 Termination of Employment

to be heard, a not possible —

notice of the Separation Pay
decision to Reinstatement
dismiss. a. Without + Full
The Worker is an There is no Just or Backwages
requirement inactive hearing Authorized
INVALID
under Art. party in the requirement Cause NOTE: If
292 (b) of cause for in diseases b. Without Reinstatement
notice and termination. but there is Due not possible—
hearing Only notice notice Separation Pay
applies only with dole requirement Liable for
in Art. 297 and notice to to worker, noncompliance
because the worker is but no notice With
a. With Just or
Er is accusing required. No to DOLE. procedural
Authorized
the worker need for a requirements
Cause
that the latter hearing VALID
b. Without
committed an because due NOTE:
Due Process
act or process is Separation Pay
omission found in LC if for
constituting a (Art. 298) Authorized
cause for not in Cause
termination Constitution
of his according to NOTE: The Agabon ruling was modified by JAKA
employment. Agabon. Food Processing v. Pacot, (G.R. No. 151378, March
28, 2005), where it was held that:
NOTE: in Art.
292 (b) in 1. If based on just cause (Art. 297, LC), but the
relation Er failed to comply with the notice
to Art. 298, if requirement, the sanction to be imposed
the closure upon him should be tempered because the
of dismissal process was, in effect, initiated by
business will an act imputable to the Ee; and
result in a
mass 2. If based on authorized causes (Art. 298, LC),
layoff and but the Er failed to comply with the notice
serious labor requirement, the sanction should be stiffer
dispute, the because the dismissal process was initiated
SLE can by Er’s exercise of his management
enjoin the Er prerogative.
as regards
mass Principle of Commensurate Penalty or
termination Proportionality Rule

Possible Effect of Employer’s directives must always be fair and

Liability of ER
Situations termination reasonable, and the corresponding penalties,
NO Liability when prescribed must be commensurate to the
With Just or offense involved and to the degree of the
Authorized NOTE: infraction. (Moreno v. San Sebastian College-
Cause VALID Separation Pay Recoletos, Manila, 550 SCRA 414)
With Due if for
Process Authorized Circumstances affecting validity of dismissal
Cause
Reinstatement 1. Gravity of the offense
a. Without
+ Full 2. Employment position
Just or 3. Length of service
Backwages
Authorized INVALID 4. Totality of infractions
Cause
NOTE: If 5. Nature of the business
b. With Due 6. First-offense rule
Reinstatement

UNIVERSITY OF SANTO TOMAS 182

2021 GOLDEN NOTES
 Labor Law and Social Legislation
7. Principle of equity
8. Principle of compassion and understanding
Damages
Moral damages may be awarded to compensate
one for diverse injuries such as mental anguish,
besmirched reputation, wounded feelings and
social humiliation. It is however not enough that
such injuries have arisen; it is essential that they
have sprung from a wrongful act or omission of
the defendant which was the proximate cause
thereof. (Suario v. BPI, G.R. No. 50459, April 25,
1989) e.g., breach of contract.
Exemplary damages may be awarded only if
the dismissal was shown to have been effected in
a wanton, oppressive or malevolent manner.
(Cocoland Development Corp. v. NLRC and Mago,
G.R. No. 98458, July 17, 1996)
In the determination of the amount of nominal
damages which is addressed to the sound
discretion of the court, several factors are taken
into account:
1. The authorized cause invoked;
2. The number of employees to be awarded;
3. The capacity of the employers to satisfy the
awards, taken into account their prevailing
financial status as borne by the records;
4. The employer’s grant of other termination
benefits in favor of the employees; and
5. Whether there was a bona fide attempt to
comply with the notice requirements as
opposed to giving no notice at all.
(Industrial Timber Corp. et al. v. Ababan, et
al., G.R. No. 164518, March 30, 2006)
The Court, in the case of Deoferio v. Intel
Technology Phil. (G.R. No. 202996, June 18, 2014),
added the following to the factors mentioned
above:
1. The employer’s financial, medical, and/or
moral assistance to the sick employee; and
2. The flexibility and leeway that the
employer allowed the sick employee in
performing his duties while attending to
his medical needs.
Attorney’s Fees
In employment termination cases, attorney’s
fees are not recoverable where there is no
sufficient showing of bad faith on the part of
private respondent (employer) there must
183
always be a factual basis for the award of
attorney’s fee (Pepsi Cola Products, et al. v. E.V.
Santos, G.R. No. 165968, April 14, 2008)
Liability of Corporate Officers
It is basic that a corporation is invested by law
with a personality separate and distinct from
those of the persons composing it as well as
from that of any other legal entity to which it
may be related. (Asionics Phil., et al. v. NLRC, G.R.
No. 124950, May 19, 1998)
The mere fact that the officer is part of the family
corporation does not mean that all its acts are
imputed to him directly and personally, in the
absence of a showing that he acted without or in
excess of his authority or was motivated by
personal ill-will against the employee. (Sweet
Lines, Inc. v. NLRC, G.R. No. 79975, March 16,
1989)
GR: Officers of a corporation are not personally
liable for their official acts unless it is shown that
they have exceeded their authority.
XPN: Where the incorporators and directors
belong to a single family, the corporation and its
members can be considered as one in order to
avoid its being used as an instrument to commit
injustice, or to further an end subversive of
justice. The shield of corporate fiction shall be
pierced when it is deliberately and maliciously
designed to evade financial obligations to
employees. (Pabalan v. NLRC, G.R. No. 898799,
April 20, 1990) Officers, then, become personally
liable.
Doctrine of Piercing the Corporate Veil
Applies Only in Three Basic Areas:
1. Defeat public convenience as when the
corporate fiction is used as a vehicle for the
evasion of an existing obligation;
2. Fraud cases or when the corporate entity
is used to justify a wrong, protect fraud, or
defend a crime; or
3. Alter ego cases, where a corporation is
merely a farce since it is a mere alter ego or
business conduit of a person, or where the
corporation is so organized and controlled
and its affairs are so conducted as to make
it merely an instrumentality, agency,
conduit or adjunct of another corporation.
(Sarona v. NLRC, G.R. No. 185280, Jan. 18,
2012)
 Termination of Employment
NOTE: For the piercing-the-veil doctrine to
apply, it is of no consequence if the entity is
single proprietorship. It is the act of hiding
behind the personalities of juridical entities that
the equitable piercing doctrine was formulated
to address and prevent. (Ibid.)
In labor cases, particularly, corporate directors
and officers are solidarily liable with the
corporation for the termination of employment
of corporate employees done with malice or in
bad faith. (Uichico, et al. v. NLRC, et al., G.R. No.
121434, June 2, 1997)
TERMINATION BY EMPLOYEE
Resignation
It is 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, then he has no other
choice but to disassociate himself from his
employment. (Intertrod Maritime, Inc. v. NLRC,
G.R. No. 81087, June 19, 1991)
NOTE: It is a formal pronouncement or
relinquishment of an office. The overt act of
relinquishment should be coupled with intent to
relinquish, which intent could be inferred from
the acts of the employee before and after the
alleged resignation. (Auza, Jr., et al. v. MOL
Philippines, Inc. and Tiutan, G.R. No. 175481, Nov.
21, 2012)
With written notice - An employee may
terminate without just cause the employer-
employee relationship by serving a written
notice on the employer at least one (1) month in
advance. (Art. 300 [a], LC)
NOTE: The employer upon whom no such notice
was served may hold the employee liable for
damages.
The employer has no control over resignations
and so, the notification requirement was devised
in order to ensure that no disruption of work
would be involved by reason of the resignation.
(Intertrod Maritime, Inc. v. NLRC, G.R. No. 81087,
June 19, 1991)
Without written notice – An employee may put
an end to the relationship without serving any
notice on the employer for any of the following
just causes. (Art. 300 [b], LC):
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
a. Serious insult by the employer or his
representative on the honor and
person of the employee;
b. Inhuman and unbearable treatment
accorded the employee by the
employer or his representative;
c. 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
d. Other causes analogous to any of the
foregoing.
NOTE: If resignation is not voluntary, the same
can be deemed to be a constructive dismissal.
Withdrawal of Resignation
Resignation is withdrawable even if the
employee has called it irrevocable. (Custodio v.
Ministry of Labor and Employment, G.R. No.
643174, July 19, 1990) But after it is accepted or
approved by the employer, its withdrawal needs
the employer’s consent. (Azucena, 2016)
Intention to Resign
An employee may be deemed to have resigned
from his position, and such resignation may be
accepted and made effective by the management,
although the employee did not mention the word
“resign” and/or “resignation.” (Azucena, 2016)
Resignation Pay
GR: An employee who voluntarily resigns from
employment is not entitled to separation pay.
XPNs:
1. There is a stipulation for payment of such
in the employment contract or CBA; or
2. Payment of the amount is sanctioned by
established employment practice or policy.
(Travelaire & Tours Corp. v. NLRC, G.R. No.
131523, Aug. 20, 1998)
CONSTRUCTIVE DISMISSAL
Constructive Dismissal
It occurs when there is cessation of work
because continued employment is rendered
impossible, unreasonable, or unlikely as when
there is a demotion in rank or diminution in pay
or when a clear discrimination, insensibility, or
disdain by an Er becomes unbearable to the Ee
leaving the latter with no other option but to
184
 Labor Law and Social Legislation
quit. (The University of Immaculate Conception v.
NLRC, G.R. No. 181146, Jan. 26, 2011)
NOTE: It is an employer’s act amounting to
dismissal but made to appear as if it were not. It
is a dismissal in disguise. (Uniwide Sales
Warehouse Club v. NLRC, G.R. No. 154503)
Burden of proof on the employee
The employee who is complaining of
constructive dismissal has the burden of proof
“to prove that her resignation was not voluntary,
but was actually a case of constructive dismissal,
with clear, positive, and convincing evidence.”
(Hechanova v. Atty. Matorre, G.R. No. 198261, Oct.
16, 2013)
Shortening the resignation’s 30-day period of
effectivity does not prove forced resignation
The 30-day notice requirement for an
employee’s resignation is actually for the benefit
of the employer who 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
turn-over of the tasks which the resigning
employee may be handling.” (Hechanova v. Atty.
Matorre, G.R. No. 198261, Oct. 16, 2013)
The rule requiring an employee to stay or
complete the 30-day period prior to the
effectivity of his resignation becomes
discretionary on the part of the management as
an employee who intends to resign may be
allowed a shorter period before his resignation
becomes effective. (Phimco Industries v. NLRC,
G.R. No. 118041, June 11, 1997)
Shortening from 30 days to 15 days the period
required for the resigning employee does not
prove forced or constructive dismissal.
(Hechanova v. Atty. Matorre, G.R. No. 198261, Oct.
16, 2013)
Act of Tearing Timecards Constitutes
Constructive Dismissal
A daily time record is a mandatory requirement
for inclusion in the payroll, and in the absence of
an employment agreement, it constitutes
evidence of employment. The tearing of time
cards confirms employer’s vindictive nature and
oppressive conduct, as well as his reckless
disregard for employees’ rights. The act of
tearing timecards may be considered an outright
– not only symbolic – termination of
employment relationship, a categorical
185
indication of an employee’s dismissal from
employment. (Ang v. San Joaquin, G.R. No.
185549, Aug. 7, 2013)
Relief entitled to illegally or constructively
dismissed Ees
An illegally or constructively dismissed Ee is
entitled to: (1) either reinstatement, if viable, or
separation pay, if reinstatement is no longer
viable; and (2) backwages. These two reliefs are
separate and distinct from each other and are
awarded conjunctively. (Robinsons Galleria v.
Ranchez, G.R. No. 177937, Jan. 9, 2011)
RESIGNATION vs. CONSTRUCTIVE DISMISSAL
RESIGNATION CONSTRUCTIVE
DISMISSAL
1. Voluntary 1. Involuntary or
forced resignation
2. Not entitled to 2. Entitled to either
separation pay, reinstatement or
unless it is a separation pay and
company practice backwages
or provided in the
CBA. (Hanford
Philippines Inc. v.
Shirley Joseph, G.R.
No. 158251, March
31, 2005)
3. Burden of proving 3. Burden of proving
voluntariness is on constructive
the employer. dismissal is on the
employee.
Q: Monica is a customer associate in LBC
Danao. Arturo, her immediate superior,
started sexually harassing her. On May 5,
2010, she reported the incident to the LBC
Head Office. On May 14, 2010, sensing that
management did not immediately act on her
complaint, Monica resigned. She asserted
that she was forced to quit since she no
longer felt safe at work. On June 15, 2010,
Monica was served a copy of a Notice to
Explain. On July 20, 2010, LBC held the
administrative hearing for the incident. On
the same day, Monica filed a Complaint for
Illegal Dismissal against the company. On
Sept. 27, 2010, the area head of LBC Cebu
sent a letter addressed to Arturo containing a
suspension with last warning.
LBC argues that it should not be held liable
for constructive dismissal. It argues that it
cannot be held liable for the hostile work
environment that Monica experienced
 Termination of Employment
because it was Arturo who committed the
acts subject of her complaint. It asserts that
four (4) months is not an unreasonable
period to resolve a sexual harassment
complaint. Is LBC liable for constructive
dismissal?
A: YES. Constructive dismissal occurs when an
employer makes an employee's continued
employment impossible, unreasonable or
unlikely, or has made an employee's working
conditions or environment harsh, hostile and
unfavorable, such that the employee feels
obliged to resign from his or her employment.
One of the ways by which a hostile or offensive
work environment is created is through the
sexual harassment of an employee. Under
Section 5 of the Anti-Sexual Harassment Act, the
employer is only solidarily liable for damages
with the perpetrator in case an act of sexual
harassment was reported and it did not take
immediate action on the matter.
There is no showing that LBC acted on Monica’s
report before they issued Arturo a Notice to
Explain. Thus, the formal investigation is
deemed to have commenced only 41 days after
the incident was reported. LBC likewise offered
no explanation as to why it took another month
before it held an administrative hearing for the
case. Worse, it took LBC another two months to
resolve the matter.
LBC’s insensibility to Monica’s sexual
harassment case is a ground for constructive
dismissal. In this instance, it cannot be denied
that Monica was compelled to leave her
employment because of the hostile and offensive
work environment created and reinforced by
Arturo and LBC. She was thus clearly
constructively dismissed. (LBC Express-Vis, Inc. v.
Monica C. Palco, G.R. No. 217101, Feb. 12, 2020, as
penned by J. Leonen)
Q: Donna Jacob sought employment with
First Step Manpower International Services,
Inc. as a household service worker. When
First Step accepted her application, she
signed a two-year contract where she would
be deployed to Riyadh, Kingdom of Saudi
Arabia. Jacob narrated several events that
caused her to only stay in her employer for
only three (3) months. First is that her male
employer had attempted to rape her while
she was washing the dishes, and when she
reported such matter to her female
employer, the latter did not believe her, and
another event is when her female employer
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
hit her with a shoe that was “violently thrown
at her.” Unable to take this, she escaped her
employers and met Bermido, a fellow Filipina
worker, that was being maltreated by her
employers as well.
Jacob and Bermido filed a case before the
Labor Arbiter for constructive illegal
dismissal, maltreatment, and nonpayment of
wages for the unexpired portion of their
contract with claims of moral and exemplary
damages, medical expenses, and attorney's
fees. The Complaint filed was directed
against First Step and its President, Elnor
Tapnio, as well as against Jacob's foreign
employer, Muhammad. Jacob insisted on
having been constructively dismissed
because her working environment allegedly
became so intolerable that she was impelled
to leave her job. Was she constructively
dismissed?
A: YES. Constructive dismissal does not always
entail a "forthright dismissal or diminution in
rank, compensation, benefit and privileges."
Pertinent in the case at hand, there can also be
constructive dismissal in cases where "an act of
clear discrimination, insensibility, or disdain by
an employer becomes so unbearable on the part
of the employee that it could foreclose any
choice by him [or her] except to forego his [or
her] continued employment."
To gauge if constructive dismissal exists, the test
is whether a reasonable person in the
employee's standing was impelled to surrender
his or her post under the given situation. It is a
dismissal in disguise because the doing equates
to a "dismissal but made to appear as if it were
not." Hence, "the law recognizes and resolves
this situation in favor of employees in order to
protect their rights and interests from the
coercive acts of the employer."
It is discernable from petitioner's declaration
that the controversy emanated from the lewd
actuations of her male foreign employer. To
avert a commotion, she reported the matter to
her female employer but unfortunately, she was
merely discredited and even blamed for the
incident. From then on, petitioner's female
foreign employer treated her differently. Jacob
was subjected to physical and verbal harm that
she was left with no other choice but to
relinquish her employment. Certainly, the
treatment petitioner experienced in the hands of
her foreign employers fostered a hostile and
unbearable work setting which impelled her not
186
 Labor Law and Social Legislation
only to leave her employers but also, as in
petitioner's words, to escape (tumakas).
The conclusion is all too clear that there exists a
well-grounded fear on her part prompting her to
run away despite having been employed
overseas for barely two (2) months. The
cessation of petitioner's employment was not of
her own doing but was brought about by
unfavorable circumstances created by her
foreign employers. To put in simply, if petitioner
failed to continue her job, it was because she
refused to be further subjected to the ordeal
caused by her employers' conduct. (Donna Jacob
v. First Step Manpower Int’l Services, Inc., G.R. No.
229984, July 8, 2020, as penned by J. Leonen)
Q: Flores, a conductor of JAM Transportation
Co., Inc., had an accident where he had to be
hospitalized for a number of days. Upon
reporting back to the company, he was told
to wait. For several days, this continued and
he was promised a route assignment which
did not materialize. Upon speaking to
Personnel Manager Medrano, he was told
that he will be accepted back to work but as a
new Ee. Flores rejected the offer because it
would mean forfeiture of his 18 years of
service to the company. Is the offer for
reinstatement as a new Ee a constructive
dismissal?
A: YES. Flores’ re-employment as a new Ee
would be very prejudicial to him as it would
mean a demotion in rank and privileges and the
retirement benefits for his previous 18 years of
service with the company would simply be
considered as non-existent. It amounts to
constructive dismissal. (JAM Transportation Co.,
Inc. v. Flores, G.R. No. 82829, March 19, 1993)
Q: Quinanola was transferred from the
position of Executive Secretary to the
Executive Vice President and General
Manager to the Production Dep’t as
Production Secretary. Quinanola rejected the
assignment and filed a complaint for illegal
dismissal due to constructive dismissal. Did
the transfer of Quinanola amount to
constructive dismissal?
A: NO. Quinanola’s transfer was reasonable since
it did not involve a demotion in rank or a change
in her place of work nor a diminution in pay,
benefits and privileges. It did not constitute
constructive dismissal. Furthermore, an Ee’s
security of tenure does not give him a vested
right in his position as would deprive the
187
company of its prerogative to change his
assignment or transfer him where he will be
most useful. (Philippine Japan Active Carbon
Corp. v. NLRC, G.R. No. 83239, March 8, 1989)
Q: Sangil was a utility man/assistant steward
of the passenger cruise vessel Crown Odyssey
under a one-year contract. Sangil suffered
head injuries after an altercation with a
Greek member of the crew. He informed the
captain that he no longer intends to return
aboard the vessel for fear that further
trouble may erupt between him and the
other Greek crewmembers of the ship. Was
Sangil constructively dismissed?
A: YES. There is constructive dismissal where
the act of a seaman in leaving ship was not
voluntary but was impelled by a legitimate
desire for self-preservation or because of fear for
his life. Constructive dismissal does not always
involve diminution in pay or rank but may be
inferred from an act of clear discrimination,
insensibility, or disdain by an Er may become
unbearable on the part of the Ee that it could
foreclose any choice by him except to forego his
continued employment. (Sunga Ship
Management Phil., Inc. v. NLRC, G.R. No. 119080,
April 14, 1998)
RELIEFS FOR ILLEGAL DISMISSAL
Remedies of Ee in case of illegal dismissal
In case where the worker is illegally terminated,
his remedies are:
1. Reinstatement without loss of seniority
rights – Actual reinstatement or payroll
reinstatement
2. Full backwages – Full backwages means no
deduction
3. Separation pay in lieu of reinstatement
4. Damages, including Attorney’s fees
5. 6% legal interest on monetary award
Q: Does the offer to reinstate the illegally
dismissed Ee affect the liability of the erring
Er?
A: NO. Sincere or not, the offer of reinstatement
could not correct the earlier illegal dismissal of
the Ee. The Er incurred liability under the LC
from the moment an Ee was illegally dismissed,
and the liability did not abate as a result of the
Er’s repentance. (Ranara v. NLRC, 212 SCRA 631)
 Termination of Employment
Q: PAL dismissed strike leader Capt. Gaston,
as a result of which, the Union resolved to
undertake the grounding of all PAL planes
and the filing of applications for “protest
retirement” of members who had completed
5 years of continuous service, and “protest
resignation” for those who had rendered less
than 5 years of service in the company. PAL
acknowledged receipt of said letters and
among the pilots whose “protest resignation
or retirement” was accepted by PAL were
Enriquez and Ecarma.
Before their readmission, PAL required
Enriquez and Ecarma to accept 2 conditions,
namely: that they sign conformity to PAL’s
letter of acceptance of their retirement and
or resignation, and that they submit an
application for employment as new Ees
without protest or reservation. As a result of
this, their seniority rights were lost. Are the
pilots entitled to the restoration of their
seniority rights?
A: NO. An Ee has no inherent right to seniority.
He only has such rights as may be based on a
contract, statute, or an administrative regulation
relative thereto. Seniority rights which are
acquired by an Ee through long-time
employment are contractual and not
constitutional. The discharge of an Ee thereby
terminating such rights would not violate the
Constitution. When the pilots tendered their
respective retirement or resignation and PAL
immediately accepted them, both parties
mutually terminated the contractual
employment relationship between them thereby
curtailing whatever seniority rights and
privileges the pilots had earned through the
years. (Enriquez v. PAL, et al., G.R. No. L-51382
Dec. 29, 1986)
Q: Remoticado was absent for fourteen (14)
days without an official leave. He then
informs Nielo, HR officer, that he was
resigning due to personal reasons. After
receiving his final pay, he protested that he
was entitled to separation pay computed at
two (2) months for his services for two (2)
years. Nielo averred that he could not be
entitled to separation pay considering that
he voluntarily resigned. Remoticado then
filed a complaint for illegal dismissal
claiming that he was told to stop reporting
for work due to a "debt at the canteen" and
thereafter was prevented from the
company’s premises. Was there an illegal
dismissal?
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
A: NO. There can be no illegal termination when
there was no termination. Before the employer
must bear the burden of proving that the
dismissal was legal, the employee must first
establish by substantial evidence the fact of his
dismissal from service. If there is no dismissal,
then there can be no question as to the legality
or illegality thereof. Petitioner insists on his
version of events, that is, that on Dec. 23, 2010,
he was told to stop reporting for work on
account of his supposed indebtedness at the
canteen. This bare insistence, however, is all that
petitioner has. He failed to present convincing
evidence. (Remoticado v. Typical Construction
Trading Corp., and Alignay, G.R. No. 206529, April
23, 2018, as penned by J. Leonen)
Q: On July 1986, Arriola was employed as a
correspondent assigned in Olongapo City and
Zambales under Pilipino Star Ngayon, Inc.
(Pilipino Star). Sometime in November 2002,
after his column was removed from
publication, Arriola never returned for work.
Three years later, Arriola filed an illegal
dismissal complaint against Pilipino Star
stating that he was “arbitrarily dismissed.”
Arguing that he was a regular employee,
Arriola contended that his rights to security
of tenure and due process were violated. On
the other hand, Pilipino Star claims that he
was never dismissed, in fact, they tried
calling and sending him messages to report
for work but to no avail until such time that
they discovered that Arriola transferred to a
rival newspaper publisher. The Labor Arbiter
dismissed the case stating that there was no
illegal dismissal for Arriola was the one who
abandoned his work. Is the Labor Arbiter
correct in dismissing the complaint?
A: YES. Pilipino Star Ngayon, Inc. did not illegally
dismiss Ariolla. The removal of Arriola’s column
from Pilipino Star’s newspaper is not
tantamount to a termination of his employment
as his job is not dependent on the existence of
the column. Moreover, a newspaper publisher
has the management prerogative to determine
what columns to print in its newspaper.
Furthermore, it took him three years to file the
complaint of illegal dismissal which is a clear
intention to sever his employment with Pilipino
Star Ngayon, Inc. (Arriola v. Pilipino Star
Ngayon, Inc, and/or Belmonte, G.R. No. 175689,
Aug. 13, 2014, as penned by J. Leonen)
Full backwages
188
 Labor Law and Social Legislation
The LC points to "full backwages" as meaning
exactly that, i.e., without deducting from
backwages, the earnings derived elsewhere by
the concerned Ee during the period of his illegal
dismissal. (Buenviaje v. CA, G.R. No. 147806, Nov.
12, 2002)
NOTE: The award of backwages is computed on
the basis of a 30-day month.
Period covered by full backwages
From the date of illegal dismissal to the
employee’s date of actual reinstatement.
Separation pay in lieu of reinstatement
when:
Doctrine of Strained Relations (applies to
confidential and managerial Ees only)
In case the position has been abolished (applies
to both managerial and rank and file Ees)
NOTE: Moral and exemplary damages may also
be awarded.
REINSTATEMENT PENDING APPEAL
(ART. 229, LC)
Reinstatement
It is the restoration of the Ee to the state from
which he has been unjustly removed or
separated without loss of seniority rights and
other privileges. The person reinstated assumes
the position he had occupied prior to his
dismissal, and is, ordinarily, entitled only to the
last salary in that position. (Azucena, 2016)
Reinstatement presupposes that the previous
position from which one had been removed still
exists, or that there is an unfilled position which
is substantially equivalent or of similar nature as
the one previously occupied by the employee.
Forms of reinstatement
1. Actual or physical –The Ee should be
reinstated to his position which he
occupies prior to his illegal dismissal under
the same terms and conditions prevailing
prior to his dismissal or separation or, if no
longer available, to a substantially
equivalent position.
2. Payroll – The Ee is merely reinstated in the
payroll. The Ee although not admitted back
189
to work, would nevertheless be included in
the payroll and entitled to receive salary
and other benefits as if she were in fact
working. (Azucena, 2016)
NOTE: Employer is given the option to
reinstate either actually or in payroll.
An employer can reinstate an employee in
payroll when actual reinstatement is no longer
possible:
1. The Er believes that there was a valid cause
for dismissal.
2. Er does not want to see anymore an
unwanted face in the company premise
because it may demoralize employees.
NOTE: An order of reinstatement by the LA is
not the same as actual reinstatement of a
dismissed or separated Ee, however it is
immediately executory even pending appeal.
Thus, until the Er continuously fails to actually
implement the reinstatement aspect of the
decision of the LA, their obligation to the illegally
dismissed Ee, insofar as accrued backwages and
other benefits are concerned, continues to
accumulate. It is only when the illegally
dismissed Ee receives the separation pay (in
case of strained relations) that it could be
claimed with certainty that the Er-Ee
relationship has formally ceased thereby
precluding the possibility of reinstatement.
(Triad Security & Allied Services, Inc. et al v.
Ortega, G.R. No. 160871, Feb. 6, 2006)
Q: Is an illegally dismissed Ee entitled to
reinstatement as a matter of right?
A: GR: YES.
XPNs: Proceeds from an illegal dismissal
wherein reinstatement is ordered but cannot
be carried out as in the following cases:
1. Reinstatement cannot be effected in
view of the long passage of time or
because of the realities of the situation;
2. It would be inimical to the Ers’ interest;
3. When reinstatement is no longer
feasible;
4. When it will not serve the best interest
of the parties involved;
5. Company will be prejudiced by
reinstatement;
6. When it will not serve a prudent
purpose;
 Termination of Employment

7. When there is resultant strained Art. 229 Art. 294

relation (applies to both confidential and
managerial Ees only); May be availed of as Presupposes that the
8. When the position has been abolished soon as the LA renders judgment has already
(applies to managerial, supervisory and a judgment declaring become final and
rank-and-file Ees) that the dismissal of executory.
the Ee is illegal and
NOTE: In such cases, it would be more prudent ordering said Consequently, there is
to order payment of separation pay instead of reinstatement. It may nothing left to be done
reinstatement. (Quijano v. Mercury Drug be availed of even except the execution
Corporation, G.R. No. 126561, July 8, 1998) pending appeal thereof.

Q: Is there any violation of the “No work, No

pay” in payroll reinstatement?
A: Generally, yes. However, since it is the
mandate of the law, although it is harsh, there is
no violation under the dictum of dura lex sed lex.
(2 Poquiz, 2018, p. 460)
The option in Art. 229 of the Labor Code is
exclusively granted to the employer. The event
that gives rise for its exercise is not the
reinstatement decree of a Labor Arbiter, but the
writ for its execution commanding the employer
to reinstate the employee, while the final act
which compels the employer to exercise the
option is the service upon it of the writ of
execution when, instead of admitting the
employee back to his work, the employer
chooses to reinstate the employee in the payroll
only.
This option is based on practical considerations.
The employer may insist that the dismissal of the
employee was for a just and valid cause and the
latter's presence within its premises is
intolerable by any standard; or such presence
would be inimical to its interest or would
demoralize the co-employees.
NOTE: An award or order for reinstatement is
self-executory. It does not require the issuance
of a writ of execution. (Pioneer Texturizing Corp.
v. NLRC, G.R. No. 118651, Oct. 6, 1997)
Rule on wages during reinstatement pending
appeal
Dismissed Ee whose case was favorably decided
by the LA is entitled to receive wages pending
appeal upon reinstatement, which is
immediately executory. Unless there is a
restraining order, it is ministerial upon the LA to
implement the order of reinstatement and it is
mandatory on the Er to comply therewith.
NOTE: After the LA’s decision is reversed by a
higher tribunal, the Ee 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 Er.
Two-Fold Test
1. There must be actual delay or the fact that
the order of reinstatement pending appeal
was not executed prior to its reversal; and

Thus, while payroll reinstatement would in fact be
unacceptable because it sanctions the payment
of salaries to one not rendering service, it may
still be the lesser evil compared to the intolerable
presence in the workplace of an unwanted
employee. (Maranao Hotel v. NLRC, G.R. No.
110027, Nov. 16, 1994)
2. The delay must not be due to the Er’s
unjustified act or omission. If the delay is
due to the Er’s unjustified refusal, the Er
may still be required to pay the salaries
notwithstanding the reversal of the LA’s
decision. (Garcia v. PAL, G.R. No. 164856,
Aug. 29, 2009)

Order of reinstatement Wenphil Doctrine

An order for reinstatement entitles an Ee to In case of payroll reinstatement, the reinstated

receive his accrued backwages from the moment
the reinstatement order was issued up to the
date when the same was reversed by a higher
court without fear of refunding what he had
received. (Pfizer v. Velasco, G.R. No. 177467,
March 9, 2011)
employee is not required to return the salary he
received during the period the lower court or
tribunal declared that he was illegally dismissed,
even if the employer's appeal would eventually
be ruled in its favor. Such non-requirement to
reimburse salary presupposes that salary must

UNIVERSITY OF SANTO TOMAS 190

2021 GOLDEN NOTES
 Labor Law and Social Legislation
in fact be paid to the concerned employee when
he or she is ordered reinstated pending appeal.
(Wenphil Corporation v. Abing, et al, G.R. No.
207983, April 7, 2014)
Q: May the Court order the reinstatement of a
dismissed employee even if the prayer of the
complaint did not include such relief?
A: YES. So long as there is a finding that the Ee
was illegally dismissed, the court can order the
reinstatement of an Ee even if the complaint
does not include a prayer for reinstatement,
unless, of course the Ee has waived his right to
reinstatement. By law, an Ee who is unjustly
dismissed is entitled to reinstatement among
others. The mere fact that the complaint did not
pray for reinstatement will not prejudice the Ee,
because technicalities of law and procedure are
frowned upon in labor proceedings. (Pheschem
Industrial Corp. v. Moldez, G.R. No. 116158, May 9,
2005)
NOTE: Reinstatement ordered by LA is self-
executory as provided under Art. 229 while the
one by the NLRC is not because it awaits the
issuance of a writ of execution under Art. 230.
(Azucena, 2016)
Q: A complaining Ee obtained a favorable
decision in an illegal dismissal case. The LA
ordered her immediate reinstatement. The
Er opted payroll reinstatement pending
appeal. The NLRC ruled that the dismissal
was valid. The Er stopped the payroll
reinstatement. The Ee elevated the case to
the CA, and eventually to the SC. The SC
upheld the dismissal. Is the Ee entitled to
continued payroll reinstatement after the
NLRC decision?
A: NO. The Ee is not entitled to continued payroll
reinstatement. The decision of the NLRC on
appeals from decisions of the LA shall become
final and executory after 10 calendar days from
receipt thereof by the parties. That the CA may
take cognizance of and resolve a petition for
certiorari for the nullification of the decisions of
the NLRC on jurisdictional and due process
considerations does not affect the statutory
finality of the NLRC decision. Since the NLRC
decision which upheld the dismissal became
final, the Er was correct in stopping the payroll
reinstatement of the Ee. (Bago v. NLRC, G.R. No.
170001, April 4, 2007)
191
Q: What happens if there is an Order of
Reinstatement but the position is no longer
available?
A: The Ee should be given a substantially
equivalent position. If no substantially
equivalent position is available, reinstatement
should not be ordered because that would in
effect compel the Er to do the impossible. In such
a situation, the Ee should merely be given a
separation pay consisting of 1-month salary for
every year of service. (Grolier Int’l Inc. v. ELA,
G.R. No. 83523, Aug. 31, 1989)
Doctrine of Strained Relations
It is when the Er can no longer trust the Ee and
vice versa or there were imputations of bad faith
to each other; reinstatement could not
effectively serve as a remedy. This rule applies
only to positions which require trust and
confidence. (Globe Mackay v. NLRC, G.R. No.
82511, March 3, 1992)
NOTE: Under the circumstances where the
employment relationship has become so
strained to preclude a harmonious working
relationship and that all hopes at reconciliation
are naught after reinstatement, it would be more
beneficial to accord the Ee backwages and
separation pay.
The following must be proven before the
strained relations rule can be applied to a
particular case
1. The Ee concerned occupies a position
where he enjoys the trust and confidence of
his Er; and
2. That it is likely if the Ee is reinstated, an
atmosphere of antipathy and antagonism
may be generated as to adversely affect the
efficiency and productivity of the Ee
concerned. (Globe Mackay Cable & Wire
Corp. v. NLRC G.R. No. 82511, March 3, 1992)
Q: Does the strained relations rule always
bar reinstatement in all cases?
A: NO. The rule should be applied on a case-to-
case basis, based on each case’s peculiar
conditions and not universally. Otherwise,
reinstatement can never be possible simply
because some hostility is invariably engendered
between the parties as a result of litigation. That
is human nature. (Anscor Transport v. NLRC, G.R.
No. 85894, Sept. 28, 1990)
 Termination of Employment
Besides, no strained relations should arise from
a valid and legal act of asserting one's right;
otherwise, an Ee who shall assert his right could
be easily separated from the service, by merely
paying his separation pay on the pretext that his
relationship with his Er had already become
strained. (Globe Mackay Cable & Wire Corp. v.
NLRC, G.R. No. 82511, March 3, 1992)
SEPARATION PAY
IN LIEU OF REINSTATEMENT
Q: Delfin and Luisito are licensed drivers of
public utility jeepneys owned by Moises
Capili. When Capili assumed ownership and
operation of the jeepneys, the drivers were
required to sign individual contracts of lease
of the jeepneys. The drivers gathered the
impression that signing the contract was a
condition precedent before they could
continue driving. The drivers stopped plying
their assigned routes and a week later filed
with the LA a complaint for illegal dismissal
praying not for reinstatement but for
separation pay. Are the respondents entitled
to separation pay?
A: NO. When the drivers voluntarily chose not to
return to work anymore, they must be
considered as having resigned from their
employment. The common denominator of those
instances where payment of separation pay is
warranted is that the employee was dismissed by
the Er. (Capili v. NLRC, G.R. 117378, March 26,
1997)
Q: Romeo has been an Ee of AAA Company
from 1993 to 1999 but was unable to report
to work due to some illness. Romeo claimed
that he was offered by AAA of Php 15,000
separation pay, on the contrary AAA claimed
Romeo was never terminated and even told
the latter that Romeo could go back to work
anytime but Romeo clearly manifested that
he was no longer interested in returning to
work and instead asked for separation pay. Is
Romeo terminated or considered resigned?
Is Romeo entitled to separation pay?
A: Romeo is considered resigned. Romeo’s
various pleadings support his intention of not
returning to work on the ground that his health
is failing. Moreover, Romeo did not ask for
reinstatement and rejected AAA Company’s offer
for him to return to work. This is tantamount to
resignation. Resignation is defined as the
voluntary act of an Ee who finds himself in a
situation where he believes that personal
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
reasons cannot be sacrificed in favor of the
exigency of the service and he has no other
choice but to disassociate himself from his
employment.
Romeo is not entitled to separation pay. There is
no provision in the LC which grants separation
pay to voluntarily resigning Ees. In fact, the rule
is that an Ee who voluntarily resigns from
employment is not entitled to separation pay,
except when it is stipulated in the employment
contract or CBA, or it is sanctioned by
established Er practice or policy. Hence, Romeo
is not entitled to separation pay in the absence of
a Labor provision and a stipulation in his
employment contract or CBA. (Villaruel v. Yeo
Han Guan, G.R. No. 169191, June 1, 2011)
Q: Two groups of seasonal workers claimed
separation benefits after the closure of Phil.
Tobacco processing plant in Balintawak and
the transfer of its tobacco operations to
Candon, Ilocos Sur. Phil. Tobacco refused to
grant separation pay to the workers
belonging to the first batch, because they had
not been given work during the preceding
year and, hence, were no longer in its employ
at the time it closed its Balintawak plant.
Likewise, it claims exemption from awarding
separation pay to the second batch, because
the closure of its plant was due to "serious
business losses," as defined in Art. 298 of the
LC.
Both labor agencies held that the two groups
were entitled to separation pay equivalent to
½-month salary for every year of service,
provided that the employee worked at least 1
month in a given year. Is the separation pay
granted to an illegally dismissed Ee the same
as that provided under Art. 298 of the LC in
case of retrenchment to prevent losses?
A: NO. The separation pay awarded to Ees due to
illegal dismissal is different from the amount of
separation pay provided for in Art. 298 of the LC.
Proceeding from the above, Phil. Tobacco is
liable for illegal dismissal and should be
responsible for the reinstatement of the first
group and the payment of their backwages.
However, since reinstatement is no longer
possible as Phil. Tobacco have already closed its
Balintawak plant, members of the said group
should instead be awarded normal separation
pay (in lieu of reinstatement) equivalent to at
least one month pay, or one month pay for every
year of service, whichever is higher.
192
 Labor Law and Social Legislation
It must be stressed that the separation pay being
awarded to the first group is due to illegal
dismissal; hence, it is different from the amount
of separation pay provided for in Art. 298 in case
of retrenchment to prevent losses or in case of
closure or cessation of the Er’s business, in
either of which the separation pay is equivalent
to at least one (1) month or one-half (1/2)
month pay for every year of service, whichever
is higher. (Phil. Tobacco Flue-Curing & Redrying
Corp. v. NLRC, G.R. No. 127395, Dec. 10, 1998)
Q: Does separation pay apply in cases of legal
dismissal?
A: YES. Separation pay is warranted when the
cause for termination is not attributable to
the employee's fault, such as those provided
in Arts. 298 and 299 of the Labor Code, as well
as in cases of illegal dismissal where
reinstatement is no longer feasible. On the other
hand, an employee dismissed for any of the
just causes enumerated under Art. 297 of the
same Code, being causes attributable to the
employee's fault, is not, as a general rule,
entitled to separation pay. As an exception,
case law allows the grant of separation pay or
financial assistance to a legally-dismissed
employee as a measure of social justice or on
grounds of equity. (Claudia’s Kitchen, Inc. v.
Tanguin, G.R. No. 221096, June 28, 2017)
BACKWAGES
Backwages
It refers to the relief given to an Ee to
compensate him for the lost earnings during the
period of his dismissal. It presupposes illegal
termination. (Azucena, 2016)
NOTE: Entitlement to backwages of the illegally
dismissed Ee flows from law. Even if he does not
ask for it, it may be given. The failure to claim
backwages in the complaint for illegal dismissal
is a mere procedural lapse which cannot defeat a
right granted under substantive law. (St.
Michael’s Institute v. Santos, G.R. No. 145280, Dec.
4, 2001)
Q: What is the basis of awarding backwages
to an illegally dismissed employee?
A: The payment of backwages is generally
granted on the ground of equity. It is a form of
relief that restores the income that was lost by
reason of the unlawful dismissal; the grant
thereof is intended to restore the earnings that
193
would have accrued to the dismissed Ee during
the period of dismissal until it is determined that
the termination of employment is for a just
cause. It is not private compensation or damages
but is awarded in furtherance and effectuation of
the public objective of the LC. Nor is it a redress
of a private right but rather in the nature of a
command to the Er to make public reparation for
dismissing an Ee either due to the former’s
unlawful act or bad faith. (Tomas Claudio
Memorial College Inc., v. CA, G.R. No. 152568, Feb.
16, 2004)
Q: What is the period covered by the payment
of backwages?
A: The backwages shall, from the time that
wages are unlawfully withheld until the time of
actual reinstatement or, if reinstatement is no
longer feasible, until the finality of judgment
awarding backwages, cover the period from the
date of dismissal of the Ee up to the date of:
1. Actual reinstatement, or if reinstatement is
no longer feasible
2. Finality of judgment awarding backwages.
(Buhain v. CA, G.R. No. 143709, July 2, 2002)
The backwages to be awarded should not be
diminished or reduced by earnings elsewhere
during the period of his illegal dismissal. The
reason is that the Ee while litigating the illegality
of his dismissal must earn a living to support
himself and his family. (Bustamante v. NLRC, G.R.
No. 111651, March 15, 1996; Buenviaje v. CA, G.R.
No. 147806, Nov. 12, 2002)
PREVENTIVE SUSPENSION
Preventive suspension
It means that during the pendency of the
investigation, the Er may place the Ee under
preventive suspension leading to termination
when there is an imminent threat or a
reasonable possibility of a threat to the lives and
properties of the Er, his family and
representatives as well as the offender’s co-
workers by the continued service of the Ee. (Sec.
8, Rule XXIII, Book V, IRR)
Duration of preventive suspension
It should not last for more than 30 days. The Ee
should be made to resume his work after 30
days. It can be extended provided the Ee’s wages
are paid after the 30-day period.
 Termination of Employment
This period is intended only for the purpose of
investigating the offense to determine whether
he is to be dismissed or not. It is not a penalty.
Preventive suspension exceeding 30 days will
amount to constructive dismissal.
NOTE: If more than 1 month, the Ee must
actually be reinstated or reinstated in the
payroll. Officers are liable only for the offense
committed if done with malice.
Q: Cantor and Pepito were preventively
suspended pending application for their
dismissal by Manila Doctor’s Hospital after
being implicated by one Macatubal when
they refused to help him when he was caught
stealing x-ray films from the hospital. Was
the preventive suspension of Cantor and
Pepito proper?
A: NO. Where the continued employment of an
Ee poses a serious and imminent threat to the
life and property of the Er or on his co-Ees, the
Ees’ preventive suspension is proper. In this
case, no such threat to the life and property of
the Er or of their co-Ees’ is present and they
were merely implicated by Macatubal. (Manila
Doctors Hospital v. NLRC, G.R. No. L-64897, Feb.
28, 1985)
Q: Karina Santos is a famous news anchor
appearing nightly in the country’s most
watched newscast. She is surprised, after one
newscast, to receive a notice of hearing
before the station’s Vice-President for
Human Resources and calls the VP
immediately to ask what was wrong. Karina
is told over the phone that one of her crew
filed a complaint against her for verbal abuse
and that management is duty bound to
investigate and give her a chance to air her
side. Karina objects and denies that she had
ever verbally assaulted her crew. The VP
then informed her that pending the
investigation she will be placed on a 30-day
preventive suspension without pay and that
she will not be allowed to appear in the
newscast during this time. Is the preventive
suspension of Karina valid? Discuss the
reasons for your answer. (2015 BAR)
A: NO. The preventive suspension of Karina is
not valid. The employer may place an employee
under preventive suspension if his/her
continued employment would pose a serious
and imminent threat to the life or property of the
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
employer or of his/her co-employees. These
requirements are not present here.
RETIREMENT
Retirement
Retirement has been defined as withdrawal from
office, public station, business, occupation, or
public duty. (Brion v. South Phil. Union Mission of
the Seventh Day Adventist Church, G.R. No.
135136, May 19, 1999) It is the result of a
bilateral act of the parties, a voluntary
agreement between the Er and the Ee whereby
the latter after reaching a certain age agrees
and/or consents to sever his employment with
the former. (Ariola v. Philex Mining Corp, G.R. No.
147756. Aug. 9, 2005)
Persons covered by retirement benefit
All Ees in the private sector:
1. Regardless of their position, designation or
status; and
2. Irrespective of the method by which their
wages are paid (Sec. 1, Rule II, Book VI, IRR);
3. Part-time Ees;
4. Ees of service and other job contractors;
5. Domestic Helpers or Persons in the
personal service of another (D.O. No. 20, s.
1994);
6. Underground mine workers (RA 8558);
7. Ees of GOCCs organized under the
Corporation Code (without original
charters) (Postigo, et al. v. Philippine
Tubercolosis Society, Inc., G.R. No. 155146,
Jan. 24, 2006)
Persons NOT covered by retirement benefits
1. Ees of the National Government and its
political subdivisions, including GOCCs (if
they are covered by the Civil Service Law);
2. Ees of retail, service, and agricultural
establishments or operations employing
not more than 10 Ees. (Sec. 2, Rule II, Book
VI, IRR)
Kinds of retirement schemes
1. Compulsory and contributory in nature;
2. One set up by the agreement between the
Er and Ees in the CBA or other agreements
between them (other applicable
employment contract);
3. One that is voluntarily given by the Er,
expressly as announced company policy or
194
 Labor Law and Social Legislation
impliedly as in the failure to contest the
Ee’s claim for retirement benefits. (Gerlach
v. Reuters Limited Phils., G.R. No. 148542,
Jan. 17, 2005)
Retroactive application of Art. 302 of the LC
(on retirement) as amended by RA 7641
Art. 302 of the LC as amended by RA 7641 can be
applied retroactively, provided that;
1. The claimant for retirement benefits was
still the Ee of the Er at the time the statute
took effect; and
2. The claimant was in compliance with the
requirements for eligibility under the
statute for such retirement benefits.
(PSVSIA v. NLRC, G.R. No. 115019, April 14,
1997)
Provisions of the retirement plan binding as
part of the employment contract
The retirement plan forms part of the
employment contract since it is made known to
the Ees and accepted by them, and such plan has
an express provision that the company has the
choice to retire an Ee regardless of age, with 20
years of service, said policy is within the bounds
contemplated by the LC. Moreover, the manner
of computation of retirement benefits depends
on the stipulation provided in the company
retirement plan. (Progressive Dev’t Corporation v.
NLRC, G.R. No. 138826, Oct. 30, 2000)
Retirement age
It is the age of retirement that is specified in the:
1. CBA;
2. Employment contract;
3. Retirement plan (Sec. 3, Rule II, Book VI,
IRR); or
4. Optional retirement age for underground
mining Ees.
Retirement age in the absence of a
retirement plan or other applicable
agreement
1. Optional – Upon reaching 60 years old
provided that Ee has rendered 5 years of
service.
The option to retire upon reaching the age
of 60 years or more but not beyond 65 is
the exclusive prerogative of the Ee if there
is no provision on retirement in a CBA or
any other agreement or if the Er has no
195
retirement plan. (Capili v. NLRC, G.R. No.
117378, March 26, 1997)
2. Compulsory – 65 years old, regardless of
years of service. (Sec. 4, Rule II, Book VI,
IRR)
Retirement benefits, where not mandated
by law, may be granted by agreement of the
Ees and their Er or as a voluntary act on the
part of the Er. Retirement benefits are
intended to help the Ee enjoy the remaining
years of his life, lessening the burden of
worrying for his financial support, and are
a form of reward for his loyalty and service
to the Er. (Aquino v. NLRC, G.R. No. 87653,
Feb. 11, 1992)
Q: Cesario started working as an orderly in
United Doctors Medical Center's (UDMC)
housekeeping department. UDMC and its
rank-and-file employees had a CBA, under
which rank-and-file employees were entitled
to optional retirement benefits. Leonila,
representing her deceased husband filed a
Complaint for payment of retirement
benefits against UDMC. However, UDMC
argued that Leonila does not have legal
capacity to apply for Cesario's optional
retirement benefits since Cesario never
applied for it in his lifetime. It asserted that
even assuming Cesario was already qualified
to apply for optional retirement three (3)
years prior to his death, he never did. IS
UDMC correct?
A: NO. Under the law, retirement benefits are the
property interests of the retiree and his or her
beneficiaries. The CBA does not prohibit the
employee's beneficiaries from claiming
retirement benefits if the retiree dies before the
proceeds could be released. Here, UDMC’s
optional retirement plan is premised on length
of service, not upon reaching a certain age. In
any case, the CBA does not mandate that an
application must first be filed by the employee
before the right to the optional retirement
benefits may vest. Thus, this ambiguity should
be resolved in favor of the retiree. Leonila, being
the surviving spouse, is entitled to claim the
optional retirement benefits on his behalf.
(UDMC v. Bernadas, G.R. No. 209468, Dec. 13,
2017, as penned by J. Leonen)
5-year service requirement only applies to
absence of retirement plan
 Termination of Employment
Being in a nature of ‘minimum requirement’, the
parties cannot stipulate a period higher than five
years since this will run counter to the law.
(Chan, 2014)
The minimum length of service includes
authorized absences and vacations, regular
holidays, and mandatory fulfillment of a military
or civic duty. (Sec. 4.4, Rule II, Book VI, IRR)
Employee must have met the conditions of
eligibility as condition precedent
Although retirement plan forms part of the
employment contract, before a right to
retirement benefits or pension vests in an Ee, he
must have met the stated conditions of eligibility
with respect to the nature of employment, age,
and length of service. This is a condition
precedent to his acquisition of rights thereunder.
(Brion v. South Phil. Union Mission of the Seventh
Day Adventist Church, G.R. No. 135136, May 19,
1999)
NOTE: SC ruled that the conditions of eligibility
for retirement must be met at the time of
retirement at which juncture the right to
retirement benefits or pension, if the Ee is
eligible, vests in him. (Ibid.)
Compulsory retirement age below 60
allowed by mutual agreement
Art. 302 permits Er and Ee to fix the applicable
retirement age at below 60. The same is legal
and enforceable so long as the parties agree to
be governed by such CBA. (Pantranco North
Express v. NLRC, G.R. No. 95940, July 24, 1996)
NOTE: In order for retirement at an earlier age
to be valid, it must be shown that the Ee’s
participation in the plan is voluntary. (Jaculbe v.
Siliman University, G.R. No. 156934, March 16,
2007)
Different Retirement Age for mine workers
under RA 8558
The optional retirement age of underground
mine workers is fifty (50) years of age; while the
compulsory retirement age is sixty (60) years
old. (Sec. 2, D.O. No. 167, s. 2016)
Rule for extension of service of retiree upon
reaching the compulsory retirement age
Upon the compulsory retirement of an Ee or
official in the public or private service, his
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
employment is deemed terminated. The matter
of extension of service of such Ee or official is
addressed to the sound discretion of the Er. (UST
Faculty Union v. NLRC, G.R. No. 89885, Aug. 6,
1990)
Q: After thirty (30) years of service, Beta
Company compulsorily retired Albert at age
65 pursuant to the company's Retirement
Plan. Albert was duly paid his full retirement
benefits of one (1) month pay for every year
of service under the Plan. Thereafter, out of
compassion, the company allowed Albert to
continue working and paid him his old
monthly salary rate, but without the
allowances that he used to enjoy. After five
(5) years under this arrangement, the
company finally severed all employment
relations with Albert; he was declared fully
retired in a fitting ceremony but the company
did not give him any further retirement
benefits.
Albert thought this treatment unfair as he
had rendered full service at his usual hours
in the past five (5) years. Thus, he filed a
complaint for the allowances that were not
paid to him, and for retirement benefits for
his additional five (5) working years, based
either on the company's Retirement Plan or
the Retirement Pay Law, whichever is
applicable.
a. After Albert's retirement at age 65,
should he be considered a regular
employee entitled to all his previous
salaries and benefits when the company
allowed him to continue working?
b. Is he entitled to additional retirement
benefits for the additional service he
rendered after age 65? (2013 BAR)
A:
a. NO. He would be considered a contractual
employee, not a regular employee. His
salaries and benefits will be in accordance
with the stipulations of the contract he
signed with the company.
The present case is similar to a case decided
by the Supreme Court in Rivera v. United
Laboratories, (G.R. No. 155639, April 22,
2009), where the Court held that the
company, in employing a retired employee
whose knowledge, experience and expertise
the company recognized, as an employee or
as a consultant, is not an illegality; on the
196
 Labor Law and Social Legislation

contrary, it is a recognized practice in this separation pay and damages. Is Angus

country. entitled to both retirement pay and
separation pay?
b. NO. He cannot be compulsorily retired twice
in the same company. A: YES. Angus is entitled to both separation pay
and early retirement benefits due to the absence
RETIREMENT PAY SEPARATION PAY of a specific provision in the CBA prohibiting
Distinctions recovery of both. In Aquino v. NLRC (G.R. No.
87653, Feb. 11, 1992), it was held that an
Required in cases employee is entitled to recover both separation
enumerated under Art. pay and retirement benefits in the absence of a
Paid by reason of 298 and 299 and as a specific prohibition in the Retirement Plan or
retirement substitute where CBA. Concomitantly, the Court ruled that an
reinstatement is not employee's right to receive separation pay in
possible addition to retirement benefits depends upon
Purpose is to hold the provisions of the company's Retirement Plan
the Ee enjoy the and/or CBA.
Werewithal during the
remaining years of
period that an employee NOTE: Retirement benefits and separation pay
his life thereby
is looking for another are not mutually exclusive.
lessening the
employment after his
burden of worrying
termination Retirement benefits are a form of reward for
for his financial
support an employee's loyalty and service to an
employer and are earned under existing laws,
When both must be paid
CBAs, employment contracts and company
Payment of retrenchment embodied in the CBA policies.
as well as retirement pay provided under a
separate Retirement Plan due to the demand of On the other hand, separation pay is that
the Ee of their right under the CBA which was amount which an employee receives at the time
result of negotiations between the company of his severance from employment, designed to
and Ees. (Aquino v. NLRC, G.R. No. 87653, Feb 11, provide the employee with the wherewithal
1992) during the period that he is looking for another
employment and is recoverable only in instances
When Ees are entitled to only
enumerated under Arts. 298 and 299 of the
one form of benefit
Labor Code or in illegal dismissal cases when
When the CBA provisions are considered an reinstatement is not feasible. (Goodyear
effective bar to the availment of retirement Philippines v. Angus, G.R. No. 185449, Nov. 12,
benefits once the Ees have chosen separation 2014)
pay or vice versa. Such when the CBA
enunciates express prohibition against ‘double Q: Moralde, an employee of the Provincial
recovery’. (Zuellig Pharma Corp. v. Sibal, G.R. No. Health Office, was formally charged with
173587, July 15, 2013) falsifying his Daily Time Records. Unknown
to the Province’s officials, Moralde filed an
Retirement Pay and Separation Pay are Not “application for retirement” under the
Mutually Exclusive Revised GSIS Act of 1977 while the
administrative case against him was pending.
Q: Angus was employed by Goodyear as The next day, Moralde was found guilty of the
Secretary. Due to cost saving measures charge and was dismissed from service.
implemented by the company, a letter was However, on appeal, the Civil Service
sent to her informing her that her position Commission (CSC) issued a resolution ruling
has become redundant based on a study that Moralde should be reinstated. It was
made by the management. Angus replied that only when the Province was processing
she will only accept the early retirement Moralde’s papers for his reinstatement that it
program if she will be given a premium of found out about his successful application for
additional 3 days per year of service. She retirement. Thus, the Province sought to
accepted a check covering her retirement modify the CSC’s previous resolution.
benefits without the additional 3 day Moralde maintained that the CSC's ruling on
premium but under protest. She filed a his reinstatement was immutable and that, in
complaint for illegal dismissal with claim for

197
 Termination of Employment
any case, he had never retired, but merely
received separation pay. Is Moralde already
separated from government service?
A: YES. Moralde willfully severed his employer-
employee relationship with the government.
This is the inescapable implication of his
deliberate petitioning for benefits occasioned by
what he mistakenly thought was retirement, but
which was more accurately a simulation of
resignation. While retirement benefits differ
from separation benefits, a public officer who
applies to receive either of them nevertheless
acts out of the same contemplation: the complete
and unequivocal termination of his or her
employer-employee relationship with the
government. This is because, by their very
nature, retirement and separation benefits
become available only when employment ceases.
(Civil Service Commission v. Moralde, G.R. No.
211077, Aug. 15, 2018, as penned by J. Leonen)
Computation of retirement benefits in the
absence of an applicable agreement or
retirement plan
A retiree is entitled to a retirement pay
equivalent to at least ½ month salary for every
year of service, a fraction of at least 6 months
being considered as 1 whole year.
Composition of ½ month salary or
retirement pay
Unless parties provide for broader inclusions,
retirement pay is comprised of:
1. 15 days salary based on latest salary rate;
2. Cash equivalent of not more than 5 days of
service incentive leaves
3. 1/12 of the 13th month pay (2.5 days)
4. All other benefits as may be agreed upon by
the Er and Ee. (Sec.5.2, Rule II, Book VI, IRR)
The “one-half month salary” is equivalent to
22.5 days. (Capitol Wireless, Inc. v. Confesor, G.R.
No.117174, 13 Nov. 1996)
NOTE: Under Sec. 26 of RA 4670, otherwise
known as “Magna Carta for Public School
Teachers”, public school teachers having fulfilled
the age and service requirements of the
applicable retirement laws shall be given one
range salary raise upon the retirement, which
shall be the basis of the computation of the lump
sum of the retirement pay and monthly benefit
thereafter.
Superiority of Benefits Rule
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Once the Ee retires, it is not Art. 302 that is
controlling but the retirement plan under the
CBA or other applicable employment contract.
(Chan, 2014)
Art. 302 becomes relevant only in the matter of
ensuring that the retirement benefits are not less
than those provided therein. (Elegir v. PAL, Inc.,
G.R. No. 181995, July 16, 2012)
Q: The instant labor dispute between
petitioners (PAL) stemmed from petitioner’s
act of unilaterally retiring airline pilot
Captain Albino Collantes under PAL-ALPAP
Retirement Plan. The SLE assailed the order
of PAL’s action of unilaterally retiring
Captain Collantes and further ordered that
the basis of the computation of Captain
Collantes’ retirement benefits should be Art.
302 of the LC. But PAL contends that the
retirement plan should prevail as it is the
agreement between the parties.
What should be the basis of the computation
of Captain Collantes’ retirement benefits?
A: The basis of computation of Collantes’
retirement benefits should be Art. 302 of the
LC. The given retirement benefits under the
retirement plan is low compared to the
retirement benefits provided under Art. 302 of
the LC. Applying the second paragraph of Art.
302, an Ee’s retirement benefits under any
collective bargaining and other agreement shall
not be less than those provided in the LC. Hence,
Art. 302 of the LC and not the PAL-ALPAP
Retirement Plan, should govern the computation
of the benefits to be awarded to Captain
Collantes.
Moreover, a pilot who retires after twenty years
of service or after flying 20,000 hours would still
be in the prime of his life and at the peak of his
career, compared to one who retires at the age of
60 years old. Based on this peculiar
circumstance that PAL pilots are in, the parties
provided for a special scheme of retirement
different from that contemplated in the LC.
Conversely, the provisions of Art. 302 of the LC
could not have contemplated the situation of
PAL’s pilots. Rather, it was intended for those
who have no more plans of employment after
retirement, and are thus in need of financial
assistance and reward for the years that they
have rendered service. (PAL, Inc. v. Airline Pilots
Association of the Philippines, G.R. No. 143686,
Jan. 15, 2002)
198
 Labor Law and Social Legislation

an Er is a subject to
Gratuity Pay vs. Retirement Benefits 2.Compulsory covered Ee if compulsory
upon all self- he receives coverage.
RETIREMENT employed compensation
GRATUITY PAY
BENEFITS persons for such
It is paid to the earning Php service.
beneficiary for the 1,800 or
past services or favor more per
Are intended to help
rendered purely out annum.
the Ee enjoy the
of the generosity of
remaining years of his
the giver or Right to contributory retirement plan
life, releasing him from
grantor. It is not
the burden of
intended to pay a Where both Er and Ee contribute to a retirement
worrying for his
worker for actual fund in accordance with the CBA or other
financial support, and
services rendered or applicable employment contract, the Er’s total
are a form of reward
for actual contribution thereto should not be less than the
for his loyalty to the
performance. It is a total retirement benefits to which the Ee would
Er. (Sta. Catalina
money benefit or have been entitled had there been no such
College and Oranza, v.
bounty given to the retirement fund. In case the Er's contribution is
NLRC and Tercera, G.R.
worker, the purpose less than the retirement benefits provided under
No. 144483, Nov. 19,
of which is to reward the law, the Er should pay the deficiency. (Sec.
2003)
Ee’s who have 3.3, Rule II, Book VI, IRR)
rendered satisfactory
service to the Right to non-contributory retirement plan
company.
The Ee have a vested and demandable right to a
RETIREMENT PAY UNDER RA 7641 non-contributory retirement plan. It is an
VIS-À-VIS RETIREMENT BENEFITS UNDER existing benefit voluntarily granted to them by
SSS AND GSIS LAWS their Er. The latter may not unilaterally
withdraw, eliminate or diminish such benefits.
Retirement pay under the LC in relation to (Nestle Philippines, Inc. v. NLRC, G.R. No. 91231,
retirement benefits under SSS and GSIS laws Feb. 4, 1991)
(1997 BAR)
RETIREMENT BENEFITS OF WORKERS
Revised PAID BY RESULTS/ RETIREMENT
Social Government Employees’ BENEFITS OF PART-TIME
Security Service Compensation WORKERS/SEASONAL EMPLOYEE
Law Insurance Act
Act Determination of the amount of retirement
Compulsory Compulsory for Compulsory benefits of workers paid by results and part-
upon all E e s all permanent upon all Ers time workers
not o ver Ees below 60 and their Ees
6 0 years of years of age not over 60 The 15-day salary of workers paid by results and
age and their upon years of age; part-time workers shall be determined from
Ers. appointment of Provided, that their average daily salary (ADS), which is the
permanent an Ee who is average daily salary for the last 12 months
1. Filipinos status, and for over 60 years reckoned from the date of their retirement,
recruited in all elective of age and divided by the number of actual working days in
the officials for the paying that particular period. (Sec. 5.2 and 5.3, Rule II,
Philippines duration of contributions Book VI, IRR)
by foreign- their tenure. to qualify for
based Ers for the NOTE: The rule mentioned is the same for
employment NOTE: Any retirement or underground mine Ees. (Sec. 4.3, D.O. No. 167, s.
abroad may person, life insurance 2016)
be covered whether benefit
by the SSS on elected or administered In the absence of a retirement plan or agreement
a voluntary appointed, in by the System providing for retirement benefits of employees
basis. the service of shall be in the establishment, an employee upon reaching

199
 Termination of Employment

the age of sixty (60) years or more, but not
beyond sixty-five (65) years which is hereby
declared the compulsory retirement age, who
has served at least five (5) years in the said
establishment, may retire and shall be entitled to
retirement pay equivalent to at least one-half
(1/2) month salary for every year of service, a
fraction of at least six (6) months being
considered as one whole year. (Paz v. Northern
Tobacco Redrying Co., Inc, G.R. No. 199554, Feb.
18, 2015)
would subject the benefits to tax. (Santos v.
Servier Philippines, Inc., G.R. No. 166377, Nov. 28,
2008)
Exemption of retirement pay of underground
mine workers from tax
The retirement pay provided in RA 8558 may be
exempted from tax consistent with the BIR as
discussed above.

TAXABILITY

Non-taxability of retirement benefits under

RA 7641

Retirement benefits under R.A 7641 are tax

exempt provided that such benefits under the
retirement plan be equal or less than the
minimum statutory requirement.

Requirements for tax exemption under RA

7641

That there be no CBA or other applicable

employment contract providing for retirement
benefits for an Ee; or

Even if there is a CBA or other applicable

employment contract providing for retirement
benefits for an Ee, that the same is below the
requirements set forth by law.

Retirement benefits of private firms shall not

be subject to any tax

The following conditions must be complied with:

1. The retirement benefits received by the

officials and Ees of private firms, whether
individual or corporate, is in accordance
with a reasonable private benefit plan
maintained by the Er;
2. The retiring official or Ee has been in the
service of the same Er for at least ten (10)
years;
3. He/She is not less than fifty (50) years of
age at the time of his/her retirement; and
4. The benefits shall be availed of by an
official or employee only once. (Sec. 1, RA
4917)

RA 8424, the Tax Reform Act of 1997, which

amended the NIRC, expressly excludes
retirement benefits from gross income based on
the same four (4) conditions enumerated above.
Non-compliance with any of the requirements

UNIVERSITY OF SANTO TOMAS 200

2021 GOLDEN NOTES
 Labor Law and Social Legislation

longer afford to provide transportation

MANAGEMENT PREROGATIVE shuttle services. Consequently, it announced
that a normal fare would be charged
depending on the distance traveled by the
workers availing of the service.
GR: Management prerogative is the right of the
employer to regulate all aspects of employment,
Was the Little Hands Garments Company
such as:
within its rights to withdraw this benefit
which it had unilaterally been providing its
1. Freedom to prescribe work assignments,
Ees? (2005 BAR)
2. Working methods,
3. Processes to be followed,
A: YES. This is a management prerogative which
4. Regulation regarding transfer of Ees,
is not due any legal or contractual obligation.
5. Supervision of their work, lay-off and
The facts of the case do not state the
discipline, and
circumstances through which the shuttle service
6. Dismissal and recall of work. (Goya, Inc. v.
may be considered as a benefit that ripened into
Goya, Inc. Ees Union-FFW, G.R. No. 170054,
a demandable right. There is no showing that the
Jan. 21, 2013).
benefit has been deliberately and consistently
granted, i.e. with the Er’s full consciousness that
NOTE: It presupposes the existence of an Er-EE
despite its not being bound by law or contract to
relationship. (Goya, Inc. v. Goya, Inc, Employees
grant it, it just the same granted the benefit.
Union-FFW, G.R. No. 170054, Jan. 21, 2013)
Limitations on management prerogative
So long as the company’s prerogatives are
exercised in good faith for the advancement of
It is circumscribed by limitations found in:
the employer’s interest and not for the purpose
of defeating or circumventing the rights of the
1. Law;
employees under special laws or under valid
2. CBA;
agreements, the SC will uphold them. (San
3. Employment contract;
Miguel Brewery Sales v. Ople, G.R. No. 53515, Feb.
4. Employer policy or practice; or
8, 1989)
5. General principles of fair play and justice.
An employer is free to regulate, according to his
Furthermore, a line must be drawn between
best discretion and best business judgement, all
management prerogatives regarding business
aspects of employment, from hiring to firing,
operations per se and those which affect the
except in cases of unlawful discrimination or
rights of Ees. In treating the latter, management
those which may be provided by law. (Philippine
should see to it that its Ees are at least properly
Telegraph and Telephone Company v. NLRC, G.R.
informed of its decisions and modes of actions.
No. 118978, May 23, 1997).
Such management prerogative may be availed of
without fear of any liability so long as it is
The Secretary of Labor and Employment is duly
exercised in good faith for the advancement of
mandated to equally protect and respect not
the Er’s interest and not for the purpose of
only the laborer or worker’s side but also the
defeating or circumventing the rights of Ees
management and/or employer’s side. The law, in
under special laws or valid agreement and are
protecting the rights of the laborer, authorizes
not exercised in a malicious, harsh, oppressive,
neither oppression nor self-destruction of the
vindictive or wanton manner or out of malice or
employer. (Colgate Palmolive, Inc v. Ople, G.R. No.
spite. (PAL v. NLRC, G.R. No. 85985, Aug. 13, 1993)
73681, June 30, 1988).
NOTE: It must be established that the
XPN: Otherwise limited by law, contract, and
prerogative being invoked is clearly a
principles of fair play and justice. managerial one.

Q: Little Hands Garment Company, an Q: Is withholding an Ee’s salary a valid

unorganized manufacturer of children's
apparel with around 1,000 workers, suffered
losses for the 1st first time in history when
its US and European customers shifted their
huge orders to China and Bangladesh. The
management informed its Ees that it could no
exercise of management prerogative?
A: NO. Any withholding of an Ee’s wages by an
Er may only be allowed in the form of wage
deductions under the circumstances provided in

201
 Labor Standards – Management Prerogative

Art. 113 of the LC: 1) the worker is insured; 2) Here, the series of letter requiring Padilla to
for union dues; 3) in cases authorized by law or report to head office does not suffice.
regulation issued by the SLE. In the absence of Jurisprudence is consistent in its disapproval of
the following circumstances, withholding thereof general return-to-work orders as a justification
is thus unlawful. (SHS Perforated Materials, Inc. v. for failure to timely render assignments to
Diaz, G.R. 185814, Oct. 13, 2010) security guards. (Padilla v. Airborne, G.R. No.
210080, Nov. 22, 2017, as penned by J. Leonen)
Q: May a MERALCO Ee invoke the remedy of
writ of habeas data available where his Er RIGHT TO RETURN OF INVESTMENTS
decides to transfer her workplace on the
basis of copies of an anonymous letter posted Employer’s Right to Return of Investments
therein, imputing to her disloyalty to the
company and calling for her to leave, which This includes the right to make profit.
imputation it investigated but fails to inform
her of the details thereof? Consistent with the policy of the State to bridge
the gap between the underprivileged
A: NO. The writs of amparo and habeas data will workingman and the more affluent employers,
not issue to protect purely property or the balance in favor of the workingman should
commercial concerns nor when the grounds be titled without being blind to the concomitant
invoked in support of the petitions therefore are right of the employer to the protection of his
vague or doubtful. Employment constitutes a property. (Gelmart Industries Phils., Inc. v. NLRC,
property right under the context of the due G.R. No. 55668, Aug. 10, 1989).
process clause of the Constitution. The writ of
habeas data directs the issuance of the writ only RIGHT TO DISCIPLINE
against public officials or Ees, or private
individuals or entities engaged in the gathering,
Employer's Right to Discipline His Employees
collecting or storing of data or information
regarding an aggrieved party’s person, family or
The employer has the prerogative to instill
home; and that MERALCO (or its officers) is
discipline in his employees and to impose
clearly not engaged in such activities. (MERALCO
reasonable penalties, including dismissal, on
v. Lim, G.R. No. 184769, Oct. 5, 2010)
erring employees pursuant to company rules and
regulations. (San Miguel Corporation v. NLRC, G.R.
Q: Padilla was hired by Airborne as a security
No. 87277, May 12, 1989)
guard. He allegedly rendered continuous
service for 24 years, but he was relieved from
Company policies and regulations are, unless
his post and was advised to wait for his re-
shown to be grossly oppressive or contrary to
assignment order. Later, he received a letter
law, generally binding and valid on the parties.
from Airborne directing him to report for
(China Banking Corp. v. Borromeo, G.R. No.
assignment. He called Airborne's office but
156515, Oct. 19, 2004).
was told that he had no assignment yet. After
more than six months not having been
Limitation On The Employer’s Power To
deployed or re-assigned, Padilla filed his
Discipline
Complaint for illegal dismissal against
Airborne. Airborne argued that Padilla was
While management has the prerogative to
placed on floating status for only two (2)
discipline its Ees and to impose appropriate
months; and he was directed to report to
penalties on erring workers, pursuant to
Airborne's office however, he failed to
company rules and regulations, however, such
comply and went on absence without leave
management prerogative must be exercised in
instead, thus there was no constructive
good faith for the advancement of the Er’s
dismissal. Is Airborne correct?
interest and not for the purpose of defeating or
circumventing the rights of the Ees under special
A: NO. Under law, the period of temporary off-
laws and valid agreements. (PLDT v. Teves, G.R.
detail for security guards must not exceed six (6)
No. 143511, Nov. 15, 2010)
months. Beyond this, a security guard's floating
status shall be tantamount to constructive
dismissal. Also the security guard must be RIGHT TO TRANSFER OF EMPLOYEES
assigned to a specific or particular client. A
general return-to- work order does not suffice.

UNIVERSITY OF SANTO TOMAS 202

2021 GOLDEN NOTES
 Labor Law and Social Legislation
Transfer is the lateral movement from one
position to another of equivalent rank, level or
salary without break of service.
Employer’s Right to Transfer and Reassign
Employees
In the pursuit of its legitimate business interests,
especially during adverse business conditions,
management has the prerogative to transfer or
assign Ees from one office or area of operation to
another provided there is no demotion in rank or
diminution of salary, benefits and other
privileges and the action is not motivated by
discrimination, bad faith, or effected as a form of
punishment or demotion without sufficient
cause. This privilege is inherent in the right of
Ers to control and manage their enterprises
effectively.
NOTE: The right of Ees to security of tenure does
not give them vested rights to their positions to
the extent of depriving management of its
prerogative to change their assignments or to
transfer them. (Endico v. Quantum Foods
Distribution Center, G.R. No. 161615, Jan. 30,
2009)
Q: May the Er exercise his right to transfer an
Ee and compel the latter to accept the same if
said transfer is coupled with or is in the
nature of promotion?
A: NO. There is no law that compels an Ee to
accept promotion. Promotion is in the nature of
a gift or a reward which a person has a right to
refuse. When an Ee refused to accept his
promotion, he was exercising his right and
cannot be punished for it. While it may be true
that the right to transfer or reassign an Ee is an
Er’s exclusive right and the prerogative of
management, such right is not absolute. (Dosch v.
NLRC and Northwest Airlines, G.R. No. 51182, July
5, 1983.
Q: Manalo is a faculty member of the
Accountancy Department of Ateneo de Naga
University's College of Commerce and part-
time Manager of the Ateneo de Naga Multi-
Purpose Cooperative. The Grievance
Committee of the University found her in
“fraud in issuance of official receipts,
collection of cash without documented
remittance to the cooperative, use of
inappropriate forms of documents cash
receipts” and, thus, recommended his
dismissal”. Instead of dismissing Manalo, the
University President transferred Manalo to
203
teach Economics in another Department. Was
Manalo constructively dismissed?
A: NO. Transferring employees, to the extent
that it is done fairly and in good faith, is a valid
exercise of management prerogative and will
not, in and of itself, sustain a charge of
constructive dismissal. In this case, the acts
committed by Manalo run afoul from the
principles of integrity and objectivity governing
ethics and education in the accountancy
profession as mandated by the International
Federation of Accountants. Relevant as it is,
ethical behavior takes on even greater
significance in the education and training of
individuals who are prospective members of the
profession. Professionals who concurrently take
on the role of educators act as gatekeepers to the
esteemed ranks of a profession or as channels of
skills and knowledge. (Manalo v. Ateneo De Naga
University, et al., G.R. No. 185058, Nov. 9, 2015, as
penned by J. Leonen)
Burden of Proving that the Transfer was
Reasonable
The Er must be able to show that the transfer is
not unreasonable, inconvenient or
prejudicial to the Ee; nor does it involve a
demotion in rank or a diminution of his
salaries, privileges and other benefits. Should
the Er fail to overcome this burden of proof, the
Ee’s transfer shall be tantamount to
constructive dismissal. (Blue Dairy Corporation
v. NLRC, 314 SCRA 401)
Limitations on Management Prerogatives
1. Such that the Er must be motivated by good
faith
2. The contracting out should not be resorted
to circumvent the law or must not have
been the result of malicious or arbitrary
actions. (MERALCO v. Quisumbing, G.R. no.
127598. Feb. 22, 2000)
It is the inherent prerogative of an employer to
transfer and reassign its employees to meet the
requirements of its business. Be that as it may,
the prerogative of the management to transfer
its employees must be exercised without grave
abuse of discretion. The exercise of the
prerogative should not defeat an employee's
right to security of tenure. The employer’s
privilege to transfer its employees to different
workstations cannot be used as a subterfuge to
rid itself of an undesirable worker. (Veterans
 Labor Standards – Management Prerogative
Security Agency v. Vargas, G.R. No. 159293, Dec.
16, 2005)
RIGHT TO DEMOTE
An employee may be demoted due to his failure
to observe proper diligence in his work, and also
because of his indolence, habitual tardiness, and
absences. (Petrophil Corporation v. NLRC, et al.,
G.R. No. L-64048, Aug. 29, 1986)
RIGHT TO DISMISS
It is management prerogative to transfer,
demote, discipline and even to dismiss an
employee to protect its business, provided it is
not tainted with unfair labor practice. (Petrophil
Corporation v. NLRC, et al., G.R. No. L-64048, Aug.
29, 1986; See also the discussion under
Termination of Employment).
PRODUCTIVITY STANDARD
Q: May an Er impose productivity standards
for its workers?
A: YES. An Er is entitled to impose productivity
standards for its workers. In fact, non-
compliance may be visited with a penalty even
more severe than demotion. The practice of a
company in laying off workers because they
failed to make the work quota has been
recognized in this jurisdiction. Failure to meet
the sales quota assigned to each of them
constitute a just cause of their dismissal,
regardless of the permanent or probationary
status of their employment.
Likewise, failure to observe prescribed
standards of work or to fulfill reasonable work
assignments due to inefficiency may constitute
just cause for dismissal. Such inefficiency is
understood to mean failure to attain work goals
or work quotas, either by failing to complete the
same within the allotted reasonable period, or
by producing unsatisfactory results. This
management prerogative of requiring standards
may be availed of so long as they are exercised in
good faith for the advancement of the Er’s
interest. (Leonardo v. NLRC, G.R. No. 125303,
2000)
GRANT OF BONUS
Bonus
It is an amount granted and paid to an Ee for his
industry and loyalty which contributed to the
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
success of the Er’s business and made possible
the realization of profits.
Q: Can bonus be demanded?
A: GR: NO. Bonus is not demandable as a matter
of right. It is a management prerogative given in
addition to what is ordinarily received by or
strictly due to recipient. (Producers Bank of the
Phil. v. NLRC, G.R. No. 100701, March 28, 2001)
XPNs: Given for a long period of time, provided
that:
a. Consistent and deliberate – Er continued
giving benefit without any condition
imposed for its payment;
b. Er knew he was not required to give
benefit;
c. Nature of benefit is not dependent on
profit;
d. Made part of the wage or compensation
agreed and stated in the employment
contract;
e. It was promised to be given without any
conditions imposed for its payment in
which case it is deemed part of the wage;
f. It has ripened into practice. (Marcos v.
NLRC, G.R. No. 111744, Sept. 8, 1995)
Elimination or diminution of benefits may
constitute constructive dismissal or indicate
demotion
Constructive dismissal is an involuntary
resignation resorted to when continued
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, insensibility or
disdain by an employer becomes unbearable to
the employee. (Phil. Wireless Inc. v. NLRC; G.R. No.
112963, July 20, 1999; See also the discussion on
Bonus under Wages).
Q: The projected bonus for the Ees of Suerte
Co. was 50% of their monthly compensation.
Unfortunately, due to the slump in the
business, the president reduced the bonus to
5% of their compensation. Can the company
unilaterally reduce the amount of bonus?
(2002 BAR)
A: YES. The granting of a bonus is a management
prerogative, something given in addition to what
is ordinarily received by or strictly due the
recipient. An Er cannot be forced to distribute
bonuses when it can no longer afford to pay. To
hold otherwise would be to penalize the Er for
204
 Labor Law and Social Legislation
his past generosity. (Producers Bank of the Phil. v.
NLRC, G.R. No. 100701, March 28, 2001)
CHANGE OF WORK HOURS
Er’s Right to Change Working Hours
The working hours may be changed, at the
discretion of the company, should such change
be necessary for its operations, and that
employees shall observe such rules as have been
laid down by the company. (Interphil
Laboratories Union-FFW v. Interphil Laboratories,
Inc., G.R. No. 142824, Dec. 19, 2001)
Management retains the prerogative, whenever
exigencies of the service so require, to change
the working hours of its employees. The exercise
of management prerogative, however, is not
absolute as it must be exercised in good faith
and with due regard to the rights of labor”.
(Royal Plant Workers Union v. Coca-Cola Bottlers
Phil., Inc.; G.R. No. 198783, April 15, 2013)
Q: May the normal hours fixed in Art. 83 of
the LC be reduced by the Er? Explain.
A: It depends. Art. 83 provides that the normal
hours of work of an Ee shall not exceed 8 hours a
day. This implies that the Er, in the exercise of its
management prerogatives, may schedule a work
shift consisting of less than 8 hours. And
following the principle of “a fair day’s wage for a
fair day’s labor,” the Er is not obliged to pay an
Ee, working for less than 8 hours a day, the
wages due for 8 hours.
Nonetheless, if by voluntary practice or policy,
the Ee for a considerable period of time has been
paying his Ees’ wages due for 8 hours work
although the work shift less than 8 hours (e.g.,
seven) it cannot later on increase the working
hours without an increase in the pay of the Ees
affected. An Er is not allowed to withdraw a
benefit which he has voluntarily given.
Q: Sime Darby Pilipinas issued a
memorandum implementing a new work
schedule. It eliminated the 30-minute paid
“on call” lunch break of its monthly salaried
employees and instead provided for a 10-
minute break time and one hour lunch break.
The employees felt adversely affected by the
memorandum and filed before the Labor
Arbiter a complaint for unfair labor practice.
The LA dismissed the complaint on the
ground that the change in the work schedule
205
constituted a valid exercise of management
prerogative. Is changing the work schedule of
the employees a valid exercise of
management prerogative?
A: YES. The right to fix the work schedules of the
employee rests principally on their employer.
The petitioner, as the employer, cites as reason
for the adjustment the efficient conduct of its
business operations and improved production.
Management retains the prerogative, whenever
exigencies of the service so require, to change
the working hours its employees.
So long as such prerogative is exercised in good
faith for the advancement of the employer’s
interest and not for the purpose of defeating and
circumventing the rights of the employees under
special laws or under valid agreements, this
court will uphold such exercise. (Sime Darby
Pilipinas v. NLRC, G.R. No. 119205, April 15, 1998)
RIGHT TO HIRE
It is both a right and a prerogative. An ER has the
right to select EEs and decide when to engage
them. He has the right under the law, to full
freedom in employing any person free to accept
employment from him, and this, except as
restricted by valid statute and valid contract, at a
wage and under conditions agreeable to them.
However, the exercise of this right is NOT
absolute. Generally, the state cannot interfere
with the liberty to contract with respect to labor,
except in the exercise of police power.
Legal limitations and prohibitions prior to
hiring
1. Prohibition against gender discrimination
2. Minimum employable age
3. Anti-Sexual Harassment Act of 1995 (RA
7877)
4. Magna Carta of Disabled Persons (RA
7277)
5. Stipulation against marriage
Rule Against Marriage When Valid
The prohibition against personal or marital
relationships with employees of competitor
companies is reasonable because relationships
of that nature might compromise the interests of
the company. The company merely seeks to
avoid a conflict of interest between the
employee and the company that may arise out of
such relationships. It has a right to guard its
trade secrets, manufacturing formulas,
 Labor Standards – Management Prerogative
marketing strategies and other confidential
programs and information from competitors.
(Duncan Ass'n v. Glaxo Wellcome Phils., G.R. No.
162994, Sept. 17, 2004)
RULE ON MARRIAGE BETWEEN EMPLOYEES
OF COMPETITOR-EMPLOYEES
Q: Is the stipulation in the employment
contract prohibiting an Ee from marrying
another Ee of a competitor company a valid
exercise of management prerogative?
A: YES. The policy is not aimed at restricting a
personal prerogative that belongs only to the
individual. However, an Ee’s personal decision
does not detract the Er from exercising
management prerogatives to ensure maximum
profit and business success. It does not impose
an absolute prohibition against relationships
between its Ees and those of competitor
companies. Its Ees are free to cultivate
relationships with and marry persons of their
own choosing. What the company merely seeks
to avoid is a conflict of interest between the
employee and the company that may arise out of
such relationships. It is also not violative of the
equal protection clause because it is a settled
principle that the commands of the equal
protection clause are addressed only to the State
or those acting under color of its authority.
Corollarily, it has been held in a long array of U.S.
Supreme Court decisions that the equal
protection clause erects no shield against merely
private conduct, however, discriminatory or
wrongful. The only exception occurs when the
State in any of its manifestations or actions has
been found to have become entwined or
involved in the wrongful private conduct.
(Duncan Association of Detailman-PTGWO and
Pedro A. Tecson v. Glaxo Wellcome Philippines,
Inc., G.R. No. 162994, Sept. 17, 2004)
The failure of the employer to prove legitimate
business concern in imposing the questioned
policy cannot prejudice the employee’s right to
be free from arbitrary discrimination based
upon stereotypes of married persons working
together in one company. Thus, for failure of the
employer to present undisputed proof of a
reasonable business necessity, we rule that the
questioned policy is an invalid exercise of
management prerogative. (Star Paper Corp. v.
Simbol, G.R. No. 164774, April 12, 2006)
BONA FIDE OCCUPATIONAL QUALIFICATION
(BFOQ) RULE
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Where the job itself necessarily requires a
particular question qualification, then the job
applicant or worker who does not possess it may
be disqualified on that basis. This will not be
unlawful discrimination. (Azucena, Vol. 1, 2016,
p. 479)
E.g., One whose job is to preach the teachings of
a religious sect must himself/herself be a
member of that sect; or where the job itself
necessarily requires a male, then the female is
disqualified as when the job is to haul or saw
logs in logging operations.
To justify a BFOQ, the Er must prove two
factors:
1. That the employment qualification is
reasonably related to the essential
operation of the job involved; and
2. That there is a factual basis for believing
that all or substantially all persons meeting
the qualification would be unable to
properly perform the duties of the job.
(Star Paper v. Simbol, G.R. No. 164774, April
12, 2006)
POST-EMPLOYMENT BAN
Q: Genesis Fulgencio had been working for
Solidbank Corporation since 1977. He later
on applied for retirement. Solidbank
required Genesis to sign an undated
Undertaking where he promised that "[he]
will not seek employment with a competitor
bank or financial institution within one (1)
year from Feb. 28, 1995, and that any breach
of the Undertaking or the provisions of the
Release, Waiver and Quitclaim would entitle
Solidbank to a cause of action against him
before the appropriate courts of law.”
Equitable Banking Corporation (Equitable)
employed Genesis.
Is the post-retirement employment ban
incorporated in the Undertaking which
Genesis executed upon his retirement
unreasonable, oppressive, hence, contrary to
public policy?
A: NO. There is a distinction between restrictive
covenants barring an Ee to accept a post-
employment competitive employment or
restraint on trade in employment contracts and
restraints on post-retirement competitive
employment in pension and retirement plans
either incorporated in employment contracts or
206
 Labor Law and Social Legislation

in CBAs between the Er and the union of Ees, or
separate from said contracts or CBAs which
provide that an Ee who accepts post retirement
competitive employment will forfeit retirement
and other benefits or will be obliged to
reinstitute the same to the Er.
The strong weight of authority is that forfeitures
for engaging in subsequent competitive
employment included in pension and retirement
plans are valid even though unrestricted in time
or geography. A post-retirement competitive
employment restriction is designed to protect
the Er against competition by former Ee who
may retire and obtain retirement or pension
benefits and, at the same time, engage in
competitive employment. (Rivera v. Solidbank,
G.R. No. 163269, April 19, 2006)
1. Whether the covenant protects a legitimate
business interest of the employer;
2. Whether the covenant creates an undue
burden on the employee;
3. Whether the covenant is injurious to the
public welfare;
4. Whether the time and territorial limitations
contained in the covenant are reasonable;
5. Whether the restraint is reasonable from
the standpoint of public policy. (Rivera v.
Solidbank Corporation, G.R. No. 163269,
April 19, 2006)

Non-Involvement Clause

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. It was also stated in this case
that the Labor Law validity of a non-involvement
clause depends upon the nature of work of the
subject employee. (Daisy Tiu v. Platinum Plans,
G.R. No. 163512, Feb. 28, 2007)

TYPES OF RESTRICTIVE COVENANTS

Non-compete clause

When the employee is prevented from directly

competing or working for a competitor of his
former employer, or when the employee is
prevented from setting up a competing business.

Non-solicitation clause

When a duty is imposed on the employee not to

approach his former employer’s customers or
prospective customers, or when the employee is
prevented from taking customers/clients of his
former employer.

Non-poaching clause

When the employee is prevented from enticing

his former employer’s staff away from the
business, the aim is to prevent the employee
from taking key employees with him to his new
employment or business.

Factors to consider to enforce a restrictive

covenant

207
 Social and Welfare Legislation
SOCIAL AND WELFARE LEGISLATION
Social Legislation
Social legislations are laws, policies, rules and
regulations that promote welfare of all sectors of
society. It includes all laws that provide
particular kinds of protection or benefits to the
society, in furtherance of social justice. Not all
social legislation are labor laws. (Duka, 2019)
Q: Is there any distinction between labor
legislation and social legislation? Explain.
(1995 BAR)
A: YES. Labor legislation is sometimes
distinguished from social legislation by the
former referring to labor statutes, like Labor
Relations Law and Labor Standards, and the
latter to Social Security Laws. Labor legislation
focuses on the rights of the worker in the
workplace.
Social legislation is a broad term and may
include not only laws that give social security
protection, but also those that help the worker
secure housing and basic necessities. The
Comprehensive Agrarian Reform Law could
also be considered a social legislation.
Labor Legislation is limited in scope and deals
with the rights and duties of employees and
employers. Social Legislation is more
encompassing and includes such subjects as
agrarian relations, housing and human
settlement, protection of women and children,
etc. All labor laws are social legislation, but not
all social legislation is labor law.
Q: Manila Southcoast entered into a joint
venture agreement with Fil-Estate
Properties, Inc. for the development of 10
lots with an area totaling 1,219.0133
hectares. In view of this joint venture
agreement, Fil-Estate filed a Petition on Oct.
8, 1996, praying that these 10 lots be
excluded from the coverage of the
Comprehensive Agrarian Reform Program. It
claimed that the lots had slopes of more than
18%. Fil-Estate further argued that the 10
lots, located inside a tourist zone, were
excluded from the Comprehensive Agrarian
Reform Law’s coverage. Are the subject lots
excluded from the coverage of the
Comprehensive Agrarian Reform Program?
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
A: NO. Proclamation No. 1520, on which Fil-
Estate heavily relies, was issued on Nov. 28,
1975. The Proclamation identifies the
municipalities of Maragondon and Ternate in
Cavite and the municipality of Nasugbu in
Batangas as potential tourist zones.
The effect of Proclamation No. 1520 vis-à-vis the
application of the Comprehensive Agrarian
Reform Law was tackled in Roxas & Company,
Inc. v. DAMBA-NSFW. This Court rejected the
argument and ruled that Proclamation No. 1520
merely identified areas that had potential
tourism value. According to Roxas, Proclamation
No. 1520 neither reclassified nor converted all
lands in the Maragondon, Ternate, and Nasugbu
from agricultural to non-agricultural. Thus, these
areas were deemed not to have been
automatically excluded from the coverage of the
Comprehensive Agrarian Reform Program. (Fil-
Estate Properties, Inc. v. Paulino Reyes, G.R. No.
152797, Sept. 18, 2019, as penned by J. Leonen)
SOCIAL SECURITY ACT OF 2018
R.A. No. 11199
Declaration of Policy
It is the policy of the State to establish, develop,
promote and perfect a sound and viable tax-
exempt social security system suitable to the
needs of the people throughout the Philippines
which shall promote social justice through
savings, and ensure meaningful social security
protection to members and their beneficiaries
against the hazards of disability, sickness,
maternity, old age, death, and other
contingencies resulting in loss of income or
financial burden. Towards this end, the State
shall endeavor to extend social security
protection to Filipino workers, local or overseas,
and their beneficiaries.
In the pursuit of this policy, a social security
program shall be developed emphasizing the
value of “work, save, invest and prosper”. The
maximum profitability of investible funds and
resources of the program shall be ensured
through a culture of excellence in management
grounded upon sound and efficient policies
employing internationally recognized best
practices. (Sec. 2, RA 11199)
NOTE: The enactment of SSS law is a legitimate
exercise of the police power. It affords
protection to labor and is in full accord with the
208
 Labor Law and Social Legislation
constitutional mandate on the promotion of
social justice.
The funds contributed to the System created by
the law are not public funds, but funds belonging
to the members which are merely held in trust
by the Government. (Roman Catholic Archbishop
of Manila v. SSS, G.R. No. 15045, Jan. 20, 1961).
Definitions
Employer – Any person, natural or juridical,
domestic or foreign, who carries on in the
Philippines any trade, business, industry,
undertaking, or activity of any kind and uses the
services of another person who is under his
orders as regards the employment, except the
Government and any of its political subdivisions,
branches or instrumentalities, including
corporations owned or controlled by the
Government: Provided, That a self-employed
person shall be both employee and employer at
the same time. [Sec. 8(c), RA 11199]
Employee – Any person who performs services
for an employer in which either or both mental
or physical efforts are used and who receives
compensation 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. [Sec.
8(d), RA 11199]
NOTE: As a general rule, the determination of
the existence or non-existence of an employer-
Ee relationship for the purpose of determining
the coverage in the SSS shall be within the sole
jurisdiction of the Commission. (SSS Office Order
2017-032, May 2017)
Employment – Any service performed by an
employee for his employer except:
1. Services where there is no employer-
employee relationship in accordance with
existing labor laws, rules, regulations and
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 government or international
organization, or their wholly-owned
instrumentality;
4. Such other services performed by
temporary and other employees which may
209
be excluded by regulation of the
Commission. Employees of bona fide
independent contractors shall not be
deemed employees of the employer
engaging the service of said contractors
[Sec. 8(j), RA 11199]
Monthly Salary Credit (MSC) – The
compensation base for contributions and
benefits as indicated in the Social Security Act of
2018. In the computation of benefits, the
maximum MSC to be considered shall be twenty
thousand pesos (P20,000.00) until adjusted [Sec.
8(g), RA 11199]
Average Monthly Salary Credit (AMSC) - The
AMSC shall be the higher of the following:
1. Sum of the last sixty (60) MSCs
immediately preceding the semester of
contingency, divided by sixty (60); or
2. Sum of all the MSCs paid prior to the
semester of contingency, divided by the
number of monthly contributions paid in
the same period.
For disability benefits, the injury or sickness
which caused the disability shall be deemed as
the permanent disability for purposes of
computing the AMSC. [Sec. 8 (m), RA 11199]
Average Daily Salary Credit (ADSC) - The
result obtained by dividing the sum of the six (6)
highest MSCs in the twelve-month period
immediately preceding the semester of
contingency by one hundred eighty (180). [Sec.
8(n), RA 11199]
Compensation – All actual remuneration for
employment, including the mandated cost-of-
living allowance, as well as the cash value of any
remuneration paid in any medium other than
cash except that part of the remuneration
received during the month in excess of the
maximum salary credit as provided in this Act.
[Sec. 8(g), RA 11199]
SSS premiums are not taxes
The funds contributed to the System belong to
the members who will receive benefits, as a
matter of right, whenever the hazards provided
by the law occur. (CMS Estate, Inc., v. SSS, G.R. No.
26298, Sept. 28, 1984)
Benefits received under SSS law are not part
of the estate of a member
 Social and Welfare Legislation
Benefits receivable under the SSS Law are in the
nature of a special privilege or an arrangement
secured by the law pursuant to the policy of the
State to provide social security to the
workingman. The benefits are specifically
declared not transferable and exempt from tax,
legal processes and liens. (SSS v. Davac, et. al.,
G.R. No. 21642, July 30, 1966)
COVERAGE
1. Compulsory Coverage
a. All Ees not over 60 years of age and
their Ers;
b. Domestic helpers whose income is not
less than P1,000/month and not over 60
years of age and their Ers;
The minimum wage of domestic
workers is now P1,500 to P2,500
pursuant to Sec. 24 of RA 10361 or
Batas Kasambahay Law.
Per RA 10361, a domestic worker who
has rendered at least one (1) month of
service shall be covered by the Social
Security System (SSS), the Philippine
Health Insurance Corporation
(PhilHealth), and the Home
Development Mutual Fund or Pag-IBIG,
and shall be entitled to all the benefits in
accordance with the pertinent
provisions provided by law.
The following rules shall govern the covered
employees with private benefit plans:
i. Any benefit earned by the Ees under
private benefit plans existing at the time
of the approval of the Act shall not be
discontinued, reduced, or otherwise
impaired;
ii. The benefit already earned by the Ees
under private benefit plans existing at the
time of the approval of the Act shall not be
discontinued, reduced, or otherwise
impaired;
iii. Existing private plans shall be integrated
with the SSS but if the Er under such plan
is contributing more than what is required
by this Act, he shall pay to the SSS the
amount required to him, and he shall
continue with his contributions less the
amount paid to SSS;
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
iv. Private benefit plans which are existing
and in force at the time of compulsory
coverage shall be integrated with the plan
of the SSS. If the ER’s contribution to his
private plan is more than that required of
him in this Act, he shall pay to SSS the
amount required to him, and he shall
continue with his contributions less the
amount paid to SSS;
v. Any changes, adjustments, modifications,
eliminations or improvements in the
benefits to be available under the
remaining private plan, which may be
necessary to adopt by reason of the
reduced contributions thereto as a result
of the integration, shall be subject to
agreements between the Ers and EEs
concerned;
vi. The private benefit plan which the Er shall
continue for his Ees shall remain under
the Ers management and control unless
there is an existing agreement to the
contrary;
vii. Nothing in the Social Security Act of 2018
shall be construed as a limitation to the
right of ERs and EEs to agree on and adopt
benefits which are over and above those
provided under the Act. (Sec. 2, Rule 13,
IRR of RA 11199)
NOTE: A self-employed person is one
whose income is not derived from
employment as well as those mentioned in
Sec. 9-A of the law [Sec. 8(s), RA 11199]:
a. All self-employed professionals;
b. Partners and single proprietors of
business;
c. Actors and actresses, directors,
scriptwriters, and news correspondents
who do not fall within the definition of
the term “Ee”;
d. Professional athletes, coaches, trainers,
and jockeys;
e. Individual farmers and fisherman and
f. All sea-based and land-based OFWs, as
defined under RA 8042, as amended,
provided they are not over sixty (60)
years of age. [Sec. 9-B (a), RA 11199]
210
 Labor Law and Social Legislation

NOTE: Land-based OFWs are compulsory

Effective Date of SSS Coverage
members of the SSS and are considered in the
(Rule 15, IRR, RA 11199)
same manner as self-employed persons, until a
Bilateral Labor Agreement (BLA) shall have been On the first day of
Employer
entered into. [Sec. 9-B (c), RA 11199] operation
On the first day of his
Employee
For the purposes of the implementation of the employment
Act, Manning Agencies are jointly and severally Upon his registration
liable with their principals with respect to the Self-employed
with the SSS
civil liabilities incurred for any violation of the First day of his/her
Act. [Sec. 9-B (b), RA 11199] Sea-based OFW
employment;
Based on the provisions
2. Voluntary Coverage Land-based OFW of the Agreement and its
covered under
implementing
a. Spouses who devote full time to BLAs
managing the household and family arrangement
affairs. Land-based OFW Applicable month and
NOT covered year of the first
XPN: They are also engaged in other under BLAs contribution payment
vocation or employment which is Voluntary Applicable month and
subject to mandatory coverage [Sec. coverage of land-
year of the first
9(b), RA 11199] based overseas
contribution payment.
Filipinos
b. An OFW upon the termination of
his/her employment overseas [Sec. 9-B Q: What is the effect of separation of
(f), RA 11199]; employee on the obligation to contribute and
remit?
c. A covered employee who was separated
from employment who continues to pay A: The effects are as follows:
his/her contributions;
1. His Er’s obligation to contribute arising
d. Self-employed who realizes no income from that employment shall cease at the
for a certain month; end of the month of separation.

e. Filipino permanent migrants, including 2. The separated employee shall be credited

Filipino immigrants, permanent
residents and naturalized citizens of
their host countries [Sec. 9-B (g), RA
11199].
3. By agreement
Any foreign government, international
organization, or their wholly owned
instrumentality employing workers in the
Philippines or employing Filipinos outside of
the Philippines.
XPN: Those already covered by their
respective civil service retirement systems.
with all contributions paid on his/her
behalf and is entitled to the social security
benefits in accordance with issued
guidelines and the provisions of the Social
Security Act of 2018.
3. The separated employee may continue to
pay his/her contributions voluntarily to
maintain his/her right to full benefit. (Sec.
11, RA 11199)
4. Any contribution paid in advance by the
employer but not due shall be credited or
refunded to his employer. (Sec. 22, RA
11199)

The above provision recognizes the “once a

member, always a member” rule.

Effect of the interruption of business or

professional income

1. If the Self-employed member realizes no

211
 Social and Welfare Legislation

income in any given month, he/she shall with a large garden. One day, he noticed that
not be required to pay his/her the plants in his garden needed trimming. He
contributions for that month. remembered that Lando, a 17-year-old out-
of-school youth, had contacted him in church
NOTE: No self-employment income, no the other day looking for work. He contacted
obligation to pay. Lando who immediately attended to Don
Luis’s garden and finished the job in three
2. A self-employed member may be days. (2013 BAR)
allowed to continue paying
contributions under the same rules and a. Is there an employer-employee
regulations applicable to a separated relationship between Don Luis and
employee member. Lando?

3. No retroactive payment of contributions b. Does Don Luis need to register Lando

shall be allowed. (Sec. 22, RA 11199) with the Social Security System (SSS)?

EXCLUSIONS FROM COVERAGE A:

a. YES. There is employer-employee
The following are excluded from compulsory relationship between Don Luis and Lando.
coverage under SSS Act: Firstly, Lando who was looking for work
finally rendered personal services for Don
1. Services where there is no employer- Luis. Secondly, Lando could not have been
employee relationship in accordance with the master of his time, means and methods
existing labor laws, rules, regulations and under the circumstances.
jurisprudence;
Alternative Answer: YES. All the element
2. Service performed in the employ of the of employer-employee relationship are
Philippine Government or instrumentality present, viz:
or agency thereof;
1. The selection and engagement of the
3. Service performed in the employ of a employee;
foreign government or international 2. The power of dismissal;
organization, or their wholly-owned 3. The power of wages; and
instrumentality; 4. The power to control the employee’s
conduct.
4. Such other services performed by
There was also no showing that Lando has
temporary and other employees which may
his own tools, or equipment so as to qualify
be excluded by regulation of the
him as an independent contractor.
Commission. (Sec 8, [j], RA 11199)
Alternative Answer: NONE. Lando is an
NOTE: Employees of bona fide independent
independent contractor for Don Luis does
contractors shall not be deemed employees of
not exercise control over Lando’s means
the employer engaging the service of said
and method in tending to the former’s
contractors.
garden.
Q: A textile company hires 10 carpenters to
b. NO. Don Luis does not need to register
repair the roof of its factory which was
Lando with the SSS because he is a purely
destroyed by typhoon “Bening.” Are the
casual employee, hence outside SSS
carpenters subject to compulsory coverage
coverage. Neither should he report Lando
under the SSS Law? Why?
for SSS coverage under the Kasambahay
Act because, although a gardener, he is an
A: NO. The employment is purely casual and not
occasional if not sporadic employee.
for the purpose of the occupation or business of
Therefore, he is not a kasambahay who is
the Er. Their engagement is occasioned by the
entitled to SSS coverage. (RA 10361)
passage of the typhoon; they are not hired on a
regular basis.
Alternative Answer: YES. Coverage in the
SSS shall be compulsory upon all
Q: Don Luis, a widower, lived alone in a house

UNIVERSITY OF SANTO TOMAS 212

2021 GOLDEN NOTES
 Labor Law and Social Legislation
employees not over sixty (60) years of age.
Alternative Answer: NO. Lando is not an
employee of Don Luis. What the parties
have is a contract for a piece of work which,
while allowed by Art. 1713 of the Civil
Code, does not make Lando an employee
under the Labor Code and Social Security
Act.
Q: The owners of FALCON Factory, a
company engaged in the assembling of
automotive components, decided to have
their building renovated. Fifty (50) persons,
composed of engineers, architects, and other
construction workers, were hired by the
company for this purpose. The work was
estimated to be completed in 3 years. The
workers contended that since the work
would be completed after more than 1 year,
they should be subject to compulsory
coverage under the Social Security Law. Do
you agree with their contention? Explain
your answer fully. (2002 BAR)
A: NO. Under Sec. 8 (j) of RA 1161, as amended,
employment of purely casual and not for the
purpose of the occupation or business of the Er
is excepted from compulsory coverage. An
employment is purely casual if it is not for the
purpose of occupation or business of the Er.
In the problem given, Falcon Factory is a
company engaged in the assembly of automotive
components. The 50 persons (engineers,
architects, and construction workers) were
hired by Falcon Factory to renovate its building.
The work to be performed by these 50 people is
not in connection with the purpose of the
business of the factory. Hence, the employment
of these 50 persons is purely casual. They are,
therefore, excepted from the compulsory
coverage of the SSS law.
BENEFITS
Benefits under the SSS Act
1. Sickness Benefits
2. Permanent Disability benefits
3. Maternity Leave Benefits
4. Retirement Benefits
5. Death Benefits
6. Funeral Benefits
7. Unemployment Insurance or Involuntary
Separation Benefits
Non-transferability of Benefits
213
The SSS shall promptly pay the benefits to such
persons as may be entitled thereto in accordance
with the Act.
The beneficiary who is a national of a foreign
country which does not extend benefits to a
Filipino beneficiary residing in the Republic of
the Philippines, or which is not recognized by
the Republic of the Philippines, shall not be
entitled to receive any benefit.
If the recipient of the benefits is a minor or a
person incapable of administering his/her own
affairs, the Commission shall appoint a
representative under such terms and conditions
as it may deem proper, provided that such
appointment shall not be necessary in case the
recipient is under the custody of or living with
the parents or spouse of the SSS member in
which case the benefits shall be paid to such
parents or spouse, as representative payee of the
recipient.
Benefits payable are not transferable and no
power of attorney or other document executed
by those entitled thereto in favor of any agent,
attorney or any other person for the collection
thereof on their behalf shall be recognized,
except when the payees are physically unable to
collect personally such benefits. (Sec. 15, RA
11199)
Q: On her way home from work, Mikaela, a
machine operator in a sash factory, decided
to watch a movie in a movie house. However,
she is stabbed by an unknown assailant.
When she filed a claim for benefits under the
law, it was denied on the ground that her
injury is not work-connected. Is the denial
legal? Why?
A: NO. It is not necessary, for the enjoyment of
benefits under the SSS Law that the injury is
work-connected. What is important is
membership in the SSS and not the causal
connection of the work of the Ee to his injury or
sickness.
NOTE: Claims based on work-connected injuries
or occupational diseases are covered by the
State Insurance Fund.
SICKNESS BENEFITS
Sickness benefit
It is a daily cash allowance paid by the employer
to the member who is unable to work due to
 Social and Welfare Legislation
sickness or injury for each day of compensable
confinement or a fraction thereof, or by the SSS,
if such person is unemployed or is SE, OFW, VM
who have been previously covered either as
employed/SE/OFW and NW spouse. (Rule 25,
IRR)
Qualifying conditions
1. The member is unable to work due to
sickness or injury and is confined either in
a hospital or at home for at least four (4)
days.
2. The member has paid at least three (3)
months of contributions within the 12-
month period immediately before the
semester or injury.
3. The member has used all company sick
leaves with pay for the current year and
has duly notified his employer.
4. The member must notify the SSS by filing a
sickness benefit application if he is
separated from employment, a self-
employed or voluntary member, including
OFW-member. (Sec. 14, RA 11199)
NOTE: No contributions paid retroactively by
SE/VM/OFWs shall be used in determining
his/her eligibility to sickness benefit wherein
the date of payment is within or after the
semester of contingency.
When Notification Requirement is Not
Necessary
1. Confinement is in a hospital, the employer
shall inform the SSS of such confinement in the
prescribed manner within one (1) year from
date of discharge of the employer.
2. The employee became sick or was injured
while working or within the, however the
employer shall notify the SSS of such
sickness/injury in the prescribed manner within
five (5) calendar days after onset of
sickness/injury. (Sec. 14, RA 11199)
Rule on Notification of Self-employed
member
GR: The unemployed or SE member, land-based
OFWs, or VM including NW spouse, shall directly
notify the SSS of the confinement in the
prescribed manner within five (5) calendar days
after the start of confinement.
XPN: When such confinement is in a hospital,
notification to the SSS in the prescribed manner
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
shall be within one (1) year from date of
discharge. (Sec. 14, RA 11199)
OFWs are given thirty-five (35) calendar days in
filing sickness benefits. This applies only for
confinement elsewhere as defined by the SSS
(Sec. 14, RA 11199).
Amount of Benefit
The amount of the member’s daily Sickness
Benefit allowance is equivalent to 90% of his
average daily salary credit (ADSC). (Sec. 14, RA
11199)
NOTE: The Sickness Benefit is granted up to
maximum of 120 days in one (1) calendar year.
Compensable confinement
1. It begins on the 1st day of sickness;
2. Payment of such allowances shall be
promptly made by the Er:
a. Every regular payday or on the 15 th
and last day of each month
b. In case of direct payment by the SSS -
as long as such allowances are due
and payable. (Sec. 14, RA 11199)
Requirements for an Er to claim
reimbursement of the sickness benefit
1. 100% of daily benefits shall be reimbursed
by SSS if the following requirements are
satisfied:
a. Receipt of SSS of satisfactory proof of
such payment and legality thereof;
b. The Er has notified the SSS of the
confinement within 5 calendar days
after receipt of the notification from
the Ee member.
2. Er shall be reimbursed only for each day of
confinement starting from the 10th calendar
day immediately preceding the date of
notification to the SSS if the notification to
the SSS is made beyond 5 calendar days
after receipt of the notification from the Ee
member. (Sec. 14, RA 11199)
Reimbursement by SSS
GR: SSS shall reimburse the Er or pay the
unemployed member only for confinement
within 1 year immediately preceding the date
the claim for benefit or reimbursement is
received by the SSS.
214
 Labor Law and Social Legislation

XPN: Confinement in a hospital, in which case Permanent disability benefit

the claim for benefit or reimbursement must be
filed within 1 year from the last day of It is a cash benefit granted to a member who
confinement. (Sec. 14, RA 11199) becomes permanently disabled, either partially
or totally. (Sec. 1, Rule 23, IRR, RA 11199)
Instances when the employer or the
unemployed member is not entitled to Permanent total disability
reimbursement:
The following are deemed permanent total
1. Where the Er failed to notify the SSS of the disabilities:
confinement;
2. In the case of the unemployed, where he 1. Complete loss of sight of both eyes;
failed to send the notice directly to the SSS 2. Loss of two limbs at or above the ankle or
except when the confinement is in a wrists;
hospital; and 3. Permanent complete paralysis of two
3. Where the claim for reimbursement is limbs;
made after 1 year from the date of 4. Brain injury resulting to incurable
confinement (Sec. 14, RA 11199). imbecility or insanity; and
5. Such cases as determined and approved
NOTE: Sickness and disability benefits may be by the SSS. (Sec. 13-A, RA 11199)
availed of simultaneously
Types of Disability Benefit
Requisites
1. Monthly pension
1. Sickness/injury and disability are not 2. Lump sum
related.
2. Member meets all the qualifying conditions Qualifying Conditions:
for the grant of sickness and disability
benefits. (Rule 25, IRR of RA 11199) 1. The member has paid at least one (1)
month contribution before the semester of
Q: Because of the stress in caring for her four disability.
(4) growing children, Tammy suffered a 2. To qualify for a monthly disability pension,
miscarriage late in her pregnancy and had to the member must have paid at least 36
undergo an operation. In the course of the monthly contributions prior to the
operation, her obstetrician further semester of disability.
discovered a suspicious-looking mass that 3. If within less than 36 monthly
required the subsequent removal of her contributions, he is granted a lump sum
uterus (hysterectomy). After surgery, her amount. (Sec. 13-A, RA 11199)
physician advised Tammy to be on full bed
rest for six (6) weeks. Amount of Benefits

Meanwhile, the biopsy of the sample tissue
taken from the mass in Tammy's uterus
showed a beginning malignancy that
required an immediate series of
chemotherapy once a week for four (4)
weeks. What benefits can Tammy claim
under existing social legislation? (2013 BAR)
A: Assuming she is employed, Tammy is entitled
to a special leave benefit of two months with full
pay (Gynecological Leave) pursuant to RA 9710
or the Magna Carta of Women. She can also claim
Sickness Leave benefit in accordance with the
SSS Act.
1. The minimum monthly Disability Pension
is P1000 if the member has less than 10
credited years (CYS); P1,200 if with at least
10 CYS; and P2,400 with at least 20 CYS.
2. If qualified, the member is granted a
monthly Disability Pension, plus P5000
monthly Supplemental Allowance (Sec. 7,
R23, IRR of RA 11199).
3. Dependent’s Pension (for total disability),
which is 10% of the member’s basic
monthly pension, or 250, whichever is
higher (Sec. 12-A, RA 11199).

PERMANENT DISABILITY BENEFITS NOTE: Only five dependent minor children,

beginning from the youngest, are entitled

215
 Social and Welfare Legislation
to dependent’s pension. No substitution is
allowed.
4. Plus P1,000 additional benefit effective
January 2017. (Sec. 12 [c], RA 11199)
5. 13th month pension, which is payable every
December to total disability pensioners; for
partial disability pensioners, 13th month
pension shall be paid provided that pension
duration is at least 12 months. (Sec. 8, Rule
23, IRR, RA 11199)
Effect of the death of a pensioner with
permanent total disability
1. Primary beneficiaries are entitled to
receive monthly pension as of the date of
disability.
2. If there are no primary beneficiaries
and the pensioner dies within 60
months from the start of his monthly
pension – secondary beneficiaries shall be
entitled to a lump sum benefit equivalent to
the total monthly pensions corresponding
to the balance of the 5-year guaranteed
period excluding the dependents’ pension.
(Sec. 13-A, RA 11199)
Effect of retirement or death of a pensioner
with a partial disability
If the pensioner with partial disability retires or
dies, the disability pension shall cease upon his
retirement or death. (Sec. 13-A, RA 11199)
Permanent partial disability
If disability occurs after thirty-six (36) monthly
contributions have been paid prior to the
semester of disability, the benefit shall be the
monthly pension for permanent total disability
payable not longer than the period designated in
the foregoing schedule. The monthly pension
benefit shall be given in lump sum if it is payable
for less than twelve months.
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.
The permanent partial disability benefits are as
follows:
1. Percentage of the lump sum benefit –
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
available if the permanent partial disability
occurs before thirty-six (36) monthly
contributions have been paid prior to the
semester of disability;
2. Monthly pension – available if the
permanent partial disability occurs after
thirty-six (36) contributions, payable in
accordance with the schedule. (Sec. 13-A,
RA 11199)
NOTE: The monthly pension benefit for
permanent partial disability will be given in
lump sum if it is payable in less than 12 months.
(Ungos, 2013)
MATERNITY LEAVE BENEFIT
Maternity benefit
Maternity Leave Benefit is a daily cash allowance
granted to female members who gave birth via
normal delivery or caesarean section or suffered
miscarriage, regardless of civil status or
legitimacy of the child. (Rule 26, IRR of RA 11199)
Qualifying conditions:
1. The member has paid at least 3 monthly
contributions within the 12-month period
immediately preceding the semester of her
childbirth or miscarriage.
2. If employed, she must have notified her
pregnancy and the probable date of her
childbirth.
3. She must directly notify the SSS if she is
unemployed, a self-employed or voluntary
member, non-working spouse, including
OFW-member. (Sec. 14-A, RA 11199)
Amount of Benefit
1. The amount of daily allowance is
equivalent to 100% of the member’s ADSC
for a compensable period of 105 days for
normal or caesarian section delivery, 120
days for solo parents under RA 8972 or
Solo Parents’ Welfare Act, or 60 days for
miscarriage or emergency.
2. The Maternity Benefit is granted regardless
of member’s civil status and frequency of
emergency.
Q: A, single, has been an active member of the
Social Security System for the past 20
months. She became pregnant out of wedlock
and on her 7th month of pregnancy, she was
216
 Labor Law and Social Legislation
informed that she would have to deliver the
baby through caesarean section because of
some complications. Can A claim maternity
benefits? If yes, how many days can she go on
maternity leave? If not, why is she not
entitled? (2010 BAR)
A: YES. The SSS Law does not discriminate based
on the civil status of a female member-employee.
As long as said female employee has paid at least
three (3) monthly contributions in the 12-month
period immediately preceding the semester of
her childbirth, she can avail of the maternity
benefits under the law.
Since A gave birth through C-section, she is
entitled to one hundred percent (100%) of her
average salary credit for seventy-eight (78) days,
provided she notifies her employer of her
pregnancy and the probable date of her
childbirth, among others (Sec. 14-A, RA 8282).
The same maternity benefits are ensured by Sec.
22 (b)(2) of the Magna Carta of Women (RA
9710).
Q: Luisa is an unwed mother with 3 children
from different fathers. In 2004, she became a
member of the Social Security System (SSS).
That same year, she suffered a miscarriage of
a baby out of wedlock from the father of her
third child. She wants to claim maternity
benefits under the SSS Act. Is she entitled to
claim? (2015 BAR)
A: YES. Provided Luisa has reported to her
employer her pregnancy and date of expected
delivery and paid at least three months
contributions during the 12-month period
immediately preceding her miscarriage then she
is entitled to maternity benefits up to four
deliveries. As to the fact that she got pregnant
outside wedlock, as in her past three
pregnancies, this will not bar her claim because
the SSS is non-discriminatory.
RETIREMENT BENEFIT
Retirement benefit
The Retirement Benefit is a monthly pension or
lump sum granted to a member who can no
longer work due to old age. (Rule 21, IRR of RA
11199)
Types of retirement benefit
1. Monthly Pension– Lifetime cash benefit
paid to a retiree who has paid at least 120
217
monthly contributions to the SSS prior to
the semester of retirement.
2. Lump Sum Amount – Granted to a retiree
who has not paid the required 120 monthly
contributions.
Qualifying condition:
1. A member who:
a. Is at least 60 years old;
b. Has paid at least 120 monthly
contributions prior to the semester of
retirement; and
c. Already separated from employment
or has ceased to be self-employed
2. A member who has reached the age of 65
years old, shall be entitled for as long as he
lives to the monthly pension [Sec 12-B (a),
RA 11199];
3. A member who:
a. At least 60 years old at retirement;
and
b. Does not qualify for pension benefits
under paragraph a of Sec. 12-B –
entitled to a lump sum benefit equal
to the total contributions paid by him
and on his behalf;
c. Must be separated from employment
and is not continuing payment of
contributions to the SSS on his own.
[Sec 12-B (b), RA 11199]
Amount of Benefit
1. If qualified, the member is granted a
monthly Retirement Plan Pension.
2. The retiree has the option to receive the
first 18th months pension in lump sum,
discounted at a preferential rate to be
determined by the SSS. This option can be
exercised only upon application of the first
retirement claim, and the Dependent’s
Pension is excluded from the advanced 18
months pension. (Sec. 3, Rule 21, IRR of RA
11199)
3. The minimum monthly Retirement Pension
is P1,200 if the member has 120 months
contribution or at least ten (10) CYS; or
P2,400 if with at least 20 CYS.
4. Plus P1,000 additional benefit effective
January 2017. [Sec. 12(c), RA 11199]
 Social and Welfare Legislation
5. Dependent’s Pension (for total disability),
which is 10% of the member’s basic
monthly pension, or 250, whichever is
higher. (Sec. 12-A, RA 11199)
NOTE: Only five dependent minor children,
beginning from the youngest, are entitled to
dependent’s pension. No substitution is
allowed.
6. 13th month pension, which is payable every
December plus additional benefits. (Sec. 4,
Rule 21, IRR of RA 11199)
Consequence of the re-employment or
resumption to work of a retired pensioner
The monthly pension of a retired member who
resumes employment and is less than 65 years
old will be suspended. He and his Er will again
be subject to compulsory coverage. (Sec. 13-A, RA
11199)
DEATH AND FUNERAL BENEFITS
Death Benefit
It is a cash benefit either in monthly pension or
lump sum paid to the beneficiaries of a deceased
member. (Sec. 1, Rule 22, IRR of RA 11199)
Entitlement to death benefits
1. Upon death of a member, if he has paid at
least 36 monthly contributions prior to the
semester of death:
a. Primary beneficiaries shall be entitled
to the monthly pension; or
b. If there are no primary beneficiaries,
secondary beneficiaries shall be
entitled to a lump sum benefit
equivalent to 36 times the monthly
pension.
2. Upon death of a member if he has not paid
the required 36 monthly contributions
prior to the semester of death:
a. Primary or secondary beneficiaries
shall be entitled to a lump sum benefit
equivalent to the monthly pension
multiplied by the number of monthly
contributions paid to the SSS: or
b. 12 times the monthly pension,
whichever is higher. (Sec. 13, RA
11199).
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Amount of Benefit
1. The member’s primary beneficiary is
granted a monthly death pension.
2. If there is no primary beneficiary, the
member’s secondary beneficiaries
(dependent’s parents) shall be given a lump
sum amount.
3. In the absence of secondary, the amount
will be given to the legal heirs.
4. Dependent’s Pension (for total disability) is
10% of the member’s basic monthly
pension, or 250, whichever is higher. (Sec.
12-A, RA 11199)
NOTE: Only five dependent minor children,
beginning from the youngest, are entitled
to dependent’s pension. No substitution is
allowed.
5. Plus P1,000 additional benefit effective
January 2017. [Sec. 12(c), RA 11199]
6. The minimum monthly Death Pension is
P1,000 if the member had less than 10 CYS;
P1, 200 if with at least 10 CYS; and P2,400
with at least 20 CYS.
Funeral benefit
A funeral grant equivalent to Php 12,000.00 shall
be paid, in cash or in kind, to help defray the cost
of expenses upon the death of a member or
retiree. (Sec. 13-B, RA 8282)
Qualifying Conditions
1. The EE-member was reported for coverage
by his ER.
2. A self-employed member / OFW / non-
working spouse who had at least one (1)
contribution payment.
3. A voluntary member who was previously
covered either as employed / self-
employed / OFW and has at least on (1)
contribution payment.
4. The EE-member was subject to compulsory
coverage but was not reported for coverage
by ER.
UNEMPLOYMENT BENEFIT
218
 Labor Law and Social Legislation
Also known as unemployment insurance or
involuntary separation benefit, it is a cash benefit
granted to covered employees, including
Kasambahays and OFWs (sea-based or land-
based) who are involuntarily separated from
employment. (Sec. 14-B, RA 11199)
The unemployment insurance or involuntary
separation benefit is a monthly cash payment
equivalent to fifty percent (50%) of the AMSC for
a maximum of two (2) months, subject to the
rules and regulations that the Commission may
prescribe. (Rule 27, IRR)
Qualifying Conditions
1. Not over sixty (60) years old at the time of
involuntary separation, except;
a. In the case of underground
mineworker or surface mineworker
which must not be over fifty (50)
years old; or
b. In the case of racehorse jockey, not
over 55 years old.
2. Has paid at least thirty-six (36) monthly
contributions, twelve (12) months of which
should be in the eighteen (18) month
period immediately preceding the
unemployment or involuntary separation;
3. Involuntarily separated from employment
provided that such separation did not arise
from fault or negligence of the employee
and which may be attributed to any of, but
not limited to, the following:
a. Installation of labor-saving devices;
b. Redundancy;
c. Retrenchment to prevent loss;
d. Closure or cessation of operation; or
e. Disease/illness. (Sec. 2, Rule 27, IRR of
RA 11199)
Amount of Benefit
If qualified, the EE is granted an amount that is
equivalent to twice the half of the member’s
average monthly salary credit (AMSC).
The benefit is granted thru a one- time payment,
and the claim must be filed within a year from
the date of involuntary separation.
DEPENDENTS AND BENEFICIARIES
Primary beneficiaries
219
1. The dependent spouse until he or she
remarries.
2. The dependent legitimate, legitimated, or
legally adopted, and illegitimate children:
Provided, that the dependent illegitimate
children shall be entitled to 50% of the
share of the legitimate, legitimated, or
legally adopted children.
In their absence, the dependent illegitimate
children shall be entitled to 100% of the
benefits. [Sec. 8(k), RA 11199]
Secondary beneficiaries
1. In the absence of primary beneficiaries, the
dependent parents of the member.
2. In the absence of the foregoing, any other
person designated by the covered
employee as secondary beneficiary. [Sec.
8(k), RA 11199]
Dependents
1. The legal spouse entitled by law to receive
support from the member;
2. The legitimate, legitimated, or legally
adopted, and illegitimate child who:
a. Is unmarried,
b. Not gainfully employed, and
c. Has not reached 21 years of age, or if
over 21 years of age, he is congenitally
or while still a minor has been
permanently incapacitated and
incapable of self-support, physically
or mentally.
3. The parent who is receiving regular
support from the member. [Sec. 8(c), RA
11199].
Q: John died in an accident while in the
performance of his duties as an electrician at
a vessel. At the time of his demise, he was
childless and unmarried, predeceased by his
adoptive parent Cornelio during his minority,
and survived only by his biological parent
Bernardina. Bernardina filed a claim for
death benefits, but the SSS rejected her claim
because she is no longer considered a
primary beneficiary, because she is no longer
John’s legitimate parent due to his legal
adoption by Cornelio. Is the SSS correct?
A: NO. The term "parents" in the phrase
 Social and Welfare Legislation
"dependent parents" ought to be taken in its
general sense and cannot be unduly limited to
"legitimate parents”. The phrase "dependent
parents" should, therefore, include all parents,
whether legitimate or illegitimate and whether
by nature or by adoption. When the law does not
distinguish, one should not distinguish. Plainly,
"dependent parents" are parents, whether
legitimate or illegitimate, biological or by
adoption, who are in need of support or
assistance.
The biological parent has the right to the
benefits stemming from John’s death as a
dependent parent given the adoptive parent’s
untimely demise during John’s minority. It is
true that adoption decree severed the relation
between John and his biological parent,
effectively divesting the latter’s status of a
legitimate parent, and consequently, that of
being a secondary beneficiary. However, it
should be noted that parental authority should
be deemed to have reverted in favor of the
biological parent upon death of the adoptive
parent during the adoptee’s minority. Thus, the
death benefits under the Employees
Compensation Program shall accrue solely to the
surviving biological parent, John’s sole
remaining beneficiary. (Bartolome v. SSS, G.R. No.
192531, Nov. 12, 2014)
Dependent for support
The entitlement to benefits as a primary
beneficiary requires not only legitimacy but also
dependence upon the member Ee. (Gil v. SSC CA-
GR SP. 37150, May 8, 1996)
NOTE: The Court defined a dependent as one
who derives his or her main support from
another. Meaning, relying on, or subject to,
someone else for support; not able to exist or
sustain oneself, or to perform anything without
the will, power, or aid of someone else.
It should be noted that the GSIS law likewise
defines a dependent spouse as the legitimate
spouse dependent for support upon the member
or pensioner. If a wife is already separated de
facto from her husband, she cannot be said to be
"dependent for support" upon the husband,
absent any showing to the contrary. Conversely,
if it is proved that the husband and wife were
still living together at the time of his death, it
would be safe to presume that she was
dependent on the husband for support, unless it
is shown that she is capable of providing for
herself. (SSS v. Aguas, G.R. No. 165546, Feb. 27,
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
2006)
Q: Bonifacio and Elena Dycaico lived together
as husband and wife without the benefit of
marriage. In June 1989, Bonifacio was
considered retired and began receiving his
monthly pension from the SSS. Bonifacio
married Elena on Jan. 6, 1997. He continued
to receive the monthly pension until he
passed away on June 19, 1997. Elena filed
with the SSS an application for survivor’s
pension, but it was denied on the ground that
under Sec. 12-B(d) of the SSS Law, the
primary beneficiaries who are entitled to
survivor’s pension are those who qualify
as such as of the date of retirement of the
deceased member. Hence, Elena, who was not
then the legitimate spouse of Bonifacio as of
the date of his retirement, could not be
considered his primary beneficiary. Is Elena
entitled to claim survivor’s pension?
A: YES. The proviso as of the date of his
retirement in Sec. 12-B (d) of RA 8282, which
qualifies the term primary beneficiaries, is
unconstitutional for it violates the due process
and equal protection clauses of the Constitution.
The classification of dependent spouses on the
basis of whether their respective marriages to
the SSS member were contracted prior to or
after the latter’s retirement for the purpose of
entitlement to survivor’s pension does not rest
on real and substantial distinctions. It is too
sweeping because the proviso effectively
disqualifies the dependent spouses whose
respective marriages to the retired SSS member
were contracted after the latter’s retirement as
primary beneficiaries and unfairly lumps all
these marriages as sham relationships or were
contracted solely for the purpose of acquiring
benefits accruing upon the death of the other
spouse.
The proviso runs afoul of the due process clause
as it out rightly deprives the surviving spouses
whose respective marriages to the retired SSS
members were contracted after the latter’s
retirement of their survivor’s benefits. There is
outright confiscation of benefits due such
surviving spouses without giving them an
opportunity to be heard. (Dycaico v. SSS, G.R. No.
161357, Nov. 30, 2005)
NOTE: The reckoning point in determining the
beneficiaries of the deceased should be
the time of the latter’s death. (SSS v. De Los
Santos, G.R. No. 164790, Aug. 29, 2008)
220
 Labor Law and Social Legislation
QUALIFICATION OF SPOUSE-BENEFICIARY
To ensure a uniform implementation of the
Dycaico v. SSS case, the SSS issued the following
guidelines:
Spouse:
1. Must have been legally married to the
retiree-pensioner at the time of death.
2. If the marriage was celebrated after the
retirement of the member, any of the
following circumstances is present:
a. The spouses were living together as
husband and wife without legal
impediment to marry each other
prior to the retirement of the
member; or
b. The surviving spouse was reported
as beneficiary-spouse in the SSS
Forms prior to the retirement of the
member; or
c. A child was born during the
existence of the marriage between
the retiree-pensioner and the
surviving spouse; or
d. Before marriage, a child was born
during the time the spouses were
living together as husband and wife
without legal impediment to marry
each other; or
e. The marriage between the surviving
spouse and retiree-pensioner is
established to have been contracted
not for any fraudulent purpose. In
this regard, the SSS Branch
concerned shall conduct an
appropriate investigation to satisfy
this requirement.
3. Must have been dependent for support
upon the retiree-pensioner during the
existence of marriage. (SSS Office Order
No. 2010-02)
Q: Antonio and Gloria de los Santos, both
Filipinos, got married in 1964. In 1983,
Gloria left Antonio and went to the United
States. In 1986, she filed for divorce against
Antonio in California. The divorce was
granted.
In 1987, Antonio married Cirila de
los Santos. On her part, Gloria married Larry
Thomas Constant, an American citizen, in
the US. In 1999, Antonio died of respiratory
221
failure. Cirila applied for and began receiving
his SSS pension benefit.
On Dec. 21, 1999, Gloria filed a claim for
Antonio’s death benefits with the SSS. Her
claim was denied on the ground that she was
not a qualified beneficiary of Antonio. She
contended that her marriage to Larry
Constant was not the subsequent marriage
contemplated under SSS Law that would
disqualify her as a beneficiary; that the
decree of divorce issued by a foreign state
involving Filipino citizens has no validity and
effect under Philippine law. Is Gloria still
qualified as a primary beneficiary of Antonio
under the SSS Law?
A: NO. It is true that the divorce obtained by
Gloria against the deceased Antonio was not
binding in this jurisdiction. Under Philippine
law, only aliens may obtain divorces abroad,
provided they are valid according to their
national law. The divorce was obtained by Gloria
while she was still a Filipino citizen and thus
covered by the policy against absolute
divorces. It did not sever her marriage ties with
Antonio. Nonetheless, although Gloria was the
legal spouse of the deceased, she is
still disqualified to be his primary beneficiary
under the SSS Law. She fails to fulfill the
requirement of dependency upon her deceased
husband Antonio. (SSS v. De Los Santos, G.R. No.
164790, Aug. 29, 2008)
Q: Rodolfo, an SSS member, was survived by
the following: his legal wife Editha, who was
now cohabiting with another man; another
wife Yolanda, whom Rodolfo married and
had four illegitimate children now over 21
years old; and another common-law wife,
Gina, with whom he had two illegitimate
minor children. All wives filed a claim before
the SSS for death benefits. Who among the
claimants are qualified and/or disqualified
as beneficiaries?
A: Yolanda is disqualified because the marriage
between her and Rodolfo was null and void
because of a prior subsisting marriage
contracted with Editha.
Editha is disqualified, because even if she was
the legal wife, she was not qualified to the death
benefits since she herself admitted that she was
not dependent on her deceased husband for
support inasmuch as she was cohabiting with
another man.
 Social and Welfare Legislation

Gina is disqualified, being a common-law wife.

Since the wives are disqualified and because the

deceased has no legitimate child, it follows that
the dependent illegitimate minor children of the
deceased shall be entitled to the death benefits
as primary beneficiaries. The SSS Law is clear
that for a minor child to qualify as a “dependent,”
the only requirements are that he/she must be
below 21 years of age, not married nor gainfully
employed.

Yolanda’s children are disqualified for being

over 21 years old.

In this case, the minor illegitimate children of

Gina are the only qualified beneficiaries of
Rodolfo. (Signey v. SSS, G.R. No. 173582, Jan. 28,
2008)

Social Security Law is not a law on succession

The Social Security System is not a law on

succession. It is not the heirs of the employee but
the designated beneficiaries who are to receive
the social security benefits. It is only when the
beneficiary is the estate, or when there is no
designated beneficiary or if the designation of
beneficiary is void, that the Social Security
System is required to pay the employee’s heirs.
(Ungos, 2013 p. 349)

Prescriptive period to claim the benefits

GR: 10 years from the date of contingency

XPNs: Life insurance and retirement. (SSS Office

Order Number 2015-005)

NOTE: Pursuant to SSC Resolution No. 10-

19279-10, the reckoning point for the 10-year
prescriptive period depends on when the claim
was originally settled. For claims settled before
March 1, 2006, the 10-year prescriptive period
will start on the said date. For claims settled on
or after March 1, 2006, the prescriptive period
will start on the initial settlement date of the
retirement, disability or death claim.

UNIVERSITY OF SANTO TOMAS 222

2021 GOLDEN NOTES
 Labor Law and Social Legislation

duties. Under this definition, the per diem is

GSIS LAW intended to cover the cost of lodging and
R.A. No. 8291 subsistence of officers and employees when the
latter are on a duty outside of their permanent
station. On the other hand, a per diem could
rightfully be considered a compensation or
Purpose for the enactment of the GSIS law
remuneration attached to an office.
To provide and administer the following social
The per diems paid to Baradero and Belo were in
security benefits for government Ees:
the nature of compensation or remuneration for
their services as Sangguniang Bayan and Vice-
1. Compulsory life insurance;
Governor, respectively, rather than a
2. Optional life insurance;
reimbursement for incidental expenses incurred
3. Retirement benefits;
while away from their home base.
4. Disability benefits to work- related
contingencies;
If the remuneration received by a public official
5. Death benefits.
in the performance of his duties does not
constitute a mere “allowance for expenses” but
Definitions
appears to be his actual base pay, then no
amount of categorizing the salary as a “per diem”
1. Employer
would take the allowances received from the
a. National Government
term service with compensation for the purpose
b. Its political subdivisions, branches,
of computing the number of years of service in
agencies, instrumentalities
government. (GSIS v. CSC, G.R. Nos. 98395 &
c. Government-owned or controlled
102449, June 19, 1995)
corporations (GOCCs), and financial
institutions with original charters
Reportorial requirements of the Er
d. Constitutional Commissions and the
Judiciary [Sec. 2(c), RA 8291]
Er must report to GSIS the names, employment
status, positions, salaries of the Ee and such other
2. Employee or member – Any person,
matter as determined by the GSIS.
receiving compensation while in the service
of an Er, whether by election or
Penalty in case of delayed remittance or non-
appointment, irrespective of status of
remittance of contributions
appointment, including barangay and
sanggunian officials. [Sec. 2(d), RA 8291]
The unremitted contributions shall be charged
interests as prescribed by the GSIS Board of
3. Compensation – The basic pay or salary
Trustees but shall not be less than 2% simple
received by an Ee, pursuant to his or her
interest per month from due date to the date of
election or appointment, excluding per
payment by the employers concerned. (Sec. 7, RA
diems, bonuses, OT pay, honoraria,
8291)
allowances, and any other emoluments
received in addition to the basic pay which
Q: May a member enjoy the benefits provided
are not integrated into the basic pay under
for in the Revised GSIS Act simultaneous with
existing laws. [Sec. 2(i), RA 8291]
similar benefits provided under other laws
for the same contingency?
Q: Baradero is a member of the Sangguniang
Bayan of the Municipality of La Castellana,
A: Whenever other laws provide similar benefits
Negros Occ. and is paid on a per diem basis.
for the same contingencies covered by this Act,
On the other hand, Belo a Vice-Governor of
the member who qualifies to the benefits shall
Capiz is in a hold over capacity and is paid on
have the option to choose which benefits will be
a per diem basis. Are the services rendered
paid to him. However, if the benefits provided
by Baradero and Belo on a per diem basis
by the law chosen are less than the benefits
creditable in computing the length of service
provided under this Act, the GSIS shall pay only
for retirement purposes?
the difference. (Sec. 55, RA 8921)
A: YES. The traditional meaning of per diem is a
reimbursement for extra expenses incurred by
the public official in the performance of his

223
 Social and Welfare Legislation

Similarities between the SSS law and the GSIS law

Social Security Act of 1997

Government Service Insurance Act of 1997
Basis Social Security Act of 2018
(RA 8291)
(RA 11199)
1. Legal spouse entitled to support;
Dependents 2. Child, whether legitimate, legitimated, legally adopted or illegitimate; and
3. Parents dependent on support
1. Er’s contribution; and
Funding
2. Ee’s / member’s contribution
Property, assets, revenues of SSS and GSIS are all exempt from taxes, and all
Exemption from tax,
benefits paid by SSS or GSIS shall likewise be exempt from taxes, assessments, fees,
legal processes, lien
charges and duties of all kinds.

SSS Law vs. GSIS Law

Social Security Act of 2018 Government Service Insurance Act

Basis
(RA 11199) of 1997 (RA 8291)
1. Employer – any person, natural or 1. Employer – the National Government,
judicial, domestic, or foreign who its political subdivisions, branches,
carries on in the Philippines any trade, agencies, or instrumentalities,
business, industry, undertaking or including GOCCs, and financial
activity of any kind and uses the institutions with original charters, the
services of another person who is Constitutional Commissions, and the
under his orders as regards Judiciary
employment.
Who are 2. Employee – any person receiving
covered Exempt employer – Government and compensation while in service of an Er
any of its political subdivisions, as defined herein, whether by election
branches and instrumentality, or appointment, regardless of the
including GOCCs, i.e., those under GSIS status of employment, including
Barangay and Sanggunian Members
2. Employee – any person who performs
services for an employer who receives
compensation for such services, where
there is an Er-Ee relationship

3. Self-employed – considered both Er

and Ee
1. Unmarried; 1. Unmarried;
2. Not gainfully employed; 2. Not gainfully employed;
Conditions for
3. Has not reached 21 years of age; OR 3. Not over the age of majority; OR
child to be
4. Incapable of supporting himself either 4. Incapable of supporting himself either
considered
physically or mentally prior to 21 years physically or mentally prior to 21 years
dependent
of age or age of majority, as the case may of age or age of majority, as the case may
be. be.
1. Primary 1. Primary
a. Dependent Spouse until remarriage; a. Legal dependent spouse until
AND remarriage; AND
b. Dependent Legitimate or b. Dependent Children
Beneficiaries Legitimated or Legally Adopted and
Illegitimate Children 2. Secondary
a. Dependent Parents; AND
2. Secondary b. Legitimate descendants, subject to
a. Dependent Parents; AND restrictions on dependent children,
b. Absent any primary and secondary legitimate descendants
beneficiaries, any other person

UNIVERSITY OF SANTO TOMAS 224

2021 GOLDEN NOTES
 Labor Law and Social Legislation

designated by member as secondary

beneficiary
1. Sickness Benefits; 1. Separation Benefits;
2. Permanent Disability Benefits; 2. Retirement Benefits;
3. Maternity Benefits; 3. Permanent Disability Benefits;
4. Retirement Benefits; 4. Temporary Disability Benefits;
5. Death Benefits; 5. Survivorship Benefits;
Benefits 6. Funeral Benefits; 6. Funeral Benefits; AND
7. Loan Grant; AND 7. Life Insurance Benefits.
8. Unemployment insurance or
involuntary separation benefit. XPN: The members of the Judiciary and
Constitutional Commissions shall have life
insurance only.
1. Compulsory
a. All Ees not over sixty (60) years of Compulsory for all employees receiving
age and their Ers; compulsory compensation who have not reached
coverage of the Ers shall take effect compulsory retirement age, irrespective of
on the first day of his operation and employment status.
that of the Ee on the day of his
employment;

b. Self-employed persons as may be

determined by the Commission,
including but not limited to: all self-
employed professionals; partners
and single-proprietors of business;
actors and actresses, directors,
scriptwriters, and news
correspondents not employees;
professional athletes, coaches,
trainers and jockeys, and individual
farmers and fishermen, upon their
registration with the SSS;

c. Domestic workers who have

Coverage rendered at least one (1) month of
service, premium payments or
contributions shall be shouldered by
the employer. However, if the
domestic worker is receiving a wage
of Five thousand pesos (P5,000.00)
and above per month, the domestic
worker shall pay the proportionate
share in the premium payments or
contributions, as provided by law
(Sec. 30, RA 10361 or Batas
Kasambahay);

d. Individual farmers and fishermen

under SSS rules and regulation;

e. All sea-based and land-based OFWs,

provided they are not over sixty
(60) years of age.

2. Voluntary
a. Filipinos recruited by foreign-based
Ers for employment abroad;

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 Social and Welfare Legislation

b. Ees separated from employment to

maintain his right to full benefits;

b. Self-employed who realizes no

income for a certain month;

c. Spouses who devote full time to

managing household and family
affairs unless specifically
mandatorily covered;

d. An OFW upon the termination of

his/her employment overseas;

e. A covered employee who was

separated from employment who
continues to pay his/her
contributions;

f. Filipino permanent migrants,

including Filipino immigrants,
permanent residents and
naturalized citizens of their host
countries.
1. Employment purely casual and not for 1. Members of the AFP;
purpose, occupation, or business of the
Er. 2. Members of the PNP;

2. Services performed on or in connection 3. Contractual Ees, who have no Er-Ee

with alien vessel, if employed when relationship with the agency they serve;
such vessel is outside of the
Philippines. 4. Members of Judiciary and Constitutional
Commissions covered by life insurance
3. Ees of Philippine Government or only.
instrumentality or agency thereof.
Exceptions
from 4. Service performed in the employ of a
Coverage foreign government, or international
organizations, or wholly owned
instrumentality employing workers in
the Philippines or employing Filipinos
outside of the Philippines.

5. Services performed by temporary Ees

and other Ees excluded by SSS
regulation; Ees of bona fide
independent contractors shall not be
deemed Ees of the Er engaging the
services of an independent contractor.
All actual remuneration for employment, The basic pay or salary received by an Ee,
including the mandated COLA, as well as pursuant to his election/appointment,
the cash value of any remuneration paid in EXCLUDING per diems, bonuses, overtime
Compensation
any medium other than cash EXCEPT that pay, honoraria, allowances and any other
part of the remuneration in excess of the emoluments received in addition to the
maximum salary credit basic pay

UNIVERSITY OF SANTO TOMAS 226

2021 GOLDEN NOTES
 Labor Law and Social Legislation

1. Er’s contribution on his account ceases; A member separated from the service shall
2. Ee’s obligation to contribute also ceases continue to be a member, and shall be
Effects of
at the end of the month of separation; entitled to whatever benefits he has
separation
AND Ee shall be credited with all qualified to in the event of any contingency
from
contributions paid on his behalf and compensable under the GSIS Act.
employment
entitled to benefits according to the
provisions of the SSS Act.

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 Social and Welfare Legislation
COVERAGE
Compulsory coverage of the GSIS (2009 BAR)
1. All Ees receiving compensation who have
not reached the compulsory retirement age,
irrespective of employment status.
XPNs:
a. Uniformed members of the:
i. AFP; and
ii. PNP
b. Contractual Ees who have no Er and Ee
relationship with the agencies they
serve.
2. Members of the Judiciary and Constitutional
Commissions for life insurance policy. (Sec.
3, RA 8291)
Coverage of life insurance, retirement and
other social security protection
GR: All members of the GSIS shall have life
insurance, retirement, and all other social
security protections such as disability,
survivorship, separation, and unemployment
benefits. (Sec. 3, RA 8291)
XPNs: The members of the following shall have
life insurance only:
1. The Judiciary; and
2. Constitutional Commissions
Compulsory coverage of life insurance
GR: All Ees receiving compensation who have
not reached the compulsory retirement age,
irrespective of employment status
XPNs: All members of the Armed Forces of the
Philippines (AFP) and the Philippine National
Police (PNP).
NOTE: An employee who is already beyond the
mandatory retirement age of sixty-five (65) shall
be compulsorily covered and be required to pay
both the life and retirement premiums under the
following situations:
1. An elective official who at the time of
election to public office is below 65 years of
age will be more than 65 at the end of his
term of office, including the period/s of his
re-election to public office thereafter
without interruption.
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
2. 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 government service at an age beyond 65.
3. 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. (Chan, Bar Reviewer on
Labor Law, 2014 Ed.)
Classification of members for the purpose of
benefit entitlement
1. Active Members
a. Still in the service and are paying
integrated premiums; Covered for the
entire package benefits and privileges
being extended by GSIS
2. Policy Holders
a. Covered for life insurance only
b. Can avail of policy loan privilege only
c. May also apply for housing loans
d. Judiciary and Constitutional
Commissions
3. Retired Members
a. Former active members who have
retired from the service and are
already enjoying the corresponding
retirement benefits applied for; and
b. Not entitled to any loan privilege,
except stock purchase loan. (Sec. 2.2,
Rule II, IRR of RA 8291)
NOTE: A member separated from the service
shall continue to be a member, and shall be
entitled to whatever benefits he has qualified to
in the event of any contingency compensable
under the GSIS Law.
EXCLUSIONS FROM COVERAGE
Persons excluded from the coverage of the
GSIS Law
1. Ees who have separate retirement
schemes (members of the Judiciary,
Constitutional Commissions and others
who are similarly situated);
2. Contractual Ees who have no Er-Ee with
the agencies they serve;
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 Labor Law and Social Legislation
3. Uniformed members of the AFP, BJMP,
whose coverage by the GSIS have ceased,
effective June 24, 1997; AND
4. Uniformed members of the PNP whose
coverage by the GSIS has ceased, effective
Feb. 1, 1996. (Sec. 2.4, Rule II, IRR of RA
8291)
DEPENDENTS AND BENEFICIARIES
1. Primary beneficiaries
a. Legal dependent spouse until he/she
remarries
b. Dependent children
1. A member with at least 3 years but less
than 15 years – Cash payment equivalent
to 100% of the average monthly
compensation for every year of service the
member has paid contributions:
a. Not less than Php 12, 000.00; and
b. Payable upon reaching sixty (60)
years of age or upon separation,
whichever comes later.
2. A member with less than 15 years of
service and less than 60 years of age at
the time of resignation or separation:

2. Secondary beneficiaries a. Cash payment equivalent to eighteen

a. Dependent parents
b. Legitimate descendants, subject to
restrictions on dependent children
Dependents
1. Legitimate spouse dependent for support
upon the member or pensioner;
2. Legitimate, legitimated, legally adopted
child, including the illegitimate child; AND
3. An Ee over 60 years of age if he had been
paying contributions to the System prior to
age 60 and has not been compulsory
retired.
(18) times the basic monthly pension
(BMP), payable at the time of
resignation or separation; and
b. An old-age pension benefit equal to the
BMP, payable monthly for life upon
reaching the age of sixty (60).
Effects of separation from service with
regard to membership
A member separated from the service shall
continue to be a member and shall be entitled to
whatever benefits he has qualified to (once a
member is always a member).

BENEFITS NOTE: A member separated for a valid cause

shall automatically forfeit his benefits, unless the
terms of resignation or separation provide
Benefits under the GSIS Act
otherwise. In case of forfeiture, the separated
employee shall be entitled to receive only one-
1. Separation
half (1/2) of the cash surrender value of his
2. Unemployment or involuntary separation
insurance.
3. Retirement
4. Permanent disability
5. Temporary disability UNEMPLOYMENT BENEFITS
6. Survivorship
7. Funeral Unemployment benefits
8. Life Insurance
9. Such other benefits and protection as may It will consist of cash payment equivalent to
be extended to them by the GSIS such as 50% of the average monthly compensation.
loans
A member who has rendered at least 15 years of
SEPARATION BENEFITS service will be entitled to separation benefits
instead of unemployment benefits.
Entitlement of a member to separation
Conditions for entitlement to unemployment
benefits
benefits
A member who has rendered a minimum of
1. The recipient must be a permanent Ee at
three (3) years of creditable service shall be
the time of separation;
entitled to separation benefit upon resignation
2. His separation was involuntary due to the
or separation under the following terms:
abolition of his office or position resulting
from reorganization; and

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 Social and Welfare Legislation
3. He has been paying the contribution for at
least one (1) year prior to separation.
RETIREMENT BENEFITS
Reason for compulsory retirement
The compulsory retirement of government
officials and Ees upon reaching the age of sixty-
five (65) years is founded on public policy which
aims to maintain efficiency in the government
service and at the same time give the retiring
public servants the opportunity to enjoy during
the remainder of their lives the recompense, for
their long service and devotion to the
government, in the form of a comparatively
easier life, freed from the rigors of civil service
discipline and the exacting demands that the
nature of their work and their relations with
their superiors as well as the public would
impose upon them. (Beronilla v. GSIS, G.R. No. L-
21723, Nov. 26, 1970)
Conditions to be entitled to retirement
benefits
1. A member has rendered at least 15 years of
service;
2. He is at least sixty (60) years of age at the
time of retirement; and
3. He is not receiving a monthly pension
benefit from permanent total disability.
(Sec. 13-A, RA 8291)
NOTE: Where the employee retires and meets
the eligibility requirements, he acquires a vested
right to benefits that is protected by the due
process clause. Retirees enjoy a protected
property interest whenever they acquire a right
to immediate payment under pre-existing law.
Thus, a pensioner acquires a vested right to
benefits that have become due as provided
under the terms of the public employees’
pension statute. No law can deprive such person
of his pension rights without due process of law,
that is, without notice and opportunity to be
heard. (GSIS v. De Leon, G.R. No. 186560; Nov. 17,
2010)
Options of the retiree with regard to his or
her retirement benefits
The retiree may get either of the following:
1. Lump sum equivalent to six (6) months of
the basic monthly pension (BMP) payable
at the time of retirement and an old-age
pension benefit equal to BMP payable for
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
life, starting upon the expiration of the five
(5) years covered by the lump sum; or
2. Cash payment equivalent to eighteen (18)
times his BMP and monthly pension for life
payable immediately.
Rule in case of extension of service in order
to be entitled for retirement benefits
The Supreme Court held that the head of the
government agency concerned is vested with
discretionary authority to allow or disallow
extension of the service of an official or Ee who
has reached 65 years old without completing the
15 years of government service. However, this
discretion is to be exercise conformably with the
provisions of Civil Service Memorandum
Circular No. 27, series of 1990 which provides
that the extension shall not exceed 1 year.
(Rabor v. CSC, G.R. No. 111812, May 31, 1995)
PERMANENT DISABILITY BENEFITS
Disability
Any loss or impairment of the normal functions
of the physical and/or mental faculty of a
member, which reduces or eliminates his/her
capacity to continue with his/her current gainful
occupation or engage in any other gainful
occupation.
Total disability
Complete incapacity to continue with present
employment or engage in any gainful occupation
due to the loss or impairment of the normal
functions of the physical and/or mental faculties
of the member.
Types of permanent disability
1. Permanent Total Disability (PTD) –
Accrues or arises when recovery from any
loss or impairment of the normal functions
of the physical and/or mental faculty of a
member which reduces or eliminates his
capacity to continue with his current gainful
occupation or engage in any other gainful
occupation is medically remote. [Sec. 2(q)
and (s), RA 8291]
2. Permanent Partial Disability (PPD) –
Accrues or arises upon the irrevocable loss
or impairment of certain portion/s of the
physical faculties, despite which the
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 Labor Law and Social Legislation
member is able to pursue a gainful The following disabilities shall be deemed
occupation. [Sec. 2(u), RA 8291] permanent partial

Benefits for permanent total disability 1. Complete and permanent loss of the use of:
a. Any finger
1. A member is entitled to the monthly income b. Any toe
benefit for life equivalent to the BMP when: c. One arm
d. One hand
a. He is in the service at the time of the e. One foot
disability; or f. One leg
b. If separated from service g. One or both ears
h. Hearing of one or both ears
i. He has paid at least thirty-six (36) i. Sight of one eye
monthly contributions within five
(5) years immediately preceding 2. Such other cases as may be determined by
his disability the GSIS. [Sec. 17(b), RA 8291]
ii. He has paid a total of at least one
hundred eighty (180) monthly Suspension of payment of benefits
contribution prior his disability
iii. He is not receiving old-age 1. In case a member is re-employed; or
retirement pension benefits. [Sec. 2. Member recovers from disability as
16(a), RA 8291] determined by the GSIS; or
3. Fails to present himself for medical
NOTE: A member cannot enjoy the monthly examination when required by the GSIS.
income benefit for permanent disability and the [Sec. 16(c), RA 8291]
old-age retirement simultaneously.
Instances when recovery is precluded
2. If the member does not satisfy the
conditions above but has rendered at least If the permanent disability was due to the
three (3) years of service, he shall be following acts of the subject Ee:
advanced the cash payment equivalent to
100% of his average monthly compensation a. Grave misconduct
for each year of service he has pad b. Notorious negligence
contributions but not less than Php c. Habitual intoxication
12,000.00 which should have been his d. Willful intention to kill himself or another
separation benefit. [Sec. 16(b), RA 8291]
TEMPORARY DISABILITY BENEFITS
The following disabilities shall be deemed
total and permanent Temporary total disability

1. Complete loss of sight of both eyes
2. Loss of two (2) limbs at or above the ankle
or wrist
3. Permanent complete paralysis of two (2)
limbs
4. Brain injury resulting in incurable
imbecility or insanity
5. Such other cases as may be determined by
the GSIS. [Sec. 6(d), RA 8291]
Benefits for permanent partial disability
A member is entitled to cash payment in
accordance with the schedule of disabilities to be
prescribed by GSIS, if he satisfies the given
conditions of either (1) or (2) of Sec. 16(a).
It accrues or arises when the impaired physical
and/or mental faculties can be rehabilitated
and/or restored to their normal functions. [Sec.
2(t), RA 8291]
NOTE: A member cannot enjoy the temporary
total disability benefit and sick leave pay
simultaneously.
Benefits for temporary disability
1. Member is entitled to 75% of his current
daily compensation for each day or fraction
thereof of total disability benefit, to start at
the 4th day but not exceeding 120 days in
one calendar year when:

a. He has exhausted all sick leaves

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 Social and Welfare Legislation
b. CBA sick leave benefits
Provided, that:
i. He was in the service at time of
disability; or
ii. If separated, he has rendered at
least three (3) years of service and
has paid at least six (6) monthly
contributions in the year
preceding his disability.
2. The temporary total disability benefits shall
in no case be less than P70.00 a day.
NOTE: An application for disability must be filed
with the GSIS within four (4) years from the date
of the occurrence of the contingency.
SURVIVORSHIP BENEFITS
Persons entitled to survivorship benefits
Upon the death of a member or pensioner, his
beneficiaries shall be entitled to survivorship
benefits. Such benefit shall consist of:
1. The basic survivorship pension which is
50% of the basic monthly pension; and
2. The dependent children’s pension not
exceeding 50% of the basic monthly
pension.
NOTE: The dependent children shall be entitled
to the survivorship pension as long as there are
dependent children and, thereafter, the
surviving spouse shall receive the basic
survivorship pension for life or until he or she
remarries.
Conditions for the primary beneficiaries to
be entitled to basic monthly pension
Upon the death of a member, the primary
beneficiaries shall be entitled to:
1. Survivorship pension – Provided, that the
deceased:
a. Was in the service at the time of his
death; or
b. If separated from the service, has
rendered at least three (3) years of
service at the time of his death and
has paid thirty-six (36) monthly
contributions within the five-year
period immediately preceding his
death; or has paid a total of at least
180 monthly contributions prior to
his death; or
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
2. The survivorship pension plus a cash
payment equivalent to 100% of his
average monthly compensation for
every year of service – Provided, that the
deceased was in the service at the time of
his death with at least three (3) years of
service; or
3. A cash payment equivalent to 100% of
his average monthly compensation for
each year of service he paid
contributions, but not less than Php
12,000.00 – Provided, that the deceased
has rendered at least three (3) years of
service prior to his death but does not
qualify for the benefits under item (1) or
(2) of this paragraph. [Sec. 21(a), RA 8291]
Secondary beneficiaries
In the absence of primary beneficiaries, the
secondary beneficiaries shall be entitled to:
1. The cash payment equivalent to 100% of
his average monthly compensation for each
year of service he paid contributions, but
not less than Php 12,000.00 – Provided,
That the member is in the service at the
time of his death and has at least three (3)
years of service; or
2. In the absence of secondary beneficiaries,
the benefits under this paragraph shall be
paid to his legal heir [RA 8291, Sec. 21(c)].
Payment of survivorship pension
After the end of the guaranteed thirty (30)
months, the beneficiaries are still entitled to
survivorship benefits. The survivorship pension
shall be paid as follows:
1. When the dependent spouse is the only
survivor, he/she shall receive the basic
survivorship pension for life or until he or
she remarries;
2. When only dependent children are the
survivors, they shall be entitled to the basic
survivorship pension for as long as they are
qualified, plus the dependent children’s
pension equivalent to 10% of the basic
monthly pension for every dependent child
not exceeding five (5), counted from the
youngest and without substitution;
3. When the survivors are the dependent
spouse and the dependent children, the
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 Labor Law and Social Legislation
dependent spouse shall receive the basic
survivorship pension for life or until he/she
remarries, and the dependent children shall
receive the dependent children’s pension
[Sec. 21(b), RA 8291]
Benefits that the beneficiaries are entitled to
upon the death of the pensioner
1. Upon the death of an old-age pensioner or a
member receiving the monthly income
benefit for permanent disability, the
qualified beneficiaries shall be entitled to
the survivorship pension.
2. When the pensioner dies within the period
covered by the lump sum, the survivorship
pension shall be paid only after the
expiration of such period.
Q: Gary Leseng was employed as a public
school teacher at the Marinduque High
School. On April 27, 1997, a memorandum
was issued by the school principal
designating Gary to prepare the model dam
project, which will be the official entry of the
school in the search for Outstanding
Improvised Secondary Science Equipment for
Teachers. Gary complied with his superior's
instruction and took home the project to
enable him to finish before the deadline.
While working on the model dam project, he
came to contact with a live wire and was
electrocuted. The death certificate showed
that he died of cardiac arrest due to
accidental electrocution.
Bella (Gary’s common-law wife) and Jobo (his
only son) filed claim for death benefits with
the GSIS which was denied on the ground that
Gary’s death did not arise out of and in the
course of employment and therefore not
compensable because the accident occurred
in his house and not in the school premises. Is
Bella entitled to file a claim for death benefits
with the GSIS? Why? (1991 BAR)
A: NO. Bella is not entitled to receive
survivorship benefits because she is not
considered as a beneficiary. Bella is a common-
law wife and not a legal dependent spouse. The
beneficiaries of a member of the GSIS are entitled
to the benefits arising from the death of said
member. Death benefits are called survivorship
benefits under the GSIS Law.
Q: Is the cause of death of Gary (cardiac arrest
due to accidental electrocution in his house)
233
compensable? Why?
A: YES. To be compensable under the GSIS Law,
the death need not be work-connected. In the
case presented, although the accident happened
in Gary’s house, it is still considered work-
connected since Gary only heeded to the
memorandum issued by the school principal and
complied with the instruction of his superior to
work on the model dam project.
Q: Odeck, a policeman, was on leave for a
month. While resting in their house, he heard
two of his neighbors fighting with each other.
Odeck rushed to the scene intending to pacify
the protagonists. However, he was shot to
death by one of the protagonists. Zhop, a
housemaid, was Odeck's surviving spouse
whom he had abandoned for another woman
years back. When she learned of Odeck's
death, Zhop filed a claim with the GSIS for
death benefits. However, her claim was
denied because: (a) when Odeck was killed,
he was on leave; and (b) she was not the
dependent spouse of Odeck when he died.
Resolve with reasons whether GSIS is correct
in denying the claim. (2005 BAR)
A: YES, GSIS is correct in denying the claim.
Under the law, a dependent is one who is a
legitimate spouse living with the employee [LC,
Art. 173(i)]. In the problem given, Zhop had been
abandoned by Odeck who was then living
already with another woman at the time of his
death. Moreover, Odeck was on leave when he
was killed. The 24-hour duty rule does not
apply when the policeman is on vacation
leave. (Employees’ Compensation Commission v.
CA, G.R. No. 121545, Nov. 14, 1996)
Taking together jurisprudence and the pertinent
guidelines of the ECC with respect to claim for
death benefits, namely: (a) That the employee
must be at the place where his work requires
him to be; (b) That the employee must have
been performing his official functions; and (c)
That the injury is sustained elsewhere, the
employee must have been executing an order for
the employer, it is not difficult to understand
then why Zhop’s claim was denied by the GSIS.
(Tancinco v. GSIS, G.R. No. 132916, Nov. 16, 2001)
In the present case, Odeck was resting at his
house when the incident happened; thus, he was
not at a place where his work requires him to be.
Although at the time of his death Odeck was
performing a police function, it cannot be said
 Social and Welfare Legislation
that his death occurred elsewhere other than the
place where he was supposed to be because he
was executing an order for his employer.
Q: Luis, a PNP officer, was off duty and resting
at home when he heard a scuffle outside his
house. He saw two of his neighbors fighting
and he rushed out to pacify them. One of the
neighbors shot Luis by mistake, which
resulted in Luis's death. Marian, Luis's
widow, filed a claim with the GSIS seeking
death benefits. The GSIS denied the claim on
the ground that the death of Luis was not
service related as he was off duty when the
incident happened. Is the GSIS correct? (2015
BAR)
A: NO. The GSIS is not correct. Luis, a policeman,
just like a soldier, is covered by the 24-Hour
Duty Rule. He is deemed on round-the-clock
duty unless on official leave, in which case his
death outside performance of official peace-
keeping mission will bar death claim. In this
case, Luis was not on official leave and he died in
the performance of a peacekeeping mission.
Therefore, his death is compensable.
No presumption of Sham Marriages
The present GSIS law does not presume that
marriages contracted within three (3) years
before retirement or death of a member are
sham marriages contracted to avail of
survivorship benefits. The law acknowledges
that whether the surviving spouse contracted
the marriage mainly to receive survivorship
benefits is a matter of evidence. It no longer
prescribes a sweeping classification that unduly
prejudices the legitimate surviving spouse and
defeats the purpose for which Congress enacted
the social legislation. (Alcantara, Book II; GSIS v.
Montesclaros, G.R. No. 146494, July 14, 2004)
FUNERAL BENEFITS
Funeral benefits
The funeral benefit is in the amount Php 18,000.
It is intended to defray the expenses incident to
the burial and funeral of the deceased member,
pensioner, or retiree under RA 660, RA 1616, PD
1146, and RA 8291. It is payable to the members
of the family of the deceased, in the order which
they appear:
1. Legitimate spouse;
2. Legitimate child who spent for the funeral
services; or
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
3. Any other person who can show
unquestionable proof that he has borne
the funeral expenses of the deceased.
Payment of funeral benefits
Funeral benefits will be paid upon the death of:
1. An active member
2. A member who has been separated from
the service but is entitled to future
separation or retirement benefits
3. A member who is a pensioner (excluding
survivorship pensioners)
4. A retiree who is at the time of his
retirement was of pensionable age, at least
sixty (60) years old, who opted to retire
under RA 1616 (An act further amending
Sec. 12, C.A. 186, as amended, by prescribing
two other modes of retirement and for other
purposes).
LIFE INSURANCE
Classes of life insurance coverage under the
GSIS law
1. Compulsory Life Insurance
2. Optional Life Insurance
The plans may be endowment or ordinary life.
Compulsory life insurance coverage
All Ees including the members of the Judiciary
and the Constitutional Commissioners except for
Members of the AFP, the PNP, BFP and BJMP,
shall, under such terms and conditions as may
be promulgated by the GSIS, be compulsorily
covered with life insurance, which shall
automatically take effect as follows:
1. Those employed after the effectivity of this
Act, their insurance shall take effect on the
date of their employment;
2. For those whose insurance will mature after
the effectivity of this Act, their insurance
shall be deemed renewed on the day
following the maturity or expiry date of
their insurance; and
3. For those without any life insurance as of
the effectivity of this Act, their insurance
shall take effect following said effectivity.
Optional life insurance coverage
234
 Labor Law and Social Legislation
1. A member may at any time apply for
himself and/or his dependents an
insurance and/or pre-need coverage
embracing:
a. Life
b. Memorial plans
c. Health
d. Education
e. Hospitalization
f. Other plans as maybe designed by
GSIS

2. Any Er may apply for group insurance

coverage for its Ees.

PRESCRIPTION

Prescriptive period to claim the benefits

GR: Four (4) years from the date of contingency.

XPNs: Life insurance and retirement [Sec. 28, RA

8291]

Q: GSIS foreclosed a mortgage involving two

parcels of land. The Municipal Agrarian
Reform Officer issued a Notice of Coverage
covering one of the two parcels of land.
Subsequently, the Department of Agrarian
Reform offered to pay GSIS for the covered
land. GSIS contends that the land may be
excluded from coverage and that an
exception exists outside Sec. 10 of the
Comprehensive Agrarian Reform Law. Can
the property be excluded from compulsory
agrarian reform coverage?

A: NO. Roman Catholic Archbishop of Caceres v.

Secretary of Agrarian Reform (G.R. No. 139285,
Dec. 21, 2007) has settled that the exemptions
from agrarian reform coverage are contained in
“in an exclusive list,” which are enumerated
under Sec. 10 of RA 6557. Sec. 7 of the
Comprehensive Agrarian Reform Law is even
more specific. It explicitly states that “lands
foreclosed by government financial institutions”
are subject to agrarian reform. (GSIS v. Municipal
Agrarian Reform Officer Romerico Datoy, G.R. No.
232863, July 24, 2019, as penned by J. Leonen)

235
 Social and Welfare Legislation
The totalization shall not apply to following
LIMITED PORTABILITY LAW instances:
R.A. No. 7699
1. If a worker is not qualified for any benefits
from both Systems; or
2. If a worker in the public sector is not
Limited portability rule
qualified for any benefits from the GSIS; or
3. If the worker in the private sector is not
A covered worker who transfers employment
qualified for any benefits from the SSS.
from one sector to another or is employed on
both sectors, shall have creditable services or
For purposes of computation of benefits,
contributions on both Systems credited to his
totalization applies in all cases so that the
service or contribution record in each of the
contributions made by the worker-member in
Systems and shall be totalized for purposes of
both Systems shall provide maximum benefits
old-age, disability, survivorship, and other
which otherwise will not be available. In no case
benefits in either or both Systems. (Sec. 3, RA
shall the contribution be lost or forfeited. (Chan,
7699)
2017 Labor Law Reviewer)
All contributions paid by such member
If after totalization, the worker-member still does
personally, and those that were paid by his
not qualify for any benefit as listed in the law, the
employers to both Systems shall be considered
member will then get whatever benefits
in the processing of benefits which he can claim
correspond to his/her contributions in either or
from either or both Systems. (Sec. 4, RA 7699)
both Systems.
This is advantageous to the SSS and GSIS
Q: Luisito has been working with Lima Land
members for purposes of death, disability or
for 20 years. Wanting to work in the public
retirement benefits. In the event the Ees transfer
sector, Luisito applied with and was offered a
from the private sector to the public sector, or
job at Livecor. Before accepting the offer, he
vice-versa, their creditable employment services
wanted to consult you whether the payments
and contributions are carried over and
that he and Lima Land had made to the Social
transferred as well.
Security System (SSS) can be transferred or
credited to the Government Service Insurance
Totalization
System (GSIS). What would you advise? (2014
BAR)
Refers to the process of adding up the periods of
creditable services or contributions under each
A: YES. Under RA 7699, otherwise known as the
of the Systems, SSS or GSIS, for the purpose of
Portability Law, one may combine his years of
eligibility and computation of benefits. [Sec. 2(e),
service in the private sector represented by his
RA 7699]
contributions to the Social Security System (SSS)
with his government service and contributions
Portability
to the GSIS. The contributions shall be totalized
for purposes of old-age, disability, survivorship
Refers to the transfer of funds for the account
and other benefits in case the covered member
and benefit of a worker who transfers from one
does not qualify for such benefits in either or
system to the other. [Sec. 2(b), RA 7699]
both Systems without totalization.
Q: How the benefits are computed under the
Limited Portability Law?

A: All contributions paid by such member

personally, and those that were paid by his
employers to both Systems shall be considered in
the processing of benefits which he can claim
from either or both Systems: Provided, however,
That the amount of benefits to be paid by one
System shall be in proportion to the number of
contributions actually remitted to that System.
(Sec. 4, RA 7699)

UNIVERSITY OF SANTO TOMAS 236

2021 GOLDEN NOTES
 Labor Law and Social Legislation
The Ee may belong to either the:
EMPLOYEES’ COMPENSATION PROGRAM
a. Public sector comprising the employed
workers who are covered by the GSIS,
including the members of the AFP, elective
Employees’ Compensation Program
officials who are receiving regular salary
and any person employed as casual
It is the program provided for in Arts. 172 to 215
emergency, temporary, substitute or
of the LC whereby a fund known as the State
contractual;
Insurance Fund is established through
premium payments exacted from Ers and from
b. Private sector comprising the employed
which the Ees and their dependents in the event
workers who are covered by the SSS.
of work-connected injury, disability, or death,
may promptly secure adequate income benefit,
Effectivity of the Compulsory Coverage
and medical or related benefits.
1. Employer – On the first day of operation but
NOTE: The claimant under the Ees’
not earlier than Jan. 1, 1975
Compensation Program is required to present
2. Employee – On the day of his employment
proof of casual relation or aggravation if the
cause or origin of the disease is still unknown.
The law, however, does not require a direct WHEN COMPENSABLE
casual relation. It is enough that the hypothesis
on which the workman’s claim is based is In general
probable.
1. Injury and the resulting disability or
Contributions to the State Insurance Fund death must be the result of an employment
accident satisfying all the following grounds:
Contributions under this Title shall be paid in
their entirety by the Er and any contract or a. Ee must have been injured at the place
device for the deduction of any portion thereof where his work requires him to be;
from the wages or salaries of the Ees shall be b. Ee must have been performing his
null and void. [LC, Art. 189(c)] official functions; and
c. If injury is sustained elsewhere, the Ee
COVERAGE must have been executing an order for
the Er [Sec. 1(a), Rule III, Amended
Rules on EC]
Coverage shall be compulsory upon:
2. For sickness and the resulting disability
1. Every Er.
or death, the sickness must be the result of
an occupational disease listed under the IR
a. Public sector covered by the GSIS,
with the conditions set therein satisfied.
comprising the National Government,
including GOCCs, Philippine
XPN: Proof must be shown that the risk of
Tuberculosis Society, the Philippine
contracting the disease is increased by the
National Red Cross, and the Philippine
working conditions. [Sec. 1(b), Rule III,
Veterans Bank; and
Amended Rules on EC]
b. Private sector covered by the SSS,
Injury
comprising all Ers other than those
defined in the immediately preceding
Any harmful change in the human organism
paragraph.
from any accident arising out of and in the
course of employment [LC, Art. 173 (k)].
2. Every Ee not over 60 years of age.
24-Hour Doctrine
3. An Ee over 60 years of age if he had been
paying contributions to the System prior to
The 24-hour duty doctrine should not be
age 60 and has not been compulsory
sweepingly applied to all acts and circumstances
retired.
causing the death of a police officer but only to
those which, although not on official line of duty,

237
 Social and Welfare Legislation
are nonetheless basically police service in
character. (Tancinco v. GSIS, G.R. No. 132916.
Nov. 16, 2001)
“Street Peril” or “Going to/ Coming from
work”
GR: In the absence of special circumstances, an
Ee injured while going to or coming from his
place of work is excluded from the benefits of
Workmen’s Compensation Act.
XPNs:
1. Where the Ee is proceeding to or from his
work on the premises of the Er;
2. Proximity Rule — where the Ee is about
to enter or about to leave the premises of
his Er by way of exclusive or customary
means of ingress and egress;
3. Ee is charged, while on his way to or from
his place of employment or at his home, or
during this employment with some duty
or special errand connected with his
employment; and
4. Where the Er as an incident of the
employment provides the means of
transportation to and from the place of
employment.
NOTE:
1. The act of going to or coming from the
workplace must be a continuing act; Ee
had not been diverted therefrom; Ee did
not deviate or departed from his usual
route to or from his workplace; and
2. With regard to an Ee on a special errand,
the latter must have been official and in
connection with his work (Azucena, 2013).
Acts of Ministration / Personal Comfort
Doctrine
Acts performed by an Ee within the time and
space limits of his employment, to minister
personal comfort, such as satisfaction of his
thirst, hunger, or other physical demands, or to
protect him from excessive cold, shall be deemed
incidental to his employment and injuries
suffered in the performance of such act shall be
considered compensable and arising out of and
in the course of employment.
Rest or Refreshment
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
GR: Injuries of Ee during a break for rest or
refreshment are compensable.
XPN: When the nature of Ee’s work requires him
to remain awake. (Azucena, 2013)
Lunch Period
GR: Injuries of an Ee is compensable although
they occurred during lunch period where eating
of lunch was within Er’s consent or knowledge,
express or implied.
XPN: Not work connected and occurred in a
place where he had no right to be (Azucena,
2013).
Union Meeting
Injuries suffered at a union meeting during lunch
period are not compensable if not recognized by
the Er in the CBA (Azucena, 2013).
Extra-premises / Shuttle Bus Rule
Injuries suffered by the Ee, while on board a
means of transportation provided by the Er in
going to or coming from work, are compensable
(Azucena, 2013).
While living, boarding or lodging on Er’s
premises or at the workplace
GR: Injuries suffered, while living, boarding or
lodging on Er’s premises or at the workplace:
a. Pursuant to an express or implied
requirement contract of hiring; or
b. Reasonably attributable or incidental to the
nature of employment or conditions under
which he lives in the performance of his
duties, are to be considered as having
arisen out of and in the course of
employment.
XPNs:
1. When the residence of Ee in Er’s premises
is merely permissive and not required.
2. Injury suffered results from a risk or
danger which is not reasonably
incidental to the employment (Azucena,
2013).
While travelling
Compensability depends on:
238
 Labor Law and Social Legislation
1. Whether the injury results from a risk
which is inherent in the nature of
employment or reasonably incidental
thereto or to which the Ee is specially
exposed; and
2. Whether the Ee was engaged in the
exercise of some functions or duties
reasonably necessary or incidental to the
performance of the contract of his
employment; or
3. If not actively engaged, whether Ee was at
the place where he was authorized or
required by such contract to be (Azucena,
2013).
NOTE: Authorized deviation from route,
schedule, or travel is compensable (Azucena,
2013).
Dual Purpose Doctrine
This doctrine considers as compensable the
injury that an Ee sustains while on a trip
undertaken for the benefit of the Er even if in the
course of such business trip the Ee pursues a
personal purpose (Azucena, 2013).
Er’s Sponsored Activities
Injuries suffered by an Ee during recreational
activities and other Er sponsored activities are
compensable if such activities were for the Er’s
exclusive benefit or when the Er had some
interest in those activities.
Acts of Force Majeure
GR: Not compensable when the Ee has not been
exposed to a greater danger than usual.
XPN: “Positional and local risks doctrine”
whereby the Ee, because of his duties, was
exposed to a special or peculiar danger from the
elements, that is, one which is greater than that
to which other persons in the community are
exposed. The unexpected injury sustained by
reason of such elements is considered as arising
out of and in the course of employment.
(Azucena, 2013)
Presumptive Compensability
Applicable when the victims are police officers
and military men. Their injuries and death are
compensable under the doctrine of
“presumptive compensability”. It has been
239
observed lately that policemen and military
personnel were killed for no other reason than
the fact that they are military personnel and
policemen (Quebec v. GSIS, ECC Case No. 4310,
Nov. 9, 1988).
Defenses that may be interposed by the state
insurance fund against a claim for
compensation made by a covered Ee or his
dependents
The following defenses may be set up:
1. Injury is not work-connected, or the
sickness is not occupational
2. Disability or death was occasioned by the
Ee’s
a. Intoxication
b. Willful intention to injure or kill
himself or another; or
c. Notorious negligence (LC, Art. 178).
3. No notice of sickness, injury or death was
given to the Er (LC, Art. 212).
4. Claim was filed beyond 3 years from the
time the cause of action accrued (LC, Art.
207 as amended by PD 1921).
NOTE: Notorious negligence is equivalent to
gross negligence; it is something more than
mere carelessness or lack of foresight.
Q: Abraham Dino works as a delivery man in
a construction supply establishment owned
by Abraham Julius. One day, while Dino was
making reports on his delivery, he had an
altercation with Julius; irked by the
disrespectful attitude of Dino, Julius pulled
out his gun and shot Dino, hitting him in the
spinal column and paralyzing him
completely. Julius was prosecuted for the act.
a. Is the disability suffered by Abraham
Dino compensable?
b. If Abraham Dino recovers compensation
from the SIF, can he still recover from
Abraham Julius damages in the criminal
case? Why?
A:
a. YES. The injury was sustained by Abraham
Dino in his place of work and while in the
performance of his official functions.
b. NO. Under Art. 179 of the LC, as amended
by PD 1921, the liability of the State
 Social and Welfare Legislation
Insurance Fund under the Employees’
Compensation Program shall be exclusive
and in place of all other liabilities of the Er
to the Ee or his dependents or anyone
otherwise entitled to recover damages on
behalf of the Ee or his dependents.
Q: Wilfredo, a truck driver employed by a
local construction company, was injured in
an accident while on assignment in one of his
employer’s project in Iraq. Considering that
his injury was sustained in a foreign country,
is Wilfredo entitled to benefits under the
Employees’ Compensation Program?
A: YES. Filipinos working abroad in the service
of an Er, domestic or foreign, who carries on in
the Philippines any trade, business, industry,
undertaking or activity of any kind, are covered
by the ECP. (Sec. 5, Rule 1, ECC Rules; LC, Art.
175).
Sickness
“Any illness definitely accepted as an
occupational disease listed by the Commission,
or any illness caused by employment, subject to
proof that the risk of contracting the same is
increased by working conditions” [LC, Art. 173
(l)].
Occupational Disease
One which results from the nature of the
employment, and by nature it means conditions
which all Ees of a class are subject and which
produce the disease as a natural incident of a
particular occupation and attach to that
occupation a hazard which distinguishes it from
the usual run of occupations and is in excess of
the hazard attending the employment in general.
To be occupational, the disease must be wholly
due to causes and conditions which are normal
and constantly present and characteristic of the
particular occupation.
Theory of Increased Risk
The term “sickness” as defined in Art. 173(l) of
the LC is recognition of the theory of increased
risk. To establish compensability under the
same, the claimant must show substantial proof
of work-connection, but what is required is
merely a reasonable work-connection and not a
direct causal relation.
Proof of actual cause of the ailment is not
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
necessary. The test of evidence of relation of the
disease with the employment is probability and
not certainty (Jimenez v. Employees’
Compensation Commission, G.R. No. L-58176, Mar.
23, 1984; Panotes v. ECC, G.R. No. L-64802, Sept.
23, 1985).
NOTE: Where the primary injury is shown to
have arisen in the course of employment, every
natural consequence that flows from the injury
likewise arises out of the employment, unless it
is the result of an independent intervening cause
attributable to claimant's own negligence or
misconduct (GSIS v. Aurelia Calumpiano, G.R. No.
196102, Nov. 26, 2014).
An illness not listed by the Employees’
Compensation Commission as an occupational
disease is compensable provided that it is
established that the risk of contracting the same
is increased by working conditions.
Brain tumor/ Cancer of the brain requires
proof
The law, as it now stands requires the claimant
to prove a positive thing – the illness was caused
by employment and the risk of contracting the
disease is increased by the working conditions.
To say that since the proof is not available,
therefore, the trust fund has the obligation to
pay is contrary to the legal requirement that
proof must be adduced. The existence of
otherwise non-existent proof cannot be
presumed. x x x
The Court recognized the fact that cancer is a
disease of still unknown origin which strikes
people in all walks of life, employed or
unemployed. Unless it be shown that a particular
form of cancer is caused by specific working
conditions (e.g., chemical fumes, nuclear
radiation, asbestos dust, etc.). The Court cannot
conclude that it was the employment which
increased the risk of contracting the disease
(Raro v. ECC, G.R. No. 58445, April 27, 1989).
BENEFITS
Benefits under the State Insurance Fund
1. Medical Benefits
2. Disability Benefits
3. Death Benefits
4. Funeral Benefits
Persons entitled to benefits under the
Employees’ Compensation Program
240
 Labor Law and Social Legislation
1. The covered Ee
2. Es’s dependents and
3. In case of Ee’s death, his beneficiaries.
Dependents of the employee
1. Legitimate, legitimated, legally adopted or
acknowledged natural child who is
unmarried, not gainfully employed, and not
over 21 years of age or over 21 years of age
provided he is incapacitated and incapable of
self-support due to a physical or mental
defect which is congenital or acquired during
minority;
2. Legitimate spouse living with the Ee;
3. Parents of said Ee wholly dependent upon
him for regular support [LC as amended by PD
1921, Art. 173 (i)].
BENEFICIARIES
Primary beneficiaries
1. Dependent spouse until he remarries
2. Dependent children
Secondary beneficiaries
1. In absence of primary beneficiaries, the
dependent parents
2. Subject to the restrictions imposed on
dependent children, the illegitimate
children, and legitimate descendants.
Provided, that the dependent
acknowledged natural child shall be
considered as a primary beneficiary when
there are no other dependent children who
are qualified and eligible for monthly
income benefit. (LC, Art. 173, as amended by
Sec. I, PD 1921)
Accrual of the right to compensation or
benefit under the Employee’s Compensation
Program
The right to compensation or benefit for loss or
impairment of an employee’s earning capacity
due to work-related illness or injury arises or
accrues upon, and not before, the happening of
the contingency. Hence, an Ee acquires no vested
right to a program of compensation benefits
simply because it was operative at the time he
became employed. (San Miguel Corporation v.
NLRC, G.R. No. 57473, Aug. 15, 1988)
Recovery from the State Insurance Fund does
241
not bar a claim for benefits under the SSS
Law
As expressly provided for in Art. 179 of the LC,
payment of compensation under the State
Insurance Fund shall not bar the recovery of
benefits under the SSS Law. Benefits under the
State Insurance Fund accrue to the Ees
concerned due to hazards involved and are
made a burden on the employment itself. On the
other hand, social security benefits are paid to
SSS members by reason of their membership
therein for which they contribute their money to
a general fund. (Ma-ao Sugar Central Co., Inc. v.
CA, G.R. No. 83491, Aug. 27, 1990)
MEDICAL BENEFITS
(MEDICAL SERVICES)
Medical Benefits
Includes reimbursement of the cost of medicine
for the illness or injury, payment to providers of
medical care, hospital care, surgical expenses
and the costs of appliances and supplies.
The medical services are limited to ward
services of an accredited hospital.
Conditions for the entitlement to medical
services
For an Ee to be entitled to medical services, the
following conditions must be satisfied:
1. He has been duly reported to the System
(SSS or GSIS);
2. He sustains an injury or sickness; and
3. The System has been notified of the injury
or sickness which caused his disability.
DISABILITY BENEFITS
Disability benefits
They are income benefits in case of temporary
total disability, permanent total disability and
permanent partial disability.
Permanent and Total Disabilities
The following disabilities shall be deemed
permanent and total:
1. Temporary total disability lasting
continuously for more than 120 days,
except as otherwise provided for in the
Rules;
 Social and Welfare Legislation
2. Complete loss of sight of both eyes;
3. Loss of two limbs at or above the ankle or
wrist;
4. Permanent complete paralysis of two
limbs;
5. Brain injury resulting in incurable
imbecility or insanity; and
6. Such cases as determined by the Medical
Director of the System and approved by the
Commission. [LC, Art. 198(c)]
NOTE: Permanent total disability may arise
although the employee does not lose the use of
any part of his body. Where the Ee is unable, by
reason of the injury or sickness, to perform his
customary job for more than 120 days,
permanent total disability arises.
Conditions for the entitlement to an income
benefit for permanent total disability:
1. Ee has been duly reported to the System
(SSS or GSIS)
2. Ee sustains the permanent total disability
as a result of injury or sickness; and
3. The system has been duly notified of the
injury or sickness which caused his
disability (Sec. 1, Rule XI, Amended Rules on
EC)
Period of entitlement
1. The full monthly income benefit shall be
paid for all compensable months of
disability.
2. After the benefit under the EC shall have
ceased, 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 provisions of that law.
This paragraph applies to contingencies
which occurred prior to May 1, 1978.
3. 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:
a. Failure to present himself for
examination at least once a year upon
notice by the System;
b. Failure to submit a quarterly medical
report certified by his attending
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
physician
c. Complete or full recovery from his
permanent disability, or
d. Upon being gainfully employed. (Sec. 2,
Rule XI, Amended Rules on EC)
Conversion of a permanent partial disability
to permanent total disability
A permanent partial disability is converted to
permanent total disability after the employee’s
retirement. This is in line with the social justice
provision in the Constitution. A person’s
disability may not manifest itself fully at one
precise moment in time but rather over a period
of time. Disability should not be understood
more on its medical significance but on the loss
of earning capacity.
Q: Balasta was hired as an Able Seaman by
his employers. While on board, Balasta
experienced chest pains, fatigue, and
shortness of breath. The incident requires
further medical examination as Balasta was
repatriated back in the Philippines. Balasta
was diagnosed with heart disease which
requires bypass operation. Balasta claimed
for disability benefits against his employers
but denied the same on the ground that
Balasta’s illness is not work related. Can
Balasta claim for disability benefits?
A: YES. Regarding the issue of compensability, it
has been the Court’s consistent ruling that in
disability compensation, "it is not the injury
which is compensated, but rather it is the
incapacity to work resulting in the impairment of
one’s earning capacity." Moreover, "the list of
illnesses/ diseases in Sec. 32-A does not
preclude other illnesses/diseases not so listed
from being compensable. The POEA-SEC cannot
be presumed to contain all the possible injuries
that render a seafarer unfit for further sea
duties.”
The company-designated physician must arrive
at a definite assessment of the seafarer’s fitness
to work or permanent disability within the
period of 120 or 240 days, pursuant to Art. 198
(c)(1) of the Labor Code and Rule X, Sec. 2 of
the AREC. If he fails to do so and the seafarer’s
medical condition remains unresolved, the latter
shall be deemed totally and permanently
disabled (Fil-Pride Shipping Company, Inc. et al, v.
Balasta, G.R. No. 193047, March 3, 2014).
Q: Mark Anthony Saso was engaged by
respondent 88 Aces Maritime Services, Inc.
242
 Labor Law and Social Legislation
as a fisherman in Taiwan. Saso had an
accident while on board of the vessel and in
the process of hauling their catch, fracturing
his right thigh. As a result, he had to be
operated. He was there after repatriated to
the country. He presented himself on the
office of the he was merely told that he
should first shoulder his continued medical
expenses subject to reimbursement only
upon proper documentation and was
referred to Dr. Rafael Recto the company
designated physician who allegedly failed to
pronounce whether petitioner was fit to
work within the 120-day period. This
prompts the respondent to consult Dr.
Magtira who, declared that he was
permanently disabled with Grade 10
impediment based on POEA contract. Is Saso
entitled to total and permanent disability
benefits?
A: NO. Under the provisions of the Labor Code
and POEA SEC, the seafarer upon sign-off from
his vessel, must report to the company-
designated physician within 3 days from the
arrival for diagnosis and treatment. The
duration of the treatment shall in no case exceed
120 days for the Company-Physician to declare
whether the seafarer was fit to engaged in sea or
not. However, if the 120 days initial period is
exceeded because the seafarer needs further
medication it can be extended up to the
maximum period of 240 days.
In the case at bar, 120 days had not yet lapsed
thus, the claim for Total or Permanent Disability
Benefits is premature. However, non-
entitlement to Total or Permanent Disability
Benefits does not rule out his right to the other
benefits provided for under the POEA-SEC such
as reimbursement for medical expenses,
sickness allowance and benefit for partial
disability caused by a work-related injury (Mark
Anthony Saso v. 88 Aces Maritime Service et. al.,
G.R. No. 211638, Oct. 7, 2015).
DEATH BENEFITS
Conditions for entitlement to death benefits
The beneficiaries of a deceased Ee shall be
entitled to an income benefit if all of the
following conditions are satisfied:
1. The Ee has been duly reported to the
System;
NOTE: If an employee suffers disability or
243
dies before he is duly reported for coverage
to the System (SSS or GSIS), the Er shall be
liable for the benefits (Sec. 1, Rule X; Sec. 1,
Rule XI; Sec. 1, Rule XII; Sec. 1, Rule XIII; ECC
Rules).
2. He died as a result of an injury or sickness;
and
3. The System has been duly notified of his
death, as well as the injury or sickness
which caused his death.
NOTE: 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
In addition, the cause of death must be a
complication or natural consequence of the
compensated Permanent Total Disability (Sec.
1(b), Rule XIII, Amended Rules on EC)
Length of time the primary beneficiaries are
entitled to death benefits
1. Dependent Spouse — until he or she
remarries
2. Dependent Children — until they get
married, or find gainful employment, or
reach 21 years of age
3. Dependent Child suffering from physical or
mental defect — until such defect
disappears
Er’s liability in case of death or injury of the
Ee
1. If the cause of the death or personal injury
arose out of and in the course of
employment, the Er is liable.
2. If the cause was due to the Ee’s own
notorious negligence, or voluntary act or
drunkenness, the Er shall not be liable.
3. If the cause was partly due to the Ee’s lack
of due care, the compensation shall be
inequitably reduced.
4. If the cause was due to the negligence of a
fellow Ee, the Er and the guilty Ee shall be
liable solidarily.
5. If the cause was due to the intentional or
malicious act of fellow Ee, the fellow Ee and
 Social and Welfare Legislation
Er are liable unless the Er exercised due
diligence in selecting and supervising his
Ees.
Q: New Filipino Maritime Agencies, Inc.
(NFMA), for and on behalf of St. Paul
Maritime Corp. (SPMC), employed Simon
Datayan II (SIMON) as deck cadet on board
the vessel Corona Infinity for a period of nine
months. On Dec. 30, 2007, Raymond Ocleasa
saw SIMON jump overboard after being
reprimanded due to poor performance in a
fire and emergency drill. After a few weeks,
SIMON was declared missing and was
presumed dead. A suicide note was found in
his belongings. SIMON's father (DATAYAN)
filed for death benefits but his claim was
unheeded. He then filed a complaint against
the company and averred that SIMON died
during the term of his employment, thus
entitled for such benefit. NFMA on the other
hand argued that SIMON's death was a result
of SIMON's deliberate act. Is NFMA liable for
the death benefits of SIMON?
A: NO. NFMA is not liable for the death benefits
of SIMON. As claimant for death benefits,
DATAYAN has the burden to prove by
substantial evidence that his son's death is
work-related and that it transpired during the
term of his employment contract. In this respect,
DATAYAN was able to discharge his burden. The
burden then shifted to the company to prove
that SIMON's death was due to his deliberate act.
NFMA discharged their burden to prove that
SIMON committed suicide. The Master's Report
as well as the Statement of Facts described the
events that occurred prior to, during and after
the incident when SIMON went overboard.
Furthermore, the suicide note found was
informative as to why SIMON committed suicide
(New Filipino Maritime Agencies Inc., et.al., v.
Datayan, G.R. No. 202859, Nov. 11, 2015).
FUNERAL BENEFIT
Funeral benefit
A funeral benefit of Php 20,000 be paid upon the
death of a covered Ee or permanently totally
disabled pensioner to one of the following:
1. The surviving spouse; or
2. The legitimate child who spent for the
funeral services; or
3. Any other person who can show
incontrovertible proof or proof of his
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
having borne the funeral expenses (Sec. 1,
Rule XIV, Amended Rules on EC)
PRESCRIPTIVE PERIOD
Prescriptive Period
No claim for compensation shall be given due
course unless said claim is filed with the System
within three years from the time the cause of
action accrued. (as provided under ECC
Resolution No. 2799, July 25, 1984) (Sec. 6, Rule
VII, Amended Rules on EC)
Reckoning Date of the Three-Year
Prescriptive Period
1. Sickness – from the time the employee lost
his earning capacity;
NOTE: The three (3) years have to be
counted from the time the employee lost his
earning capacity, not from the time the
illness was discovered. (ECC v. Sanico, G.R.
No. 134028, Dec. 17, 1999)
2. Injury – from the time it was sustained;
3. Death – from the time of death of the covered
employee.
Claim for Death or Disability Benefits under
the SSS/GSIS Law should be considered as the
Employees’ Compensation claim itself
The claim for funeral benefits under PD No. 626,
as amended, which was filed after the lapse of
ten (10) years by petitioner who had earlier filed
a claim for death benefits, had not prescribed.
This is but logical and reasonable because the
claim for death benefits which petitioner filed
with the SSS is of the same nature as her claim
before the ECC. When petitioner filed her
claim for death benefits with the SSS under
the SSS law, she had already notified the SSS
of her employees’ compensation claim,
because the SSS is the very same agency where
claims for payment of sickness/disability/death
benefits under P.D. No. 626 are filed.
Thus, when the petitioner filed her claim for
death benefits under the SSS law, her claim for
the same benefits under the Employees’
Compensation Law should be considered as
filed. (Mesa v. SSS and Philrock Incorporated, G.R.
No. 160467, April 7, 2009)
244
 Labor Law and Social Legislation
POEA STANDARD EMPLOYMENT CONTRACT
DISABILITY BENEFITS FOR
INJURY OR ILLNESS
Elements of a Compensable Injury:
1. The injury or illness is work-related;
2. It occurred during the term of the
seafarer’s contract.
NOTE: For an occupational disease and the
resulting disability or death to be compensable,
all of the following conditions must be satisfied:
1. The seafarer's work must involve the risks
described herein;
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 contract it; and
4. There was no notorious negligence on the
part of the seafarer. (Benedict Romana v.
Magsaysay Maritime Corporation, G.R. No.
192442, Aug. 2, 2017)
Permanent/Total Disability
Permanent disability is the inability of a
worker to perform his job for more than 120
days, regardless of whether or not he loses the
use of any part of his body.
Total disability means the disablement of an
employee to earn wages in the same kind of
work of similar nature that he was trained for,
accustomed to perform, or any kind of work
which a person of his mentality and attainments
could do.
A total disability does not require that the
employee be completely disabled, or totally
paralyzed. What is necessary is that the injury
must be such that the employee cannot pursue
his or her usual work and earn from it. A total
disability is considered permanent if it lasts
continuously for more than 120 days.
Liabilities of the Er when the Seafarer Suffers
Work-related Injury or Illness During the
Term of His Contract
245
1. The Er 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 er shall be liable for the full cost of such
medical, serious dental, surgical and
hospital 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 shall be so provided
at cost to the er until such time he is
declared fit or the degree of his disability
has been established by the company-
designated physician.
3. The seafarer shall also receive sickness
allowance from his er in an amount
equivalent to his basic wage computed from
the time he signed off until he is declared fit
to work or the degree of disability has been
assessed by the company-designated
physician. (Sec. 20(a) 2010 POEA-SEC)
NOTE:
a. The period within which the seafarer
shall be entitled to his sickness allowance
shall not exceed 120 days.
b. Payment of the sickness allowance shall
be made on a regular basis, but not less
than once a month.
4. The seafarer shall be entitled to
reimbursement of the cost of medicines
prescribed by the company-designated
physician.
5. In case of permanent total or partial
disability of the seafarer caused by either
injury or illness the seafarer shall be
compensated in accordance with the
schedule of benefits enumerated in Sec. 32
of his Contract.
In Case Treatment of the Seafarer is On an
Out-patient Basis as Determined by the
Company-designated Physician [Sec. 20 (a[3])
2010 POEA-SEC)
1. The company shall approve the appropriate
mode of transportation and accommodation.
2. The reasonable cost of actual traveling
expenses and/or accommodation shall be
 Social and Welfare Legislation
paid subject to liquidation and submission
of official receipts and/or proof of expenses.
3. For this purpose:
GR: The seafarer shall submit himself to a
post-employment medical examination by a
company-designated physician within three
(3) working days upon his return
XPN: When he is physically incapacitated to
do so, in which case, a written notice to 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.
Q: Pedro is a Filipino seafarer. Two weeks
after he commenced to work aboard the
vessel, he was brought to the ship doctor
when he slipped on a metal stairway, fell
down and hit his abdomen and chest on a
metal pipe and was diagnosed to have a
"sebaceous cyst to the right of the umbilicus."
Under a local anesthesia, his cyst was
removed, and the lesion was closed with
three (3) stitches.
After 2 months, his employer terminated his
services and was repatriated to the
Philippines on July 6, 2010. Pedro now seeks
compensation for his sebaceous cyst as an
occupational disease. To support his claim,
he presented his Medical Examination that
he was "fit to work" before the start of his
employment, hence, the cyst was caused by
his employment. Is Pedro entitled to
disability benefits?
A: NO. A sebaceous cyst is not included under
Sec. 32 of the 2000 POEA Amended Standard
Terms and Conditions Governing the
Employment of Filipino Seafarers on Board
Ocean-Going Vessels. However, illnesses not
listed as an occupational disease are disputably
presumed to be work-related. Nevertheless,
seafarers must prove through substantial
evidence the correlation between their illness
and the nature of their work for their claim for
disability benefits to prosper.
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
In this case, Pedro failed to substantiate his
claim that his cyst was either work-related or
work-aggravated. Also, his Pre-Employment
Medical Examination stating that he was “fit to
work” cannot be relied upon to reflect a
"seafarer's true state of health" since it is not
exploratory and may just disclose enough for
employers to decide whether a "seafarer is fit for
overseas employment." Due to the nature of a
Pre-Employment Medical Examination, it is
possible that Madridejos' sebaceous cyst was not
detected prior to his employment. Hence, Pedro
is not entitled to disability benefits. (Mario
Madridejos v. NYK-FIL Ship Management, Inc.,
G.R. No. 204262, June 7, 2017, as penned by J.
Leonen)
Q: Gonzales, while on board the general
cargo vessel Star Florida, experienced
"shortness of breath, pain in his left leg,
fatigue, fever and headaches." The following
month, his past symptoms returned with the
added symptom of black tarry stools. He was
initially diagnosed with "pancytopenia
suspect aplastic anemia." This caused his
further medical attention as Gonzales was
repatriated in the Philippines.
The company physicians opined that
Gonzales' leukemia was not work-related. He
sought a second opinion from an
independent physician, Dr. Emmanuel
Trinidad, who certified that his leukemia was
work-related. Gonzales claimed for disability
benefits against Grieg Philippines, Inc. but
denied the same on the ground that Gonzales
was not able to substantially prove the
relation between his illness and his former
position as an Ordinary Seaman.
Can Gonzales claim disability benefits against
Grieg Philippines, Inc.?
A: YES. 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 suffered by the seafarer. 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.
Gonzales was able to satisfy the conditions
under the Sec. 32-A of the 2000 POEA – Standard
Employment Contract and establish a reasonable
linkage between his job as an Ordinary Seaman
246
 Labor Law and Social Legislation
and his leukemia. Gonzales provided his
functions as an Ordinary Seaman aboard Star
Florida. Among others, his tasks included
removing rust accumulations and refinishing
affected areas of the ship with chemicals and
paint to retard the oxidation process. This meant
that he was frequently exposed to harmful
chemicals which could have also contributed to
Gonzales' leukemia.
It is also not disputed that he contracted
leukemia only while he was onboard Star Florida
since he was certified to be fit for sea duty prior
to boarding and his leukemia was not genetic in
nature. (Grieg Philippines, Inc. v. Michael John
Gonzales, G.R. No. 228296, July 26, 2017, as
penned by J. Leonen)
Q: Manansala’s services were engaged by
Marlow Navigation Phils., Inc, for him to
serve as a fitter on a vessel. Before boarding
the vessel, Manansala underwent a Pre-
Employment Medical Examination (PEME). In
his examination, Manansala was required to
disclose information regarding all existing
and prior medical conditions. Manansala's
examination certificate indicates that he
denied having hypertension and diabetes,
specifically answering "NO."
On May 30, 2010, while on board the vessel,
Manansala suffered a stroke. Because of this,
Manansala was repatriated on June 8, 2010.
He was confined at the De Los Santos Medical
Center from June 10, 2010 to June 23, 2010,
under the primary care of company-
designated physician, Dr. Barrairo. While
under Dr. Barrairo's care, he "repeatedly
denied that he had any past history of
diabetes and hypertension."
On Oct. 21, 2010, Manansala filed a
Complaint against the respondents for total
and permanent disability benefits. Two
months after he filed his Complaint, Dr. San
Luis, issued a medical opinion stating that
Manansala must be considered permanently
disabled. The same opinion indicated that
Manansala admitted to having had a long
history of hypertension and diabetes.
Is Manansala entitled to total and permanent
disability benefits occasioned by work-
related illnesses?
A: NO, Manansala is not entitled to total and
permanent disability benefits. Sec. 20 (E) of the
POEA-SEC bars the compensability of disability
247
arising from pre-existing illness when attended
by an employee’s fraudulent misrepresentation.
Petitioner knowingly and fraudulently
misrepresented himself as not afflicted with
hypertension and diabetes during his PENE and
after repatriation while being treated by the
company-designated physician. (Antonio
Manansala v. Marlow Navigation Phils., Inc., G.R.
No. 208314, Aug. 23, 2017, as penned by J.
Leonen)
When a Seafarer May Be Allowed to Pursue
and Action for Total or Permanent Disability
Benefits
The Court enumerated the following instances
when a seafarer may be allowed to pursue an
action for total and permanent disability
benefits, to wit:
1. 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;
2. 240 days had lapsed without any
certification issued by the company-
designated physician;
3. The company-designated physician
declared that he is fit for sea duty within
the 120-day or 240-day period, as the case
may be, but his physician of choice and the
doctor chosen under Sec. 20-B(3) of the
POEA-SEC are of a contrary opinion;
4. The company-designated physician
acknowledged that he is partially
permanently disabled but other doctors
who he consulted, on his own and jointly
with his employer, believed that his
disability is not only permanent but total as
well;
5. The company-designated physician
recognized that he is totally and
permanently disabled but there is a dispute
on the disability grading;
6. 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 Sec. 20-
 Social and Welfare Legislation
B(3) of the POEA-SEC found otherwise and
declared him unfit to work;
7. The company-designated physician
declared him totally and permanently
disabled but the employer refuses to pay
him the corresponding benefits; and
8. 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. (C.F. Sharp Crew
Management, Inc. v. Joel Taok, G.R. No.
193679, July 18, 2012)
Q: Mabunay was hired by Sharpe Sea as an
oiler for a period of nine (9) months. A day
after boarding, Mabunay slipped and hit his
back on the purifier, while he was cleaning.
When he awoke, his back was numb and he
had difficulty getting up. Despite the
persistent pain in his back, Mabunay
continued working for two (2) days, until the
Chief Engineer allowed him to have a medical
checkup when the ship docked in Nanjing,
China. He was declared unfit to work by his
attending physician and was eventually
repatriated.
On April 30, 2009, Mabunay reported to
Sharpe Sea's office and was told to report to a
company-designated physician. He was
diagnosed with "Cervical Spondylosis;
Thoracolumbar Spondylosis; and Mild
chronic compression fracture". The doctor
recommended that Mabunay undergo a
discectomy. On Nov. 24, 2009, Mabunay
underwent surgery and was observed that he
"tolerated the procedure well."
Mabunay filed a complaint against Sharpe
Sea, Monte Carlo, and Florem for the
payment of his total disability benefits
Mabunay sought the opinion of third doctor,
who opined that he was unfit to work as a
seaman in his present condition.
The LA ruled in Mabunay's favor and
directed Sharpe Sea to pay him permanent
and total disability benefits. It rejected
Sharpe Sea's claim that its company-
designated physicians assessed Mabunay
with a disability rating of Grade 8 since it was
not supported by the records. The NLRC
upheld the LA's findings that the records
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
were bereft of evidence to support Sharpe
Sea's claim.
On Nov. 29, 2011, the NLRC modified its
decision by reducing the award of
US$60,000.00 it earlier granted to Mabunay,
to US$16,795.00, corresponding to a Grade 8
disability rating. The NLRC noted that
Sharpe Sea attached a medical report dated
Aug. 18, 2009 from Dr. Cruz, which supported
its claim that a company-designated
physician had diagnosed Mabunay with a
Grade 8 disability. Is Mabunay entitled to
permanent and total disability benefits?
A: YES. With the company-designated
physicians' failure to issue either a fit-to-work
certification or a final disability rating within the
prescribed periods, respondent's disability was
rightfully deemed to be total and permanent.
A company-designated physician is expected to
come up with a definite assessment of a
seafarer's fitness or lack of fitness to work or to
determine the seafarer's degree of disability
within a period of 120 or 240 days from
repatriation. Clearly, Dr. Cruz, Dr. Castillo, or any
other company-designated physician failed to
issue respondent either a fit-to-work
certification or a final disability rating after his
operation and before the lapse of 240 days from
his repatriation.
Nonetheless, even if this Court accepted
petitioners' explanation on the belated
submission of the disability rating into evidence,
it is worthy to note that Dr. Cruz only issued an
interim disability rating. Magsaysay Maritime
Corp. stated that an interim disability grading is
merely an initial prognosis and does not provide
sufficient basis for an award of disability
benefits. (Sharpe Sea Personnel, Inc. v. Macario
Mabunay, Jr., G.R. No. 206113, Nov. 6, 2017, as
penned by J. Leonen)
Need for Definite Assessment Within
120/240 Days
The court summarized the rules regarding the
company-designated physician's duty to issue a
final medical assessment on the seafarer's
disability grading, 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 time the seafarer
reported to him;
248
 Labor Law and Social Legislation
2. If the company-designated fails to give his
assessment within the period of 120 days,
without any justifiable reason, then the
seafarer's disability becomes permanent
and total;
3. If the company-designated physician fails
to give his assessment within the 120 days
with a sufficient justification (e.g., seafarer
required 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 company-
designated physician has sufficient
justification to extend the period; and
4. If the company-designated physician still
fails to give his assessment within the
extended period of 240 days, then the
seafarer's disability becomes permanent
and total, regardless of any justification.
Case law states that without a valid final and
definitive assessment from the company-
designated physician within the 120/240-day
period, the law already steps in to consider
petitioner's disability as total and
permanent. Thus, a temporary total disability
becomes total and permanent by operation of
law. (Oscar Gamboa v. Maunlad Trans., Inc., G.R.
No. 232905, Aug. 20, 2018)
NOTE: A temporary total disability lasting
continuously for more than 120 days, except as
otherwise provided, is considered as a total and
permanent disability. The exception pertains to
a situation when the sickness "still requires
medical attendance beyond the 120 days but not
to exceed 240 days" in which case the temporary
total disability period is extended up to a
maximum of 240 days.
However, for the company-designated physician
to avail of the extended 240-day period, he must
first perform some significant act to justify an
extension; otherwise, the seafarer's disability
shall be conclusively presumed to be permanent
and total. (Talaroc v. Arpaphil Corporation, et. al.,
G.R. No. 223731, Aug. 30, 2017)
Q: Smith Bell Manning hired Esteva as a
seafarer for nine (9) months. He underwent
the prescribed medical examination and was
pronounced fit to work. While he was
onboard the vessel, Esteva began to suffer
severe back pains. He underwent x-ray and
was diagnosed with lumbar disc prolapse.
249
According to the Injury/Illness Report, his
condition required a specialist treatment and
possible operation. Dr. Watson declared
Esteva to have a temporary total disability
and unfit for work and recommended
immediate repatriation. Wilhelmsen Ship
Management also wrote a letter requesting
that Esteva be examined by the company-
designated physician in the Philippines.
Esteva returned to the Philippines and
reported to his employer.
The company-designated physician, Dr. Cruz-
Balbon, issued a Medical Certificate
indicating that Esteva was given medications
for Pott's disease, a form of tuberculosis of
the spine. She prescribed that Esteva take at
least one (1) year of treatment.
In the Medical Certificate, Esteva's suggested
disability grading was Grade 8, with 2/3 loss
of lifting power. Esteva consulted another
doctor, Dr. Reyes-Paguia, who issued another
Medical Certificate. Esteva consulted another
doctor, Dr. Raymundo, an orthopedic
surgeon. The physician issued a Medical
Report which showed Esteva to be
ambulatory but walking with a limp and his
condition will no longer allow him to return
as an able-bodied seaman.
Is Esteva entitled to total disability benefits?
A: YES. The entitlement of an overseas seafarer
to disability benefits is governed by law, the
employment contract, and the medical findings.
Sec. 20, (3) of the POEA Standard Employment
Contract states that “. . . 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 shall be final and binding on both
parties.”
The assessment referred to in this provision is
the declaration of fitness to work or the degree
of disability. It presupposes that the company-
designated physician came up with a valid, final,
and definite assessment on the seafarer's fitness
to work before the 120-day or 240-day period
expires. The SC has held that despite the
wording of the provision in Sec. 20 of the POEA
Standard Employment Contract, the referral of a
disputed medical assessment to a third doctor is
mandatory.
However, as the one contesting the company-
designated physician's findings, it is the
 Social and Welfare Legislation
seafarer's duty to signify the intention to resolve
the conflict through the referral to a third
doctor. If the seafarer' does not contest the
findings and fails to refer the assessment to a
third doctor, "the company can insist on its
disability rating even against a contrary opinion
by another physician." Securing a third doctor's
opinion is the duty of the employee, who must
actively or expressly request for it. (Esteva v.
Wilhelmsen Smith Bell Manning, et al., G.R. No.
225899, July 10, 2019, as penned by J. Leonen)
Q: Jara was hired by Orient Hope as an engine
cadet on board M/V Orchid Sun. On its way to
Oman, M/V Orchid Sun sank off Muscat on
July 12, 2007. Jara sustained leg injuries. On
May 29, 2008, the company-designated
physician suggested that his disability
grading is Grade 11.
On March 6, 2008, Jara filed a complaint with
the Labor Arbiter, insisting that he was
entitled to total permanent disability
benefits amounting to US$60,000.00. Is Jara
entitled to permanent and total disability
compensation considering that there was a
Grade 11 disability grading given by the
company-designated physician?
A: YES. Jara is entitled to permanent and total
disability compensation despite the Grade 11
disability grading given by the company-
designated physician. The Court finds that the
company-designated physician’s failure to issue
a final and definitive medical assessment within
the 240-day extended period transformed the
respondent’s disability to permanent and total.
In Island Overseas Transport Corporation v. Beja,
this Court clarified that: If the maritime
compensation complaint was filed prior to Oct.
6, 2008, the rule on the 120-day period, during
which the disability assessment should have
been made in accordance with Crystal Shipping,
Inc. v. Natividad, that is, the doctrine then
prevailing before the promulgation of Vergara
on Oct. 6, 2008, stands; if, on the other hand, the
complaint was filed from Oct. 6, 2008 onwards,
the 240-day rule applies. (Orient Hope Agencies,
Inc. v. Michael Jara, G.R. No. 204307, June 6, 2018,
as penned by J. Leonen)
Third-Doctor Referral
If the physician appointed by the seafarer
disagrees with the company-designated
physician's assessment, the opinion of a third
doctor may be agreed jointly between the
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
employer and the seafarer to be the decision
final and binding on them. Non-compliance with
this procedure would lead to the conclusion that
the determination of the company-designated
physician would prevail. (Jakerson Gargallo v.
Dohle Seafront Crewing, G.R. No. 215551, Aug. 17,
2016)
Q: After suffering an Epileptic Seizure with
post-fit neurological deficit, Atraje was
repatriated back to the Philippines and was
referred to the company-designated doctor
for further medical evaluation and
treatment. After completing his treatment,
Atraje continued to suffer from shoulder and
neck pain. Thus, he consulted an
independent specialist who declared him
permanently unfit to resume his duties as a
seaman.
Atraje later filed a complaint for permanent
and total disability benefits against his
employers. The latter argued that since
Atraje failed to comply with the third doctor
rule, the assessment of the company-
designated doctor should prevail.
Meanwhile, the Panel of Voluntary
Arbitrators noted that while Atraje initiated
submitting to examination by a third doctor,
there was silence on the part of his
employers. Hence, it held that Atraje could
not be faulted anymore if the appointment of
a third physician was deemed waived in this
case.
Does non-compliance with the third doctor
rule prejudice Atraje’s claim for disability
benefits?
A: NO. Under Sec. 20(A)(3) of the 2010 POEA-
SEC, “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
shall be final and binding on both parties.” The
assessment refers to the declaration of fitness to
work or the degree of disability, as can be
gleaned from the first paragraph of Sec.
20(A)(3). It presupposes that the company-
designated physician came up with a valid, final,
and definite assessment on the seafarer’s fitness
or unfitness to work before the expiration of the
120- or 240-day period.
In this case, the third doctor-referral provision
does not apply because there is no definite
disability assessment from the company-
250
 Labor Law and Social Legislation
designated physicians. (Magsaysay Mol Marine,
Inc. v. Atraje, G.R. No. 229192, July 23, 2018, as
penned by J. Leonen)
Q: Gallano was employed by Philsynergy. He
was declared fit for duty during the pre-
employment medical examination. While in
the performance of his duties, Gallano felt a
sudden numbness on the left side of his body
and noticed that his speech was slurred.
Gallano took on an Isordil tablet which he
personally brought to the vessel. On the next
day his symptoms recurred, but which did
not improve despite taking another dose of
Isordil. This prompted Gallano to be brought
to a hospital in New Caledonia. Gallano was
eventually repatriated on Oct. 23, 2012
because of his hypertension.
In a Medical Report dated March 9, 2013, the
physician assessed that Gallano is getting
better. Gallano claiming that his physical
condition did not improve, and more than
120 days has lapsed from the time he was
repatriated, sought for the payment of total
disability benefits. Philsynergy denied the
claim and raised that Gallano fraudulently
concealed a pre-existing medical condition
on the basis he has brought Isordil along.
Philsynergy further raised the issue that
Gallano did not contest the medical report
dated March 9, 2013 by resorting to the joint
appointment of a third doctor.
1. Is the disability pre-existing?
2. Is the failure to resort to a third-party
doctor estoppel?
A:
1. NO, to be considered pre-existing, any of
the following requirements should be
present: (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.
Isordil is not a medication directly used for
hypertension, which illness Philsynergy
claims Gallano to be suffering from prior to
his engagement, as well as the reason for
his repatriation. Hypertension could have
been easily detected by standard/routine
tests conducted during the said
examination. However, Gallano's PEME
showed normal blood pressure with no
251
heart problem, which led the company-
designated physician to declare him fit for
sea duty.
2. NO, absent a certification from the
company-designated physician, the
seafarer has nothing to contest and the law
steps in to conclusively characterize his
disability as total and permanent. In this
case, there is no showing that respondent
received a timely conclusive and definitive
assessment of his ailment. As borne from
the records, the company-designated
physician's last medical report was issued
on March 9, 2013, 65 or way beyond the
120-day period reckoned from the time of
respondent's repatriation on Oct. 23, 2012.
Q. Teodoro Ventura, Jr. was employed by
Crewtech Shipmanagement Philippines, Inc.,
for its principal, as Chief Cook on board the
vessel MV Maria Cristina Rizzo. Ventura
complained that he was having a hard time
urinating that was accompanied by lower
abdominal pain. He was medically
repatriated and referred to the company-
designated physician who diagnosed
Ventura's illnesses to be "Cystitis with
Cystolithiases and Benign Prostatic
Hyperplasia (BPH)," which he declared to be
not work-related.
Prior to the expiration of the 240-day period
reckoned from his repatriation, Ventura
claimed that he was verbally informed by the
company-designated physician that it would
be his last check-up session and that
subsequent consultations would be for his
own account. Ventura was compelled to seek
an independent physician of his choice, Dr.
Tan, who declared him to be permanently
disabled.
Ventura filed a complaint for total
permanent disability benefits. Crewtech
argued that the failure to observe the
procedure for the joint appointment of a
third doctor negates the claim for the
disability benefits. Is Ventura entitled?
A. NO. While the seafarer is not irrevocably
bound by the findings of the company-
designated physician as he is allowed to seek a
second opinion and consult a doctor of his
choice, Sec. 20 (A)(3) thereof further provides
that any disagreement in the findings may be
referred to a third doctor jointly agreed upon by
the parties, whose findings shall be final and
 Social and Welfare Legislation
binding between them. The non-observance of
the requirement to have the conflicting
assessments determined by a third doctor would
mean that the assessment of the company-
designated physician prevails.
Considering that Ventura failed to observe the
conflict-resolution procedure provided under
the 2010 POEA-SEC, the Court is inclined to
uphold the opinion of the company-designated
physician that Ventura's illnesses were not
work-related, hence, not compensable.
Q: Toquero was employed by Crossworld as a
fitter for a vessel for seven (7) months. He
underwent a pre-employment medical
examination and was declared fit for sea
duty. While on board the vessel, Toquero was
assaulted by his fellow seafarer, Fong.
According to Toquero, he and Fong were
instructed by the master of the vessel to
check and repair a generator. While
repairing, Toquero advised Fong not to
remove the flanges which his irked Fong, and
recalled their prior altercation and
challenged him to a fistfight. He ignored Fong
and continued working when suddenly Fong
hit the back of his head with a large metal
spanner, knocking him unconscious. He was
given first aid treatment at the ship clinic,
where his vital signs were monitored.
Toquero's assessment showed that his
physical discomfort was due to trauma and
skull defect. His Medical Evaluation Report
read that Toquero became incapacitated
because of the serious head injury that he
incurred on board; he has a large bone defect
which may pose further damage to his brain;
contusion of the brain tissue also occurred at
the site of the skull fracture. At this time, he
is no longer allowed to engage in heavy
physical activities. The ship's environment is
also dangerous to him because of the
unsteady state of the vessel when sailing at
high seas. Dizziness may set anytime and
may result to fall, which may cause further
irreparable injury.
Because of the impediment, he is
permanently unfit to return to work as a
seaman in any capacity and considered for
total permanent disability. Is Toquero's
injury compensable?
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
A: YES. A disability is compensable under the
POEA Standard Employment Contract if two (2)
elements are present:
1. The injury or illness must be work-related;
and
2. The injury or illness must have existed
during the term of the seafarer's
employment contract.
Hence, a claimant must establish the causal
connection between the work and the illness or
injury sustained.
Here, the two (2) elements of a work-related
injury are present. Not only was petitioner's
injury work-related, it was sustained during the
term of his employment contract. His injury,
therefore, is compensable.
Respondents' argument that the claim is
precluded because the injury is due to the willful
acts of another seafarer is untenable. The POEA
Standard Employment Contract disqualifies
claims caused by the willful or criminal act or
intentional breach of duties done by the
claimant, not by the assailant. It is highly unjust
to preclude a seafarer's disability claim because
of the assailant's willful or criminal act or
intentional breach of duty. (Toquero v.
Crossworld Marine Services, et al., G.R. No.
213482, June 26, 2019, as penned by J. Leonen)
DEATH BENEFITS
Death Benefit Under Sec. 20(B) of the 2010
POEA-SEC:
GR: The seafarer’s death should occur during the
term of his employment.
XPN: The seafarer’s death occurring after the
termination of his employment due to his
medical repatriation on account of a work-
related injury or illness. This is based on a liberal
construction of the 2000 POEA-SEC as impelled
by the plight of the bereaved heirs who stand to
be deprived of a just and reasonable
compensation for the seafarer’s death,
notwithstanding its evident work-connection.
In case of work-related death of the seafarer,
during the term of his contract
The Er shall pay his beneficiaries the Philippine
currency equivalent to:
252
 Labor Law and Social Legislation
1. The amount of Fifty Thousand US dollars
(US$50,000); and
2. An additional amount of Seven Thousand
US dollars (US$7,000) to each child under
the age of twenty-one (21) but not
exceeding four (4) children, at the
exchange rate prevailing during the time of
payment. [Sec. 20(b-1), 2010 POEA – SEC]
Where death is caused by warlike activity
while sailing within a declared war zone or
war risk area
The compensation payable shall be doubled. The
employer shall undertake appropriate war zone
insurance coverage for this purpose.
NOTE: It is understood and agreed that the
benefits mentioned above shall be separate and
distinct from, and will be in addition to whatever
benefits which the seafarer is entitled to under
Philippine laws from the SSS, OWWA, ECP, PHIC
and Home Development Mutual Fund (Pag-IBIG
Fund). [Sec. 20(b-2), 2010 POEA – SEC]
Other liabilities of the Er when the seafarer
dies as a result of work – related injury or
illness during the term of employment
1. The employer shall pay the deceased’s
beneficiary all outstanding obligations due
the seafarer under this Contract.
2. The employer shall transport the remains
and personal effects of the seafarer to the
Philippines at employer’s expense except if
the death occurred in a port where local
government laws or regulations do not
permit the transport of such remains.
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/master shall
communicate with the manning agency to
advise for disposition of seafarer’s remains.
3. The employer shall pay the beneficiaries of
the seafarer the Philippine currency
equivalent to the amount of One Thousand
US dollars (US$1,000) for burial expenses
at the exchange rate prevailing during the
time of payment.
253
When is there no compensation and benefits
to be payable in respect of an injury,
incapacity, disability or death of a seafarer
No compensation and benefits shall be payable
in respect of any injury, incapacity, disability or
death of the seafarer when it is the result of his:
1. Willful or criminal act; or
2. Intentional breach of his duties
Provided, that the employer can prove that such
injury, incapacity, disability or death is directly
attributable to the seafarer.
Q: Rodolfo L. Racelis was recruited and hired
by respondent United Philippine Lines, Inc.
(UPL) for its principal, respondent Holland
America Lines, Inc. (HAL) to serve as "Demi
Chef De Partie" on board the vessel MS
Prinsendam.
In the course of his last employment
contract, Rodolfo experienced severe pain in
his ears and high blood pressure causing him
to collapse while in the performance of his
duties. He consulted a doctor in Argentina
and was medically repatriated on for further
medical treatment.
Upon arrival in Manila, he was immediately
brought to Medical City, Pasig City, where he
was seen by a company-designated
physician, Dr. Gerardo Legaspi, and was
diagnosed to be suffering from Brainstem
(pontine) Cavernous Malformation. He
underwent surgery twice for the said ailment
but developed complications and died.
Rodolfo’s surviving spouse sought to claim
death benefits but to no avail.
Is petitioner entitled to death benefits?
A: YES. Among other basic provisions, the POEA-
SEC stipulates that the beneficiaries of a
deceased seafarer may be able to claim death
benefits for as long as they are able to establish
that (a) the seafarer’s death is work-related, and
(b) such death had occurred during the term of
his employment contract.
While it is true that Brainstem (pontine)
Cavernous Malformation is not listed as an
occupational disease under Sec. 32-A of the 2000
POEA-SEC, Sec. 20 (B) (4) of the same explicitly
provides that “[t]he liabilities of the employer
when the seafarer suffers work-related injury or
illness during the term of his contract are as
 Social and Welfare Legislation
follows: those illnesses not listed in Sec. 32 of
this Contract are disputably presumed as work
related.”
Also, while the general rule is that the seafarer’s
death should occur during the term of his
employment, the seafarer’s death occurring after
the termination of his employment due to his
medical repatriation on account of a work-
related injury or illness constitutes an exception
thereto.
Invalid Side Agreement
An agreement that diminishes an employee’s
pay and benefits as contained in the POEA-
approved contract is void, unless such
subsequent agreement is approved by the POEA.
(Azucena, Vol. 1, 2016, p. 69)
Period to File OFW Claims
The POEA-SEC states in Sec. 28 that claims
under the contract shall be filed within 1 year
from the date of the seafarer’s return to the
point of hire. On the other hand, Art. 291 of the
LC provides for 3 years to file money claims
arising from employer-employee relations. The
LC provision prevails over Sec. 28 of the SEC and
the latter is declared “null and void.” (Azucena,
Vol. 1, 2016, p. 70)
Q: On Feb. 28, 2006, Magsaysay Maritime
Corporation (Magsaysay), the local manning
agent of Princess Cruise Lines, Limited, hired
Bernardine De Jesus as an Accommodation
Supervisor for the cruise ship Regal Princess.
On March 9, 2006, Bernardine boarded Regal
Princess and he eventually disembarked 10
months later, or on Jan. 16, 2007, after his
contract of employment ended. Bernardine
was soon diagnosed with Aortic Aneurysm
and on March 15, 2007, he had a coronary
angiography.
On March 21, 2007, he underwent a Left
Axillofemoral Bypass. He died on March 26,
2007. Cynthia, Bernardine’s widow claimed
that her husband suffered chest pains while
he was still aboard the Regal Princess. She
claimed that he had reported his condition,
but he was not provided with medical
attention. Furthermore, he had also asked for
medical attention upon his repatriation, but
his request was once again denied.
Is Bernardine’s widow is entitled to death
benefits?
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
A: YES, Bernardine's widow is entitled to death
benefits. Sec. 20 (A) of the POEA-SEC requires
that for a seafarer to be entitled to death
benefits, he must have suffered a work-related
death during the term of his contract.
However, Sec. 32-A of the POEA-
SEC acknowledges the possibility of
"compensation for the death of the seafarer
occurring after the employment contract on
account of a work-related illness" as long as the
following conditions are met:
1. The seafarer's work must involve the risks
described herein;
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 contract it;
4. There was no notorious negligence on the
part of the seafarer.
Both labor tribunals found that Bernardine first
experienced chest pains while he was still
onboard the cruise ship, i.e., during the term of
his employment contract. It was likewise
established that while Bernardine requested
medical attention when he started to feel ill and
upon his repatriation, his requests were
repeatedly ignored.
This Court concurs with the Labor Arbiter's
observation that it was improbable for
Bernardine to have developed and died from a
cardio-vascular disease within the two (2) short
months following his repatriation. (Magsaysay
Maritime Corporation v. Cynthia De Jesus, G.R. No.
203943, Aug. 30, 2017, as penned by J. Leonen)
254
 Labor Law and Social Legislation

Service Paternity Parental VAWC Gynecological Maternity

Incentive Leave Leave (Solo Leave Leave (Magna (SSS)
Leave (LC) (Paternity Parents’ Carta for
Leave Act) Welfare Women)
Act)
5 days 7 days with 7 days 10 days 2 months/60 105 days for
full pay days with full normal or
pay caesarian
Period section delivery
120 days for
solo parents or
60 days for
miscarriage or
emergency.
Who is Male/female Male Male/ Female Female Female
entitled employee female
Is Yes No No No
commuta
tion
allowed?
a. Leave Leave; can Leave Leave Leave Leave
b. Monetary be availed
Ways of commutation of before,
enjoying c. Equivalent during, or
of after
accumulated childbirth
leaves after
retirement
Has rendered First four Solo parent Must be a. Employment See discussion
at least 1 year deliveries who has a victim service of at on SSS
of service of the rendered at least 6 months
legitimate least 1 year b. Must have
Requirem spouse of service had surgery
ents with whom caused by
he is gynecological
cohabiting disorders

255
 Social and Welfare Legislation
SOLO PARENTS’ WELFARE ACT
R.A. No. 8972
Construction
These Rules shall be liberally construed in favor
of the solo parent and applied in accordance
with and in furtherance of the policy and
objectives of the law. (Sec. 3, Art. I, IRR, RA 8972)
DEFINITION OF SOLO PARENT
A solo parent is any individual who falls under
any of the following categories:
1. A woman who gives birth as a result of rape
and other crimes against chastity even
without a final conviction of the offender:
Provided, That the mother keeps and raises
the child;
2. Parent left solo or alone with the
responsibility of parenthood due to death of
spouse;
3. Parent left solo or alone with the
responsibility of parenthood while the
spouse is detained or is serving sentence for
a criminal conviction for at least one (1)
year;
4. Parent left solo or alone with the
responsibility of parenthood due to physical
and/or mental incapacity of spouse as
certified by a public medical practitioner;
5. Parent left solo or alone with the
responsibility of parenthood due to legal
separation or de facto separation from
spouse for at least one (1) year, as long as
he/she is entrusted with the custody of the
children;
6. Parent left solo or alone with the
responsibility of parenthood due to
declaration of nullity or annulment of
marriage as decreed by a court or by a
church as long as he/she is entrusted with
the custody of the children;
7. Parent left solo or alone with the
responsibility of parenthood due to
abandonment of spouse for at least one (1)
year;
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
8. Unmarried mother/father who has
preferred to keep and rear her/his
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;
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. (Sec. 3(a), RA 8972)
Change in status
A change in the status or circumstance of the
parent claiming benefits under this Act, such
that he/she is no longer left alone with the
responsibility of parenthood, shall terminate
his/her eligibility for these benefits. [Sec. 3(a),
RA 8972]
Children
Children refer to those living with and
dependent upon the solo parent for support who
are unmarried, unemployed and not more than
eighteen (18) years of age, or even over eighteen
(18) years but are incapable of self-support
because of mental and/or physical
defect/disability. [Sec. 3(b), RA 8972]
Criteria for Support
Any solo parent whose income in the place of
domicile falls below the poverty threshold as set
by the National Economic and Development
Authority (NEDA) and subject to the assessment
of the DSWD worker in the area shall be eligible
for assistance. (Sec. 4, RA 8972)
A Solo Parent can directly inquire from the
following agencies to avail of their services:
1. DOH (Health Services)
2. CHED, TESDA (Educational Services)
3. NHA (Housing)
4. Employer, DOLE, CSC (Parental Leave)
A solo parent whose income is above the poverty
threshold shall enjoy only such limited benefits
as flexible work schedule, parental leave and
others to be determined by the DSWD.
Qualifications of Solo Parent
256
 Labor Law and Social Legislation
A solo parent shall be qualified on the basis of
the following:
1. A resident of the area where the assistance
is sought, as certified by the barangay
captain;
If the solo parent is a transferee from
another barangay, he/she is required to
secure a clearance from his/her previous
barangay, indicating whether or not he/she
has availed of any benefits for solo parents,
and the nature of such benefits.
2. With an income level equal to or below the
poverty threshold as set forth by NSCB and
assessed by a social worker. (Sec. 8, IRR, RA
8972)
Assessment by Social Worker
An applicant who manifests the need for
assistance under the Act is subject to assessment
by a social worker at the city/municipal Social
Welfare and Development Office. The
assessment shall cover, but not be limited to, the
following:
1. Determination of the applicant's category;
2. Evaluation of the needs of the applicant
and his/her children as basis for provision
of the appropriate service and
intervention;
3. Identification of the level of readiness of
the applicant to receive a particular
service/assistance, which shall serve as
basis for the conduct of social preparation
activities prior to the provision of such
service/assistance; and
4. Identification of existing and potentially
available resources that may support the
applicant and his/her children. (Sec. 9, IRR,
RA 8972)
Solo Parent Identification Card
Upon the favorable evaluation of the social
worker, a Solo Parent Identification Card shall
be issued to the solo parent within 30 days upon
application duly signed by the city/municipal
Social Welfare Officer and the city/municipal
mayor. The Solo Parent Identification Card is
necessary for the availment of benefits under the
Act and these Rules. [Sec. 10(g), IRR, RA 8972]
The Identification Card shall cease to be effective
upon the lapse of one year from issuance, unless
renewed based on a new assessment and
evaluation. Failure to renew will mean that
257
he/she has changed his/her status as a solo
parent. [Sec. 12(b), IRR, RA 8972]
Termination of Benefits
1. A solo parent shall manifest to the Social
Welfare Office his/her intention to
withdraw the availment of the benefits.
2. If the solo parent does not voluntarily
manifest his/her intention to terminate
benefits before the lapse of one year from
the issuance of the Solo Parent I.D., the
Social Worker, based on a report by the
employer or any interested person, shall
conduct the necessary assessment/
evaluation to ascertain if grounds for
termination and withdrawal of benefits
exist.
3. The solo parent shall be informed of the
result of the assessment/evaluation and
termination of the service, if warranted,
through written notice. The termination
shall take effect 30 days from the receipt of
the notice of termination. In cases when the
service cannot be terminated in a period of
one month, e.g., schooling, the service shall
be completed until its due time.
4. The solo parent and his/her children shall
undergo psychosocial counseling with the
social worker to prepare them for
independent living.
NOTE: The termination of said benefits shall be
without prejudice to re-application should the
circumstances so warrant. [Sec. 12(a), (b), (c), &
(d), IRR, RA 8972]
Relocation of the Family
In the event a solo parent decides to relocate
his/her family, he/she shall inform the
city/municipal Social Welfare and Development
Office. Said office shall thereupon transmit the
records to the city/municipal Social Welfare and
Development Office of the place of relocation.
(Sec. 13, IRR, RA 8972)
BENEFITS AVAILABLE TO A SOLO PARENT
1. Flexible work schedule (Sec. 6);
2. Protection against discrimination (Sec. 7);
3. Parental leave of not more than seven (7)
days (Sec. 8);
4. Educational benefits (Sec. 9);
 Social and Welfare Legislation
5. Housing benefits on liberal terms in low-
cost government housing (Sec. 10);
6. Medical assistance (Sec. 11).
Flexible Work Schedule
A flexible work schedule refers to 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. [Sec. 3(e), RA 8972]
The employer shall provide for a flexible work
schedule for solo parents: Provided, That the
same shall not affect individual and company
productivity: Provided further, That any
employer may request exemption from the
above requirements from the DOLE on certain
meritorious grounds. (Sec. 16, IRR, RA 8972)
PARENTAL LEAVE FOR SOLO PARENTS
Parental Leave for Solo Parents
Parental leave of not more than seven (7)
working days every year shall be granted to any
solo parent employee who has rendered service
of at least one (1) year. The seven-day parental
leave shall be non-cumulative. (Sec. 18, IRR, RA
8972)
In the event that the parental leave is not availed
of, said leave shall not be convertible to cash
unless specifically agreed upon previously. (Sec.
20, IRR, RA 8972)
Conditions for Entitlement to Parental Leave
1. The solo parent must have rendered at
least one year of service, whether
continuous or broken;
2. The solo parent must give notice to the
employer of the availment thereof within
a reasonable time period; and
3. The solo parent must present his Solo
Parent Identification Card to the employer.
(Sec. 19, IRR, RA 8972)
Housing Benefits for Solo Parents
Solo parents who meet the eligibility criteria for
housing assistance shall be provided with liberal
terms of payment on government low-cost
housing projects, in accordance with housing
law provisions, prioritizing applicants below the
poverty line as declared by the NSCB. (Sec. 23,
IRR, RA 8972)
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
The NHA shall make available housing units to
solo parents in its housing projects subject to
existing disposition policies or may refer them to
other housing projects, as appropriate, provided
that:
a. The identified solo parent must be eligible
for assistance under the provisions of this
Act;
b. Solo parents applying for housing benefits
must meet the qualification criteria for
housing assistance under RA 7279, or the
Urban Development and Housing Act
(UDHA) and other NHA eligibility criteria
under existing policies, rules and
regulations; and
c. Eligible solo parents shall file their
application for housing unit directly with
the concerned NHA Project Offices. (Sec. 24,
IRR, RA 8972)
Educational Benefits
The DepEd, CHED and TESDA shall provide the
following benefits and privileges:
a. Scholarship programs for qualified solo
parents and their children in institutions of
basic, tertiary and technical/skills
education;
b. Non-formal education programs
appropriate for solo parents and their
children. (Sec. 22, IRR, RA 8972)
Medical Assistance for Solo Parents
The DOH shall develop a comprehensive health
care program for solo parents and their children.
The program shall be implemented by the DOH
through their retained hospitals and medical
centers and the LGUs through their
provincial/district/city/municipal hospitals and
rural health units. (Sec. 25, IRR, RA 8972)
BATAS KASAMBAHAY
R.A. No. 10361
See Batas Kasambahay under Labor Standards –
Special Groups of Employees.
258
 Labor Law and Social Legislation
personally with the aid of labor available from
AGRARIAN RELATIONS members of his immediate farm household, and
the produce thereof to be divided between the
landholder and the tenant in proportion to their
respective contributions.
Agrarian Reform
Rights of the Agricultural Tenants
Agrarian Reform covers the redistribution of
lands, regardless of crops or fruits produced to
1. The tenant shall be free to work elsewhere
farmers and regular farmworkers who are
whenever the nature of his farm
landless, irrespective of tenurial arrangement, to
obligations warrants his temporary
include the totality of factors and support
absence from his holdings;
services designed to lift the economic status of
the beneficiaries and all other arrangements
2. The tenant shall, aside from his labor, have
alternative to the physical redistribution of
the right to provide any of the
lands, such as production or profit-sharing, labor
contributions for production whenever he
administration, and the distribution of shares of
can do so adequately and on time subject to
stocks, which will allow beneficiaries to receive a
the provisions of Sec. 14 of this Act;
just share of the fruits of the lands they work.
[Sec. 3(a), RA 6657, as amended by RA 9700]
3. The tenant shall have the right to demand
for a home lot suitable for dwelling with an
Agricultural Tenancy
area of not more than 3% of the area of his
landholding; provided, that it does not
Agricultural tenancy is the physical possession
exceed 1,000 square meters and that it
by a person of land devoted to agriculture
shall be located at a convenient and
belonging to, or legally possessed by, another for
suitable place within the land of the
the purpose of production through the labor of
landholder to be designated by the latter
the former and of the members of his immediate
where the tenant shall construct his
farm household, in consideration of which the
dwelling and may raise vegetables, poultry,
former agrees to share the harvest with the
pigs, and other animals, and engage in
latter, or to pay a price certain or ascertainable,
minor industries, the products of which
either in produce or in money, or in both. (Sec. 3,
shall accrue to the tenant exclusively.
RA 1199, as amended by RA 2263)
The tenant’s dwelling shall not be removed
Classifications
from the lot already assigned to him by the
landholder, except as provided in Sec. 26,
Agricultural tenancy is classified into:
unless there is a severance of the tenancy
relationship between them as provided
1. Leasehold tenancy; and
under Sec. 9, or unless he is ejected for
2. Share tenancy.
cause, and only after the expiration of
forty-five (45) days following such
Leasehold tenancy exists when a person who,
severance of relationship or dismissal for
either personally or with the aid of labor
cause; and
available from members of his immediate farm
household, undertakes to cultivate a piece of
4. The tenant shall have the right to be
agricultural land susceptible of cultivation by a
indemnified for his labor and expenses in
single person together with members of his
the cultivation, planting, or harvesting and
immediate farm household, belonging to or
other incidental expenses for the
legally possessed by another in consideration of
improvement of the crop raised in case he
a fixed amount in money or in produce, or in
is dispossessed of his holdings whether
both. (Sec. 4, RA 1199, as amended by Sec. 1, RA
such dismissal is for a just cause or not,
2263)
provided the crop still exists at the time of
the dispossession. (Sec. 22, RA 1199, as
Share tenancy exists whenever two persons
amended by Sec. 5, RA 2263)
agree on a joint undertaking for agricultural
production wherein one party furnishes the land
Farmworkers
and the other his labor, with either or both
contributing any one or several of the items of
production, the tenant cultivating the land

259
 Social and Welfare Legislation
A Farmworker is a natural person who renders
services for value as an employee or laborer in
an agricultural enterprise or farm regardless of
whether his compensation is paid on a daily,
weekly, monthly or “pakyaw” basis.
The term includes an individual whose work has
ceased as a consequence of, or in connection
with, a pending agrarian dispute and who has
not obtained a substantially equivalent and
regular farm employment. Such farmworker is
further classified into the following:
1. Regular Farmworker is a natural person
who is employed on a permanent basis by
an agricultural enterprise or farm.
2. Seasonal Farmworker is a natural person
who is employed on a recurrent, periodic
or intermittent basis by an agricultural
enterprise or farm, whether as a
permanent or a non-permanent laborer,
such as “dumaan”, “sacada”, and the like.
3. Other Farmworker is a farmworker who
does not fall within the abovementioned
classifications. [Sec. 3(g)(h)(i)(j), RA 6657,
as amended by RA 9700]
UNIVERSAL HEALTH CARE LAW
R.A. No. 11223
Policy
It is the policy of the State to protect and
promote the right to health of all Filipinos and
instill health consciousness among them.
Towards this end, the State shall adopt:
1. An integrated and comprehensive
approach to ensure that all Filipinos are
health literate, provided with healthy
living conditions, and protected from
hazards and risks that could affect their
health;
2. A health care model that provides all
Filipinos access to a comprehensive set of
quality and cost-effective, promotive,
preventive, curative, rehabilitative, and
palliative health services without causing
financial hardship, and prioritizes the
needs of the population who cannot afford
such services;
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
3. A framework that fosters a whole-of-
system, whole-of-government, and whole-
of-society approach in the development,
implementation, monitoring, and
evaluation of health policies, programs,
and plans; and
4. A people-oriented approach for the
delivery of health services that is centered
on people’s needs and well-being, and
cognizant of the differences in culture,
values, and beliefs.
Coverage
1. Population Coverage – Every Filipino citizen
shall be automatically included into the National
Health Insurance Program (NHIP), hereinafter
referred to as the Program (Sec. 5, RA 11223)
2. Service Coverage –
a. Every Filipino shall be granted
immediate eligibility and access to
preventive, promotive, curative,
rehabilitative, and palliative care for
medical, dental, mental and emergency
health services, delivered either as
population-based or individual-based
health services: Provided, That the
goods and services to be included shall
be determined through a fair and
transparent HTA process;
b. Within two (2) years from the effectivity
of this Act, PhilHealth shall implement a
comprehensive outpatient benefit,
including outpatient drug benefit and
emergency medical services in
accordance with the recommendations
of the Health Technology Assessment
Council (HTAC) created under Sec. 34
hereof;
c. The DOH and the local government units
(LGUs) shall endeavor to provide a
health care delivery system that will
afford every Filipino a primary care
provider that would act as the
navigator, coordinator, and initial and
continuing point of contact in the health
care delivery system: Provided, That
except in emergency or serious cases
and when proximity is a concern, access
to higher levels of care shall be
coordinated by the primary care
provider; and
260
 Labor Law and Social Legislation
d. Every Filipino shall register with a
public or private primary care provider
of choice. The DOH shall promulgate the
guidelines on the licensing of primary
care providers and the registration of
every Filipino to a primary care
provider (Sec. 6, RA 11223).
3. Financial Coverage –
a. Population-based health services shall be
financed by the National Government
through the DOH and provided free of charge
at point of service for all Filipinos.
b. The National Government shall support LGUs
in the financing of capital investments and
provision of population-based
c. Interventions.Individual-based health services
shall be financed primarily through
prepayment mechanisms such as social
health insurance, private health insurance,
and HMO plans to ensure predictability of
health expenditures. (Sec. 7, RA 11223)
National Health Insurance Program
Types of Members
1. Direct contributors refer to those who
have the capacity to pay premiums, are
gainfully employed and are bound by an
employer-employee relationship, or are
self-earning, professional practitioners,
migrant workers, including their qualified
dependents, and lifetime members (Sec.
4(f), RA 11223); and
2. Indirect contributors refer to all others
not included as direct contributors, as well
as their qualified dependents, whose
premium shall be subsidized by the
national government including those who
are subsidized as a result of special laws.
(Sec. 4(o), RA 11223)
Contributors’ Qualified Dependents
1. Legal spouse who is not an active member;
2. Unmarried and unemployed legitimate,
illegitimate children, and legally adopted or
stepchildren below twenty-one (21) years
of age;
3. Foster children; and
4. Parents who are sixty (60) years old and
above, not otherwise members. (Sec. 8.1, RA
11223, IRR)
261
Direct contributors shall be composed of, but
not limited to, the following:
1. Employees with formal employment
characterized by the existence of an
employer-employee relationship, which
include workers in the government and
private sector, whether regular, casual, or
contractual, are occupying either an
elective or appointive position, regardless
of the status of appointment, whose
premium contribution payments are
equally shared by the employee and the
employer;
2. Kasambahays
3. All other workers who are not covered by
formal contracts or agreements or who
have no employee-employer relationship
and whose premium contributions are self-
paid, and with capacity to pay premiums,
such as the following:
a. Self-earning individuals; and
b. Professional practitioners.
4. Overseas Filipino Workers, such as, but
not limited to:
a. Sea-based Filipino workers or
seafarers; and
b. Land-based overseas Filipino
workers;
5. Filipinos living abroad;
6. Filipinos with dual citizenship;
7. Lifetime members as defined in RA 10606
(National Health Insurance Act); and
8. All Filipinos aged 21 years and above who
have the capacity to pay premiums. (Sec. 8.2,
IRR of RA 11223)
Indirect contributors shall be composed of, but
not limited to, the following:
1. Indigents identified by the DSWD;
2. Beneficiaries of Pantawid Pamilyang
Pilipino Program/Modified Conditional
Cash Transfer (4Ps/MCCT);
3. Senior citizens who are not currently
covered by the Program;
4. Persons with disability;
 Social and Welfare Legislation
5. All Filipinos aged 21 years old and above 2019 2.75% ₱10,000.00 ₱50.000.00
without the capacity to pay premiums;
2020 3.00 % ₱10,000.00 ₱60,000.00
6. Sangguniang Kabataan officials; 2021 3.50% ₱10,000.00 ₱70,000.00

7. Those previously identified at point-of- 2022 4.00 % ₱10,000.00 ₱80,000.00

service (POS) or during registration, 2023 4.50 % ₱10,000.00 ₱90,000.00
members previously sponsored by LGUs
and those who are not yet in the PhilHealth 2024 5.00 % ₱10,000.00 ₱100,000.00
database and are financially incapable to 2025 5.00 % ₱10,000.00 ₱100,000.00
pay premiums. (Sec. 8.4, IRR of RA 11223)
Provided, That for indirect contributors,
Entitlement to Benefits
premium subsidy shall be gradually adjusted
and included annually in the General
Every member shall be granted immediate
Appropriations Act (GAA):
eligibility for health benefit package under the
Program:
Provided, further, That the funds shall be
released to PhilHealth:
Provided, That PhilHealth Identification Card
shall not be required in the availment of any
Provided, furthermore; That the DOH, in
health service:
coordination with PhilHealth, may request
Congress to appropriate supplemental funding
Provided, further, That no co-payment shall be
to meet targeted milestones of this Act:
charged for services rendered in basic or ward
accommodation:
Provided, finally, That for every increase in the
rate of contribution of direct contributors and
Provided, furthermore, That co-payments and co-
premium subsidy of indirect contributors,
insurance for amenities in public hospitals shall
PhilHealth shall provide for a corresponding
be regulated by the DOH and PhilHealth:
increase in benefits. (Sec. 10, RA 11223)
Provided, finally, That the current PhilHealth
package for members shall not be reduced.

Additional Program Benefits

PhilHealth shall provide additional Program

benefits for direct contributors, where
applicable:

Provided, That failure to pay premiums shall not

prevent the enjoyment of any Program benefits:

Provided, further, That employers and self-

employed direct contributors shall be required
to pay all missed contributions with an interest,
compounded monthly, of at least 3% for
employers and not exceeding 1.5% for self-
earning, professional practitioners, and migrant
workers (Sec. 9, RA 11223)

Premium Contributions

For direct contributors, premium rates shall be

in accordance with the following schedule, and
monthly income floor and ceiling:

PREMIUM INCOME INCOME

YEAR
RATE FLOOR CEILING

UNIVERSITY OF SANTO TOMAS 262

2021 GOLDEN NOTES
 Labor Law and Social Legislation

6. Stable but dynamic and just industrial

LABOR RELATIONS peace
7. Participation of workers in decision and
policy making processes affecting their
rights, duties and welfare;
Labor Relations
8. Truly democratic method of regulating the
relations between the employers and
Refers to the interactions between employer and
employees by means of agreements freely
employees or their representatives and the
entered into through collective bargaining.
mechanism by which the standards and other
terms and conditions of employment are
No court or administrative agency or official
negotiated, adjusted and enforced. (Azucena, Vol.
shall have the power to set or fix wages, rates of
2, 2016, p. 10)
pay, hours of work or other terms and
conditions of employment, except as otherwise
The term denotes all aspects of employer-
provided under this Code. (LC, Art. 218, as
employee relationship which involve concerted
renumbered)
action on the part of the workers. It is usually
associated with all the ramifications of unionism,
Definition of Terms
collective bargaining and negotiations, and
concerted activities such as strike, picket, mass
Labor Organization means any union or
leave, etc. (2, Poquiz 2018, p. 2)
association of employees which exists in whole
or in part for the purpose of collective
Constitutional provisions in relation to Labor
bargaining or of dealing with employers
Relations:
concerning terms and conditions of employment.
Sec. 3, Art. XIII guarantees to all workers,
NOTE: Labor Organization is a generic term as it
among others, their right to:
can refer to a “union” or association of
employees,” registered or not. The purposes may
1. Self-organization;
also be broad such as “collective bargaining” or
2. Peaceful concerted activities including the
“mutual aid” or “cooperation” or other lawful
right to strike in accordance with law; and
purpose. (Azucena, Vol. 2, 2016, p. 178)
3. Participate in policy-decision making
processes affecting their rights and benefits
Legitimate labor organization means any
as may be provided by law.
labor organization duly registered with the
DOLE, and includes any branch or local thereof.
Sec. 8, Art. III provides that “The right of the
people, including those employed in the public
Bargaining representative means a legitimate
and private sectors, to form unions, associations,
labor organization or any officer or agent of such
or societies for purposes not contrary to law,
organization whether or not employed by the
shall not be abridged.”
employer. (LC, Art. 219, as renumbered)
Declaration of Policy
Company Union refers to any labor
organization whose formation, function or
The State aims to promote:
administration has been assisted by any act
defined as unfair labor practice by this Code.
1. Free collective bargaining and negotiations,
including voluntary arbitration, mediation
and conciliation, as modes of settling labor
or industrial disputes; RIGHT TO SELF-ORGANIZATION
2. Free trade unionism;
3. Free and voluntary organization of a strong
and united labor movement; Right to Self-Organization
4. Enlightenment of workers concerning their
rights and obligations as union members Refers to the right of workers and employees to
and as employees; form, join or assist unions, organizations or
5. Adequate administrative machinery for the associations for purposes of collective
expeditious settlement of labor or bargaining and/or for mutual aid and protection,
industrial peace; including the right to engage in peaceful
concerted activities and participate in policy-

263
 LABOR RELATIONS – RIGHT TO SELF-ORGANIZATION
decision making processes affecting their rights
and benefits.
Extent of the right to self-organization
It includes at least two (2) rights:
1. The right to form, join or assist labor
organizations; and
2. The right to engage in lawful concerted
activities. (LC, Art. 257)
Purpose of exercise of right to self-
organization
1. Collective bargaining; and
2. Mutual aid and protection (LC, Art. 257)
Q: Why do workers organize?
A: For self-advancement and the desire for: (a)
job security; (b) substituting “rule of law” for the
arbitrary power by the boss; and (c) sense of
participation in the business enterprise.
(Azucena, Vol. 2, 2016, p. 14)
Collective Bargaining vs. Dealing with
Employer
Collective Bargaining is a right that may be
acquired by a labor organization after
registering itself with the DOLE and after being
recognized or certified by DOLE as the exclusive
bargaining representative of the employees.
Dealing with the employer, on the other hand,
is a generic description of interaction between
employer and employees concerning grievances,
wages, work hours and other terms and
conditions of employment, even if the
employees’ group is not registered with the
DOLE. (Azucena, Vol. 2, 2013, p. 184)
Registration of a Union
A labor organization may be registered or not. If
registered, it is considered “legitimate labor
organization” (LLO). However, a labor
organization is not “illegitimate” just because it
is unregistered. It is still a lawful organization
but it has no legal personality to demand
collective bargaining with the employer.
(Azucena, Vol. 2, 2016, p. 186-187)
NOTE: Registration with the DOLE makes a
labor organization legitimate in the sense that it
is clothed with legal personality to claim the
representational and bargaining rights
enumerated in Art. 251 and Art. 267 or to strike
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
and picket under Art. 278. (Azucena, Vol. 2, 2013,
p. 190)
It is the fact of being registered with DOLE that
makes a labor organization legitimate.
Registration under the corporation law before
the Securities and Exchange Commission (SEC)
only has the effect of giving it juridical
personality to represent itself in regular courts
but it does not grant the rights and privileges of
a legitimate labor organization. (Phil. Land-Sea-
Air Labor Union, Inc. v. CIR, 93 Phil. 747)
Requirements for Registration
Any applicant labor organization, association or
group of unions or workers shall acquire legal
personality and shall be entitled to the rights
and privileges granted by law to legitimate labor
organizations upon issuance of the certificate of
registration based on the following requirements:
1. Fifty pesos (P50.00) registration fee;
2. The names of its officers, their addresses,
the principal address of the labor
organization, the minutes of the
organizational meetings and the list of the
workers who participated in such
meetings;
3. The names of all its members comprising at
least 20% of all the employees in the
bargaining unit where it seeks to operate;
4. If the applicant union has been in existence
for one or more years, copies of its annual
financial reports; and
5. Four (4) copies of the constitution and by-
laws of the applicant union, minutes of its
adoption or ratification, and the list of the
members who participated in it. (LC, Art.
239, as renumbered)
Where to Register
1. For registration of independent labor
unions, chartered locals and workers’
associations, it shall be filed with and
acted upon by the Regional Office where
the applicant principally operates.
2. For registration of federations, national
unions or workers’ associations
operating in more than one region, it
shall be filed with the Bureau or the
Regional Offices, but shall be processed and
acted upon by the Bureau which has
national jurisdiction unlike a regional
office.
264
 Labor Law and Social Legislation

Classification of Labor Organizations national union, this fact shall be indicated

accordingly.
At the National Level
1. National Union/Federation; NOTE: The genuineness and the due execution
2. Industry Union; of all the foregoing supporting requirements
3. Trade Union Center; and shall be certified under oath by the Secretary or
4. Company Union. the Treasurer of the local/chapter and attested
by its President.
At the Enterprise Level
1. Independent Union; and Tentative Legal Personality
2. Chapter.
Upon being issued a charter certificate, a chapter
Independent Union vs. Chapter acquires legal personality, but “only for purposes
of filing a petition for a certification election
INDEPENDENT xxx”. (LC, Art. 241)
CHAPTER
UNION
Creation Q: When does a chapter become an LLO?
Created through
chartering which A: The labor union or workers’ association shall
takes place when a be deemed registered and vested with legal
Created by personality on the date of issuance of its
duly registered
independent certificate of registration or certificate of
federation or national
registration obtained creation of chartered local. (Sec. 8, Rule IV)
union issues a charter
by the union
to a union in an
organizers in an
enterprise and COVERAGE
enterprise through
registers the creation
their own action.
of the chapter with the Who may unionize for purposes of collective
Regional Office where bargaining
the applicant operates.
Legal Personality All persons employed in commercial, industrial
Has no legal and agricultural enterprises and in religious,
personality of its own. charitable, medical or educational institutions
Its legal personality is whether operating for profit or not, shall have
Has a legal personality derived from the the right to self-organization and to form, join, or
of its own. federation/national assist labor organizations of their own choosing
union but it may for purposes of collective bargaining. (LC, Art.
subsequently register 253)
itself independently
Who may form a labor organization for
Requisites for Chartering purposes of mutual aid and protection

A chartered local has to be registered, not just
reported. A duly registered federation or
national union, directly creating a chartered
local, is required to submit to the Regional Office
two (2) copies of the following:
1. A charter certificate issued by the
federation or national union indicating the
creation or establishment of the
local/charter.
2. The names of the local chapter’s officers,
their addresses, and the principal office of
the local or chapter; and
3. The local/chapter’s constitution and by-
laws, provided that where the
local/chapter’s constitution and by-laws is
the same as that of the federation or
All persons employed in commercial, industrial
and agricultural enterprises and in religious,
charitable, medical, or educational institutions,
whether operating for profit or not;
Ambulant, intermittent and itinerant workers,
self-employed people, rural workers and those
without any definite employers may form labor
organizations for their mutual aid and
protection. (LC, Art. 253)
Who cannot form, join or assist labor
organizations
1. Managerial employees
2. Confidential employees (in the field of
labor relations)

265
 LABOR RELATIONS – RIGHT TO SELF-ORGANIZATION
3. Employees of international organizations
4. Employee-members of a cooperative
5. Foreign workers
6. Religious objectors; INC members
7. Members of AFP, police officers,
policemen, firemen, and jail guards
8. High level government employees
1. Managerial employees
Managerial employees are not eligible to join,
assist or form any labor organization. (LC, Art.
255)
The rationale for the inhibition is that if
managerial employees would belong to or be
affiliated with a union, the latter might not be
assured of their loyalty to the union in view of
evident conflict of interests. The union can
become company-dominated with the presence
of managerial employees in the union
membership. (Bulleting Publishing Co., Inc. v.
Hon. Sanchez)
Managerial employees cannot be allowed to
share in the concessions obtained by 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. (Azucena, Vol.
2, 2016, p. 251)
2. Confidential employees
(in the field of labor relations)
A confidential employee is one who assists and
acts in a confidential capacity to, or has access to
confidential matters of, persons who exercise
managerial functions in the field of labor
relations. (Philips Industrial Development v.
NLRC, G.R. No. 88957, June 25, 1992)
NOTE: The phrase “in the field of labor
relations” is important because it stresses the
labor nexus, that is, the confidentiality of the
position should relate to labor relations matters.
Doctrine of necessary implication
The doctrine of necessary implication states that
what is implied in a statute is as much a part
thereof as that which is expressed.
The reason for ineligibility of managerial
employees to form, assist or join a labor union
equally applies to confidential employees. While
the Labor Code singles out managerial
employees as ineligible to join, under the
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
doctrine of necessary implication, confidential
employees are similarly disqualified. (National
Association of Trade Unions - Republic Planters
Bank Supervisors Chapter v. Hon. Torres, G.R. No.
93468, Dec. 29, 1994)
Examples of Confidential Employees who could
NOT unionize:
1. Bank cashiers
2. Accounting personnel
3. Radio and telegraph operators who have
access to confidential information
4. Personnel staff
Human Resource Assistants and Personnel
Assistants are considered confidential
employees
As Human Resource Assistant, the scope of one’s
work necessarily involves labor relations,
recruitment and selection of employees, access
to Ees' personal files and compensation package,
and human resource management. As regards a
Personnel Assistant, one's work includes the
recording of minutes for management during CB
negotiations, assistance to management during
grievance meetings and administrative
investigations, and securing legal advice for
labor issues from the petitioner’s team of
lawyers, and implementation of company
programs.
Therefore, in the discharge of their functions,
both gain access to vital labor relations
information which outrightly disqualifies them
from union membership. (San Miguel Foods Inc.
v. San Miguel Corporation Supervisors and
Exempt Union, G.R. No. 146206, Aug. 1, 2011)
Payroll masters are not confidential
employees
A confidential employee is one entrusted with
confidence on delicate, or with the custody,
handling or care and protection of the
employer’s property. Confidential employees,
such as accounting personnel, should be
excluded from the bargaining unit, as their
access to confidential information may become
the source of undue advantage. However, such
fact does not apply to the position of Payroll
Master and the whole gamut of employees who
has access to salary and compensation data. The
position of Payroll Master does not involve
dealing with confidential labor relations
information in the course of the performance of
his functions. Since the nature of his work does
266
 Labor Law and Social Legislation
not pertain to company rules and regulations
and confidential labor relations, it follows that
he cannot be excluded from the subject
bargaining unit. (San Miguel Foods Inc. v. San
Miguel Corporation Supervisors and Exempt
Union, G.R. No. 146206, Aug. 1, 2011)
3. Employees of International
Organizations
GR: International organizations are immune
from Philippine jurisdiction (ex. ICMC, IRRI, ADB)
Thus, a certification election cannot be
conducted in an international organization
which has been granted immunity from local
jurisdiction. (ICMC v. Hon. Pura Calleja, G.R. No.
89331, Sept. 28, 1990)
XPN: However, the international organization
has the discretion to waive its immunity.
Without such express waiver, the NLRC or its
labor arbiters have no jurisdiction over
international organizations, even in cases of
alleged illegal dismissal of any of its employees.
(Callado v. IRRI, G.R. No. 106483, May 22, 1995)
4. Employee-Members of a Cooperative
An employee of a cooperative who is also a
member and co-owner thereof cannot invoke the
right to collective bargaining, for an owner
cannot bargain with himself or his co-owners.
(San Jose Electric Service Cooperative, Inc. v.
Ministry of Labor, G.R. No. 77231, May 31, 1989)
NOTE: Even if employee-members of a
cooperative cannot form a union, they may,
however, form an association for their mutual
aid and protection as employees. (Azucena, Vol.
2, 2016, p. 253)
Q: A, an employee of XYZ Cooperative, owns
500 shares in the cooperative. He has been
asked to join the XYZ Cooperative Employees
Association. He seeks your advice on whether
he can join the association. What advice will
you give him? (2010 BAR)
A: A cannot join XYZ Cooperative Employees
Association because owning shares makes him a
co-owner thereof. An employee-member of a
cooperative cannot join a union and bargain
collectively with his cooperative for an owner
cannot bargain with himself and his co-owners.
(Cooperative Rural Bank of Davao City v. Calleja,
165 SCRA 725)
5. Foreign workers
267
GR: Foreigners are prohibited from engaging in
all forms of trade union activities.
XPN: However, an alien working in the country
with a valid working permit may exercise the
right to self-organization if they are nationals of
a country which grants the same or similar right
to Filipino workers (reciprocity).
6. Religious objectors; INC members
Members of religious sects cannot be compelled
or coerced to join labor unions even when said
unions have closed shop agreements with the
employers. Free exercise of religious belief is
superior to contract rights. In case of conflict, the
latter must yield to the former. (Victoriano v.
Elizalde Rope Worker’s Union, G.R. No. L-25246,
Sept. 12, 1974)
Two (2) broad notions of freedom of
association
A right comprehends at least two broad notions,
namely: first, liberty or freedom, i.e., the
absence of legal restraint, whereby an employee
may act for himself without being prevented by
law; and second, power, whereby an employee
may, as he pleases, join or refrain from joining
an association. It is, therefore, the employee who
should decide for himself whether or not he
should join an association; and should he choose
to join, he himself makes up his mind as to which
association he would join; and even after he has
joined, he still retains the liberty and the power
to leave and cancel his membership with said
organization at any time. (Victoriano v. Elizalde
Rope Worker’s Union, G.R. No. L-25246, Sept. 12,
1974)
Religious objectors can form and join their
own union
Recognition of the tenets of a sect should not
infringe on the basic right to self-organization
granted by the Constitution to workers,
regardless of religious affiliation. (Kapatiran sa
Meat and Canning Division v. Hon. Pura Calleja,
G.R. No. L-82914, June 20, 1988)
NOTE: Religious objectors also have the right to
vote in a certification election. (Reyes v. Trajano,
G.R. No. 84433, June 2, 1992)
Government employees have the right to self-
organization
 LABOR RELATIONS – RIGHT TO SELF-ORGANIZATION
The highest law of the land guarantees to
government employees the right to organize and
to negotiate, but not the right to strike. (Azucena,
Vol. 2, 2016, p. 259) The right to self-organization
of government employees pertains to all
branches, subdivision, instrumentalities and
agencies of the Government, including
government-owned or controlled corporations
(GOCCs) with original charters. (E. O. No. 180)
Government employees’ right to organize is
for a limited purpose
The right of government employees to “form,
join or assist employees’ organizations of their
own choosing” under E. O. No. 180 is not
regarded as existing or available “for purposes of
collective bargaining,” but simply “for the
furtherance and protection of their interests”.
(Arizala v. CA, G.R. No. L-43633-34, Sept. 14, 1990)
Only terms and conditions not fixed by law may
be the subject of negotiation by the duly
recognized employees’ organization of
government employees and the appropriate
government authorities. Terms and conditions of
employment that are fixed by law are excluded
from negotiation. (E. O. No. 180)
Declared to be “not negotiable” are matters “that
require appropriation of funds” and “those that
involve the exercise of management
prerogatives”. Considered negotiable are such
matters as schedule of vacation, leaves, etc.
(Azucena, Vol. 2, 2016, p. 261)
NOTE: Employees of government corporations
established under the Corporation Code shall
have the right to organize and to bargain
collectively. (LC, Art. 254)
Q: Royal Savings Bank (RSB), organized and
incorporated as a thrift bank entered into a
Memorandum of Agreement with
Commercial Bank of Manila to rehabilitate
and infuse capital into RSB. RSB was renamed
ComSavings Bank (CB). In 1987, the GSIS
transferred its holdings from Commercial
Bank of Manila to Boston Bank. CB was not
included in the transfer. Due to Boston
Bank’s acquisition of Commercial Bank of
Manila, the GSIS took over the control and
management of CB.
Sometime in 2001, CB changed its name to
GSIS Family Bank. On June 6, 2011, President
Aquino signed into law RA 10149, or the
GOCC Governance Act of 2011. The law
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
created the Governance Commission for
Government-Owned or Controlled
Corporations (Governance Commission). On
Dec. 20, 2013, counsel for the GSIS Union sent
GSIS Family Bank a demand letter for the
payment of Christmas bonus to its members,
as stipulated in their Collective Bargaining
Agreement (CBA). The GSIS Family Bank's
refused to negotiate a new CBA. Thus, the
GSIS Union filed a Complaint before the
NCMB. They aimed to compel GSIS Family
Bank to abide by the provisions of their
existing CBA.
Can the GSIS Family Bank, a non-chartered
government-owned or controlled
corporation, enter into a CBA with its
employees?
A: NO. RA 10149 directed the Governance
Commission to develop a Compensation and
Position Classification System, to be submitted
for the President's approval, which shall apply to
all officers and employees of government-owned
or controlled corporations, whether chartered or
non-chartered. On March 22, 2016, President
Aquino issued Executive Order No. 203, which
approved the compensation and classification
standards and the Index of Occupational
Services Framework developed and submitted
by the Governance Commission.
When it comes to collective bargaining
agreements and collective negotiation
agreements in government-owned or controlled
corporations, Executive Order No. 203
unequivocally stated that while it recognized the
right of workers to organize, bargain, and
negotiate with their employers, "the Governing
Boards of all covered [government-owned or
controlled corporations], whether Chartered or
Non-chartered, may not negotiate with their
officers and employees the economic terms of
their [collective bargaining agreements]." (GSIS
Family Bank Employees Union v. Secretary
Villanueva, G.R. No. 210773, Jan. 23, 2019, as
penned by J. Leonen)
7. Government employees
GR: Government employees can form, join or
assist labor organizations of their own choosing.
XPNs: AFP, police officers, policemen, firemen,
jail guards, and high-level government
employees.
268
 Labor Law and Social Legislation
8. Members of AFP, police officers,
policemen, firemen, and jail guards
E. O. No. 180 excludes members of AFP, police
officers, policemen, firemen, and jail guards from
unionizing for reasons of security and safety.
High-level employees
A high-level employee is one whose functions
are normally considered policy determining,
managerial or one whose duties are highly
confidential in nature. They cannot join the
organization of rank-and-file government
employees. (E. O. No. 180)
NOTE: In the public sector, there are only two
levels of position: high level and rank-and-file.
Security Guards
Security guards may freely join a labor
organization of either rank-and-file or
supervisory, depending on their rank. (Manila
Electric Company v. Sec. of Labor, G.R. No. 91902,
May 20, 1991)
Workers in Export Processing Zones
Export processing zones are still part of the
Philippine territory which is subject to
sovereignty and laws. Therefore, the
Constitution that guarantees workers’ right to
organize applies to them with undiminished
force. (Azucena, Vol. 2, 2016, p. 293)
COMMINGLING AND MIXTURE OF
MEMBERSHIP
Categories of Employees (in the Private
Sector)
1. Managerial
2. Supervisory
3. Rank-and-file
Categories of Employees (in the Government)
1. High level or managerial
2. Rank-and-file
Q: Are professors of state universities rank-
and-file employees or high level employees?
Can they form and organize a separate
bargaining unit for academic and non-
academic employees?
269
A: Professors who are not exercising managerial
or highly confidential functions are rank-and-file
employees. They may organize themselves into
a separate collective bargaining unit, if so
minded, considering that mutuality of interest is
wanting between the academic and non-
academic personnel of the university. (UP v.
Ferrer-Calleja, G.R. No. 96189, July 14, 1992)
Managerial Employees
Managerial employees refer to those who are
vested with power to lay down and execute
management policies and/or to hire, transfer,
suspend, lay-off, recall, discharge, assign or
discipline employees. [LC, Art. 219 (m)]
Types of Managerial Employees
1. First-line managers – supervisors who
direct operating employees only
Their tasks is simply to ensure that such
policies are carried out by the rank – and-
file employees of and organization (Paper
Industries Corp. of the Philippines v.
Laguesma, G.R. No. 101738, April 12, 2000)
NOTE: they can form unions
2. Middle managers – direct the activities of
other managers and sometimes also those
of operating employees
3. Top managers – responsible for the
overall management of the organization
Based on the above distinction, “managerial
employees” may fall into two (2) distinct
categories:
a. Managers – composed of top and middle
managers
b. Supervisors – composed of first – line
managers (2, Poquiz 2018, p. 201)
Supervisory Employees
Supervisory employees are those who, in the
interest of the employer, effectively recommends
such managerial actions if the exercise of such
authority is not merely routinary or clerical in
nature but requires the use of independent
judgment.
Rank-and-file Employees
 LABOR RELATIONS – RIGHT TO SELF-ORGANIZATION
All employees not falling within the definition of
managerial or supervisory employees are
considered rank-and-file employees. (Rule I, D.O.
40-03)
Supervisory employees cannot join union of
rank-and-file employees
Supervisory employees shall not be eligible for
membership in the collective bargaining unit of
the rank-and-file employees but may join, assist
or form separate collective bargaining units
and/or legitimate labor organization of their
own. (LC, Art. 255)
Supervisory employees may join the same
federation or national union of rank-and-file
employees
The rank-and-file union and the supervisors’
union operating within the same establishment
may join the same federation or national union.
(LC, Art. 255)
Effect of inclusion as members of employees
outside the bargaining unit
The inclusion as union members of employees
outside the bargaining unit shall not be a ground
for the cancellation of the registration of the
union. Said employees are automatically deemed
removed from the list of membership of said
union. (LC, Art. 256; as amended by RA 9481)
RIGHTS AND CONDITIONS OF MEMBERSHIP
The rights of union members may be
summarized as follows: (PRRD)
1. Political right;
2. Right over money matters;
3. Right to information; and
4. Deliberative and decision-making right
Political right
The member’s right to vote and be voted for,
subject to lawful provisions on qualification and
disqualifications
Right over money matters
The member’s right:
1. Against excessive fees;
2. Against unauthorized collection of
contributions or disbursements;
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
3. To require adequate records of income and
expenses;
4. Of access to financial records;
5. Vote on officer’s compensation; and
6. Vote on proposed special assessment and
be deducted a special assessment only with
the member’s written authorization.
Right to information
The member’s right to be informed about the:
1. Organization’s constitution and by-laws;
2. Collective bargaining agreement; and
3. Labor laws.
Deliberative and decision-making right
The member’s right to participate in
deliberations on major policy questions and
decide them by secret ballot.
Q: When, how, and under what conditions
does an employee become a union member?
A: The answer depends on the union’s
constitution and by-laws. The Labor Code gives a
labor organization the right to prescribe its own
rules for acquisition or retention of membership.
Nonetheless, an employee is already qualified for
union membership starting on his first day of
service. (Azucena, Vol. 2, 2016, p. 226)
Membership in the union does not
necessarily mean coverage in the CBA
Inclusion or coverage in the CBA depends on the
stipulations in the CBA itself. It is the CBA which
defines its coverage as agreed by the parties.
Qualifying for union membership does not
necessarily mean inclusion in the coverage of the
CBA.
Membership in the CBU does not mean
membership in the union
Inclusion or membership in the union depends
on the union’s constitution and by-laws.
Inclusion in the CBU depends on the
determination of its appropriateness.
Expulsion of a union member
A member of a union may be expelled but only
for a valid cause and by following the procedure
outlined in the constitution and by-laws. A
member is entitled to due process. Expulsion of a
270
 Labor Law and Social Legislation
member for arbitrary or impetuous reasons may
amount to ULP by the union.
Election of union officers
Q: What positions should be filled up, when,
and how should the election be done?
A: It depends on the union’s constitution and by-
laws or the agreement among the members. In
the absence thereof, the Implementing Rules of
Book V shall apply.
NOTE: Officers are elected by the members
through secret ballot voting.
Eligibility of voters
Only union members can take part in the
election of union officers. The election takes
place at intervals of five (5) years which is the
term of office of the union officers. (Azucena, Vol.
2, 2016 p. 226)
Election under the Implementing Rules
The incumbent president should create an
election committee within 60 days before
expiration of the term of incumbent officers. The
Rules specify the composition of the election
committee as well as its powers and duties.
If the officers with expired term do not call an
election, the remedy is for at least 30% of the
members to file a petition with the DOLE
Regional Office. (Rule XII)
Union officer must be an employee
No person who is not an employee or worker of
the company or establishment where a union
operates shall be elected or appointed as an
officer of such union. Only an employee may be a
union officer.
Disqualification of union officers
The following are disqualified to become union
officers:
1. Those convicted of a crime involving
moral turpitude;
2. Those who belong to a subversive
organization;
3. Those engaged directly or indirectly in
any subversive activity.
271
Frustration over incumbent officers of union
does not justify disregard of union’s
constitution and by-laws
Frustration over the performance of the
incumbent officers, as well as their fears of a
fraudulent election to be held under the latter’s
supervision, could not justify the imposition of
their own will on the union. The organizations
shall have the right to draw up their own
constitution and rules and to elect their
representatives in full freedom, free from any
interference from public authorities. The union
members should respect the constitution and
rules they themselves draw up equally so. The
CBL is the fundamental law that governs the
relationship between and among the members
of the union. (UST Faculty Union, et. al. v. Bitonio,
Jr., G.R. No. 131235, Nov. 16, 1999)
Due process in impeachment of union
officers
Despite practical difficulties in complying with
the procedure laid down in the constitution and
by-laws, the impeachment procedure contained
therein must be substantially complied with.
(Litton Mills Employees Association v. Ferrer-
Calleja, G.R. No. 78061, Nov. 24, 1988)
Q: Can a labor organization prescribe rules
and regulation with respect to voting?
A: YES. It may require reasonable period of prior
membership (such as six months or a year). It
may also condition the exercise of right to vote
on the payment of dues since paying dues is a
basic obligation of membership. However, this is
subject to two (2) qualifications: (a) it must be
applied uniformly and (b) members must be
afforded a reasonable opportunity to pay dues,
including a grace period during which dues may
be paid without any loss of rights. It should be
noted however, that it cannot create special
classes of nonvoting members.
Obtaining relief with the union
GR: First, redress must be sought with the union
itself in accordance with the constitution and by-
laws.
When the intra-union remedy fails, a case can be
filed with the Bureau of Labor Relations.
XPN: When the exhaustion of remedies with the
union would practically amount to a denial of
justice. Then, it cannot be insisted upon as a
 LABOR RELATIONS – RIGHT TO SELF-ORGANIZATION
condition to the right to invoke the aid of the
court.
30% requirement
GR: At least 30% of the members are required to
report a violation of labor organization
procedures
XPN: When such violation affects only one or
two members, then only one or two members
would be enough to report such violation.
Visitorial power of SOLE to inquire into the
financial activities of labor organizations
SOLE is authorized to inquire into the financial
activities of any labor organization to determine
compliance or non-compliance with the laws and
to aid in the prosecution of any violation thereof.
It is initiated on the basis of a:
1. Complaint under oath; and
2. Supported by 20% of the membership
NATURE OF RELATIONSHIP
Member – Labor Union
The union may be considered the agent of its
members for the purpose of securing for them
fair and just wages and good working conditions
and is subject to the obligation of giving the
members as its principals all information
relevant to union and matters entrusted to it.
(Heir of Teodolo M. Cruz v. Court of Industrial
Relations, G.R. Nos. L-23331-32, Dec. 27, 1969)
The relationship of the members and the labor
union is governed by their mutual agreement,
the terms and conditions of which are set forth
in the union constitution and by-laws and
binding on the members, as well as the
organization itself, provided that it is not against
the law, morals, good customs, public order and
public policy. (Manggagawa sa Ang Tibay v. Ang
Tibay)
Labor Union – Federation
Relationship between a union and the federation
or national union is generally understood to be
that of agency, where the union is the principal
and the federation is the agent.
Q: Does a local union lose its legal personality
when it affiliates with a federation?
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
A: NO. A local union does not owe its existence
to the federation with which it is affiliated. It is a
separate and distinct voluntary association
owing its creation to the will of its members.
Mere affiliation does not divest the local union of
its own personality, neither does it give the
mother federation the license to act
independently of the local union. (Insular Hotel
Employees Union-NFL v. Waterfront Insular Hotel
Davao, Sept. 22, 2010)
NOTE: Affixing the name of the federation to the
name of the local merely stresses that the local
union is an affiliate. It does not mean that the
local union cannot stand on its own.
AFFILIATION/DISAFFILIATION
A local union may affiliate with or disaffiliate
from a federation. This is an exercise of the right
of association recognized by the Constitution.
Between the chapter and the federation,
affiliation or disaffiliation is a contractual
relation. Hence, even if disaffiliation is a matter
of right, the local must comply with the
obligations under the CBL such as manner and
period of notice.
Affiliate
An affiliate refers to a:
1. An independently registered union that
enters into an agreement of affiliation with
a federation or national union; or
2. A chartered local which applies for and is
granted an independent registration but
does not disaffiliate from its mother
federation or national union.
How local chapter is created
A duly registered federation or national union
may directly create a local/chapter by issuing a
charter certificate indicating the establishment
of a local/chapter.
1. The chapter shall acquire legal personality
only for purposes of filing a PCE from the
date it was issued a charter certificate.
2. The chapter shall be entitled to all other
rights and privileges of a LLO only upon the
submission of the following documents in
addition to its charter certificate:
272
 Labor Law and Social Legislation
a. Names of the chapter’s officers, their
addresses, and the principal office of
the chapter
b. Chapter’s constitution and by-laws
c. Where the chapter’s constitution and
by-laws are the same as that of the
federation or the national union, this
fact shall be indicated accordingly.
3. The genuineness and due execution of the
supporting requirements shall be:
a. Certified under oath by the secretary
or treasurer of the local/chapter, and
b. Attested to by its president. [IRR as
amended by D.O. 40-F-03, Book V,
Rule III, Sec. 2(e)]
Reportorial requirements in affiliation
The report of affiliation of independently
registered labor unions with a federation or
national union shall be accompanied by the
following documents:
1. Resolution of the labor union's board of
directors approving the affiliation;
2. Minutes of the general membership
meeting approving the affiliation;
3. The total number of members comprising
the labor union and the names of members
who approved the affiliation;
4. The certificate of affiliation issued by the
federation in favor of the independently
registered labor union; and
5. Written notice to the Er concerned if the
affiliating union is the incumbent
bargaining agent. (D.O. 40-03, Rule, III, Sec.
7 (2003))
Reasons for Affiliation
Some common reasons for affiliation:
1. Secure support or assistance especially
during the formative stage of unionization
2. Utilize expertise in preparing and pursuing
bargaining proposals
3. To marshal mind and manpower in the
course of a group action such as a strike
(Azucena, Vol. 2, 2016, p. 201)
NOTE: The sole essence of affiliation is to
increase, by collective action, the common
bargaining power of local unions for the effective
enhancement and protection of their interests.
(Azucena, Vol. 2, 2016, p. 203)
273
Independently registered union is required
to report affiliation with the Regional Office
A union affiliating with a federation or national
union is required to report such affiliation to the
Regional Office that issued its certificate of
registration.
Disaffiliation of local union from the
federation
GR: A labor union may disaffiliate from the
mother union to form an independent union
only during the 60-day freedom period
immediately preceding the expiration of the
CBA.
XPN: Even before the onset of the freedom
period, disaffiliation may still be carried out, but
such must be effected by the majority of the
union members in the bargaining unit.
Disaffiliation must be decided by the entire
membership through secret balloting in
accordance with Art. 250(d). This happens when
there is a substantial shift in allegiance on the
part of the majority of the members of the union.
In such a case, however, the CBA continues to
bind the members of the new or disaffiliated and
independent union to determine the union
which shall administer the CBA. (ANGLO-KMU v.
Samahan ng Manggagawang Nagkakaisasa
Manila Bay Spinning Mills at J.P. Coats, G.R.
No.118562, July 5, 1996)
Disaffiliation must be by majority decision
Disaffiliation has to be decided by the entire
membership through secret balloting in
accordance with Art. 250 (d). An individual
member or any number of members may
disaffiliate from the union during the “freedom
period”, but disaffiliating the union itself from
the mother union must be supported by the
majority of the members. If done by a minority,
even during the freedom period, the act may
constitute disloyalty. They may be expelled from
the union or may be removed from their
employment because of the union security
clause.
Limitation to disaffiliation
To disaffiliate is a right, but to observe the terms
of affiliation is an obligation. (Azucena, Vol. 2,
2016)
 LABOR RELATIONS – RIGHT TO SELF-ORGANIZATION
Disaffiliation should be in accordance with the continue to the rights and
rules and procedures stated in the Constitution have legal privileges
and by-laws of the federation. A local union may personality granted by law
disaffiliate with its mother federation provided and to possess to LLO, unless
that there is no enforceable provision in the all rights and the local
federation’s constitution preventing privileges of chapter is
disaffiliation of a local union. (Tropical Hut LLO. covered by its
Employees Union v. Tropical Hut, G.R. Nos. L- duly registered
43495-99, Jan. 20, 1990) CBA.
An existing
A prohibition to disaffiliate in the Federation’s CBA would
constitution and by-laws is valid because it is continue to be
intended for its own protection. Effect of The CBA would
valid as the
Disaffiliati continue to be
labor
on to the valid up to its
Effect of Disaffiliation organization
CBA expiration date.
can continue
1. Union Dues – the obligation of an administering
employee to remit union dues to the the CBA.
mother is coterminous with the affiliation Labor Union dues may
or membership of its local. The dues must organization no longer be
now be remitted to the local. entitled to the collected as
Entitlemen
union dues there would no
2. Existing CBA – the CBA continues to bind t to union
and not the longer be any
the members of the new or disaffiliated and dues after
federation labor union that
independent union up to the CBA’s Disaffiliati
from which is allowed to
expiration date based on the on
the labor collect such
‘substitutionary doctrine.’ organization union dues
disaffiliated. from the Ees.
Revocation of charter
Effect of revocation
A federation may revoke the charter issued to a
local/chapter by serving a verified notice of GR: The revocation shall divest the local/chapter
revocation, copy furnished to the Bureau, on the of its legal personality upon receipt of the notice
ground of disloyalty or such other grounds as by the Bureau
may be specified in the constitution and by-laws
of the federation. (IRR, Book V, Rule VIII, Sec. 5) XPN: If the local/chapter has acquired
independent registration.
Effect of revocation: Independently
Registered vs. Unregistered Chartered Local Effect of cancellation of registration of
Union federation or national union on
locals/chapters
CHARTERED LOCAL UNION
Basis Independently GR: The cancellation shall operate to divest its
Unregistered
Registered locals/chapters of their status as legitimate labor
By application organizations
with the
federation for XPN: Locals/chapters are covered by a duly
By signing the issuance of registered CBA.
How to
contract of a charter
affiliate?
affiliation certificate to be NOTE: In the latter case, locals/chapters shall be
submitted to allowed to register as independent unions. If
the Bureau of they fail to register, they shall lose their
Labor Relations legitimate status upon the expiration of the CBA.
Effect of Would not Would cease to
Disaffiliati affect its being be an LLO and Q: PSEA is a local union in Skylander
on to the an LLO and would no longer Company which is affiliated with PAFLU.
union therefore it have the legal PSEA won the certification election among
(local) would personality and the rank and file employees of the Skylander

UNIVERSITY OF SANTO TOMAS 274

2021 GOLDEN NOTES
 Labor Law and Social Legislation

Company but its rival union PSEA-WATU Non-Abridgement

protested the results. Pending the resolution
of such controversy, PSEA disaffiliated with It shall be unlawful for any person to restrain,
PAFLU and hence affiliated with NCW which coerce, discriminate against or unduly interfere
was supported by its members. May a local with employees and workers in their exercise of
union disaffiliate with its mother federation the right to self-organization. Such right shall
pending the settlement of the status as the include the right to form, join, or assist labor
sole and exclusive bargaining agent? organizations for the purpose of collective
bargaining through representatives of their own
A: YES. The pendency of an election protest does choosing and to engage in lawful aid and
not bar the valid disaffiliation of the local union protection, subject to the provisions of Art. 264
which was supported by the majority of its of this Code. (LC, Art. 257)
members. The right of a local union to disaffiliate
with the federation in the absence of any
stipulation in the Constitution and by-laws of the
federation prohibiting disaffiliation is well
settled. Local unions remain as the basic unit of
association, free to serve their own interest
subject to the restraints imposed by the
Constitution and by-laws of national federation
and are free to renounce such affiliation upon
the terms and conditions laid down in the
agreement which brought such affiliation to
existence.

In the case at bar, no prohibition existed under

the Constitution and by-laws of the federation.
Hence, the union may freely disaffiliate with the
federation. (Philippine Skylanders v. NLRC, G.R.
No. 127374, G.R. No. 127374, Jan. 31, 2002)

Substitutionary Doctrine

This doctrine holds that the employees cannot

revoke the validly executed collective bargaining
contract with their employer by the simple
expedient of changing their bargaining agent.
The new agent must respect the contract. The
employees, thru their new bargaining agent,
cannot renege on the collective bargaining
contract, except to negotiate with the
management for the shortening thereof. (Elisco-
Elirol Labor Union, G.R. No. L-41955, Dec. 29,
1977)

The "substitutionary" doctrine, however, cannot

be invoked to support the contention that a
newly certified collective bargaining agent
automatically assumes all the personal
undertakings — like the no-strike stipulation
here — in the collective bargaining agreement
made by the deposed union. When EBR bound
itself and its officers not to strike, it could not
have validly bound all the other rival unions
existing in the bargaining units in question.
(Benguet Consolidated Inc v. BCI Employees and
Workers Union- Paflu, G.R. L-24711, April 30,
1968)

275
 LABOR RELATIONS – BARGAINING UNIT

7. Continuity and integration of production

BARGAINING UNIT processes;
8. Common supervision and determination of
labor-relations policy;
9. History of CB;
It is a group of Ees of a given Er, comprised of all
10. Desires of the affected Ees; or
or less than all of the entire body of the Ees
11. Extent of union organization (Cox, Bok &
which the collective interest of all the Ees
Gorman, Labor Law (1977), p. 300.)
consistent with equity to the Er, indicate to be
best suited to serve the reciprocal rights and
NOTE: The fact that the three plants are located
duties of the parties under the collective
in three different places, namely, in Cabuyao,
bargaining provisions of the law.
Laguna, in Otis, Pandacan, Metro Manila, and in
San Fernando, Pampanga is immaterial.
Collective Bargaining Unit (CBU)
Geographical location can be completely
disregarded if the communal or mutual interests
Refers to a group of employees sharing mutual
of the employees are not sacrificed. (Azucena,
interests within a given employer unit. (D.O. No.
Vol. 2, 2016, p. 461)
40-03)
Q: Samahang Tunay, a union of rank-and-file
NOTE: There may be one or more unions within
employees, lost in a certification election at
one unit, but only one union should represent
Solam Company and has become a minority
the whole CBU in bargaining with the employer.
union. The majority union now has a signed
CBA with the company and the agreement
There may be two or more certified bargaining
contains Maintenance of Membership Clause.
agents serving different interests. [Herrera-
Veloso amendment. (UP v. Ferrer-Calleja, July 14,
What can Samahang Tunay still do within the
1992)]
company as a union considering that it still
has members who continue to profess
Tests to determine the appropriate
continued loyalty to it? (2013 BAR)
bargaining unit
A: As a legitimate labor organization, it can
1. Community or mutuality of interest
continue to represent its members on non-CBA-
2. Will of the employees or “Globe Doctrine”
related matters. (LC, Art. 248, as renumbered)
3. Collective bargaining history
4. Similarity of employment status
Q: A registered labor union in UP, ONAPUP,
filed a petition for certification election
Substantial or Mutuality of Interest Doctrine
among the non-academic employees. The
university did not oppose, however, another
The Ees sought to be represented by the CB
labor union, the All UP Workers Union
agent must have substantial mutual interest in
assents that it represents both academic and
terms of employment and working condition as
non-academic personnel and seeks to unite
evinced by the type of work they perform. (San
all workers in one union. Do employees
Miguel Corp. Employees Union-PTGWO v.
performing academic functions need to
Confesor, G.R. No. 111262, Sept. 19, 1996)
comprise a bargaining unit distinct from that
of the non-academic employees?
Factors considered in determining the
Substantial or Mutuality Interest Doctrine
A: YES. The mutuality of interest test should be
taken into consideration. There are two classes
1. Similarity in the scale and manner of
of rank and file Ees in the university, those who
determining earnings;
perform academic functions such as the
2. Similarity in employment benefits, hours of
professors and instructors, and those whose
work, and other terms and conditions of
function are non-academic who are the janitors,
employment;
messengers, clerks etc. Thus, not much reflection
3. Similarity in the kinds of work performed;
is needed to perceive that the mutuality of
4. Similarity in the qualifications, skills and
interest which justifies the formation of a single
training of Ees;
bargaining unit is lacking between the two
5. Frequency of contract or interchange
classes of Ees. (U.P. v. Ferrer-Calleja, G.R.
among the Ees;
No.96189, July 14, 1992)
6. Geographical proximity;

UNIVERSITY OF SANTO TOMAS 276

2021 GOLDEN NOTES
 Labor Law and Social Legislation
Will of the employees or “Globe Doctrine”
The desires of the employees are relevant to the
determination of the appropriate bargaining
unit. While the desires of employees with
respect to their inclusion in bargaining unit is
not controlling, it is a factor which would be
taken into consideration in reaching a decision.
[Globe Machine & Stamping Co., 3 NLRB 294
(1937)]
Bargaining history not a decisive factor in the
determination of appropriateness of
bargaining unit
While the existence of a bargaining history is a
factor that may be reckoned with in determining
the appropriate bargaining unit, the same is not
decisive or conclusive. Other factors must be
considered. The test of grouping is community
or mutuality of interests. This is because the
basic test of an asserted bargaining unit’s
acceptability is whether or not it is
fundamentally the combination which will best
assure to all Ees the exercise of their CB rights.
(Democratic Labor Association v. Cebu
Stevedoring Company, Inc., G.R. No. L-10321, Feb.
28, 1958)
“One-company, One-union” Policy
It is the policy of the BLR to encourage the
formation of an employer unit. In other words,
one employer enterprise should constitute only
one bargaining unit because the more solid the
employees are, the stronger their bargaining
capacity.
GR: All the rank-and-file Ees with substantially
the same interests and who invoke the right to
self-organization are part of a single unit so that
they can deal with their Er with just one and
potent voice. The Ees’ bargaining power is
strengthened thereby. (General Rubber and
Footwear Corporation v. Bureau of Labor
Relations, et al., G.R. No. 74262, Oct. 29, 1987)
XPNs:
1. Supervisory Ees who are allowed to form
their own unions apart from the rank-and-
file Ees;
2. Craft Unit – bargaining unit composed of
employees of the company with the same
occupation, such as pilots as distinguished
from ground personnel;
277
3. Plant Unit – bargaining unit composed of
employees in a particular plant of the
company, such as the company’s Cebu plant
as distinguished from its Ilocos plant.
The main consideration in a plant unit is
geographical while it is occupational in a craft
unit. (Alcantara, 2008)
NOTE: The policy should yield to the right of Ees
to form union for purposes not contrary to law,
self-organization and to enter into CB
negotiations.
Two corporations cannot be treated as a single
bargaining unit, even if their businesses are
related. (Indophil Textile Mill Workers Union v.
VA Calica, G.R. No. 96490, Feb. 3, 1992)
NOTE: The proliferation of unions in an
employer unit is merely discouraged as a matter
of policy. However, if there are compelling
reasons which would deny a certain class of
employees the right to self-organization for
purposes of collective bargaining, then it would
be allowed.
In case of two companies with related
businesses, not necessarily treated as a
single BU
It is erroneous to treat two companies as a single
bargaining unit when these companies are
indubitably distinct entities with separate
juridical personalities.
Subsidiaries and Spin-off Corporations
Subsidiaries or corporations formed out of
former divisions of a mother company following
a re-organization may constitute a separate
bargaining unit.
NOTE: In determining an appropriate bargaining
unit, the test of grouping is mutuality or
commonality of interests. Considering the spin-
offs, the companies would have their respective
and distinctive concerns in terms of the nature
of work, wages, hours of work and other
conditions of employment. Interests of
employees in the different companies per force
differ. (San Miguel Corp. Union v. San Miguel
Corp., Magnolia Corp., and San Miguel Foods, Inc.,
G.R. No. 111262, Sept. 19, 1996)
The Four-Factor Analysis
 LABOR RELATIONS – BARGAINING UNIT
The US National Labor Relations Board
continues to apply a four-factor analysis in
determining whether two or more employers
constitute a single employer:
1. Interrelations of operation;
2. Centralized control of labor relations;
3. Common management; and
4. Common ownership (Azucena, Vol. 2, 2016,
p. 471)
Distinguishing the CBU from the union is
important because:
1. In a C.E., the votes are the whole bargaining
unit, whether union or non-union
members;
2. In CBA ratification, the voters are the whole
bargaining unit, not just the union
members;
3. In strike voting, the voters are the
members of the union, not the whole
bargaining unit. (Azucena, Vol. 2, 2016 p.
472)
Q: Union filed a petition for certification
election among the rank and file employees
of three security agencies including the
Veterans Security. The latter opposed
alleging that the three security agencies have
separate and distinct corporate
personalities. May a single petition for
certification election be filed by a labor union
in the three corporations instead of filing
three separate petitions?
A: YES. The following are indications that the
three agencies do not exist and operate
separately and distinctly from each other with
different corporate direction and goals:
1. Veterans Security failed to rebut the fact
that they are managed through the Utilities
Management Corporation with all their
employees drawing their salaries and
wages from the said entity;
2. That the agencies have common and
interlocking incorporators and officers;
3. That they have a single mutual benefit
system and followed a single system of
compulsory retirement;
4. They could easily transfer security guards
of one agency to another and back again by
simply filling-up a common pro-forma slip;
5. They always hold joint yearly ceremonies
such as the PGA Annual Awards Ceremony;
and
6. They continue to be represented by one
counsel.
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Hence, the veil of corporate fiction of the three
agencies should be lifted for the purpose of
allowing the Ees of the three agencies to form
single union. As a single bargaining unit, the Ees
need not file three separate PCE. (Philippine
Scout Veterans Security and Investigation Agency
v. SLE, G.R. No. 92357, July 21, 1993)
Q: Company XYZ has two recognized labor
unions, one for its rank-and-file employees
and the other for its supervisory employees.
Of late, the company instituted a
restructuring program by virtue of which A, a
rank-and-file employee and officer of rank-
and-file employees’ labor union, was
promoted to a supervisory position along
with four other colleagues, also active union
members and/or officers. Labor Union KMJ, a
rival labor union seeking recognition as the
rank-and-file bargaining agent, filed a
petition for the cancellation of the
registration of rank-and-file Ees labor union
on the ground that A and her colleagues have
remained to be members of rank-and-file Ees
labor union. Is the petition meritorious?
Explain. (2010 BAR)
A: NO. The inclusion as union members of Ees
outside the bargaining unit shall not be a ground
for the cancellation of the registration of the
union. Said Ees are automatically deemed
removed from the list of membership of said
union.
There are only three grounds for the
cancellation of union registration:
1. Misrepresentation, false statement or
fraud in connection with the adoption or
ratification of the constitution and by-laws
or amendments thereto, the minutes of
ratification and the list of members who
took part in the ratification;
2. Misrepresentation, false statements or
fraud in connection with the election of
officers, minutes of the election of officers,
and the list of voters;
3. Voluntary dissolution by the members.
(LC, Art. 239 as amended by RA 9481, June
14, 2007)
278
 Labor Law and Social Legislation

purposes of collective bargaining with the

BARGAINING REPRESENTATIVE employer.

Conditions:
1. The bargaining unit is not unionized;
An Organized establishment is an enterprise
2. The requesting union is the only union in
where there exists a recognized or certified sole
that bargaining unit;
and exclusive bargaining agent.
3. The CBU majority are members of the
union.
An Unorganized establishment, on the other
hand, is an enterprise where no union has yet
DOCUMENTARY REQUIREMENTS
been duly recognized or certified as bargaining
representative.
The Request should indicate:
Bargaining representative of the Ees for
purposes of collective bargaining 1. The name and address of the requesting
legitimate labor organization;
The labor organization designated or selected by 2. The name and address of the company
the majority of the Ees in an appropriate where it operates;
collective bargaining unit shall be the exclusive 3. The bargaining unit sought to be
representative of the Ees in such unit for the represented;
purpose of CB. However, an individual Ee or 4. The approximate number of the employees
group of Ees shall have the right at any time to in the bargaining unit; and
present grievances to their Er. [LC, Art. 267 5. The statement of the existence/non-
(formerly Art. 255) as amended by Sec 22 of RA existence of other labor organization/CBA.
6715, Sec. 22 (1989)]
Where to file the Request
Three (3) methods of determining the
exclusive bargaining representative: Any legitimate labor organization may file a
Request in the DOLE Regional Office which
1. SEBA Certification issued its certificate for registration or
2. Certification Election certificate of creation of chartered local, as the
3. Consent Election case may be.

Action on the Request

SEBA CERTIFICATION
Within one (1) day from the submission of the
This is a new mode of determining SEBA. D.O.
Request, the DOLE Regional Director should:
No. 40-I-15, s. 2015 issued on Sept. 7, 2015, has
expressly repealed the entire set of Rules
1. Determine whether the request for is
applicable to Voluntary Recognition in the
compliant with the documentary
Implementing Rules on Book V of the Labor
requirements and whether the bargaining
Code. (Chan, 2017)
unit sought to be represented is organized
or not; and
Rationale for the Repeal
2. Request a copy of the payroll for purposes
of SEBA certification.
By allowing the employer to extend “voluntary
recognition” to a union, it is no longer the
If the DOLE Regional Director finds the Request
employees but the employer who determines
deficient, he should advise the requesting union
and designates the SEBA when it is supposed to
or local to comply within 10 days from notice.
be just a mere “by-stander” in such
Non-compliance shall be deemed withdrawal of
determination and designation process. (Chan,
the request. (Sec. 3, D.O. 40-1-15, s. 2015)
2017)
Scenarios contemplated by the Rules on
SEBA Certification
Request for Sole and Exclusive Bargaining
Agent Certification
Process where a union requests the DOLE
regional director to recognize and certify the
union as the SEBA (sole and exclusive bargaining
agent) of the BU it purports to represent for

279
 LABOR RELATIONS – BARGAINING REPRESENTATIVE
1. Request certification in unorganized
establishment with only one legimate
union.
The DOLE Regional Director shall call a
conference within five (5) working days for
the submission of the following:
a. The names of employees in the covered
bargaining unit who signify their
support for the SEBA certification,
provided that said employees comprise
at least majority of the number of
employees in the covered bargaining
unit; and
b. Certification under oath by the
President that all documents submitted
are true and correct based on his/her
personal knowledge.
If the requesting union or local fails to
complete the requirements for the SEBA
certification during the conference, the
Request should be referred to the Election
Officer for the conduct of certification
election.
If the DOLE Regional Director finds that the
requirements are complete, he shall issue,
during the conference, a Certification as
SEBA.
Effect of the Issuance of the Certification
as SEBA
a. The certified union shall enjoy all the
rights and privileges of an exclusive
bargaining agent of all the employees
in the covered bargaining unit.
b. Certification Bar Rule. The issuance of
the SEBA Certification as SEBA bars the
filing of a petition for election by any
labor organization for a period of one
(1) year from the date of issuance.
2. Request for certification in unorganized
establishment with more than one
legimitate labor organization
If the DOLE Regional Director finds that the
establishment unorganized with more than
one legitimate labor organization, he should
refer the same to the Election Officer for the
conduct of certification election. (Sec. 5, D.O.
No. 40-I-15, s. 2015)
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
3. Request for certification in organized
establishment
If the DOLE Regional Director finds that the
establishment organized, he should refer the
same to the Mediator-Arbiter for the
determination of the propriety of conducting
a certification election.
Q: What would happen if the request is
denied?
A: It may be referred to an election officer for the
conduct of a certification election.
Q: What if it was granted?
A: Then the certified union shall enjoy the rights
and privileges of an EBA for the BU.
CERTIFICATION ELECTION
Certification Election
It is the process of determining through secret
ballot the sole and exclusive representative of
the Ees in an appropriate bargaining unit, for
purposes of CB or negotiation. [IRR, Book V, Rule
I, Sec. 1 (h)]
NOTE: The process is called CE because it serves
as the official, reliable and democratic basis for
the BLR to determine and certify the union that
shall be the exclusive bargaining representative
of the Ees for the purpose of bargaining with the
Er.
Nature of certification election
A CE is not a litigation but merely an
investigation of a non-adversarial fact-finding
character in which BLR plays a part of a
disinterested investigator seeking merely to
ascertain the desire of the Ees as to the matter of
their representation. (Airline Pilots Association of
the Philippines v. CIR, G.R. No. L-33705, April 15,
1977)
Certification proceedings directly involve only
two issues:
a. proper composition and constituency of the
bargaining unit; and
b. veracity of majority membership claims of
the competing unions so as to identify the
one union that will serve as the bargaining
280
 Labor Law and Social Legislation
representative of the entire bargaining unit.
(Azucena, Vol. 2, 2016, p. 477)
Purpose of a certification election
It is a means of determining the worker’s choice
of:
1. Whether they want a union to represent
them for CB or if they want no union to
represent them at all.
2. And if they choose to have a union to
represent them, they will choose which
among the contending unions will be the
sole and exclusive bargaining
representative of the Ees in the
appropriate bargaining unit.
Filing a petition for certification election
(PCE)
The following may file a PCE:
1. Any LLO
2. A national union or federation which has
already issued a charter certificate to its
local chapter participating in the CE
3. A local chapter which has been issued a
charter certificate
4. An Er only when requested to bargain
collectively in a bargaining unit where no
registered CBA exists. (IRR as amended by
D.O. 40-F-03, Book V, Rule VIII, Sec. 1)
NOTE: A national union or federation filing a
petition in behalf of its local/chapter shall not be
required to disclose the names of the
local/chapter’s officers and members, but shall
attach to the petition the charter certificate it
issued to its local/chapter. (IRR as amended by
D.O. 40-F-03, Book V, Rule VIII, Sec. 1)
In registration of federation or national
union, the 20% membership requirement
may not be complied with
The registration requirement of submitting the
names of all its members comprising at least
20% of all the Ees in the bargaining unit where it
seeks to operate is applicable only to
registration of independent union. LC merely
requires for proof of affiliation of at least 10 local
chapters and the names and addresses of the
companies where they operate. No 20%
membership requirement is required for
registration of a federation or national union.
281
NOTE: Under the LC and the rules, the power
granted to labor organizations to directly create
a chapter or local through chartering is given to
a federation or national union only, not to a
trade union center. (SMCEU v. San Miguel
Packaging Products Employees Union, G.R. No.
171153, Sept. 12, 2007)
Employer may file a petition for certification
election
Er may file a petition for certification election
when requested to bargain collectively, but it
should thereafter not be allowed to have an
active role in the CE; it shall merely act as a
bystander.
NOTE: If the petition for certification election
was filed by the federation which is merely an
agent, the petition is deemed to be filed by the
chapter, the principal which must be a legitimate
labor organization. The chapter cannot merely
rely on the legitimate status of the mother union.
Equity of the Incumbent
The incumbent bargaining agent will not file a
PCE because it will not contest its own status as
the bargaining representative.
It does not lose its representative status; it
remains the sole bargaining representative until
it is replaced by another. Until so replaced, it has
the right to retain the recognition by the
employer.
Time to File PCE
It would depend if the Bargaining Unit has a CBA
or none.
If there is none: Petition may be filed anytime
except within the 12 months of a previous
election, if any.
If there is a CBA: Petition may only be filed
within the “freedom period” of the
representational aspect of the CBA.
Q: In what instance may a petition for
certification election be filed outside the
freedom period of a current collective
bargaining agreement? (1997 BAR)
A: As a general rule in an establishment where
there is a CBA in force and effect, a PCE may be
filed only during the freedom period of such
CBA, but to have that effect, the CBA should have
 LABOR RELATIONS – BARGAINING REPRESENTATIVE

been filed and registered with the DOLE. (LC, After the last hearing, Med-Arbiter shall issue a
Art. 237, 265 and 268) formal order denying or granting the petition.

Thus, a CBA that has not been filed and
registered with the DOLE cannot be a bar to a
CE and such election can be held outside the
freedom period of such CBA.
Alternative Answer: A PCE may be filed outside
the freedom period of a current CBA if such CBA
is a new CBA that has been prematurely entered
into, meaning it was entered into before the
expiry date of the old CBA. The filing of the PCE
shall be within the freedom period of the old
CBA which is outside the freedom period of the
new CBA that had been prematurely entered
into.
Where to file the PCE
A petition for certification election shall be filed
with the Regional Office which issued the
petitioning union’s certificate of registration or
certificate of creation of chartered local.
IN AN UNORGANIZED ESTABLISHMENT
Unorganized Establishment
An unorganized establishment is a bargaining
unit with no recognized or certified bargaining
agent. It does not necessarily refer to an entire
company.
NOTE: It may happen that the rank-and-file unit
has a bargaining agent while the supervisory
unit still does not have such agent; thus, the
former is already an “organized establishment”
while the latter remains, in the same company,
an unorganized establishment.
Requirement for certification election in
unorganized establishments
The certification election shall be automatically
conducted upon the filing of a PCE by a LLO.

The petition shall be heard and resolved by the IN AN ORGANIZED ESTABLISHMENT

Med-Arbiter.
Requisites for certification election in an
NOTE: The filing or pendency of any inter/intra-
Organized Establishment
union dispute and other related labor relations
dispute is not a prejudicial question to any
The Mediator-Arbiter is required to
petition for certification election and shall not be
automatically order the conduct of a CE by secret
a ground for the dismissal of a petition for
ballot in an organized establishment as soon as
certification election or suspension of
the following requisites are met:
proceedings of certification election. (Sec. 2, Rule
XI of D.O. 40-03)
1. A petition questioning the majority status
of the incumbent bargaining agent is filed
Med-Arbiter’s Action on the Petition
before the DOLE within the 60-day freedom
period;
Hold a Preliminary Conference:
2. Such petition is verified;
3. The petition is supported by the written
1. To determine whether the PCE should be
consent of at least 25% of all the Ees in the
processed or dismissed;
bargaining unit. (LC, Art. 268; TUPAS-WFTU
2. To determine the BU that will participate in
v. Laguesma, G.R. No. 102350, June 30, 1994)
the election and the identity of the
contending unions.
Filing of 25% consent signatures in the
3. To determine the possibility of holding a
petition for certification election
“consent election”
Ideally, the signature should be filed together
a. If the unions agree, the PCE will no
with the petition. However, it may be filed after
longer be heard and the unions will
the petition within a reasonable period of time.
instead prepare for the consent
election. (There is implied waver of
Effect if the petition for certification election
the bars)
was not accompanied by the requisite 25%
b. If the unions fail to agree, hearings
consent signatures
would be conducted
Under the Implementing Rules, absence or
Conduct of Hearings
failure to submit the written consent of at least

UNIVERSITY OF SANTO TOMAS 282

2021 GOLDEN NOTES
 Labor Law and Social Legislation
25% of all the Ees in the bargaining unit to
support the petition is a ground for denying the
said petition.
Notwithstanding the provision of the IRR, that
failure to submit the required 25% consent
signatures is a ground for the denial of the
petition. The Supreme Court ruled that, it is
within the discretion of the Med-Arbiter whether
to grant or deny the petition despite absence of
the required 25% written consent. (Port Workers
Union v. Bienvenido Laguesma, G.R. Nos. 94929-
30, March 18, 1992)
If the petition, however, is accompanied by the
25% consent signatures, then the holding of the
CE becomes mandatory. (California
Manufacturing Corp. v. Laguesma, G.R. No. 97020,
June 8, 1992)
Consent signatures of at least 25% of the
employees in the bargaining unit may not be
submitted simultaneously with the filing of
the petition for certification election
The administrative rule requiring the
simultaneous submission of the 25% consent
signatures upon the filing of PCE should not be
strictly applied to frustrate the determination of
the legitimate representative of the workers.
Accordingly, the Court held that the mere filing
of a PCE within the freedom period is sufficient
basis for the issuance of an order for the holding
of a CE, subject to the submission of the consent
signatures within a reasonable period from such
filing. (Port Workers Union of the Phils. v.
Laguesma, G.R. Nos. 94929-30, March 18, 1992)
Rules prohibiting the filing of petition for
certification election (Bar rules)
1. General rule
The general rule is that in the absence of a CBA
duly registered in accordance with Art. 237 of
the Labor Code, a petition for certification
election may be filed at any time.
2. Bar rules
No certification election may be held under the
following rules:
1. Certification year bar rule;
2. Negotiations bar rule;
3. Bargaining deadlock bar rule; or
4. Contract bar rule
283
Certification year bar rule
Under this rule, a petition for certification
election may not be filed within one (1) year
from the date a valid certification, consent, run-
off or re-run election has been conducted within
the bargaining unit.
This is also called as the 12-month Bar rule.
NOTE: The same ban applies if “No Union” won
in the previous election.
NOTE: In case of failure of elections, a re-run
election will be held within six (6) months. Also,
when the election held is invalid.
Exception to the Certification year bar rule
When there is a failure of election - when the
number of votes cast in a certification or consent
election is less than the majority of the number
of eligible votes and there are no material
challenged votes.
Failure of election does not bar the holding of
another certification or consent election within
six months.
NOTE: If an election had been held but No Union
won, a PCE may be filed again but only after 12
months.
If a union has won, such union and the employer
must within 12 months start negotiating a
collective agreement.
Negotiation bar rule
Under this rule, no petition for certification
election should be entertained while the sole and
exclusive bargaining agent and the employer
have commenced and sustained negotiations in
good faith within the period of one (1) year from
the date of a valid certification, consent, run-off,
re-run or from the date of voluntary recognition.
Once the CBA negotiation have commenced and
while the parties are in the process of
negotiating the terms and conditions of the CA,
no challenging union is allowed to file a petition
for certification election that would disturb the
process and unduly forestall the early conclusion
of the agreement.
If after the lapse of 12 months and they failed to
commence the negotiation, the employees’ wish
to have a CBA is defeated. Hence, another union
 LABOR RELATIONS – BARGAINING REPRESENTATIVE
can petition again for a certification election to
replace the unproductive bargaining agent.
(Azucena, Vol. 2, 2016)
Bargaining deadlock bar rule
Under this rule, a petition for certification
election may not be entertained when a
bargaining deadlock to which an incumbent or
certified bargaining agent is a party has been
submitted to conciliation or has become the
subject of a valid notice of strike or lockout.
NOTE: The employer’s continuing act of evading
negotiation with the certified bargaining union is
tantamount to a bargaining deadlock.
Artificial Deadlock
A deadlock pre-arranged or preserved by
collusion of the employer and the majority
union. Signs of Artificial Deadlock includes
failure of the union to resort to conciliation,
failure to charge the Employer ULP or failure to
file a notice of strike despite the deadlock.
Contract bar rule
Under this rule, a petition for certification
election may not be filed when a CBA between
the employer and a duly recognized or certified
bargaining agent has been registered with the
Bureau of Labor Relations (BLR) in accordance
with the Labor Code. Where the CBA duly
registered, a petition for certification election
may be filed within the 60-day freedom period
prior to its expiry.
The purpose of this rule is to ensure stability in
the relationship of the workers and the
employer by preventing frequent modifications
of any CBA entered into by them in good faith
and for the stipulated original period.
NOTE: To bar a certification election, it is no
longer necessary that the CBA be “certified”; it is
enough that it is registered in accordance with
Art. 237. (Azucena, Vol. 2, 2016)
Requisites of Contract Bar
1. It must contain substantial terms and
conditions of employment sufficient to
stabilize the bargaining relationship;
2. It must be signed by the parties; and
3. The effective date and expiration date must
be readily discernible on the face of the
contract.
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Contract bar rule applied on extended CBA
under deadlock
No petition for certification election may be filed
before the onset of the freedom period nor after
such period. The old CBA is extended until a new
one is signed.
It shall be the duty of both parties to keep the
status quo and to continue in full force and effect
the terms and conditions of the existing
agreement during the 60-day period and/or
until a new agreement is reached by the parties.
The contract bar rule does not apply in the
following cases:
1. Where 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 Bureau of Labor
Relations of its intention to terminate the
said agreement if and when it is established
that the bargaining agent does not represent
anymore the majority of the workers in the
bargaining unit.
2. Where the CBA, despite its due registration,
is found in appropriate proceedings that (a)
it contains provisions lower than the
standards fixed by law; or (b) the documents
supporting its registration are falsified,
fraudulent or tainted with
misrepresentation.
3. Where the CBA does not foster industrial
stability, such as contracts where the
identity of the representative is in doubt
since the employer extended direct
recognition to the union and conducted a
CBA therewith less than one (1) year from
the time a certification election was
conducted where the “no union” vote won.
This situation obtains in a case where the
company entered into a CBA with the union
when its status as exclusive bargaining
agent of the employees has not been
established yet.
4. Where the CBA was registered before or
during the last sixty (60) days of a subsisting
agreement or during the pendency of a
representation case. It is well-settled that
the 60-day freedom period based on the
original CBA should not be affected by any
amendment, extension or renewal of the
CBA for purposes of certification election.
284
 Labor Law and Social Legislation
Denial; Other grounds:
The Med-Arbiter may either approve or
disapprove the PCE. The disapproval or denial of
the petition has to be based on the grounds
specified by the law:
1. Non-appearance: When petitioner does
not appear in two (2) successive
conferences called by the Med-Arbiter,
despite notice, the petition may be
dismissed.
2. Illegitimacy – Unregistered union: When
the petitioning union or national union or
federation is not listed in DOLE’s list of
LLOs or if its registration has been
cancelled.
Q: Does the filing of a petition for
cancellation of registration of union cause
the suspension or dismissal of a PCE?
A: NO. An order to hold a certification election is
proper despite the pendency of the petition for
cancellation of the registration certificate of the
respondent union. The rationale for this is that
at the time the respondent union filed its
petition, it still had the legal personality to
perform such act absent an order directing the
cancellation. (Association of Court of Appeals
Employees v. Ferrer-Calleja, G.R. No. 94716, Nov.
15, 1991)
NOTE: The finality of a decision cancelling the
certificate of registration of a LLO would not
retroact to the time of its issuance of the
certificate. Meaning, despite the fact that a PCE is
filed during the pendency of a trial ruling over
the legitimacy of a labor union, the filing for said
petition was done when it still had legal
personality. Additionally, the legitimacy of the
legal personality of a LLO cannot be
collaterally attacked. It must be done in a
separate action. (Legend International Resorts
Limited v. Kilusang Manggagawa Ng Legenda,
G.R. No. 169754, Feb. 23, 2011)
3. Illegitimacy – No charter: When the local
or chapter, or the national union or
federation fails to submit a duly issued
charter certificate of the chapter at the time
the union files its PCE, it will cause the
dismissal of the PCE.
4. Absence of employment relationship:
Employees’ right to unionize is founded on
285
the existence of Er-Ee relationship. If there
is none, there would be no basis.
Med-Arbiter can determine Er-Ee
relationship
Med-Arbiter has the authority to determine
existence of Er-Ee relationship in a PCE.
5. Lack of support (25% signature
requirement): When the union filing a PCE
does not have the support of 25% of the
bargaining unit manifested through their
signatures, the PCE may be denied.
Reason: without this minimum support, the
challenge to the incumbent union looks like
a nuisance. It must appear that a sizeable
portion of the employees desires to have a
union.
This requirement only applies to organized
establishments. In unorganized establishments,
it is merely directory.
NOTE: 25% requirement may be relaxed by the
Med-Arbiter and order the holding of the
certification election precisely for the purpose of
ascertaining which of the contending unions
shall be the EBA.
Effect of withdrawal of signature by the
employees
Critical factor to consider is when the
withdrawal happened:
1. If it is made before the filing, the
withdrawal is presumed voluntary and
affects the propriety of the petition.
2. If it is made after the filing, the withdrawal
is deemed involuntary and does not cause
the dismissal of the petition.
Appeal of grant or denial of PCE
It would depend if the establishment is
organized or unorganized.
1. In case of organized establishment, it is
appealable.
2. In case of unorganized establishment, it
is not appealable, except if the petition is
denied.
NOTE: The filing or pendency of any inter/intra-
union dispute and other related labor relations
dispute is not a prejudicial question to any
 LABOR RELATIONS – BARGAINING REPRESENTATIVE
petition for certification election and shall not be
a ground for the dismissal of a petition for
certification election or suspension of
proceedings of certification election. (Sec. 2, Rule
XI of D.O. 40-03)
Double Majority rule (certification election)
1. Valid election (1st majority) – majority of
eligible voters shall have validly cast their
votes (First Majority rule).
2. Winning Union (2nd majority) – the
winner who obtained majority of the valid
votes cast shall be declared as the
bargaining agent in the bargaining unit
(Second Majority rule).
Q: Liwayway Glass had 600 rank-and-file
employees. Three rival unions A, B, and C ‒
participated in the certification election
ordered by the Med-Arbiter. Five hundred
(500) employees voted. The unions obtained
the following votes: A-200; B-150; C-50; 90
employees voted “no union”; and 10 were
segregated votes. Out of the segregated votes,
four (4) were cast by probationary
employees and six (6) were cast by dismissed
employees whose respective cases are still
on appeal. (2014 BAR)
a. Should the votes of the probationary
and dismissed employees be counted in
the total votes cast for the purpose of
determining the winning labor union?
b. Was there a valid election?
c. Should Union A be declared the winner?
d. Suppose the election is declared invalid,
which of the contending unions should
represent the rank-and-file employees?
e. Suppose that in the election, the unions
obtained the following votes: A-250; B-
150; C-50; 40 voted “no union”; and 10
were segregated votes. Should Union A
be certified as the bargaining
representative?
A:
a. YES. Rule IX, Sec. 5 of DOLE D.O. No. 40-03
provides that “all employees who are
members of the appropriate bargaining
unit sought to be represented by the
petitioner at the time of the issuance of the
order granting the conduct of a certification
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
election shall be eligible to vote. An
employee who has been dismissed from
work but has contested the legality of the
dismissal in a forum of appropriate
jurisdiction at the time of the issuance of
the order for the conduct of a certification
election shall be considered a qualified
voter, unless his/her dismissal was
declared valid in a final judgment at the
time of the conduct of the certification
election.”
b. YES. To have a valid election, at least
majority of all eligible voters in the unit
must have cast their votes. In the instant
case, 500 out of 600 rank-and-file
employees voted.
c. NO. The Labor Code provides that the
Labor Union receiving majority of the valid
votes cast shall be certified as the exclusive
bargaining agent of all the workers in the
unit. Here, the number of valid votes cast is
490; thus, the winning union should
receive at least 246 votes. Union A only
received 200 votes.
d. None of them should represent the rank-
and-file employees.
e. YES. The Labor Code provides that the
Labor Union receiving majority of the valid
votes cast shall be certified as the exclusive
bargaining agent of all the workers in the
unit. Here, the number of valid votes cast is
490. Thus, the winning union should
receive at least 246 votes; Union A received
250 votes.
Employer as a Bystander (Bystander Rule)
In all cases, whether the PCE is filed by an Er or a
LLO, the Er shall not be considered a party
thereto with a concomitant right to oppose a
PCE. The only purpose of the proceeding is to
determine which organization will represent the
employees in bargaining with the employer. The
choice of representative is the exclusive concern
of the employees.
The Er’s participation in such proceedings
shall be limited to:
Being notified or informed of petitions of such
nature; and
Submitting the list of Ees during the pre-election
conference should the Mediator-Arbiter act
286
 Labor Law and Social Legislation

favorably on the petition. (Republic v. Held according to the Procedure is

Kawashima Textile, G.R. No. 160352, July 23, Labor Code and its governed by the
2008) implementing rules union by-laws

Employer’s possible recourse The winner in a

If the employer believes that the union has certification election
inappropriate membership because it includes is an entity, a union, Winners in a union
rank-and-file with managerial/supervisory which becomes the election become
employees, the employer’s recourse is not to representative of the officers and
oppose the PCE, but to file a separate petition to whole bargaining unit representatives of
cancel the union’s registration. (Azucena, Vol. 2, that includes even the the union only
2016, p. 503) members of the
defeated union
Q: May an organization which carries a
mixture of rank-and-file and supervisory Q: Who can vote in the CE?
employees possess any of the rights of a
legitimate labor organization, including the A: All employees who are members of the
right to file a petition for certification appropriate BU three (3) months prior to the
election for the purpose of collective filing of PCE including those dismissed from
bargaining? work but has contested the legality of the
dismissal in a proper forum. The Code does not
A: YES. While there is a prohibition against the make any distinction as to the employment
mingling of supervisory and rank-and-file status.
employees in one labor organization, the Labor
Code does not provide for the effects thereof. Issues directly involved in a certification
Thus, the Court held that after a labor proceeding
organization has been registered, it may exercise
all the rights and privileges of a legitimate labor 1. Proper composition and constituency of the
organization. Any mingling between supervisory bargaining unit; and
and rank-and-file employees in its membership 2. The veracity of majority membership
cannot affect its legitimacy for that is not among claims of the competing unions so as to
the grounds for cancellation of its registration, identify the one union that will serve as the
unless such mingling was brought about by bargaining representative of the entire
misrepresentation, false statement or fraud bargaining unit.
under Art. 239 of the Labor Code. (Republic v.
Kawashima Textile, G.R. No. 160352, July 23, NOTE: Some of the Ees may not want to have a
2008) union; hence, “no union” is one of the choices
named in the ballot. If “no union” wins, the
Certification Election vs. Union Election company or the bargaining unit remains un-
unionized for at least 12 months, the period is
CERTIFICATION known as 12-month bar. After that period, a PCE
UNION ELECTION may be filed again.
ELECTION
The process, ordered
Five-year representation status of a
and supervised by
bargaining agent cannot be extended
DOLE, of determining, Held pursuant to the
through secret ballot, union’s constitution
While the parties may agree to extend the CBA’s
whether or not a and by-laws, and the
original five-year term together with all other
majority of the right to vote in it is
CBA provisions, any such amendment or term in
employees wish to be enjoyed only by
excess of five years will not carry with it a
represented by a union members
change in the union’s exclusive CB status. Under
labor union and, if so,
Art. 265, LC, the exclusive bargaining status
by which union
cannot go beyond five years and the
All employees Only members of representation status is a legal matter not for the
whether union that union may vote workplace parties to agree upon.
members or not, who unless otherwise
belongs to the authorized by the In other words, despite an agreement for a CBA
bargaining unit can union constitution with a life of more than five years, either as an
vote and by-laws original provision or by amendment, the

287
 LABOR RELATIONS – BARGAINING REPRESENTATIVE
bargaining union’s exclusive bargaining status is
effective only for five years and can be
challenged within 60 days prior to the expiration
of the CBA’s first five years. (FVC Labor Union-
Philippine Transport and General Workers
Organization v. Sama-
samangNagkakaisangManggagawasa FVC-
Solidarity of Independent and General Labor
Organizations, G.R. No. 176249, Nov. 27, 2009)
Illegally dismissed employees of the
company may participate in the certification
election
It is now well-settled that Ees who have been
improperly laid off but who have at present an
unabandoned right to or expectation of re-
employment, are eligible to vote in CEs. Thus,
and to repeat, if the dismissal is under question,
as in the case now at bar whereby a case of
illegal dismissal and/or ULP was filed, the Ees
concerned could still qualify to vote in the
elections (Philippine Fruits & Vegetables
Industries v. Torres, G.R. No. 92391, July 3, 1992).
Employees whose services were terminated
are still entitled to vote during the
certification election
Provided that there is a pending illegal dismissal
case filed by them in the proper forum. While the
case is still pending, the Er-Ee relationship is not
yet severed.
RUN-OFF ELECTION
Run-off Election
A run-off election refers to an election between
the labor union receiving the two highest votes
in a certification election or consent election
with three or more unions in contention, where
such certification election or consent election
results in none of the contending unions
receiving the majority of the valid votes cast;
provided, that the total number of votes for all
contending unions, if added is at least fifty
percent (50%) of the number of valid votes cast.
(LC, Art. 268, as renumbered)
Qualification of voters in the run-off election
The same voters’ list used in the certification
election shall be used in the run-off election.
When to be conducted
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
If 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 motu proprio conduct the run-off election
within ten days from the close of the election
proceeding between the labor unions receiving
the two highest number of votes cast.
Requirements for a run-off election
1. An election was conducted with three or
more choices;
2. None of the contending union obtained the
required majority vote of 50% + 1 of the
valid votes cast;
3. There are no objections or challenges that
can alter the results materially; and
4. The number of votes received by all
contending unions when added together
amounts to at least 50% of the total votes
cast.
A run-off election is proper if five concurrent
conditions exist:
1. A valid election took place because majority
of the CBU members voted;
2. The election presented at least three
choices, e.g., Union One, Union Two, and No
Union, meaning, there are at least two
union “candidates”;
3. Not one of the unions obtained the majority
valid votes;
4. The total number of votes for all the unions
is at least 50% of the votes cast; and
5. There is no unresolved challenge of voter or
election process. (Azucena, 2016)
NOTE: Thus if “no union” garnered the majority
vote, no run-off elections may be held.
Choices in a run-off election
The unions receiving the highest and 2nd highest
number of the votes cast. (IRR, Book V, Rule X,
Sec. 2)
“No Union” is not a choice in the Run-off
Election.
Posting of notice for run-off election
The notice should be posted by the Election
Officer at least five days before the actual date.
(IRR, Book V, Rule X, Sec. 1)
RE-RUN ELECTION
288
 Labor Law and Social Legislation

There are three instances of Re-Run: A: The deliberations of the 1986 Constitutional
Commission reveal the intention was to refer to
1. Failure on certification election declared by participation in grievance procedures, voluntary
the election officer; modes of settling disputes, and collective
2. Tie between two unions; bargaining, and not to formulation of corporate
3. Tie between a union and no union. programs or policies. (Azucena, Vol. 2, 2016, p.
449)
In both instances, the “no union” is also a choice.
Q: The hotel union filed a Notice of Strike
CONSENT ELECTIONS with the National Conciliation and Mediation
Board (NCMB) due to an unfair labor practice
Consent election is an election that is voluntarily against the Diamond Hotel who refused to
agreed upon by the parties with or without the bargain with it. The hotel advised the union
intervention of DOLE for the purpose of that since it was not certified by the DOLE as
determining the EBA. the exclusive bargaining agent, it could not
be recognized as such. The union sought to
Difference between Certification Election and bargain for members only. May the Union
Consent Election bargain collectively?
CERTIFICATION CONSENT
A: NO. The labor organization not recognized as
ELECTION ELECTION
the Exclusive Bargaining Representive cannot
Voluntarily agreed bargain with the employer in behalf of the
upon by the parties employees. (Manila Diamond Hotel v. Manila
Ordered by DOLE
with or without the Diamond Hotel Ees Union, G.R. No. 158075, June
intervention of DOLE 30, 2006)

Duty of Fair Representation Principle of Codetermination or co-sharing

The winning union in the certification election
becomes the EBA of all the workers in the BU
and shall represent even the members of the
minority union.
EXCLUSIVE BARGAINING REPRESENTATION
AND WORKER’S PARTICIPATION IN POLICY
AND DECISION-MAKING
(2007 BAR)
It refers to the right of workers to participate in
policy and decision-making process affecting
their rights and benefits. (PAL v. NLRC, G.R. No.
85985, Aug. 13, 1993; 1987 Constitution, Art. XIII,
Sec. 3)
Individual Grievance

Rule on solicitation of questions, suggestions The presence of an employees’ organization (a

and complaints by the Er from the Ees who
are represented by a union
GR: The Er may not solicit questions,
suggestions and complaints from Ees who are
represented by a union.
XPNs:
1. The CB representative executes an
agreement waiving the right to be present
on any occasion when Ee grievances are
being adjusted by the Er; and
2. Er acts strictly within the terms of his
waiver agreement.
Q: What is the meaning or extent of the
workers’ right to participate in policy and
decision-making? Does it carry approval/
disapproval power?
union, an LMC or other forum), does not replace
the individual employee’s right to pursue
grievances. Each employee retains the right to
deal with his or her employer, and vice-versa.
(Art. 267, LC)
Q: Does the worker’s right to participate in
policy and decision-making process as
provided under Art. XIII, Sec. 13 of the 1987
Constitution include membership in the
Board of Directors of a corporation? (2008
BAR)
A: NO. The SC recognized the right of the union
to participate in policy formulation and decision-
making process on matters affecting the union
members’ rights, duties and welfare. However,
such participation of the union in committees of
the Er is not in the nature of a co-management
control of the business. Impliedly, therefore,

289
 LABOR RELATIONS – BARGAINING REPRESENTATIVE

workers’ participatory right in policy and

decision-making processes does not include the
right to put a union member in a corporation’s
Board of Directors. (Manila Electric Company v.
Quisumbing, G.R. No. 127598, Jan. 27, 1999)

Q: May the employees’ demand participation

in making the company’s code of discipline?

A: YES. The employees may demand

participation. The Supreme Court declared that
employees possess the right to participate in the
deliberation of matters which may affect their
rights and the formulation of policies relative
thereto. (PAL v. NLRC, G.R. No. 85985, Aug. 13.
1993)

NOTE: Participatory right does not grant

management control, but a policy about
employee’s tenure needs their participation.

Q: Enumerate at least four (4) policies

enshrined in Sec. 3, Art. XIII of the
Constitution that are not covered by Art. 3 of
the Labor Code on declaration of basic policy.
(2009 BAR)

A:
1. All workers shall have the right to
peaceful concerted activities, including the
right to strike in accordance with law.
2. They shall be entitled to a living wage.
3. They shall participate in policy and
decision making processes affecting their
rights and benefits as may be provided by
law.
4. The state shall promote the principle of
shared responsibility between workers
and employers. [Answers to Bar questions
in Labor law and Social Legislations, UP
Law Complex (2017), p. 137]

UNIVERSITY OF SANTO TOMAS 290

2021 GOLDEN NOTES
 Labor Law and Social Legislation

Union dues
RIGHTS OF LABOR ORGANIZATIONS
These are regular monthly contributions paid by
the members to the union in exchange for the
benefits given to them by the CBA and to finance
A legitimate labor organization shall have the
the activities of the union in representing the
right:
union.
1. To act as the representative of its members
Check-off
for the purpose of collective bargaining;
It is a method of deducting from an Ee’s pay at a
2. To be certified as the exclusive
prescribed period, the amounts due the union
representative of all the employees in an
for fees, fines and assessments.
appropriate bargaining unit for purposes of
collective bargaining;
Under Art. 113, one of the lawful deductions
from employee’s wage is “for union dues, in
3. To be furnished by the employer with
cases where the right of the worker or his union
annual audited financial statements,
to check-off has been recognized by the
including the balance sheet and the profit
employer or authorized in writing by the
and loss statement;
individual worker concerned.” (Azucena, Vol. 2,
2016, p. 236)
4. To own property, real or personal;
Nature and purpose of union dues
5. To sue and be sued in its registered name;
and
Union dues are the lifeblood of the union. All
unions are authorized to collect reasonable
6. To undertake all other activities designed
membership fees, union dues, assessments, fines
to benefit the organization and its
and other contributions for labor education and
members; [LC, Art. 251, renumbered]
research, mutual death and hospitalization
benefits, welfare fund, strike fund and credit and
7. To collect reasonable membership fees,
cooperative undertakings. [LC, Art. 292(a),
union dues, assessments, fines and other
renumbered]
contributions. [LC, Art. 292(a), renumbered]
REQUIREMENTS FOR VALIDITY
UNION DUES AND SPECIAL ASSESSMENTS
Requisites to Collect Special Assessment
Dues and assessments which the union may
collect
GR: No special assessments, attorney’s fees,
negotiation fees or any other extraordinary fees
Legitimate labor organizations are authorized to
may be checked off from any amount due to an
collect reasonable amount of the following:
employee unless there is:
1. Membership fees
1. Authorization by a written resolution of the
2. Union dues
majority of all members at the general
3. Assessments
membership meeting duly called for that
4. Fines
purpose;
5. Contribution for labor education and
2. Secretary’s record of the minutes of the
research, mutual death and hospitalization
meeting;
benefits, welfare fun, strike fund and credit
3. Individual written authorization for check-
and cooperative undertakings [LC, Art. 292
off duly signed by the employee concerned.
(a), renumbered]
(ABS-CBN Supervisors Employees Union
6. Agency fees [LC, Art. 259 (e), renumbered]
Members v. ABS-CBN Corp., G.R. No. 106518,
March 11, 1999)
Assessments
The authorization should specify the:
Payments used for a special purpose. Especially
1. Amount;
if required only for a limited time. (Azucena, Vol.
2. Purpose; and
2, 2016, p. 237)
3. Beneficiary of the deduction.

291
 LABOR RELATIONS – RIGHTS OF LABOR ORGANIZATIONS
XPNs:
a. For mandatory activities under the LC;
b. For Agency Fees;
c. When non-members of the union avail of
the benefits of the CBA:
i. Non-members may be assessed union
dues equivalent to that paid by union
members;
ii. Only by board resolution approved by
majority of the members in general
meeting called for the purpose.
Effect of failure to strictly comply with the
requirements set by law
It shall invalidate the questioned special
assessments. Substantial compliance with the
requirements is not enough in view of the fact
that the special assessment will diminish the
compensation of union members. (Palacol v.
Ferrer-Calleja, G.R. No. 85333, Feb. 26, 1990)
Jurisdiction over check-off disputes
Being an intra-union dispute, the Regional
Director of DOLE has jurisdiction over check off
disputes. (LC, Art. 250 (p))
AGENCY FEE
Agency fee
It is an amount equivalent to union dues, which a
non-union members pays to the union because
he benefits from the CBA negotiated by the
union.
NOTE: Payment by non-union members of
agency fees does not amount to unjust
enrichment because the purpose of such dues is
to avoid discrimination between union and non-
union members. The source of Agency Fee is not
contractual by quasi-contractual particularly
unjust enrichment.
Requisites for assessment of agency fees
1. The Ee is part of the bargaining unit
2. He is not a member of the union
3. He partook of the benefits of the CBA
NOTE: The individual authorization required
under Art. 250(n) shall not apply to non-
members of the recognized CB agent with regard
to assessment of agency fees.
NOTE: The employee's acceptance of benefits
resulting from a collective bargaining agreement
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
justifies the deduction of agency fees from his
pay and the union's entitlement thereto. In this
aspect, the legal basis of the union's right to
agency fees is neither contractual nor statutory,
but quasi-contractual, deriving from the
established principle that non-union employees
may not unjustly enrich themselves by
benefiting from employment conditions
negotiated by the bargaining union. (Holy Cross
of Davao College v. Hon. Joaquin, G.R. No. 110007,
Oct. 18, 1996)
Q: A is employed by XYZ Company where XYZ
Employees Union (XYZ-EU) is the recognized
exclusive bargaining agent. Although A is a
member of rival union XYR-MU, he receives
the benefits under the CBA that XYZ-EU had
negotiated with the company. XYZ-EU
assessed A, a fee equivalent to the dues and
other fees paid by its members but A insists
that he has no obligation to pay said dues and
fees because he is not a member of XYZ–EU
and he has not issued an authorization to
allow the collection. Explain whether his
claim is meritorious. (2010 BAR)
A: NO. The fee exacted from A takes the form of
an agency fee which is sanctioned by Art. 248
(now 259) (e), LC. The collection of agency fees
in an amount equivalent to union dues and fees
from Ees who are not union members is
recognized under the LC. The union may collect
such fees even without any written
authorization from the non-union member Ees, if
said Ees accept the benefits resulting from the
CBA. The legal basis of agency fees is quasi-
contractual. (Del Pilar Academy v. Del Pilar
Academy Employees Union, G.R. No. 170112, April
30, 2008)
UNION DUES vs. AGENCY FEES
Union dues vs. agency fees
AGENCY
BASIS UNION DUES
FEES
Collected by
the union
from non-
members
belonging to
Collected
From whom the same
from union
collected bargaining
members
unit who
receive the
benefits
under the
CBA.
292
 Labor Law and Social Legislation
Can be
There must
assessed
be an
even without
Need for individual
the written
Written written
authorization
Authorization authorization
of the
by individual
employee
members.
concerned.
COLLECTIVE BARGAINING
Duty to Bargain Collectively
The duty to bargain collectively means the
performance of a mutual obligation to meet and
convene promptly and expeditiously in good
faith for the purpose of:
1. Negotiating an agreement with respect to
wages, hours of work and all other terms
and conditions of employment;
2. Including proposals for adjusting any
grievances or questions arising under such
agreement; and
3. Executing a contract incorporating such
agreements if requested by either party but
such duty does not compel any party to
agree to a proposal or to make any
concession. (LC, Art. 263, renumbered)
4. Negotiation over the terms of a new
contract or proposed modifications, when
an existing agreement is validly opened for
negotiations (Azucena, Vol. 2, 2016, p. 374)
When there is no CBA
In the absence of an agreement or other
voluntary arrangement providing for a more
expeditious manner of Collective Bargaining, it
shall be the duty of employer and the
representatives of the employees to bargain
collectively in accordance with the provisions of
the LC. (LC, Art. 262, renumbered)
When there is a CBA
When there is a CBA, the duty to bargain
collectively, in addition to Art. 263, renumbered,
shall mean that neither party shall terminate nor
modify such agreement during its lifetime.
However, either party can serve a written notice
to terminate or modify the agreement at least 60
days prior the expiration of its 5th year.
293
NOTE: It shall be the duty of both parties to keep
the status quo and to continue in full force and
effect the terms and conditions of the existing
agreement during the 60-day period and/or
until a new agreement is reached by the parties
– automatic renewal clause. (LC, Art. 264,
renumbered).
Jurisdictional Preconditions of Collective
Bargaining:
1. Possession of the status of majority
representation of the employees’
representative
2. Proof of majority representation
3. A demand to bargain.
NOTE: An employer’s duty to recognize and
bargain collectively with a union does not arise
until the union requests the employer to bargain.
Q: When should bargaining begin and when
should it end?
A: It begins when the three (3) jurisdictional
preconditions are present, the collective
bargaining should begin within the 12 months
following the determination and certification of
the employees’ exclusive bargaining
representative. The period is known as
certification year.
The law encourages expeditious and good-faith
negotiations but fixes no time limit for
completion of the negotiation. The law dictates
no deadline. It depends upon the will and
agreement of the negotiating panels. (Azucena,
Vol. 2, 2016, p. 382-383)
COLLECTIVE BARGAINING AGREEMENT
Refers to a contract executed upon request of
either the employer or the exclusive bargaining
representative of the employees incorporating
the agreement reached after negotiations with
respect to wages, hours of work and all other
terms and conditions of employment, including
proposals for adjusting any grievances or
questions under such agreement.
Nature
The CBA is the law between the contracting
parties and the Collective Bargaining
representative and the employer-company.
Compliance with a CBA is mandated by the
expressed policy to give protection to labor.
 LABOR RELATIONS – RIGHTS OF LABOR ORGANIZATIONS
(Vicente Almario v. Philippine Airlines, Inc., G.R.
No. 170928, Sept. 11, 2007)
NOTE: Unilateral changes in the implementation
of the provisions of the CBA cannot be allowed
without the consent of both contracting parties.
(Wesleyan University-Philippines v. WUP Faculty
and Staff Association, G.R. No. 181806, March 12,
2014)
Purpose
The goal of Collective Bargaining is the making
of agreements that will stabilize business
conditions and fix fair standards of working
conditions. (P.I. Manufacturing, Incorporated v.
P.I. Manufacturing Supervisors and Foremen
Association, G.R. No. 167217, Feb. 4, 2008)
Registration
Within 30 days from execution of CBA, the
parties thereto shall submit the agreement to the
DOLE Regional Office where the bargaining
union is registered or where it principally
operates. Multi-employer collective bargaining
agreements shall be filed with the Bureau.
NOTE: Failure to register the CBA does not make
it invalid or unenforceable. Once it is duly
entered into and signed by the parties, a CBA
becomes effective as between the parties
whether or not it has been certified by the BLR.
(Liberty Flour Mills Employees Association v.
Liberty Flour Mills, G.R. Nos. 58768-70, Dec. 29,
1989) However, its non-registration renders the
contract-bar rule inoperative.
Requirements for Registration
The application for CBA registration shall be
accompanied by the original and two duplicate
copies of the following requirements:
1. CBA
2. A statement that the CBA was posted in at
least two conspicuous places in the
establishment concerned for at least five
days before its ratification
3. Statement that the CBA was ratified by the
majority of the Ees in the bargaining unit.
The following documents must be certified
under oath by the representative of the
employer and the labor union. No other
document shall be required in the registration of
the CBA.
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Q: What is the effect for non-compliance with
the requirement of posting?
A: In one case, the CBA was not posted for at
least five days in two conspicuous places in the
establishment before ratification, to enable the
workers to clearly inform themselves of its
provisions. Moreover, the CBA submitted to the
MOLE (now SOLE) did not carry the sworn
statement of the union secretary, attested by the
union president, that the CBA had been duly
posted and ratified, as required by Sec. 1, Rule 9,
Book V of the Implementing Rules and
Regulations. These requirements being
mandatory, non-compliance therewith rendered
the said CBA ineffective. (Associated Trade
Unions v. Trajano, G.R. No. L-75321, June 20,
1988)
NOTE: In case of denial by the Regional Office, it
is appealable to the Bureau within 10 days. In
case of denial by the Bureau, it is appealable to
the Secretary of Labor and Employment.
Ratification of the CBA
GR: The agreement negotiated by the
employees' EBR should be ratified or approved
by the majority of all the workers in the
bargaining unit. The proper ratifying group is
not the majority union but the majority of all the
workers in the bargaining unit represented by
the negotiation.
XPN: Ratification of the CBA by the employees is
not needed when the CBA is a product of an
arbitral award by a proper government
authority [LC, Art. 278 (g), renumbered] or a
voluntary arbitrator (LC, Art. 275, renumbered).
Effectivity of an Arbitral Award
CBA arbitral awards granted after six months
from the expiration of the last CBA, shall retroact
to such time agreed upon by both parties. Absent
such an agreement, the award shall retroact to
the first day after the six-month period following
the expiration of the last day of CBA.
In the absence of a CBA, the Secretary’s
determination of the date of retroactivity as part
of his discretionary powers over arbitral awards
shall control. (Manila Electric Co. v. Quisumbing,
G.R. No. 127598, Feb. 22, 2000)
Zipper clause
294
 Labor Law and Social Legislation
It is a stipulation in a CBA indicating that issues
that could have been negotiated upon but not
contained in the CBA cannot be raised for
negotiation when the CBA is already in effect. All
matters not included in the agreement shall be
deemed to have been raised and disposed of as if
covered.
A CBA is not an ordinary contract but one
impressed with public interest, only provisions
embodied in the CBA should be so interpreted
and complied with. Where a proposal raised by a
contracting party does not find print in the CBA,
it is not a part thereof and the proponent has no
claim whatsoever to its implementation under
the zipper clause. (SMTFM-UWP v. NLRC, G.R. No.
113856, Sept. 7, 1998)
Effectivity
The effectivity date depends on whether the CBA
is the first CBA or a renegotiated CBA.
1. First CBA - Effectivity date depends upon
the agreement of the parties.
NOTE: The determining point is the date
the parties agreed, not the date they signed.
2. Renegotiated CBA - If within six (6)
months from the expiry date of the old CBA,
then the new CBA starts to take effect on
the date following such expiry date. If
beyond six (6) months, the retroaction date
will have to be agreed upon by the parties.
NOTE: The date is important particularly in
relation to wage increase because a long
retroaction period will mean sizeable back pay
to employees.
Duration of a CBA
1. Economic and Non-Economic Aspect –
may last for a maximum period of 3 years
after the execution of the CBA.
2. Representation Aspect – may last for 5
years. It refers to the identity and majority
status of the union that negotiated the CBA
as the exclusive bargaining representative.
60-Day Freedom Period (Representative
Aspect)
During the 60-day freedom period:
1. A labor union may disaffiliate from the
mother union to form a local or
295
independent union only during the 60-day
freedom period immediately preceding the
expiration of the five-year term of the CBA.
2. Either party can serve a written notice to
terminate or modify agreement at least 60
days prior to the expiration of the five-year
term of the CBA.
3. A PCE may be filed.
60–Day Notice Period (Non-representative
aspect)
The freedom period under Art. 265 & 268 is
different from the other 60-day period
mentioned in Art. 264. The latter speaks of the
right of the parties to propose modifications to
the existing CBA, as an exception to the rule that
the CBA cannot be modified during its lifetime,
within 60 days prior the expiration of its
economic/non-economic aspect. This 60-day
period does not and cannot refer to the
representative status of the incumbent union
since the acquisition or loss of representative
status is to be resolved through CE.
Q: Is the 10-year suspension of the CBA
unconstitutional and contrary to public
policy?
A: The assailed PAL-PALEA agreement was the
result of voluntary collective bargaining
negotiations undertaken in the light of the
severe financial situations faced by the
employer. It is a valid exercise of the freedom to
contract. (Rivera, et al. v. Espiritu, G.R. No.
135547, Jan. 23, 2002)
Procedure in Collective Bargaining
When a party desires to negotiate an agreement:
1. It shall serve a written notice upon the
other party with a statement of proposals;
2. Reply by the other party shall be made
within ten (10) calendar days with counter
proposals;
3. In case of differences, either party may
request for a conference which must be
held within 10 calendar days from receipt
of request;
4. If not settled, NCMB may intervene and
shall exert all efforts to settle disputes
amicably, and encourage the parties to
submit the dispute to a voluntary
arbitrator;
 LABOR RELATIONS – RIGHTS OF LABOR ORGANIZATIONS

5. If not resolved, the parties may resort to
any other lawful means (either to settle the
dispute or submit it to a voluntary
arbitrator).
NOTE: During the conciliation proceeding in the
NCMB, the parties are prohibited from doing any
act which may disrupt or impede the early
settlement of disputes. (LC, Art. 261 [d])
Stevedoring Services, Inc. v. Confessor, G.R. No.
110854, Feb. 13, 1995)
The rationale of the such clause to make it the
duty of the parties to keep the status quo and to
continue in full effect the terms and conditions of
the existing agreement until a new agreement is
reached by the parties. (Principle of CBA
Continuity) (LC, Art. 264, renumbered)

Mandatory Provisions of the CBA Hold-over Principle

In order for a matter to be subject to mandatory It shall be the duty of both parties to keep the
collective bargaining, it must materially or status quo and to continue in full force and effect
significantly affect the terms or conditions of the terms and conditions of the existing
employment. agreement during the 60-day period and/or
until a new agreement is reached by the parties.
Examples of matters considered as mandatory Despite the lapse of the formal effectivity of the
subjects of bargaining: CBA the law still considers the same as
continuing in force and effect until a new CBA
1. Wages and other types of compensation shall have been validly executed.
including merit increases
2. Working hours and working days, including Q: Does the hold-over principle apply to an
work shifts imposed CBA / arbitral award?
3. Vacations and holidays
4. Bonuses A: YES. The hold-over principle applies to an
5. Pensions and retirement plants imposed CBA. The law does not provide for any
6. Seniority exception nor qualification on which economic
7. Transfer provisions of the existing agreement are to
8. Lay-offs retain its force and effect. Likewise, the law does
9. Employee workloads not distinguish between a CBA duly agreed upon
10. Work rules and regulations by the parties and an imposed CBA. (General
11. Rent of company houses Milling Corporation – ILU v. General Milling Corp.,
12. Union security arrangements G.R. No. 193723, July 20, 2011)

CBA should include the mandatory provisions

such as grievance procedure, “no strike-no
lockout” clause, cooperative scheme, and Labor
Management Council (LMC). (Abad, 2015, p. 201)

No duty to agree even on mandatory subjects

The law speaks of a duty to bargain but not of an

obligation to agree. The law does not compel
agreements between employers and employees,
and neither party is legally obligated to yield
even on a mandatory bargaining subject.
(Azucena, Vol. 2, 2016, p. 403)

Q: What is the automatic renewal clause of

collective bargaining agreements? (2008
BAR)

A: The automatic renewal clause means that

although the CBA has expired, it continues to
have legal effects as between the parties until a
new CBA has been entered into. (Pier &Arrastre

UNIVERSITY OF SANTO TOMAS 296

2021 GOLDEN NOTES
 LABOR LAW AND SOCIAL LEGISLATION

A: There should be a finality of judgment in a

labor case finding that the respondent indeed
UNFAIR LABOR PRACTICE committed ULP.

NOTE: The judgment in the labor case cannot be

used as evidence in the criminal case. It should
ULP means any unfair labor practice as
be noted that the evidence required in labor
expressly defined by the Labor Code. [LC, Art.
proceedings is only substantial evidence while
219 (k), renumbered]
criminal cases need proof beyond reasonable
doubt. Thus, the criminal charge needs to be
ULP has a technical meaning. It only refers to
proven independently from the labor case.
acts that violate the right of employees to self-
organization and the observance of the CBA.
Difference between Civil and Criminal aspect
Thus, not all unfair acts constitute as unfair
of ULP
labor practice. Without the element of self-
organization, an act, no matter how unfair,
cannot be considered as unfair labor practice. CIVIL ASPECT CRIMINAL ASPECT
Persons liable
Q: Is there an exception where ULP is Officers and agents of Officers and agents
committed even if the act is not a violation of employer or labor who participated or
an employee’s right to self-organization? organizations authorized the act
Jurisdiction
A: YES. Dismissing or prejudicing an employee RTC or MTC as the
for giving testimony (regardless of the subject of case may be.
the testimony) under Art. 259 (f) of the Labor Labor Arbiter
(concurrent
Code. jurisdiction)
Prescriptive Period
Nature One (1) year from One (1) year from
accrual of the ULP act accrual of the ULP act
ULPs are not only violations of the civil rights of Quantum of Proof
both labor and management, but are also Beyond reasonable
criminal offenses against the State (LC, Art. 258). Substantial evidence
doubt

Elements of ULP All ULP acts must be included in a single

charge
1. Existence of Er-Ee relationship between
the offender and offended party A charge of ULP must include all acts of ULP.
2. Act is expressly defined in the Code as ULP Splitting the cause of action is not allowed to
prevent harassing the employer with
NOTE: A showing of prejudice to public interest subsequent charges.
is not a requisite for ULP charges to prosper
(Standard Chartered Bank Employees Union v. ULP COMMITTED BY EMPLOYERS (ULP-ER)
Hon. Confessor, G.R. No. 114974, June 16, 2014)
The following are the ULP committed by
Aspects of ULP employers: (IC2Y-PD2VG)
ULP has two aspects, namely: 1. Interference, restraint, or coercion
2. Yellow dog condition
1. Civil; and 3. Contracting out of services
2. Criminal 4. Company unionism
5. Discrimination for or against union
NOTE: Lawmakers intended acts of ULP to be membership
prosecuted in the same manner as criminal 6. Discrimination because of testimony
offenses because it is an offense against a public 7. Violation of duty to bargain
right or interest. 8. Paid negotiation
9. Gross violation of the CBA
Q: What is the condition precedent before
criminal prosecution of ULP may be made?

297
 LABOR RELATIONS – UNFAIR LABOR PRACTICE
NOTE: The enumeration of ULP under Art. 259
is not exclusive. Other ULP acts can be found in
other provisions of the Labor Code.
INTERFERENCE, RESTRAINT, OR COERCION
To interfere with, restrain or coerce employees
in the exercise of their right to self-organization.
[Art. 259 (a)]
ULP can be committed even if union is not
registered
Employer who interferes with the formation of a
labor union and retaliation against the
employees’ exercise of their right to self-
organization is guilty of ULP. (Samahan ng mga
Manggagawa sa Bandolino-LMLC, et. al v. NLRC,
G.R. No. 125195, July 17, 1997)
Q: Is persistent interrogation by an employer
to elicit information about what happened in
union meetings and activities considered as
ULP?
A: It depends. It may be deemed as coercive. In
order not to become coercive, the employer
must:
1. Communicate to the employee the purpose
of the questioning;
2. Assure the employee that no reprisal would
take place; and
3. The questioning must occur in a context
free from employer hostility to union
organization.
Test of Interference
Whether the employer has engaged in conduct
which it may reasonably be said tends to
interfere with the free exercise of employees’
rights.
Direct evidence of interference is not
necessary
Direct evidence is not necessary if there is a
reasonable inference that the anti-union conduct
of the employer does have an adverse effect on
self-organization and collective bargaining.
Totality of Conduct Doctrine
An employer’s remarks must be evaluated not
only on the basis of their implications, but
against the background of and in conjunction
with collateral circumstances.
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Expression of opinion by the employer, though
innocent in themselves, was frequently held to
be culpable because of the circumstances under
which they were uttered.
Prohibiting organizing activities is ULP
It is unlawful to prohibit solicitation of union
membership in the company whether it is
working or non-working time.
Illegal dismissal may be considered as ULP
When there is a showing that the illegal
dismissal was dictated by anti-union motives,
the same constitutes as ULP. If not, then there is
no ULP. The proper remedy would be an action
for reinstatement with backwages and damages.
Lockout or closure may amount to ULP
The lockout or closure must be for the purpose
of interfering with an employees’ exercise of
their right. An honest closing of one’s plant is not
a violation of the law.
NOTE: Proof of employer’s state of mind is often
very difficult unless it is expressed. However, it
may be proven by circumstantial evidence.
Other examples of interference, restraint, or
coercion:
1. Using violence or intimidation to restrain
or coerce employees to exercise their right
to self-organization.
2. Espionage and surveillance of employees
by the employer since it is a form of
“pressure”.
3. Inducing employees with economic
benefits to restrain or coerce them in their
exercise of their right to self-organization.
4. Mass layoff of union members by the
company pursuant to a subterfuge or a
fake reduction effort when it has been
actually making profits. (Madrigal and
Company, Inc. v. Zamora, G.R. No. L-48237,
June 30, 1987)
In case of sale in bad faith
When the sale of a business enterprise was
attended with bad faith, labor contracts, despite
being in personam, becomes enforceable against
the transferee. The transferee is in the position
of tort-feasor, having been a party likewise
responsible for the damage inflicted on the
members of the aggrieved union and therefore
298
 LABOR LAW AND SOCIAL LEGISLATION
cannot justly escape liability. As successor-in-
interest of the vendor, he becomes responsible
for all the rights and obligations of his
predecessor.
Q: Kim, owner of the factory, called the
workers who are also members of the union
to a meeting. He requested them to resign
from the union and withdraw their claims
filed before the NLRC years before. The
requests were rejected.
Later, Kim executed a deed purporting to
convey the factory to Yu Guat. When the
factory reopened, the members of the union
were not readmitted and those who left the
union were allowed to work. The union
members filed a complaint for ULP against
Kim. Decide.
A: YES. The sale of the factory was simulated
and a device resorted merely to get rid of the
employees who were members of the union.
(Moncada Bijon Factory v. CIR, G.R. No. L-16037,
April 29, 1964)
YELLOW DOG DOCTRINE
To require as a condition of employment that a
person or an employee shall not join a labor
organization or shall withdraw from one to
which he belongs. [Art. 259 (b)]
A yellow dog condition is a promise exacted
from workers as a condition of employment that
they are not to belong to, or attempts to foster, a
union during their period of employment.
Indicators of a “Yellow Dog” condition
1. A representation by the employee that he is
not a member of a labor union.
2. A promise by the employee not to join a
labor union.
3. A promise by the employee that, upon,
joining a labor union, he will quit his
employment.
CONTRACTING OUT
To contract out services or functions being
performed by union members when such will
interfere with, restrain or coerce employees in
the exercise of their right to self-organization.
[Art. 259 (c)]
Q: Is contracting out per se ULP?
299
A: NO. Contracting out, itself, is not ULP. It is the
ill intention that makes it so when it is motivated
by a desire to prevent his employees from
organizing and selecting a collective bargaining
representative, get rid of union men, or escape
his statutory duty to bargain collectively with his
employees’ bargaining representative.
NOTE: If the contracting out is done for a
legitimate business reason such as decline in
business, inadequacy of equipment, or need to
reduce cost, it is a valid exercise of management
prerogative.
NOTE: To be considered as valid outsourcing, it
must be (1) motivated by good faith and (2)
must not have been resorted to circumvent the
law.
Contracting be restricted in the CBA
When a CBA is entered into, the terms of the
agreement is binding on both parties. The
company did not have to agree to such a
stipulation. Or it could have reserved the right to
effect a dissolution and reassignment. It did not
do so (Shell Oil Workers’ Union v. Shell Company
of the Philippines, G.R. No. L-28607, May 31,
1971).
Runaway shop
Refers to business relocation animated by anti-
union animus. It is a plant removed to a new
location in order to discriminate against
employees at the old plant because of their
union activities.
Q: Complex Electronics Corporation
informed its employees that it was closing
down its operations since it was incurring
losses and promised to give notice and
retrenchment pay. The employees asked for
a higher retrenchment pay but the company
refused. The machines and equipments were
pulled out from the company premises and
were transferred to the premises of Ionics
Circuit, Inc.
The union of the employees filed a complaint
for ULP against the company alleging that
Ionics Circuit is a runaway shop since it has
the same President and Board of Directors
with Complex Electronics. Is the contention
tenable?
A: NO. The mere fact that one or more
corporations are owned or controlled by the
 LABOR RELATIONS – UNFAIR LABOR PRACTICE
same or single stockholder is not sufficient
ground for disregarding separate corporate
personalities. It is not enough reason to pierce
the veil of corporate fiction of the corporation.
The closure was not motivated by union
activities of the employees, but rather by
necessity since it can no longer engage in
production. (Complex Electronics Employees
Association v. NLRC, G.R. No. 121315, July 19,
1999)
COMPANY UNIONISM
To initiate, dominate, assist or otherwise
interfere with the formation or administration of
any labor organization, including the giving of
financial or other support to it or its organizers
or supporters. [Art. 259 (d)]
Forms of company domination:
1. Initiation of the company union idea by:
a. Outright formation by the employer
or his representatives
b. Managerially motivated formation of
union
2. Financial support to the union
3. Employer encouragement and assistance
4. Supervisory assistance
DISCRIMINATION FOR OR AGAINST UNION
MEMBERSHIP
To discriminate in regard to wages, hours of
work, and other terms and conditions of
employment in order to encourage or
discourage membership in any labor
organization. [Art. 259 (e)]
Discrimination v. Classification
Discrimination is different from classification.
For instance, it is common management practice
to classify jobs and grant them varying levels of
pay or benefits package. These are valid
differentiations that recognize differences in job
requirements or contributions. They are not
necessarily discrimination classifiable as ULP.
Test of Discrimination
Whenever benefits or privileges given to one is
not given to the other under similar or identical
conditions when directed to encourage or
discourage union membership.
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
NOTE: Existence of a union security clause is a
form of valid discrimination. It is a
discrimination favoring unionism.
DISCRIMINATION BECAUSE OF TESTIMONY
Dismissing or prejudicing an employee who is
about to give or has given testimony under this
Code.
NOTE: The subject matter of the testimony is
anything under the Labor Code.
ULP also applies to refusal to testify
The article also applies to refusal to testify
because it is analogous to giving of testimony.
(Mabeza v. NLRC G.R. No. 118506. April 18, 1997)
VIOLATION OF DUTY TO BARGAIN
It refers to acts that violate the duty to bargain
collectively as prescribed by the Code.
Four Forms of ULP in bargaining:
1. Failure or refusal to meet and convene
Occurrence of Refusal to Bargain
This occurs when the Er refuses or fails to meet
and convene with the majority of his Ees. To
bargain in good faith, an Er must not only meet
and confer with the union which represents his
Ees, but must also recognize the union for the
purpose of CB. (Azucena, 2010)
Effect of Refusal of Management to Give
Counter-Proposals to the Union’s Demands
The failure of the Er to submit its counter-
proposals to the demands of the bargaining
union does not, by itself, constitute refusal to
bargain. (Philippine Marine Radio Officers
Association v. CIR, 102 Phil 373) However, when
the Er refuses to submit an answer or reply to
the written bargaining proposals of the certified
bargaining union, ULP is committed.
NOTE: While the law does not compel the
parties to reach an agreement, it contemplates
that both parties will approach the negotiation
with an open mind and make a reasonable effort
to reach a common ground of agreement. They
should negotiate in good faith. (Kiok Loy v. NLRC,
G.R. No. 54334, Jan. 22, 1986)
Acts not deemed refusal to bargain
300
 LABOR LAW AND SOCIAL LEGISLATION
a. Adoption of an adamant bargaining
position in good faith;
b. Refusal to bargain over demands for
commission of ULP;
c. Refusal to bargain during period of illegal
strike;
d. There is no request for bargaining;
e. The union seeks recognition for an
appropriately large unit;
f. The union seeks to represent some person
who are excluded under the LC;
g. The rank-and-file includes supervisors;
h. The demand for recognition and bargaining
is made within the year following a
certification election in which the clear
choice was no union and no ad interim
significant change has taken place in the
unit;
i. The union make unlawful bargaining
demand.
2. Evading mandatory subjects
of bargaining
No duty to agree even on Mandatory subjects
The law speaks of a duty to bargain but not of an
obligation to agree
Voluntary benefits
Q: In consideration of the impending
expiration of the existing collective
bargaining agreement, which includes a
retirement plan, between Nestle and Union,
the latter informed the former of their intent
to open a new collective bargaining
negotiation for the succeeding years.
However, Nestle underscored its position
that unilateral grants such as the retirement
plan are by their very nature not proper
subjects of the CBA negotiations. The Union
argues that the retirement plan remains to
be a CBA item. May the Union demand that an
existing voluntary benefit such as the
retirement plan be discussed and included in
the CBA?
A: YES. As the benefit was already subject of the
existing CBA, the members of Union were only
exercising their prerogative to bargain or
renegotiate for the improvement of the terms of
the Retirement Plan just like they would for all
the other economic, as well as non-economic
benefits previously enjoyed by them. Precisely,
the purpose of collective bargaining is the
acquisition or attainment of the best possible
covenants or terms relating to economic and
301
non-economic benefits granted by employers
and due the employees. The Labor Code has
actually imposed as a mutual obligation of both
parties, this duty to bargain collectively. (Union
of Filipro Employees v. Nestle Philippines, G.R. No.
158930-31, March 3, 2008)
3. Bad faith in bargaining
Boulwarism
Boulwarism is a violation of good faith in
bargaining. It includes the failure to execute the
CBA (Bad Faith Bargaining).
It is a practice wherein one party gives an offer
to which no further revisions is intended to be
made. It is also known as the “Take-It-or-Leave-It
Bargaining”.
4. Gross violation of the CBA
PAID NEGOTIATION
The act of employer of paying negotiation or
attorney’s fees to the union or its officers as part
of the settlement of any issue in collective
bargaining or any other dispute.
GROSS VIOLATION OF THE CBA
It is the flagrant and/or malicious refusal by a
party to comply with the economic provisions of
the CBA.
NOTE: If the violation of the CBA is not gross, it
is not ULP but a mere grievance.
INDIVIDUAL BARGAINING CONSIDERED AS
UNFAIR LABOR PRACTICE
When the Er attempts to negotiate with
individual workers rather than with the certified
bargaining agent is considered as ULP. (Insular
Life Assurance Co., Ltd., Employees Assoc.-NATU v.
Insular Life Assurance Co., Ltd., G.R. No. L-25291,
Jan. 30, 1971)
NOTE: There is no legal prohibition for an Ee to
bargain with his Er.
Q: ABC Corporation offered, among other
benefits, a ₱l6.00/day wage increase to their
employees. To receive the benefits,
employees had to sign a waiver that said that
the new CBA Agreement shall only be
effective on Jan. 1, 2008. Realizing that the
waiver was an unfair labor practice, some
 LABOR RELATIONS – UNFAIR LABOR PRACTICE
members of XYZ union refused to sign. XYZ
Union and its members who refused to sign
the waivers filed a complaint for unfair labor
practices against ABC Corporation. Further,
XYZ Union members who did not sign the
waiver demanded a wage increase enjoyed
by those who signed. The Court found ABC
Corp guilty of unfair labor practice but
denied the claim for wage increase as there
was no provision in the existing CBA
pertaining to the said increase. XYZ Union
appealed alleging that the wage increase was
integrated in the salary of those who signed
the waivers and are currently receiving
₱32.00/day more than those who did not
sign. Should the wage increase given to the
employees who signed the waiver be
awarded to the employees who did not?
A: YES. Generally, the Collective Bargaining
Agreement controls the relationship between
the parties. Any benefit not included in it is not
demandable. However, in light of the peculiar
circumstances in this case, the requested wage
increase should be granted. Accordingly, it is
illegal to continue denying the petitioners the
wage increase that was granted to employees
who signed the waivers. To rule otherwise will
perpetuate the discrimination against
employees who did not sign. All the
consequences of the unfair labor practice must
be addressed. The grant of the ₱32.00/day wage
increase is not an additional benefit outside the
Collective Bargaining Agreement of 2009. By
granting this increase to those who did not sign,
the Court is eliminating the discrimination
against them, which was a result of respondent's
unfair labor practice. (Sonedco Workers Free
Labor Union v. Universal Robina Corporation, G.R.
No. 220383, July 5, 2017, as penned by J. Leonen)
ULP OF LABOR ORGANIZATIONS (ULP-LO)
Persons Criminally Liable In Case Of ULP by
LO
1. Officers
2. Members of governing board
3. Representatives, agents, members of the
labor organization who actually
participated, authorized, or ratified the ULP
act.
ULP Committed By Labor Organizations
1. Restraint or coercion
2. Union-induced discrimination
3. Refusal to bargain
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
4. Featherbedding or Make-Work
Arrangements
5. CBA deal with employer
6. Gross violation of CBA
RESTRAINT OR COERCION
Interference by a Labor Organization is not
ULP
A labor organization can actually interfere with
employees’ right to self-organization as long as it
does not amount to restraint or coercion.
Interfering in the exercise of right to organize is
itself a function of self-organizing. (Azucena, Vol.
2, 2016, p. 368)
NOTE: Under the first ULP committed by an
employer, there is “IRC” – interference, restraint,
or coercion. However, under the first ULP
committed by a labor organization, the word
“interference” is left out, leaving only “restraint
or coercion”. The omission is deliberate.
(Azucena, Vol. 2, 2016, p. 368)
Labor organization cannot coerce members
to participate in strike
A labor organization violates the law when it
restrains or coerces an employee in the exercise
of his right to refuse to participate in or
recognize a strike.
UNION-INDUCED DISCRIMINATION
This pertains to the attempt of the labor
organization to cause an employer to grant
advantages to:
1. Members over non-members;
2. Members in good standing over suspended
or expelled members;
3. Members of the executive board over more
senior employees; or
4. Members of one union over members of
another union.
Arbitrary use of Union Security Clause
Unions are not entitled to arbitrarily exclude
qualified applicants for membership, and a
closed-shop provision would not justify the
employer in discharging, or a union in insisting
upon the discharge of an employee whom the
union thus refuses to admit to membership,
without any reasonable ground therefor.
(Salunga v. CIR)
302
 LABOR LAW AND SOCIAL LEGISLATION
A union member may not be expelled from her
union, and consequently from her job, for
personal or impetuous reasons or for causes
foreign to the closed-shop agreement and in a
manner characterized by arbitrariness and
whimsicality. (Manila Mandarin Employees Union
v. NLRC G.R. No. 76989 Sept. 29, 1987)
Not disloyalty to ask help from another union
The mere act of seeking help from another union
cannot constitute disloyalty. It is an act of self-
preservation of workers who, driven to
desperation, found shelter in another union who
took the cudgels for them. (Rance v. NLRC, G.R.
No. L-68147, June 30, 1988)
Q: Noya was employed by Slord. The
employment was governed by a CBA effective
until April 15, 2014. The CBA contained a
closed-shop agreement. Sometime in 2013,
Noya tried to form a new union which was
eventually formed and registered on Feb. 20,
2014. NLM – Katipunan, the exclusive
bargaining representative, on the strength of
the testimonies and affidavit signed by the
other members that Noya was actively
seeking signature to form a new union,
terminated the membership of Noya after
due proceeding.
Thereafter, NLM- Katipunan requested Slord
to terminate Noya’s employment. After
notifying Noya of the decision of NLM-
Katipunan and showing him the documents,
Slord terminated the employment of Noya.
Could Noya be dismissed on the ground he
solicited signature to form a new union?
A: YES, Case law recognizes that dismissal from
employment due to the enforcement of the
union security clause in the CBA is another just
cause for termination of employment. To validly
terminate the employment of an employee
through the enforcement of the union-security
clause, the following requisites must concur:
1. The union security clause is applicable;
2. The union is requesting for the
enforcement of the union security
provision in the CBA; and
3. There is sufficient evidence to support
the decision of the union to expel the
employee from the union.
All requisites are present. In Tanduay Distillery
Labor Union v. NLRC, the Court ruled that the
organization by union members of a rival union
303
outside the freedom period, without first
terminating their membership in the union and
without the knowledge of the officers of the
latter union, is considered an act of disloyalty,
for which the union members may be
sanctioned. This requirement ceases to be
binding only during the sixty (60)-day freedom
period immediately preceding the expiration of
the CBA. However, the employer must furnish
the employee with two (2) written notices
before the termination of employment can be
effected: (1) the first apprises the employee of
the particular acts or omissions for which his
dismissal is sought; and (2) the second informs
the employee of the employer's decision to
dismiss him. Slord failed to do so.
It is settled that in cases involving dismissals for
just cause but without observance of the twin
requirements of notice and hearing, the validity
of the dismissal shall be upheld, but the
employer shall be ordered to pay nominal
damages. (Slord Development Corp v. Noya, G.R.
No. 232687, Feb. 4, 2019 penned by Perlas-
Bernabe)
REFUSAL TO BARGAIN
It is the act of a union in refusing or violating its
duty to bargain collectively by entering
negotiations with a fixed purpose of not
reaching an agreement or signing a contract.
NOTE: It is intended to insure that unions
approach the bargaining table with the same
attitude of willingness to agree as the law
requires of management.
FEATHERBEDDING OR
MAKE-WORK ARRANGEMENTS
Featherbedding refers to an employee practice
which creates or spreads employment by
unnecessarily maintaining or increasing the
number of employees used, or the amount of
time consumed, to work on a particular job.
The practices are found to be economically
wasteful and without any legitimate employee
justification.
CBA DEAL WITH EMPLOYER
Accepting for or accepting some “fee” from the
employer as part of CBA or dispute settlement.
GROSS VIOLATION OF THE CBA
 LABOR RELATIONS – UNFAIR LABOR PRACTICE
It is the flagrant and/or malicious refusal by a
party to comply with the economic provisions of
the CBA.
NOTE: If the violation of the CBA is not gross, it
is not ULP but a mere grievance.
Reliefs available in ULP cases
1. Cease and Desist Order
2. Affirmative Order
3. Order to Bargain; or Mandated CBA
4. Disestablishment of the Company-
Dominated Union
Cease and Desist Order
A prohibitive order requiring a person found to
be committing ULP to cease and desist from such
ULP and take affirmative action as will effectuate
the policies of the law including (but not limited
to) reinstatement with or without back pay and
including rights of employees prior to dismissal,
including seniority.
Affirmative Order
It is an order directing either the reinstatement
of the discharged employee without prejudice to
their rights or, if new laborers have been hired,
the dismissal of the hired laborers to make room
for the returning employee.
Order to Bargain
It is an order to compel the respondent to
bargain with the bargaining agent. It can also be
an imposition of a collective bargaining contract
upon an employer who refuses to bargain with
the union of its employees which is known as
“mandated CBA”.
Disestablishment
It is an order directing the employer to
withdraw all recognition from the dominated
labor union and to disestablish the same.
ULP case is not subject to compromise
In view of the public interest involved, they are
not subject to compromise. (E.G. Gochangco
Workers Union v. NLRC, G.R. Nos. L-67158-62,
May 30, 1988)
.BLUE SKY BARGAINING
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
It is defined as making exaggerated or
unreasonable proposals. It connotes demands
from the union which the Er has no capacity to
give. Whether or not the union is engaged in
blue-sky bargaining is determined by the
evidence presented by the union as to its
economic demands. Thus, if the union requires
exaggerated or unreasonable economic
demands, then it is guilty of ULP. (Standard
Chartered Bank v. Confessor, G.R. No. 114974,
June 16, 2004)
SURFACE BARGAINING
It is the act of “going through the motions of
negotiating” without any legal intent to reach an
agreement. (Standard Chartered Bank v.
Confessor, G.R. No. 114974, June 16, 2004)
A concrete example is the withholding of the Er
of the audited financial statement requested by
the union.
Surface bargaining is a question of intent of the
party concerned and usually such intent can only
be inferred from the totality of the challenged
party’s conduct both at and away from the
bargaining table.
Sweetheart Contract
It is when a labor organization asks for or
accepts negotiations or attorney’s fees from Ers
as part of the settlement of any issue in CB or
any other dispute. The resulting CBA is
considered as a “sweetheart contract” – a CBA
that does not substantially improve the
employees’ wages and benefits and whose
benefits are far below than those provided by
law. It is an incomplete or inadequate CBA.
Impasse In Bargaining
Where the subject of a dispute is a mandatory
bargaining subject, either party may bargain to
an impasse as long as he bargains in good faith.
Where the subject is non-mandatory, a party
may not insist in bargaining to the point of
impasse. His instance may be construed as
evasion of duty to bargain.
Deadlock
It is synonymous with impasse or a standstill
which presupposes reasonable effort at good
faith bargaining but despite noble intentions
304
 LABOR LAW AND SOCIAL LEGISLATION

does not conclude an agreement between the

parties.

Occurrence of Deadlock In Collective

Bargaining

A deadlock arises when there is an impasse

which presupposes reasonable effort at good
faith in bargaining which, despite noble
intentions, does not conclude in agreement
between the parties.

Remedies In Case Of Deadlock

The parties, during renegotiation, may:

1. Call upon the NCMB to intervene for the

purpose of conducting conciliation or
preventive mediation;
2. Refer the matter for voluntary arbitration or
compulsory arbitration;
3. Declare a strike or lockout upon compliance
with the legal requirements (this remedy is
a remedy of last resort).

305
 LABOR RELATIONS – PEACEFUL CONCERTED ACTIVITIES
11. Walk-out Strike - A form of strike where
PEACEFUL CONCERTED ACTIVITIES the employees leave their workplace and
establish themselves outside the plant and
refuse access to the owners and other
employees who want to work (Ungos, 2015,
Forms of Concerted Activities
p. 222)
1. Legal Strike – One called for a valid purpose
12. Primary Strike - Directed against the
and conducted through means allowed by
employer because of a labor dispute with
law.
him. (Ungos, 2015, p. 223)
2. Illegal Strike – One staged for a purpose not
13. Secondary Strike - Directed against the
recognized by law, or if for a valid purpose,
employer with primary labor dispute
conducted through means not sanctioned by
connected by-product or employment with
law.
the employer of the secondary strikers.
3. Economic Strike/Bargaining Strike – One
14. Sympathy Strike - A strike staged to make
staged by workers to force wage or other
common cause with strikers in other
economic concessions from the employer
establishments, without any dispute
which he is not required by law to grant.
between the strikers and their employer. In
(Consolidated Labor Association of the Phil.
a sympathy strike, there is no connection of
v. Marsman, G.R. No. L-17038, July 31, 1964)
product or employment with the primary
labor dispute. This distinguishes a
4. ULP Strike – One called to protest against
secondary strike and a sympathy strike.
the employer’s acts of unfair practice
enumerated in Art. 259 of the LC, as
15. General Strike - Directed against all the
amended, including gross violation of the
employers, participated in by the workmen
CBA and union busting.
irrespective of the employers for whom they
are working.
5. Slow Down Strike –An industrial action in
which employees perform their duties but
16. Particular Strike - Directed solely against
seek to reduce productivity or efficiency in
the strikers’ employer. (Montemayor, Labor,
their performance of these duties.
Agrarian and Social Legislation, 2nd ed. pp.
238-239)
6. Mass leaves –An action wherein the Ees
simultaneously filed leaves of absence based
NOTE: For purposes of determining whether or
on various reasons such as, inter alia,
not a certain activity is “Concerted”, it is
vacation and sick leaves.
essential that the activities of the employee
should be collective in nature.
7. Wild-Cat Strike –A strike action undertaken
by employees without filing the required
STRIKE
notice of strike and without the majority
approval of the total union membership.
It means any temporary stoppage of work by the
8. Sit Down Strike – A strike during which concerted action of Ees as a result of an
workers occupy their place of employment industrial or labor dispute. [IRR, Book V, Rule I,
and refuse to work or allow others to work Sec. 1(uu)]
until such time that the strike is settled.
The right to strike, while constitutionally
9. Overtime boycott – involves the act of recognized, is not without legal constrictions.
workers in refusing to render overtime Art. 279(a) of the LC, as amended, provides that
work in violation of the CBA resorted to as it no strike or lockout shall be declared after
means to coerce the Er to yield to their assumption of jurisdiction by the President or
demands. the Secretary or after certification or submission
of the dispute to compulsory or voluntary
10. Boycott of Products – On which involves arbitration or during the pendency of cases
the concerted refusal to patronize an Er’s involving the same grounds for the strike or
goods and services and to persuade others lockout. The court has consistently ruled that
to a like refusal. once the Secretary of Labor assumes jurisdiction

UNIVERSITY OF SANTO TOMAS 306

2021 GOLDEN NOTES
 LABOR LAW AND SOCIAL LEGISLATION
over a labor dispute, such jurisdiction should not
be interfered with by the application of the
coercive processes of a strike or lockout. A strike
that is undertaken despite the issuance by the
Secretary of Labor of an assumption order
and/or certification is a prohibited activity and
thus illegal. (Solidbank Corporation v.
Gamier/Solid Bank Union, G.R. No. 159460, Nov.
15, 2010)
NOTE: 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 will be deemed
controlling. (Toyota Motor Phils. Corp. Workers
Association v. NLRC, 537 SCRA 174)
It shall comprise not only concerted work
stoppages, but also slowdowns, mass leaves, sit
downs, attempt to damage, destroy or sabotage
plant equipment and facilities, and similar
activities. (Samahang Manggagawa sa Sulpicio
Lines v. Sulpicio Lines, Inc., G.R. No. 140992,
March 25, 2004)
“Striking Employee” is still an employee
During a strike the Er-Ee relationship is not
terminated but merely suspended as the work
stoppage is not permanent but only temporary.
Thus, a striking employee is still an employee.
However, the effects of employment are
suspended, hence a striking employee, as a rule,
is not entitled to his wage during the strike
(Azucena, Vol. 2, 2016, p. 590).
Purpose of a strike
A strike is a coercive measure resorted to by
laborers to enforce their demands. The idea
behind a strike is that a company engaged in a
profitable business cannot afford to have its
production or activities interrupted, much less,
paralyzed. (Phil. Can Co. v. CIR, G.R. No. L-3021,
July 13, 1950)
Elements of strike
1. Existence of established relationship
between the strikers and the person or
persons against whom the strike is called;
2. Existence of an Er-Ee relationship;
3. Existence of a labor dispute and the
utilization by labor of the weapon of
concerted refusal to work as a means of
persuading, or coercing compliance with
the working men’s demands;
307
4. Employment relation is deemed to
continue although in a state of belligerent
suspension;
5. Temporary work stoppage;
6. Work stoppage is done through concerted
action; and
7. The striking group is a legitimate labor
organization; in case of a bargaining
deadlock, it must be the Ees’ sole
bargaining representative.
Strike-breaker
Any person who obstructs, impedes, or
interferes with by force, violence, coercion,
threats, or intimidation any peaceful picketing
affecting wages, hours or conditions of work or
in the exercise of the right of self-organization or
collective bargaining. (LC, Art. 219(r),
renumbered)
No Er shall employ any strike-breaker that shall
interfere with any peaceful picketing by Ees
during any labor controversy. (LC, Art. 279,
renumbered)
Strike area
It means the establishment, warehouses, depots,
plants or offices, including the sites or premises
used as runaway shops, of the Er struck against,
as well as the immediate vicinity actually used
by picketing strikers in moving to and fro before
all points of entrance to and exit from said
establishment. [Sec. 1 (vv), Rule I, Book V, IRR]
Role of the Police
The involvement of the police during strikes,
lockouts or labor disputes in general shall be
limited to the maintenance of the peace and
order, enforcement of laws and legal orders of
duly constituted authorities and the
performance of specific functions as may be
provided by law.
Requisites
1. Should always be in uniform with proper
namecloth;
2. Shall observe strict neutrality in dealing
with both parties. They shall not bring in,
introduce, or escort any individual who
seeks to replace the strikers;
3. Shall not be stationed in the
picket/confrontation line; and
4. Shall maintain themselves outside a 50-
meter radius from the picket/confrontation
 LABOR RELATIONS – PEACEFUL CONCERTED ACTIVITIES
or in such public thoroughfare for the other
purpose of insuring free flow of traffic. companies
without
EXAMPLE OF REASON FOR ITS demands or
STRIKE ILLEGALITY grievances of
1. Sit-down Amounts to a their own
strike – criminal act against the Er.
Characterized because of the Ees 5. Secondary There is no labor
by a trespass on the strike – Work dispute involved.
temporary premises of the Er. stoppages of
work stoppage workers of
of workers one company
who seize or to exert
occupy pressure on
property of their Er so
the Er or that the latter
refuse to will in turn
vacate the bring pressure
premises of upon the Er of
the Er. another
2. Wildcat It fails to comply company with
strike – A with certain whom another
work stoppage requirements of union has a
that violates the law, to wit: labor dispute.
the labor notice of strike, 6. General It is a political
contract and is vote and report on strike (cause rally.
not authorized strike vote. oriented
by the union strike) – A
membership. type of
3. Slowdown – Ees work on their political
Strike on an own terms; while sympathetic
installment the Ees continue to strike and
plan; an work and remain therefore
activity by in their positions there is
which and accept wages neither a
workers, paid to them, they bargaining
without at the same time deadlock nor
complete select what part of any ULP. e.g.,
stoppage of their allotted tasks Welga ng
work, retard they care to bayan.
production or perform on their 7. Quickie Failure to comply
their own volition or strike – Brief with notice
performance refuse openly or and requirements and
of duties and secretly. unannounced etc.
functions to temporary
compel work
management stoppage.
to grant their
demands. Prior consultation before arrest or detention
4. Sympathetic There is no labor
strike – Work dispute between GR: Union officers, members or organizers
stoppages of the workers who cannot be arrested nor detained for union
workers of are joining the activities without previous consultation (not
one company strikers and the approval) with the Secretary of Labor and
to make latter’s Er. Employment.
common cause
with other XPN: When prior consultation not necessary:
strikers or

UNIVERSITY OF SANTO TOMAS 308

2021 GOLDEN NOTES
 LABOR LAW AND SOCIAL LEGISLATION
1. On grounds of national security and public
peace; or
2. In case of commission of a crime.
Tests in determining the legality of strike
The following must concur:
1. Purpose test – The strike must be due to
either bargaining deadlock and/or the ULP.
2. Compliance with the procedural and
substantive requirements of the law. (See
requisites of a valid strike)
3. Means employed test – It states that a strike
may be legal at its inception but eventually
be declared illegal if the strike is
accompanied by violence which is
widespread, pervasive and adopted as a
matter of policy and not mere violence
which is sporadic and which normally
occurs in a strike area.
PICKETING
It is a concerted activity of workers consisting in
peacefully marching to and from before an
establishment involved in a labor dispute
generally accompanied by the carrying and
display of signs, placards and banners intended
to inform the public about the dispute. (Chan,
Labor Relations, 2017)
The Right to Picket as a Means of
Communicating the Facts of a Labor Dispute
It is a phase of the freedom of speech guaranteed
by the Constitution. Picketing if peacefully
carried out, cannot be curtailed even in the
absence of Er-Ee relationship. (PAFLU v. Cloribel,
G.R. No. L-25878, March 28, 1969)
Requisites for lawful picketing
1. It should be peacefully carried out;
2. There should be no act of violence,
coercion or intimidation;
3. The ingress to (entrance) or egress from
(exit) the company premises should not be
obstructed; and
4. Public thoroughfares should not be
impeded.
Effect of the absence of Employee-Employer
relationship on picketing
If peacefully carried out, picketing cannot be
prohibited even in the absence of Ee-Er
309
relationship. (PAFLU v. CFl, G.R.L-49580, Jan. 17,
1983)
Right to picket not an absolute right
While peaceful picketing is entitled to protection
as an exercise of free speech, the courts are not
without power to confine or localize the sphere
of communication or the demonstration to the
parties to the labor dispute, including those with
related interests, and to insulate establishments
or persons with no industrial connection or
having interest totally foreign to the context of
the dispute. (Liwayway Pub., Inc. v. Permanent
Concrete Workers Union, G.R. No. L-25003, Oct.
23, 1981)
While workers have the right to peaceful
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. (Chan, 2017)
Moving Picket
The right granted to striking workers is merely a
pedestrian right. It does not create the
additional rights of squatting or assembly on the
portion of Er’s land. Any such squatting or
assembly would exceed the scope of the public’s
easement and would constitute enjoinable
trespass.
Untruthful Picketing
Such act is tantamount to unlawful picketing
which is enjoinable even though the purpose is
valid. It is the act of employing false statements,
falsehood, defamation and other
misrepresentations.
Other Unlawful Picketing Acts
1. Use of abusive and threatening language
towards patrons of the place or business;
2. Use of violence and intimidation;
3. Vandalisms and other acts of a less
terroristic nature which causes physical
discomfort to the Er’s customers.
Right to picket is protected by the
Constitution and the law
Unlike a strike which is guaranteed under the
Constitutional provision on the right of workers
to conduct peaceful concerted activities under
 LABOR RELATIONS – PEACEFUL CONCERTED ACTIVITIES
Sec. 3, Art. XIII thereof, the right to picket is
guaranteed under the freedom of speech and of
expression and to peaceably assemble to air
grievances under Sec. 4, Art. III (Bill of Rights)
thereof.
Effect of the use of foul language during the
conduct of the picket
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.
Strike vs. Picketing
A: YES. Despite the validity of the purpose of a
strike and compliance with the procedural
requirements, a strike may still be held illegal
where the means employed are illegal. The
means become illegal when they come within
the prohibitions under Art. 264(e) of the Labor
Code. Protected picketing does not extend to
blocking ingress to and egress from the company
premises, and, the fact that the picket was
moving, was peaceful and was not attended by
actual violence may not free it from taints of
illegality if the picket effectively blocked entry to
and exit from the company premises. (PHIMCO
Industries, Inc. v. PHIMCO Industries Labor
Association, G.R. No. 170830, Aug. 11, 2010)

STRIKE PICKETING LOCKOUT

To withhold or to stop To march to and from
work by concerted the employer’s It means any temporary refusal of an Er to
action of Ees as a premises, usually furnish work as a result of an industrial or labor
result of an industrial accompanied by the dispute. [LC, Art. 219 (p)]
or labor dispute. The display of placards and
work stoppage may be other signs making It is an Er’s act of excluding Ees who are union
accompanied by known the facts members from the plant. (Sta. Mesa Slipways
picketing by the involved in a labor Engineering Co. v. CIR, 48 O.G. 3353)
striking employees dispute. It is a strike
outside of the activity separate and Elements of Lockout
company compound. different from actual
stoppage of work. 1. Temporary refusal to furnish work by the
Focuses on stoppage of Focuses on publicizing employer ; and
work. the labor dispute and 2. Occasioned by an industrial or labor
its incidents to inform dispute. (Chan, Labor Relations, 2017)
the public of what Is
happening in the The lockout must be for a lawful purpose and
company struck carried out through lawful means. A lockout is
against. unlawful where it is declared in order to defeat
organizational and bargaining rights of
NOTE: A strike conducted by a union which employees. (Dingsalan v. NLU, 98 Phil. 649)
acquired its legal personality after the filing of
its notice of strike and the conduct of the strike Lockout consists of the following:
vote is deemed illegal.
1. Shutdowns
When picket considered a strike 2. Mass Retrenchment and dismissals
initiated by the Er
In distinguishing between a picket and a strike, 3. Dismissals without previous written
the totality of the circumstances obtaining in a clearance from the Secretary of Labor or
case should be taken into account. his duly authorized representative. (Sec. 3,
PD 823, as amended by PD 849)
Q: PHIMCO argues that the strike staged by 4. Er’s act of excluding Ee’s who are union
its employees was illegal as they committed members. (Complex Electronics Employees
the prohibited acts under Art. 279(e) of the Association, etc. et. al. v. NLRC, et al., G.R. No.
LC such as blocking the ingress and egress of 121315, July 19, 1999)
the company premises. The employees, on
the other hand, submit that the picket was Lockout amounting to ULP
peaceful and no human barricade blocked
the company premises. May a peaceful A lockout, actual or threatened, as a means of
picketing of employees be held illegal? dissuading the Ees from exercising their rights is
clearly an ULP. However, to hold an Er guilty, the

UNIVERSITY OF SANTO TOMAS 310

2021 GOLDEN NOTES
 LABOR LAW AND SOCIAL LEGISLATION
evidence must establish that the purpose was to
interfere with the Ees exercise of their rights.
In an unfair labor practice proceeding which
arises out of a lockout used as a weapon during a
labor-management dispute, an employer’s legal
position is improved if it appears that he did not
lock out his employees during the early stages of
negotiations, and did not employ the lockout to
for acceptance of his terms. (NLRB v. Brown, 13 L
ed 839).
Lockout vs. Shutdown
Lockout is different from shutdown in the sense
that in a lockout the plant continues to operate,
whereas in a shutdown, the plant ceases to
operate. (Ungos, The Fundamentals of Labor Law
Review, page 237)
A shutdown is the willful act of the employer
himself following a complete lockout as
contrasted to the compulsory stoppage of
operations as a result of a strike and walkout. It
can be truly said that all shutdowns are lockouts
but not all lockouts constitute shutdowns. (Sta.
Mesa Slipway Engineering v. CIR, 91 Phil. 764)
RIGHT TO STRIKE AND LOCKOUT
Express statutory recognition of the workers’
right to strike and the employer’s right to
lockout
The right to strike is a constitutional and legal
right of the workers in the same manner that the
employers have the inherent and statutory right
to lockout, all within the context of labor
relations and collective bargaining. It is a means
of last resort and presupposes that the duty to
bargain in good faith has been fulfilled and other
voluntary modes of dispute settlement have
been tried and exhausted. (No. 1, Guidelines
Governing Labor Relations; No. 04, Primer on
Strike, Picketing and Lockout)
Right to strike or lockout not absolute
The exercise of these rights is subject to
reasonable restrictions pursuant to the police
power of the State. It has been held that the right
to strike, because of the more serious impact
upon the public interest, is more vulnerable to
regulation than the right to organize and select
representatives for purposes of CB. [National
Federation of Sugar Workers (NFSW) v. Ovejera,
et al. G.R. No. L-59743, May 31, 1982]
311
Strike cannot be converted into a lockout
A strike cannot be converted into a pure and
simple lockout by the mere expedient of filing
before the trial court a notice of offer to return
to work during the pendency of the labor
dispute between the union and the Er. (Rizal
Cement Workers Union v. CIR, G.R. No. L-18442,
Nov. 30, 1962)
Instances where a strike or lockout CANNOT
be declared
1. Violations of CBAs, except flagrant and/or
malicious refusal to comply with economic
provisions
2. Inter-union disputes
3. Intra-union disputes
4. Failure to file a notice of strike or lockout or
lack of necessary strike or lockout vote
obtained and reported to the Board.
5. After assumption of jurisdiction by the
Secretary has been declared
6. After certification or submission of the
dispute to compulsory or voluntary
arbitration
7. There is already a pending case involving
the same grounds for the strike or lockout
8. Execution and enforcement of final orders,
decisions, resolutions or awards in no. 7
9. Labor standards cases such as wage orders
(IRR, as amended by D.O. 40-03, Book V, Rule
XXII, Sec. 5)
10. Any issue covered by a no strike
commitment in a duly executed CBA
Declaration of a strike or lockout
The following may declare a strike or lockout:
1. Any certified or duly recognized bargaining
representative may declare a strike in
cases of bargaining deadlocks and ULP. The
Er may declare a lockout in the same cases.
2. In the absence of a certified or duly
recognized bargaining representative, any
LLO in the establishment may declare a
strike but only on grounds of ULP. [IRR as
amended by D.O. 40-03, Book V, Rule XXII,
Sec. 6]
A strike conducted by a minority union is
patently illegal because no labor dispute which
will justify the conduct of a strike may exist
between the employer and a minority union.
(United Restaurors v. Torres, et al., 26 SCRA 435. )
NOTE: The right to strike is reserved for the Ees.
 LABOR RELATIONS – PEACEFUL CONCERTED ACTIVITIES
Grounds for declaration of strike or lockout Conversion Doctrine

1. Collective Bargaining Deadlock – economic
1. ULP act (includes flagrant and/or
malicious refusal to comply with the
economic provisions of the CBA) –
political
NOTE: It is possible to change an economic
strike into a ULP strike. (Consolidated Labor
Ass’n of the Phils. v. Marsman and Co., G.R. No. L-
17038, July 31, 1964)
NOTE: It is settled that a "no strike, no lock-out"
provision in the CBA "may only be invoked by an
employer when the strike is economic in nature
or one which is conducted to force wage or other
agreements from the employer that are not
mandated to be granted by law. It is not
applicable when the strike is grounded on unfair
labor practice. (Guagua National Colleges v GNC
Faculty Labor Union, G.R. 204693, 13 July 2016)
It is when a strike starts as economic and but
later on, because of the actuations of the parties,
the same may be converted to an unfair labor
practice or lockout or vice versa. The
significance of this doctrine lies in the fact that
an economic strike or lockout is different and
distinct from ULP strike or lockout as to certain
requirements or rights of the parties. The
cooling-off period for economic strike or lockout
is 30 days while that of the ULP strike or lockout
is only 15 days. The right of the employer to
hire replacements and retain them although the
strikers are reinstated depends on the nature of
the strike. (Chan, Law on Labor Relations and
Termination of Employment, p. 566)

Economic strike vs. ULP strike

BASIS ECONOMIC STRIKE ULP STRIKE

Involuntary strike, the LO is forced to go on
Voluntary strike, the employees will strike because of the ULP committed against
As to
declare a strike to compel them by the Er. It is an act of self-defense
nature
management to grant their demands. since the Ees are being pushed to the wall
and their only remedy is to stage a strike.
The CB agent of the appropriate
Who will Either the CB agent or the LLO in behalf of its
bargaining unit can declare an
initiate members.
economic strike.
As to the 30 days from the filing of the notice of
cooling- strike before the intended date of
15 days from the filing of the notice of strike.
off actual strike subject to the 7-day
period strike ban.
The cooling-off period may be dispensed
with, and the union may take immediate
As to the action in case of dismissal from employment
No exception - mandatory
exception of their officers duly elected in accordance
to the with the union’s constitution and by-laws,
NOTE: Notice of strike and strike
cooling- which may constitute union-busting where
vote may be dispensed with; they
off the existence of the union is threatened. It
may strike immediately.
period must still observe the mandatory 7-day
strike ban period before it can stage a valid
strike.

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2021 GOLDEN NOTES
 LABOR LAW AND SOCIAL LEGISLATION
Q: Does a strike staged by resigned
employees fall under the ambit of concerted
actions protected by law?
A: NO. Resigned employees’ mass action is not a
strike because Ees who go on strike do not quit
their employment. Ordinarily, the relationship of
Er and Ee continues until one of the parties’ acts
to sever the relationship or they mutually act to
accomplish that purpose. As they did not assume
the status of strikers, their “protest
retirement/resignation” was not a concerted
activity which was protected by law. (Enrique v.
Zamora, G.R. No. L-51382, Dec. 29, 1986)
NOTE: Even if the purpose of a strike is valid, the
strike may still be held illegal where
the means employed are illegal. Thus, the
employment of violence, intimidation, restraint
or coercion in carrying out concerted activities
which are injurious to the right to property
renders a strike illegal. And so is picketing or
the obstruction to the free use of property or the
comfortable enjoyment of life or property, when
accompanied by intimidation, threats, violence,
and coercion as to constitute nuisance. (Soriano
Aviation v. Employees Association of A. Soriano
Aviation, G.R. No. 166879, Aug. 14, 2009)
Penalty of outright dismissal against the
striking employees too severe for a one-day
absence from work
The penalty of dismissal against the striking Ees,
who only staged a one-day walkout, is too
severe. It is not in accordance with settled and
authoritative doctrine and legal principles that a
mere finding of the illegality of a strike does not
automatically warrant a wholesale dismissal of
the strikers from their employment and that a
premature or improvident strike should not be
visited with a consequence so severe as
dismissal where a penalty less punitive would
suffice. (Automotive Engine Rebuilders, Inc. v.
Progresibong Unyon ng mga Manggagawa ng
AER, G.R. No. 160138, July 13, 2011)
Q: Because of financial problems, the
company decided to temporarily shut down
its operations at the dyeing and finishing
division. It notified the DOLE of the
shutdown. Raymund Tomaroy, with 16
members of the union, staged a picket in
front of the company’s compound, carrying
placards. They demanded resumption of
work and 13th month pay. The company filed
a petition to declare the strike illegal. The
union argues that they did not stage a strike;
313
for considering that the dyeing and finishing
division of the company was shutdown, it
could not have caused a work stoppage. Was
the action of the union a strike?
A: YES. The concerted efforts of the members of
the union and its supporters caused a temporary
work stoppage. The allegation that there can be
no work stoppage because the operation in the
division had been shut down is of no
consequence. It bears stressing that the other
divisions were fully operational. (Bukluran ng
Manggagawa sa Clothman Knitting Corp. v. CA,
G.R. No. 158158, Jan. 17, 2005)
PROCEDURAL REQUIREMENT FOR
STRIKE/LOCKOUT
Substantive Requirements for Strike or
Lockout
The law recognizes two (2) grounds for the valid
exercise of the right to strike or lockout, namely:
1. Collective Bargaining Deadlock (CBD);
and/or
2. Unfair Labor Practices (ULP) - Includes
flagrant and/or malicious refusal to comply
with the economic provisions of the CBA.
Procedural Requirements for Strike or
Lockout
1. Filing a Notice of Strike or Lockout
It should be field with the DOLE, specifically
the regional branch of the NCMB, copy
furnished the employer or the union, as the
case may be.
Time to File
a. At least 15 days before the intended
strike or lockout if the issues raised are
ULP; or in case of dismissal from
employment of union officers duly
elected in accordance with the union
constitution and by-laws, which may
constitute union busting where the
existence of the union is threatened, the
15-day cooling-off period shall not
apply and the union may take action
immediately after the strike vote is
conducted and the result thereof
submitted to the appropriate Regional
Branch of the NCMB with due
observance with the 7 day strike ban.
 LABOR LAW AND SOCIAL LEGISLATION
b. At least 30 days before the intended
date thereof if the issues involve
bargaining deadlock.
Those Who May File Notice of Strike
Only a LLO can legally hold a strike.
(Bukluran ng Manggagawa sa Clothman
Knitting, etc. v. CA, et al., G.R. No. 158158, Jan.
17, 2005)
a. In establishments with certified
bargaining agent. - Any certified or
duly recognized bargaining
representative may file a notice or
declare a strike in cases of ULP.
If the reason for the intended strike is
bargaining deadlock, only the
bargaining union has the legal right to
file a notice of strike.
The employer may file a notice or
declare lockout or request for
preventive mediation in the same cases.
b. In establishments with no certified
bargaining agent - Any LLO in the
establishment may file a notice, request
preventive mediation or declare a strike
but only on grounds of ULP.
NOTE: A union, instead of filing a notice of
strike, may request NCMB to do preventive
mediation, but the union has to be the certified
or duly recognized bargaining agent. (Insular
Hotel Employees Union-NFL v. Waterfront Insular
Hotel Davao, G.R. No. 174040-41, Sept. 22, 2010)
Contents of Notice of Strike
1. Name and addresses of Er
2. Union involved
3. Nature of the industry to which the Er
belongs
4. Number of union members
5. Workers in the bargaining unit
6. Other relevant dates
7. In case of bargaining deadlocks:
Unresolved issues, written proposals of the
union, counterproposals of the Er and
proof of request for conference to settle
differences
8. In case of ULP: the acts complained of, and
the efforts taken to resolve the dispute
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
NOTE: NCMB shall inform the concerned party
in case notice does not conform to the
requirements.
2. Strike Vote or Lockout Vote
A strike must be approved by a majority
vote of the members of the union and a
lockout must be approved by a majority vote
of the members of the Board of Directors of
the Corporation or Association or of the
partners in a partnership, obtained by a
secret ballot in a meeting called for that
purpose.
Purpose of Strike Vote
To ensure that the decision to strike broadly
rests with the majority of the union members in
general, and not with a mere minority, at the
same time, to discourage wildcat strikes, union
bossism and even corruption. (No. 07, Primer on
Strike, Picketing and Lockout)
Participation of the NCMB in the taking of
strike vote or lockout vote
The Regional Branch of the NCMB may, at its
own initiative or upon request of any affected
party, supervise the conduct of the secret
balloting. The union / employer must give notice
at least 24 hours prior to the conduct of the
voting to give the NCMB sufficient time to decide
if it will supervise the voting and in the event it
does, to prepare.
Effect of the 7-day waiting period if the vote
balloting is taken within the cooling-off
period
The 7-day requirement shall be counted from
the day following the expiration of the cooling-
off period. (No. 06 Primer on Strike, Picketing and
Lockout)
Q: Is the Strike Vote still necessary in case of
union-busting?
A: YES. The time requirement of 15 days for the
filing of the Notice of Strike shall be dispensed
with but the strike vote requirement, being
mandatory in character, shall “in every case” be
complied with.
3. Strike Vote or Lockout Vote Report
Submission of Strike or Lockout Vote Report
314
 LABOR RELATIONS – PEACEFUL CONCERTED ACTIVITIES
The result of the strike or lockout voting should
be reported to the NCMB at least 7 days before
the intended strike or lockout, subject to the
cooling-off period.
The mere filing of the notice with NCMB without
proof of valid service thereof to the other party
concerned, shall not trigger the running of the
cooling-off period.

A strike held within the 7-day waiting period is Purpose of the Cooling-off Period
plainly illegal. (Lapanday Workers’ Union, et al. v.
NLRC and Lapanday Agricultural and It is designed to afford the parties the
Development Corp., G.R. Nos. 95494-97, Sept. 7, opportunity to amicably resolve the dispute with
1995) the assistance of the NCMB
Conciliator/Mediator.
Effect of non-submission of strike vote to
NCMB 5. 7-Day Waiting Period or Strike Ban

Waiting period vs. Cooling-off period

A strike staged without the submission of the
result of the strike-vote is illegal. (Samahan ng
COOLING-OFF
Manggagawa in Moldex Products, et al. v. NLRC, WAITING PERIOD
PERIOD
et al., G.R. No. 119467, Feb. 1, 2000)
Period reckoned from Period counted form
4. Cooling-off Period the time the strike the time of the filing
vote report is of the notice of strike
It is the period of time given by the NCMB to submitted to the or lockout up to the
mediate and conciliate the parties. It is the NCMB, DOLE. intended or actual
span of time allotted by law for the parties staging thereof.
to settle their disputes in a peaceful manner
before staging a strike or lockout. The The requirement on In case of union-
principles of improved offer and reduced the 7-day waiting busting, the law
offer balloting apply during the cooling-off period or strike ban, allows the complete
period. together with the disregard of the
requirement on the cooling-off period.
NOTE: It directs the NCMB-DOLE to exert all conduct of strike vote
efforts at the mediation and conciliation to affect and submission of the
a voluntary settlement during the cooling-off result thereof to the
period. NCMB, should still be
complied with in case
Cooling-off Periods Provided by Law of union-busting.

Cooling-off and waiting period may be

a. In cases of CBD, the cooling-off period is
done simultaneously.
thirty (30) days;
b. In cases of ULP, the period shall be fifteen
(15) days. Purpose of the 7-day waiting period

NOTE: In the case of union busting, as defined in
Art. 278(c), the cooling-off period need not be
observed.
Start of Cooling-off Period
It is intended to give the DOLE an opportunity to
verify whether the projected strike really carries
the imprimatur of the majority of the union
members in addition to the cooling-off period
before the actual strike.

The start of the cooling-off period should be
reckoned not on the date the union or employer
prepared the notice of strike or lockout, as the
case may be, but from the time the notice of
strike or lockout is filed with the NCMB, a copy
of said notice having been served on the other
party concerned.
NOTE: Failure to comply with the aforesaid
requirements makes the strike illegal.
Consequently, the officers of the union who
participated therein are deemed to have lost
their employment status. (Bukluran ng
Manggagawa sa Clothman Knitting, etc. v. CA, et
al., G.R. No. 158158, Jan. 17, 2005)

Q: Johnny is the duly elected President and

principal union organizer of the

315
 LABOR LAW AND SOCIAL LEGISLATION
Nagkakaisang Manggagawa ng Manila
Restaurant (NMMR), a legitimate labor
organization. He was unceremoniously
dismissed by management for spending
virtually 95% of his working hours in union
activities. On the same day Johnny received
the notice of termination, the labor union
went on strike.
Management filed an action to declare the
strike illegal, contending that:
a. The Union did not observe the “cooling-
off period” mandated by the LC; and
b. The Union went on strike without
complying with the strike-vote
requirement under the LC.
Rule on the foregoing contentions with
reasons. (2009 BAR)
A:
a. YES. The conduct of a strike action without
observing the cooling-off period is a
violation of one of the requirements of law.
The cooling-off periods required by Art.
278 (c) and (f) of the LC are to enable the
DOLE to exert efforts to amicably settle the
controversy and for the parties to review
and reconsider their respective positions
during the cooling-off periods.
b. YES. The conduct of the strike action
without a strike vote violates Art. 278 (f) –
“In every case, the union or the Er shall
furnish the DOLE the results of the voting
at least 7_days before the intended strike”
to enable the DOLE and the parties to exert
the last effort to settle the dispute without
strike action.
When Does Union Busting Exist ?
The codal definition has specific elements:
1. The union officers are being dismissed;
2. Those officers are the ones duly elected in
accordance with the union constitution and
by-laws; and
3. The existence of the union is threatened.
NOTE: Before plunging the organization into a
strike because of alleged union busting by the
employer, the union officers should notify the
NCMB and consult the general membership.
These persons must be given the opportunity to
assess, coolly and carefully, whether or not
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
union busting is indeed occurring. (Azucena, Vol.
2, 2016, p. 605)
Q: NFSW, the bargaining agent of Central
Azucarera de la Carlota (CAC) rank and file
employees, filed a notice of strike based on
non-payment of the 13th month pay and 6
days thereafter they held the strike. A day
after the commencement of the strike, a
report of the strike-vote was filed by NFSW
with DOLE. CAC filed a petition to declare the
strike illegal due to non-compliance with the
15-day cooling off period and the strike was
held before the lapse of 7 days from the
submission to the DOLE of the result of the
strike vote. Was the strike held by NFSW
legal?
A: NO. The cooling-off period in Art. 278(c), LC
and the 7-day strike ban after the strike-vote
report prescribed in Art. 278(f) of the LC were
meant to be mandatory. The law provides that
“the labor union may strike” should the dispute
“remain unsettled until the lapse of the requisite
number of days from the filing of the notice”, this
clearly implies that the union may not strike
before the lapse of the cooling-off period. The
cooling-off period is for the SOLE to exert all
efforts at mediation and conciliation to effect a
voluntary settlement.
The mandatory character of the 7-day strike ban
is manifested in the provision that “in every
case” the union shall furnish the DOLE with the
results of the voting “at least 7 days before the
intended strike.” This period is to give time to
verify that a strike vote was actually held. (NFSW
v. Ovejera, G.R. No. L-59743, May 31, 1982)
Purpose of giving notice of the conduct of a
strike vote to the NCMB at least 24 hours
before the meeting for the said notice
1. Inform the NCMB of the intent of the union
to conduct a strike vote;
2. Give the NCMB ample time to decide on
whether or not there is a need to supervise
the conduct of the strike vote to prevent
any acts of violence and/or irregularities;
and
3. Ample time to prepare for the deployment
of the requisite personnel. (Capitol Medical
Center v. NLRC, G.R. No. 147080, April 26,
2005)
Legality of No Strike/Lockout Clause
316
 LABOR RELATIONS – PEACEFUL CONCERTED ACTIVITIES
A no strike/lockout clause is legal but it is
applicable only to economic strikes, not ULP
strikes. As a provision in the CBA, it is a valid
stipulation although the clause may be invoked
by an Er only when the strike is economic in
nature or one which is conducted to force wage
or other concessions from the Er that are not
mandated to be granted by the law itself. It
would be inapplicable to prevent a strike which
is grounded on ULP. (Panay Electric Co. v. NLRC,
G.R. No. 102672, Oct. 4, 1995); (Malayang
Samahan ng mga Manggagawa sa Greenfield v.
Ramos, G.R. No. 113907, Feb. 28, 2000)
Preventive Mediation Case
It involves labor disputes which are the subject
of a formal or informal request for conciliation
and mediation assistance sought by either or
both parties or upon the initiative of the NCMB.
[IRR, Book V, Rule I, Sec. 1 (mm)]
NOTE: The regional branch may treat the notice
as a preventive mediation case upon agreement
of the parties.
Mediation should safeguard confidentiality.
Information discovered in mediation is
inadmissible in court. A party cannot use
information gathered in mediation against the
other party and the Mediator cannot be
subpoenaed to reveal what transpired in
mediation. (The PHILJA Judicial Journal, Vol. 4;
Issue no.11, Jan.-March 2002, p. 8)
Legal basis for the conversion of a notice of
strike to preventive mediation
It is in pursuance of the NCMB’s duty under the
Rules Implementing the Labor Code to exert “all
efforts at mediation and conciliation to enable
the parties to settle the dispute amicably” and in
line with the state policy of favoring voluntary
modes of settling labor disputes. And a strike
mounted by the union after the NCMB dropped
the notice of strike from its docket of notice of
strikes and during the pendency of preventive
mediation proceedings would be illegal. (San
Miguel Corporation v. NLRC et al., G.R. No.
119293, June 10, 2003)
Duty to declare that the notice of strike or
lockout has been converted into preventive
mediation case
Upon the recommendation of the conciliator or
mediator handling the labor dispute, the
Director of the Regional Branch of the NCMB
317
which has jurisdiction over the labor dispute has
the duty to declare and inform the parties that
the issues raised or the actual issues involved
are not proper subjects of a Notice of Strike or
Lockout has been converted into a Preventive
Mediation Case without prejudice to further
conciliation or upon the request of either or both
parties.
NOTE: NCMB shall inform the concerned party
in case notice does not conform to the
requirements.
Action taken by the NCMB on the notice of
strike of strike or lockout
1. Upon receipt of notice, the regional branch
of the NCMB shall exert all efforts at
mediation and conciliation to enable the
parties to settle the dispute amicably. It
shall also encourage the parties to submit
the dispute to voluntary arbitration.
2. The regional branch of the NCMB may,
upon agreement of the parties, treat a
notice as a preventive mediation case.
3. During the proceedings, the parties shall
not do any act which may disrupt or
impede the early settlement of the dispute.
They are obliged, as part of their duty to
bargain collectively in good faith and to
participate fully and promptly in
conciliation meetings called by the regional
branch of the NCMB.
4. A notice, upon agreement of the parties,
may be referred to alternative modes of
dispute resolution, including voluntary
arbitration.
Q: Was the strike held by the union legal
based on the fact that the notice of strike
only contained general allegations of ULP?
A: NO. In cases of ULP, the notice of strike shall
as far as practicable, state the acts complained of
and the efforts to resolve the dispute amicably.
(Tiu v. NLRC, G.R. No. 123276, Aug. 18, 1997)
Q: Fil Transit Employees Union filed a notice
of strike with the Bureau of Labor Relations
because of alleged ULP of the company.
Because of failure to reach an agreement the
union went on strike. Several employees
were dismissed because of the strike. The
union filed another notice of strike alleging
ULP, massive dismissal of officers and
members, coercion of employees and
violation of workers’ rights to self-
organization.
 LABOR LAW AND SOCIAL LEGISLATION
The DOLE after assuming jurisdiction over
the dispute, ordered all striking employees
including those who were dismissed to
return to work. The company however
countered that no strike vote had been
obtained before the strike was called and the
result of the strike vote was not reported to
DOLE. Was the strike held by the union illegal
for failure to hold a strike vote?
A: YES. There is no evidence to show that a
strike vote had in fact been taken before a strike
was called. Even if there was a strike vote held,
the strike called by the union was illegal because
of non-observance by the union of the
mandatory 7-day strike ban counted from the
date the strike vote should have been reported
to the DOLE. (First City Interlink Transportation
Co., Inc. v. Confessor, G.R. No. 106316, May 5,
1997)
Q: A is a member of the labor union duly
recognized as the sole bargaining
representative of his company. Due to a
bargaining deadlock, 245 members of the
500-strong union voted on March 13, 2010 to
stage a strike. A notice of strike was
submitted to the NCMB on March 16, 2010.
Seven days later the workers staged a strike.
In the course of which, A had to leave to
attend to his wife who just gave birth. The
union members later intimidated and barred
other employees from entering the work
premises, thus paralyzing the business
operations of the company. A was dismissed
from employment as a consequence of the
strike.
a. Was the strike legal? Explain.
b. Was A’s dismissal valid? Why or why
not? (2010 BAR)
A:
a. NO. First, the union failed to satisfy the
required majority vote of the union
membership approving the conduct of a
strike [LC, Art. 278 (f); D.O. No. 40-03, Rule
XII, Sec. 10]. Second, the strike was illegal
due to the non-observance of the 30-day
cooling off period by the union. [LC, Art.
278(c)]
b. NO. A, as an ordinary striking worker, may
not be declared to have lost his
employment status by mere participation
in an illegal strike, unless there is proof
that he knowingly participated in the
commission of illegal acts during the strike.
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
(LC, Art. 279; Arellano University Employees
and Workers Union v. Court of Appeals, 502
SCRA 219)
Q: Two unions, joined a welga ng bayan. The
unions, led by their officers, staged a work
stoppage which lasted for several days,
prompting FILFLEX and BIFLEX Corporations
to file a petition to declare the work stoppage
illegal for failure to comply with procedural
requirements. Did the employees commit an
illegal work stoppage?
A: YES. Ees, who have no labor dispute with
their Er but who, on a day they are scheduled to
work, refuse to work and instead join a welga ng
bayan commit an illegal work stoppage. There
being no showing that the two unions notified
the corporations of their intention, or that they
were allowed by the corporations, to join the
welga ng bayan, their work stoppage is beyond
legal protection. (BIFLEX Phils. Inc. Labor Union
(NAFLU) v. FILFLEX Industrial and
Manufacturing Corp., G.R. No. 155679, Dec. 19,
2006)
Enjoinment of strike
GR: Strikes arising from a labor dispute may not
be enjoined.
XPNs:
1. Assumption order by SLE [LC, Art. 278(g)];
2. Enjoining or restraining any actual or
threatened commission of any unlawful act
in any labor dispute [LC, Art. 225(e)];
and/or
3. When innocent-by-standers are being
prejudiced.
Only the Strike Can Be Enjoined, Not the
Imposition of Sanctions Against the Strikers
Under Art. 278 if the LC, all that the SOLE may
enjoin is the holding of a strike or lockout but
not the right of an employer to take disciplinary
action against union officers who participated in
the illegal strike and against union members
who committed illegal acts during the strike.
(Philippine Airlines, Inc. v. Secretary of Labor and
Employment, 193 SCRA 223)
ASSUMPTION OF JURISDICTION BY
THE DOLE SECRETARY
CERTIFICATION OF THE LABOR DISPUTE TO
THE NLRC FOR COMPULSORY ARBITRATION
318
 LABOR RELATIONS – PEACEFUL CONCERTED ACTIVITIES
When DOLE Secretary may assume or certify
a labor dispute
Art. 278(g) of the Labor Code provides that
when in the opinion of the DOLE Secretary, the
labor dispute causing or will likely cause a strike
or lockout in an industry indispensable to the
national interest, he is empowered to either:
1. Assume jurisdiction over the labor dispute
and decide it himself; or
2. Certify it to the NLRC for compulsory
arbitration, in which case, it will be the
NLRC which shall hear and decide it.
The secretary may act at his own initiative or
upon petition by any of the parties. (Azucena,
Vol. 2, 2016, p. 637)
Effect of Assumption
The assumption or certification by the DOLE
Secretary has the effect of automatically
enjoining the intended or impending strike or
lockout as specified in the assumption or
certification order.
Effect of assumption if a strike or lockout has
already taken place
If a strike or lockout has already taken place at
the time of assumption or certification:
1. Striking or locked employees shall
immediately return to work.
2. Employer shall immediately resume
operations and readmit all workers under
the same terms and conditions prevailing
before the strike or lockout.
Prior notice is not required for Assumption
of Jurisdiction
The discretion to assume jurisdiction may
exercise by the SOLE without the necessity or
prior notice or hearing given to any of the
parties disputants. The rationale justifiably rests
on his consideration of the exigency of the
situation in relation to national interests.
Actual Strike or Lockout Not a Condition for
the Exercise of the Power
Art. 278(g) of the LC does not require the
existence of a strike or lockout. All that is
required is the existence of a labor dispute likely
to cause a strike or lockout.
319
What constitutes a national interest case
The LC vests in the DOLE Secretary the
discretion to determine what industries are
indispensable to the national interest.
Accordingly, upon the determination by the
DOLE Secretary that such industry is
indispensable to the national interest, he has
authority to assume jurisdiction over the labor
dispute .
D.O. No. 40-H-13 s. 2013, indicates certain
“national interest” industries includes:
1. Hospital sector;
2. Electric power industry;
3. Water supply services, to exclude small
water supply services such as bottling and
refilling stations;
4. Air traffic control; and
5. Such other industries as may be
recommended by the National Tripartite
Industrial Peace Council (TIPC).”
The above enumerated industries are NOT
exclusive as other industries may be considered
indispensable to the national interest based on
the appreciation and discretion of the DOLE
Secretary or as may be recommended by TIPC.
Industries considered as indispensable to the
national interest
1. Public utilities;
2. Companies engaged in the generation or
distribution of energy;
3. Banks;
4. Schools;
5. Hospitals; and
6. Export-oriented industries.
Extent of the power of the President or the
Secretary of Labor and Employment to issue
assumption and certification orders
The power to issue assumption and certification
orders is an extraordinary authority strictly
limited to national interest cases and granted to
the President or to the SOLE, “which can
justifiably rest on his own consideration of the
exigency of the situation in relation to the
national interest.”
The SOLE is vested with the discretionary power
to decide not only the question of whether to
assume jurisdiction over a given labor dispute or
certify the same to the NLRC, but also the
 LABOR LAW AND SOCIAL LEGISLATION
determination of the industry indispensable to
national interest.
The President shall not be precluded from
intervening at any time and assuming
jurisdiction over any labor dispute involving
industries indispensable to national interest in
order to settle or terminate the same.
The SOLE may suspend the effects of the
termination pending resolution of the dispute in
the event of a prima facie finding by the
appropriate official of the DOLE before whom
such dispute is pending that the termination
may cause a serious labor dispute or is an
implementation of a mass lay-off.
When a dispute is assumed by the President
or SOLE, or certified to the NLRC for
compulsory arbitration
The assumption or certification shall have the
effect of automatically enjoining the intended or
impending strike or lockout.
Extent of the powers of the President during
strikes/lockouts
May determine the industries, which are in his
opinion indispensable to national interest;
May intervene at any time and assume
jurisdiction over any such labor dispute in order
to settle or terminate the same. [LC, Art. 278(g)]
NOTE: The decision of the President or SOLE is
final and executory after receipt thereof by the
parties.
Different rule on strikes and lockouts in
hospitals, clinics and medical institutions
As a general rule, strikes and lockouts in
hospitals, clinics and similar medical institutions
should be avoided.
In case a strike or lockout is staged, 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 movement and services shall
be unhampered and unrestricted as are
necessary to insure the proper and adequate
protection of the life and health of its patients,
most especially in emergency cases, for the
duration of the strike or lockout.
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
The DOLE Secretary may immediately assume,
within 24 hours from knowledge of the
occurrence of such a strike or lockout,
jurisdiction over the same or certify it to the
NLRC for compulsory arbitration.
Issues that the SOLE may resolve when he
assumes jurisdiction over a labor dispute
Power of SOLE is plenary and discretionary. (St.
Luke’s Medical Center v. Torres, G.R. No. 99395,
June 29, 1993)
As the term "assume jurisdiction" connotes, the
intent of the law is to give the Labor Secretary
full authority to resolve all matters within the
dispute that gave rise to or which arose out of
the strike or lockout; it includes and extends to
all questions and controversies arising from or
related to the dispute, including cases over
which the labor arbiter has exclusive
jurisdiction. (Tabangao Shell Refinery Employees
Association v. Pilipinas Shell Petroleum Corp, G.R.
No. 170007, April 7, 2015)
Some principles on assumption/certification
power of the DOLE Secretary:
Prior notice and hearing are NOT required in the
issuance of the assumption or certification
order.
The DOLE Secretary may seek the assistance of
law enforcement agencies like the Philippine
National Police to ensure compliance with the
provision thereof as well as with such orders as
he may issue to enforce the same.
Assumption or certification orders are
immediately executory and are to be strictly
complied with even during the pendency of a
motion for reconsideration or petition
questioning its validity. (St. Scholastica’s College
v. Torres, G.R. No. 100158, June 2, 1992)
Return-to-work order
The mere issuance of an assumption/
certification order automatically carries with it
a return-to-work order, even if the directive to
return to work is not expressly stated therein.
Thus, it is not necessary for the DOLE Secretary
to issue another order directing the strikers to
return to work.
It is an error for striking workers to continue
with their strike alleging absence of a return-to-
work order since Art 278(g) is clear that once an
320
 LABOR RELATIONS – PEACEFUL CONCERTED ACTIVITIES
assumption/certification order is issued, strikes
are enjoined or, if one has already taken place,
all strikers should immediately return to work.
Nature of a return-to-work order
A return-to-work order is a valid statutory part
and parcel of the assumption of jurisdiction and
certification orders given the predictable
prejudice the strike could cause not only to the
parties but more especially to the national
interest. It must be discharged as a duty even
against the worker’s will. The 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 its interest.
It is executory in character and shall be strictly
complied with by the parties even during the
pendency of any petition questioning their
validity precisely to maintain the status quo
while the determination is being made. (Union of
Filipro Employees v. Nestle Philippines, Inc., G.R.
No. 88710-13, Dec. 19, 1990)
A return-to-work order may be validly issued
pending determination of the legality of the
strike
Where the return-to-work order is issued
pending the determination of the legality of the
strike, it is not correct to say that it may be
enforced only if the strike is legal and may be
disregarded if illegal. Precisely, the purpose of
the return to work order is to maintain the
status quo while the determination is being
made. (Sarmiento v. Tuico, G.R. Nos. 75271-73,
June 27, 1988)
Q: Where a return-to-work is issued, may the
employer be compelled to accept back to
work the strikers with pending criminal
charges?
A: YES. To exclude those with pending criminal
charges in the directive to the company to accept
back the striking workers without first
determining whether they knowingly committed
illegal acts would be tantamount to dismissal
without due process of law. (Telefunken
Semiconductors Employees Union-FFW v.
Secretary of Labor, et al. G.R. Nos. 122743 and
127215, Dec. 12, 1997)
Return-to-work order does not violate the
constitutional provision against involuntary
servitude
321
A return-to-work order is not offensive to the
constitutional provision against involuntary
servitude. It must be discharged as a duty even
against the worker’s will. The 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 its interest. It is executory in
character and should be strictly complied with
by the parties even during the pendency of any
petition questioning its validity in order to
maintain the status quo while the determination
is being made.
Some principles on return-to-work order
The issue of legality of strike is immaterial in
enforcing the return-to-work order.
Upon assumption/certification, the parties
should revert to the status quo ante litem which
refers to the state of things as it was before the
labor dispute or the state of affairs existing at
the time of filing of the case. It is the last actual,
peaceful and uncontested status that preceded
the actual controversy.
To implement the return-to-work order, the
norm is actual reinstatement. However, payroll
reinstatement in lieu of actual reinstatement
may properly be resorted to when special
circumstances exist that render actual
reinstatement impracticable or otherwise not
conducive to attaining the purposes of the law.
e.g., Where the teachers ordered to return to
work 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 first semester of the academic year. The SC
affirmed the validity of the payroll reinstatement
order of the NLRC and ruled that the NLRC did
not commit grave abuse of discretion in
providing for the alternative remedy of payroll
reinstatement. It observed that the NLRC was
only trying its best to work out a satisfactory ad
hoc solution to a serious problem. (University of
Santo Tomas v. NLRC, G.R. No. 89920, Oct. 18,
1990)
Return-to-work order different from an
Order of Reinstatement
The award of reinstatement, including
backwages, is awarded by a Labor Arbiter to an
illegally dismissed employee pursuant to Art.
294 of the Labor Code.
 LABOR LAW AND SOCIAL LEGISLATION
On the other hand, a return-to-work order is
issued by the Secretary of Labor and
Employment when he or she assumes
jurisdiction over a labor dispute in an industry
that is considered indispensable to the national
interest. Art. 278(g) of the Labor Code provides
that the assumption and certification of the
Secretary of Labor and Employment shall
automatically enjoin the intended or impending
strike. When a strike has already taken place at
the time the Secretary of Labor and Employment
assumes jurisdiction over the labor dispute, all
striking employees shall immediately return to
work. Moreover, the employer shall immediately
resume operations, and readmit all workers
under the same terms and conditions prevailing
before the strike.
Return-to-work and reinstatement orders are
both immediately executory; however, a return-
to-work order is interlocutory in nature, and is
merely meant to maintain status quo while the
main issue is being threshed out in the proper
forum. In contrast, an order of reinstatement is
a judgment on the merits handed down by the
Labor Arbiter pursuant to the original and
exclusive jurisdiction provided for under Art.
224(a) of the Labor Code. (Manggagawa ng
Komuniksyon sa Pilipinas v. PLDT, G.R. No.
190389, April 19, 2017, as penned by J. Leonen)
NATURE OF ASSUMPTION ORDER OR
CERTIFICATION ORDER
Police Power Measure
The power to issue assumption/certification
orders is an extraordinary authority granted to
the President and to his alter ego, the DOLE
Secretary, the exercise of which should be
strictly limited to national interest cases. It is in
the nature of a police power measure. This is
done for the promotion of the common good
considering that a prolonged strike or lockout
can be inimical to the national economy.
Nature of the power of the SOLE in assuming
jurisdiction
The SOLE acts to maintain industrial peace.
Thus, his certification for compulsory arbitration
is not intended to impede the worker’s right to
strike but to obtain a speedy settlement of the
dispute. (Philtread Workers Union v. Confesor,
G.R. No. 117169, March 12, 1997)
The provision under the LC does not interfere
with the workers right to strike but merely
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
regulates it, when in the exercise of such right
national interest will be affected.
NOTE: The underlying principle embodied in
Art. 278(g), LC on the settlement of labor
disputes is that assumption and certification
orders are executory in character and are
strictly complied with by the parties even during
the pendency of any petition questioning their
validity. This extraordinary authority given to
the Secretary of Labor is aimed at arriving at a
peaceful and speedy solution to labor disputes,
without jeopardizing national interests.
Q: A notice of strike was filed by the PSBA
Employees Union-FFW, alleging union-
busting, coercion of Employees and
harassment on the part of PSBA. The
conciliation being ineffective, the strike
pushed through. A complaint for ULP and for
a declaration of illegality of the strike with a
prayer for preliminary injunction was filed
by PSBA against the union.
While the cases were pending, a complaint
was filed in the RTC of Manila by some PSBA
students against PSBA and the union, seeking
to enjoin the union and its members from
picketing and from barricading themselves
in front of the school’s main gate. A TRO was
then issued by the RTC, which the union
opposed on the ground that the case involves
a labor dispute over which the RTC had no
jurisdiction. The Acting SOLE later on
assumed jurisdiction over the labor dispute
and ordered the striking Employees to return
to work.
a. Was the SOLE correct in ordering the
striking Employees to return to work?
b. Does the RTC have jurisdiction to decide
the case filed by the PSBA students?
A:
a. YES. In the opinion of the Acting SOLE, the
labor dispute adversely affected the
national interest, affecting as it did 9,000
students. He is authorized by law to
assume jurisdiction over the labor dispute,
after finding that it adversely affected the
national interest. This power is expressly
granted by Art. 278(g) of the LC, as
amended by B.P. Blg. 227.
b. NO. The RTC was without jurisdiction over
the subject matter of the case filed by some
PSBA students. It is a labor dispute which
the labor agencies have exclusive
322
 LABOR RELATIONS – PEACEFUL CONCERTED ACTIVITIES
jurisdiction. The rule that regular courts
have no jurisdiction over labor disputes
and to issue injunctions against strikes is
well-settled. (PSBA v. Noriel, G.R. No. 80648,
Aug. 1, 1988)
Q: Members of the union learned that a
redundancy program would be implemented
by PLDT. They thus filed a notice of strike on
the ground of ULP. However, the Secretary of
Labor, recognizing that PLDT’s operations is
impressed with public and national interest
as communication plays a vital role in
furtherance of trade, commerce, and
industry specially at this time of globalized
economy where information is vital to
economic survival, enjoined the strike and
issued a “qualified” return-to-work order
where all striking employees except those
who were terminated due to redundancy
were ordered to return to work. Was the
“qualified” return-to-work order valid?
A: NO. When the SOLE exercises the powers
granted by Art. 278(g) of the LC, he is, indeed,
granted great breadth of discretion. However,
the application of this power is not without
limitation, lest the SLE would be above the law.
As Art. 278(g) is clear and unequivocal in stating
that all striking or locked out Ees shall
immediately return to work and the Er shall
immediately resume operations and readmit all
workers under the same terms and conditions
prevailing before the strike or lockout, then the
unmistakable mandate must be followed by the
SOLE. (PLDT v. Manggagawa ng Komunikasyon
sa Pilipinas, G.R. No. 162783, July 14, 2005)
EFFECT OF DEFIANCE OF ASSUMPTION OR
CERTIFICATION ORDERS
Effect of defiance to the return to work order
1. Effect on strikers in case of strike
In case of non-compliance by the strikers
with return-to-work order issued in
connection with the certification or
assumption of jurisdiction by the SOLE, they
may be subjected to immediate disciplinary
action, including dismissal or loss of
employment status and even to criminal
prosecution. (Art. 278[g], Labor Code)
2. Effect on employers in case of lockout
In case of non-compliance by the employer
with the return-to-work order issued in
323
connection with the certification or
assumption of jurisdiction by the SOLE, he
may be held liable to pay backwages,
damages and other affirmative reliefs, even
criminal prosecution against him. (Art.
278[g], Labor Code)
Effect of a defiance of assumption or
certification orders of the SOLE
Non-compliance with the certification order of
the SOLE shall be considered as an illegal act
committed in the course of the strike or lockout.
The defiance by the union, its officers and
members of the SOLE’s assumption of
jurisdiction or certification order constitutes a
valid ground for dismissal. [LC, Art. 278(g)]
The moment a worker defies an assumption or
certification order (which in itself is also a
return-to-work order), he is deemed to have
abandoned his employment. It is already in
itself knowingly participating in an illegal act,
hence, he could be validly replaced. (St.
Scholastica’s College v. Torres, G.R. No. 100158,
June 2, 1992)
NOTE: The SOLE may cite the defiant party in
contempt pursuant to the power vested in him
under the provisions of the LC.
Justifications for the dismissal of a defiant
Employee
1. A strike that is undertaken after the
issuance by the SOLE of an assumption or
certification order becomes a prohibited
activity and thus illegal. The striking union
officers and members, as a result, are
deemed to have lost their employment
status for having knowingly participated in
an illegal strike.
2. From the moment an Ee defies a return-to-
work order, he is deemed to have
abandoned his job.
3. By staging a strike after the assumption or
certification for compulsory arbitration, the
Ee forfeit their right to be re-admitted to
work, having, in effect, abandoned their
employment. (Steel Corporation of the
Philippnes v. SCP Employees Union, G.R. Nos.
169829-30, Aug. 16, 2008)
NOTE: Once the SOLE assumes jurisdiction over
a labor dispute or certifies it to the NLRC for
 LABOR LAW AND SOCIAL LEGISLATION
compulsory arbitration, such jurisdiction should
not be interfered with by the application of the
coercive process of a strike or lockout.
The workers defying a return-to-work order
issued in connection with the asusmption or
certification by the SOLE may, in fact, be
subjected not only to immediate disciplinary
action such as dismissal or loss of employment
status but to criminal prosecution as well.
Defiant strikers could be validly replaced.
Period of defiance of the return-to-work
order, not material
The length of time within which the return-to-
work order was defied by the strikers is not
significant in determining their liability for the
legal consequences thereof. The following cases
are illustrative of this rule:
1. The period of defiance was less than 9 hours
from 8:45 a.m. to 5:25 p.m. on Sept. 19,
2003. (University of San Agustin Employees’
Union-FFW v. CA, G.R. No. 169632, March 28,
2008)
2. The period of defiance was only 9 days.
(Federation of Free Workers v. Inciong, G.R.
No. L-49983, April 20, 1992)
Some principles on defiance of the
assumption or certification order
1. The assumption/certification order may be
served at any time of the day or night.
2. No practice of giving 24 hours to strikers
within which to return to work. There is no
law or jurisprudence recognizing this
practice.
3. The defiant strikers could be validly
replaced.
4. The refusal to acknowledge receipt of the
assumption/certification orders and other
processes is an apparent attempt to
frustrate the ends of justice, hence, invalid.
The union cannot be allowed to thwart the
efficacy of the said orders issued in the
national interest through the simple
expediency of refusing to acknowledge
receipt thereof.
5. When the employees slowed down in their
work after assumption of jurisdiction, the
slowdown amounted to a strike in defiance
of the assumption order. (Fardiquelan, et al.
v. Monetary Foods Corp., G.R. No. 178409,
June 8, 2011)
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Q: Several employees and members of Union
A were terminated by Western Phone Co. on
the ground of redundancy. After complying
with the necessary requirements, the Union
staged a strike and picketed the premises of
the company. The management then filed a
petition for the SOLE to assume jurisdiction
over the dispute. Without the benefit of a
hearing, the SOLE issued an Order to assume
jurisdiction and for the parties to revert to
the status quo ante litem.
a. Was the order to assume jurisdiction legal?
Explain.
b. Under the same set of facts the Secretary
instead issued an Order directing all striking
workers to return to work within 24 hours,
except those who were terminated due to
redundancy. Was the order legal? Explain.
A:
a. YES. The SOLE has plenary power to
assume jurisdiction under Art. 278(g), LC:
“When in his opinion, there exists a labor
dispute causing or likely to cause a strike or
lockout in an industry indispensable to the
national interest, the SLE may assume
jurisdiction over the dispute and decide it
or certify it to the NLRC for compulsory
arbitration.” This extraordinary authority
given to the SOLE is aimed at arriving at a
peaceful and speedy solution to labor
disputes without jeopardizing national
interests. (Steel Corportaion v. SCP
Employees Union, G.R. Nos. 169829-30, April
16, 2008)
Such assumption shall have the effect of
automatically enjoining an impending
strike or lockout or an order directing
immediate return to work and resume
operations, if a strike already took place,
and for the employer to re-admit all
employees under the same terms and
conditions prevailing before the strike or
lockout. [LC, Art. 278(g); D.O. No. 40-G-03,
Rule XXII, Sec. 15]
b. NO. The order will be inconsistent with the
established State policy of enjoining the
parties from performing acts that
undermines the underlying principles
emodied in Art. 278(g), LC. In this case,
exempting the employees terminated due
to redundancy from those who are required
to return-to-work, the SOLE comes short of
his duty under Art. 278(g), LC to maintain
324
 LABOR RELATIONS – PEACEFUL CONCERTED ACTIVITIES
status quo or the terms and conditions
prevailing before the strike.
ILLEGAL STRIKE
A strike is illegal if declared and staged:
1. Contrary to specific prohibition of law, such
as strike by Ees performing governmental
functions.
2. In violation of a specific requirement of law.
If any of the requirements for a valid strike
or lockout is not complied with.
3. For an unlawful purpose, such as inducing
the Er to commit ULP against non-union
Ees, compelling the dismissal of an
employee, forcing recognition of the union,
or for trivial purposes or circumventing
contracts and judicial orders.
4. Through unlawful means in the pursuit of
its objective, such as widespread terrorism
of non-strikers.
5. In violation of an existing injunction or
temporary restraining order.
6. Contrary to an existing agreement, such as
a no-strike clause or conclusive arbitration
clause.
7. Based on non-strikeable or invalid grounds
such as: inter-union/intra-union disputes,
simple violation of CBA (in contrast to gross
violation thereof which is deemed ULP),
violation of labor standards, legislated
wage orders (wage distortion).
8. Without first having bargained collectively.
9. Without submitting the issues to the
grievance machinery or voluntary
arbitration or failing to exhaust the steps
provided therein.
10. While conciliation and mediation
proceeding is on-going at NCMB.
11. Based on issues already brought to
voluntary or compulsory arbitration.
12. During the pendency of a case involving the
same ground/s cited in the notice of strike.
13. In defiance of an assumption or
certification or return-to-work order.
14. After the conversion of the notice of strike
into a preventive mediation case.
15. By a minority union
16. By an illegitimate union
17. By dismissed employees
18. In violation of the company code of conduct
which prohibits “inciting or participating in
riots, disorders, alleged strikes, or
concerted actions detrimental to the
company’s interest,” the penalty for which
is dismissal.
325
19. As protest rallies in front of government
offices such as in the following cases:
The SC ruled that protest rallies staged by the
Ees from Feb. 21 to 23, 2001 in front of the
offices of the BLR and the DOLE Secretary
constitute illegal strike and not legitimate
exercise of their right to peaceably assemble and
petition the government for redress of
grievances. It was illegal for having been
undertaken without satisfying the mandatory
pre-requisites for a valid strike under Art. 278 of
the LC. (Toyota Motor Phils. Corp. Workers
Association v. NLRC, G.R. Nos. 158786 & 158789,
Oct. 19, 2007)
The ruling in Toyota was cited in Solidbank
Corporation v. Gamier, G.R. No. 159460, Nov. 15,
2010 as basis in declaring the protest action of
the Ees of Solidbank which staged in front of the
Office of the DOLE Secretary in Intramuros,
Manila, as constitutive of illegal strike since it
paralyzed the operations of the bank. The
protest action in this case was conducted
because of the CBA deadlock.
20. As welga ng bayan which is in the nature of
a general strike as well as an extended
sympathy strike.
Good Faith Strike is no longer a valid defense
A strike may be considered legal when the union
believed that the respondent company
committed unfair labor acts and the
circumstances warranted such belief in good
faith although subsequently such allegation of
unfair labor practices are found out as not true.
(PICEWO-FFW v. People’s Industrial and
Commercial Corp., 112 SCRA 440)
However, with the enactment of RA 6715 which
took effect on March 21, 1989, the rule now is
that such requirements as the filing of a notice of
strike, strike vote, and notice given to the DOLE
are mandatory in nature.
Thus, even if the union acted in good faith in the
belief that the company was committing an
unfair labor practice, if no notice of strike and a
strike vote were conducted, the said strike is
illegal. Claim of good faith is not a valid excuse to
dispense with the procedural steps for a lawful
strike. (Grand Boulevard Hotel v. Dacanay, G.R.
No. 153665, 18 July 2003; Poquiz, Vol. II)
It is not enough that the union believed that the
employer committed acts of ULP when the
 LABOR LAW AND SOCIAL LEGISLATION
circumstances clearly negate even a prima facie
showing to sustain such belief. (National Union
of Workers in Hotels, Restaurants and Allied
Industries v. NLRC, et al., G.R. No. 122561, March
6, 1998)
Employees who staged an illegal strike are
not entitled to backwages
Contemplating two causes for the dismissal of an
Ee —(a) unlawful lockout, and (b) participation
in an illegal strike— Art 279(a) authorizes the
award of full backwages only when the
termination of employment is a consequence of
an unlawful lockout.
As a general rule, backwages are granted to
indemnify a dismissed ee for his loss of earnings
during the whole period that he is out of his job.
Considering that an illegally dismissed Ee is not
deemed to have left his employment, he is
entitled to all the rights and privileges that
accrue to him from the employment. That
backwages are not granted to Ees participating
in an illegal strike simply accords with the
reality that they do not render work for the Er
during the period of the illegal strike under the
principle of a fair day’s wage for a fair day’s
labor.
With respect to backwages, the principle of “fair
day’s wage for a fair day’s labor” remains as the
basic factor in determining the award thereof. If
there is no work performed by the employee
there can be no wage or pay unless, of course,
the laborer was able, willing and ready to work
but was illegally locked out, suspended or
dismissed or otherwise illegally prevented from
working. However, for this exception to apply, it
is required that the strike be legal. (Danilo
Escario v. NLRC, G.R. No. 160302, Sept. 27, 2010)
LIABILITY OF UNION OFFICERS vs. LIABILITY
OF ORDINARY WORKERS
Participation in lawful strike
An employee who participates in a lawful strike
is NOT deemed to have abandoned his
employment. Such participation should not
constitute sufficient ground for the termination
of his employment even if a replacement has
already been hired by the Er during the lawful
strike.
Participation in illegal strike
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Distinction in the liability between union
officers and ordinary union members.
1. Union officers – The mere finding or
declaration of illegality of the strike will
result in the termination of all union
officers who knowingly participated in the
illegal strike. Unlike ordinary members, it is
not required, for purposes of termination,
that the officers should commit an illegal
act during the strike. However, absent any
showing that the Ees are union officers,
they cannot be dismissed solely on the
illegality of the strike. Further, the fact they
are union officers is not sufficient, it should
be proven that they participated.
To illustrate how the “knowing
participation” of union officers may be
ascertained, the following were taken into
account in Abaria v. NLRC, G.R. No. 154113,
Dec. 7, 2011:
a. Their persistence in holding picketing
activities despite the declaration by the
NCMB that their union was not duly
registered as a legitimate labor
organization and notwithstanding the
letter from the federation’s legal
counsel informing them that their acts
constituted disloyalty to the national
federation; and
b. Their filing of notice of strike and
conducting a strike vote despite the
fact that their union has no legal
personality to negotiate with their Er
for collective bargaining purposes
2. Ordinary union members – the mere
finding or declaration of illegality of a
strike will not result in termination of
ordinary union members. For an ordinary
union member to suffer termination, it
must be shown by clear evidence that he
has committed illegal acts during the strike.
Reason for the distinction – Union 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, their dismissal
from the service is just a penalty for their
unlawful act. Their responsibility as main
players in an illegal strike is greater than that of
an ordinary union member’s and, therefore,
limiting the penalty of dismissal only to the
former for their participation in an illegal strike
is in order.
326
 LABOR RELATIONS – PEACEFUL CONCERTED ACTIVITIES
Some principles on illegality of a strike
1. The fact that the Ees are signatories to the
CBA does not itself sufficiently establish
their status as union officers during the
illegal strike. Neither could their active
roles during the bargaining negotiations be
considered as evidence of their being union
officers.
2. Only the union officers during the period of
illegal strike are liable. If the Ees acted as
union officers after the strike, they may not
be held liable and, therefore, could not be
terminated in their capacity as such.
3. Shop stewards are union officers. Hence,
they should be terminated upon the
declaration of the illegality of the strike.
4. Union officers may be dismissed despite
the fact that the illegal strike was staged
only for 1 day or even for less than 10
hours. This holds true in cases of defiance
of the assumption/certification order
issued in national interest cases.
5. If the dispositive portion of the decision
failed to mention the names of union
officers, resort should be made to the text
of the decision.
6. No wholesale dismissal of strikers allowed.
The Er cannot unceremoniously dismiss a
hundred of its Ees in the absence of clear
and convincing proof that these people
were indeed guilty of the acts charged and
then, afterwards, go to court to seek
validation of the dismissal it whimsically
executed.
Union’s Liability for damages due to Illegal
Strike
The local union and not the mother federation is
liable for damages resulting from an illegal
strike. The reason is because the mother
federation is a mere agent of the local union.
(Filipino Pipe v. NLRC, 318 SCRA 68)
Participation in the commission of illegal acts
during a strike
1. The legality or illegality of strike is
immaterial as far as liability for
commission of illegal acts during the strike
is concerned. As long as the union officer or
member commits an illegal act in the
327
course of the strike, be it legal or illegal, his
employment can be validly terminated.
Where the strikers were found to have
prevented the free entry into and exit of
vehicles from the employer’s compound,
their dismissal from employment was
declared legal. A prior petition to declare
the strike illegal is not necessary. Art. 279
allows an employer to terminate
employees that committed illegal acts in
the course of a strike. (Jackbilt Industries,
Inc. v. Jackbilt Employees’ Workers Union-
NAFLU-KMU, G.R. No. 171618-19, March 13,
2009)
2. The term “illegal acts” under Art. 279(a)
may encompass a number of acts that
violate existing labor or criminal laws, such
as:
a. “Any act of violence, coercion or
intimidation or obstruct the free
ingress to or egress from the Er’s
premises for lawful purposes, or
obstruct public thoroughfares” [LC,
Art. 279(b)]
b. Commission of crimes and other
unlawful acts in carrying out the
strike.
c. Violation of any order, prohibition, or
injunction issued by the DOLE
Secretary or NLRC in connection with
the assumption of jurisdiction or
certification order under Art. 278(g)
of the LC.
Liability for illegal acts should be determined on
an individual basis. For this purpose, the
individual identity of the union members who
participated in the commission of illegal acts
may be proved through affidavits and
photographs.
Some principles on commission of illegal acts
in the course of the strike:
Only members who are identified as having
participated in the commission of illegal acts are
liable. Those who did not participate should not
be blamed therefor.
To effectively hold ordinary union members
liable, those who participated in the
commissions of illegal acts must not only be
identified but the specific illegal acts they each
committed should be described with
particularity.
 LABOR LAW AND SOCIAL LEGISLATION

If violence was committed by both Er and Ees,
the same cannot be cited as a ground to declare
the strike illegal.
Q: Can the SOLE restrain the employer from
imposing sanctions against the union officers
who knowingly participated in the illegal
strike?
consequence of the Er’s ULP because while out
on strike, the strikers are not considered to have
abandoned their employment, but rather have
only ceased from their labor; the declaration of a
strike is not a renunciation of employment
relation.
Persons not entitled to reinstatement

A: NO. If the strike is declared illegal, the SOLE 1. Union officers who knowingly participate
cannot restrain or enjoin the employer from in the illegal strike
imposing the appropriate sanctions against the 2. Any striker or union who knowingly
union officers who knowingly participated in the participates in the commission of illegal
illegal strike and against any striking employee acts during the strike
who committed illegal acts during the strike.
Since the strike is illegal, the employer has the NOTE: Those union members who have joined
right to take disciplinary action against the an illegal strike but have not committed any
union officers who participated in it and against illegal act shall be reinstated but without
any member who committed illegal acts during backwages.
the strike. (PAL v. SOLE, 193 SCRA 223)
The responsibility for the illegal acts committed
UNION ORDINARY during the strike must be on an individual and
BASIS not on a collective basis. (First City Interlink
OFFICER WORKER
Transportation Co., Inc. v. Confesor, G.R. No.
May be Cannot be
106316, May 5, 1997)
declared to terminated
have lost his
Q: X was dismissed for joining an illegal
employment NOTE: The LC
status protects strike but was reinstated because he is only a
member of the union who did not commit
ordinary,
any illegal act. Is X entitled for backwages for
rank-and-file
union the period of strike?
Knowingly members
A: NO. Conformably with the long honoured
participating who
principle of “a fair day’s wage for a fair day’s
in an illegal participated
labor”, Ee’s dismissed for joining illegal strike
strike in such a
strike from are not entitled to backwages for the period of
the strike even if they are reinstated by virtue of
losing their
their being merely members of the striking
jobs provided
union who did not commit any illegal act during
that they did
the strike. (Escario v. NLRC, G.R. 124055, June 8,
not commit
illegal acts 2000)
during the
Rule on strikes in hospitals
strike.
Knowingly
It shall be the duty of the striking Ees or locking-
participating
out Er to provide and maintain an effective
in the May be May be
skeletal workforce of medical and health
commission terminated terminated
personnel for the duration of the strike or
of illegal acts
lockout.
during strike
SOLE may immediately assume jurisdiction
(Samahang Manggagawa Sa Sulpicio Lines, Inc.–
within 24 hours from knowledge of the
Naflu et al. v. Sulpicio Lines, Inc., G.R. No. 140992,
occurrence of such strike or lockout certify it to
March 25, 2004)
the NLRC for compulsory arbitration.
Rule on reinstatement of striking workers
Q: More or less 1400 employees of the
company staged a mass walk-out, allegedly
Striking Ees are entitled to reinstatement,
without anybody leading them as it was a
regardless of whether or not the strike was the

UNIVERSITY OF SANTO TOMAS 328

2021 GOLDEN NOTES
 LABOR RELATIONS – PEACEFUL CONCERTED ACTIVITIES
simultaneous, immediate and unanimous
group action and decision, to protest the non-
payment of their salaries and wages. The SLE
who found the strike to be illegal granted the
clearance to terminate the employment of
those who were instigators in the illegal
strike. Was the decision of the Secretary in
granting the clearance correct?
A: NO. A mere finding of the illegality of a strike
should not be automatically followed by
wholesale dismissal of the strikers from their
employment. While it is true that administrative
agencies exercising quasi-judicial functions are
free from the rigidities of procedure, it is equally
well-settled that avoidance of technicalities of
law or procedure in ascertaining objectively the
facts in each case should not, however, cause
denial of due process. (Bacus v. Ople, G.R. No. L-
56856, Oct. 23, 1984)
Q: Two days after the union struck, the SLE
ordered the striking workers to return to
work within 24 hours. But the striking union
failed to return to work and instead they
continued their pickets. As a result, violence
erupted in the picket lines. The service bus
ferrying non-striking workers was stoned
causing injuries to its passengers. Threats,
defamation, illegal detention, and physical
injuries also occurred. The company was
directed to accept back all striking workers,
except the union officers, shop stewards, and
those with pending criminal charges. Was the
SLE correct in not including the union
officers, shop stewards and those with
pending criminal charges in the return-to-
work order?
A: NO. To exclude union officers, shop stewards
and those with pending criminal charges in the
directive to the company to accept back the
striking workers without first determining
whether they knowingly committed illegal acts
would be tantamount to dismissal without due
process of law. (Telefunken Semiconductors Ees
Union-FFW v. SOLE, G.R. No. 122743 & 127215,
Dec. 12, 1997)
Employees who abandoned a legal strike but
were refused reinstatement can be awarded
backwages
Provided the following requisites are present:
1. The strike was legal
2. There was an unconditional offer to return
to work as when the strikers manifested
329
their willingness to abide by the CIR back-
to-work order and even sought the aid of
competent authorities to effect their return
3. The strikers were refused reinstatement
such as when they have not been re-
admitted to their former position.
(Philippine Marine Officers' Guild v.
Compañia Maritima et al., G.R. Nos. L-20662
and L-20662, March 27, 1971)
Separation pay in lieu of reinstatement in
strike cases
In strike cases, the award of separation pay in
lieu of reinstatement is proper only when the
strikers did not participate in the commission of
illegal acts in the course thereof.
Entitlement of strikers to their backwages or
strike duration pay
GR: Strikers are not entitled to their backwages
or strike duration pay even if such strike was
legal.
XPNs:
1. Where the strikers voluntarily and
unconditionally offered to return to work,
but the Er refused to accept the offer – Ers
are entitled to backwages from the date
their offer was made
2. When there is a return-to-work order and
the Ees are discriminated against other Ees,
workers are entitled to backwages from the
date of discrimination
3. In case of a ULP strike, in the discretion of
the authority deciding the case
4. When the Ees were illegally locked out and
thus compel them to stage a strike.
If the strike is illegal, no backwages should be
paid. Thus, in Arellano University Employees and
Workers Union v. CA, G.R. No. 139940, Sept. 19,
2006, where the strike was declared illegal,
petitioner union members who were found not
to have participated in the commission of illegal
acts during the strike were ordered reinstated to
their former positions but without backwages. If
reinstatement is no longer possible, they should
receive separation pay of 1 month for every year
of service in accordance with existing
jurisprudence. With respect to the union officers,
their mere participation in the illegal strike
warrants their dismissal.
LIABILITY OF EMPLOYER
Liability for reinstatement of strikers
 LABOR LAW AND SOCIAL LEGISLATION
Reinstatement (without backwages) ordinary
rank-and-file union members who did not
participate in the commission of illegal acts
during the conduct of the illegal strike may be
ordered.
Terminate strikers who committed illegal acts
during and in the course of a strike. They are not
entitled to be reinstated. Additionally, they may
be held criminally liable therefor.
Forfeit reinstatement of strikers who failed to
report for work without proper justification and
despite the order reinstating them to their job.
Pay backwages, reckoned from the labor
Arbiter’s issuance of the reinstatement order up
to its reversal by the NLRC, if Er fails to reinstate
strikers who were ordered reinstated by the
Labor Arbiter.
Q: By reason of a deadlock in collective
bargaining, the union, after the lapse of the
cooling-off period, declares a strike. The
strike is peaceful but fruitless; the
management is adamant. So after 60 days,
the strikers abandon their strike and offer to
return to work. Is the company bound to re-
admit them? Why?
A: YES. By going on strike, the Ees are not
deemed to have abandoned their work; they are
merely utilizing a weapon given to them by law
to seek better terms and conditions of
employment and to protect their rights. An Er
who refuses to re-admit the strikers, excepting
those who have forfeited their employment
status because of illegal acts committed in the
course of the strike would be discriminating
against them for having exercised their right to
engage in a concerted action; it commits a ULP.
(Cromwell Commercial Employees and Laborers
Union v. CIR, et al., G.R. No. L-19778, Sept. 30,
1964)
Mere participation of an Ee in a lawful strike
shall not constitute sufficient ground for
termination of his employment
If by reason of the prolonged strike, the
company was compelled to hire replacements
this would not constitute as sufficient reason for
it not to re-admit the strikers. Under Art. 279(a)
of the LC, mere participation of an Ee in a lawful
strike shall not constitute sufficient ground for
termination of his employment, even if a
replacement had been hired by the Er during
such lawful strike. A contrary rule would enable
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
the Er to dismiss an Ee by the simple expedient
of hiring a replacement.
The illegal acts of a re-admitted striker is
deemed to have been condoned
If an employer knowingly re-admits to work a
striker who committed illegal acts during a
strike, it cannot later on seek the dismissal of the
employee by reason of such acts.
In Pari Delicto
If the employer committed illegal lockout and
the employees staged an illegal strike, they are
both at fault. The court will restore their
respective positions before the strike. The
dismissed strikers will be ordered reinstated
without backwages. (Azucena, Vol. 2, 2016, p.
725)
Discriminatory Reinstatement
The act of the employer in reinstating the
strikers with less prominent union activities
while denying reinstatement tot the strikers
who were more militant, is discrimination. (The
Insular Life Assurance Co., Ltd. Employees
Association - NATU v. The Insular Life Assurance
Co., Ltd., 37 SCRA 244)
WAIVER OF ILLEGALITY OF STRIKE
Voluntary reinstatement constitutes a waiver
of the illegality of the strike
The act of the Er in inviting the workers to
return to their posts without making any
reference to the pending case involving the issue
of the illegality of the strike or imposing any
condition or alteration of the terms of their
employment was deemed a waiver of its right to
consider the strikers as wrongdoers. More so in
this case when such invitation was accepted by
the strikers. By said act, the parties may be said
to have both abandoned their original positions
and come to a virtual compromise to resume
unconditionally their former relation. (Citizens’
Labor Union v. Standard Vacuum Oil Co., G.R. No.
L-7478, May 6, 1955)
Instance when there is a waiver of the
illegality of a strike by the employer
When an Er accedes to the peaceful settlement
brooked by the NLRC by agreeing to accept all
Ees who had not yet returned to work, it waives
the issue of the illegality of the strike. (Reformist
Union v. NLRC, G.R. No. 120482, Jan. 27, 1997)
330
 LABOR RELATIONS – PEACEFUL CONCERTED ACTIVITIES
Effect of compliance with the return-to-work
order to the legality of strike
GR: A return-to-work order does not have the
effect of rendering the issue of the legality of the
strike as moot and academic. (Insurefco Paper
Pulp and Project Workers Union v. Insular Sugar
Refining Corp., 95 Phil. 761)
XPN: Er may be considered to have waived its
right to proceed against the striking Es for
alleged commission of illegal acts during the
strike when, during a conference before the
Chairman of the NLRC, it agreed to reinstate
them and comply with the return-to-work order
issued by the SOLE. (TASLI-ALU v. Court of
Appeals, G.R. No. 145428, July 7, 2004)
INJUNCTION
It is an order or a writ that commands a person
to do or not to do a particular act. It may be a
positive (mandatory) or a negative (prohibitory)
command.
Injunction in picketing, strike or lockout
cases
GR: Strikes and lockouts that are validly
declared enjoy the protection of the law and
cannot be enjoined unless illegal acts are
committed or threatened to be committed in the
course thereof.
A strike cannot be enjoined even if it may appear
to be illegal because strike is a weapon that the
law grants the employees for their protection
and advancement of their interest. (Caltex v.
Lucero, 4 SCRA 1196)
XPNs: In some cases, injunctions issued to
enjoin the conduct of the strike itself and not
only the commission of illegal acts in the course
thereof, were held to be valid.
1. Injunction may be issued not only against
the commission of illegal acts in the course
of the strike but against the strike itself
because the notice of strike filed by the
union has been converted into a preventive
mediation case. Having been so converted,
a strike can no longer be staged based on
said notice. Upon such conversion, the legal
effect is that there is no more notice of
strike to speak of. (San Miguel Corporation
v. NLRC, G.R. No. 119293, June 10, 2003)
331
2. 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. (San
Miguel Corporation v. NLRC, G.R. No. 99266,
March 2, 1999)
3. If declared against an industry
indispensable to national interest.
4. If staged by employees who are not
accorded the right to strike.
Regular courts are prohibited from issuing
injunction against strikes or lockouts
The cases cited above involve the issuance of
restraining order or injunction by the NLRC
pursuant to the exercise of its injunctive power.
In contrast, regular courts are absolutely
prohibited to grant any injunctive relief in cases
of strikes or lockouts.
Injunction in picketing cases
GR: Injunction cannot be issued against the
conduct of picketing by the workers. Under our
constitutional set up, picketing is considered
part of the freedom of speech duly guaranteed
by the Constitution.
XPNs (Picketing may be enjoined by the
NLRC):
1. When carried out through illegal means;
2. Involves the use of violence and other
illegal acts;
3. Affects the rights of third parties or
innocent bystanders and injunction
becomes necessary to protect such rights.
Q: Company C, a toy manufacturer, decided to
ban the use of cell phones in the factory
premises. In the pertinent Memorandum,
management explained that too much texting
and phone-calling by employees disrupted
company operations. Two employee-
members of Union X were terminated from
employment due to violation of the
memorandum-policy.
The union countered with a prohibitory
injunction case (with prayer for the issuance
of a temporary restraining order) filed with
the RTC challenging the validity and
constitutionality of the cell phone ban.
 LABOR LAW AND SOCIAL LEGISLATION
The company filed a motion to dismiss,
arguing that the case should be referred to
the grievance machinery pursuant to an
existing CBA with Union X, and eventually to
Voluntary Arbitration. Is the company
correct? Explain. (2010 BAR)
A: NO. The RTC has jurisdiction to hear and
decide the prohibitory injunction case filed by
Union X against Company C to enjoin the latter
from implementing the memorandum-policy
against the use of cell phones in the factory. The
issue in this case is the validity and
constitutionality of the cell phone ban being
implemented by Company C. The issue,
therefore, does not involve the interpretation of
the memorandum-policy, but its intrinsic
validity. (Haliguefla v. PAL 602 SCRA 297)
REQUISITES FOR LABOR INJUNCTIONS
Injunction in labor disputes
GR: No temporary or permanent injunction or
restraining order in any case involving or
growing out of labor disputes shall be issued by
any court. (LC, Art. 266)
XPNs:
1. Injunction power of the NLRC (LC, Art. 225)
2. Prohibited activities during a strike or
lockout (LC, Art. 279)
3. Assumption or certification power of the
SOLE in national interest cases [LC, Art.
278(g)]
Requisites in issuing an injunction in labor
cases
1. There is an actual or threatened
commission of any or all prohibited or
unlawful acts in any labor dispute;
2. There is a need to enjoin or restrain such
acts or to require the performance of a
particular act;
3. If not restrained or performed forthwith,
may cause grave or irreparable damage to
any party or render ineffectual any
decision in favor of such party; [LC, Art.
225(e)]
Provided, that no temporary or permanent
injunction in any case involving or growing
out of a labor dispute as defined in this
Code shall be issued except after hearing
the testimony of witnesses, with
opportunity for cross-examination, in
support of the allegations of a complaint
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
made under oath, and testimony in
opposition thereto, if offered, and only after
a finding of fact by the Commission, to the
effect:
4. That prohibited or unlawful acts have been
threatened and will be committed and will
be continued unless restrained, but no
injunction or temporary restraining order
shall be issued on account of any threat,
prohibited or unlawful act, except against
the person or persons, association or
organization making the threat or
committing the prohibited or unlawful act
or actually authorizing or ratifying the
same after actual knowledge thereof;
5. That substantial and irreparable injury to
complainant’s property will follow;
6. That as to each item of relief to be granted,
greater injury will be inflicted upon
complainant by the denial of relief than will
be inflicted upon defendants by the
granting of relief;
7. That complainant has no adequate remedy
at law; and
8. That the public officers charged with the
duty to protect complainant’s property are
unable or unwilling to furnish adequate
protection.
NOTE: "Labor dispute" includes any controversy
or matters concerning terms or conditions of
employment or the association or
representation of persons in negotiating, fixing,
maintaining, changing or arranging the terms
and conditions of employment, regardless of
whether the disputants stand in the proximate
relation of Er and Ee. (LC, Art. 219)
INNOCENT BYSTANDER RULE
Innocent bystander
A third party in a picketing who has no existing
connection or interest with the picketing union.
(MSF Tire & Rubber v. CA, G.R. No. 128632, Aug. 5,
1999)
NOTE: While peaceful picketing is entitled
protection as an exercise of free speech, the
courts are not without power to confine or
localize the sphere of communication or the
demonstration to the parties to the labor
dispute, including those with related interest,
and to insulate establishments or persons with
no industrial connection or having interest
totally foreign to the context of the dispute.
332
 LABOR RELATIONS – PEACEFUL CONCERTED ACTIVITIES
Thus, the right may be regulated at the instance
of third parties or "innocent bystanders" if it
appears that the inevitable result of it is to
create an impression that a labor dispute with
which they have no connection or interest exists
between them and the picketing union or
constitute an invasion of their rights. (Ibid.)
Required proof to be established by an
innocent bystander before a court enjoins a
labor strike
The innocent by stander must show:
Compliance with the grounds specified in Rule
58 of the Rules of Court; and
That it is entirely different from, without any
connection whatsoever to, either party to the
dispute and, therefore, its interests are totally
foreign to the context thereof. (MSF Tire &
Rubber v. CA, G.R. No. 128632, Aug. 5, 1999)
When injunction on picketing is allowed
through the regular courts and not through
the NLRC
In situations where the picket affects not only
the Er but also the business operations of other
establishments owned by third parties, an
injunction may be secured by the latter from the
regular courts to enjoin the picket under the
“Innocent Bystander Rule.” Under this rule, the
third party Ers or “innocent bystanders” who
have no Er-Ee relationship with the picketing
strikers, may apply for injunction with the
regular courts (not with the NLRC) to enjoin the
conduct of the picket.
Because of the absence of such Er-Ee
relationship, the NLRC cannot entertain such
application for injunction from “innocent
bystanders.” Only the Er of the picketers can
apply for injunctive relief from the NLRC.
Q: May the RTC take cognizance of the
complaint which is incidental to a labor
dispute?
A: NO. The RTC has no jurisdiction to act on
labor cases or various incidents arising
therefrom, including the execution of decisions,
awards or orders where the subject matter of
the 3rd party claim is only incidental to a labor
case.
333
A party, by filing its 3rd party claim with the
deputy sheriff, submits itself to the jurisdiction
of the NLRC acting through the LA.
The broad powers granted to the LA and to the
NLRC by Arts. 224, 225 and 230 of the LC can
only be interpreted as vesting in them
jurisdiction over incidents arising from, in
connection with or relating to labor disputes, as
the controversy under consideration, to the
exclusion of the regular courts. The RTC, being a
co-equal body of the NLRC, has no jurisdiction to
issue any restraining order or injunction to
enjoin the execution of any decision of the latter.
(Deltaventures v. Cabato, G.R. No. 118216, March
9, 2000)
Q: Liwayway Publication Inc. is a second sub-
lessee of a part of the premises of the
Permanent Concrete Products, Inc. It has a
bodega for its newsprint in the sublet
property which it uses for its printing and
publishing business. The daily supply of
newsprint needed to feed its printing plant is
taken from its warehouse. The employees of
the Permanent Concrete Products Inc.
declared a strike against their company. The
union members picketed, stopped and
prohibited Liwayway’s trucks from entering
the compound to load newsprint from its
bodega.
Does the lower court have jurisdiction to
issue a writ of preliminary injunction
considering that there was a labor dispute
between Permanent Concrete Products, Inc.
and the union?
A: YES. Liwayway Publication Inc. is not in any
way related to the striking union except for the
fact that it is the sub-lessee of a bodega in the
company’s compound.
The business of Liwayway is exclusively the
publication of magazines which has absolutely
no relation or connection whatsoever with the
cause of the strike of the union against their
company, much less with the terms, conditions
or demands of the strikers. Liwayway is merely
a 3rd person or an innocent by-stander.
(Liwayway Pub., Inc. v. Permanent Concrete
Workers Union, G.R. No. L-25003, Oct. 23, 1981)
Q: The employer filed with the RTC a
complaint for damages with preliminary
mandatory injunction against the union, the
main purpose of which is to disperse the
picketing of the members of the union. The
 LABOR LAW AND SOCIAL LEGISLATION
union filed a motion to dismiss on the ground
of lack of jurisdiction.
The RTC denied the motion to dismiss and
enjoined the picketing, it said that mere
allegations of Employer-Employee
relationship does not automatically deprive
the court of its jurisdiction and even the
subsequent filing of charges of ULP, as an
afterthought, does not deprive it of its
jurisdiction. Was the issuance by the RTC of
the injunction proper?
A: NO. The concerted action taken by the
members of the union in picketing the premises
of the department store, no matter how illegal,
cannot be regarded as acts not arising from a
labor dispute over which the RTCs may exercise
jurisdiction. (Samahang Manggagawa ng Liberty
Commercial v. Pimentel, G.R. No. L-78621, Dec. 2,
1987)
LABOR DISPUTES
A labor dispute includes any controversy or
matter concerning:
1. Terms and conditions of employment;
2. The association or representation of
persons in negotiating, fixing, maintaining,
changing or arranging the terms and
conditions of employment; or
3. Regardless of whether the disputants stand
in the proximate relation of Er and Ee. [LC,
Art. 219(l)]
Tests on whether a controversy is a labor
dispute
1. As to nature – It depends on whether the
dispute arises from Er-Ee relationship,
although disputants need not be
proximately Er or Ee of another.
2. As to subject matter – The test depends on
whether it concerns terms or conditions of
employment or association or
representation of persons in negotiating,
fixing, maintaining or changing terms or
conditions of employment.
Kinds of labor disputes
1. Labor standard disputes
Compensation – e.g., Underpayment of
minimum wage; stringent output quota;
illegal pay deductions.
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Benefits e.g., Non-payment of holiday
pay, OT pay or other benefits.
Working Conditions e.g., Unrectified
work hazards.
2. Labor relations disputes
a. Organizational right disputes / Unfair
Labor Practice (ULP) – e.g., Coercion,
restraint or interference in unionization
efforts; reprisal or discrimination due to
union activities; company unionism;
ULP, strike or lockout; union members’
complaint against union officers.
b. Representation disputes – e.g.,
Uncertainty as to which is the majority
union; determination of appropriate CB
unit; contests for recognition by
different sets of officers in the same
union.
c. Bargaining disputes – e.g., Refusal to
bargain; bargaining in bad faith;
bargaining deadlock; economic strike or
lockout.
d. Contract administration or personnel
policy disputes – e.g., Non-compliance
with CBA provision (ULP if gross non-
compliance with economic provisions);
disregard of grievance machinery; non
observance of unwarranted use of union
security clause; illegal or unreasonable
personnel management policies;
violation of no-strike / no-lockout
agreement.
e. Employment tenure disputes – e.g.,
Non-regularization of Ees; non-
absorption of labor-only contracting
staff; illegal termination; non-issuance
of employment contract.
Parties to a labor dispute
1. Primary parties are the Er, Ees and the
union.
2. Secondary parties are the voluntary
arbitrator, agencies of DOLE, NLRC, SLE and
the Office of the President.
Inter-union dispute
Any conflict between and among legitimate
labor unions involving representation questions
334
 LABOR RELATIONS – PEACEFUL CONCERTED ACTIVITIES
for the purposes of CB or to any other conflict or
dispute between legitimate labor unions.
Intra-union dispute
Any conflict between and among union
members, grievances arising from any violation
of the rights and conditions of membership,
violation of or disagreement over any provision
of the union’s constitution and by-laws, or
disputes from chartering or affiliation of union.
Original Jurisdiction over Intra-Union or
Inter-Union Disputes
DOLE Regional Office – If the dispute involves
independent unions, local chapter, or workers’
association.
Bureau of Labor Relations (BLR) – If the
dispute involves trade union centers,
federations, national unions, or workers
association operating in more than one region.
Effect of Intra-Union or Inter-Union Disputes
1. On the Rights and Obligations of the Parties
– The rights, relationships and obligations
of the parties-litigants against each other
prior to the filing of the action subsists until
the dispute is decided with finality.
2. On a Petition for Certification Election – The
pendency of an intra-union or inter-union
dispute or other related labor relations
dispute is not a prejudicial question to a
petition for certification election. Therefore,
it is not a ground for suspension or
dismissal of the petition for certification
election.
Internal union dispute
It includes all disputes or grievances arising
from any violation of or disagreement over any
provision of the constitution and by-laws of a
union, including any violation of the rights and
conditions of union membership provided for in
this LC. [LC, Art. 219, (q)]
Rights disputes
They are claims for violations of a specific right
arising from a contract, e.g., CBA or company
policies.
Interest disputes
335
They involve questions on “what should be
included in the CBA.” Strictly speaking, the
parties may choose a voluntary arbitrator to
decide on the terms and conditions of
employment, but this is impracticable because it
will be a value judgment of the arbitrators and
not of the parties.
Contract–negotiation disputes
These are disputes as to the terms of the CBA.
Contract–interpretation disputes
These are disputes arising under an existing
CBA, involving such matters as the
interpretation and application of the contract, or
alleged violation of its provisions.
Instances when a person or entity is
considered as participating or interested in a
labor dispute
1. If relief is sought against him or it, and
2. He or it is engaged in the same industry,
trade, craft, or occupation in which such
dispute occurs, or
3. Has a direct or indirect interest therein, or
4. Is a member, officer, or agent of any
association composed in whole or in part of
Ees or Ers engaged in such industry, trade,
craft, or occupation.
Remedies in Labor Disputes
1. Grievance Procedure
2. Enforcement or compliance order
3. Certification of bargaining representatives
4. Assumption of Jurisdiction
5. Certification to NLRC
6. Injunction
7. Judicial action
8. Appeal
9. Review by court
NOTE: No law allows appeal from a
decision of the SOLE, or of the NLRC, or of a
Voluntary Arbitrator. In appropriate cases,
a petition for certiorari, prohibition, or
mandamus (Rule 65, Rules of Court) may
be lodged with the CA or the SC. The
grounds for petition for certiorari and/or
prohibition are abuse of discretion, or lack
or excess of jurisdiction.
Alternative Dispute Resolution, modes of
settling disputes
 LABOR LAW AND SOCIAL LEGISLATION

1. Conciliation – Consist in the efforts of a

third party, other than the immediate
disputants, to assist the parties to end their
dispute perhaps by condoning each other’s
fault or finding a give-and-take
compromise.

2. Mediation – Mediator takes a more active

role than a conciliator in searching for and
formulating a solution.

NOTE: A conciliator or mediator is not a judge;

he does not render a verdict

3. Arbitration – Arbitration is either

compulsory under the NLRC or through its
labor arbiters, or voluntary by choice of the
disputing parties as in negotiating a CBA.
The decision of an arbitrator binds the
disputant as a court verdict does.

NOTE: Conciliation, mediation, arbitration are

ADR methods differentiated from litigation
which is characterized by adversarial formal
presentation of evidence and arguments in trials
before a court of law. The aim of ADR is
expeditious resolution of the dispute to bring the
parties back to a constructive, harmonious
relationship.

Compromise Agreement

At any stage of the settlement process, the labor

dispute may be resolved by the parties through a
compromise agreement, provided that the
agreement is freely entered into and is not
contrary to law, moral, or public policy.

A compromise agreement is also subject to

approval of the authority before whom the case
is pending. Even a labor standards case can be
settled through a compromise. (Art. 233, LC)

UNIVERSITY OF SANTO TOMAS 336

2021 GOLDEN NOTES
 JURISDICTION AND REMEDIES
JURISDICTION AND REMEDIES
LABOR ARBITER
JURISDICTION
Nature of jurisdiction of Labor Arbiters
LAs only have original and exclusive jurisdiction.
They have no appellate jurisdiction.
Nature of the cases which the Labor Arbiter
may resolve
The cases that the LA can hear and decide are
employment related. Where no Er-Ee
relationship exists between the parties and no
issue is involved which may be resolved by
reference to the LC, other labor statutes, or any
CBA, it is the RTC that has jurisdiction (Lapanday
Agricultural Dev’t. Corp v. CA, G.R. No. 112139,
Jan. 31, 2000).
The LA has jurisdiction over controversies
involving Ers and Ees only if there is a
“reasonable causal connection” between the
claim asserted and the Er-Ee relations. Absent
such link, the complaint is cognizable by the
regular court (Eviota v. CA, G.R. No. 152121, July
29, 2003).
Cases falling under the Labor Arbiters’
exclusive and original jurisdiction to hear
and decide: (UTR-DVAO-WCO)
1. ULP cases;
2. Termination disputes;
3. If accompanied with a claim for
Reinstatement, those cases that workers
may file involving wages, rates of pay,
hours of work and other terms and
conditions of employment;
4. Claims for actual, moral, exemplary and
other forms of Damages arising from Er-Ee
relations;
5. Cases arising from any Violation of Art.
279, LC including questions involving the
legality of strikes and lockouts.;
6. Except claims for Employees
Compensation, Social Security, Medicare
and maternity benefits, All other claims,
arising from employer-employee relations,
including those of persons in domestic or
household service, involving an amount
exceeding five thousand pesos (P5,000.00)
337
regardless of whether accompanied with a
claim for reinstatement;
7. Monetary claims of Overseas contract
workers arising from Er-Ee relations under
the RA 10022 or Act Amending the Migrant
Workers and Overseas Filipinos Act of
1995;
8. Wage distortion disputes in unorganized
establishments not voluntarily settled by
the parties pursuant to the Wage
Rationalization Act or RA 6727;
9. Enforcement of Compromise agreements
when there is non-compliance by any of the
parties pursuant to Art. 233 of the LC, as
amended; and
10. Other cases as may be provided by law.
NOTE: Claims for Employment Compensation,
Social Security, PhilHealth and maternity
benefits DO NOT fall under the jurisdiction of the
LA because these fall under the jurisdiction of
other government agencies mandated by law.
Although the provision speaks of exclusive and
original jurisdiction of LAs, the cases
enumerated may instead be submitted to a
voluntary arbitrator by agreement of the parties
under Art. 275 of the LC. The law prefers
voluntary over compulsory arbitration.
Exceptions to the original and exclusive
jurisdiction of Labor Arbiters:
1. In assumed cases. When the DOLE
Secretary or the President exercises his
power under Art. 278(g) of the Labor Code
to assume jurisdiction over national
interest cases and decide them himself.
2. In certified cases. When the NLRC
exercises its power of compulsory
arbitration over similar national interest
cases that are certified to it by the DOLE
Secretary pursuant to the exercise by the
latter of his certification power under the
same Art. 263(g).
3. In cases arising from CBA. When the cases
arise from the interpretation or
implementation of collective bargaining
agreements and from the interpretation or
enforcement of company personnel policies
which shall be disposed of by the Labor
Arbiter by referring the same to the
grievance machinery and voluntary
arbitration, as may be provided in said
agreements.
 LABOR LAW AND SOCIAL LEGISLATION
4. In cases submitted for voluntary
arbitration. When the parties agree to
submit the case to voluntary arbitration
before a Voluntary Arbitrator or panel of
Voluntary Arbitrators who, under Arts. 274
and 275 of the Labor Code, are also
possessed of original and exclusive
jurisdiction to hear and decide cases
mutually submitted to them by the parties
for arbitration and adjudication.
Q: May a money claim arising from
implementation of the CBA be filed with a
labor arbiter?
A: The original and exclusive jurisdiction of the
Labor Arbiter under Art. 224(c) for money
claims is limited only to those arising from
statutes or contracts other than a Collective
Bargaining Agreement. The Voluntary
Arbitrator or Panel of Voluntary Arbitrators
will have original and exclusive jurisdiction over
money claims “arising from the interpretation or
implementation of the Collective Bargaining
Agreement, and those arising from the
interpretation or enforcement of company
personnel policies,” under Art. 274. (San Jose v.
NLRC and Ocean Terminal Services, Inc., G.R. No.
121227, Aug. 17, 1998, as cited in Azucena, Vol. 2,
2016, p. 53)
Extent of the jurisdiction of the Labor Arbiter
if there are unresolved matters arising from
the interpretation of the CBA
GR: LAs have no jurisdiction over unresolved or
unsettled grievances arising from the
interpretation or implementation of the CBA and
those arising from the interpretation or
enforcement of company personnel policies.
XPN: Actual termination disputes
NOTE: Where the dispute is just in the
interpretation, implementation, or enforcement
stage of the termination, it may be referred to
the grievance machinery set up by the CBA or by
voluntary arbitration. Where there was
already actual termination, i.e., violation of
rights, it is already cognizable by the LA
(Maneja v. NLRC, G.R. No. 124013, June 5, 1998).
Usage of the word “may” in the provisions of
the Grievance Procedure allow the
alternative submission of the case before the
labor arbiter
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
The use of the word “may” shows the intention
of the parties to reserve the right to submit the
illegal termination dispute to the jurisdiction of
the LA, rather than to a voluntary arbitrator.
Petitioner validly exercised his option to submit
his case to a LA when he filed his complaint
before the proper government agency. Voluntary
arbitration is mandatory in character only if
there is a specific agreement between the parties
to that effect. In the case at bar, however, the use
of the word “may” shows the intention of the
parties to reserve the right of recourse to LAs
(Vivero v. CA, G.R. No. 138938, Oct. 24, 2000).
Cases which DO NOT fall under the
jurisdiction of the Labor Arbiters
1. Foreign governments, except if it acted in
its proprietary capacity, it impliedly
divested itself of its sovereign immunity
from suit (JUSMAG-Phils. v. NLRC, G.R. No.
108813, Dec. 15, 1994)
2. International agencies (Lasco v. NLRC, G.R.
Nos. 109095-109107, Feb. 23, 1995)
3. Intra-corporate disputes which fall under
PD 902-A and now falls under the
jurisdiction of the regular courts pursuant
to the new Securities Regulation Code
(Nacpil v. IBC, G.R. No. 144767, March 21,
2002)
4. Executing money claims against
government (Dept. of Agriculture v. NLRC,
G.R. No. 104269, Nov. 11, 1993)
5. Cases involving GOCCs with original
charters which are governed by civil
service law, rules or regulations (1987
Constitution, Art. IX-B, Sec. 2(1))
6. Local water district (Tanjay Water District
v. Gabaton, G.R. No. L-63742, April 17, 1989)
except where NLRC jurisdiction is invoked
(Zamboanga City Water District v. Buat, G.R.
No. 104389, May 27, 1994)
7. The aggregate money claim does not
exceed P5,000 and without claim for
reinstatement (Rajah Humabon Hotel, Inc. v.
Trajano, G.R. Nos. 100222-23 Sept. 14,1993)
8. Claim of Ee for cash prize under the
Innovation Program of the company,
although arising from Er-Ee relationship, is
one requiring application of general civil
law on contracts which is within the
338
 JURISDICTION AND REMEDIES
jurisdiction of the regular courts (SMC v.
NLRC, G.R. No. 80774, May 31, 1988)
9. Cause of action based on quasi-delict or
tort which has no reasonable connection
with any of the claims enumerated in
Art.217, LC (Ocheda v. CA, G.R. No. 85517,
Oct. 16, 1992)
10. Complaint arising from violation of training
agreement (Singapore Airlines v. Pano, G.R.
No. L-47739, June 22, 1983)
Q: Malcaba has been employed with
ProHealth since it started in 1997. He was
initially the Vice President for Sales until he
became the President in 2005. Malcaba
alleged that Del Castillo, the Chair of the
Board of Directors and Chief Executive
Officer, did acts that made his job difficult. He
asked to take a leave on Oct. 23, 2007. When
he attempted to return on Nov. 5, 2007, Del
Castillo insisted that had already resigned
and had his things removed from his office.
He attested that he was paid a lower salary in
December 2007 and his benefits were
withheld. On Jan. 7, 2008, Malcaba tendered
his resignation effective Feb. 1, 2008.
Does the Labor Arbiter or the NLRC have a
jurisdiction over petitioner Malcaba’s
termination dispute considering the
allegation that he was a corporate officer,
and not a mere employee?
A: NO. Under the Labor Code, the Labor Arbiter
exercises original and exclusive jurisdiction over
termination disputes between an employer and
an employee while the National Labor Relations
Commission exercises exclusive appellate
jurisdiction over the cases provided in Art. 244.
Under Sec. 25 of the Corporation Code, the
President of a corporation is considered a
corporate officer. The dismissal of a corporate
officer is considered an intra-corporate dispute,
not a labor dispute. (Nicanor Malcaba v.
Prohealth Pharma Philippines, Inc., G.R. No.
209085, June 6, 2018, as penned by J. Leonen)
Intra-Corporate Cases (Matling doctrine)
In order to determine whether a dispute
constitutes an intra-corporate controversy or
not, the Court considers two elements instead,
namely:
a. The status or relationship of the parties;
and
339
b. The nature of the question that is the
subject of their controversy.
In order that the SEC (now the regular courts)
can take cognizance of a case, the controversy
must pertain to any of the following
relationships:
1. Between the corporation, partnership or
association and the public;
2. Between the corporation, partnership or
association and its stockholders, partners,
members or officers;
3. Between the corporation, partnership or
association and the State as far as its
franchise, permit or license to operate is
concerned; and
4. Among the stockholders, partners or
associates themselves.
The fact that the parties involved in the
controversy are all stockholders or that the
parties involved are the stockholders and the
corporation does not necessarily place the
dispute within the ambit of the jurisdiction of
SEC. 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 SEC will not have jurisdiction.
Furthermore, it does not necessarily follow that
every conflict between the corporation and its
stockholders would involve such corporate
matters as only the SEC can resolve in the
exercise of its adjudicatory or quasi-judicial
powers.
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 the respondent’s case, he was
supposedly at once an employee, a stockholder,
and a Director of Matling. 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. We
must also consider whether his status as
Director and stockholder had any relation at all
 LABOR LAW AND SOCIAL LEGISLATION

to his appointment and subsequent dismissal as

Vice President for Finance and Administration.

Obviously enough, the respondent was not

appointed as Vice President for Finance and
Administration because of his being a
stockholder or Director of Matling. He had
started working for Matling on Sept. 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.
(Matling Industrial v. Coros, G.R. No. 157802, Oct.
13, 2010)

Q: Who has jurisdiction over intra-corporate

controversies?

A: The RTC. In Matling Industrial and

Commercial Corporation v. Coros, the Court
distinguished between a "regular employee" and
a "corporate officer" for purposes of establishing
the true nature of a dispute or complaint for
illegal dismissal and determining which body
has jurisdiction over it. Succinctly, it was
explained that "[t]he determination of whether
the dismissed officer was a regular employee or
corporate officer unravels the conundrum" of
whether a complaint for illegal dismissal is
cognizable by the LA or by the RTC. "In case of
the regular employee, the LA has jurisdiction;
otherwise, the RTC exercises the legal authority
to adjudicate.” (Cosare v. Broadcom Asia, Inc., G.R.
No. 201298, Feb. 5, 2014)

Q: Where do you appeal the decision, award,

or order of the Labor Arbiter?

A: To the NLRC, within the reglementary period

of ten (10) calendar days from receipt.

UNIVERSITY OF SANTO TOMAS 340

2021 GOLDEN NOTES
 JURISDICTION AND REMEDIES

POWERS OF THE SECRETARY OF LABOR AND EMPLOYMENT VS.

REGIONAL DIRECTOR VS. LABOR ARBITER

VISITATION AND
ENFORCEMENT POWER REGIONAL DIRECTOR LABOR ARBITER
OF THE SOLE

LA exercises original and exclusive

jurisdiction on cases involving :
Enforcement of labor
a. ULP ;
legislation in general, such as: Under Art. 129 of the LC, the
b. Termination disputes ;
Regional Director have
c. Wages ;
a. Inspection of jurisdiction over money
d. Rates of pay;
establishments; and claims NOT EXCEEDING
e. Hours of work ;
P5,000, arising from ER-EE
f. Other terms of employment,
b. Issuance of orders to relationship AND the
claims for damages arising from
compel compliance with claimant DOES NOT SEEK
Er-Ee relationship, legality of
labor standards, wage REINSTATEMENT.
strikes and lockouts ; and
orders and other labor laws
g. All other claims arising from Er-
Ee relationship involving an
amount exceeding Php 5,000.00

Initiated by sworn LA decides case within 30 calendar

Proceeding is an offshoot of
complaints filed by any days after submission of the case by
routine inspections
interested party the parties for decision

Appealable to Secretary of
Labor (In case compliance
Appealable to NLRC Appealable to NLRC
order is issued by Regional
Office)

341
 LABOR LAW AND SOCIAL LEGISLATION
REQUIREMENTS TO PERFECT AN APPEAL
TO THE NLRC
Grounds for filing an appeal (PFPS)
The appeal may be entertained only on any of
the following grounds:
1. If there is Prima facie evidence of abuse of
discretion on the part of the LA or RD;
2. If the decision, award or order was secured
through Fraud or coercion, including graft
and corruption;
3. If made Purely on questions of law; and/or
4. If Serious errors in the findings of facts are
raised which, if not corrected, would cause
grave or irreparable damage or injury to
the appellant (NLRC 2011 Rules of
Procedure, Rule VI, Sec. 2).
Requirements
1. Filed within the reglementary period of ten
(10) calendar days from receipt if it
involves a decision, award, or order of the
LA, or five (5) calendar days from receipt
if it involves a decision or resolution of the
RD.
2. Verified by the appellant himself in
accordance with Sec. 4, Rule 7 of the Rules
of Court, as amended.
3. In the form of a memorandum of appeal
which shall state the grounds relied upon
and arguments in support thereof, the
relief prayed for, and with a statement of
the date the appellant received the
appealed decision, resolution or order.
4. In three (3) legibly typewritten or printed
copies.
5. Accompanied by:
i. Proof of payment of the required
appeal fee;
ii. Posting of a cash or surety bond as
provided in Sec. 6 of this Rule;
iii. A certificate of non-forum shopping;
and
iv. Proof of service upon the other
parties (NLRC 2011 Rules of
Procedure, Rule VI, Sec. 4).
NOTE: Mere notice of appeal without complying
with the aforementioned requisites shall not
stop the running of the period for perfecting an
appeal.
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
While Art. 229 of the Labor Code and Sec. 3(a),
Rule VI of the then New Rules of Procedure of
the NLRC require the party intending to appeal
from the LA’s ruling to furnish the other party a
copy of his memorandum of appeal, the Court
has held that the mere failure to serve the same
upon the opposing party does not bar the NLRC
from giving due course to an appeal. Such
failure is only treated as a formal lapse, an
excusable neglect, and, hence, not a
jurisdictional defect warranting the dismissal of
an appeal. Instead, the NLRC should require the
appellant to provide the opposing party copies
of the notice of appeal and memorandum of
appeal (Lei Sheryll Fernandez v. Botica Claudio,
G.R. No. 205870, Aug. 13, 2014).
Perfection of appeal, mandatory and
jurisdictional
The perfection of appeal within the period and
in the manner prescribed by the law is
jurisdictional and non-compliance with the legal
requirements is fatal and has the effect of
rendering the judgment final and executor,
hence, unacceptable.
Posting of an appeal bond required to perfect
an appeal from a LA’s decision involving
monetary award
In case the decision of the LA or the RD involves
a monetary award, an appeal by the Er may be
perfected only upon the posting of a bond. (NLRC
2011 Rules of Procedure, Rule VI, Sec. 6).
In Cawaling v. Menese, (A.C. No. 9698, Nov. 13,
2013), the Supreme Court categorically ruled
that the defense of good faith does not render
the issued bond valid.
The condition of posting a cash or surety bond is
not a meaningless requirement – it is meant to
assure the workers that if they prevail in the
case, they will receive the money judgment in
their favor upon the dismissal of the former’s
appeal. Such aim is defeated if the bond issued
turned out to be invalid due to the surety
company’s expired accreditation. (Mount Carmel
College Employees Union (MCCEU) v. Mount
Carmel College, Incorporated, G.R. No. 187621,
Sept. 24, 2014)
Forms of the appeal bond
It shall either be in the form of cash deposit or
surety bond equivalent in amount to the
monetary award, exclusive of damages and
342
 JURISDICTION AND REMEDIES
attorney's fees. (NLRC 2011 Rules of Procedure
Rule VI, Sec. 6)
Issuance of a surety bond
It shall be issued by a reputable bonding
company duly accredited by the Commission or
the SC, and shall be accompanied by original or
certified true copies of the following:
1. A joint declaration under oath by the Er, his
counsel, and the bonding company,
attesting that the bond posted is genuine,
and shall be in effect until final disposition
of the case;
2. An indemnity agreement between the Er-
appellant and bonding company;
3. Proof of security deposit or collateral
securing the bond: provided, that a check
shall not be considered as an acceptable
security;
4. A certificate of authority from the
Insurance Commission;
5. Certificate of registration from the SEC;
6. Certificate of authority to transact surety
business from the Office of the President;
7. Certificate of accreditation and authority
from the SC; and
8. A notarized board resolution or secretary's
certificate from the bonding company
showing its authorized signatories and
their specimen signatures. (NLRC 2011
Rules of Procedure, Rule VI, Sec. 6)
NOTE: The appellant shall furnish the appellee
with a certified true copy of the said surety bond
with all the above-mentioned supporting
documents.
Period within which a cash or surety bond
shall be valid and effective
From the date of deposit or posting, until the
case is finally decided, resolved or terminated,
or the award satisfied. This condition shall be
deemed incorporated in the terms and
conditions of the surety bond, and shall be
binding on the appellants and the bonding
company. (NLRC 2011 Rules of Procedure, Rule
VI, Sec. 6)
Effect if the bond is verified to be irregular or
not genuine
The Commission shall cause the immediate
dismissal of the appeal, and censure or cite in
contempt the responsible parties and their
counsels, or subject them to reasonable fine or
343
penalty. (NLRC 2011 Rules of Procedure, Rule VI,
Sec. 6)
NOTE: The appellee shall verify the regularity
and genuineness of the bond and immediately
report any irregularity to the NLRC.
Q: Respondents seasonably filed a
memorandum of appeal and posted a surety
bond in an amount equivalent to the
monetary award of the LA, but the bond
turned out to be spurious upon verification
of the petitioner. Upon being informed of the
spuriousness of the bond, the respondents
dismissed their counsel of record who was
allegedly responsible for its submission and
hired another lawyer who submitted a
genuine bond. Both the NLRC and the CA
found good faith on the part of respondents,
stating that the filing of the alleged fake bond
was without their knowledge and that they
did not purposely post a spurious bond. Are
the NLRC and CA correct in allowing the
appeal?
A: YES. While posting of an appeal bond is
mandatory and jurisdictional, we sanction the
relaxation of the rule in certain meritorious
cases. These cases include instances in which:
1. There was substantial compliance with the
Rules;
2. Surrounding facts and circumstances
constitute meritorious grounds to reduce
the bond;
3. A liberal interpretation of the requirement
of an appeal bond would serve the desired
objective of resolving controversies on the
merits; or
4. The appellants, at the very least, exhibited
their willingness and/or good faith by
posting a partial bond during the
reglementary period.
The first and second instances are present in this
case. As correctly found by the CA, respondents
substantially complied with the rules as shown
by their lack of intention to evade the
requirement of appeal bond. We adhere to a
strict application of Art. 229 of the Labor Code
when appellants do not post an appeal bond at
all; but here an appeal bond was actually filed.
Strict application of the rules is therefore
uncalled for.
Further, Art. 227 of the same Code authorizes
the NLRC to "use every and all reasonable means
to ascertain the facts in each case speedily and
 LABOR LAW AND SOCIAL LEGISLATION
objectively, without regard to technicalities of
law or procedure." In the case before us, the
NLRC opined that it is in the best interest of
justice that the appeal be allowed so that the
case could be resolved on its merits. (Tolentino-
Prieto v. Elvas, G.R. No. 192369, Nov. 9, 2016)
Motion to Reduce Bond
GR: No motion to reduce bond shall be
entertained.
XPNs: Only when there are:
1. Meritorious grounds; and
2. Upon posting of a bond in reasonable
amount in relation to the monetary award.
NOTE: The mere filing of a motion to reduce
bond without complying with the requisites in
the preceding paragraphs shall not stop the
running of the period to perfect an appeal.
(NLRC 2011 Rules of Procedure, Rule VI, Sec. 6)
McBurnie Guidelines
The following guidelines shall be observed:
1. The filing of a motion to reduce appeal
bond shall be entertained by the NLRC
subject to the following conditions: (1)
there is meritorious ground; and (2) a
bond in reasonable amount is posted;
2. For purposes of compliance with
condition no. (2), 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,
exclusive of damages and attorney’s fees;
3. Compliance with the foregoing conditions
shall suffice to suspend the running of the
10-day reglementary period to perfect an
appeal from the Labor Arbiter’s decision
to the NLRC;
4. The NLRC retains its authority and duty to
resolve the motion to reduce bond and
determine the final amount of bond that
shall be posted by the appellant, still in
accordance with the standards of
“meritorious grounds” and “reasonable
amount”; and
5. In the event that the NLRC denies the
motion to reduce bond, or requires a bond
that exceeds the amount of the provisional
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
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. (McBurnie v. Gauzon, G.R. No.
178034, Oct. 13, 2013)
NOTE: When the appellant employer prayed for
the reduction of the bond in view of serious
liquidity problems evidenced by audited
financial statements, while simultaneously
posting a surety bond which is more than 10%
of the full judgment award, the bond may be
reduced and the appeal is considered perfected.
(Philippine Touristers, Inc. and/or Alejandro R.
Yague, Jr. v. MAS Transit Workers Union-ANGLO-
KMU, G.R. No. 201237, Sept. 3, 2014)
Motion for reconsideration (MR) of the NLRC
decision required before certiorari may be
availed
A motion for reconsideration shall be filed
before a petition for certiorari to enable NLRC to
correct its mistakes. Otherwise, NLRC’s decision
becomes final and executory.
Remedy in case of denial of the MR
If the motion is denied, the aggrieved party may
file a petition for certiorari not later than 60
days from notice of the judgment, order or
resolution. In case a motion for reconsideration
or new trial is timely filed, whether such motion
is required or not, the 60 day period shall be
counted from notice of the denial of said motion.
No extension of time to file the petition shall be
granted except for compelling reason and in no
case exceeding 15 days. (Rules of Court, Rule 65,
Sec. 4)
Q: Cristobal became a pilot for PAL on Oct.
16, 1971. In May 1998, in line with a
downsizing program of PAL, Cristobal
applied for leave without pay to enter into a
four (4)-year contract with EVA Air. Cristobal
advised PAL of his intent to retire. In
response, PAL advised him that he was
deemed to have lost his employment
status. Thus, on May 12, 1999, Cristobal filed
a complaint with the NLRC.
The LA found Cristobal's dismissal illegal. On
the matter of retirement benefits, the LA
noted PAL's claim that Cristobal could only
be entitled to a retirement pay of P5,000.00
per year, pursuant to the Philippine Airlines,
Inc.-Airline Pilots Association of the
344
 JURISDICTION AND REMEDIES
Philippines (PAL-ALPAP) Retirement Plan of
1967. However, he found that Cristobal's
retirement benefits should not be less than
the amount provided under the law. He is
entitled to a retirement pay in the amount of
P1,575,964.30. NLRC affirmed the LA
Decision.
Later, Cristobal filed a Motion for Partial
Reconsideration while PAL also filed a
motion for reconsideration, claiming that it
was error to find that Cristobal was illegally
dismissed and to base his retirement benefits
on Art. 287 of the Code. NLRC affirmed that
Cristobal's retirement benefits should not be
computed in accordance with Art. 287 of
the Code as Cristobal was not yet 60 years old
when he retired on March 10,
1999. Accordingly, Cristobal is only entitled
to receive retirement benefits from the 1967
PAL-ALPAP Retirement Plan in an amount
equal to P5,000.00 for every year of service.
Cristobal filed his Motion for
Reconsideration, seeking reconsideration of
the reduction of retirement benefits. NLRC
denied Cristobal's Motion for
Reconsideration, deeming it a second motion
for reconsideration of its May 31, 2011
Decision. Was the Motion for
Reconsideration filed by Cristobal assailing
the NLRC May 31, 2011 Decision a prohibited
second motion for reconsideration?
A: NO. The Amended Decision is an entirely new
decision which supersedes the original decision,
for which a new motion for reconsideration may
be filed again. Here, the NLRC May 31, 2011
Decision substantially modified its Sept. 30,
2010 Decision. Thus, petitioner was not
precluded from seeking reconsideration of the
new decision of the NLRC, and it was clearly an
error for the Court of Appeals to find that
petitioner's petition for certiorari was filed out
of time on that ground. (Cristobal v. PAL and
Lucio Tan, G.R. No. 201622, Oct. 4, 2017, as
penned by J. Leonen)
Effect if no service of summons was made
In the absence of service of summons or a valid
waiver thereof, the hearings and judgment
rendered by the LA is null and void.
Compulsory arbitration
The process of settlement of labor disputes by a
government agency which has the authority to
345
investigate and make an award binding on all
the parties.
Labor Arbiter conducts compulsory
arbitration
Under the LC, it is the LA who is clothed with the
authority to conduct compulsory arbitration on
cases involving termination disputes. (PAL v.
NLRC, G.R. No. 55159, Dec. 22, 1989)
Rules on venue of filing cases
1. All cases which the LAs have authority to
decide may be filed in the Regional
Arbitration Branch (RAB) having
jurisdiction over the workplace of the
complainant /petitioner.
NOTE: Workplace is understood to be the
place or locality where the Ee is regularly
assigned when the cause of action arose. It
shall include the place where the Ee is
supposed to report back after a temporary
detail, assignment or travel.
In case of field Ees, as well as ambulant or
itinerant workers, their workplace is where
they are:
a. Regularly assigned
b. Supposed to regularly receive their
salaries and wages
c. Receive their work instructions from
d. Reporting the results of their
assignment to their Er
2. Where 2 or more RABs have jurisdiction
over the workplace, the first to acquire
jurisdiction shall exclude others.
3. Improper venue when not objected to
before filing of position papers shall be
deemed waived.
4. Venue may be changed by written
agreement of the parties or when the NLRC
or the LA so orders, upon motion by the
proper party in meritorious cases.
5. For Overseas Contract Workers where the
complainant resides or where the principal
office of the respondent Er is located, at the
option of the complainant.
NOTE: The Rules of Procedure on Venue is
merely permissive, allowing a different
venue when the interest of substantial
 LABOR LAW AND SOCIAL LEGISLATION
justice demands a different one. (Dayag v.
Canizares, G.R. No. 124193, March 6, 1998)
REINSTATEMENT PENDING AN APPEAL
Effect of appeal to the order of reinstatement
by the Labor Arbiter
In any event, the decision of the Labor Arbiter
reinstating a dismissed or separated employee,
in so far as the reinstatement aspect is
concerned, shall be immediately executory,
even pending appeal.
The employee shall either be admitted back to
work under the same terms and conditions
prevailing prior to his dismissal or separation or,
at the option of the employer, merely reinstated
in the payroll. The posting of a bond by the
employer shall not stay the execution for
reinstatement provided herein. (Baronda v. CA,
G.R. No. 161006, Oct. 14, 2015, citing now LC, Art.
229)
Ministerial duty of Labor Arbiter to
implement reinstatement orders
Unless there is a restraining order, it is
ministerial upon the LA to implement the order
of reinstatement and it is mandatory on the Er to
comply therewith. (Garcia v. PAL, G.R. No.
164856, Jan. 20, 2009)
NOTE: Reinstatement pending appeal is
applicable only to the reinstatement order
issued by the Labor Arbiter. Writ of execution is
required when reinstatement is ordered by the
NLRC on appeal, or subsequently by the Court of
Appeals or Supreme Court, as the case may be.
Options of employer to implement
reinstatement of a Labor Arbiter’s decision:
1. Actual reinstatement. The Ee should be
reinstated to his position which he
occupies prior to his illegal dismissal under
the same terms and conditions prevailing
prior to his dismissal or separation or, if no
longer available, to a substantially
equivalent position; or
2. Payroll reinstatement. The Ee should be
reinstated in the payroll of the company
without requiring him to report back to his
work.
Duty of the employer to notify the employee
ordered reinstated
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Contents of an order of reinstatement:
1. A statement that the reinstatement aspect
is immediately executory; and
2. A directive for the employer to submit a
report of compliance within ten (10)
calendar days from receipt of the decision.
NOTE: Disobedience of this directive clearly
denotes a refusal to reinstate. The employee
need not file a motion for the issuance of the
writ of execution since the Labor Arbiter is
mandated to motu proprio issue the writ.
Instances when writ of execution of Labor
Arbiter’s reinstatement order is still
required
The following are the instances when a writ of
execution should still be issued immediately,
even pending appeal, by the Labor Arbiter to
implement his order of reinstatement (2011
NRLC Rules and Procedures):
1. When the employer disobeys the
prescribed directive to submit a report of
compliance within ten (10) calendar days
from receipt of the decision; or
2. When the employer refused to reinstate the
dismissed employee.
The Labor Arbiter shall motu proprio issue a
corresponding writ to satisfy the reinstatement
wages as they accrue until actual reinstatement
or reversal of the order of reinstatement.
Jurisdiction of NLRC vs. Jurisdiction of LA
1. The NLRC has exclusive appellate
jurisdiction on all cases decided by the LA.
2. The NLRC does NOT have original
jurisdiction on the cases over which the LA
have original and exclusive jurisdiction.
3. The NLRC CANNOT have appellate
jurisdiction if a claim does not fall within
the exclusive original jurisdiction of the LA.
NATIONAL LABOR RELATIONS COMMISSION
(NLRC)
It is an administrative body with quasi-judicial
functions and the principal government agency
that hears and decides labor-management
disputes. It is attached to the DOLE solely for
program and policy coordination only.
Allocation of the powers and functions of the
NLRC
346
 JURISDICTION AND REMEDIES

1. En Banc 2. Exclusive Appellate Jurisdiction

a. Promulgating rules and regulations and a. All cases decided by the LA under
governing the hearings and disposition Art. 224(b) of the LC and Sec. 10 of
of cases before any of its divisions and RA 8042 (Migrant Worker’s Act);
regional branches; b. Cases decided by the Regional
b. Formulating policies affecting its Offices of DOLE in the exercise of
administration and operations; its adjudicatory function under
c. On temporary or emergency basis, to Art. 129 of the LC over monetary
allow cases within the jurisdiction of claims of workers amounting to
any division to be heard and decided by not more than P5,000 and not
any other division whose docket allows accompanied by claim for
the additional workload and such reinstatement;
transfer will not expose litigants to c. Decision by the LA in Contempt
unnecessary additional expense. cases.

2. Division (8 Divisions with 3 members) Q: Philippine News Network (PNN) engages

a. Adjudicatory; the services of Anya, a prominent news
b. All other powers, functions and duties; anchor from a rival station, National News
c. Exclusive appellate jurisdiction over Network (NNN). NNN objects to the transfer
cases within their respective territorial of Anya claiming that she is barred from
jurisdiction. working in a competing company for a period
of three years from the expiration of her
Individual Commissioner does not have contract. Anya proceeds to sign with PNN
adjudicatory power which then asks her to anchor their nightly
newscast. NNN sues Anya and PNN before the.
The law lodges the adjudicatory power on each of NLRC, asking for a labor injunction. Anya and
the eight divisions, neither on the individual PNN object claiming that it is a matter
commissioners nor on the whole commission. cognizable by a regular court and not the
The “division” is a legal identity, not the person NLRC. Is NNN's remedy correct? Why or why
who sits in it. Hence, an individual commissioner not? (2015 BAR)
has no adjudicatory power, although of course,
he can concur or dissent in deciding a case. A: NO. The NLRC has no jurisdiction because of
the following reasons: (1) As to PNN, there is no
JURISDICTION employer-employee relationship between itself
and NNN; hence, the NLRC cannot hear and
Kinds of jurisdiction of the NLRC resolve their dispute (Reasonable Causal
Connection Rule); (2) As to Anya, the injunctive
1. Exclusive Original Jurisdiction power of the NLRC is ancillary in nature; hence,
it requires a principal case, which is absent.
a. Certified labor disputes causing or Besides, the dispute between her and PNN is not
likely to cause a strike or lockout in an resolvable solely through the application of the
industry indispensable to national Labor Code, other labor statutes, CBA or
interest, certified to it by the SOLE or employment contract.
the President of the Philippines for
compulsory arbitration; Jurisdiction of Labor Arbiter vs. NLRC (2015
b. Injunction in ordinary labor disputes to BAR)
enjoin or restrain any actual or
threatened commission of any or all BASIS LA NLRC
prohibited or unlawful acts or to LA can hear NLRC
require the performance of a particular and resolve reviews
act in any labor dispute which, if not cases under decisions
restrained or performed forthwith, Art. 224 of the rendered by
may cause grave or irreparable Labor Code, the LA;
damage to any party; Jurisdiction
money claims decisions or
c. Injunction in strikes or lockouts under under Sec. 7 of orders
Art. 279 of the LC; RA 10022; and rendered by
d. Contempt cases. referred wage the RD
distortion under Art.

347
 LABOR LAW AND SOCIAL LEGISLATION

disputes in 129 of the meet for purposes of consultation.

unorganized Labor Code;
establishments, and NOTE: The conclusion of a division on any
as well as the conducts case submitted to it for decision should be
enforcement of compulsory reached in consultation before the case is
compromise arbitration assigned to a member for the writing of the
agreements in certified opinion.
pursuant to the cases.
2011 NLRC 3. A certification that a consultation has been
Rules of conducted, signed by the presiding
Procedure, as commissioner of the division, shall be
amended issued (copy attached to the record of case
NLRC can and served upon the parties).
Issuance of Labor Arbiter
issue an
Labor cannot issue an
injunctive Qualifications of the Chairman and the
Injunction injunctive writ.
writ. Commissioners

Composition of the NLRC 1. Member of the Philippine Bar;

1. Chairman
2. 23 Members
a. Eight (8) members each of whom
shall be chosen only from among the
nominees of the workers and Er
organization respectively.
b. The Chairman and the seven (7)
remaining members shall come from
the public sector, with the latter to be
chosen preferably from among the
incumbent LAs.
c. Upon assumption into office, the
members nominated by the workers
and Ers organization shall divest
themselves of any affiliation with or
interest in the federation or
association to which they belong.
There is no need for the Commission on
Appointments to confirm the positions in the
NLRC. Such requirement has no constitutional
basis. (Calderon v. Carale, G.R. No. 91636, April 23,
1992)
Adjudication of cases by the NLRC
1. The NLRC adjudicates cases by division. A
concurrence of 2 votes is needed for a valid
judgment.
NOTE: Whenever the required membership
in a division is not complete and the
concurrence of the Commissioners to arrive
at judgment or resolution cannot be
obtained, the Chairman shall designate such
number of additional Commissioners from
the other divisions as may be necessary.
2. It shall be mandatory for the division to
2. Engaged in the practice of law in the
Philippines for at least 15 years;
3. At least five (5) years of experience or
exposure in handling labor management
relations;
4. Preferably a resident of the region where he
is to hold office.
Qualifications of an Executive Labor Arbiter
1. Member of the Philippine Bar;
2. Engaged in the practice of law in the
Philippines for at least ten (10) years;
3. At least five (5) years of experience or
exposure in handling labor management
relations.
Terms of office of the Chairman,
Commissioners, and Labor Arbiters
They shall hold office during good behavior until
they reach the age of 65 unless removed for
causes as provided by law or become
incapacitated to discharge the function of his
office. Provided, however, that the President of
the Philippines may extend the services of the
Commissioners and LAs up to the maximum age
of 70 years upon the recommendation of the
Commission en banc.
Q: Some disgruntled members of Bantay
Labor Union filed with the Regional Office of
the DOLE a written complaint against their
union officers for mismanagement of union
funds. The RD dismissed their complaint.
Hence, they elevated the RD’s decision to the
NLRC. The union officers moved to dismiss on
the ground of lack of jurisdiction. Are the
union officers correct? Why? (2001 BAR)

UNIVERSITY OF SANTO TOMAS 348

2021 GOLDEN NOTES
 JURISDICTION AND REMEDIES
A: YES. The union officers are correct in claiming
that the NLRC has no jurisdiction over the
appealed ruling of the RD. In Barles v. Bitonio
(G.R. No. 120220, June 16, 1999), the SC ruled that
“Appellate authority over decisions of the RD
involving examination of union account is
expressly conferred on the BLR under the Rule of
Procedure on Mediation-Arbitration.”
Sec. 4. Jurisdiction of the BLR — (b) The BLR
shall exercise appellate jurisdiction over all
cases originating from the RD involving
complaints for examination of union books of
accounts.
Q: Company "A" and Union "B" could not
resolve their negotiations for a new CBA.
After conciliation proceedings before the
NCMB proved futile, B went on strike.
Violence during the strike prompted A to file
charges against striker-members of B for
their illegal acts. The SLE assumed
jurisdiction, referred the strike to the NLRC
and issued a return-to-work order. The NLRC
directed the parties to submit their respective
position papers and documentary evidence.
At the initial hearing before the NLRC, the
parties agreed to submit the case for
resolution after the submission of the
position papers and evidence.
Subsequently, the NLRC issued an arbitral
award resolving the disputed provisions of
the CBA and ordered the dismissal of certain
strikers for having knowingly committed
illegal acts during the strike. The dismissed
employees elevated their dismissal to the CA
claiming that they were deprived of their
right to due process and that the affidavits
submitted by A were self-serving and of no
probative value.
Should the appeal prosper? State the
reason(s) for your answer clearly. (2001
BAR)
A: NO. The SC, in many cases, has ruled that
decisions made by the NLRC may be based on
position papers. In the question, it is stated that
the parties agreed to submit the case for
resolution after the submission of position
papers and evidence. Given this fact, the striker-
members of B cannot now complain that they
were denied due process. They are in estoppel.
After voluntarily submitting a case and
encountering an adverse decision on the merits,
it is too late for the loser to question the
jurisdiction or power of the court. A party cannot
349
adopt a posture of double dealing. (Marquez v.
Secretary of Labor, G.R. No. 80685, March 16,
1989)
Q: Debie Ubana filed a civil case for damages
against DBP Services Corporation, Social
Security System (SSS), and the SSS Retirees
Association before the RTC. She alleged that
she was required to work for SSS
continuously under different assignments
and was constantly assured that she was
being absorbed into the SSS plantilla.
However, she was never absorbed into SSS
plantilla until she resigned because of the
prejudicial treatment and false promises by
SSS.
The latter, in its answer, contends that RTC
has no jurisdiction because the claim arose
from and employer-employee relationship
and that it is cognizable by NLRC. The RTC
assumed jurisdiction on the ground that the
claim of damages was based on Civil Code
Provision which was affirmed by CA on the
appeal of SSS. Does the RTC have jurisdiction
over the case?
A: YES. RTC has jurisdiction over the case. Labor
arbiters and the NLRC have jurisdiction to award
not only reliefs provided by labor laws, but also
damages governed by the Civil Code, these
reliefs must still be based on an action that has a
reasonable causal connection with the Labor
Code, other labor statutes, or collective
bargaining agreements. Claims for damages
under par. 4 of Art. 224 must have a reasonable
causal connection with any of the claims
provided for in the article in order to be
cognizable by the labor arbiter. Only if there is
such a connection with the other claims can the
claim for damages be considered as arising from
employer-employee relations.
In the present case, Ubana's claim for damages is
not related to any other claim under Art. 217,
other labor statutes, or collective bargaining
agreements. (SSS v. Debbie Ubana, G.R. No.
200114, Aug. 24, 2015)
Barangay conciliation not available in labor
cases
Labor cases are not subject to barangay
conciliation since ordinary rules of procedure
are merely suppletory in character vis-à-vis
labor disputes which are primarily governed by
labor laws. (Montoya v. Escayo, G.R. No. 82211-
12, March 21, 1989)
 LABOR LAW AND SOCIAL LEGISLATION
Powers of the NLRC
1. Rulemaking power – Promulgation of rules
and regulations:
a. Governing disposition of cases
before any of its division/regional
offices;
b. Pertaining to its internal functions;
c. As may be necessary to carry out the
purposes of the LC.
2. Power to issue compulsory processes
(administer oaths, summon parties, issue
subpoenas)
3. Power to investigate matters and hear
disputes within its jurisdiction
(adjudicatory power – original and
appellate jurisdiction over cases)
4. Contempt power
5. Ocular Inspection
6. Power to issue injunctions and restraining
orders
EFFECT OF NLRC REVERSAL OF LABOR
ARBITER’S ORDER OF REINSTATEMENT
Dismissed employees may collect wages
during the period between the Labor
Arbiter’s order of reinstatement pending
appeal and the NLRC’s decision overturning
that of the LA’s
The LC provides that the decision of the LA
reinstating a dismissed or separated Ee, insofar
as the reinstatement aspect is concerned, shall
be immediately executory, pending appeal.
A dismissed employee whose case was favorably
decided by the LA is entitled to receive wages
pending appeal upon reinstatement, which
reinstatement is immediately executory. After
the LA’s decision is reversed by a higher
tribunal, the employer’s duty to reinstate the
dismissed employee is effectively terminated.
The employee, in turn, is not required to return
the wages that he had received prior to the
reversal of the LA’s decision.
By way of exception, an employee may be barred
from collecting the accrued wages if shown that
the delay in enforcing the reinstatement pending
appeal was without fault on the part of the
employer and not when it was due to the
employer’s unjustified act or omission by filling
several pleadings to suspend the execution of
the LA’s reinstatement order and not notifying
the petitioners of their intent to actually
reinstate them. (Froilan Bergonio, et al. v. South
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
East Asian Airlines and Irene Dornier, G.R. No.
195227, April 21, 2014)
Effect of reversal of reinstatement order
1. Actually reinstated: The Bergonio Rule
After reversal of Labor Arbiter’s decision,
the employer’s duty to reinstate the
dismissed employee in the actual service or
in the payroll is effectively terminated. The
employee, in turn is not required to return
the wages that he had received prior to the
reversal of the LA’s decision. (Bergonio Jr. v.
South East Asian Airlines, April 21, 2014)
2. Payroll reinstatement: The Wenphil Rule
The period for computing the backwages
due to the dismissed employees during the
period of appeal should end on the date
that a higher court reversed the labor
arbitration ruling of illegal dismissal.
(Wenphil Corporation v. Abing, April 7,
2014)
REMEDIES
Availability of judicial review of the NLRC’s
decision
Judicial review of NLRC’s decision is available
through a petition for certiorari (Rule 65) which
should be initially filed with the CA in strict
observance of the doctrine on the hierarchy of
courts as the appropriate forum for the relief
desired. The CA is procedurally equipped to
resolve unclear or ambiguous factual finding,
aside from the increased number of its
component divisions. (St. Martin Funeral Home v.
NLRC, G.R. No. 130866, Sept. 16, 1998)
Q: Tahanang Walang Hagdanan (TWH) is a
private organization engaged in the business
of producing and marketing various
handicrafts, utilizing employees who are
mostly physically disabled. Sister Baerts is a
nun who recruited Bernardo Pacios, et al. to
work for TWH. They were among the regular
employees who were persons with disability
of TWH for years, until they were dismissed.
The workers filed a complaint for illegal
dismissal, inter alia, against TWH. The LA
rendered a decision in favor of the workers.
TWH appealed the LA’s decision before the
NLRC. The appeal and the subsequent motion
for reconsideration were denied. Thus, TWH,
350
 JURISDICTION AND REMEDIES
filed a Petition for Certiorari before the CA.
The CA reversed the NLRC Resolution. It
reinstated the appeal of TWH.
In the meantime, before the CA reinstated the
appeal before the NLRC, the LA issued a Writ
of Execution. In lieu of the writ of execution,
the workers filed a Motion to Release the
Supersedeas Bond. TWH opposed the
workers’ motion to release the bond because
of the CA Decision reinstating their appeal
before the NLRC. The LA then issued a
resolution suspending the Writ of Execution
because of the CA Decision reinstating the
TWH’s appeal before the NLRC.
The workers filed a Petition for Mandamus to
proceed with the execution and order the
issuance of the bond before the CA. The
Petition was denied, ruling that the NLRC
Resolution denying THW’s appeal was
reversed by the CA. The workers claim that it
was the purely ministerial act or duty of the
NLRC to order the release of the supersedeas
bond. Furthermore, Petitioners point out
that the CA did not include any restraining
order in its Decision. Hence, the Writ of
Execution should have continued. Should the
suspension of the execution proceedings be
affirmed?
A: NO. Execution may be authorized even
pending appeal. In Aris (Phil.), Inc. v. NLRC, the
Court held that the Labor Code already allowed
execution of decisions of the NLRC pending their
appeal to the Secretary of Labor and
Employment. In authorizing execution, the law
itself has laid down a compassionate policy
which, once more, vivifies and enhances the
provisions of the 1987 Constitution on labor and
the workingman. This Court finds that the
principles allowing execution pending appeal
invoked in Aris are equally applicable here as
petitioners are poor employees, deprived of
their only source of livelihood for years and
reduced to begging on the streets. (Pacios v.
Tahanang Walang Hagdanan, G.R. No. 229579,
Jan. 17, 2019, as penned by J. Leonen)
Injunction or a temporary restraining order
(TRO)
The power of the NLRC to enjoin or restrain, any
actual or threatened, commission of, any or all,
prohibited or unlawful acts under Art. 218 of LC
can only be exercised in labor disputes.
351
NOTE: A restraining order is generally regarded
as an order to maintain the subject of
controversy in status quo until the hearing of an
application for a temporary injunction. (BF
Homes v. Reyes, G.R. No. L-30690, Nov. 19, 1982)
Persons authorized to issue a TRO
1. President [LC, Art. 263(g)]
2. Secretary of Labor [LC, Art. 263(g)]
3. NLRC (LC, Art. 218)
NOTE: Art. 218 of the LC limits the grant of
injunctive power to the NLRC. The LA is
excluded statutorily. Hence, no NLRC Rules can
grant him that power.
Procedure for issuance of restraining
order/injunction
1. Filing of a verified petition
2. Hearing after due and personal notice has
been served in such manner as the
Commission shall direct to:
a. All known persons against whom
relief is sought;
b. Also, the President or other public
officials of the province or city within
which the unlawful acts have been
threatened or commercial charged
with the duty to protect the
complainant’s property.
3. Reception at the hearing of the testimonies
of the witnesses with opportunity for
cross-examination, in support of the
allegations of the complaint made under
oath as well as testimony in opposition
thereto.
4. Finding of fact of the Commission to the
effect that:
a. Prohibited or unlawful acts have
been threatened and will be
committed, or have been and will be
continued unless restrained, but no
injunction or TRO shall be issued on
account of any threat, prohibited or
unlawful act, except against the
persons, association or organization
making the threat or committing the
prohibited or unlawful act or actually
authorizing or ratifying the same
after actual knowledge thereof.
 LABOR LAW AND SOCIAL LEGISLATION
b. The substantial and irreparable
injury to the complainant’s property.
NOTE: Irreparable Injury is an injury which
cannot be adequately compensated in damages
due to the nature of the injury itself or the
nature of the right or property injured or when
there exist no pecuniary standard for the
measurement of damages.
c. That as to each item of relief to be
granted, greater injury will be inflicted
upon the complainant by the denial of
the relief than will be inflicted upon the
defendants by the granting of the relief.
d. That complainant has no adequate
remedy at law
Adequate remedy – one that affords
relief with reference to the matter in
controversy and which is
appropriate to the particular
circumstances of the case if the
remedy is specifically provided by
law. (PAL v. NLRC, G.R. No. 120567,
March 20, 1998)
e. That public officers charged with the
duty to protect complainant’s property
are unable or unwilling to furnish
adequate protection.
5. Posting of a bond
CERTIFIED CASES
Certified Cases
These are cases certified or referred to the
Commission for compulsory arbitration under
Art. 263(g) of the LC dealing about national
interest cases.
A national interest dispute may be certified to
the NLRC even before a strike is declared since
Art. 263(g) of the LC does not require the
existence of a strike, but only of an industrial
dispute. [Government Service Insurance System
Employees Association (GSISEA), et al. v. Court of
Industrial Relations, G.R. No. L-18734, Dec. 30,
1961]
Effects of certification of labor disputes
The certification of a labor dispute to the NLRC
has the following effects:
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
1. On intended or impending strike or
lockout – Upon certification, the intended
or impending strike is automatically
enjoined, notwithstanding the thing of any
motion for reconsideration of the
certification order or the non-resolution of
any such motion which may have been duly
submitted to the DOLE Secretary.
2. On actual strike or lockout – If a work
stoppage has already taken place at the
time of the certification, all striking or
locked out employees shall immediately
return to work and the employer shall
immediately resume operations and
readmit all workers under the same terms
and conditions prevailing before the strike
or lockout.
3. On cases already filed or may be filed –
All cases between the same parties, except
where the certification order specifies
otherwise the issues submitted for
arbitration which are already filed or may
be filed and are relevant to or are proper
incidents of the certified case, shall be
considered subsumed or aborted by the
certified case, and shall be decided by the
appropriate Division of the Commission.
4. On other pending cases – The parties to a
certified case, under pain of contempt, shall
inform their counsels and the Division
concerned of all cases pending with the
Regional Arbitration Branches and the
Voluntary Arbitrators relative or incident
to the certified case before it.
5. On which Division should take
cognizance of the certified case in case
entity has several workplaces in
different regions - Whenever a certified
labor dispute involves a business entity
with several workplaces located indifferent
regions, the Division having territorial
jurisdiction over the principal office of the
company shall acquire jurisdiction to
decide such labor dispute; unless the
certification order provides otherwise.
NOTE: Same effect of certification to the NLRC as
in cases assumed directly by DOLE Secretary.
The effects described above are also applicable
when the DOLE Secretary directly assumes
jurisdiction over a labor dispute affecting
industries imbued with national interest and
decides it himself.
352
 JURISDICTION AND REMEDIES
Function of the NLRC in certified cases
When sitting in a compulsory arbitration
certified to by the SLE, the NLRC is not sitting as
a judicial court but as an administrative body
charged with the duty to implement the order of
the SLE. As an implementing body, its authority
does not include the power to amend the
Secretary’s order. (UST v. NLRC and UST Faculty
Union, G.R. No. 89920, Oct. 18, 1990)
Effect of defiance from the certification order
Non-compliance with the certification order of
the SLE shall be considered as an illegal act
committed in the course of the strike or lockout
and shall authorize the Commission to enforce
the same under pain of immediate disciplinary
action, including dismissal or loss of
employment status or payment by the locking-
out Er of backwages, damages and/or other
affirmative relief, even criminal prosecution
against the liable parties. (NLRC 2011 Rules, Rule
VIII, Sec. 4)
The Commission may also seek the assistance of
law enforcement agencies to ensure compliance
and enforcement of its orders and resolutions.
(ibid.)
Procedure in deciding certified cases
1. Unless there is a necessity to conduct a
clarificatory hearing, the Commission shall
resolve all certified cases within 30
calendar days from receipt by the assigned
Commissioner of the complete records,
which shall include the position papers of
the parties and the order of the SLE
denying the motion for reconsideration of
the certification order, if such motion has
been filed.
2. Where a clarificatory hearing is needed, the
Commission shall, within five days from
receipt of the records, issue a notice to be
served on the parties through the fastest
means available, requiring them to appear
and submit additional evidence, if any.
3. Notwithstanding the necessity for a
clarificatory hearing, all certified cases
shall be resolved by the Commission within
60 calendar days from receipt of the
complete records.
353
4. No motion for postponement or extension
shall be entertained. (NLRC 2005 Rules,
Rule VIII, Sec. 5)
COURT OF APPEALS
(Rules of Court, Rule 65)
GR: Decisions of the DOLE secretary, NLRC, and
BLR in its appellate jurisdiction, are NOT
appealable to the CA as per the St. Martin
Ruling. However, their decisions may be
elevated to the CA via petition for certiorari
under rule 65.
XPN: RULE 43 of Rules of Court – Appeals from
the Court of Tax Appeals and Quasi-Judicial
Agencies to the Court of Appeals
Sec. 1. Scope. — This Rule shall apply to appeals
from judgments or final orders of x x x and from
awards, judgments, final orders or resolutions of
or authorized by any quasi-judicial agency in the
exercise of its quasi-judicial functions. Among
these agencies are x x x and voluntary
arbitrators authorized by law.
Hence, orders or awards of the VA may be
appealed to the CA via Petition for Review
under Rule 43.
Remedy of a party aggrieved by a decision of
the NLRC
File a petition for certiorari (Rule 65) which
should be initially filed with the CA in strict
observance of the doctrine on the hierarchy of
courts as the appropriate forum for the relief
desired. The CA is procedurally equipped to
resolve unclear or ambiguous factual finding,
aside from the increased number of its
component divisions. (St. Martin Funeral Home v.
NLRC, G.R. No. 130866, Sept. 16, 1998)
NOTE: Rule 65, Sec. 1, Rules of Court:
Petition for Certiorari – When any tribunal,
board or officer exercising judicial or quasi-
judicial functions has acted without or in excess
of its or his jurisdiction, or with grave abuse of
discretion amounting to lack or excess of
jurisdiction, and there is no appeal, or any
plain, speedy, and adequate remedy in the
ordinary course of law, a person aggrieved
thereby may file a verified petition in the proper
court, alleging the facts with certainty and
praying that judgment be rendered annulling or
modifying the proceedings of such tribunal,
 LABOR LAW AND SOCIAL LEGISLATION
board or officer, and granting such incidental
reliefs as law and justice may require.
The petition shall be accompanied by a certified
true copy of the judgment, order or resolution
subject thereof, copies of all pleadings and
documents relevant and pertinent thereto, and a
sworn certification of non-forum shopping as
provided in the third paragraph of Sec. 3, Rule
46.
Grave abuse of discretion may be ascribed to
the NLRC when its findings and conclusions
are not supported by substantial evidence
In labor disputes, grave abuse of discretion may
be ascribed to the NLRC when, inter alia, its
findings and the conclusions reached thereby
are not supported by substantial evidence.
Tested against these considerations, the Court
finds that the CA correctly granted respondents’
certiorari petition before it, since the NLRC
gravely abused its discretion in ruling that
petitioners were regular employees of Sykes
Asia when the latter had established by
substantial evidence that they were merely
project-based. (Ma. Charito C. Gadia, et al., v.
Sykes Asia, Inc., Chuck Sykes, Mike Hinds, Michael
Henderson, G.R. No. 209499, Jan. 28, 2015)
Period when the petition for certiorari
should be filed with the Court of Appeals
Under Sec. 4, Rule 65 (as amended by A.M. No.
00-2-03-SC) of the Rules of Civil Procedure, the
petition must be filed within 60 days from notice
of the judgment or from notice of the resolution
denying the petitioner’s motion for
reconsideration. This amendment is effective
Sept. 1, 2000, but being curative may be given
retroactive application. (Narzoles v. NLRC, G.R.
No. 141959, Sept. 29, 2000)
Art. 224 of the LC, which requires that copies of
final decisions, orders or awards be furnished
not only the party’s counsel of record but also
the party himself applies to the execution
thereof and not to the filing of an appeal or
petition for certiorari. The period within which a
petition for certiorari against a decision of the
NLRC may be filed should be computed from the
date counsel of record of the party receives a
copy of the decision or resolution, and not from
the date the party himself receives a copy
thereof. (Ginete v. Sunrise Manning Agency, G.R.
No. 142023, June 21, 2001)
SUPREME COURT
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
(Rules of Court, Rule 45)
How to appeal from a judgment, or final
order or resolution, of the Court of Appeals
A party desiring to appeal may file with the
Supreme Court a verified petition for review on
certiorari under Rule 45 within fifteen (15) days
from notice of the judgment, final order or
resolution appealed from. (Sea Power Shipping
Enterprises, Inc. v. CA, G.R. No. 138270, June 28,
2001)
NOTE: Rule 45, Sec. 1, Rules of Court:
Filing of petition with Supreme Court. — A party
desiring to appeal by certiorari from a judgment,
final order or resolution of the Court of Appeals,
the Sandiganbayan, the Court of Tax Appeals, the
Regional Trial Court or other courts, whenever
authorized by law, may file with the Supreme
Court a verified petition for review on certiorari.
The petition may include an application for a
writ of preliminary injunction or other
provisional remedies and shall raise only
questions of law, which must be distinctly set
forth. The petitioner may seek the same
provisional remedies by verified motion filed in
the same action or proceeding at any time
during its pendency.
Policy of the Supreme Court regarding
appeals in labor cases
The Supreme Court is very strict regarding
appeals filed outside the reglementary period
for filing the same. To extend the period of the
appeal is to delay the case, a circumstance which
could give the employer the chance to wear out
the efforts and meager resources of the worker
that the latter is constrained to give up for less
than what is due him. (Firestone Tire and Rubber
Co. of the Philippines v. Firestone Tire and Rubber
Co. Employees Union, G.R. No. 75363, Aug. 4,
1992)
Q: The Labor Arbiter ruled in favor of Brown
and declared his dismissal illegal, holding.
that Brown was regular employee. On appeal,
the NLRC affirmed the LA decision. Through a
petition for Certiorari with the CA, the CA
ruled that Brown was legally dismissed.
According to the CA, there was no showing
that Brown was prevented from returning or
was deprived of work. Brown was not
dismissed but was only informed of the
complaints against him.
354
 JURISDICTION AND REMEDIES

In turn, Brown filed a Petition in the Supreme representation cases or assist in the disposition
Court under Rule 45. Brown contends that of intra or inter-union disputes.
Marswin failed to discharge its burden to
prove that he committed abandonment. On Kinds of cases within BLR’s jurisdiction
the other hand, Marswin (employer)
counters that the Court should not give due The BLR has original and exclusive jurisdiction
course to the Petition because it raises over:
factual issues which are not within the ambit
of a petition under Rule 45 of the Rules of 1. Inter-union disputes;
Court. Should the petition under Rule 45 be 2. Intra-union disputes;
given due course? 3. Other related labor relations disputes

A: YES. As a rule, the Court is not a trier of facts Coverage of inter/intra-union disputes
and only questions of law may be raised in a
petition under Rule 45. A departure from this Inter-union disputes include the following:
rule is nevertheless allowed where the factual
findings of the CA are contrary to those of the 1. Validity/invalidity of SEBA, certification
lower courts or tribunals. Here, the findings of election, consent election, run-off election or re-
the CA vary with those of the NLRC and LA. As run election.
such, the Court deems it necessary to review the 2. Such other disputes or conflicts involving the
records and determine which findings and rights to self-organization, union membership
conclusion truly conform to the evidence and collective bargaining between and among
adduced by the parties. (Ernesto Brown v. legitimate labor organizations. (D.O. 40-03, series
Marswin Marketing Inc., G.R. No. 206891, March 2003; D.0. 40-1-15, series of 2015)
15, 2017)
Intra-union disputes shall include:
BUREAU OF LABOR RELATIONS
Jurisdiction (Original and Appellate) 1. Conduct or nullification of election of
union and workers’ association officers
Coverage of the BLR’s jurisdiction and 2. Audit/accounts examination of union or
functions workers’ association funds
3. Deregistration of CBAs
The BLR no longer handles all labor 4. Validity/invalidity of union affiliation or
management disputes; rather its functions and disaffiliation
jurisdiction are largely confined to: 5. Validity/invalidity of acceptance/ non-
acceptance for union membership
1. Union matters; 6. Validity/invalidity of voluntary
2. Collective bargaining registry; and recognition
3. Labor education. 7. Opposition to application for union or CBA
registration
Jurisdiction over labor management problems or 8. Violations of or disagreements over any
disputes is also exercised by other offices: provision of the constitution and by-laws
of union or workers’ association
1. DOLE Regional Offices 9. Disagreements over chartering or
2. Office of the Secretary of Labor registration of labor organizations or the
3. NLRC registration of CBAs
4. POEA 10. Violations of the rights and conditions of
5. OWWA membership in a union or workers’
6. SSS-ECC association;
7. RTWPB 11. Violations of the rights of LLO, except
8. NWPC interpretation of CBAs
9. Regular courts over intra-corporate 12. Validity/invalidity of impeachment/
disputes expulsion/suspension or any disciplinary
action meted against any officer and
Mediator-arbiter member, including those arising from
non-compliance with the reportorial
An officer in the Regional Office or Bureau requirements under Rule V;
authorized to hear, conciliate and decide

355
 LABOR LAW AND SOCIAL LEGISLATION
13. Such other disputes or conflicts involving
the rights to self-organization, union
membership and CB –
a. Between and among LLO and
b. Between and among members of a
union or workers’ association. (IRR
as amended by D.O. 40-F-03, Book V,
Rule XI, Sec. 1)
Coverage of the phrase “other related labor
relations disputes”
1. Any conflict between:
a. A labor union and the Er;
b. A labor union and a group that is not a
LO; or
c. A labor union and an individual who
is not a member of such union
2. Cancellation of registration of unions and
worker’s associations filed by individual/s
other than its members, or group that is
not a LO.
3. A petition for Interpleader involving labor
relations. (IRR as amended by D.O. 40-F-03,
Book Vi, Rule XI, Sec. 2)
Filing a complaint or petition involving
intra/inter-union disputes
A legitimate labor organization or its members
may file a complaint or petition involving
intra/inter-union disputes. (D.O. 40-03, Rule XI,
Sec. 5)
Filing a complaint or petition if the issue
involves the entire membership
The complaint must be signed by at least 30% of
the entire membership of the union.
Filing a complaint or petition if the issue
involves a member only
Only the affected member may file the
complaint. (D.O. 40-03, Rule XI, Sec. 5)
GR: Redress must first be sought within the
union itself in accordance with its constitution
and by-laws.
XPNs:
1. Futility of intra-union remedies;
2. Improper expulsion procedure;
3. Undue delay in appeal as to constitute
substantial injustice;
4. The action is for damages;
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
5. Lack of jurisdiction of the investigating
body; action for the administrative agency
is patently illegal, arbitrary and oppressive;
6. Issue is purely a question of law;
7. Where the administrative agency had
already prejudged the case; and
8. Where the administrative agency was
practically given the opportunity to act on
the case but it did not.
Appeal of a decision in inter/intra-union
dispute
A decision in an inter/intra-union dispute may
be appealed.
Rules on appeal in intra/inter-union disputes
1. Formal Requirements
a. Under oath
b. Consist of a memorandum of appeal
c. Based on either of the following
grounds:
i. Grave abuse of discretion
ii. Gross violation of the rules
iii. With supporting arguments and
evidence
2. Period – Within 10 days from receipt of
decision. (D.O. 40-03, Rule XI, Sec. 16)
3. To whom appealable
a. BLR – If the case originated from the
Med-Arbiter/Regional Director
b. SLE – If the case originated from the
BLR
4. Where Filed – Regional Office or to the BLR,
where the complaint originated. Records are
transmitted to the BLR or Sec. within 24
hours from the receipt of the memorandum
of appeal. (D.O. 40-03, Rule XI, Sec. 17)
Extent of authority of the Bureau of Labor
Relations
1. It may hold a referendum election among
the members of a union for the purpose of
determining whether or not they desire to
be affiliated with a federation.
2. But the BLR has no authority to:
a. Order a referendum among union
members to decide whether to expel
or suspend union officers;
b. Forward a case to the Trade Union
Congress of the Philippines for
arbitration and decision.
356
 JURISDICTION AND REMEDIES
Administrative functions of the Bureau of
Labor Relations
1. Regulation of the labor unions
2. Keeping the registry of labor unions
3. Maintenance of a file of the CBA
4. Maintenance of a file of all settlements or
final decisions of the SC, CA, NLRC, and
other agencies on labor disputes
Effects of filing or pendency of inter/intra-
union dispute and other labor relations
disputes
1. The rights relationships and obligations of
the party-litigants against each other and
other parties-in-interest prior to the
institution of the petition shall continue to
remain during the pendency of the petition
and until the date of the decision rendered
therein. Thereafter, they shall be governed
by the decision ordered.
2. The filing or pendency of any inter/intra
union disputes is not a prejudicial question
to any petition for certification election,
hence it shall not be a ground for the
dismissal of a petition for certification of
election or suspension of the proceedings
for the certification of election. (Rule XI, DO
40-03, Rule XI, Sec. 3)
NATIONAL CONCILIATION AND
MEDIATION BOARD (NCMB)
NCMB, refers to the agency attached to the DOLE
principally in-charge of the settlement of labor
disputes through conciliation, mediation and
of the promotion of voluntary approaches to
labor dispute prevention and settlement.
NCMB is not a quasi-judicial agency
NCMB is not a quasi-judicial agency. Not being a
quasi-judicial agency, NCMB’s ruling cannot be
elevated to, and be cognizable by, the Court of
Appeals.
Rule 43 of the Rules of Court applies only to
awards, judgments, final orders or resolutions of
or authorized by any quasi-judicial agency in the
exercise of its quasi-judicial functions. Hence,
NCMB’s decision, not having been rendered by a
quasi-judicial body, cannot be elevated to the
Court of Appeals under the said rule.
NOTE: The NCBM’s conciliation and mediation
functions are discharged by its Conciliators –
Mediators. (Poquiz, 2018)
357
Conciliator-Mediator
An officer of the NCMB whose principal function
is to assist in the settlement and disposition of
labor management disputes through conciliation
and mediation, including the promotion and
encouragement of voluntary approaches to labor
disputes prevention and settlement. [Sec. 1(k),
Rule I, Book V, Rules to Implement the Labor Code,
as amended by D.O. 40-03, series of 2003]
Alternative modes of settlement of labor
dispute
1. Voluntary Arbitration
2. Conciliation
3. Mediation
Nature of the proceedings
The proceedings are non-litigious.
All labor disputes are required to be
submitted to mandatory conciliation-
mediation
GR: All issues arising from labor and
employment shall be subject to mandatory
conciliation-mediation. The LA or the
appropriate DOLE agency or office that has
jurisdiction over the dispute shall entertain only
endorsed or referred cases by the duly
authorized officer. [Labor Code as amended by
RA 103960, Art. 228(a)]
XPNs:
1. Grievance machinery and Voluntary
Arbitration, in which case, their agreement
will govern;
2. When excepted by the SLE. (Ibid.)
NOTE: Any or both parties involved in the
dispute may pre-terminate the conciliation-
mediation proceedings and request referral or
endorsement to the appropriate DOLE agency or
office which has jurisdiction over the dispute, or
if both parties so agree, refer the unresolved
issues to voluntary arbitration. [LC as amended
by RA 103960, Art. 228(a)]
Arbitration
It is the submission of a dispute to an impartial
person for determination, based on evidence
and arguments of the parties. The arbiter’s
decision or award is enforceable upon the
disputants. It may be voluntary, by agreement,
or compulsory which is required by statutory
 LABOR LAW AND SOCIAL LEGISLATION

provision. (Luzon Dev’t Bank v. Ass’n of Luzon who tries to keep

Dev’t Bank Employees, G.R. No. 120319 Oct. 6, things calm and
1995) forward-looking in a
tense situation.
Court cannot fix resort to voluntary It is the process where It is when a 3rd
arbitration a disinterested 3rd party studies each
party meets with side of the dispute
Resort to VA dispute should not be fixed by the management and then makes
court but by the parties relying on their labor, at their request proposals for the
strengths and resources. or otherwise, during a disputants to
labor dispute or in CB consider. The
Parties to labor relations cases conferences, and by mediator cannot
cooling tempers, aids make an award nor
1. Employee’s organization in reaching an render a decision.
2. Management agreement.
3. The public
Legal basis of conciliation and mediation
NOTE: Er and Ees are active parties while the
public and the State are passive parties. (Poquiz, The State shall promote x x x the preferential
2006) use of voluntary modes of settling disputes
including conciliation and shall ensure mutual
Tripartism compliance by the parties thereof in order to
foster industrial peace. (1987 Constitution, Art.
It is the representation of 3 sectors in policy- 13, Sec. 3)
making bodies of the government. These are:
NOTE: A similar provision is echoed in the
1. The public or the government Declaration of Policy under Art. 211(a) of the
2. The employers LC, as amended.
3. The workers
Persons who can avail of conciliation and
NOTE: Workers cannot insist that they be mediation services of the NCMB
represented in the policymaking in the company.
Such kind of representation in the policy-making Any party to a labor dispute, either the union
bodies of private enterprises is not ordained, not or management, may seek the assistance
even by the Constitution. What is provided for is of NCMB or any of its Regional Branches by
workers' participation in policy and decision- means of formal request for conciliation and
making process directly affecting their rights, preventive mediation. Depending on the
benefits, and welfare. nature of the problem, a request may be filed
in the form of consultation, notice of
CONCILIATION vs. MEDIATION preventive mediation or notice of
strike/lockout.
CONCILIATION MEDIATION
Where to file a request for conciliation and
An intervention by a An intervention by a
mediation
neutral third party neutral third party
The conciliator relies The mediator starts An informal or formal request for conciliation
on his persuasive advising the parties and mediation service can be filed at the
expertise and takes an or offering solutions NCMB Central Office or any of its Regional
active role in assisting or alternatives to Branches.
parties by trying to the problems with
keep disputants the end in view of There are at present 14 regional offices of the
talking, facilitating assisting them NCMB which are strategically located all over
other procedural towards voluntarily the country for the convenient use of
niceties, carrying reaching their own prospective clients.
messages back and mutually acceptable
forth between the settlement of the PREVENTIVE MEDIATION
parties, and generally dispute.
being a good fellow Preventive mediation case

UNIVERSITY OF SANTO TOMAS 358

2021 GOLDEN NOTES
 JURISDICTION AND REMEDIES
Refers to the potential labor dispute which is
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 an
actual labor dispute.
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 from a notice of
strike/lockout, or
2. By conversion of the notice of
strike/lockout into a preventive mediation
case.
Authority to convert a notice of
strike/lockout into a preventive mediation
case
The NCMB has the authority to convert a notice
of strike/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 strike-able in
character;
2. When the party which filed the notice of
strike/lockout voluntarily asks for the
conversion;
3. When both parties to a labor dispute
mutually agree to have it subjected to
preventive mediation proceeding.
NOTE: Such authority is in pursuance of the
NCMB’s duty to enable the parties to settle their
dispute amicably and in line with the State
policy of favoring voluntary modes of settling
labor disputes.
Conversion of a notice of strike or notice of
lockout into a preventive mediation case will
result in its dismissal
Once the notice of strike is converted into a
preventive mediation case, the notice is deemed
dropped 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
359
and therefore illegal. The same rule applies in
the case of lockout by an employer.
Persons who may file a notice for preventive
mediation
Any certified or duly recognized bargaining
representative may file a notice or declare a
strike or request for preventive mediation in
cases of bargaining deadlocks and ULPs. The Er
may file a notice or declare a lockout or request
for preventive mediation in the same cases.
In the absence of a certified or duly recognized
bargaining representative, any LLO in the
establishment may file a notice, request
preventive mediation or declare a strike, but
only on grounds of ULP. (NCMB Manual of
Procedure, Rule IV, Sec. 3)
NOTE: Only a certified or duly recognized
bargaining agent may file a notice or request for
preventive mediation. If the notice was filed not
by the Union but by its individual members, the
NCMB had no jurisdiction to entertain it. (Insular
Hotel Employees Union-NFL v. Waterfront Insular
Hotel Davao, G.R. Nos. 174040-41, Sept. 22, 2010)
Filing of notice or request for preventive
mediation cannot be filed by the Federation
The notice or request for preventive mediation
cannot be filed by the Federation on behalf of its
local/chapter. A local union does not owe its
existence to the federation with which it is
affiliated. It is a separate and distinct voluntary
association owing its creation to the will of its
members.
Mere affiliation does not divest the local union of
its own personality; neither does it give the
mother federation the license to act
independently of the local union. It only gives
rise to a contract of agency, where the former
acts in representation of the latter. Hence, local
unions are considered principals while the
federation is deemed to be merely their agent.
(Ibid.)
Valid issues for a notice of strike/lockout or
preventive mediation
A notice of strike or lockout maybe filed on
ground of ULP acts, gross violation of the CBA,
or deadlock in CBAs. A complaint on any of the
above grounds must be specified in the NCMB
Form or the proper form used in the filing of
complaint.
 LABOR LAW AND SOCIAL LEGISLATION
In case of preventive mediation, any issue
may be brought before the NCMB Central Office
or its regional offices for conciliation and
possible settlement through a letter. This
method is more preferable than a notice of
strike/lockout because of the non-adversarial
atmosphere that pervades during the
conciliation conferences.
Advantages that can be derived from
conciliation and mediation services
Conciliation and mediation are non-
litigious/non-adversarial, less expensive, and
expeditious. Under this informal set-up, the
parties find it more expedient to fully ventilate
their respective positions without running
around with legal technicalities and, in the
course thereof, afford them wider latitude of
possible approaches to the problem.
Parties are bound by the agreement entered
into
The parties are bound to honor any agreement
entered into by them. It must be pointed out
that such an agreement came into existence as a
result of painstaking efforts among the union,
management, and the Conciliator-
Mediator. Therefore, it is only logical to assume
that the Conciliator assigned to the case has to
follow up and monitor the implementation of
the agreement.
Conciliation and mediation service still
possible during actual strike or lockout
It is possible to subject an actual strike or actual
lockout to continuing conciliation and mediation
services. In fact, it is at this critical stage that
such conciliation and mediation services be fully
given a chance to work out possible solution to
the labor dispute. With the ability of the
Conciliator-Mediator to put the parties at ease
and place them at a cooperative mood, the final
solution/s of the issues involved may still be
settled.
Possibility of remanding the dispute already
been assumed or certified to the NLRC to
conciliation and mediation
The parties are not precluded from availing the
services of an NCMB Conciliator-Mediator as the
duty to bargain collectively subsists until the
final resolution of all issues involved in the
dispute.
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
Conciliation is so pervasive in application that,
prior to a compulsory arbitration award, the
parties are encouraged to continue to exhaust
all possible avenues of mutually resolving their
dispute, especially through conciliation and
mediation services.
Benefits that the parties can have in
appearing during conciliation conferences
Generally speaking, any party appearing during
scheduled conciliation conferences has the
advantage of presenting its position on the labor
controversy. The issue raised in the complaint
can be better ventilated with the presence of the
concerned parties. Moreover, the parties can
observe a norm of conduct usually followed in
like forum.
DOLE REGIONAL DIRECTOR
Jurisdiction of the DOLE Regional Directors
The Dole Regional Directors have original and
exclusive jurisdiction over the following cases:
1. Labor standards enforcement cases under
Art. 128;
2. Small money claims cases arising from
labor standards violations in the amount
not exceeding P5,000.00 and not
accompanied with a claim or reinstatement
under Art. 129;
3. Occupational safety and health violation;
4. Registration of unions and cancellation
thereof, cases filed against unions and
other labor relations related cases;
5. Complaints against private recruitment and
placement agencies for local employment;
and
6. Cases submitted to them for voluntary
arbitration in their capacity as Ex- Officio
Voluntary Arbitrators under D.O. No. 83 -
07, Series of 2007.
RECOVERY AND ADJUDICATORY POWERS OF
DOLE REGIONAL DIRECTORS
Money claims falling under the jurisdiction of
the DOLE Regional Directors
Under Art. 129 of the LC, the RDs or any of the
duly authorized hearing officers of DOLE have
jurisdiction over claims for recovery of wages,
simple money claims and other benefits,
provided that:
360
 JURISDICTION AND REMEDIES

1. The claim must arise from Er-Ee Allied Services, Inc./Romeo T. Nolasco, G.R. No.
relationship; 175198, Sept. 23, 2015, as penned by J. Leonen)
2. The claimant does not seek reinstatement;
and DOLE SECRETARY
3. The aggregate money claim of each
employee does not exceed Php 5,000.00. Jurisdiction

NOTE: In the absence of any of the above SOLE has jurisdiction over the following cases:
requisites, it is the LA who shall have the
1. Assumption of jurisdiction over cases
jurisdiction over the claims arising from Er-Ee
where labor disputes are likely to cause a
relations, except claims for Ee’s compensation,
strike or lockout in an industry
SSS, PhilHealth, and maternity benefits, pursuant
indispensable to national interest (D.O. 40-
to Art. 217 of the LC.
G03, S 2010)
2. Visitorial powers to over employers (Art.
The proceedings before the Regional Office shall
128)
be summary and non-litigious in nature.
3. Issue a writ of execution on a judgment
(Art. 224)
Adjudicatory power of the Regional Director
4. Suspend the effects of the termination
pending resolution of the dispute in the
The RD or any of his duly authorized hearing
event of a prima facie finding by the
officers is empowered through summary
appropriate official of the Department of
proceeding and after due notice, to hear and
Labor and Employment before whom such
decide cases involving recovery of wages and
dispute is pending that the termination
other monetary claims and benefits, including
may cause a serious labor dispute or is in
legal interests.
implementation of a mass lay-off [Art. 277
(b)]
Q: Uniden contracted the services of
Nationwide Security to provide the former APPELLATE JURISDICTION
security guard services. However, upon
exercise of the Regional Director’s
Cases within the appellate jurisdiction of the
enforcement and visitorial powers it found
SOLE
Uniden violated several labor standard laws.
Thus, the RD directed Nationwide Security
1. Appeal from and adverse decision of the
and Uniden liable to solidarily pay 40
POEA. (2003 POEA Rules and Regulations,
security personnel including Ceprado, Sebial,
Rule V, Part VII, Sec. 1; Eastern
Olivar, Villegas, and Manato. Nationwide
Mediterranean Maritime Ltd. And Agemar
Security filed a motion for reconsideration of
Manning Agency Inc., v. Surio et. al., G.R. No.
the order, which granted by the RD. On
154213, Aug. 23, 2012)
appeal, the SOLE reversed the RD. It ruled
that Ceprado, Jr. et al. were deprived of their
2. Appeal the order or results of a
right to due process for Nationwide
certification election on the ground that the
Security’s failure to serve the motion for
Rules and Regulations or parts thereof
reconsideration to the former. Is the SOLE
established by the SLE for the conduct of
correct?
election have been violated. (LC, Art. 259)
A: YES. Motions for reconsideration not served
3. A review of cancellation proceedings
on the adverse party do not toll the running of
decided by the BLR in the exercise of its
the reglementary period for filing an appeal.
exclusive and original jurisdiction. (Abbott
Upon lapse of the reglementary period, the
Laboratories Philippines, Inc. v. Abbott
judgment sought to be reconsidered becomes
Laboratories Employees Union, G.R. No.
immutable. Rule II, Sec. 19 of the Rules on the
131374, Jan. 26, 2000)
Disposition of Labor Standards Cases in the
Regional Offices allows an aggrieved party to file
NOTE: The SOLE has no jurisdiction over
a motion for reconsideration of the Order of the
decisions of the BLR rendered in the exercise of
Regional Office. In this case, respondent filed a
its appellate power to review the decision of the
Motion for Reconsideration of Regional Director
RD in a petition to cancel the union's certificate
Martinez's April 19, 2001 Order. (Alejandro
of registration, said decisions being final and
Ceprado, Jr. et al. v. Nationwide Security and
unappealable. (Ibid.)

361
 LABOR LAW AND SOCIAL LEGISLATION
Secs. 7 to 9 of Rule II, Book V of the IRR of the LC
provides for two situations:
a. The first situation involves a petition for
cancellation of union registration which is
filed with a Regional Office. A decision of a
Regional Office cancelling a union's
certificate of registration may be appealed
to the BLR whose decision on the matter
shall be final and unappealable.
b. The second situation involves a petition
for cancellation of certificate of union
registration which is filed directly with
the BLR. A decision of the BLR cancelling a
union's certificate of registration may be
appealed to the SLE whose decision on the
matter shall be final and unappealable.
(Ibid.)
NOTE: The certificate of registration of any
legitimate labor organization including labor
federations or national unions may be cancelled
by the Bureau or the Regional Office on any of
the following grounds:
1. Violation of Arts. 234, 237 and 239 of the
Code;
2. Failure to comply with Art. 238 of the Code;
and
3. Violation of any of the provisions of Art.
241 of the Code.
SOLE has no appellate jurisdiction over
decisions of RD involving petitions for
examinations of union accounts. It is the BLR
which exercises appellate jurisdiction in such
case. (Barles v. Bitonio, G.R. No. 120270, June 16,
1999)
VISITORIAL POWERS AND
ENFORCEMENT POWERS
The DOLE issued D.O. No. 57-04, also called the
Labor Standards Enforcement Framework
(LSEF). The framework comprises three
approaches:
1. Self-assessment;
2. Inspection;
3. Advisory service.
Visitorial power
It constitutes:
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
1. Access to Er’s records and premises at any
time of the day or night, whenever work is
being undertaken;
2. To copy from said records;
3. Question any Ee and investigate any fact,
condition or matter which may be necessary
to determine violations or which may aid in
the enforcement of the LC and of any wage
order, or rules and regulation issued
pursuant thereto.
Instances where the visitorial power of the
SLE may be exercised under the LC
Power to:
1. Inspect books of accounts and records of
any person or entity engaged in
recruitment and placement, require it to
submit reports regularly on prescribed
forms and act in violations of any
provisions of the LC on recruitment and
placement. (Art. 37)
2. Have access to Er’s records and premises to
determine violations of any provisions of
the LC on recruitment and placement. (Art.
128)
3. Conduct industrial safety inspections of
establishments. (Art. 165)
4. Inquire into the financial activities of LLO
and examine their books of accounts upon
the filing of the complaint under oath and
duly supported by the written consent of at
least 20% of the total membership of the
LO concerned.
Enforcement power
It is the power of the SOLE to:
1. Issue compliance orders;
2. Issue writs of execution for the
enforcement of their orders, except in cases
where the Er contests the findings of the
labor officer and raise issues supported by
documentary proof which were not
considered in the course of inspection;
3. Order stoppage of work or suspension of
operation when non-compliance with the
law or implementing rules and regulations
poses grave and imminent danger to health
and safety of workers in the workplace;
362
 JURISDICTION AND REMEDIES
4. Require Ers to keep and maintain such
employment records as may be necessary
in aid to the visitorial and enforcement
powers;
5. Conduct hearings within 24 hours to
determine whether:
a. An order for stoppage of work or
suspension of operations shall be
lifted or not; and
b. Er shall pay the concerned Ees their
salaries in case the violation is
attributable to his fault. (as amended
by RA 7730; Guico v. Secretary, G.R. No.
131750, Nov. 16, 1998)
Violations under Art. 128 of the LC
1. Obstruct, impede, delay or otherwise
render ineffective the orders of the SOLE or
his authorized representatives.
2. Any government employee found guilty of,
or abuse of authority, shall be subject to
administrative investigation and summary
dismissal from service.
Limitations to other courts
In relation to enforcement orders issued under
Art. 128 of the LC, no inferior court or entity
shall:
1. Issue temporary or permanent injunction
or restraining order; or
2. Assume jurisdiction over any case
Instances when Enforcement power may not
be used
1. Case does not arise from the exercise of
visitorial power;
2. When Er-Ee relationship ceased to exist at
the time of the inspection;
3. If Er contests the finding of the Labor
Regulation Officer and such contestable
issue is not verifiable in the normal course
of inspection.
The Supreme Court revisited the Bombo Radyo
Ruling of 2009 and modified it in March 2012
through an en banc resolution. The Court now
concedes that DOLE has the authority to
determine the existence of an employer-
employee relationship, “subject to judicial
review, not review by NLRC”.
POWER TO SUSPEND EFFECTS
363
OF TERMINATION
The SOLE may suspend the effects of the
termination pending resolution of the dispute in
the event of a prima facie finding by the
appropriate official of the DOLE before whom
such dispute is pending that the termination
may cause serious labor dispute or is in
implementation of a mass layoff. [LC, Art. 277(b)]
NOTE: Art. 277(b) of LC is applicable on
suspension of the effects of termination if there
is a showing that the termination may cause
serious labor dispute within the company while
Art. 263(g) of LC on assumption of jurisdiction is
applicable in cases of strike in establishments
affecting national interest, not just the company.
Reinstatement Pending Resolution of The
Termination Dispute
Suspension of the effects of termination will
necessarily result in the immediate
reinstatement of the terminated employees. An
order of reinstatement pending resolution of the
case may thus be issued by the SOLE pursuant to
this power.
ASSUMPTION OF JURISDICTION
SOLE can assume jurisdiction over a labor
dispute
When there is a labor dispute causing or likely to
cause a strike affecting national interest, the SLE,
on his own initiative or upon petition by any of
the parties, may either assume jurisdiction or
certify the dispute to the NLRC for compulsory
arbitration.
NOTE: Art. 263(g) of the LC is both an
extraordinary and a pre-emptive power to
address an extraordinary situation (a strike or
lockout in an industry indispensable to the
national interest). As the term “assume
jurisdiction” connotes the intent of the law is to
give the SOLE full authority to resolve all
matters within the dispute that gave rise to or
which arose out of the strike or lockout—it
includes and extends to all questions and
controversies arising from or related to the
dispute, including cases over which the Labor
Arbiter has exclusive jurisdiction. (Bagong
Pagkakaisa ng Manggagawa ng Triumph
International v. Secretary of the DOLE, G.R. No.
167401, July 5, 2010)
 LABOR LAW AND SOCIAL LEGISLATION
Assumption of jurisdiction can be exercised
without the necessity of prior notice or
hearing given to any of the party disputants
The rationale for the SOLE’s assumption of
jurisdiction can justifiably rest on his own
POWER OF SOLE UNDER ART 277(B)
It involves only the issue of termination of
employment which may cause a serious labor
dispute or is in implementation of a mass lay-
off.
Requires the conduct of preliminary
determination of the existence of prima facie
evidence that the termination may cause a
serious labor dispute or is in implementation of
a mass lay-off to be conducted by appropriate
official of DOLE before whom the termination
dispute is pending.
“Serious labor dispute” contemplated may or
may not involve a strike or lockout.
May be exercised in cases of termination of
employment for as long any of the two (2)
grounds mentioned in Art. 277(b) exists,
irrespective of the nature of the business of the
employer.
Remedy: Immediate reinstatement pending
resolution of the termination case
ARTICLE 128
As to nature and
It covers enforcement
subject of the
legislation in general.
proceedings
As to workers
Employees still in the service
involved
The law fixes no maximum monetary
As to jurisdictional
amount for the exercise of
limits
enforcement power.
SOLE or any of his duly authorized
As to officers
representatives who may or may not
designated
be a regional director.
Appeal Appealable to the SOLE.
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
consideration of the exigency of the situation in
relation to the national interests. (Capitol
Medical Center v. Trajano, G.R. No. 155690, June
30, 2005)
POWER OF SOLE UNDER ART 263(G) /
ASSUMPTION OF JURISDICTION
It 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.
Does not require such preliminary prima facie
determination. In fact, prior notice and hearing are
not required before the SOLE may issue an
assumption or certification order.
Labor dispute referred to will cause or likely to
cause a strike or lockout.
May only be exercised in industries indispensable to
the national interest.
Remedy: Automatic return to work of the strikers
or locked-out employees, if the strike or lock-out is
on-going at the time of the issuance of the
assumption/ certification order of 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.
ARTICLE 129
Limits the proceedings to monetary
of labor
claims which involve only labor
standards laws.
It applies to present or past employees
at the time the complaint is filed,
provided there is no demand for
reinstatement.
The amount of money claim per
claimant should not exceed P5,000.00.
Vested upon a regional director or any
duly authorized hearing officer of the
DOLE.
Appealable to the NLRC.
364
 Labor Law and Social Legislation
REMEDIES
The remedy of an aggrieved party in a decision
or resolution of the Secretary of Labor is to
timely file a motion for reconsideration as a
precondition for any further or subsequent
remedy, and then seasonably file a special civil
action for certiorari under Rule 65 of the 1997
Rules on Civil Procedure. (Pildtranco Service
Enterprises, Inc. v. PHILTRANCO Worker’s
Association, G.R. No. 180962, Feb. 26, 2014)
VOLUNTARY ARBITRATION POWERS
Powers of SOLE regarding voluntary
arbitration
The SOLE may authorize any official to act as
Voluntary Arbitrator upon the written request
and agreement of the parties to a labor dispute.
[LC, Art. 212 (n)] He shall also approve, upon
recommendation of the NCMB the guidelines in
administering the Voluntary Arbitration Fund.
[LC, Art. 276 (f)]
VOLUNTARY ARBITRATOR
GRIEVANCE MACHINERY AND VOLUNTARY
ARBITRATION
Grievance
Any question by either the Er or the union
regarding the interpretation or application of
the CBA or company personnel policies or any
claim by either party that the other party is
violating any provision of the CBA, or company
personnel policies.
Grievance machinery
It 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. It is
part of the continuing process of CB.
NOTE: The Court has ruled that the grievance
procedure provided in the CBA should be
adhered to by the parties. Refusal or failure to do
so is an unfair labor practice, because the
grievance procedure is part of the continuous
process of collective bargaining. (Azucena, Vol. 2,
2016, p. 537)
365
Q: What is the effect of absence of a grievance
machinery under the CBA, being considered
as a mandatory provision of the CBA?
A: The CBA cannot be registered with the DOLE
Regional Office.
NOTE: Despite non-registration, the CBA will not
be rendered invalid or unenforceable as
between parties but the contract bar rule will be
inoperative.
Grievance procedure
It is the internal rules of procedure established
by the parties in their CBA with voluntary
arbitration as the terminal step, which are
intended to resolve all issues arising from the
implementation and interpretation of their CBA.
In the absence of applicable provisions in the
CBA, a grievance committee shall be created
within 10 days from signing of the CBA.
In accordance with Sec. 2, D.O. No. 40-03,
regarding procedure in handling grievances, in
the absence of a specific provision in the CBA or
existing company practice prescribing for the
procedures in handling grievance, the following
shall apply:
1. An employee shall present his grievance or
complaint, orally or in writing to the shop
steward.
2. If the grievance is valid, the shop steward
shall immediately bring the complaint to
the employer’s immediate supervisor. At
this level, parties shall exert efforts to settle
the grievance.
3. If no settlement is reached, the grievance
shall be referred to the grievance
committee which shall have 10 days to
decide the case.
Cases falling under the jurisdiction of the
Grievance Machinery
Any grievance arising from:
1. The interpretation or implementation of
the CBA; and
2. The interpretation or enforcement of
company personnel policies.
JURISDICTION
 LABOR LAW AND SOCIAL LEGISLATION
Jurisdiction of the Voluntary Arbitrators
Generally, the arbitrator is expected to decide
only those questions expressly delineated by the
submission agreement. Nevertheless, the
arbitrator can assume that he has the necessary
power to make a final settlement since
arbitration is the final resort for the adjudication
of the disputes. (Ludo and Luym Corp. v.
Saornido, G.R. No. 140960, Jan. 20, 2003)
Original and exclusive jurisdiction over:
1. All unresolved grievances arising from the:
a. Implementation or interpretation of
the CBA
b. Interpretation or enforcement of
company personnel policies
NOTE: Under Art. 217, it is clear that a LA
has original and exclusive jurisdiction over
termination disputes. However, under Art.
261, a VA has original and exclusive
jurisdiction over grievances arising from the
interpretation or enforcement of company
policies. As a general rule then, termination
disputes should be brought before a LA,
except when the parties unmistakably
express that they agree to submit the same
to voluntary arbitration. (Negros Metal
Corporation v. Armelo Lamayo, G.R. No.
186557, Aug. 25, 2010) As long as the
termination is still an unresolved grievance,
meaning there is no actual termination yet
or serving of notice of dismissal, it may still
be subject to the jurisdiction of the VA.
2. Wage distortion issues arising from the
application of any wage orders in
organized establishments;
3. Those arising from interpretation and
implementation of productivity incentive
programs under RA 6971;
4. Violations of CBA provisions which are not
gross in character are no longer treated as
ULP and shall be resolved as grievances
under the CBA;
NOTE: Gross violation of CBA provisions
shall mean flagrant and/or malicious refusal
to comply with the economic provisions of
such agreement. Total disregard of the CBA
constitutes ULP. (Employees’ Union of Bayer
v. Bayer Phil. G.R. No. 162943, Dec. 6, 2010)
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
5. Any other labor disputes upon agreement
by the parties including ULP and
bargaining deadlock. (LC, Art. 275)
NLRC and DOLE cannot entertain
disputes/grievances/matters under the
exclusive and original jurisdiction of the
voluntary arbitrator
They must immediately dispose and refer the
same to the grievance machinery or voluntary
arbitration provided in the CBA.
The parties may choose to submit the dispute to
voluntary arbitration proceedings before or at
the stage of compulsory arbitration proceedings.
Original and exclusive power over
unresolved grievance appellate in nature
Pursuant to Art. 273 and in relation to Art. 274,
all grievances which are not settled within seven
calendar days from the date of its submission for
resolution to the last step of the grievance
machinery shall automatically be referred to
voluntary arbitration in the CBA. (Poquiz, 2018)
NOTE: Original and exclusive power of
Voluntary Arbitration over unresolved grievance
is appellate in nature. (Poquiz, 2018)
Jurisdiction over actual termination disputes
and complaints for illegal dismissal
The Labor Arbiter has jurisdiction over actual
termination disputes and complaints for illegal
dismissal filed by workers pursuant to the union
security clause and not the grievance machinery.
PROCEDURE
How to initiate arbitration
1. Submission Agreement – Where the
parties define the disputes to be resolved
2. Demand/ notice to arbitrate – Invoking
collective agreement arbitration clause
Voluntary arbitrator (VA)
1. Any person accredited by the NCMB as
such
2. Any person named or designated in the
CBA by the parties to act as their VA
3. One chosen with or without the assistance
of the NCMB, pursuant to a selection
procedure agreed upon in the CBA
366
 Labor Law and Social Legislation
4. Any official that may be authorized by the
SLE to act as VA upon the written request
and agreement of the parties to a labor
dispute. (LC, Art. 262)
as the parties agree to have him hear and decide
their dispute. (Manila Central Line Free Workers
Union v. Manila Central Line Corp., G.R. No.
109383, June 15, 1998)

Powers of a voluntary arbitrator Effect of the award of voluntary arbitrator

1. Hold hearings The decision or award of the voluntary

2. Receive evidence arbitrator acting within the scope of its authority
3. Take whatever action necessary to resolve shall determine the rights of the parties and
the dispute including efforts to effect a their decisions shall have the same legal effects
voluntary settlement between parties. (LC, as judgment of the courts. Such matters on fact
Art. 262-A) and law are conclusive.

Alternative answer to Powers of a Voluntary NOTE: Arbitral award is not subject to

Arbitrators ratification of the employees.

a. Adjudicatory power. (No. 64, NCMB Primer Both the employer and the bargaining
on Grievance Settlement and Voluntary representative of the employees are required
Arbitration) to go through the grievance machinery
b. Compulsory power. (No. 80, Ibid)
c. Power to conciliate and mediate. (No. 65, It is but logical, just and equitable that whoever
Ibid.) is aggrieved should initiate settlement of
d. Power to encourage the parties to enter grievance through the grievance machinery. To
into a stipulation of facts. (Rule V, NCMB impose compulsory procedure on Ers alone
Revised Procedural Guidelines in the would be oppressive of capital.
Conduct of Voluntary Arbitration
Proceedings) Difference between voluntary arbitration
e. Power to issue writ of execution. (Sec. 3, and compulsory arbitration
Ibid. ) (Poquiz, 2018)
VOLUNTARY COMPULSORY
Procedure for choosing voluntary ARBITRATION ARBITRATION
arbitrator/panel Referral of a dispute Process of settlement
by the parties. of labor disputes by a
1. The parties in a CBA shall designate in government agency.
advance a VA/panel, preferably from the Appointment of the Arbitrator is the Labor
listing of qualified VAs duly accredited by Arbitrator by the Arbiter or NLRC.
or the NCMB, parties.
2. Include in the agreement a procedure for
the selection of such VA or panel of VAs, NOTE: Before or at any stage of the compulsory
preferably from the listing of qualified VAs arbitration process, parties may opt to submit
duly accredited by the NCMB. [LC, Art. 260 their dispute to VA.
(3)]
Cost of Voluntary Arbitration and Voluntary
Who will designate the voluntary arbitrator / Arbitrator’s Fee
panel in case the parties fail to select
The parties to a CBA shall provide a
It is the NCMB that shall designate the VA panel proportionate sharing scheme on the cost of VA.
based on the selection procedure provided by
the CBA. (Manila Central Line Free Workers The fixing of fee of VA, shall take into account
Union v. Manila Central Line Corp., G.R. No. the following factors:
109383, June 15, 1998)
1. Nature of the Case;
Labor Arbiters can be designated as 2. Time consumed in hearing the case;
voluntary arbitrators 3. Professional standing of the VA;
4. Capacity to pay of the parties; and
There is nothing in the law that prohibits LAs 5. Fees provided for in the Revised Rules of
from also acting as voluntary arbitrators as long Court (Art. 277, LC)

367
 LABOR LAW AND SOCIAL LEGISLATION
Nature of power of the voluntary arbitrator
Arbitrators by the nature of their functions act in
a quasi-judicial capacity (BP 129, as amended by
RA 9702); where a question of law is involved or
there is abuse of discretion, courts will not
hesitate to pass upon review of their acts.
NOTE: Voluntary Arbitration proceedings are
non-litigious or non-adversary in nature.
(Poquiz, 2018)
REMEDIES
Decisions of voluntary arbitrators
appealable
GR: Decisions of VA are final and executory after
10 calendar days from receipt of the copy of the
award or decision by the parties. (LC, Art. 262-A)
XPN: Decisions of VA may still be subject to
judicial review.
NOTE: Art. 262-A deleted the word
“unappealable” from Art. 263. It makes the
voluntary arbitration award final and executory
after 10 calendar days from receipt of the copy
of the award or decision by the parties.
Presumably, the decision may still be
reconsidered by the VA on the basis of a motion
for reconsideration duly filed during that period.
(Albert Teng v. Alfredo Pahagac, G.R. No. 169704,
Nov. 17, 2010)
Motion for Reconsideration
As a general rule, pursuant to Sec. 7, Rule XIX of
D.O. No. No. 40-03, decision, order, resolution or
award of the voluntary arbitrator shall not be
subject of a motion for reconsideration.
However, this rule cannot stand in a petition for
a writ of certiorari because such petition
inherently requires having filed a motion for
reconsideration. (Azucena, Vol. 2, 2016, p. 559)
NOTE: The propriety of filing a motion for
reconsideration was confirmed in Coca-Cola
Bottlers Phil., etc. v. Coca-Cola (G.R. No. 155651).
Mode of appeal from VA to CA
In the case of Samahan ng Manggawa sa HYATT
v. Bacungan, (G.R. No. 149050, Mar. 25, 2009), the
Supreme Court ruled that a decision or award of
a Voluntary arbitrator is appealable to the CA via
petition for review under Rule 43, not Rule 65.
UNIVERSITY OF SANTO TOMAS
2021 GOLDEN NOTES
The reason for this rule was explained in the
case of Nippon Paint Union v. CA, which the SC
ruled that the mode of appeal from VA to CA is a
petition for review under Rule 43. It is not Rule
65 because a petition for certiorari, under that
Rule lies only where there is “no appeal” and “no
plain, speed, and adequate remedy in the
ordinary course of law.” Certiorari is not a
substitute for a lapsed appeal.
XPNs: The Court cited situations when petition
for certiorari, despite availability of appeal, may
be entertained, such as:
1. When public welfare and advancement of
public policy dictates;
2. When the broader interest of justice so
requires;
3. When the writs issued are null and void; or
4. When the questioned order amounts to an
oppressive exercise of judicial authority.
(Azucena, Vol. 2, 2016, pp. 561-562)
Period of Appeal is TEN (10) DAYS, not fifteen
(15)
In Coca-Cola Bottlers PH, Inc. Sales Force
Union v. Coca-Cola Bottlers PH., Inc, (464 SCRA
507), the Court declared that the decision of the
VA had become final and executory because it
was appealed beyond the 10-day reglementary
period. Despite Rule 43 providing for a 15-day
period to appeal, the SC ruled that the VA’s
decision must be appealed before the CA within
10 calendar days from receipt of decision. The
10-day period to appeal under LC being a
substantive right, this period cannot be
diminished, increased, or modified through the
Rules of Court because the Rules of Court are
subordinate to the statute.
NOTE: A VA by the nature of his functions acts in
quasi-judicial capacity. There is no reason why
the VA’s decisions involving interpretation of
law should be beyond the SC’s review.
Administrative officials are presumed to act in
accordance with law, yet the SC will not hesitate
to pass upon their work where a question of law
is involved or where a showing of abuse of
authority or discretion in their official acts is
properly raised in petitions for certiorari.
(Continental Marble Corporation v. NLRC, G.R. No.
L-43825, May 9, 1988)
Q: PSSLU had an existing CBA with Sanyo
Phils., Inc. with a union security clause which
provides that: “all members of the union
covered by this agreement must retain their
368
 Labor Law and Social Legislation
membership in good standing in the union as
condition of his/her continued employment
with the company.” On account of anti-union
activities, disloyalty and for joining another
union, PSSLU expelled 12 employees from
the union. As a result, PSSLU recommended
the dismissal of said Ees pursuant to the
union security clause. Sanyo approved the
recommendation and considered the said Ees
dismissed. Thereafter, the dismissed Ees
filed with the Arbitration Branch of the NLRC
a complaint for illegal dismissal. Does the
voluntary arbitrator have jurisdiction over
the case?
A: NO. The VA has no jurisdiction over the case.
Although the dismissal of the Ees concerned was
made pursuant to the union security clause
provided in the CBA, there was no dispute
whatsoever between PSSLU and Sanyo as
regards the interpretation or implementation of
the said union security clause. Both PSSLU and
Sanyo are united and have come to an
agreement regarding the dismissal of the Ees
concerned. Thus, there is no grievance between
the union and management which could be
brought to the grievance machinery. The dispute
is between PSSLU and Sanyo. The dispute
therefore, does not involve the interpretation or
implementation of a CBA. (Sanyo Philippines
Workers Union-PSSLU v. Canizares, G.R. No.
101619, June 8, 1992)
Q: X was employed as a telephone operator of
Manila Midtown Hotel. She was dismissed
from her employment for committing the
following violations of offenses subject to
disciplinary actions, namely: falsifying
official documents and culpable
carelessness-negligence or failure to follow
specific instructions or established
procedures. X then filed a complaint for
illegal dismissal with the Arbitration branch
of the NLRC. The Hotel challenged the
jurisdiction of the Labor Arbitrator on the
ground that the case falls within the
jurisdictional ambit of the grievance
procedure and voluntary arbitration under
the CBA. Does the LA have jurisdiction over
the case?
A: YES. The LA has jurisdiction. The dismissal of
X does not call for the interpretation or
enforcement of company personnel policies but
is a termination dispute which comes under the
jurisdiction of the LA. The dismissal of X is not
an unresolved grievance. Neither does it pertain
369
to interpretation of company personnel policy.
(Maneja v. NLRC, G.R. No. 124013, June 5, 1998)
Q: Sime Darby Salaried Employees
Association-ALU (SDSEA-ALU) wrote
petitioner Sime Darby Pilipinas (SDP)
demanding the implementation of a
performance bonus provision identical to the
one contained in their own CBA with SDP.
Subsequently, SDP called both respondents
SDEA and SDEA-ALU to a meeting wherein
SDEA explained that it was unable to grant
the performance bonus. In a conciliation
meeting, both parties agreed to submit their
dispute to voluntary arbitration. Their
agreement to arbitrate stated, among other
things, that they were "submitting the issue
of performance bonus to voluntary
arbitration." Does the voluntary arbitrator
have the power to pass upon the question of
whether to grant the performance bonus and
to determine the amount thereof?
A: YES. In their agreement to arbitrate, the
parties submitted to the VA “the issue of
performance bonus.” The language of the
agreement to arbitrate may be seen to be quite
cryptic. There is no indication at all that the
parties to the arbitration agreement regarded
“the issue of performance bonus” as a two-tiered
issue, only one tier of which was being
submitted to arbitration. Possibly, Sime Darby’s
counsel considered that issue as having dual
aspects and intended in his own mind to submit
only one of those aspects to the VA, if he did,
however, he failed to reflect his thinking and
intent in the arbitration agreement. (Sime Darby
Phils. v. Magsalin, G.R. No. 90426, Dec. 15, 1989)
Q: Apalisok, production chief for RPN Station,
was dismissed due to her alleged hostile,
arrogant, disrespectful, and defiant behavior
towards the Station Manager. She informed
RPN that she is waiving her right to resolve
her case through the grievance machinery
provided in the CBA. The voluntary
arbitrator resolved the case in the
employee’s favor.
On appeal, the CA ruled in favor of RPN
because it considered Apalisok’s waiver to
file her complaint before the grievance
machinery as a relinquishment of her right to
avail herself of the aid of the voluntary
arbitrator. The CA said that the waiver had
the effect of resolving an otherwise
unresolved grievance, thus the decision of
 LABOR LAW AND SOCIAL LEGISLATION
the VA should be set aside for lack of VA by the Submission Agreement duly signed by
jurisdiction. Is the ruling of the CA correct? their respective counsels. The VA had
jurisdiction over the parties’ controversy.
A: NO. Art. 262 of the LC provides that upon (Apalisok v. RPN, G.R. No. 138094, May 29, 2003)
agreement of the parties, the VA can hear and
decide all other labor disputes. The Ees waiver
of her option to submit her case to grievance
machinery did not amount to relinquishing her
right to avail herself of voluntary arbitration.
Contrary to the finding of the CA, voluntary
arbitration as a mode of settling the dispute was
not forced upon RPN. Both parties indeed
agreed to submit the issue of validity of the
dismissal of petitioner to the jurisdiction of the

PRESCRIPTION OF ACTIONS

Rules as regards to the prescriptive period provided for in the LC and Special laws on Labor

SUBJECT PRESCRIPTIVE PERIOD

Criminal Offenses penalized under
the LC and its IRR
ULP
Money Claims
[including incremental proceeds
arising from tuition fees under
PD451 (MLQU Association v. MLQU,
G.R. No. 82312,
19 April 1989)]
All money claims accruing prior to
the effectivity of the LC
Illegal Dismissal
Claim for backwages
Workmen’s Compensation claims
accruing prior to the effectivity of the
LC and between Nov. 1, 1974-Dec.
31, 1974
Reinstatement
Simple Illegal Recruitment
Syndicated or Large-scale Illegal
Recruitment
Union funds
SSS Violations
GSIS Benefits
Employee’s Compensation Claims
3 years from the date of commission or discovery thereof
(People v. Duque, 212 SCRA 607)
1 year from accrual of such ULP; otherwise forever barred (LC,
Art. 290)
GR: 3 years from the time the cause of action accrued;
otherwise forever barred (LC, Art. 291)
XPN: Promissory Estoppel
Within 1 year from the date of effectivity, in accordance with
IRR; otherwise, they shall forever be barred
4 years. It commences to run from the date of formal dismissal.
[Mendoza v. NLRC, G.R. No. 122481, (1998)]
4 years – Since an award of backwages is merely consequent
to a declaration of illegal dismissal. (Arriola v. Pilipino Star
Ngayon, Inc. and Miguel G. Belmonte, G.R. No. 175689, Aug. 13,
2014)
Dec. 31, 1974 shall be filed not later than Mar. 31, 1975 before
the appropriate regional offices of the DOLE. (LC, Art. 291)
4 years (Callanta v. Carnation, 145 SCRA 268)
5 years (RA 8042)
20 years (RA 8042)
After 3 years from the date of submission of the annual
financial report to the DOLE or from the date the same should
have been submitted as required by law, whichever comes
earlier. (Omnibus Rules Implementing the LC, Book VII, Rule II,
Sec. 5)
20 years from the time of delinquency is known or the
assessment is made or the benefit accrues as the case may be
(RA 8282)(Lo v. CA, G.R. No. 128667, 17 Dec. 1999)
GR: 4 years
XPN: Life and retirement benefits – Imprescriptible
3 years from accrual of cause of action

UNIVERSITY OF SANTO TOMAS 370

2021 GOLDEN NOTES
 Jurisdiction and Remedies
Promissory estoppel
It may arise from the making of a promise, even
though without consideration, if it was intended
that the promise should be relied upon. If in fact
it was relied on, a refusal to enforce it would
virtually sanction the perpetration of fraud or
would result in other injustice. It presupposes
the existence of a promise on the part of one
against whom estoppel is claimed. The promise
must be plain and unambiguous and sufficiently
specific so that the court can understand the
obligation assumed and enforce the promise
according to its terms.
NOTE: In order to make out a claim of
promissory estoppel, a party bears the burden of
establishing the following elements:
a. A promise was reasonably expected to induce
action or forbearance;
b. Such promise did, in fact, induce such
action or forbearance; and
c. The party suffered detriment as a result.
(Accessories Specialists, et al. v. Alabanza, G.R. No.
168985)
Elements of Promissory Estoppel
1. A promise was reasonably expected to
induce action or forbearance;
2. Such promise induce action or forbearance;
3. The party suffered detriment as a result.
(Poquiz, 2018)
Acts considered as criminal violations of the
LC
Except as otherwise provided in the LC, or
unless the acts complained of hinge on a
question of interpretation or implementation of
ambiguous provisions of an existing CBA, any
violation of the provisions of the LC declared to
be unlawful or penal in nature shall be punished
with a fine of not less than Php 1,000.00 nor
more than Php 10,000.00 or imprisonment of
not less than three months nor more than three
years, or both such fine and imprisonment at the
discretion of the court. (LC, Art. 288)
1. Prohibition against transfer of employment
– After the issuance of an employment
permit, the alien shall not transfer to
another job or change his employer
without prior approval of the SLE. (LC, Art.
41)
349
2. Violation of the provisions on learnership
(LC, Art. 77)
3. In cases of unlawful withholding of wages,
the culpable party may be assessed
attorney’s fees equivalent to ten percent of
the amount of wages recovered. (LC, Art.
111)
4. It shall be unlawful for any person to
demand or accept, in any judicial or
administrative proceedings for the
recovery of wages, attorney’s fees which
exceed ten percent of the amount of wages
recovered. (LC, Art. 111)
5. It shall be unlawful for any person, directly
or indirectly, to withhold any amount from
the wages of a worker or induce him to give
up any part of his wages by force, stealth,
intimidation, threat or by any other means
whatsoever without the worker’s consent.
(LC, Art. 116)
6. It shall be unlawful to make any deduction
from the wages of any employee for the
benefit of the Er or his representative or
intermediary as consideration of a promise
of employment or retention in
employment. (LC, Art. 116)
7. It shall be unlawful for an Er to refuse to
pay or reduce the wages and benefits,
discharge or in any manner discriminate
against any Ee who has filed any complaint
or instituted any proceeding under this
Title or has testified or is about to testify in
such proceedings. (LC, Art. 118)
8. It shall be unlawful for any person to make
any statement, report, or record filed or
kept pursuant to the provisions of this
Code knowing such statement, report or
record to be false in any material respect.
(LC, Art. 119)
9. It shall be unlawful for any person or entity
to obstruct, impede, delay or otherwise
render ineffective the orders of the SLE or
his duly authorized representatives issued
pursuant to the authority granted under
this Article, and no inferior court or entity
shall issue temporary or permanent
injunction or restraining order or
otherwise assume jurisdiction over any
case involving the enforcement orders
issued in accordance with this Article. [LC,
Art. 128 (4)]
 LABOR LAW AND SOCIAL LEGISLATION
10. It shall be unlawful for any employer to
discriminate against any woman Ee with
respect to terms and conditions of
employment solely on account of her sex.
(LC, Art. 135)
11. It shall be unlawful for an Er to require as a
condition of employment or continuation of
employment that a woman employee shall
not get married, or to stipulate expressly or
tacitly that upon getting married, a woman
employee shall be deemed resigned or
separated, or to actually dismiss, discharge,
discriminate or otherwise prejudice a
woman Ee merely by reason of her
marriage. (LC, Art. 136)
12. It shall be unlawful for any Er:
a. To deny any woman Ee the benefits
provided for in this Chapter or to
discharge any woman employed by
him for the purpose of preventing her
from enjoying any of the benefits
provided under this Code;
b. To discharge such woman on account
of her pregnancy, or while on leave or
in confinement due to her pregnancy;
or
13. To discharge or refuse the admission of
such woman upon returning to her work
for fear that she may again be pregnant. It
shall be unlawful for any Er:
a. To deny any woman Ee the benefits
provided for in this Chapter or to
discharge any woman employed by
him for the purpose of preventing her
from enjoying any of the benefits
provided under this Code;
b. To discharge such woman on account
of her pregnancy, or while on leave or
in confinement due to her pregnancy;
or
c. To discharge or refuse the admission
of such woman upon returning to her
work for fear that she may again be
pregnant.
14. Violations of rights and conditions of
membership in a labor organization (LC,
Art. 241)
15. Unfair labor practice of Ers (LC, Art. 259)
UNIVERSITY OF SANTO TOMAS
2020 GOLDEN NOTES
16. Unfair labor practice of labor organizations
(LC, Art. 260 in relation to Art. 258)
17. Violation of the provision on retirement
benefits (LC, Art. 302)
NOTE: In addition to the penalty prescribed
under Art. 303, any alien found guilty shall be
summarily deported upon completion of service
of sentence. (LC, Art. 303)
If the offense is committed by a corporation,
trust, firm, partnership, association or any other
entity, the penalty shall be imposed upon the
guilty officer or officers of such corporation,
trust, firm, partnership, association or entity.
(LC, Art. 28)
Prescriptive period not suspended by
Criminal Case
The filing of the criminal case against the
employee does not have the effect of suspending
or interrupting the prescriptive period for the
filing of an action for illegal dismissal. An action
for illegal dismissal is an administrative case
which is entirely separate and distinct from a
criminal action for estafa. Each may proceed
independently of the other. (Pepsi Cola Bottling
Company v. Guanzon, G.R. No. 81162, April 19,
1989)
Effect of filing then withdrawing a complaint
The filing of the illegal dismissal complaint
interrupts the running of the prescriptive
period. If such complaint however, is dismissed
or voluntarily withdrawn, the dismissal or
voluntary withdrawal is effectively erased.
Q: Workers were terminated in
October/November 1997. They filed illegal
dismissal complaint in May 1998 but
withdraw it voluntarily in March 1999. Few
years later, however, they again filed the
same kind of complaint in June 2002 or
almost five years after their dismissal in
1997. Is the complaint filed out of time?
A: YES. The four-year period to file an illegal
dismissal complaint had lapsed. The eight-
month period during which their cases were
pending should not be excluded from the four-
year prescriptive period. (Montero, et al. v. Times
Transportation, G.R. No. 190828, March 16, 2015)
Laches
350
 Jurisdiction and Remedies
Laches or sleeping on one’s right, can defeat an
action such as a complaint for illegal dismissal,
because if one has a right to assert, he should
assert it in due time. (Azucena, Vol. 2, 2016, p.
1088)

NOTE: Laches cannot be taken against the

complainant if there is a valid reason for the
delay in filing the action. (Radio Communications
of the Phil., Inc. v. NLRC, G.R. No. 102958, June 25,
1993)

Elements of Laches:

1. Conduct of the defendant or one under

whom he claims, giving rise to the situation
of which the complaint is made and for
which the complaint seeks remedy;

2. Delay in asserting the complaint’s rights.

The complainant having had knowledge or
notice of the part of the defendant’s
conduct and having the opportunity to
institute the suit;

3. Lack of knowledge or notice on the part of

the defendant that the complainant would
assert the right on which he bases his suit;

4. Injury or prejudice to the defendant in the

event relief is accorded to the complainant,
or the suit is not held to be barred. (RCPI v.
NLRC, 223 SCRA 656, June 25, 1993)

349