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ADMINISTRATIVE COMMITTEE
CREATIVES
NICOLE ANN C. PAGLICAWAN
JULIANNE BEATRICE N. ROSARIO
KIM PATRIZ B. CAMPANILLA
CHRISTINE C. TIAMZON
TECHNICAL
JOSEPH BILL P. QUINTOS
CHYLER BON AEHROLD S. GARMA
SAMANTHA J. MAGAOAY
SPECIAL PROJECTS
AINA RAE L. CORTEZ
JAYE MARIE C. MARTINEZ
ANNA MARIE GRACE M. ANTONIO
NORBERTO O. SARIGUMBA III
JOHN TAN
JAZZMIN A. BENJAMIN
IMI LIZA B. ESPINA
MARY STEPHANIE C. CRUZ
RAYMIELLE CHRISTIE MAGCALAS
YUUMEI MARIE B. ESMA
AIHRA NICOLE V. DIESTRO
IRISH MAE D. GARCIA
LOGISTICS
CHRISTIAN GIO R. SENARLO
PATRICIA ALYX D. ANG
BERNETTE ANELA S. CUEVAS
DONN LIN
CELINA EUNICE CHEYENNE D. ABUEG
CLARISSE EVANGELINE G. CHOA
ANTHONY JEFFERSON JULIO
ZACKARY N. DUQUILLA
MAEDEN M. BORCELANGO
LABOR
FINANCE
SERMAE ANGELA G. PASCUAL
PHOEBE TANSIONGKUN
RUTH MARIE DISTOR MORALES
ALLYSSA DANIELLE Y. NG
ERIKA THERESE C. BOLLOZOS
MARKETING
KATHLEEN C. ROMINA
AARON C. CHENG
ISABELLE BEATRIZ DLS. GINEZ
PRISHA D. CRUZ
NORLENE JAE M. ANDAYA
RIANNA CO
PUBLIC RELATIONS
LUMINA ALINEA O. AQUINO
LUIS ENRICO BATARA
MIKAELA FRANCESCA K. BELEY
REYNALDO M. REVECHE
GRACIELLA RACHEL D. ROBLES
INTERNALS
JEWEL M. CULALA
DANELLA DIANE D. DIMAPILIS
MARC ANGELO M. GUIBONE
SHEILA MARIE GRACE DELOS ANGELES
ALEXIS CAESAR E. SANCHEZ
CHRISTINE C. TIAMZON
ANGELIQUE P. LEDA
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TABLE OF CONTENTS

I. GENERAL PRINCIPLES .................................................................................................................... 11

A. BASIC POLICY ON LABOR......................................................................................................... 11

1. SECURITY OF TENURE .................................................................................................................... 11
2. SOCIAL JUSTICE ............................................................................................................................. 11
3. BALANCING OF INTERESTS ............................................................................................................ 12
4. EQUAL WORK OPPORTUNITIES ..................................................................................................... 12
5. RIGHT TO SELF-ORGANIZATION AND COLLECTIVE BARGAINING .................................................. 13
B. CONSTRUCTION IN FAVOR OF LABOR ...................................................................................... 13
1. LABOR CODE, ART. 4 ..................................................................................................................... 13
2. LIMITATIONS OF CONSTRUCTION IN FAVOR OF LABOR CONSTRUCTION IN FAVOR OF LABOR;
LIMITATIONS ..................................................................................................................................... 14
C. BURDEN OF PROOF AND QUANTUM OF EVIDENCE IN LABOR CASES ........................................ 14
D. LEGAL BASIS UNDER THE 1987 CONSTITUTION, CIVIL CODE, AND LABOR CODE ........................ 14

II. RECRUITMENT AND PLACEMENT OF WORKERS ............................................................................. 18

A. RECRUITMENT AND PLACEMENT............................................................................................. 18

1. ILLEGAL RECRUITMENT AND OTHER PROHIBITED ACTIVITIES ...................................................... 18
A. ELEMENTS OF ILLEGAL RECRUITMENT ................................................................................... 20
B. ILLEGAL RECRUITMENT AS DISTINGUISHED FROM ESTAFA ................................................... 21
2. LIABILITY OF LOCAL RECRUITMENT AGENCY AND FOREIGN EMPLOYER ...................................... 22
A. SOLIDARY LIABILITY ................................................................................................................ 22
B. THEORY OF IMPUTED KNOWLEDGE ....................................................................................... 23
3. ENTITIES PROHIBITED FROM RECRUITING ENTITIES DISQUALIFIED FROM ENGAGING IN THE
BUSINESS OF RECRUITMENT AND PLACEMENT OF WORKERS FOR LOCAL EMPLOYMENT ............. 23
4. CANCELLATION OF LICENSE OR AUTHORITY ................................................................................. 24
5. TERMINATION OF CONTRACT OF MIGRANT WORKER WITHOUT JUST OR VALID CAUSE ............ 25
6. BAN ON DIRECT HIRING, EXCEPTIONS .......................................................................................... 26
B. EMPLOYMENT OF NON-RESIDENT ALIENS ............................................................................... 26

III. LABOR STANDARDS ..................................................................................................................... 28

1. EMPLOYER-EMPLOYEE RELATIONSHIP.......................................................................................... 29
A. KINDS OF EMPLOYMENT ........................................................................................................ 29
2. TEST TO DETERMINE EXISTENCE OF EMPLOYER-EMPLOYEE RELATIONSHIP................................ 36
A. FOUR-FOLD TEST .................................................................................................................... 36
3. EMPLOYEE VS. INDEPENDENT CONTRACTOR ............................................................................... 39
A. ELEMENTS............................................................................................................................... 39
B. TRILATERAL RELATIONSHIP .................................................................................................... 41
A. CONDITIONS OF EMPLOYMENT............................................................................................... 48
1. EXCLUDED EMPLOYEES (GO-MA-OFF-FIFA-DOPE) ........................................................................ 48
A. GOVERNMENT EMPLOYEES.................................................................................................... 48

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B. MANAGERIAL EMPLOYEES IF THEY MEET ALL OF THE FOLLOWING CONDITIONS: ............... 48

C. OFFICER OR MEMBERS OF A MANAGERIAL STAFF IF THEY PERFORM THE FOLLOWING
DUTIES AND RESPONSIBILITIES: .................................................................................................. 48
D. NON-AGRICULTURAL FIELD PERSONNEL ................................................................................ 48
E. MEMBERS OF THE FAMILY OF THE EMPLOYER WHO ARE DEPENDENT ON HIM FOR
SUPPORT ...................................................................................................................................... 49
F. DOMESTIC HELPERS ............................................................................................................... 49
G. PERSONS IN THE PERSONAL SERVICE OF ANOTHER .............................................................. 49
H. WORKERS WHO ARE PAID BY RESULTS (IRR LABOR CODE, BOOK III, RULE I, SEC. 2) ............ 49
2. HOURS OF WORK .......................................................................................................................... 49
A. NORMAL HOURS OF WORK .................................................................................................... 49
B. MEAL PERIODS ....................................................................................................................... 50
C. NIGHT SHIFT DIFFERENTIAL .................................................................................................... 51
D. OVERTIME WORK ................................................................................................................... 51
E. COMPRESSED WORK WEEK (CWW) ....................................................................................... 54
3. REST PERIODS ................................................................................................................................ 55
4. HOLIDAYS ...................................................................................................................................... 56
5. SERVICE CHARGE ........................................................................................................................... 58
6. 13TH MONTH PAY........................................................................................................................... 59
B. WAGES................................................................................................................................... 61
1. PAYMENT OF WAGES .................................................................................................................... 61
2. PROHIBITIONS REGARDING WAGES.............................................................................................. 63
3. FACILITIES VS. SUPPLEMENTS ....................................................................................................... 66
4. MINIMUM WAGE .......................................................................................................................... 66
5. WAGE DISTORTION ....................................................................................................................... 67
6. NON-DIMINUTION OF BENEFITS ................................................................................................... 68
C. LEAVES ................................................................................................................................... 69
1. SERVICE INCENTIVE LEAVE ............................................................................................................ 69
2. EXPANDED MATERNITY LEAVE ...................................................................................................... 70
3. PATERNITY LEAVE .......................................................................................................................... 70
4. PARENTAL LEAVE FOR SOLO PARENTS .......................................................................................... 71
5. LEAVE BENEFITS FOR WOMEN WORKERS UNDER R.A NO. 9710 AND R.A NO. 9262 ................... 72
D. SPECIAL GROUPS OF EMPLOYEES ............................................................................................ 72
1. WOMEN......................................................................................................................................... 72
A. DISCRIMINATION .................................................................................................................... 72
B. STIPULATION AGAINST MARRIAGE ........................................................................................ 73
C. PROHIBITED ACTS ................................................................................................................... 74
2. MINORS ......................................................................................................................................... 74
3. KASAMBAHAY................................................................................................................................ 75
4. HOMEWORKERS ............................................................................................................................ 77
5. NIGHT WORKERS ........................................................................................................................... 78
6. PERSONS WITH DISABILITIES ......................................................................................................... 79
A. DISCRIMINATION ON EMPLOYMENT ..................................................................................... 80
B. INCENTIVES FOR EMPLOYERS (SEC. 8) ................................................................................... 81
E. SEXUAL HARASSMENT IN THE WORK ENVIRONMENT .............................................................. 81

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IV. SOCIAL WELFARE LEGISLATION .................................................................................................... 84

A. SSS LAW ................................................................................................................................. 84

B. GSIS LAW ............................................................................................................................... 84
C. LIMITED PORTABILITY LAW ..................................................................................................... 91
D. DISABILITY AND DEATH BENEFITS ........................................................................................... 91

V. LABOR RELATIONS ....................................................................................................................... 97

A. RIGHT TO SELF-ORGANIZATION............................................................................................... 98
1. WHO MAY JOIN, FORM, OR ASSIST LABOR ORGANIZATIONS OR WORKERS’ ASSOCIATIONS ...... 98
2. RESTRICTIONS AS TO MANAGERIAL EMPLOYEES, SUPERVISORY EMPLOYEES, CONFIDENTIAL
EMPLOYEES, EMPLOYEE-MEMBERS OF COOPERATIVES, ALIEN EMPLOYEES, AND GOVERNMENT
EMPLOYEES ....................................................................................................................................... 99
3. DETERMINATION OF APPROPRIATE BARGAINING UNIT (ABU), EFFECT OF INCLUSION OF
EMPLOYEES OUTSIDE OF THE ABU ................................................................................................. 101
4. NON-INTERFERENCE WITH WORKERS’ RIGHTS TO SELF-ORGANIZATION .................................. 103
B. LEGITIMATE LABOR ORGANIZATIONS .................................................................................... 104
1. REGISTRATION WITH THE DOLE .................................................................................................. 104
2. CANCELLATION OF REGISTRATION ............................................................................................. 105
3. AFFILIATION/DISAFFILIATION FROM NATIONAL UNION OR FEDERATION ................................. 105
4. RIGHTS OF LEGITIMATE LABOR ORGANIZATIONS....................................................................... 107
5. RIGHTS AND CONDITIONS OF MEMBERSHIP IN LEGITIMATE LABOR ORGANIZATIONS ............. 107
6. CHECK OFF, ASSESSMENTS, UNION DUES, AND AGENCY FEES................................................... 109
7. UNION SECURITY CLAUSE............................................................................................................ 110
C. BARGAINING REPRESENTATIVE ............................................................................................. 111
1. MODES TO ACQUIRE STATUS AS SOLE AND EXCLUSIVE BARGAINING AGENT (SEBA)................ 112
A. SEBA CERTIFICATION ............................................................................................................ 112
B. CERTIFICATION/CONSENT ELECTION ................................................................................... 113
C. BARS TO THE HOLDING OF CERTIFICATION/CONSENT ELECTION ....................................... 124
D. FAILURE OF ELECTION, RUN-OFF ELECTION, RE-RUN ELECTION ......................................... 126
E. EMPLOYER AS A MERE BYSTANDER RULE ............................................................................ 128
D. COLLECTIVE BARGAINING ..................................................................................................... 128
1. DUTY TO BARGAIN COLLECTIVELY, BARGAINING IN BAD FAITH ................................................. 128
2. COLLECTIVE BARGAINING AGREEMENT (CBA), MANDATORY PROVISIONS ............................... 129
3. SIGNING, POSTING, REGISTRATION ............................................................................................ 133
4. TERM OF CBA, FREEDOM PERIOD ............................................................................................... 134
E. UNFAIR LABOR PRACTICES .................................................................................................... 134
1. NATURE, ASPECTS ....................................................................................................................... 134
2. BY EMPLOYERS ............................................................................................................................ 135
3. BY LABOR ORGANIZATIONS ........................................................................................................ 144
F. PEACEFUL CONCERTED ACTIVITIES ........................................................................................ 147
1. PICKETING ................................................................................................................................... 147
2. STRIKES ........................................................................................................................................ 147
A. LEGAL STRIKE VS. ILLEGAL STRIKE ........................................................................................ 149
B. MANDATORY PROCEDURAL REQUIREMENTS ...................................................................... 149

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C. GROUNDS FOR STRIKE.......................................................................................................... 151

D. PROHIBITED ACTS DURING STRIKE ....................................................................................... 152
E. LIABILITY OF UNION OFFICERS AND MEMBERS FOR ILLEGAL STRIKE AND ILLEGAL ACTS
DURING STRIKE .......................................................................................................................... 152
3. LOCKOUTS ................................................................................................................................... 153
A. GROUNDS FOR LOCKOUT ..................................................................................................... 153
B. MANDATORY PROCEDURAL REQUIREMENTS ...................................................................... 154
4. ASSUMPTION OF JURISDICTION BY THE DOLE SECRETARY......................................................... 156
5. INJUNCTIONS............................................................................................................................... 161

VI. TERMINATION OF EMPLOYMENT .............................................................................................. 164

A. SECURITY OF TENURE ........................................................................................................... 164

1. CATEGORIES OF EMPLOYMENT AS TO TENURE .......................................................................... 164
A. REGULAR .............................................................................................................................. 164
B. CASUAL ................................................................................................................................. 165
C. PROBATIONARY .................................................................................................................... 165
D. PROJECT................................................................................................................................ 166
E. SEASONAL ............................................................................................................................. 167
F. FIXED-TERM .......................................................................................................................... 168
G. WORK-POOL EMPLOYEES ..................................................................................................... 168
2. LEGITIMATE SUBCONTRACTING VS. LABOR-ONLY CONTRACTING ............................................ 169
A. ELEMENTS............................................................................................................................. 169
B. TRILATERAL RELATIONSHIP .................................................................................................. 171
C. SOLIDARY LIABILITY .............................................................................................................. 173
B. TERMINATION BY EMPLOYER................................................................................................ 178
1. SUBSTANTIVE DUE PROCESS ....................................................................................................... 178
A. JUST CAUSES ......................................................................................................................... 178
B. AUTHORIZED CAUSES ........................................................................................................... 184
2. PROCEDURAL DUE PROCESS ....................................................................................................... 189
A. TWO-NOTICE RULE ............................................................................................................... 189
3. ILLEGAL DISMISSAL, RELIEFS THEREFROM ................................................................................. 190
A. REINSTATEMENT .................................................................................................................. 191
B. BACKWAGES ......................................................................................................................... 192
C. SEPARATION PAY, DOCTRINE OF STRAINED RELATIONS...................................................... 193
D. DAMAGES ............................................................................................................................. 194
E. LIABILITIES OF CORPORATE OFFICERS .................................................................................. 195
F. BURDEN OF PROOF .............................................................................................................. 195
C. TERMINATION BY EMPLOYEE ................................................................................................ 196
1. RESIGNATION VERSUS CONSTRUCTIVE DISMISSAL .................................................................... 196
2. ABANDONMENT .......................................................................................................................... 197
D. PREVENTIVE SUSPENSION ..................................................................................................... 197
E. FLOATING STATUS ................................................................................................................ 198
F. RETIREMENT ........................................................................................................................ 198

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VII. MANAGEMENT PREROGATIVE .................................................................................................. 203

A. DISCIPLINE ........................................................................................................................... 203

B. TRANSFER OF EMPLOYEES .................................................................................................... 203
C. PRODUCTIVITY STANDARDS .................................................................................................. 204
D. BONUS ................................................................................................................................. 204
E. CHANGE OF WORKING HOURS .............................................................................................. 205
F. BONA FIDE OCCUPATIONAL QUALIFICATIONS ....................................................................... 205
G. POST-EMPLOYMENT RESTRICTIONS ...................................................................................... 206
H. CLEARANCE PROCEDURES ..................................................................................................... 206
I. LIMITATIONS ON MANAGEMENT PREROGATIVE; POLICE POWER OF THE STATE .................... 207

VIII. JURISDICTION AND REMEDIES ................................................................................................. 210

A. MANDATORY CONCILIATION-MEDIATION, SENA ................................................................... 210

B. LABOR ARBITER .................................................................................................................... 211
1. JURISDICTION OF THE LABOR ARBITER AS DISTINGUISHED FROM THE REGIONAL DIRECTOR .. 211
2. REQUIREMENTS TO PERFECT APPEAL TO NATIONAL LABOR RELATIONS COMMISSION ........... 214
3. REINSTATEMENT AND/OR EXECUTION PENDING APPEAL.......................................................... 216
C. NATIONAL LABOR RELATIONS COMMISSION ......................................................................... 216
D. JUDICIAL REVIEW OF LABOR RULINGS ................................................................................... 217
E. BUREAU OF LABOR RELATIONS ............................................................................................. 219
F. NATIONAL CONCILIATION AND MEDIATION BOARD .............................................................. 220
G. POEA.................................................................................................................................... 220
H. DOLE REGIONAL DIRECTORS ................................................................................................. 220
I. DOLE SECRETARY .................................................................................................................. 221
1. JURISDICTION OF THE SOLE ........................................................................................................ 221
2. VISITORIAL AND ENFORCEMENT POWERS.................................................................................. 221
3. POWER TO SUSPEND EFFECTS OF TERMINATION....................................................................... 223
4. REMEDIES .................................................................................................................................... 224
J. GRIEVANCE MACHINERY ....................................................................................................... 224
K. VOLUNTARY ARBITRATOR .................................................................................................... 224
L. PRESCRIPTION OF ACTIONS................................................................................................... 225

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I. GENERAL PRINCIPLES A. BASIC POLICY ON LABOR

1. Security of Tenure
TOPIC OUTLINE UNDER THE SYLLABUS:
Article 294. Security of Tenure. In case of regular
A. BASIC POLICY ON LABOR employment, the employer shall not terminate the
services of an employee except for a just cause or
1. Security of Tenure when authorized by this Title. xxx
2. Social Justice
3. Balancing of Interests Security of Tenure Applicable to Probationary
4. Equal Work Opportunities Employees
5. Right to Self-Organization and Collective The foregoing shall also apply in cases of
Bargaining probationary employment; provided, however, that in
such cases, termination of employment due to failure
B. CONSTRUCTION IN FAVOR OF LABOR of the employee to qualify in accordance with the
standard of the employer made known to the former
1. Labor Code, Art. 5 at the time of engagement may also be a ground for
2. Limitations of Construction in favor of Labor termination of employment. (RULE XXIII Section 1.
Security of Tenure, DO 9, 1997, predecessor of D.O.
C. BURDEN OF PROOF AND QUANTUM OF 40)
EVIDENCE IN LABOR CASES
1. Summary on Burden of Proof In cases of project employment or employment
2. EE has burden of proving fact of covered by legitimate contracting or subcontracting
employment and of dismissal arrangements, no employee shall be dismissed prior
3. ER has burden of proving valid dismissal to the completion of the project or phase thereof for
4. Penalty must be commensurate with gravity which the employee was engaged, or prior to the
of offense expiration of the contract between the principal and
contractor, unless the dismissal is for just or
D. LEGAL BASIS UNDER THE 1987 authorized cause subject to the requirements of due
CONSTITUTION, CIVIL CODE, AND LABOR process or prior notice, or is brought about by the
CODE completion of the phase of the project or contract for
1. 1987 Constitution which the employee was engaged. (RULE XXIII
2. Civil Code Section 1. Security of Tenure, DO 9, 1997,
3. Labor Code predecessor of D.O. 40)

Security of tenure of contractor’s employees. It is

understood that all contractor’s employees enjoy
security of tenure regardless of whether the contract
of employment is co-terminus with the service
agreement, or for a specific job, work or service, or
phase thereof. (Section 11, D.O. No. 18-A, 2011)

2. Social Justice

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. (Calalang v. Williams, G.R. No.
47800, 1940)

Welfare state based on social justice

The welfare state concept is found in the
constitutional clause on the promotion of social
justice to ensure the well-being and economic

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security of all the people, and in the pledge of
protection to labor with specific authority to regulate
the relations between landowners and tenants and
between labor and capital. (Alalayan v. National
Power Corp., G.R. No. L-24396, 1968)
Limitations of Social Justice
Social justice should be used only to correct an
injustice. It must be founded on the recognition of the
necessity of interdependence among diverse units of
a society, and of the protection that should be equally
and evenly extended to all groups as a combined
force in our social and economic life. (Agabon v.
NLRC, G.R. No. 158693, 2004)
Social justice is not intended to countenance
wrongdoing simply because it is committed by the
underprivileged. At best it may mitigate the penalty
but it certainly will not condone the offense.
Compassion for the poor is an imperative of every
humane society but only when the recipient is not a
rascal claiming an undeserved privilege. Social
justice cannot be permitted to be a refuge of
scoundrels any more than can equity be an
impediment to the punishment of the guilty. (Tirazona
v. Philippine EDS Techno-Service, G.R. No. 169712,
2009)
Laissez-Faire not fully embraced by the
Constitution
The Constitution is primarily a document of social
justice, and although it has recognized the
importance of the private sector, it has not embraced
fully the concept of laissez-faire or relied on pure
market forces to govern the economy. (Employers
Confederation v. NWPC, G.R. No. 96169, 1991)
3. Balancing of Interests
Balancing of interests
It is high time that employer and employee cease to
view each other as adversaries and instead
recognize that theirs is a symbiotic relationship,
wherein they must rely on each other to ensure the
success of the business. When they consider only
their own self-interests, and when they act only with
their own benefit in mind, both parties suffer from
short-sightedness, failing to realize that they both
have a stake in the business.
The employer wants the business to succeed,
considering the investment that has been made. The
employee in turn, also wants the business to
succeed, as continued employment means a living,
and the chance to better one’s lot in life. It is clear
then that they both have the same goal, even if the
benefit that results may be greater for one party than
LABOR
the other. If this becomes a source of conflict, there
are various, more amicable means of settling
disputes and of balancing interests that do not add
fuel to the fire, and instead open avenues for
understanding and cooperation between the
employer and the employee. (Toyota Motor Phils.
Corp Workers Ass’n. v. NLRC, G.R. No. 158786,
2007)
4. Equal Work Opportunities
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
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. (Art.
XIII, 1987 PH Constitution)
Art 3. Declaration of Basic Policy. — The State shall
afford protection to labor, promote full employment,
ensure equal work opportunities regardless of sex,
race or creed, and regulate the relations between
workers and employers. The State shall assure the
rights of workers to self-organization, collective
bargaining, security of tenure, and just and humane
conditions of work. (Labor Code)
Section 2. Declaration of Policies. - The State shall
promote equal opportunities in employment for
everyone. To this end, it shall be the policy of the
State to:
(a) Promote employment of individuals on the basis
of their abilities, knowledge, skills and qualifications
rather than their age.
(b) Prohibit arbitrary age limitations in employment.
(c) Promote the right of all employees and workers,
regardless of age, to be treated equally in terms of
compensation, benefits, promotion, training and
other employment opportunities. (R.A. No. 10911, An
Act Prohibiting Discrimination Against Any Individual
in Employment on Account of Age and Providing
Penalties Therefor)
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5. Right to Self-Organization and
Collective Bargaining
1987 Constitution
The State shall guarantee:
1. 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. [Sec. 8, Art.
III.]
2. The rights of all workers to –
1. Self-organization [Sec. 3, Art. XIII]
2. Collective bargaining and
negotiations [Sec. 3, Art. XIII]
3. Peaceful concerted activities [Sec.
3, Art. XIII]
4. Strike in accordance with law. [Sec.
3, Art. XIII]
Art. 253, Labor Code
All persons employed:
1. In commercial, industrial and agricultural
enterprises, and
2. In religious, charitable, medical or educational
institutions, whether operating for profit or not,
shall have the right to –
a. Self-organization,
b. Form, join, or assist labor organization of their
own choosing for purposes of collective
bargaining.
Ambulant, intermittent and itinerant workers, self-
employed people, rural workers and those without
any definite employers may form labor organizations
for their mutual aid and protection.
Art. 254, Labor Code
Employees of government corporations established
under the corporation code shall have the right to:
1. Organize, and
2. Bargain collectively with their respective
employers.
All other employees in the civil service shall have
the right to form associations for purposes not
contrary to law.
Infringement of the right to self- organization
It shall be unlawful for any person to restrain,
coerce, discriminate against or unduly interfere with
employees and workers in their exercise of the right
to self-organization [Art. 257, LC]
Scope of right to self-organization
1. Right to form, join or assist labor
organizations of their own choosing for the
purpose of collective bargaining through
representatives of their own choosing [Art. 257];
LABOR
2. Right to engage in lawful concerted
3. activities for the same purpose (collective
bargaining) or for their mutual aid and protection
[Art. 257]
4. The right of any person to join an organization
also includes the right to leave that
organization and join another one. [Heritage
Hotel Manila v. PIGLAS- Heritage, G.R. No.
177024 (2009)]
5. The right to form or join a labor organization
necessarily includes the right to refuse or
refrain from exercising said right. It is self-
evident that just as no one should be denied the
exercise of a right granted by law, so also, no
one should be compelled to exercise such a
conferred right. [Reyes v. Trajano, G.R. No.
84433 (1992)]
6. The right of the employees to self- organization
is a compelling reason why their withdrawal
from the cooperative must be allowed. As
pointed out by the union, the resignation of the
member- employees is an expression of their
preference for union membership over that of
membership in the cooperative. [Central Negros
Electric Cooperative v. SOLE, G.R. No. 94045
(1991)]
7. Their freedom to form organizations would be
rendered nugatory if they could not choose
their own leaders to speak on their behalf and
to bargain for them. [Pan- American World
Airways, Inc v. Pan- American Employees
Association, G.R. No. L-25094 (1969)]
B. CONSTRUCTION IN FAVOR OF LABOR
1. Labor Code, Art. 4
All doubts in the implementation and interpretation of
the provisions of this Code, including its
implementing rules and regulations, shall be
resolved in favor of labor. [Art. 4, Labor Code]
In case of doubt, all legislation and all labor contracts
shall be construed in favor of the safety and
decent living for the laborer. [Art. 1702, Civil Code]
Liberal Construction Of the laws
Art. 4 of the Labor Code mandates that all doubts in
the implementation and interpretation of the
provisions thereof shall be resolved in favor of
labor. This is merely in keeping with the spirit of our
Constitution and laws which lean over backwards in
favor of the working class, and mandate that every
doubt must be resolved in their favor. [Hocheng
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Philippines Corporation v. Farrales, G.R. No. 211497
(2015)]
Of Labor Contracts
A CBA, as a labor contract within the contemplation
of Art. 1700 of the Civil Code of the Philippines which
governs the relations between labor and capital, is
not merely contractual in nature but impressed with
public interest, thus, it must yield to the common
good. As such, it must be construed liberally rather
than narrowly and technically, and the courts must
place a practical and realistic construction upon it,
giving due consideration to the context in which it is
negotiated and purpose which it is intended to serve.
[Cirtek Employees Labor Union-FFW v. Cirtek
Electronics, G.R. No. 190515 (2010)]
Mutual obligation
The employer's obligation to give his workers just
compensation and treatment carries with it the
corollary right to expect from the workers adequate
work, diligence and good conduct. [Judy Philippines,
Inc. v NLRC, G.R. No. 111934 (1998)]
2. Limitations of Construction in
Favor of Labor Construction in
favor of labor; limitations
It is construed in favor of labor if there is a doubt as
to the meaning of the legal and contractual provision.
If the provision is clear and unambiguous, it must be
applied in accordance with its express terms.
(MERALCO v. NLRC, G.R. No. 78763, 1989)
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 v. NLRC, G.R. No.
162053, 2007)
While labor laws should be construed liberally in
favor of labor, we must be able to balance this with
the equally important right of the [employer] to due
process. (Gagui v. Dejero, G.R. No. 196036, 2013)
If doubts exist between the evidence presented by
the employer and the employee, the scale of justice
must be tilted in favor of the latter. (Dreamland Hotel
Resort v. Johnson, G.R. No. 191455, 2014).
C. BURDEN OF PROOF AND QUANTUM
OF EVIDENCE IN LABOR CASES
Employer has burden of proof in alleging unfair
labor practice
Furthermore, basic is the principle that good faith is
presumed and he who alleges bad faith has the duty
LABOR
to prove the same. By imputing bad faith to the
actuations of CAB, CABEU-NFL has the burden of
proof to present substantial evidence to support the
allegation of unfair labor practice. [Central Azucarera
De Bais Employees Union - NFL v. Central
Azucarera De Bais, Inc. G.R. No. 186605, (2010)]
Employer that filed petition for revocation of
union’s registration has burden of proving fraud
and misrepresentation
YTPI, being the one which filed the petition for the
revocation of YEU’s registration, had the burden of
proving that YEU committed fraud and
misrepresentation. YTPI had the burden of proving
the truthfulness of its accusations — that YEU
fraudulently failed to remove Pineda’s signature from
the organizational documents and that YEU
fraudulently misrepresented that it conducted an
election of officers.[Yokohama Tires Philippines, Inc.
v. Yokohama Employees Union, G.R. No. 163532,
(2010)]
Penalty imposed by employer should be
commensurate to offense involved
Although we recognize the inherent right of the
employer to discipline its employees, we should still
ensure that the employer exercises the prerogative
to discipline humanely and considerately, and that
the sanction imposed is commensurate to the offense
involved and to the degree of the infraction. The
discipline exacted by the employer should further
consider the employee’s length of service and the
number of infractions during his employment. The
employer should never forget that always at stake in
disciplining its employee are not only his position but
also his livelihood, and that he may also have a
family entirely dependent on his earnings.
[Nathaniel N. Dongon, v. Rapid Movers and
Forwarders Co., Inc., and/or Nicanor E. Jao, Jr., G.R.
No. 163431, August 28, 2013.
D. LEGAL BASIS UNDER THE 1987
CONSTITUTION, CIVIL CODE, AND
LABOR CODE
1. 1987 Constitution
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.
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Due process
Under the Labor Code, the requirements for the
lawful dismissal of an employee by his employer are
two-fold: the substantive and the procedural. Not only
must the dismissal be for a valid or authorized cause
as provided by law, but the rudimentary requirements
of due process, basic to which are that an opportunity
to be heard and to defend oneself must be observed
before an employee may be dismissed. (Metro Eye
Security v. Salsona, G.R. No. 167367, 2007)
To constitute valid dismissal from employment, two
requisites must concur: (1) the dismissal must be for
a just or authorized cause; and (2) the employee
must be afforded an opportunity to be heard and to
defend himself. (Nacague v. Sulpicio Lines, G.R. No.
172589, 2010)
Labor as Property Right
One’s employment is a property right, and the
wrongful interference therewith is an actionable
wrong. The right is considered to be property within
the protection of the constitutional guarantee of due
process of law. (Texon Mfg. v. Millena, G.R. No.
141380, 2004)
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.
Wearing armbands and putting up placards to
express one’s views without violating the rights of 3rd
parties are legal per se and even constitutionally
protected. (Bascon v. CA, G.R. No. 144899, 2004)
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.
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.
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
LABOR
promote full employment and equality of employment
opportunities for all.
It shall guarantee the rights of all workers to self-
organization, collective bargaining and negotiations,
and peaceful concerted activities, including the right
to strike in accordance with law. They shall be
entitled to security of tenure, humane conditions of
work, and a living wage. They shall also participate in
policy and decision-making processes affecting their
rights and benefits as may be provided by law.
The State shall promote the principle of shared
responsibility between workers and employers and
the preferential use of voluntary modes in settling
disputes, including conciliation, and shall enforce
their mutual compliance therewith to foster industrial
peace.
The State shall regulate the relations between
workers and employers, recognizing the right of labor
to its just share in the fruits of production and the right
of enterprises to reasonable returns to investments,
and to expansion and growth.
Sec 13. The State shall establish a special agency
for disabled person for their rehabilitation, self-
development, and self-reliance, and their integration
into the mainstream of society.
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.
Management prerogative
See discussion in Part V.
Seven basic rights of workers guaranteed by the
Constitution: (WHOSE-CD)
1. To participate in policy and Decision-making
processes affecting their rights and benefits as
may be provided by law
2. To receive a living Wage
3. To conduct Collective bargaining or negotiation
with management
4. To work under Humane conditions
5. Right to Organize
6. To enjoy Security of tenure
7. To Engage in peaceful concerted activities,
including strike in accordance with law
Articles 1700 to 1703, Civil Code
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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 lockouts, closed shop, wages,
working conditions, hours of labor and similar
subjects.
Article 1701. Neither capital nor labor shall act
oppressively against the other, or impair the interest
or convenience of the public.
the interest of fair play. (St. Luke’s v. NLRC, G.R. No.
162053, 2007)
While labor laws should be construed liberally in
favor of labor, we must be able to balance this with
the equally important right of the [employer] to due
process. (Gagui v. Dejero, G.R. No. 196036, 2013)
If doubts exist between the evidence presented by
the employer and the employee, the scale of justice
must be tilted in favor of the latter. (Dreamland Hotel
Resort v. Johnson, G.R. No. 191455, 2014).

Art. 1702. In case of doubt, all labor legislation and -- end of topic --
all labor contracts shall be construed in favor of the
safety and decent living for the laborer.

Article 1703. No contract which practically amounts

to involuntary servitude, under any guise whatsoever,
shall be valid.

Rights Guaranteed by the Labor Code

The State shall afford protection to labor, promote full
employment, ensure equal work opportunities
regardless of sex, race or creed and regulate the
relations between workers and employers. The State
shall assure the right of workers to self-organization,
collective bargaining, security of tenure, and just and
humane conditions of work. (Labor Code, Art. 3)

The constitutional policy to provide full protection to

labor is not meant to be a sword to oppress
employers. The commitment of this Court to the
cause of labor does not prevent us from sustaining
the employer when it is in the right. (Sarocam v.
Interorient Marine, G.R. No. 167813, 2006)

Principle of Co-Determination
Refers to the right of workers to participate in the
policy and decision making processes directly
affecting their rights and benefits, without intruding
into matters pertaining to management prerogative.
(PAL v. NLRC, G.R. No. 85985, 1993)

Construction in favor of labor; limitations

All doubts in the implementation and interpretation of
the provisions of this Code, including its
implementing rules and regulations, shall be resolved
in favor of labor. (Labor Code, Art. 4)

It is construed in favor of labor if there is a doubt as

to the meaning of the legal and contractual provision.
If the provision is clear and unambiguous, it must be
applied in accordance with its express terms.
(MERALCO v. NLRC, G.R. No. 78763, 1989)

The law also recognizes that management has rights,

which are also entitled to respect and enforcement in

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II. RECRUITMENT AND PLACEMENT OF
WORKERS
TOPIC OUTLINE UNDER THE SYLLABUS
A. RECRUITMENT AND PLACEMENT
(Labor Code and R. A. No. 8042, as
amended by R.A. No. 10022)
1. Illegal recruitment and other
prohibited activities
a. Elements
b. Types of illegal recruitment
c. Illegal recruitment vs.
estafa
2. Liability of local recruitment
agency and foreign employer
a. Solidary liability
b. Theory of imputed
knowledge
3. Entities prohibited from recruiting
4. Cancellation of license or
authority
5. Termination of contract of migrant
worker without just or valid cause
6. Ban on direct hiring, exceptions
B. EMPLOYMENT OF NON-RESIDENT
ALIENS
LABOR
A. RECRUITMENT AND PLACEMENT
1. Illegal Recruitment and Other
Prohibited Activities
ILLEGAL RECRUITMENT
1. Elements
2. Types
3. Illegal recruitment as distinguished from estafa
ILLEGAL RECRUITMENT UNDER THE LABOR
CODE (Art. 38) vs. MIGRANT WORKERS ACT
(Sec. 6)
Any recruitment activities, including the prohibited
practices enumerated under Art. 34 of the Labor
Code, to be undertaken by non-licensees or non-
holders of authority, shall be deemed illegal and
punishable under Art. 39. (Labor Code, Art. 38)
The Department of Labor and Employment or any
law enforcement officer may initiate complaints.
(Labor Code, Art. 38)
Any act of canvassing, enlisting, contracting,
transporting, utilizing, hiring, or procuring workers
and includes referring, contract services, promising
or advertising for employment abroad, whether for
profit or not, when undertaken by non-licensee or
non-holder of authority contemplated under the
Labor Code. (R.A. No. 8042, Sec. 6)
Policy of Selective Deployment
The State shall allow the deployment of overseas
Filipino workers only in countries where the rights of
Filipino migrant workers are protected.
The government recognizes any of the following as a
guarantee on the part of the receiving country for the
protection of the rights of overseas Filipino workers:
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 overseas Filipino
Workers: Provided, That the receiving country is
taking positive, concrete measures to protect the
rights of migrant workers in furtherance of any of
the guarantees under subparagraphs (a), (b) and
(c) hereof. (R.A. No. 8042, Sec. 3)
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LABOR CODE
Local recruitment and employment
Illegal Recruitment (Art. 38)
Any recruitment activity including
Prohibited Acts under Art. 34 committed
by non-licensees or non-holders of
authority.
Elements:
1. That the offender has no valid
license or authority required by law
to enable one to lawfully engage in
recruitment and placement of
workers; and,
2. That the offender undertakes either
any activity within the meaning of
recruitment and placement defined
under Article 13(b), or any of the
prohibited practices enumerated
under Article 34.
A Non-Licensee / Non-Holder of
authority is any person, corporation or
entity which has not been issued a valid
license or authority to engage in
recruitment and placement by the
Secretary of Labor, or whose license or
authority has been suspended, revoked
or cancelled by the POEA or the
Secretary.
LABOR
R.A. No. 8042 – MIGRANT WORKERS ACT, AS AMENDED
Applies to recruitment for overseas employment
Illegal Recruitment (Sec. 6):
1. Any recruitment activity committed by non-licensees / non-
holders of authority; OR
2. Prohibited Acts (same as Art. 34 of LC) committed by any
person, whether a non-licensee, non-holder, licensee or
holder of authority.
3. Added the following in the list of Prohibited Acts (DEMIL-
RETSI):
a. Fail to actually Deploy Without valid reason;
b. 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
c. To allow a non-Filipino citizen to head or Manage a
licensed recruitment/manning agency.
d. Grant a loan to an OFW with Interest exceeding 8% per
annum, to be used for payment of legal and allowable
placement fees and make the OFW issue postdated
checks in relation to the said loan;
e. Impose a compulsory and exclusive arrangement whereby
an OFW is required to avail of a Loan only from specifically
designated institutions, entities or persons;
f. Refuse to condone or renegotiate a loan incurred by an
OFW after the latter's employment contract has been
prematurely terminated through no fault of his or her own;
g. Impose a compulsory and Exclusive arrangement whereby
an OFW is required to undergo health examinations only
from specifically designated medical clinics, institutions,
entities or persons, (except in the case of a seafarer whose
medical exam cost is shouldered by the principal/ ship-
owner);
h. Impose a compulsory and exclusive arrangement whereby
an OFW 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/ ship
owners where the latter shoulder the cost of such trainings;
i. For a Suspended recruitment/manning agency to engage
in any kind of recruitment activity including the processing
of pending workers' applications;
j. For a recruitment/ manning agency or a foreign principal/
employer 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.
The offender may be a non-licensee or a non-holder of authority
and commits any of the acts of recruitment;
OR
A licensee or holder of authority commits any of the prohibited
acts under section 6, RA 8042, as amended.
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a. Elements of Illegal Recruitment
The essential elements of illegal recruitment vary in
accordance with the following classifications:
1. Simple illegal recruitment
 Local workers
 Migrant workers
2. When committed by a syndicate; or
3. When committed in large scale.
Simple Illegal Recruitment for Local Workers
(Labor Code)
1. The person charged with the crime must have
undertaken recruitment activities:
a. Defined under Art. 13 (b) or
b. Prohibited activities defined under Art.
34; and
2. The said person does not have a license or
authority to do so. (Labor Code, Art. 38)
Profit or Lack Thereof - Immaterial
It is the lack of the necessary license or authority, not
the fact of payment that renders the recruitment
activity of the agency unlawful. (C.F. Sharp vs.
Espanol, G.R. No. 155903, 2007)
Accused must give the impression of ability to
send complainant abroad
It must be shown that the accused gave
complainants the distinct impression that she had the
power or ability to send complainants abroad for work
such that the latter were convinced to part with their
money in order to be employed. (People v. Ochoa,
G.R. No. 173792, 2011)
Simple Illegal Recruitment for Migrant Workers
(R.A. No. 8042, as amended by R.A. No. 10022)
First type of Illegal Recruitment:
1. Person charged undertakes any recruitment
activity as defined in Art.13 (b) of the Labor
Code; and 
 Syndicate - count the conspirators
2. Said person does not have a license or authority
to do so.


Second type of Illegal Recruitment:
1. Person charged commits any of the enumerated
acts under Sec. 6 of R.A. 8042, as amended by,
R.A. No. 10022.
2. It is immaterial whether he is a holder or not of
any license or authority. 
 These categories are separate or independent
Illegal recruitment shall mean any act of
canvassing, enlisting, contracting, transporting,
LABOR
utilizing, hiring, or procuring workers and includes
referring, contract services, promising or advertising
for employment abroad, whether for profit or not,
when undertaken by non-licensee or non-holder of
authority contemplated under Article 13(f) of the
Labor Code;
Provided, That any such non-licensee or non-holder
who, in any manner, offers or promises for a fee
employment abroad to two or more persons shall be
deemed so engaged. (R.A. No. 8042, Sec. 6)
Illegal recruitment by a syndicate
1. The offender undertakes either any activity
within the meaning of "recruitment and
placement" defined under Art. 13(b), or any of
the prohibited practices enumerated under Art.
34 of the Labor Code; 

2. He has no valid license or authority required
by law to enable one to lawfully engage in
recruitment and placement of workers; and 

3. The illegal recruitment is committed by a group
of three (3) or more persons conspiring or
confederating with one another. (People v. Gallo,
G.R. No. 187730, 2010)
Illegal recruitment in large scale
1. The accused engages in acts of recruitment and
placement of workers defined under Art. 13(b)
of the Labor Code or in any prohibited activities
under Art. 34 of the Labor Code;
2. The accused has not complied with the
guidelines issued by the Secretary of Labor and
Employment, particularly with respect to the
securing of license or an authority to recruit and
deploy workers, either locally or overseas; and
3. The accused commits the unlawful acts
against three or more persons individually or
as a group.
Note:
Large scale - count the victims
Doctrines: Illegal Recruitment
Where illegal recruitment is proved but the elements
of “large scale” or “syndicate” are absent, the
accused can be convicted only of “simple illegal
recruitment”. (People v. Balagan and Avila, G.R.
No. 183099, 2010)
categories. If there is only one complainant in several
complaints, there is no illegal recruitment in large
scale. But where there are three conspiring
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recruiters, there is illegal recruitment by a syndicate. Kinds of Illegal Recruitment

(People v. Fernandez, et. al., G.R. No. 141221-36,
2002) (1) Simple Illegal Recruitment
Illegal recruitment committed by a person who is
Appellant’s acts, which were clearly described in the neither a licensee nor a holder of authority;
lucid testimonies of the three victims, such as
collecting from each of the complainants payment for
(2) Illegal Recruitment as Economic Sabotage
passport, medical tests, placement fee, plane tickets
and other sundry expenses, promising them Illegal recruitment when committed:
employment abroad, contracting and advertising for By a syndicate; or
employment, constitute acts of large scale illegal In large scale,
recruitment. (People v. Diaz, G.R. No. 112175, 1996) shall be considered an offense involving economic
sabotage. (R.A. No. 10022, Sec. 5[m])
Receipt of payments, after the expiration of the
license, for services rendered before said expiration Illegal Recruitment shall be considered an offense
does not constitute illegal recruitment. Recruitment involving economic sabotage if any of the following
refers to the offering of inducements to qualified qualifying circumstances exist:
personnel to enter a particular job or employment. ILLEGAL ILLEGAL
The advertising, the promise of future employment RECRUITMENT RECRUITMENT
and other come-ons took place while the recruiter COMMITTED BY COMMITTED IN
was still licensed. The payments are necessary in SYNDICATE LARGE SCALE
order to defray the expenses entailed in any Carried out by a group Committed against 3 or
overseas contract of employment. They are intended of 3 or more persons more persons
for administrative and business expenses and for the conspiring and/or individually or as a
traveling expenses of the applicants once cleared for
confederating with one group
overseas travel. (Aquino v. CA, G.R. No. 91896,
1991) another in carrying out
It is not the issuance or signing of receipts for the any unlawful or illegal
placement fees that makes a case for illegal transaction, enterprise
recruitment, but rather the undertaking of recruitment or scheme falling under
activities without the necessary license or authority. illegal recruitment
(People v. Senoron, G.R. No. 119160, 1997)
b. Illegal recruitment as
By themselves, procuring a passport, airline tickets distinguished from estafa
and foreign visa for another individual, without more,
can hardly qualify as recruitment activities. IR must
be proved beyond reasonable doubt. (Darvin v. ILLEGAL
ESTAFA
CA,G.R. No. 125044, 1998Types of Illegal RECRUITMENT
Recruitment It is malum prohibitum It is malum in se
The criminal intent of the The criminal intent is
Two Kinds of Illegal Recruiters accused is not imperative
necessary
(1) Non-Licensee or Non-Holder of Authority Penalized under the Penalized under the
The offender commits: Labor Code Revised Penal Code
Any of the acts defined in Art. 13(b) of the Labor Code Limited in scope Wider in scope and
as recruitment and placement; covers deceits whether
Illegal recruitment as defined in ¶ 1, Sec. 6 of R.A. related or not related to
No. 8042, or amended; or recruitment activities
Any of the 14 acts enumerated in Sec. 6 of R.A. No.
8042, as amended Note: Conviction under the Labor Code for illegal
recruitment does not preclude punishment under the
(2) Licensed Recruiter or Holder of Authority RPC for estafa (People v. Fernandez, G.R. No.
The offender commits any of the 14 wrongful acts 199211, 2014)
enumerated in Sec. 6 of R.A. No. 8042, as amended
(Sto. Tomas v. Salac, G.R. No. 152642, 2012) 
 A worker who suffers pecuniary damage, regardless
of amount, as a result of previous or simultaneous
false pretense resorted to by a non-licensee or non-
holder of authority, may complain of estafa under Art.

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315, par. 2(a) of the RPC, aside from illegal
recruitment. (People v. Fernandez, G.R. Nos.
141221-36, 2002)
Estafa is committed by any person who defrauds
another by using fictitious name, or falsely pretends
to possess power, influence, qualifications, property,
credit, agency, business or imaginary transactions, or
by means of similar deceits executed prior to or
simultaneously with the commission of the fraud.
(Revised Penal Code, Art. 315)
The offended party must have relied on the false
pretense, fraudulent act or fraudulent means of the
accused-appellant and as a result thereof, the
offended party suffered damages.
2. Liability of local recruitment
agency and foreign employer
a. Solidary liability
b. Theory of imputed knowledge
c. Entities Prohibited from Recruiting
d. Cancellation of license or authority
e. Termination of contract of migrant worker without
just or valid cause
f. Ban on direct hiring, exceptions
a. Solidary liability
Solidary Liability
The liability of the principal/employer and the
recruitment/placement agency for any and all claims
under this section shall be joint and several. This
provision shall be incorporated in the contract for
overseas employment and shall be a condition
precedent for its approval. (R.A. No. 8042, as
amended, Sec. 10)
Even if the recruiter and the principal had already
severed their agency agreement at the time
employee was injured, the recruiter may still be sued
for a violation of the employment contract because
no notice of the agency agreement's termination was
given to the employee.
The obligations covenanted in the recruitment
agreement entered into by and between the local
agent and its foreign principal are not coterminous
with the term of such agreement so that if either or
both of the parties decide to end the agreement, the
responsibilities of such parties towards the
contracted employees under the agreement do not at
all end, but the same extends up to and until the
expiration of the employment contracts of the
employees recruited and employed pursuant to the
LABOR
said recruitment agreement. (Catan v. NLRC, G.R.
No. 77279, 1988).
Purpose of Solidary Liability
The agency agreement with the principal even if
ended as between them, still extends up to and until
the expiration of, the employment contracts of the
employees recruited and employed pursuant to the
said recruitment agreement. (OSM Shipping Phil, Inc.
v. NLRC, G.R. No. 138193, 2003)
Venue of Criminal Action
The complainant, may, at his option, file at the RTC
of the province or city:
Where the offense was committed; or
Where the offended party resides at the time of the
commission of the offense (R.A. No. 8042, Sec. 9)
Prescriptive Period
ECONOMIC
SIMPLE
SABOTAGE
Within 5 years from time Within 20 years from
the illegal recruitment the time the illegal
happened recruitment happened
When maximum penalty is imposed:
 If the person illegally recruited is less than
18 years of age; or
 If committed by a non-licensee or non-holder
of authority (R.A. No. 8042, Sec. 7)
Local Recruitment Agency
The persons criminally liable are the principals,
accomplices and accessories. In case of juridical
persons, the officers having ownership, control,
management or direction of their business who are
responsible for the commission of the offense and the
responsible employees/agents thereof shall be liable.
(RA 8042, as amended, Section 6)
 Local Recruitment Agency is solidarily liable
with foreign principal. (IRR of the Labor
Code, Book I, Rule V, Sec. 17)
 Severance of relations between local agent
and foreign principal does not affect liability
of local recruiter.
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 Supreme Court absolved the
agency from liability (Feagle Construction Corp. v.
Dorado, G.R. No. 86042, 1991)
Foreign Employer
In case of a final and executory judgement against a
foreign employer/principal, it shall be automatically
disqualified, without further proceedings, from
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participating in the POEA Program and from
recruiting and hiring Filipino workers until and unless
it fully satisfies the judgement award. (R.A. No. 8042,
Sec. 10)
b. Theory of Imputed Knowledge
[This theory means] knowledge of the agent is
knowledge of the principal. (New Life v. CA, G.R. No.
94071, 1992)
For the liability of the agent to attach, this theory
states that the agent knew of and consented to the
extension of period of employment. Otherwise, the
liability of the recruitment agency shall expire from
the termination of the worker's original contract.
(Sunace International Management v. NLRC, G.R.
No. 161757, 2006, Carpio Morales, J. as seen in
Veloso’ answers to the 2011 Bar Examination)
Posting of Cash Bond by Recruiter
The requirement for the posting of a cash bond is also
an indispensable requirement. By posting such, the
agency undertakes to assume joint and solidary
liability with the employer for all claims and liabilities
which may arise in connection with the
implementation of the overseas employment contract
and to guarantee compliance with existing Philippine
labor laws and the laws of country of employment.
The peculiar nature of overseas employment makes
it very difficult for the Filipino overseas worker to
effectively go after his foreign employer for
employment-related claims and, hence, public policy
dictates that the recruitment or placement agency in
the Philippines be made to share in the employer's
responsibility. (Capricorn Travel & Tours v. CA, G.R.
No. 91096, April 3, 1990)
The surety bond is intended to insure that if the rights
of overseas workers are violated by their employers,
recourse would still be available against the local
companies that recruited them for the foreign
principal. (Stronghold Insurance Co. v. CA, G.R. No.
88050, 1992)
LABOR
3. Entities prohibited from
recruiting Entities disqualified
from Engaging in the Business
of Recruitment and Placement of
Workers for Local Employment
a. Travel agencies and sales agencies of
b. airline companies, whether for profit or not. (Art.
26)
c. Those who are convicted of illegal recruitment,
trafficking in persons, anti- child labor violation,
or crimes involving moral turpitude;
d. Those against whom probable cause or prima
facie finding of guilt for illegal recruitment or
other related cases exist particularly to owners
or directors of agencies who have committed
illegal recruitment or other related cases.
e. Those agencies whose licenses have been
previously revoked or cancelled by the
Department under Sec. 54 of these rules.
f. Cooperatives whether registered or not under
the Cooperative Act of the Philippines.
g. Law enforcers and any official and employee of
the Department of Labor and Employment
(DOLE).
h. Sole proprietors of duly licensed agencies are
prohibited from securing another license to
engage in recruitment and placement.
i. Sole proprietors, partnerships or corporations
licensed to engage in private recruitment and
placement for local employment are prohibited
from engaging in job contracting or
subcontracting activities. (Sec. 5, DO 141-14,
Revised Rules and Regulations Governing
Recruitment and Placement for Local
Employment)
Entities disqualified from Engaging or
Participating in the Business of Recruitment and
Placement of Workers for Overseas Employment
a. Travel agencies and sales agencies of airline
companies, whether for profit or not. (Art. 26)
b. Officers or members of the Board of any
corporation or partners in a partnership engaged
in the business of a travel agency;
c. Corporations and partnerships, where 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; 

d. Individuals, partners, officers, or directors of an
insurance company who make, propose or
provide an insurance contract under the
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compulsory insurance coverage for agency-
hired OFWs;
e. Sole proprietors, partners or officers and
members of the board with derogatory records,
such as, but not limited to the ff:
i. Those convicted or against whom
probable cause or prima facie finding of
guilt is deterined by a competent
authority for illegal recruitment or for
other related crimes or offenses
committed in the course of, related to, or
resulting from, illegal recruitment, or for
crimes involving moral turpitude;
ii. Those agencies whose licenses have
been revoked for violation of RA 8042,
PD 442, RA 9208, and their IRRs;
iii. Those agencies whose licenses have
been cancelled, or those who, pursuant
to the order of the Administrator, were
included in the list of persons with
derogatory record for violation of
recruitment laws and regulations;
f. Any official employee of the DOLE, POEA, OWWA,
DFA, DOJ, DOH, BI, IC, NLRC, TESDA, CFO, NBI,
PNP, Civil Aviation Authority of the Philippines,
international airport authorities, and other
government agencies directly involved in the
implementation of RA 8042, as amended, and/or any
of his/her relatives within the fourth civil degree of
consanguinity or affinity. (Part II, Rule I, Sec. 3, 2016
Revised POEA Rules and Regulation
4. Cancellation of license or
authority
Power to suspend or cancel any license or authority
to recruit employees for overseas employment is
concurrently vested with the POEA and the Secretary
of Labor. (Labor Code, Art. 35)
The Secretary of Labor has the power, under Art. 35
of the Code, to apply the sanctions, as well as the
authority, conferred by Art. 36, 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 thus granted, the
Secretary of Labor gave the POEA on its own
initiative or upon filing of a complaint or report or upon
request for investigation by any aggrieved person,
(authority to) conduct the necessary proceedings for
the suspension or cancellation of the license or
LABOR
authority of any agency or entity for certain
enumerated offenses including:
1. The imposition or acceptance, directly or
indirectly, of any amount of money, goods or
services, or any fee or bond in excess of
what is prescribed by the Administration.
2. Any other violation of pertinent provisions of
the Labor Code and other relevant laws,
rules and regulations.
The Administrator was also given the power to order
the dismissal of the case or the suspension of the
license or authority of the respondent agency or
contractor or recommend to the Secretary the
cancellation thereof. (Eastern Assurance& Surety
Corp. v. Secretary of Labor, G.R. No. L-79436-50,
1990)
Termination/ Ban On Deployment
Notwithstanding the provisions of Section 4 of R.A.
No. 8042, as amended by R.A. No. 10022, in pursuit
of the national interest or when public
welfare so requires, the POEA Governing Board,
after consultation with the Department of Foreign
Affairs, may, at any time, terminate or impose a ban
on the deployment of migrant workers. (R.A. No.
10022, Sec. 5)
Under Section 4 of R.A. No. 8042, as amended by
Section 3 of R.A. No. 10022, it is provided that the
State shall allow the deployment of overseas Filipino
workers only in countries where the rights of Filipino
migrant workers are protected.
The government recognizes any of the following as a
guarantee on the part of the receiving country for the
protection of the rights of overseas Filipino workers:
(a) It has existing labor and social laws protecting
the rights of workers, including migrant workers;
(b) 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
(c) It has concluded a bilateral agreement or
arrangement with the government on the
protection of the rights of overseas Filipino
Workers:
Provided, That the receiving country is taking
positive, concrete measures to protect the rights of
migrant workers in furtherance of any of the
guarantees under subparagraphs (a), (b) and (c)
hereof.
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In the absence of a clear showing that any of the
aforementioned guarantees exists in the country of
destination of the migrant workers, no permit for
deployment shall be issued by the POEA. (R.A. No.
8042, Sec. 4)
Remittance of Foreign Exchange Earnings
It shall be mandatory for all Filipino workers abroad
to remit a portion of their foreign earnings to their
families, dependents, and/or beneficiaries in the
country. (Labor Code, Art. 22)
Amount required to be remitted (E.O. No. 857)
The amount of one’s salary required to be remitted
depends on the type or nature of work performed
by the employee.
Percentages of foreign exchange remittance
required from various kinds of migrant workers:
1. Seaman or mariner – 80% of basic salary
2. Workers for Filipino contractors and construction
companies – 70%
3. Doctors, engineers, teachers, nurses and other
professional workers whose contract provide for
free board and lodging – 70%
4. All other professional workers whose
employment contracts do not provide for free
board and lodging facilities – 50%
5. Domestic and other service workers – 50%
6. All other workers not falling under the
aforementioned categories – 50%
7. Performing artists – 50%
Individuals exempted from the mandatory
remittance requirement:
1. The immediate family members, dependents or
beneficiaries of migrant workers residing with the
latter abroad;
2. Filipino servicemen working within US military
installations; 
 could be recovered by an illegally dismissed
3. Immigrants and Filipino professionals working
with the United Nations and its agencies or other
specialized bodies.
4. Missionaries actually engaged in missionary
work
5. All aliens granted exemption by special laws and
all those whose employment in the Phil.
determined by the Secretary of Labor to be
beneficial to national interest.
LABOR
5. Termination of contract of
migrant worker without just or
valid cause
Under the Migrant Workers’ Act
A worker dismissed from overseas employment
without just, valid or authorized cause as defined by
law or contract, is entitled to:
a. Full reimbursement of the placement fee
with interest at 12% per annum PLUS
b. His salary for unexpired portion of his
employment contract OR salary for 3
months for every year of the unexpired term,
WHICHEVER IS LESSER. (R.A. No. 8042,
Sec. 10)
Rule before Serrano (1995-2009): 3-month salary
rule
 The employment contract involved in the instant
case covers a two-year period but the overseas
contract worker actually worked for only 26 days
prior to his illegal dismissal. Thus, the three
months’ salary rule applies. (Flourish Maritime
Shipping v. Almanzor, G.R. No. 177948, 2008)
Rule after Serrano (2009-present): it invalidated
the 3-month salary cap clause
 Full reimbursement of the placement fee with
interest at 12% per annum. This decision held
that Sec. 10 of 8042, which limited the separation
pay to three months, was unconstitutional for
violating the equal protection clause. (Serrano v.
Gallant, G.R. No. 167614, 2009)
 Despite the fact that the clause “or for three (3)
months for every year of the unexpired term,
whichever is less” was reinstated in R.A 8042
upon promulgation of R.A. 10022 in 2010, the
Supreme Court reiterated its finding in Serrano
v. Gallant Maritime that limiting wages that
overseas worker to three months is both a
violation of due process and the equal
protection clauses of the Constitution.
(Sameer Overseas Placement Agency v.
Cabiles, G.R. 170139, 2014)
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6. Ban on direct hiring, exceptions
General Rule: No employer may hire a Filipino
worker for overseas employment except through the
Boards and entities authorized by the Secretary of
Labor.
Exceptions:
1. Members of the diplomatic corps,
2. International organizations and
3. Such other employers as may be allowed by the
Secretary of Labor is exempted from this
provision. (Labor Code, Art. 18)
4. Name hirees – those individuals who are able to
secure contracts for overseas employment on
their own efforts and representation without the
assistance or participation of any agency. Their
hiring, nonetheless, has to be processed through
the POEA. (Part III, Rule III of the POEA Rules
Governing Overseas Employment as amended
in 2002)
Employers cannot directly hire workers for
overseas employment EXCEPT through
authorized entities.
 The reason for the ban is to ensure full regulation
of employment in order to avoid exploitation.
Entities Authorized To Engage In Recruitment
And Placement
1. Public employment offices
2. Philippine Overseas Employment Administration
(POEA)
3. Private recruitment entities
4. Private employment agencies
5. Shipping or manning agents or representatives
6. Such other persons or entities as may be
authorized by the DOLE Secretary
7. Construction contractor
B. EMPLOYMENT OF NON-RESIDENT
ALIENS
ART. 40. Employment Permit of Non-resident Aliens.
- Any alien seeking admission to the Philippines for
employment purposes and any domestic or foreign
employer who desires to engage an alien for
employment in the Philippines shall obtain an
employment permit from the Department of Labor.
The employment permit may be issued to a non-
resident alien or to the applicant employer after a
determination of the non-availability of a person in the
Philippines who is competent, able and willing at the
LABOR
time of application to perform the services for which
the alien is desired.
For an enterprise registered in preferred areas of
investments, said employment permit may be issued
upon recommendation of the government agency
charged with the supervision of said registered
enterprise.
ART. 41. Prohibition Against Transfer of
Employment.
(a) After the issuance of an employment permit, the
alien shall not transfer to another job or change his
employer without prior approval of the Secretary of
Labor.
(b) Any non-resident alien who shall take up
employment in violation of the provision of this Title
and its implementing rules and regulations shall be
punished in accordance with the provisions of
Articles 289 and 29043 of the Labor Code.
In addition, the alien worker shall be subject to
deportation after service of his sentence. ART. 42.
Submission of List. Any employer employing non-
resident foreign nationals on the effective date of this
Code shall submit a list of such nationals to the
Secretary of Labor within thirty (30) days after such
date indicating their names, citizenship, foreign and
local addresses, nature of employment and status of
stay in the country. The Secretary of Labor shall then
determine if they are entitled to an employment
permit.
Considering that McBurnie, an Australian, alleged
illegal dismissal and sought to claim under our labor
laws, it was necessary for him to establish that he
was qualified and duly authorized to obtain
employment within our jurisdiction. His failure to
obtain an employment permit, by itself, necessitates
the dismissal of his labor complaint. (McBurnie v.
Ganzon, G.R. Nos. 178034, 178117 & 186984-85
(Resolution), October 17, 2013)
-- end of topic --
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III. LABOR STANDARDS 2. Minors (R.A. No. 7610, as amended by R.A.

No. 9231)
a. Child labor vs. working child
TOPIC OUTLINE UNDER THE SYLLABUS
b. Allowed working hours and
industries of a working child
1. Employer-employee relationship
c. Prohibited acts
a. Kinds of Employment
3. Kasambahay (R.A. No. 10361)
2. Test to determine existence
4. Homeworkers
a. Four-Fold Test
5. Night workers
b. Two-Tiered Test (Francisco
6. Persons with Disabilities
Doctrine)
a. Discrimination
3. Employee vs. independent contractor
b. Incentives for employers
a. Elements
E. SEXUAL HARASSMENT IN THE WORK
A. CONDITIONS OF EMPLOYMENT
ENVIRONMENT
1. Covered employees/workers
1. Anti-Sexual Harassment Act (R.A. No. 7877)
2. Hours of work
2. Safe Spaces Act (R.A. No. 11313)
a. Normal hours of work; hours
worked
b. Meal periods
c. Night-shift differential
d. Overtime work
e. Compressed work week, flexible
work arrangement alternative work
arrangements, telecommuting
program
3. Rest periods
4. Holidays
5. Service charges
6. 13th month pay

B. WAGES
1. Payment of wages
2. Prohibitions regarding wages
3. Facilities vs. supplements
4. Minimum wage
5. Wage distortion
6. Non-diminution of benefits

C. LEAVES
1. Service incentive leave
2. Expanded Maternity leave
3. Paternity leave
4. Parental leave for solo parents
5. Leave benefits for women workers under
R.A. No. 9710 and R.A. No. 9262

D. SPECIAL GROUPS OF EMPLOYEES

1. Women
a. Discrimination
b. Stipulation against marriage
c. Prohibited acts

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1. EMPLOYER-EMPLOYEE
RELATIONSHIP
“Employer” includes any person acting in the interest
of an employer, directly or indirectly. The term shall
not include any labor organization or any of its
officers or agents except when acting as employer.
(Labor Code, Art. 219[e])
“Employee” includes any person in the employ of an
employer. The term shall not be limited to the
employees of a particular employer, unless the Code
so explicitly states. It shall include any individual
whose work has ceased as a result of or in
connection with any current labor dispute or because
of any unfair labor practice if he has not obtained any
other substantially equivalent and regular
employment. (Labor Code, Art. 219[f])
It is axiomatic that the existence of an employer-
employee relationship cannot be negated by
expressly repudiating it in the management contract
and providing therein that the “employee” is an
independent contractor when the terms of agreement
clearly show otherwise. For, the employment status
of a person is defined and prescribed by law and not
by what the parties say it should be. (Insurance Life
Assurance Co. v. NLRC, GR No. 11930, 1998)
Contractual in nature
The relationship of employer and employee is
contractual in nature. It may be an oral or written
contract. A written contract is not necessary for the
creation and validity of the relationship. (Compania
Maritima v. Ernesta Cabagnot Vda. De Hio, GR No.
L-10675, 1960)
Conditional Employment
PERLAS-BERNABE, J.: An employment contract,
like any other contract, is perfected at the moment
the parties come to agree upon its terms and
conditions, and thereafter, concur in the essential
elements thereof. In Sagun v. ANZ Global Services,
the Court ruled that there was already a perfected
contract of employment when Sagun signed
ANZ's employment offer and agreed to the terms
and conditions that were embodied therein.
Nonetheless, the offer of employment extended to
Sagun contained several conditions before he may
be deemed an employee of ANZ. Accordingly,
Sagun’s employment depended on the outcome of
his background check, which partakes of the nature
of a suspensive condition, and hence, renders the
obligation of the would-be employer, i.e., ANZ in this
case, conditional. Jurisprudence states that when a
contract is subject to a suspensive condition,
its effectivity shall take place only if and when the
event which constitutes the condition happens or
LABOR
is fulfilled. Considering, however, that Sagun failed
to comply with his obligations, ANZ's obligations
as a would-be employer were held in suspense and
thus, had yet to acquire any obligatory force. (Sagun
v. ANZ Global Services, GR No. 220399, 2016)
Authority of DOLE Secretary to determine
Employer-Employee Relationship (EER)
The DOLE Secretary has the authority to determine
the existence of an employer- employee relationship.
Under Article 128(b) of the Labor Code, as amended
by RA 7330, the DOLE is fully empowered to make a
determination as to the exercise of an employer-
employee relationship in the exercise of its visitorial
and enforcement power, subject to judicial review,
not review by the NLRC. (People’s Broadcasting
Service v. Secretary of Labor, GR 179652, 2012)
a. Kinds of Employment
Rundown of Kinds of Employment
a. Regular
b. Casual
c. Probationary
d. Project
e. Seasonal
f. Fixed-term
g. Security guards
h. Floating
Despite the distinction between regular and casual
employment, every employee 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
employees during the period of their actual
employment.
REGULAR EMPLOYMENT
Regular employment is an arrangement where the
employee:
1. Has been engaged to perform tasks
usually necessary or desirable to the
usual trade or business of the employer
(by nature of work);
2. Has rendered at least 1 year of service,
whether such service is continuous or
broken, with respect to the activity in
which he is employed (by length of
service); or
3. When an employee is allowed to work
after a probationary period (by
probationary employment) (Labor Code,
Art. 295, 296)
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Test to determine regular employment
The primary standard of determining regular
employment is the reasonable connection
between the particular activity performed by the
employee to the usual trade or business of the
employer. The connection can be determined by
considering the nature of work performed and its
relation to the scheme of the particular business or
trade in its entirety. The repeated and continuing
need for the performance of the job has been
deemed sufficient evidence of the necessity, if not
indispensability of the activity to the business. (Lopez
v. MWSS, G.R. No. 154472, 2005)
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. (URC v. Catapang, G.R. No. 164736,
2005).
Ways of attaining regular employment
1. By nature of work
The employment is deemed regular when the
employee has been engaged to perform activities
which are usually necessary or desirable in the usual
business or trade of the employer. (Labor Code, Art.
295; Paguio v. NLRC G.R. No. 147816, 2003)
2. By length of service
The casual employee is reckoned as regular when
the employee has rendered at least one (1) year of
service, whether such service is continuous or
broken, with respect to the activity in which he is
employed and his employment shall continue while
such activity exists. (Labor Code, Art. 295; Conti v.
NLRC, G.R. No. 119253, 1997)
3. Work beyond the probationary
employment
The employment is considered regular when the
employee is allowed to work after a probationary
period. (Labor Code, Art. 296)
4. Repeated Hiring
When the "seasonal" workers are continuously and
repeatedly hired to perform the same tasks or
activities for several seasons or even after the
cessation of the season, this length of time may
likewise serve as badge of regular employment.
(Universal Robina Sugar Milling Corporation v. Acibo,
G.R. No. 186439, 2014)
LABOR
Note: Regular employment does not mean
permanent employment. A regular employee may be
terminated for just and authorized causes.
CASUAL EMPLOYMENT
General Rule: Activity performed is not usually
necessary or desirable in the usual business or trade
of the employer, not project and not seasonal.
Otherwise stated, casual employees perform
activities which are incidental to the business of the
employer.
Exception: If he has rendered at least 1 year of
service, whether such service is continuous or
broken, he is considered a REGULAR employee with
respect to the activity in which he is employed and
his employment shall continue while such activity
exists. (Labor Code, Art. 295)
PROBATIONARY EMPLOYMENT
Probationary employment exists where the
employee, upon his engagement, is made to undergo
a trial period during which the employer determines
his fitness to qualify for regular employment based on
reasonable standards made known to him at the time
of his engagement (Labor Code, Art. 296)
Period of Probationary Employment
Probationary employment shall not exceed six (6)
months from the date the employee started working,
unless it is covered by an apprenticeship agreement
stipulating a longer period. (Labor Code, Art. 296)
Probationary employee is one who is on trial by an
employer during which the employer determines
whether or not he is qualified for permanent
employment. (International Catholic Migration
Comm. v. NLRC, G. R. No. 72222, 1989)
While the employer observes the fitness, propriety,
and efficiency of a probationer to ascertain whether
he is qualified for permanent employment, the
probationer, on the other hand, seeks to prove to the
employer that he has the qualifications to meet the
reasonable standards for permanent employment.
(Tamson’s Enterprises, Inc. v. CA, GR No. 192881,
2011)
Probationary employment must have been expressly
agreed upon. If there is no such agreement, the
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employment is considered regular (Sampaguita Auto
Transport Corp. v. NLRC, G.R. No. 197384, 2013)
Duration of Probationary Employment
General Rule: Probationary employment shall not
exceed 6 months from the date the employee started
working (Labor Code, Art. 296)
Probation ends 180 days from the starting date.
(Mitsubishi Motors Corporation v. Chrysler Phils.,
G.R. No. 148738, 2004)
When an employer renews a contract of employment
after the lapse of the six-month probationary period,
the employee thereby becomes a regular employee.
No employer is allowed to determine indefinitely the
fitness of its employees. (Labor Code, Art. 291,
Malicdem v. Marulas Industrial Corp., GR No.
204406, 2014)
Exceptions:
1. Covered by an apprenticeship
agreement stipulating a longer period
(Labor Code, Art. 296)
2. Voluntary agreement of parties
(especially when nature of work requires
a longer period) (Mariwasa
Manufacturing v. Leogardo, G.R. No.
74246, 1989)
3. The employer gives the employee a
second chance to pass the standards set
(Mariwasa Manufacturing v. Leogardo,
G.R. No. 74246, 1989)
4. When a longer period is required and
established by company policy
If not one of the exceptional circumstances above is
proven, the employee whose employment exceeds 6
months is undoubtedly a regular employee (San
Miguel v. Del Rosario, G.R. No. 168194 & 168693,
2005)
Example: 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.
Extension of Probation; Double/Successive
Probation Not Allowed
The employer and employee may extend by
agreement the probationary period of employment
beyond 6 months, but it cannot be ad infinitum.
(Mariwasa Manufacturing v. Leogardo, G.R. No.
74246, 1989)
LABOR
The evil sought to be prevented is to discourage
scheming employers 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 employees (Holiday Inn Manila
v. NLRC, G.R. No. 109114, 1993)
Standards Must Be Made Known to Employee
In all cases of probationary employment, the
employer shall make known to the employee the
standards under which he will qualify as a regular
employee at the time of his engagement. Where no
standards are made known to the employee at that
time, he shall be deemed a regular employee.
(Aberdeen Court, Inc. v. Agustin, G.R. No. 149371,
2005; IRR Labor Code, Sec. 6[d], Rule I, Book V)
PERLAS-BERNABE. When dealing with a
probationary employee, the employer is made to
comply with two requisites:
a. The employer must communicate the
regularization standards to the
probationary employee (performance
standard); and
b. The employer must make such
communication at the time of
probationary employee’s engagement.
If the employee fails to comply with either, the
employee is deemed as a regular and not a
probationary employee.
GR: 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.
EXCEPTIONS:
a. When the job is self-descriptive in nature
such as in the case of maids, cooks,
drivers, or messengers. (Abbott
Laboratories, Philippines v. Alcaraz, GR
No. 192571, 2013)
b. Probationary managerial employee. A
managerial role essentially connotes an
exercise of discretion, the quality of
effective management can only be
determined through subsequent
assessment.
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c. The case of probationary employees
whose tasks involve the application of
discretion and intellect, such as – to name
a few – lawyers, artists, and journalists
(Abbott Laboratories, Philippines v.
Alcaraz, GR No. 192571 MR, 2014)
Termination of Probationary Employment
PERLAS-BERNABE. A probationary employee, like
a regular employee, enjoys security of tenure. Thus,
services of an employee who has been engaged on
probationary basis may be terminated for any of the
following:
1. Just causes
2. Authorized causes
3. When he fails to qualify as a regular
employee in accordance with
reasonable standards made known by
the employer to employee at the time of
his engagement. (Abbott Laboraties,
Philippines v. Alcaraz, GR No. 192571,
2013))
Note: If the termination is for cause, it may be done
anytime during the probation. The employer need not
wait until the probation period is over. (Carvajal v.
Luzon Development Bank, GR No. 186169, 2012)
Limitations to Termination of Probation
1. Must be exercised in accordance with the specific
requirements of the contract;
2. The dissatisfaction on the employer’s part must
be real and in good faith, not feigned so as to
circumvent the contract or the law; and
3. There must be no unlawful discrimination in the
dismissal (Davao Contractors Development v.
Pasawa, G.R. No. 172174, 2009)
Probationary employee may be dismissed before end
of the probationary period. Termination, to be valid,
must be done before the lapse of the probationary
period. (Pasamba v. NLRC, G.R. No. 168421, June
8, 2007; Manila Electric Company v. NLRC, G.R. No.
83751, 1989).
Conversely, once the employer finds the employee
qualified, the employer may extend to him regular
employment even before the end of the probation
(Canagian Opportunities v. Dalangin, Jr., G.R. No.
172223, 2012)
Due Process Prior to Termination
Probationary employees is entitled to procedural due
process prior to dismissal from service. Unlike the
LABOR
first and second grounds (see above enumeration),
the third ground does not require notice and hearing.
Due process for the third ground consists of making
the reasonable standards excepted of the employee
during his probationary period known to him at the
time of his probationary employment. (PDI v.
Magtibay, Jr., G.R. No. 164532, 2007)
Acquisition of Permanent Employment for
Private School Teachers
The legal requirements for acquisition of permanent
employment, are as follows:
1. The teacher is a full-time teacher;
2. The teacher must have rendered three
consecutive years of service; and
3. Such service must have been satisfactory. (UST
v. NLRC G.R. No. 85519, 1990)
PROJECT EMPLOYMENT
One whose employment has been fixed for a specific
project or undertaking, the completion of which has
been determined at the time of engagement of the
employee. (Labor Code, Art. 295)
PERLAS-BERNABE. For an employee to be
considered project-based, the employer must show
compliance with two (2) requisites, namely that:
a. The employee was assigned to carry
out a specific project or undertaking;
and
b. The duration and scope of which were
specified at the time they were engaged
for such project. (Gadia v. Sykes Asia,
Inc., GR No. 209499, 2015)
Project Employees are NOT Regular Employees;
Exception
General Rule: Project employees are not regular
employees, as their services are needed only when
there are projects to be undertaken.
Exception: Where the employment or project
employees is extended long after the supposed
project has been finished, the employees are
removed from the scope of project employees and
are considered regular employees. (Lao
Construction v. NLRC, G.R. No. 116781, 1997)
When a Project Employee Becomes a Regular
Employee
a. There is continuous re-hiring of project
employees even after the cessation of a
project for the same tasks or nature of tasks
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(the employee must be continuously rehired Types of Employees in the Construction

without gaps and intervals); and Industry:
b. The tasks performed by the alleged project a. Non-project employees are those
employee are vital, necessary, and employed without reference to any particular
indispensable to the usual business or trade construction project or phase of a project.
of the employer (Maraguinot v. NLRC, G.R. Said employees are considered regular
No. 120969, 1998) employees; or
b. Project employees are those employed in
Duration of Work connection with a particular construction
One year duration on the job is pertinent in deciding project or phase thereof and such
whether a casual employee has become regular or employment is coterminous with each
not, but it is not pertinent to a seasonal or project project or phase of the project to which they
are assigned. (Exodus International
employee.
Construction v. Biscocho, GR No. 166109,
2011))
“Day Certain” Rule
Project employment does not end on an exact date, Mere membership in the work pool does not result in
but on the completion of the project. the workers’ becoming regular employees by reason
of that fact alone. (Abesso Construction and Dev’t
Termination Corp., v. Ramirez, G.R. No. 141168, 2006).
As project employees, their termination is governed However, a project employee who is a member of a
by Rule XXIII, Book V of the Omnibus Rules work pool may attain regular status as a project
Implementing the Labor Code which provides that: If employee.
the termination is brought about by the completion of
the contract or phase thereof, no prior notice is Project Employment vs. Regular Employment
required. PROJECT REGULAR
EMPLOYMENT EMPLOYMENT
This is because completion of work or project The services of project Regular employees
automatically terminates employment, in which case, employees are enjoy security of tenure
the employer is, under the law, only obliged to render coterminus with project and are legally entitled
a report to the DOLE on the termination of or any phase thereof to remain in the service
employment. (Cioco, Jr. v. C.E. Construction Corp., any may be terminated of their employer and to
GR No. 156748 & 156896, 2015) upon the end or hold on their work or
completion of the position until their
Length of time not applicable to the construction project or phase thereof services are terminated
industry for which they were by any of the modes of
Generally, length of service provides a fair yardstick hired termination of service
for determining when an employee initially hired on a under the Labor Code
temporary basis becomes a permanent one, entitled
As to termination, due If termination is for just
to the security and benefits of regularization. But this
process complied with cause, due process
standard will not be fair, if applied to the construction
even if no prior notice of applicable to Art. 297
industry, simply because construction firms cannot termination is served applies. If due to
guarantee work and funding for its payrolls beyond authorized causes, Art.
the life of each project. And getting projects is not a
298 & 299 followed.
matter of course. (Uy Construction v. Trinidad, G.R.
No. 183250, 2010)
Note: A regular employee cannot be at the same
time a project employee (Magcalas v. NLRC, G.R.
Work Pool Principle
No. 100333, 1997)
Generally, employees may or may not be members
of a work pool. A work pool refers to a group of works
SEASONAL EMPLOYMENT
from which an employer like a construction company
Work or services to be performed is seasonal in
deploys or assigns to its various projects or any
nature and the employment is for the duration of the
phase/s thereof.
season. (Labor Code, Art. 295)

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Farm workers generally fall under the definition of
seasonal employees. Seasonal employees may be
considered as regular employees.
Regular seasonal employees are those called to
work from time to time. The nature of their
relationship with the employer is such that during the
off season, they are temporarily laid off; but re-
employed during the summer season or when their
services may be needed. They are in regular
employment because of the nature of their job, and
not because of the length of time they have worked.
(Gapayao v. Fulo, GR No. 19343, 2013)
Employment Relationship During Off-Season
During off-season, the EER is not severed; the
seasonal employee is merely considered on leave of
absence without pay. Workers who have performed
the same tasks every season for several years are
considered regular employees for their respective
tasks. (Hacienda Fatima v. National Federation of
Sugarcane Workers-Food and General Trade, G.R.
No. 149440, 2003)
When Seasonal Employees Considered as
Regular Employees
1. Where there is a reasonable connection
between the particular activity performed
by the employee in relation to the usual
trade or business of the employer; and
2. When seasonal workers are repeatedly
engaged to perform the same tasks for
more than one season (Zamudio v.
NLRC, G.R. No. 76723, 1990)
One year duration on the job is pertinent in deciding
whether a casual employee has become regular or
not, but it is not pertinent to a seasonal or project
employee. Passage of time does not make a
seasonal worker regular or permanent. (Mercado v.
NLRC, G.R. No. 79869, 1991)
When Seasonal Employees NOT Considered as
Regular Employees
a. Seasonal workers who have worked for one
season only (Hacienda Fatima v. National
Federation of Sugarcane Workers-Food and
General Trade, G.R. No. 149440, 2003);
b. When seasonal employees are free to
contract their services with other farm
owners (Mercado, Sr. v. NLRC, 2013).
LABOR
FIXED-TERM EMPLOYMENT
Fixed-term employment was repealed by Labor
Code. But the Civil Code, a general law, allows fixed-
term employment. (Brent School, Inc. v. Zamora,
G.R. No. 48494, 1990)
Elements of valid fixed-term employment
1. The fixed period of employment was knowingly
and voluntarily agreed upon by the parties
without any force, duress, or improper pressure
being brought to bear upon the employee and
absent any other circumstances vitiating his
consent;
2. It satisfactorily appears that the employer and
the employee dealt with each other on more or
less equal terms with no moral dominance
exercised by the former or the latter.
These indications, which must be read together,
make the Brent doctrine applicable only in a few
special cases wherein the employer and employee
are on more or less in equal footing in entering into
the contract.
The reason for this is: when a prospective employee,
on account of special skills or market forces, is in a
position to make demands upon the prospective
employer, such prospective employee needs less
protection than the ordinary worker. Lesser
limitations on the parties’ freedom of contract are
thus required for the protection of the employee. (Fuji
Television Network v. Espiritu, G.R. Nos. 204944-45,
2014)
General Rule: Fixed-Period Employment is valid so
long as the criteria is complied with.
Exception: Fixed-term employment will not be
considered valid where, from the circumstances, it is
apparent that periods have been imposed to preclude
acquisition of tenurial security by the employee.
(Dumpit-Murillo v. CA, G.R. No. 164652, 2007)
Rules:
1. Notice of termination is not necessary in fixed-
term employment (Pangilinan v. General Milling
Corporation, supra)
2. Employee is deemed regular if the contract
failed to state the specific period of employment
(Poseidon Fishing v. NLRC, G.R. No. 168052,
2006);
3. Termination prior to lapse of fixed-term contract
should be for a just or authorized cause
(Anderson v. NLRC, G.R. No. 111212, 1996);
4. Liability for illegal dismissal of fixed-term
employees is only for the salary for unexpired
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portion (New Sunrise Metal v. Pia, G.R. No. Employment Contracts

171131, 2007) Notwithstanding and oral or written stipulations to the
contrary, the contract between SSC/PPA and its
Probationary Employment vs. Fixed-Term security guards shall be governed by provisions of
Employment Art. 294 and 295 of the Labor Code. The SSC/PSA
PROBATIONARY FIXED-TERM shall provide his/her security guards a copy of the
EMPLOYMENT EMPLOYMENT employment contract duly signed by the parties,
The parties intend to No such intention exists which shall contain terms and conditions of
make their relationship and the relationship employment. (Sec. 5.1, DO 150-16)
regular after the lapse automatically
of the period. terminates at the Reserved Status
expiration of the period.
A security guard and other private security personnel
may be placed in a work pool or on reserved status
SECURITY GUARDS
due to lack of service assignment after the expiration
or termination of the Service Agreement with the
Employment Status
principal where he/she is assigned, or due to the
The Security Service Contractor (SSC) or Private
temporary suspension of security service operations,
Security Agency (PSA) is the employer of its security
or due to valid relief from the current place of work
guards and other private security personnel on duty
and there is no work assignment available.
detail to a principal or client under a Service
Agreement. (Sec. 3.1, DO 150-16)
No security guard and other private security
personnel can be placed in a work pool or on
Note: Similar to a situation of legitimate
reserved status in any of the following situations:
subcontracting.
a. after expiration of a service contract, if there are
The three parties involved:
other principals where he/she can be assigned;
a. SSC/PSA as Contractor / Subcontractor
b. Security Guards as employees of
b. as a measure to constructively dismiss the security
SSC/PSA
guard; and
c. Principal or client of SSC/PSA - puts out
c. as an act of retaliation for filing any complaint
or farms out a security and/or detective job,
against the employer for violation of labor laws,
service, or work to a private SSC/PSA.
among others.
Probationary Employment
If after a period of six (6) months, the SSC/PSA
Probationary period of newly-hired security guard
cannot provide work or give an assignment to the
and other private security personnel in the private
reserved security guard, the latter can be separated
security industry shall not exceed six (6) months.
from service and shall be entitled to separation pay
While on probationary status, their services may be
as described in Subsection 7.5 (m) hereof. An
terminated for failure to meet reasonable standards
assignment of the security guard and other private
or criteria made known by the SSC/PSA at the time
security personnel as a reliever for less than one-
of their engagement or for any just case contained in
month shall not be considered as an interruption of
the probationary contract. (Sec. 3.2, DO 150-16)
the six (6) months period. (Sec. 10.3, DO 150-16)
Regular Employment
PERLAS-BERNABE. Specifically with respect to
Any security guard or other private security personnel
cases involving security guards, a relief and transfer
who is allowed to work after the probationary period
order in itself does not sever employment relationship
or in the absence of a valid probationary contract
between a security guard and his agency. Temporary
shall be considered a regular employee. Security
“off-detail” or the period of time security guards are
guards affected by repeated hiring-firing-rehiring
made to wait until they are transferred or assigned to
scheme for short periods of time, the aggregate
a new post or client does not constitute constructive
duration of which is at least 6 months, shall be
dismissal, so long as such status does not continue
considered a regular employee. (Sec. 3.3, DO
beyond six (6) months. (Tatel v. JLFP Investigation
15016)
and Security Agency, Inc., GR No. 206942, 2015)

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PERLAS-BERNABE. The concept of temporary “off-
detail” or “floating status” of security guards
employed by private security agencies – a form of
temporary retrenchment or lay-off – relates to the
period of time when security guards are in between
assignments or when they are made to wait after
being relieved from a previous post until they are
transferred to a new one. When a security guard is
placed on a floating status, he or she does not
receive any salary or financial benefit provided by
law. (Quillopa v. Quality Guards Services, GR No.
213814, 2015)
Burden of Proof
The onus of proving that there is no post available to
which the security guard can be assigned rests on
the employer. (Nationwide Security and Allied
Services, Inc. v. Valderama, 659 Phil. 362, 2011)
Due to the grim economic consequences to the
security guard in which he does not receive any
salary while in temporary off-detail or floating status,
the employer-security agency should bear the burden
of proving that there are no posts available to which
the security guard temporarily out of work can be
assigned. (Pido v. NLRC, 545 Phil 507, 516, 2007)
Management Prerogative
PERLAS-BERNABE. Placing a security guard in
temporary off-detail or floating status is part of
management prerogative of the employer-security
agency and does not, per se, constitute a severance
of the employer-employee relationship. However,
such exercise of management prerogative must be
made in good faith. (Quillopa v. Quality Guards
Services, GR No. 213814, 2015)
2. TEST TO DETERMINE
EXISTENCE OF EMPLOYER-
EMPLOYEE RELATIONSHIP
a. FOUR-FOLD TEST
The existence of an employer-employee relationship
(EER) is ultimately a question of fact. To ascertain
the existence of an employer-employee relationship,
jurisprudence has invariably adhered to the four-fold
test, to wit:
1. Selection and engagement of the employee
(Hiring);
a. Who has the power to select the employee?
LABOR
b. Employment relation arises from contract of
hire, express or implied. (Ruga v. NLRC,
G.R. No. L-72654-61, 1990).
c. Selection and engagement of the workers
rests with the employers.
2. Payment of wages or salaries
a. Who pays the employee’s wages?
b. The mode of paying the salary or
compensation of a worker does not preclude
existence of employer-employee
relationship.
c. Not a conclusive test since it can be avoided
by the use of subcontracting agreements or
other contracts other than employment
contracts.
d. Payment of compensation by way of
commission does not militate against the
conclusion that EER exists. Under Art. 97 of
the Labor Code, "wage" shall mean
"however designated, capable of being
expressed in terms of money, whether fixed
or ascertained on a time, task, price or
commission basis…" (Insular Life
Assurance Co., Ltd. v. NLRC, G.R. No.
119930, 1998)
e. EER not determined by basis of employee’s
compensation. (Labor Congress v. NLRC,
G.R. No. 123938, 1998).
3. Power of dismissal (Firing)
a. Who has the power to dismiss the
employee?
b. Disciplinary power exercised by
employer over the worker and the
corresponding sanction imposed in
case of violation of any of its rules and
regulations
4. Power to control employee’s conduct
(Control Test)
Who exercises control over the methods and results
by which the work of the employee is accomplished?
The most important factor is the control test. This test
is premised on whether the person for whom the
services are performed reserves the right to control
both the end achieved and the manner and means
used to achieve that end. (Reyes v. Glaucoma
Research Foundation, Inc.,GR No. 189255, 2015)
The control test calls 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. Int’l Labor &
Marine Union of the Phil, G.R. No. L-32245, 1979)
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There could be no EER where "the element of control
is absent; where a person who works for another
does so more or less at his own pleasure and is not
subject to definite hours or conditions of work; and in
turn is compensated according to the result of his
efforts and not the amount thereof, we should not find
that the relationship of employer-employee exists."
(Filipinas Broadcasting Network, Inc. v. NLRC, G.R.
No. 118892, 1998)
Concept of Control over Insurance Agents –
NOT Control in Labor Law
The fact that private respondent was required to
solicit business exclusively for petitioner could hardly
be considered as control in labor jurisprudence.
Under Memo Circulars No. 2-81 and 2-85 issued by
the Insurance Commissioner, insurance agents are
barred from serving more than one insurance
company, in order to protect the public and to enable
insurance companies to exercise exclusive
supervision over their agents in their solicitation work.
Thus, the exclusivity restriction springs from a
regulation issued by the Insurance Commission, and
not from an intention by petitioner to establish control
over the method and manner by which private
respondent shall accomplish his work. This is not
meant to change the nature of the relationship
between the parties, nor does it necessarily imbue
such relationship with the quality of control
envisioned by the law. (AFP Mutual Benefit
Association v. NLRC, G.R. No. 102199, 1997)
That private respondent was bound by company
policies, memo/circulars, rules and regulations
issued from time to time is also not indicative of
control. With regard to the territorial assignments
given to sales agents, this too cannot be held as
indicative of the exercise of control over an
employee. Not every form of control that a party
reserves to himself over the conduct of the other
party in relation to the services being rendered may
be accorded the effect of establishing an employer-
employee relationship. (AFP Mutual Benefit
Association v. NLRC, G.R. No. 102199, 1997)
EER between crew members and owners of
fishing vessels
The employer-employee relationship between the
crew members and the owners of the fishing vessels
engaged in deep-sea fishing is merely suspended
during the time the vessels are dry-docked or
undergoing repairs or being loaded with the
necessary provisions for the next fishing trip. This is
premised on the principle that all these activities i.e.,
dry-dock, repairs, loading of necessary provisions,
form part of the regular operation of the company
fishing business. (Ruga v. NLRC, G.R. No.L-72654-
61, 1990)
LABOR
Not every form of control will have the effect of
establishing EER. The line should be drawn
between:
1. Rules that merely serve as guidelines towards
the achievement of mutually desired results
without dictating the means or methods to be
employed in attaining it. These aim only to
promote the result. NO EER exists.
2. Rules that control or fix the methodology and
bind or restrict the party hired to the use of such
means. These address both the result and the
means used to achieve it and hence, EER exists
(Insular Life Assurance Co, Ltd. v. NLRC, G.R.
No. 84484, 1989)
TWO-TIERED TEST (Francisco Doctrine)
(Francisco v. NLRC, G.R. No. 170087, 2006)
In cases where the control test is insufficient to
determine the relationship between the parties, the
Francisco doctrine adds another test, applied in
conjunction with the control test, called the economic
dependence test.
(I) FIRST TIER: CONTROL TEST
The putative employer’s power to control the
employee with respect to the means and methods by
which the work is to be accomplished.
(II) SECOND TIER: ECONOMIC REALITY TEST
(ALSO, ECONOMIC DEPENDENCE TEST)
Under this test, the economic realities prevailing
within the activity or between the parties are
examined, taking into consideration the totality of
circumstances surrounding the true nature of the
relationship between the parties. This is resorted to
when there is serious doubt or genuine confusion as
to the relationship of the employee with the employer.
The proper standard of “economic dependence” of
the employee is whether the worker is dependent on
the alleged employer for his continued employment
in that line of business. (Orozco v. CA, G. R. No.
155207, 2008)
The 2-tiered test provides a framework of analysis
which would take into consideration the totality of
circumstances surrounding the true nature of the
relationship between the parties. It is appropriate in a
case where there is:
1. No written agreement or terms of reference to
base the relationship on; and
2. There exists a complexity in the relationship
based on the various positions and
responsibilities given to the worker over the
period of the latter’s employment.
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Thus, the determination of the relationship between
employer and employee depends upon the
circumstances of the whole economic activity, such
as:
1. The extent to which the services performed are an
integral part of the employer’s business;
2. The extent of the worker’s investment in equipment
and facilities;
3. The nature and degree of control exercised by the
employer;
4. The worker’s opportunity for profit and loss;
5. The amount of initiative, skill, judgment or foresight
required for the success of the claimed independent
enterprise;
6. The permanency and duration of the relationship
between the worker and the employer; and
7. The degree of dependency of the worker upon the
employer for his continued employment in that line of
business. (Francisco v. NLRC, G.R. No. 170087,
2006)
Cases Where EER Exists:
a. Jeepney drivers on boundary basis (Villamaria
v. CA, G.R. No. 165881, 2006)
b. Drivers or helpers of salesmen are employees
of the company (Alhambra Industries v. CIR,
G.R. No. L-25984, 1970)
c. Employees of an unregistered association
(Orlando Farm Growers v. NLRC, G.R. No.
129076, 1998)
d. Street-hired kargador (Caurdanetaan Piece
Workers Union v. Laguesman, G.R. No.
113542, 1998)
e. Workers in movie projects (Maraguinot and
Enero v. NLRC and Viva Fils, G.R. No.
113542, 1998)
f. “Talents” (Begino v. ABS-CBN, G.R. No.
199166, 2015)
g. Salaried insurance agent, as distinguished
from registered agents on commission basis
(Great Pacific Life Assurance Corp., v. Judico,
G.R. No. 73887, 1989)
h. Tailors, seamstresses, servers, basters,
plantsadoras paid on piece-rate basis (Makati
Haberdashery v. NLRC, G.R. Nos. 83380-83,
1989)
i. In-house counsel (Hydro Resources
Contractors v. Pagalilauan, G.R. No. 62909,
1989)
LABOR
j. Security guards, with respect to the security
agency (Agro Commercial Services v. NLRC,
G.R. No. 82823-24, 1989)
Cases where no EER exists:
a. Farm Workers are not employees of the sugar
central (Pondoc v. NLRC, G.R. No. 116347,
1996)
b. Once in the playing court, the referees
exercise their own independent judgment,
based on the rules of the game, as to when
and how a call or decision is to be made. The
very nature of officiating a professional
basketball game undoubtedly calls for
freedom of control (Bernante v. PBA, G.R. No.
190842, 2011)
c. Healthcare associate - The manner in which
Consulta was to pursue these activities was
not subject to the control of Pamana. Consulta
failed to show that she had to report for work
at definite hours. The amount of time she
devoted to soliciting clients was left entirely to
her discretion. The means and methods of
recruiting and training her sales associates, as
well as the development, management and
maintenance of her sales division, were left to
her sound judgment (Consulta v. CA, G.R. No
145443, 2005)
d. TV personality – The specific selection and
hiring of Sonza, because of his unique skills,
talent and celebrity status not possessed by
ordinary employees, is a circumstance
indicative, but not conclusive, of an
independent contractual relationship (Sonza
v. ABS-CBN, G.R. No. 138051, 2004)
e. Where the contractor PSI was the one that
selected, engaged, and hired the security
guards, the latter cannot claim that PLDT, the
entity to which they were detailed to, is their
employer (Abella v. PLDT, G.R. No. 159469,
2005)
Importance of determining existence of
employer-employee relationship
Generally, labor standards and conditions apply only
if there is an EER. However, in some instances, even
if tehre is no EER, the Labor Code may still be
invoked (e.g. indirect employer’s liability, illegal
recruitment, and misuse of POEA license).
EER is determined by law and not by contract
between the parties (Paguio v. NLRC, G.R. No.
147816, 2003)
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3. EMPLOYEE VS. INDEPENDENT h. Duty to supply premises, tools, appliances,

CONTRACTOR materials, and labor
i. Mode, manner, and terms of payment.
(Vinoya v. NLRC, GR No. 126586, 2000)
Contracting or Subcontracting refers to an
arrangement whereby a principal agrees to farm out
Job Contracting v. Labor-Only Contracting
to a contractor the performance or completion of a
specific job or work within a definite or predetermined JOB CONTRACTING LABOR-ONLY
period, regardless of whether such work is to be CONTRACTING
performed or completed within or outside the Has sufficient
premises of the principal. (DO 174-17, Sec. 3(c)) substantial capital OR
Has NO substantial
investment in
Labor-Only Contracting – An arrangement where capital OR investment in
machinery, tools or
the contractor or subcontractor recruits, supplies, or the form of machinery,
equipment directly or
places workers to perform a job or work for a tools or equipment
intended to be related
principal, and the elements hereunder: to the job contracted
A. The contractor does not have substantial capital or Carries an
the contractor or subcontractor does not have independent business Has no independent
investments in the form of tools, equipment, different from the business
machineries; and the contractor’s or subcontractor’s employer’s
employees recruited and placed are performing Undertakes to perform
activities which are directly related to the main the job under its own Performs activities
business operation of the principal; or account and directly related to the
B. The contractor or subcontractor does not exercise responsibility, FREE main business of the
the right of control over the work of the employee from the principal’s principal
(D.O. No. 174-17, Sec. 5) control
Principal treated as
Test to determine the existence of an NO EER except when
direct employer of the
independent contractor the contractor or
person recruited in all
Whether one claiming to be an independent subcontractor fails to
instances (contractor is
contractor has contracted to do the work according to pay the employees’
deemed agent of the
his own methods and without being subject to the wages.
principal)
control of the employer, except only as to the results LIMITED liability
of the work. (SMC v. Aballa, G.R. No. 149011, 2005) (principal solidarily
liable with contractor or Principal’s liability
An individual can be an independent contractor for subcontractor only extends to all rights,
himself. (Sonza v. ABS-CBN, G.R. No. 138051, when latter fails to duties and liabilities
2004) comply with under labor standard
requirements as to laws including the right
Factors to consider in determining whether unpaid wages and to self-organization
Contractor is carrying on an Independent other labor standards
Business: violations.
It is not enough to show substantial capitalization or
PERMISSIBLE PROHIBITED
investment in the form of tools, equipment,
machineries, and work premises, among others, to
be considered as an independent contractor. In a. ELEMENTS
determining the existence of an independent
contractor relationship, several factors might be Legitimate contracting or subcontracting
considered: Contracting or subcontracting shall be legitimate if
a. Nature and extent of work all the following circumstances occur:
b. Skill required a. The contractor is engaged in a distinct and
c. Term and duration of the relationship independent business and undertakes to
d. Right to assign the performance of specified perform the job or work on its own
pieces of work responsibility according to its own method;
e. Control and supervision of the workers b. The contractor or subcontractor has
f. Power of the employer with respect to the substantial capital and/or investment;
hiring, firing, and payment of workers of the c. The contractor undertakes to perform the
contractor job, work or service on its own responsibility,
g. Control of the premises according to its own manner and method, and

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free from control and direction of the principal
in all matters connected with the performance
of the work except as to the results thereof;
 obligations of an employer. If proven, it amounts to
and
d. The Service Agreement ensures compliance
with all the rights and benefits for all of the
employees of the contractor or subcontractor
under Labor laws. (D.O. No. 174-17, Sec. 8)
Labor-Only Contracting
Labor only contracting shall refer to an arrangement
where the contractor or subcontractor recruits,
supplies, or places workers to perform a job or work
for a principal, and the elements hereunder:
a. The contractor does not have
substantial capital; or the contractor or
subcontractor does not have
investments in the form of tools,
equipment, machineries; and the
contractor’s or subcontractor’s
employees recruited and placed are
performing activities which are directly
related to the main business operation
of the principal; or
b. The contractor or subcontractor does
not exercise the right of control over the
work of the employee (D.O. No. 174-17,
Sec. 5)
Right to Control
Right reserved to the person for whom the services
of the contractual workers are performed, to
determine not only the end to be achieved, but also
the manner and means to be used in reaching that
end. (D.O. No. 18-A, Sec. 3[i])
Only one of either (i) substantial capital or (ii)
performing activities related to the main
business – is required for Labor-Only
Contracting to exist
Performing activities directly related to the principal
business of the employer is only one of the two
indicators that "labor-only" contracting exists; the
other is lack of substantial capital or investment.
Labor-only contracting exists when any of the
two elements is present. (Quintanar, et al. v. Coca-
Cola, G.R. No. 210565, 2016)
Posting of Bond
An employer or indirect employer may require the
contractor or subcontractor to furnish a bond equal to
the cost of labor under contract, on 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. (D.O. No. 174-17, Sec.
3[a], Labor Code, Art. 108)
LABOR
Note: Labor-Only Contracting is legally wrong and
prohibited because it is an attempt to evade the
employment avoidance (Convoy Marketing v. Albia,
G.R. No. 194969, 2015)
Substantial Capital
It refers to capital stocks and subscribed
capitalization in the case of corporations, tools,
equipment, implements, machineries, and work
premises, actually and directly used by the contractor
or subcontractor in the performance or completion of
the job, work or service contracted out (D.O. No. 18-
02, Sec. 5)
It also refers to paid-up capital stocks/shares of at
least Five Million Pesos (P5,000,000.00) in the case
of corporations, partnerships and cooperatives; in the
case of single proprietorship, a net worth of at least
Five Million Pesos (P5,000,000.00). (D.O. No. 174-
17, Sec. 3, ¶(i))
Capital stocks and subscribed capitalization in the
case of corporations, tools, equipment, implements,
machineries and work premises, actually and directly
used by the contractor or subcontractor in the
performance or completion of the job, work or service
contracted out.
The law does not require both substantial capital and
investment in the form of tools, equipment and
machineries. This is clear from the use of the
conjunction “or.” If the intention was to require the
contractor to prove that he has both capital and the
requisite investment, then the conjunction “and”
should have been used. (New Golden Builders &
Dev’t Corp v. CA, et al., G.R. No. 154715, 2003)
Net Financial Contracting Capacity (NFCC)
refers to the formula to determine the financial
capacity of the contractor to carry out the job, work or
services sought to be undertaken under a Service
Agreement. NFCC is current assets minus current
liabilities multiplied by K, which stands for contract
duration equivalent to: 10 for one year or less; 15 for
more than one (1) year up to two (2) years; and 20
for more than two (2) years, minus the value of all
outstanding or ongoing projects including contracts to
be started. (D.O. 18-A, Sec. 3[g])
Illicit Forms of Employment Arrangements
The following are declared prohibited for being
contrary to law or public policy:
a. When the principal farms out work to a
"Cabo".

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“Cabo” refers to a person or group of persons or to a
labor group which, under the guise of labor
organization, cooperative, or any entity, supplies
workers to an employer, with or without any monetary
or other consideration, whether in the capacity of
agent of the employer or as ostensible independent
contractor. (D.O. No. 174-17, Sec. 3[b])
b. Contracting out of job or work through an in-
house agency.
c. Contracting out of job or work through an in-
house cooperative which merely supplies
workers to the principal.
d. Contracting out of a job or work by reason of
a strike or lockout whether actual or
imminent.
e. Contracting out of a job or work being
performed by union members and such will
interfere with, restrain or coerce employees
in the exercise of their rights to self-
organization as provided in Article 259 of the
Labor Code, as amended
f. Requiring the contractor's/subcontractor's
employees to perform functions which are
currently being performed by the regular
employees of the principal.
g. Requiring the contractor's/subcontractor's
employees to sign, as a precondition to
employment or continued employment, an
antedated resignation letter; a blank payroll;
a waiver of labor standards including
minimum wages and social or welfare
benefits; or a quitclaim releasing the principal
or contractor from liability as to payment of
future claims; or require the employee to
become member of a cooperative.
h. Repeated hiring by the
contractor/subcontractor of employees under
an employment contract of short duration.
i. Requiring employees under a principal and the contractor as governed by
contracting/subcontracting arrangement to
sign a contract fixing the period of
employment to a term shorter than the term
of the Service Agreement, unless the contract
is divisible into phases for which substantially
different skills are required and this is made
known to the employee at the time of
engagement.
j. Such other practices, schemes or
employment arrangements designed to
circumvent the right of workers to security of
tenure. (D.O. No. 174-17, Sec. 6)
LABOR
b. TRILATERAL RELATIONSHIP
The three parties involved:
a. Contractor / Subcontractor
Any person or entity, including a cooperative,
engaged in a legitimate contracting or
subcontracting arrangement.
b. Contractor’s Employee
One employed by a contractor or subcontractor to
perform or complete a job, work or service pursuant
to an arrangement between the latter and a principal
c. Principal
Any employer who puts out or farms out a job,
service or work to a contractor or subcontractor
(D.O. No. 174-17, Sec. 3)
Relationships that exist in legitimate contracting
or subcontracting:
a. An employer-employee relationship between
the contractor and the employees it engaged
to perform the specific job, work or service
being contracted; and
b. A contractual relationship between the
the provisions of the Civil Code. (D.O. No. 18-
A-11, Sec. 5, ¶ 1)
Governing Laws
a. Between the principal and the contractor the
major laws applicable to their work
relationship are the Civil Code and pertinent
commercial laws.
b. Between the contractor and his employees the
major laws applicable to their work
relationship are the Civil Code and special
labor laws.
c. Between the principal and the contractor’s
employees, no employer-employee
relationship exists, because the contractor
himself is the employer. (Azucena, The Labor
Code with Comments and Cases Volume I,
306, 2013)
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The law recognizes and resolves this situation in on or before the first day of his/her
favor of employees in order to protect their rights employment.
and interests from the coercive acts of the
employer. In fact, the employee who is 2. Service Agreement between the
constructively dismissed may be allowed to keep on principal and the contractor v. security
coming to work. (McMer Corp., Inc. v. NLRC, G.R. guards
No. 193421, 2014)
Required Provisions:
Rights of contractor’s employees DO 174-17: Service DO 150-16: The
All contractor’s/subcontractor’s employees, shall be Agreement between SSC/PSA and/or the
entitled to security of tenure and all the rights and the principlal and the principle shall produce
privileges as provided for in the Labor Code, as contractor. or submit the original
amended, to include the following: copy of the Service
a. Safe and healthful working conditions; Agreement when
b. Labor standards such as but not limited to directed to do so by
service incentive leave, rest days, overtime the Regional Director
pay, holiday pay, 13th month pay, and or his/her duly
separation pay as may be provided in the authorized
Service Agreement or under the Labor representative.
Code;
c. Retirement benefits under the SSS or The Service The Service
retirement plans of the contractor, if there is Agreement shall Agreement shall
any; include the following: stipulate, among
d. Social security and welfare benefits; and others:
e. Self-organization, collective bargaining and a. The specific a. Specific
peaceful concerted activities, including the description of the description of the
right to strike. (D.O. No. 174-17, Sec. 10) job or work being kind or nature of
subcontracted, security job, work,
Required Contracts including its term or service being
1. Employment contract between the contractor or duration; subcontracted;
and its employee. b. The place or work b. Place of work and
a. Notwithstanding any oral or written and terms and terms and
stipulations to the contrary, the conditions conditions
contract between the contractor and governing the governing the
its employee shall be governed by the contracting contracting
provisions of Articles 279 and 280 of arrangement, to arrangement
the Labor Code, as amended.
include the agreed which shall
amount of the include the agreed
It shall include the following terms and conditions:
i. The specific description of contracted job or amount of security
the job, work or service to work as well as services to be
be performed by the standard rendered and the
the employee; administrative fee standard
ii. The place of work and of not less than administrative fee
terms and conditions of 10% of the total of not less than
employment, including contract cost. 20% of the total
a statement of the wage c. A provision on the contract cost;
rate applicable to the issuance of bon/s c. Basic equipment
individual employee; and as defined in Sec. to be provided by
iii. The term or duration of 3(a) renewable the SSC/PSA
employment that must be every year. (Sec. (handgun,
co-extensive with 11, DO 174-17) handheld radio);
the Service Agreement or d. Automatic
with the specific phase of crediting provision
work for which the which shall
employee is engaged.
immediately give
effect to the
b. The contractor shall inform the
employee of the foregoing terms and common provision
conditions of employment in writing in wage orders

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that prescribed Validity of Certificate of Registration of

wage increases Contractors
and the Service The contractor shall be deemed registered only on
Agreements shall the date of issuance of its Certificate of Registration.
be deemed The Certificate of Registration shall be effective for 2
amended years, unless cancelled after due process. The same
accordingly; shall be valid in the region where it is registered.
e. Provisions which
shall ensure that In case the contractor has Service Agreement or
the principle and operates outside the jurisdiction of the RTC where it
the SSC/PSA is registered, it shall request a duly authenticated
shall uphold the copy of its certificate of registration from the DOLE
rights and provide Regional Office where it seeks to operate, together
all benefits of with a copy of its Service Agreement/s in the area, for
security guards; purposes of monitoring compliance with the rules
f. Provision on the (D.O. No 174-17, Sec. 20)
NFCC of
SSC/PSA; Note: Failure to register shall give rise to the
g. Undertaking that presumption that the contractor is engaged in labor-
the SSC/PSA only contracting. (Aklan v. San Miguel Corporation,
shall directly remit G.R. No. 168537, 2008)
monthly
employers’ share SOLIDARY LIABILITY
and employees’
contribution to Labor Code Provisions on Liability
SSS, ECC, In the event that the contractor or sub-contractor
PhilHealth, Pag- fails to pay the wages of his employees in
IBIG; accordance with this Code, the employer shall be
h. Undertaking theat jointly and severally liable with his contractor or sub-
expenses for any contractor to such employees to the extent of the
training required work performed under the contract, in the same
by the principal or manner and extent that he is liable to employees
other government directly employed by him. (Labor Code, Art. 106)
instrumentalities
shall be Principal as Direct Employer: Finding of Labor-
shouldered by the Only Contracting
principal. (Sec. 4, There is "labor-only" contracting where the person
DO 150-16) supplying workers to an employer does not have
substantial capital or investment in the form of tools,
equipment, machineries, work premises, among
others, and the workers recruited and placed by
Note: Administrative fee is different for security
such person are performing activities which are
guards which must not be less than 20% of the total
directly related to the principal business of such
contract cost.
employer. In such cases, the person or intermediary
shall be considered merely as an agent of the
Registration of Contractors and Subcontractors employer who shall be responsible to the workers in
Mandatory Registration and Registry of Legitimate the same manner and extent as if the latter were
Contractors. Consistent with the authority of the directly employed by him. (Labor Code, Art. 106)
Secretary of Labor and Employment to restrict or
prohibit the contracting out of labor to protect the In the event that there is a finding that the
rights of workers, it shall be mandatory for all persons contractor or subcontractor is engaged in labor-only
or entities, including cooperatives, acting as contracting under Section 5 and other illicit forms of
contractors to register with the Regional Office of the employment arrangements under Section 6 of these
Department of Labor and Employment (DOLE) where Rules, the principal shall be deemed the direct
it principally operates. (D.O. No. 174-17, Sec. 14) employer of the contractor's or subcontractor's
employees. (D.O. No. 174-17, Sec. 7)

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Therefore: The principal shall be deemed an
employer of the contractual employee and shall be
directly liable, in the following cases:
a. Labor-only contracting; and
b. Prohibited contracting
arrangements (Broadway Motors v.
NLRC, G.R. No. 78382, 1987)
Principal as Direct Employer: Violations of
Rights of Employees or Required Contracts
A finding of violation of either Sections 10 (Rights of
Contractor’s Employees) or 11 (Required Contracts)
shall render the principal the direct employer of the
employees of the contractor or subcontractor,
pursuant to Art. 109 of the Labor Code (D.O. No.
147-17, Sec. 12)
Solidary Liability in Legitimate Contracting:
Violations of the Labor Code and Social
Legislation
In the event of violation of any provision of the Labor
Code, including the failure to pay wages, there
exists a solidary liability on the part of the principal
and the contractor for purposes of enforcing the
provisions of the Labor Code and other social
legislations, to the extent of the work performed
under the employment contract. (D.O. No. 174-17,
Sec. 9)
Every employer or indirect employer shall be held
responsible with his contractor or subcontractor for
any violation of any provision of this Code. For
purposes of determining the extent of their civil
liability under this Chapter, they shall be considered
as direct employers. (Labor Code, Art. 109)
Note: Principal’s Liability under Art. 109
If the liability is for failure to pay the minimum wage,
or the service incentive leave or other benefits
derived from or provided for by law, the principal is
equally liable with the contractor
If the liability is invested with punitive character,
such as an award for backwages and separation
pay because of an illegal dismissal, the liability
should be solely with the contractor in the absence
of proof that the principal conspired with the
contractor in the commission of the illegal dismissal
(see Meralco v. NLRC, G.R. No. 145402, 2008)
Solidary Liability for Wages and Money Claims
for Performed Under The Contract
In the event that the contractor or subcontractor fails
to pay the wages of his employees in accordance
with this Code, the employer shall be jointly and
severally liable with his contractor or subcontractor to
such employees to the extent of the work performed
under the contract, in the same manner and extent
LABOR
that he is liable to employees directly employed by
him (Labor Code, Art. 106)
Should the indirect employer be constrained to pay
the workers, it can recover whatever amount it paid,
in accordance with the terms of the service contract
between itself and the contractor (Rosewood
Processing v. NLRC, G.R. Nos. 116476-84, 1998).
The joint and several liability of the contractor and the
principal is mandated by the Labor Code to assure
compliance with the provisions therein including the
minimum wage. The contractor is made liable by
virtue of his status as direct employer. The principal,
on the other hand, is made the indirect employer of
the contractor's employees to secure payment of
their wages should the contractor be unable to pay
them. Even in the absence of an EER, the law itself
establishes one between the principal and the
employees of the agency for a limited purpose i.e. in
order to ensure that the employees are paid the
wages due them. (Lapanday Agricultural Dev’t Corp.
v. CA, G.R. No. 112139, 2000)
Solidary Liability of Principal and Employer in
cases of Illegal Dismissal
Joint and several with the employer, but with the right
to reimbursement from the employer-contractor
Wage differentials only to the extent where the
employee performed the work under the principal
General Rule: Principal and contractor are solidarily
liable.
Exception: When the contractor has already
received from the Principal the correct amount of
wages and benefits, but failed to turn them over to
the workers, the contractor should solely bear the
liability for the underpayment of wages and non-
payment of overtime pay. (Meralco v. NLRC, G.R.
No. 145402, 2008)
Effect of Termination of Employment
The termination of employment of the
contractor's/subcontractor's employee prior to the
expiration of the Service Agreement shall be
governed by Articles 297, 298 and 299 of the Labor
Code.
In case the termination of employment is caused by
the pre-termination of the Service Agreement not due
to authorized causes under Article 298, the right of
the contractor's/subcontractor's employee to unpaid
wages and other unpaid benefits including
unremitted legal mandatory contributions, e.g., SSS,
PhilHealth, Pag-IBIG, ECC, shall be borne by the
party at fault, without prejudice to the solidary liability
of the parties to the Service Agreement.
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rights and (SA) complies

Where the termination results from the expiration of benefits with labor law
the Service Agreement, or from the completion of the rights and
phase of the job or work for which the employee is benefits
engaged, the latter may opt to wait for re-employment Substantial Capital
within three (3) months to resign and transfer to
Php3,000,00.00 Php5,000,00.00
another contractor-employer.
Failure of the contractor to provide new employment
for the employee shall entitle the latter to payment of Net Financial Contracting Capacity (NFCC)
separation benefits as may be provided by law or the The formula to No provision on NFCC
Service Agreement, whichever is higher, without determine the financial
prejudice to his/her entitlement to completion capacity of the
bonuses or other emoluments, including retirement contractor to carry out
benefits whenever applicable. The mere expiration of the job, work or
the Service Agreement shall not be deemed as a services sought to be
termination of employment of the undertaken under a
contractor's/subcontractor's employees who are SA.
regular employees of the latter.
Co-terminus Employment
Comparative Table: D.O. No. 18-A-11 vs. D.O. Allowed. No co-terminus
No. 174-17 The term or duration employment (for
of employment that regular)
DOLE D.O. 18-A-11 DOLE D.O. 174-17
must be co-extensive Mere expiration of SA
Coverage with the SA or with the shall not be deemed as
Expressly includes No express inclusion of specific phase of work a termination of
cooperatives cooperatives, but should for which the employment of the
still be included employee is engaged. contractor’s employees
Trilateral Relationship who are regular
employees of the latter.
Trilateral Relationship Deleted provision on Labor-Only Contracting
was emphasized. trilateral relationship.
Principal   Prohibited Absolutely Prohibited
Contractor   Labor-only Labor-only Contracting:
Employees Contracting: 1st Kind 2nd kind
On Contracting and Subcontracting The contractor does The contractor does not
Legitimacy: Legitimate Requirements: not have substantial have substantial capital
Job Contracting Permissible Contracting capital - or -
 DOLE-  Distinct and - or – The contractor does not
registered independent The contractor does have investments in the
 Distinct and business; own not have investments form of tools,
independent manner and in the form of tools, equipment,
business; own method of equipment, machinery, machineries,
manner and performance of work premises, among supervision, work
method in job or work others, premises among
performing  Substantial others,
job, work, capital AND - and -
service; free investment (in - and -
from control the form of The employees
and direction tools, recruited and placed The contractor’s or
of principal equipment, are performing subcontractor’s
except results machinery and activities which are employees recruited
 Substantial supervision) usually necessary or and placed are
capital and/or  [new] Free from desirable to the performing activities
investment control and/or operation of the which are directly
 Service direction of the company, or directly related to the main
Agreement principal related to the main business operation of
(SA) complies  Service business of the the principal.
with labor law Agreement principal within a

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definite or principal’s certified

predetermined period,
regardless of whether
such job, work or
service is to be
performed within or
outside the premises
of the principal.
Labor-only Labor-only Contracting:
Contracting: 2nd kind 2nd kind
The contractor does The contractor does not
not exercise the right exercise the right to
to control the control over the
performance of the performance of the
work of employee. work of the employee.
Other Prohibitions
Other Prohibitions Other Illicit Forms of
(Not done in good faith Employment
and legitimate Arrangements
business reason) (Good faith and
legitimate business
reason no longer a
defense)
1. N/A 1. [new] Contracting
through an in-house
cooperative which
merely supplies
workers to the
principal
2. N/A 2. [new] Practices,
schemed or
employment
arrangements
designed to
circumvent Security
of Tenure
3. N/A 3. [new] Contracting
out of a job or work
by reason of a strike
or lockout whether
actual or imminent
4. Results in 4. Not listed
termination/reducti
on of regulars and
reduction of work
hours; or
5. Results in
termination/reducti
on of regulars and
reduction/splitting
of bargaining unit
6. Refusal to give 5. Not listed
provide SA and
employment
contracts in
bargaining unit of
bargaining agent
to sole and
exclusive
bargaining agent
7. Engaging/maintai 6. Not listed
ning by principal of
subcontracted
employees in
excess of CBA or
set by Industry
Tripartite Council
8. Contracting out of 7. Not listed
a job/work/service
that is necessary/
desirable or
directly related to
the business/
operation of the
principal by
reason of
strike/lockout
When Principal May Be Liable
“Duties of the Principal deemed direct
principal,” as “indirect employer when there is
employer.” evidence of:
1. Labor-only contracting;
2. Other illicit forms of
employment
arrangements;
3. Violation of employee’s
rights
4. Violation of required
contracts
Non-impairment of existing contracts
Benefits being enjoyed - No provision
by parties to existing
contracting
arrangements shall
not be impaired by this
D.O.
Employment Termination
If caused by pre- Same
termination of SA not
due to authorized
causes, right to unpaid
wages and benefits
borne by party at fault.
Employee may opt for Employee may opt to
payment of separation wait for re-employment
benefits as may be within 3 months to
provided by law or the resign and transfer to
SA, without prejudice another employer.
to his/her entitlement Failure to provide new
to the completion [of] employment, employee
bonuses or other shall be entitled to
emoluments, including separation benefits as

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retirement benefits may be provided by law

whenever applicable. or the SA, whichever is D.O. No. 174-17 applies only to trilateral relationship
higher, without which characterizes contracting or subcontracting
prejudice to entitlement arrangement. It does not contemplate to cover
completion of bonuses contractual relationships such as in contract of sale
or other emoluments, or purchase, contract of lease, contract of carriage,
including retirement contract growing/growership agreement, toll
benefits whenever manufacturing, contract of management, operation
applicable. and maintenance and other contracts governed by
Separation Benefits the Civil Code and other special laws.
Separation pay is If not re-employed after
contingent on its 3-month wait, D.O. No. 174-17 does not also cover the contracting
inclusion in the SA or separation benefits are out of job or work to a professional, or individual with
may apply only in given as may be unique skills and talents who himself or herself
authorized causes provided by law or the performs the job or work for the principal.
outline in the Labor SA.
Code. Non-Applicability of DO 174-17 to BPO/LPO/KPO
Certificate of Registration 3. Business Process Outsourcing
Registration/Renewal Php 100,00 4. Knowledge Process Outsourcing
Fee: Php 25,000 Two (2) years 5. Legal Process Outsourcing
Validity: Three (3) 6. IT Infrastructure Outsourcing
years 7. Application Development
DOLE Programs 8. Hardware and/or Software Support
N/A Mandatory Enrollment 9. Medical Transcription
to DOLE Programs: 10. Animation Services
Principal and 11. Back Office Operations/Support
Contractors/Subcontrac
tors
Applicability/Non-Applicability of DO 174-17 to
Construction Industry; Coordination with PCAB-
Department Circular No. 01-17 CIAP
D.O. 174, Series of 2017, applies only to trilateral Pursuant to PD No. 1746, Series of 1980, licensing
relationship which characterizes contracting or and the exercise of regulatory powers over the
subcontracting arrangement. It does not contemplate construction industry is lodged with the Philippine
to cover information technology-enabled services Contractors Accreditation Board (PCAB) of the
involving entire or specific business process. Construction Industry Authority of the Philippines
(CIAP)
NOTE: Construction Industry NOT covered by
mandatory registration provision of D.O. 174-17 Applicability/Non-Applicability of DO 174-17 to
Private Security Agencies
The DOLE, through its regional offices, shall not Except for the registration requirements as provided
require contractors licensed by PCAB in the for in DO 174-17, contracting or subcontracting
Construction Industry to register under D.O. 18-A, arrangements in the private security industry shall
Series of 2011. Findings of violation/s on labor be governed by DO 15-16
standards and occupational health and safety
standards shall be coordinated with PCAB for its Non-Applicability of DO 174-17 to Other
appropriate action, including the possible Contractual Relationships
cancellation/suspension of the contractor’s license.
DO 174-17 applies only to trilateral relationship which
characterizes contracting or subcontracting
Contractors licensed by PCAB which are engaged in
arrangement. It does not cover: (governed by CC)
other contracting or subcontracting arrangement in
1. Contract of Sale or Purchase
addition to, or other than construction activities shall
2. Contract of Lease
be required to register under D.O. No. 174-17
3. Contract of Carriage
4. Contract of Growing/Growership Agreement
Except for the registration requirements of D.O. 174-
5. Toll Manufacturing
17, contracting or subcontracting arrangements in
6. Contract of Management, Operation, and
the private security industry shall be governed by Maintenance
D.O. No. 150, Series of 2016.

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DO 174-17 does not cover the contracting out of job b. Managerial employees if they
or work to a professional, or individual with unique meet all of the following
skills and talents who himself performs the job or conditions:
work for the principal.
(a) Their primary duty consists of the management
SPECIAL CASES of the establishment in which they are employed or
1. Working scholars of a department or sub-division thereof.
No EER between students on one hand, and (b) They customarily and regularly direct the work of
schools, colleges or universities on the other, two or more employees therein.
where: (c) They have the authority to hire or fire employees
a. There is written agreement between of lower rank; or their suggestions and
them under which the former agree to recommendations as to hiring and firing and as to
work for the latter in exchange for the the promotion or any other change of status of other
privilege to study free of charge employees, are given particular weight. (IRR Labor
b. Provided, the students are given real Code, Book III, Rule I, Sec. 2)
opportunities, including such facilities as
may be reasonable and necessary to c. Officer or members of a
finish their chosen courses under such managerial staff if they perform
agreement the following duties and
responsibilities:
2. Resident physicians in training
(a) The primary duty consists of
There is EER between resident physicians and the
the performance of work
training hospital UNLESS:
directly related to management
a. There is a training agreement between
policies of their employer;
them
(b) Customarily and regularly
b. The training program is duly accredited
exercise discretion and
or approved by the appropriate
independent judgment; and(i)
government agency.
Regularly and directly assist a
proprietor or a managerial
Effects of Labor-Only Contracting
employee whose primary duty
A finding by a competent authority of labor-only
consists of the management of
contracting shall render the principal jointly and
the establishment in which he
severally liable with the contractor to the latter’s
is employed or subdivision
employees in the same manner and extent that the
thereof; or (ii) execute under
principal is liable to employees directly hired by
general supervision work along
him/her as provided in Art. 106 of the Labor Code, as
specialized or technical lines
amended. (D.O. 18-A, Sec. 27, 2011)
requiring special training,
experience, or knowledge; or
A finding of commission of any of the prohibited
(iii) execute, under general
activities in Sec. 7 or violation of either Sections 8 or
supervision, special
9 hereof, shall render the principal the direct
assignments and tasks; and
employer of the employees of the contractor or
(c) Who do not devote more than
subcontractor. (D.O. 18-A, Sec. 7, 2011)
20 percent of their hours
worked in a work week to
A. CONDITIONS OF EMPLOYMENT activities which are not directly
and closely related to the
Book III of the Labor Code provides the conditions or performance of the work
standards of employment. These standards apply described in paragraphs (1), (2)
only if an employer-employee relationship (EER) and (3) above.
exist.

1. Excluded Employees (Go-Ma-Off- d. Non-agricultural Field Personnel

FiFa-DoPe) Non-agricultural employees who regularly perform
their duties away from the principal place of business
a. Government employees or branch office of the employer and whose actual
hours of work in the field cannot be determined with

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reasonable certainty) (Autobus Transport v. Bautista,
G.R. No. 156367, 2005)
e. Members of the Family of the
employer who are dependent on
him for support
f. Domestic Helpers
The mere fact that the househelper or domestic
servant is working within the premises of the
business of the employer and in relation to or in
connection with its business, as in its staff houses for
its guest or even for its officers and employees,
warrants the conclusion that such househelper or
domestic servant is and should be considered as a
regular employee of the employer and not as a mere
family househelper or domestic servant. (Apex
Mining Company v. NLRC, G.R. No. 94951, 1991).
g. Persons in the personal service
of another
h. Workers who are paid by Results
(IRR Labor Code, Book III, Rule I,
Sec. 2)
2. Hours of Work
Principles in Determining Hours Worked
1. All hours are hours worked which the
employee is required to give to his employer,
regardless of whether or not such hours are
spent in productive labor or involve physical
or mental exertion.
2. An employee need not leave the premises of
the workplace in order that his rest period
shall not be counted, it being enough that he
stops working, may rest completely and may
leave his workplace.
3. If the work performed was necessary or it
benefited the employer, or the employee
could not abandon his work at the end of his
normal working hours because he had no
replacement, all time spent or such work
shall be considered as hours worked, if the
work was with the knowledge of his
employer or immediate supervisor.
4. The time during which an employee is
inactive by reason of interruptions in his
work beyond his control shall be considered
working time either if:
a. The imminence of the resumption of
work requires the employee's
presence at the place of work; or
LABOR
b. The interval is too brief to be utilized
effectively and gainfully in the
employee's own interest. (IRR of
Labor Code, Sec. 4, Book III, Rule
I)
Considered as Compensable Hours Worked
1. All time during which an employee is
required to be on duty or to be at the
employer’s premises or to be at a prescribed
work place;
2. All time during which an employee is
suffered or permitted to work; (IRR Labor
Code, Book III, Rule I, Sec. 3) and
3. Rest periods of short duration during
working hours. (Philippine Airlines v. NLRC,
G.R. No. 132805, 1999).
a. Normal Hours of Work
General Rule: The normal hours of work of any
employee shall not exceed eight (8) hours a day.
(Labor Code, Art. 83)
Part-time work, or a day’s work of less than 8 hours,
is not prohibited (Legend Hotel v. Realuyo, G.R. No.
153511, 2012)
Purpose of the Law
To protect the health of the workers.
The law is designed to minimize unemployment by
forcing employers, in case where more than eight-
hour operation is necessary, to utilize different shifts
of laborers or employees working only for eight hours
each. (Manila Terminal Company v. CIR, G.R. No. L-
4148, 1952).
Exception to 8-Hour Law: Work Hours of Health
Personnel
Health Personnel in:
a. Cities and municipalities with a
population of at least one million
(1,000,000) or
b. Hospitals and clinics with a bed capacity
of at least one hundred (100) shall hold
regular office hours for eight (8) hours a
day, for five (5) days a week, exclusive
of time for meals, except where the
exigencies of the service require that
such personnel work for six (6) days or
forty-eight (48) hours (Labor Code, Art.
83)
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WORK DAY CALENDAR DAY
24-hour period 24-hour period
commencing from the commencing at 12
time an employee midnight and ending at
regularly starts to work 11:59 p.m.
regardless of whether
the work is broken or
continuous.
b. Meal Periods
General Rule: Meal periods are NOT compensable.
Meal periods should not be less than 60 minutes.
(Labor Code, Art. 85)
Exceptions:
1. Where the lunch period or meal time is
predominantly spent for the employer’s benefit;
2. Meal periods of 1hour are deemed compensable
when the employee is on continuous shift
(National Dev’t Corp. v. CIR, G.R. No. 15422,
1962)
3. Shortened meal period of less than 1 hour must
be compensable (IRR Labor Code, Book III, Rule
1, Sec. 7)
Meal period of not less than 20 minutes in the
following cases are compensable hours worked:
a. Where the work is non-manual work in nature or
does not involve strenuous physical exertion;
b. Where the establishment regularly operates not
less than 16 hours a day;
c. In case of actual or impending emergencies or
there is urgent work to be performed on
machineries, equipment or installations to avoid
serious loss which the employer would otherwise
suffer; and
d. Where the work is necessary to prevent serious
loss of perishable goods (IRR Labor Code, Book
III, Rule 1, Sec. 7)
Note: Rest periods or coffee breaks running from 5-
20 minutes shall be considered compensable
working time. (IRR Labor Code, Book III, Rule 1, Sec.
7)
Note: To shorten meal time to less than 20 minutes
is not allowed. If it is less than 20 minutes, it becomes
only a REST PERIOD and is considered working time
(Labor Code, Art. 84, ¶ 2)
If standby is for emergency work, meal break is
part of hours worked. (Pan-American World
Airways System Philippines v. Pan-American
Employees Association G.R. No.L-16275, 1961)
LABOR
Exception to the exception: Shortened meal
breaks upon the employee’s request are NOT
compensable, provided that:
1. The employees voluntarily agree in writing to a
shortened meal period of 30 minutes and are
willing to waive the overtime pay for such
shortened meal period;
2. There will be no diminution whatsoever in the
salary and other fringe benefits of the employees
existing before the effectivity of the shortened
meal period;
3. The work of the employees does not involve
strenuous physical exertion and they are
provided with adequate “coffee breaks” in the
morning and afternoon.
4. The value of the benefits derived by the
employees from the proposed work arrangement
is equal to or commensurate with the
compensation due them for the shortened meal
period as well as the overtime pay for 30 minutes
as determined by the employees concerned;
5. The overtime pay of the employees will become
due and demandable if ever they are permitted
or made beyond 4:30pm; and
6. The effectivity of the proposed working time
arrangement shall be of temporary duration as
determined by the Secretary of Labor (2004
BWC Manual on Labor Standards).
Note: For a full one (1) hour undisturbed lunch break,
the employees can freely and effectively use this
hour not only for eating but also for their rest and
comfort. Since the employees are no longer required
to work during this 1-hour lunch break, there is no
more need for them to be compensated for this
period. (Sime Darby Pilipinas v. NLRC, G.R. No.
119205, 1998)
Waiting Time
Whether waiting time constitutes working time
depends upon the circumstances of each particular
case. The facts may show that the employee was
engaged to wait or may show that he waited to be
engaged. The controlling factor is whether waiting
time spent in idleness is spent predominantly for
the employer’s benefit or the employee’s
(Azucena Vol. I, 9th ed., p. 231).
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
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shall not be counted. (Luzon Stevedoring v. Luzon
Marine Department Union, G.R. No. L-9265, 1957)
Waiting time spent by an employee shall be
considered as working time if:
1. Waiting is an integral part of his work; or
2. The employee is required or engaged by the
employer to wait. (IRR Labor Code, Sec. 5[a],
Rule 1, Book III)
When Employee is Considered Working while on
call - When employee
1. Is required to remain on call in the employer’s
premises or so close thereto; or
2. Cannot use the time effectively and gainfully for his
own purpose (IRR Labor Code, Sec. 5[b], Rule 1,
Book III)
c. Night Shift Differential
Night Worker:
Any employed person whose work requires
performance of a substantial number of hours of night
work which exceed a specified limit. This limit shall
be fixed by the Secretary of Labor after consulting the
workers’ representatives/labor organizations and
employers. (Labor Code, Art. 154, as amended by
R.A. No. 10151)
Night Shift Differential, defined (R.A. 10151)
Definition: Every employee shall be paid a night shift
differential of not less than 10% of his regular wage
for each hour of work performed between ten o’clock
in the evening (10 pm) and six o’clock in the morning
(6 am). (Labor Code, Art. 86)
Coverage:
This benefit applies to ALL employees EXCEPT:
(Go-FR-PMS)
1. Those of the government and any of its
political subdivisions, including government-
owned and/or controlled corporations;
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
LABOR
irrespective of the time consumed in the
performance thereof. (IRR Labor Code,
Book III, Rule II, Sec. 1)
NSD = (10% x regular wage/hr.) x no. of hrs. of
work between 10 pm – 6 am
NOTE: If work done between 10 pm and 6 am is OT
work, the NSD should be based on the OT rate.
NOTE: Additional compensation for nighttime work is
founded on public policy. (Mercury Drug v. Dayao,
G.R. No. L-30452) NSD is not waivable except for
higher and bigger benefits.
d. Overtime Work
OVERTIME PAY (OT)
Work exceeding eight hours within the worker’s 24-
hour workday regardless whether the work covers 2
calendar days. Work within the employee’s shift is not
overtime.
Coverage:
This benefit applies to all employees EXCEPT
(Go-Ma-Off-FiFa-DoPe):
1. Government employees
2. Managerial employees if they meet all of
the following conditions:
(a) Their primary duty consists of the management
of the establishment in which they are employed or
of a department or sub-division thereof.
(b) They customarily and regularly direct the work of
two or more employees therein.
(c) They have the authority to hire or fire employees
of lower rank; or their suggestions and
recommendations as to hiring and firing and as to
the promotion or any other change of status of other
employees, are given particular weight. (IRR Labor
Code, Book III, Rule I, Sec. 2)
3. Officer or members of a managerial staff
if they perform the following duties and
responsibilities:
a. The primary duty consists of the
performance of work directly related
to management policies of their
employer;
b. Customarily and regularly exercise
discretion and independent
judgment; and
c. (i) Regularly and directly assist a
proprietor or a managerial
employee whose primary duty
consists of the management of the
establishment in which he is
employed or subdivision thereof; or
(ii) execute under general
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supervision work along specialized
or technical lines requiring special
training, experience, or knowledge;
or (iii) execute, under general
supervision, special assignments
and tasks; and
d. Who do not devote more than 20
percent of their hours worked in a
work week to activities which are
not directly and closely related to
the performance of the work
described in paragraphs (1), (2) and
(3) above.
4. Non-agricultural Field Personnel
Non-agricultural employees who regularly perform
their duties away from the principal place of
business or branch office of the employer and
whose actual hours of work in the field cannot be
determined with reasonable certainty) (Autobus
Transport v. Bautista, G.R. No. 156367, 2005)
If employee is paid on a monthly salary basis, the
daily rate is obtained by the following formula:
monthly salary x 12 ___
Daily Rate = Total no of days considered
paid in a year
It is permissible for the employer to stipulate that the
employee’s monthly salary constitutes payment for
all the days of the month, including rest days and
holidays, where the employee’s monthly salary, when
converted by the increased divisor into its daily
equivalent, would still meet minimum wage. (Interphil
Laboratories Employees Union-FFW v. Interphil
Laboratories, Inc., G.R. No. 142824, 2001)
Regular Wage
Includes the cash wage only, without deduction on
account of facilities provided by the employer. (Bisig
ng Manggagawa ng Philippine Refining Co. v.
Philipine Refining Co., G.R. No. L-2776, 1981)

5. Members of the Family of the employer

NOTE: When the overtime work is performed on the
who are dependent on him for support
employee’s rest day or on special days or regular
holidays (Labor Code, Arts. 93-94), the premium pay
6. Domestic Helpers
must be included in the computation of overtime pay
The mere fact that the househelper or domestic
(Bureau of Working Conditions, Handbook on
servant is working within the premises of the
Worker’s Statutory Monetary Benefits, p. 19, 2006)
business of the employer and in relation to or in
connection with its business, as in its staff houses
Overtime Pay Premium Pay
for its guest or even for its officers and employees,
Additional Additional
warrants the conclusion that such househelper or
compensation for work compensation required
domestic servant is and should be considered as a
performed beyond 8 by law for work
regular employee of the employer and not as a
hours a day. Every performed within 8
mere family househelper or domestic servant. (Apex
employee who is hours on non-working
Mining Company v. NLRC, G.R. No. 94951, 1991).
entitled to premium pay days, such as rest
is likewise entitled to days, and regular and
7. Persons in the personal service of
the benefit of overtime special holidays.
another
pay.
8. Workers who are paid by Results (IRR
Labor Code, Book III, Rule I, Sec. 2) Conditions to be entitled to OT pay
1. Actual rendition of OT work
2. Submission of sufficient proof that said work was
Overtime Pay Rates
actually performed (Cagampan v. NLRC, G.R.
SCENARIO RATE
No. 85122-24)
OT ON A Regular wage + at least
3. OT work is with the knowledge and consent of
REGULAR DAY 25% thereof
the employer (Azucena, 254)
OT ON A Rest day or special holiday
HOLIDAY/SPECIAL wage rate (130%) + 30% NOTE: On rest days and holidays, written authority
DAY/EMPLOYEES thereof.
after office hours is required for entitlement to
REST DAY
compensation (Global Incorporated v. Atienza)
OT ON A HOLIDAY Rest day & holiday wage
WHICH FALLS ON rate (150%) + 30% thereof. Proof of Hours Worked
A REST DAY Entitlement to overtime pay must first be established
NOTE: Since OT work is considered hourly, the pay by proof that said overtime work was actually
rate is computed on per hour basis. The daily wage performed, before an employee may avail of said
is divided by 8 to get the hourly base rate. benefit. (Lagatic v. NLRC, G.R. No. 121004, 1998)

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Burden of Proof: When an employer alleges that
his employee works less than the normal hours of
employment as provided for in the law, the employer
bears the burden of proving his allegation with clear
and satisfactory evidence. (Prangan v. NLRC, G.R.
No. 126569, 1998)
Emergency OT Work
General Rule: Employees cannot be compelled to
render overtime work against their will.
Exceptions: (P2W2IM)
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 (IRR Labor
Code, Book III, Rule I, Sec. 10)
3. Note: This is an exclusive list. (IRR Labor
Code, Book III, Rule I, Sec. 10)
Undertime NOT offset by OT
Offsetting of undertime hours against the OT hours
whether on the same or any other day is prohibited
by law. (Labor Code, Art. 88)
Overtime pay does not preclude night shift
differential pay
When the tour of duty of a laborer falls at nighttime
[between 10:00pm and 6:00am], the receipt of
overtime pay will not preclude the right to night
differential pay. The latter is payment for work done
during the night while the other is payment for the
excess of the regular eight-hour work. (Naric v. Naric
Workers Union, G.R. No. 12075, 1959)
LABOR
Waiver of overtime pay
Right to OT pay cannot be waived. But when the
alleged waiver of OT pay is in consideration of
benefits and privileges, which may even exceed the
OT pay, the waiver may be permitted. (Bisig
Manggagawa sa Tryco v. NLRC, G.R. No. 151309,
2008)
In Intertranz Container Lines, Inc. v. Bautista, (G.R.
No. 187693, 2010), the Court held that an employee
may not sweepingly claim that overtime work was
performed and consequent payment for such work is
compensable absent any evidence that overtime
work was indeed performed considering that a pre-
approved overtime schedule and daily time record is
required before overtime pay can be claimed.
While as a general rule, the parties may enter into
any kind of stipulation in a contract and the same
shall be considered as the law between them,
however, it must be emphasized that a labor contract
is not an ordinary contract since it is impressed with
public interest. Thus, the parties are prohibited to
enter into any stipulation which may result in the
reduction of any employee benefits. (Labor Code,
Art. 100; Republic Planters Bank v. NLRC, G.R.
117460, 1997)
The employer and the employee are not prohibited
under the law to enter into an agreement for the
increase of whatever benefit being mandated by law
for the simple reason that any such increase certainly
redounds to the benefit of the employee. Thus, the
employer and the employee may legally and validly
agree to increase the minimum percentage provided
for night differential pay, overtime pay, and premium
pay. (Republic Planters Bank v. NLRC, G.R. 117460,
1997)
Note: Compressed work week is an exception to OT
(DOLE Advisory No. 2-04)
Work Hours of Seamen
Seamen are required to stay on board of their vessels
by the very nature of their duties, and it is for this
reason that, in addition to their regular compensation,
they are given free living quarters to be on board. It
could not have been the purpose of the law to require
their employers to pay them overtime pay even when
they are not actually working. The correct criterion in
determining whether sailors are entitled to overtime
pay is whether they actually rendered service in
excess of said number of hours. (Cagampan v.
NLRC, G.R. No. 85122-24, 1991)
Composite or package pay is not per se illegal
Composite or “package pay” or “all-inclusive salary”
is an arrangement where the employee’s salary
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includes the overtime pay. The overtime pay is “built-
in” (Trans-Asia Phils. Employees Association v.
NLRC, G.R. No. 118289, 1999)
Two conditions for validity of such arrangement:
1) There is a clear written arrangement knowingly
and freely entered by the employee; and
2) The mathematical result shows that the agreed
legal wage rate and the overtime pay, computed
separately, are equal to or higher than the separate
amounts legally due (Damasco v. NLRC, G.R. No.
115755, 2000)
Synthesis: Overtime Rules
1) An employer cannot compel an employee to work
overtime
Exception: Emergency overtime work (Labor Code,
Art. 89)
2) Additional compensation is demandable only if
the employer had knowledge and consented to the
overtime work rendered by the employee
Exception: Express approval by a superior NOT a
requisite to make overtime compensable:
a. If the work performed is necessary, or that it
benefited the company; or
b. 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 (Manila Railroad Co. v. CIR,
G.R. No. L-4614, 1952)
NOTE: The claim for overtime is not justified in the
absence of a written authority to render overtime
after office hours during Sundays and holidays
(Global Incorporate v. Atienza, G.R. No. L-51612,
1986)
3) Compensation for work rendered in excess of the
8 normal working hours a day
a. For ordinary days, additional 25% of the
basic hourly rate
b. For rest day/special day/holiday, additional
30% of the basic hourly rate
4) A given day is considered an ordinary day, unless
it is a rest day
5) Undertime does not offset overtime (Labor Code,
Art. 88)
e. Compressed Work Week (CWW)
Department Order No. 21-90/ DOLE Advisory No. 2-
09 and No. 02-04
LABOR
Resorted to by the employer to prevent serious
losses due to causes beyond his control (i.e. when
there is substantial slump in demand for his goods
and services or when there is lack of raw materials).
(DOLE Explanatory Bulletin, July 23, 1985)
Under this scheme, the number of workdays is
reduced, but the number of work hours in a day is
increased to more than eight (8), but no overtime pay
may be claimed. Thus, a CWW scheme is an
alternative arrangement wherein the normal
workweek is reduced to less than six (6) days but the
total number of normal work hours per week shall
remain at 48 hours. (Azucena Vol. I, 9th ed., p. 265).
Conditions for implementation of the CWW
(DOLE Department Advisory No. 02 Series of
2004)
a. The scheme is expressly and voluntarily
supported by majority of employees affected;
b. 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 (8) hours is
within the limits or levels of exposure set by
DOLE’s occupational safety and health
standards; and
c. The DOLE Regional Office is duly notified.
Effects of a CWW Scheme:
a. Unless there is a more favorable practice existing
in the firm, work beyond eight (8) hours will not be
compensable by overtime premium provided the
total number of hours worked per day shall not
exceed twelve (12) hours. In any case, any work
performed beyond 12 hours a day or 48 hours a
week shall be subject to overtime premium.
b. Consistent with Articles 85 of the Labor Code,
employees under a CWW scheme are entitled to
meal periods of not less than sixty (60) minutes.
Nothing herein shall impair the right of employees
to rest days as well as to holiday pay, rest day
pays or leaves in accordance with law or
applicable collective bargaining agreement or
company practice.
c. Adoption of the CWW scheme shall in no case
result in diminution of existing benefits. Reversion
to the normal eight-hour workday shall not
constitute a diminution of benefits. The reversion
shall be considered a legitimate exercise of
management prerogative, provided that the
employer shall give the employees prior notice of
such reversion within a reasonable period of time.
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Health Personnel in Hospitals and Clinics
Hospital and clinic personnel can start and end work
at any hour on any day but would not work for more
than 8 hours in a day, nor more than 40 hours in one
week.
Hospital and clinic personnel may be scheduled to
work for more than 5 days or 40 hours in a week, if
they are paid overtime. (+ at least 30% regular rate).
(Labor Code, Art. 83)
Power Interruptions/Brownout
Brownouts not exceeding twenty (20) minutes
shall be treated as hours worked.
Brownouts running for more than twenty (20)
minutes may not be treated as hours worked
provided that any of the following conditions are
present:
a. The employees can leave their work place or
go elsewhere whether within or without the
work premises; or
b. The employees can use the time effectively
for their own interest. (Policy Instruction No.
36, cited in Durabuilt Recapping Plant & Co.
vs. NLRC, G.R. No. 76746, 1987)
The time during which an employee is inactive by
reason of work interruptions beyond his control is
considered working time, either if the imminence of
the resumption of work requires the employee’s
presence at the place of work or if the interval is too
brief to be utilized effectively and gainfully in the
employee’s own interest. (IRR Labor Code, Sec. 4[d],
Rule 1, Book III)
3. Rest Periods
Weekly Rest Periods – applies to all employers
whether operating for profit or not, including public
utilities operated by private persons
It is the duty of every employer, whether operating for
profit or not, including public utilities operated by
private persons, to provide each of his employees a
rest period of not less than 24 consecutive hours for
every 6 normal work days. (Labor Code, Art. 91)
Business on Sundays/Holidays – All
establishments and enterprises may operate or open
for business on Sundays and holidays provided that
the employees are given the weekly rest day and the
benefits as provided.
Who Determines Weekly Rest Days
The employer determines and schedules the weekly
rest period subject to the following:
LABOR
1. Collective Bargaining Agreement;
2. Rules and regulations issued by the
Secretary of Labor; and
3. Employee’s preference based on religious
grounds
Preference of employee – The preference of the
employee as to his weekly day of rest shall be
respected by the employer if the same is based on
religious grounds. (Labor Code, Art. 91)
The employee shall make known his preference to
the employer in writing at least seven (7) days
before the desired effectivity of the initial rest day so
preferred. (IRR Labor Code, Sec. 4, Rule III, Book III)
Exception: Where, the choice of the employee as to
his rest day based on religious grounds will inevitably
result in serious prejudice or obstruction to the
operations of the undertaking and the employer
cannot normally be expected to resort to other
remedial measures, the employer may schedule
the weekly rest day of his choice for at least two
(2) days in a month. (IRR Labor Code, Sec. 4, Rule
III, Book III)
Schedule of Rest Day
a. Where the weekly rest is given to all employees
simultaneously – the employer shall make
known such rest period by means of a written
notice posted conspicuously in the work place at
least one week before it becomes effective 

b. Where the rest period is not granted to all
employees simultaneously and collectively – the
employer shall make known to the employees
their respective schedules of weekly rest through
written notices posted conspicuously in the work
place at least one week before they become
effective 

Employer May Require Work on Rest Day
General Rule: The employer may not require the
employees to work on a rest day.
Exceptions: (UAAP FAN)
1. In case of Urgent work to be performed on
machineries, equipment or installations to
avoid serious loss which the employer would
otherwise suffer
2. In case of Actual or impending
emergencies caused by serious accident,
fire, flood, typhoon, earthquake, epidemic or
other disaster or calamity, to prevent loss of
life or property, or in cases of force majeure
or imminent danger to public safety
3. In the event of Abnormal pressure of work
due to special circumstances, where the
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employer cannot ordinarily be expected to
resort to other measures
4. To prevent serious loss of Perishable goods
5. Where the Nature of the work is such that
the employees have to work continuously for
7 days in a week or more, as in the case of
the crew members of a vessel to complete a
voyage and in other similar cases (IRR
Labor Code, Sec. 6, Rule III, Book III)
6. Under other Analogous or similar
circumstances
7. Where nature of work requires continuous
operations and the stoppage of work may
result in irreparable injury or loss to the
employer (Labor Code, Art. 92)
Other than the above circumstances, no employee
shall be required against his will to work on his
scheduled rest day.
When an employee volunteers to work on his rest day
under other circumstances, he shall express such
desire in writing, subject to payment of additional
compensation. 

An employee shall be entitled additional
compensation for work performed on a Sunday only
when it is his established rest day.
The failure to work during an employer’s rest day
does not justify the disciplinary sanction of outright
dismissal from employment as such is so severe a
consequence, moreso when justifiable grounds exist
for said failure (Remerco Garments Manufactuing v.
Minister of Labor, G.R. No. L-56176-77, 1985)
Employees NOT covered
Employees excepted under Article 82 of the Labor
Code are, generally, not covered by the rule on
additional compensation.
Remuneration of employee working on a rest day
– REGULAR REMUNERATION (100%) + PREMIUM
PAY (additional sum of at least 30% of the regular
remuneration)
Note: There can be no valid waiver of compensation
for work done on a rest day or holiday.
Synthesis of the Rules
1. Rest day of not less than 24 consecutive hours
after 6 consecutive days of work. 

2. No work, no pay principle applies 

3. If an employee works on his designated rest day,
he is entitled to a premium pay. 

4. Premium pay is additional 30% of the basic pay.
LABOR
5. Employer selects the rest day of his employees


6. However, employer must consider the religious
reasons for the choice of a rest day.
7. When the choice of the employee as to his rest
day based on religious grounds will inevitably
result in serious prejudice or obstruction to the
operations and the employer cannot normally be
expected to resort to other measures, the
employer may so schedule the weekly rest day
of his choice for at least two days in a month.
(IRR Labor Code, Sec. 4, Book III, Rule III)
4. Holidays
Holiday Pay: Coverage; Exclusions
Right to Holiday Pay
Holiday pay refers to the payment of the regular daily
wage for any unworked regular holiday. (Handbook
on Workers’ Statutory Monetary Benefits, Bureau of
Working Conditions, p. 12, 2016)
Coverage:
General Rule: Applies to ALL employees.
Exceptions:
1. Those of the government and any of the
political subdivision, including government-
owned and controlled corporation;
2. Those of retail and service establishments
regularly employing less than ten (10)
workers;
3. Domestic helpers and persons in the
personal service of another;
4. Managerial employees as defined in Book
Three of the 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.cralaw(IRR Labor
Code, Sec. 1, Rule IV, Book III)
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Regular Holidays Double Holiday

1. New Year’s Day – Jan. 1 1. If unworked – employee entitled to 200% of basic
2. Maundy Thursday – Movable Date wage, provided he was present or on leave with
3. Good Friday – Movable Date pay on the preceding work day
4. Araw ng Kagitingan – April 9 2. If worked – employee entitled to 300% of basic
5. Labor Day – May 1 wage. Only an employee who works on the day
6. Independence Day – June 12 immediately preceding or after a regular holiday
7. Nat’l Heroes Day – Last Mon. of Aug. shall be entitled to the holiday pay. A paid legal
8. Bonifacio Day – Nov. 30 holiday occurring during the scheduled vacation
9. Eid al Fit’r – Movable Date leave will result in holiday payment in addition to
10. Eid al Adha – Movable Date normal vacation pay but will not entitle the
11. Christmas Day – Dec. 25 employee to another vacation leave. (Asian
12. Rizal Day – Dec. 30 Transmission v. CA, GR No. 144664, March 15,
2004)
Special Days
1. Ninoy Aquino Day – August 21 Holiday-Sunday
2. All Saints’ Day – Nov. 1 A legal holiday falling on a Sunday creates no legal
3. Last Day of the Year – Dec. 31 obligation for the employer to pay extra, aside from
4. Special Non-Working Days the usual holiday pay, to its monthly-paid employees.
5. Special Public Holidays
6. Special National Holiday
In cases temporary cessation of work
Muslim Holidays Regular holidays falling within this period are
General Rule: Muslim holidays are observed only in compensable (i.e. yearly inventory, repair or cleaning
specified areas of machineries or equipment, etc).
1. Amun Jadid (New Year)
2. Maulid un-Nabi (Birthday of the Prophet However, in the case of a regular holiday during the
Muhammad) cessation of operations due to business reverses as
3. Lailatul Isra Wal Miraj (Nocturnal Journey and the authorized by the Secretary of Labor, the employer
Ascencion of the Prophet Muhammad) may not pay the regular holidays during this period.

Exception: Eid al Fit’r and Eid ul Adha (Celebrated
nationwide)
Muslim employees working outside of the specified
areas shall be excused from reporting for work during
the observance of the Muslim holidays as recognized
by law, without diminution of salary or wages during
the period.
Considering that all private corporations, offices,
agencies, and entities or establishments operation
within the designated Muslim provinces and cities are
required to observe Muslim holidays, both Muslims
and Christians working within the Muslim areas
may not report for work on the days designated
by law as Muslim Holidays. (SMC v. CA, G.R. No.
146775, January 30, 2002).
Successive Regular Holidays
Where there are 2 successive regular holidays, like
Holy Thursday and Good Friday, an employee may
not be paid for both holidays if he absents himself
from work on the day immediately preceding the first
holiday, unless he works on the first holiday, in which
case he is entitled to his holiday pay on the second
holiday.
In cases of periodic and temporary closures, the
Omnibus Rules Implementing the Labor Code
Book 3 Rule IV Section 7 provides that in cases of
temporary or periodic shutdown and temporary
cessation of work of an establishment, as when a
yearly inventory or when the repair of cleaning
machines and equipment is undertaken, the regular
holidays falling within the period shall be
compensated.
Teachers, Pieceworkers, Takay, Seasonal
Workers, Seafarers
Holiday Pay of Certain Employees:
1. Private School teachers including faculty
members of college and universities – may
not be paid for the regular holidays during
semestral vacations. Paid for the regular
holidays during Christmas vacation (Jose Rizal
College v. NLRC & NATOW, G.R. No. L-65428,
1987)
2. Employee paid by results (payment on piece-
work) – holiday pay shall not be less than his
average daily earnings for the last 7 actual
working days preceding the regular holiday;
Provided, However, that in no case shall the

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holiday pay be less than the applicable statutory 251. (Chartered Bank v. Ople, GR No. L-44717,
minimum wage rate 1985)
3. Seafarers – any hours of work or duty including
hours of watch keeping performed on designated Outline of Rules on Payment of Holiday Pay
rest days and holidays shall be paid rest day or
holiday REGULAR HOLIDAYS
4. Seasonal workers – may not be paid the Falling on a regular work day
required holiday pay during off-season when
100% (EXCEPT: in retail and
they are not at work Unworked
service establishments employing
5. Workers without regular working days –
less than 10 workers)
entitled to the benefits, under item d, Section 8,
First 8 Hours 200%
Rule IV of the Omnibus Rules Implementing the
Labor Code. + 30% of
Worked
Excess of 8 Hours hourly rate
on said day
Holiday pay is a legislated benefit enacted as part of
Falling on a rest day
the Constitutional imperative that the State shall
afford protection to labor. Its purpose is not merely Unworked 100%
“to prevent diminution of the monthly income of the + 30% of
First 8 hours
workers on account of work interruptions. In other 200%
words, although the worker is forced to take a rest, + 30% of
Worked
he earns what he should earn, that is, his holiday Excess of 8 hours hourly rate
pay.” (RFM Corporation v. Kasapian, GR No. on said day
162324, 2009) SPECIAL DAYS

There is no provision of law requiring any employer NO PAY, unless there is a

to make such adjustments in the monthly salary rate favorable company policy, practice
Unworked
set by him to take account of legal holidays falling on or CBA granting payment of wages
Sundays in a given year, or, contrary to the legal on special days even if unworked
provisions bearing on the point, otherwise to reckon
a year at more than 365 days. What the law requires + 30% of the
of employers opting to pay by the month is to assure First 8 hours daily rate
that “the monthly minimum wage shall not be less (100%)
than the statutory minimum wage multiplied by 365 Worked + 30% of
days divided by twelve,” and to pay that salary “for all Excess of 8 hours hourly rate
days in the month whether worked or not,” and on said day
“irrespective of the number of working days therein.” +50% of
(Wellington v. Trajano, GR No. 114698, 1995) Worked & First 8 hours
daily rate
Divisors Falling On A
+30% of
The divisor assumes an important role in determining Rest Day Excess of 8 hours
hourly rate
whether or not holiday pay is already included in the SPECIAL WORKING HOLIDAYS – only the
monthly paid employee’s salary and in the basic rate
computation of his daily rate. (Union of Filipro Empl.
V. Vivar, Jr., G.R. No. 79255, 1992)
5. Service Charge
The divisor used in arriving at an employee’s daily
rate for the purpose of computing salary-related Definition:
benefits is 261. From the 365 days in a year, we Service charges are considered part of the cost of the
deduct 104 rest days which gives a total of 261 days. food, goods, or services ordered by the customers.
Now, if 261 days is the number of working days of the
employees then, there is a disputable presumption Establishments
that the employees are paid their holiday pay. Applies only to establishments collecting service
(Producer’s Bank v. NLRC, G.R. No.100701, 2001) charges such as hotels, restaurants, lodging houses,
night clubs, cocktail lounge, massage clinics, bars,
The 251 working days divisor is the result of casinos and gambling houses, and similar
subtracting all Saturdays, Sundays and the ten (10) enterprises, including those entities operating
legal holidays from the total number of calendar days primarily as private subsidiaries of the Government.
in a year. If the employees are already paid for all (Labor Code, Art. 96)
non-working days, the divisor should be 365 and not

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Coverage
All employees of covered employers, regardless of
their positions, designations or employment status,
and irrespective of the method by which their wages
are paid
EXCEPT to managerial employees
Service Charge different from Tip
Tip, not normally part of the salary, it being given
voluntarily by the customer. Service charges are
considered part of the cost of the food, goods, or
services ordered by the customers.
Distribution
a. 85% distributed equally among the covered
employees
b. 15% for the disposition by management to
answer for losses and breakages and
distribution to managerial employees at the
discretion of the management in the latter
case
c. Distributed and paid to the employees not
less than once every 2 weeks or twice a
month at intervals not exceeding 16 days
d. Supervisors share in the 15%. LC speaks of
“management,” and not “managerial
employees.”
Abolition and Integration
In case the service charge is abolished, the share of
the covered employees shall be integrated into their
wages. (Labor Code, Art. 96)
The basis of the amount to be integrated shall be the
average monthly share of each employee for the past
12 months immediately preceding the abolition of
withdrawal of the charges. (IRR Labor Code, Sec. 5,
Rule VI, Book 3)
6. 13th Month Pay
Governing Laws
P.D. No. 851 (The 13th-month Pay Law) and the
Revised Guidelines on the Implementation of the
13th Month Pay Law
Coverage:
All employers are required to pay all their rank-and-
file employees, a 13th month pay not later than
December 24 of every year, provided that they have
worked for at least 1 month during a calendar year.
Exempted employers:
LABOR
 Government and any of its political
subdivisions, including GOCCs, except
those corporations operating essentially as
private subsidiaries of the Government;
 Employers already paying their employees
13th month pay or more in a calendar year
or its equivalent at the time of issuance of
PD 851
o “Its equivalent” – includes Christmas
bonus, mid-year bonus, cash bonuses
and other payments amounting to not
less than 1/12 of the basic salary but
shall not include cash and stock
dividends, COLA and all other
allowances regularly enjoyed by the
employee as well as non-monetary
benefits.
 Employers of household helpers and
persons in the personal service of another in
relation to such workers
 Employers of those who are paid on
commission, boundary, or task basis, and
those who are paid a fixed amount for
performance of a specific work, irrespective
of the time consumed in the performance
thereof
Exception: where the workers are paid on a piece-
rate basis, in which case the employer shall grant
the required 13th month pay to such workers.
 Piece Rate – employees 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.
Computation of 13th month pay
13th Month Pay = 1/12th of the basic salary of an
employee within a calendar year.
Basic Salary
INCLUDES:
All remunerations or earnings paid by an employer
to an employee for services rendered .
DOES NOT INCLUDE:
1. Cost of living allowances (COLA),
2. Profit-sharing payments and
3. All allowances and monetary benefits (e.g.
unused VL and sick leave credits, OT
premium, night differential and holiday pay)
which are not considered or integrated as part
of the regular or basic salary of the employee.
However, the above should be included in the
computation if by individual or collective
agreement, company practice or policy.
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Time of Payment
The thirteenth-month pay shall be paid not later than
December 24 of every year. An employer, however,
may give to his or her employees one-half (1/2) of the
thirteenth-month pay before the opening of the
regular school year and the remaining half on or
before December 24 of every year.
The frequency of payment of this monetary benefit
may be the subject of an agreement between the
employer and the recognized/collective bargaining
agent of the employees.
13th Month Pay for Certain Types of Employees
12. Employees paid by results – entitled to 13th
month pay
13. Those with Multiple Employers – entitled to the
13th month pay from all their private employers
regardless of their total earnings from each or all
of their employers
14. Private School Teachers – 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.
13th Month Pay of Resigned or Separated
Employee
Employee is entitled to the benefit in proportion to the
length of time he worked during the year, reckoned
from the time he started working during the calendar
year up to the time of his resignation or termination
from the service. Can be demanded by the employee
upon the cessation of EER.
Non-inclusion in Regular Wage
Benefit need not be credited as part of regular wage
of employees for purposes of determining OT pay
and premium pays, fringe benefits as well as
contributions to the state insurance fund, Social
Security, Medicare, and private retirement plans.
Nature of 13th month pay
All employers are hereby required to pay all their
employees receiving a basic salary of not more than
P1,000 a month, regardless of the nature of their
employment, a 13th-month pay not later than
December 24 of every year. (P.D. No. 851, Sec. 1)
The payment of a thirteenth-month pay is a statutory
grant, and compliance therewith is mandatory. The
benefit is deemed written in every CBA.
Food and other material things are not substitute for
13th month pay.
th
Proportionate 13 month pay accrues to employees
who worked only for a period of less than twelve
months in a given year.
LABOR
Note: 13th month pay is a non-strike able issue.
Commissions vis-à-vis 13th month pay
If the commissions may be properly considered part
of the basic salary – included in computing the 13th
month pay
If the commissions are not part of basic salary –
excluded.
In Boie-Takeda Chemicals v. Hon. Laserna (GR No.
92174, 1993) we note that productivity bonuses are
generally tied to the productivity, or capacity for
revenue production, of a corporation; such bonuses
closely resemble profit-sharing payments and have
no clear director necessary relation to the amount of
work actually done by each individual employee.
More generally, a bonus is an amount granted and
paid ex gratia to the employee; its payment
constitutes an act of enlightened generosity and self-
interest on the part of the employer, rather than as a
demandable or enforceable obligation.
In principle, where these earnings and remuneration
are closely akin to fringe benefits, overtime pay or
profit-sharing payments, they are properly excluded
in computing the 13th month pay. However, sales
commissions which are effectively an integral portion
of the basic salary structure of an employee, shall be
included in determining his 13th month pay.
(Philippine Duplicators v. NLRC, GR No. 110068,
1995)
CBA vis-à-vis 13th month pay
Employers who are already paying their employees a
13th month pay “or its equivalent” are not covered by
the decree.
Note: “Equivalent” includes:
a) Christmas bonus, mid-year bonus, cash bonuses;
b) and Other payments amounting to not less than
1/12 of the basic salary;
c) But shall not include cash and stock dividends,
cost of living allowances, and all other allowances
regularly enjoyed by the employee as well as non-
monetary benefits (IRR P.D. 851, Sec. 3[e])
An employer is not obliged to give a 13th month salary
in addition to other bonuses stipulated in a CBA
amounting to more than a month’s pay. (See
Brokenshire Memorial Hospital Inc., v. NLRC, G.R.
No. L-69741, 1986)
In Relation to Collective Bargaining Agreements
and Employer-Employee Agreements
Nothing in the Rules shall prevent the employer and
employee from entering into any agreement with
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terms more favorable to the employees than those

granted therein, or be used to diminish any benefit WAGE SALARY
granted to the employees under existing laws, Paid for skilled or Paid to white collar
agreement AND voluntary employer practice. (Sec. unskilled manual workers and denote a
6, Rule VI, Book 3, IRR) 
 labor higher grade of
employment
The rule is without prejudice to existing, future Not subject to Not exempt from
collective bargaining agreements. (Sec. 7, Rule VI, execution, execution, garnishment
Book 3, IRR) 
 garnishment or or attachment. (Gaa v.
attachment except for CA, G.R. No. L-44169,
Synthesis of the Rules debts related to 1985)
1. Service charges must be pooled; 
 necessities (Civil
2. Where a restaurant or similar establishment Code, Art. 1708)
does not collect service charges but has a
practice or policy of monitoring and pooling tips Minimum wage is set by law or wage order issued by
given voluntarily by its customers to its the Regional Tripartite Wages and Productivity
employees, the pooled tips should be monitored, Boards (RTWPB’s) or the rate which may be fixed by
accounted for and distributed in the same the employer provided the same is not lower than the
manner as the services charges. (DOLE legally mandated minimum wage for agricultural or
Handbook on Workers’ Statutory Monetary non-agricultural workers.
Benefits, 2014ed.)
3. The amount collected is divided between the Wage or Salary includes:
company (15%) and employees (85%); 
 Commission; Facilities; and Commodities/
4. It shall be given twice a month with intervals of Supplements
not more than 16 days; 

If discontinued, removed, or stopped, the average 1. PAYMENT OF WAGES
share of the employees of their service charge or
tips shall be integrated with their basic wage. 
 Means of Payment
The employer cannot pay his workers by means of
B. WAGES any of the following:
a) Vouchers;
b) Promissory notes;
Wages paid to any employee shall mean the:
c) Any object other than legal tender;
1. Remuneration or earnings, however designated, d) Coupons;
capable of being expressed in terms of money, e) Chits;
whether fixed or ascertained on a time, task, f) Tokens; or
piece, or commission basis, or other method of g) Tickets (Labor Code, Art. 102)
calculating the same, which is payable by an
employer to an employee under a written or General Rule: No employer shall pay the wages of
unwritten contract of employment for work done an employee by any other means other than legal
or to be done, or for services rendered or to be tender, even when expressly requested by the
rendered; employee. (Congson v. NLRC, G.R. No. 114250,
April 5, 1995)
2. INCLUDES, the fair and reasonable value, as
Exception: Payment of wages by bank checks,
determined by the DOLE Secretary, of board,
postal checks or money orders is allowed where:
lodging, or other facilities customarily furnished 1. Such manner of wage payment is customary
by the employer to the employee. (Labor Code, on the date of the Labor Code’s effectivity;
Art. 97) 2. It is stipulated in a collective agreement;
3. All of the following conditions are met; or
"Fair and reasonable value" shall not include a. There is a bank or other facility for
any profit to the employer, or to any person encashment within a radius of 1 kilometer
affiliated with the employer. (Id.) from the workplace
b. The employer or any of his agents or
representatives does not receive any

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pecuniary benefit directly or indirectly
from the arrangement
c. The employees are given reasonable
time during banking hours to withdraw
their wages from the bank which time
shall be considered as compensable
hours worked if done during working
hours
d. The payment by check is with the written
consent of the employees concerned if
there is no collective agreement
authorizing the payment of wages by
bank checks
4. Necessary because of special circumstances as
specified in appropriate regulations issued by the
Secretary of Labor (IRR Labor Code, Sec. 2,
Rule VIII, Book III)
Time of Payment
General Rule: At least once every 2 weeks or twice
a month at intervals not exceeding 16 days.
Exceptions:
1. In case of force majeure or other circumstances
beyond the employer’s control, payment must be
made immediately after such occurrence has
ceased; and
2. In case of payment of wages by result involving
work which cannot be completed in two weeks
and in the absence of CBA or arbitration award:
- Payments are made at intervals not
exceeding 16 days, in proportion to the
amount of work completed; and
- Final settlement is made upon completion
of the work. (IRR Labor Code, Sec. 3, Rule
VIII, Book III)
In ALL Cases: No employer shall make payment
with less frequency than once a month.
If on account of force majeure or circumstances
beyond the employer’s control, payment of wages on
or within the time herein provided cannot be made,
the employer shall pay the wages immediately after
such force majeure or circumstances have ceased.
Place of Payment
General Rule: Payment of wages shall be made at
or near the place of undertaking
Exceptions: Payment in a place other than the work
place shall be permissible only under the following
circumstances:
LABOR
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
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
(Labor Code, Art. 103; IRR Labor Code, Sec.
4, Rule VIII, Book III)
Prohibited Place of Payment
General Rule: Payment cannot be made in a 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
Exception: Persons employed in the
abovementioned places may be paid there (IRR
Labor Code, Sec. 4[b], Rule VIII, Book III)
Payment through Banks; Requisites
1. There must be a written permission of the
majority of the employees concerned in an
establishment
2. The establishment must have 25 or more
employees
3. The establishment must be located within 1
km. radius to the bank.
Payment through ATM; Requisites
Payment through automated teller machines (ATM)
of banks is allowed, provided the ff. conditions are
met [CTARRDR]:
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;
3. The system shall Allow workers to receive
their wages within the period or frequency and
in the amount prescribed under the Labor
Code;
4. There is a bank or ATM facility within a Radius
of one (1) kilometer to the place of work;
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5. Upon request of the concerned employee/s,
the employer shall issue a Record of payment
of wages, benefits and deductions for a
particular period;
6. There shall be no additional expenses and no
Diminution of benefits and privileges as a
result of the ATM system of payment;
7. The employer shall assume Responsibility in
case the wage protection provisions of law
and regulations are not complied with under
the arrangement (DOLE’s Explanatory
Bulletin on Wage Payment Through ATM
Facility, November 25, 1996)
To Whom Wages are Paid
General Rule: Wages shall be paid directly to the
workers to whom they are due (Labor Code, Art. 105)
Exceptions:
1. Payment through another person
(a) In cases of force majeure rendering such
payment impossible or under other special
circumstances to be determined by the
Secretary – the worker may be paid through
another person under written authority given
by the worker for the purpose (Labor Code,
Art. 105[a]); or
(b) When authorized under existing law,
including:
i. Payments for the insurance premiums
of the employee
ii. Union dues where the right to check-off
has been recognized by the employer
in accordance with a collective
agreement
iii. Authorized in writing by the individual
employees concerned (IRR of Labor
Code, Sec. 5[b], Rule VIII)
2. Payment through heirs of the worker
Where the worker has died – the employer may pay
the wages of the deceased worker to the heirs of the
latter without the necessity of intestate proceedings.
(Labor Code, Art. 105[b])
Procedure:
The claimants, if they are all of age (or in case of
a minor, by the natural guardians or next-of-
kin), shall 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
If any of the heirs is a minor, the affidavit shall be
executed on his behalf by his natural
guardian or next-of-kin.
The affidavit shall be presented to the employer
who shall make payment through the
Secretary or his representative. The
representative of the Secretary shall act as
referee in dividing the amount paid among the
heirs.
The payment of wages under this Article shall
absolve the employer of any further liability
with respect to the amount paid.
3. Payment through member of worker’s family
Where the employer is authorized in writing by the
employee to pay his wages to a member of his family
(IRR Labor Code, Sec. 5[a], Rule VIII, Book III)
Summary of Rules on Payment of Wages
Legal tender; Prohibited:
Promissory notes, vouchers,
WHAT MUST
coupons, tokens, tickets, chits,
BE PAID
or any other object other than
legal tender
Once every two weeks or twice
WHEN a month at intervals not
exceeding 16 days
At or near the place of
WHERE
undertaking
Directly to the employee entitled
HOW
thereto
2. PROHIBITIONS REGARDING
WAGES
Deductions from Wages (Labor Code, Art. 113)
General Rule: Wage deduction is strictly prohibited.
Exceptions:
1. With Employee’s Consent in Writing
 SSS payments
 PHILHEALTH payments
 Contributions to PAG-IBIG Fund
 Value of meals and other facilities
 Payments to third persons with employee’s
consent and without pecuniary benefit
 Deduction for unpaid absences
2. Without Employee’s Consent
 Worker’s insurance acquired by the
employer
 Union dues, where the right to check-off has
been recognized by the employer or
authorized in writing by the employee
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 Cases where the employer is authorized by
law or regulations issued by the Secretary of
Labor
 Debts of the employee to the employer that
have become due and demandable
Withholding tax
NOTE: Persons earning minimum wage are
exempted from income tax.
3. When Authorized by Law
 Deposit for loss/breakage (Labor Advisory,
No. 11 [2014], Sec. 3)
 In cases where the employee is indebted to
the employer, where such indebtedness has
become due and demandable (Civil Code,
Art. 1706)
 Court judgment, but only for debts incurred
for food, shelter, clothing, and medical
attendance (Civil Code, Art. 1708)
4. Regulation Issued by the Secretary of Labor
Deposits for Loss or Damage
General Rule: No employer shall require his worker
to make deposits for the reimbursement of loss of or
damage to material, equipment, or tools supplied by
the employer.
Exception: When the trade, occupation or business
of the employer recognizes or considers the practice
of making deductions or requiring deposits necessary
or desirable. (Labor Code, Art. 114)
Requisites for Valid Deduction for Loss/Damage
1. The employee concerned is clearly shown to be
responsible for the loss or damage
2. The employee is given reasonable opportunity to
show cause why deduction should not be made
3. The amount of such deduction is fair and
reasonable and shall not exceed the actual loss
or damage
4. The deduction from the wages of the employee
does not exceed 20% of the employee's wages
in a week (IRR Labor Code, Sec. 11, Rule VIII,
Book III)
Note: Art. 144 provides for the rule on deposits for
the loss or damage to tools, materials, or equipment
supplied by the employer. The same does not apply
to or permit deposits to defray any deficiency, which
the taxi driver may incur in the remittance of
LABOR
“boundary” (Five J Taxi v. NLRC, G.R. No. 111474,
1994)
Prohibited / Unlawful Acts
1. 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. (Labor Code, Art. 116)
2. Deduction from the wages of any employee for
the benefit of the employer or his representative
or intermediary as consideration of a promise of
employment or retention in employment. (Labor
Code, Art. 117)
3. Refuse to pay or reduce the wages and benefits,
discharge or in any manner discriminate against
any employee who has filed any complaint or
instituted any proceeding under this Title or has
testified or is about to testify in such proceedings.
(Labor Code, Art. 118)
4. 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. (Labor Code, Art.
119)
Non-Interference in Disposal of Wages (Civil
Code Provisions)
1. The laborer’s wages shall be paid in legal
currency (Civil Code, Art. 1705)
2. Withholding of wages, except for a debt due,
shall not be made by the employer (Civil Code,
Art. 1706)
3. The laborer’s wages shall be a lien on the goods
manufactured or the work done (Civil Code, Art.
1707)
4. The laborer’s wages shall not be subject to
execution or attachment, except for debts
incurred for food, shelter, clothing, and medical
attendance (Civil Code, Art. 1708)
5. The employer shall neither seize nor retain any
tool or other articles belonging to the laborer
(Civil Code, Art. 1709)
Wage Order
An order issued by the Regional Board whenever the
conditions in the region so warrant after studying and
investigating and studying all pertinent facts and
based on the standards and criteria prescribed by the
Labor Code. (Labor Code, Art. 123)
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A wage order adjusts the minimum level but not the
levels above the minimum. It does not mandate
across the board salary increase.
Employees NOT Covered
1. Household or domestic helpers, including family
drivers and workers in the personal service of
another
2. Workers and employees in retail/service
establishments regularly employing not more
than 10 workers, when exempted from
compliance, for a period fixed by the
Commission/Boards
3. Workers and employees in new business
enterprises outside the National Capital Region
and export processing zones for a period of not
more than two or three years, as the case may
be, from the start of operations when exempted
(R.A. No. 6727)
In addition to setting the minimum wage, the RTWPB
can provide additional exemptions since it is vested
with the competence to determine the industries and
sectors to exempt from the coverage of their wage
orders. (National Wages and Productivity
Commission (NWPC) and the Regional Tripartite
Wages and Productivity Board (RTWPB) vs. Alliance
of Progressive Labor (APL) and the Tunay na
Nagkakaisang Manggagawa sa Royal (TNMR), G.R.
No. 150326, 2014)
Effectivity of Wage Orders
Takes effect after 15 days from its complete
publication in at least one newspaper of general
circulation in the region. (NWPC Guidelines No. 001-
95, Sec. 4, Rule IV)
Public Hearings and Consultations Mandatory
Notice must be given to employees’ and employers’
groups, provincial, city and municipal officials and
other interested parties.
A wage order issued without the required public
consultation and newspaper publication is null and
void.
Frequency
General Rule: A wage order issued by the Board
may not be disturbed for a period of 12 months from
its effectivity and no petition for wage increase shall
be entertained during said period (NWPC Guidelines
No. 001-05, Sec. 3, Rule IV)
LABOR
Exceptions:
15. When Congress itself issues a law
increasing wages; or
4. Supervening conditions, such as extraordinary
increases in prices of petroleum products and
basic goods / services
Standards/Criteria for Minimum Wage Fixing
Must be economically feasible to maintain the
minimum standards of living necessary for the health,
efficiency and general well-being of the employees
within the framework of the national economic and
social development program.
Factors to Consider: (SNAPE CRIED)
1. Improvements in Standards of living
2. The Needs of workers and their families
3. Wage Adjustment vis-à-vis the consumer price
index
4. The Prevailing wage levels
5. Effects on employment generation and family
income
6. The Cost of living and changes or increases
7. Fair Return of the capital invested and capacity
to pay of employers
8. The need to induce Industries to invest in the
countryside
9. The Equitable distribution of income and wealth
along the imperatives of economic and social
development
10. The Demand for living wages (Labor Code, Art.
124)
Appeal
A party aggrieved by a Wage Order may appeal to
the NWPC not later than 10 days from the date of the
publication of the order (NWPC Guidelines No. 001-
95, Sec. 1, Rule V)
Effect of Appeal
General Rule: Appeal does not stay the effect of the
wage order
Exception: Unless the party appealing such order
shall file with the NWPC an undertaking with a
surety/sureties (surety bond) satisfactory to the
Commission for payment to employees affected by
the order for the corresponding increase, in the event
that such order is affirmed (IRR of R.A. No. 6727,
Sec. 5, Rule V)
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Doctrine of Double Indemnity Criterion: In determining whether a privilege is a

Payment to a concerned employee of the prescribed facility, the criterion is not so much its kind but its
increase or adjustments in the wage rate which was PURPOSE (Millares v NLRC & PICOP, G.R. no.
not paid by an employer in an amount equivalent to 122827, 1999)
twice the unpaid benefits owing to such employee
(D.O. No. 10, Sec. 2[1] [1998]) FACILITIES
FACILITIES SUPPLEMENTS
3. FACILITIES VS. SUPPLEMENTS What it is
Necessary items of Extra remuneration or
Facilities
expense, articles, or special privileges/
Articles or services for the benefit of the employee or
services benefits/ articles or
his family but shall not include tools of the trade or
services / tools of the
articles or ; may be deducted from the employees’
trade
wages.
Who Benefits
Acceptance of Facilities For the benefit of the For the benefit or
In order that the cost of facilities furnished by the employee and his convenience of the
employer may be charged against an employee, the family; for their employer
employee’s acceptance of such facilities must be existence and
voluntary. subsistence
Deductibility from wage
Requirements for deducting value of facilities:
Part of the wage Independent of the wage
1. Proof must be shown that such facilities are
Deductible from the Not wage deductible
customarily furnished by the trade
wage
2. The provision of deductible facilities must be
voluntarily accepted in writing by the employee
3. The facilities must be charged at fair and 4. MINIMUM WAGE
reasonable value. (SLL International Cable
Specialists v. NLRC, G.R. No. 172161, 2011). Current Minimum Wage
PhP 512 (Wage Order No. NCR-21)
Note: As regards meals and snacks, the employer
may deduct from the wages not more than 70% of the PhP 512 is the minimum wage for the non-
value of the meals and snacks enjoyed by the Agricultural Sector, and is composed of:
employees, provided that such deduction is Basic Wage of PhP 502 + COLA of PhP 10
authorized in writing by the employees.
Standards/Criteria for minimum wage fixing
The remaining 30% of the value has to be subsidized The regional minimum wages to be established by
by the employer. (IRR Labor Code, Sec. 1, Rule VII- the Regional Board shall be as nearly adequate as is
A, Book III) economically feasible to maintain the minimum
standards of living necessary for the health,
Supplements efficiency and general well-being of the employees
The benefit or privilege given to the employee which within the framework of the national economic and
constitutes an extra remuneration over and above his social development program.
basic or ordinary earning or wage, is supplement. Thus,
free meals supplied by the ship operator to crew In the determination of such regional minimum
members, out of necessity, cannot be considered as wages, the Regional Board shall, among other
facilities but supplements which could not be reduced relevant factors, consider the following:
having been given not as part of wages but as a 1. The demand for living wages;
necessary matter in the maintenance of the health and 2. Wage adjustment vis-à-vis the consumer price
efficiency of the crew personnel during the voyage. index
(States Marine Corporation and Royal Line, Inc. v. Cebu 3. The cost of living and changes or increases
Seamen’s Association, Inc., G.R. No. L-12444, 1963). therein
4. The needs of workers and their families

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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 of the capital invested and capacity to
pay of employees
9. Effects on employment generation and family
income
10. The equitable distribution of income and wealth
along the imperatives of economic and social
development (Labor Code, Art. 124)
Two Methods of fixing the minimum wage rate.
1. Floor Wage Method
Method which involves the fixing of a determinate
amount to be added to the prevailing statutory minimum
wage rates.
2. Salary Cap Method
Method where the wage adjustment is to be applied
to employees receiving a certain denominated salary
ceiling. In other words, workers already being paid
more than the existing minimum wage (up to a certain
amount stated in the Wage Order) are also to be
given a wage increase. (Employers Confederation of
the Philippines v. National Wages and Productivity
Commission, G.R. No. 96169, 1991).
Pursuant to its authority, the Regional Wage Boards
may issue wage orders which set the daily minimum
wage rates. It has no authority to grant an across-
the-board wage increase. (Metropolitan Bank and
Trust Company v. NWPC, 2007).
5. WAGE DISTORTION
Definition of Wage Distortion
A situation where an increase in prescribed wage
rates 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 basis of
differentiation. (Labor Code, Art. 124)
Simply, if the pay advantage of a position over
another is removed or significantly reduced by a pay
adjustment required by a wage order, such pay
advantage should be restored. Manila Mandarin
Employees Union v. NLRC, (G.R. No. 108556, 1996)
LABOR
For a distortion to exist, the law does not require an
elimination or total abrogation of quantitative wage or
salary difference; a severe contraction thereof is
enough. (MBTC Employees Union-ALU-TUCP v.
NLRC, G.R. No. 102636, 1993)
Wage distortion involves comparison of jobs located
in the same region. Examination of alleged salary
distortion is limited to jobs or positions in the same
employer in the same region; thus, the comparison of
salaries has to be intra-region, not inter-region.
(Prubankers Association v. Prudential Bank and
Trust Co., G.R. No. 131247, 1999)
Elements of Wage Distortion:
1. An existing hierarchy of positions with
corresponding salary rates.
2. A significant change in the salary rate of
a lower pay class without a concomitant
increase in the salary rate of a higher
one.
3. The elimination of the distinction
between the two levels.
4. The existence of the distortion in the
same region of the country. (Alliance
Trade unions v. NLRC, G.R. No.
140689, 2004)
Correction of Wage Distortion
A. In case of an ORGANIZED establishment
1. Employer and union shall negotiate to correct
the distortion
2. Any dispute arising should be resolved through
grievance procedure under CBA
3. If dispute remains unresolved, through voluntary
arbitration (Labor Code, Art. 124)
B. In case of an UNORGANIZED establishment
1. The employer and employees shall endeavor to
correct the distortion
2. Any dispute shall be settled through National
Conciliation and Mediation Board (NCMB)
3. If remains unresolved after 10 days of
conciliation, it shall be referred to the NLRC
(Labor Code, Art. 124)
Note: Any issue involving wage distortion is not a
valid ground for a strike or a lockout. (Ilaw at Buklod
ng Manggagawa, G.R. No. 91980, 1991)
Amount of Distortion Adjustment
The restoration of the previous pay advantage is the
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aim but not necessarily to the last peso. Restoration
of appreciable differential, a significant pay gap,
should suffice as correction.
Suggested Formula to Correct a Salary Distortion
Minimum = % x Actual Salary Prescribed
Wage Increase
The distortion that should be rectified refers to
distortion arising from compliance with a government
wage order. It does not refer to distortion caused by
salary revisions voluntarily initiated by the employer
unless such a duty exists because of a CBA
stipulation or company practice. (Bankard
Employees Union – WATU v. NLRC, G.R. No.
140689, 2004)
CBA vis-à-vis Wage Orders – CBA Creditability
The provisions of the CBA should be read in harmony
with the wage orders, whose benefits should be given
only to those employees covered thereby. (P.I.
Manufacturing, Inc., v. P.I. Manufacturing
Supervisors and Foreman Ass’n and the NLRC, G.R.
No. 167217, 2008).
Summary of Principles on Wage Distortion (NFL
v. NLRC, G.R. No. 103586, 1994)
The concept of wage distortion assumes an existing
grouping or classification of employees which
establishes distinctions among such employees on
some relevant or legitimate basis. This classification
is reflected in a differing wage rate for each of the
existing classes of employees.
Wage distortions have often been the result of
government-decreed increases in minimum wages.
There are, however, other causes of wage distortions
(such as merger).
Should a wage distortion exist, there is no legal
requirement that the gap which had been previously
existed be restored in precisely the same amount.
Correction of a wage distortion may be done by re-
establishing a substantial or significant gap (as
distinguished from the historical gap) between the
wage rages of the differing classes of employees.
The re-establishment of a significant wage difference
may be done through the grievance procedure or
collective bargaining negotiations.
LABOR
6. NON-DIMINUTION OF BENEFITS
There is diminution of benefits when:
1. The grant or benefit is founded on a policy or has
ripened into a practice over a long period of time
2. The practice is consistent and deliberate
3. The practice is not due to error in the
construction or application of a doubtful or
difficult question of law, and
4. The diminution or discontinuance is done
unilaterally by the employer. (TSPIC v. TSPIC
Employee Union, G.R. No. 163419, 2008).
5. The “benefits” refer to monetary benefits or
privileges given to the employee with monetary
equivalents. (Royal Plant Workers Union vs.
Coca-Cola Bottlers Philippines, Inc.-Cebu Plant,
G.R. 198783, 2013).
Non-Diminution Rule
General Rule: 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 promulgation of the Labor
Code. Benefits being given to employees shall not be
taken back or reduced unilaterally by the employer
because the benefit has become part of the
employment contract, written or unwritten. (Labor
Code, Art. 100)
Exception: To correct an error, otherwise, if the
error is left uncorrected for a reasonable period of
time, it ripens into a company policy and employees
can demand for it as a matter of right.
When Non-Diminution Rule Applicable
The rule is applicable if it is shown that:
1. The practice is consistent and deliberate
(Metrobank v. NLRC, G.R. No. 152928, 2009)
2. The diminution or discontinuance is done
unilaterally by the employer (Steel Corporation v.
Nagkakaisang Manggagawang Supreme
Independent Union, G.R. No. 185556, 2011);
3. The grant of the benefit is founded on a policy or
has ripened into a practice over a long period
(Phil. Appliance Corp. v. CA, G.R. No. 149434,
2004); and
4. The practice is not due to error in the
construction or application of a doubtful or
difficult question of law (Vergara, Jr., v. Coca
Cola, G.R. No. 176985, 2013)
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When not applicable
1. At least one of the requisites is absent
2. Mistake in the application of the law (Globe
Mackay v. NLRC, G.R. No. 82511, 1988)
3. Negotiated benefits (Azucena)
4. Reclassification of Positions – e.g. loss of some
benefits by promotion.
5. Contingent or Conditional Benefits – the rule
does not apply to a benefit whose grant depends
on the existence of certain conditions, so that the
benefit is not demandable if those preconditions
are absent.
Past Errors
If it is a past error that is being corrected, no vested
right may be said to have arisen nor any diminution
of benefit under Art. 100 may be said to have resulted
by virtue of the correction (TSPIC Corp. v. TSPIC
Employees Union, G.R. No. 163419, 2008)
Benefits initiated through negotiation between
Employee and Employer, e.g. CBA, can only be
eliminated or diminished bilaterally. A union is not
prohibited from offering and agreeing to reduce
wages and benefits of the employees during CBA
negotiations. (Insular Hotel Employees Union v.
Waterfront, G.R. 174040-41, 2010)
Bonus
A benefit which is contingent or conditional; its
demandability depends on certain pre-conditions.
It is an amount granted voluntarily to an employee for
his/her industry and loyalty, which contributed to the
success and realization of profits of the employer’s
business.
General Rule: 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 the recipient (Producers Bank v. NLRC, G.R.
No. 100701, 2001)
Exceptions:
1. When it was promised to be given without any
conditions imposed for its payment in which case
it is deemed part of the wage; and
2. When it has ripened into practice (Marcos v.
NLRC, G.R. No. 111744, 1995)
LABOR
C. LEAVES
1. SERVICE INCENTIVE LEAVE
Right To Service Incentive Leave Definition:
Every employee who has rendered at least 1 year of
service shall be entitled to a yearly service incentive
leave of 5 days with pay. (Labor Code, Art. 95)
Coverage:
This benefit applies to all employees,
EXCEPT:
1. Government employees, whether employed by the
National Government or any of its political
subdivisions, including those employed in
government-owned and/or controlled corporations
with original charters or created under special laws;
2. House helpers and persons in the personal service
of another;
3. Managerial employees, if they meet all of the
following conditions.
3.1. Their primary duty is to manage the
establishment in which they are employed or of
a department or subdivision thereof;
3.2. They customarily and regularly direct the
work of two or more employees therein;
3.3. They have the authority to hire or fire other
employees of lower rank; or their suggestions
and recommendations as to hiring, firing, and
promotion, or any other change of status of other
employees are given particular weight.
4. Field personnel and those whose time and
performance is unsupervised by the employer;
5. Those already enjoying this benefit;
6. Those enjoying vacation leave with pay of at least
five (5) days; and
7. Those employed in establishments regularly
employing less than ten (10) employees.
(IRR Labor Code, Sec. 1, Rule V, Book III)
Meaning of “at least 1 year of service”
Service for not less than 12 months, whether
continuous or broken reckoned from the date the
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2. EXPANDED MATERNITY LEAVE
105-Day Expanded Maternity Leave Law
A female Social Security System (SSS) member who
has paid at least three (3) monthly contributions in the
twelve (12)-month period immediately preceding the
semester of her childbirth, miscarriage, or emergency
termination of pregnancy shall be paid her daily
maternity benefit which shall be computed based on
her average monthly salary credit for one hundred
five (105) days, regardless of whether she gave birth
via caesarian section or natural delivery.
Conditions for entitlement:
1. That the female worker 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;
2. That the full payment shall be advanced by the
employer within thirty (30) days from the filing of the
maternity leave application;
3. That payment of daily maternity benefits shall be a
bar to the recovery of sickness benefits provided
under Republic Act No. 1161, as amended, for the
same period for which daily maternity benefits have
been received;
4. That the SSS shall immediately reimburse the
employer of one hundred percent (100%) of the
amount of maternity benefits advanced to the female
worker by the employer upon receipt of satisfactory
and legal proof of such payment; and
5. That if a female worker should give birth or suffer
a miscarriage or emergency termination of
pregnancy without the required contributions having
been remitted for her by her employer to the SSS, or
without the latter having been previously notified by
the employer of the time of the pregnancy, the
employer shall pay to the SSS damages equivalent
to the benefits which said female member would
otherwise have been entitled to. (RA 11210, Sec. 5a)
In case the employee qualifies as a solo parent under
the Solo Parents’ Welfare Act, the employee shall be
paid an additional maternity benefit of 15 days. (RA
11210, Sec. 5a)
An additional maternity leave of 30 days, without pay,
can be availed of, at the option of the female worker,
provided:
LABOR
1. That the employer shall be given due notice,
in writing, at least 45 days before the end of
her maternity leave;
2. That no prior notice shall be necessary in the
event of a medical emergency but
subsequent notice shall be given to the head
of the agency. (RA 11210, Sec. 5b)
Workers availing of the maternity leave period and
benefits must receive their full pay. Employers from
the private sector shall be responsible for payment of
the salary differential between the actual cash
benefits received from the SSS by the covered
female workers and their average weekly or regular
wages, for the entire duration of the maternity leave,
except:
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
(₱3,000,000.00); and
4. Those who are already providing similar or
more than the benefits herein provided. (RA
11210, Sec. 5c)
Notes:
Women in the military, police, and other services
shall be entitled to leave benefits such as maternity
leave, as provided for by existing laws (Magna Carta
of Women, Sec. 15)
It is not necessary that the woman be impregnated
by her legitimate husband. It is immaterial who the
father is.
Every pregnant woman in the private sector, whether
married or unmarried, is entitled to the maternity
leave benefits.
3. PATERNITY LEAVE
Definition:
Paternity Leave refers to the benefits granted to a
married male employee allowing him not to report for
work for seven (7) days but continues to earn the
compensation therefor, on the condition that his
spouse has delivered a child or suffered a
miscarriage for purposes of enabling him to
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effectively lend support to his wife in her period of
recovery and/or in the nursing of the newly-born
child. (R.A. No. 8187, Sec. 3)
Coverage
Paternity Leave is granted to all married male
employees in the private sector, regardless of their
employment status (e.g., probationary, regular,
contractual, project basis).
Government employees are also entitled to the
paternity leave benefit. They shall be governed by the
Civil Service rules.
Conditions to entitlement:
1. A married male employee at the time of delivery
of his child;
2. Cohabiting with his spouse at the time she gives
birth or suffers a miscarriage;
3. Applied for paternity leave within a reasonable
period from the expected date of delivery by the
pregnant spouse, or within such period as may
be provided by company rules or by CBA;
provided that prior application is not required in
case of miscarriage;
4. Wife has given birth or suffered a miscarriage.
5. Where a male employee is already enjoying the
paternity leave benefits by reason of contract,
company policy or CBA, the greater benefit
prevails.
Application for Paternity Leave
The male employee applying for paternity leave shall
notify his employer of the pregnancy of his legitimate
spouse and the expected date of such delivery by the
pregnant spouse, or within such period as may be
provided by company rules and regulations or by
collective bargaining agreement, provided that prior
application for leave shall not be required in case of
miscarriage (IRR of R.A. No. 8187 for the private
sector, Sec. 4)
Non-conversion to Cash
In the event that the paternity leave is not availed of,
it shall not be convertible to cash and shall not be
cumulative. IRR of R.A. No. 8187, Sec. 7)
4. PARENTAL LEAVE FOR SOLO
PARENTS
Parental (Solo Parent Leave)
Benefits granted to a solo parent to enable him/her to
perform parental duties and responsibilities where
physical presence is required. The parental leave, in
addition to leave privileges under existing laws, shall
LABOR
be for seven (7) work days every year, with full pay,
consisting of basic salary and mandatory allowances
fixed by the Regional Wage Board, if any, provided
that his/her pay shall not be less than the mandated
minimum wage. (IRR of R.A. No. 8972, Sec. 6[g])
Coverage:
Who are considered Solo Parents:
a. A parent left alone with the responsibility of
parenthood because of death of one’s spouse.
b. A parent left alone with the responsibility of
parenthood because of any physical and/or
mental incapacity of one’s spouse as certified by
a public medical practitioner
c. A parent left alone with the responsibility of
parenthood because one has legally separated
from his spouse or because they have been
separated for at least one year and the child is in
solo parent’s custody
d. A parent left alone with the responsibility of
parenthood because the marriage was annulled
by a court or a church decree, and the child is in
solo parent’s custody.
e. A parent left alone with the responsibility of
parenthood because his spouse abandoned him
for at least one year.
f. A parent left solo or alone with the responsibility
of parenthood because his spouse is detained or
is serving sentence for a crime for at least one
year.
g. An unmarried mother or father who has preferred
to keep and rear the child himself, instead of
having others care for them or give up to a
welfare institution.
h. Solely provides parental care and support to a
child or children.
i. Assumes responsibility of head of the family as
a result of the death, abandonment,
disappearance or prolonged absence of the
children’s parents or solo parent.
j. A victim of rape and/or other crimes against
chastity, have given birth to a child as a result
and have decided to keep and raise his child.
(R.A. No. 8972, Sec. 3[a])
Children
1. Those living with and dependent upon the solo
parent for support who are unmarried,
unemployed and not more than 18 years of age;
or
2. Those even over 18 years but are incapable of
self-support because of mental and/or physical
defect (R.A. No. 8972, Sec. 3[e])
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Conditions to Entitlement
He/she has rendered at least 1 year of service,
whether continuous or broken;
He/she has notified his/her employer of the availment
thereof within a reasonable period
He/she has presented a Solo Parent Identification
Card to his/her employer which may be obtained from
the DSWD office of the city or municipality where
he/she resides (IRR of R.A. No. 8972, Sec. 19)
Availment
A parental leave of not more than 7 working days
every year shall be granted to any solo parent
employee who has rendered service of at least 1
year.
Non-Conversion to Cash
Unused parental leave is not convertible to cash
unless otherwise provided by the CBA. (IRR of R.A.
No. 8972, Sec. 20)
Termination of the benefit
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. (R.A. No. 8972, Sec. 3[a])
5. LEAVE BENEFITS FOR WOMEN
WORKERS UNDER R.A NO. 9710
AND R.A NO. 9262
R.A. No. 9710 or the Magna Carta for Women
A special leave benefit for women was granted under
R.A. No. 9710 (August 14, 2009). Women who
qualify under R.A. No. 9710 are entitled to a special
leave benefit of two (2) months with full pay based on
her gross monthly compensation following surgery
caused by gynecological disorders.
Conditions for Entitlement:
1. A woman employee must have rendered
continuous aggregate employment service of at
least six (6) months for the twelve (12) months
immediately prior to the surgery
2. She has filed an application for special leave with
her employer within a reasonable period of time
from the expected date of surgery or within such
period as may be provided by company rules and
regulations or collective bargaining agreement;
and
3. She has undergone surgery due to
gynecological disorders as certified by a
competent physician.
LABOR
R.A. No. 9262 or the Anti-Violence Against
Women and their Children Act of 2004
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 will 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. (R.A. 9262 “Anti-Violence Against Women
and Their Children Act of 2004”)
Coverage:
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 employee, 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.
Conditions to entitlement
1. The employee has to submit a certification from
the Punong Barangay or Kagawad or prosecutor
or Clerk of Court that an action under RA 9262
has been filed and is pending.
2. The use of the 10-day leave is at the option of
the employee
3. It shall be used for the days that she need to
attend to medical and legal concerns.
4. Leaves not availed of are non-cumulative and
not convertible to cash.
Availment
Leave of up to ten (10) days in addition to other paid
leaves under the Labor Code, or other laws. (Sec. 43,
RA 9262)
D. SPECIAL GROUPS OF EMPLOYEES
1. WOMEN
a. Discrimination
Unlawful for any employer to discriminate against any
woman employee with respect to terms and
conditions of employment solely on account of her
sex (Labor Code, Art. 135)
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Acts of Discrimination
1. Payment of a lesser compensation, including
wage, salary or other form of remuneration and
fringe benefits, to a female employees as against
a male employee, for work of equal value
2. Favoring a male employee over a female
employee with respect to promotion, training
opportunities, study and scholarship grants
solely on account of their sexes
a. Person guilty of committing these acts are
criminally liable under Arts. 288-289 of the
Labor Code
b. That the institution of any criminal action
under this provision shall not bar the
aggrieved employee from filing an entirely
separate and distinct action for money
claims, which may include claims for
damages and other affirmative reliefs. The
actions hereby authorized shall proceed
independently of each other.
3. Favoring a male applicant with respect to hiring
where the particular job can equally be handled
by a woman; and
4. Favoring a male employee over a female
employee with respect to dismissal of personnel
b. Stipulation Against Marriage
It shall be unlawful for the employer:
1. To require as a condition of employment or
continuation of employment that a woman
employee shall not get married;
2. To stipulate expressly or tacitly that upon getting
married, a woman employee shall be deemed
resigned or separated
3. To actually dismiss, discharge, discriminate or
otherwise prejudice a woman employee merely
by reason of her marriage (Labor Code, Art. 136)
Jurisprudence: Stipulations on Marriage
1. Philippine Telegraph and Telephone
Company v. NLRC (G.R. No. 118978, 1997)
It was declared here that the company policy of
not accepting or considering as disqualified from
work any woman worker who contracts marriage
runs afoul of the test of, and the right against,
discrimination afforded all women workers by our
labor laws and by no less than the Constitution.
LABOR
2. Star Paper Corp. v. Simbol, (G.R. No. 164774,
2006)
The following policies were struck down as
invalid for violating the standard of
reasonableness which is being followed in our
jurisdiction, otherwise called the “Reasonable
Business Necessity Rule”: 

i) New applicants will not be allowed to be hired
if in case he/she has [a] relative, up to [the] 3rd
degree of relationship, already employed by the
company. 

ii) In case of two of our employees (both singles
[sic], one male and another female) developed a
friendly relationship during the course of their
employment and then decided to get married,
one of them should resign to preserve the policy
stated above.
3. Duncan Association of Detailman-PTGWO v.
Glaxo Welcome Philippines, Inc (G.R. No.
162994, Sept. 17, 2004)
- In this case, the prohibition against marriage
embodied in the following stipulation in the
employment contract was held as valid: 
“10.
You agree to disclose to management any
existing or future relationship you may have,
either by consanguinity or affinity with co-
employees or employees of competing drug
companies. Should it pose a possible conflict of
interest in management discretion, you agree to
resign voluntarily from the Company as a matter
of Company policy.”
- The Supreme Court ruled that the dismissal
based on this stipulation in the employment
contract is a valid exercise of management
prerogative. The prohibition against personal or
marital relationships with employees of
competitor companies upon its employees was
held reasonable under the circumstances
because relationships of that nature might
compromise the interests of the company. In
laying down the assailed company policy, the
employer only aims to protect its interests
against the possibility that a competitor company
will gain access to its secrets and procedures.
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Bona fide occupational qualification exception upon getting married, a woman employee shall
When the employer can prove that the reasonable be deemed resigned or separated, or to actually
demands of the business require a distinction based dismiss, discharge, discriminate or otherwise
on marital status and there is no better available or prejudice a woman employee merely by reason
acceptable policy which would better accomplish the of her marriage
business purpose, an employer may discriminate
against an employee based in the identity of the 2. MINORS
employee’s spouse. (Star Paper Corp. vs. Simbol, Allowable work for minors
G.R. No. 164774, 2006)
Below 15 NOT employable,
The Court sustained the validity of employer policy EXCEPT:
prohibiting an employee from having a personal or 1. When the child works directly
marital relationship with an employee of a competitor. under the sole responsibility of
The prohibition was reasonable under the his/her parents/legal guardian
circumstances because relationships of such nature and where only members of
might compromise the interests of the company. his/her family are employed,
(Duncan Association of Detailmen v. Glaxo under the ff. conditions:
Wellcome, G.R. no. 162994, 2004)  employment does not
endanger the child’s life,
Classification of Certain Women Workers safety, health and morals
Any woman who is permitted or suffered to work, with  employment does not
or without compensation, in any night club, cocktail impair the child’s normal
lounge, massage clinic, bar or similar establishments development; and
under the effective control or supervision of the  the parent/legal guardian
employer for a substantial period of time as provides the child with
determined by the Secretary of Labor and primary/secondary
Employment, shall be considered as an employee of education
such establishment for purposes of labor and social
2. When the child’s employment or
legislation. (Labor Code, Art. 138)
participation in public
entertainment or information
c. Prohibited Acts through cinema, theater, radio
or television is essential,
Art. 137 Prohibited Acts (DEP-R-TeC)
provided that:
It is unlawful for any employer:
 the employment contract
a. To Deny any woman the benefits provided for
is concluded by the
under the Code
child’s parents/legal
b. To discharge any woman employed by him for
guardian, with the
the purpose of preventing such woman from
express agreement of the
Enjoying the maternity leave, facilities and other
child concerned, if
benefits provided under the Code
possible, and the
c. To discharge such woman employee on account
approval of the DOLE
of her Pregnancy, or while on leave or in
 the following
confinement due to her pregnancy (Del Monte v.
requirements are
Velasco, G.R. No. 153477 (March 6, 2007).
complied with:
d. To discharge or refuse the admission of such
o employer shall
woman upon Returning to her work for fear that
ensure protection,
she may be pregnant
health, morals, and
e. To discharge any woman or child or any other
normal development
employee for having filed a complaint or having
of the child
Testified or being about to testify under the Code
o employer shall
f. To require as a Condition for a continuation of
institute measures to
employment that a woman employee shall not
prevent child’s
get married or to stipulate expressly or tacitly that
exploitation /

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discrimination taking Regulation of working hours of a child

into account the
system and level of 15 AND
AGE BELOW 15
remuneration, BELOW 18
duration, and Not more Not more than
DAY
arrangement of than 4 hours 8 hours
working time Not more Not more than
WEEK
than 20 hours 40 hours
o employer shall
8pm to 6am 10pm to 6am
formulate and
PPROHIBITION of the of the
implement a following day following day
continuing program
for training and skills Employment of the child in public
acquisition of the
entertainment (please refer to the table above)
child, subject to
approval and
Prohibition on the employment of children in
supervision of
certain undertaking and certain advertisements
competent authorities
(as amended by RA NO CHILD shall be employed as a model in any
9231) advertisement directly/indirectly promoting alcoholic
beverage, intoxicating drinks, tobacco and its
In these two cases: employer must byproducts, gambling or any form of violence or
first secure a work permit from the pornography. (Sec. 5)
DOLE before engaging the child
15 – ALLOWED ONLY in: non-hazardous Prohibition against worst forms of child labor
Below 18 or non-deleterious undertakings “Worst forms of child labor”:
1. All forms of slavery
“Hazardous Workplaces” 2. Prostitution
1. Nature of the work exposes 3. Production and trafficking of dangerous drugs
the workers to dangerous and prohibited volatile substances
environmental elements, 4. Work which by its nature or the circumstances
contaminants or work in which it is carried out is hazardous or likely
conditions to be harmful to the health, safety, or morals of
2. Workers are engaged in children (Sec. 3)
construction work, logging,
fire-fighting, mining, quarrying, 3. KASAMBAHAY
blasting, stevedoring, dock-
Coverage
work, deep sea fishing, and
This Act applies to all domestic workers employed
mechanized farming
and working within the country.
3. Workers are engaged in the
manufacture or handling of Definition
explosives and other
pyrotechnic products Domestic worker or “Kasambahay” refers to any
4. Exposed to or use of heavy person engaged in domestic work within an
power-driven machinery or employment relationship such as, but not limited to,
equipment the following: general househelp, nursemaid or
5. Workers use or are exposed to “yaya”, cook, gardener, or laundry person, but shall
power-driven tools exclude any person who performs domestic work
only occasionally or sporadically and not on an
occupational basis. (R.A. No. 10361, Sec. 2[d])

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Benefits accorded to househelpers
Rights and privileges of domestic worker:
a. The domestic worker shall not be subjected to
any kind of abuse or any form of physical
violence or harassment or any act tending to
degrade his or her dignity.
b. The employer shall provide for the basic
necessities of the domestic worker to include at
least three (3) adequate meals a day and
humane sleeping arrangements that ensure
safety.
c. Respect for the privacy of the domestic worker
shall be guaranteed at all times and shall extend
to all forms of communication and personal
effects.
d. The employer shall grant the domestic worker
access to outside communication during free
time.
e. The employer shall afford the domestic worker
the opportunity to finish basic education and may
allow access to alternative learning systems and,
as far as practicable, higher education or
technical and vocational training.
f. All communication and information pertaining to
the employer or members of the household shall
be treated as privileged and confidential, and
shall not be publicly disclosed by the domestic
worker during and after employment.
Employment contract
An employment contract shall be executed by and
between the domestic worker and the employer
before the commencement of the service in a
language or dialect understood by both parties and
shall include the following:
1. the kasambahay's duties and responsibilities
2. period of employment
3. compensation
4. authorized deductions
5. working conditions
6. Termination of employment
7. any other lawful condition agreed upon by both
parties. (Sec. 11)
Note: A kasambahay assigned to work in a
commercial, industrial or agricultural enterprise, will
be entitled to the applicable minimum wage for
agricultural or non-agricultural workers.
Pre-employment requirements:
1. Medical certificate or a health certificate issued
by a local government health officer
LABOR
2. Barangay and police clearance
3. NBI clearance
4. Duly authenticated birth certificate or if not
available, any other document showing the age
of the domestic worker such as voter’s
identification card, baptismal record or passport.
(Sec. 12)
Terms and conditions of employment
1. Minimum Wage
 Those employed in the National Capital
Region – P2,500 a month
 Those employed in chartered cities and first
class municipalities – P2,000 a month
 Those employed in other municipalities –
P1,500 a month
2. Rest period
 Daily rest period – aggregate of 8 hours per
day
 Weekly rest period - at least 24 consecutive
hours of rest in a week
3. Thirteenth month pay
 The domestic worker is entitled to 13th month
pay as provided for by law
4. Leave benefits
 A domestic worker who has rendered at least
1 year of service shall be entitled to an annual
service incentive leave of 5 days with pay.
Any unused portion of said annual leave shall
not be cumulative or carried over to the
succeeding years. Unused leaves shall not
be convertible to cash.
5. Social and other benefits
 A domestic worker who has rendered at least
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.
 Premium payments or contributions shall be
shouldered by the employer. However, if the
domestic worker is receiving a wage of
P5,000.00 and above per month, the
domestic worker shall pay the proportionate
share in the premium payments or
contributions.
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Termination of Employment
A. Initiated by the domestic worker
1. Verbal or emotional abuse of the domestic
worker by the employer or any member of the
household
2. Inhuman treatment including physical abuse of
the domestic worker by the employer or any
member of the household
3. Commission of a crime or offense against the
domestic worker by the employer or any member
of the household
4. Violation by the employer of the terms and
conditions of the employment contract and other
standards set forth under this law
5. Any disease prejudicial to the health of the
domestic worker, the employer, or member/s of
the household
6. Other causes analogous to the foregoing (Sec.
32)
Note: If the domestic worker leaves without justifiable
reason, any unpaid salary due not exceeding the
equivalent 15 days work shall be forfeited. In
addition, the employer may recover from the
domestic worker costs incurred related to the
deployment expenses, provided that the service has
been terminated within 6 months from the domestic
worker’s employment.
B. Initiated by the employer
1. Misconduct or willful disobedience by the
domestic worker of the lawful order of the
employer in connection with the former’s work
2. Gross or habitual neglect or inefficiency by the
domestic worker in the performance of duties
3. Fraud or willful breach of the trust reposed by the
employer on the domestic worker
4. Commission of a crime or offense by the
domestic worker against the person of the
employer or any immediate member of the
employer’s family
5. Violation by the domestic worker of the terms
and conditions of the employment contract and
other standards set forth under this law
6. Any disease prejudicial to the health of the
domestic worker, the employer, or member/s of
the household
7. Other causes analogous to the foregoing (Sec.
34)
LABOR
Reliefs for unjust termination
If the domestic worker is unjustly dismissed, the
domestic worker shall be paid the compensation
already earned plus the equivalent of 15 days work
by way of indemnity.
Penalties
Any violation of R.A. No. 10391 declared unlawful
shall be punishable with a fine of not less than Ten
thousand pesos (P10,000.00) but not more than
Forty thousand pesos (P40,000.00) without prejudice
to the filing of appropriate civil or criminal action by
the aggrieved party.
4. HOMEWORKERS
Definition
Homeworker
Applies to any person who performs industrial
homework for an employer, contractor or sub-
contractor
Industrial Homework
Industrial Homework is a system of production under
which work for an employer or contractor is carried
out by a homeworker at his/her home. Materials may
or may not be furnished by the employer or
contractor. It differs from regular factory production
principally in that it is a decentralized form of
production where there is ordinarily very little
supervision or regulation or methods of work. (D.O.
No. 05-92, Sec. 2[a])
Industrial Homeworker
System of production under which work for an
employer or contractor is carried out by a
homeworker at his/her home. Materials may or may
not be furnished by the employer or contractor (Labor
Code, Art. 154)
Employer of 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 employee, agent contractor, sub-
contractor or any other person:
 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
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 Sells any goods, articles or materials to be
processed or fabricated in or about a home and
then re-buys them after such processing or
fabrication, either by himself or through some
other person (D.O. No. 05-92)
Rights and benefits accorded to homeworkers
Immediately upon receipt of the finished goods or
articles, the employer shall pay the homeworker of
the contractor or subcontractor, as the case may be,
for, the work performed less corresponding
homeworkers’ share of SSS, MEDICARE AND ECC
premium contributions which shall be remitted by the
contractor/subcontractor or employer to the SSS with
the employer’s 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. (D.O. No. 05-92, Sec. 6)
Conditions for deductions from homeworker’s
earnings
No employee, contractor, or sub-contractor shall
make any deduction from the homeworker's earnings
for the value of materials which have been lost,
destroyed, soiled or otherwise damaged unless the
following conditions are met:
 The homeworker concerned is clearly shown to
be responsible for the loss or damage;
 The employee is given reasonable opportunity to
show cause why deductions should not be made;
 The amount of such deduction is fair and
reasonable and shall not exceed the actual loss
or damages; and
 The deduction is made at such rate that the
amount deducted does not exceed 20% of the
homeworker's earnings in a week.
Liability of employer and contractor
Whenever an employer shall contract with another for
the performance of the employer's work, it shall be
the duty of such employer to provide in such contract
that the employees or homeworkers of the contractor
and the latter's sub-contractor shall be paid in
accordance with the provisions of this Rule.
In the event that such contractor or sub-contractor
fails to pay the wages or earnings of his employees
or homeworkers, such employer 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
LABOR
manner as if the employees or homeworkers were
directly engaged by the employer.
Prohibitions for Homework
1. Explosives, fireworks and articles of like
character
2. Drugs and poisons
3. Other articles, the processing of which requires
exposure to toxic substance
5. NIGHT WORKERS
R.A. No. 10151
An Act Allowing the Employment of Night Workers,
Thereby Repealing Articles 130 and 131 of
Presidential Decree Number Four Hundred Forty-
Two, as amended, otherwise known as the Labor
Code of the Philippines, 2011
This new Republic Act provides that women can now
work on night time.
Coverage
All persons, who shall be employed or permitted or
suffered to work at night, except those employed in
agriculture, stock raising, fishing, maritime transport
and inland navigation, during a period of not less than
seven (7) consecutive hours, including the interval
from midnight to five o’clock in the morning, to be
determined by the Secretary of Labor and
Employment, after consulting the workers’
representative/labor organizations and employers.
Night Worker means any employed person whose
work requires performance of a substantial number
of hours of night work which exceeds a specified limit.
This limit shall be fixed by the Secretary of Labor after
consulting the workers’ representative/labor
organizations and employers.”
Health Assessment
At their request, workers shall have the right to
undergo a health assessment without charge and to
receive advice on how to reduce or avoid health
problems associated with their work:
a. Before taking up an assignment as a night
worker;
b. At regular intervals during such an assignment;
and
c. If they experience health problems during such
an assignment which are not caused by factors
other than the performance of night work.
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With the exception of a finding of unfitness for night
work, the findings of such assessments shall not be
transmitted to others without the workers’ consent
and shall not be used to their detriment.
Mandatory Facilities
Suitable first-aid facilities shall be made available for
workers performing night work, including
arrangements where such workers, where
necessary, can be taken immediately to a place for
appropriate treatment. The employers are likewise
required to provide safe and healthful working
conditions and adequate or reasonable facilities such
as 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.
Transfer
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, these workers shall be granted the same
benefits as other workers who are unable to work, or
to secure employment during such period. A night
worker certified as temporarily unfit for night work
shall be given the same protection against dismissal
or notice of dismissal as other workers who are
prevented from working for reasons of health.
Compensation
The compensation for night workers in the form of
working time, pay or similar benefits shall recognize
the exceptional nature of night work.
Social Services
Appropriate social services shall be provided for night
workers and, where necessary, for workers
performing night work.
Night Work Schedules
Before introducing work schedules requiring the
services of night workers, the employer shall consult
the workers’ representatives/labor organizations
concerned on the details of such schedules and the
forms of organization of night work that are best
adapted to the establishment and its personnel, as
well as on the occupational health measures and
social services which are required. In establishments
employing night workers, consultation shall take
place regularly.
LABOR
CBA provision vis-à-vis overtime work
CBA may stipulate higher overtime pay rate.
The basis of computation of overtime pay beyond
that required by Art. 87 of the Labor Code must be
the collective agreement. It is not for the court to
impose upon the parties anything beyond what they
have agreed upon which is not tainted with illegality.
On the other hand, where the parties fail to come to
an agreement, on a matter not legally required, the
court abuses its discretion when it obliges any of
them to do more than what is legally obliged. (PNB v.
PNB Employee’s Assoc., G.R. No. L-30279, 1982)
6. PERSONS WITH DISABILITIES
PERSONS WITH DISABILITY
(R.A. No. 7277, as Amended by R.A. No. 9442)
Persons with Disability are those suffering from
restriction or different abilities, as a result of a mental,
physical or sensory impairment, to perform an activity
in the manner or within the range considered normal
for a human being.
Impairment refers to any loss, diminution or
aberration of psychological, physiological, or
anatomical structure or function.
Disability means:
e. A physical or mental impairment that
substantially limits one or more psychological,
physiological or anatomical functions of an
individual or activities of such individual;
f. A record of such an impairment; or
g. Being regarded as having such an impairment.
Handicap refers to a disadvantage for a given
individual, resulting from an impairment or a disability
that limits or
prevents the function or activity that is considered
normal given the age and sex of the individual.
When Employable
1. their employment is necessary to prevent
curtailment of employment opportunities;
2. does not create unfair competition in labor costs;
and
3. does not impair or lower working standards.
Handicapped workers may be hired as
apprentices or learners if their handicap is not such
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as to effectively impede the performance of job
operation in the particular position for which they are
hired.
Handicapped Workers May Become Regular
Employees – if their handicap is not such as to
effectively impede the performance of job operations
in the particular occupations for which they were
hired.
Rules on Handicapped Workers
Handicapped workers may be employed when:
1. Their employment is necessary to prevent
curtailment of employment opportunities 
 regard to job application procedures, the hiring,
2. Does not create unfair competition in labor costs


3. Does not impair or lower working standards.
(Labor Code, Art. 79)
Employment Agreement; Contents
1. Names and addresses of the employer and the
handicapped worker
2. Rate of pay of the handicapped worker which
shall not be less than 75% of the legal minimum
wage
3. Nature of work to be performed by the
handicapped worker
4. Duration of the employment (Labor Code, Art.
80)
Equal Opportunity for Employment
No disabled person shall be denied access to
opportunities for suitable employment. Qualified
disabled employees shall be subject to same terms
and conditions of employment and the same
compensation, privileges, benefits, fringe benefits,
incentives or allowances as a qualified able-bodied
person
What are the rights of PWDs?
Under the law, PWDs are entitled to equal
opportunity for employment. Consequently, no PWD
shall be denied access to opportunities for suitable
employment. A qualified employee with disability
shall be subject to the same terms and conditions of
employment and the same compensation, privileges,
benefits, fringe benefits, incentives or allowances as
a qualified able-bodied person.
What is the wage rate of PWDs?
 employee with disability by reason of his
The wage rate of PWDs is 100% of the applicable
minimum wage. 
 impairs the satisfactory performance of the work
LABOR
What is the wage rate of PWD if hired as
apprentice or learner? 

A PWD hired as an apprentice or learner shall be paid
not less than seventy-five percent (75%) of the
applicable minimum wage.
a. Discrimination on Employment
What is the rule on discrimination against
employment of PWDs?
No entity, whether public or private, shall discriminate
against a qualified PWD by reason of disability in
promotion, or discharge of employees, employee
compensation, job training, and other terms,
conditions and privileges of employment. (RA 7277,
Sec. 32)
The following constitute acts of discrimination:
1. Limiting, segregating or classifying a job
applicant with disability in such a manner that
adversely affects his work opportunities;
2. Using qualification standards, employment tests
or other selection criteria that screen out or tend
to screen out a PWD unless such standards,
tests or other selection criteria are shown to be
job-related for the position in question and are
consistent with business necessity;
3. Utilizing standards, criteria, or methods of
administration that:
4. Have the effect of discrimination on the basis of
disability; or
5. Perpetuate the discrimination of others who are
subject to common administrative control.
6. Providing less compensation, such as salary,
wage or other forms of remuneration and fringe
benefits, to a qualified employee with disability,
by reason of his disability, than the amount to
which a non-disabled person performing the
same work is entitled;
7. Favoring a non-disabled employee over a
qualified employee with disability with respect to
promotion, training opportunities, study and
scholarship grants, solely on account of the
latter’s disability;
8. Re-assigning or transferring an employee with a
disability to a job or position he cannot perform
by reason of his disability;
9. Dismissing or terminating the services of an
disability unless the employer can prove that he
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involved to the prejudice of the business entity;
provided, however, that the employer first sought
to provide reasonable accommodations for
persons with disability;
10. Failing to select or administer in the most
effective manner employment tests which
accurately reflect the skills, aptitude or other
factor of the applicant or employee with disability
that such tests purports to measure, rather than
the impaired sensory, manual or speaking skills
of such applicant or employee, if any; and
11. Excluding PWD from membership in labor
unions or similar organizations.
b. Incentives for Employers (Sec. 8)
To encourage the active participation of the private
sector in promoting the welfare of disabled persons
and to ensure gainful employment for qualified
disabled persons, adequate incentives shall be
provided to private entities which employ disabled
persons.
Private entities that employ disabled persons who
met the required skills or qualifications, either as
regular employee, apprentice or learner, shall be
entitled to an additional deduction, from their gross
income, equivalent to 25% of the total amount paid
as salaries and wages to disabled persons.
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.
E. SEXUAL HARASSMENT IN THE WORK
ENVIRONMENT
Where Committed (WET)
a. Working
b. Education
c. Training environment
Who Commits (MEE-PATIS-COT)
1. Manager
2. Employer
3. Employee
4. Professor
5. Agent of the employer
6. Teacher
7. Instructor
LABOR
8. Supervisor
9. Coach
10. Trainer
11. Any Other person having authority, influence or
moral ascendancy over another (R.A. No. 7877,
Sec. 3)
How Committed
Person liable demands, requests, or otherwise
requires any sexual favor from the other, regardless
of whether the demand, request or requirement for
submission is accepted by the latter.
It is not necessary that a demand, request or
requirement of sexual favor be articulated in a
categorical oral or written statement. It may be
discerned, with equal certitude, from acts of the
offender. (Domingo v. Rayala, G.R. No. 155831,
2008).
It is also 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 offender’s acts result in creating
an intimidating, hostile, or offensive environment for
the employee. (Domingo v. Rayala, G.R. No. 155831,
2008)
Work-Related/Employment Environment, Sexual
Harassment Committed When
1. The sexual favor is made as a condition:
a. In hiring or in the employment,
reemployment or continued employment of
said individual
b. In granting said individual favorable
compensation, terms, conditions,
promotions or privileges
c. The refusal to grant the sexual favor results
in limiting, segregating or classifying the
employee which in any way would
discriminate, deprive or diminish
employment opportunities or otherwise
adversely affect said employee
2. The above acts would impair the employee’s
rights or privileges under existing labor laws.
3. The above acts would result in an intimidating,
hostile or offensive environment for the
employee. (Sec. 3[a])
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Education or Training Environment, Sexual

Harassment Committed When
1. The sexual favor is made as a condition:
2. The above acts would impair the employee’s
rights or privileges under existing labor laws.
3. The above acts would result in an intimidating,
hostile or offensive environment for the
employee. (Sec. 3[a])

Duty of Employer
1. Promulgate appropriate rules and regulations
prescribing the procedure for investigation of
sexual harassment cases as well as guidelines
on proper decorum in the workplace.
2. Create a committee on decorum and
investigation of cases on sexual harassment.
(Sec. 4)

Liability of Employer / Head of Office

Solidarily liable for damages arising from the acts of
sexual harassment committed in the employment,
education or training environment if the employer is
informed of such acts by the offended party and no
immediate action is taken.

Prescriptive period to file action: 3 years

(Sec. 7)

-- end of topic --

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IV. SOCIAL WELFARE LEGISLATION

TOPIC OUTLINE UNDER THE SYLLABUS:

A. SSS Law (R.A. No. 8282)

1. Coverage and exclusions
2. Dependents and beneficiaries
3. Benefits
B. GSIS Law (R.A. No. 8291)
1. Coverage and exclusions
2. Dependents and beneficiaries
3. Benefits
C. Limited Portability Law (R.A. No. 7699)
D. Disability and death benefits
1. Labor Code
2. POEA-Standard Employment
3. Contract for Seafarers

A. SSS LAW

B. GSIS LAW

B. GOVERNMENT
A. SOCIAL SECURITY SERVICE INSURANCE C. EMPLOYEE’S
ACT OF 1997 (R.A. No. ACT OF 1997 COMPENSATION LAW
8282) (P.D. No. 626)
(R.A. No. 8291)
1. Employer – any 1. Employer – the 1. Employer - any
person, natural or national government, person, natural or
judicial, domestic or its political juridical, employing the
foreign who carries on subdivisions, services of the
in the Philippines any branches, agencies or employee.
trade, business, instrumentalities,
industry undertaking, including GOCCs, and
2. Employees –
or activity of any kind financial institutions
and uses the services with original charters, belonging to either of
of another person who the constitutional the following sectors:
is under his orders as commissions and the
COVERED Public sectors,
regards employment. judiciary
SCOPE comprised of the
*EXCEPT: Government 2. Employee – any following:
and any of its political person receiving (a) Employed workers
subdivisions, branches compensation while in covered by the GSIS,
and instrumentality, service of an employer including members of
including GOCCs, i.e., as defined herein, the AFP;
those under GSIS. whether by election or (b) Elective officials
appointment who are receiving
2. Employee – any regular salary;
person who performs (c) Those employed
services for an as Casual, Contractual,
employer who Emergency,

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receives Temporary or
compensation for Substitute Employees
such services, where (Labor Code, Art.
there is an employer- 173[g])
employee
relationship. Private sector,
comprising all the
3. Self-Employed – employed workers who
considered both are covered by the
employer and SSS;
employee.
Overseas Filipinos
(ECL Rules, Sec. 5,
Rule 1)

DEPENDENTS
1. Legal spouse entitled for support; 1. Legitimate spouse
2. Child, whether legitimate, legitimated, legally living with the
adopted or illegitimate; employee
3. Parents receiving regular support from the member. 2. Child, whether
legitimate, legitimated
DEPENDENTS or legally adopted;
3. Parents of said
employee wholly
dependent upon him
for regular support.

1. Unmarried;
Not gainfully employed;
2. Has not reached 21 2. Not over age of majority; 2. Not over 21 years of age
years of age; OR OR provided that he is enrolled
CONDITIONS FOR
in school; OR
CHILD TO BE
3. Incapable of supporting himself either physically or 3. Over twenty-one years of
CONSIDERED
mentally prior to 21 years of age or age of majority, age provided that he is
DEPENDENT
as the case may be congenitally incapacitated
and incapable of self-
support physically or
mentally
a. Dependent Spouse, a. Legal Dependent a. Dependent Spouse until
until remarriage; AND Spouse until he remarries; AND
b. Dependent Legitimate remarriage ;AND b. Dependent Children who
BENEFICIARIES
or Legitimated or b. Dependent Children are the primary
1. PRIMARY
Legally Adopted and beneficiaries.
Illegitimate Children

a. Dependent Parents a. Dependent Parents a. Dependent Parents

b. Absent primary and AND b. Illegitimate Children and
secondary b. Legitimate Legitimate Descendants,
beneficiaries, any descendants, subject who are the secondary
2. SECONDARY other person to restrictions on beneficiaries
designated by dependent children
member as
secondary
beneficiary

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As to DEATH BENEFITS,
if no beneficiary qualifies
3. OTHERS
under the Act, benefits
shall be paid to Legal
Heirs in accordance with
Law of Succession
1. Monthly Pension 1. Monthly Pensions 1. Medical
2. Dependents Pension 2. Separation 2. Temporary Total
3. Retirement 3. Unemployment or Disability
4. Death Involuntary Separation 3. Permanent Total
5. Permanent Disability 4. Retirement Disability
6. Funeral 5. Disability 4. Permanent Partial
7. Sickness 6. Survivorship Disability
BENEFITS 8. Maternity (ONLY 1ST 7. Funeral 5. Death
FOUR DELIVERIES 8. Life Insurance
OR MISCARRIAGES) 9. Loan Grants

*EXCEPT Judiciary and

Constitutional
Commissions who shall
have life insurance only
a. All employees not All employees receiving a. All employers;
over 60 years of age compensation who have b. Employees not over 60
and their employers; not reached compulsory years old;
(effective date: on the retirement age, irrespective c. Employees over 60
first day of his of employment status years old and paying
operation and that of contributions;
COVERAGE
the employee on the d. Employee coverable by
day of his both the GSIS and SSS
1. Compulsory
employment) are compulsorily
b. Self-employed covered by both
persons, as may be Systems; and
determined by the e. Filipino employees
Commission under employed abroad
such rules and subject to prescribed
regulations as it may EC regulations
prescribe, including, (Labor Code, Art. 175;
but not limited to: Amended Rules on
i. all self-employed Employees’
professionals; Compensation, Rule 1,
ii. partners and single- Sec. 2)
proprietors of
business; Compulsory coverage of
iii. actors and the employer shall take
actresses, effect on the first day of his
directors, operation.
scriptwriters and
news Compulsory coverage of
correspondents the employee shall take
not employees; effect on the first day of his
iv. professional employment. (ECL Rules,
athletes, coaches, Sec. 6, Rule 1)
trainers and
jockeys, and
individual farmers
and fishermen;

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(effective date: on
registration with the
SSS)
c. Domestic helpers 60
years of age and
below, provided, that
their monthly income
is not less than
P1,000; (effective
date: upon rendering
at least 1 month of
service)

a. Filipinos recruited by
foreign-based
employers for
employment abroad;
b. Employee separated
from employment to
maintain his right to
full benefits;
c. Self-employed who
realizes no income
for a certain month;
d. Spouses who devote
full time to managing
household and family
affairs, unless
2. VOLUNTARY specifically
mandatorily covered.

*BY AGREEMENT:
Any foreign government,
international organization
or wholly owned
instrumentality employing
workers in the Philippines
or employing Filipinos
outside the Philippines,
may enter agreement with
Philippines for inclusion of
such employees in SSS
EXCEPT those already
covered by their

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respective civil service

retirement system.

1. Employment purely 1. Members of the AFP

casual and not for and PNP, subject to the
the purpose of condition that they
occupation, or must settle first their
business of the financial obligation with
employer the GSIS;
2. Service performed 2. Contractual
on or in connection employees, who have
with alien vessel, if no employer-employee
employed when such relationship with the
vessel is outside of agencies they serve;
Philippines 3. Uniformed personnel
3. Employees of of the Bureau of Fire
Philippine Protection (BFP);
government or 4. Uniformed personnel
instrumentality or of the Bureau of Jail
EXCLUSIONS agency thereof Management and
FROM 4. Service performed in Penology (BJMP);
COVERAGE the employ of a 5. Barangay and
foreign Sanggunian Officials
government, or who are not receiving
international fixed monthly
organizations, or compensation;
wholly owned 6. Employees who do not
instrumentality have monthly regular
employing workers in hours of work and are
the Philippines or not receiving fixed
employing Filipinos monthly compensation
outside of the (IRR of R.A. No. 8291,
Philippines Rule II, Sec 3, Par. 2)
5. Services performed
by temporary
employees and
other employees
excluded by SSS

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regulation;
employees of bona
fide independent
contractors shall not
be deemed
employees of the
employer engaging
the services of an
independent
contractor
All actual remuneration for The basic pay or salary All payments made for
employment, including the received by an employee, income benefits, and
mandated cost-of-living pursuant to his medical or related benefits.
allowance, the cash value election/appointment,
of any remuneration paid excluding per diems,
COMPENSATION
in any medium other than bonuses, overtime pay,
cash EXCEPT that part of honoraria, allowances and
the remuneration in any other emoluments
excess of the maximum received in addition to the
salary credit basic pay
Non-work connected Work-connected exempt
disability, sickness, from liability where
maternity, death and old permanent disability due to
age and other his grave misconduct,
BASIS OF CLAIM
contingencies resulting in habitual intoxication, or
loss of income or financial willful intention to kill
burden (Sec. 2) himself or another (Sec. 15-
17)
1. Employer’s 1. Member shall continue Employer's obligation to
contribution on his to be a member; and pay the monthly
account ceases at the 2. Member shall be contribution arising from
end of the month of entitled to whatever that employment shall
separation; benefits he has cease at the end of the
2. Employee’s qualified to in the event month of contingency and
obligation to of any contingency during such months that
contribute also compensable under he is not receiving wages
ceases at the end of this Act. or salary.
EFFECTS OF
the month of
SEPARATION
separation;
FROM
3. Employee shall be
EMPLOYMENT
credited with all
contributions paid on
his behalf and entitled
to benefits;
4. Employee may
continue to pay the
total contributions to
maintain his right to
full benefits.
A. Employer: Employer: A. Any physician attending
Report immediately to Report to GSIS the names, an injured or sick employee
SSS the names, ages, civil employment status, shall report concerning his
status, occupations, positions, salaries of the condition or treatment, and
REPORTING
salaries and dependents employee and such other thereafter, make available
REQUIREMENTS
of all his covered matter as determined by to the employee or the
employees. the GSIS. System such medical
information.
B. Self-employed:

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Report to SSS within 30 B. Within five days after

days from the first day of entry in the logbook, the
his operation, his name, employer shall report to the
age, civil status, System only those
occupation, average contingencies it deems to
monthly net income and be work-connected.
his dependents.
1. Employer’s contributions 1. Employer’s
2. Employee’s/member’s contributions contributions
FUNDING 2. Government
guarantee

Property, assets, and revenues of SSS and GSIS are all State Insurance Fund and
EXEMPTION exempt from taxes, and all benefits paid by SSS or GSIS all its assets shall be
FROM TAX/ shall likewise be exempt from taxes, assessments, fees, exempt from any tax, fee,
LEGAL PROCESS/ charges, and duties of all kind charge, levy, or customs or
LIEN import duty

Dispute arising from: Any dispute arising under Dispute arising from:
1. Coverage this Act and other laws 1. Coverage
2. Benefits administered by GSIS 2. Benefits
3. Contributions 3. Contributions
4. Penalties Jurisdiction: GSIS 4. Penalties
5. Any matters related 5. Any matter related
thereto When decision made: 30 thereto
days from receipt of the
Jurisdiction: Social hearing officer’s findings Jurisdiction: SSS or GSIS,
DISPUTE Security Commission and recommendations or as the case may be.
SETTLEMENT 30 days after submission
When decision made: for decision Appeal:
Mandatory period of 20 The Commission - decide
days from submission of Appeal: within twenty working days
evidence CA – Rule 43, Section 31 from the submission of the
SC – Rule 45 evidence.
Appeal:
CA – questions of law and SC – questions of law only
facts
SC – questions of law only
20 years from: 4 years from date of Claim for compensation -
1. time delinquency is contingency EXCEPT for 1 year from notice to the
known; life and retirement benefits employer
2. time the assessment
PRESCRIPTIVE is made by the SSS; All money claims arising
PERIOD or from employer-employee
3. time the benefit relations accruing during
accrues. the effectivity of this Code -
(as the case may be) within 3 years from the time
the cause of action accrued

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C. LIMITED PORTABILITY LAW
A covered worker who transfers employment from
one sector to another or is employed in both sectors
shall have his credible services or contributions in
both Systems credited to his service or contribution
record in each of the Systems and shall be totalized
for purposes of old-age, disability, survivorship and
other benefits in case the covered member does not
qualify for such benefits in either or both Systems
without totalization: Provided, however, That
overlapping periods of membership shall be credited
only once for purposes of totalization. (Sec. 3, RA
7699)
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)
D. DISABILITY AND DEATH BENEFITS
TEMPORARY TOTAL DISABILITY
As a result of injury or sickness, the employee is
unable to perform any gainful occupation for a
continuous period not exceeding 120 days. (Barko
International v. Alcayno, G.R. No. 188190, 2014)
Amount of Benefits
Income benefit equivalent to 90% of his average daily
salary credit subject to the following:
1. Benefit shall not be less than P10 or more than
P90; not paid lower than 120 days unless
injury or sickness requires more extensive
treatment that lasts beyond 120 days not
exceeding 240 days from the onset of
disability, in which case he shall be paid
benefit for Temporary Total Disability during
the extended period (P10 – P200 per day,
maximum 120 days).
2. Benefit shall be suspended if employee failed
to submit monthly medical report certified by
attending physician. (Amended Rules on
Employees’ Compensation, Rule X, Sec. 3)
Period of Relapse
The period covered by any relapse he suffers, or
recurrence of the illness, which results in disability
and is determined to be compensable, shall be
LABOR
considered independent of, and separate from, the
period covered by the original disability. Such a
period shall not be added to the period covered by
his original disability (Amended Rules on Employees’
Compensation, Rule X, Sec. 2[b])
PERMANENT TOTAL DISABILITY
In means incapacity to perform gainful work which is
expected to be permanent. This status does not
require a condition of complete helplessness. Nor is
it affected by the performance of occasional odd jobs.
There is permanent total disability if as a result of the
injury or sickness, the employee is unable to perform
any gainful occupation for a continuous period
exceeding 240 days. (Abaya v. ECC, G.R. No.
64255, 1989)
Test of Permanent Total Disability
The test of whether an employee suffers from
“permanent total disability” is a showing of the
capacity of the employee to continue performing his
work notwithstanding the disability he incurred.
(Vicente v. ECC, G.R. No. 85024, 1991)
Instances of Permanent Total Disability
1. Temporary total disability lasting continuously
for more than one hundred twenty days, except
as otherwise provided for in the Rules;
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. (Labor Code, Art. 198[c])
When temporary total disability becomes
permanent total disability
1. Declared by the company-designated
physician within 120 or 240 day treatment
period; or
2. In case of absence of such a declaration either
of fitness or permanent total disability, upon
the lapse of the 120 or 240 day treatment
period, while the employee’s disability
continues and he is unable to engage in gainful
employment during such period, and the
company physician fails to arrive at a definite
assessment of the employee’s fitness or
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disability (Alpha Ship Management v. Calo,
G.R. No. 192034, 2014)
When the company-designated physician and
employee-designated physician disagree
If a doctor appointed by the seafarer disagrees with
the assessment of the company-designated doctor, a
3rd doctor may be agreed jointly between the
employer and the seafarer, and the 3rd doctors’
decision shall be final and binding on both parties.
(Bahia Shipping v. Constantino, G.R. No. 180343,
2014)
Suspension of Income Benefits
Monthly income benefits can be suspended under
any of the following conditions:
1. Failure of the employee to present himself for
examination at least once a year upon notice
by the System;
2. Failure to submit a quarterly Medical Report
certified by the attending physician;
3. Complete or full recovery from his permanent
disability; or
4. Upon being Gainfully employed. (Amended
Rules on Employees’ Compensation, Rule XI,
Sec. 2)
PERMANENT PARTIAL DISABILITY
A disability is partial and permanent if as a result of
the injury or sickness, the employee suffers a
permanent partial loss of the use of any part of his
body. (Abaya v. ECC, G.R. No. 64255, 1989)
Distinguished from Permanent Total Disability
The test of whether an employee suffers from
“permanent total disability” is a showing of the
capacity of the employee to continue performing his
work notwithstanding the disability he incurred.
(Vicente v. ECC, G.R. No. 85024, 1991)
Receipt of Disability Benefit Precludes Claim for
Loss of Future Earnings
Once given disability compensation for loss of
earning capacity, an additional award for loss of
earnings (future earnings) no longer lies, otherwise,
it will result in double recovery. (Magsaysay Maritime
Corp.v. Chin, Jr., G.R. No. 199022, 2014)
NOTES: It must be shown that the injury or illness
was contracted during the term of employment. The
unqualified phrase “during the term” covers all
injuries or illnesses occurring during the lifetime of
LABOR
the contract. (Wallem Maritime Services v. Tanawan,
G.R. No. 160444, 2012)
Reimbursement for Medical Expenses are separate
and distinct from Disability Benefits. (Javier v. PH,
Inc., G.R. No. 204101, 2014)
DISABILITY BENEFITS (2010 AMENDED POEA-
SEC)
Liabilities of Employer (ER) for Work-related
Injury or Illness (IN/ILL) of the Seafarer During
Term of Contract
1. ER will continue to pay the seafarer his
wages during the time he is on board the
ship.
2. If IN/ILL requires medical and/or dental
treatment in a foreign port, ER shall be liable
for full cost of such treatment as well as
board and lodging until the seafarer is
declared fit to work or to be repatriated.
NOTE: If after repatriation, seafarer still requires
medical attention, he shall be provided such
treatment until he is declared fit or the degree of his
disability had been established by company-
designated physician at the expense of the ER.
3. Seafarer shall also receive sickness
allowance from his employer. The amount is
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. The period within which the
seafarer shall be entitled to his sickness
allowance shall not exceed 120 days.
Payment shall be made on a regular basis,
but not less than once a month.
NOTE: Under the 2000 POEA-SEC, the
assessment made by company-designated
physician for permanent disability shall in no case
exceed 120 days.
Elburg Shipmanagement Phils., Inc. v. Ouioguie, Jr.
provided a summation of periods when the
company-designated physician must assess the
seafarer:
a. 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;
b. If the company-designated physician fails to give
his assessment within the period of 120 days,
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without any justifiable reason, then the seafarer's
disability becomes permanent and total;
c. If the company-designated physician fails to give
his assessment within the period of 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
d. 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.
Hence, the general rule is that the 120-day period is
an absolute rule. The company-designated physician
must provide a sufficient justification to extend
the original 120-day period of assessment.
(Career Philippines Shipmanagement, Inc. v.
Silvestre, G.R. No. 213465, 2018).
NOTE: Prior to Elburg ruling, the Court held in
Vergara v. Hammonia Maritime Services, Inc. that
seafarers could not automatically claim permanent
and total disability even though the 120-day period
for medical evaluation was exceeded for it was
possible to extend the evaluation or treatment period
to 240 days. (Vergara v. Hammonia Maritime
Services, Inc., 588 Phil. 895, 2008).
4. Seafarer is entitled to reimbursement of the
cost of medicines prescribed by company-
designated physician.
If treatment is on an out-patient basis as
determined by the company-designated
physician, the company shall approve the
appropriate mode of transportation and
accommodation.
The reasonable cost of actual traveling
expenses and/or accommodation shall be
paid subject to liquidation and
submission of official receipts and/or
proof of expenses.
NOTE: To be entitled to the foregoing monetary
benefits, seafarer shall submit himself to a post-
employment medical examination by a company-
designated physician within 3 working days upon
his return.
EXCEPT when he is physically incapacitated to do
so. In such case, a written notice to the agency
LABOR
within the same period (3 working days upon return)
is deemed as compliance.
The seafarer shall also report regularly to the
company-designated physician.
Failure of the seafarer to comply with the
mandatory reporting requirement shall result in
his forfeiture of the right to claim the above
benefits.
When the seafarer suffers work-related illness during
the term of his contract, the employer shall be liable
to pay for: (1) the seafarer's wages; (2) costs of
medical treatment both in a foreign port and in the
Philippines until the seafarer is declared fit to work,
or the disability rating is established by the company-
designated physician; (3) sickness allowance which
shall not exceed 120 days; and (4) reimbursement of
reasonable medicine, traveling, and accommodation
expenses. However, to be qualified for the foregoing
monetary benefits, the same section of the POEA
Contract requires the seafarer to submit
himself/herself to a post-employment medical
examination by a company-designated physician
within three working days upon his return to the
Philippines, except when he is physically
incapacitated to do so. The seafarer is likewise
required to report regularly to the company-
designated physician during the course of his
treatment. The three-day reporting requirement is
MANDATORY. (Manila Shipmanagement &
Manning, Inc. v. Aninang, G.R. No. 217135, 2018)
5. Illnesses NOT listed in Sec. 32 of POEA-
SEC are disputably presumed as work-
related.
6. In case seafarer is disembarked from ship
for medical reasons, ER shall bear full cost
of repatriation if seafarer is declared:
a. fit for repatriation; or
b. fit to work but the employer is
unable to find employment for the
seafarer on board his former ship or
another ship of the employer.
7. In case of permanent total or partial disability
of the seafarer, he shall be compensated in
accordance with the schedule of benefits
enumerated in Section 32 of POEA-SEC.
Computation of his benefits shall be
governed by the rates and the rules of
compensation applicable at the time the
illness or disease was contracted.
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NOTE: The disability shall be based solely on
the disability gradings provided under
Section 32. It shall NOT be measured or
determined by the number of days a seafarer is
under treatment or the number of days in which
sickness allowance is paid.
8. The aforementioned benefits are separate
and distinct from other benefits the seafarer
is entitled to.
In determining the compensability of an illness, it is
not required that the employment be the sole factor
in the growth, development, or acceleration of a
claimants' illness to entitle him to the benefits
provided for. It is enough that his employment
contributed, even if only in a small degree, to the
development of the disease.
Even assuming that the ailment of the worker was
contracted prior to his employment, this still would not
deprive him of compensation benefits. For what
matters is that his work had contributed, even in a
small degree, to the development of the disease.
Neither is it necessary, in order to recover
compensation, that the employee must have been in
perfect health at the time he contracted the disease.
A worker brings with him possible infirmities in the
course of his employment, and while the employer is
not the insurer of the health of the employees, he
takes them as he finds them and assumes the risk of
liability. (Skippers United Pacific, Inc. v. Lagne, G.R.
No. 217036, 2018)
For disability to be compensable, two elements must
concur: (1) the injury or illness must be work-related;
and (2) the work-related injury or illness must have
existed during the term of the seafarer's employment
contract.
Work-related injury pertains to injuries resulting in
disability or death arising out of, and in the course of,
employment. Work-relatedness of an injury or illness
means that the seafarer's injury or illness has a
possible connection to one's work, and thus, allows
the seafarer to claim disability benefits.
Whoever claims entitlement to the benefits provided
by law should establish his or her right thereto by
substantial evidence. Petitioner failed to prove that
the injury suffered is work-related. Hence, he is not
entitled to disability benefits. (Guerrero v. Philippine
Transmarine Carriers, Inc., G.R. No. 222523, 2018)
LABOR
DEATH BENEFITS
The System shall pay to the primary beneficiaries,
upon the death of the covered employee, an amount
equivalent to his monthly income benefit, plus 10%
thereof, for each dependent child, but not exceeding
5, beginning with the youngest and without
substitution. The income benefit shall be guaranteed
for 5 years. (Amended Rules on Employees’
Compensation, Rule XIII, Sec.3)
Conditions to entitlement
1. The employee has been duly reported to the
System;
2. He died as a result of an injury or sickness; and
3. The System has been duly notified of his
death, as well as the injury or sickness which
caused his death.
NOTES: Employer shall be liable for the benefit if
such death occurred before the employee is duly
reported for coverage to the System.
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.
The cause of death must be a complication or natural
consequence of the compensated Permanent Total
Disability
(Amended Rules on Employees’ Compensation,
Rule XIII, Sec.1)
Amount of Benefits
1. For life to the primary beneficiaries,
guaranteed for 5 years;
2. For not more than 60 months to secondary
beneficiaries;
3. Total benefits shall be at least P15,000 (Labor
Code, Art. 200[a])
Persons Entitled to Funeral Benefits
A funeral benefit of P30,000 (ECC Board Resolution
No. 16-05-28, May 31, 2016) shall be paid to:
1. Surviving spouse; or
2. Legitimate child who spent for funeral
services;
3. Any other person who can show
incontrovertible proof of having borne the
funeral expenses. (Amended Rules on
Employees’ Compensation, Rule XI)
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Death Benefits (2010 AMENDED POEA-SEC) directly attributable to the seafarer. (Sec. 20 (C)
POEA-SEC)
Work-related death of seafarer during the term of his
contract, the employer shall pay his beneficiaries Disqualification due to Misrepresentation
$50,000 in Philippine currency and an additional
amount of $7,000 to each child under the age of 21
A seafarer who knowingly conceals a pre-existing
but not exceeding 4 children, at the exchange rate
illness or condition in the Pre- Employment Medical
prevailing during the time of payment. (Sec. 20 (B)
Examination (PEME) shall be liable for
(1), POEA-SEC)
misrepresentation and shall be disqualified from any
compensation and benefits.
Compensation payable shall be doubled where death
is caused by warlike activity while sailing within a
declared war zone or war risk area, the This is likewise a just cause for termination of
compensation payable shall be doubled. (Sec. 20 (B) employment and imposition of appropriate
(2), POEA-SEC) administrative sanctions. (Sec. 20 (D) POEA-SEC)

The aforementioned benefits are separate and -- end of topic --

distinct from other benefits the seafarer is entitled to.
(Sec. 20 (B) (3), POEA-SEC)

The other liabilities of the employer when seafarer

dies as a result of work-related injury or illness during
the term of employment:
1. Pay the deceased’s beneficiary all
outstanding obligations due the seafarer
under the Contract.
2. Transport the remains and personal effects
of the seafarer to the Philippines at
employer’s expense EXCEPT:
a. If death occurred in a port where
local government laws or
regulations do not permit the
transport of such remains.
b. 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. Pay the beneficiaries of the seafarer $1,000
in Philippine currency for burial. expenses at
the exchange rate prevailing during the time
of payment. (Sec. 20 (B) (4), POEA-SEC)

Injury/Incapacity/Disability/Death Resulting from

Willful or Criminal Act or Intentional Breach of
Duties

Compensation and benefits shall not be payable in

case of injury, incapacity, disability or death of the
seafarer resulting from his willful or criminal act or
intentional breach of his duties.

PROVIDED HOWEVER, that the employer can prove

that such injury, incapacity, disability or death is

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V. LABOR RELATIONS b. Mandatory procedural requirements

c. Legal strike vs. illegal strike
d. Prohibited acts during strike
TOPIC OUTLINE UNDER THE SYLLABUS e. Liability of union officers and members
for illegal strike and illegal acts during
A. RIGHT TO SELF-ORGANIZATION strike
1. Who may join, form, or assist labor 3. Lockouts
organizations or workers’ associations a. Grounds for lockout
2. Restrictions as to managerial employees, b. Mandatory procedural requirements
supervisory employees, confidential 4. Assumption of jurisdiction by the DOLE
employees, employee-members of Secretary
cooperatives, alien employees, and 5. Injunctions
government employees
3. Determination of appropriate bargaining unit
(ABU), effect of inclusion of employees
outside of the ABU
4. Non-interference with workers’ rights to self-
organization

B. LEGITIMATE LABOR ORGANIZATIONS

1. Registration with the DOLE
2. Cancellation of registration
3. Affiliation/disaffiliation from national union or
federation
4. Rights of legitimate labor organizations
5. Rights and conditions of membership in
legitimate labor organizations
6. Check off, assessments, union dues, and
agency fees
7. Union security clause

C. BARGAINING REPRESENTATIVE
1. Modes to acquire status as Sole and
Exclusive Bargaining Agent (SEBA)
a. SEBA Certification
b. Certification/Consent Election
c. Bars to the holding of
Certification/Consent Election
d. Failure of election, Run-Off Election,
Re-run election
e. Employer as a mere bystander rule

D. COLLECTIVE BARGAINING
1. Duty to bargain collectively, bargaining in
bad faith
2. Collective bargaining agreement (CBA),
mandatory provisions
3. Signing, posting, registration
4. Term of CBA, freedom period

E. UNFAIR LABOR PRACTICES

1. Nature, aspects
2. By employers
3. By labor organizations

F. PEACEFUL CONCERTED ACTIVITIES

1. Picketing
2. Strikes
a. Grounds for strike

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A. RIGHT TO SELF-ORGANIZATION charitable, medical or educational institutions,

whether or not operated for profit.
Scope of Self-Organization Under the Labor Code
1. Forming, joining, or assisting labor Purpose: Collective bargaining, engaging in
organizations for the purpose of collective lawful concerted activities for collective
bargaining through representatives of their bargaining, and mutual aid and protection (Labor
own choosing. Code, Art. 253).
2. To engage in lawful concerted activities for
the purpose of collective bargaining or for 2. As to who may form, join and assist a union
their mutual aid and protection. (Labor or a workers’ association: Ambulant,
Code, Art. 257) intermittent and itinerant and rural workers, the
self-employed and those with no definite
The right to form, join, assist a union is specifically employers may form labor organizations.
protected by Art. XIII, Section 3 of the Constitution
and Art 257 of the Labor Code, and shall not be Purpose: Mutual aid and protection (Labor Code,
abridged. (SS Ventures Intl. v. SS Ventures Labor Art. 253).
Union, G.R. No. 161690)
Who can join a workers’ association?
What the Constitution guarantees is the right to form The last sentence of Art. 253 broadens the coverage
or join organizations. It is the employee who should of workers who can form or join a workers’
decide for himself whether he should join or not in an association and is not exclusive to ambulant,
association. The right to join a union includes the intermittent and itinerant workers.
right to abstain from joining any union. (Victoriano v.  Unlike in a labor union, Employee-Employer
Elizalde Rope Workers’ Union, G.R. L-25246) relationship is not necessary to join a
workers’ association. (Samahan ng mga
UNION VS. WORKER’S ASSOCATION Manggagawa sa Hanjin, G.R. 211145,
2015).
The two general kinds of labor organizations:
1. Union Note: Employees of non-profit organizations are now
2. Worker’s Association permitted to form, organize, or join labor unions of
their choice for purposes of collective bargaining
WORKERS’ (FEU-Dr. Nicanor Reyes Medical Foundation v.
UNION Trajano, G.R. No. 76273)
ASSOCIATION
Organization of workers EMPLOYEES OF GOCCs CREATED UNDER THE
Any labor formed for the mutual aid CORPORATION CODE
organization in and protection of its
the private members or for any (See discussion below.)
sector organized legitimate purpose other
for collective than collective bargaining SUPERVISORY EMPLOYEES
bargaining and Supervisory employees shall not be eligible for
for other NOTE: Workers have the membership in the collective bargaining unit of the
legitimate right to choose whether to rank-and-file employees but may join, assist or form
purpose form or join a union or separate collective bargaining units and/or legitimate
workers’ association. labor organizations of their own. (Labor Code, Art.
255)
1. WHO MAY JOIN, FORM, OR
ASSIST LABOR Rationale: Supervisory employees, while in the
ORGANIZATIONS OR performance of supervisory functions, become the
alter ego of the management in the making and the
WORKERS’ ASSOCIATIONS implementing of key decisions. It would be difficult to
find unity or mutuality of interests in a bargaining unit
GENERAL RULE: consisting of a mixture of rank-and-file and
supervisory employees. (Toyota Motor Phil. Corp. v.
ALL EMPLOYEES Toyota Motor Phil. Corp. Labor Union, G.R. No.
1. As to who may form, join or assist a union: 121084)
ALL persons employed in: Commercial,
industrial, agricultural enterprises, religious,

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ALIENS
General Rule: All aliens, natural or juridical, [...] are
strictly prohibited from engaging directly or indirectly
in all forms of trade union activities. (Labor Code, Art.
284)
Exceptions: Aliens may exercise the right to self-
organization and join or assist labor unions for
purposes of collective bargaining, provided the
following requisites are fulfilled:
1. With valid working permits issued by DOLE;
and
2. They are nationals of a country which grants
the same or similar rights to Filipino workers:
a. As certified by the DFA; or
b. Ratified either the ILO Convention
No. 8 or ILO Convention No. 98
SECURITY GUARDS
The security guards and other personnel employed
by the security service contractor shall have the right
to form, join, or assist in the formation of a labor
organization and even engage in concerted activities.
Note: The right to organize cannot be bargained
away (Southern Philippines Federation of Labor v.
Calleja, G.R. No. 80882)
2. Restrictions as to managerial
employees, supervisory
employees, confidential
employees, employee-members
of cooperatives, alien
employees, and government
employees
EXCEPTIONS TO THE GENERAL RULE THAT
ALL EMPLOYEES MAY FORM/JOIN/ASSIST A
UNION:
1. MANAGERIAL AND CONFIDENTIAL
EMPLOYEES
Managerial vs. Supervisory vs. Confidential
Employees
MANAGERIAL EMPLOYEE:
Managers cannot unionize. (United Pepsi-Cola
Supervisory Union v. Laguesma, G.R. No. 122226;
Labor Code, Art. 255)
Who is considered a managerial employee?
A managerial employee is one who is vested with
powers or prerogatives:
1. To lay down and execute management
policies and/or
LABOR
2. To hire, transfer, suspend, layoff, recall,
discharge, assign or discipline employees.
(Labor Code, Art. 219[m])
Managerial employees have the authority to devise,
implement, and control strategic and operational
policies (decision maker).
Managerial Functions refers to powers such as
to:
1. Effectively recommend managerial actions;
2. Formulate or execute management policy or
decisions; or
3. Hire, transfer, suspend, lay-off, recall,
dismiss, assign or discipline employees
(San Miguel Supervisors v. Laguesma, G.R.
No. 110399)
SUPERVISORS
Supervisors can unionize. (Pagkakaisa ng mga
Manggagawa sa Triumph International v. Pura
Ferrer-Calleja, G.R. No. 85915)
Who is considered a supervisory employee?
Supervisors are those employees, who in the interest
of the employer:
3. Effectively recommend such managerial actions
4. If the exercise of such authority is not merely
routinary or clerical in nature but requires
independent judgment. (Labor Code, Art. 219)
Supervisors have the task of simply ensuring that
such policies are carried out by the rank-and-file
employees, or who may merely recommend strategic
and operational policies (recommender).
Managerial Employee vs. Supervisor
MANAGERIAL
SUPERVISOR
EMPLOYEE
Has power to
recommend those
Has power to decide
managerial acts, such
and do managerial
as laying down policy,
acts.
hiring, or dismissing
employees, and so on.
Note: The power of the position, not the title, make
the position-holder a manager or a supervisor.
For an Employee to be Considered a Supervisor,
Recommendation Must Be;
5. Discretionary or judgmental (not clerical);
6. Independent (not a dictation of someone else);
and
7. Effective (given particular weight in making the
management decision). (Azucena, Everyone’s
Labor Code, 2015 ed.)
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DEFINITION OF A MANAGERIAL EMPLOYEE: (Tunay na Pagkakaisa ng Manggagawa sa Asia

LABOR STANDARDS VS. LABOR RELATIONS Brewery v. Asia Brewery, G.R. No. 162025)

LABOR STANDARDS LABOR RELATIONS Doctrine of necessary implication

Includes the officers Does not include the While Art. 255 of the Labor Code singles out
and members of the managerial staff since managerial employees as ineligible to join, assist or
managerial staff they are classified as form any labor organization, under the doctrine of
(supervisory supervisory necessary implication, confidential employees are
employees); such is employees; used in similarly disqualified. This doctrine states that what
important to be able to order to determine an is implied in a statute is as much a part thereof as
determine if employees employee’s eligibility in that which is expressed. (NATU v. Republic Planters
are covered by the joining or forming a Bank, G.R. No. 93468; United Pepsi Cola v.
Labor Code on union. Laguesma, G.R. No. 9663)
Conditions of
Employment. Note: Confidentiality may attach to a managerial or
non-managerial position. Confidentiality is not
Extent of Limitation on Right to Self- determined by rank, but by the nature of the job.
Organization
Art. 255 only disallows managerial employees from Note: Confidential employees are excluded from
joining “labor organizations” (means any union or joining labor organization under the doctrine of
association of employees which exists in whole or in necessary implication. If confidential employees
part for the purpose of collective bargaining or of could unionize in order to bargain for advantages for
dealing with the employer concerning terms and themselves, then they could be governed by their
conditions of employment). own motives rather than the interest of the
 Art. 255 does not absolutely disqualify employers. They may become the source of undue
managerial employees from exercising their advantage. Said employees may act as spy or spies
right of association. (United Pepsi v. of either party to a collective bargaining agreement.
Laguesma, G.R. No. 122226, 1998) (Pepsi-Cola Products, Inc. v. Secretary of Labor,
G.R. 96663)
CONFIDENTIAL EMPLOYEES
They are those who: 2. EMPLOYEE-MEMBERS OF COOPERATIVES
8. By the nature of his functions, assist or act in a An employee of a cooperative who is a member and
confidential capacity, in regard to persons who co-owner thereof cannot invoke the right to collective
formulate, determine; and bargaining, for certainly, an owner cannot bargain
9. Assists the person who effectuate management with himself or his co-owners.
policies, specifically in the field of labor relations.
(Sugbuanon Rural Bank v. Laguesma, G.R. No. However, insofar as it involves cooperatives with
116194) employers who are not members or co-owners
thereof, such employees are entitled to exercise the
Because of such fiduciary role, he has necessary rights of all workers to organization, collective
access to confidential information in the area of labor bargaining negotiations and others. (San Jose
relations. Electric Service Cooperative v. Ministry of Labor,
G.R. No. 77231)
Confidential employees, by reason of their position or
nature of work are required to assist or act in a Employee-Members of cooperatives cannot invoke
fiduciary manner to managerial employees, they are the right to collective bargaining due to the fact of
likewise privy to sensitive and highly confidential ownership but they are allowed to form an
records. (Standard Chartered Bank Union v. association for their mutual aid and protection as
Standard Chartered Bank, G.R. No. 161933) employees. (Planters Products, G.R. No. 78524,
1989; Benguet Electric, G.R. No. 79025)
Confidentiality Must be Related to Labor
Relations, and Not a Business Standpoint 3. RELIGIOUS OBJECTORS
An employee must assist or act in a confidential Under the Industrial Peace Act (1953), members of
capacity and obtain confidential information relating religious sects cannot be compelled or coerced to
to labor relations policies. Exposure to internal join labor unions even when said unions have closed
business operations of the company is not per se a shop agreements with employers (Victoriano v.
ground for the exclusion in the bargaining unit. Elizalde Rope Workers’ Union, G.R. no. L-25246)

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Note: While the Victoriano decision was penned
citing the Industrial Peace Act, and while said act was
repealed by R.A. No. 3350, which does not contain
the same exception, subsequent decisions still
uphold the religious objector exception (see
Ebralinag v. Division Superintendent of Cebu, G.R.
No. 95770)
However: The Victoriano decision does not bar the
members of the Iglesia ni Kristo from forming their
own union. (Kapatiran sa Meat and Canning Division
v. BLR Director, G.R. No. L-82914)
In fact, religious objectors can vote for “No-Union” in
a certification election in the exercise of their right to
self-organization (Reyes v. Trajano, G.R. No. 84433)
4. EMPLOYEES OF FOREIGN EMBASSIES,
CONSULATES AND INTERNATIONAL
ORGANIZATIONS
For example, the employees of International Catholic
Migration Commission cannot unionize nor conduct a
certification election (International Catholic Migration
Commission v. Hon. Calleja, G.R. No. 85750)
The International Rice Research Institute (“IRRI”)
enjoys immunity from local jurisdiction; it has the
discretion whether to waive its immunity (Callado v.
International Rice Research Institute, G.R. No.
106483)
Note: Aliens working in the country with valid work
permits issued by the DOLE, may exercise right to
self-organization subject to rule on comity. (Labor
Code, Art. 284)
5. GOVERNMENT EMPLOYEES
Note: The prohibition/s are not absolute.
Employees of government corporations established
under the Corporation Code shall have the right to
organize and to bargain collectively with their
respective employers.
All other employees of the civil service shall have the
right to form associations for purposes not contrary
to law. (Art. 254, Labor Code)
E.O. 180:
Guidelines for the exercise of the right to
organize of government employees, creating a
Public Sector Labor-Management Council, and
for other purposes.
*not in the syllabus
Right to Self-Organization under EO 180 is for a
limited purpose – only for the furtherance and
LABOR
protection of their interests not for purposes of
collective bargaining.
Coverage of EO 180
(a) Applies to all government employees
(b) Employees of all branches, subdivisions,
instrumentalities, and agencies of the
government, including GOCCs with
original charters. (§1)
Excluded from Coverage
(c) Members of the Armed Forces of the
Philippines
(d) Including police officers
(e) Policemen
(f) Firemen and
(g) Jail guards (§4)
Who are Ineligible to Join Organization of Rank &
File Government Employees
High-level employees whose functions are normally
considered as policy-making or managerial or whose
duties are of a highly confidential nature. (§3)
Non-Interference of Government Authorities
Government authorities shall not interfere in the
establishment, functioning or administration of
government employees' organizations through acts
designed to place such organizations under the
control of government authority. (§6)
3. Determination of appropriate
bargaining unit (ABU), effect of
inclusion of employees outside
of the ABU
Bargaining Unit
A group of employees sharing mutual interests within
a given employer unit, comprised of all or less than
all of the entire body of employees in the employer
unit or any specific occupational or geographical
grouping within such employer unit. (D.O. No. 40-03,
Sec. 1[d], Rule I, Book V)
Appropriate Bargaining Unit (ABU)
A group of employees of a given employer comprised
of all or less than all of the entire body of employees,
which the collective interests of the employees,
consistent with the equity of the employer, indicate to
be best suited to serve reciprocal rights and duties of
the parties. (Belyca Corp. v. Calleja, G.R. No. 77395,
1988)
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Right of Individual or Group to Present

Grievances Not Impaired ELEMENTS OF AN APPROPRIATE
An individual employee or group of employees shall BARGAINING UNIT
have the right at any time to present grievances to All or less than all of the entire
their employer. COMPOSITION
body of employees
Of employees, i.e. the
Any provision of law to the contrary notwithstanding, collective interest of
workers shall have the right, to participate in the EQUITY
employees consistent with
policy and decision-making processes of the the equity of the employer
establishment where they are employed insofar as To serve the reciprocal rights
said processes will directly affect their rights, benefits and duties of the parties
and welfare. PURPOSE
under the CB provisions and
with law
For this purpose, workers and employers may form
labor-management councils: Provided, that the Factors in Determining Community of Interest
representatives of the workers in such labor- 1. Similarity in the scale and manner of
management councils shall be elected by at least the determining earnings
majority of all employees in said establishment. 2. Similarity in employment benefits, hours of
(Labor Code, Art. 267) work and other terms and conditions of
employment
Note: In establishments where no legitimate labor 3. Similarity in the kinds of work performed
organization exists, the workers’ representative shall 4. Similarity in the qualifications, skills and
be elected directly by the employees at large. training of the employees
(Azucena Vol. I, 7th ed., p.458). 5. Frequency of contact or interchange among
the employees
Test to determine the constituency of an 6. Geographic proximity
appropriate bargaining unit 7. Continuity or integration of production
The law fixes no maximum or minimum number of process
bargaining units. Union members come from the 8. Common supervision and determination of
CBU and several rival unions can come from the labor-relations policy
CBU. The representative is the union, and the group 9. History of collective bargaining
represented is the CBU. 10. Desires of the affected employees
11. Extent of union organization (Azucena Vol.
Fundamental Factors in Determining the I, 7th ed., p. 461).
Appropriate Collective Bargaining Unit:
1. Will of the Employees Globe doctrine: If units in one industry cannot be
2. Substantial Mutual Interests determined, the employees can decide how to
3. Prior Collective Bargaining History organize themselves into units. The best way to
4. Similarity of Employment Status determine such preference is through referendum or
Out of these, the controlling test of grouping is plebiscite. (Kapisanan ng Mga Manggagawa sa
mutuality or commonality of interest (San Miguel Manila Road Co. v. Yard Crew Union, G.R. Nos. L-
Corporation v. Laguesma, G.R. 100485, 1994). 16292-94, 1960)
Community of Interests Rule: States that the Geography and Location play a significant role in
employees within an appropriate bargaining unit determining community of interests if:
must have commonality of collective bargaining 1. The separation between the camps and the
interests in the terms of employment and working different kinds of work in each all militate in
conditions as evidenced by the type of work they favor of the system of separate bargaining
perform. (San Miguel Foods Inc. v. San Miguel Corp. units;
Supervisors and Exempt Union, G.R. No. 146206, 2. When the problems and interests of the
2011) workers are peculiar in each camp or
department;
3. The system of having one collective
bargaining unit in each camp has operated
satisfactorily in the past. (Benguet
Consolidated v. Bobok Lumberjack
Association, G.R. No. L-11029, 1958)

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Prior Collective Bargaining History
The existence of a prior collective bargaining history
is neither decisive nor conclusive in the determination
of what constitutes an appropriate bargaining unit.
(National Association of Free Trade Unions v. Mainit
Lumber Development Company Workers Union,
G.R. No. 79526, 1990)
Single or “Employer Unit” Preferred
General Rule: The proliferation of unions in an
employer unit is discouraged as a matter of policy
unless there are compelling reasons which would
deny a certain class of employees the right to self-
organization for purposes of collective bargaining.
(Philtranco v. BLR, G.R. No. 85343, 1989)
Exceptions:
1. Supervisory employees who are allowed to
form their own unions apart from the rank-
and-file employees;
2. Where the employees exercise their right to
form unions or associations for purpose not
contrary to law, to self-organization, and to
enter into collective bargaining negotiations
(Barbizon Phil. v. Nagkakaisang Supervisor
ng Barbizon, G.R. Nos. 113204-05, 1996)
Two Companies with Related Business
General Rule: Two corporations cannot be treated
as a single bargaining unit even if their businesses
are related. (Diatagon Labor Federation Local v.
Ople, G.R. No. L-44493-94, 1980)
Exception: Application of Piercing Doctrine
The cross-linking of the agencies command, control,
and communication systems indicate their unitary
corporate personality. Accordingly, the veil of
corporate fiction should be lifted for the purpose of
allowing the employees of the three agencies to form
a single labor union. (Philippine Scouts Veterans v.
Torres, G.R. No. 92357, 1993)
Spin-Off Corporations
In the case of subsidiaries or corporations formed out
of former divisions of a mother company following a
bona fide reorganization, it is best to have separate
bargaining units for the different companies. (San
Miguel v. Confesor, G.R. 11262, 1996)
Summary: Signification of Determining the
Bargaining Unit
1. In a Certification Election, the voters are the
whole bargaining unit, whether union or non-
union members (Labor Code, Arts. 267);
2. In a CBA Ratification, the voters are the
whole bargaining unit, and not just the union
members (Labor Code, Art 237); and
LABOR
3. In Strike Voting, the voters are the members
of the union, not the whole bargaining unit.
(Labor Code, Art. 278[f])
Commingling or Mixture of Membership
Effect of Inclusion of Employees Outside the
Bargaining Unit or Commingling
General Rule: It 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. [Art. 256]
Exception: Unless such mingling was brought about
by misrepresentation, false statement or fraud under
Art. 247 (Grounds for cancellation of Union
Registration) of the Labor Code. [SMCC-Super v.
Charter Chemical and Coating Corporation, G.R. No.
169717 (2011)]
Supervisor and Rank and File Union Affiliation
RA 9481: AN ACT STRENGTHENING THE
WORKERS' CONSTITUTIONAL RIGHT TO SELF-
ORGANIZATION, amending the Labor Code
modified previous Supreme Court rulings prohibiting
supervisors’ unions from joining with the same
federation as the rank and file.
New law now explicitly ALLOWS for the
commingling of the two.
Sec. 8 of new law provides: “Article 245 (now 255)
of the Labor Code is hereby amended to read as
follows –
Art. 245 (now 255). Ineligibility of Managerial
Employees to Join any Labor Organization; Right
of Supervisory Employees. - Managerial
employees are not eligible to join, assist or form any
labor organization. Supervisory employees shall not
be eligible for membership in the collective
bargaining unit of the rank-and-file employees but
may join, assist or form separate collective
bargaining units and/or legitimate labor organizations
of their own. The rank and file union and the
supervisors’ union operating within the same
establishment may join the same federation or
national union.
The inclusion as union members outside the
bargaining unit shall render said employees
automatically removed from the list of membership
of said union. (Labor Code, Art. 256)
4. Non-interference with workers’
rights to self-organization
It shall be unlawful for any person to restrain, coerce,
discriminate against or unduly interfere with
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employees and workers in their exercise of the right
to self-organization (Labor Code, Art. 257)
B. LEGITIMATE LABOR ORGANIZATIONS
1. Registration with the DOLE
Preliminary: Discussion of Registration and
Cancellation of Labor Organizations
DEFINITION OF TERMS
Any union or association of
employees in the private
sector which exists in whole
or in part for the purposes of
Labor
collective bargaining, mutual
Organization
aid, interest, cooperation,
protection, or other lawful
purposes (Labor Code, Art.
219[g])
Any labor organization in the
private sector organized for
Union
collective bargaining and for
other legitimate purpose
(Sec. 1[ccc], Rule I, DO 40-
03)
Any labor organization in
the private sector registered
or reported with the DOLE,
which includes a 3. Where the
Legitimate
Labor
local/chapter directly
Organization
chartered by a legitimate
federation or national union
which has been duly
reported to the Department
(Labor Code, Art. 219[h])
A labor union created by
independent registration;
required to submit names of
Independent
all its members comprising
Union
at least 20% of all the
employees in the bargaining
unit
Labor Organization Worker’s
Association
It exists in whole or in It is organized for the
part for the purpose of mutual aid and
collective bargaining protection of its
or of dealing with members or for any
employers legitimate purpose
concerning terms and other than collective
conditions of bargaining. (DO No.
employment 40-03).
LABOR
Modes of Acquiring Legitimacy for Labor
Organizations
1. Registration with the Bureau of Labor
Relations (Independent Union);
2. Chartering or Issuance of a Federation or
National Union of a Charter Certificate
Acquisition of Legal Personality
Federation, Issuance of the Certificate
national union, of Registration
trade union
center,
independent
union
Chapter/ Local/ Tentative legal personality
Chartered Union to file Petition for
Certification Election – upon
issuance of Charter
Certificate
Other rights, upon
submission of:
1. Names of the
chapters’ officers,
addresses, and
principal office
2. Chapter’s
constitution and by-
laws
chapter’s
constitution and by-
laws are the same
of the federation or
national union, it
shall be indicated.
Note: Such legal personality may be question only
through an independent petition for cancellation and
not by way of collateral attack. (Sec. 8, Rule IV of DO
40-03). The proceedings on a petition for cancellation
of registration are independent of those of a petition
for certification election. (Samma-Likga v. Samma
Corporation, G.R. 167141, 2009).
Purpose of Registration
Registration is the operative act that gives rights to a
labor organization.
1. It is clothed with legal personality, once
registered, to claim representational and
bargaining rights or to strike or to picket.
2. It is a conditional sine qua non for the
acquisition of legal personality.
3. It is a valid exercise of police power because
the activities in which labor organizations,
associations, and unions of workers are
engaged affect public interest, which should
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be protected. (PH Association of Labor 2. Application to cancel registration by the

Unions v. Secretary of Labor) board and attested by the president (Art.
248)
Independent Chartering
Registration Article 241 3. Affiliation/disaffiliation from
Article 240 national union or federation
Obtained by union A duly registered
organizers in an federation/national Purpose of Affiliation
enterprise through union issues a charter To foster the free and voluntary organization of a
their own accord to a union in an strong and united labor movement [Art. 218A(c)]
enterprise and
registers the charter The sole essence of affiliation is to increase, by
with the regional collective action, the common bargaining power of
office of the BLR local unions for the effective enhancement and
protection of their interests. Admittedly, there are
Result: Independent Result: Chapter/Local times when without succor and support local
Union unions may find it hard, unaided by other support
Accorded legal Certificate only limited groups, to secure justice for themselves.
personality to petition for [Philippine Skylanders, Inc. v. NLRC, G.R. No.
certification election; 127374 (2002)]
once registered,
acquires legal Nature of Relationship: Agency
personality (but loses The mother union, acting for and on behalf of its
it once disaffiliated) affiliate, had the status of an agent while the local
Application is filed Charter certificate union remained the basic unit of the association,
with and will be acted issued by federation free to serve the common interest of all its
upon by the DOLE or national union is members subject only to the restraints imposed by
Regional Office where filed with the Regional the constitution and by-laws of the association. [...]
the applicant’s Office or BLR within The same is true even if the local is not a legitimate
principal office is 30 days after the labor organization. [Filipino Pipe and Foundry
located issuance of charter Corp v. NLRC, G.R. No. 115180 (1998)]
certificate
20% minimum No minimum size of Effect of Affiliation
membership is membership is Inclusion of [the federation’s initials] in the
required to register an required registration is merely to stress that they are its
independent union affiliates at the time of registration. It does not
mean that said local unions cannot stand on their
2. Cancellation of registration own. [Adamson v. CIR, G.R. No. L-35120 (1984)]

Grounds for Cancellation:
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. (Art.
247)
Requirements for Voluntary Cancellation:
1. At least 2/3 of its general membership votes,
in a meeting duly called for that purpose
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. [Insular Hotel Employees
Union NFL v. Waterfront Insular Hotel, G.R. No.
174040-41 (2010)]
(a) Disaffiliation
A right granted to affiliates to disassociate from the
mother union. Disaffiliation is a right corollary to the
right of association granted by the Constitution. The
right to associate necessarily entails the right not to

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associate. (Volkschel Labor Union v. BLR, G.R. No.  In the absence of enforceable provisions in
L-45824, 1985) the federation’s constitution preventing
disaffiliation of a local union, a local may
Local unions remain the basic units of association, sever its relationship with its parent.
free to serve their own interests subject to the (Tropical Hut Employees Union-CGW v.
restraints imposed by the constitution and the by- Tropical Hut, G.R. Nos. L-43495-99, 1990)
laws of the national federation, and they are also free
to renounce the affiliation upon the terms laid down Note: A local union which has affiliated itself with a
in the agreement which brought about affiliation. To federation is free to sever such affiliation anytime and
disaffiliate is a right, but to observe the terms of such disaffiliation cannot be considered disloyalty. In
affiliation is an obligation. the absence of specific provisions in the federation's
constitution prohibiting disaffiliation or the declaration
Note: Chartered local can disaffiliate from the of autonomy of a local union, a local may dissociate
federation, but it will lose its legal personality. In with its parent union (MSMG-UWP v. Ramos, G.R.
practice, chartered locals file for independent 113907, 2000)
registration prior to disaffiliation in order for it to gain
new legal personality despite disaffiliation. Limitations to Disaffiliation
Disaffiliation should be in accordance with the rules
When to Disaffiliate and procedures stated in the constitution and by-laws
General Rule: A labor union may disaffiliate from of the federation. (See Cirtek Employees Labor
the mother union to form a local or independent Union-FFW v. Cirtek Electronics, G.R. No. 190515,
union ONLY during the 60-day freedom period 2011)
immediately preceding expiration of CBA.
 Freedom Period: The last 60 days of the 5th EFFECTS OF DISAFFILIATION
year of the CBA. (Labor Code, Art. 265) AS TO EXISTING
AS TO UNION DUES
CBA
Exception: Shift of allegiance of majority. In such The federation will no
a case, however, the CBA continues to bind longer receive the dues
members of the new or disaffiliated and independent from the employer
union up to the CBA’s expiration date. (Tanduay because without the
The CBA continues to
Distillery Labor Union v. NLRC, G.R. No. 75037, said affiliation, the
bind the members of
1987) employer has no link to
the new or disaffiliated
the mother union.
and independent
Individual Member Disaffiliation vs. Union’s union up to the CBA’s
Disaffiliation The employer’s check-
expiration date.
Any individual member or any number of members off authorization, even if
(Associated Workers
may disaffiliate from the union during the “freedom declared irrevocable, is
Union-PTGWO v.
period.” But disaffiliating the union from its mother good only as long as
NLRC, G.R. Nos.
union must be supported by the majority of the they remain members of
87266-69, 1990)
members. the union concerned.
 If done by a minority, even during the (Phil. Federation of
freedom period, the act may constitute Petroleum Workers v.
disloyalty. (Villar, et al v. Inciong, G.R. Nos. CIR, G.R. No. L-26346,
L-50283-8, 1983) 1971)

Manner of Disaffiliation (b) Substitutionary Doctrine

An affiliate may disaffiliate from a labor federation or
national union through the members’ determination
by secret balloting, after due deliberation. (Labor
Code, Art. 250[d])
Local Union Disaffiliates to Join New Federation
– Allowed
When the local union withdraws from the old
federation to join a new federation, it is merely
exercising its primary right to self-organization for the
effective enhancement and protection of common
interests.
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, through their new bargaining agent,
cannot renege on the collective bargaining contract,
except to negotiate with management for the
shortening hereof. (Azucena Vol. I, 7th ed., p. 209).

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Effect of substitutionary doctrine on the Deposed
Union’s Personal Undertakings
In case of change of bargaining agent under the
substitutionary doctrine, the new bargaining agent is
not bound by the personal undertakings of the
deposed union like the “no strike, no lockout” clause
in a CBA which is the personal undertaking of the
bargaining agent which negotiated it.
Summary of Principles: Affiliation / Disaffiliation
1. A local union may affiliate or disaffiliate
from federation
2. Affiliation and disaffiliation entail rights
and obligations
3. Affiliation or disaffiliation is a major issue
that can be decided only by a majority of
the members through secret balloting in a
formal meeting duly called for the purpose
4. Between the chapter and the federation,
affiliation or disaffiliation is a contractual
relation.
5. An affiliation contract cannot absolutely
prohibit disaffiliation but may impose
limitations or restrictions. It may specify
the number or proportion of votes needed,
or the appropriate period to disaffiliate.
6. By affiliating or disaffiliating, the local
union does not dissolve itself nor does it
lose its standing as principal.
7. The local union, even a local chapter,
must be a legitimate labor organization –
it must have been duly registered with
DOLE, otherwise it is not entitled to the
rights of an LLO
4. Rights of legitimate labor
organizations
1. To act as the representative of its
members for the purpose of collective
bargaining;
2. To be certified as the exclusive
representative of all the employees in an
appropriate bargaining unit for purposes
of collective bargaining;
3. To be furnished by the employer, upon
written request, with its annual audited
financial statements, including the
balance sheet and the profit and loss
statement, within 30 calendar days from
the date of receipt of the request, after the
union has been duly recognized by the
employer or certified as the sole and
exclusive bargaining representative of the
employees in the bargaining unit, or within
60 calendar days before the expiration of
LABOR
the existing collective bargaining
agreement, or during the collective
bargaining negotiation;
4. To own property, real or personal, for the
use and benefit of the labor organization
and its members;
5. To sue and be sued in its registered name;
and
6. To undertake all other activities designed
to benefit the organization and its
members, including cooperative, housing,
welfare and other projects not contrary to
law. (Labor Code, Art. 251)
Reportorial Requirements to be Submitted to the
BLR by the Legitimate Labor Organization
1. Its constitution and by-laws, or
amendments thereto, the minutes of
ratification, and the list of members who
took part in the ratification of the
constitution and by-laws within thirty (30)
days from adoption or ratification of the
constitution and by-laws or amendments
thereto;
2. Its list of officers, minutes of the election of
officers, and list of voters within thirty (30)
days from election;
3. Its annual financial report within thirty (30)
days after the close of every fiscal year;
and
4. Its list of members at least once a year or
whenever required by the Bureau.
Failure to comply with the above requirements
shall not be a ground for cancellation of union
registration but shall subject the erring officers or
members to suspension, expulsion from
membership, or any appropriate penalty. (Labor
Code, Art. 252)
5. Rights and conditions of
membership in legitimate labor
organizations
Nature of Relationship
Member – Labor Union
The relationship of the union and the member is
fiduciary in nature. 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 labor matters entrusted to it.
(Heirs of Teodolo Cruz v. CIR, G.R. No. L-23331-32,
1969)
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AGENCY RELATIONSHIP INVOLVED 6. To be deducted a

PRINCIPAL AGENT
AGENT OF special assessment
AGENT only with the member’s
Local/ Federation/ individual written
Employees authorization
Chapter National Union
The member’s right to be
informed about:
ii. Labor Union Federation
1. The organization’s
RIGHT TO
constitution and by-
Affiliate: Independent union affiliated with a INFORMATION
federation or national union (IRR Labor Code, Sec. laws; and
3, Book V, Rule II); OR a chartered local which was 2. The CBA, and about
subsequently granted independent registration but labor laws
did not disaffiliate from its federation, reported to the
Regional Office and the Bureau in accordance with Note: Any violation of the above rights and conditions
Rule III, Sections 6 and 7 of these Rules (Sec. 1[a], of membership shall be a ground for the cancellation
Rule I of D.O. 40-03) of the union registration or expulsion of an officer
from office, whichever is appropriate. However, with
A local union does not owe its existence to the RA 9481 amending and limiting the grounds for
federation with which it is affiliated. It is a separate cancellation of registration, this should also be
and distinct voluntary association owing its creation deemed amended.
to the will of its members. Mere affiliation does not
divest the local union of its own personality, neither Reporting Violations of Membership
does it give the mother federation the license to act At least 30% of all the members of the union or any
independently of the local union. It only gives rise to member or members specifically concerned may
a contract of agency, where the former acts in report such violation to the Bureau (Labor Code, Art.
representation of the latter. (Insular Hotel Employees 250)
v. Waterfront Insular Hotel, G.R. No. 174040-41,
2010) However: When the violation directly affects only 1
or 2 members, then only 1 or 2 members would be
SUMMARY OF RIGHTS AND CONDITIONS OF enough to report such violation (Verceles v. BLR-
MEMBERSHIP UNDER ART. 250 DOLE, G.R. No. 152322, 2005)
The member’s right to vote
and be voted for, subject to Visitorial Power of DOLE Secretary
POLITICAL
lawful provisions on The complaint to authorize the DOLE Secretary’s or
RIGHTS
qualifications and his duly authorized representative’s power to inquire
disqualifications into the financial activities of any labor organization
DELIBERATIVE The member’s right to must be supported by at least 20% of the Labor
AND DECISION- participate in deliberations on Organization’s membership (Labor Code, Sec. 289).
MAKING major policy questions and
RIGHTS decide them by secret ballot Eligibility for Membership
Eligibility for membership depends on a union’s
The member’s rights:
constitution and by-laws. Nonetheless, employee is
1. Against unauthorized
already qualified for union membership starting on
collection of
his first day of service. (Labor Code, Art. 292[c])
contributions or
unauthorized An employee’s membership in the union does not
disbursements mean coverage in the CBA. Neither does coverage
RIGHTS OVER 2. To require adequate in the CBA mean membership in the union.
MONEY records of income and
MATTERS expenses;
3. To access to financial
records;
4. To vote on officers’
compensation;
5. To vote on proposed
special assessments

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6. Check off, assessments, union

WHO ARE WHO ARE dues, and agency fees
PROHIBITED FROM PROHIBITED FROM
BECOMING BECOMING A method of deducting from an employee’s pay at
MEMBERS OF A OFFICERS OF A prescribed period, the amounts due the union for
LABOR LABOR fees, fines or assessments.
ORGANIZATION ORGANIZATION
Deductions for union service fee are authorized by
1. Non-Employees 1. Non-Employees law and do not require individual check-off
(Labor Code, Art. (Labor Code, Art. authorizations.
250[c]); 250[c]);
2. Subversives or 2. Subversives or Nature and Purpose of Check-Off
those engaged in those engaged in All unions are authorized to collect reasonable
subversive subversive membership fees, union dues, assessments, and
activities (Labor activities (Labor fines and other contributions for labor education and
Code, Art. Code, Art. research, mutual death and hospitalization benefits,
250[e]); 250[e]); welfare fund, strike fund and credit and cooperative
3. Persons who undertakings. (Labor Code, Art. 250)
have been
convicted of a Requirements Regarding Check-Offs
General Rule: No special assessment, attorney’s
crime involving
fees, registration fees, or other extraordinary fees
moral turpitude
may be checked off from any amount due an
(Labor Code, Art. employee without an individual written
250[f]) authorization duly signed by the employee (Labor
Note: No qualification requirements for candidacy to Code, Art. 250[o])
any position shall be imposed other than membership
in good standing in the labor organization. Union The authorization should specifically state the:
officer must be an employee. 1. Beneficiary of the deduction;
2. Amount; and
Who are Entitled to Vote 3. Purpose
Only members of the union can take part in the
election of union officers. (Labor Code, Art. 250[c]) Note: There can be no valid check-off if the majority
of the union members had already withdrawn their
The question however of eligibility to vote may be individual authorization. (Palacol v. Ferrer-Calleja,
determined through the use of the applicable G.R. No. 85333, 1990)
payroll period and employee's status during the
applicable payroll period. The payroll of the month Exceptions to Written Authorization Requirement
next preceding the labor dispute in case of regular 1. For mandatory activities provided under
employees and the payroll period at or near the the Labor Code; and
peak of operations in case of employees in
2. When Non-members of the union avail of
seasonal industries. (Tancino v. Ferrer-Calleja,
the benefits of the CBA:
G.R. No. 78131, 1988)
a. Said non-members may be
Limitations assessed union dues equivalent
1. The labor organization cannot compel to that paid by members; and
employees to become members of their b. Only a board resolution approved
labor organization if they are already by majority of the members in a
members of a rival union; general meeting called for the
2. The persons mentioned in Art. 250[e]) of purpose; and
the Labor Code are prohibited from 3. Check-off for union service fees
becoming a member of a labor authorized by law (Radio
organization (Subversives); and Communications of the Philippines, Inc. v.
3. Religious objectors cannot be compelled Sec. of Labor, G.R. No. 77959, 1989)
or coerced to join labor unions (Victoriano
v. Elizalde Rope Worker’s Union, G.R. No.
L-25246, 1974)

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Requisites for a Valid Special Assessment (RMI)
1. Authorization by a written Resolution of
the majority of all the members at the
general membership meeting duly called
for that purpose.
2. Secretary’s record of the Minutes of the
meeting including the list of members
present, votes cast, purpose of the special
assessments and the recipient of such
assessments which must be attested to by
the President
3. Individual written authorization for check-
off duly signed by the employee
concerned to levy such assessments
Agency fees
Dues equivalent to union dues, charged from the
non-union members who are benefited by or under
the CBA.
Requisites for the Imposition of Agency Fees
1. Employee is part of the bargaining unit;
2. He is not a member of the union; and
3. He partook of the benefits of the CBA
(Labor Code, Art. 259[e])
NOTE: No written authorization is required from the
non-union employees in order to effect a valid check-
off. (Del Pilar Academy v. Del Pilar Academy
Employees, G.R. No. 170112, 2008)
Rule on Levy
Article 250, par. (n) of the Labor Code provides that
no special assessment or extraordinary fees may be
levied upon the members of a labor organization
unless authorized by a written resolution of a majority
of all the members at a general membership meeting
duly called for the purpose. The secretary of the
organization shall record the minutes of the meeting
including the list of all members present, the votes
cast, the purpose of the special assessment or fees
and the recipient of such assessment or fees. The
record shall be attested to by the president.
Rule on Collection
Article 250, par (o) of the Labor Code provides that
other than for mandatory activities under the Code,
no special assessments, attorney’s fees, negotiation
fees or any other extraordinary fees may be checked
off from any amount due to an employee without an
individual written authorization duly signed by the
employee. The authorization should specifically state
the amount, purpose and beneficiary of the
deduction.
LABOR
7. Union security clause
Union Security
Union security is a generic term which is applied to
and comprehends closed shop, union shop,
maintenance of membership or any other form of
agreement which imposes upon employees the
obligation to acquire or retain union membership as
a condition affecting employment.
It is indeed compulsory union membership whose
objective is to assure continued existence of the
union. In a sense, there is discrimination when
certain employees are obliged to join a particular
union. But if it is discrimination favoring unionism; it
is a valid kind of discrimination. (Azucena,
Everyone’s Labor Code, 2015 ed.)
Nothing in this Code or in any other law shall stop the
parties from requiring membership in a recognized
collective bargaining agent as a condition for
employment, except those employees who are
already members of another union at the time of the
signing of the collective bargaining agreement.
(Labor Code, Art. 259[e])
The law has allowed stipulations for 'union shop' and
'closed shop' as means of encouraging workers to
join and support the union of their choice in the
protection of their rights and interests vis-a-vis the
employer. (Del Monte Philippines v. Salvidar, G.R.
No. 158620, 2006)
The employer is not guilty of unfair labor practice if
he merely complies in good faith with the request of
the certified union for the dismissal of employees
expelled from the union pursuant to the union
security clause in the collective bargaining
agreement. (Soriano v. Atienza, G.R. No. 68619,
1989)
Types Of Unions Security Clauses
1. CLOSED SHOP
Only union members can be hired by the company
and they must remain as union members to retain
employment in the company.
Employees not covered by the closed shop
provision
1. Any employee who at the time the closed
– shop agreement takes effect is a bona
fide member of a religious organization
which prohibits its members from joining
labor unions of religious grounds.
2. Employees already in service and already
members of a labor union or unions other
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than the majority union at the time the
closed – shop agreement took effect.
3. Confidential employees who are excluded
from the rank and file bargaining unit.
4. Employees excluded from the closed –
shop by express terms of the agreement.
(BPI v. BPI Employees Union-Davao
Chapter, G.R. No 164301, 2010).
Generally Applicable to Persons to be Hired or
Not Yet Members of Labor Organizations.
In the absence of a manifest intent to the contrary,
closed – shop provisions in a collective bargaining
agreement apply only to persons to be hired or to
employees who are not yet members of any labor
organization and that said provisions of the
agreement are not applicable to those already in the
service at the time of the execution.
Disaffiliation from a labor union is not open to legal
objection since to do so would render nugatory the
right of all employees to self – organization and to
form, join or assist labor organizations of their own
choosing. But a closed shop is a valid form of union
security, and such provision in a CBA is not a
restriction on the right. Thus, although one is entitled
to disaffiliation from their union to form a new
organization of their own, must, however, suffer the
consequences of their separation from the union
under the security clause of the CBA. (Villar v.
Inciong, G.R. No. L-50283-84, 1983; NAFLU v.
Hamilton Distillery Co., et. al., G.R. No. L-18112,
1962)
2. UNION SHOP
Non-members may be hired, but to retain
employment, they must become union members after
a certain period. The requirement applies to present
and future employees. (Azucena Vol. II-A, 9th ed., p.
346).
There is union shop when all new regular employees
are required to join the union within a certain period
as a condition for their continued employment. (GMC
v. Casio, G.R. No. 149552 , 2010)
3. MAINTENANCE OF MEMBERSHIP SHOP
There is maintenance of membership shop when
employees, who are union members as of the
effective date of the agreement, or who thereafter
become members, must maintain union membership
as a condition for (their) continued employment until
they are promoted or transferred out of the
bargaining unit or the agreement is terminated. (GMC
v. Casio, G.R. No. 149552, 2010)
LABOR
4. AGENCY SHOP
An agreement whereby employees must either join
the union or pay to the union as exclusive bargaining
agent a sum equal to that paid by the members.
(Azucena Vol. II-A, 9th ed., p. 346).
Under the agency – shop clause of a CBA, an
employee is not required to join the union as a
condition of continued employment, but must pay the
union a service fee (usually equivalent to union dues
and initiation fees). Since a union is required by
statute to act as the bargaining representative of all
employees, both union and non – union, within their
bargaining unit, the justification for the clause is that
the nonmember should contribute towards the cost of
collective bargaining process without supporting it
financially.
5. MODIFIED UNION SHOP
Employees who are not union members at the time
of signing the contract need not join the union, but all
workers hired thereafter must join. (Azucena Vol. II-
A, 9th ed., p. 346).
C. BARGAINING REPRESENTATIVE
Selection/Designation of an exclusive bargaining
representative
General Rule: The labor organization
designated/selected by the majority of the employees
in an ABU shall be the exclusive bargaining
representative of the employees in such unit for the
purpose of collective bargaining.
Exceptions:
1. An individual employee or group of
employees shall have the right at any time to
present grievances to their exclusive
bargaining representative.
2. Any provision of law to the contrary
notwithstanding, workers shall have the right
to participate in policy and decision-making
processes of the establishment where they
are employed insofar as said processes will
directly affect their rights, benefits and
welfare. Workers and employees may also
form labor management councils for the
same purpose. In such case, its
representatives shall be elected by a
majority of all employees in said
establishment. (Labor Code, Art. 267)
Note: A bargaining unit is a group of employees
sought to be represented by a petitioning union. Such
employees need not be members of a union seeking
the conduct of a certification election. A union
certified as an exclusive bargaining agent represents
not only its members but also other employees who
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are not union members (Holy Child Catholic School
v. BHCCS-TELI-PIGLAS, G.R. 179146 ,2013).
Creation of Labor Management and Other
Councils
The Department shall promote the formation of labor-
management councils in organized and unorganized
councils.
Purpose of the Labor-Management Councils
To enable the workers to participate in policy and
decision-making processes in the establishment,
insofar as said processes will directly affect their
rights, benefits and welfare.
Services to be rendered by the Department in line
with the said policy
1. Conduct awareness campaigns
2. Assist the parties in setting up labor-
management structures, functions and
procedures
3. Provide process facilitators upon request of
the parties
4. Monitor the activities of labor-management
structures as may be necessary and
conduct studies on best practices aimed at
promoting harmonious labor-management
relations.
SELECTION OF EMPLOYEES’
REPRESENTATIVES TO THE COUNCIL
NO LEGITIMATE
ORGANIZED
LABOR
ESTABLISHMENT
ORGANIZATION
Nominated by the
By the employees at
exclusive bargaining
large.
representatives
a. SEBA Certification
Voluntary recognition was repealed and replaced by
a Request for the Sole and Exclusive Bargaining
Agent Certification (D.O. No. 40-I-15 Series of 2015)
SEBA Certification may be issued if it is proved
that the following concur:
1. The bargaining unit is ununionized;
2. The requesting union is the only union in that
bargaining unit; and
3. The CBU majority are members of the union
Requesting Union
Any legitimate labor organization
Where to File
Regional Office which issued the legitimate labor
organization’s certificate of registration or certificate
of creation of chartered local.
Requirements for Request of SEBA Certification:
The request shall indicate:
1. The name and address of the requesting
legitimate labor organization
2. The name and address of the company
where it operates
3. The bargaining unit sought to be
represented
4. The approximate number of employees in
the bargaining unit; and
5. The statement of the existence/non-
existence of other labor organization/CBA
The certificate of registration or certification of
creation as duly certified by the president of the
requesting union or of the federation of the local,
respectively, shall be attached to the request.

1. Modes to acquire status as Sole Action on the Request

Within 1 day from the submission of the request, the
and Exclusive Bargaining Agent
Regional Director shall:
(SEBA) 1. Determine whether the request is compliant
with the rules and whether the bargaining
Representation is determined through: unit sought to be represented is organized or
a. SEBA (Sole and Exclusive Bargaining not
Agent) Certification 2. Request a copy of the payroll for purposes
b. Certification Election of SEBA certification
c. Consent Election
d. Bars to the holding of Certification/Consent If he/she finds it deficient, the Regional Director shall
Election advise the requesting union or local to comply within
e. Run-Off Election 10 days from notice. Failure to comply is deemed a
f. Re-run Elections withdrawal of the request.

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organization, unless a CBA between the

REQUEST FOR CERTIFICATION employer and the certified labor organization
UNORGANIZED was executed and registered with the
UNORGANIZED Regional Officer in accordance with Rule
ESTABLISHMENT WITH
ESTABLISHMENT XVII of this rules. (D.O. 40-i-15)
ONLY 1 LEGITIMATE
WITH MORE THAN
LABOR ORGANIZATION
1 LLO
(LLO) b. Certification/Consent Election
The RD shall call a
conference within 5 work Process of determining through secret ballot the sole
days for the submission of and exclusive bargaining agent of the employees in
the following: an appropriate bargaining unit for purposes of
1. The names of the collective bargaining or negotiations.
employees in the Conducted by Med-Arbiter of the Bureau of Labor
covered bargaining Relations of the DOLE. (IRR Labor Code, Sec. 1[x],
unit who support the Rule I, Book V)
certification, provided
that said employees Purpose
comprise at least The ascertainment of the wishes of the majority of the
majority of the number employees in the appropriate bargaining unit: to be
The RD shall refer
of employees in the or not to be represented by a labor organization, and
the same to the
covered bargaining in the affirmative case, by which particular labor
Election Officer for
unit; and organization. (Reyes v. Trajano, G.R. No. 84433,
the conduct of a
2. Certification under 1992)
Certification
oath by the president
Election.
of the requesting union Whenever there is doubt as to whether a particular
or local that all union represents the majority of the rank-and-file
documents submitted employees, in the absence of a legal impediment, the
are true and correct holding of a certification election is the most
based on his/her democratic method of determining the employees’
personal knowledge. choice of their bargaining representative. It is the
appropriate means whereby controversies and
If the RD finds the disputes on representation may be laid to rest, by the
requirements complete, unequivocal vote of the employees themselves.
he/she shall issue during (Philippine Airlines Employees’ Association (PALEA)
the conference a v. Ferrer-Calleja, G.R. No. 76673, 1988)
certification as SEBA.
Issues Involved in a Certification Election
Request for Certification In Organized 1. Proper composition and constituency of the
Establishment bargaining unit; and
If the RD finds the establishment organized, he/she 2. Veracity of membership claims of the
shall refer the same to the Mediator-Arbiter for the competing unions so as to identify the union
determination of the propriety of conducting a that will serve as the bargaining
certification election. representative of the entire bargaining unit

Effects of Certification Note: The questions to be resolved in a Certification

1. Upon the issuance of the certification as
SEBA, the certified union or local shall enjoy
the rights and privileges of an exclusive
bargaining agent of all the employees in the
covered bargaining unit.
2. The certification shall bar the filing of a
petition for certification by any labor
organization for a period of 1 year from the
date of its issuance. Upon expiration of this
1-year period, any legitimate labor
organization may file a petition for
certification election in the same bargaining
unit represented by the certified labor
Election:
1. Whether the employees what to be
represented
2. By whom should they be represented
Pending Petition for Cancellation of Registration
is not a Bar for a Certification Election
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
because at that time the union filed its petition, it still
had the legal personality to perform such act absent
an order directing the cancellation (Legend

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International Resorts Limited v. Kilusang
Manggagawa ng Legenda, G.R. 169754, 2006).
Certification Election Union Election
To determine the
exclusive bargaining To elect union officers
agent
All members of the
Only union members
appropriate bargaining
may vote
unit may vote
Note: The process in certification elections depends
upon whether the establishment is organized or
unorganized. The general flow remains the same, but
there are some differences, as will be discussed
below.
IN AN UNORGANIZED ESTABLISHMENT
Unorganized establishment: an establishment
without a bargaining representative.
Who May File
Any legitimate labor organization including
1. A national union or federation which has
already issued a charter certificate to its
local/chapter participating in the certification
election or a local/chapter which has been
issued a charter certificate by the national
union or federation. (Labor Code, Art. 269)
2. An employer may file a Petition for
Certification Election when:
a. Requested to bargain collectively;
and
b. No bargaining agent nor a
registered CBA exists in the unit.
(Labor Code, Art. 270)
Requisites for holding a certification election in
an unorganized establishment (Labor Code, Art.
269)
Once a petition is filed by a legitimate labor
organization, the Med-Arbiter shall automatically
order the conduct of a certification election.
When to File
Any time, except within 12 months of a previous
election (if any).
IN AN ORGANIZED ESTABLISHMENT
Organized establishment: an establishment with a
duly certified bargaining agent and/or an existing
CBA.
Who May File
Any legitimate labor organization, including
1. A national union or federation which has
already issued a charter certificate to its
local chapter participating in the certification
LABOR
election. (Labor Code, Art. 268) (National
union or federation 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 Sec. 1, Rule VIII of D.O. 40-I-
15)
2. A local chapter which has been issued a
charter certificate by the national union or
federation before the DOLE within the 60-
day freedom period. (Labor Code, Art. 268)
Requisites for holding a certification election in
an organized establishment (Labor Code, Art.
268):
1. The Med-Arbiter shall automatically order an
election by secret ballot when
2. Verified petition supported by at least 25%
of all the employees in the bargaining unit,
questioning the majority status of the
incumbent bargaining agent.
3. Filed before the DOLE within the 60-day
period before the expiration of the five year
representation aspect of the CBA
Note: The requisite written consent of at least 20%
(now 25%) of the workers in the bargaining unit
applies to certification election only, and not to
motions for intervention. (PAFLU v. Calleja, G.R. No.
79347, 1989)
When to file
The proper time to file a petition for C.E. depends on
whether the bargaining unit has a CBA or not.
If it has no CBA, the petition may be filed anytime
except within 12 months of a previous election (if
any).
If the bargaining unit has a CBA, the petition can be
filed only within the “freedom period” which is the last
60 days of the 5th year of the CBA.
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Comparison of Organized v. Unorganized endorse the petition to the former for

establishments consolidation.
3. At the option of the petitioner, a PCE and its
ART. 268 ART. 269 supporting document may also be filed
ORGANIZED UN-ORGANIZED ONLINE. (DO No. 40-I-15)
BARGAINING AGENT The Regional Director or his/her authorized
personnel shall be responsible for the posting of the
Existing None
Notice of Petition for Certification Election.
FREEDOM PERIOD
Not applicable. Can file
No petition for Grounds for Denying Petition (R.A. 9481; D.O. No.
petition anytime,
certification except 40-F-03) (ALCEC-YDS)
except within 12
within the 60-day 1. If the petitioner union does not Appear in two
months of a previous
freedom period successive conferences called by the Med-
election (if any).
Arbiter, upon showing that the petitioner was
SUBSTANTIAL SUPPORT RULE duly notified.(Non-Appearance)
Must be duly supported 2. The petitioner is not Listed in the
by 25% of all the
Substantial support Department’s registry of legitimate labor
members of the unions or that its legal personality has been
rule not applicable
appropriate bargaining revoked or cancelled with finality.
unit (Illegitimacy – Unregistered Union)
GRANT OF PETITION FOR CERT. ELECTION
Appealable Not Appealable The filing or pendency of any inter/intra-union dispute
(Protest may be filed) and other related labor relations dispute is not a
prejudicial question to any petition for certification
REQUIREMENTS FOR VALID CERTIFICATION and shall not be a ground for the dismissal of a
ELECTION petition for certification election or suspension of
1. The union should be legitimate which proceedings for certification election. (D.O. No. 40-
means that it is duly registered and listed in 03, as amended by D.O. No. 40-F-03, Sec. 2, Rule
the registry of legitimate labor unions of the XI)
BLR or that its legal personality has not been
revoked or cancelled with finality. Certification election may be ordered despite the
2. In case of organized establishments, the pendency of a ULP charge against a union filed by
petition for certification election is filed the employer (Barrera v. CIR, G.R. No. L-32853,
during (and not before or after) the 60- 1981) or the pendency of a petition to cancel the
day freedom period of a duly registered union’s registration certificate based on an alleged
CBA. 
 illegal strike by the union. (National Union of Bank
3. In case of organized establishments, the Employees v. Minister of Labor, G.R. No. L-53406,
petition complied with the 25% written 1981)
support of the members of the bargaining
unit. 
 3. Failure of a local/chapter or national union or
4. The petition is filed not in violation of any of federation to submit a duly issued Charter
the three (3) bar rules.
 Certificate upon filing of the petition for
certification election. (Illegitimacy – No
COMMON REQUISITES Charter)

Where to file the PCE 4. Absence of an Employment relationship

With the Regional Office which issued the petitioning
union’s certificate of registration or certificate of
creation of chartered local.
1. Where two/more petitions involving the
same bargaining unit are filed in one
Regional Office, the same shall be
automatically consolidated with the Med-
Arbiter who first acquires jurisdiction.
2. Where the petitions are filed in different
Regional Offices, the Regional office in
which the petition was first filed shall exclude
all others; in which case, the latter shall
between all the members of the petitioning
union and the establishment where the
proposed bargaining unit is sought to be
represented. (Absence of EER
Relationship)
5. The petition was filed before or after the
freedom period of a duly registered
collective bargaining agreement; provided
that the 60-day period based on the original
collective bargaining agreement shall not be
affected by any amendment, extension or

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renewal of the collective bargaining
agreement; (Contract Bar)
6. The petition was filed within 1-year from
entry of voluntary recognition or a valid
certification, consent or run-off election and
no appeal on the results of the certification,
consent or run-off election is pending; (1-
Year Bar/Certification Year Bar)
7. A duly certified union has commenced and
sustained negotiations with the employer or
there exists a bargaining deadlock which
had been submitted to conciliation or
arbitration or had become the subject of a
valid notice of strike or lockout to which an
incumbent or certified bargaining agent is a
party; (Deadlock Bar/Negotiation Bar)
8. In case of an organized establishment,
failure to submit the 25% Support
requirement for the filing of the petition for
certification election. (Lack of Support)
A certification may be called by the Med-Arbiter even
through the 25% support requirement has not been
complied with. The requirement is relevant only when
it becomes mandatory to conduct a certification
election. In all other instances, the discretion ought to
be exercised in favor of a petition for certification
election. (California Manufacturing Corp., v. Usec of
Labor, G.R. No. 97020, 1992)
In Summary, the Grounds for Denying Petition for
Certification Election:
1. Non-Appearance
2. Illegitimacy – Unregistered Union
3. Illegitimacy – No Charter
4. No Employee-Employer Relationship
5. Contract Bar
6. 1-Year Bar/Certification Year Bar
7. Negotiation/Deadlock Bar
8. Lack of Support
PROTESTS/APPEAL AND OTHER QUESTIONS
ARISING FROM CONDUCT OF CERTIFICATION
ELECTION
The order granting the conduct of a certification
election in an unorganized establishment shall not
be subject to appeal. Any issue arising therefrom
may be raised by means of protest on the conduct
and results of the certification election.
The order granting the conduct of a certification
election in an organized establishment and the
decision dismissing or denying the petition, whether
in an organized or unorganized establishment, may
LABOR
be appealed to the Office of the Secretary within 10
days from receipt thereof.
(Sec. 17, Rule VIII of D.O. 40-03).
PROTEST (Sec. 13, Rule IX, Book V)
Who may file: Any party-in-interest
Ground: On the conduct or mechanics of election
How to protest:
1. Record the protest in the minutes of the
election proceedings; AND 

2. Formalize the protest with specific grounds
and arguments before the Med-Arbiter
within five (5) days after the close of the
election proceedings
Protests deemed dropped
Protests which are:
1. Not recorded in the minutes; AND
2. Not formalized within the prescribed period
General Reservation to file protest prohibited
Protesting party shall specify the grounds.
Failure to formalize within 5-days cannot be taken
against the union.
The union misrepresented that they were
independent which caused the members to
disaffiliate and form a new union and their protest
was not filed within the 5-day period.
The failure to follow strictly the procedural
technicalities regarding the period for filing their
protest (within the 5-day period) should not be taken
against them. Mere technicalities should not be
allowed to prevail over the welfare of the workers.
What is essential is that they be accorded an
opportunity to determine freely and intelligently which
labor organization shall act on their behalf. (DHL-
URFA-FFW v. BMP, G.R. No. 152094 2004)
ELECTION PROCEEDINGS refer to the period
Included:
1. Starting from the opening to the closing of
the polls
2. Counting, tabulation and consolidation of
votes
Excluded:
1. Period for the final determination of the
challenged votes
2. Canvass
(Sec. 1[p], Rule I of D.O. 40-03).
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ELECTION MECHANICS (Rule VIII of D.O. 40-03).
1. RAFFLE OF THE CASE
Upon the filing of the petition, the Regional Director
or any of his/her authorized representative shall allow
the party filing the petition to personally determine the
Med-Arbiter assigned to the case by means of a raffle
(Sec. 5, Rule VIII of D.O. 40-03).
2. PRELIMINARY CONFERENCE
The Med-Arbiter shall conduct a preliminary
conference and hearing within 10 days from the
receipt of the petition to determine the following:
1. The bargaining unit to be represented;
2. Contending Labor Unions;
3. Possibility of labor unions consent
elections;
4. Existence of any of the bars to certification
election; and
5. Such other matters as may be relevant for
the final disposition of the case. (Sec.
10[s], Rule VIII of D.O. 40-03).
When parties fail to agree to a consent election
during the preliminary conference, hearing/s will be
conducted.
Number of Hearings
The Med-Arbiter may conduct as many hearings as
he/she may deem necessary, but in no case shall the
conduct thereof exceed 15 days from the date of the
scheduled preliminary conference/hearing, after
which time the petition shall be considered submitted
for decision (Sec. 12, Rule VIII of D.O. 40-03)
Failure to Appear Despite Notice
Failure of any party to appear in the hearing/s when
notified or to file its pleadings shall be deemed a
waiver of its right to be hear. (Sec. 12 Rule VIII of
D.O. 40-03)
Note: See diagram in the succeeding pages.
3. ORDER/DECISION ON THE PETITION
Within 10 days from the date of the last hearing, the
Med-Arbiter shall issue a formal order granting or
denying the petition.
In organized establishments, no order or decision
shall be issued during the freedom period.
The order granting the petition shall state the
following:
1. Name of the employer or establishment
2. Description of the bargaining unit
3. Statement that none of the grounds for
dismissal exists
4. Names of contending labor unions
LABOR
5. Directive to an unregistered local/chapter
or a federation/national union representing
an unregistered local/chapter to personally
submit to the Election Officer its certificate
of creation at least 5 working days before
the actual conduct of the certification
election. Non-submission of this
requirement as certified by the Election
Officer shall disqualify the local/chapter
from participating in the certification
election
6. Directive upon the employer and the
contending union(s) to submit within 10
days from receipt of the order, the certified
list of employees in the bargaining unit, or
where necessary, the payrolls covering the
members of the bargaining unit of at least
3 months prior to the issuance of the order
(Sec. 14 Rule VIII of D.O. 40-03).
Grounds for Denial of the Petition for
Certification Election:
1. Petitioner is not listed as a LLO or its legal
personality has been revoked
2. Petition was filed outside of the freedom
period
3. Petition was filed within one (1) year from
entry of valid certification/consent or run
off election AND no appeal on the results
of the election is pending
4. Petition was filed in violation of the
negotiation/deadlock bar rule or had
become the subject of a valid notice of
strike or lockout to which an incumbent or
CBA is a party
5. In case of organized establishment, failure
to submit the twenty-five percent (25%)
support requirement (Sec. 15, Rule VIII of
D.O. 40-03)
Prohibited Grounds for Denial of Petition
The following must be heard and resolved by the
Regional Director in an independent petition for
cancellation of registration:
1. Validity of petitioning union’s certificate of
registration or its legal personality as a
labor organization
2. Validity of registration and execution of
CBA
The following issues shall be raised before the Med-
Arbiter during the hearing and in the pleadings in the
petition for certification election and shall be resolved
in the same order:
1. Existence of Employer-Employee
relationship
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2. Eligibility or mixture in union membership
(Sec. 14 Rule VIII of D.O. 40-03)
4. APPEAL
Order granting conduct of certification election in
unorganized establishments – NOT appealable
All others – appealable to the DOLE Sec. within 10
days from receipt.
5. PRE-ELECTION CONFERENCE
Within 24 hours from receipt of the assignment for the
conduct of a certification election, the Election Officer
shall cause the issuance of notice of pre-election
conference upon the contending unions and the
employer.
Must be scheduled within 10 days from receipt of the
assignment.
Must be completed within 30 days from the last
hearing.
The employer shall be required to submit the certified
list of employees in the bargaining unit, or where
necessary, the payrolls covering the members of the
bargaining unit at the time of the filing of the petition.
Importance: The pre-election conference shall set
the mechanics for the election and determine the
following:
1. Date, time and place of the election
2. Not be later than 45 days from the date of
the first pre-election conference
3. On a regular working day
4. Within the employer’s premises, unless
circumstances require otherwise
5. List of eligible and challenged voters
6. Number and location of polling places or
booths and the number of ballots to be
prepared with appropriate translations, if
necessary
7. Name of watchers or representatives and
their alternates for each of the parties
during election
8. Mechanics and guidelines of the election
(Rule IX of D.O. 40-03)
Effect of failure to appear during the pre-election
conference
1. Considered as a waiver to be present and
to question or object to any of the
agreements reached in said pre-election
conference.
2. However, the non-appearing party or the
employer still has the right to be furnished
notices of subsequent pre-election
LABOR
conferences and to attend the same (Sec.
4, Rule IX of D.O. 40-03).
Qualification of Voters
1. All employees who are members of the
appropriate bargaining unit 3 MONTHS
PRIOR to the filing of the petition/request
shall be eligible to vote.
2. 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 (Sec. 6, Rule IX of D.O. 40-I-15).
Inclusion/Exclusion of Voters
In case of disagreement over the voters’ list or over
the eligibility of voters, all contested voters shall be
allowed to vote, but their votes shall be segregated
and sealed in individual envelopes with their names.
6. POSTING OF NOTICES OF ELECTION
At least 10 days before the actual date of the election
in 2 most conspicuous places in the company
premises
Contents of the Notice
1. Date and time of the election, which is
preferably within the establishment
2. Names of all contending unions
3. The description of the bargaining unit and
the list of eligible and challenged voters
The posting of the list of employees comprising the
bargaining unit shall be done by the DOLE personnel.
Note: The posting of the notice of election, the
information required to be included therein and the
duration of posting cannot be waived by the
contending unions or the employer (Sec. 7, Rule IX
of D.O. 40-I-15).
Secrecy and Sanctity of the Ballot
The Election Officer and the authorized
representatives of the contending unions shall before
the start of the actual voting, inspect the polling place,
the ballot boxes and the polling booths.
No device that could record or identify the voter or
otherwise undermine the secrecy and sanctity of the
ballot shall be allowed within the premises, except
those devices brought in by the election officer.
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Any other device found within the premises shall be
confiscated by the election officer and returned to its
owner after the conduct of the certification election.
(Sec. 12, Rule IX of D.O. 40-I-15)
Preparation of Ballots
The Election Officer shall prepare the ballots in
English and Filipino or the local dialect
The number of ballots should correspond to the
number of voters in the bargaining unit plus a
reasonable number of extra ballots for contingencies.
All ballots shall be signed at the back by the Election
Officer and an authorized representative each of the
contending unions.
A party who refuses or fails to sign the ballots waives
its right to do so and the Election Officer shall enter
the fact of refusal or failure and the reason therefore
in the records of the case(Sec. 9, Rule IX of D.O. 40-
03).
Challenging of Votes
An authorized representative of any of the
contending unions and employer may challenge the
vote.
The challenge must be raised before vote is
deposited in the ballot box.
Grounds for Challenging Votes
1. No employer-employee relationship
between the voter and the company
2. Voter is not a member of the appropriate
bargaining unit which petitioner seeks to
represent
Procedure in Challenging of Votes
1. The Election Officer shall place the ballot
of the voter who has been properly
challenged during the pre-election
conferences in an envelope.
a. Sealed in the presence of the
voter and the representatives of
the contending unions and
employer.
b. Indicate on the envelope the
voter’s name, the union or
employer challenging the voter,
and the ground for the challenge.
c. Envelope shall be signed by the
Election Officer and the
representatives of the contending
unions and employer.
2. The Election Officer shall note all
challenges in the minutes of the election
LABOR
proceedings and shall have custody of all
envelopes containing the challenged
votes.
3. The envelopes shall be opened and the
question of eligibility shall be passed upon
by the mediator-arbiter only if the number
of segregated voters will materially alter
the results of the election (Sec. 11, Rule
IX of D.O. 40-03)
Protest
Any party-in-interest may file a protest based on the
conduct or mechanics of the election.
Protests not so raised immediately after the last ballot
cast are deemed waived.
General Reservation to file a protest shall be
prohibited. The protesting party shall specify the
grounds for protest.
Requirements in order that a protest may
prosper:
1. Filed with the representation officer and
made of record in the minutes of the
proceedings before the close of election
proceedings; and
2. Formalized before the Med-Arbiter within
5 days after the close of the election
proceedings.
3. If not recorded in the minutes and
formalized within the prescribed period,
the protest shall be deemed dropped
(Sec. 14, Rule IX of D.O. 40-I-15).
Canvassing of Votes
1. Votes shall be counted and tabulated by
the Election Officer in the presence of the
representatives of the contending unions.
2. Each representative is entitled to a copy of
the minutes of the election proceedings
and results of the election.
3. The ballots and the tally sheets shall be:
a. Sealed in an envelope
b. Signed by the Election Officer and
the representatives of the
contending unions
c. Transmitted to the Med-Arbiter,
together with the minutes and
results of the election, within 24
hours from the completion of the
canvass
4. Where the election is conducted in more
than one region, consolidation of results
shall be made within 15 days from the
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conduct thereof (Sec. 14, Rule IX of D.O.
40-03).
7. CONDUCT OF ELECTION AND CANVASS OF
VOTES
1. The election precincts shall open and
close on the date and time agreed upon
during the pre-election conference.
2. The opening and canvass shall proceed
immediately after the precincts have
closed
3. Failure of any party or the employer or
his/her/their representative to appear
during the election proceedings shall be
considered a waiver to be present and to
question the conduct thereof (Sec. 15,
Rule IX of D.O. 40-03).
Double Majority Rule
For there to be a valid certification election:
1. Majority of the bargaining unit must have
voted; AND
2. The winning union must have garnered
majority of the valid votes cast. (National
Union of Workers In Hotels, Restaurant
LABOR
and Allied Industries-Manila Pavilion Hotel
Chapter v. Secretary of Labor, G.R. No.
181531, 2009)
Note: Spoiled ballots are not reckoned to
determine majority (PAFLU v. BLR, G.R. No. L-
43760, 1976) Valid votes are those not
challenged, damaged, etc.
8. CERTIFICATION OF COLLECTIVE
BARGAINING AGENT
The union which obtained a majority of the valid
votes cast shall be certified as the sole and
exclusive bargaining agent of all the employees in the
appropriate bargaining unit.
Certification must be done within five (5) days from
the day of election provided there was no protest.
When the winning choice is a local chapter
without a certificate of creation of chartered local
The local chapter shall submit its DOLE issued
certificate of creation within five (5) days from the
conclusion of election (Sec. 15, Rule IX of D.O. 40-I-
15)
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FILING PETITION FOR CERTIFICATION ELECTION

File PETITION for

certification election

RAFFLE
Dispensed with if there is only
one Med-Arbiter

Service of NOTICE of
preliminary conference

PRELIMINARY CONFERENCE
Must be within 10 days from receipt of
petition for certification election

Parties AGREE on a consent Parties FAIL TO AGREE on a

election consent election

FORWARD RECORDS of HEARINGS

petition to RD / authorized No set #, but must not exceed
representative 15 days from date of
preliminary conference

First PRE-ELECTION
CONFERENCE DECISION
Must be within 10 days from Must be within 10 days from last
date of entry of agreement hearing

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APPEAL OF DECISIONS RE: GRANTING / DENYING CONDUCT OF CERTIFICATION ELECTION

DECISION

UNORGANIZED ORGANIZED
Establishment Establishment

Petition Petition Petition Petition

GRANTED DENIED GRANTED DENIED

File MEMORANDUM OF APPEAL within 10 days from receipt of

Unappealable decision with the REGIONAL DIRECTOR where the petition
originated

REGIONAL DIRECTOR to transmit entire record within 24 hours

from receipt of appeal to OFFICE OF THE SECRETARY OF
LABOR

REPLY
Any party may file a reply within 10 days from receipt of the
Memorandum of Appeal

Decision of the SECRETARY OF LABOR

Secretary shall have 15 days from receipt of the entire records to

decide the appeal
CERTIFICATION ELECTION PROPER
The decision shall be final and executory
within 10 days from receipt by the parties

No motion for reconsideration shall be entertained

The entire records of the case shall be remanded to the

Regional Office for implementation
within 48 hours from notice of receipt of the decision

RECEIPT OF ENTRY OF FINAL JUDGMENT granting conduct of a Certification Election

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Regional Director to cause the RAFFLE of the case to an ELECTION OFFICER

within 24 hours from receipt of notice

Election Officer to cause issuance of NOTICE OF PRE-ELECTION CONFERENCE upon contending

unions and employer w/in 24 hours from receipt of assignment

Posting of notices must be done at least 10 days before election,

in 2 most conspicuous places in the company premises

PRE-ELECTION CONFERENCE

Must be within 10 days from receipt of assignment, and completed within 3 days of first hearing

Failure to appear in pre-election conference is a waiver of the right to question any agreement in pre-
election conference. However, the non-appearing party retains the right to be given notices of subsequent
pre-election conferences.

CERTIFICATION ELECTION
Must not be later than 45 days from date of first pre-election conference

ELECTION PRECINCTS CLOSE

On the date and time agreed upon during the pre-election conference

CANVASS OF VOTES
Opening and canvassing of votes shall begin immediately after the precincts have closed

NOTE: FAILURE OF ELECTIONS

Exists when the votes cast is less than the majority of eligible voters, and there are no material challenged
votes. Another certification or consent election may be held within 6 months.

TRANSMIT RECORDS OF CASE to MED-ARBITER. MED-ARBITER to issue an order PROCLAIMING

THE RESULTS of the Certification Election.

Any of the following conditions must have been present:

[1] No protest was filed, or protest filed but not perfected within the 5-day period for perfection of protest
[2] No challenge or eligibility issue raised, or even if raised, will not materially change results of elections

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CONSENT ELECTIONS
Definition
Election voluntarily agreed upon by the parties, with
or without the intervention of the Department of Labor
and Employment, to determine the issue of majority
representation of all the workers in the appropriate
collective bargaining unit. (IRR Labor Code, Sec.
1[h], Rule I, Book V)
Note: If done as part of a certification election case,
i.e., with the intervention of the DOLE, a consent
election shall have the same legal effect as a
certification election.
Procedure in Consent Elections if Agreed in the
Course of Proceeding of Petition for certification
Election
1. In case the contending unions agree to a
consent election, the Med-Arbiter shall not
issue a formal order calling for the conduct
of certification election, but shall enter the
fact of the agreement in the minutes of the
hearing.
2. The minutes of the hearing shall be signed
by the parties and attested to by the Med-
Arbiter.
3. The employer may be required to submit
the certified list of employers in the
bargaining unit or where necessary, the
payrolls at the time of filing of the petition.
(Sec. 2, Rule IX)
4. The Med-Arbiter shall, immediately
thereafter, forward the records of the
petition to the Regional Director or his/her
authorized representative for the
determination of the Election Officer by
the contending unions through raffle.
5. The first pre-election conference shall be
scheduled within 10 days from the date of
entry consent election agreement. (See
Annex G) (Sec. 11, Rule VIII of D.O. 40-
03).
Effects of Consent Election
Where a petition for certification election is filed, and
upon the intercession of the Med-Arbiter, the parties
agreed to hold a consent election, the results shall
constitute a bar to the holding of a certification
election for one year from the holding of such consent
election. Where an appeal has been filed from the
results of the consent election, the running of the
one-year period shall be suspended until the decision
on appeal has become final and executory.
Where no petition for certification election was filed
but the parties themselves agreed to hold a consent
election with the intercession of the Regional Office,
LABOR
the results thereof shall constitute a bar to another
petition for certification election. (Sec. 25 Rule VIII of
D.O. 40-03).
c. Bars to the holding of
Certification/Consent Election
Petition for certification may be filed:
General Rule: Anytime
Exceptions:
1. Contract bar rule
2. Deadlock bar rule
3. Negotiation bar rule
4. One-year bar rule
1. CONTRACT BAR RULE
General Rule: The representation status of the
incumbent exclusive bargaining agent which is a
party to a duly registered CBA shall be for a term of
five (5) years from the date of effectivity of the CBA.
No petition questioning the majority status of the
incumbent exclusive bargaining agent or petition for
certification election shall be filed (Sec. 7, Rule XVII
of D.O. 40-03).
Exception: (Freedom period) Arts. 264, 265, 268:
Within 60 days before expiration of the 5-year term of
the representational aspect of the CBA.
Note: This freedom period is different from the sixty
day period within which to start negotiations for a new
CBA.
Requisites for Contract-Bar Rule
1. Agreement is existing;
2. Ratified by the union membership;
3. It is adequate for it contains substantial
terms and conditions for employment;
4. It encompasses the employees in the
appropriate bargaining unit;
5. It was not prematurely extended; the CBA
was not hastily entered into;
6. It is for a definite period;
7. No schism or mass disaffiliation affects the
contracting union during the lifetime of the
agreement;
8. The contracting union is not defunct; and
9. The contracting union is not company-
dominated
Exceptions: The existence of a CBA will not bar
certification election in the following instances:
1. CBA is not registered
2. CBA deregistered
3. CBA is incomplete in itself
4. CBA where the identity of the representative is in
doubt (Associated Labor Unions v. Hon. Ferrer-
Calleja, G.R. No. 85085, 1989)
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5. CBA was hastily entered into, i.e. signed before
the freedom period (Associated Trade Unions-
ATU v. Hon. Noriel, G.R. No. L-48367, 1979)
6. CBA entered into between the employer and the
union during the pendency for certification
election (Vassar Industries EU v. Estrella, G.R.
No. L-46562, 1978)
7. CBA was concluded in violation of an order
enjoining the parties from entering into a CBA
until the issue of representation is resolved
8. Referendum to register an independent union
2. DEADLOCK BAR RULE
Deadlock arises when there is an impasse, which
presupposes reasonable effort at good faith
bargaining which, despite noble intentions, did not
conclude in an agreement between the parties.
Genuine Deadlock
1. The submission of the deadlock to a 3rd party
conciliator or arbitrator; or
2. The deadlock is the subject of a valid notice
of strike or lockout (National Congress of
Unions in the Sugar Industry v. Trajano,
G.R. No. 67485, 1992)
Petition for certification election cannot be
entertained if:
1. A duly certified union has commenced and
sustained negotiations with the employer in
accordance with Art. 261 within the 1-year
period referred to in Sec. 14.d of the IRR.
2. Before the filing of the petition for
certification election, a bargaining deadlock
to which an incumbent or certified
bargaining agent is a party, had been
submitted to conciliation or arbitration or had
become the subject of a valid notice of strike
or lockout.
Requisites:
10. Parties must have negotiated in good faith
11. Deadlock must have been submitted to voluntary
conciliation or arbitration or is subject of a valid
notice of strike / lock-out.
When Deadlock Bar Not Applicable:
Artificial Deadlock: A deadlock prearranged or
preserved by collusion of the employer and the
majority union. (See Kaisahan ng Manggagawang
Pilipino (KAMPIL-KATIPUNAN) v. Trajano, G.R. No.
758110, 1991)
12. NEGOTIATION BAR RULE
Negotiation bar rule exists when a union has
already commenced and sustained collective
bargaining negotiations in good faith within the 1-
year period, but there is no CBA yet.
LABOR
4. ONE-YEAR BAR RULE OR CERTIFICATION
YEAR BAR RULE
No petition for a certification election may be filed
within 1 year from the date of a valid certification,
consent, or run-off election, or from the date of entry
of a voluntary recognition of the union by the
employer.
Certification year rule will apply even if the “No union”
choice won. Therefore, for one year, no PCE will be
entertained (Samahang Manggagawa sa Permex v.
Secretary, G.R. No. 107792, 1998)
Note: The 12-month prohibition presupposes that
there was an actual conduct of election, i.e. ballots
were cast and there was a counting of votes. In a
case where there was no certification election
conducted precisely because the first petition was
dismissed on the ground that it did not include all the
employees who should be properly included in the
collective bargaining unit, the certification year bar
does not apply. (R Transport Corp. v. Laguesma,
G.R. No. 106830, 1993)
Date of election
Date to be considered is when the election was
conducted; if results are appealed, then the date
when appeal is finally resolved.
Where less than majority of CBU voted
There is a failure of election when less than majority
of the CBU members voted. A failure of election shall
not bar the filing of a motion for the immediate holding
of another certification or consent election may be
filed within 6 months from date of declaration of the
failure of election. (D.O. No. 40-03, Sec. 18, Rule IX)
Note: The last sentence pertains to the re-run
election as provided under D.O. No. 40-I-15.
When Certification Year Bar Rule will NOT APPLY
1. In a case where there was no certification
election conducted precisely because the
first petition was dismissed on the ground
that it did not include all the employees who
should be properly included in the collective
bargaining unit. (R Transport Corp. v.
Laguesma, G.R. No. 106830, 1993)
2. A failure of election where less than majority
of the CBU members voted. A failure of
election shall not bar the filing of a motion for
the immediate holding of another
certification or consent election may be filed
within 6 months from date of declaration of
the failure of election. (D.O. No. 40-03, Sec.
18, Rule IX)
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Failure of election
Where the number of votes cast in a certification or
consent election is less than the majority of the
number of eligible voters and there are no material
challenged votes (Sec. 17, Rule IX of D.O. 40-03).
A failure of election shall not bar the filing of a motion
for the immediate holding of another certification or
consent election within 6 months from date of
declaration of failure of election (Sec. 19, Rule IX of
D.O. 40-03).
Action on motion for the immediate holding of
another certification or consent election
Within 24 hours from receipt of the motion, the
Election Officer shall immediately schedule the
conduct of another certification or consent election
within 15 days from receipt of the motion and cause
the posting of the notice of certification election at
least 10 days prior to the scheduled date of election
in 2 most conspicuous places in the establishment.
The same guidelines and list of voters shall be used
in the election.
d. Failure of election, Run-Off
Election, Re-run election
RUN-OFF ELECTION
An election between the labor unions receiving the
two (2) highest number of votes in a certification or
consent election with three (3) or more choices,
where such results in none of the choices (unions or
“no union” choice) receiving a majority of the valid
votes cast.
Provided, that the total number of votes for all
contending union is at least fifty (50%) of the number
of votes cast (Sec. 1[uu], Rule I of D.O. 40-03)
Procedure in Run-off Elections
The Election Officer shall motu propio conduct a
run-off election within 10 days from the close of the
election proceedings between the labor unions
receiving the two highest numbers of votes.
Notice of run-off elections shall be posted by the
Election Officer at least 5 days before the actual date
of run-off election.
Requirements for Run-Off Election
1. A valid election took place because
majority of the CBU members voted
2. There are three or more choices in the
election (including no union)
3. Not one of the choices obtained majority
of the valid votes
LABOR
4. Total number of votes for all contending
unions is at least 50% of the number of
votes cast.
5. There is no unresolved challenge of voter
or election protest
Note: “No Union” shall not be a choice in the run-off
election (Sec. 1, Rule X of D.O. 40-03)
Abstention refers to a blank or unfilled ballot validly
cast by an eligible voter. It is not considered as a
negative vote but is considered a valid vote in
determining a valid election. (Sec. 1[a], Rule I, D.O.
No. 40-I-15).
Spoiled Ballot refers to a ballot that is torn, defaced,
or contains marking which can lead another to clearly
identify the voter who casts such vote (Sec. 1[ww],
Rule I, D.O. No. 40-I-15).
Example 1: 100 members in the appropriate
bargaining unit. All members cast their votes.
Election results:
Union A – 24 Union C - 10
Union B – 15 No Union - 5
Total number of votes: 54 valid votes, with the rest
declared spoiled.
Q1: Is the election valid?
Yes, because everyone voted.
Q2: Who won?
None of the three unions won, because not one
received a majority of the valid votes cast. (Majority
is 28 votes)
Q3: Is run-off election a remedy here?
No. The total number of votes for all contending
unions is LESS than 50% of ALL of the number of
votes cast (Unions A, B and C garnered 49 votes, or
at least one vote short of the requirement, since there
are 100 members in the ABU).
Q4: Is a re-run election a remedy here?
No. There is no failure of election and none of the
choices obtained the same number of votes. (D.O.
No. 40-I-15)
Example 2: 200 members in the appropriate
bargaining unit. All members cast their votes.
Election results:
Union A – 40
Union B – 30
Union C - 20
No Union – 80
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Spoiled – 30

Total number of votes: 170 valid votes, with 30

spoiled votes.

Step 1: Check for first majority: WoN there was a

Valid Election — 50% +1 of the Bargaining Unit

Step 2: Check for second majority: WoN a union/no

union won the majority of valid votes cast — 50% + 1
of VVC

In example 2,
Step 1:
First majority – 50%+1 of the BU = (200*50% +1 ) =
101 votes

40+30+20+80+30 = 200 ; There is a valid election

since all 200 members voted, which satisfies the
first majority of 50% + 1 of the BU.

Step 2:
Second majority – 50%+1 of VVC =
((40+30+20+80)*50%+1) = 86

Q1: Is the election valid?

Yes, because everyone voted.

Q2: Who won?

None of the three unions won, because not one
received a majority of the valid votes cast. (Majority
is 86 votes)

Q3: Is run-off election a remedy here?

No. The total number of votes for all contending
unions is LESS than 50% of ALL of the number of
votes cast (Unions A, B and C garnered 90 votes, or
10 votes short of the requirement, since there are 200
members in the ABU).

Q4: Is a re-run election a remedy here?

No. There is no failure of election and none of the
choices obtained the same number of votes. (D.O.
No. 40-I-15)

Note: The above given examples are for illustration

purposes only existing as it does in its most basic and
ideal form. Answers may vary depending on the
circumstances.

RE-RUN ELECTION
Re-Run Election Takes Place in Two Instances
1. An election conducted to break a tie
between contending unions, including “no
union” and one of the unions.
2. If a failure of election has been declared
by the election officer and/or affirmed by
the Med-Arbiter (Sec. 1[tt], Rule I, D.O.
No. 40-I-15)
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Situation contemplated
When a Certification, Consent or Run-off Election
results to a tie between 2 choices.
Duty of Election Officer (EO)
1. Immediately notify the parties of a Re-run
Election.
2. Cause the posting of the NOTICE within 5
days from the Certification, Consent or
Run-off Election. The Re-run shall be
conducted within 10 days after the
posting. (Sec. 18, Rule IX, D.O. No. 40-I-
15)
When will re-run be conducted
Within ten (10) days after the posting of the notice.
Declared as winner and certified
Choice who receives the HIGHEST VOTES CAST.
Note: ‘No Union’ is still included in the Re-run
Elections, since D.O. No. 40-I-15 did not specify
otherwise.
e. Employer as a mere bystander
rule
IN ALL CASES (including when petition for
certification is filed by employer), the employer’s
participation shall be limited to:
1. Being notified or informed of petitions of
such nature; and
2. Submitting the list of employees during the
pre-election conference should the Med-
Arbiter act favorably on the petition. (Labor
Code, Art. 271)
However, manifestation of facts that would aid the
Med-Arbiter in expeditiously resolving the petition
may be considered (i.e. existence of bars). (D.O. No.
40-I-15)
Note: An employer has no legal standing in a
certification election. He cannot oppose the petition
or appeal the Med-Arbiter’s orders related thereto.
(San Miguel Foods Inc.-Cebu B-Meg Feed Plant v.
Laguesma, G.R. No. 116172, 1996)
An employee has the right to intervene for the
protection of his individual right. (D.O. No. 40-F-03)
LABOR
D. COLLECTIVE BARGAINING
1. Duty to bargain collectively,
bargaining in bad faith
Meaning of the Duty to Bargain Collectively
1. The performance of a mutual (employer
and the exclusive bargaining agent)
obligation to meet and convene,
2. Promptly and expeditiously in good faith
3. For the purpose of negotiating an
agreement with respect to wages, hours of
work and all other terms and conditions of
employment, including proposals for
adjusting any grievances or questions
arising under such agreement, and
4. Executing a contract incorporating such
agreements, if requested by either party.
(Labor Code, Art. 263)
Parties to Collective Bargaining
1. Employer
2. Employees, represented by the exclusive
bargaining agent
The duty to bargain collectively arises only between
the employer and its employee. (Allied Free Workers
Union v. Compania Maritima, G.R. Nos. L-122951-
52, 1967)
Jurisdictional Pre-Conditions of Collective
Bargaining
1. Status of majority representation of the
employees’ representative;
2. Proof of majority representation; and
3. Demand to bargain under Art. 261(a)
(Kiok Loy v. NLRC, G.R. No. 54334,
1986).
Pending Petition for Cancellation of Union
Registration
Pendency of a petition for cancellation of union
registration does NOT preclude collective bargaining.
It shall not suspend the proceedings for certification
election nor shall it prevent the filing of a petition for
certification election (Sec. 3, Rule XI of D.O. 40-03)..
Purpose of Collective Bargaining
Purpose of collective bargaining is the reaching of an
agreement resulting in a contract binding on the
parties; but the failure to reach an agreement after
negotiations have continued for a reasonable period
does not establish a lack of good faith. The statutes
invite and contemplate a collective bargaining
contract, but they do not compel one.
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The duty to bargain does not include the obligation to
reach an agreement (Union of Filipro Employees v.
Nestle Phils., G.R. 158930-31, 2008)
2. Collective bargaining agreement
(CBA), mandatory provisions
Collective Bargaining Agreement (CBA)
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 the
following:
1. Wages;
2. Hours of work; and
3. All other terms and conditions of
employment, including proposals for
adjusting any grievance or questions
under the agreement (Davao Integrated
Port Stevedoring Services v. Abarquez,
G.R. No. 102132, 1993)
Note: CBA constitutes the law between the parties
when freely and voluntarily entered into. The goal of
collective bargaining is the making of agreements
that will stabilize business conditions and fix fair
standards of working conditions. (PI Manufacturing
Inc. v. PI Manufacturing Supervisors and Foremen
Associations, G.R. No. 167217, 2008)
Coverage of CBA
It is a well-settled doctrine that the benefits of a CBA
extend to the laborers and employees in the
collective bargaining unit, including those who do not
belong to the chosen bargaining labor organization.
Otherwise, it would be a clear case of discrimination
(PAL v. PALEA, G.R. 142399, 2008).
Commencement of Bargaining
During Certification Year or within 12 months after
the determination and certification of the employees’
exclusive bargaining representative
Bargaining Procedure
The parties may agree on the bargaining procedure.
If there is a procedure agreed upon, the Labor Code
Procedure applies supplementary.
Labor Code Procedure in Collective Bargaining
(Labor Code, Art. 261)
The following procedures shall be observed in
collective bargaining:
1. When a party desires to negotiate an
agreement, it shall serve a written notice
upon the other party with a statement of its
proposals the other party shall make a
reply thereto not later than 10 calendar
days from the receipt of such notice;
LABOR
2. Should differences arise on the basis of
such notice and reply either party may
request for a conference which shall begin
not later than 10 calendar days from the
date of request.
3. If the dispute is not settled, the NCMB
shall intervene upon the request of either
or both parties or at its own initiative and
immediately call the parties to conciliation
meetings.
The NCMB shall have the power to issue subpoenas
requiring the attendance of the parties to such
meetings. It shall be the duty of the parties to
participate fully and promptly in the conciliation
meetings the NCMB may call.
4. During the conciliation proceedings in the
NCMB, the parties are prohibited from
doing any act which may disrupt or
impede the early settlement of the
disputes; and
5. The NCMB shall exert all efforts to settle
disputes amicably and encourage the
parties to submit their case to a voluntary
arbitrator.
When There Is No Collective Bargaining
Agreement (Labor Code, Art. 262)
In absence of an agreement OR other voluntary
arrangement providing for a more expeditious
manner of collective bargaining, it shall be the duty of
the employer AND the representatives of the
employees to bargain collectively in accordance with
the provisions of this Code.
The duty to bargain collectively where no CBA exists
involves the performance of a mutual obligation:
1. To meet and convene promptly and
expeditiously in good faith for the purpose of
negotiating an agreement with respect to
wages, hours of work, and all other terms
and conditions of employment including
proposals for adjusting any grievances or
questions arising under such agreement;
and
2. To execute a contract incorporating such
agreements, if requested by either party.
(Labor Code, Art. 263)
Essentially, the duty to bargain in this situation still
requires the performance of the obligation by the
employer and the union to meet, convene and
confer for collective purposes.
Limitations to the Duty to Bargain
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The duty to bargain does not compel any party to
agree to a proposal or to make any concession
(Labor Code, Art. 263).
Notes: The provisions of the Code are only
supplementary and not mandatory with regard to the
process of collective bargaining. It is the policy of the
state to promote the primacy of FREE collective
bargaining. (Labor Code, Art. 218[a])
The Code authorizes parties to provide for their own
procedure in CB but it must be more expeditious than
that provided in Art. 261.
If they are unable to agree, they must follow the Code
procedure (i.e. in Art. 261).
Automatic Renewal Clause
At the expiration of the freedom period, the employer
shall continue to recognize the majority status of the
incumbent bargaining agent where no petition for
certification election is filled. It shall be the duty of
LABOR
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.
(Labor Code, Art. 264)
Duty to Bargain Collectively when there is a
Collective Bargaining Agreement (Labor Code,
Art. 264)
General Rule: When there is a CBA, the duty to
bargain also means that neither party shall terminate
nor modify such agreement during its lifetime.
Exception: 60 days before the CBA expires, either
party may notify the other in writing that it wants to
terminate or modify the agreement. The CBA
remains in full force and effect during the 60 day
period and until a new agreement is reached.
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BARGAINING PROCEDURE UNDER THE LABOR CODE

(Labor code, Art. 261)

The recognized or certified

labor union and its employer
may adopt such procedures Serve written notice with statement of
and processes they may proposals upon the other party.
deem appropriate and
necessary for the early
termination of their
negotiations.
NOTE: Not more than
They shall name their 10 days from receipt
respective representatives to Reply of other party
the negotiation, schedule the
number and frequency of
meetings, and agree on NOTE: Only if differences
wages, benefits and other arise between the
terms and conditions of work proposals and the reply
for all employees covered in
the bargaining unit (Section 4, Shall begin not later than
Rule XVI, Omnibus Rules CONFERENCE 10 calendar days from date
Implementing the Labor Code) of request
Board shall have the power to
issue subpoenas to require
attendance to such meetings. NOTE: Only if
(Labor code, Art 261 (c)) differences are not
Board shall intervene, call parties settled
Board shall exert all efforts to
settle disputes amicably, to conciliation meetings It shall be the duty of
encourage parties to submit the parties to
case to voluntary arbitrator. participate fully and
(Art 261 (e)) promptly in the
conciliation meetings
Parties are prohibited from
doing any act which may
disrupt or impede the early
settlement of the disputes.
(Art. 261 (d))

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Mandatory Provisions of the CBA
Matters considered as mandatory subjects of
bargaining
1. Grievance Machinery (Labor Code, Art.
271)
2. Voluntary Arbitration (Labor Code, Art.
274-75)
3. No Strike-No Lockout Clause
4. Labor Management Council (Labor Code,
Art. 267)
5. Union Security Arrangements
6. Economic / Working Conditions
a. Wages and other types of
compensation; including merit
increases;
b. Working hours and working days,
including work shifts;
c. Vacations and holidays;
d. Bonuses;
e. Pensions and retirement plans;
f. Seniority;
g. Transfer;
h. Lay-offs;
i. Employee workloads;
j. Work rules and regulations;
k. Rent of company houses;
l. Family planning;
m. Rates of pay;
n. Mutual observance duties; and
o. Provision against Drug Use in
Workplace (R.A. No. 9165, Sec.
49)
Where the subject of the 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 on bargaining to the point of impasse. His
insistence may be construed as evasion of the duty
to bargain.
Valid Stipulation – No Strike No Lockout
A “no strike, no lockout” provision in the CBA is a
valid stipulation, although the clause may be invoked
by an employer only when the strike is economic in
nature or one which is conducted to force wage or
other concessions from the employer that are not
mandated to be granted by the law itself. Such
provision CANNOT be used to assail the legality
of a strike which is grounded on ULP. In this
situation, it is not essential that the ULP act has, in
fact, been committed; it suffices that the striking
workers are shown to have acted honestly on an
impression that the company has committed ULP
and the surrounding circumstances could warrant
such belief in good faith (Panay Electric v. NLRC,
LABOR
G.R. No. 102672, Oct. 4, 1995); (Malayang Samahan
ng mga Manggagawa sa Greenfield v. Ramos, G.R.
No. 113907, 2000).
In the case of (Nuwhrain-Dusit v. NLRC, G.R. No.
163942, 2008; G.R. No. 166295), the Union’s
concerted violation of the Hotel’s Grooming Standard
by deliberately shaving their heads which resulted in
the disruption of the Hotel’s operations clearly
violated the CBA’s “No Strike, No Lockout” provision
which states that “The Union agrees that there shall
be no strikes, walkouts, stoppage or slowdown of
work, boycott, or any other form of interference
and/or interruptions with any of the normal operations
of the Hotel during the life of the Agreement”. The
strike arose out of a bargaining deadlock in the CBA
negotiations with the Hotel. The concerted action is
an economic strike upon which the afore-quoted “no
strike/work stoppage and lockout” prohibition is
squarely applicable.
Establishment of a grievance machinery
The parties to a CBA shall include therein provisions
that will ensure the mutual observance of its terms
and conditions.
They shall establish a machinery for the adjustment
and resolution of grievances arising from the
interpretation or implementation of their CBA AND
those arising from the interpretation or enforcement
of company personnel policies (Labor Code, Art. 273)
Establishment of Grievance Machinery
(Omnibus Rule Implementing the Labor Code, Rule
XIX, Sec. 1)
1. By provision in the CBA
2. In the absence of applicable provision in the
CBA, a Grievance committee shall be created
within 10 days from the signing of the CBA.
The grievance committee shall be composed of at
least 2 representatives each from the members of the
bargaining unit, designated by the union and the
employer, unless otherwise agreed upon by the
parties.
“Grievance” or “Grieveable Issue”
1. Interpretation or implementation of the CBA
2. Interpretation or enforcement of company
personnel policies
3. Any claim by either party that the other party
is violating any provisions of the CBA or
company personnel 
 policies. 

In order to be grieveable, the violations of the CBA
should be ordinary and not gross in character;
otherwise, they shall be considered as unfair labor
practice (ULP).
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Gross violation of the CBA is defined as flagrant
and/or malicious refusal by a party thereto to
comply with the economic provisions thereof.
Accordingly, violations of a CBA, except those which
are gross in character, shall no longer be treated as
ULP, and shall be resolved as grievances. (Labor
Code, Art. 274)
If what is violated, therefore, is a non-economic or a
political provision of the CBA, the same shall not be
considered as unfair labor practice and may thus be
processed as a grievable issue in accordance with
and following the grievance machinery laid down in
the CBA.
Note: In the case of (Liberal Labor Union v. Phil Can
Co., 1952), the Court declared as illegal the strike
staged by the union for not complying with the
grievance procedure provided in the collective
bargaining agreement ruling that “xxx the main
purpose of the parties in adopting a procedure in the
settlement of their disputed is to prevent a strike. This
procedure must be followed in its entirety if it is to
achieve its objective. xxx strikes held in violation of
the terms contained in the collective bargaining
agreement are illegal, especially when they provide
for conclusive arbitration clauses.”
In abandoning the grievance proceedings and
stubbornly refusing to avail of the remedies under the
CBA, respondent Union violated the mandatory
provisions of the collective bargaining agreement.
(San Miguel Corporation v. NLRC, G.R. No. 99266,
1999)
3. Signing, posting, registration
Registration of Collective Bargaining
Agreements
Requirements for registration
The application for CBA registration shall be
accompanied by the original and 2 duplicate copies
of the following documents:
1. CBA
2. A statement that the CBA was posted in at
least 2 conspicuous places in the
establishment concerned for at least 5 days
before its ratification.
3. Statement that the CBA was ratified by the
majority of the employees in the bargaining
unit.
Note: The foregoing 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 (Sec. 2, Rule XVII of
D.O. 40-03).
Where to file
LABOR
With the Regional Office which issued the certificate
of registration/certificate of creation of chartered
local.
If the certificate of creation of the chartered local was
issued by the Bureau, the agreement shall be filed
with the Regional Office which has jurisdiction over
the place where it principally operates.
Multi-employer collective bargaining agreements
shall be filed with the Bureau (Sec. 1, Rule XVII of
D.O. 40-03).
When to file
Within 30 days from execution of the CBA.
(Sec. 1, Rule XVII of D.O. 40-03)
Procedure for registration
1. The Regional Office or the Bureau shall
act on the applications within 5 days from
receipt of the application.
2. The Regional Office or Bureau may within
5 days from receipt of the application,
a. Approve the application and issue the
certificate of registration or
b. Deny the application for failure to
comply with the requirements.
If the supporting documents are not complete, or are
not verified under oath, the Regional Office or the
Bureau shall notify the applicants in writing of the
requirements needed to complete the registration.
NOTE: If the applicant fails to complete the
requirements within 10 days from receipt of notice,
application is denied without prejudice.
Denial of Registration; Grounds of Appeal
1. The denial shall be in writing, stating in
clear terms the reason therefore and
served upon the applicant union and
employer within 24 hours from issuance.
2. The denial by the Regional Office of the
registration of single enterprise collective
bargaining agreements may be appealed
to the Bureau while the denial by the
Bureau of the registration of multi-
employer collective bargaining
agreements may be appealed to the
Office of the Secretary, both within 10
days from receipt of the notice of denial.
3. The memorandum of appeal is filed with
the Regional Office or the Bureau, as the
case may be.
4. The memorandum of appeal and the
entire records of the application shall be
transmitted to the Bureau or the Office of
the Secretary within 24 hours from receipt
of the memorandum of appeal.
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5. Bureau or the Office of the Secretary shall
resolve within the same period and in the
same manner as that prescribed for
inter/intra-union disputes (Sec. 5, Rule XVII
of D.O. 40-03).
4. Term of CBA, freedom period
Registration of Collective Bargaining
Agreements
Requirements for registration
The application for CBA registration shall be
accompanied by the original and 2 duplicate copies
of the following documents:
4. CBA
5. A statement that the CBA was posted in at
least 2 conspicuous places in the
establishment concerned for at least 5 days
before its ratification.
6. Statement that the CBA was ratified by the
majority of the employees in the bargaining
unit.
Note: The foregoing 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 (Sec. 2, Rule XVII of
D.O. 40-03).
Where to file
With the Regional Office which issued the certificate
of registration/certificate of creation of chartered
local.
If the certificate of creation of the chartered local was
issued by the Bureau, the agreement shall be filed
with the Regional Office which has jurisdiction over
the place where it principally operates.
Multi-employer collective bargaining agreements
shall be filed with the Bureau (Sec. 1, Rule XVII of
D.O. 40-03).
When to file
Within 30 days from execution of the CBA.
(Sec. 1, Rule XVII of D.O. 40-03)
Procedure for registration
3. The Regional Office or the Bureau shall
act on the applications within 5 days from
receipt of the application.
4. The Regional Office or Bureau may within
5 days from receipt of the application,
a. Approve the application and issue the
certificate of registration or
b. Deny the application for failure to
comply with the requirements.
LABOR
If the supporting documents are not complete, or are
not verified under oath, the Regional Office or the
Bureau shall notify the applicants in writing of the
requirements needed to complete the registration.
NOTE: If the applicant fails to complete the
requirements within 10 days from receipt of notice,
application is denied without prejudice.
Denial of Registration; Grounds of Appeal
6. The denial shall be in writing, stating in
clear terms the reason therefore and
served upon the applicant union and
employer within 24 hours from issuance.
7. The denial by the Regional Office of the
registration of single enterprise collective
bargaining agreements may be appealed
to the Bureau while the denial by the
Bureau of the registration of multi-
employer collective bargaining
agreements may be appealed to the
Office of the Secretary, both within 10
days from receipt of the notice of denial.
8. The memorandum of appeal is filed with
the Regional Office or the Bureau, as the
case may be.
9. The memorandum of appeal and the
entire records of the application shall be
transmitted to the Bureau or the Office of
the Secretary within 24 hours from receipt
of the memorandum of appeal.
10. Bureau or the Office of the Secretary shall
resolve within the same period and in the
same manner as that prescribed for
inter/intra-union disputes (Sec. 5, Rule XVII
of D.O. 40-03).
E. UNFAIR LABOR PRACTICES
Unfair Labor Practice
Any unfair labor practice expressly defined by the
Labor Code. (Labor Code, Art. 219[k])
1. Nature, aspects
Nature of Unfair Labor Practice
1. Inimical to the legitimate interests of both
labor and management, including their
right to bargain collectively and otherwise
deal with each other in an atmosphere of
freedom and mutual respect;
2. Disrupt industrial peace;
3. Criminal offenses against the State;
4. Violation of civil rights of both labor and
management;
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5. Violate the constitutional right of workers
and employees to self-organization; and
6. Creates unstable labor-management
relations (Labor Code, Art. 258)
Elements of Unfair Labor Practice
1. There is an employer-employee
relationship.
2. The act done is expressly defined in the
Code as an unfair labor practice
3. Act complained of as ULP must have
proximate and causal connection with/
violation of:
a. Exercise the right to self-
organization
b. Exercise of the right to collective
bargaining (Allied Banking
Corporation v. CA, G.R. No.
144412, 2003)
Note: Employee refers to any person working for an
employer. It includes one whose work has ceased in
connection with any current labor dispute or because
of any unfair labor practice and one who has been
dismissed from work but the legality of the dismissal
is being contested in a forum of appropriate
jurisdiction. (IRR Book V Rule 1 Sec.1 (r))
Prescription of actions for ULP
The offense prescribes in 1 year. (Labor Code, Art.
305)
Not every unfair act is an Unfair Labor Practice
The Court has ruled that prohibited acts refer to "acts
that violate the workers’ right to organize." Without
that element, the acts, even if unfair, are not ULP.
Thus, an employer may only be held liable for unfair
labor practice if it can be shown that his acts affect in
whatever manner the right of his employees to self-
organize. (Bankard v. NLRC, G.R. 171664, 2013).
ULP therefore, refers only to acts opposed to
workers’ right to organize. When committed by the
employer, it commonly connotes anti – unionism.
ASPECTS OF UNFAIR LABOR PRACTICE
CIVIL ASPECT CRIMINAL ASPECT
May include liability for Can only be initiated
damages and may be after the finality of
passed upon by the judgment in the labor
Labor Arbiter (Labor case (Labor code, Art.
code, Art. 258) 258)
NOTE: But judgment in the labor case will not serve
as evidence of ULP in the criminal case.
Jurisdiction of Criminal Charge of ULP
The criminal charge falls under the concurrent
jurisdiction of the MTC or the RTC. Only substantial
LABOR
evidence is required in the labor case while proof
beyond reasonable doubt is need in the criminal
prosecution. Recovery of civil liability in the
administrative proceedings shall bar recovery under
the Civil Code.
Who can Commit ULP
Both employers and labor organizations can commit
acts of unfair labor practices in collective bargaining.
However, the labor organization must be the
representative of the employees before any act it
does may be considered as a violation of the duty to
bargain collectively. (Labor Code, Arts. 259[g] and
260[c])
Who are Liable when ULP is committed by
Entities Other than Natural Persons
If the ULP is committed by a labor organization, the
parties liable are the officers, members of governing
boards, representatives or agents or members of
labor associations or organizations who have actually
participated in, authorized or ratified such acts. [Art
260].
If ULP is committed by the employer corporation,
partnership, association, its officers or agents who
have actually participated in, authorized or ratified
ULP shall be held criminally liable. [Art. 259]
2. By employers
ULP Committed By Employers
The Code enumerates the acts or categories of acts
considered as ULP. The enumeration does not mean
an exhaustive listing of ULP incidents. (HSBC
Employees Union v. NLRC, G.R. No. 125038, 1997)
WHEN THERE IS NO ULP AND THERE IS VALID
EXERCISE OF MANAGEMENT RIGHTS
When rules are necessary to the proper and
effective business operation
The law on unfair labor practices is not intended to
deprive the employer of his fundamental right to
prescribe and enforce such rules as he honestly
believes to be necessary to the proper, productive
and profitable operation of his business. (Bankard,
Inc. v. NLRC, G.R. No. 171664, 2013)
Management exercised in good faith
So long as a company’s management prerogatives
are exercised in good faith for the advancement of
the employer’s interest and not for the purpose of
defeating or circumventing the rights of the
employees under special laws or under valid
agreements, the Court will uphold them. (LVN Picture
Workers v. LVN, G.R. No. L-23495, 1970)
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The Court has held that 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, lay-off of workers,
and discipline, dismissal and recall of workers. 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 Philippines, inc,
G.R. No. 198783, 2013)
Where the vacation leave is without pay, which the
employer requires employees to take in view of the
economic crisis, is neither malicious, oppressive nor
vindictive, ULP is not committed. (Philippine Graphic
Arts, Inc. v. NLRC, et al., G.R. No. L-80737, 1988)
In the absence of showing that the illegal dismissal
was dictated by anti – union motives, the same does
not constitute an unfair labor practice as would be a
valid ground for strike. The remedy is an action for
reinstatement with back wages and damages. (AHS/
Philippine Employees Union v. NLRC, G.R. No.
73721 , 1987)
ACTS NOT CONSIDERED AS ULP
Transfer of Employees when there is No
Interference to Self- Organization.
As a rule, it is the prerogative of the company to
promote, transfer or even demote its employees to
other positions when the interests of the company
reasonably demand it. Unless there are instances
which directly point to interference by the company
with the employees right’s to self – organization, the
transfer of an employee should be considered within
the bounds allowed by law, e.g. where despite his
transfer to a lower position, his original rank and
salary remained undiminished. (Rubberworld Phils.
Inc., et al. v. NLRC, G.R. No. 75704, 1989)
Voluntary Resignation or Termination of
Employment
Acceptance of a mass voluntary resignation is not
ULP. In a Philippine Airlines case, the courts said that
the pilots’ protest retirement/resignation was not a
concerted activity which was protected by law. They
did not assume the status of strikers. They cannot,
therefore, validly claim that the company committed
unfair labor practice. When the pilots voluntarily
terminated their employment relationship with the
company, they cannot claim that they were
dismissed. (Enriquez v. Zamora, G.R. No. 51382,
1986).
Differential Treatment of Employees Not Similarly
Situated
LABOR
Discrimination per se is not unlawful. There can be
no discrimination where the employees concerned
are not similarly situated. The grant by the employer
of profit-sharing benefits to the employees outside
the bargaining unit falls under the ambit of its
managerial prerogative. (Wise and Co. v. Employees
Union, G.R. No. 87672, 1989)
DETERMINATION OF VALIDITY OF EMPLOYER’S
ACTS
Involves an appraisal of his motives. Thus, there
must be a measure of reliance on the administrative
agency. It is for the CIR (NLRC now), in the first
instance, to weigh the employer’s expressed motive
in determining the effect on the employees of
management’s otherwise equivocal act. (Republic
Savings Bank v. CIR, G.R. No. L-20303, 1967)
ACTS CONSTITUTING ULP
Rundown of Acts Constituting Unfair Labor
Practice of Employers (YIP-C2-D2-V2) (Art. 259)
1. Interference
2. Yellow dog condition
3. Contracting out
4. Company unionism
5. Discrimination for or against union
membership
6. Discrimination because of testimony
7. Violation of duty to bargain
8. Paid negotiation
9. Violation of CBA
FIRST ULP: INTERFERENCE (ART. 259 [A])
To interfere with, restrain or coerce employees in
the exercise of their right to self-organization
TEST
Whether the employer has engaged in conduct
which, it may reasonably be said, tends to interfere
with the free exercise of the employees’ right and that
it is not necessary that there be direct evidence that
any employee was in fact intimidated or coerced by
the statements or threats of the employer if there is a
reasonable interference that the anti-union conduct
of the employer does have an adverse effect on self-
organization and collective bargaining. (Insular Life
Assurance Co., Ltd. EU v. Insular Life, G.R. No. L-
25291, 1971)
Totality of Conduct Doctrine
The culpability of employer’s remarks is to be
evaluated on the basis of their implication, against
the background of and in conjunction with collateral
circumstances.
Under this doctrine, an expression which might be
permissibly uttered by one employer, might be
deemed improper when spoken by a more hostile
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employer, because of the circumstances under which
they were uttered, the history of the particular
employer’s labor relations or anti – union bias or
because of their connection with an established
collateral plan of coercion or interference, and
consequently actionable as an unfair labor practice.
(Insular Life Assurance Co., Ltd., Employees
Association-ATU, et al. v. Insular Life Assurance Co.,
Ltd., G.R. L-25291, 1971).
ACTS CONSTITUTITNG INTERFERENCE
Threatening Employees
Interference with employee organizational rights
were found where the superintendent of the employer
threatened the employees with cutting their pay,
increasing rent of the company houses, or closing the
plant if they supported the union and where the
employer encouraged the employees to sign a
petition repudiating the union. [No Citation]
Restriction on Right to Self-Organization
The questioned acts of petitioners, namely: 1)
sponsoring a field trip to Zambales for its employees,
to the exclusion of union members, before the
scheduled certification election; 2) the active
campaign by the sales officer of petitioners against
the union prevailing as a bargaining agent during the
field trip; 3) escorting its employees after the field trip
to the polling center; 4) the continuous hiring of
subcontractors performing respondents’ functions; 5)
assigning union members to the Cabangan site to
work as grass cutters; and 6) the enforcement of
work on a rotational basis for union members, all reek
of interference on the part of petitioners. Indubitably,
the various acts of petitioners, taken together,
reasonably support an inference that, indeed, such
were all orchestrated to restrict respondents’ free
exercise of their right to self–organization. (T&H
Shopfitters Corporation v. T&H Shopfitters
Corporation Union, G.R. No. 191714, 2014).
Discouraging Membership in a Labor
Organization
Refusal over a period of years to give salary
adjustments according to the improved salary
scales in the collective bargaining agreements.
(Benguet Consolidated v. BCI Employees and
Workers Union, G.R. No. L-25471, 1968)
Dismissal of an old employee allegedly for
inefficiency, on account of her having joined a
union and engaging in union activities. (East
Asiatic Co v. CIR, G.R. No. L-17037, 1966)
Dismissal of teachers for fear by the school that
there would be strike the following semester.
LABOR
(Rizal Memorial Colleges Faculty Union v. NLRC,
G.R. Nos. 59012-13, 1989)
A company’s capital reduction efforts, to
camouflage the fact that it has been making profits
to justify the mass lay-off of its employees
especially union members. (Madrigal & Company
Inc. v. Zamora, G.R. No. L-48237, 1987)
Lockout or Closure Amounting to ULP
A lockout, actual or threatened, as a means of
dissuading the employees from exercising their rights
under the Act is clearly an unfair labor practice. To
hold an employer who actually or who threatens to
lock out his employees guilty of a violation of this Act,
the evidence must establish that the purpose thereof
was to interfere with the employee’s exercise of their
rights
(Azucena Vols. II-A and II-B, 9th ed., 2016, p. 323).
Sale in Bad Faith
Where the sale of a business enterprise is attended
with bad faith, there is no need to consider the
applicability of the rule that labor contracts being in
personam are not enforceable against the transferee.
The latter is in the position of tortfeasor, having been
a party likewise responsible for the damage inflicted
on the members of the aggrieved union and therefore
cannot justly escape liability. (Cruz v. PAFLU, G.R.
No. L-26519, 1971)
DOCTRINE OF SUCCESSOR - EMPLOYER
A new company will be treated as a continuation or
successor of the one that closed if the new or take-
over company is engaging in the same business as
the closed company or department, or is owned by
the same people, and the "closure" is calculated to
defeat the worker's organizational right in which case
the closure may be declared a subterfuge.
This doctrine is just an enforcement of the piercing
the veil of corporate entity. (Azucena Vols. II-A and
II-B, 9th ed., 2016, p. 327).
Factors to Determine Continuity:
1. Retention of control
2. Use of the same plant or factory
3. Use of the same or substantially the
same employees, workers, supervisors
or managers
4. Similar or substantially the same work or
production under similar or substantially
the same working conditions
5. Use of the same machinery and
equipment
6. Manufacture of the same products or the
performance of the same services
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Doctrine Applicable when the Successor is an
Alter-ego
Absorbing all labor force and necessary personnel as
part of the merging of operations indicate the
intention to continue the employer – employee
relationship of the individual companies with its
employees.This is true where the transferee was
found to be merely an alter ego of the different
merging firms, as in this case. Thus, the transferee
has the obligation not only to absorb the workers of
the dissolved companies but also to include the
length of service earned by the absorbed employees
with their former employers as well. (Filipinas Port
Services v. NLRC, G.R. No.97237, 1991)
Doctrine Not Applicable Where There Is No
Retention of Control
There can be no continuity of the business operations
of the predecessor employer by the successor
employer if the latter has no controlling interest and
the two companies have no privity and are strangers
to each other. Sundowner Development Corporation
v. Drilon, G.R. No. 82341, 1989
SECOND ULP: YELLOW DOG (ART. 259 [B])
To require as a condition of employment that a
person or an employee shall not join a labor
organization or shall withdraw from one to which he
belongs
Yellow Dog Contract: A promise exacted from
workers as a condition of employment that they are
not to belong to, or attempt to foster, a union during
their period of employment (Azucena Vols. II-A and
II-B, 9th ed., 2016, p. 329).
Usual Provisions under Yellow Dog Contract
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; and
3. A promise by the employee that, upon
joining a labor union, he will quit his
employment (Teller, Law Governing Labor
Disputes and Collective Bargaining, pp.
118-119)
THIRD ULP: CONTRACTING OUT (ART. 259 [C])
To contract out services or functions being performed
by union members when such will interfere with,
restrain or coerce employees in the exercise of their
rights to self-organization
Not Guilty when Done as an Exercise of Business
Judgment
An employer is not guilty of an unfair labor practice in
contracting work out for business reasons such as
decline in business, the inadequacy of his equipment,
LABOR
or the need to reduce the cost, even if the employer’s
estimate of his cost is based on a projected increase
attributable to unionization.
It is to be emphasized that contracting out of services
is not illegal per se. It is an exercise of business
judgment or management prerogative. Absent proof
that the management acted in malicious or arbitrary
manner, the Court will not interfere with the exercise
of judgment by an employer. In this case, bad faith
cannot be attributed to BPI because its actions were
authorized by BSP Circular No. 1388, Series of 1993
issued by the Monetary Bank of BSP. (BPI
Employees Union-Davao City-FUBU v. BPI, G.R. No.
174912, 2013)
Conditions for a valid outsourcing
1. Motivated by good faith; and
2. Must not have been resorted to
circumvent the law or must not have been
the result of malicious or arbitrary action
(Manila Electric v. Quisumbing, G.R. No.
127598, 1999; Bankard v.NLRC, G.R. No.
171664, 2013)
Runaway Shop is ULP
When an industrial plant is moved by its owners from
one location to another to escape union labor
regulations or state laws or to discriminate against
employees at the old plant because of their union
activities. Resorting to runaway shop is ULP.
Where a plant removal is for business reasons but
the relocation is hastened by anti – union motivation,
the early removal is unfair labor practice. It is
immaterial that the relocation is accompanied by a
transfer of title to a new employer who is an alter ego
of the original employer.
FOURTH ULP: COMPANY DOMINATION OF
UNION (ART. 259 [D])
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
Manifestations of Domination of a Labor Union
1. Initiation of company union idea.
This may further occur in three styles:
a. outright formation by the employer or his
representatives
b. employee formation on outright demand
or influence by employer
c. managerially motivated formation by
employees
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2. Financial support to the union.
By defraying the union expenses or paying the
attorney’s fees of the lawyer who drafted the
constitution and by – laws of the union.
3. Employer encouragement and assistance.
Immediately granting the union exclusive recognition
as a bargaining agent without determining whether
the union represents the majority of employees.
4. Supervisory assistance.
This takes the form of soliciting membership,
permitting union activities during working time or
coercing employees to join the union by threats of
dismissal or demotion. (Philippine American Cigar &
Cigarette Factory Workers Union v. Philippine
American Cigar & Cigarette Mfg. Co., G.R. No. L-
18364, 1963)
A labor union is company – dominated where it
appears that key officials of the company have been
forcing employees belonging to rival labor union to
join the former under pain of dismissal should they
refuse to do so; that key officials of the company, as
well as its legal counsel, have attended the election
of officers of the former union; that officers and
members of the rival union were dismissed allegedly
pursuant to a retrenchment policy of the company,
after they had presented demands for the
improvement of the working conditions despite its
alleged retrenchment policy; and that, after dismissal
of the aforesaid officers of the rival labor union, the
company engages the services of new laborers.
(Oceanic Air Products, Inc. v. CIR, GR No. L-18704,
1963)
Effect of Pendency of ULP Case
While generally, the pendency of ULP case filed
against a labor organization participating in the
certification election does not stay the holding thereof
(Barrera v. CIR, G.R. No. L-32853, 1981).
Prejudicial Question that Bars Holding of
Certificate Election
However, the pendency of a formal charge of
company domination against one of the unions which
is participating in the certification election is a
prejudicial question that bars the holding thereof until
its final resolution. (Standard Cigarette v. CIR, G.R.
No. L-9908, 1957).
Suspension of CBA
The right to free collective bargaining includes the
right to suspend it. The act of the exclusive
bargaining agent of voluntarily entering into the CBA
with the employer and its act of voluntarily opting for
the 10-year suspension of the CBA both constitutes
as valid exercise of the union’s right to collective
bargaining. The act of sanctioning the 10-year
LABOR
suspension the CBA did not contravene the
"protection to labor" policy of the Constitution. The
agreement afforded full protection to labor; promoted
the shared responsibility between workers and
employers; and the exercised voluntary modes in
settling disputes, including conciliation to foster
industrial peace. (Rivera v. Espiritu, G.R. No.
135547, January 23, 2002)
FIFTH ULP: DISCRIMINATION (ART. 259 [E])
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. (Labor Code, Art. 259[e])
To Constitute Discrimination, it must be
established that:
1. No reasonable distinction or classification
that can be obtained between persons
belonging to the same class
2. Persons belonging to the same class have
not been treated alike (Wise and Co., Inc.
v. Wise and Co., Inc Employees Union,
G.R. No. 87672, 1989).
There is discrimination only when one is denied
privileges which are granted to others under similar
conditions and circumstances (Caltex Philippines,
Inc. v. Philippine Labor Organization, G.R. No. L-
5206, 1953).
There can be no discrimination if the employees are
not similarly situated. (Great Pacific Life Employees
Union v. Great Pacific Life Assurance Corporation,
G.R. No. 126717, 1999).
Note: To constitute an unfair labor practice, the
discrimination committed by the employer must be in
regard to the hire or tenure of employment or any
term or condition of employment to encourage or
discourage membership in any labor organization.
The exaction by the Company, from strikers returning
to work, of a promise not to destroy company
property and not to commit acts of reprisal against
the Union members who did not participate in the
strike, cannot be considered as intended to
encourage or discourage Union membership. Taking
the circumstances surrounding the prescribing of that
condition, the requirement by the Company is
actually an act of self – preservation and designed to
inure the maintenance of peace and order in the
Company premises. (Pagkakaisang Itinataguyod ng
mga Manggagawasa Ang Tibay, et al., G.R. No. L-
22273, 1967)
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Discrimination in Bonus Allocation or Salary
Adjustments
There is unfair and unjust discrimination in granting
of salary adjustments where evidence shows that:
1. The management paid the employees of
the unionized branch;
2. Where salary adjustments were granted to
employees of one of its non – unionized
branches although it was losing in its
operations; and
3. The total salary adjustments given every
ten of its unionized employees would not
even equal the salary adjustments given
one employee in the non – unionized
branch. (Manila Hotel Company v. Pines
Hotel Employees Association (CUGCO)
and CIR, G.R. No. L-30818, 1972)
Discrimination in Layoff or Dismissal
Even where business conditions justified a layoff of
employees, unfair labor practices in the form of
discriminatory dismissal were found where only
unionists were permanently dismissed while non –
unionists were not.
Discharge due to union activity, a question of fact
The question of whether an employee was
discharged because of his union activities is
essentially a question of fact as to which the findings
of the court of Industrial Relations are conclusive and
binding if supported by substantial evidence
considering the record as a whole. (Philippine Metal
Foundries, Inc., v. CIR, G.R. No. L-34948, 1979)
Test of Discrimination
To determine whether or not a discharge is
discriminatory, it is necessary that the underlying
reason for the discharge be established.
The fact that a lawful cause for discharge is available
is not a defense where the employee is actually
discharged because of his union activities. If the
discharge is actually motivated by a lawful reason,
the fact that the employee is engaged in union
activities at the time will not lie against the employer
and prevent him from the exercise of his business
judgment to discharge an employee for cause.
(NLRB v. Ace Comb Co. 342 F. 2 841, as cited in
Cainta Catholic School v. CCSEU, G.R. No. 151021,
2006).
An inference that the discharge of an employee was
motivated by his union activity must be based upon
evidence, direct or circumstantial, not upon mere
suspicion. (NLRB v. South Rambler Co., 324 F 2d
447).
LABOR
VALID DISCRIMINATION
General Rule: It is ULP to discriminate in regard to
wages, hours of work, and other terms and conditions
of employment in order to encourage or discourage
membership in any labor organization.
Exception: Union security clauses
ENFORCEMENT OF UNION SECURITY CLAUSE
Requisites
In terminating the employment of an employee by
enforcing the union security clause, the employer
needs only to determine and prove that:
1. The union security clause is applicable
2. The union is requesting for the
enforcement of the union security
provision in the CBA

3. There is sufficient evidence to support the
union’s decision to expel the employee
from the union; and
4. The employer must comply with due
process:
a. Notify the employees that their
dismissal is being requested by the
union;
b. The employees’ explanations are
heard (Alabang Country Club v.
NLRC, G.R. No 170287, 2008)
Termination Due to Union Security Provision
Termination of employment by virtue of a union
security clause embodied in a CBA is recognized and
accepted in our jurisdiction. This practice strengthens
the union and prevents disunity in the bargaining unit
within the duration of the CBA.
By preventing member disaffiliation with the threat of
expulsion from the union and the consequent
termination of employment, the authorized
bargaining representative gains more numbers and
strengthens its position as against other unions which
may want to claim majority representation. (Alabang
Country Club v. NLRC, G.R. No. 170287, 2008)
To validly dismiss an employee because of a union
shop or closed-shop provisions, there should be a
clear and unequivocal statement that loss of good
standing in the union would be a cause for dismissal.
(Confederated Sons of Labor v. Anakan Lumber Co.,
G.R. No. L-12503, 1960)
Employer Must Conduct Separate Investigation
and Hearing
While company may validly dismiss the employees
expelled under the union security upon the
recommendation by the union, this dismissal should
not be done hastily and summarily thereby eroding
the employees' right to due process, self-
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organization and security of tenure. Even if there are
valid grounds to expel the union officers, due process
requires that these union officers be accorded a
separate hearing by respondent company.
(Malayang Samahan ng Manggagawa sa M.
Greenfield v. Ramos, G.R. No. 113907, 2000)
Requirement of Due Process
Substantive and procedural due process
requirements in determining whether or not an
employee was validly terminated must still be
followed even if the termination is based on a (union
security clause) of the CBA.
Further, in order that any CBA-mandated dismissal
may receive the warrant of the courts and labor
tribunals, the causes for dismissal as provided for in
the CBA must satisfy to the evidentiary threshold of
the NLRC and the courts. (Del Monte v. Saldivar,
G.R. No. 158620, 2006)
Obligations and Liabilities
Where the employer dismissed his employees in the
belief in good faith that such dismissal was required
by the (union security provision) of the collective
bargaining agreement with the union, he may not be
ordered to pay back compensations to such
employees although their dismissal is found to be
illegal. (Confederated Sons of Labor v. Anakan
Lumber Co., G.R. No. L-12503, 1960)
As dictated by fairness, [...] the union shall be liable
to pay their backwages. This is because
management would not have taken the action it did
had it not been for the insistence of the labor union
seeking to give effect to its interpretation of a closed
shop provision. (Guijarno v. CIR, G.R. Nos. L-28791-
93, 1973)
SIXTH ULP: DISCRIMINATION BECAUSE OF
TESTIMONY (ART. 259 [F])
To dismiss, discharge or otherwise prejudice or
discriminate against an employee for having given or
being about to give testimony under this Code.
Note: This is the only ULP not directly related to the
right to self – organization. The testimony or
proceedings might involve wages, employee’s
benefits disciplinary rules, or organizational rights, or
anything covered by the Labor Code. What is
chargeable as ULP is the employer’s retaliatory act
regardless of the subject of the employee’s complaint
or testimony.
Unfair labor practice refers to acts that violate the
workers’ right to organize. The prohibited acts are
related to workers' right to self-organization with the
sole exception of Art. [259 (f)]. (Philcom Employees
LABOR
Union v. Philippine Global Communication, G.R.
126717, 1999).
SEVENTH ULP: VIOLATION OF THE DUTY TO
BARGAIN (ART. 259 [G])
To violate the duty to bargain collectively as
prescribed by this Code
Both employers and labor organizations can commit
acts of unfair labor practices in collective bargaining.
However, the labor organization must be the
representative of the employees before any act it
does may be considered as a violation of the duty to
bargain collectively. (Labor Code, Art. 259[g] and
260[c])
Four Forms of Unfair Labor Practice in
Bargaining
1. Failure or Refusal to Meet and Convene
2. Evading the Mandatory Subjects of
Bargaining
3. Bad Faith in Bargaining
4. Gross Violation of the CBA
FIRST FORM: FAILURE OR REFUSAL TO MEET
AND CONVENE
Employer cannot bargain directly with employees
The employer cannot ignore the bargaining agent
and bargain directly with individual employees.
Refusal to make counter-proposals – Effect is
that CBA will be imposed on the union
A company’s refusal to make counter-proposal if
considered in relation to the entire bargaining
process, may indicate bad faith and this is especially
true where the Union’s request for a counter proposal
is left unanswered. (Kiok Loy v. NLRC, G.R. No. L-
54334, 1986; Divine Word University of Tacloban v.
Secretary of Labor, G.R. No. 91915, 1992)
Failure to reply - ULP
Likewise, in Colegio de San Juan de Letran v.
Association of Employees and Faculty of Letran
(G.R. No. 141471, 2000), petitioner-school was
declared to have acted in bad faith because of its
failure to make a timely reply to the proposals
presented by the union. The school merely offered a
feeble excuse that its Board of Trustees had not yet
convened to discuss the matter.
A local union which is not independently registered
cannot exercise the rights and privileges granted by
law to legitimate labor organizations. The employer
cannot be faulted for refusing to negotiate with the
unregistered chapter. (Abaria, et al v. Metro Cebu
Community Hospital, G.R. No. 154113, 2011)
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An employer is guilty of ULP when he directly
discharges his employees to forestall a demand for
collective bargaining, and also indirectly causes that
discharge by selling to a company that he knows is
unwilling to accept his employees. (Fernando v.
Angat Labor Union, G.R. No. L-17896, 1962)
Acts Not Deemed Refusal to Bargain
1. Adoption of an adamant bargaining
position in good faith, particularly when
the company is operating at a loss;
2. Refusal to bargain over demands for
commission of ULP;
3. Refusal to bargain during period of illegal
strike;
4. Refusal to bargain where there is no
request for bargaining;
5. Union seeks recognition for an
inappropriately large unit
Note: Holding meetings that result in deadlocks, if
done in good faith, does not result in ULP. The
purpose of collective bargaining is the reaching of an
agreement resulting in a contract binding on the
parties but the failure to reach an agreement after
negotiations have continued for a reasonable period
does not establish a lack of good faith. (Union of
Filipro Employees v. Nestle, G.R. Nos. 158930-31,
2008).
SECOND FORM: EVADING THE MANDATORY
SUBJECTS OF BARGAINING
Where the subject of the 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 on bargaining to the point of impasse. His
insistence may be construed as evasion of the duty
to bargain.
THIRD FORM: BARGAINING IN BAD FAITH
Determination of Good Faith: Question of Fact
Good faith or bad faith is an inference to be drawn
from the facts. There is no per se test of good faith in
bargaining. The test of good-faith bargaining is not
the effect of an employer’s or a union's actions
individually but rather it is the impact of all such
occasions or actions, considered as a whole, and the
inferences fairly drawn therefrom. (The Hong Kong
and Shanghai Banking Corporation Employees
Union v. NLRC, G.R. 125038, 1997).
An employer’s steadfast insistence to exclude a
particular substantive provision from the union’s
proposal is no different from a bargaining
representatives perseverance to include one that
they deem of absolute necessity. (Union of Filipro
LABOR
Employees v. Nestle-Philippines, G.R. Nos. 158930-
31, 2008)
Bargaining in Bad Faith Must Occur While
Bargaining is in Process
With the execution of the CBA, bad faith can no
longer be imputed upon any of the parties thereto. All
provisions in the CBA are supposed to have been
jointly and voluntarily incorporated therein by the
parties. This is not a case where private respondent
exhibited an indifferent attitude towards collective
bargaining because the negotiations were not the
unilateral activity of petitioner union. The CBA is
proof enough that private respondent exerted
“reasonable effort of good faith bargaining.”
(Samahan Ng Manggagawa sa Top Form
Manufacturing-United Workers of the Philippines v.
NLRC, G.R. No. 13856, 1998)
A company's refusal to make counter-proposal, if
considered in relation to the entire bargaining
process, may indicate bad faith and this is especially
true where the Union's request for a counter-proposal
is left unanswered." Considering the facts of that
case, the Court concluded that the company was
"unwilling to negotiate and reach an agreement with
the Union." (Kiok Loy v. NLRC, G.R. 54334, 1986).
Inflexible Demands and Strike Amid Negotiation
– Bad Faith Bargaining
The parties had a total of (5) conferences for
purposes of collective bargaining. The first strike was
staged less than a week after the fourth CBA
conference and without any benefit of any previous
strike notice. Thus, from these stated facts, it can be
inferred that the first strike was held while the parties
were in the process of negotiating. There is reason to
believe that the first strike was staged only for the
purpose of compelling the respondent companies to
accede to the inflexible demands of the complainant
LAKAS. (Lakas ng Manggagawang Makabayan v.
Marcelo Enterprises, G.R. Nos. L-38258 & 38260,
1982)
Other Examples of Bad Faith Bargaining
Surface Bargaining: A sophisticated pretense in the
form of apparent bargaining does not satisfy the
statutory duty to bargain. The duty is not discharged
by merely meeting together or simply manifesting a
willingness to talk. An employer’s proposals which
could not be offered with any reasonable expectation
that they would be accepted by the union constitute
surface bargaining. (Standard Chartered Bank
Employees Union (NUBE) v. Confessor, G.R. No
114974, 2004)
Blue Sky Bargaining: The making of exaggerated
or unreasonable proposals in collective bargaining.
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(Standard Chartered Bank Employees Union (NUBE)
v. Confessor, G.R. No. 114974, 2004)
Boulwarism – occurs:
1. When the employer directly bargains with
the employee disregarding the union;
2. The aim was to deal with the union
through the employees, rather than with
the employees through the union;
3. Employer submits its proposals and
adopts a “take it or leave it” stand. (NLRB
v. General Election Co., 418 F. 2d 736
(1970)
FOURTH FORM: GROSS VIOLATION OF THE
CBA
ULP exists in this form when the complaint shows
prima facie the concurrence of two things:
1. There is a gross violation of the CBA;
and
2. The violation pertains to the economic
provisions of the CBA (Silva v. NLRC,
G.R. No. 110226, 1997)
Gross: Refers to a flagrant and/or malicious refusal
by a party to comply with the [economic provisions]
(FASAP v. PAL, G.R. No. 178083, 2008).
Total Disregard of CBA Constitutes ULP
Reference to the economic provisions of the CBA is
not a necessary element of ULP where the employer
in effect totally disregarded the CBA. (Employees’
Union of Bayer v. Bayer Phil., G.R. No. 162943,
2010)
An employer should not be allowed to rescind
unilaterally its CBA with the duly certified bargaining
agent it had previously contracted with, and decide to
bargain with a different group if there is no legitimate
reason for doing so and without first following the
proper procedure. (Employees’ Union of Bayer v.
Bayer Phil., G.R. No. 162943, 2010)
EIGHTH ULP: PAID NEGOTIATION (ART. 259 [H])
To pay negotiation or attorney’s fees to the union or
its officers or agents as part of the settlement of any
issue in collective bargaining or any other dispute
Note: Self – organization and collective bargaining
are treasured rights of the workers. The law zealously
shields them from corruption. It is a punishable act of
ULP for the employer to pay the union or any of its
officers or agents any negotiation fee or attorney’s
fees as part of the settlement in collective bargaining
or any labor dispute. To do so is not only unlawful. It
is ethically reprehensible. Correspondingly, Art. 260
prohibits union officers or agents from asking for or
accepting such payments. Such act, furthermore, is
LABOR
a ground for cancellation of union registration under
Art. 247(g). (Azucena Vols. II-A and II-B, 9th ed.,
2016, p. 362).
NINTH ULP: VIOLATION OF THE CBA (ART. 259
[I])
See above discussion on Fourth Form of ULP in
Bargaining.
Note: Under Art. 259, simple violation of the
collective bargaining agreement is no longer treated
as unfair labor practice but as mere grievance, which
should be processed through the grievance
machinery in the CBA. It becomes an unfair labor
practice only when it is gross in nature, which means
that there is flagrant and/or malicious refusal to
comply with the economic provisions of such
agreement by either the employer or the union.
In the case of Master Union Labor Union v. NLRC,
(G.R. No. 92009, 1993), Master Iron Works
Construction Corporation’s insistence that the hiring
of casual employees is a management prerogative
betrays its attempt to coat with legality the illicit
curtailment of its employees’ right to work under the
terms of the contract of employment and to a fair
implementation of the CBA.
Relief In ULP Cases
1. Cease and Desist Order
To support a cease and desist order, the record
must show that the restrained misconduct was an
issue in the case; that there was a finding of fact
of said misconduct and such finding was
supported by evidence.
The Court is not authorized to issue blank cease
and desist orders, but must confine its injunction
orders to specific act or acts which are related to
past misconduct. (Azucena Vols. II-A and II-B, 9th
ed., 2016, p. 363).
2. Affirmative Order
In addition to a cease and desist order, the court may
issue an affirmative order to reinstate the said
employee with back pay from the date of the
discrimination.
The order may usually direct the full reinstatement of
the discharged employees to their substantially
equivalent position without prejudice to their seniority
and other rights and privileges.
If other laborers have been hired, the affirmative
order shall direct the respondent to dismiss these
hired laborers to make room for the returning
employee. (Azucena Vols. II-A and II-B, 9th ed.,
2016, p. 363).
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1. Court may impose the union’s proposed
CBA on the employer. (Kiok Loy v. NLRC,
G.R. No. L-54334, 1986)
2. Strike by union members (Labor code, Art.
278)
ULP is not subject to compromise
ULP cases are not, in view of the public interest
involved, subject to compromise. (CLLC E.G.
Gochangco Workers Union v. NLRC, G.R. No. L-
67153, 1988)
However: In another decision, the Court approved a
compromise agreement finally settling an illegal
strike case. The agreement in that case was
voluntarily entered into and represented a
reasonable settlement, thus binding. (see Reformist
Union of R.B. Liner v. NLRC, G.R. No. 120482, 1997)
ULP in a given period should be included in a
single charge
When a labor union accuses an employer of acts of
unfair labor practice allegedly committed during a
given period of time, the charges should include all
acts of unfair labor practice committed against any
and all members of the union during that period. The
union should not, upon the dismissal of the charges
first preferred, be allowed to split its cause of action
and harass the employer with subsequent charges,
based upon acts committed during the same period
of time. (Dionela, et. al. v. CIR et. al., G.R. No. L-
18334, 1963)
3. By labor organizations
ULP Committed By Labor Organizations
Kinds of ULP by Labor Organizations (Labor
code, Art. 260)
1. To restrain or coerce employees in the
exercise of their right to self –
organization.
2. To attempt to or cause an employer to
discriminate against an employee to
whom membership in the labor
organization was denied or to terminate
an employee on any ground other than the
usual terms and conditions under which
membership or continuation of
membership is made available to other
members.
3. To refuse to bargain collectively with the
employer, if it is the representative of the
employee.
4. To attempt to or cause the employer to
pay money or other things of value, in the
nature of an exaction, for services which
LABOR
are not performed or not to be performed.
This includes fees for union negotiations.
5. To ask or accept negotiations or attorney’s
fees from employers as part of the
settlement in any dispute.
6. Violation of CBA.
FIRST ULP: RESTRAINT OR COERCION BY
LABOR ORGANIZATION; INTERFERENCE BY
UNION IS NOT ULP (ART. 260 [A])
A labor organization commits ULP when it restrains
or coerces employees in their right to self –
organization. It may interfere in the employees’ right
to self-organization as long as the interference does
not amount to restraint or coercion.
Union cannot coerce employees to join a strike
Similarly, a violation is committed when a union
threatens the employees with bodily harm in order to
force them to strike.
A union violates the law when, in order to restrain or
coerce non-strikers from working during the strike, it:
1. Assaults or threatens to assault them
2. Threatens them with the loss of their jobs
3. Blocks their ingress to and egress from
the plant
4. Damages non-strikers’ automobiles or
forces them off the highway
5. Physically preventing them from working
6. Sabotages the employer’s property in their
presence, thereby creating an
atmosphere of fear or violence
7. Demonstrates loudly in front of a non-
strikers’ residence with signs and shouts
accusing the non-striker of “scabbing”
8. Holding the non-striker up to ridicule
9. Seeking public condemnation of the non-
striker
Note: Interference, which is ULP with employers, is
not ULP when done by a labor organization because
it is part and parcel of the duties and functions of a
labor organization.
SECOND ULP: UNION-INDUCED
DISCRIMINATION (ART. 260[B])
Three (3) Kinds of Discrimination that the Union
may commit under Art. 260(b)
1. Act of the union to cause or attempt to
cause an employer to discriminate against
an employee, in general, irrespective of
whether he/she is a member or non-
member of the union
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2. Discriminatory act of the union against an
employee “with respect to whom
membership in such organization has
been denied.”
3. Discriminatory act of the union against an
employee whose membership therein has
been terminated based “on any ground
other than usual terms and conditions
under which membership or continuation
of membership is made available to other
members.”
Arbitrary use of union security clause
The broad rule is that the union has the right to
determine its membership and to prescribe the
conditions for the acquisition and retention thereof.
Consequently, admission to membership may not be
compelled.
This rule, however, is qualified in the case of labor
unions holding a monopoly in the supply of labor,
either in a given locality, or as regards a particular
employer by reason of a closed – shop or similar
agreements. In such case, qualified applicants may
not be barred by unreasonable rules. Salunga v. CIR
(G.R. No. L-22456, 1967)
The Court held that labor unions are not entitled to
arbitrarily exclude qualified applicants for
membership. A closed-shop provision will not justify
the employer in discharging, as well as a union
insisting upon the discharge of an employee whom it
refuses to admit, without any reasonable ground
thereof. Having been dismissed from service owing
to unfair labor practice on the part of the union,
petitioner is entitled to reinstatement as member of
the union and to his former or substantially equivalent
position in the company, without prejudice to his
seniority and/or rights and privileges, and with back
pay. Union security clauses are also governed by law
and by principles of justice, fair play, and legality.
Union security clauses cannot be used by union
officials against an employer, much less their own
members, except with a high sense of responsibility,
fairness, prudence and judiciousness. (Manila
Mandarin Employees Union v. NLRC, G.R. No.
76989, 1987)
THIRD ULP: REFUSAL TO BARGAIN (ART.
260(C))
A union violates its duty to bargain collectively by
entering negotiations with a fixed purpose of not
reaching an agreement or signing a contract.
Requisites
1. Union is the duly certified bargaining
agent (Lakas ng Manggagawang
LABOR
Makabayan v. Marcelo Enterprises, G.R.
No. L-38258, 1982)
2. Commits any of the following:
a. Violation of the duty to bargain
collectively
b. Refusal to bargain collectively
with the employer
See above discussion on Forms of ULP in Collective
Bargaining
FOURTH ULP: FEATHERBEDDING AND MAKE –
WORK ARRANGEMENTS (ART. 260 [D])
Featherbedding: Employee practices which create
or spread employment by unnecessarily maintaining
or increasing the number of employees used, or the
amount of time consumed, to work on a particular job.
In spite of employee assertions that these so-called
featherbedding [or make-work] practices are directly
related to job security, or health and safety, most
courts at common law found these practices to be
economically wasteful and without any legitimate
employee justification. (Cox, Cases and Materials on
labor Law, NY, 1977, p.919, cited in Azucena Vols.
II-A and II-B, 9th ed., 2016, p. 372).
Note: It may take the form of minimum crew
regulations on the railroad, make – work rules such
as the setting of and prompt destruction of unneeded
bogus type in the newspaper industry, stand – by pay
for musicians when a radio station broadcasts music
from phonograph records or production ceilings for
work on the assembly lines or at the construction site.
Requisites for featherbedding:
1. Labor organization, its officers, agents or
representatives have caused or attempted
to cause an employer either:
a. To pay, or agree to pay any
money, including the demand for
fee for union negotiations
b. To deliver or agree to deliver any
things of value
2. Such demand for payment of money or
delivery of things of value is in the nature
of an exaction
3. The services contemplated in exchange
for the exaction are not actually performed
or will not be performed (Labor code, Art.
260 (d)).
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UNFAIR LABOR PRACTICES OF EMPLOYERS

v. UNFAIR LABOR PRACTICES OF LABOR
ORGANIZATIONS
Art. 259
(EMPLOYERS)
To interfere with, restrain or coerce (IRC) employees
in the exercise of their right to self-organization
To violate a collective bargaining agreement gross
violations only)
To violate the duty to bargain collectively as
prescribed by the Labor Code
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 contract out services or functions being performed
by union members when such will interfere with,
restrain or coerce employees in the exercise of their
rights to self-organization
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
To discriminate in regard to wages, hours of work and
other terms and conditions of employment in order to
encourage or discourage members of any labor
organization
To dismiss, discharge or otherwise discriminate
against an employee for having given or being about
to give testimony under the Labor Code
To pay negotiation or attorney’s fees to the union or
its officers or agents as part of the settlement of any
issue in collective bargaining or any other dispute
Art. 260
(LABOR ORGANIZATIONS)
To restrain or coerce (RC) employees in the exercise
of their right to self-organization (However, a labor
organization shall have the right to prescribe its own
rules with respect to the acquisition or retention or
membership)
To violate a collective bargaining agreement (gross
violations only)
To violate the duty, or refuse to bargain collectively
with the employer (provided it is the representative of
the employees)
To cause or attempt to cause an employer to
discriminate against an employee, including
discrimination against an employee with respect to
whom membership in such organization has been
denied or to terminate an employee on any ground
other than the usual terms and conditions
To cause or attempt to cause an employer to pay or
deliver or agree to pay or deliver any money or other
things of value, in the nature of an exaction, for
services which are not performed or not to be
performed including demand for fee for union
negotiations (Featherbedding)
To ask for or accept negotiations or attorney’s fees
from employers as part of the settlement of any issue
in collective bargaining or any other dispute

NOTE: Provided that only the officers, members of

governing boards, representatives or agents or
members of labor associations or organization who
have actually participated in, authorized or ratified
unfair labor practices shall be held criminally liable.

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F. PEACEFUL CONCERTED ACTIVITIES
1. Picketing
Definition of Picketing
While a strike focuses on stoppage of work, picketing
focuses on publicizing the labor dispute and its
incidents to inform the public of what is happening in
the company struck against. A picket simply means
to march to and from the employer's premises,
usually accompanied by the display of placards and
other signs making known the facts involved in a
labor dispute.41cra1aw It is a strike activity separate
and different from the actual stoppage of work.
(Phimco Industries, Inc. V. Phimco Industries Labor
Association, G.R. No. 170830, 2010).
Picketing as a concerted activity is subject to the
same limitations as strike, particularly as to lawful
purpose and lawful means employed to carry it out. It
should be done within the bounds of law.
Picketing peacefully carried out is not illegal even in
the absence of employer-employee relationship for it
is a part of a freedom of speech guaranteed by the
Constitution. (De Leon v. NLRC, G.R. No. L-7586,
1957)
Prohibition on those Engaged in Picketing
Article 279[e] prohibits any person engaged in
picketing from obstructing the free ingress to and
egress from the employer’s premises (Jackbilt
Industries v. Jackbilt Employees Workers Union,
G.R. Nos. 171618-19, 2009)
No person engaged in picketing shall:
1. Commit any act of violence, coercion or
intimidation, or
2. Obstruct the free ingress to or egress from
the employer’s premises for lawful
purposes, or
3. Obstruct public thoroughfares. (Art.
279(e), Labor Code)
Note: No person shall obstruct, impede or interfere
with by force, violence, coercion, threats or
intimidation, any peaceful picketing by workers
during any labor-controversy or in the exercise of the
right to self-organization or collective bargaining, or
shall aid or abet such obstruction or interference.
No employer shall use or employ any person to
commit such acts nor shall any person be employed
for such purpose (Sec. 9, D.O. 40-G-03, 2010)
Moving Pickets may be Illegal
A picket, although “peaceful” and “moving,” may
constitute illegal obstruction if it effectively blocks the
LABOR
entry and exit points of the company premises, thus
violating the law and making the strike itself illegal.
(PHIMCO v PILA, G.R. No. 170830, 2010)
Picketing may be considered as a nuisance if it
constitutes an obstruction to the free use of property,
so as to substantially interfere with the comfortable
enjoyment of life or property of another, or if it
constitutes an unlawful obstruction to the free
passage or use, in the customary manner, of a street.
Pickets may not aggressively interfere with the right
of peaceful ingress to and egress from the ER’s
establishment or obstruct the public thoroughfares.
A picket, although peaceful and moving, may
constitute illegal obstruction if it effectively blocks the
entry and exit points of the ER’s premises.
Picketing of Neutral Parties or “Innocent
Bystanders” Not Allowed
Although the right to peaceful picketing is entitled to
protection as an exercise of free speech, such right
may be regulated at the instance of third parties or
“innocent bystanders” if it appears that the inevitable
result of its exercise is to create an impression that a
labor dispute with which they have no connection or
interest exists between them and the picketing union.
A picketing union has no right to prevent employees
of another company (who is not their employer) from
getting in and out of its premises, otherwise the
picketing union may be held liable for damages for its
act against innocent bystanders.
2. Strikes
Any temporary stoppage of work by the concerted
action of the employees as a result of an industrial or
labor dispute. (Labor code, Art. 219 (o))
Note: The term “strike” has been elucidated to
encompass not only concerted work stoppage, but
also slowdowns, mass leaves, sit downs, attempts to
damage, destroy or sabotage plant equipment and
facilities, and similar activities. (Toyota Motor Phils.
Corp Workers Assoc. v. NLRC, G.R. Nos. 158798-
99, October 19, 2007)
Labor Dispute includes any controversy or matters
concerning terms and conditions of employment or
the association or representation of persons in
negotiations, fixing, maintaining, changing, or
arranging the terms and conditions of employment,
regardless of whether or not the disputants stand in
the proximate relation of employers and employees
(Labor code, Art. 219(l); Gold City Integrated Port
Services v. NLRC, G.R. No. 103560 & 103599, 1995)
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Who can declare a strike or lockout
1. Any certified or duly recognized
bargaining representative on the grounds
of bargaining deadlock and ULP;
2. Employer; or
3. In the absence of #1, any legitimate labor
organization in the establishment (IRR
Labor Code, Sec. 2, Rule XII, Book V)
Characteristics of a Strike
1. There must be an employer-employee
relationship
2. Existence of a dispute
3. Employment relation is deemed to
continue although in a state of belligerent
suspension
4. There is temporary work stoppage
5. Work stoppage is done through concerted
action
6. The striking group is a legitimate labor
organization. In case of bargaining
deadlock, it must be the employee’s sole
bargaining representative.
Internal union dispute: 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 Code (Ilaw at Buklod ng
Manggagawa (IBM) v. NLRC), G.R. Nos. 81852-53,
1993).
Different Kinds of Strike
1. LEGAL STRIKE – one called for a valid
purpose and conducted through means
allowed by law;
2. ILLEGAL STRIKE – one staged for a
purpose not recognized by law, or if for a
valid purpose, conducted through means
not sanctioned by law, or one that did not
follow the procedural requirements;
3. ECONOMIC STRIKE – one staged by
workers to force wage or other economic
concessions from the employer which he
is not required by law to grant
(Consolidated Labor Association of the
Phil. vs. Marsman and Company, G.R.
No. L-17038, 1964);
4. ULP STRIKE – one called to protest
against the employer’s acts of unfair labor
practice enumerated in the Labor Code;
5. SLOWDOWN STRIKE – one staged
without the workers quitting their work but
LABOR
merely slackening or by reducing their
normal work output;
6. WILD-CAT STRIKE – one declared and
staged without filing the required notice of
strike and without the majority approval of
the recognized bargaining agent;
7. SIT DOWN STRIKE – one where the
workers stop working but do not leave
their place.
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 (Labor Code, Art. 219(r))
Strike Area: Establishments, warehouses, depots,
plants or offices, including the sites or premises used
as runaway shops, of the employer struck against, as
well as the immediate vicinity actually used by
picketing strikers in moving to and fro before all
points of entrance to and exit from said establishment
(Labor Code, Art. 219 (s))
Boycott: A combination of many to cause a loss to
one person by causing others, against their will, to
withdraw from him their beneficial business
intercourse through threats that unless others do so,
the many will cause similar loss to him or them. (31
Am Jur., Sec. 250, p. 956)
Slowdown: A method by which one’s employees,
without seeking a complete stoppage of work, retard
production and distribution in an effort to compel
compliance by the employer with the labor demands
made upon him. (Rothenberg, p. 101)
Unlike other forms of strike, the employees involved
in a slowdown do not walk out of their jobs to hurt the
company. They need only to stop work or reduce the
rate of their work while generally remaining in their
assigned post. (Fadriquelan v. Monterey Foods
Corp., G.R. Nos. 178409 & 178434, 2011)
Note: Such slowdown is generally condemned as
inherently illicit and unjustifiable, because while the
employees continue to work and remain at their
positions and accept the wages due them, they at the
same time select what part of their allocated task they
care to perform of their own volition or refuse openly
or secretly to the employer’s damage, to do other
work. They work on their own terms. But whether or
not the workers’ activity in question—their concerted
adoption of a different work schedule than that
prescribed by management and adhered to for
several years—constitutes a slowdown need not be
gone into. The activity is contrary to RA6727 and the
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parties’ CBA (Ilaw at Buklod v. NLRC, G.R. No.

91980, June 27, 1991) WHERE FILED: Regional Branch of the National
Conciliation and Mediation board, copy furnished the
a. Legal strike vs. illegal strike employer or the union, as the case may be.

VALID VERSUS ILLEGAL STRIKES WHEN FILED: At least 30 days, in case of CBD, and
An Illegal Strike is one which: PPP-MIA at least 15 days, in case of ULP, before the intended
1. Is contrary to a specific Prohibition of law, date of strike.
such as strike by employees performing
governmental functions WHO FILES NOTICE OF STRIKE
2. Violates a specific requirement of law (as ULP DEADLOCK
to Procedure) Duly recognized or
certified bargaining
3. Is declared for an unlawful Purpose, such
agent ONLY EXCLUSIVE
as inducing the employer to commit an
BARGAINING
unfair labor practice against nonunion If none, unrecognized REPRESENTATIVE
employees labor union, provided
4. Employs unlawful Means in the pursuit of union is duly registered.
its objective, such as widespread
terrorism of non-strikers CONTENTS OF NOTICE
5. Violates an existing Injunction BARGAINING DEADLOCK ULP
6. Contrary to an existing Agreement, such Notice shall, as far as Notice shall, as
as a no-strike clause or conclusive practicable, further state the far as
arbitration clause (Toyota Motor Phil. unresolved issues in the practicable,
Workers Association v. NLRC, G.R. No. bargaining negotiations and state the acts
158789, 2007) be accompanied by the written complained of
proposals of the union, the and the efforts
EXPOUNDED: counter-proposals of the taken to resolve
FIRST FACTOR: STATUTORY PROHIBITION employer and the proof of a the dispute
Employees in the public service may not engage in request for conference to amicably.
strikes. While the Constitution recognizes the right of settle the differences.
government employees to organize, they are NOTE: In case notice does not conform with
prohibited from staging strikes, demonstrations, requirements of this and foregoing section/s, the
mass leaves, walk-outs and other forms of mass Regional branch of the Board shall inform the
action which will result in temporary stoppage or concerned party of such fact. (Club Filipino, Inc. v.
disruption of public service. The right of government Bautista, G.R. No. 168406, 2015)
employees to organize is limited only tot the
formation of unions or associations, without including 2. COOLING-OFF PERIOD
the right to strike. (Bangalisan, et al. v. CA, G.R. No. BARGAINING
124687, 1997) ULP
DEADLOCK
30 days 15 days
b. Mandatory procedural
requirements NCMB, upon receipt of the notice of strike and during
the cooling-off period, mediates and conciliates the
SECOND FACTOR: PROCEDURAL parties. The Regional branch of the Board may, upon
REQUIREMENTS agreement of the parties, treat a notice as a
PROCEDURAL REQUIREMENTS (Labor Code, Art. preventive mediation case. It shall also encourage
278) the parties to submit the dispute to voluntary
1. Notice of Strike arbitration.
2. Cooling-off Period
3. Strike Vote In cases of ULP strike, the cooling-off period need not
4. Strike Vote Report be observed when union-busting is present. (Labor
5. 7-day strike/lockout ban Code, Art. 278)
These requirements are mandatory, meaning, non-
compliance therewith makes the strike illegal. Elements of Union Busting: (Labor code, Art.
(Azucena Vol. II-A, 9th ed., p. 594). 278(c))
1. The union officers are being dismissed
1. NOTICE OF STRIKE
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2. Those officers are duly elected in
accordance with the union constitution
and by-laws
3. The existence of the union is threatened
3. STRIKE VOTE (Labor code, Art. 278(f))
A strike/lockout vote should be taken by secret
balloting, in meetings or referenda specially called for
the purpose.
The regional branch of the Board may, at its own
initiative or upon request of any affected party,
supervise the conduct of the secret balloting.
NOTE: The requirement of giving notice of the
conduct of a strike vote to the NCMB at least 24 hours
before the meeting for the said purpose is designed
to:
a. inform the NCMB of the intent of the union to
conduct a strike vote;
b. give the NCMB ample 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
attendant thereto; and
c. should the NCMB decide on its own initiative
or upon the request of an interested party
including the employer, to supervise the
strike vote, to give it ample time to prepare
for the deployment of the requisite
personnel, including peace officers if need
be.
Unless and until the NCMB is notified at least 24
hours of the union's decision to conduct a strike vote,
and the date, place, and time thereof, the NCMB
cannot determine for itself whether to supervise a
strike vote meeting or not and insure its peaceful and
regular conduct. The failure of a union to comply with
the requirement of the giving of notice to the NCMB
at least 24 hours prior to the holding of a strike vote
meeting will render the subsequent strike staged by
the union illegal. (Capitol Medical Center Inc. v.
National Labor Relations Commission, G.R. No.
147080, 2005)
NUMBER OF VOTES REQUIRED for stike/
lockout: Majority of the total UNION MEMBERSHIP
OR OF THE DIRECTORS OR PARTNERS, as the
case may be.
Strike or lockout vote
1. Approved by majority of total union
membership or by majority of the BOD or
partners
2. By a secret ballot
3. In a meeting called for that purpose
LABOR
4. STRIKE VOTE REPORT
The result of the strike/lockout vote should be
reported to the NCMB at least 7 days before the
intended strike or lockout, subject to the cooling-off
period. Labor code, Art. 278 (f))
If the strike vote is filed within the cooling-off period,
the 7-day requirement shall be counted from the day
following the expiration of the cooling-off period.
(NCMB’s Primer on Strike, Picketing and Lockout)
Note: There is no law or Supreme Court decision that
supports this formula.
If the union is being busted, there is no need to
observe the cooling-off period but the unions must
still file a notice of strike, take a strike vote and submit
the strike vote report. What is being excused in case
of union busting is only the observance of the 15-day
cooling-off period.) (Sec. 7, D.O. 40-G-03, 2010)
No strike or lockout can be declared while a case is
pending involving the same grounds for strike or
lockout. (Bulletin v. Sanchez, G.R. No. 74425, 1986)
The submission of the report gives assurance that a
strike vote has been taken and that, if the report
concerning it is false, the majority of the members
can take appropriate remedy before it is too late.' The
seven (7)-day waiting period is intended to give the
Department of Labor and Employment an opportunity
to verify whether the projected strike really carries the
imprimatur of the majority of the union members. The
need for assurance that majority of the union
members support the strike cannot be gainsaid|||
(Lapanday Workers Union v. National Labor
Relations Commission, G.R. Nos. 95494-97, 1995)
Legal and Enforceable Dismissal of Employees
during Conciliation
When the strike notice was filed by the union, the
chain of events which culminated in the termination
of the 14 salespersons’ employment was already
taking place; the series of defiant refusals by said
sales representatives to comply with GTE’s
requirement to submit individual reports was already
in progress. At that time, no less than 3 of the ultimate
6 direct orders of the employer for the submission of
the reports had already been disobeyed. The filing of
the strike notice, and the commencement of
conciliation activities by the BLR did not operate to
make GTE’s orders illegal and unenforceable so as
to excuse continued noncompliance therewith. (GTE
Directories v. Sanchez, G.R. No. 76219, 1991)
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c. Grounds for strike
THIRD FACTOR: UNLAWFUL PURPOSE
Grounds for Strike or Lockout
1. Unfair Labor Practice (ULP) of the
Employer and the Union
2. Collective Bargaining Deadlock (CBD)
NOTE: Violations of CBA must be gross to be
considered as ULP
Conversion Doctrine: A strike may start as
economic and, as it progresses, becomes ULP, or
vice-versa.
Non-Strikeable Issues (NCMB, Manual of
Procedures in Settlement and Disposition of
Conciliation and Preventive Mediation Cases,
Rule VI, Sec. 6(c)(i); see University of San Agustin
Employees’ Union-FFW v. CA, G.R. No. 169632,
2006).
1. Labor Standards Cases;
2. Wage Distortion;
3. Inter-Union or Intra-Union Disputes;
4. Physical Re-arrangement of the Office
(Reliance Surety and Insurance Co., v.
NLRC, G.R. Nos. 86917-18, 1991);
5. Execution and Enforcement of Final
Orders, Decisions, Resolutions, or
Awards in the Cases Mentioned in # 6;
6. Cases pending at the DOLE Regional
Offices, BLR, NLRC, DOLE Secretary,
Voluntary and Compulsory Arbitrators,
CA, and SC;
7. Violations of CBA which are resolved via
Grievance Machinery;
8. Company’s Sales Evaluation Policy (GTE
Directories v. Hon. Sanchez, G.R. No.
76219, 1991); and
9. Issues covered by a No-Strike
Commitment in the CBA
ULP Strike in Good Faith
It is not even required that there be in fact an unfair
practice committed by the employer. It suffices if such
a belief in good faith is entertained by labor as the
inducing factor for staging a strike. (Shell Oil Union v.
Shell Oil Company, G.R. No. L-28607, 1971)
If the management performed acts which, under the
circumstances, the strikers believed were unfair labor
practices on the part of the management, although
they were not, the court rules that the strike cannot
be held illegal. However, the union’s belief needs
some rational basis. (Azucena Vol. II-A, 9th ed., p.
617)
LABOR
NOTE: The good faith strike doctrine does not
tolerate groundless strike. It does not excuse the
union’s presentation of substantial evidence to
support its allegation of ULP by the employer.
Such requirements as the filing of a notice of strike,
strike vote and notice given to DOLE are mandatory
in nature and apply even to ULP strike in good faith.
(Azucena Vol. II-A, 9th ed., p. 621)
Strike to Compel Recognition of and Bargaining
with the Majority Union
The legal way to secure union recognition is not
through strike but through a certification process.
This is why Article 278 (b) prohibits strike due to inter-
union or intra-union dispute.
But where the majority status of a union is not in
doubt, not in dispute, or is certainly established and,
despite this, the employer still refuses to bargain,
then the situation is one of refusal to bargain which is
ULP by employer. (Caltex Filipino v. CIR, G.R. Nos.
L-30632-33, 1972)
Minority Union Cannot Strike
Defeated union cannot lawfully undertake a strike
against the employer; if one is being done, it must
come to a halt. (United Restauror’s Employees &
Labor Union, G.R. No. L-24993, 1968).
Trivial, Unjust or Unreasonable Strike Illegal
The walkout was premature as it was declared
without giving the General Manafer, or the Board of
Directors of the Company a reasonable time within
which to consider and act on the demands submitted
by the Union. The nature of the demands was such
that no possible action could be taken thereon by the
officials to whom they were submitted. They could
have only been acted upon by the General Manager,
or by the Board of Directors. The former was then in
Bacolod, and the latter could not be convened
because the chairman and two of its members were
also absent. This fact was well known to the leaders
of the Union. The Court of Industrial Relations,
therefore, acted rightly in declaring said strike
unjustified and illegal. (Industrial Paper v. Insular
Sugar, G.R. No. L-7394, 1954)
Acts Calculated to Force Disruption of
Operations, Thereby Violating the No-strike
Clause in the CBA, Constitute Illegal Strike
The Union officers and members’ concerted action to
shave their heads and crop their hair not only violated
the Hotel’s Grooming Standards but also violated the
Union’s duty to bargain in good faith. By shaving their
heads and cropping their hair, the Union officers and
members violated then Section 6, Rule XIII of the IRR
of Book V of the Labor Code. This rule prohibits the
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commission of any act which will disrupt or impede Acts of violence justify the dismissal of the guilty
the early settlement of the labor dispute that are strikers. (Shell Oil Workers' Union v. Shell Company,
under conciliation. Since the bargaining deadlock is G.R. No L-28607, 1971)
being conciliated by the NCMB, the Union’s action to
have their officers and members’ heads shaved was The mere filing of charges against an employee for
manifestly calculated to antagonize and embarrass alleged illegal acts during a strike does not by itself
the Hotel management and in doing so effectively justify dismissal. The charges must be proved at an
disrupted the operations of the Hotel and violated investigation duly called where the employee shall be
their duty to bargain collectively in good faith. given an opportunity to defend himself. This is true
(NUWHRAIN-APL-IUF v. CA, G.R. No. 163942, even if the alleged ground constitutes a criminal
2008) offense. (Almira v. B.F. Goodrich Phil., Inc., G.R. No.
L-34974, 1974)
Strike motivated by an unreasonable demand of the
labor union for the dismissal of a factory foreman is Violence on Both Sides
illegal and unjustified. (Luzon Marine v. Roldan, G.R. Where violence was committed on both sides during
No. L-2660, 1950) a strike, such violence cannot be a ground for
declaring the strike as illegal. (Malayang Samahan
d. Prohibited acts during strike ng mga Manggagawa v. Ramos, G.R. No. 113907,
2000)
FOURTH FACTOR: UNLAWFUL MEANS
e. Liability of union officers and
Strike may be illegal for commission of prohibited members for illegal strike and
acts. Despite the validity of the purpose of a strike illegal acts during strike
and compliance with the procedural requirements, a
strike may still be held illegal where the means Liability of Union Officers and Ordinary Members
employed are illegal. The means become illegal Declaration of a strike does not amount to a
when they come within the prohibitions under Article renunciation of the employment relation (Rex Taxi
279(e) of the Labor Code. (Phimco Industries, Inc v. Cab v. CIR, G.R. No. 47303, 1940).
Phimco Industries Labor Association (PILA), G.R.
No. 170830, 2010) a.) Union Officer
Participation in Participation in Illegal
The strike had been attended by the widespread Lawful Strike Strike
commission of prohibited acts. Well-settled is the rule Mere participation of a Mere finding or
that even if the strike were to be declared valid worker in a lawful strike declaration of illegality
because its objective or purpose is lawful, the strike cannot constitute of strike will result in
may still be declared invalid where the means sufficient ground for the termination of all
employed are illegal. Among such limits are the termination of his union officers who
prohibited activities under Article [279] of the Labor employment, even if knowingly
Code, particularly paragraph (e), which states that no replacement had been participated in the
person engaged in picketing shall: hired by the employer illegal strike (Lapanday
(a) commit any act of violence, coercion, or during such lawful Workers union v.
intimidation or strike (Labor code, Art. NLRC, G.R. Nos.
(b) obstruct the free ingress to or egress from 279 (a) (paragraph 3) 9594-97, 1995)
the employer's premises for lawful purposes, It is not required, for
or purposes of
(c) obstruct public thoroughfares. (Sukhothai termination that the
Cuisine v. CA, G.R. No. 150437, 2006) officers should commit
an illegal act during the
NOTE: Whoever commits these acts – union officers strike (Phimco
or members, employees or non-employees – is Industries, Inc. v.
answerable for the acts. Phimco Industries
Labor Association,
The use of violence, intimidation, restraint or coercion G.R. No. 170830,
in carrying out concerted activities, which are 2010)
injurious to the rights of property or to particular Any union officer who
individuals, makes a strike illegal. (Cf. Liberal Labor knowingly participates
Union v. Phil. Can Co, G.R. No. L-4834, 1952) in an illegal strike and

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any worker or union
officer who knowingly
participates in the
commission of illegal
acts
During a strike may be
declared to have lost
his employment status
(Toyota Motors Phils.
Corp v. NLRC, G.R.
Nos. 158786 &158799,
2007)
b.) Ordinary Employee
Participation in Participation in Illegal
Lawful Strike Strike
Employee who Mere finding or
participates in lawful declaration of illegality
strike is not deemed to of a strike will not result
have abandoned his in termination of
employment but is ordinary union
merely exercising his members.
right to self-
organization
Mere participation of a An ordinary striking
worker in a lawful strike employee cannot be
cannot constitute terminated for mere
sufficient ground for participation in an
termination of his illegal strike. There
employment, even if must be proof that he
replacement had been committed illegal acts
hired by the employer during the strike and
during such lawful the striker who
strike (Labor code, Art. participated in the
279 (a) (paragraph 3) commission of illegal
act[s] must be
identified. But proof
beyond reasonable
doubt is not required.
Substantial evidence
available under the
circumstances, which
may justify the
imposition of the
penalty of dismissal,
may suffice. (Toyota
Motors Phils. Corp v.
NLRC, G.R. Nos.
158786 &158799,
2007)
Reason for distinction: The responsibility of union
officers, as main players in an illegal strike, is greater
than that of the members and, therefore, limiting the
penalty of dismissal only for the former for
participation in an illegal strike is in order. (Solidbank
Corporation v. Gamier, G.R. No. 159460, 2010)
LABOR
Officials’ Inability to Leave Premises Not Illegal
Detention
There was no kidnapping as the detention or
deprivation of liberty under the circumstance while
certainly not to be justified, was not done with
criminal intent. (People v. Barba, 20 SCRA 663,
1969)
Blockade or Obstruction
Illegal obstructions on public thoroughfares, such as
streets or sidewalks, are nuisances which local
government authorities can summarily remove.
Waiver of Illegality of Strikes
Where the ER voluntarily agrees to reinstate the
strikers, such agreement on the part of the ER
constitutes a waiver of the defense that the strike was
illegal.
3. Lockouts
Temporary refusal of any employer to furnish work as
a result of an industrial or labor dispute
a. Grounds for lockout
Grounds for Lockout or Strike
1) Collective Bargaining Deadlock
2) Unfair Labor Practice
NOTE: Violations of CBA must be gross to be
considered as ULP
Conversion Doctrine: A strike may start as
economic and, as it progresses, becomes ULP, or
vice-versa.
When labor may strike or when the employer may
lockout its workers
If the dispute remains unsettled after the lapse of the
requisite number of days from the filing of the notice
of strike or lockout and of the results of the election
but the regional branch of the Board shall continue
mediating and conciliating.
When strike or lockout cannot be declared
1. Violations of CBA which are not gross.
2. Grounds involving inter/intra union
disputes.
3. When there is no notice of strike or lockout
or without the strike or lockout vote.
4. After assumption of jurisdiction by the
Secretary.
5. After certification or submission of dispute
to compulsory or voluntary arbitration or
during the pendency of cases involving
the same grounds for strike or lockout.
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2. To aid a particular union by preventing

Prohibited activities during strikes and lockouts
(Labor Code, Art. 279)
1. Strike or lockout without first having
bargained collectively
2. Strike or lockout without the necessary
vote first having been obtained and
reported to the DOLE.
3. Strike or lockout after DOLE has assumed
jurisdiction or the President or after
certification or submission of dispute to
the compulsory arbitration/voluntary
arbitration or during the pendency of
cases involving the same grounds for the
strike or lockout.
4. Knowingly participating in illegal strike or
knowingly participating in the commission
of illegal acts during a strike (ground for
termination of employment).
5. Obstruct, impede, or interfere with by
force, violence, coercion, threats, or
intimidation any peaceful picketing by
employees during any labor controversy
or shall abet or aid such obstruction or
interference.
6. Employment or use of any strikebreaker/
employed as a strike breaker.
7. Bringing in, introducing, or escorting by
any public officer or employee, including
officers and personnel of the AFP or PNP,
or any armed person in any manner of any
individual who seeks to replace strikers in
entering or leaving the premises of a strike
area or work in place of strikers.
8. Commit any act of violence, coercion or
intimidation while engaged in picketing or
obstruct the ingress or egress from the
employer's premises for lawful purposes
or obstruct public thoroughfares (must be
pervasive and widespread/consistently
and deliberately resorted to as a matter of
policy
Lockouts have been held valid in the following
situations:
1. In anticipation of a threatened strike,
where motivated by economic
considerations
2. In response to unprotected strike or
walkout
3. In response to a whipsaw strike
Lockouts have been held unlawful in the ff.
circumstances:
1. To discourage and dissipate membership
in a labor organization
further work of its rival
3. To avoid bargaining
b. Mandatory procedural
requirements
Procedure for Declaring a Strike or Lockout
WHO MAY DECLARE? (Sec. 6, D.O. 40-G-03,
2010)
STRIKE LOCKOUT
Any legitimate labor
Employer in
organization or any certified or
cases of
duly recognized bargaining
bargaining
representative in cases of
deadlocks and
bargaining deadlocks and
ULPs
ULPs
Note: If there is no certified or duly recognized
bargaining representative, any legitimate labor
organization may declare a strike but only on grounds
of unfair labor practice.
Procedural Requirements in Lockouts: (Same as
those required in Strikes) (Labor Code, Art. 278)
1. Notice of Lockout
2. Cooling-off Period
3. Strike/Lockout Vote
4. Strike/Lockout Vote Report
5. 7-day strike/lockout ban
Expounded:
1. NOTICE OF LOCKOUT
Contents of the notice of strike or lockout
1. Names and addresses of employer
2. Union involved
3. Nature of industry to which the employer
belongs
4. Number of union members
5. Workers in the bargaining unit
6. Other relevant data
7. In case of bargaining deadlocks: the
unresolved issues, written proposals of
the union, counter-proposals of the
employer and proof of request for
conference to settle differences
8. In case of unfair labor practice: the acts
complained of, and the efforts taken to
resolve the dispute (Sec 8, D.O. 40-G-03,
Series of 2010)
Note: Board shall inform the concerned party in case
notice does not conform with the requirements. (Sec
8, D.O. 40-G-03, Series of 2010)
Action on notice of strike or lockout (Sec 9, D.O.
40-G-03, Series of 2010)

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1. Upon receipt of the notice, the regional
branch of the Board 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 Board may,
upon agreement of the parties, treat a
notice as a preventive mediation case. It
shall also encourage the parties to submit
to submit the dispute to voluntary
arbitration.
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 the
conciliation meetings called by the
regional branch of the Board.
4. A notice, upon agreement of the parties,
may be referred to alternative modes of
dispute resolution, including voluntary
arbitration.
2. COOLING-OFF PERIOD
When Notice Must be Filed: Cooling – off period
1. In case of bargaining deadlocks: at
least 30 days before the intended date of
strike
2. In case of unfair labor practice: at least
15 days before the intended date of strike
3. In case of ULP involving the dismissal
of duly elected union officer/s which
may constitute union-busting: union
may take action immediately after the
strike vote and the submission of the
results of the strike vote to the regional
branch of the Board
3. STRIKE/LOCKOUT VOTE
Strike or lockout vote
1. Approved by majority of total union
membership or by majority of the BOD or
partners
2. By a secret ballot
3. In a meeting called for that purpose
The regional branch may supervise the conduct of
the secret balloting at its own initiative or upon
request of any party.
Notice of the meeting must be given at least 24 hours
before such meeting, and the results of the voting
must be given at least 7 days before the intended
strike or lockout to the regional branch of the Board.
LABOR
This is subject to the cooling-off period. (Labor Code,
Art. 278(f))
4. STRIKE/LOCKOUT VOTE REPORT
Strike/Lockout Vote Report
The result of the strike (or lockout voting) should be
reported to the NCMB at least 7 days before the
intended strike or lockout, subject to the cooling off
period. This means that after the strike vote is taken
and the result reported to NCMB, seven days must
pass before the union can actually commence the
strike. This seven-day reporting period is intended to
give the Dept. of Labor and Employment an
opportunity to verify whether the projected strike
really carries the imprimatur of the majority of the
union members. (Lapanday Workers’ Union, et. al. v.
NLRC, G.R. Nos. 95494-97, September 7, 1995)
A strike tagged without the submission of the result
of the strike vote is illegal. (Samahan ng
Manggagawa in Moldex Products, et. al. v. NLRC,
et.al., G.R. No. 119467, February 1, 2000)
5. 7-DAY STRIKE/LOCKOUT BAN
The waiting period, on the other hand, is intended
to provide opportunity for the members of the
union or the management to take the appropriate
remedy in case the strike or lockout vote report is
false or inaccurate. [National Federation of Sugar
Workers v. Ovejera, G.R. No. L-59743 (1982)]
The waiting period 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. [Lapanday Workers Union
v. NLRC, G.R. Nos. 95494-97 (1995)]
Compliance with Both Cooling-off and Waiting
Periods The observance of both periods must be
complied with, although a labor union may take a
strike vote and report the same within the statutory
cooling-off period. The cooling-off and 7-day strike
ban provisions of law constitute a valid exercise of
police power of the State. [National Federation of
Sugar Workers v. Ovejera, G.R. No. L-59743
(1982)]
Mutually exclusive periods (used in the NCMB
Manual) The cooling off period and the 7-day
period are mutually exclusive. Thus, in the case of
Capitol Medical Center v. NLRC [G.R. No. 147080
(2005)], the Court held that when the strike vote is
conducted within the cooling-off period, the 7-day
requirement shall be counted from the day
following the expiration of the cooling off period.
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including cases over which the labor arbiter has

IMPROVED OFFER BALLOTING (Labor code, exclusive jurisdiction.
Art. 280; Sec 9, D.O. 40-G-03, Series of 2010)
IN CASE OF The authority of the Secretary to assume jurisdiction
IN CASE OF STRIKE over a labor dispute causing or likely to cause a strike
LOCKOUT
1. Regional branch 1. The regional or lockout in an industry indispensable to national
of the Board shall, branch of the interest includes and extends to all questions and
conduct a Board shall also controversies arising from such labor dispute. The
referendum by conduct a power is plenary and discretionary in nature to enable
secret balloting referendum by him to effectively and efficiently dispose of the
dispute. (Philcom Employees Union v. Philippine
on the improved secret balloting
Global Communications, G.R. No. 144315, 2006)
offer of the on the reduced
employer. offer of the union. As held in International Pharmaceuticals, Inc. v.
2. On or before the 2. On or before the Secretary of Labor, the Labor Secretary has
30th day of strike. 30th day of the jurisdiction over all questions and controversies
3. At its own lockout. arising from an assumed dispute, including cases
(regional board) 3. When at least a over which the labor arbiter has exclusive jurisdiction.
initiative or upon majority of the (G.R. Nos. 92981-83, 1992)
the request of any board of directors
affected party. or trustees or the a. INDUSTRY INDISPENSABLE TO THE
4. When at least a partners holding NATIONAL INTEREST
majority of the the controlling What Constitutes a National Interest Case
union members interest in the The Labor Code vests upon the Secretary of Labor
vote to accept the case of the discretion to determine what industries are
improved offer, partnership vote indispensable to national interest. Thus, upon the
the striking to accept the determination of the Secretary of Labor that such
workers shall reduced offer, the industry is indispensable to the national interest, it will
immediately workers shall assume jurisdiction over the labor dispute of said
return to work and immediately industry. (Philtread Workers Union v. Confesor, G.R.
the employer return to work and No. 117169, 1997).
shall thereupon the employer
A Police Power Measure
re-admit them shall thereupon
The assumption of jurisdiction is in the nature of
upon the signing re-admit them
police power measure. This is done for the promotion
of the agreement. upon the signing of the common good considering that a prolonged
of the agreement. strike or lockout can be inimical to the national
economy. The Secretary of Labor acts to maintain
4. Assumption of jurisdiction by industrial peace. Thus, his certification for
the DOLE Secretary compulsory arbitration is not intended to impede the
workers' right to strike but to obtain a speedy
SECRETARY OF LABOR AND EMPLOYMENT settlement of the dispute. (Philtread Workers Union
Nature v. Confesor, G.R. No. 117169, 1997).
Art. 278(g) is both an extraordinary and a preemptive
power to address an extraordinary situation – a strike What are Considered “National Interest” Cases
or lockout in an industry indispensable to the national The NLRC vests the President of the Philippines and
interest. The secretary of Labor is empowered to: the Secretary of Labor almost unlimited discretion to
1. Assume jurisdiction over the dispute and determine what industries may be considered as
decide it, or indispensable to the national interest.
2. Certify the dispute to the NLRC for
compulsory arbitration, in which case, Industries Indispensable to the National Interest
NLRC shall here and decide 1. Hospital Sector
2. Electric Power Industry
The intent of the law is to give the Labor Secretary 3. Water Supply Services, to exclude small
full authority to resolve all matters within the dispute water supply such as bottling and refilling
that gave rise to or which arose out of the strike or stations
lockout; it includes and extends to all questions and 4. Air traffic control
controversies arising from or related to the dispute,

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5. Such other industries as maybe
recommended by the National Tripartite
Peace Council (TIPC) (DO No.40-H-13)
Examples of “National Interest” disputes:
1. Nestle Philippines, Inc. is engaged in an
undertaking affected with public interest
being one of the largest manufacturers of
food products. (Union of Filipro v. NLRC,
G.R. No. 91025, 1990 )
2. Academic institutions (Philippine School
of Business Administration v. Noriel, G.R.
No. 80648, 1988)
3. A company supplying the sulfate
requirements of MWSS
4. Banking is expressly classified by the
General Banking Law as an industry
indispensable to the national interest.
5. However, the Court ruled that the
production of telephone directories is not
an industry affecting the national interest.
(GTE Directories Corp v. Sanchez, G.R.
No. 76219, 1991)
b. EFFECTS OF ASSUMPTION OF
JURISDICTION
1. On intended or impending strike or lockout
– Automatically enjoined (Labor code, Art.
278(g))
2. On actual strike or lockout (already taken
place) – 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(Labor code, Art. 278(g))
3. On cases already filed and may be filed –
considered subsumed or absorbed by
assumed or certified case, except where
certification or assumption order states
otherwise (Guagua National Colleges v.
Guagua National Colleges Faculty Labor
Union, G.R. No. 204693, 2016)
4. On other pending cases – Parties are
required to inform their counsels and the
DOLE Secretary/ NLRC Division
concerned of all pending cases that are
related or incident to the
assumed/certified case.(Par 2, Sec. 3(b),
Rule VIII, 2011 NLRC Rules of Procedure)
Such assumption or certification has the effect of
automatically enjoining the intended or impending
strike or lockout as specified in the assumption or
certification order.
LABOR
If one has already taken place at the time of the
assumption or 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. In
such case, the assumption/certification results to a
return-to-work of all striking workers even if the
Secretary has not issued a Return to Work Order
(RTWO). (Labor code, Art. 278 (g))
Upon assumption or 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 affairs existing at the time of the filing of the
case. (Overseas Workers’ Welfare Administration v.
Chavez, G.R. No. 169802, 2007).
The assumption or certification also has the effect of
regulating the management prerogative of
determining the assignment or movement of EEs.
Thus, in one case, the Court held the layoff of 94 EEs
pending the resolution of the dispute illegal as it was
violative of the assumption order. (Metrolab v.
Roldan-Confesor, G.R. No. 108855, 1996)
When May the Secretary Assume Jurisdiction
Over a Case or Certify it to the NLRC
Under the law, when in his opinion there exists a
labor dispute causing or likely to cause a strike or
lockout in an industry indispensable to the national
interest, the Secretary [of Labor] may:
1. Assume jurisdiction over the dispute and
decide it, or
2. Certify the same to the NLRC for
compulsory arbitration
Note: Power of DOLE Secretary to assume
jurisdiction over a labor dispute is limited to strikes or
lockouts adversely affecting the national interest.
(Free Telephone Workers Union v. Hon. Minister of
Labor and Employment, G.R. L-58184, 1981)
Rule on Strikes and Lockouts in Hospitals,
Clinics and Medical Institutions (Labor code,
Article 278 (g) (par.2))
GR: Strikes and lockouts in these institutions must be
avoided
But in case a strike or lockout is staged:
1. It shall be the duty of the striking union or
locking-out employer to provide and
maintain an effective skeletal workforce of
medical/ other health personnel whose
services shall be unhampered and
unrestricted to insure the proper and
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adequate protection of life and health of its
patients for the duration of the
strike/lockout
2. DOLE Secretary shall immediately
assume, within 24 hours from knowledge
of the occurrence of the strike/lockout,
jurisdiction over the same or certify it to
NLRC for compulsory arbitration
Assumption of Jurisdiction: Prior Notice Not
Required
The discretion to assume jurisdiction may be
exercise by the Secretary without the necessity of
prior notice or hearing given to any of the parties.
The rationale for his primary assumption of
jurisdiction can justifiably rest on his own
consideration of the exigency of the situation in
relation to the national interests. (Capitol Medical
Center v. Trajano, G.R. No. 155690, 2005).
Return-to-Work-Order (RTWO)
The moment the Secretary of Labor assumes
jurisdiction over a labor dispute in an industry
indispensable to national interest, such assumption
shall have the effect of automatically enjoining the
intended or impending strike. It was not even
necessary for the Secretary of Labor to issue another
order directing a return to work. The mere issuance
of an assumption order by the Secretary of Labor
automatically carries with it a return-to-work order,
even if the directive to return to work is not expressly
stated in the assumption order. (Steel Corporation of
the Philippines v. SCP Employees Union, G.R.
169829-30, 2008)
Note:
● It is always part of the assumption/
certification order even if not expressly
stated.
● RTWO is compulsory in character
Certification to NLRC
“Certified labor disputes” are cases certified [or
referred] to the NLRC for compulsory arbitration
A “national interest” dispute may be certified to the
NLRC even before a strike is declared since the
Labor Code does not require the existence of a strike,
but only of an industrial dispute.
When sitting in a compulsory arbitration certified to
by the DOLE Secretary, the NLRC is not sitting as a
judicial court but as an administrative body charged
with the duty to implement the order of the Secretary.
In such a case, the NLRC does not have the power
to amend the Secretary’s order. (GSISEA v. CIR,
G.R. No. L-18734, 1961)
LABOR
Effects of Defiance of Assumption or
Certification
Non-compliance with the certification order of the
Secretary shall be considered an illegal act
committed in the course of the strike or lockout, and
shall authorize the NLRC to enforce the same under
pain of immediate disciplinary action, including loss
of employment status or payment by the locking-out
ER of backwages or damages, even criminal
prosecution against the liable parties.
Defiant Employers
An assumption order was issued. However, the
company laid off employees, one batch after the
order. Company argues that it is in the employer’s
right to manage his business. Any act committed
during the pendency of the dispute that tends to give
rise to further contentious issues or increase the
tensions between the parties should be considered
an act of exacerbation. One must look at the act itself,
not on speculative reactions. A misplaced recourse is
not needed to prove that a dispute has been
exacerbated. (Metrolab Industries v Roldan-
Confesor, G.R. 108855, February 28, 1996)
Defiant Strikers, Whether Officer or Ordinary
Members of the Striking Union, are Deemed
Dismissed
Once DOLE Sec assumes jurisdiction over a labor
dispute or certifies it to NLRC for compulsory
arbitration, such jurisdiction should not be interfered
with by the application of the application of coercive
processes of a strike or lockout.
Any defiance thereof is a valid ground for the loss of
employment status regardless of whether the defiant
worker is an officer or an ordinary member of the
union Defiance of the assumption order or a return-
to work order by a striking employee, whether a union
officer or a member, is an illegal act and, therefore, a
valid ground for loss of employment status. (Manila
Hotel Employees Association v. Manila Hotel Corp.,
G.R. No. 154591, 2007)
Certification to the NLRC makes the continuation of
the strike illegal, provided that the parties are duly
notified of the certification order. Notice is a
prerequisite even if the order states that it is
“immediately executory.”
Refusal to Receive the Assumption of
Jurisdiction Order Amounts to Defiance
Refusal to receive the Assumption of Jurisdiction
Order (AJO) amounts to defiance of the order, which
makes the continuation of the strike an illegal act,
thus subjecting the strikers to possible termination of
employment.
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The strikers should resume work immediately upon
receipt or constructive receipt of the order. A grace
period may be given but that is not required by the
law. (Azucena Vol. II-A, 9th ed., 2016, p. 646)
Effects of Defying the RTWO
The mere issuance of an assumption order
automatically carries with it a return-to-work order.
(Steel Corporation of the Philippines v. SCP
Employees Union, G.R. Nos. 169829-30, 2008)
From the moment a worker defies a RTWO, he is
deemed to have abandoned his job. (St.
Scholastica's College v. Torres, G.R. No. 100158,
1992)
Those workers who refuse to obey the RTWO are not
entitled to be paid for work not done or to
reinstatement to the positions they have abandoned
by their refusal to return thereto as ordered. (Asian
Transmission Corporation v. NLRC, G.R. No. 88725,
1989)
Where the RTWO 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 the strike is illegal.
Precisely, the purpose of the RTWO is to maintain
the status quo while the determination is being made.
(Union of Filipro Emplees v. Nestle Philippines, G.R.
No. 88710-13, 1990)
Not only union officers but also union members who
defy an RTWO are subject to dismissal.
But to justify the dismissal, the defiance of the RTWO
must be clearly proven. (Batangas Laguna Tayabas
Bus Company v. NLRC, G.R. No. 101858, 1992)
Thus, the alleged or perceived defiance of the RTWO
does not mean automatic dismissal of the defying
employees. Due process must be observed. The
employees must be given the chance to explain and
prove that there was no defiance at all. (Azucena Vol.
II-A, 9th ed., 2016, p. 652)
Actual, Not Payroll, Reinstatement
Under the law, “the striking or locked out employees
shall return to work and the employer shall readmit
them.” The Court has interpreted this to mean, as a
general rule, actual, not payroll, readmission to the
EEs’ positions. (Azucena Vol. II-A, 9th ed., 2016, p.
655)
With respect to the Secretary's Order allowing payroll
reinstatement instead of actual reinstatement for the
individual respondents herein, an amendment to the
previous Orders issued by her office, the same is
usually not allowed. Article 263(g) of the Labor Code
LABOR
aforementioned states that all workers must
immediately return to work and all employers must
readmit all of them under the same terms and
conditions prevailing before the strike or lockout. The
phrase "under the same terms and conditions"
makes it clear that the norm is actual reinstatement.
This is consistent with the idea that any work
stoppage or slowdown in that particular industry can
be detrimental to the national interest. (University of
Immaculate Concepcion, Inc. v. Secretary of Labor,
G.R. No. 151379, 2005)
Thus, placing the striking employees to
substantially equivalent positions could not be
considered reinstatement “under the same terms
and conditions prevailing before the strike.” The
remedy of payroll reinstatement is nowhere to be
found in the orders of the Secretary of Labor and
hence it should not have been imposed by the
public respondent NLRC. Article 263(g) is one
such limitation provided by law. To the extent that
Art. 263(g) calls for the admission of all workers
under the same terms and conditions prevailing
before the strike. It was error for the NLRC to order
the alternative remedies of payroll reinstatement
or actual reinstatement. However, the order did
not amount to grave abuse of discretion. Such
error is merely an error of judgment which is not
correctible by a special civil action for certiorari.
The NLRC was only trying its best to work out a
satisfactory ad hoc solution to a festering and
serious problem. In the light of our rulings on the
impropriety of the substantially equivalent
academic assignments and the need to defer the
changes of teachers until the end of the first
semester, the payroll reinstatement will actually
minimize the petitioners problems in the payment
of full backwages.
(University of Sto. Tomas v. NLRC, G.R. No. 89920,
1990)
Appeal of Secretary’s Order
In “national interest” cases, the Secretary’s Order
may be appealed to the Office of the President.
In “non-national interest” cases, the Order may be
appealed via a Petition for Certiorari (Rule 65).
The parties may at any stage withdraw the case from
compulsory arbitration to bring it instead to a
voluntary arbitrator. (Labor code, Art. 278(h).
Arrest and Detention (Labor code, Art. 281)
GR: No Union members or union organizers may be
arrested or detained for union activities without
previous consultation with the Secretary of Labor.
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Exception: On grounds of national security and public
peace.
Consequences
Generally, the effects of employment are merely
suspended while on strike, the workers do not work
and do not get paid.
Mere participation of a worker in a lawful strike shall
not be a sufficient ground for termination of his
employment, even if a replacement had been hired
during the strike. (Art.279 (a), Labor Code)
Art. 279 sets out the consequences to union officers
and member for (1) participation in a strike and (2)
commission of illegal acts.
The penalty imposable is not always be termination
but maybe suspension. The Court used its judicial
prerogative in the case of PAL v. Brillantes, G.R.
119360, 1990, where it found that both employers
and employees contributed to the volatile
atmosphere.
Forfeiture of Reinstatement
The Court has ruled that a striker who failed to report
for work when one had the opportunity to do so
waived his right to reinstatement. (East Asiatic v.
CIR, G.R. L-29068, 1971)
What are Illegal Acts?
1. Violation of Art. 279(e) of the Labor Code
2. Commission of crimes and other unlawful
acts in carrying out the strike
3. Violation of any order, prohibition, or
injunction issued by the DOLE Secretary
or NLRC in connection with the
assumption of jurisdiction/certification
order under Art. 278(g) of the Labor Code
This enumeration is not exclusive and may cover
other breaches of existing laws.
a. LIABILITY OF UNION OFFICERS
Any union officer who knowingly participates in an
illegal strike and any union officer who knowingly
participates in the commission of illegal acts
during a strike may be declared to have lost his
employment. (Labor Code, Art. 279[e])
Illegal Acts are:
1. Violation of Art. 279(e) of the Labor Code
2. Commission of crimes and other unlawful acts
in carrying out the strike
3. Violation of any order, prohibition, or injunction
issued by the DOLE Secretary or NLRC in
LABOR
connection with the assumption of
jurisdiction/certification order under Art. 278(g)
of the Labor Code (Toyota Motor Phil. Workers
Association v. NLRC, G.R. No. 158789, 2007)
Union officer may not be vicariously held liable for
illegal acts of strikers. The rule is, for an LO and/or its
officer and members to be liable, there must be proof
of actual participation in, authorization or ratification
of, the illegal acts.
Labor Organizations (LOs) are not liable for
unauthorized or unratified acts of its officers. Nor is it
liable for the unlawful acts of its members which
neither its officer nor committees have directed,
aided, or approved.
Shop stewards appointed by the Union, in a shop,
department or plant serves as representative of the
Union, charged with negotiating and adjustment of
grievances of employees with the supervisor of the
employer, is considered an officer. Hence, shop
stewards were similarly dismissed from employment
in the conduct of an illegal strike. (Santa Rosa Coca-
Cola v. Coca-Cola, G.R. 164302-03, 2007)
b. LIABILITY OF ORDINARY WORKERS
Any worker who knowingly participates in the
commission of illegal acts during a strike may be
declared to have lost his employment status. (Art.
279(a), Labor Code)
The individual strikers committing the illegal acts
must be identified. Proof beyond reasonable doubt is
not required, only substantial evidence.
Declaration of Loss of Employment Status
The law grants the employer the option of declaring
a union officer who participated in an illegal strikes as
having lost his employment. Filing a petition to
declare a strike illegal is not a pre-requisite for the ER
to terminate the employment of EEs who commit
illegal acts in the course of the strike. In terminating
the employee, the ER must observe due process.
Entitlement to Backwages
In an economic strike, the strikers are not entitled to
backwages on the principle that a “fair’s day wage”
accrues only for a “fair day’s labor.” (Heilbronn v.
NLU, G.R. L-6454, 1954)
In a ULP strike, if the strike was voluntary, strikers
are not entitled to backwages. In the case of
involuntary strike, strikers are entitled to backwages.
Exception: Voluntary strikers who subsequently
applied for reinstatement but were denied are entitled
to backwages provided the ff. requisites concur:
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1. The strike was legal
2. There was an unconditional offer to return
to work
3. The strikers were refused reinstatement
However, backwages are not granted to employees
participating in an illegal strike they do not render
work for the employer during the period of the illegal
strike. The principle of a "fair day’s wage for a fair
day’s labor" is applicable. 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. For this exception to apply,
it is required that the strike be legal, a situation that
does not obtain in the case at bar (Escario v. NLRC,
G.R. No. 160302, 2010)
Summary: Consequences of Actions in Strike
Participation in Strike
DISMISSABLE?
LEGAL STRIKE ILLEGAL STRIKE
Union Officer
No Yes
Union Member
No No
Commission of Illegal Act in a Strike
DISMISSABLE?
LEGAL STRIKE ILLEGAL STRIKE
Union Officer
Yes Yes
Union Member
Yes Yes
c. LIABILITY OF EMPLOYERS
Any worker whose employment has been terminated
as a consequence of an unlawful lockout shall be
entitled to reinstatement with full backwages. (Labor
Code, Art. 279[a])
In Pari Delicto
If the employer committed illegal lockout and the
employees staged illegal strike, they are both at fault.
The court will restore their respective positions before
the strike. The dismissed strikers will be reinstated
without backwages (Automative Engine Rebuilders
v. Progresibong Unyon ng mga Manggagawa sa
AER, G.R. No. 16138, 2011)
Criminal Liability
The regular courts shall have jurisdiction over any
criminal action under Art. 272 of the Labor Code, but
subject to the required clearance from DOLE on
cases arising out of or related to a labor dispute
LABOR
pursuant to DOJ Circular No. 15 (1982), and Circular
No. 9 (1986)
5. Injunctions
General Rule: No temporary or permanent injunction
or restraining order in any case involving or growing
out of labor disputes shall be issued by any court or
other entity (Labor Code, Art. 225 (e) paragraph 1)
Exceptions:
1. Art. 225 (e) – NLRC can enjoin or restrain
an actual or threatened commission of any
or all prohibited or unlawful acts or to
require the performance of a particular act
in any labor dispute which, if not
restrained or performed forthwith, may
cause grave or irreparable damage to any
party or render ineffectual any decision in
favor of such party
2. Art. 279 – NLRC can enjoin or restrain the
commission of the prohibited acts under
Art. 279.
3. Innocent Bystander Rule – The no-
injunction rule does not apply in cases
where the interests of an innocent
bystander are concerned. Thus, the right
may be regulated at the instance of third
parties or "innocent. bystanders" if it
appears that the inevitable result of its
exercise is to create an impression that a
labor dispute with which they have no
connection or interest exists between
them and the picketing union or constitute
an invasion of their rights. In one case
decided by this Court, we upheld a trial
court's injunction prohibiting the union
from blocking the entrance to a feed mill
located within the compound of a flour mill
with which the union had a dispute
(Liwayway Publications v. Permanent,
G.R. No. L-25003, 1981)
Thus, in a case where the Union declared a strike
against its ER and picketed the premises, preventing
the peaceful passing of other persons not connected
with the ER, the Court upheld the injunction granted
by a regular court (not by the NLRC).
Injunctions by the NLRC
Under Art. 225 (e), the NLRC has the power to enjoin
or restrain any actual or threatened commission of
any or all prohibited or unlawful acts or to require the
performance of a particular act in any labor dispute
which, if not restrained or performed forthwith, may
cause grave or irreparable damage to any party or
render ineffectual any decision in favor of such party.
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Requirements for Injunction to Issue: (Labor

Code, Art. 225 (e))
1. Hearing of testimony of witnesses, with
opportunity for cross-examination, in support
of verified complaint, and testimony in
opposition thereto
2. A finding of fact by the NLRC that: (see
Philippine Association of Free Labor Unions
v. Hon. Tan, G.R. 9115, 1956)
a. Prohibited/unlawful acts will be
committed or have been committed and
will be continued unless restrained
b. Substantial and irreparable injury will
follow
c. Greater injury will be inflicted upon
complainant by the denial of relief than
will be inflicted upon defendants by the
granting of the relief
d. Complainant has no adequate remedy
at law
e. The public officers charged with the
duty to protect complainant’s property
are unable or unwilling to furnish
adequate protection
3. Notice of hearing has been served to
a. All persons against whom relief is
sought
b. Local Chief Executive and other public
officers of the province/city charged
with the duty to protect complainant’s
property
4. Bond in an in an amount to be fixed by the
NLRC

Conditions for Ex-Parte TRO: (Sec. 14, D.O. 40-G-

03, 2010)

A 20-day TRO may be issued ex-parte under the ff.

conditions:
1. Complainant also alleges that, unless a
TRO shall be issued without notice, a
substantial and irreparable injury to his
property will be unavoidable
2. Testimony under oath, sufficient, if
sustained, to justify the issuance of a TRO
after notice and hearing
3. Bond in an amount to be fixed by the
NLRC sufficient to recompense the
improvident/erroneous issuance of such
injunction/TRO
4. TRO shall be effective for no longer than
20 days and shall become void at its
expiration

-- end of topic --

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VI. TERMINATION OF EMPLOYMENT

A. SECURITY OF TENURE
TOPIC OUTLINE UNDER THE SYLLABUS Legal Basis; Security of Tenure
In cases of regular employment, the employer shall
A. SECURITY OF TENURE not terminate the services of an employee except for
1. Categories of Employment as to Tenure a just cause or when authorized by this Title. An
a. Regular employee who is unjustly dismissed from work shall
b. Casual be entitled to reinstatement without loss of seniority
c. Probationary rights and other privileges and to his full backwages,
d. Project inclusive of allowances, and to his other benefits or
e. Seasonal their monetary equivalent computed from the time his
f. Fixed-term compensation was withheld from him up to the time
g. Work-pool employees of his actual reinstatement.
2. Legitimate subcontracting vs. labor-only (Labor Code, Art. 294)
contracting
a. Elements Despite the distinction between the kinds of
b. Trilateral relationship employment, every employee shall be entitled to the
c. Solidary liability same rights and privileges and shall be subject to the
B. TERMINATION BY EMPLOYER same duties as may be granted by law to regular
1. Substantive due process employees during the period of their actual
a. Just causes employment.
b. Authorized causes
2. Procedural due process
a. Two-notice rule 1. Categories of Employment as to
3. Illegal dismissal, reliefs therefrom Tenure
a. Reinstatement
b. Backwages a. Regular
c. Separation pay, doctrine of strained
relations Definition
d. Damages Regular employment is an arrangement where the
e. Attorneys’ fees employee:
f. Liabilities of corporate officers 1. Has been engaged to perform tasks usually
g. Burden of proof necessary or desirable to the usual trade or
C. TERMINATION BY EMPLOYEE business of the employer (by nature of
1. Resignation versus constructive dismissal work);
2. Abandonment 2. Has rendered at least 1 year of service,
D. PREVENTIVE SUSPENSION whether such service is continuous or
E. FLOATING STATUS broken, with respect to the activity in which
F. RETIREMENT he is employed (by length of service); or
3. When an employee is allowed to work after
a probationary period (by probationary
employment) (Labor Code, Art. 295, 296)

Ways of Attaining Regular Employment

1. By nature of work
The employment is deemed regular when
the employee has been engaged to perform
activities which are usually necessary or
desirable in the usual business or trade of
the employer. (Labor Code, Art. 295; Paguio
v. NLRC G.R. No. 147816,2003)

2. By length of service
The casual employee is reckoned as regular
when the employee has rendered at least
one (1) year of service, whether such service
is continuous or broken, with respect to the
activity in which he is employed and his

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employment shall continue while such
activity exists. (Labor Code, Art. 295; Conti
v. NLRC, G.R. No. 119253, 1997)
3. Work beyond the probationary employment
The employment is considered regular when
the employee is allowed to work after a
probationary period. (Labor Code, Art. 296)
4. Repeated Hiring
When the "seasonal" workers are
continuously and repeatedly hired to perform
the same tasks or activities for several
seasons or even after the cessation of the
season, this length of time may likewise
serve as badge of regular employment.
(Universal Robina Sugar Milling Corporation
v. Acibo, G.R. No. 186439, 2014)
Note: Regular employment does not mean
permanent employment. A regular employee may be
terminated for just and authorized causes.
Test to determine regular employment
The primary standard of determining regular
employment is the reasonable connection between
the particular activity performed by the employee to
the usual trade or business of the employer. The
connection can be determined by considering the
nature of work performed and its relation to the
scheme of the particular business or trade in its
entirety. The repeated and continuing need for the
performance of the job has been deemed sufficient
evidence of the necessity, if not indispensability of
the activity to the business. (Lopez v. MWSS, G.R.
No. 154472,2005)
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. (URC v. Catapang, G.R. No. 164736,
2005).
b. Casual
Nature
General Rule: Casual employment involves activities
performed which are not usually necessary or
desirable in the usual business or trade of the
employer, or not considered as project nor seasonal.
Otherwise stated, casual employees perform
activities which are incidental to the business of the
employer.
LABOR
Exception: If he has rendered at least 1 year of
service, whether such service is continuous or
broken, he is considered a REGULAR employee with
respect to the activity in which he is employed and
his employment shall continue while such activity
exists. (Labor Code, Art. 295)
c. Probationary
Nature
Probationary employment exists where the
employee, upon his engagement, is made to undergo
a trial period during which the employer determines
his fitness to qualify for regular employment based on
reasonable standards made known to him at the time
of his engagement (Labor Code, Art. 296)
Probationary employee is one who is on trial by an
employer during which the employer determines
whether or not he is qualified for permanent
employment. (International Catholic Migration
Comm. v. NLRC, G. R. No. 72222,1989)
While the employer observes the fitness, propriety,
and efficiency of a probationer to ascertain whether
he is qualified for permanent employment, the
probationer, on the other hand, seeks to prove to the
employer that he has the qualifications to meet the
reasonable standards for permanent employment.
(Tamson’s Enterprises, Inc. v. CA, GR No. 192881,
2011)
Probationary employment must have been expressly
agreed upon. If there is no such agreement, the
employment is considered regular (Sampaguita Auto
Transport Corp. v. NLRC, G.R. No. 197384, 2013)
Duration of Probationary Employment
General Rule: Probationary employment shall not
exceed 6 months from the date the employee started
working (Labor Code, Art. 296)
Probation ends 180 days from the starting date.
(Mitsubishi Motors Corporation v. Chrysler Phils,
G.R. No. 148738, 2004)
When an employer renews a contract of employment
after the lapse of the six-month probationary period,
the employee thereby becomes a regular employee.
No employer is allowed to determine indefinitely the
fitness of its employees. (Labor Code, Art. 291,
Malicdem v. Marulas Industrial Corp., GR No.
204406, 2014)
Exceptions:
1. Covered by an apprenticeship agreement
stipulating a longer period (Labor Code, Art.
296)
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2. Voluntary agreement of parties (especially
when nature of work requires a longer
period).
But there are restrictions to the agreement:
a. The employer and employee may extend by
agreement the probationary period of
employment beyond 6 months, but it cannot
be ad infinitum. (Mariwasa Manufacturing v.
Leogardo, G.R. No. 74246, 1989)
b. Double/ Successive Probation is Not
Allowed. The evil sought to be prevented is
to discourage scheming employers 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 employees (Holiday
Inn Manila v. NLRC, G.R. No. 109114, 1993)
c. The employer gives the employee a second
chance to pass the standards set (Mariwasa
Manufacturing v. Leogardo, G.R. No. 74246,
1989)
d. When a longer period is required and
established by company policy
If not one of the exceptional circumstances above
is proven, the employee whose employment exceeds
6 months is undoubtedly a regular employee (San
Miguel v. Del Rosario, G.R. No. 168194 & 168693,
2005)
Special Rule Pertaining to Full-time Instructors
and teachers: 3 consecutive years of satisfactory
service pursuant to DepEd 2010 Revised Manual
of Regulations for Private Schools
Standards Must Be Made Known to Employee
In all cases of probationary employment, the
employer shall make known to the employee the
standards under which he will qualify as a regular
employee at the time of his engagement. Where no
standards are made known to the employee at that
time, he shall be deemed a regular employee.
(Aberdeen Court, Inc. v. Agustin, G.R. No. 149371,
2005; IRR Labor Code, Sec. 6[d], Rule I, Book V)
General Rule: 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.
LABOR
Exceptions:
When the job is self-descriptive in nature such as in
the case of maids, cooks, drivers, or messengers.
(Abbott Laboratories, Philippines v. Alcaraz, GR No.
192571, 2013)
Probationary managerial employee
A managerial role essentially connotes an exercise
of discretion, the quality of effective management can
only be determined through subsequent assessment.
The case of probationary employees whose tasks
involve the application of discretion and intellect,
such as – to name a few – lawyers, artists, and
journalists (Abbott Laboratories, Philippines v.
Alcaraz, GR No. 192571, 2014)
d. Project
Nature
One whose employment has been fixed for a specific
project or undertaking, the completion of which has
been determined at the time of engagement of the
employee. (Labor Code, Art. 295)
For an employee to be considered project-based, the
employer must show compliance with two (2)
requisites, namely that:
1. The employee was assigned to carry out a
specific project or undertaking; and
2. The duration and scope of which were
specified at the time they were engaged for
such project. (Gadia v. Sykes Asia, Inc., GR
No. 209499, 2015)
Project Employees v. Regular Employees
General Rule: Project employees are not regular
employees, as their services are needed only when
there are projects to be undertaken.
Exception: Where the employment or project
employees is extended long after the supposed
project has been finished, the employees are
removed from the scope of project employees and
are considered regular employees. (Lao
Construction v. NLRC, G.R. No. 116781, 1997)
When a Project Employee Becomes a Regular
Employee
1. When there is continuous re-hiring of project
employees even after the cessation of a
project for the same tasks or nature of tasks
(the employee must be continuously rehired
without gaps and intervals); and
2. The tasks performed by the alleged project
employee are vital, necessary, and
indispensable to the usual business or trade
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of the employer (Maraguinot v. NLRC, G.R.
No. 120969, 1998)
Duration of Work
One year duration on the job is pertinent in deciding
whether a casual employee has become regular or
not, but it is not pertinent to a seasonal or project
employee.
“Day Certain” Rule.
Project employment does not end on an exact date,
but on the completion of the project. If the termination
is brought about by the completion of the contract or
phase thereof, no prior notice is required. (Sec. 2 (III),
Rule XXIII, Book V of the Omnibus Rules
Implementing the Labor Code)
This is because completion of work or project
automatically terminates employment, in which case,
the employer is, under the law, only obliged to render
a report to the DOLE on the termination of
employment. (Cioco, Jr. v. C.E. Construction Corp.,
GR No. 156748 & 156896,2004)
Rule for Construction Industry
Generally, length of service provides a fair yardstick
for determining when an employee initially hired on a
temporary basis becomes a permanent one, entitled
to the security and benefits of regularization. But this
standard will not be fair, if applied to the construction
industry, simply because construction firms cannot
guarantee work and funding for its payrolls beyond
the life of each project. And getting projects is not a
matter of course. (Uy Construction v. Trinidad, G.R.
No. 183250, 2010)
Project Employment v. Regular Employment
PROJECT REGULAR
EMPLOYMENT EMPLOYMENT
The services of project Regular employees
employees are enjoy security of tenure
coterminous with and are legally entitled
project or any phase to remain in the service
thereof any may be of their employer and to
terminated upon the hold on their work or
end or completion of position until their
the project or phase services are terminated
thereof for which they by any of the modes of
were hired. termination of service
under the Labor Code
As to termination, due If termination is for just
process complied with cause, due process
even if no prior notice of applicable to Art. 297
termination is served applies. If due to
authorized causes, Art.
298 & 299 followed.
LABOR
Note: A regular employee cannot be at the same time
a project employee (Magcalas v. NLRC, G.R. No.
100333,1997)
e. Seasonal
Nature
Where the work or services to be performed is
seasonal in nature and the employment is for the
duration of the season. (Art. 295, Labor Code)
Farm workers generally fall under the definition of
seasonal employees. Seasonal employees may
be considered as regular employees.
Regular Seasonal Employees
Regular seasonal employees are those called to
work from time to time. The nature of their
relationship with the employer is such that during
the off season, they are temporarily laid off; but re-
employed during the summer season or when their
services may be needed. They are in regular
employment because of the nature of their job, and
not because of the length of time they have
worked. (Gapayao v. Fulo, GR No. 193493, 2013)
Employment Relationship During Off-Season
During off-season, the EER is not severed; the
seasonal employee is merely considered on leave
of absence without pay. Workers who have
performed the same tasks every season for
several years are considered regular employees
for their respective tasks. (Hacienda Fatima v.
National Federation of Sugarcane Workers-Food
and General Trade, G.R. No. 149440, 2003)
When Seasonal Employees Considered as
Regular Employees
1. Where there is a reasonable connection
between the particular activity performed by
the employee in relation to the usual trade or
business of the employer; and
2. When seasonal workers are repeatedly
engaged to perform the same tasks for more
than one season (Zamudio v. NLRC, G.R.
No. 76723, 1990)
One year duration on the job is pertinent in deciding
whether a casual employee has become regular or
not, but it is not pertinent to a seasonal or project
employee. Passage of time does not make a
seasonal worker regular or permanent. (Mercado v.
NLRC, G.R. No. 79869, 1991)
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When Seasonal Employees NOT Considered as Rules:

Regular Employees
Seasonal workers who have worked for one season
only (Hacienda Fatima v. National Federation of
Sugarcane Workers-Food and General Trade, G.R.
No. 149440, 2003);
When seasonal employees are free to contract their
services with other farm owners (Mercado, Sr. v.
NLRC, G.R. No. 79869, 1991)
1. Notice of termination is not necessary in
fixed-term employment (Pangilinan v.
General Milling Corporation, G.R. 149329,
2004)
2. Employee is deemed regular if the contract
failed to state the specific period of
employment (Poseidon Fishing v. NLRC,
G.R. No. 168052, 2006)

f. Fixed-term 3. Termination prior to lapse of fixed-term

contract should be for a just or authorized
Nature cause (Anderson v. NLRC, G.R. No.
Fixed-term employment was repealed by Labor 111212, 1996);
Code. But the Civil Code, a general law, allows fixed-
term employment. (Brent School, Inc. v. Zamora, 4. Liability for illegal dismissal of fixed-term
G.R. No. 48494, 1990) employees is only for the salary for
unexpired portion (New Sunrise Metal v. Pia,
Elements of valid fixed-term employment G.R. No. 171131, 2007)
1. The fixed period of employment was
knowingly and voluntarily agreed upon by Probationary Employment v. Fixed-Term
the parties without any force, duress, or Employment
improper pressure being brought to bear PROBATIONARY FIXED-TERM
upon the employee and absent any other EMPLOYMENT EMPLOYMENT
circumstances vitiating his consent; The parties intend to No such intention exists
make their relationship and the relationship
2. It satisfactorily appears that the employer regular after the lapse automatically
and the employee dealt with each other on of the period. terminates at the
more or less equal terms with no moral expiration of the period.
dominance exercised by the former or the
latter. g. Work-pool employees

These indications, which must be read together, Nature

make the Brent doctrine applicable only in a few Generally, employees may or may not be members
special cases wherein the employer and employee of a work pool. A work pool refers to a group of works
are on more or less in equal footing in entering into from which an employer like a construction company
the contract. deploys or assigns to its various projects or any
phase/s thereof.
The reason for this is: when a prospective employee,
on account of special skills or market forces, is in a Types of Employees in the Construction
position to make demands upon the prospective Industry:
employer, such prospective employee needs less
protection than the ordinary worker. Lesser 1. Non-project employees
limitations on the parties’ freedom of contract are Those employed without reference to any
thus required for the protection of the employee. (Fuji particular construction project or phase of a
Television Network v. Espiritu, G.R. Nos. 204944-45, project. Said employees are considered
2014) regular employees; or

General Rule: Fixed-Period Employment is valid so 2. Project employees

long as the criteria is complied with. Those employed in connection with a
particular construction project or phase
Exception: Fixed-term employment will not be thereof and such employment is
considered valid where, from the circumstances, it is coterminous with each project or phase of
apparent that periods have been imposed to preclude the project to which they are assigned.
acquisition of tenurial security by the employee. (Exodus International Construction v.
(Dumpit-Murillo v. CA, G.R. No. 164652, 2007) Biscocho, G.R No. 166109, 2011)

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Mere membership in the work pool does not result in LIMITED liability
the workers’ becoming regular employees by reason (principal solidarily
of that fact alone. (Abesso Construction and Dev’t liable with contractor Principal’s liability
Corp., v. Ramirez, G.R. No. 141168, 2006). or subcontractor only extends to all rights,
However, a project employee who is a member of a when latter fails to duties and liabilities
work pool may attain regular status as a project comply with under labor standard
employee. requirements as to laws including the right
unpaid wages and to self-organization
2. Legitimate subcontracting vs. labor- other labor standards
only contracting violations.
PERMISSIBLE PROHIBITED
Contracting or Subcontracting
It refers to an arrangement whereby a principal
agrees to farm out to a contractor the performance or a. Elements
completion of a specific job or work within a definite
or predetermined period, regardless of whether such Legitimate Contracting
work is to be performed or completed within or Contracting or subcontracting shall be legitimate if all
outside the premises of the principal. (DO 174-17, the following circumstances occur:
Sec. 3(c))
1. The contractor is engaged in a distinct and
Job Contracting v. Labor-Only Contracting independent business and undertakes to
LABOR-ONLY perform the job or work on its own
JOB CONTRACTING
CONTRACTING responsibility according to its own method;
Has sufficient 2. The contractor or subcontractor has
substantial capital OR Has NO substantial substantial capital and/or investment;
investment in capital OR investment 3. The contractor undertakes to perform the
machinery, tools or in the form of job, work or service on its own responsibility,
equipment directly or machinery, tools or according to its own manner and method,
intended to be related equipment and free from control and direction of the
to the job contracted principal in all matters connected with the
performance of the work except as to the
Carries an results thereof;
 and
independent business Has no independent
different from the business The Service Agreement ensures compliance with all
employer’s the rights and benefits for all of the employees of the
Undertakes to perform contractor or subcontractor under Labor laws. (D.O.
the job under its own Performs activities No. 174-17, Sec. 8)
account and directly related to the
responsibility, FREE main business of the Labor-Only Contracting
from the principal’s principal Labor only contracting shall refer to an arrangement
control where the contractor or subcontractor recruits,
supplies, or places workers to perform a job or work
Principal treated as for a principal, and the elements hereunder:
NO EER except when 1. The contractor does not have substantial
direct employer of the
the contractor or capital; or the contractor or subcontractor
person recruited in all
subcontractor fails to does not have investments in the form of
instances (contractor is
pay the employees’ tools, equipment, machineries; and the
deemed agent of the
wages. contractor’s or subcontractor’s employees
principal)
recruited and placed are performing
activities which are directly related to the
main business operation of the principal; or
2. The contractor or subcontractor does not
exercise the right of control over the work of
the employee (D.O. No. 174-17, Sec. 5)

Labor-only contracting exists when any of the two

elements is present. Only one of either (i) substantial
capital or (ii) performing activities related to the main
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business – is required for Labor-Only Contracting to
exist. Performing activities directly related to the
principal business of the employer is only one of the
two indicators that "labor-only" contracting exists; the
other is lack of substantial capital or investment.
Labor-only contracting exists when any of the two
elements is present. (Quintanar, et al. v. Coca-Cola,
G.R. No. 210565, 2016)
Substantial Capital
It refers to capital stocks and subscribed
capitalization in the case of corporations, tools,
equipment, implements, machineries, and work
premises, actually and directly used by the contractor
or subcontractor in the performance or completion of
the job, work or service contracted out (D.O. No. 18-
02, Sec. 5)
It also refers to paid-up capital stocks/shares of at
least Five Million Pesos (P5,000,000.00) in the case
of corporations, partnerships and cooperatives; in the
case of single proprietorship, a net worth of at least
Five Million Pesos (P5,000,000.00). (D.O. No. 174-
17, Sec. 3,¶(i))
Capital stocks and subscribed capitalization in the
case of corporations, tools, equipment, implements,
machineries and work premises, actually and directly
used by the contractor or subcontractor in the
performance or completion of the job, work or service
contracted out.
The law does not require both substantial capital and
investment in the form of tools, equipment and
machineries. This is clear from the use of the
conjunction “or.” If the intention was to require the
contractor to prove that he has both capital and the
requisite investment, then the conjunction “and”
should have been used. (New Golden Builders &
Dev’t Corp v. CA, et al., G.R. No. 154715, 2003)
Net Financial Contracting Capacity (NFCC)
It refers to the formula to determine the financial
capacity of the contractor to carry out the job, work or
services sought to be undertaken under a Service
Agreement. NFCC is current assets minus current
liabilities multiplied by K, which stands for contract
duration equivalent to: 10 for one year or less; 15 for
more than one (1) year up to two (2) years; and 20
for more than two (2) years, minus the value of all
outstanding or ongoing projects including contracts to
be started. (D.O. 18-A, Sec. 3[g])
Effects of Labor-Only Contracting
A finding by a competent authority of labor-only
contracting shall render the principal jointly and
severally liable with the contractor to the latter’s
employees in the same manner and extent that the
principal is liable to employees directly hired by
LABOR
him/her as provided in Art. 106 of the Labor Code, as
amended. (D.O. 18-A, Sec. 27)
A finding of commission of any of the prohibited
activities in Section 7, or violation of either Sections
8 or 9 hereof, shall render the principal the direct
employer of the employees of the contractor or
subcontractor, pursuant to Article 109 of the Labor
Code, as amended. (D.O. 18-A, Sec. 27)
Note: Labor-Only Contracting is legally wrong and
prohibited because it is an attempt to evade the
obligations of an employer. If proven, it amounts to
employment avoidance (Convoy Marketing v. Albia,
G.R. No. 194969, 2015)
Posting of Bond
An employer or indirect employer may require the
contractor or subcontractor to furnish a bond equal to
the cost of labor under contract, on 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. (D.O. No. 174-17, Sec.
3[a], Labor Code, Art. 108)
Test to determine the existence of an
independent contractor
Whether one claiming to be an independent
contractor has contracted to do the work according to
his own methods and without being subject to the
control of the employer, except only as to the results
of the work. (SMC v. Aballa, G.R. No. 149011, 2005)
An individual can be an independent contractor for
himself. (Sonza v. ABS-CBN, G.R. No. 138051,
2004)
Right to Control
Right reserved to the person for whom the services
of the contractual workers are performed, to
determine not only the end to be achieved, but also
the manner and means to be used in reaching that
end. (D.O. No. 18-A, Sec. 3[i])
Factors to consider in determining whether
Contractor is carrying on an Independent
Business:
It is not enough to show substantial capitalization or
investment in the form of tools, equipment,
machineries, and work premises, among others, to
be considered as an independent contractor. In
determining the existence of an independent
contractor relationship, several factors might be
considered:
1. Nature and extent of work
2. Skill required
3. Term and duration of the relationship
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4. Right to assign the performance of specified
pieces of work
5. Control and supervision of the workers
6. Power of the employer with respect to the
hiring, firing, and payment of workers of the
contractor
7. Control of the premises
8. Duty to supply premises, tools, appliances,
materials, and labor
9. Mode, manner, and terms of payment.
(Vinoya v. NLRC, GR No. 126586)
Illicit Forms of Employment Arrangements
The following are declared prohibited for being
contrary to law or public policy:
1. When the principal farms out work to a
“Cabo”
“Cabo” refers to a person or group of
persons or to a labor group which, under the
guise of labor organization, cooperative, or
any entity, supplies workers to an employer,
with or without any monetary or other
consideration, whether in the capacity of
agent of the employer or as ostensible
independent contractor. (D.O. No. 174-17,
Sec. 3[b])
2. Contracting out of job or work through an in-
house agency.
3. Contracting out of job or work through an in-
house cooperative which merely supplies
workers to the principal.
4. Contracting out of a job or work by reason of
a strike or lockout whether actual or
imminent.
5. Contracting out of a job or work being
performed by union members and such will
interfere with, restrain or coerce employees
in the exercise of their rights to self-
organization as provided in Article 259 of the
Labor Code, as amended
6. Requiring the contractor's/subcontractor's
employees to perform functions which are
currently being performed by the regular
employees of the principal.
7. Requiring the contractor's/subcontractor's
employees to sign, as a precondition to
employment or continued employment, an
antedated resignation letter; a blank payroll;
a waiver of labor standards including
minimum wages and social or welfare
benefits; or a quitclaim releasing the
principal or contractor from liability as to
payment of future claims; or require the
employee to become member of a
cooperative.
LABOR
8. Repeated hiring by the
contractor/subcontractor of employees
under an employment contract of short
duration.
9. Requiring employees under a
contracting/subcontracting arrangement to
sign a contract fixing the period of
employment to a term shorter than the term
of the Service Agreement unless the
contract is divisible into phases for which
substantially different skills are required and
this is made known to the employee at the
time of engagement.
10. Such other practices, schemes or
employment arrangements designed to
circumvent the right of workers to security of
tenure. (D.O. No. 174-17, Sec. 6)
b. Trilateral relationship
a. Contractor / Subcontractor
Any person or entity, including a cooperative,
engaged in a legitimate contracting or subcontracting
arrangement.
b. Contractor’s Employee
One employed by a contractor or subcontractor to
perform or complete a job, work or service pursuant
to an arrangement between the latter and a principal
c. Principal
Any employer who puts out or farms out a job, service
or work to a contractor or subcontractor (D.O. No.
174-17, Sec. 3)
Relationships that exist in legitimate contracting
or subcontracting:
a. An employer-employee relationship between the
contractor and the employees it engaged to
perform the specific job, work or service being
contracted; and
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b. A contractual relationship between the principal ii. The place of work and terms and
and the contractor as governed by the provisions conditions of employment, including
of the Civil Code. (D.O. No. 18-A-11, Sec. 5, ¶ 1) a statement of the wage rate applicable
to the individual employee; and
Governing Laws iii. The term or duration of employment that
c. Between the principal and the contractor the must be co-extensive with the Service
major laws applicable to their work relationship Agreement or with the specific phase of
are the Civil Code and pertinent commercial work for which the employee is engaged.
laws.
d. Between the contractor and his employees the b. The contractor shall inform the employee of
major laws applicable to their work relationship the foregoing terms and conditions of
are the Civil Code and special labor laws. employment in writing on or before the first
e. Between the principal and the contractor’s day of his/her employment.
employees, no employer-employee relationship
exists, because the contractor himself is the Service Agreement between the principal and
employer. (Azucena, The Labor Code with the contractor v. security guards
Comments and Cases Volume I, 306, 2013) Required Provisions:
DO 174-17: Service DO 150-16: The
The law recognizes and resolves this situation in Agreement between SSC/PSA and/or the
favor of employees in order to protect their rights and the principlal and the principle shall produce
interests from the coercive acts of the employer. In contractor. or submit the original
fact, the employee who is constructively dismissed copy of the Service
may be allowed to keep on coming to work. (McMer Agreement when
Corp., Inc. v. NLRC, G.R. No. 193421, 2014) directed to do so by
the Regional Director
Rights of contractor’s employees or his/her duly
All contractor’s/subcontractor’s employees, shall be authorized
entitled to security of tenure and all the rights and representative.
privileges as provided for in the Labor Code, as The Service The Service
amended, to include the following: Agreement shall Agreement shall
f. Safe and healthful working conditions; include the following: stipulate, among
d. Labor standards such as but not limited to service others:
incentive leave, rest days, overtime pay, holiday a. The specific a. Specific
pay, 13th month pay, and separation pay as may description of the description of the
be provided in the Service Agreement or under job or work being kind or nature of
the Labor Code; subcontracted, security job, work,
e. Retirement benefits under the SSS or retirement including its term or service being
plans of the contractor, if there is any; or duration; subcontracted;
f. Social security and welfare benefits; and b. The place or work b. Place of work and
g. Self-organization, collective bargaining and and terms and terms and
peaceful concerted activities, including the right conditions conditions
to strike. (D.O. No. 174-17, Sec. 10) governing the governing the
contracting contracting
Required Contracts arrangement, to arrangement
4. Employment contract between the contractor include the agreed which shall include
and its employee. amount of the the agreed
a. Notwithstanding any oral or written contracted job or amount of security
stipulations to the contrary, the contract work as well as the services to be
between the contractor and its employee standard rendered and the
shall be governed by the provisions of administrative fee standard
Articles 279 and 280 of the Labor Code, as of not less than administrative fee
amended. 10% of the total of not less than
contract cost. 20% of the total
It shall include the following terms and c. A provision on the contract cost;
conditions: issuance of bon/s c. Basic equipment
i. The specific description of the job, work as defined in Sec. to be provided by
or service to be performed by 3(a) renewable the SSC/PSA
the employee.

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every year. (Sec. (handgun, rights of workers, it shall be mandatory for all persons
11, DO 174-17) handheld radio); or entities, including cooperatives, acting as
d. Automatic contractors to register with the Regional Office of the
crediting provision Department of Labor and Employment (DOLE) where
which shall it principally operates. (D.O. No. 174-17, Sec. 14)
immediately give
effect to the Validity of Certificate of Registration of
common provision Contractors
in wage orders The contractor shall be deemed registered only on
that prescribed the date of issuance of its Certificate of Registration.
wage increases The Certificate of Registration shall be effective for 2
and the Service years, unless cancelled after due process. The same
Agreements shall shall be valid in the region where it is registered.
be deemed
amended In case the contractor has Service Agreement or
accordingly; operates outside the jurisdiction of the RTC where it
e. Provisions which is registered, it shall request a duly authenticated
shall ensure that copy of its certificate of registration from the DOLE
the principle and Regional Office where it seeks to operate, together
the SSC/PSA shall with a copy of its Service Agreement/s in the area, for
uphold the rights purposes of monitoring compliance with the rules
and provide all (D.O. No 174-17, Sec. 20)
benefits of security
guards; Note: Failure to register shall give rise to the
f. Provision on the presumption that the contractor is engaged in labor-
NFCC of only contracting. (Aklan v. San Miguel Corporation,
SSC/PSA; G.R. No. 168537, 2008)
g. Undertaking that
the SSC/PSA shall c. Solidary liability
directly remit
monthly Labor Code Provisions on Liability
employers’ share
and employees’ Principal as Direct Employer: Finding of Labor-
contribution to Only Contracting
SSS, ECC, There is "labor-only" contracting where the person
PhilHealth, Pag- supplying workers to an employer does not have
IBIG; substantial capital or investment in the form of tools,
h. Undertaking theat equipment, machineries, work premises, among
expenses for any others, and the workers recruited and placed by such
training required person are performing activities which are directly
by the principal or related to the principal business of such employer. In
other government such cases, the person or intermediary shall be
instrumentalities considered merely as an agent of the employer who
shall be shall be responsible to the workers in the same
shouldered by the manner and extent as if the latter were directly
principal. (Sec. 4, employed by him. (Labor Code, Art. 106)
DO 150-16)
In the event that there is a finding that the contractor
or subcontractor is engaged in labor-only contracting
Note: Administrative fee is different for security under Section 5 and other illicit forms of employment
guards which must not be less than 20% of thetotal arrangements under Section 6 of these Rules, the
contract cost. principal shall be deemed the direct employer of the
contractor's or subcontractor's employees. (D.O. No.
Registration of Contractors and Subcontractors 174-17, Sec. 7)
Mandatory Registration and Registry of Legitimate
Contractors. Consistent with the authority of the Therefore: The principal shall be deemed an
Secretary of Labor and Employment to restrict or employer of the contractual employee and shall be
prohibit the contracting out of labor to protect the directly liable, in the following cases:

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1. Labor-only contracting; and
2. Prohibited contracting arrangements
(Broadway Motors v. NLRC, G.R. No.
78382, 1987)
Principal as Direct Employer: Violations of Rights
of Employees or Required Contracts
A finding of violation of either Sections 10 (Rights of
Contractor’s Employees) or 11 (Required Contracts)
shall render the principal the direct employer of the
employees of the contractor or subcontractor,
pursuant to Art. 109 of the Labor Code (D.O. No. 147-
17, Sec. 12)
Solidary Liability in Legitimate Contracting:
Violations of the Labor Code and Social
Legislation
Every employer or indirect employer shall be held
responsible with his contractor or subcontractor for
any violation of any provision of this Code. For
purposes of determining the extent of their civil
liability under this Chapter, they shall be considered
as direct employers. (Labor Code, Art. 109)
In the event of violation of any provision of the Labor
Code, including the failure to pay wages, there exists
a solidary liability on the part of the principal and the
contractor for purposes of enforcing the provisions of
the Labor Code and other social legislations, to the
extent of the work performed under the employment
contract. (D.O. No. 174-17, Sec. 9)
Solidary Liability for Wages and Money Claims
for Performed Under the Contract
If the liability is for failure to pay the minimum wage,
or the service incentive leave or other benefits
derived from or provided for by law, the principal is
equally liable with the contractor.
In the event that the contractor or subcontractor fails
to pay the wages of his employees in accordance
with this Code, the employer shall be jointly and
severally liable with his contractor or subcontractor to
such employees to the extent of the work performed
under the contract, in the same manner and extent
that he is liable to employees directly employed by
him (Labor Code, Art. 106)
Should the indirect employer be constrained to pay
the workers, it can recover whatever amount it paid,
in accordance with the terms of the service contract
between itself and the contractor (Rosewood
Processing v. NLRC, G.R. Nos. 116476-84, 1998).
The joint and several liability of the contractor and the
principal is mandated by the Labor Code to assure
compliance with the provisions therein including the
minimum wage. The contractor is made liable by
LABOR
virtue of his status as direct employer. The principal,
on the other hand, is made the indirect employer of
the contractor's employees to secure payment of
their wages should the contractor be unable to pay
them. Even in the absence of an EER, the law itself
establishes one between the principal and the
employees of the agency for a limited purpose i.e. in
order to ensure that the employees are paid the
wages due them. (Lapanday Agricultural Dev’t Corp.
v. CA, G.R. No. 112139, 2000)
Solidary Liability of Principal and Employer in
cases of Illegal Dismissal
Joint and several with the employer, but with the right
to reimbursement from the employer-contractor
Wage differentials only to the extent where the
employee performed the work under the principal
General Rule: Principal and contractor are solidarily
liable.
Exception: When the contractor has already
received from the Principal the correct amount of
wages and benefits, but failed to turn them over to
the workers, the contractor should solely bear the
liability for the underpayment of wages and non-
payment of overtime pay. (Meralco v. NLRC, G.R.
No. 145402, 2008)
If the liability is invested with punitive character, such
as an award for backwages and separation pay
because of an illegal dismissal, the liability should be
solely with the contractor in the absence of proof that
the principal conspired with the contractor in the
commission of the illegal dismissal (See Meralco v.
NLRC, G.R. No. 145402, 2008)
Effect of Termination of Employment
The termination of employment of the
contractor's/subcontractor's employee prior to the
expiration of the Service Agreement shall be
governed by Articles 297, 298, and 299 of the Labor
Code.
In case the termination of employment is caused by
the pre-termination of the Service Agreement not due
to authorized causes under Article 298, the right of
the contractor's/subcontractor's employee to unpaid
wages and other unpaid benefits including
unremitted legal mandatory contributions, e.g., SSS,
PhilHealth, Pag-IBIG, ECC, shall be borne by the
party at fault, without prejudice to the solidary liability
of the parties to the Service Agreement.
Where the termination results from the expiration of
the Service Agreement, or from the completion of the
phase of the job or work for which the employee is
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engaged, the latter may opt to wait for re-employment

within three (3) months to resign and transfer to
another contractor-employer.

Failure of the contractor to provide new employment

for the employee shall entitle the latter to payment of
separation benefits as may be provided by law or the
Service Agreement, whichever is higher, without
prejudice to his/her entitlement to completion
bonuses or other emoluments, including retirement
benefits whenever applicable. The mere expiration of
the Service Agreement shall not be deemed as a
termination of employment of the
contractor's/subcontractor's employees who are
regular employees of the latter.

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Comparative Table: D.O. No. 18-A-11 vs. D.O. No. 174-17

DOLE D.O. 18-A-11 DOLE D.O. 174-17
Coverage
Expressly includes cooperatives No express inclusion of cooperatives, but should still
be included
Trilateral Relationship
Trilateral Relationship was emphasized. Deleted provision on trilateral relationship.
Principal   Contractor   Employees
On Contracting and Subcontracting
Recognition of Legitimacy: Legitimate Job Requirements: Permissible Contracting
Contracting Distinct and independent business; own manner and
DOLE-registered method of performance of job or work
Distinct and independent business; own manner and Substantial capital AND investment (in the form of
method in performing job, work, service; free from tools, equipment, machinery and supervision)
control and direction of principal except results [new] Free from control and/or direction of the
Substantial capital and/or investment principal
Service Agreement (SA) complies with labor law Service Agreement (SA) complies with labor law
rights and benefits rights and benefits
Substantial Capital
Php3,000,00.00 Php5,000,00.00
Net Financial Contracting Capacity (NFCC)
The formula to determine the financial capacity of the No provision on NFCC
contractor to carry out the job, work or services sought
to be undertaken under a SA.
Co-terminus Employment
Allowed. No co-terminus employment (for regular)
The term or duration of employment that must be co- Mere expiration of SA shall not be deemed as a
extensive with the SA or with the specific phase of termination of employment of the contractor’s
work for which the employee is engaged. employees who are regular employees of the latter.
Labor-Only Contracting
Prohibited Absolutely Prohibited
Labor-only Contracting: 1st Kind Labor-only Contracting: 2nd kind
The contractor does not have substantial capital The contractor does not have substantial capital
- or – - or -
The contractor does not have investments in the form The contractor does not have investments in the form
of tools, equipment, machinery, work premises, of tools, equipment, machineries, supervision,
among others, work premises among others,
- and - - and -
The employees recruited and placed are performing The contractor’s or subcontractor’s employees
activities which are usually necessary or desirable to recruited and placed are performing activities which
the operation of the company, or directly related to the are directly related to the main business operation of
main business of the principal within a definite or the principal.
predetermined period, regardless of whether such
job, work or service is to be performed within or
outside the premises of the principal.
Labor-only Contracting: 2nd kind Labor-only Contracting: 2nd kind
The contractor does not exercise the right to control The contractor does not exercise the right to control
the performance of the work of employee. over the performance of the work of the employee.
Other Prohibitions
Other Prohibitions Other Illicit Forms of Employment Arrangements
(Not done in good faith and legitimate business (Good faith and legitimate business reason no longer
reason) a defense)
N/A [new] Contracting through an in-house cooperative
which merely supplies workers to the principal

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N/A [new] Practices, schemed or employment

arrangements designed to circumvent Security of
Tenure
N/A [new] Contracting out of a job or work by reason of a
strike or lockout whether actual or imminent
Results in termination/reduction of regulars and Not listed
reduction of work hours; or
Results in termination/reduction of regulars and
reduction/splitting of bargaining unit
Refusal to give provide SA and employment contracts Not listed
in bargaining unit of principal’s certified bargaining
agent to sole and exclusive bargaining agent
Engaging/maintaining by principal of subcontracted Not listed
employees in excess of CBA or set by Industry
Tripartite Council
Contracting out of a job/work/service that is Not listed
necessary/ desirable or directly related to the
business/ operation of the principal by reason of
strike/lockout
When Principal May Be Liable
“Duties of the principal,” as “indirect employer.” Principal deemed direct employer when there is
evidence of:
1. Labor-only contracting;
2. Other illicit forms of employment arrangements;
3. Violation of employee’s rights
4. Violation of required contracts
Non-impairment of existing contracts
Benefits being enjoyed by parties to existing - No provision
contracting arrangements shall not be impaired by
this D.O.
Employment Termination
If caused by pre-termination of SA not due to Same
authorized causes, right to unpaid wages and benefits
borne by party at fault.
Employee may opt for payment of separation benefits Employee may opt to wait for re-employment within 3
as may be provided by law or the SA, without months to resign and transfer to another employer.
prejudice to his/her entitlement to the completion [of] Failure to provide new employment, employee shall
bonuses or other emoluments, including retirement be entitled to separation benefits as may be provided
benefits whenever applicable. by law or the SA, whichever is higher, without
prejudice to entitlement completion of bonuses or
other emoluments, including retirement benefits
whenever applicable.
Separation Benefits
Separation pay is contingent on its inclusion in the SA If not re-employed after 3-month wait, separation
or may apply only in authorized causes outline in the benefits are given as may be provided by law or the
Labor Code. SA.
Certificate of Registration
Registration/Renewal Fee: Php 25,000 Php 100,00
Validity: Three (3) years Two (2) years
DOLE Programs
N/A Mandatory Enrollment to DOLE Programs: Principal
and Contractors/Subcontractors

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Department Circular No. 01-17
D.O. 174, Series of 2017, applies only to trilateral
relationship which characterizes contracting or
subcontracting arrangement. It does not
contemplate to cover information technology-
enabled services involving entire or specific
business process.
NOTE: Construction Industry NOT covered by
mandatory registration provision of D.O. 174-17
The DOLE, through its regional offices, shall not
require contractors licensed by PCAB in the
Construction Industry to register under D.O. 18-A,
Series of 2011. Findings of violation/s on labor
standards and occupational health and safety
standards shall be coordinated with PCAB for its
appropriate action, including the possible
cancellation/suspension of the contractor’s license.
Contractors licensed by PCAB which are engaged
in other contracting or subcontracting arrangement
in addition to, or other than construction activities
shall be required to register under D.O. No. 174-17
Except for the registration requirements of D.O. 174-
17, contracting or subcontracting arrangements in
the private security industry shall be governed by
D.O. No. 150, Series of 2016.
D.O. No. 174-17 applies only to trilateral relationship
which characterizes contracting or subcontracting
arrangement. It does not contemplate to cover
contractual relationships such as in contract of sale
or purchase, contract of lease, contract of carriage,
contract growing/growership agreement, toll
manufacturing, contract of management, operation
and maintenance and other contracts governed by
the Civil Code and other special laws.
D.O. No. 174-17 does not also cover the contracting
out of job or work to a professional, or individual with
unique skills and talents who himself or herself
performs the job or work for the principal.
Non-Applicability of DO 174-17 to BPO/LPO/KPO
1. Business Process Outsourcing
2. Knowledge Process Outsourcing
3. Legal Process Outsourcing
4. IT Infrastructure Outsourcing
5. Application Development
6. Hardware and/or Software Support
7. Medical Transcription
8. Animation Services
9. Back Office Operations/Support
LABOR
Applicability/Non-Applicability of DO 174-17 to
Construction Industry; Coordination with PCAB-
CIAP
Pursuant to PD No. 1746, Series of 1980, licensing
and the exercise of regulatory powers over the
construction industry is lodged with the Philippine
Contractors Accreditation Board (PCAB) of the
Construction Industry Authority of the Philippines
(CIAP)
Applicability/Non-Applicability of DO 174-17 to
Private Security Agencies
Except for the registration requirements as provided
for in DO 174-17, contracting or subcontracting
arrangements in the private security industry shall
be governed by DO 15-16
Non-Applicability of DO 174-17 to Other Contractual
Relationships
DO 174-17 applies only to trilateral relationship
which characterizes contracting or subcontracting
arrangement. It does not cover: (governed by CC)
1. Contract of Sale or Purchase
2. Contract of Lease
3. Contract of Carriage
4. Contract of Growing/ Growership
Agreement
5. Toll Manufacturing
6. Contract of Management, Operation, and
Maintenance
DO 174-17 does not cover the contracting out of job
or work to a professional, or individual with unique
skills and talents who himself performs the job or
work for the principal.
B. TERMINATION BY EMPLOYER
Note: In September 2015, DOLE issued D.O. 147-
15, Amending the IRR of Book VI of the Labor Code
Requisites for Valid Dismissal
1. Substantive Due Process: The dismissal
must be for cause; and
2. Procedural Due Process: The employee
must be afforded an opportunity to be heard
and defend himself (Fujitsu Computer
Products v.CA, G.R. No. 158232, 2005)
1. Substantive Due Process
a. Just Causes
Grounds:
1. Serious misconduct or Willful disobedience
by the employee of the lawful orders of his
employer or representative in connection
with his work (work-related)
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2. Gross and Habitual neglect by the
employee of his duties
3. Fraud or Willful breach by employee of the
Trust reposed in him by his employer or
duly authorized representative (not mere
suspicion)
4. Commission of a crime or offense by the
employee against the person of his
employer or any immediate member of his
family or duly authorized representative
5. Other analogous cases
Serious Misconduct or Willful Disobedience
(Labor Code, Article 297[A])
Serious Misconduct
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)
Elements of Serious Misconduct
1. There must be misconduct;
2. The misconduct must be of such grave and
aggravated character;
3. Relates to the performance of the
employee’s duties; and
4. A showing that the employee becomes unfit
to continue working for the employer. (D.O.
No. 147-15, Sec. 5.2[a])
Examples
1. Reckless Driving. The irregularities or
infractions committed by the bus driver,
including his tendency to speed up during
his trips, his reckless driving, his picking up
passengers in the middle of the road, his
racing with other buses and his jostling for
vantage positions constitute as serious
misconduct (Sampaguita Auto Transport v.
NLRC & Sagad, G.R. No. )
2. The charge of drug abuse inside the
company’s premises and during working
hours (Bughaw v. Treasure Island, G.R. No.
173151)
3. Sexual harassment;
4. Fighting within company premises;
5. Accusatory and inflammatory language
used by an employee to an employer or
superior (Nissan Motors Phils. v. Angelo,
G.R. No. 164181, 2011)
6. Falsification of time records;
LABOR
7. Gross immorality;
8. Sexual intercourse inside company
premises and during work hours (Imasen
Philippine Manufacturing Corp v. Alcon,
G.R. No. 194884)
9. Theft of company property
Habitual Infractions
A series of irregularities when put together may
constitute serious misconduct (Gustilo v. Wyeth
Phil., G.R. No. 149629)
Note: In one case, the Court considered the
substantial amount of loss caused to the company
in holding that the infraction of the employee
constituted serious misconduct, despite it only being
gross and not habitual. (LBC Express v. Mateo, G.R.
No. 168215, 2009)
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. Fitness for continued
employment cannot be compartmentalized into tight
little cubicles of aspects of character, conduct and
ability separate and independent of each other.
While it may be true that petitioner was penalized for
his previous infractions, this does not and should not
mean that his employment record would be wiped
clean of his infractions. After all, the record of an
employee is a relevant consideration in determining
the penalty that should be meted out since an
employee's past misconduct and present behavior
must be taken together in determining the proper
imposable penalty. (Merin v. NLRC, G.R. No.
171790, 2008)
Elements of Willful Disobedience
1. There must be disobedience or
insubordination;
2. The disobedience or insubordination must
be willful or intentional characterized by a
wrongful and perverse attitude;
3. The order violated must be reasonable,
lawful, and made known to the employee;
and
4. The order must pertain to the duties which
he has been engaged to discharge. (D.O.
No. 147-15)
Note: This ground presupposes an act that is willful
in character and implies a wrongful intent. The
wrongful and perverse attitude must be present.
Examples When There Was No Wrongful Intent
5. In a case, where an employee lent his ID The
employee lent his ID to the driver who forgot his
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ID, to facilitate entry into the company premises.
The court said that there was no wrongful intent.
In fact, the employee who lent his ID to the other
worker was for the benefit of the employer.
(Dongon v. Rapid Movers and Forwarders Co.,
Inc., G.R. No. 163431, 2013)
6. A teacher held various teaching positions in
other schools without asking permission from
her superior, which is against the school’s rules.
However, it was ruled that the teacher’s
performance was apparently unaffected by her
external teaching engagements, as she was
found by the grievance committee to be one of
the better professors and was even offered the
Chairmanship of her college. Also, the fact that
the teacher merely wanted to alleviate her
family’s poor financial conditions is a
justification that the school failed to refute.
(Moreno v. San Sebastian College-Recoletos,
G.R. No. 175283, 2008)
Gross and Habitual Neglect (Labor Code, Article
297[b])
Gross Neglect
An absence of that diligence that an ordinarily
prudent man would use in his own affairs (DOLE
Manual, Sec. 4343.01[27])
Habitual Neglect
Implies repeated failure to perform one’s duties over
a period of time (JGB and Associates, Inc. v. NLRC,
G.R. no. 109390, 1996)
Elements of Gross and Habitual Neglect:
1. There must be neglect of duty; and
2. The negligence must be both gross and
habitual in character. (D.O. No. 147-15,
Sec. 5.2[c])
Exception: Where the negligence was gross, but
not habitual, the SC still dismissed the erring
employee. The SC agreed that the resultant
damage caused by the employee’s negligence
should be considered in the dismissal of the
employee. In this case, the damage went as far as
claiming the life of a child. (School of Holy Spirit v.
Taguim, G.R. No. 165565, 2008)
Note: Actual damage, loss, or injury is not an
essential requisite (DOLE Manual, Sec. 4343.01[2])
Forms of neglect of duty
1. Habitual tardiness and absenteeism;
2. Abandonment of work
3. Failure to report for work or absence
without valid or justifiable reason; and
LABOR
4. Clear intention to sever EER is manifested
by some overt acts (Tamblot Security and
General Services v. Item, G.R. No. 199314,
2015)
Abandonment vis-à-vis Illegal Dismissal
General Rule: Abandonment inconsistent with the
immediate filing of a complaint for illegal dismissal
Tamblot Security v. Item, G.R. No. 199314, 2015)
Exception: The above rule has no application where
the complainant does not pray for reinstatement and
asks for separation pay instead (Jo v. NLRC, G.R.
No. 121605, 2000)
Examples
1. Poor performance
Previous infractions by the employee
should have been acted upon appropriately
by the employer before terminating the
former.
As a general concept, “poor performance”
is equivalent to inefficiency and
incompetence in the performance of official
duties. An unsatisfactory rating can be just
cause for dismissal only if it amounts to
gross and habitual neglect of duties. Thus,
the fact that an employee’s performance is
found to be poor and unsatisfactory does
not necessarily mean that the employee is
grossly and habitually negligent of his
duties. (Universal Staffing Inc. v. NLRC,
G.R. No. 177576, 2008)
2. Habitual Tardiness
Habitual tardiness is a form of neglect of
duty. Lack of initiative, diligence, and
discipline to come to work on time everyday
exhibit the employee’s deportment towards
work. Habitual and excessive tardiness is
inimical to the general productivity and
business of the employer. This is especially
true when the tardiness and/or
absenteeism occurred frequently and
repeatedly within an extensive period of
time. (RB Michael Press v. Galit, G.R. No.
153510, 2008)
3. Gross negligence includes gross
inefficiency
Article 290 of the Labor Code provides that
one of the just causes for terminating an
employment is the employee's gross and
habitual neglect of his duties. This cause
includes gross inefficiency, negligence and
carelessness (Century Iron Works, Inc. v.
Bañas, G.R. No. 184116, 2013)
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Fraud or Willful Breach of Trust (Labor Code,
Article 297[b])
Elements 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
employees’ work. (D.O. No. 147-15, Sec.
5.2[d])
Elements of Loss of Confidence
1. There must be an act, omission or
concealment;
2. The act, omission or concealment justifies
the loss of trust and confidence of the
employer to the employee;
3. The employee concerned must be holding
a position of trust and confidence;
4. The loss of trust and confidence should not
be simulated;
5. It should not be used as a subterfuge for
causes which are improper, illegal, or
unjustified; and
6. It must be genuine and not a mere
afterthought to justify an earlier action taken
in bad faith. (D.O. No. 147-15, Sec. 5.2[e])
Loss of trust and confidence to be a valid cause for
dismissal must be based on a willful breach of trust
and founded on clearly established facts. The basis
for the dismissal must be clearly and convincingly
established but proof beyond reasonable doubt is
not necessary. (Prudential Guarantee and
Assurance Employee Labor Union v. NLRC, G.R.
No. 185335, 2012)
Guidelines for the application of the doctrine of loss
of confidence
1. Loss of confidence should not be
simulated.
2. It should not be used as a subterfuge for
causes which are improper, illegal or
unjustified;
3. It may not be arbitrarily asserted in the face
of overwhelming evidence to the contrary;
and
4. It must be genuine, not a mere afterthought
to justify earlier action taken in bad faith
(Coca-Cola Bottlers, Phils. Inc. v.
Kapisanan ng Malayang Manggagawa sa
Coca-Cola, G.R. No. 148205, 2005)
LABOR
5. Unless duly proved or sufficiently
substantiated otherwise, impartial tribunals
should not rely only on the statement of the
employer that it has lost confidence in its
employee (Perez v. Philippine Telegraph
and Telephone Co., G.R. No. 152048,
2009)
The breach must be related to the performance of
the employee’s function. (Enriquez v. BPI, G.R. No.
172812, 2008)
Examples
1. A treasury Sales Division Head of a bank
personally and actively participated in the
diversion of bank clients' funds to products
of other companies that yielded interests
higher than what the employer bank
offered. The managerial employee was
found to be dealing with customers in a
manner with conflict of interest (Genuino v.
NLRC, G.R. Nos. 142732-33 & 142753-54,
2007)
2. A managerial employee authorized the
transfer of funds without the knowledge or
consent of the Board and in direct
contravention of the company's Distribution
Rules constitutes valid and legal ground
sufficient enough to warrant her dismissal.
The fact that the employee did not use the
funds for her personal gain and that the
transfer thereof redounded to the benefit of
the company is of no moment. (Gaite v.
Filipino Society of Composers, Authors and
Publishers, Inc., G.R. No. 219324, 2018)
Positions of trust and confidence
Managerial employees: Those vested with the
powers or prerogatives to lay down management
policies and to hire, transfer, suspend, lay-off, recall,
discharge, assign or discipline employees or
effectively recommend such managerial actions.
Fiduciary Rank and file: Those who in the normal
and routine exercise of their functions, regularly
handle significant amounts of money or property.
Examples are cashiers, auditors, property
custodians, etc. (Prudential Guarantee and
Assurance Employee Labor Union v. NLRC, G.R.
No. 185335, 2012)
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2. The act or omission must be voluntary

MANAGERIAL FIDUCIARY RANK- and/or willful on the part of the employees.
AND-FILE (D.O. No. 147-15, Sec. 5.2[f])
Mere existence of a Proof of involvement in
basis for the belief of the alleged events in Conviction or prosecution of the employee is not
employee’s guilt question required; necessary. A criminal case need not be actually
(Grand Asian Shipping mere uncorroborated filed. Commission of acts constituting a crime is
Lines v. Galvez, G.R. assertions and sufficient. (Nicolas v. NLRC, G.R. No. 113948,
No. 178184, 2014) accusations are not 1996)
Employment for a long enough (Etcuban v.
time is counted against Sulpicio Lines, G.R. Immediate Members of the Family
the employee No. 148410, 2005) 1. Between husband and wife;
(Salvador v. Philippine 2. Between parents and children;
Mining Service Corp., 3. Among other ascendants and descendants;
G.R. No. 148766, 4. Among brothers and sisters, whether of the
2003) full or half-blood (see Family Code, Art.
150)
Confidential employees are those charged with
custody and protection of employer’s property like a Acquittal in criminal case arising from misconduct
cashier (this is different from the “confidential Notwithstanding petitioner’s acquittal in the criminal
employees” in labor relations) case for qualified theft, the company had adequately
established the basis for the company’s loss of
When an employee accepts a promotion to a confidence as a just cause to terminate. As opposed
managerial position or to an office requiring full trust to the "proof beyond reasonable doubt" standard of
and confidence, she gives up some of the rigid evidence required in criminal cases, labor suits
guarantees available to ordinary workers infractions require only substantial evidence to prove the
which is committed by others would be overlooked validity of the dismissal (Paulino v. NLRC, G.R. No.
or condoned or penalties mitigated may be visited 176184, 2012)
with more sever disciplinary action. (Tirazona v. CA,
G.R. No. 169712, 2008) Past Infractions Rule
Previous offenses may be used as justification for
Criminal and labor proceedings are distinct and dismissal from work only if the past infractions are
separate from each other. Each requires a different related to the subsequent offense upon which the
quantum of proof, arising though they are from the basis of termination is decreed. (Salas v. Aboitiz
same set of facts or circumstances. An employee’s One Inc., G.R. No. 178236, 2008)
acquittal in a criminal case does not automatically
preclude a determination that he has been guilty of Past offenses/infractions can be taken into account
acts inimical to the employer’s interest resulting in in determining the appropriate penalty. If the past
loss of trust and confidence. Corollarily, the ground infractions have already been penalized, the
for the dismissal of an employee does not require employer can no longer punish the employee for the
proof beyond reasonable doubt; as noted earlier, the second time for the same offense, otherwise it is
quantum of proof required is merely substantial going to be analogous to double jeopardy. (Santos
evidence. (Lopez v. Alturas Group of Companies, v. Integrated Pharmaceutical, Inc., G.R. No.
G.R. No. 191008, 2011) 204620, 2016)

Commission of a Crime or Offense: (Labor Code,
Article 297[d])
Commission of a crime or offense
Refers to an offense by the employee against the
person of his employer or any immediate member of
his family or his duly authorized representative.
Analogous Cases (Labor Code, Article 297[e])
Requisites
1. There must be an act or omission similar to
those specified just causes;
2. The act or omission must be voluntary
and/or willful on the part of the employees
(D.O. No. 147-15, Sec. 5.2[g])

Elements Analogous Cases must be due to the voluntary

1. There must be an act or omission and/or willful act or omission of the employee.
punishable/ prohibited by law; and (Cosmos Bottling Corp. v. Fermin, G.R. No. 193676,
2012)

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D.O. No. 147-15 (new qualification)
No act or omission shall be considered as
analogous cause unless expressly specified in he
company rules and regulations or policies.
Analogous Cases must be due to the voluntary
and/or willful act or omission of the employee.
(Cosmos Bottling Corp. v. Fermin, G. R. No.
193676, 2012)
Examples
1. Abandonment
2. Violation of safety rules
3. Gross inefficiency
4. Wrongful acts of employee against the
company
5. Violation of code of discipline
6. Failure to heed an order not to join an illegal
picket
7. Immorality
8. Sexual harassment
Other Just Causes under other Labor Code
provisions
1. Union officers who, with knowledge,
participate in an illegal strike.
2. Any employee who commits an illegal act
during a strike
3. Strikers who violate orders, prohibitions or
injunctions issued by the NLRC, the
Secretary of Labor and Employment or the
President
4. Violation of union security clause in the
CBA
Doctrine of Incompatibility
Where the employee has done something that is
contrary or incompatible with the faithful
performance of his duties, his employer has a just
cause for terminating his employment. (Manila
Chauffer’s League v. Bachrach Motor, G.R. No. L-
47138, 1940)
Immorality
Disgraceful or immoral conduct can be used as a
basis for termination of employment (Santos, Jr. v.
NLRC, G.R. No. 115795, 1998)
The act of engaging in extramarital affairs was
specifically provided for by the cooperative’s
Personnel Policy as one of the grounds for
termination of employment and said act raised
concerns to the cooperative as the Board received
numerous complaints and petitions from the
cooperative members themselves asking for the
removal of Bandiola because of his immoral
LABOR
conduct, hence, immorality (extramarital affair)
justified terminating the employment by the
employer (Alilem Credit Cooperative v. Bandiola,
Jr., G.R. No. 173489, 2013)
Pregnancy out of wedlock
When the law speaks of immoral or, necessarily,
disgraceful conduct, it pertains to public and secular
morality; it refers to those conducts which are
proscribed because they are detrimental to
conditions upon which depend the existence and
progress of human society.
To stress, pre-marital sexual relations between two
consenting adults who have no impediment to marry
each other, and, consequently, conceiving a child
out of wedlock, gauged from a purely public and
secular view of morality, does not amount to a
disgraceful or immoral conduct. (Leus v. St.
Scholastica, G.R. No. 187226, 2015)
Valid Dismissal Because of Application of Union
Security Clause
Union security clauses in the collective bargaining
agreements, if freely and voluntarily entered into,
are valid and binding. Thus, the dismissal of an
employee by the company pursuant to a labor
union’s demand in accordance with a union security
agreement does not constitute unfair labor practice.
(Malayang Samahan ng mga Manggagawa sa M.
Greenfield v. Ramos, G.R. No. 113907, 2001; Villar
v. Inciong, G.R. No. L-50283-84, 1983)
Although a union security clause in a CBA may be
validly enforced and dismissal pursuant thereto may
likewise be valid, this does not erode the
fundamental requirement of due process. The
reason behind the enforcement of union security
clauses which is the sanctity and inviolability of
contracts cannot override one’s right to due process.
(MSMG-UWP v. Ramos, G.R. No. 113907, 2000)
Where the employer compelled the employee to go
on forced leave upon recommendation of the union
for alleged violation by the employee of the closed–
shop agreement, the NLRC correctly ordered the
reinstatement of the employee and directed the
union to pay the wages and fringe benefits which
employees failed to receive as a result of her forced
leave and to pay attorney’s fees. (Manila Mandarin
Employees Union v. NLRC, G.R. No. 76989,,1987)
Where the employer dismissed his employees in the
belief in good faith that such dismissal was required
by the closed – shop provisions of the collective
bargaining contract with the union, he may not be
ordered to pay back compensation to such
employees although their dismissal is found to be
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illegal. (Confederated Sons of Labor v. Anakan
Lumber, G.R. No. L-12503, 1960)
Bona Fide Occupational Qualification (BFOQ)
General Rule: Where the job itself necessarily
requires a particular qualification, then the job
applicant or worker who does not possess it may be
disqualified on that basis and such will not be
considered unlawful discrimination.
Exception: To justify a BFOQ, the employer must
prove that:
1. The employment qualification is reasonably
related to the essential operation of the job
involved; and
2. There is factual basis for believing that all
or substantially all persons meeting the
qualification would be unable to properly
perform the duties of the job (Star Paper
Corporation, et. al. vs. Simbol, et. al., G.R.
No. 164774, 2006).
The Supreme Court had upheld the dismissal of a
cabin crew member for being unable to trim down
his weight. The Court classified such weight
standards as a BFOQ, which is defined as the
employment qualifications imposed by an employer
such as sex, religion, or national origin as a limiting
factor in performing a certain job. In the instant case,
PAL is a common carrier and from the nature of its
business and for reasons of public policy, it is bound
to observe extraordinary diligence for the safety of
the passengers it transports. A BFOQ on weight
standards in this case was deemed to be necessary
and justified given the normal operations of PAL. (t|||
(Yrasuegui v. Pilippine Airlines, Inc., G.R. No.
168081, 2008)
b. Authorized Causes
Grounds:
1. Redundancy
2. Retrenchment
3. Introduction of Labor-saving devices
4. Cessation or Closure of Operation of the
Establishment or Undertaking
5. Disease
Change of Ownership
A mere change in the equity composition of a
corporation is neither a just nor an authorized cause
that would legally permit the dismissal of the
corporation's employees en masse. (SME Bank,
Inc. v. De Guzman, G.R. Nos. 184517 & 186641,
2013)
LABOR
Installation of Labor-Saving Device
This refers to the installation of machinery to effect
economy and efficiency in the employer’s method of
production (Edge Apparel, Inc. v. NLRC, G.R. No.
121314, 1998)
Elements of a valid termination based on
installation of labor-saving devices
1. There must be introduction of machinery,
equipment or other devices;
2. The introduction must be done in good faith;
3. The purpose for such introduction must be
valid such as to save on cost, enhance
efficiency and other justifiable economic
reasons;
4. There is no other option available to the
employer than the introduction of
machinery, equipment or device and the
consequent termination of employment of
those affected thereby; and
5. There must be fair and reasonable criteria
in selecting employees to be terminated.
(DO 147-15)
Due Process Requirements for Termination Due
to Installation of Labor-Saving Device
1. The employer served a written notice both
to the employees and to the DOLE at least
30 days prior to the intended date of
termination; and
2. The employer pays the employees
separation pay equivalent to one month pay
or at least one month pay for every year of
service, whichever is higher, a fraction of at
least six months being considered as one
whole year. (Labor Code, Art. 298)
Redundancy
Redundancy exists where the services of an
employee 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, 1991)
A position has become superfluous as an outcome
of a number of factors such as over hiring of
workers, decreased volume of business, dropping of
a particular product line or service activity previously
manufactured or undertaken by the enterprise (thus
it only requires superfluity not duplication of work
(Asian Alcohol Corp. v. NLRC, G. R. No. 131108,
1999)
Elements of Redundancy
1. There must be superfluous positions or
services of employees;
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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 pattern, feasibility studies/
proposal, on the viability of the newly
created positions, job description and the
approval by the management of the
restructuring. (DO 147-15)
Requisites for Implementation of a Valid
Redundancy Program
1. A written notice served on both the
employees and the DOLE 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
4. Fair and reasonable criteria in ascertaining
what positions are to be declared
redundant and accordingly abolished.
(Lopez Sugar Corporation v. Franco, G.R.
No. 148195, 2005)
Proof of good faith and fair and reasonable
criteria to substantiate redundancy
1. New staffing pattern;
2. Feasibility studies / proposal on the viability
of the newly created positions;
3. Job description; and
4. Approval by the management of the
restructuring (General Milling Corporation
v. Violeta L. Viajar, G.R. No. 181738, 2013)
Retrenchment
Retrenchment is one of the economic grounds
resorted to by an employer to terminate employment
primarily to avoid or minimize business losses.
(Azucena, The Labor Code with Comments and
Cases Volume II-B, 884, 2016)
The characterization of an employee’s services as
no longer necessary or sustainable, and therefore,
properly terminable, is an exercise of business
judgment on the part of the employer, and that the
wisdom or soundness of such characterization or
decision is not subject to discretionary review,
LABOR
provided of course that violation of law or arbitrary
or malicious action is not shown. (Becton Dickinson
Phils., Inc. v. National Labor Relations Commission,
G.R. Nos. 159969 & 160116, 2005)
A reduction of the number of regular working days is
valid where the arrangement is resorted to by the
employer 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 lack of raw materials. (I|||
(Linton Commercial Co., Inc. v. Hellera, G.R. No.
163147, 2007)
Elements of Retrenchment or Downsizing
1. The retrenchment must be reasonably
necessary and likely to prevent business
losses;
2. The losses, if already incurred, are not
merely de minimis, but substantial, serious,
actual and real, or if only expected, are
reasonably imminent.
3. The expected or actual losses must be
proved sufficient and convincing evidence
such as financial statements (audited by an
independent firm) over a span of several
years OR some reasonable period of time,
and not merely the actual year of business
loss;
4. The retrenchment must be in good faith for
the advancement of its interest and not to
defeat or circumvent the employees’ right to
security of tenure; and
5. There must be fair and reasonable criteria
in ascertaining who would be dismissed
and who would be retained among the
employees, such as status, efficiency,
seniority, physical fitness, age, and
financial hardship for certain workers. (D.O.
No. 147-15, Sec. 5.4[c])
Two kinds of losses to justify retrenchment
1. Incurred losses which are substantial,
serious, actual and real; and
2. Expected losses – which are reasonably
imminent. (Sanoh Fulton Phils. Inc. v.
Bernardo & Tagohoy, G.R. No. 187214,
2013)
a. The phrase “to prevent losses” means
that retrenchment or termination from
the service of some employees is
authorized to be undertaken by the
employer sometime before the losses
anticipated are actually sustained or
realized. Actual losses need not set in
prior to retrenchment (Cajucom VII v.
TPI Phil. Cement Corp., G.R. No.
149090, 2005)
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Fair and Reasonable Criteria
In selecting employees to be dismissed, fair and
reasonable criteria must be used, such as but not
limited to: (a) less preferred status (e.g., temporary
employee), (b) efficiency and (c) seniority.
Example when Criteria was not Used
[The employer] demonstrated arbitrariness in the
selection of which of its employees to retrench. By
discarding the cabin crew personnel’s previous
years of service and taking into consideration only 1
year’s worth of job performance for evaluation, PAL
virtually did away with the concept of seniority,
loyalty and past efficiency, and treated all cabin
attendants as if they were on equal footing. (FASAP
v. Philippine Airlines, Inc., G.R. No. 178083, 2008;
G.R. No. 178083, 2009)
“Last In, First Out” Rule (LIFO)
When there are two or more employees occupying
the same position in the company affected by the
retrenchment program, the last one employed will
necessarily be the first to go (Maya Farms
Employees Organization v. NLRC, G.R. No.
106256, 1994)
However: No law mandates LIFO. A host of relevant
factors come into play in determining cost-efficient
measures in choosing the employees who will be
retained or separated to save the company from
closing chop. In determining these issues,
management has to enjoy a pre-eminent role.
(Asian Alcohol Corp. v. NLRC, G.R. No. 131108,
1999)
In case of installation of labor-saving devices,
redundancy and retrenchment, the LIFO rule shall
apply, except when an employee volunteers to be
separated from employment (D.O. No. 147-15, Sec.
5.4)
Hobson’s Choice
No choice at all; a choice between accepted what is
offered or having nothing at all.
In Asufrin, Jr. v. San Miguel Corp. (G.R. No. 156658,
2004), the employees were given the choice either
to voluntarily retire, be retrenched without benefits,
or be dismissed without receiving any benefit at all.
Due Process Requirements of the Retrenchment
Program:
1. The retrenchment is necessary to prevent
or minimize losses and such losses are
proven;
2. Written notice is given to the employees
and the Department of Labor and
LABOR
Employment at least one month before the
intended date of retrenchment;
3. Payment of separation pay equivalent to at
least one month pay or at least ½ month
pay for every year of service, whichever is
higher;
4. The employer exercise its prerogative to
retrench employees in good faith for the
advancement of its interest; and
5. Fair and reasonable criteria in ascertaining
who will be dismissed or retained.
(Azucena, The Labor Code with Comments
and Cases Volume II-B, 886-887, 2016)
Burden of Proof
The employer bears the burden of proving the
existence of the imminence of substantial losses
with clear and satisfactory evidence that there are
legitimate business reasons justifying a
retrenchment. (Mount Carmel Employees Union v.
Mount Carmel College, G.R. No. 187261, 2014)
No evidence can best attest to a company's
economic status other than its financial statement.
The condition of business losses is normally shown
by audited financial documents l like yearly balance
sheets and profit and l loss statements as well as
annual income tax returns. Financial statements
must be prepared and signed by independent
auditors. Unless duly audited, they can be assailed
as self-serving documents. It is not enough that only
the financial statements for the year during which
retrenchment was undertaken, are presented in
evidence. For it may happen that while the company
has indeed been losing, its losses may be on a
downward trend, indicating that business I s picking
up and retrenchment, being a drastic move, should
no longer be resorted to.
While it is true that the Court has ruled that financial
statements audited by independent external
auditors constitute the normal method of proof of the
profit and loss performance of a Company, financial
statements, in themselves, do not suffice to meet
the stringent requirement of the l aw that the losses
must be substantial, continuing and without any
immediate prospect of abating. Oriental Petroleum
and Minerals Corp. v. Fuentes, G.R. No. 151818,
2005)
Difference between redundancy and
retrenchment
Redundancy: the position of the employee has
become superfluous even if the business does not
suffer from financial problems.
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Retrenchment: always linked with losses; a cost-
cutting measure made necessary by business
reverses.
(Azucena, The Labor Code with Comments and
Cases Volume II-B, 893, 2016)
Closure or Cessation of Operation of The
Establishment or Undertakings
Closure of business is the reversal of fortune of the
employer whereby there is a complete cessation of
business operations and/or an actual locking-up of
the doors of establishment, usually due to financial
losses. Closure of business as an authorized cause
for termination of employment aims to prevent
further financial drain upon an employer who cannot
pay anymore his employees since business has
already stopped. (J.A.T. General Services v.
National Labor Relations Commission, G.R. No.
148340, 2004)
Elements of Closure or Cessation of Operation
1. There must be a decision to close or cease
operation of the enterprise by the
management;
2. The decision was made in good faith; and
3. There is no other opinion available to the
employer except to close or cease
operations. (DO 147-15)
Due Process Requirements for Termination Due
to Closure or Cessation of Operation
1. Service of written notice to the employees
and to the DOLE at least one month before
the intended date thereof;
2. The cessation of or withdrawal from
business operations must be bona fide in
character; and
3. When Closure is not due to losses.
Payment to the employees of termination
pay amounting to at least one-half (1/2)
month pay for each year of service, or one
month pay, whichever is higher. (Azucena,
The Labor Code with Comments and
Cases Volume II-B, 903)
4. When Closure is due to losses. Article 283
of the Labor Code does not obligate an
employer to pay separation benefits when
the closure is due to serious losses. To
require an employer to be generous when it
is no longer in a position to do so, in our
view, would be unduly oppressive, unjust,
and unfair to the employer. (GSWU-
NAFLU-KMU v. National Labor Relations
Commission, G.R. No. 165757, 2006)
LABOR
Closure Not Due to Losses
In cases of closure not due to losses, it must NOT
be in BAD FAITH. (Azucena, The Labor Code with
Comments and Cases Volume II-B, 902)
Guidelines in Closure
1. Closure or cessation of operations of
establishment or undertaking may either be
partial or total.
2. Closure or cessation of operations of
establishment or undertaking may or may
not be due to serious business losses or
financial reverses. However, in both
instances, proof must be shown that:
a. It was done in good faith to advance the
employer's interest and not for the
purpose of defeating or circumventing
the rights of employees under the law or
a valid agreement; and
b. A written notice on the affected
employees and the DOLE is served at
least one month before the intended
date of termination of employment.
c. The employer can lawfully close shop
even if not due to serious business
losses or financial reverses but
separation pay, which is equivalent to at
least one month pay as provided for by
the Labor Code as amended, must be
given to all the affected employees.
3. If the closure or cessation of operations of
establishment or undertaking is due to
serious business losses or financial
reverses, the employer must prove such
allegation in order to avoid the payment of
separation pay. Otherwise, the affected
employees are entitled to separation pay.
4. The burden of proving compliance with all
the above-stated falls upon the employer.
(Manila Polo Club Employees’ Union v.
Manila Polo Club, Inc., G.R. No. 172846,
2013)
Closure of Department
The closure of a department or division of a
company constitutes retrenchment by, and not
closure of, the company itself. (Waterfront Cebu City
Hotel v. Jimenez, G.R. No. 174214, 2012)
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Retrenchment vs. Redundancy vs. Closure Computation of Separation Pay

Retrenchment Redundancy Closure Computation of Separation Pay

Reduction of The service The reversal Installation of labor- 1 month pay or 1

personnel of an of the fortune saving devices month pay for every
usually due to Employee is of the Redundancy year of service
poor financial in excess of employer whichever is higher.
returns so as what is whereby there Retrenchment to 1 month pay or at
to cut down on required by is a complete prevent losses least 1/2 month pay
costs of an enterprise cessation of for every year of
operations in business Closures or cessation service whichever is
terms of operations of operations of higher.
salaries and and/or actual establishments or
wages locking-up of undertaking NOT due
the doors of to serious business
the losses or financial
establishment, reverses
usually due to
financial Disease
losses
Resorted to To save Aims to Closures or cessation No separation pay
primarily to production prevent of operations due to
avoid or costs further serious business
minimize financial drain losses or financial
business upon the reverses
losses Employer
Employee is Employee is In case of Note: A fraction of at least 6 months is considered 1
entitled to entitled to closure of year
separation pay separation business not
of 1 month pay pay of 1 due to serious Temporary Closure / Bona Fide Suspension of
or 1/2 month month pay or business Operations (Labor Code, Art. 301)
pay per year of 1 month pay losses, the A bona fide suspension of business operations for
service, per year of employer not more than 6 months does not terminate
whichever is service, pays the employment.
higher whichever is employees
higher terminated After 6 months, the employee may be recalled to
separation work or be permanently laid off. (SKM Art Craft Corp
pay of 1 v. Bauca, G.R. No. 171282, 183484, 2013)
month pay or
1/2 month pay An employer may validly suspend operations for at
per year of most 6 months. Not accepting the workers back to
service, work after the 6-month period is equivalent to
whichever is termination, which should be for cause and with
higher proper procedure. (Manila Mining Corp. v. Amor,
G.R. No. 182800, 2015)

Floating Status
It is legal, such as in the case of security guards who
have no assignment.

In security agency parlance, being placed “off duty”

or on ‘floating” status means “waiting to be posted.”
Such a status should not exceed six months; if it
does, it amounts to a dismissal. (Agro Commercial
Services v. NLRC, G.R. No. 82823-24, 1989)

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Ailment or Disease
Substantive Elements of Due Process for
Termination Due to Ailment or Disease
1. An employee has been found to be
suffering from any disease, whether
contagious or not;
2. His continued employment is prohibited by
law or prejudicial to his health, or to the
health of his co-employees;
3. A competent public health authority certifies
that the disease is of such nature or at such
a stage that it cannot be cured within a
period of six months even with proper
medical treatment; and
4. Payment of separation pay equivalent to at
least one month salary or to one-half month
salary for every year of service, whichever
is greater, a fraction of at least six months
being considered as one whole year.
Prior Certification from Competent Public
Authority
The burden falls upon the employer to establish
these requisites, and in the absence of such
certification, the dismissal must necessarily be
declared illegal.
It is only where there is a prior certification from a
competent public authority that the disease afflicting
the employee 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
(Crayons Processing, Inc., v. Pula, G.R. No.
167727, 2007)
2. Procedural due process
Subject to the constitutional right of workers to
security of tenure and their right to be protected
against dismissal except for a just and authorized
cause and without prejudice to the requirement of
notice under Art. 283 of this Code,
The employer shall furnish the worker whose
employment is sought to be terminated:
1. A written notice containing a statement of
the causes for termination,
2. And shall afford the latter ample opportunity
to be heard and to defend himself with the
assistance of his representative if he so
desires, in accordance with company rules
and regulations promulgated pursuant to
guidelines set by the Department of Labor
and Employment. (Labor Code, Art. 292[b])
Note: Employee may have a counsel but it is not
indispensable.
a. Two-notice rule
The employer has the burden of proving that a
dismissed worker has been served two notices:
First written notice: served on the employee
specifying the ground or grounds for termination,
and giving said employee reasonable opportunity
within which to explain his side.
Second written notice: served upon the employee,
indicating that upon due consideration of all the
circumstances, grounds have been established to
justify his termination.
First Contain specific causes or grounds for
Notice termination as provided under Art. 297
and company policies, if any;
Contain a detailed narration of the
facts and circumstances that will serve
as basis for the charge against the
employee. (general description of the
charge will not suffice); and
Contain a directive that the employee
is given the opportunity to submit his
written explanation within the
reasonable period of FIVE (5)
CALENDAR DAYS from receipt of the
notice:
- to enable him to prepare
adequately for his defense;
- to study the accusation
against him;
- to consult a union official or
lawyer;
- to gather data and evidence;
and
- to decide on the defenses he
will raise against the
complaint. (DO 147-15)
Second After determining that termination of
Notice employment is justified, the employer
shall serve the employees a written
notice of termination indicating that:
- all circumstances involving
the charge/s against the
employee have been
considered; and
- grounds have been
established to justify the
severance of his employment.
An employee may be dismissed only if the grounds
mentioned in the pre-dismissal notice were the ones
cited for the termination of employment. (Erector
Advertising Sign Group, Inc. v. Cloma, G.R. No.
167218, 2010)

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Ample Opportunity to be Heard reversed. (ABD Overseas Manpower Corporation v.

After serving the first notice, the employer should NLRC, G.R. No. 117056, 1998)
schedule and conduct a hearing or conference
wherein the employee will be given the opportunity Procedural Requirements in Termination Cases
to: (Just Cause and Authorized Cause)
1. Explain and clarify his defenses to the AUTHORIZED
JUST CAUSES
charge/s against him; CAUSES
2. Present evidence in support of his First Notice specifying Notice to the following:
defenses; and the grounds for which 1. Employee; and
3. Rebut the evidence presented against him dismissal is sought 2. DOLE
by the management.
Hearing or opportunity At least 1 month prior to
Guiding principles in hearing requirement to be heard effectivity of the
1. "Ample opportunity to be heard" means any separation
meaningful opportunity (verbal or written) Second Notice of the
given to the employee to answer the decision to dismiss
charges against him and submit evidence
in support of his defense, whether in a Requisites for Notice in Authorized Causes
hearing, conference or some other fair, just 1. Notice is not needed when Employee
and reasonable way. consented to the retrenchment or
2. A formal hearing or conference becomes voluntarily applied for one (Int’l Hardware v.
mandatory only when requested by the NLRC, G.R. No. 80770, 1989)
employee in writing or substantial 2. Notice must be individual, and not
evidentiary disputes exist or a company collective (Shoppers Gain Supermart v.
rule or practice requires it, or when similar NLRC, G.R. No. 110731, 1996)
circumstances justify it. 3. Voluntary Arbitration satisfies notice
3. The "ample opportunity to be heard" requirement for authorized causes
standard in the Labor Code prevails over (Revidad v. NLRC, G.R. No. 111105, 1995)
the "hearing or conference" requirement in
the implementing rules and regulations 3. Illegal dismissal, reliefs
(Perez v. PT&T, G.R. No. 152048, 2009) therefrom
Use of position paper
Determining the Validity of Dismissal
It is the labor arbiter who is authorized to determine
whether or not there is a necessity for conducting DISMISSAL SUBSTANTIAL PROCEDURAL
formal hearings in cases brought before them for DUE DUE
adjudication even after the submission of the parties PROCESS PROCESS
of their position papers or memoranda. A formal Valid  
trial-type hearing is not at all times and in all Illegal  
instances essential to due process. It is enough that Illegal  
the parties are given a fair and reasonable Valid but  
opportunity to explain their respective sides of the employer
controversy and to present supporting evidence on must pay
which a fair decision can be based. (Seastar Marine nominal
v. Bul-an, Jr., G.R. No. 142609, 2004) damages

Decision/Award Consequences for Non-Compliance of

It is a requirement of due process that the parties to Procedural Due Process
a litigation be informed of how it was decided, with
an explanation of the factual and legal reasons that 1. Just or Authorized Cause Exists + Due
led to the conclusions of the court. Process
(a) Valid Dismissal
The court cannot simply say that judgment is (b) Employer is not liable; but pays
rendered in favor of X and against Y and just leave separation pay only in authorized
it at that without any justification whatsoever for its causes.
action. The losing party is entitled to know why he 2. Just or Authorized Cause + No Due
lost, so he may appeal to a higher court, if permitted, Process
should he believe that the decision should be (a) Valid Dismissal

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(b) Employer is liable for damages
due to procedural infirmities.
(c) Employer pays separation pay if
for authorized causes.
3. No Just or Authorized Cause + Due
Process
(a) Illegal Dismissal
(b) Employer is liable to reinstate
employee or pay separation pay.
(c) If reinstatement is not possible,
pay full backwages.
4. No Just or Authorized Cause + No Due
Process
(a) Illegal Dismissal
(b) Employer is liable to reinstate
employee or pay separation pay.
(c) If reinstatement is not possible,
pay full backwages.
RELIEFS FOR ILLEGAL DISMISSAL
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. (Labor Code,
Art. 294)
1. Backwages + Reinstatement without loss of
seniority rights, OR
2. Backwages + Separation Pay, if
reinstatement impossible, or not ordered, in
view of the application of the strained
relations doctrine.
NOTE: Where reinstatement is ordered, but the
position is already filled up, the dismissed employee
must still be reinstated if it is still possible.
In illegal dismissal cases, the VA or panel of VAs
may grant the same reliefs and remedies granted by
Labor Arbiters under Article 279 of the Labor
Code, such as:
1. Actual reinstatement;
2. Separation pay in lieu of reinstatement, in
case reinstatement becomes impossible,
non-feasible or impractical;
3. Full backwages;
4. Moral and exemplary damages; and
5. Attorney’s fees.
a. Reinstatement
Reinstatement means the restoration to a state or
condition from which one had been removed or
separated. The person reinstated assumes the
LABOR
position he had occupied prior to his dismissal. It
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. (Pfizer, Inc., et al. v. Velasco, G.R.
No. 177467, 2011)
General Rule: Reinstatement and backwages are
awarded
Exceptions:
1. Payment of separation pay as a substitute
for reinstatement is allowed only under
exceptional circumstances:
a. when reasons exist which are not
attributable to the fault or are beyond
the control of the employer, such as
when the employer — who is in severe
financial strait, has suffered serious
business losses, and has ceased
operations — implements
retrenchment, or abolishes the position
due to the installation of labor-saving
devices;
b. when the illegally dismissed employee
has contracted a disease and his
reinstatement will endanger the safety
of his co-employees; or,
c. where a strained relationship exists
between the employer and the
dismissed employee. (Composite
Enterprises v. Caparoso, G.R.
No.159919)
2. Closure of business (Retuya v. Hon.
Dumarpa, G.R. No. 148848, 2003)
3. Economic Business Conditions (Union of
Supervisors v. Secretary of Labor, G.R. No.
L-39889, 1981)
4. Employee’s unsuitability (Divine Word High
School v. NLRC, G.R. No 72207, 1986)
5. Employee’s retirement / overage (New Phil.
Skylanders v. Dekila, G.R. No. 199547,
2012)
6. Antipathy and antagonism (Wensha Spa
Center v. Yung, G.R. No. 185122, 2010)
7. Job with a totally different nature (DUP
Sound Phils. v. CA, G.R. No. 168317,
2011)
8. Long passage of time
9. Inimical to the employer’s interest
10. Supervening facts have transpired which
make execution unjust or inequitable, to an
increasing extent (Emeritus Security v.
Dailig, G.R. No. 204761, 2014)
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Prescriptive Period
Bring action for reinstatement within 4 years from
the time of dismissal. (Civil Code, Art. 1146)
Reinstatement pending appeal
Note: The decision of the Labor Arbiter reinstating a
dismissed or separated employee shall immediately
be executory, even pending appeal. The employee
shall either be admitted back to work under the
same terms and conditions prevailing prior to his
dismissal or separation or, at the option of the
employer, merely reinstated in the payroll. The
posting of a bond by the employer shall not stay the
execution for reinstatement provided herein. (Labor
Code, Art. 223)
Two options given to employers
1. Actual Reinstatement
2. Restoration of an illegally dismissed
employee to the position s/he had occupied
prior to the illegal dismissal.
Payroll Reinstatement
The employer, instead of physically reinstating the
employee to his former or substantially equivalent
position, chooses to reinstate the employee in the
payroll only by paying him wages and other benefits
without however allowing or requiring him to actually
report for work.
Obligation to Reinstate – Order of Reinstatement
If the order of reinstatement of the Labor Arbiter is
reversed on appeal, it is obligatory on the part of the
employer to reinstate and pay the wages of the
dismissed employee during the period of appeal
until reversal by the higher court. The Labor Arbiter's
order of reinstatement is immediately executory and
the employer has to either re-admit them to work
under the same terms and conditions prevailing
prior to their dismissal, or to reinstate them in the
payroll, and that failing to exercise the options in the
alternative, employer must pay the employee's
salaries. (Magana v. Medicard Philipppines, G.R.
No. 174833, 2010)
No obligation to refund salaries and wages
during pendency of the appeal
An employee cannot be compelled to reimburse the
salaries and wages he received during the
pendency of his appeal, notwithstanding the
reversal by the NLRC of the LA's order of
reinstatement. (College of Immaculate Conception
v. NLRC, G.R. No. 167563, 2010)
Note: Rule XI, Sec. 14 of the 2011 NLRC Rules of
Procedure provide for restitution of amounts paid
pursuant to execution of awards during pendency of
the appeal. However, it expressly disallows
LABOR
restitution of wages paid due to reinstatement
pending appeal.
b. Backwages
Backwages are earnings lost by a worker due to his
illegal dismissal; a form of relief that restores the
income lost by reason of such unlawful dismissal; it
is not private compensation or damages; nor is it a
redress of a private right but, rather, in the nature of
a command to the employer to make a public
reparation for illegally dismissing an employee. (St.
Theresa's School of Novaliches Foundation v.
NLRC, G.R. No. 122955, 1998)
Backwages and reinstatement are two reliefs that
should be given to an illegally dismissed employee.
They are separate and distinct from each other.
(Aurora Land Projects v. NLRC, G.R. No. 114733,
1997)
Failure to order backwages
A “plain error” which may be rectified, even if
employee did not bring an appeal regarding the
matter (Aurora Land Projects v. NLRC, G.R. No.
114733, 1997)
Limited Backwages
General Rule: Illegally dismissed employee is
entitled to full backwages
Exceptions:
The Court awarded limited backwages where the
employee was illegally dismissed but the employer
was found to be in good faith. (San Miguel
Corporation v. Javate, Jr., G.R. No. L-54244, 1992)
Delay of the employee in filing the case for illegal
dismissal (Mercury Drug Co., v. CIR, G.R. No. L-
23357, 1974)
Deduction of earnings elsewhere rule
There is no deduction from backwages the earnings
which the employee has derived from another
employment during the time of his illegal dismissal
(Bustamante v. NLRC, G.R. No. 111651, 1996)
Note: The Bustamante doctrine must be read in light
of R.A. No. 6715 (21 March 1989). Prior to that date,
backwages are limited to three years without
deduction or qualification (Azucena, The Labor
Code with Comments and Cases Volume II, 918,
2013)
Components of the amount of backwages
(Azucena, The Labor Code with Comments and
Cases Volume II-B, 976, 2016)
1. Salaries at the wage rate level at the time
of dismissal, not current wage level.
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2. Allowances or other benefits regularly If reinstatement is no longer possible, backwages

granted should be computed from the time the employee
was terminated until the finality of the decision,
Emergency cost of living allowances (ECOLA), finding the dismissal unlawful. (Bustamante v.
transportation allowances, and 13th month pay NLRC, G.R. No. 111651, 1996)
should be included. (Paramount Vinyl Product Corp.
v. NLRC, G.R No. 81200, 1990) Full backwages means exactly that, i.e., without
deducting from backwages the earnings derived
General wage increases are not included in the elsewhere by the concerned employee during the
computation of wages. However, The LA and NLRC period of his illegal dismissal. (Bustamante v. NLRC,
usually include the increases mandated by wage G.R. No. 111651, 1996)
orders in the computation of backwages regardless
of the time they are given since they are close to a l Awards including salary differentials are not allowed
egal issuance that stems from an authorized statute. (Insular Life Assurance Co., v. NLRC, G.R. No. L-
This only applies i f the employee illegally dismissed 74191, 1987)
is actually covered by that particular wage order.
(Equitable Banking Corp. v. Sadac, G.R. No. The effects of extraordinary inflation are not to be
164772, 2006) applied without an official declaration by competent
authorities (Lantion v. NLRC, G.R. No. 82028,
Reinstatement; payment of backwages 1990).
An order of reinstatement by the labor arbiter is not
the same as actual reinstatement of a dismissed or Reliefs of local workers vs. migrant workers
separated employee. Thus, until employer actually Art. 279, LC Sec. 10, RA 8042
reinstates, their obligation to the illegally dismissed (LOCAL WORKERS) (MIGRANT
employee, insofar as accrued backwages and other WORKERS)
benefits are concerned, continues to accumulate. Reinstatement Full reimbursement of
his placement fee with
It is only when the illegally dismissed employee interest of 12% per
receives the separation pay (in case of strained annum
relations) that it could be claimed with certainty that Full backwages from Salaries for the
the EER has formally ceased thereby precluding the the time his unexpired portion of his
possibility of reinstatement. In the meantime, the compensation was employment contract.
illegally dismissed employee’s entitlement to withheld from him up to
backwages, 13th month pay, and other benefits the time of his actual
subsists. Until the payment of separation pay is reinstatement
carried out, the employer should not be allowed to
remain unpunished for the delay, if not outright c. Separation pay, doctrine of
refusal, to immediately execute the reinstatement strained relations
aspect of the labor arbiter’s decision.
Reinstatement and separation pay – exclusive
Further, the employer cannot refuse to reinstate the
remedies
illegally dismissed employee by claiming that the
Payment of separation pay and reinstatement are
latter had already found a job elsewhere. Minimum
exclusive remedies. The payment of separation pay
wage earners are left with no choice after they are
replaces the legal consequences of reinstatement to
illegally dismissed from their employment, but to
an employee who was illegally dismissed. (Bank
seek new employment in order to earn a decent
Rural Bank v. De Guzman, G.R. No. 170940, 2013)
living. Surely, we could not fault them for their
perseverance in looking for and eventually securing
Kinds of separation pay
new employment opportunities instead of remaining
1. Statutory separation pay, in authorized
idle and awaiting the outcome of the case. (Triad
causes (Labor Code, Arts. 288-299)
Security & Allied Services, Inc, et al. v Ortega, G.R.
2. Separation pay as financial assistance
No. 160871, 2006)
(found in the next section)
3. Separation pay in lieu of reinstatement
Computation of backwages
where reinstatement is not feasible; and
Backwages is computed from the time of illegal
4. Separation pay as a benefit in the CBA or
dismissal up to time of actual reinstatement.
company policy

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First Kind: Statutory separation pay 2. Where reinstatement is not feasible,

The employer has a statutory obligation in cases of expedient or practical, as where
legal termination due to authorized causes. reinstatement would only exacerbate the
tension and strained relations between the
CAUSE SEPARATION PAY parties, or where the relationship between
Introduction of labor- Separation pay of 1 the employer and [the] employee has been
saving devices, month pay or 1 month unduly strained by reason of their
redundancy pay per year of service, irreconcilable differences, particularly
whichever is higher where the illegally dismissed employee
Retrenchment or Separation pay of 1 held a managerial or key position in the
closure or cessation of month pay or ½ month company, it would be more prudent to order
operations NOT due to pay per year of service, payment of separation pay instead of
serious business whichever is higher reinstatement. (Sagum v. Court of Appeals,
losses; Disease G.R. No. 158759, 2005)
Retrenchment or None 3. In one case, reinstatement of janitor
closure or cessation of supervisors and security guards were held
operations due to as no longer feasible due to strained
serious business relations between the parties (Carlos v.
losses Court of Appeals, G.R. No. 168096, 2007)
Note: A fraction of at least 6 months is considered 1
year Note: Moral and exemplary damages may also be
awarded.
Second Kind: Separation pay as financial
assistance Computation of separation pay
Separation pay may be awarded, in the name of SP as a statutory requirement is computed by
compassionate justice, to an employee dismissed integrating the basic salary with regular allowances
for a “just cause”, except in the following: employee has been receiving (Planters Products v.
1. Serious misconduct; or NLRC, G.R. No. 78524, 1989); allowances include
2. Other offenses reflecting on his moral transportation and emergency living allowances
character (PLDT v. NLRC, G.R. No. 80609, (Santos v. NLRC, G.R. No. 76721, 1987)
1988)
Commissions included in separation pay;
However: In the Toyota case, the Supreme Court exception to inclusion
ruled that if the dismissal is based on any of the just Inasmuch as the words "wages", "pay" and "salary"
causes in Art. 297 of the Labor Code – No financial have the same meaning, and commission is
assistance can be granted, except perhaps under included in the definition of "wage", the logical
“analogous causes.” (Toyota Motor Phil. Corp. conclusion, therefore, is, in the computation of the
Workers Ass’n. v. NLRC, G.R. No. 158786, 2007) separation pay of petitioners, their salary base
should include also their earned sales commissions.
But note: In the International School case, the (Songco v. NLRC, G.R. Nos. 50999-51000)
Supreme Court granted “separation pay” of ½ month
per year of service while upholding the teacher’s Commissions given to a managerial employee who
dismissal on the ground of “gross inefficiency” did not perform actual business transactions to earn
resulting from the lack of skills, thereby failing to the commission shall not be included in the salary
meet the standards of the employer of the school. for purposes of computing separation pay. (Phil.
(International School v. International School Duplicators v. NLRC, G.R. No. 11068, 1995)
Alliance, G.R. No. 167286, 2014)
d. Damages
No financial assistance to dismissed strikers.
Award of Nominal Damages
Third Kind: Separation Pay in Lieu of If the dismissal is based on a just cause but the
Reinstatement employer failed to comply with the notice
This happens only in cases where: requirement, the sanction to be imposed upon him
1. When reinstatement would only exacerbate should be tempered because the dismissal process
the tension and strained relations between was, in effect, initiated by an act imputable to the
the parties. (Quijano v. Mercury, G.R. No. employee. If the dismissal is based on an authorized
126561, 1998) cause but the employer failed to comply with the
notice requirement, the sanction should be stiffer

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because the dismissal was initiated by the
employer’s exercise of management prerogative.
The amount of nominal damages awarded by the
Court are as follows:
1. If dismissal due to Just causes - P30,000
2. If dismissal due to Authorized causes -
P50,000 (Jaka Food v. Pacot, G.R. No.
151378)
In cases involving dismissals for cause but without
observance of the twin requirements of notice and
hearing, the dismissal was for just cause but
imposing sanctions on the employer. By doing so,
this Court would be able to achieve a fair result by
dispensing justice not just to employees, but to
employers as well. (Agabon v. National Labor
Relations Commission, G.R. No. 158693, 2004)
But there may be other factors to be considered by
the Court in the award of nominal damages such as:
1. the authorized cause invoked, whether it
was a retrenchment or a closure or
cessation of operation of the establishment
due to serious business losses or financial
reverses or otherwise;
2. the number of employees to be awarded;
3. the capacity of the employers to satisfy the
awards, taken into account their prevailing
financial status as borne by the records;
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 v. Ababan, G.R. No. G.R.
No. 164518, 2006)
Award of Moral Damages
The employee is entitled to moral damages when
the employer acted
1. in bad faith or fraud;
2. in a manner oppressive to labor; or
3. in a manner contrary to morals, good
customs, or public policy (Montinola v. PAL,
G.R. No. 198656, 2014).
The award of moral damages cannot be justified
solely upon the premise (otherwise sufficient for
redress under the Labor Code) that the employer
fired his employee without just cause or due
process. Additional facts must be pleaded and
proven to warrant the grant of moral damages under
the Civil Code, these being, to repeat, that the act of
dismissal was attended by bad faith or fraud, or was
oppressive to labor, or done in a manner contrary to
morals, good customs, or public policy; and, of
course, that social humiliation, wounded feelings,
grave anxiety, etc., resulted therefrom. (Primero v.
LABOR
Intermediate Appellate Court, G.R. No. L-72644,
1987)
Award of Exemplary Damages
In labor cases, the court may award exemplary
damages "if the dismissal was effected in a wanton,
oppressive or malevolent manner. (Garcia v. NLRC,
GR. No. 110518, 1994)
Attorneys’ fees
LA, NLRC, or CA MAY validly award attorney’s fees
in favor of a complainant even if not claimed or
proven in the proceeding.
The provision on attorney’s fees in Article 111
envisions a situation where there is a judicial or
administrative proceeding for recovery of wages.
Upon the termination of the proceedings, the law
allows a deduction for attorney’s fees of 10% from
the total amount due to the winning party. (Vengco
v. Trajano, G.R. No. 74453, 1989).
Hence, even if there is no claim and proof, attorney’s
fees not more than 10% of the amount entitled may
be awarded. The court has also a liberty of
decreasing it if the questions involved in the litigation
are neither novel nor difficult. (D.M. Consunji v.
NLRC, G.R. No. 71459, 1986).
e. Liabilities of corporate officers
An “employer” is defined as that including any
person acting in the interest of an employer, directly
or indirectly. (Art. 219(e), Labor Code)
Note that the provision does not expressly make a
corporate officer personally liable for the liabilities of
a corporation. As a general rule, officers are not
personally liable for corporate obligation, with the
exception that in order to hold a director or officer
personally liable occurs when the following
requisites are present:
1. the complaint must allege that the director
or officer assented to the patently unlawful
acts of the corporation, or that the director
or officer was guilty of gross negligence or
bad faith; and
2. there must be proof that the director or
officer acted in bad faith. (Lozada vs
Mendoza, G.R. No. 196134, 2016)
f. Burden of Proof
In illegal dismissal cases, the onus of proving that
the employee was not dismissed or, if dismissed,
that the dismissal was not illegal, rests on the
employer, failure to discharge which would mean
that the dismissal is not justified and, therefore,
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illegal. (Macasero v. Southern Industrial Gases
Philippines, G.R. No. 178524, 2009)
Degree of proof
In labor cases, substantial evidence is required, and
it is such relevant evidence as a reasonable mind
might accept as adequate to support a conclusion.
(Andrada v. Agemar Manning Agency, G.R. No.
194758, 2012)
If the authorized cause that terminates employment
arises from losses, the penalty to the employer who
disregarded due process may be lighter than if the
authorized cause has no relation to losses.
(Industrial Timber v. Ababan, G.R. No. 164518,
2006)
A dismissal lacking in valid cause or valid procedure
is “illegal.” In a dismissal based on just or authorized
cause, but effected without due process, the
employee remains dismissed, but the employer
must pay nominal damages. (HSBC Employees
Union v. NLRC, G.R. No. 156635, 2016)
C. TERMINATION BY EMPLOYEE
Termination by employee may be split into (Labor
Code, Art. 300):
WITH NOTICE: Termination without Just Cause
3. At least 1month prior notice
4. Acceptance by the employer is necessary
Employee may be held liable for damages for failure
to give notice
WITHOUT NOTICE: Termination with Just Cause
Grounds
1. Serious insult on the honor and person of
employee by the employer or his
representative
2. Inhumane and unbearable treatment
accorded to the employee
3. Commission of a crime against person of
the employee or any of the immediate
members of his family
4. Other causes analogous to the foregoing
5. Notice not necessary when resignation is
with just cause.
1. Resignation versus constructive
dismissal
Resignation
Resignation 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, such that he has no other
choice but to disassociate himself from his
LABOR
employment. (Cervantes v. PAL Maritime Corp.,
G.R. No. 175209, 2013)
To constitute a resignation, it must be unconditional
and with the intent to operate as such. There must
be an intention to relinquish a portion of the term of
office accompanied by an act of relinquishment.
(Azcor Manufacturing Inc. v. NLRC, G.R. No.
117963, 1999)
Resignation is inconsistent with the filing of a
complaint for illegal dismissal. (Blue Angel
Manpower and Security Services Inc. v Court of
Appeals, G.R. No. 161196 2008)
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
management as an employee who intends to resign
may be allowed a shorter period before his
resignation becomes effective. (Hechanova Bugay
Vilchez Lawyers v. Matorre, G.R. No. 198261, 2013)
Stipulations providing that either party may
terminate a contract even without cause are
legitimate if exercised in good faith. Thus, while
either party has the right to terminate the contract at
will, it cannot not act purposely to injure the other.
The monetary award provided in Section 10 of R.A.
8042 applies only to an illegally dismissed overseas
contract worker or a worker dismissed from
overseas employment without just, valid or
authorized cause as defined by law or contract. It
finds no application to cases in which the OFW was
not illegally dismissed. (GBMLT Manpower Services
vs Malinao, G.R. No. 189262, 2015)
Constructive Dismissal
No formal dismissal
The employee is placed in a situation by the
employer such that his continued employment has
become UNBEARABLE  Forced resignation.
Constructive dismissal exists when an act of clear
discrimination, insensibility or disdain on the part of
the employer has become so unbearable as to leave
an employee with no choice but to forego continued
employment.
Constructive dismissal occurs when:
1. Continued employment is rendered
impossible or unreasonable, resulting in an
involuntary resignation
2. Demotion in rank or diminution in pay
3. Forced resignation to make it appear that
no termination by the employer was done
(Leonardo v. NLRC, G.R. No. 125303,
2000)
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Test of Constructive dismissal: whether or not a
reasonable person in the employee’s position would
feel the need to give up his position
Note: Abandonment is incompatible with
constructive dismissal.
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 Security Agency v. Vargas, G.R. No.
159293, 2005)
Instances of Constructive Dismissal
1. There may be constructive dismissal if an
act of an employer becomes so unbearable
on the part of the employee that it could
foreclose any choice by him except to
forego his continued employment (Hyatt
Taxi Services v. Catinoy, G.R. No. 143204,
2001)
2. Continued employment is rendered
impossible or unreasonable, resulting in an
involuntary resignation;
3. Demotion in rank or diminution in pay;
4. Forced resignation to make it appear that
no termination by the employer was done;
(Leonardo v. NLRC, G.R. No. 125303,
2000)
5. After the 30-day period of preventive
suspension, the employee must be
reinstated to his former position because
suspension beyond this maximum period
amounts to constructive dismissal (Hyatt
Taxi Services v. Catinoy, supra);
6. Floating status of a security guard if it lasts
for more than 6 months (Emeritus Security
and Maintenance Systems v. Dailig, G.R.
No. 204761, 2014)
Note: It is manifestly unfair and unacceptable to
declare the mere lapse of the six-month period of
floating status as a case of constructive dismissal
without looking into the peculiar circumstances that
resulted in the security guard’s failure to assume
another post (Exocet Security and Allies Services
Corp v. Serrano, G.R. no. 198538, 2014)
LABOR
Resignation
Forced resignation must be substantiated by more
than mere threats and allegations. (Mandapat v.
AddForce Personnel Services, Inc., G.R. No.
180285, 2010)
A threat to sue the employee will not amount to
forced resignation, as this is a legal act which will be
decided by a competent authority. (Callanta v.
NLRC, G.R. No. 105083, 1993)
A choice between investigation and resignation is
not illegal. (Belaunzaran v. NLRC, G.R. 120038,
1996)
An employee who tenders her voluntary resignation,
accepts separation pay and benefits cannot claim
constructive dismissal. (Concrete Aggregates v.
NLRC, G.R. No. 82458, 1989)
An employee may be considered constructively
dismissed and at the same time legally dismissed,
as when a complaint for sexual abuse is proven in
the NLRC. This will amount to a termination with just
cause but without due process (see the Agabon
doctrine above). (Formantes v. Duncan
Pharmaceuticals Inc., G.R. No. 170661, 2009)
2. Abandonment
Abandonment is the deliberate and unjustified
refusal of an employee to resume his employment.
It is a form of neglect of duty, hence, a just cause for
termination of employment by the employer.
For a valid finding of abandonment, these two
factors should be present:
1. the failure to report for work or absence
without valid or justifiable reason; and
2. a clear intention to sever employer-
employee relationship
With the second as the more determinative factor
which is manifested by overt acts from which it may
be deduced that the employees have no more
intention to work. The intent to discontinue the
employment must be shown by clear proof that it
was deliberate and unjustified. (Agabon v. National
Labor Relations Commission, G.R. No. 158693,
2004)
D. PREVENTIVE SUSPENSION
Preventive suspension is a disciplinary measure for
the protection of the company's property pending
investigation of any alleged malfeasance or
misfeasance committed by the employee. The
employer may place the worker concerned under
preventive suspension if his continued employment
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poses a serious and imminent threat to the life or
property of the employer or of his co- workers.
However, when it is determined that there is no
sufficient basis to justify an employee's preventive
suspension, the latter is entitled to the payment of
salaries during the time of preventive suspension.
(Gatbonton v. NLRC, G.R. No. 146779, 2009)
Duration of preventive suspension
No preventive suspension shall last longer than
thirty (30) days.
Upon the expiry of such period, the employer shall
thereafter
1. Reinstate the worker in his former or in a
substantially equivalent position or
2. The employer may extend the period of
suspension provided that during the period
of extension, he pays the wages and other
benefits due to the worker (IRR Labor
Code, Sec. 9, Rule XXIII, Book V)
Preventive Suspension as a Protective Measure
vs. Suspension as a Penalty
Preventive suspension is not a penalty in itself. It is
merely a measure of precaution so that the
employee who is charged may be separated, for
obvious reasons, from the scene of his alleged
misfeasance while the same is being investigated.
While [preventive suspension] may be imposed on
a respondent during the investigation of the charges
against him, [suspension] is the penalty which may
only be meted upon him at the termination of the
investigation or the final disposition of the case.
(PAL v. NLRC, G.R. No. 114307, 1998)
Notice requirement not complied with by mere
issuance of suspension order
Suspension orders are not enough to meet the
notice requirement necessary in termination. These
do not give the employee ample warning that he
may be terminated for his infractions, only that he is
being suspended for them. The notice must
sufficiently apprise the employee of the instances or
for which he is to be terminated, and he must not
have already been punished for these (ex. with
suspension) (Erector v. NLRC, G.R. No. 167218,
2010)
E. FLOATING STATUS
The bona fide suspension of the operation of a
business or undertaking for a period not exceeding
six (6) months, or the fulfillment by
the employee of a military or civic duty shall
not terminate employment. During this time,
employees are considered on "floating status". (Art.
LABOR
301; International Hardware, Inc. vs. NLRC, G.R.
No. 80770,1989)
“Floating status” of an employee should only last for
a legally prescribed amount of
time. If it lasts longer than 6 months, he may be
considered illegally dismissed from the service.
Floating Status in Security Agencies
This pertains to the period when security guards are
in between assignments or when they are made to
wait after being relieved from a previous post until
they are transferred to a new one.
A floating status requires the dire exigency of the
employer's bona fide suspension of operation,
business or undertaking. In security services, this
happens when
1. the clients who do not renew their contracts
with a security agency are more than those
who do and the new ones that
the agency get
2. Contracts for security services stipulate
that the client may request the agency for
the replacement of the guards assigned to
it. (Sentinel Security Agency, Inc. v.
National Labor Relations Commission,
G.R. Nos. 122468 & 122716)
The employer should prove that there are no posts
available to which the employee temporarily out of
work can be assigned. (Peak Ventures Corp v.
Nestor Villareal, G.R. No. 184618)
Reinstatement
The employer shall reinstate the employee to his
former position without loss of seniority rights if he
indicates his desire to resume his work not later than
one (1) month from the resumption of operations of
his employer or from his relief from the military or
civic duty (Art. 301, Labor Code).
When deemed constructive dismissal
When that "floating status" of an employee
lasts for more than six months, he may be
considered to have been illegally dismissed
from the service.
F. RETIREMENT
The result of a bilateral act of the parties, a voluntary
agreement between the employer and the employee
whereby the latter, after reaching a certain age
agrees to sever his or her employment with the
former. (Jaculbe v. Siliman University, G.R. No.
156934, 2007)
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Retroactive Effect of Retirement Laws
The claimant for retirement benefits was still in the
employ of the employer at the time the statute took
effect; and
The claimant had complied with the requirements for
eligibility for such retirement benefits under the
statute (URC v. Caballeda, G.R. No. 156644, 2008)
Eligibility
General Rule: All employees in the private sector,
regardless of their position, designation, or status,
and irrespective of the method by which their wages
are paid (IRR R.A. No. 7641, Sec. 1)
Exceptions:
1. Employees covered by the Civil Service
Law;
2. Domestic Helpers and Persons in the
Personal Service of Another; and
3. Employees in Retail, Service, and
Agricultural Establishments or Operations
Regularly Employing Not More Than 10
Employees (IRR R.A. No. 7641, Sec. 2)
Exclusions from coverage
1. R.A. No. 7641, "The Retirement Pay Law,"
only applies in a situation where:
2. There is no collective bargaining
agreement or other applicable employment
contract providing for retirement benefits
for an employee; or
3. There is a collective bargaining agreement
or other applicable employment contract
providing for retirement benefits for an
employee, but it is below the requirements
set for by law.
The reason for the first situation is to prevent the
absurd situation where an employee, who is
otherwise deserving, is denied retirement benefits
by the nefarious scheme of employers in not
providing for retirement benefits for their employees.
The reason for the second situation is expressed in
the Latin maxim pacta private juri public derogare
non possunt. Private contracts cannot derogate
from the public law. (Oxales vs Unilab, G.R. No.
152991, 2008)
Age of retirement
Optional retirement: In the absence of a retirement
plan or other applicable agreement providing for
retirement benefits of employees in an
establishment, an employee may retire upon
reaching the age of 60 or more if he has served for
at least 5 years in said establishment.
Compulsory retirement: In the absence of a
retirement plan or other applicable agreement
LABOR
providing for retirement benefits of EEs in an
establishment, an EE shall be retired at the age of
65 years. (IRR R.A. No. 7641, Sec. 4)
May the optional and compulsory retirement
ages be lowered?
1. Written policy – such as in the CBA
(Pantranco North Express v. NLRC & U.
Suniga, G.R. No. 95940, 1996); or
2. Assented to by the employees (Jaculbe v.
Silliman University, G.R. No. 156934,
2007)
Nature of employees’ assent
The employees’ assent may be evidenced by
silence. (Obusan v. PNB, G.R. No. 181178, 2010)
However, in another case, the Supreme Court ruled
that acceptance by the employees of an early
retirement age option must be explicit, voluntary,
free, and uncompelled. (Cercado v. Uniprom, Inc.,
G.R. No. 188154, 2010)
Note: Obusan was decided by the Supreme Court
in division on July 26, 2010, while Cercado was
decided also in division on October 13, 2010.
Extension of Service of Retiree
The matter of extension of service of such employee
or official is addressed to the sound discretion of the
employer. (UST Faculty Union v. NLRC, G.R. No.
89885, 1990)
Retirement Age for Underground and Surface
Mine Workers
For underground and surface mine workers, the
optional retirement age is 50, while the mandatory
retirement age is now 60. (R.A. No. 10757, Sec. 2)
Amount of Retirement Pay
The minimum retirement pay shall be equivalent to
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.
For the purpose of computing retirement pay, “one-
half month salary” shall include all of the following:
Fifteen (15) days salary based on the latest salary
rate;
1. Cash equivalent of five (5) days of service
incentive leave;

2. One-twelfth (1/12) of the 13th month pay.
(1/12 x 365/12 = .083 x 30.41 = 22.5 days)
Total: 22.5 days
Thus, “one-half month salary” is equivalent to 22.5
days. (Capitol Wireless, Inc. vs Sec. Confessor,
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G.R. No. 117174, 1996; Rogelio Reyes v. NLRC,
G.R. No. 160233, 2007)
Other benefits may be included in the computation
of the retirement pay upon agreement of the ER and
the EE or if provided in the CBA.
Retirement pay under RA 7641 vis-à-vis
retirement benefits under SSS and GSIS laws
RA 7641 mandates payment of retirement benefits.
All private sector employees regardless of their
position, designation or status and irrespective of
the method by which their wages are paid are
entitled to retirement benefits upon compulsory
retirement at the age of sixty-five (65) or upon
optional retirement at sixty (60) or more but not 65.
The minimum retirement pay due covered
employees shall be equivalent to one-half month
salary for every year of service, a fraction of at least
six (6) months being considered as one whole year.
The benefits under this law are other than those
granted by the SSS or the GSIS.
Retirement Benefits under a CBA or Applicable
Contract
Any employee may retire or be retired by his/her
employer upon reaching the age established in the
CBA or other applicable agreement/contract and
shall receive the retirement benefits granted therein;
provided, however, that such retirement benefits
shall not be less than the retirement pay required
under R.A. No. 7641, and provided further that if
such retirement benefits under the agreement are
less, the employer shall pay the difference.
Where both the employer and the employee
contribute to a retirement fund pursuant to the
applicable agreement, the employer’s total
contributions and the accrued interest thereof
should not be less than the total retirement benefits
to which the employee would have been entitled had
there been no such retirement benefits’ fund. If such
total portion from the employer is less, the employer
shall pay the deficiency.
Retirement Benefits of Workers Who Are Paid
By Results
For covered workers who are paid by result and do
not have a fixed monthly salary rate, the basis for
the determination of the salary for 15 days shall be
their average daily salary (ADS). The ADS is derived
by dividing the total salary or earning for the last 12
months reckoned from the date of retirement by the
number of actual working days in that particular
period, provided that the determination of rates of
payment by results are in accordance with
established regulations. (Rules Implementing R.A.
No. 7641, Sec. 5.3)
LABOR
Retirement Benefit of Part-Time Workers
Part-time workers are also entitled to retirement pay
of “one-month salary” for every year of service under
RA 7641 after satisfying the following conditions
precedent for optional retirement:
There is no retirement plan between the employer
and the employee; and
The employee should have reached the age of 60
years, and should have rendered at least 5 years of
service with the employer.
The components of retirement benefit of part- time
workers may likewise be computed at least in
proportion to the salary and related benefits due
them. (DOLE Handbook on Workers’ Statutory
Monetary Benefits, 2014 ed.)
Taxability
General Rule: Any provision of law to the contrary
notwithstanding, the retirement benefits received by
officials and employees of private firms, whether
individual or corporate, in accordance with a
reasonable private benefit plan maintained by the
employer shall be exempt from all taxes and shall
not be liable to attachment, garnishment, levy or
seizure by or under any legal or equitable process
whatsoever (Intercontinental Broadcasting Corp.
(IBC) v. Amorilla, G.R. No. 162775, 2006)
Exception: Except to pay a debt of the official or
employee concerned to the private benefit plan or
that arising from liability imposed in a criminal
action.
Additional conditions
3. The benefit plan must be approved by the
Bureau of Internal Revenue;
4. The retiring official or employee has been
in the service of the same employer for at
least ten (10) years and is not less than fifty
years of age at the time of his retirement;
5. The retirement benefits shall be availed of
by an official or employee only once; and,

6. In case of separation of an official or
employee from the service of the employer
due to death, sickness or other physical
disability or for any cause beyond the
control of the said official or employee, any
amount received by him or by his heirs from
the employer as a consequence of such
separation shall likewise be exempt as
hereinabove provided.

Reasonable private benefit plan
A pension, gratuity, stock bonus or profit sharing
plan maintained by an employer for the benefit of
some or all of his officials and employees, wherein
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contributions are made by such employer or officials

and employees, or both, for the purpose of
distributing to such officials and employees the
earnings and principal of the fund thus accumulated,
and wherein it is provided in said plan that at no time
shall any part of the corpus or income of the fund be
used for, or be diverted to, any purpose other than
for the exclusive benefit of the said officials and
employees.

Retirement Benefits and Separation Pay May be

Simultaneously Granted; When Not Granted
Yes. (University of the East v. UE Faculty
Association, G.R. No. 74007, 1987)

Separation pay is required in the cases

enumerated in Articles [298] and [299] of the Labor
Code. It is a statutory right designed to provide the
employee with the wherewithal during the period
that he is looking for another employment.

Retirement benefits, where not mandated by law,

may be granted by agreement of the employees and
their employer or as a voluntary act on the part of
the employer. Retirement benefits are intended to
help the employee 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 employer. (Aquino v. NLRC & Otis
Elevator, G.R. No. 87653, 1992)

However: Company policy or CBA may make

separation pay and retirement benefits mutually
exclusive. (Aquino v. NLRC & Otis Elevator, G.R.
No. 87653, 1992)

Gratuity Pay distinguished from Retirement

Benefit

Gratuity Pay is paid to the beneficiary for the past

services or favor rendered purely out of the
generosity of the giver or grantor. Gratuity,
therefore, is not intended to pay a worker for actual
services rendered or for actual performance. It is a
money benefit or bounty given to the worker, the
purpose of which is to reward employees who have
rendered satisfactory service to the company.
Retirement Benefits are intended to help the
employee enjoy the remaining years of his life,
releasing him from the burden of worrying for his
financial support, and are a form of reward for his
loyalty to the employer. (Sta. Catalina College v.
NLRC and Tercero, G.R. No. 144483, 2003)

-- end of topic --

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Overview of Management Prerogative

VII. MANAGEMENT PREROGATIVE The law in protecting the rights of the employees
authorizes neither oppression nor self-destruction of
TOPIC OUTLINE UNDER THE SYLLABUS the employer. It should be made clear that when the
law tilts the scale of justice in favor of labor, it is but
A. DISCIPLINE a recognition of the inherent economic inequality
B. TRANSFER OF EMPLOYEES between labor and management. Never should the
C. PRODUCTIVITY STANDARDS scale be so tilted if the result is an injustice to the
D. BONUS employer. (Panuncillo v. CAP, G.R. No. 161305,
E. CHANGE OF WORKING HOURS 2007)
F. BONA FIDE OCCUPATIONAL
QUALIFICATIONS General Rule: An employer is free to regulate,
G. POST-EMPLOYMENT RESTRICTIONS according to his own discretion and judgment, all
H. CLEARANCE PROCEDURES aspects of employment, including hiring, work
I. LIMITATIONS ON MANAGEMENT assignments, working methods, time, place and
PREROGATIVE; POLICE POWER OF THE manner of work, tools to be used, processes to be
STATE followed, supervision of workers, working
regulations, transfer of employees, work
supervision, lay-off of workers and the discipline,
dismissal and recall of workers (Peckson v.
Robinson’s Supermarket Corporation, G.R. No.
198534, 2013)

A. DISCIPLINE

Management has the prerogative to discipline its

employees and to impose appropriate penalties on
erring workers, pursuant to company rules and
regulations (Artificio v. NLRC, G.R. No. 172988,
2010)

Although the right of employers to shape their own

work force, is recognized, this management
prerogative must not curtail the basic right of
employees to security of tenure. (Alert Security
Investigation Agency v. Saidali Pasawilan, G.R. No.
182397 (2011)

B. TRANSFER OF EMPLOYEES

An employee’s right to security of tenure does not

give him such a vested right in his position as would
deprive the company of its prerogative to change his
assignment or transfer him where he will be most
useful.

The employer has the right to transfer or assign

employees from one area of operation to another, or
one office to another or in pursuit of its legitimate
business interest, Provided there is no demotion in
rank or diminution of salary, benefits and other
privileges and not motivated by discrimination or
made in bad faith, or effected as a form of
punishment or demotion without sufficient cause.
(Westin Phil. Plaza Hotel v. NLRC, G.R. No.
121621, 1999)

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When the transfer is not unreasonable, or
inconvenient, or prejudicial to the employee, and it
does not involve a demotion in rank or diminution of
salaries, benefits, and other privileges, the
employee may not complain that it amounts to a
constructive dismissal. (Bisig ng Manggagawa sa
TRYCO v. NLRC, G.R. No. 151309, 2008)
It is management prerogative for employers to
transfer employees on just and valid grounds such
as genuine business necessity. (William Barroga v.
Data Center College of the Philippines, G.R. No.
174158, 2011)
Re-assignments made by management pending
investigation of irregularities allegedly committed by
an employee fall within the ambit of management
prerogative. The purpose of reassignments is no
different from that of preventive suspension which
management could validly impose as a disciplinary
measure for the protection of the company's
property pending investigation of any alleged
malfeasance or misfeasance committed by the
employee. (Ruiz v. v. Wendel Osaka Realty, G.R.
No. 189082, 2012)
In cases of a transfer of an employee, the employer
is charged with the burden of proving that its
conduct and action are for valid and legitimate
grounds such as genuine business necessity and
that the transfer is not unreasonable, inconvenient
or prejudicial to the employee. If the employer
cannot overcome this burden of proof, the
employee’s transfer shall be tantamount to unlawful
constructive dismissal. (Jonathan Morales v. Harbor
Centre Port Terminal, G.R. No. 174208, 2012)
C. PRODUCTIVITY STANDARDS
The employer has the right to demote and transfer
an employee who has failed to observe proper
diligence in his work and incurred habitual tardiness
and absences and indolence in his assigned work.
(Petrophil Corporation v. NLRC, G.R. No. L-64048,
1986)
As a general concept, “poor performance” is
equivalent to inefficiency and incompetence in the
performance of official duties. Under Art. 282 of the
Labor Code, an unsatisfactory rating can be a just
cause for dismissal only if it amounts to gross and
habitual neglect of duties. Thus, the fact that an
employee’s performance is found to be poor or
unsatisfactory does not necessarily mean that the
employee is grossly and habitually negligent of his
duties. Gross negligence implies a want or absence
of or failure to exercise slight care of diligence, or
the entire absence of care. It evinces a thoughtless
LABOR
disregard of consequences without exerting any
effort to avoid them. (Universal Staffing Services,
Inc. vs. NLRC, G.R. No. 177576, 2008)
The imposition of productivity standards is an
allowable exercise of company rights. An employer
is entitled to impose productivity standards for its
workers and non-compliance may be visited with a
penalty even more severe than demotion.
(Leonardo v. NLRC, G.R. No. 125303, 2000)
D. BONUS
The granting of bonus is a management prerogative,
something given in addition to what is ordinarily
received by or strictly due the recipient. (Producers
Bank of the Philippines v. NLRC, G.R. No. 100701,
2001)
There is unfair and unjust discrimination in the
granting of salary adjustments where the evidence
shows that
1. The management paid the employees of
the unionized branch;
2. Salary adjustments were granted to
employees of one of its non - unionized
branches although it was losing in its
operations; and
3. The total salary adjustments given every
ten of its unionized employees would not
even equal to the salary adjustments
given to one employee in the non –
unionized branch. (Manila Hotel
Company v. Pines Hotel Employees
Association(CUGCO) and CIR, G.R. No.
L-30818, 1972)
Bonus in the CBA
Generally, a bonus is not a demandable and
enforceable obligation. For a bonus to be
enforceable, it must have been promised by the
employer and expressly agreed upon by the parties.
Given that the bonus in this case is integrated in the
CBA, the same partakes the nature of a
demandable obligation. Verily, by virtue of its
incorporation in the CBA, the Christmas bonus due
to respondent Association has become more than
just an act of generosity on the part of the petitioner
but a contractual obligation it has undertaken.
(Lepanto Ceramics v. Lepanto Ceramics
Employees Association, G.R. No. 180866, March 2,
2010)
A bonus, however, becomes a demandable or
enforceable obligation when it is made part of the
wage or salary or compensation of the employee. In
the case at bench, it is indubitable that ETPI and
ETEU agreed on the inclusion of a provision for the
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grant of 14th, 15th and 16th month bonuses in the
1998-2001 CBA Side Agreement. (Eastern
Telecoms v. Eastern Telecoms Employees Union,
February 8, 2012)
E. CHANGE OF WORKING HOURS
Management retains the prerogative, whenever
exigencies of the service so require, to change the
working hours of 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 or circumventing the rights
of the employees under special laws or under valid
agreements, this Court will uphold such exercise.
(Sime Darby Pilipinas, Inc. v. NLRC, G.R. No.
119205, 1998)
Except as limited by special laws, an employer is
free to regulate, according to his own discretion and
judgment, all aspects of employment, including
hiring, work assignments, working methods, time,
place and manner of work, tools to be used,
processes to be followed, supervision of workers,
working regulations, transfer of employees, work
supervision, lay-off of workers and discipline,
dismissal and recall of workers. (San Miguel
Brewery v. Ople, G.R. No. L-53515, 1989)
F. BONA FIDE OCCUPATIONAL
QUALIFICATIONS
Employment in particular jobs may not be limited to
persons of a particular sex, religion, or national
origin UNLESS, the employer can show that sex,
religion, or national origin is an actual qualification
for performing the job. The qualification is called a
bona fide occupational qualification (BFOQ).
BFOQ is valid "provided it reflects an inherent
quality reasonably necessary for satisfactory job
performance."
Weight standards of PAL show its effort to comply
with the exacting obligations imposed upon it by law
by virtue of being a common carrier. On board an
aircraft, the body weight and size of a cabin
attendant are important factors to consider in case
of emergency. The job of a cabin attendant during
emergencies is to speedily get the passengers out
of the aircraft safely. Being overweight necessarily
impedes mobility. Indeed, in an emergency
situation, seconds are what cabin attendants are
dealing with, not minutes. Hence, separation from
service for failure to meet weight standards of PAL
is justified. (Yrasuegi v. PAL, G.R. No. 168081)
LABOR
Marriage Between Employees of Competitor-
Employers
It is unlawful for an employer to require as a
condition of employment or continuation of
employment that:
1. A woman employee shall not get married,
or
2. To stipulate expressly or tacitly that upon
getting married a woman employee shall
be deemed resigned or separated; or
3. To actually dismiss, discharge,
discriminate or otherwise prejudice a
woman employee merely by reason of
her marriage. (Labor Code, Art. 136)
The company policy of not accepting or considering
as disqualified from work any woman worker who
contracts marriage runs afoul of the test of, and the
right against, discrimination afforded all women
workers by our labor laws and by no less than the
Constitution. (Philippine Telegraph and Telephone
Company v. NLRC, G.R. No. 118978, 1997)
The following policies were struck down as invalid
for violating the standard of reasonableness which
is being followed in our jurisdiction, called the
“Reasonable Business Necessity Rule”: 

1. New applicants will not be allowed to be
hired if in case he/she has (a) relative, up
to (the) 3rd degree of relationship, already
employed by the company. 

2. In case of two of our employees (both
singles (sic), one male and another
female) developed a friendly relationship
during the course of their employment
and then decided to get married, one of
them should resign to preserve the policy
stated above.” (Star Paper Corp. v.
Simbol, Comia and Estrella, G.R. No.
164774, 2006)
In this case, the prohibition against marriage
embodied in the following stipulation in the
employment contract was held valid: 

“You agree to disclose to management any existing
or future relationship you may have, either by
consanguinity or affinity with co-employees or
employees of competing drug companies. Should it
pose a possible conflict of interest in management
discretion, you agree to resign voluntarily from the
Company as a matter of Company policy.”
SC ruled that the dismissal based on this stipulation
in the employment contract is a valid exercise of
management prerogative.
The prohibition against personal or marital
relationships with employees of competitor
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companies upon its employees was held reasonable
under the circumstances because relationships of
that nature might compromise the interests of the
company.
In laying down the assailed company policy, the
employer only aims to protect its interests against
the possibility that a competitor company will gain
access to its secrets and procedures. (Duncan
Ass’n of Detailman-PTGWO v. Glaxo Welcome
Philippines, G.R. No. 162994, 2004)
Prohibition against Pregnancy
Respondents were constructively dismissed.
Hence, their termination was illegal. The termination
of respondents' employment happened when they
were pregnant and expecting to incur costs on
account of child delivery and infant rearing.
Pregnancy is a time when they need employment to
sustain their families. Indeed, it goes against normal
and reasonable human behavior to abandon one's
livelihood in a time of great financial need. It is clear
that respondents intended to remain employed with
Saudia. All they did was avail of their maternity
leaves. Evidently, the very nature of a maternity
leave means that a pregnant employee will not
report for work only temporarily and that she will
resume the performance of her duties as soon as
the leave allowance expires. (Saudia v. Rebesencio,
G.R. No. 198587, January 14, 2015)
G. POST-EMPLOYMENT RESTRICTIONS
A post-retirement competitive employment
restriction is designed to protect the employer
against competition by former employees who may
retire and obtain retirement or pension benefits and,
at the same time, engage in competitive
employment. (Rivera v. Solidbank, G.R. No.
163269, 2006)
Petitioner retired under the Special Retirement
Program and received P963,619.28 from
respondent. However, petitioner is not proscribed,
by waiver or estoppel, from assailing the post-
retirement competitive employment ban since under
Article 1409 of the New Civil Code, those contracts
whose cause, object or purpose is contrary to law,
morals, good customs, public order or public policy
are inexistent or void from the beginning. Estoppel
cannot give validity to an act that is prohibited by law
or to one that is against public policy. (Rivera v.
Solidbank, G.R. No. 163269, 2006)
Respondent, as employer, is burdened to establish
that a restrictive covenant barring an employee from
accepting a competitive employment after
retirement or resignation is not unreasonable or
LABOR
oppressive, or not an undue or unreasonable
restraint of trade, thus, unenforceable for being
repugnant to public policy. (Rivera v. Solidbank,
G.R. No. 163269, 2006)
Two principal grounds on which the doctrine is
founded that a contract in restraint of trade is
void as against public policy.
1. The injury to the public by being deprived
of the restricted party’s industry; and
2. The injury to the party himself by being
precluded from pursuing his occupation,
and thus being prevented from
supporting himself and his family.
In cases where an employee assails a contract
containing a provision prohibiting him or her from
accepting competitive employment as against public
policy, the employer has to adduce evidence to
prove that the restriction is reasonable and not
greater than necessary to protect the employer’s
legitimate business interests. The restraint may not
be unduly harsh or oppressive in curtailing the
employee’s legitimate efforts to earn a livelihood
and must be reasonable in light of sound public
policy.
In determining whether the contract is
reasonable or not, the trial court should
consider the following factors:
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; and
5. Whether the restraint is reasonable from
the standpoint of public policy. (Rivera v.
Solidbank Corporation, G.R. No. 163269,
2006)
H. CLEARANCE PROCEDURES
Labor Advisory No. 06, Series of 2020, or the
"Guidelines on the Payment of Final Pay and
Issuance of Certificate of Employment"
LA 06-20 prescribes the periods within which an
employee's final pay should be released by the
employer and within which the certificate of
employment should be issued by the employer, and
the enforcement mechanism in settling any issue,
claim, or dispute in connection therewith.
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Prior Rule
Prior to this DOLE issuance, there was no specific
period prescribed for the release of the separated
employees' final pay and certificate of employment.
LA 06-20 effectively imposes an obligation upon
employers to comply with the prescribed periods.
Non-compliance with the provisions of LA 06-20
may expose an employer to a complaint for such
violation, which shall be dealt with accordingly by
the DOLE.
Payment of Final Pay
Under LA 06-20, "Final Pay" was defined as the sum
or totality of all the wages or monetary benefits due
the employee regardless of the cause of the
termination of employment, including but not limited
to the following:
a) Unpaid earned salary of the employee;
b) Cash conversion of unused Service
Incentive Leave (SIL) pursuant to Article 95
of the Labor Code;
c) Cash conversions of remaining unused
vacation, sick or other leaves pursuant to a
company policy, or individual or collective
agreement, if applicable;
d) Pro-rated 13th month pay pursuant to
Presidential Decree No. 851 (PD 851);
e) Separation pay pursuant to Articles 298-
299 of the Labor Code, as renumbered,
company policy, or individual or collective
agreement, if applicable;
f) Retirement pay pursuant to Article 302 of
the Labor Code, as renumbered, if
applicable;
g) Income tax claim for the excess of taxes
withheld, if applicable;
h) Other types of compensation stipulated in
an individual or collective agreement, if
any; and
i) Cash Bond/s or any kind of deposit/s due
for return to the employee, if any.
Within (30) Days
Accordingly, these amounts shall be released to the
employee within thirty (30) days from the date of
separation or termination of employment, unless
there is a more favorable company policy, individual
or collective agreement thereto.
Possible legal exception to the prescribed
period: Doctrine in the case of Milan v. NLRC
Nevertheless, in certain instances, an employer may
take an aggressive stance and delay the release of
the separated employee's final pay beyond the
prescribed 30-day period such as when the
employee refuses to complete the company's
clearance process or has pending accountabilities
with the company (e.g., unreturned company
LABOR
properties in the employee's possession). In such
cases, the employer may invoke the ruling in the
case of Milan v. NLRC (G.R. No. 202961, 04
February 2015) where the Supreme Court upheld
the withholding of the employees' salaries pending
return of company property. The Supreme Court in
the Milan case noted that the law supports the
employers' institution of clearance procedures
before the release of the employees' final pay, being
a valid exercise of management prerogative. This is
also consistent with the equitable principle that "no
one should be unjustly enriched or benefited at the
expense of another."
Thus, the prescribed 30-day period may be taken as
a guideline for both the separated employee and the
employer, that is for the former to complete the
necessary clearance procedure before or soon after
the commencement of the 30-day period in order to
afford the latter sufficient time and opportunity to be
able to release the employee's final pay in
accordance with LA 06-20.
I. LIMITATIONS ON MANAGEMENT
PREROGATIVE; POLICE POWER OF
THE STATE
Limits to Management Prerogative
1. Good Faith
So long as a company’s management prerogatives
are exercised in good faith for the advancement of
the employer’s interest and not for the purpose of
defeating or circumventing the rights of the
employees under special laws or under valid
agreements, this Court will uphold them. Even as
the law is solicitous of the welfare of the employees,
it must also protect the right of an employer to
exercise what are clearly management
prerogatives. The free will of management to
conduct its own business affairs to achieve its
purpose cannot be denied. (Ymbong v. ABS-CBN,
G.R. No. 184885, 2012)
2. Grave abuse of discretion
The managerial prerogative to transfer personnel
must be exercised without grave abuse of
discretion, bearing in mind the basic elements of
justice and fair play. Having the right should not be
confused with the manner in which the right is
exercised. (Tinio v. CA, G.R. No. 171764, 2007)
3. Law
A pharmaceutical company defended its termination
of rank and file employees during a bargaining
deadlock, as an exercise of management
prerogative. This was after the Labor Secretary had
assumed jurisdiction over the dispute and enjoined
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the parties from “any acts which might exacerbate

the situation.” Where, however, an employer does violate the Act
and is found guilty of the commission of an unfair
The Court disagreed with the company’s defense, labor practice, it is no excuse that his conduct was
stating that the privilege is not absolute but subject unintentional and innocent.
to limitations imposed by law. In this case, it is
limited by Sec. 236(g), which gives the Secretary the
power to assume jurisdiction and resolve labor -- end of topic --
disputes involving industries indispensable to
national interest.

The company’s management prerogatives are not

being unjustly curtailed but duly tempered by the
limitations set by law, taking into account its special
character and the particular circumstances in the
case at bench. (Metrolab Industries, Inc. v. Roldan-
Confesor, G.R. No. 108855, 2013)

4. Collective Bargaining
The CBA provisions agreed upon by the Company
and the Union delimit the free exercise of
management prerogative. The parties in a CBA may
establish such stipulations, clauses, terms and
conditions as they may deem convenient provided
these are not contrary to law, morals, good customs,
public order or public policy. Where the CBA is clear
and unambiguous, it becomes the law between the
parties and compliance therewith is mandated by
the express policy of the law. (Goya v. Goya
Employees Union-FFW, G.R. No. 170054, 2013)

5. Equity and/or Substantial Justice

The Court recognized the inherent right of the
employer to discipline its employees but it should
still ensure that the employer exercises the
prerogative to discipline humanely and
considerately, and that the sanction imposed is
commensurate to the offense involved and to the
degree of the infraction. The discipline exacted by
the employer should further consider the
employee’s length of service and the number of
infractions during his employment. (Dongon v.
Rapid Movers and Forwarders Co., G.R. No.
163431, 2013)

The exercise of management prerogatives is not

unlimited. A line must be drawn between
management prerogatives regarding business
operations per se and those which affect the rights
of employees. In treating the latter, management
should see to it that its employees are at least
properly informed of its decisions and modes of
action. (PAL v. NLRC, G.R. No. 85985, 1993)
The law on unfair labor practices is not intended to
deprive the employer of his fundamental right to
prescribe and enforce such rules as long as it is not
exercised in violation of the Act and its several
prohibitions.

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VIII. JURISDICTION AND REMEDIES
TOPIC OUTLINE UNDER THE SYLLABUS
A. MANDATORY CONCILIATION-MEDIATION,
SENA
B. LABOR ARBITER
C. NATIONAL LABOR
COMMISSION
D. JUDICIAL REVIEW OF LABOR RULINGS
E. BUREAU OF LABOR RELATIONS
F. NATIONAL CONCILIATION AND MEDIATION
BOARD
G. POEA
H. DOLE REGIONAL DIRECTORS
I. DOLE SECRETARY
J. GRIEVANCE MACHINERY
K. VOLUNTARY ARBITRATOR
L. PRESCRIPTION OF ACTIONS
1. Money claims
2. Illegal dismissal
3. Unfair labor practice
4. Offenses under the Labor Code
5. Illegal recruitment
LABOR
A. MANDATORY CONCILIATION-
MEDIATION, SENA
“Single Entry Approach (SEnA)” refers to the
administrative approach to provide an accessible,
speedy, impartial, and inexpensive settlement
procedure of all labor and employment issues
RELATIONS through a 30-day mandatory conciliation mediation.
(D.O. 151-16)
Exceptions
All issues arising from labor and employment shall
be subject to the 30-day mandatory conciliation-
mediation, except:
1. Notices of strike/lockout or preventive
mediation cases with the National
Conciliation and Mediation Board (NCMB);
2. Issues arising from the interpretation or
implementation of the collective bargaining
agreement and those arising from
interpretation or enforcement of company
personnel policies which should be
processed through the grievance
machinery.
3. Applications for exemption from Wage
Orders with the National Wages and
Productivity Commission (NWPC);
4. Issues involving violations of: Alien
a. Employment Permit (AEP); Private
b. Employment Agency (PEA) authority
or license;
c. Working Child Permit (WCP) and
violations of Republic Act No.9231
(Anti-Child Labor Law);
d. Registration under Department Order
No. 18-A, Series of 2011;
e. Professional license issued by the
Professional Regulations Commission
(PRC) and violation of Professional
Code of Conduct;
f. Technical Education and Skills
Development Authority (TESDA)
accreditations; and
g. Other similar permits, l licenses or
registrations i issued by the DOLE or
its attached agencies.
5. Violations of POEA Rules and Regulations
involving:
a. Serious offenses and offenses
penalized with cancellation of license;
b. Disciplinary actions against overseas
workers/seafarers\which are
considered serious offenses or which
carry the penalty of delisting from the
POEA registry at first offense
c. Complaints initiated by the POEA;
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d. Complaints against an agency whose

license is revoked, cancelled, expired
or otherwise delisted; and
e. Complaints categorized under the
POEA Rules and Regulations as not
subject to SEnA.
6. Issues on occupational safety and health
standards involving imminent danger
situation, dangerous occurrences/disabling
injury, and absence of personal protective
equipment.
JURISDICTION OF THE LABOR ARBITER
(1) ULP (PRIORITY, RESOLVED WITHIN 30
CALENDAR DAYS FROM SUBMISSION FOR
DECISION)
The LA has jurisdiction over the civil aspect of
ULP. The criminal aspect is lodged with the regular
courts. (Labor Code, Art. 258)

B. LABOR ARBITER Violations of the CBA are not ULP unless the same
are gross violations. (Labor Code, Art. 274)
1. Jurisdiction of the Labor Arbiter
The test of whether an employer has interfered with
as distinguished from the
and coerced employees within the meaning of Art.
Regional Director 259 (a) is whether the employer has engaged in
conduct which it may reasonably be said tends to
In order that the causes of action under Art. 224(a) interfere with the free exercise of an employee’s
may prosper (and inferentially, in order that a LA can rights, and it is not necessary that there be direct
exercise jurisdiction over cases thereon), an evidence that any employee was in fact intimidated
indispensable precondition must be met – the prior or coerced by statements of threats of the employer
existence of an EER between the parties. if there is a reasonable inference that anti-union
(Palomado v. NLRC, (G.R. No. 96520, 1996) conduct of the employer does not have an adverse
effect on self-organization and collective bargaining.
A money claim arising from employer-employee (Francisco Labor Laws, 1956, Vol. II p 323)
relations, except SSS, ECC/Medicare claims, is
within the jurisdiction of:
(2) TERMINATION DISPUTES
Labor Arbiter Regional Director
Claim, regardless of Money claim is not Resolving Questions of Jurisdiction Between
amount, is accompanied by Labor Arbiter and Voluntary Arbitrator
accompanied with a reinstatement AND General Rule: Complaints for illegal dismissal are
claim of reinstatement; within the original and exclusive jurisdiction of the
or Claim does not exceed LA.
P5,000 (Labor Code,
Claim exceeds P5,000, Art. 129) Exception: The parties may submit the question of
whether or not there is termination to voluntary arbitration but this must be
a claim for expressed in unequivocal language in their CBA.
reinstatement. 
 (Ace Navigation Co. v. Fernandez, G.R. No.
197309, 2012)
Jurisdiction over Contested Cases Forwarded
from Regional Director to Labor Arbiter Termination of Corporate Officers
(m) The employer contests the findings of the labor The LA has jurisdiction over the termination of
regulations officer and raises issues thereon; corporate employees.
(n) In order to resolve such issues, there is a need
to examine evidentiary matters; and The RTC acting as a Special Commercial Court has
(o) Such matters are not verifiable in the normal jurisdiction over termination of corporate officers.
course of inspection.
A person is a corporate officer if:
If all requisites are present, the labor standard case
falls under the exception clause under Art. 128(b), (a) The creation of the position is under the
and the RD will need to endorse the case to the corporation’s charter or specifically
appropriate LA (Ex-Bataans Veterans Security mentioned in the by-laws as a corporate
Agency v. Secretary, G.R. No. 162396, 2007) officer position; and
(b) The election of the officer is by the
directors or stockholders.

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The better policy in determining which body has
jurisdiction over a case would be to consider not
only the status or relationship of the parties but also
the nature of the question that is the subject of their
controversy. (Matling v. Coros, G.R. No. 157802,
2010)
However: In Prudential Bank v. Reyes (G.R. No.
141093, 2001), it was held that an employee who
rose from the ranks is a regular employee and not a
mere corporate officer.
(3) CLAIMS FOR WAGES, RATES OF PAY,
HOURS OF WORK AND OTHER TERMS AND
CONDITIONS OF EMPLOYMENT – IF
ACCOMPANIED WITH A CLAIM FOR
REINSTATEMENT
The LA has jurisdiction to award not only the reliefs
provided by labor laws, but also damages governed
by the Civil Code. The employee need only include
his claim for damages in the illegal dismissal suit
filed with the LA. (Kawachi v. Del Quero, G.R. No.
163738, 2007)
(4) CLAIMS FOR ACTUAL, MORAL,
EXEMPLARY AND OTHER FORMS OF
DAMAGES ARISING FROM EER
(5) CASES ARISING FROM PROHIBITED
ACTIVITIES DURING STRIKES, INCLUDING
QUESTIONS INVOLVING THE LEGALITY OF
STRIKES AND LOCKOUTS
LA vs. DOLE Secretary/NLRC Jurisdiction
General Rule: LA has jurisdiction (NCMB Primer on
Strike, Picketing, and Lockout, No. 22)
Exception: In labor disputes involving industries
indispensable to the national interest, the DOLE
Secretary (if there is an assumption of jurisdiction)
or NLRC (if certified by the Secretary) has
jurisdiction.
Industries Indispensable to the National Interest
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.
LABOR
(6) ALL OTHER CLAIMS ARISING FROM EER
INVOLVING AN AMOUNT EXCEEDING P,5000
REGARDLESS OF WHETHER ACCOMPANIED
BY A CLAIM FOR REINSTATEMENT EXCEPT
CLAIMS FOR ECC, SSS, MEDICARE, &
MATERNITY BENEFITS
Monetary claims arising from EER which do not
exceed Php5,000 fall within the jurisdiction of the
DOLE Regional Director. (LC, Art. 129)
NOTE: A kasambahay’s claim, regardless of the
amount, falls within the jurisdiction of the DOLE
Regional Office, and not the NLRC. (Batas
Kasambahay, Sec. 37)
Art. 306 provides that “all money claims arising from
EER shall be filed within 3 years from the time the
cause of action accrued, before the labor arbiter.
But this prescriptive period is subject to interruption
through:
(p) Filing of an action;
(q) Written extrajudicial demand;
(r) Written acknowledgement of indebtedness.
(IBC v. Panganiban, G.R. No. 151407, 2007)
A judgment in the form of a wage order for money
claims which has become final and executory
prescribes in 10 years, pursuant to Art. 1144 of the
Civil Code on prescription of judgments. (JK
Mercado & Sons v. Sto Tomas, G.R. No. 158084,
2008)
DOLE certification that all mandatory wage
increases and other monetary benefits were all
complied with by the employer is not sufficient proof
to conclude payment of the monetary claims of the
employee, especially if the certification was issued
based only on documents submitted by the
employer. (Dansart Security v. Bagoy, G.R. No.
168495, 2010)
(7) WAGE DISTORTION CASES IN
UNORGANIZED ESTABLISHMENTS
Note: In Organized Establishments: The Voluntary
Arbitrator (VA) has jurisdiction
(8) ALL MONETARY CLAIMS OF OFWS ARISING
FROM EER 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 (RA 8042)
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For the LA to have jurisdiction over money claims of
OFWs, a EER is not necessary, as the article also
refers to “law” or “contract.” (see Santiago v. C.F.
Sharp, G.R. No. 162419, 2007)
In order for the LA to assume jurisdiction over the
money claim, the OFC must have a certification from
the POEA (PNB v. Cabansag, G.R. No. 157010,
2005)
(9) ENFORCEMENT OF COMPROMISE
AGREEMENTS WHEN THERE IS NON-
COMPLIANCE BY ANY OF THE PARTIES
PURSUANT TO ART. 233 OF THE CODE (SEC. 1,
RULE V, 2005 NLRC RULES)
Cooperatives
Termination of members of cooperatives is not
cognizable by the LA (members are not employees)
LA has jurisdiction over illegal dismissal cases
involving employees of cooperatives
LA Does NOT Have Jurisdiction Over
1. Intra-corporate disputes
2. Cases involving corporate officers (because
they are not employees);
3. Cases involving GOCCs with original charters;
4. Cases involving entities immune from suit
(except when the entity performs proprietary
functions);
5. Local water districts (since they are quasi-public
corporations);
6. Actions based on tort;
7. Claim of a seaman for damages is under torts
(regular court has jurisdiction). (Tolosa v.
NLRC, G.R. No. 149578, 2003)
Money Claims: LA vs. VA’s Jurisdiction
1. Money claims arose from EER; and
(b) Money claims arose from law or contracts other
than a CBA
 jurisdictional in nature. (Charter Chemical & Coating
NOTE: EER is a jurisdictional requisite, absent of
which, the NLRC has no jurisdiction to hear and
decide the case. (Hawaiian-Philippine Company v.
Gulmatico, G.R. No. 106231, 1994)
LABOR
MONEY CLAIMS
ARISE FROM EER
MONEY CLAIMS NOT
BUT BY VIRTUE OF
ARISING FROM EER
IMPLEMENTATION
OF CBA
Regular Courts have Voluntary Arbitrator
jurisdiction has jurisdiction
“Exclusive and Original” Jurisdiction subject to
Articles 274 and 275
Note: Subject to Assumption of Jurisdiction
A case under Art 224 may be lodged with the VA.
The policy of the law is to give primacy to voluntary
modes of settling dispute.
For the VA to have jurisdiction over a subject matter
under the LA’s jurisdiction (such as termination
disputes), the parties must express this in
unequivocal language in their CBA. (see Ace
Navigation Co. v. Fernandez, G.R. No. 197309,
2012)
Appeal of LA’s Decision
Appeal from the decision of the LA is brought by
ordinary appeal to the NLRC within 10 calendar
days from receipt of the decision. (Vir-jen Shipping
and Marine Services v. NLRC, G.R. No. 58011-12,
1982)
The 10-day period is reckoned from receipt by
counsel of the final decision, order or award. This
applies to both appeals from the LA to NLRC and
NLRC to CA. (Sy. v. Fairland Knitcraft, G.R. No.
182915, 2011)
This 10-day period is both mandatory and
Corp v. Tan, G.R. No. 163891, 2009)
NOTE: There is no appeal from the decision of the
NLRC. The only way to elevate the case to the CA
is by way of special civil action of certiorari under
Rule 65, Rules of Court.
From the ruling of the CA, it may be elevated to the
SC by petition for review on certiorari under Rule 45
of the Rules of Civil Procedure. (St. Martin Funeral
Home v. NLRC, et al., G.R. No. 130866, 1998)
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Grounds
1. Prima facie evidence of abuse of discretion on
the part of LA;
(b) The decision, order or award was secured
through fraud or coercion including graft and
corruption;
(c) Pure questions of law; and
(d) Raised serious errors in the findings of facts
which could cause grave or irreparable
damage or injury to the appellant.
Additional Requirement: In case of judgment
involving a monetary award, employer (appellant)
may perfect the appeal of the LA’s decision only
upon the posting of a cash or surety bond issued
by a reputable bonding company duly accredited by
the NLRC in the amount equivalent to the monetary
award in the judgment appealed from.
Effect of self-executing order of reinstatement
on back wages
The law intends the award of backwages and similar
benefits to accumulate past the date of the LA’s
decision until the dismissed employee is actually
reinstated. (Siemens Philippines v. Domingo, G.R.
No. 150488, 2008)
However, if reinstatement is no longer possible,
backwages shall be computed from the time of
illegal dismissal until the date the decision becomes
final. (Javellana v. Belen, G.R. No. 181913 and
182158, 2010)
Note: If there was implementation of reinstatement
pending appeal, either through actual or payroll
reinstatement, and the employee received his/her
salary for the period of such reinstatement, the said
amount received shall be deducted from the total
amount of backwages due the employee, assuming
the final decision of the case awarded backwages to
the employee.
An employee who was dismissed on the ground of
AWOL due to incarceration, is entitled to
reinstatement and under the principle of “no work,
no pay”, his full backwages shall only commence
from the time he is refused work after acquittal.
(Standard Electric v. Standard Electric employees
Union, G.R. No. 166111, 2005)
Determination of Employer’s Liability After
Finality of the Case
After finality of the case, the records will have to be
remanded to the LA to determine the actual liability
of the employer to each and every employee. Both
parties will have a chance to submit further proof
LABOR
and argument in support of their respective
proposed computations.
For the guidance of the LA, as well as the parties,
jurisprudence had laid down the following yardsticks
in the computation of the final amount of liability:
1. Employees who have been re – employed
without loss of seniority rights shall be paid
backwages but only up to actual
reinstatement;
2. Employees who have been re – employed as
new hires shall be restored their seniority and
other preferential rights. However, their
backwages shall be computed only to date of
actual re-hiring;
3. Employees who shall have reached
compulsory age of retirement shall receive
backwages up to their retirement only. The
same is true as regards the heirs of those
who have passed away;
4. Employees who have not been reemployed
plus those who have executed quitclaims and
received separation pay of financial
assistance shall be reinstated without loss of
seniority rights and paid full backwages, after
deduction of whatever amounts already
received; and
5. Employees who had obtained substantially
equivalent or even more lucrative
employment elsewhere in 1998 or thereafter
are deemed to have severed their
employment with their previous employer, and
shall be entitled to full backwages from the
date of their retrenchment only up to the date
they found gainful employment elsewhere.
(FASAP v. PAL, G.R. No. 172013, October 2,
2009)
2. Requirements To Perfect Appeal
To National Labor Relations
Commission
Requisites
1. Filed within the reglementary period;
2. Memorandum of Appeal under oath;
3. Appeal fee;
4. Cash, property, or surety bond, if judgment
involves monetary award; and
5. Proof of service to the adverse party.
Procedure
1. File Memorandum of Appeal within 10 calendar
days, counted from receipt of decision;
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2. Other party can file an Answer within 10
calendar days from receipt of Memorandum of
Appeal;
3. NLRC decides within 20 calendar years;
4. NLRC decision becomes final and executory 10
days after it is rendered. (subject to MR)
Failure to Serve Copy of Memorandum of Appeal
Not Jurisdictional
The mere failure of a party to serve his
Memorandum of Appeal 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. (J.
PB: Fernandez v. Botica Claudio, G.R. No. 205870,
2014)
Execution of Decision Pending Appeal
General Rule: The NLRC Rules provides that the
perfection of an appeal shall stay execution of the
decision of the LA.
Exception: Execution of decisions reinstating
dismissed employees dismissed employees in labor
cases pending appeal.
In the case of Aris, Inc. v. NLRC the Supreme Court
explained that the reason for such exception is the
compassionate policy on labor and workingman.
The State is mandated to afford full protection to
labor. If in ordinary civil actions execution of
judgment pending appeal is authorized for reasons
the determination of which is merely left to the
discretion of the judge, the Court saw no reason to
withhold it in cases of decisions reinstating
dismissed employees. In such cases, the poor
employees had been deprived of their only source
of livelihood. (Pacios, et. al. v. Tahanang Walang
Hagdan, G.R. No. 229579, 2017).
Appeal by Employer Involving Monetary Award
A bond equivalent to monetary award should be
posted within the 10-day period for filing of appeal.
If no bond is filed, appeal is not perfected. (see
Catubay v. NLRC, G.R. No. 119289, 2000)
Remedy in case of failure to post bond, remedy is to
file a motion to dismiss.
LABOR
No monetary award, no appeal bond required
If LA’s decision does not provide for a computation
of the monetary award, no appeal bond is required
to be filed.
Justifications for Non-Posting of Bond
1. No monetary award (Aba v. NLRC, G.R. No.
122627, 1999);
2. Monetary award is not specified in the decision
(Orozco v. CA, G.R. No. 155207, 2005);
3. In case of conflict between body and fallo of the
decision, the latter should prevail (Mendoza Jr.
v. San Miguel Foods, G.R. No. 158684, 2005)
Motion to Reduce Bond
General Rule: Motion to reduce bond does not toll
the running of the period to perfect appeal.
Exception: See below (McBurnie v. Ganzon, G.R.
Nos. 178034 & 178117, 2013)
McBurnie v. Ganzon Guidelines in Reduction of
Appeal Bond
1. The filing of a motion to reduce appeal bond
shall be entertained by the NLRC subject to the
following conditions:
(a) There is meritorious ground; and
(b) A bond in a reasonable amount is posted;
2. For purposes of compliance with the second
condition – bond in reasonable amount – a
motion shall be accompanied by the posting of
a provisional cash or surety bond equivalent to
(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 bond, the
appellant shall be given a fresh period of 10
days from notice of the NLRC order within
which to perfect the appeal by posting the
required appeal bond.
NOTE: A substantial monetary award, even if it runs
into millions, does not necessarily give the
employer-appellant a ‘meritorious case’ and does
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not automatically warrant a reduction of the appeal
bond. (Calabash Garments v. NLRC, G.R. No.
110827, 1996)
Examples of Meritorious Grounds
but the choice must be communicated to the
employee by the employer)
Posting of a bond shall not stay the execution of
reinstatement.

1. Fundamental consideration of substantial The unjustified refusal of the employer to reinstate

justice;
2. Prevention of miscarriage of justice or of unjust
enrichment; or
3. Special circumstances of the case combined
with its legal merits and the amount and issue
involved (Garcia v. KJ Commercial, G.R. No.
196830, 2012)
an illegally dismissed employee entitles the
employee to payment of his salaries.
Reinstatement Pending Appeal (Art. 229) vs.
Order of Reinstatement (Art. 294)
ART. 229 ART. 294

10% Appeal Bond is Provisional Order of reinstatement The order of

The 10% requirement in McBurnie pertains to the by the LA is reinstatement
reasonable amount which the NLRC would accept immediately executory presupposes the
as the minimum of the bond that should accompany pending appeal. award thereof is
the motion to reduce bond in order to suspend the pursuant to a final and
period to perfect an appeal under the NLRC rules. executory judgment,
The 10% is based on the judgment award and and not while the case
should in no case be construed as the minimum It is similar to a return- for illegal dismissal is
amount of bond to be posted in order to perfect to-work order. pending on appeal.
appeal. There is no room for a different
interpretation when McBurnie made it clear that the Issued by the LA Issued by the NLRC,
percentage of bond set is provisional. (Sara Lee v. CA, or SC
Macatlang, G.R. No. 180147, 2015)
Generally, no need for Requires the issuance
Enforcement the issuance of a writ of of a writ of execution.
Any law enforcement agency may be deputized by execution.
the DOLE Secretary or the NLRC.

Issuance of writ of execution on a judgment within 5 Jurisprudence

years from date it becomes final and executory motu
proprio or in motion of any interested party.
3. Reinstatement and/or Execution
Pending Appeal
If reinstatement is ordered in an illegal dismissal
case, it is immediately executory even pending
appeal. This means that the perfection of an appeal
shall stay the execution of the decision of the LA
except execution of the reinstatement pending
appeal.
Self – executing with no need for a writ of
execution – only applicable to order issued by
Labor Arbiter.
Writ of execution required when reinstatement is
ordered by NLRC on appeal, or subsequently by the
CA or SC, as the case may be.
Either admitted back to work under the same terms
and conditions prevailing prior to his dismissal or
separation or merely reinstated in the payroll (at the
option of the employer, i.e. confidential employee,
If despite several writs of execution, the employer
still refuses to reinstate the employee, the remedy is
not the grant of additional backwages to serve as
damages but to file a motion to cite the employer for
contempt. (Christian Literature Crusade v. NLRC,
G.R. No. 79106, 1989)
An order for reinstatement entitles an employee to
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.
(Garcia v. Philippine Airlines, Inc., G.R. No.164856,
2009)
C. NATIONAL LABOR RELATIONS
COMMISSION
Injunction in ordinary labor disputes to enjoin or
restrain any actual or threatened commission of any
or all prohibited or unlawful acts or to require the
performance of a particular act in any labor dispute
which, if not restrained or performed forthwith, may
cause grave or irreparable damage to any party;

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Injunction in strikes or lockouts under Art. 279;
A. Certified labor dispute causing or likely to
cause a strike or lockout in an industry
indispensable to the national interest,
certified to it by the DOLE Secretary for
compulsory arbitration;
B. Contempt cases; and
C. Petition to annul or modify the order or
resolution of the LA;
Exclusive Appellate Jurisdiction
1. All cases decided by the LAs, including
contempt cases;
2. Cases decided by the DOLE Regional
Directors or his duly authorized hearing
officers involving recovery of wages, simple
money claims and other benefits not
exceeding P5,000 and not accompanied by
a claim for reinstatement.
Jurisdiction to Determine EER
The NLRC has jurisdiction to determine,
preliminarily, the parties’ rights over a property,
when it is necessary to determine an issue related
to rights or claims arising from a EER (Milan v.
NLRC, G.R. No. 202961, 2015)
Jurisdiction to hear cases over company-owned
property
Both the LA and the NLRC have jurisdiction to hear
cases over company-owned property although the
LA has primary jurisdiction.
In Yupangco Cotton vs. CA (G.R. 126322, 2002),
the Court held a third party whose property has been
levied upon by a sheriff to enforce a decision against
a judgment debtor is afforded with several
alternative remedies to protect its interests. The
third party may avail himself of alternative remedies
cumulatively, and one will not preclude the third
party from availing himself of the other alternative
remedies in the event he failed in the remedy first
availed of.
Thus, a third party may avail himself of the following
alternative remedies:
1. File a third party claim with the sheriff of the
Labor Arbiter, and
2. If the third party claim is denied, the third
party may appeal the denial to the NLRC.
Even if a third party claim was denied, a third party
may still file a proper action with a competent court
to recover ownership of the property illegally seized
by the sheriff.
LABOR
Ocular Inspection by LA & NLRC at any time
during working hours
The Chairman, any Commissioner, LA, or their duly
authorized representatives, may at any time during
work hours, conduct ocular inspection. (2011 NLRC
Rules of Procedure, Rule X, Sec. 5)
Injunction from the NLRC is NOT the proper remedy
against employee dismissal. The NLRC’s power to
issue an injunction originates from a ‘labor dispute’
before the LA. (PAL v. NLRC, G.R. No. 120567,
1998)
Prohibited Second Motions
Sec. 15 of the NLRC RULES OF PROCEDURE prohibits
a party from questioning a decision, resolution, or
order, twice. However, a decision substantially
reversing a determination in a prior decision is a
discrete decision from the earlier one. Where a
tribunal renders a decision substantially reversing
itself on a matter, a motion for reconsideration
seeking reconsideration of this reversal, for the first
time, is not a prohibited second motion for
reconsideration. (Cristobal v. Philippine Airlines,
Inc., G.R. No. 201622, 2017.)
D. JUDICIAL REVIEW OF LABOR
RULINGS
COURT OF APPEALS
RULE 65, RULES OF COURT
Section 1. Petition for certiorari. — When any tribunal,
board or officer exercising judicial or quasi-judicial
functions has acted without or in excess 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, board or
officer, and granting such incidental reliefs as law and
justice may require.
General Rule
The only mode by which a labor case decided by
any of the following labor authorities/tribunals may
reach the Court of Appeals is through a Rule 65
petition for certiorari.
1. The DOLE Secretary;
2. The NLRC; and
3. The Director of the Bureau of Labor
Relations (BLR) in cases decided by him in
his appellate jurisdiction (as distinguished
from those he decides in his original
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jurisdiction which are appealable to the
DOLE Secretary).
Exception
Decisions, orders or awards issued by the VA or
panel of VAs which may be elevated to the CA by
way of an ordinary appeal under a Rule 43 petition
for review.
Requisites before filing a Petition for Review under
Rule 65
4. A Motion for Reconsideration must have
been filed before the DOLE Secretary,
NLRC, or BLR Director, as the case may
be. This is mandatory and jurisdictional.
A motion for reconsideration should be filed even
though it is not required or even prohibited by the
concerned government office. This was the rule
enunciated in the 2014 case of Philtranco Service
Enterprises, Inc. v. PWU- AGLO (G.R. No. 180962,
2014).
Failure to file a motion for reconsideration within the
10-day reglementary period prior to the filing of a
petition for certiorari renders the NLRC decision final
and executory. (J. PB: Michelin Asia Pacific
Application Support System v. Ortiz, G.R. No.
189861, 2014)
Thus, while a government office may prohibit
altogether the filing of a motion for reconsideration
with respect to its decisions or orders, the fact
remains that certiorari inherently requires the filing
of a motion for reconsideration which is the tangible
representation of the opportunity given to the office
to correct itself.
Simply put, regardless of the proscription against
the filing of a motion for reconsideration, the same
may be filed on the assumption that rectification of
the decision or order must be obtained and before a
petition for certiorari may be instituted.
NOTE: A second motion for reconsideration is
prohibited under the NLRC Rules. (G.R. No.
189861, 2014)
When Filing of a Motion for Reconsideration
Not Necessary
Q: A labor dispute between X and Y was pending
before the NLRC. The NLRC ruled partly in favor of
Y. Dissatisfied with the decision, Y filed a motion for
reconsideration which was denied. In the denial, the
NLRC stated that “No further motion of similar
import shall be entertained.” Without filing a motion
for reconsideration, X filed a petition for certiorari
before the CA. Was the action taken by X proper?
LABOR
A: Yes. The resolution explicitly warned the litigating
parties that the NLRC shall no longer entertain any
further motions for reconsideration. This
circumstance gave X the impression that moving for
reconsideration before the NLRC would only be an
exercise in futility in light of the tribunal's aforesaid
warning. (Genpact Services v. Santos-Falceso,
G.R. No. 227695, 2017)
When Appeal Bond May Be Reduced
1. While the posting of a cash or surety bond
is indispensable to the perfection of an
appeal in cases involving monetary awards
from the decision of the LA, the Rules of
Procedure of the NLRC nonetheless allows
the reduction of the bond upon a showing
of:
2. The existence of a meritorious ground for
reduction, and
3. The posting of a bond in a reasonable
amount in relation to the monetary award.
(Philippine Touristers, Inc. and/or Alejandro
R. Yague, Jr. v. Mas Transit Workers
Union-Anglo-Kmu and its members, G.R.
No. 201237, 2014).
Simultaneous filing of the motion to reduce bond
and the posting of the reduced amounts to
substantial compliance with Art. 223
While the bond requirement on appeals involving a
monetary award has been relaxed in certain cases,
this can only be done where there was substantial
compliance with the rules or where the appellants,
at the very least, exhibited willingness to pay by
posting a partial bond. (Magdala Multipurpose v.
KMLMS, G.R. 191138- 39, 2011).
SUPREME COURT
RULE 45, RULES OF COURT
Section 1. Filing of petition with Supreme
Court. — A party desiring to appeal by certiorari
from a judgment or final order or resolution of the
Court of Appeals, the Sandiganbayan, the Regional
Trial Court or other courts whenever authorized by
law, may file with the Supreme Court a verified
petition for review on certiorari. The petition shall
raise only questions of law which must be distinctly
set forth.
All references in the amended Section 9 of B.P. No.
129 to supposed appeals from the NLRC to the
Supreme Court are interpreted and hereby declared
to mean and refer to petitions for certiorari under
Rule 65.
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Consequently, all such petitions should hence forth 6. Cancellation by the BLR in a petition filed
be initially filed in the Court of Appeals in strict directly, appeal to DOLE Secretary by
observance of the doctrine on the hierarchy of ordinary appeal
courts as the appropriate forum for the relief desired. 7. Decision of the BLR rendered in its original
(St. Martin Funeral Home vs. NLRC, 1998) jurisdiction may be appealed to the DOLE
Secretary whose decision thereon may
Appeal from CA to SC should be under Rule 45 only be elevated to the CA by way of
(Petition for Review on Certiorari) and not Rule 65 certiorari under Rule 65.
(Special Civil Action for Certiorari). (Sea Power 8. Decision of the BLR rendered in its
Shipping Enterprises, Inc. vs. CA, 2001) appellate jurisdiction may not be appealed
to the DOLE Secretary but may be elevated
E. BUREAU OF LABOR RELATIONS directly to the CA by way of certiorari under
Rule 65. (Abbott Laboratories Philippines,
Jurisdiction of BLR Inc. v. Abbott Laboratories Employees
1. Inter-union and intra-union conflicts Union, et al., G.R. No. 131374, 2000)
2. All disputes, grievances or problems arising
from or affecting labor-management Note: Unlike the NLRC which is explicitly vested
relations in all workplaces EXCEPT those with the jurisdiction over claims for actual, moral,
arising from the implementation or exemplary and other forms of damages, the BLR is
interpretation of the CBA which shall be the not specifically empowered to adjudicate claims of
subject of grievance procedure and/or such nature arising from intra-union or inter-union
voluntary arbitration disputes. (Mariño, Jr., et. al. v. Gamilla, et. al.,G.R.
No. 132400, January 31, 2005)
Original Appellate
Cases involving Cases involving Power to Issue Subpoena
Federations and independent unions When relevant to a labor dispute under its
National Unions and local chapters jurisdiction either at the request of any interested
party or at its own initiative
Mode of review
Compromise Agreements
Original Appellate jurisdiction
If voluntarily agreed upon by the parties with the
jurisdiction
assistance of the BLR or the regional office of DOLE
Decision is
are final and binding upon the parties
immediately executory
upon issuance of entry
The only time NLRC or any courts can assume
Appeal to DOLE of final judgment; can
jurisdiction over issues involved therein:
Secretary be reviewed by the CA
In case of non-compliance thereof
in a petition for
If there is prima facie evidence that the settlement
certiorari under Rule
was obtained through fraud, misrepresentation or
65.
coercion
Within 10 days to the
DOLE Secretary
As long as the agreement is voluntarily entered into
Grounds:
and has a reasonable award, it is valid.
Grave abuse of
discretion
It must be approved by the LA (NLRC Rules).
Gross incompetence
At the DOLE Secretary’s level, the Secretary must
approve.
Appeal of BLR’s Decision
1. Denial of application for registration of a On appeal, the NLRC must approve the
union agreement.
2. Denial by the Regional Office, appeal to the
BLR An offer to settle is not proof that something is due
3. Denial is originally made by the BLR, to the employee.
appeal may be had to the DOLE Secretary
4. Cancellation of registration of a union Art. 233 of the Labor Code states that any
5. Cancellation by the Regional Office, appeal compromise settlement, including those involving
to the BLR. labor standard laws, voluntarily agreed upon by the

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parties with the assistance of the Bureau or the Privileged Communication

Regional Office of the Department of Labor shall be Information and statements made at conciliation
final and binding upon the parties. meetings shall NOT be used as evidence in the
NLRC. Conciliators and similar officials shall not
Note: The assistance of the BLR or the regional testify in any court or body regarding any matters
office of the DOLE in the execution of a compromise taken up at conciliation proceeding conducted by
settlement is a basic requirement. Without it, there them.
can be no valid compromise settlement. Mere
appearance before BLR or the regional office of the Preventive Mediation
DOLE to file the already executed compromise NCMB Manual of Procedures Section 1, (24), refers
settlement is not the “assistance” required by the to Preventive Mediation cases as labor disputes
law. (Mindoro Lumber and Hardware v. Eduardo D. which are the subject of a formal or informal request
Bacay, et. al., G.R. No. 158753, 2005) for conciliation and mediation assistance sought by
either or both parties or upon the initiative of the
F. NATIONAL CONCILIATION AND NCMB.
MEDIATION BOARD
Only a certified or duly recognized bargaining agent
Jurisdiction of the NCMB may file a notice or request for preventive mediation.
1. Conciliation
2. Mediation NCMB has no jurisdiction to entertain any notice
3. Voluntary arbitration cases filed by the federation in behalf of individual union
members of its local. (Insular Hotel Employees
Conciliation as distinguished from Mediation Union-NFL v. Waterfront Insular Hotel Davao, G.R.
Conciliation – Mediation refers to the process of No. 174040-41, 2010)
dispute management conducted by a Conciliator –
Mediator with the end in view of facilitating amicable G. POEA
settlement of the labor dispute. (NCMB Manual of Jurisdiction of the POEA
Procedures Rule III, Section 1, (4)) 1. Cancellation/Suspension of License of
Authority to recruit of Recruitment Agencies
Conciliation Preventive Mediation (until phase out within 5 years as provided
Case Case in RA 8042)
Refers to actual 2. Disciplinary Action against OFWs
Refers to the potential 3. Appeal to Secretary of DOLE within 10
existing labor dispute
labor disputes which calendar days from the
subject of a notice of
are the subject of a cancellation/revocation/supervision of
strike or lockout and
formal or informal license or authority
cases of actual strike
request for conciliation
or lockout. (NCMB
and mediation Appeal of POEA Decision to NLRC w/in 10 calendar
Manual of Procedures
assistance sought by days in cases of:
Rule III, Section 1, (3))
either or both parties or Violation of overseas employment contracts.
upon the initiative of Disciplinary cases filed against overseas contract
the NCMB to avoid the workers.
occurrence of actual
labor disputes. (NCMB
Manual of Procedures H. DOLE REGIONAL DIRECTORS
Rule III, Section 1,
(20)) Jurisdiction of DOLE RDs
1. Visitorial power. (Art. 128, Labor Code)
Organized Unorganized 2. Simple Money Claims not exceeding Php
Establishment With Establishments And 5,000. (Art. 129, Labor Code)
CBA Without CBA
Submit issue before Submit the issue Recovery and Adjudicatory Power - Requisites
the grievance before NCMB for for RD to Decide Small Money Claims
machinery. If conciliation. If not 1. Claim is presented by an employee, or a
unresolved, refer to fruitful in 10 days, refer person employed in domestic or household
voluntary arbitration. to NLRC for arbitration. service, or employer;
2. The claim arises from an EER;

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3. The claimant does not seek reinstatement;
and
4. The aggregate money claim of each
claimant does not exceed PhP 5,000
Notes: In the absence of any of the above
requisites, the LA will have jurisdiction over the
case, pursuant to ART. 224.
The claimant need not be an employee at the time
the complaint has been filed; it is enough that the
claim arises from employment
Appeal from the RD’s Decision
The Complainant may appeal to the NLRC within 5
calendar days from a receipt of a copy of the
Regional Director’s decision / resolution.
I. DOLE SECRETARY
1. Jurisdiction of the SOLE
If the BLR Director inhibits himself in a case
falling under the jurisdiction of the BLR, can
be appealed to the SOLE. Additionally, the ff
matters are under the SOLE’s jurisdiction:
1. Art. 128 (a) – Jurisdiction over inspections
& investigations (can also be exercised by
the RD)
2. Art. 128 (b) – Compliance orders for labor
standards, where EER still exists
(a) XPN: If ER contests the findings of
the labor employment & enforcement
officer & raises issues supported by
documentary proofs which were not
considered in the course of
inspection (then the case will be with
LA)
(b) NOTE: This power is often exercised
through RD (see RD cases)
(c) There is no ceiling for the amount in
this case.
3. Jurisdiction over work stoppage orders
when non-compliance with the law or IRRs
poses grave & imminent danger to health &
safety or workers in the workplace
(d) Within 24 hours: Hearing to decide if
suspension order should be lifted
(e) If violation is ER’s fault: ER will pay
wages during stoppage period
4. Jurisdiction of SOLE for strikes or lockouts
that involve national interest cases (SOLE
may assume jurisdiction or certify) –
regardless of decision, CA.
5. Appeals from BLR decisions, where BLR
exercises original jurisdiction.
LABOR
2. Visitorial and Enforcement
Powers
Visitorial Power
Power of the Secretary of Labor or his duly
authorized representative, including labor regulation
officers to:
1. Have access to employer’s records and
premises at any time of the day or night
whenever work is being undertaken therein
2. Right to copy records
3. To question any employee
4. Investigate any fact, condition, or matter
which may be necessary to determine
violations or which may be necessary to aid
in enforcement of the Labor Code or any
labor law or order
Enforcement Power
Power of the Secretary of Labor or his duly
authorized representative, including labor regulation
officers to:
1. Issue compliance orders to give effect to
labor legislation based on the findings of
employment and enforcement officers or
industrial safety engineers made in the
course of inspection
2. Issue writs of execution to the appropriate
authority for the enforcement of their
orders, EXCEPT in cases where the
employer contests the findings of the labor
employment and enforcement officer and
raises issues supported by documentary
proofs which were not considered in the
course of inspection – in the latter case, the
case will have to be forwarded to a Labor
Arbiter
3. Order Work Stoppage / Suspension of
Operations when non-compliance with the
law or IRR poses grave or imminent danger
to the health and safety of the workers in
the workplace
4. Conduct hearings within 24 hours to
determine whether:
(a) An order for stoppage of work / suspension
of operations shall be lifted or not; and
(b) Employee shall pay the employees
concerned their salary in case the violation
is attributable to his fault
Note: EER must still exist at the time of the initiation
of the action for the Secretary or his authorized
representative to exercise Enforcement Power
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When Enforcement Power Cannot be Used Comparison: Enforcement Power under Art.
128 vs. Adjudicatory Power under Art. 129
5. Case does not arise from exercise of ART. 128 ART. 129
visitorial power Nature / Subject of Proceedings
6. When EER ceased to exist at the time of Inspection of
inspection establishments and
7. If employer contests finding of the labor issuance of compliance Adjudication of
officer and such contestable issue is not orders with labor monetary claims
verifiable in the normal course of inspection standards, wage (labor standards)
orders, or other labor
Compliance Order laws
Who Initiates Claims?
Must observe due process in administrative Any interested party
proceedings: The DOLE Secretary or
initiates the case
Regional Director acts
through a sworn
1. Alleged violator must first be heard and motu propio
complaint
given adequate opportunity to present
Workers Involved
evidence on his behalf.
2. Evidence presented duly considered before Present or past
any decision reached. Employees must still employees at the time
3. Decision is based on substantial evidence. be in the service the complaint is filed,
4. Decision based on evidence presented in (hence, there is an provided that there is
the hearing, or at least contained in the existing EER) no demand for
record and disclosed to the parties. reinstatement
5. Decision should explain the issues involved Jurisdictional Limits
and the reasons for the decisions rendered. No maximum monetary Maximum of P5,000
limit per complainant
Appeal Officers Designated
If order issued by duly authorized representative of DOLE Secretary or any Regional Director
DOLE Secretary – appeal to the latter of his duly authorized (RD) or any duly
rep (may or may not be authorized hearing
RD) officer of the DOLE
If order involves monetary award – an appeal by the Mode of Appeal
employer may be perfected upon only upon posting Appealable to the Appealable to the
of CASH or SURETY bond in the amount equivalent DOLE Secretary NLRC
to the monetary award in the order appealed from
Before the DOLE may exercise its power under Art.
Stoppage of Work/Suspension of Operations 128, two important things must be resolved:
The Secretary may order stoppage of work OR
suspension of any unit or department where non- 1. Does the employer – employee relationship
compliance with the law or implementing rules and still exist, or alternatively, was there ever an
regulations poses grave and imminent danger to the employer – employee relationship to speak
health and safety of workers in the workplace. of; and
2. Are there violations of the Labor Code or
Within 24 hours – a hearing shall be conducted to any of the labor laws?
determine whether an order for the stoppage of work
or suspension of operations shall be lifted Note: The existence of EER is a statutory
prerequisite to a limitation on the power of the
If violation is attributable to fault of the employer, he Secretary of Labor, on which the legislative branch
shall pay the employees concerned their salaries or is entitled to impose.
wages during the period of such stoppage of work
or suspension of operations.
Art. 128’s grant of visitorial and enforcement powers
is for the purpose of determining violations of, and
enforcing, the Labor Code and any labor law, wage
order, or rules and regulations. If there is no
employer-employee relationship in the first place,
the duty of the employer to adhere to labor

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standards with respect to the non-employees is
questionable.
DOLE can Determine, Prima Facie, the
Existence of an EER
If there is a prima facie showing of the absence of
employer-employee relationship, the Secretary is
precluded from exercising the visitorial and
enforcement powers. (People’s Broadcasting v.
Secretary of Labor, G.R. No. 179652, May 8, 2009)
Under Art. 128(b) of the Labor Code, as amended
by RA 7730, the DOLE is fully empowered to make
a determination as to the existence of an employer-
employee relationship in the exercise of its visitorial
and enforcement power, subject to judicial review,
not review by the NLRC.
If a complaint is brought before the DOLE to give
effect to the labor standards provisions of the Labor
Code or other labor legislation, and there is a finding
by the DOLE that there is an existing employer-
employee relationship, the DOLE exercises
jurisdiction to the exclusion of the NLRC.
If the DOLE finds that there is no employer-
employee relationship, the jurisdiction is properly
with the NLRC.
If a complaint is filed with the DOLE, and it is
accompanied by a claim for reinstatement, the
jurisdiction is properly with the Labor Arbiter, under
Art. 217(3) of the Labor Code, which provides that
the Labor Arbiter has original and exclusive
jurisdiction over those cases involving wages, rates
of pay, hours of work, and other terms and
conditions of employment, if accompanied by a
claim for reinstatement.
If a complaint is filed with the NLRC, and there is still
an existing EER, the jurisdiction is properly with the
DOLE.
The findings of the DOLE, however, may still be
questioned through a petition for certiorari under
Rule 65 of the Rules of Court. (People’s
Broadcasting v. Secretary of Labor, G.R. No.
179652, 2012)
Unlawful Activities
1. For any person or entity to obstruct,
impede, delay or otherwise render
ineffective the orders of the Sec. or his
authorized representatives issued pursuant
to the authority under Art. 128.
2. No inferior court shall issue temporary or
permanent injunction or restraining order or
LABOR
otherwise assume jurisdiction over any
case involving the enforcement orders.
3. Power to Suspend Effects of
Termination
Miscellaneous Provisions
The Secretary of Labor and Employment may
suspend the effects of the termination pending
resolution of the dispute in the event of a prima facie
finding by the appropriate official of the Department
of Labor and Employment before whom such
dispute is pending that the termination may cause a
serious labor dispute or is in implementation of a
mass lay-off. (Labor Code, Art. 292[b])
Conditions under which Secretary of Labor or
his duly authorized representative MAY inquire
into the financial activities of legitimate labor
organizations
The Secretary of Labor and Employment or his duly
authorized representative is hereby empowered to
inquire into the financial activities of legitimate labor
organizations upon the filing of a complaint under
oath and duly supported by the written consent of at
least 20% of the total membership of the labor
organization concerned and to examine their books
of accounts and other records to determine
compliance or non- compliance with the law and to
prosecute any violations of the law and the union
constitution and by-laws:
Provided, That such inquiry or examination shall not
be conducted during the
60-day freedom period nor within the 30 days
immediately preceding the date of election of union
officials. (Labor Code, Art. 289)
SOLE generally has NO jurisdiction over
appeals
In The Heritage Hotel vs. National Union of Workers
(G.R. 178296, 2011), the Supreme Court ruled that
jurisdiction remained with the BLR despite the BLR
Director's inhibition.
“When the DOLE Secretary resolved the appeal,
she merely stepped into the shoes of the BLR
Director and performed a function that the latter
could not himself perform.”
SOLE has the power to give arbitral awards in
the exercise of his authority to assume
jurisdiction over labor dispute
The arbitral award given by the Secretary of Labor
can be considered as an approximation of a
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collective bargaining agreement. While the award
cannot per se be categorized as an agreement
between the parties (because of the Secretary's
interference), it still has the force and effect of a valid
contract obligation between the parties, as is stated
in (Cirtek Employees vs. Cirtek Electronics, G.R.
190515, 2011).
4. Remedies
Remedy where no EER exists
Where no employer-employee relation 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 bargaining
agreement, it is the RTC that has jurisdiction.
The RTC has jurisdiction over the claim of an
independent contractor to adjust the contractor’s
fee. (Urbanes v. Secretary of Labor, G.R. No.
122791, 2003)
J. GRIEVANCE MACHINERY
Establishment of a grievance machinery
The parties to a CBA shall include therein provisions
that will ensure the mutual observance of its terms
and conditions.
They shall establish a machinery for the adjustment
and resolution of grievances arising from the
interpretation or implementation of their CBA AND
those arising from the interpretation or enforcement
of company personnel policies (Labor Code, Art.
273)
Establishment of Grievance Machinery
(Omnibus Rule Implementing the Labor Code, Rule
XIX, Sec. 1)
1. By provision in the CBA
2. In the absence of applicable provision in the
CBA, a Grievance committee shall be
created within 10 days from the signing of
the CBA.
The grievance committee shall be composed of at
least 2 representatives each from the members of
the bargaining unit, designated by the union and the
employer, unless otherwise agreed upon by the
parties.
“Grievance” or “Grieveable Issue”
1. Interpretation or implementation of the CBA
2. Interpretation or enforcement of company
personnel policies
3. Any claim by either party that the other
party is violating any provisions of the
CBA or company personnel policies.
LABOR
In order to be grieveable, the violations of the CBA
should be ordinary and not gross in character;
otherwise, they shall be considered as unfair labor
practice (ULP).
Gross violation of the CBA is defined as flagrant
and/or malicious refusal by a party thereto to
comply with the economic provisions thereof.
Accordingly, violations of a CBA, except those which
are gross in character, shall no longer be treated as
ULP, and shall be resolved as grievances. (Labor
Code, Art. 274)
If what is violated, therefore, is a non-economic or a
political provision of the CBA, the same shall not be
considered as unfair labor practice and may thus be
processed as a grievable issue in accordance with
and following the grievance machinery laid down in
the CBA.
Note: In the case of (Liberal Labor Union v. Phil Can
Co., 1952), the Court declared as illegal the strike
staged by the union for not complying with the
grievance procedure provided in the collective
bargaining agreement ruling that “xxx the main
purpose of the parties in adopting a procedure in the
settlement of their disputed is to prevent a strike.
This procedure must be followed in its entirety if it is
to achieve its objective. xxx strikes held in violation
of the terms contained in the collective bargaining
agreement are illegal, especially when they provide
for conclusive arbitration clauses.”
In abandoning the grievance proceedings and
stubbornly refusing to avail of the remedies under
the CBA, respondent Union violated the mandatory
provisions of the collective bargaining agreement.
(San Miguel Corporation v. NLRC, G.R. No. 99266,
1999)
K. VOLUNTARY ARBITRATOR
Jurisdiction (Art. 274)
1. Grievances arising from the
implementation or interpretation of CBAs
2. Arising from interpretation or enforcement
of company personnel policies
3. Wage distortion issues arising from the
application of any wage orders in organized
establishments
4. Arising from interpretation and
implementation of the productivity incentive
programs under RA 6971
5. Any other labor disputes upon agreement
by the parties.
NOTE: The parties may choose to submit the
dispute to voluntary arbitration proceedings before
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or at stage of the compulsory arbitration parties have agreed to resort to voluntary

proceedings. arbitration.”

Issues/ controversies which may be the subject of
voluntary arbitration
1. Article 261 of the Labor Code provides that
VA shall have original and exclusive
jurisdiction over unresolved grievances
arising from the interpretation or
implementation of the CBA and those
arising from the interpretation or
enforcement of company personnel
policies
2. Violations of the CBA which are not gross
in character if not resolved through the
grievance machinery.
 2. Illegal dismissal
3. All other labor disputes including ULP and
bargaining deadlock upon agreement of the
parties (Labor Code, Art. 262)
Effect of failure to resort to barangay
conciliation to the labor case
Labor disputes are the exception to PD 1508. Under
Art. 226 of the Labor Code, motions to dismiss
before the LA are only allowed on grounds of lack of
jurisdiction, improper venue and bar by prior
judgment or prescription. Hence, failure to resort to
barangay conciliation is not a valid ground to defeat
the labor case.
L. PRESCRIPTION OF ACTIONS
1. Money claims
3. Unfair labor practice
4. Offenses under the Labor Code
5. Illegal Recruitment

Submission agreement All money claims arising from

Note: It is mandatory for parties to refer their employer – employee relations
controversy to a grievance machinery and voluntary accruing during the effectivity of
MONEY
arbitrators for the adjustment or resolution of this Code shall be filed within 3
CLAIMS
grievances arising from the interpretation or years from the time the cause of
implementation of their CBA and those arising from action accrued; otherwise they
the interpretation or enforcement of company shall be forever barred.
personnel policies. (Sanyo Philippines Workers An action for reinstatement
Union-PSSLU v. Canizares, G.R. No. 101619, prescribes in 4 years, for the
1992) injury to the employee’s rights
ILLEGAL
as provided under Art. 1146 of
A VA is confined to the interpretation and application DISMISSAL the Civil Code. (Callanta v.
of the CBA. He does not sit to dispense his own Carnation Philippines, G.R. No.
brand of industrial justice and his award is legitimate 70615, 1986)
only insofar as it draws its essence form the CBA. 1 year from accrual of such
ULP
unfair labor practice.
While the VA is confined to the interpretation and the ILLEGAL Simple illegal recruitment – 5
application of the CBA in resolving the issue/s RECRUITME years
submitted for its resolution, he is not expected to NT Economic sabotage – 20 years
merely rely on the cold and cryptic words on the face General Rule: 3 years from the
of the CBA. He is mandated to discover the OFFENSES time the cause of action accrued
intentions of the parties and gaps may likewise be UNDER THE
filled by reference to the practices of the industry, LABOR Exception: ULP cases prescribe
such that the parties’ contemporaneous and CODE within 1 year from accrual of
subsequent acts should be considered. (Veloso, such unfair labor practice
Labor Reviewer, pp 415-416 (2011)) A complaint or petition for audit
or examination of funds and
A dispute settled through voluntary arbitration IS books of accounts prescribes
NOT inconsistent with Article 217 of the Labor Code within three (3) years:
The SC in The University of Immaculate Concepcion ACTIONS from the date of submission of
vs. NLRC (G.R. 181146, 2011), stated that Article INVOLVING the annual financial report to the
262 provides of an exception, and “for the exception UNION DOLE; or
to apply, there must be agreement between the FUNDS from the date the same should
parties clearly conferring jurisdiction to the voluntary have been submitted as
arbitrator. Such agreement may be stipulated in a required by law, whichever
collective bargaining agreement. However, in the comes earlier.
absence of a collective bargaining agreement, it is
enough that there is evidence on record showing the

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This provision on the It is wrong to apply opportunity be heard in due

prescriptive period applies only
to a legitimate labor
organization which has
submitted the financial report
required under the Labor Code.
Illegal recruitment cases shall
prescribe in five (5) years
ILLEGAL
RECRUIT Illegal recruitment cases
MENT involving economic sabotage
shall prescribe in twenty (20)
years.
SUMMARY OF PROCEDURE: LABOR CASES
The rules of evidence prevailing in courts of law or
equity shall not be controlling.
It is the spirit and intention of this Code which shall
be used as reasonable means to ascertain the facts
in each case, without regard to technicalities of law
and procedure all in the interest of due process.
Parties may be represented by legal counsel but it
shall be the duty of the Chairman, any presiding
Commissioner or any labor arbiter to exercise
complete control of the proceedings at all stages.
General Rule: The only way to acquire jurisdiction
is to serve summons.
process under Art. 292(b).
Verification and Certification of Non-Forum
Shopping are required BUT Art. 227 can be
invoked.
NLRC Rules provide that before deciding, LA must
inform parties that the case has been submitted for
decision. If this is not complied with, decision is still
valid because of Art. 227.
Art. 218(c) cannot be invoked to support a faulty
decision of the LA. The provision refers to a power
of the NLRC and not the LA.
Summary
1. Decision of the Voluntary Arbitrator –
appeal to CA under Rule 43 (Luzon Dev’t
Bank)
2. Decision of the DOLE and other attached
agencies (including NLRC) should be
brought to the CA under Rule 65 (St. Martin
Funeral Homes)
3. Decision of the DOLE Secretary – certiorari
to the CA under Rule 65 (NAFLU v.
Laguesma)
4. Order of the Med-Arbiter GRANTING the
Petition for CE in an UNORGANIZED
establishment – not appealable under DO
40-03 (2003). Thus, the recourse is
certiorari under Rule 65.

Exception: Voluntary appearance of the lawyer

amounts to voluntary submission to the jurisdiction
of the LA. (Santos v. NLRC, G.R No. 101699, 1996)

Failure to implead a substitute party is not a fatal

defect. (Chu v. Pasajo, 2003)

Payment of docket fees is not required in labor

standards claims under Art. 292(d).

Except: In case of bargaining deadlock, the fees are

shared by the parties.

Sec. 3, Rule V of the NLRC Rules allows parties to

submit position papers with attachments and they
can be made basis of the LA’s decision.

Holding of trial on the merits is discretionary on the

part of the LA.

Due process in Art. 292(b), termination disputes 

end line is hearing with representative of own choice

Due process in Art. 227 opportunity to be heard

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LABOR ARIBTER
1. ULP
2. Termination disputes
3. Claims for wages, rates of pay,
hours of work and other terms and
conditions of employment – if
accompanied with a claim for
reinstatement
4. Claims for actual, moral,
exemplary and other forms of
damages arising from employer-
employee relationship
5. Cases arising from prohibited
activities during strikes, including
questions involving the legality of
strikes and lockouts
6. All other claims arising from
employer – employee relationship
involving an amount exceeding
P5000 regardless of whether
accompanied by a claim for
reinstatement except claims for
ECC, SSS, Medicare, & maternity
benefits
7. Wage distortion cases
unorganized establishments
8. All monetary claims of OFWs
arising from EER 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 (RA 8042)
9. Enforcement of compromise
agreements when there is non-
compliance by any of the parties
pursuant to Art. 233 of the Code
(Sec. 1, Rule V, 2005 NLRC
Rules)
JURISDICTION TABLE
DOLE REGIONAL
NLRC
DIRECTORS
1. Visitorial power. (Art. ORIGINAL JURISDICTION
128, Labor Code) 1. Injunction in ordinary labor
2. Simple Money disputes to enjoin or restrain
Claims not exceeding any actual or threatened
Php 5,000. (Art. 129, commission of any or all
Labor Code) prohibited or unlawful acts
3. Simple Money or to require the
Claims not exceeding performance of a particular
Php 5,000. (Art. 129, act in any labor dispute
Labor Code) which, if not restrained or
4. Violation of the performed forthwith , may
constitution & by – cause grave or irreparable
laws and rights & damage to any party
conditions 2. Injunctions in strikes or
membership. lockouts under Art. 279
5. Inter-union and intra- 3. Certified labor dispute
union disputes casing or likely to cause a
involving strike or lockout in an
independent unions industry indispensable to
and chartered locals. the national interest,
certified to it by the DOLE
Secretary for compulsory
arbitration
in
EXCLUSIVE APPELLATE
JURISDICTION
1. All cases decided by the
LAs, including contempt
cases
2. Cases decided by the DOLE
Regional Directors or his
duly authorized hearing
officers involving recovery
of wages, simple money
claims and other benefits
not exceeding Php 5,000
and not accompanied by a
claim for reinstatement.
LABOR
COURT OF APPEALS SUPREME COURT
VIA RULE 65 Appeal from CA to SC
The only mode by which a should be under Rule
labor case decided by 45 (Petition for
any of the following labor Review on Certiorari)
authorities/tribunals may and not Rule 65
reach the Court of (Special Civil Action
Appeals is through a Rule for Certiorari). (Sea
65 petition for certiorari. Power Shipping
1. DOLE Secretary; Enterprises, Inc. vs.
2. Commission (NLRC); CA, 2001)
and
3. Director of the Bureau
of Labor Relations
(BLR) in cases decided
by him in his appellate
jurisdiction (as
distinguished from
those he decides in his
original jurisdiction
which are appealable to
the DOLE Secretary).
EXCEPTION: RULE 43
Decisions, orders or
awards issued by the
Voluntary Arbitrator or
panel of Voluntary
Arbitrators
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NATIONAL
BUREAU OF LABOR CONCILIATION VOLUNTARY
DOLE SECRETARY
RELATIONS AND MEDIATION ARBITRATORS
BOARD
1. Inter-union and intra-union 1. Conciliation Art. 128. Visitorial and Enforcement Power. 1. Grievances arising from
conflicts 2. Mediation Power of the Sec. of Labor or his duly authorized the implementation or
All disputes, grievances or 3. Voluntary representative, including labor regulation officers to: interpretation of CBAs
problems arising from or arbitration 1. Have access to employer’s records and premises at any 2. Arising from
affecting labor-management time of the day or night whenever work is being interpretation or
relations in all workplaces undertaken therein enforcement of
EXCEPT those arising from 2. Right to copy records company personnel
the implementation or 3. To question any employee policies
interpretation of the CBA which 4. Investigate any fact, condition, or matter which may be 3. Wage distortion issues
shall be the subject of necessary to determine violations or which may be arising from the
grievance procedure and/or necessary to aid in enforcement of the Labor Code or any application of any wage
voluntary arbitration labor law or order orders in organized
Complaint involving federations, 5. Issue compliance orders to give effect to labor legislation establishments
national unions, industry based on the findings of employment and enforcement 4. Arising from
unions, its officers or member officers or industrial safety engineers made in the course interpretation and
organizations of inspection implementation of the
6. Issue writs of execution to the appropriate authority for productivity incentive
the enforcement of their orders, EXCEPT in cases where programs under RA
the employer contests the findings of the labor 6971
employment and enforcement officer and raises issues 5. Any other labor disputes
supported by documentary proofs which were not upon agreement by the
considered in the course of inspection – in the latter case, parties.
the case will have to be forwarded to a Labor Arbiter

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LABOR

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