Chan LMT Labor Nov2022

LAST-MINUTE NOTES
FOR THE
2022 BAR EXAM IN
LABOR LAW
Based on the topics prescribed
in the Labor Law Bar Syllabus (Bar Bulletin No. 2)
Legal Practitioner
Based on the topics prescribed in the Labor Law Bar Syllabus (Bar Bulletin No. 2)
Prof. Johanna Celine Mari A. Chan
Legal Practitioner
UPDATED
LAST-MINUTE NOTES
FOR THE
2022 BAR EXAM IN LABOR LAW
Based on the topics prescribed

in the Labor Law Bar Syllabus (Bar Bulletin No. 2)
Atty. Johanna Celine Mari A. Chan

Legal Practitioner
MAJOR TOPIC 1
GENERAL PRINCIPLES
A. BASIC POLICY ON LABOR
1. Security of tenure
a. Refer to Article 3 of the Labor Code and Article XIII, Section 3 of the 1987 Constitution, as discussed
above.
2. Social justice
b. R.A. No. 6657, (“Comprehensive Agrarian Reform Law”) Section 2:
“It is the policy of the State to pursue a Comprehensive Agrarian Reform Program (CARP). The welfare of the
landless farmers and farmworkers will receive the highest consideration to promote social justice and to move the
nation toward sound rural development and industrialization, and the establishment of owner cultivatorship of
economic-sixe farms as the bass of Philippine agrculture.”
c. Article II, Section 9 of the 1987 Constitution:

“The State shall promote a just and dynamic social order that will ensure the prosperity and independence of the nation
and free the people from poverty through policies that provide adequate social services, promote full employment, a
rising standard of living, and an improved quality of life for all.”
d. Article II, Section 10 of the 1987 Constitution

“The State shall promote social justice in all phases of national development.”
e. See also Article XIII, Section 3 of the 1987 Constitution, as discussed above.
3. Equal work opportunities

f. Article XIII, Section 14 of the 1987 Constitution
“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”
g. See also Article II, Section 9 of the 1987 Constitution as discussed above.
4. Right to self-organization and collective bargaining

h. Article III, Section 8 of the 1987 Constitution
“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.”
i. Article 257 [246] speaks of the principle of non-abridgment of the right to self-organization as follows:
“Article 257 [246]. Non-Abridgment of Right to Self-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. Such right shall include the right to form, join, or assist labor organizations for the
purpose of collective bargaining through representatives of their own choosing and to engage in lawful
concerted activities for the same purpose or for their mutual aid and protection, subject to the provisions
of Article 279 [264] of this Code.”
j. See also Article 3 of the Labor Code and Article XIII, Section 3 of the 1987 Constitution, as discussed above.
5. Construction in favor of labor

k. Under Article 1702 of the Civil Code.
“Article 1702. In case of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety
and decent living for the laborer.”
l. Article 4 of the Labor Code.

“Article 4. Construction in Favor of Labor. – All doubts in the implementation and interpretation of the provisions of
this Code, including its implementing rules and regulations, shall be resolved in favor of labor.”
m. Follow this rule in interpreting and construing the following:
a. DOUBTS OR AMBIGUITIES IN LABOR CONTRACTS such as employment contract and
collective bargaining agreement (CBA); or
b. DOUBTS OR AMBIGUITIES IN EVIDENCE in labor cases.
Thus, where contracts, evidence, or provisions of the law leave no room for doubt either in their interpretation or
application, Article 4 of the Labor Code and Article 1702 of the Civil Code does not apply.
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6. Burden of proof and quantum of evidence
n. Burden of Proof in Illegal Dismissal Cases
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o Generally, the burden rests on the employer to prove that the dismissal of an employee is for a just or
authorized cause (Article 292(b) [277(b)] of the Labor Code).
o When burden of proof is on the employee: The rule does not apply if the facts and the evidence do not establish a
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prima facie case that the employee was dismissed from employment. Before the employer must bear the burden
of proving that the dismissal was legal, the employee must first establish by substantial evidence the fact of
his dismissal from service.
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o. Burden of Proof in Monetary Claims Cases
o As a general rule, in monetary claims cases, a party who alleges payment as a defense has the burden of
proving it. (Our Haus Realty Development Corporation v. Parian, G.R. No. 204651, Aug. 06, 2014)
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o Particularly, the burden rests on the employer to prove payment, rather than on the employees to prove non-
payment. (Heirs of Manuel H. Ridad v. Gregorio Araneta University Foundation, G.R. No. 188659, Feb. 13,
2013).
p. Quantum of Evidence: Substantial Evidence
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o Section 5, Rule 133 of the Rules of Court provides that “in cases filed before administrative or quasi-judicial
bodies, a fact may be deemed established if it is supported by substantial evidence, or that amount of relevant
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evidence which a reasonable mind might accept as adequate to justify a conclusion.”

o Substantial evidence is defined as Evidence that a reasonable mind might accept as adequate to support a
conclusion. (China City Restaurant v. NLRC, G.R. No. 97196, Jan. 22, 1993, 217 SCRA 451.) It does not
necessarily import preponderant evidence, as is required in an ordinary civil case. It has been defined to be
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such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.( Spouses
Giron v. Obiacoro, CV-331l5, Sept. 28,1994)
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q. Important principles to remember:
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o All administrative determinations require only substantial proof and not clear and convincing evidence.
However, this should not be construed to mean just like any form or kind of evidence; it must be relevant
evidence as a reasonable mind might accept as adequate to support a conclusion.
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o Remember that in the hierarchy of evidentiary values, proof beyond reasonable doubt is at the highest level
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and substantial evidence is the least demanding in the hierarchy of evidence.
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o If doubts exist between the evidence presented by the employer and the employee, the scales of justice
must be tilted in favor of the latter.
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B. CONSTRUCTION IN FAVOR OF LABOR

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1. Construction in favor of labor

r. Under Article 1702 of the Civil Code.
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“Article 1702. In case of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety
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and decent living for the laborer.”

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s. Article 4 of the Labor Code.

“Article 4. Construction in Favor of Labor. – All doubts in the implementation and interpretation of the provisions of
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this Code, including its implementing rules and regulations, shall be resolved in favor of labor.”
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t. Follow this rule in interpreting and construing the following:

c. DOUBTS OR AMBIGUITIES IN LABOR CONTRACTS such as employment contract and r
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collective bargaining agreement (CBA); or

d. DOUBTS OR AMBIGUITIES IN EVIDENCE in labor cases.
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Thus, where contracts, evidence, or provisions of the law leave no room for doubt either in their interpretation or
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application, Article 4 of the Labor Code and Article 1702 of the Civil Code does not apply.
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C. BURDEN OF PROOF AND QUANTUM OF EVIDENCE IN LABOR CASES

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1. Burden of proof and quantum of evidence

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u. Burden of Proof in Illegal Dismissal Cases

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o When burden of proof is on the employee: The rule does not apply if the facts and the evidence do not establish a
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prima facie case that the employee was dismissed from employment. Before the employer must bear the burden
of proving that the dismissal was legal, the employee must first establish by substantial evidence the fact of
his dismissal from service.
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v. Burden of Proof in Monetary Claims Cases

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o As a general rule, in monetary claims cases, a party who alleges payment as a defense has the burden of
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proving it. (Our Haus Realty Development Corporation v. Parian, G.R. No. 204651, Aug. 06, 2014)
o Particularly, the burden rests on the employer to prove payment, rather than on the employees to prove non-
payment. (Heirs of Manuel H. Ridad v. Gregorio Araneta University Foundation, G.R. No. 188659, Feb. 13,
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2013).
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w. Quantum of Evidence: Substantial Evidence

o Section 5, Rule 133 of the Rules of Court provides that “in cases filed before administrative or quasi-judicial
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bodies, a fact may be deemed established if it is supported by substantial evidence, or that amount of relevant
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evidence which a reasonable mind might accept as adequate to justify a conclusion.”

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necessarily import preponderant evidence, as is required in an ordinary civil case. It has been defined to be
such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.( Spouses
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Giron v. Obiacoro, CV-331l5, Sept. 28,1994)

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x. Important principles to remember:
o All administrative determinations require only substantial proof and not clear and convincing evidence.
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However, this should not be construed to mean just like any form or kind of evidence; it must be relevant
evidence as a reasonable mind might accept as adequate to support a conclusion.
o Remember that in the hierarchy of evidentiary values, proof beyond reasonable doubt is at the highest level
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and substantial evidence is the least demanding in the hierarchy of evidence.
o If doubts exist between the evidence presented by the employer and the employee, the scales of justice
must be tilted in favor of the latter.
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D. LEGAL BASIS
1. 1987 Constitution
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• Under Article II (Declaration of Principles and State Policies):
1) “Section 18. The State affirms labor as a primary social economic force. It shall protect the
rights of workers and promote their welfare.”
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This provision is invoked by the Supreme Court when it affirms the interest, rights and welfare of labor.
Example: When the SC nullifies a patently illegal provision in an employment contract or when it invalidates
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a Quitclaim executed by a worker because of unconscionably low consideration.
• Under Article III (Bill of Rights):

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a. Freedom of speech, of expression, or of the press, or the right of the people peaceably to
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assemble and petition the government for redress of grievances.
This freedom guaranteed under Article III, Section 4 of the constitution is RELEVANT ONLY IN
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CONNECTION WITH PICKETING and NOT IN RELATION TO STRIKE which has a different
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constitutional basis (Article XIII, Section 3).
b. Right of public and private sector employees to form unions, associations, or societies for
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purposes not contrary to law shall not be abridged.
This is known as “freedom of association.” This provision is the basis for the employees’ right to self-
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organization.
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c. Non-impairment of obligations of contracts. Ba

The concept of this right in political law is similar in labor law.
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d. Right to speedy disposition of cases in judicial, quasi-judicial or administrative bodies.

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This can be invoked in labor cases at all levels, to wit:

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(1) Before quasi-judicial or administrative bodies, such as:

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a) Labor Arbiters, NLRC;

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b) Med-Arbiters/BLR;
c) DOLE Regional Directors/DOLE Secretary; and
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d) Voluntary Arbitrators.
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(2) Before judicial bodies, such as: r

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a) Court of Appeals; and

b) Supreme Court,
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when labor cases reach these higher level courts.
e. Prohibition against involuntary servitude.

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This principle is relevant only in two (2) situations, namely: (1) RESIGNATION AND (2) RETURN-TO-
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WORK ORDER IN NATIONAL INTEREST CASES.

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This means that:

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(1) An employee has the right to resign since he cannot be forced to work against his will;
(2) The moment an assumption of jurisdiction order (AJO) is issued by the DOLE Secretary in
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national interest cases, a striker can be ordered to return to work even against his will in case at the
time of such issuance of the AJO, there was already an on-going strike; and
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(3) When employees are called upon to render military or civic duty.
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y. Under Article XIII, Section 3 (Social Justice and Human Rights):

a) Full protection to labor, local and overseas, organized and unorganized;
b) Promotion of full employment;
c) Promotion of equality of employment opportunities for all;
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d) Guarantee of the rights of all workers to:

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1. self-organization;
2. collective bargaining and negotiations;
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3. peaceful concerted activities, including the right to strike in accordance with law;
4. security of tenure;
5. humane conditions of work;
6. a living wage;
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7. participate in policy and decision-making processes affecting their rights and benefits as may be
provided by law.
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e) Promotion of 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
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mutual compliance therewith to foster industrial peace.
f) Regulation of 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
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to expansion and growth.
2. Civil Code
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z. Under Article 1700 of the Civil Code:
“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
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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.”
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In Davao Integrated Port Stevedoring Services v. Abarquez (March 19, 1993). It was held that a CBA,
as a labor contract within the contemplation of Article 1700 of the Civil Code, is not merely contractual in nature
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but impressed with public interest, thus, it must yield to the common good.
Similarly, an employment contract or any other labor contract is treated as not merely contractual in nature
similar to an ordinary contract like a lease contract because it is impressed with public interest. Consequently, all
labor laws are deemed read or incorporated therein even if not so expressly provided or stipulated in its
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provisions.
aa. Article 1702 of the Civil Code.
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(See discussion below of Article 1702 of the Civil Code, in relation to Article 4 of the Labor Code regarding the
rule on interpretation and construction provisions of law and labor contracts).
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3. Labor Code
bb. Under Article 3 of Labor Code:
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a) Full protection to labor;
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b) Promotion of full employment;
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c) Promotion of equal work opportunities regardless of sex, race or creed; Ba

d) Regulation of the relations between workers and employers;
e) Protection of the rights of workers to:
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1. self-organization;
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2. collective bargaining;
3. security of tenure; and
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4. just and humane conditions of work.

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MAJOR TOPIC 2
RECRUITMENT AND PLACEMENT OF WORKERS
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A. RECRUITMENT AND PLACEMENT
1. Illegal recruitment and other prohibited activities
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• What are illegal recruitment acts that can be committed by NON-LICENSEE or NON-HOLDER OF
AUTHORITY?
When what is committed by such NON-LICENSEES or NON-HOLDERS OF AUTHORITY is any of the
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acts of recruitment allowed only to be done by licensees or holders of authority such as the 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.
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In other words, had they possessed of license or authority, their commission of any of the foregoing acts
could have been valid and not constitutive of illegal recruitment.
NOTE: The non-licensee or non-holder of authority is presumed to be engaged in such recruitment if he,
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in any manner, offers or promises for a fee employment abroad to two or more persons.
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• What are acts of illegal recruitment when committed by ANY PERSON, whether a NON-
LICENSEE, NON-HOLDER OF AUTHORITY or even by a LICENSEE or HOLDER OF
AUTHORITY?
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(a) To charge or accept, directly or indirectly, any amount greater than that specified in the schedule
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of allowable fees prescribed by the DOLE Secretary, or to make a worker pay or acknowledge any
amount greater than that actually received by him as a loan or advance;
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(b) To furnish or publish any false notice or information or document in relation to recruitment or
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employment;
(c) To give any false notice, testimony, information or document or commit any act of
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misrepresentation for the purpose of securing a license or authority under the Labor Code, or for
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the purpose of documenting hired workers with the POEA, which include the act of reprocessing
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workers through a job order that pertains to non-existent work, work different from the actual overseas
work, or work with a different employer whether registered or not with the POEA;
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(d) To induce or attempt to induce a worker already employed to quit his employment in order to offer
him another unless the transfer is designed to liberate a worker from oppressive terms and conditions
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of employment;
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(e) To influence or attempt to influence any person or entity not to employ any worker who has not applied
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for employment through his agency or who has formed, joined or supported, or has contacted or is
supported by any union or workers' organization;
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(f) To engage in the recruitment or placement of workers in jobs harmful to public health or morality
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or to the dignity of the Republic of the Philippines;

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(g) To fail to submit reports on the status of employment, placement vacancies, remittance of foreign
exchange earnings, separation from jobs, departures and such other matters or information as
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may be required by the Secretary of Labor and Employment;

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(h) To substitute or alter to the prejudice of the worker, employment contracts approved and verified
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by the DOLE from the time of actual signing thereof by the parties up to and including the period of
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the expiration of the same without the approval of the DOLE;

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(i) For an officer or agent of a recruitment or placement agency to become an officer or member of the
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Board of any corporation engaged in travel agency or to be engaged directly or indirectly in the
management of travel agency;
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(j) To withhold or deny travel documents from applicant workers before departure for monetary or
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financial considerations, or for any other reasons, other than those authorized under the Labor Code
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and its implementing rules and regulations;

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(k) Failure to actually deploy a contracted worker without valid reason as determined by the Department
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of Labor and Employment;

(l) Failure to reimburse expenses incurred by the worker in connection with his documentation and
processing for purposes of deployment, in cases where the deployment does not actually take place
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without the worker's fault. Illegal recruitment when committed by a syndicate or in large scale
shall be considered an offense involving economic sabotage; and
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(m) To allow a non-Filipino citizen to head or manage a licensed recruitment/manning agency.”

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a. Elements and Types of Illegal Recruitment

The essential elements of illegal recruitment vary in accordance with the following classifications:
(1) Simple illegal recruitment;
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(2) When committed by a syndicate; or

(3) When committed in large scale.
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When illegal recruitment is committed under either Nos. 2 or 3 above or both, it is considered an offense involving
economic sabotage.
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Simple Illegal Recruitment

• What are the 2 elements of simple illegal recruitment?
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(1) The offender has no valid license or authority required by law to enable one to lawfully engage in
recruitment and placement of workers; and
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(2) He undertakes either any activity within the meaning of “recruitment and placement” defined under Article
13(b), (see above enumeration) or any prohibited practices (see above enumeration) under Article 34 of
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the Labor Code.
• Can a recruiter be a natural or juridical person?
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Yes.
• What are some relevant principles on illegal recruitment?
1. Mere impression that a person could deploy workers overseas is sufficient to constitute illegal recruitment.
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But if no such impression is given, the accused should not be convicted for illegal recruitment.
2. Mere promise or offer of employment abroad amounts to recruitment.
3. There is no need to show that accused represented himself as a licensed recruiter.
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4. Referrals may constitute illegal recruitment.
5. It is illegal recruitment to induce applicants to part with their money upon false misrepresentations and
promises in assuring them that after they paid the placement fee, jobs abroad were waiting for them and that
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they would be deployed soon.
6. Recruitment whether done for profit or not is immaterial.
7. The act of receiving money far exceeding the amount as required by law is not considered as “recruitment and
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placement” as this phrase is contemplated under the law.

8. Actual receipt of fee is not an element of the crime of illegal recruitment.
9. Conduct of interviews amounts to illegal recruitment.
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10. Absence of receipt is not essential to hold a person guilty of illegal recruitment.
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11. Conviction for illegal recruitment may be made on the strength of the testimonies of the complainants.
12. Absence of documents evidencing the recruitment activities strengthens, not weakens, the case for illegal
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recruitment.
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13. Only one person recruited is sufficient to convict one for illegal recruitment.
14. Non-prosecution of another suspect is immaterial.
15. Execution of affidavit of desistance affects only the civil liability but has no effect on the criminal liability for
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illegal recruitment.
16. Defense of denial cannot prevail over positive identification. Positive identification where categorical and
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consistent and not attended by any showing of ill motive on the part of the eyewitnesses on the matter prevails
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over alibi and denial. Between the categorical statements of the prosecution witnesses, on the one hand, and
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bare denials of the accused, on the other hand, the former must prevail. Ba
Illegal Recruitment as a Form of Economic Sabotage
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• When is illegal recruitment considered a crime involving economic sabotage?

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1. When committed by a syndicate; or

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2. When committed in large scale.

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Note: the figure three (3) makes the difference, thus:

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✓ 3 or more recruiters regardless of no. of recruitees = by a syndicate

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✓ 3 or more recruitees regardless of no. of recruiters = in large scale

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When is illegal recruitment committed by a syndicate?

If it is carried out by a group of three (3) or more persons conspiring or confederating with one another.
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• Elements of illegal recruitment by a syndicate.

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The essential elements of the crime of illegal recruitment committed by a syndicate are as follows:
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1. There are at least three (3) persons who, conspiring and/or confederating with one another, carried out
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any unlawful or illegal recruitment and placement activities as defined under Article 13(b) or committed any
prohibited activities under Article 34 of the Labor Code; and
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2. Said persons are not licensed or authorized to do so, either locally or overseas.
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The law does not require that the syndicate should recruit more than one (1) person in order to constitute the crime of illegal recruitment
by a syndicate. Recruitment of one (1) person would suffice to qualify the illegal recruitment act as having been committed by a
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syndicate.
• When is illegal recruitment considered in large scale?
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If committed against three (3) or more persons individually or as a group.

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• Elements of illegal recruitment in large scale.

The elements of illegal recruitment in large scale, as distinguished from simple illegal recruitment, are as follows:
1. The accused engages in the recruitment and placement of workers as defined under Article 13(b) or committed
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any prohibited activities under Article 34 of the Labor Code; and

2. The accused commits the same against three (3) or more persons, individually or as a group.
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• Illegal recruitment by large scale as distinguished from illegal recruitment by a syndicate.

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As distinguished from illegal recruitment committed by a syndicate, illegal recruitment in large scale may be committed
by only one (1) person. What is important as qualifying element is that there should be at least three (3) victims of
such illegal recruitment, individually or as a group.
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• Recruitment in large scale or by a syndicate is malum prohibitum and not malum in se.
b. Illegal recruitment vs. estafa
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It must be stressed that not all acts which constitute the felony of estafa under the Revised Penal Code necessarily establish
the crime of illegal recruitment under the Labor Code. Estafa is wider in scope and covers deceits, whether related or not
related to recruitment activities.
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Illegal recruitment is malum prohibitum while estafa is malum in se. Additionally, in illegal recruitment, the criminal intent of the
accused is not necessary for conviction; the fact alone that the accused violated the law warrants his conviction. On the
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other hand, intent is imperative for conviction of the crime of estafa.
• Can a person be charged and convicted separately for illegal recruitment and estafa involving one and
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the same act of recruitment?
Yes. It is clear that conviction under the Labor Code does not preclude conviction for estafa or other crimes under
other laws.
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• Some relevant principles:
o Same evidence to prove illegal recruitment may be used to prove estafa. It is thus enough to show that the
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recruiter and his cohort acted with unity of purpose in defrauding the victims by misrepresenting that they
had the power, influence, agency and business to obtain overseas employment for them upon payment of
a placement fee, which they did pay and deliver to the recruiter.
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o Conviction for both illegal recruitment and estafa is not double jeopardy.
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• What is the nature of the liability between local recruiter and its foreign principal?
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The nature of their liability is “solidary” or “joint and several” for any and all claims arising out of the employment
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contract of OFWs.
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2. Liability of local recruitment agency and foreign employer
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a. Solidary liability
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o The nature of the liability of a local recruiter and its foreign principal is “solidary” or “joint and several”
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for any and all claims arising out of the employment contract of OFWs.
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• Is the solidary liability of corporate officers with the recruitment agency “automatic” in character?
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No. In order to hold the officers of the agency solidarily liable, it is required that there must be proof of their
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culpability therefor. Thus, it was held in the 2013 case of Gagui v. Dejero, that while it is true that R.A. 8042 and the
Corporation Code provide for solidary liability, this liability must be so stated in the decision sought to be
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implemented. Absent this express statement, a corporate officer may not be impleaded and made to personally answer
for the liability of the corporation.
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• What are some relevant principles on the persons liable for illegal recruitment?
o Employees of a licensed recruitment agency may be held liable for illegal recruitment as principal by direct
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participation, together with his employer, if it is shown that he actively and consciously participated in illegal
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recruitment.
Good faith and merely following orders of superiors are not valid defenses of an employee.
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o A manager of a recruitment/manning agency is not a mere employee. As such, he receives job applications,
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interviews applicants and informs them of the agency’s requirement of payment of performance or cash
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bond prior to the applicant’s deployment. As the crewing manager, he was at the forefront of the company’s
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recruitment activities.
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b. Theory of imputed knowledge

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o Knowledge of the agent is deemed knowledge of the principal but not the other way around.
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o The theory of imputed knowledge is a rule that any information material to the transaction, either
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possessed by the agent at the time of the transaction or acquired by him before its completion, is deemed
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to be the knowledge of the principal, at least insofar as the transaction is concerned, even though the
knowledge, in fact, is not communicated to the principal at all.
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3. Entities prohibited from recruiting

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• For overseas employment:

o Travel agencies and sales agencies of airline companies, whether the recruitment and placement is for profit
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or not, including the following:

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▪ Officers or members of the Board of any corporation or partners in a partnership engaged in the
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business of a travel agency; and

▪ 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
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travel agency.
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▪ Individuals, partners, officers or directors of an insurance company who make, propose or provide
an insurance contract under the compulsory insurance coverage for agency-hired OFWs or seafarers;
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▪ In case of sea-based OFWs, if the applicant is presently an incorporator, director or key officer of at
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least five (5) licensed manning agencies;

▪ Sole proprietors, partners or officers and members of the board with derogatory records, such as, but
not limited to, the following:
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1. Those convicted, or against whom probable cause or prima facie finding of guilt is determined by a
competent authority, for illegal recruitment, or for other related crimes or offenses committed in the
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course of, related to, or resulting from, illegal recruitment, or for crimes involving moral turpitude;
2. Those agencies whose licenses have been revoked for violation of R.A. 8042 (Migrant Workers
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and Overseas Filipinos Act of 1995), as amended, P.D. 442 (Labor Code of the Philippines), as amended,
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and R.A. 9208 (Trafficking in Persons Act of 2003), as amended, and their implementing rules and
regulations;
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3. 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; and
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▪ Any official or employee of the DOLE, POEA, OWWA, DFA, DOJ, DOH, BI, IC, NLRC, TESDA,
CFO, NBI, PNP, Civil Aviation Authority of the Philippines (CAAP), MARINA, international airport
authorities, and other government agencies directly involved in the implementation of R.A. 8042, as
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amended, and/or any of his/her relatives within the fourth civil degree of consanguinity or affinity;
▪ Immigration consultants. However, they may engage in recruitment and placement activities if they
obtain a license from the POEA.
4.
•
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Cancellation of license or authority
License vs. Authority
o What is a “license” for overseas recruitment?
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“License” refers to the document issued by the DOLE Secretary authorizing a person, partnership or
corporation to operate a private recruitment or manning agency.
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o What is an “authority” for overseas employment?

“Authority” refers to the document issued by the DOLE Secretary authorizing the officers, personnel,
agents or representatives of a licensed recruitment or manning agency to conduct recruitment and
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placement activities in a place stated in the license or in a specified place.
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• Article 35 of the Labor Code grants the DOLE Secretary the power to suspend or cancel any license or authority
to recruit employees for overseas employment on the general ground of violation of rules and regulations issued
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by the DOLE and the POEA, or for violation of the Labor Code and other applicable laws.
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• Pursuant to the rule-making power of the DOLE Secretary, POEA was given authority to conduct the necessary
proceedings for the suspension or cancellation of the license or authority of any agency or entity for certain enumerated
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offenses. This is also reflected in the 2016 Revised POEA Rules and Regulations Governing the Recruitment and
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Employment of Land-Based Overseas Filipino Workers of 2016 which provides that POEA, in the exercise of
its adjudicatory power, is granted the authority to impose the penalty of reprimand, suspension, cancellation, or
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revocation of license for pre-employment/recruitment violation cases. Where the penalty of suspension is
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imposed, the POEA Administrator may impose disqualification from the overseas employment program.
• Illegal recruitment may be committed by any of the following:
o By Non-Licensee or Non-holder of authority; or
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o By ANY PERSON, regardless of whether a non-licensee, non-holder, licensee or holder of

authority,
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5. Termination of contract of migrant worker without just or valid cause

• Can an OFW acquire regularity of employment?
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No. The prevailing rule is that OFWs are contractual (fixed-term only), not regular, employees. In fact, they can never
attain regularity of employment. The nature of their employment is always fixed-term.
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• What are some relevant principles?

o
o Indefinite period of employment of OFWs is not valid as it contravenes the explicit provision of the POEA
Rules and Regulations on fixed-period employment. r
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o OFWs do not become regular employees by reason of nature of work, that is, that they are made to perform
work that is usually necessary and desirable in the usual business or trade of the employer. The exigencies
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of their work necessitate that they be employed on a contractual basis. This notwithstanding the fact that
they have rendered more than twenty (20) years of service.
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o Regular employment does not result from the series of re-hiring of OFWs.
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o The fixed-period employment of OFWs is not discriminatory against them nor does it favor foreign
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employers. It is for the mutual interest of both the seafarer and the employer why the employment status must be contractual
only or for a certain period of time.
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o The expiration of the employment contracts of OFWs marks its ending.

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• Is due process under Philippine law applicable to termination of employment of OFWs?

Yes. In the absence of proof of applicable foreign law, OFWs are entitled to due process in accordance with
Philippine laws.
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• Is the Agabon doctrine applicable to OFWs who are dismissed for cause but without due process?
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Yes. The Agabon doctrine of awarding indemnity in the form of nominal damages in cases of valid termination for
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just or authorized cause but without procedural due process also applies to termination of OFWs.
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• Who has the burden of proof to show that the dismissal of the OFW is legal?
Burden of proof devolves on both recruitment agency and its foreign principal.
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• Are OFWs entitled to the reliefs under the Labor Code?

No. They are not entitled to such reliefs under Article 279 as reinstatement or separation pay in lieu of
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reinstatement or full backwages. REASON: Because their employment is fixed-term in nature. The nature of their
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claim therefore is purely monetary, such as the payment of the salary for the unexpired portion of the employment
contract in case their dismissal is declared illegal.
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• What are the reliefs to which OFWs are entitled?

They are entitled to the reliefs provided under Section 10 of R.A. No. 8042, as amended, to wit:
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(1) All salaries for the unexpired portion of the contract;

(2) Full reimbursement of placement fees and deductions made with interest at 12% per annum.
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As pointed out above, all the reliefs available to an illegally dismissed OFW are always monetary in nature.
It must be noted that under the 2009 Serrano doctrine, (Serrano v. Gallant Maritime Services, Inc.,), an illegally
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dismissed OFW is now entitled to all the salaries for the entire unexpired portion of their employment
contracts, irrespective of the stipulated term or duration thereof. The underlined phrase in Section 10 below has
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been declared unconstitutional in this case:
“In case of termination of overseas employment without just, valid or authorized cause as defined by
law or contract, or any unauthorized deductions from the migrant worker's salary, the worker shall be
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entitled to the full reimbursement of his placement fee and the deductions made with interest at twelve
percent (12%) per annum, plus his salaries for the unexpired portion of his employment contract
or for three (3) months for every year of the unexpired term, whichever is less.”
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However, R.A. No. 10022 (March 8, 2010), which amended R.A. No. 8042 (Migrant Workers and Overseas Filipinos
Act of 1995), has replicated and re-enacted the same unconstitutional provision exactly as above quoted. The
question is: was the unconstitutionality of the above-underlined part of the provision cured by such
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replication or re-enactment in the amendatory law?
The 2014 en banc case of Sameer Overseas Placement Agency, Inc. v. Joy C. Cabiles, answered this in the
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negative. The said provision was thus declared still unconstitutional and null and void despite its replication in R.A.
No. 10022.
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6. Ban on direct hiring, exceptions
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• What is direct hiring?
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“Direct Hiring” refers to the process of directly hiring workers by employers for overseas employment as authorized
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by the DOLE Secretary and processed by the POEA, including:
1. Those hired by international organizations;
2. Those hired by members of the diplomatic corps;
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3. Name hires or workers who are able to secure overseas employment opportunity with an employer without
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the assistance or participation of any agency.
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• Does the POEA Administrator or the DOLE Secretary or DOLE Regional Director have the power to
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issue closure order?

Yes. If upon preliminary examination or surveillance, the DOLE Secretary, the POEA Administrator or DOLE
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Regional Director is satisfied that such danger or exploitation exists, a written order may be issued for the closure of
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the establishment being used for illegal recruitment activity.

• Does the DOLE Secretary have the power to issue warrant of arrest and search and seizure orders?
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No. Salazar v. Achacoso, (March 14, 1990) declared that the exercise by the DOLE Secretary of his twin powers to
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issue arrest warrant and search and seizure orders provided under Article 38[c] of the Labor Code is unconstitutional.
Only regular courts can issue such orders.
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B. EMPLOYMENT OF NON-RESIDENT ALIENS

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• What is an ALIEN EMPLOYMENT PERMIT (AEP)?

AEP - a document issued by the DOLE Secretary through the DOLE-Regional Director who has jurisdiction over r
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the intended place of work of the foreign national, authorizing the foreign national to work in the Philippines.
• Who are required to procure AEP?
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o All foreign nationals who intend to engage in gainful employment in the Philippines are required to apply
for AEP.
o “Gainful employment” refers to a state or condition that creates an employer-employee relationship
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between the Philippine-based company and the foreign national where the former has the power to hire or
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dismiss the foreign national from employment, pays the salaries or wages thereof and has authority to
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control the performance or conduct of the tasks and duties.

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• What are the categories of foreign nationals EXEMPTED from securing AEP?
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a. All members of the diplomatic service and foreign government officials accredited by and with reciprocity
arrangement with the Philippine government;
b. Officers and staff of international organizations of which the Philippine government is a member, and their
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legitimate spouses desiring to work in the Philippines;

c. Owners and representatives of foreign principals whose companies are accredited by the POEA, who come
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to the Philippines for a limited period and solely for the purpose of interviewing Filipino applicants for
employment abroad;
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d. Foreign nationals who come to the Philippines to teach, present and/or conduct research studies in
universities and colleges as visiting, exchange or adjunct professors under formal agreements between the
universities or colleges in the Philippines and foreign universities or colleges; or between the Philippine
government and foreign government, provided that the exemption is on a reciprocal basis;
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e. Permanent resident foreign nationals and probationary or temporary resident visa holders under Section 13
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(a-f) of the Philippine Immigration Act of 1940 and Section 3 of the Alien Social Integration Act of 1995
(R.A. 7917);
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f. Refugees and Stateless Persons recognized by DOJ pursuant to Article 17 of the UN Convention and
Protocol Relating to status of Refugees and Stateless Persons; and
g. All foreign nationals granted exemption by law.
• What are the categories of foreign nationals EXCLUDED from securing AEP?
o
a. Members of the governing board with voting rights only and do not intervene in the management of the
corporation or in the day to day operation of the enterprise.
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b. President and Treasurer, who are part-owners of the company.

c. Those providing consultancy services who do not have employers in the Philippines.
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d. Intra-corporate transferee who is a manager, executive or specialist as defined below in accordance with
Trade Agreements and an employee of the foreign service supplier for at least one (1) year continuous
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employment prior to deployment to a branch, subsidiary, affiliate or representative office in the Philippines.
i. an Executive: a natural person within the organisation who primarily directs the management of the
organisation and exercises wide latitude in decision-making and receives only general supervision or
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direction from higher level executives, the board of directors, or stockholders of the business; an
executive would not directly perform tasks related to the actual provision of the service or services of
the organisation;
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ii. a Manager: a natural person within the organisation who primarily directs the
organisation/department/subdivision and exercises supervisory and control functions over other
supervisory, managerial or professional staff; does not include first-line supervisors unless employees
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supervised are professionals; does not include employees who primarily perform tasks necessary for the
provision of the service; or
iii. a Specialist: a natural person within the organisation who possesses knowledge at an advanced level of
expertise essential to the establishment/provision of the service and/or possesses proprietary
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knowledge of the organisation's service, research equipment, techniques or management; may include,
but is not limited to, members of a licensed profession.
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All other intra-corporate transferees not within these categories as defined above are required to secure an
AEP prior to their employment in the Philippines
e. Contractual service supplier who is a manager, executive or specialist and an employee of a foreign service
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supplier which has no commercial presence in the Philippines:
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i. who enters the Philippines temporarily to supply a service pursuant to a contract between his/her
employer and a service consumer in the Philippines;
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ii. must possess the appropriate educational and professional qualifications; and
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iii. must be employed by the foreign service supplier for at least one year prior to the supply of service in
the Philippines.
f. Representative of the Foreign Principal/Employer assigned in the Office of Licensed Manning Agency
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(OLMA) in accordance with the POEA law, rules and regulations.
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• What is the period of validity of an AEP?
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o The AEP is valid for one (1) year.

o Exception: When employment contract provides otherwise but not to exceed three (3) years. The AEP may
be renewed subject to the conditions imposed by law.
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MAJOR TOPIC 3
LABOR STANDARDS
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1. Employer-employee relationship
2. Test to determine existence
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FOUR-FOLD TEST
• What is the 4-fold test of existence of employer-employee relationship?
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1. Selection and engagement of the employee;
2. Payment of wages or salaries;
3. Exercise of the power of dismissal; or
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4. Exercise of the power to control the employee’s conduct.
These tests, however, are not fool-proof as they admit of exceptions.
•
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What is the control test or also known as the MEANS AND METHOD CONTROL TEST?
o The 4th test above, the control test, is the controlling test which means that the employer controls or
has reserved the right to control the employee not only as to the result of the work to be done but also
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as to the means and methods by which the same is to be accomplished.

o The three (3) terms: (1) means, (2) methods and (3) results are the critical elements of the control test,
thus:
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▪ Situation 1: If the employer controls the means and methods of performing the job, work or service,
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including the results thereof, then the arrangement is one of employer-employee relationship.
▪ Situation 3: If the so-called employer does not control such means and methods but is only interested
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in the results thereof, then the arrangement is called “independent job contracting” or
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“contractualization”, the party controlling the means and methods is called the independent contractor
and the party interested only in the results is called the principal/client/indirect employer/statutory
employer.
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TWO-TIERED TEST
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• What is the 2-tiered test of employment relationship?
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o The two-tiered test enunciated in Francisco v. NLRC, is composed of:

(1) The putative employer’s power to control the employee with respect to the means and methods by which
the work is to be accomplished [control test]; and
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(2) The underlying economic realities of the activity or relationship [broader economic reality test].
o Employment relationship under the control test is determined under the same concept as discussed above, that
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is, by asking whether “the person for whom the services are performed reserves the right to control not only the
end to be achieved but also the manner and means to be used in reaching such end.”
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o Under the economic reality test, the proper standard of economic dependence is whether the worker is
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dependent on the alleged employer for his continued employment in that line of business.
o These 2-tiered test applies to cases where there are several parties alleged to be employers of one individual. The
determinant factor is economic dependency of such individual. In other words, under the economic reality test,
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the question to ask is - among the parties alleged to be the employer, to whom is the individual economically
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dependent?
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o Following the broader economic reality test, the Supreme Court found petitioner in Orozco v. The Fifth Division
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of the Hon. CA, who is a columnist in the Philippine Daily Inquirer (PDI), not an employee of PDI but an
independent contractor. Thus:
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“Petitioner’s main occupation is not as a columnist for respondent but as a women’s rights advocate
working in various women’s organizations. Likewise, she herself admits that she also contributes articles
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to other publications. Thus, it cannot be said that petitioner was dependent on respondent PDI for her
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continued employment in respondent’s line of business.

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“The inevitable conclusion is that petitioner was not respondent PDI’s employee but an independent
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contractor, engaged to do independent work.”

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• Is it necessary to have a written contract of employment in order to establish employer-

employee relationship?
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o No. It may be an oral or written contract. A written contract is not necessary for the creation
and validity of the relationship.
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o The only exception is in the case of Kasambahay where, under the Kasambahay Law, it is
required that the contract of employment should be in writing.
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3. Employee vs. independent contractor

See the case of Orozco v. the Fifth Division above.
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A. CONDITIONS OF EMPLOYMENT
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1. Covered employees/workers
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• Who are covered by the labor standards provisions of the Labor Code?
Employees in ALL establishments, whether operated for profit or not, are covered by the law on labor standards.
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• Who are excluded?

The following are excluded from the coverage of the law on labor standards:
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a. Government employees;
b. Managerial employees;
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c. Other officers or members of a managerial staff;
d. Workers paid by results;
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e. Non-agricultural field personnel; and
f. Members of the family of the employer.
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2.Hours of work
• Principles in determining hours worked and employees exempted or not covered
o The following shall be considered as compensable hours worked:
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a) All time during which an employee is required to be on duty or to be at the employer’s premises or to be at
a prescribed workplace; and
b) All time during which an employee is suffered or permitted to work.
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• “Fair day’s wage for a fair day’s labor,” remains the basic factor in determining the employees’ wages and
backwages.
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a. Normal hours of work; hours worked
• What is the total normal hours of work per day?
Eight (8) hours daily.
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• What is overtime work?

Any work in excess of said eight (8) normal hours is considered overtime work.
• May normal working hours be reduced?
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Yes, provided that no corresponding reduction is made on the employee’s wage or salary equivalent to an 8-hour
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work day. In instances where the number of hours required by the nature of work is less than 8 hours, such number
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of hours should be regarded as the employee’s full working day.
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b. Meal periods (Article 85, Labor Code)
• What is the rule on time-off for regular meal?
o
Every employer is required to give his employees, regardless of sex, not less than one (1) hour (or 60 minutes) time-
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off for regular meals.
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• Is meal break compensable?

Being time-off, it is not compensable hours worked. In this case, the employee is free to do anything he wants, except
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to work. If he is required, however, to work while eating, he should be compensated therefor.

• Are short breaks compensable?
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Rest periods of short duration during working hours are considered and counted as hours worked. Rest periods or coffee
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breaks running from five (5) to twenty (20) minutes are considered compensable working time.
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c. Night-shift differential (Article 86, Labor Code)

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• How is it reckoned and computed?

Night shift differential is equivalent to 10% of employee's regular wage for each hour of work performed between
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10:00 p.m. and 6:00 a.m. of the following day.

• What is the distinction between night shift differential pay and overtime pay?
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When the work of an employee falls at night time, the receipt of overtime pay shall not preclude the right to receive
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night differential pay. The reason is the payment of the night differential pay is for the work done during the night;
while the payment of the overtime pay is for work in excess of the regular eight (8) working hours. r
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• How is Night Shift Differential Pay computed?

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1. Where night shift (10 p.m. to 6 a.m.) work is regular work.

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a. On an ordinary day: Plus 10% of the basic hourly rate or a total of 110% of the basic hourly rate.
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b. On a rest day, special day or regular holiday: Plus 10% of the regular hourly rate on a rest day,
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special day or regular holiday or a total of 110% of the regular hourly rate.
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2. Where night shift (10 p.m. to 6 a.m.) work is overtime work.

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a. On an ordinary day: Plus 10% of the overtime hourly rate on an ordinary day or a total of 110% of
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the overtime hourly rate on an ordinary day.

b. On a rest day or special day or regular holiday: Plus 10% of the overtime hourly rate on a rest day
or special day or regular holiday.
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3. For overtime work in the night shift. Since overtime work is not usually eight (8) hours, the compensation
for overtime night shift work is also computed on the basis of the hourly rate.
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a. On an ordinary day. Plus 10% of 125% of basic hourly rate or a total of 110% of 125% of basic hourly
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rate.
b. On a rest day or special day or regular holiday. Plus 10% of 130% of regular hourly rate on said days
or a total of 110% of 130% of the applicable regular hourly rate.
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d. Overtime work (Article 87, Labor Code)

• What are some basic principles on overtime work?
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1. Work rendered after normal eight (8) hours of work is called “overtime work.”
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2. In computing overtime work, "regular wage" or "basic salary" means "cash" wage only without deduction for
facilities provided by the employer.
3. "Premium pay" means the additional compensation required by law for work performed within eight (8) hours
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on non-working days, such as regular holidays, special holidays and rest days.
4. "Overtime pay" means the additional compensation for work performed beyond eight (8) hours.
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5. Illustrations on how overtime is computed:

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a. For overtime work performed on an ORDINARY DAY, the overtime pay is plus 25% of the basic
hourly rate.
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b. For overtime work performed on a REST DAY OR ON A SPECIAL DAY, the overtime pay is
plus 30% of the basic hourly rate which includes 30% additional compensation as provided in Article 93 [a] of the
Labor Code.
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c. For overtime work performed on a REST DAY WHICH FALLS ON A SPECIAL DAY, the
overtime pay is plus 30% of the basic hourly rate which includes 50% additional compensation as provided in
Article 93 [c] of the Labor Code.
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d. For overtime work performed on a REGULAR HOLIDAY, the overtime pay is plus 30% of the
basic hourly rate which includes 100% additional compensation as provided in Article 94 [b] of the Labor Code.
e. For overtime work performed on a REST DAY WHICH FALLS ON A REGULAR
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HOLIDAY, the overtime pay is plus 30% of the basic hourly rate which includes 160% additional compensation.
• What is the distinction between PREMIUM PAY and OVERTIME PAY?

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“Premium pay” refers to the additional compensation required by law for work performed within the eight (8)
normal hours of work on non-working days, such as rest days and regular and special holidays.
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“Overtime pay” refers to the additional compensation for work performed beyond the eight (8) normal hours
of work on a given day. An employee is entitled to both premium pay and overtime pay if he works on a non-
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working day and renders overtime work on the same day.
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• What is emergency overtime work? (Article 89, Labor Code).
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a. General rule.
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The general rule is that no employee may be compelled to render overtime work against his will. The reason is that
this will constitute involuntary servitude.
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b. Exceptions when employee may be compelled to render overtime work:
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1. When the country is at war or when any other national or local emergency has been declared by the National
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Assembly or the Chief Executive;
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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 disasters or calamities;
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3. When there is urgent work to be performed on machines, installations or equipment, or in order to avoid
serious loss or damage to the employer or some other causes of similar nature;
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4. When the work is necessary to prevent loss or damage to perishable goods;

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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; and
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6. When overtime work is necessary to avail of favorable weather or environmental conditions where
performance or quality of work is dependent thereon.
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o May an employee validly refuse to render overtime work under any of the afore-said circumstances?
No. When an employee refuses to render emergency overtime work under any of the foregoing conditions, he
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may be dismissed on the ground of insubordination or willful disobedience of the lawful order of the
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employer.
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• Can overtime pay be waived?

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No. The right to claim overtime pay is not subject to a waiver. Such right is governed by law and not merely by the
agreement of the parties.
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e. Compressed work week, flexible work arrangement, alternative work arrangements, telecommuting
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program
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• Compressed work week

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o The employer may compress the work days from six (6) days (from Monday to Saturday) to five (5) days
(from Monday to Friday) under certain conditions imposed by the DOLE.
o The DOLE recognizes CWW schemes adopted in accordance with the following:
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1. The CWW scheme is undertaken as a result of an express and voluntary agreement of majority of the covered
employees or their duly authorized representatives. This agreement may be expressed through collective
bargaining or other legitimate workplace mechanisms of participation such as labor-management councils,
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employee assemblies or referenda.

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2. In firms using substances, chemicals and processes or operating under conditions where there are airborne
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contaminants, human carcinogens or noise prolonged exposure to which may pose hazards to the
employees’ health and safety, there must be a certification from an accredited health and safety organization
or practitioner or from the firm’s safety committee that work beyond eight (8) hours is within threshold
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limits or tolerable levels of exposure, as set in the OSHS.

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3. The employer shall notify the DOLE, through its Regional Office having jurisdiction over the workplace,
of the adoption of the CWW scheme. The notice should be made in DOLE CWW Report Form.
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o Effects. A CWW scheme which complies with the foregoing conditions shall have the following effects:
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1. 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 twelve (12) hours a day or forty-
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eight (48) hours a week shall be subject to overtime premium.

2. Consistent with Article 85 of the Labor Code, employees under a CWW scheme are entitled to meal periods
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of not less than sixty (60) minutes. Nothing, however, shall impair the right of employees to rest days as well
as to holiday pay, rest day pays or leaves in accordance with law or applicable collective bargaining agreement
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(CBA) or company practice.

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3. 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
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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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• What are flexible working hours?
“Flexible work arrangements” refer to alternative arrangements or schedules other than the traditional or standard work
hours, workdays and workweek. The effectivity and implementation of any of the flexible work arrangements should
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be temporary in nature.
Under R.A. No. 8972, otherwise known as “The Solo Parents’ Welfare Act of 2000,” solo parents are allowed to work on
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a flexible schedule. The phrase “flexible work schedule” is defined in the same law as the right granted to a solo parent
employee to vary his/her arrival and departure time without affecting the core work hours as defined by the employer.
• Alternative work arrangements

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• Telecommuting program
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R.A. No. 11165 or the “Telecommuting Act” allows employers to adopt alternative work arrangements. The term
"telecommuting" refers to a work from an alternative workplace with the use of telecommunications and/or computer
technologies.
An employer in private sector may offer a telecommuting program to its employees, as long as the following
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conditions are followed:
1. Terms and conditions of the program are mutually agreed upon by employers and employees
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2. That such terms and conditions shall not be less than the minimum labor standards set by law, and shall include
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compensable work hours, minimum number of work hours, overtime, rest days, and entitlement to leave benefits.
3. The employer shall provide the telecommuting employee with relevant written information in order to adequately
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apprise the individual of the terms and conditions of the telecommuting program, and the responsibilities of
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employee.
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The employer shall ensure that the telecommuting employee are given the same treatment as that of comparable
employees are given the same treatment as that of comparable employees working at the time employer's premises.
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All telecommuting employee shall: Ba

(a) Receive a rate of pay, including overtime and night shift differential, and other similar monetary benefits not
lower than those provided in applicable laws, and collective bargaining agreements.
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(b) Have the right to rest periods, regular holidays, and special nonworking days.
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(c) Have the same or equivalent workload and performance standards as those of comparable workerat the
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employer's premises.
(d) Have the same access to training and career development opportunities as those of comparable workers at
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the employer's premises and be subject to the same appraisal policies covering these workers.
(e) Receive appropriate training on the technical equipment at their disposal, and the characteristics and
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conditions of telecommuting.
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(f) Have the same collectible rights as the workers at the employer's premises and shall not be barred from
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communicating with workers' representatives.1âwphi1
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3. Rest periods
a. Weekly Rest Period
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• What is the duration of weekly rest period?

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It shall be the duty of every employer, whether operating for profit or not, to provide each of his employees a rest
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period of not less than twenty-four (24) consecutive hours after every six (6) consecutive normal work days.
• Is the employer’s prerogative to determine the rest period of its employees subject to limitations?
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Yes. The employer shall determine and schedule the weekly rest day of his employees subject to CBA and to such
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rules and regulations as the DOLE Secretary may provide. However, the employer shall respect the preference of
employees as to their weekly rest day when such preference is based on religious grounds.
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a. Emergency Rest Day Work

• When can an employer require work on a rest day?
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The employer may require any of its employees to work on their scheduled rest day for the duration of the
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following emergency and exceptional conditions:

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a. In case of actual or impending emergencies caused by serious accident, fire, flood, typhoon, earthquake,
epidemic or other disaster or calamity, to prevent loss of life and property, or in case of force majeure or
imminent danger to public safety;
b. In case of urgent work to be performed on machineries, equipment, or installations, to avoid serious loss
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which the employer would otherwise suffer;

c. In the event of abnormal pressure of work due to special circumstances, where the employer cannot ordinarily
be expected to resort to other measures;
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d. To prevent serious loss of perishable goods;

e. Where the nature of the work is such that the employees have to work continuously for seven (7) days in a
week or more, as in the case of the crew members of a vessel to complete a voyage and in other similar cases;
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and
f. When the work is necessary to avail of favorable weather or environmental conditions where performance or
quality of work is dependent thereon.
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Legal Practitioner
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4. Holidays
a. Holiday pay
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• What are the regular and special holidays?
(a) Regular Holidays
New Year's Day - January 1
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Maundy Thursday - Movable Date
Good Friday - Movable Date
Eidul Fitr - Movable Date
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Eidul Adha - Movable Date
Araw ng Kagitingan - Monday nearest April 9
Labor Day - Monday nearest May 1
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Independence Day - Monday nearest June 12
National Heroes Day - Last Monday of August
Bonifacio Day - Monday nearest November 30
Christmas Day - December 25
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Rizal Day - Monday nearest December 30
(b) Nationwide Special Holidays
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Chinese New Year - Movable Date

EDSA People Power - February 25
Revolution
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Black Saturday - Movable Date
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Ninoy Aquino Day - Monday nearest August 21
All Saints’ Day - November 1
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Feast of Immaculate - December 8
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Conception of Mary
• How many are the guaranteed paid regular holidays?

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There are twelve (12) paid regular holidays in a year. This is important for purposes of reckoning certain divisors
and computation of employee benefits. The provision on holiday pay is mandatory, regardless of whether an
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employee is paid on a monthly or daily basis.
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• What is the Holiday Pay Rule?

“Holiday pay” refers to the payment of the regular daily wage for any unworked regular holiday. The Holiday Pay
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Rule, therefore, applies to entitlement to holiday pay during regular holidays and not during special non-working
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days. Thus, every employee covered by the Holiday Pay Rule is entitled to the minimum wage rate (Daily Basic
Wage and COLA). This means that the employee is entitled to at least 100% of his minimum wage rate even if he
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did not report for work, provided he is present or is on leave of absence with pay on the workday immediately
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preceding the holiday. Should the worker work on that day, such work performed on that day would merit at least
twice or two hundred percent (200%) of the wage rate of the employee.
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• What is the coverage of the Holiday Pay Rule? Who are exempted employees?
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As a general rule, the holiday pay benefit is applicable to all employees. The following, however, are not covered by
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this benefit as they are considered exempted employees:

1. Government employees, whether employed by the National Government or any of its political r
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subdivisions, including those employed in government-owned and/or controlled corporations with

original charters or created under special laws;
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2. Those of retail and service establishments regularly employing less than ten (10) workers;
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3. Kasambahay and persons in the personal service of another;

4. Managerial employees, if they meet all of the following conditions:
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4.1. Their primary duty is to manage the establishment in which they are employed or of a department
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or subdivision thereof;
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4.2. They customarily and regularly direct the work of two or more employees therein; and
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4.3. They have the authority to hire or fire other employees of lower rank; or their suggestions and
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recommendations as to hiring, firing, and promotion, or any other change of status of other
employees are given particular weight.
5. Officers or members of a managerial staff, if they perform the following duties and responsibilities:
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5.1. Primarily perform work directly related to management policies of their employer;
5.2. Customarily and regularly exercise discretion and independent judgment;
5.3. (a) Regularly and directly assist a proprietor or managerial employee in the management of the
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establishment or subdivision thereof in which he or she is employed; or (b) execute, under general
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supervision, work along specialized or technical lines requiring special training, experience, or
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knowledge; or (c) execute, under general supervision, special assignments and tasks; and
5.4. Do not devote more than twenty percent (20%) of their hours worked in a workweek to activities
which are not directly and closely related to the performance of the work described in paragraphs
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5.1, 5.2, and 5.3 above.

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6. Field personnel and other employees whose time and performance are unsupervised by the employer,
including those who are engaged on task or contract basis, purely commission basis or those who are
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paid a fixed amount for performing work irrespective of the time consumed in the performance thereof.
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• How is premium pay for REGULAR HOLIDAYS computed?

o If the employee did not work, he/she shall be paid 100 percent of his/her salary for that day.
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Computation: (Daily rate + Cost of Living Allowance) x 100%. The COLA is included in the
computation of regular holiday pay.
o If the employee worked, he/she shall be paid 200 percent of his/her regular salary for that day for the
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first eight hours. Computation: (Daily rate + COLA) x 200%. The COLA is also included in
computation of regular holiday pay.
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o If the employee worked in excess of eight hours (overtime work), he/she shall be paid an additional
30 percent of his/her hourly rate on said day. Computation: Hourly rate of the basic daily wage x 200% x
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130% x number of hours worked.
o If the employee worked during a regular holiday that also falls on his/her rest day, he/she shall be
paid an additional 30 percent of his/her daily rate of 200 percent. Computation: (Daily rate + COLA) x
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200%] + (30% [Daily rate x 200%)].
o If the employee worked in excess of eight hours (overtime work) during a regular holiday that also
falls on his/her rest day, he/she shall be paid an additional 30 percent of his/her hourly rate on said day.
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Computation: (Hourly rate of the basic daily wage x 200% x 130% x 130% x number of hours worked);
Simplified Computation:
a. If work is rendered on an employee’s regular workday -
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• If unworked – 100%
• If worked – 1st 8 hours – 200%
• Work in excess of 8 hours – plus 30% of hourly rate on said day
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b. If it is an employee’s rest day -
• If unworked – 100%
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• If worked – first 8 hours – plus 30% of 200%

• How is premium pay for SPECIAL (NON-WORKING) DAYS OR SPECIAL HOLIDAYS
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computed?
o If the employee did not work, the “no work, no pay” principle shall apply, unless there is a
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favorable company policy, practice, or CBA granting payment on a special day.
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o If the employee worked, he/she shall be paid an additional 30 percent of his/her daily rate on
the first eight hours of work. Computation: [(Daily rate x 130%) + COLA).
o If the employee worked in excess of eight hours (overtime work), he/she shall be paid an
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additional 30 percent of his/her hourly rate on said day. Computation: (Hourly rate of the basic
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daily wage x 130% x 130% x number of hours worked).
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o If the employee worked during a special day that also falls on his/her rest day, he/she shall
be paid an additional fifty percent of his/her daily rate on the first eight hours of work.
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Computation: [(Daily rate x 150%) + COLA].

o If the employee worked in excess of eight hours (overtime work) during a special day that
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also falls on his/her rest day, he/she shall be paid an additional 30 percent of his/her hourly
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rate on said day. Computation: (Hourly rate of the basic daily wage x 150% x 130% x number of
hours worked).
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• Simplified Computation:
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a. If unworked -
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• No pay, except if there is a company policy, practice, or collective bargaining agreement (CBA) which grants
payment of wages on special days even if unworked.
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b. If worked -
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• First 8 hours – plus 30% of the daily rate of 100%

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c. If falling on the employee’s rest day and if worked -

• First 8 hours – plus 50% of the daily rate of 100%
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• What are the effects of absences on the computation of holiday pay?
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1. Employees on leave of absence with pay - entitled to holiday pay when they are on leave of absence
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with pay.
2. Employees on leave of absence without pay on the day immediately preceding the regular holiday
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- may not be paid the required holiday pay if they have not worked on such regular holiday.
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3. Employees on leave while on SSS or employee’s compensation benefits - Employers should grant
the same percentage of the holiday pay as the benefit granted by competent authority in the form of
employee’s compensation or social security payment, whichever is higher, if they are not reporting for work
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while on such benefits.

4. When day preceding regular holiday is a non-working day or scheduled rest day - should not be
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deemed to be on leave of absence on that day, in which case, employees are entitled to the regular holiday
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pay if they worked on the day immediately preceding the non-working day or rest day.
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5. Service charges
• Under the newest law on service charges approved on August 7, 2019, All service charges collected by hotels,
restaurants and similar establishments shall be distributed completely and equally among the covered
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workers except managerial employees.

• What is the frequency of distribution for service charges?
The share of the employees should be distributed and paid to them not less often than (a) once every two (2)
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weeks OR (b) twice a month at intervals not exceeding sixteen (16) days.
• What are the kinds of establishment covered by the law on service charge?
The rules on service charge apply only to establishments collecting service charges, such as hotels, restaurants,
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lodging houses, night clubs, cocktail lounges, massage clinics, bars, casinos and gambling houses, and similar
enterprises, including those entities operating primarily as private subsidiaries of the government.
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• Who are the employees covered by this law?

With the latest amendatory law cited above, all service charges collected by hotels, restaurants and similar establishments
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shall be distributed completely and equally among the covered workers except managerial employees.
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• Who are not covered?
Specifically excluded from coverage are managerial employees, referring to any person vested with powers or
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prerogatives to lay down and execute management policies or hire, transfer, suspend, lay-off, recall, discharge,
assign or discipline employees or to effectively recommend such managerial actions.
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6. 13th month pay
• Who are covered by the 13th month pay law?
Only rank-and-file employees, regardless of their designation or employment status and irrespective of the method
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by which their wages are paid, are entitled to the 13th month pay benefit. Managerial employees are not entitled
to 13th month pay.
• What is the minimum period of service required in a calendar year to be entitled to 13th month pay?
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To be entitled to the 13th month pay benefit, it is imposed as a minimum service requirement that the employee
should have worked for at least one (1) month during a calendar year.
• When should 13th month pay be paid?
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It must be paid not later than December 24 of every year.
• Who are excluded from its coverage?
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The following employers are not covered by the 13th month pay law:
1. The government and any of its political subdivisions, including government-owned and controlled
corporations, except those corporations operating essentially as private subsidiaries of the government.
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2. Employers already paying their employees 13th month pay or more in a calendar year or its equivalent at the
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time of the issuance of the Revised Guidelines.
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3. Employers of those who are paid on purely commission, boundary, or task basis, and those who are
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paid a fixed amount for performing a specific work, irrespective of the time consumed in the
performance thereof, except where the workers are paid on piece-rate basis, in which case, the employer shall
be covered by the Revised Guidelines insofar as such workers are concerned. Workers paid on piece-rate
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basis shall refer to those who are paid a standard amount for every piece or unit of work produced that is
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more or less regularly replicated without regard to the time spent in producing the same.
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• Are domestic workers or Kasambahays covered?
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Yes. They are now covered under the Kasambahay Law.
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• Are extras, casuals and seasonal employees entitled to 13th month pay? Ba
Yes, they are entitled thereto.
• Is 13th month pay part of wage?
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13th month pay which is in the nature of additional income, is based on wage but not part of wage.
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• What is the minimum amount of the 13th month pay?

The minimum 13th month pay should not be less than one-twelfth (1/12) of the total basic salary earned by an
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employee within a calendar year.

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• What is meant by “basic salary” or “basic wage”?

“Basic salary” or “basic wage” contemplates work within the normal eight (8) working hours in a day. This means
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that the basic salary of an employee for purposes of computing the 13th month pay should include all remunerations
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or earnings paid by the employer for services rendered during normal working hours.
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For purposes of computing the 13th month pay, “basic salary” should be interpreted to mean not the amount actually
received by an employee, but 1/12 of their standard monthly wage multiplied by their length of service within a given
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calendar year.
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B. WAGES
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1. Payment of wages
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• What is the manner and form of payment of wages?

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As a general rule, wages should be paid in legal tender and the use of tokens, promissory notes, vouchers, coupons or
any other form alleged to represent legal tender is prohibited even when expressly requested by the employee. A
similar requirement that the laborer’s wages be paid in legal currency is provided in the Civil Code.
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As an exception, however, payment of wages by bank checks, postal checks or money orders may be allowed only
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under any of the following circumstances:

o Where such manner of wage payment is customary on the date of the effectivity of the Labor Code; or
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o Where it is stipulated in a collective bargaining agreement (CBA); or

o Where all the following conditions are met:
a. There is a bank or other facility for encashment within a radius of one (1) kilometer from the workplace;
b. The employer or any of his agents or representatives does not receive any pecuniary benefit directly or
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indirectly from the arrangement;

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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; and
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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.
• How often should wages be paid?

o
The general rule is that wages should be paid not less often than once every two (2) weeks or twice a month at intervals
not exceeding sixteen (16) days.
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The exception is when payment of wages cannot be made with such regularity due to force majeure or circumstances beyond
the employer’s control, in which case, the employer should pay the wages immediately after such force majeure or
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circumstances beyond his control have ceased.
2. Prohibitions regarding wages
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a. NON-INTERFERENCE BY EMPLOYER IN THE DISPOSAL BY EMPLOYEES OF
THEIR WAGES
No employer is allowed to limit or otherwise interfere with the freedom of any employee to dispose of his wages
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and no employer shall in any manner oblige any of his employees to patronize any store or avail of the services
offered by any person.
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b. WAGES NOT SUBJECT TO EXECUTION OR ATTACHMENT; EXCEPTION.
The general rule is that laborer’s wages are not subject to execution or attachment. The exception is when such
execution or attachment is made for debts incurred for food, shelter, clothing and medical attendance.
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c. PROHIBITION ON DEDUCTIONS FROM WAGES
• May employer deduct from wage of employees?
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The general rule is that an employer, by himself or through his representative, is PROHIBITED from making
any deductions from the wages of his employees. The employer is not allowed to make unnecessary
deductions without the knowledge or authorization of the employees.
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• Are there EXCEPTIONS to this rule?
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Yes.
i
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(a) In cases where the worker is insured with his consent by the employer, and the deduction is to recompense
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the employer for the amount paid by him as premium on the insurance;
(b) For union dues, in cases where the right of the worker or his union to check-off has been recognized by
the employer or authorized in writing by the individual worker concerned; and
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(c) In cases where the employer is authorized by law or regulations issued by the DOLE Secretary.
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(d) Deductions for loss or damage under Article 114 of the Labor Code;
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(e) Deductions made for agency fees from non-union members who accept the benefits under the CBA
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negotiated by the bargaining union. This form of deduction does not require the written authorization of
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the non-bargaining union member concerned;
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(f) Deductions for value of meal and other facilities;

(g) Deductions for premiums for SSS, PhilHealth, employees’ compensation and Pag-IBIG;
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(h) Withholding tax mandated under the National Internal Revenue Code (NIRC);
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(i) Withholding of wages because of the employee’s debt to the employer which is already due;
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(j) Deductions made pursuant to a court judgment against the worker under circumstances where the wages
may be the subject of attachment or execution but only for debts incurred for food, clothing, shelter and
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medical attendance;
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(k) When deductions from wages are ordered by the court;

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d. PROHIBITION AGAINST DEPOSIT REQUIREMENT.

• Article 114 of the Labor Code prohibits the employer to require that workers should make a deposit from which
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deductions shall be made for the reimbursement of loss of tools, materials or equipment supplied by him, or any
damages thereto.
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• PERMISSIBLE DEDUCTIONS FOR LOSS OR DAMAGES.

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If the employer is engaged in a trade, occupation or business where there is such practice of making deductions
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or requiring deposits to answer for the reimbursement of loss of or damage to tools, materials or equipment
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supplied by the employer to the employee.

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e. PROHIBITION ON WITHHOLDING OF WAGES.

• Article 116 of the Labor Code prohibits any person, whether employer or not, directly or indirectly, to withhold
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any amount from the wages of a worker.

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• Under Article 1706 of the Civil Code, withholding of the wages, except for a debt due, is not allowed to be made
by the employer.
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• Moreover, under Article 1709 of the same Code, the employer is not allowed to seize or retain any tool or other
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articles belonging to the laborer.

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f. KICKBACKS.
Article 116 of the Labor Code also prohibits “kickback” which consists in the act of any person, whether employer
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or not, directly or indirectly, to induce a worker to give up any part of his wages by force, stealth, intimidation, threat
or by any other means whatsoever, without the worker’s consent.
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g. PROHIBITION AGAINST DEDUCTION TO ENSURE EMPLOYMENT.

Article 117 of the Labor Code prohibits any person, whether the employer himself or his representative or an
intermediary, to require that a deduction be made or to actually make any deduction from the wages of any employee
or worker, for the benefit of such employer or his representative or an intermediary, as consideration of a promise of
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employment or, when already employed, for the continuation of such employment or retention therein.
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h. RETALIATORY ACTIONS BY EMPLOYER.
Article 118 of the Labor Code prohibits the employer:
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(a) to refuse to pay the wages and benefits of an employee; or
(b) to reduce his wages and benefits; or
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(c) to discharge him from employment; or
(d) to discriminate against him in any manner;
on account and by reason of said employee’s:
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(1) act of filing any complaint or institution of any proceeding under Title II [Wages], Book III of the Labor
Code; or
(2) act of testifying in said proceedings or when he is about to testify therein.
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i. FALSE STATEMENT, REPORT OR RECORD.
Article 119 of the Labor Code prohibits any person, whether employer or not, to make any false statement, report or
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record required to be filed or kept in accordance with and pursuant to the provisions of the Labor Code, knowing
such statement, report or record to be false in any material respect.
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Examples: Payrolls, time records, employment records and production records, among others.
3. Facilities v. supplements
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• What are facilities?
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“Facilities” include articles or services for the benefit of the employee or his family but does not include tools of
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the trade or articles or services primarily for the benefit of the employer or necessary to the conduct of the employer’s
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business. They are items of expense necessary for the laborer’s and his family’s existence and subsistence which form
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part of the wage and when furnished by the employer, are deductible therefrom, since if they are not so furnished,
the laborer would spend and pay for them just the same.
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• What are supplements?
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The term “supplements” means extra remuneration or special privileges or benefits given to or received by the
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laborers over and above their ordinary earnings or wages.
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Ba
• What are the distinctions between facilities and supplements?

Ba
The benefit or privilege given to the employee which constitutes an extra remuneration over and above his basic or
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ordinary earning or wage is supplement; and when said benefit or privilege is made part of the laborer’s basic wage, it is
a facility. The criterion is not so much with the kind of the benefit or item (food, lodging, bonus or sick leave) given
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but its purpose. Thus, free meals supplied by the ship operator to crew members, out of necessity, cannot be
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considered as facilities but supplements which could not be reduced having been given not as part of wages but as a
necessary matter in the maintenance of the health and efficiency of the crew during the voyage.
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• What is the rule on deductibility of facilities and supplements?

li
Facilities are deductible from wage but not supplements.

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4. Minimum wage
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• What is minimum wage?

The minimum wage rates prescribed by law shall be the basic cash wages without deduction therefrom of
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whatever benefits, supplements or allowances which the employees enjoy free of charge aside from the basic pay.
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• What is statutory minimum wage?

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The term “statutory minimum wage” refers simply to the lowest basic wage rate fixed by law that an employer can pay
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his workers.
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• What is regional minimum wage rate?

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The term “regional minimum wage rates” refers to the lowest basic wage rates that an employer can pay his
workers, as fixed by the Regional Tripartite Wages and Productivity Boards (RTWPBs), and which shall not
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be lower than the applicable statutory minimum wage rates.

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• What are included/excluded in the term “wage rate”?

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The term "wage rate" includes cost-of-living allowances as fixed by the RTWPB, but excludes other wage-
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related benefits such as overtime pay, bonuses, night shift differential pay, holiday pay, premium pay, 13th month pay,
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premium pay, leave benefits, among others.
• Can COLA be integrated into the minimum wage?

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Yes. The cost-of-living allowance (COLA) may be ordered integrated into the minimum wage by the Regional
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Tripartite Wages and Productivity Board (“RTWPB” or “Regional Board”).

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• What is COLA?
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COLA is not in the nature of an allowance intended to reimburse expenses incurred by employees in the performance
of their official functions. It is not payment in consideration of the fulfillment of official duty. As defined, “cost of
living” refers to “the level of prices relating to a range of everyday items” or “the cost of purchasing the goods and
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services which are included in an accepted standard level of consumption.” Based on this premise, COLA is a benefit
intended to cover increases in the cost of living.
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j. Payment by hours worked
An employee must be paid his or her wages for all hours worked. Note that if the employee is made to work
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between 10pm to 6am, he/she shall be entitled to night shift differential pay. If he/she works for more than eight
(8) hours in a day, he/she shall be entitled to overtime pay.
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k. Payment by results
All workers paid by results, including homeworkers and those who are paid on piece rate, takay, pakyaw (or pakyao) or task
basis, shall receive not less than the applicable minimum wage rates under the Regional Wage Orders for normal working
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hours which shall not exceed eight (8) hours a day, or a proportion thereof for work of less than the normal working hours.
In cases of workers paid by results or on task basis involving work which cannot be finished in two (2) weeks, payment of
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their wages should be made at intervals not exceeding sixteen (16) days in proportion to the amount of work completed.
Final settlement should be made immediately upon completion of the work.
5. Wage distortion
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• What is wage distortion?
“Wage distortion” contemplates a situation where an increase in prescribed wage rates results in either of the
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following:
1. Elimination of the quantitative differences in the rates of wages or salaries; or
2. Severe contraction of intentional quantitative differences in wage or salary rates between and among employee
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groups in an establishment as to effectively obliterate the distinctions embodied in such wage structure based
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on the following criteria:
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a. Skills;
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b. Length of service; or
c. Other logical bases of differentiation.
Wage distortion presupposes a classification of positions and ranking of these positions at various levels. One
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visualizes a hierarchy of positions with corresponding ranks basically in terms of wages and other emoluments. Where
a significant change occurs at the lowest level of positions in terms of basic wage without a corresponding change in
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the other level in the hierarchy of positions, negating as a result thereof the distinction between one level of position
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from the next higher level, and resulting in a parity between the lowest level and the next higher level or rank, between
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new entrants and old hires, there exists a wage distortion. xxx. The concept of wage distortion assumes an existing
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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.
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• What are the elements of wage distortion?

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The four (4) elements of wage distortion are as follows:

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(1) An existing hierarchy of positions with corresponding salary rates;

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(2) A significant change in the salary rate of a lower pay class without a concomitant increase in the salary
rate of a higher one;
(3) The elimination of the distinction between the two levels; and
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(4) The existence of the distortion in the same region of the country.
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Normally, a company has a wage structure or method of determining the wages of its employees. In a problem dealing r
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with “wage distortion,” the basic assumption is that there exists a grouping or classification of employees that establishes
distinctions among them on some relevant or legitimate bases.
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Involved in the classification of employees are various factors such as the degrees of responsibility, the skills and
knowledge required, the complexity of the job, or other logical basis of differentiation. The differing wage rate
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for each of the existing classes of employees reflects this classification.

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• What is the formula for rectifying or resolving wage distortion?

h
rn
Following is the formula for the correction of wage distortion in the pay scale structures:
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Minimum Wage = % x Prescribed Increase = Distortion Adjustment

Actual Salary
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The above formula was held to be just and equitable.

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6. Non-diminution of benefits
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Albeit Article 100 is clear that the principle of non-elimination and non-diminution of benefits apply only to the
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benefits being enjoyed “at the time of the promulgation” of the Labor Code, the Supreme Court has consistently
cited Article 100 as being applicable even to benefits granted after said promulgation. It has, in fact, been treated as
the legal anchor for the declaration of the invalidity of so many acts of employers deemed to have eliminated or
diminished the benefits of employees.
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There is diminution of benefits when the following requisites are present:

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1. The grant or benefit is founded on a policy or has ripened into a practice over a long period of time;
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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
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4. The diminution or discontinuance is done unilaterally by the employer.

The 2014 case of Wesleyan University-Philippines v. Wesleyan University-Philippines Faculty and Staff
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Association, succinctly pointed out that the Non-Diminution Rule found in Article 100 of the Labor Code
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explicitly prohibits employers from eliminating or reducing the benefits received by their employees. This rule,
however, applies only if the benefit is based on any of the following:
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(1) An express policy;
(2) A written contract; or
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(3) A company practice.
There is not much controversy if the benefit involved is provided for under Nos. 1 and 2 above. Thus, if it is expressly
laid down in a written policy unilaterally promulgated by the employer, the employer is duty-bound to adhere and
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comply by its own policy. It cannot be allowed to renege from its commitment as expressed in the policy.
If the benefit is granted under a written contract such as an employment contract or a collective bargaining agreement
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(CBA), the employer is likewise under legal compulsion to so comply therewith.
As to No. 3 above:
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Company practice is a custom or habit shown by an employer’s repeated, habitual customary or succession of acts of
similar kind by reason of which, it gains the status of a company policy that can no longer be disturbed or withdrawn.
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To ripen into a company practice that is demandable as a matter of right, the giving of the benefit should not be by
reason of a strict legal or contractual obligation but by reason of an act of liberality on the part of the
employer.
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• What are the criteria that may be used to determine existence of company practice?
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Since there is no hard and fast rule which may be used and applied in determining whether a certain act of the employer
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may be considered as having ripened into a practice, the following criteria may be used to determine whether an act
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has ripened into a company practice:
(1) The act of the employer has been done for a considerable period of time;
(2) The act should be done consistently and intentionally; and
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(3) The act should not be a product of erroneous interpretation or construction of a doubtful or difficult
question of law or provision in the CBA.
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These shall be discussed below:
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1. THE ACT OF THE EMPLOYER HAS BEEN DONE FOR A CONSIDERABLE PERIOD OF
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TIME.
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If done only once as in the case of Philippine Appliance Corporation (Philacor) v. CA, where the CBA signing
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bonus was granted only once during the 1997 CBA negotiation, the same cannot be considered as having ripened into
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a company practice.
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In the following cases, the act of the employer was declared company practice because of the considerable period of
time it has been practiced:
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(a) Davao Fruits Corporation v. Associated Labor Unions. - The act of the company of freely and
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continuously including in the computation of the 13th month pay, items that were expressly excluded by
law has lasted for six (6) years, hence, was considered indicative of company practice.
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(b) Sevilla Trading Company v. A. V. A. Semana. - The act of including non-basic benefits such as paid
leaves for unused sick leave and vacation leave in the computation of the employees’ 13th month pay for at
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least two (2) years was considered a company practice.

(c) The 2010 case of Central Azucarera de Tarlac v. Central Azucarera de Tarlac Labor Union-NLU,
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also ruled as company practice the act of petitioner of granting for thirty (30) years, its workers the mandatory
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13th month pay computed in accordance with the following formula: Total Basic Annual Salary divided
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by twelve (12) and Including in the computation of the Total Basic Annual Salary the following: basic
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monthly salary; first eight (8) hours overtime pay on Sunday and legal/special holiday; night premium pay;
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and vacation and sick leaves for each year.

2. THE ACT SHOULD BE DONE CONSISTENTLY AND INTENTIONALLY.
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The following cases may be cited to illustrate this principle:

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(a) Tiangco v. Leogardo, Jr., where the employer has consistently been granting fixed monthly emergency
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allowance to the employees from November, 1976 but discontinued this practice effective February, 1980
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insofar as non-working days are concerned based on the principle of “no work, no pay.” The Supreme Court
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ruled that the discontinuance of said benefit contravened Article 100 of the Labor Code which prohibits the
diminution of existing benefits.
3. THE ACT SHOULD NOT BE A PRODUCT OF ERRONEOUS INTERPRETATION OR
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CONSTRUCTION OF A DOUBTFUL OR DIFFICULT QUESTION OF LAW OR PROVISION

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IN THE CBA.
The general rule is that if it is a past error that is being corrected, no vested right may be said to have arisen therefrom
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nor any diminution of benefit may have resulted by virtue of the correction thereof. The error, however, must be
corrected immediately after its discovery; otherwise, the rule on non-diminution of benefits would still apply.
The following cases would illuminate this principle:
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(a) Globe Mackay Cable and Radio Corporation v. NLRC, where the Supreme Court ruled on the proper
computation of the cost-of-living allowance (COLA) for monthly-paid employees. Petitioner corporation,
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pursuant to Wage Order No. 6 (effective October 30, 1984), increased the COLA of its monthly-paid employees
by multiplying the P3.00 daily COLA by 22 days which is the number of working days in the company. The
union disagreed with the computation, claiming that the daily COLA rate of P3.00 should be multiplied by 30
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days which has been the practice of the company for several years. The Supreme Court, however, upheld the
contention of the petitioner corporation. It held that the grant by the employer of benefits through an erroneous
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application of the law due to absence of clear administrative guidelines is not considered a voluntary act which
cannot be unilaterally discontinued.
(b) TSPIC Corp. v. TSPIC Employees Union [FFW], where the Supreme Court reiterated the rule enunciated
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in Globe-Mackay, that an erroneously granted benefit may be withdrawn without violating the prohibition against
non-diminution of benefits. No vested right accrued to individual respondents when TSPIC corrected its error
by crediting the salary increase for the year 2001 against the salary increase granted under Wage Order No. 8,
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all in accordance with the CBA. Hence, any amount given to the employees in excess of what they were entitled
to, as computed above, may be legally deducted by TSPIC from the employees’ salaries.
But if the error does not proceed from the interpretation or construction of a law or a provision in the CBA, the same
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may ripen into a company practice.
Example:
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(a) Hinatuan Mining Corporation and/or the Manager v. NLRC, where the act of the employer in granting
separation pay to resigning employees, despite the fact that the Labor Code does not grant it, was considered
an established employer practice.
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C. LEAVES
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1. Service incentive leave
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• What is service incentive leave?
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Every covered employee who has rendered at least one (1) year of service is entitled to a yearly service
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incentive leave of five (5) days with pay.
The term “at least one year of service” should mean service within twelve (12) months, whether
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continuous or broken, reckoned from the date the employee started working, including authorized absences
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and paid regular holidays, unless the number of working days in the establishment as a matter of practice or
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policy, or that provided in the employment contract, is less than twelve (12) months, in which case, said
period should be considered as one (1) year for the purpose of determining entitlement to the service
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incentive leave benefit. Ba

• Who are excluded from its coverage?
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All employees are covered by the rule on service incentive leave except:
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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
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created under special laws;

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2. 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
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subdivision thereof;
3.2. They customarily and regularly direct the work of two or more employees therein; and
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3.3. They have the authority to hire or fire other employees of lower rank; or their suggestions and
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recommendations as to hiring, firing, and promotion, or any other change of status of other employees
are given particular weight.
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4. Officers or members of a managerial staff, if they perform the following duties and responsibilities:
4.1. Primarily perform work directly related to management policies of their employer;
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4.2. Customarily and regularly exercise discretion and independent judgment;

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4.3. (a) Regularly and directly assist a proprietor or managerial employee in the management of the
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establishment or subdivision thereof in which he or she is employed; or (b) execute, under general
supervision, work along specialized or technical lines requiring special training, experience, or knowledge;
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or (c) execute, under general supervision, special assignments and tasks; and
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4.4. Do not devote more than twenty percent (20%) of their hours worked in a workweek to activities which
are not directly and closely related to the performance of the work described in paragraphs 4.1, 4.2, and
4.3 above;
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5. Field personnel and those whose time and performance are 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
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performing work irrespective of the time consumed in the performance thereof;

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6. Those already enjoying this benefit;

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7. Those enjoying vacation leave with pay of at least five (5) days; and
8. Those employed in establishments regularly employing less than ten (10) employees.
• Are KASAMBAHAYS entitled to SIL?
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Yes, but the grant of 5-day SIL to domestic workers or kasambahays is not based on Article 95 of the Labor Code but
on the following provision of R.A. 10361:
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“SEC. 29. Leave Benefits. – A domestic worker who has rendered at least one (1) year of service shall
be entitled to an annual service incentive leave of five (5) days with pay: Provided, That 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.”
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• Are unavailed service incentive leaves commutable to cash

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Yes. The service incentive leave is commutable to its money equivalent if not used or exhausted at the end
of the year.
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2. Expanded Maternity leave
• What is the new 105-DAY EXPANDED MATERNITY LEAVE LAW (R.A. NO. 11210)?
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On February 20, 2019, President Rodrigo Duterte approved R.A. No. 11210, otherwise known as the “105-Day
Expanded Maternity Leave Law.” This is the prevailing law on maternity leave benefit.
• Who are the women entitled to maternity leave?
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All covered females, regardless of civil status, employment status, and the legitimacy of her child, are entitled to
maternity leave.
• What is the period of leave?
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1. Paid leave benefit granted to a qualified female worker in both the PUBLIC SECTOR and the PRIVATE
SECTOR (which is covered by the SSS, including those in the informal economy), for the duration of:
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Maternity Benefit LIVE CHILDBIRTH, regardless of
the mode of delivery
MISCARRIAGE AND
EMERGENCY TERMINATION
OF PREGNANCY
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Period of maternity leave 105 days of paid leave 60 days of paid leave
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For female worker qualified as a solo Additional fifteen (15) days of paid None
parent under R.A. No. 8972, or the leave
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"Solo Parents' Welfare Act of 2000"
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EXTENDED MATERNITY LEAVE: Available only in case of live childbirth None
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An option to extend for an additional
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thirty (30) days without pay
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FREQUENCY OF THE GRANT In every instance of live childbirth, In every instance of pregnancy,
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regardless of frequency miscarriage or emergency termination of
pregnancy, regardless of frequency
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ALLOCATION OF MATERNITY A female worker entitled to maternity Not available

LEAVE CREDITS to the child's father leave benefits may, at her option,
or alternate caregiver allocate up to seven (7) days of said
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benefits to the child's father or alternate

caregiver
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• Is an unmarried woman entitled to maternity leave benefit?

Yes. For as long as a woman is pregnant, she is entitled to maternity leave benefit regardless of whether she is married
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or unmarried.
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3. Paternity Leave
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• What is paternity leave benefit?

o “Paternity leave” covers a married male employee allowing him not to report for work for seven (7)
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CALENDAR days but continues to earn the compensation therefor, on the condition that his spouse has
delivered a child or suffered miscarriage for purposes of enabling him to effectively lend support to his wife
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in her period of recovery and/or in the nursing of the newly-born child.

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o “Delivery” includes childbirth or any miscarriage.

o “Spouse” refers to the lawful wife. For this purpose, “lawful wife” refers to a woman who is legally married
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to the male employee concerned.

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o “Cohabiting” refers to the obligation of the husband and wife to live together.
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• What is the covered total number of deliveries?

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Every married employee in the private and public sectors is entitled to a paternity leave of seven (7) calendar days
with full pay for the first four (4) deliveries of the legitimate spouse with whom he is cohabiting.
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Paternity leave benefits are granted to the qualified employee after the delivery by his wife, without prejudice to an
employer allowing an employee to avail of the benefit before or during the delivery, provided that the total number
of days should not exceed seven (7) calendar days for each delivery.
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• Is an unavailed paternity leave benefit convertible to cash?

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No. In the event that the paternity leave benefit is not availed of, said leave shall not be convertible to cash.
• Can the mother of the child allocate her leave benefits to the father of the child?
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Yes. Any female worker entitled to maternity leave benefits as provided for herein may, at her option, allocate up to
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seven (7) days of said benefits to the child’s father, whether or not the same is married to the female worker. This
benefit is over and above that which the father is entitled to under the Paternity Leave Act.
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4. Parental leave for solo parents

• What is the solo parent leave?
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This is the leave benefit granted to a male or female solo parent to enable him/her to perform parental duties and
responsibilities where his/her physical presence is required.
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• How many days may be availed of as solo parent leave?
The solo parent leave shall not be more than seven (7) WORKING days every year to a solo parent who has
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rendered service of at least one (1) year, to enable him/her to perform parental duties and responsibilities where
his/her physical presence is required. This leave shall be non-cumulative.
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It bears noting that this leave privilege is an additional leave benefit which is separate and distinct from any other
leave benefits provided under existing laws or agreements.
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• Who is a solo parent?
The term "solo parent" refers to any individual who falls under any of the following categories:
(1) A woman who gives birth as a result of rape and other crimes against chastity even without a final conviction
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of the offender: Provided, That the mother keeps and raises the child;
(2) Parent left solo or alone with the responsibility of parenthood due to death of spouse;
(3) Parent left solo or alone with the responsibility of parenthood while the spouse is detained or is serving
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sentence for a criminal conviction for at least one (1) year;
(4) Parent left solo or alone with the responsibility of parenthood due to physical and/or mental incapacity of
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spouse as certified by a public medical practitioner;

(5) Parent left solo or alone with the responsibility of parenthood due to legal separation or de facto separation
from spouse for at least one (1) year, as long as he/she is entrusted with the custody of the children;
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(6) Parent left solo or alone with the responsibility of parenthood due to declaration of nullity or annulment of
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marriage as decreed by a court or by a church as long as he/she is entrusted with the custody of the children;
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(7) Parent left solo or alone with the responsibility of parenthood due to abandonment of spouse for at least
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one (1) year;
(8) Unmarried mother/father who has preferred to keep and rear her/his child/children instead of having
others care for them or give them up to a welfare institution;
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(9) Any other person who solely provides parental care and support to a child or children;
(10) Any family member who assumes the responsibility of head of family as a result of the death, abandonment,
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disappearance or prolonged absence of the parents or solo parent.
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• What is the effect of change of status of the solo parent? Ba

A change in the status or circumstance of the parent claiming benefits under the law, such that he/she is no longer
left alone with the responsibility of parenthood, shall terminate his/her eligibility for these benefits.
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• Who are considered children under this law?

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"Children" refer to those living with and dependent upon the solo parent for support who are unmarried,
unemployed and not more than eighteen (18) years of age, or even over eighteen (18) years but are incapable of self-
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support because of mental and/or physical defect/disability.

• Is an unavailed parental leave convertible to cash?
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No. In the event that the parental leave is not availed of, said leave shall not be convertible to cash unless specifically
agreed upon previously.
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• Can a female worker avail of both solo parent leave and maternity leave?
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Yes. Under R.A. No. 11210 (Expanded Maternity Leave Law), in case the worker qualifies as a solo parent, the worker
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shall be granted an additional fifteen (15) days maternity leave with full pay.
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5. Leave benefits for women workers under R.A. No. 9710 and R.A. No. 9262
a. Gynelogical leave (R.A. 9710)
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• What is this special leave benefit?

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A special leave benefit for women was granted under R.A. No. 9710, otherwise known as “The Magna Carta of Women”
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[August 14, 2009]. Thus, any female employee in the public and private sector regardless of age and civil status shall
be entitled to a special leave of two (2) months with full pay based on her gross monthly compensation subject
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to existing laws, rules and regulations due to surgery caused by gynecological disorders under the following terms
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and conditions:
1. She has rendered at least six (6) months continuous aggregate employment service for the last twelve (12)
months prior to surgery;
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2. In the event that an extended leave is necessary, the female employee may use her earned leave credits; and
3. This special leave shall be non-cumulative and non-convertible to cash.
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In
“Gynecological disorders” refer to disorders that would require surgical procedures such as, but not limited to,
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dilatation and curettage and those involving female reproductive organs such as the vagina, cervix, uterus, fallopian
tubes, ovaries, breast, adnexa and pelvic floor, as certified by a competent physician. Gynecological surgeries shall
also include hysterectomy, ovariectomy, and mastectomy.
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• Is this leave similar to maternity leave?

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No. This leave should be distinguished from maternity leave benefit, a separate and distinct benefit, which may be
availed of in case of childbirth, miscarriage, complete abortion or emergency termination of pregnancy.
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A woman, therefore, may avail of this special leave benefit in case she undergoes surgery caused by gynecological
disorder and at the same time maternity benefit as these two leaves are not mutually exclusive.
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b. Battered woman leave (R.A. No. 9262)

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• What is this kind of leave?
This special leave is granted to a woman employee who is a victim under this law. It is for a total of ten (10) days
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of paid leave of absence, in addition to other paid leaves under the law. It is extendible when the necessity arises
as specified in the protection order. Its purpose is to enable the woman employee to attend to the medical and
legal concerns relative to said law. This leave is not convertible to cash.
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• What is the requirement for its entitlement?
At any time during the application of any protection order, investigation, prosecution and/or trial of the criminal case,
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a victim of Violence Against Women and their Children (VAWC) who is employed shall be entitled to said paid leave
of up to ten (10) days. The Punong Barangay/kagawad or prosecutor or the Clerk of Court, as the case may be, shall
issue a certification at no cost to the woman that such an action is pending, and this is all that is required for the
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employer to comply with the 10-day paid leave.
D. SPECIAL GROUPS OF EMPLOYEES

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1. Women
a. Discrimination
•
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What are acts of discrimination under the Labor Code?

(a) Payment of a lesser compensation, including wage, salary or other form of remuneration and fringe benefits,
to a female employee as against a male employee, for work of equal value; and
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(b) Favoring a male employee over a female employee with respect to promotion, training opportunities, study
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and scholarship grants solely on account of their sexes.
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• What are acts of discrimination under the Magna Carta of Women?
ev
R.A. No. 9710, otherwise known as “The Magna Carta of Women,” is a comprehensive women’s human rights law that
seeks to eliminate discrimination against women by recognizing, protecting, fulfilling and promoting the rights of
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Filipino women, especially those in marginalized sector.
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Based on the definition of the term “Discrimination Against Women” in R.A. No. 9710, the following are
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considered discriminatory acts:
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Ba
1. Any gender-based distinction, exclusion, or restriction which has the effect or purpose of impairing or
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nullifying the recognition, enjoyment, or exercise by women, irrespective of their marital status, on a basis of
equality of men and women, of human rights and fundamental freedoms in the political, economic, social,
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cultural, civil or any other field;

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2. Any act or omission, including by law, policy, administrative measure, or practice, that directly or indirectly
excludes or restricts women in the recognition and promotion of their rights and their access to and
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enjoyment of opportunities, benefits or privileges;

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3. A measure or practice of general application that fails to provide for mechanisms to offset or address sex or
gender-based disadvantages or limitations of women, as a result of which women are denied or restricted in
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the recognition and protection of their rights and in their access to and enjoyment of opportunities, benefits,
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or privileges; or women, more than men, are shown to have suffered the greater adverse effects of those
measures or practices; and r
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4. Discrimination compounded by or intersecting with other grounds, status, or condition, such as ethnicity,
age, poverty or religion.
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Additionally, women are guaranteed their right to decent work. The State shall progressively realize and ensure decent
work standards for women that involve the creation of jobs of acceptable quality in conditions of freedom, equity,
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security and human dignity.

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b. Stipulation against marriage

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• Is the prohibition against marriage valid?

Article 136 of the Labor Code considers as an unlawful act of the employer to require as a condition for or
continuation of employment that a woman employee shall not get married or to stipulate expressly or tacitly that
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upon getting married, a woman employee shall be deemed resigned or separated. It is likewise an unlawful act of
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the employer, to actually dismiss, discharge, discriminate or otherwise prejudice a woman employee merely by
reason of her marriage.
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• What are the relevant jurisprudence on prohibition against marriage?

In
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1. Philippine Telegraph and Telephone Company (PT&T) v. NLRC. - 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.
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2. Star Paper Corp. v. Simbol. - 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
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Necessity Rule”:
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“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.
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“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
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of them should resign to preserve the policy stated above.”

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3. Duncan Association of Detailman-PTGWO v. Glaxo Welcome Philippines, Inc. In this case, the
prohibition against marriage embodied in the following stipulation in the employment contract was held as
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valid:
“10. You agree to disclose to management any existing or future relationship you may have, either
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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.”
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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
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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. Simply put, the reason behind the validity of such a policy is the avoidance of
CONFLICT OF INTEREST.
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c. Prohibited acts
•
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What are the prohibited acts against women under the Labor Code?
Article 137 of the Labor Code and its implementing rule consider unlawful the followings acts of the employer:
1. To discharge any woman employed by him for the purpose of preventing such woman from enjoying
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maternity leave, facilities and other benefits provided under the Labor Code;
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2. To discharge such woman on account of her pregnancy, or while on leave or in confinement due to her
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pregnancy;
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3. To discharge or refuse the admission of such woman upon returning to her work for fear that she may again
be pregnant;
4. To discharge any woman or any other employee for having filed a complaint or having testified or being
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about to testify under the Labor Code; or
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5. To require as a condition for or continuation of employment that a woman employee shall not get married
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or to stipulate expressly or tacitly that upon getting married, a woman employee shall be deemed
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resigned or separated, or to actually dismiss, discharge, discriminate or otherwise prejudice a woman
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employee merely by reason of marriage. Ba

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2. Minors (R.A. 7610, as amended by R.A. 9231)

a. Child labor vs. working child
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For legal purposes, the term “child” refers to any person less than eighteen (18) years of age.
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A “working child” refers to any child engaged as follows:

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i. when the child is below eighteen (18) years of age, in work or economic activity that is not “child labor;” and
ii. when the child below fifteen (15) years of age:
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(a) in work where he/she is directly under the responsibility of his/her parents or legal guardian and where
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only members of the child’s family are employed; or

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(b) in “public entertainment or information” which refers to artistic, literary, and cultural performances
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for television show, radio program, cinema or film, theater, commercial advertisement, public relations
activities or campaigns, print materials, internet, and other media.
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b. Allowed working hours and industries of a working child

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The term “hours of work” includes (1) all time during which a child is required to be at a prescribed workplace, and (2)
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all time during which a child is suffered or permitted to work. Rest periods of short duration during working hours
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shall be counted as hours worked.

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The following hours of work shall be observed for any child allowed to work under R.A. No. 9231 and its
Implementing Rules:
(a) For a child below 15 years of age, the hours of work shall not be more than twenty (20) hours per week,
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provided that the work shall not be more than four (4) hours at any given day;
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(b) For a child 15 years of age but below 18, the hours of work shall not be more than eight (8) hours a day, and
in no case beyond forty (40) hours a week; and
In
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(c) No child below 15 years of age shall be allowed to work between eight (8) o’clock in the evening and six (6)
o’clock in the morning of the following day and no child 15 years of age but below 18 shall be allowed to work
between ten (10) o’clock in the evening and six (6) o’clock in the morning of the following day.
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c. Prohibited acts
No child below 18 years of age is allowed to be employed as a model in any advertisement directly or indirectly
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promoting alcoholic beverages, intoxicating drinks, tobacco and its by-products, gambling or any form of violence
or pornography.
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3. Kasambahay (R.A. No. 10361)
• What is the coverage of the Kasambahay Law?
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R.A. No. 10361 applies to all domestic workers employed and working within the country. It shall cover all parties
to an employment contract for the services of the following Kasambahay, whether on a live-in or live-out
arrangement, such as, but not limited to:
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(a) General househelp;
(b) Yaya;
(c) Cook;
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(d) Gardener;
(e) Laundry person; or
(f) Any person who regularly performs domestic work in one household on an occupational basis.
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• Who are EXCLUDED from its coverage?
The following are not covered:
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(a) Service providers;
(b) Family drivers;
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(c) Children under foster family arrangement; and

(d) Any other person who performs work occasionally or sporadically and not on an occupational basis.
• Who is a domestic worker or kasambahay?
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“Domestic worker” or “kasambahay” refers to any person engaged in domestic work within an employment
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relationship, whether on a live-in or live-out arrangement, such as, but not limited to, general househelp, "yaya", cook,
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gardener, or laundry person, but shall exclude service providers, family drivers, children who are under foster family
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arrangement, or any person who performs domestic work only occasionally or sporadically and not on an occupational
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basis.
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This term shall not include children who are under foster family arrangement which refers to children who are
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living with a family or household of relative/s and are provided access to education and given an allowance incidental
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to education, I.e., "baon", transportation, school projects, and school activities.

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Because of these new terminologies prescribed in the law, the use of the term “househelper” may no longer be legally
correct.
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• Is the employment contract required to be in writing?

Yes. The employment contract must be in writing and should contain the conditions set by law.
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• What are the rights and privileges of a kasambahay?

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The rights and privileges of the Kasambahay are as follows:

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(a) Minimum wage;

(b) Other mandatory benefits, such as the daily and weekly rest periods, service incentive leave, and 13th month
pay;
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(c) Freedom from employers' interference in the disposal of wages;

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(d) Coverage under the SSS, PhilHealth and Pag-IBIG laws;

(e) Standard of treatment; r
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(f) Board, lodging and medical attendance;

(g) Right to privacy;
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(h) Access to outside communication;

(i) Access to education and training;
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(j) Right to form, join, or assist labor organization;

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(k) Right to be provided a copy of the employment contract;

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(I) Right to certificate of employment;

(m) Right to terminate the employment; and
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(n) Right to exercise their own religious beliefs and cultural practices.
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The foregoing rights and privileges are discussed below.

• Are the minimum wages subject to review by the RTWPBs or Regional Boards?
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Yes. After one (1) year from the effectivity of the Kasambahay Law, and periodically thereafter, the Regional
Tripartite and Productivity Wage Boards (RTPWBs) shall review, and if proper, determine and adjust the
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minimum wage rates of domestic workers.”

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• What are some important principles on wage of kasambahay?

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o Frequency of payment of wages. - The wages of the Kasambahay shall be paid at least once a month. This
is so because the minimum wage rates are on a monthly basis.
o The equivalent minimum daily wage rate of the Kasambahay shall be determined by dividing the applicable
minimum monthly rate by thirty (30) days.
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o The amount of the minimum wage depends on the geographical area where the Kasambahay works.
o Payment of wages:
▪ To whom paid. - It should be made on time directly to the Kasambahay to whom they are due in cash
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at least once a month.

▪ Deductions, prohibition; when allowed. - The employer, unless allowed by the Kasambahay through
a written consent, shall make no deductions from the wages other than that which is mandated by law
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such as for SSS, PhilHealth or Pag-IBIG contributions.

▪ Mode of payment. - It should be paid in cash and not by means of promissory notes, vouchers,
coupons, tokens, tickets, chits, or any object other than the cash wage as provided for under this Act.
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▪ Pay slip. – The employer shall at all times provide the Kasambahay with a copy of the pay slip containing
the amount paid in cash every pay day, and indicating all deductions made, if any. The copies of the pay
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slip shall be kept by the employer for a period of three (3) years.
▪ Prohibition on interference in the disposal of wages. – It shall be unlawful for the employer to
interfere with the freedom of the Kasambahay in the disposition of his/her wages, such as:
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a. Forcing, compelling, or obliging the Kasambahay to purchase merchandise, commodities or other
properties from the employer or from any other person; or
b. Making use of any store or services of such employer or any other person.
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▪ Prohibition against withholding of wages. – It shall be unlawful for an employer, directly or indirectly,
to withhold the wages of the Kasambahay. If the Kasambahay leaves without any justifiable reason, any
unpaid salary for a period not exceeding fifteen (15) days shall be forfeited. Likewise, the employer shall
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not induce the Kasambahay to give up any part of the wages by force, stealth, intimidation, threat or by
any other means whatsoever.
• What are important terms and conditions of employment of kasambahay?

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The following is a rundown of the basic terms and conditions that should be observed in the employment of a
Kasambahay:
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a. Employable age. - Children whose age is below 15 years are absolutely prohibited to work as Kasambahay.
b. Normal daily hours of work. – Because R.A. No. 10361 does not contain any provision on the number of
normal hours of work that a Kasambahay should render in a day but merely prescribes said daily rest period
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of eight (8) hours per day, it may be concluded that the Kasambahay should work for at least a total of sixteen
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(16) hours per day as normal hours of work. However, it must be noted that the Labor Code does not
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contain any provision on the normal hours of work of househelpers. Article 1695 of the Civil Code,
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however, specifically provides that househelpers shall not be required to work for more than ten (10) hours
a day. Since R.A. No. 10361, a special law, is the most recent piece of legislation, it should prevail over the
general provision of the Civil Code.
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c. Normal daily hours of work for working child-kasambahay is eight (8) hours per day.
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d. 13th month pay. - The Kasambahay who has rendered at least one (1) month of service is entitled to a 13th
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month pay which shall not be less than one-twelfth (1/12) of his/her total basic salary earned in a calendar
year. The 13th month pay shall be paid not later than December 24 of every year or upon separation from
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employment.
e. Daily rest period. – The Kasambahay shall be entitled to an aggregate daily rest period of eight (8) hours.
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f. Weekly rest period. - The Kasambahay shall be entitled to at least twenty-four (24) consecutive hours of
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rest in a week. The employer and the Kasambahay shall agree in writing on the schedule of the weekly rest
day but the preference of the Kasambahay, when based on religious grounds, shall be respected.
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g. Service incentive leave. - A Kasambahay who has rendered at least one (1) year of service shall be entitled
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to an annual service incentive leave of at least five (5) days with pay. Any unused portion of said annual leave
shall not be cumulative or carried over to the succeeding years. Unused leaves shall not be convertible to
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cash.
h. Social security benefits. - A Kasambahay who has rendered at least one (1) month of service shall be
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covered by the Social Security System (SSS), Employees Compensation Commission (ECC), Philippine
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Health Insurance Corporation (PhilHealth), and Home Development Mutual Fund or Pag-IBIG, and shall
be entitled to all the benefits in accordance with their respective policies, laws, rules and regulations.
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i. Obligation of employer to register and enroll with SSS, PhilHealth, and Pag-IBIG. - As employer of
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the Kasambahay, he/she shall register himself/herself with, and enroll the latter as his/her employee to the
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SSS, PhilHealth, and Pag-IBIG.

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j. Deposits for loss or damage. - It shall be unlawful for the employer or any other person to require a
Kasambahay to make deposits from which deductions shall be made for the reimbursement of loss or damage
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to tools, materials, furniture and equipment in the household.

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k. Standard of treatment. - The Kasambahay shall be treated with respect by the employer or any member of
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the household. He/she shall not be subjected to any kind of abuse, including repeated verbal or psychological,
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nor be inflicted with any form of physical violence or harassment or any act tending to degrade his/her
dignity, as defined under the Revised Penal Code, Violence Against Women and their Children Law (R.A.
No. 9262), Special Protection of Children Against Child Abuse, Exploitation and Discrimination Act (R.A.
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No. 7610) as amended by R.A. No. 9231, Anti-Trafficking in Persons Act of 2003 (R.A. No. 9208), and other
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applicable laws.
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l. Board, lodging and medical attendance. - The employer shall provide for the basic necessities of the
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Kasambahay, to include the following:

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(1) At least three (3) adequate meals a day, taking into consideration the Kasambahay's religious beliefs and
cultural practices;
(2) Humane sleeping condition that respects the person's privacy for live-in arrangement; and
(3) Appropriate rest and medical assistance in the form of first-aid medicines, in case of illnesses and injuries
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sustained during service without loss of benefits.

m. Opportunities for education and training. - The Kasambahay shall be afforded the opportunity to finish
basic education, which shall consist of elementary and secondary education. He/she may be allowed access
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to alternative learning systems and, as far as practicable, higher education or technical vocational education
and training.
n. Membership in labor organization. - The Kasambahay shall have the right to join a labor organization of
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his/her own choosing for purposes of mutual aid and collective negotiation.
r. Health and safety. - The employer shall safeguard the safety and health of the Kasambahay in accordance
with the standards which the DOLE shall develop through the Bureau of Working Conditions (BWC) and
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the Occupational Safety and Health Center (OSHC) within six (6) months from the promulgation of this IRR.
The said standards shall take into account the peculiar nature of domestic work.
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s. Prohibition on debt bondage. - It shall be unlawful for the employer or any person acting on his/her behalf
to place the Kasambahay under debt bondage. “Debt bondage” refers to the rendering of service by the
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Kasambahay as security or payment for a debt where the length and nature of service is not clearly defined
or when the value of the service is not reasonably applied in the payment of the debt.
t. Assignment to non-household work. - The employer shall not assign the Kasambahay to work, whether in
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full or part-time, in a commercial, industrial or agricultural enterprise at a wage rate lower than that provided
for agricultural or non-agricultural workers.
If so assigned, the Kasambahay will no longer be treated as such but as a regular employee of the
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establishment.
• What are the rules on termination of Kasambahay?
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a. Pre-termination of employment. – The following rules shall be observed:
(1) In case the duration of employment is specified in the contract, the Kasambahay and the employer may
mutually agree upon notice to terminate the contract of employment before the expiration of its term.
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(2) In case the duration is not determined by stipulation or by nature of service, the employer or the
Kasambahay may give notice to end the employment relationship five (5) days before the intended
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termination of employment.
b. Termination of employment initiated by the Kasambahay. - The Kasambahay may terminate the
employment relationship at any time before the expiration of the contract for any of the following causes:
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(1) Verbal or emotional abuse of the Kasambahay by the employer or any member of the household;
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(2) Inhuman treatment including physical abuse of the Kasambahay by the employer or any member of the
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household;
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(3) Commission of a crime or offense against the Kasambahay by the employer or any member of the
household;
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(4) Violation by the employer of the terms and conditions of the employment contract and other standards
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set forth in the law;
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(5) Any disease prejudicial to the health of the Kasambahay, the employer, or members of the household; and
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(6) Other causes analogous to the foregoing.
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If the Kasambahay leaves without cause, any unpaid salary due, not exceeding the equivalent of 15 days’ work,
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shall be forfeited. In addition, the employer may recover from the Kasambahay deployment expenses, if any, if
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the services have been terminated within six (6) months from employment.
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c. Termination of employment initiated by the employer. - An employer may terminate the employment of
the Kasambahay at any time before the expiration of the contract for any of the following causes:
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(1) Misconduct or willful disobedience by the Kasambahay of the lawful order of the employer in connection
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with the former's work;

(2) Gross or habitual neglect or inefficiency by the Kasambahay in the performance of duties;
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(3) Fraud or willful breach of the trust reposed by the employer on the Kasambahay;
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(4) Commission of a crime or offense by the Kasambahay against the person of the employer or any
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immediate member of the employer's family;

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(5) Violation by the Kasambahay of the terms and conditions of the employment contract and other standards
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set forth under the law;

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(6) Any disease prejudicial to the health of the Kasambahay, the employer, or members of the household; and
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(7) Other causes analogous to the foregoing.

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If the employer dismissed the Kasambahay for reasons other than the above, he/she shall pay the Kasambahay
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the earned compensation plus indemnity in the amount equivalent to fifteen (15) days’ work.
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d. Invalid ground for termination. - Pregnancy and marriage of the Kasambahay are not valid grounds for
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termination of employment.
e. Employment Certification. - Upon the termination of employment, the employer shall issue the
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Kasambahay, within five (5) days from request, a certificate of employment indicating the nature, duration of the
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service and work description.

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4. Homeworkers
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• What are important terms that should be noted in employment of homeworkers?

a. “Industrial homeworker” – It refers to a worker who is engaged in industrial homework.
b. “Industrial homework” – It refers to a system of production under which work for an employer or
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contractor is carried out by a homeworker at his/her home. Materials may or may not be furnished by the
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employer or contractor. It differs from regular factory production principally in that, it is a decentralized form
of production where there is ordinarily very little supervision or regulation of methods of work.
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c. “Home” - It means any nook, house, apartment or other premises used regularly, in whole or in part, as a
dwelling place, except those situated within the premises or compound of an employer, contractor/subcontractor
and the work performed therein is under the active or personal supervision by or for the latter.
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d. “Field personnel” – It refers to a non-agricultural employee who regularly performs his duties away from
the principal place of business or branch office of the employer and whose actual hours of work in the field
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cannot be determined with reasonable certainty.

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e. “Employer.” – It refers to any natural or artificial person who, for his own account or benefit, or on behalf
of any person residing outside the Philippines, directly or indirectly, or through any employee, agent, contractor,
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subcontractor or any other person:
1. delivers or causes to be delivered any goods, articles or materials to be processed or fabricated in or
about a home and thereafter to be returned or to be disposed of or distributed in accordance with his
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direction; or
2. sells any goods, articles or materials for the purpose of having such goods or articles processed in or
about a home and then repurchases them himself or through another after such processing.
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f. “Contractor” or “subcontractor” - It refers to any person who, for the account or benefit of an employer,
delivers or causes to be delivered to a homeworker, goods or articles to be processed in or about his home and
thereafter to be returned, disposed of or distributed in accordance with the direction of the employer.
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g. “Processing” - It refers to manufacturing, fabricating, finishing, repairing, altering, packing, wrapping or
handling in any way connected with the production or preparation of an article or material.
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• How is homework paid?
Immediately upon receipt of the finished goods or articles, the employer is required to pay the homeworker or the
contractor or subcontractor, as the case may be, for the work performed less the corresponding homeworker’s share
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of SSS, PhilHealth and ECC premium contributions which should be remitted by the contractor or subcontractor or
employer to the SSS with the employer’s share. However, where payment is made to a contractor or subcontractor,
the homeworker should likewise be paid immediately after the goods or articles have been collected from the workers.
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• What are prohibited homeworks?
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No homework shall be performed on the following:
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1. Explosives, fireworks and articles of like character;
2. Drugs and poisons; and
3. Other articles, the processing of which requires exposure to toxic substances.
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5. Night workers
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• Article 136 [138] of the Labor Code
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Any woman who is permitted or suffered to work, with or without compensation, in any night club, cocktail lounge, massage
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clinic, bar or similar establishments may be considered a regular employee of such establishment for purposes of the
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application of labor and social legislation if the following requisites concur:
1. She works under the effective control or supervision of the employer; and
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2. She has worked therein for a substantial period of time as determined by the DOLE Secretary.
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6. Persons with Disabilities

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• What is the applicable law to PWDs?

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R.A. No. 7277, otherwise known as the “Magna Carta for Disabled Persons.” The provisions on handicapped workers
found in the Labor Code (Articles 78 to 81) are no longer applicable.
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• What are important definitions related to PWDs?

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o “Persons with Disability” or “PWD” are those suffering from restriction or different abilities, as a result
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of a mental, physical or sensory impairment, to perform an activity in the manner or within the range
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considered normal for a human being.

o “Impairment” refers to any loss, diminution or aberration of psychological, physiological, or anatomical
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structure or function.
o “Disability” means (1) a physical or mental impairment that substantially limits one or more psychological,
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physiological or anatomical functions of an individual or activities of such individual; (2) a record of such an
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impairment; or (3) being regarded as having such an impairment.

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o “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.
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o “Marginalized Persons with Disability” refer to persons with disability who lack access to rehabilitative
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services and opportunities to be able to participate fully in socio-economic activities and who have no means
of livelihood and whose incomes fall below the poverty threshold.
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a. Equal opportunity
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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
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terms and conditions of employment and the same compensation, privileges, benefits, fringe benefits, incentives or
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allowances as a qualified able-bodied person.

Five percent (5%) of all casual emergency and contractual positions in the Departments of Social Welfare and
Development, Health, Education and other government agencies, offices or corporations engaged in social
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development shall be reserved for PWDs.

• Are PWDs eligible for apprenticeship and learnership?
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Yes. Under R.A. No. 7277, it is provided that subject to the provisions of the Labor Code, as amended, PWDs shall
be eligible as apprentices or learners; provided that their handicap is not as much as to effectively impede the
performance of job operations in the particular occupation for which they are hired and provided further that after
the lapse of the period of apprenticeship, if found satisfactory in the job performance, they shall be eligible for
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employment.
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• What is the applicable wage rate to PWDs?

Under R.A. No. 7277, the wage rate of PWDs is 100% of the applicable minimum wage.
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a. Discrimination
• What are the forms of prohibited discriminatory acts against PWDs in terms of employment?
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No entity, whether public or private, shall discriminate against a qualified PWD by reason of disability in regard to
job application procedures, the hiring, promotion, or discharge of employees, employee compensation, job training,
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and other terms, conditions and privileges of employment. The following constitute acts of discrimination:
(a) Limiting, segregating or classifying a job applicant with disability in such a manner that adversely affects his
work opportunities;
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(b) 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;
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(c) Utilizing standards, criteria, or methods of administration that:
(1) have the effect of discrimination on the basis of disability; or
(2) perpetuate the discrimination of others who are subject to common administrative control.
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(d) 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
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person performing the same work is entitled;

(e) Favoring a non-disabled employee over a qualified employee with disability with respect to promotion,
training opportunities, and study and scholarship grants solely on account of the latter’s disability;
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(f) Re-assigning or transferring an employee with a disability to a job or position he cannot perform by reason
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of his disability;
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(g) Dismissing or terminating the services of an employee with disability by reason of his disability unless the
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employer can prove that he impairs the satisfactory performance of the work involved to the prejudice of
the business entity; provided, however, that the employer first sought to provide reasonable
accommodations for persons with disability;
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(h) 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,
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rather than the impaired sensory, manual or speaking skills of such applicant or employee, if any; and
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(i) Excluding PWD from membership in labor unions or similar organizations. Ba

b. Incentives for employers
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• What are the incentives for employers who employ PWDs?

To encourage the active participation of the private sector in promoting the welfare of PWDs and to ensure gainful
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employment for qualified persons with disability, adequate incentives shall be provided to private entities which
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employ PWDs.
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Private entities that employ PWDs who meet the required skills or qualifications, either as a regular employee,
apprentice or learner, shall be entitled to an additional deduction from their gross income equivalent to twenty-five
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percent (25%) of the total amount paid as salaries and wages to persons with disability; provided, however, that such
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entities could present proof as certified by the Department of Labor and Employment (DOLE) that PWDs are under
their employ and provided further that the employee with disability is accredited with the DOLE and the Department
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of Health as to his disability, skills and qualifications.

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Private entities that improve or modify their physical facilities in order to provide reasonable accommodation for
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PWDs shall also be entitled to an additional deduction from their net taxable income equivalent to fifty percent
(50%) of the direct costs of the improvements or modifications.
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E. SEXUAL HARASSMENT IN THE WORK ENVIRONMENT

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1. Anti-Sexual Harassment Act (R.A. No. 7877)

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• What are the 3 situations contemplated under this law?

R.A. No. 7877 declares sexual harassment unlawful only in three (3) situations, namely:
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(1) employment;
(2) education; and
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(3) training environment.

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• Can sexual harassment be committed also against a man?

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Yes. Sexual harassment is not the sole domain of women as men may also be subjected to the same despicable act.
Said law does not limit the victim of sexual harassment to women.
• Who are the persons who may be held liable for sexual harassment?
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Work, education or training-related sexual harassment is committed by any employer, employee, manager, supervisor,
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agent of the employer, teacher, instructor, professor, coach, trainor, or any other person who, having authority,
influence or moral ascendancy over another in a work or training or education environment, demands, requests or
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otherwise requires any sexual favor from another, regardless of whether the demand, request or requirement for
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submission is accepted by the object of said act.
Further, any person who directs or induces another to commit any act of sexual harassment as defined in the law, or
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who cooperates in the commission thereof by another without which it would not have been committed, shall also
be held liable under the law.
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• How is sexual harassment committed in a work-related or employment environment?

In a work-related or employment environment, sexual harassment is committed when:
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1. The sexual favor is made a condition in the hiring or in the employment, re-employment or continued
employment of said individual or in granting said individual favorable compensation, terms, conditions,
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promotions, or privileges; or the refusal to grant the sexual favor results in limiting, segregating or classifying
the employee which in any way would discriminate, deprive or diminish employment opportunities or
otherwise adversely affect said employee;
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2. The above acts would impair the employee’s rights or privileges under existing labor laws; or
3. The above acts would result in an intimidating, hostile, or offensive environment for the employee.
• What are the duties of the employer in regard to sexual harassment complaints?
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It is the duty of the employer to prevent or deter the commission of acts of sexual harassment and to provide the
procedures for the resolution or prosecution of acts of sexual harassment.
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The employer or head of office is required to:
1. Promulgate appropriate rules and regulations, in consultation with and jointly approved by the employees or
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students or trainees, through their duly designated representatives, prescribing the procedure for the
investigation of sexual harassment cases and the administrative sanctions therefor. The said rules and
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regulations issued shall include, among others, guidelines on proper decorum in the workplace and
educational or training institutions.
2. Create a committee on decorum and investigation of cases on sexual harassment. The committee shall
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conduct meetings, as the case may be, with officers and employees, teachers, instructors, professors, coaches,
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trainors and students or trainees to increase understanding and prevent incidents of sexual harassment. It
shall also conduct the investigation of alleged cases constituting sexual harassment.
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2. Safe Spaces Act (R.A. No. 11313)
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• Difference between Anti-Sexual Harassment Act of 1995 and Safe Spaces Act:
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Anti-Sexual Harassment Act of 1995 Safe Spaces Act

Covers harassment only in 3 places: Expands coverage to include:
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1) Employment 1) Streets and public spaces

2) Education 2) Online
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3) Training Environment 3) Employment
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4) Education
5) Training environment
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Persons who may be liable for Sexual Harassment: Persons who may be liable for sexual harassment
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Employer, employee, manager, supervisor, agent of (workplace, education and training environment):
the employer, teacher, instructor, professor, coach, • Employer, employee, manager, supervisor,
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trainor, or any other person who, having agent of the employer, teacher, instructor,
authority, influence or moral ascendancy over professor, coach, trainor, or any other person
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another in a work or training or education who, having authority, influence or moral

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environment. ascendancy over another; OR

• Between peers; OR r
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• By a subordinate to a superior officer; OR

• By a student to a teacher; OR
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• By a trainee to a trainer.
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• Acts that constitute Gender-Based Sexual Harassment in the Workplace:

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o Unwelcome sexual advances or requests or demands of a sexual nature that has or could have a
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detrimental effect on employment/ education/ job performance or opportunities;

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o Conduct of sexual nature which affects the dignity of a person;

o Conduct that creates an intimidating/hostile/humiliating environment for the recipient.
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o Common elements of the above acts:

- May be done verbally, physically or through the use of technology such as text messaging or electronic
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mail or through any other forms of information and communication systems.

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- Conduct is unwelcome, unreasonable, offensive and pervasive.

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• Duties of the Employer

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Employers or other persons of authority, influence or moral ascendancy shall:

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1. Disseminate or post in a conspicuous place, a copy of the Act;

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2. Provide measures to prevent gender-based sexual harassment (e.g. conduct of anti-sexual harassment
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seminars);
3. Create a committee on decorum and investigation. This committee shall:
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a) Adequately represent the management, the employees, and the union;

b) Designate a woman as its head and not less than half of its members should be women;
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c) Investigate and decide on complaints of sexual harassment w/in 10 days;

d) Protect the complainant from retaliation.
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4. Provide and disseminate a code of conduct which shall provide procedures for the committee AND set
administrative penalties
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• Liability of Employer
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In addition to liabilities for acts of gender-based sexual harassment, employers may also be held responsible for:
o Non-implementation of their duties; or
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o Not taking action on reported acts of sexual harassment.
• DOLE Inspection
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DOLE shall conduct yearly spontaneous inspections to ensure compliance of employers and employees with their
obligations.
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MAJOR TOPIC 4
SOCIAL WELFARE LEGISLATION
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A. SSS LAW (R.A. No. 8282)
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1. Coverage and exclusions
COVERAGE
• Compulsory coverage.
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o Coverage in the SSS shall be compulsory upon all employees, including kasambahays or domestic workers not
over sixty (60) years of age and their employers.
o “Employer” is any person, natural or juridical, domestic or foreign, who carries on in the Philippines any trade,
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business, industry, undertaking, or activity of any kind and uses the services of another person who is under his
orders as regards the employment, except the government and any of its political subdivisions, branches or
instrumentalities, including corporations owned or controlled by the Government: Provided, That a self-employed
person shall be both employee and employer at the same time.
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o “Employee” is any person who performs services for an employer in which either or both mental or physical efforts
are used and who receives compensation for such services, where there is an employer-employee relationship:
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Provided, That a self-employed person shall be both employee and employer at the same time.
• Compulsory coverage of self-employed persons.

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o Coverage in the SSS shall also be compulsory upon such self-employed persons as may be determined by the
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Commission under such rules and regulations as it may prescribe, including, but not limited to, the following:
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(a) All self-employed professionals;
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(b) Partners and single proprietors of businesses;
(c) Actors and actresses, directors, scriptwriters and news correspondents who do not fall within the definition
of the term "employee" (supra);
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(d) Professional athletes, coaches, trainers and jockeys; and
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(e) Individual farmers and fishermen.
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o Unless otherwise specified in the law, all provisions thereof applicable to covered employees shall also be
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applicable to the covered self-employed persons
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o “Self-employed” is any person whose income is not derived from employment as defined under this Act, as well as
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those workers enumerated above.
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• Compulsory coverage of OFWs.

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o Coverage of all OFWs

▪ Coverage in the SSS shall be compulsory upon all sea-based and land-based OFWs, Provided, That they are not
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over sixty (60) years of age.

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▪ All benefit provisions under this Act shall apply to all covered OFWs. The benefits include, among others,
retirement, death, disability, funeral, sickness and maternity.
o Sea-based OFWs.
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▪ Manning agencies are agents of their principals and are considered as employers of sea-based OFWs.
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▪ For purposes of the implementation of R.A. No. 11199, any law to the contrary notwithstanding manning
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agencies are jointly and severally or solidarily liable with their principals with respect to the civil liabilities
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incurred for any violation thereof.

▪ The persons having direct control, management or direction of the manning agencies shall be held criminally
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liable for any act or omission penalized under R.A. No. 11199 notwithstanding Section 28(f) thereof.
o Land-based OFWs
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▪ Land-based OFWs are compulsory members of the SSS and considered in the same manner as self-employed
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persons under such rules and regulations that the Commission shall prescribe.
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▪ The Department of Foreign Affairs (DFA), the Department of Labor and Employment (DOLE) and all its
agencies involved in deploying OFWs for employment abroad are mandated to negotiate bilateral labor
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agreements with the OFWs' host countries to ensure that the employers of land-based OFWs, similar to the
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principals of sea-based OFWs, pay the required SSS contributions, in which case, these land-based OFWs shall
no longer be considered in the same manner as self-employed persons. Instead. they shall be considered as
compulsorily covered employees with employer and employee shares in contributions that shall be provided
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for in the bilateral labor agreements and their implementing administrative agreements: Provided, That in
countries which already extend social security coverage to OFWs, the DFA through the Philippine embassies
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and the DOLE shall negotiate further agreements to serve the best interests of the OFWs.
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▪ The DFA, the DOLE and, the SSS shall ensure compulsory coverage of OFWs through bilateral social security
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and labor agreements and other measures for enforcement
• Voluntary coverage
In addition to the foregoing OFWs who are eligible for voluntary coverage, the following may be cited:
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1) Non-working spouses of SSS members

Spouses who devote full time to managing the household and family affairs, unless they are also engaged in other
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vocation or employment which is subject to mandatorv coverage, may be covered by the SSS on a voluntary
basis.
2) OFWs
Upon the termination of their employment overseas, OFWs may continue to pay contributions on a voluntary
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basis to maintain their rights to full benefits.

3) Filipino permanent migrants, including Filipino immigrants, permanent residents and naturalized
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citizens of their host countries

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Filipino permanent migrants, including Filipino immigrants, permanent residents and naturalized citizens of their
host countries may be covered by the SSS on a voluntary basis.
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• Effective date of coverage.
The effectivity date of the compulsory coverage are as follow:
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1) For employer - Compulsory coverage of the employer shall take effect on the first day of his operation.
2) For employee - Compulsory coverage of the employee shall take effect on the first day of his employment.
3) For self-employed - The compulsory coverage of the self-employed person shall take effect upon his
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registration with the SSS.
• Effect of separation from employment.
When an employee under compulsory coverage is separated from employment, his employer's contribution on his
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account and his obligation to pay contributions arising from that employment shall cease at the end of the month of
separation but said employee shall be credited with all contributions paid on his behalf and entitled to benefits according
to the provisions of R.A. No. 11199. He may, however, continue to pay the total contributions to maintain his right to
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full benefit.
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• Effect of interruption of business or professional income.

If the self-employed member realizes no income in any given month, he shall not be required to pay contributions for
that month. He may, however, be allowed to continue paying contributions under the same rules and regulations
applicable to a separated employee member: Provided, That no retroactive payment of contributions shall be allowed
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other than as prescribed under Section 22-A of R.A. No. 11199.
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EXCLUSIONS
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• Excluded employer
Government and any of its political subdivisions, branches or instrumentalities, including corporations owned or
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controlled by the Government with original charters.
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• Excluded employees.
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Workers whose employment or service falls under any of the following circumstances are not covered:
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(1) Services where there is no employer-employee relationship in accordance with existing labor laws, rules,
regulations and jurisprudence;
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(2) Service performed in the employ of the Philippine Government or instrumentality or agency thereof;
(3) Service performed in the employ of a foreign government or international organization, or their wholly-
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owned instrumentality: Provided, however, That this exemption notwithstanding, any foreign government,
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international organization or their wholly-owned instrumentality employing workers in the Philippines or

employing Filipinos outside of the Philippines, may enter into an agreement with the Philippine Government
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for the inclusion of such employees in the SSS except those already covered by their respective civil service
retirement systems: Provided, further, That the terms of such agreement shall conform with the provisions of
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R.A. No. 11199 on coverage and amount of payment of contributions and benefits: Provided, finally, That the
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provisions of this Act shall be supplementary to any such agreement: and

(4) Such other services performed by temporary and other employees which may be excluded by regulation of r
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the Commission. Employees of bona fide independent contractors shall not be deemed employees of the
employer engaging the service of said contractors.
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2. Dependents and beneficiaries

DEPENDENTS
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The dependents shall be the following:

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(1) The legal spouse entitled by law to receive support from the member;
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(2) The legitimate, legitimated or legally adopted, and illegitimate child who is unmarried, not gainfully employed,
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and has not reached twenty-one (21) years of age, or if over twenty-one (21) years of age, he is congenitally
or while still a minor has been permanently incapacitated and incapable of self-support, physically or mentally:
and
(3) The parent who is receiving regular support from the member.
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BENEFICIARIES
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• Primary beneficiaries.
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The following are primary beneficiaries:

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1. The dependent spouse until he or she remarries;

2. The dependent legitimate, legitimated or legally adopted, and illegitimate children;
The dependent illegitimate children shall be entitled to 50% of the share of the legitimate, legitimated or
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legally adopted children. However, in the absence of the dependent legitimate, legitimated children of the
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member, his/her dependent illegitimate children shall be entitled to 100% of the benefits
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• Secondary beneficiaries.
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The following are secondary beneficiaries:

1. The dependent parents, in the absence of the primary beneficiaries.
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2. Any other person designated by the member as his/her secondary beneficiary, in the absence of all the
foregoing primary beneficiaries and dependent parents.
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3. Benefits
• Two (2) Main Classifications.
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The SSS benefits may be classified as follows:
(a) Social security benefits:
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1) Sickness
2) Maternity Leave
3) Retirement
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4) Unemployment Insurance or Involuntary Separation
5) Disability
6) Death
7) Funeral
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(b) Employees’ compensation benefits
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(1) SICKNESS BENEFIT
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• Who may avail.

The sickness benefit is a daily cash allowance paid for the number of days a member is unable to work due to sickness or
injury. This benefit may be availed of as follows:
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A member who has paid at least three (3) monthly contributions in the 12-month period immediately preceding
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the semester of sickness or injury and is confined therefor for more than three (3) days in a hospital or elsewhere
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with the approval of the SSS, shall, for each day of compensable confinement or a fraction thereof, be paid by his
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employer, or the SSS, if such person is unemployed or self-employed, a daily sickness benefit equivalent to
ninety percent (90%) of his average daily salary credit, subject to the following conditions:
(1) In no case shall the daily sickness benefit be paid longer than one hundred twenty (120) days in one (1)
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calendar year, nor shall any unused portion of the one hundred twenty (120) days of sickness benefit granted
under this section be carried forward and added to the total number of compensable days allowable in the
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subsequent year;
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(2) The daily sickness benefit shall not be paid for more than two hundred forty (240) days on account of the
same confinement; and
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(3) The employee member shall notify his employer of the fact of his sickness or injury within five (5) calendar
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days after the start of his confinement unless such confinement is in a hospital or the employee became sick
or was injured while working or within the premises of the employer, in which case, notification to the
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employer is not necessary: Provided, That if the member is unemployed or self-employed, he shall directly
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notify the SSS of his confinement within five (5) calendar days after the start thereof unless such confinement
is in a hospital, in which case, notification is also not necessary: Provided, further, That in cases where
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notification is necessary, the confinement shall be deemed to have started not earlier than the fifth day
immediately preceding the date of notification.
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• Compensable confinement.
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o The compensable confinement shall begin on the first day of sickness, and the payment of such allowances shall
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be promptly made by the employer every regular payday or on the fifteenth and last day of each month, and
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similarly in the case of direct payment by the SSS, for as long as such allowances are due and payable: Provided,
That such allowance shall begin only after all sick leaves of absence with full pay to the credit of the employee
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member shall have been exhausted.

o One hundred percent (100%) of the daily benefits provided in the preceding paragraph shall be reimbursed by the
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SSS to said employer upon receipt of satisfactory proof of such payment and legality thereof:
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▪ Provided, That the employer has notified the SSS of the confinement within five (5) calendar days after receipt
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of the notification from the employee member:

▪ Provided, further, That if the notification to the SSS is made by the employer beyond five (5) calendar days after
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receipt of the notification from the employee member, said employer shall be reimbursed only for each day of
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confinement starting from the tenth calendar day immediately preceding the date of notification to the SSS:
▪ Provided, finally, That the SSS shall reimburse the employer or pay the unemployed member only for
confinement within the one-year period immediately preceding the date the claim for benefit or reimbursement
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is received by the SSS, except confinement in a hospital, in which case, the claim for benefit or reimbursement
must be filed within one (I) year from the last day of confinement.
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• Notification requirement.
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Where the employee member has given the required notification but the employer fails to notify the SSS of the
confinement or to file the claim for reimbursement within the period prescribed in this section resulting in the reduction
of the benefit or denial of the claim, such employer shall have no right to recover the corresponding daily allowance he
advanced to the employee member as required in this section. The provisions regarding the notification required of the
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member and the employer as well as the period within which the claim for benefit or reimbursement may be filed shall
apply to all claims filed with the SSS.
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• Adjudication of claim of reimbursement

The claim of reimbursement shall be adjudicated by the SSS within a period of two (2) months from receipt thereof:
Provided, That should no payment be received by the employer within one (1) month after the period prescribed herein
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for adjudication, the reimbursement shall thereafter earn simple interest of one percent (1%) per month until paid.
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(2) MATERNITY LEAVE BENEFIT
• R.A. NO. 11210, the prevailing law.
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R.A. No. 11199, otherwise known as the “Social Security Act of 2018”, which was approved on February 07, 2019, re-
enacted the exact provision of Section 14-A of the repealed “Social Security Act of 1997.” However, 13 days later, or on
February 20, 2019, President Rodrigo Duterte approved R.A. No. 11210, otherwise known as the “105-Day Expanded
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Maternity Leave Law” which contains diametrically different provisions from R.A. No. 11199.
There is thus no doubt that the prevailing law on maternity leave benefit is R.A. No. 111210 which repealed or modified
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“[a]ll laws, decrees, orders, rules and regulations or parts thereof inconsistent [therewith].”
The maternity leave benefit under R.A. No. 11210 is discussed under the “C. LEAVES”.
al (3) RETIREMENT BENEFITS
• Two types of retirement benefits.
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Retirement benefit is a cash benefit either in monthly pension or lump sum paid to a member who can no longer work
due to old age.
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The two (2) types of retirement benefits are:

1) Monthly pension, and
2) Lump sum amount.
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The monthly pension is a lifetime cash benefit paid to a retiree who has paid at least 120 monthly contributions to the
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SSS prior to the semester of retirement. The lump sum amount is granted to a retiree who has not paid the required
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120 monthly contributions. It is equal to the total contributions paid by the member and by the employer including
interest.
• Who are qualified.
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A member who has paid at least one hundred twenty (120) monthly contributions prior to the semester of retirement
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and who:
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(1) has reached the age of sixty (60) years and is already separated from employment or has ceased to be self-
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employed: or Ba
(2) has reached the age of sixty-five (65) years, shall be entitled for as long as he lives to the monthly pension,
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Provided, That he shall have the option to receive his first eighteen (18) monthly pensions in lump sum discounted at a
preferential rate of interest to be determined by the SSS.
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A covered member who is sixty (60) years old at retirement and who does not qualify for pension benefits as above
described, shall be entitled to a lump sum benefit equal to the total contributions paid by him and on his behalf: Provided,
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That he is separated from employment and is not continuing payment of contributions to the SSS on his own.
• Reemployment or resumption of self-employment.
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The monthly pension shall be suspended upon the reemployment or resumption of self-employment of a retired
member who is less than sixty-five (65) years old. He shall again be subject to Section 18 (Employee’s Contributions)
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and his employer to Section 19 (Employer’s Contributions) of R.A. No. 11199.
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• Death of retired member.

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Upon the death of the retired member, his primary beneficiaries as of the date of his retirement shall be entitled to
receive the monthly pension: Provided, That if he has no primary beneficiaries and he dies within sixty (60) months from
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the start of his monthly pension, his secondary beneficiaries shall be entitled to a lump sum benefit equivalent to the
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total monthly pensions corresponding to the balance of the five-year guaranteed period, excluding the dependents'
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pension.
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• Retirement of member after reaching 60.

The monthly pension of a member who retires after reaching age sixty (60) shall be the higher of either: (1) the monthly
pension computed at the earliest time he could have retired had he been separated from employment or ceased to be
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self-employed plus all adjustments thereto; or (2) the monthly pension computed at the time when he actually retires.
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• Retirement of underground mineworkers.

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An underground mineworker shall be entitled to retirement benefits if he:

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1. has reached the age of 55 years old and is an underground mineworker for at least 5 years (either continuous or
accumulated) prior to the semester of retirement but whose actual date of retirement is not earlier than March
13, 1998; separated from employment or in the case of self-employed, has ceased self-employment, and has paid
at least 120 monthly contributions prior to the semester of retirement.
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2. has reached the age of 60 years old whether employed or not.

• Monthly pension.
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o Amount of monthly pension.

The monthly pension shall be the highest of the following amounts:
(1) The sum of ₱300 plus 20% of the average monthly salary credit plus 2% of the average monthly salary
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credit for each credited year of service (CYS) in excess of 10 years; or

(2) 40% of the average monthly salary credit; or
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(3) ₱1,000 if the member had less than 10 credited years of service (CYS); ₱1,200 if with at least 10 CYS; or ₱2,400
if with at least 20 CYS. The monthly pension is paid for not less than 60 months.
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o Additional monthly benefit allowance.
Pursuant to Memorandum from the Executive Secretary dated 22 February 2017, by authority of the President of the
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Republic of the Philippines, an additional monthly benefit allowance amounting to ₱1,000 shall be given to all retirement,
death, and disability pensioners receiving monthly pensions in or after January 2017.
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o Dependents’ pension.
Where monthly pension is payable on account of death, permanent total disability or retirement, dependents' pension
equivalent to 10% of the monthly pension or ₱250, whichever is higher, shall also be paid for each dependent child
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conceived on or before the date of the contingency but not exceeding five (5), beginning with the youngest and without
substitution: Provided, That where there are legitimate and illegitimate children, the former shall be preferred.
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o Retiree’s additional benefits
The retiree is entitled to a 13th month pension payable every December. All retiree pensioners prior to the effectivity of
R.A. No. 7875 on March 4, 1995 are automatically considered members of PhilHealth and he and his legal dependents
are entitled to its hospitalization benefits. On the other hand, retirees effective March 4, 1995 up to the present will be
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entitled to hospitalization benefits under PhilHealth only if they have contributed 120 monthly Medicare contributions.
The counting of 120 monthly contributions shall start in 1972, when the Medical Care Act of 1969 started
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implementation.
(4) UNEMPLOYMENT INSURANCE OR INVOLUNTARY SEPARATION BENEFITS

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• R.A. No. 11199 grants this benefit to a member who is:
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(a) not over sixty (60) years of age;
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(b) who has paid at least thirty-six (36) months contributions, twelve (12) months of which should be in the 18-
month period immediately preceding the involuntary unemployment or separation.
• He shall be paid benefits in the form of monthly cash payments equivalent to fifty percent (50%) of the average
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monthly salary credit for a maximum of two (2) months:
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o Provided, That an employee who is involuntarily unemployed can only claim unemployment benefits once every
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three (3) years;

o Provided, further, That in case of concurrence of two or more compensable contingencies, only the highest benefit
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shall be paid, subject to the rules and regulations that the Commission may prescribe. Ba
(5) DISABILITY BENEFITS
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• Permanent total disability benefits.

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o A member shall be entitled to the monthly pension upon: (a) the permanent total disability of a member who
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has (b) paid at least thirty-six (36) monthly contributions prior to the semester of disability
o Provided, That if he has not paid the required thirty-six (36) monthly contributions, he shall be entitled to a lump
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sum benefit equivalent to the monthly pension times the number of monthly contributions paid to the SSS or
twelve (12) times the monthly pension, whichever is higher.
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• Reemployment or resumption of self-employment.

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o A member who (a) has received a lump sum benefit; and (b) is reemployed or has resumed self-employment
not earlier than one (1) year from the date of his disability shall again be subject to compulsory coverage and r
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shall be considered a new member.

o The monthly pension and dependents’ pension shall be suspended upon:
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▪ the reemployment or resumption of self-employment; or

▪ the recovery of the disabled member from his permanent total disability; or
▪ his failure to present himself for examination at least once a year upon notice by the SSS.
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• Death of permanent total disability pensioner.

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o Upon the death of the permanent total disability pensioner, his primary beneficiaries as of the date of
disability shall be entitled to receive the monthly pension
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o Provided, That if he has no primary beneficiaries and he dies within sixty (60) months from the start of his monthly
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pension, his secondary beneficiaries shall be entitled to a lump sum benefit equivalent to the total monthly
pensions corresponding to the balance of the five-year guaranteed period excluding the dependents’ pension.
• Permanent total disabilities
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The following disabilities shall be deemed permanent total:

(1) Complete loss of sight of both eyes;
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(2) Loss of two limbs at or above the ankle or wrists:

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(3) Permanent complete paralysis of two limbs;

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(4) Brain injury resulting to incurable imbecility or insanity; and

(5) Such cases as determined and approved by the SSS.
• Permanent partial disabilities.
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o If the disability is permanent partial, and such disability occurs BEFORE thirty-six (36) monthly contributions
have been paid prior to the semester of disability: the benefit shall be such percentage of the lump sum benefit
described in the preceding paragraph with due regard to the degree of disability as the Commission may
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determine.
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o If the disability is permanent partial and such disability occurs AFTER thirty-six (36) monthly contributions
have been paid prior to the semester of disability: the benefit shall be the monthly pension for permanent total
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disability payable not longer than the period designated in the following schedule:
Complete and permanent loss of/use of Number of Months
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One thumb - 10
One index finger - 8
One middle finger - 6
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One ring finger - 5
One little finger - 3
One big toe - 6
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One hand
One arm
One foot
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-
-
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50
31
One leg - 46
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One ear - 10
Both ears - 20
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Hearing of one ear - 10

Hearing of both ears - 50
Sight of one eye - 25
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o In case of permanent partial disability, the monthly pension benefit shall be given in lump sum if it is payable
for less than twelve (12) months.
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o For the purpose of adjudicating retirement, death and permanent total disability pension benefits,
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contributions shall be deemed paid for the months during which the member received partial disability pension:
Provided, That such contributions shall be based on his last contribution prior to his disability.
o Should a member who is on partial disability pension retire or die, his disability pension shall cease upon his
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retirement or death.
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(6) DEATH BENEFITS
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• Who are entitled.
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o Death benefit is a cash benefit either in monthly pension or lump sum paid to the beneficiaries of a deceased
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member.
o Upon the death of a member who has paid at least thirty-six (36) monthly contributions prior to the semester
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of death, his primary beneficiaries shall be entitled to the monthly pension: Provided, That if he has no primary
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beneficiaries, his secondary beneficiaries shall be entitled to a lump sum benefit equivalent to thirty-six (36)
times the monthly pension.
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o If he has not paid the required thirty-six (36) monthly contributions, his primary or secondary beneficiaries
shall be entitled to a lump sum benefit equivalent to the monthly pension times the number of monthly
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contributions paid to the SSS or twelve (12) times the monthly pension, whichever is higher.
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• Types of death benefits

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o Based on the foregoing, there are two (2) types of death benefits, to wit:
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1) Monthly pension; and

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2) Lump sum amount.

o The monthly pension is granted only to the primary beneficiaries of a deceased member who had paid 36
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monthly contributions before the semester of death.

o The lump sum is the amount granted to the primary beneficiaries of a deceased member who had paid less than
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36 monthly contributions before the semester of death. The secondary beneficiaries shall be entitled to a lump
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sum benefit.
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•
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Amount of benefits.
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o The monthly pension depends on the member’s paid contributions, including the credited years of service
(CYS) and the number of dependent minor children but not to exceed five (5).
▪ The amount of monthly pension will be the highest of:
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1. the sum of ₱300 plus 20 percent of the average monthly salary credit plus two percent of the average
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monthly salary credit for each credited year of service (CYS) in excess of 10 years; or
2. 40% of the average monthly salary credit; or
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3. ₱1,000 if the member had less than 10 credited years of service (CYS); ₱1,200 if with at least 10 CYS; or
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₱2,400 if with at least 20 CYS. The monthly pension is paid for not less than 60 months.
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o On entitlement of illegitimate children:

▪ If a deceased member is survived by less than five (5) minor legitimate, legitimated, or legally adopted
children, the illegitimate minor children will be entitled to 50% of the share of the legitimate, legitimated or
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legally adopted children in the basic pension and 100% of the dependents’ pension.
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▪ In cases where there are no legitimate, legitimated, or legally adopted children, the illegitimate minor
children shall be entitled to 100% of the basic pension.
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• The primary beneficiaries of a deceased member who has paid less than 36 monthly contributions shall be entitled
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to lump sum benefit which shall be the higher of:

1. monthly pension times the number of monthly contributions paid prior to the semester of death; or
2. twelve (12) times the monthly pension.
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• The secondary beneficiaries of the deceased member shall be entitled to a lump sum benefit equivalent to:
1. 36 times the monthly pension; if the member has paid at least 36 monthly contributions prior to the semester
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of death; or
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2. monthly pension times the number of monthly contributions paid or twelve (12) times the monthly pension,
whichever is higher, if the member has paid less than 36 monthly contributions prior to the semester of death.
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• The primary or secondary beneficiaries of a deceased employee-member, who had no contribution payment at
all and who was reported for coverage shall be entitled to funeral benefit only.
• The dependent legitimate, legitimated, legally adopted or illegitimate children, conceived on or before the date of
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death of a deceased will each receive a dependents’ pension equivalent to 10% of the members’ monthly pension or
₱250, whichever is higher.
• Only five (5) minor children, beginning from the youngest, are entitled to the dependents’ pension. No substitution
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is allowed.
• Where there are more than five (5) legitimate and illegitimate minor children, the legitimate shall be preferred.
• The dependents’ pension stops when the child reaches 21 years old, gets married, gets employed or dies. However,
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the dependents’ pension is granted for life to children who are over 21 years old, provided they are incapacitated and
incapable of self-support due to physical or mental defect which is congenital and acquired during minority.
• Other benefits the deceased member’s beneficiaries can avail of.
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o The deceased member’s beneficiaries are entitled to a 13th month pension payable every December and the
funeral benefit, which is paid to whoever, shouldered the funeral expenses of the deceased member
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o Survivorship pensioners prior to the effectivity of R.A. 7875 on March 4, 1995 are also entitled to hospitalization
benefits under PhilHealth. They need to register under PhilHealth
o Survivorship pensioners under the effectivity of RA 7875 on March 4, 1995 and thereafter, are no longer covered.
However, those who wish to avail of PhilHealth benefits may enroll in the Individually-Paying Program (for
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voluntary/self-employed) or the Indigent Program (IP) of PhilHealth.
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(7) FUNERAL BENEFIT
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• Amount of funeral benefit.
A funeral grant equivalent to ₱12,000 shall be paid, in cash or in kind, to help defray the cost of funeral expenses upon
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the death of a member, including permanently totally disabled member or retiree.
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EMPLOYEES’ COMPENSATION BENEFITS

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This is the second class of benefits under the SSS Law, the first being the Social Security Benefits discussed above. For
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purposes of discussing this topic in an orderly fashion, the same shall be presented under the topic “C. DISABILITY
AND DEATH BENEFITS”, infra.
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B. GSIS LAW (R.A. No. 8291)

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1. Coverage and exclusions

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• Who are compulsorily required to become members of the GSIS?

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1. All government personnel, whether elective or appointive, irrespective of status of appointment, provided they are
receiving fixed monthly compensation and have not reached the mandatory retirement age of 65 years, are
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compulsorily covered as members of the GSIS and shall be required to pay contributions.
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2. However, employees who have reached the retirement age of 65 or more shall also be covered, subject to the
following rules: r
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An employee who is already beyond the mandatory retirement age of 65 shall be compulsorily covered and be
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required to pay both the life and retirement premiums under the following situations:
a. An elective official who at the time of election to public office is below 65 years of age and will be 65 years
or more at the end of his term of office, including the period/s of his re-election to public office thereafter
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without interruption.
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b. Appointive officials who, before reaching the mandatory age of 65, are appointed to government position
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by the President of the Republic of the Philippines and shall remain in government service at age beyond 65.
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c. Contractual employees including casuals and other employees with an employee-government agency
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relationship are also compulsorily covered, provided they are receiving fixed monthly compensation and
rendering the required number of working hours for the month.
• What are the classes of membership in the GSIS?
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Membership in the GSIS is classified either by type or status of membership.

o As to type of members, there are regular and special members:
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(a) Regular Members – are those employed by the government of the Republic of the Philippines, national or
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local, legislative bodies, government-owned and controlled corporations (GOCC) with original charters,
government financial institutions (GFIs), except uniformed personnel of the Armed Forces of the Philippines, the
Philippine National Police, Bureau of Jail Management and Penology (BJMP) and Bureau of Fire Protection (BFP),
who are required by law to remit regular monthly contributions to the GSIS.
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(b) Special Members – are constitutional commissioners, members of the judiciary, including those with
equivalent ranks, who are required by law to remit regular monthly contributions for life insurance policies to the
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GSIS in order to answer for their life insurance benefits defined under RA 8291.
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o As to status of membership, there are active and inactive members.

(a) Active member – refers to a member of the GSIS, whether regular or special, who is still in the government
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service and together with the government agency to which he belongs, is required to pay the monthly contribution.
(b) Inactive member – a member who is separated from the service either by resignation, retirement, disability,
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dismissal from the service, retrenchment or, who is deemed retired from the service under this Act.
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• When does membership become effective?
The effective date of membership shall be the date of the member’s assumption to duty on his original appointment or
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election to public office.
• What is the effect of separation from the service?
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A member separated from the service shall continue to be a member, and shall be entitled to whatever benefits he has
qualified to in the event of any contingency compensable under the GSIS Law.
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• Who are excluded from the compulsory coverage of the GSIS Law?
The following employees are excluded from compulsory coverage:
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(a) Uniformed personnel of the Armed Forces of the Philippines (AFP), Philippine National Police (PNP), Bureau
of Fire Protection (BFP) and Bureau of Jail Management and Penology (BJMP);
(b) Barangay and Sanggunian Officials who are not receiving fixed monthly compensation;
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(c) Contractual Employees who are not receiving fixed monthly compensation; and
(d) Employees who do not have monthly regular hours of work and are not receiving fixed monthly compensation.
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2. Dependents and beneficiaries

• Who are beneficiaries under the GSIS Law?
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There are two (2) kinds of beneficiaries under the GSIS Law as follows:
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1. Primary beneficiaries — The legal dependent spouse until he/she remarries and the dependent children.
2. Secondary beneficiaries — The dependent parents and, subject to the restrictions on dependent children, the
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legitimate descendants.
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• Who are dependents under the GSIS Law?
Dependents shall be the following:
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(a) the legitimate spouse dependent for support upon the member or pensioner;
(b) the legitimate, legitimated, legally adopted child, including the illegitimate child, who is unmarried, not gainfully
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employed, not over the age of majority, or is over the age of majority but incapacitated and incapable of self-support
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due to a mental or physical defect acquired prior to age of majority; and
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(c) the parents who are dependent upon the member for support.
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Gainful Occupation — Any productive activity that provided the member with income at least equal to the minimum
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compensation of government employees.

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3. Benefits
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The following are the benefits under the GSIS Law:

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(a) Compulsory Life Insurance Benefits under the Life Endowment Policy (LEP)
(b) Compulsory Life Insurance Benefits under the Enhanced Life Policy (ELP)
(c) Retirement Benefits
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(d) Separation Benefit

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(e) Unemployment Benefit

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(f) Disability Benefits

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(g) Survivorship Benefits

(h) Funeral Benefits
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C. LIMITED PORTABILITY LAW (R.A. No. 7699)

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• R.A. No. 7699,1 was enacted to enable those from the private sector who transfer to the government service or from
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the government sector to the private sector to combine their years of service and contributions which have been
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credited with the SSS or GSIS, as the case may be, to satisfy the required number of years of service for entitlement
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to the benefits under the applicable laws.

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• “Totalization” refers to the process of adding up the periods of creditable services or contributions under each of the
Systems, SSS or GSIS, for the purpose of eligibility and computation of benefits. On the other hand, the term
“portability” refers to the transfer of funds for the account and benefit of a worker who transfers from one system to
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the other.
• The benefits provided under R.A. No. 7699 apply to active or inactive members of either System (GSIS/SSS) as of
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the date of its effectivity on May 20, 1994.

•
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Coverage.
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o R.A. No. 7699 and its implementing rules apply to all worker-members of the GSIS and/or SSS who transfer from
the public sector to the private sector or vice-versa, or who wish to retain their membership in both Systems.
• Creditability and totalization of contributions and benefits in SSS and GSIS.
o Under R.A. No. 7699, it is enunciated that provisions of any general or special law or rules and regulations to the
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contrary notwithstanding, a covered worker who transfers employment from one sector to another (i. e., from
private sector to public sector, or vice versa), or is employed in both sectors, shall have his creditable services or
contributions in both Systems (GSIS and SSS) credited to his service or contribution record in each of the Systems
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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.
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• Limited portability of funds.

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1 R.A. No. 7699, entitled “An Act Instituting Limited Portability Scheme in the Social Security Insurance System by Totalizing the Workers’ Creditable Services
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or Contributions in Each of the Systems” approved on May 1, 1994.

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o The processes involved in the prompt payment of money benefits to eligible members are the joint responsibility
of the GSIS and SSS. The System or Systems responsible for the payment of money benefits due a covered worker
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shall release the same within fifteen (15) working days from receipt of the claim, subject to the submission of the
required documents and availability of complete employee/employer records in the System or Systems.
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D. DISABILITY AND DEATH
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1. Labor Code
• What is the State Insurance Fund [SIF]?
o The State Insurance Fund (SIF) is built up by the contributions of employers based on the salaries of their
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employees as provided under the Labor Code.
There are two (2) separate and distinct State Insurance Funds: one established under the SSS for private sector
employees; and the other, under the GSIS for public sector employees. The management and investment of the
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Funds are done separately and distinctly by the SSS and the GSIS. It is used exclusively for payment of the
employees’ compensation benefits and no amount thereof is authorized to be used for any other purpose.
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• What are the agencies involved in the implementation of the Employees Compensation Program (ECP)?
o There are three (3) agencies involved in the implementation of the Employees’ Compensation Program
(ECP). These are: (1) The Employees’ Compensation Commission (ECC) which is mandated to initiate,
rationalize and coordinate policies of the ECP and to review appealed cases from (2) the Government Service
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Insurance System (GSIS) and (3) the Social Security System (SSS), the administering agencies of the ECP.
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• Who are covered by the ECP?
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a. General coverage. – The following shall be covered by the Employees’ Compensation Program (ECP):
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1. All employers;
2. Every employee not over sixty (60) years of age;
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3. An employee over 60 years of age who had been paying contributions to the System (GSIS/SSS) prior to
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age sixty (60) and has not been compulsorily retired; and
4. Any employee who is coverable by both the GSIS and SSS and should be compulsorily covered by both
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Systems.
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b. Sectors of employees covered by the ECP. - The following sectors are covered under the ECP:
1. All public sector employees including those of government-owned and/or controlled corporations and
local government units covered by the GSIS;
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2. All private sector employees covered by the SSS; and

3. Overseas Filipino workers (OFWs), namely:
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a. Filipino seafarers compulsorily covered under the SSS.

b. Land-based contract workers provided that their employer, natural or juridical, is engaged in any trade,
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industry or business undertaking in the Philippines; otherwise, they shall not be covered by the ECP.
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• When is the start of coverage of employees under the ECP?

The coverage under the ECP of employees in the private and public sectors starts on the first day of their employment.
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• What are the benefits under the ECP?

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The following are the benefits provided under the Labor Code:
a. Medical Benefits r
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b. Disability Benefits
1. Temporary total disability
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2. Permanent total disability

3. Permanent partial disability
c. Death Benefit
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d. Funeral Benefit
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2. POEA-Standard Employment Contract for Seafarers

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• Applicable law in cases involving the POEA-SEC.

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By express provision of Section 31 of the 2010 POEA-SEC, “[a]ny unresolved dispute, claim or grievance arising out
of or in connection therewith, including the annexes thereof, shall be governed by the laws of the Republic of the
Philippines, international conventions, treaties and covenants to which the Philippines is a signatory.” This provision
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signifies that the terms agreed upon by the parties pursuant to the POEA-SEC are to be read and understood in
accordance with Philippine laws, particularly, Articles 197 [191], 198 [192] and 199 [193] of the Labor Code and the
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applicable implementing rules and regulations in case of any dispute, claim or grievance.
• OFW’S benefit claims vis-à-vis benefits in the labor code.
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It must be underscored that the claims for disability, death and burial benefits involving OFWs over which the Labor
Arbiters of the NLRC have jurisdiction, are not the same as the claims against the State Insurance Fund under Title II,
Book IV of the Labor Code for the same benefits, over which the Employees’ Compensation Commission (ECC) has
jurisdiction.
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• The labor code’s concept of PTD applies to claims of seafarers.

Permanent total disability (PTD) means the inability to do substantially all material acts necessary to the prosecution
of a gainful occupation without serious discomfort or pain and without material injury or danger to life. In disability
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compensation, it is not the injury per se which is compensated but the incapacity to work. The concept of this kind of
disability under Article 198 [192] of the Labor Code is applicable to the permanent total disability of seafarers.
• Requisites for compensability of injury or illness.
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For disability to be compensable under Section 20 (A) of the 2010 POEA-SEC, two elements must concur:
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(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.
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The same provision defines a work-related illness as "any sickness as a result of an occupational disease listed under
Section 32-A of [the POEA-SEC] with the conditions set therein satisfied." There should be a "reasonable linkage
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between the disease suffered by the employee and his work." Meanwhile, illnesses not mentioned under Section 32 of
the 2010 POEA-SEC are disputably presumed as work-related.
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Notwithstanding the presumption of work-relatedness of an illness under Section 20 (A) (4), the seafarer must still
prove by substantial evidence that his work conditions caused or, at least, increased the risk of contracting the disease.
In order to establish compensability of a non-occupational disease, reasonable proof of work-connection is sufficient
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- direct causal relation is not required. It is thus this probability of connection, and not the ultimate degree of certainty,
that is the test of proof of compensation proceedings.
• Requisites for compensability of occupational disease
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In order for an occupational disease and the resulting disability or death to be compensable, Section 32-A of the
2010 POEA-SEC requires that all of the following conditions, as supported by substantial evidence, must be established:
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1. The seafarer's work must involve the risks described in the POEA-SEC;
2. The disease was contracted as a result of the seafarer's exposure to the described risks;
3. The disease was contracted within a period of exposure and under such other factors necessary to contract it;
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and
4. There was no notorious negligence on the part of the seafarer.
• Seafarer has burden of proof in disability claims.
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The seafarer must still prove his entitlement to disability benefits by substantial evidence of his illness' work-
relatedness and that the ailment was acquired during the term of his contract. He must show that he experienced
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health problems while at sea, the circumstances under which he developed the illness, as well as the symptoms
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associated with it.
• Principle of work-relatedness.
The principle of work-relatedness of an injury or illness means that the seafarer's injury or illness has a possible
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connection to one's work, and thus, allows the seafarer to claim disability benefits therefor.
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The 2010 POEA-SEC defines a work-related injury as an "injury resulting in disability or death arising out of and in the course
of employment," and a work-related illness as "any sickness resulting to disability or death as a result of an occupational disease listed
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under Section 32-A of this Contract with the conditions set therein satisfied.” Ba
For illnesses not mentioned under Section 32, the 2010 POEA-SEC creates a disputable presumption in favor of the
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seafarer that these illnesses are work-related. However, the presumption does not necessarily result in an automatic
grant of disability compensation. The claimant, on due process grounds, still has the burden to present substantial
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evidence that his work conditions caused or at least increased the risk of contracting the illness. This is because awards
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of compensation cannot rest entirely on bare assertions and presumptions. In order to establish compensability of a
non-occupational disease, reasonable proof of work-connection is sufficient – direct causal relation is not required.
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Thus, probability, not the ultimate degree of certainty, is the test of proof in compensation proceedings.
• Injury or illness must occur during term of contract.
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Section 32-A of the 2010 POEA-SEC states that for an occupational disease and the resulting disability or death
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to be compensable, all of the following conditions need to be satisfied:

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(1) The seafarer's work must involve the risks described therein;
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(2) The disease was contracted as a result of the seafarer's exposure to the described risks;
(3) The disease was contracted within a period of exposure and under such other factors necessary to contract
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it; and
(4) There was no notorious negligence on the part of the seafarer.
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• Non-compensability of self-inflicted injury.

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o No compensation and benefits shall be payable in respect of any injury, incapacity, disability or death of the
seafarer resulting from his willful or criminal act or intentional breach of his duties; Provided, however, that the
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employer can prove that such injury, incapacity, disability or death is directly attributable to the seafarer.
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• Pre-employment medical examination (PEME); non-compensability of disability from pre-existing

illness.
o Pursuant to Section 20 (A) of the 2010 POEA-SEC, the employer is liable for disability benefits when the
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seafarer suffers from a work-related injury or illness during the term of his contract.
▪ In this regard, Section 20 (E) thereof mandates the seafarer to disclose all his pre-existing illnesses or
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conditions in his PEME; failing which shall disqualify him from receiving disability compensation.
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o An illness shall be considered as pre-existing if prior to the processing of the POEA contract, any of the
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following conditions is present, namely:

(a) The advice of a medical doctor on treatment was given for such continuing illness or condition; or
(b) The seafarer had been diagnosed and has knowledge of such illness or condition but failed to disclose
the same during the PEME, and such cannot be diagnosed during the PEME.
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• The 120-day/240-day treatment period rule.

o Significance of the period.
▪ When a seafarer suffers a work-related injury or illness in the course of employment, the company-designated
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physician is obligated to arrive at a definite assessment of the former's fitness or degree of disability within
a period of 120 days from repatriation. During the said period, the seafarer shall be deemed on
TEMPORARY TOTAL DISABILITY and shall receive his basic wage until he is declared fit to work or
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his temporary disability is acknowledged by the company to be permanent, either partially or totally, as his
condition is defined under the POEA-SEC and by applicable Philippine laws.
▪ However, if the 120-day period is exceeded and no definitive declaration is made because the seafarer
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requires further medical attention, then the temporary total disability period may be extended
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up to a maximum of 240 days, subject to the right of the employer to declare within this period that
a permanent partial or total disability already exists.
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• But before the company-designated physician may avail of the allowable 240-day extended treatment
period, he must perform some significant act to justify the extension of the original 120-day period.
Otherwise, the law grants the seafarer the relief of permanent total disability benefits due to such
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non-compliance.
o Summary of Rules on the periods to assess the seafarer.
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1. The company-designated physician must issue a final medical assessment on the seafarer’s disability grading
within a period of 120 days from the time the seafarer reported to him;
2. If the company-designated physician fails to give his assessment within the period of 120 days without any
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justifiable reason, then the seafarer’s disability becomes permanent and total;
3. 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
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that the company-designated physician has sufficient justification to extend the period; and
4. If the company-designated physician still fails to give his assessment within the extended period of 240 days,
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then the seafarer’s disability becomes permanent and total, regardless of any justification.
The above rule was further refined in the 2015 case of Marlow Navigation Philippines, Inc. v. Osias, where the Court
declared – and this is the current rule - as follows:
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1. that mere inability to work for a period of 120 days does not entitle a seafarer to permanent and total disability
benefits;
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2. that the determination of the fitness of a seafarer for sea duty is within the province of the company-
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designated physician, subject to the periods prescribed by law;
3. that the company-designated physician has an initial 120 days to determine the fitness or disability of the
seafarer; and
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4. that the period of treatment may only be extended to 240 days if a sufficient justification exists such
as when further medical treatment is required or when the seafarer is uncooperative.
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The seafarer has the right to seek a second opinion once the company-designated physician makes a definitive and final
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assessment within the 120-day period; otherwise, no such obligation devolves on the seafarer to consult his own doctor.
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• Conditions required for the claim for total and permanent disability benefits to prosper.
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In order for a seafarer’s claim for total and permanent disability benefits to prosper, any of the following
conditions should be present:
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(a) The company-designated physician failed to issue a declaration as to his fitness to engage in sea duty or
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disability even after the lapse of the 120-day period and there is no indication that further medical treatment
would address his temporary total disability, hence, justify an extension of the period to 240 days;
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(b) 240 days had lapsed without any certification issued by the company designated physician;
(c) The company-designated physician declared that he is fit for sea duty within the 120-day or 240-day period,
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as the case may be, but his physician of choice and the doctor chosen under Section 20 (B) (3) of the POEA-
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SEC are of a contrary opinion;

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(d) The company-designated physician acknowledged that he is partially permanently disabled but other doctors
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who he consulted, on his own and jointly with his employer, believed that his disability is not only permanent
but total as well;
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(e) The company-designated physician recognized that he is totally and permanently disabled but there is a
dispute on the disability grading;
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(f) The company-designated physician determined that his medical condition is not compensable or work-
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related under the POEA-SEC but his doctor-of-choice and the third doctor selected under Section 20 (B)
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(3) of the POEA-SEC found otherwise and declared him unfit to work;
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(g) The company-designated physician declared him totally and permanently disabled but the employer refuses
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to pay him the corresponding benefits; and

(h) The company-designated physician declared him partially and permanently disabled within the 120-day or
240-day period but he remains incapacitated to perform his usual sea duties after the lapse of said periods.
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• Post-Employment Medical Examination.

o As a general rule, for a seafarer’s claim for disability to prosper, it is mandatory and must be strictly observed
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that within three (3) working days from his repatriation, he is examined by a company-designated
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physician. Non-compliance with this mandatory requirement results in the forfeiture of the right to claim for
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compensation and disability benefits.

▪ Exceptions to this are: (1) when the seafarer is incapacitated to report to the employer upon his repatriation;
and (2) when the employer inadvertently or deliberately refused to submit the seafarer to a post-
employment medical examination by a company-designated physician.
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• The Third Doctor Rule

o The conflicting findings of the company's doctor and the seafarer's physician often stir suits for disability
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compensation. As an extrajudicial measure of settling their differences, the POEA-SEC gives the parties the
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option of agreeing jointly on a third doctor whose assessment shall break the impasse and shall be the final
and binding diagnosis.
o Referral to a third doctor is mandatory when:
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▪ there is a valid and timely assessment by the company-designated physician; and

▪ the appointed doctor of the seafarer refuted such assessment.
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o Note that the third doctor's decision shall be final and binding on both parties.
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• Death Benefits of seafarers
To be entitled to death compensation benefits from the employer, the death of the seafarer:
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▪ (1) must be work-related; and
▪ (2) must happen during the term of the employment contract.
• Exception when death after termination of employment is compensable.
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o POEA-SEC considers the possibility of compensation for the death of the seafarer occurring after the
termination of the employment contract on account of a work-related illness. But for death under this
provision to be compensable, the claimant must satisfy all of the following conditions:
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(1) The seafarer's work must involve the risks described in the POEA-SEC;
(2) The disease was contracted as a result of the seafarer's exposure to the described risks;
(3) The disease was contracted within a period of exposure and under such other factors necessary to contract
it; and al
(4) There was no notorious negligence on the part of the seafarer.
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In fulfilling these requisites, substantial evidence must be presented which is more than a mere scintilla; it must reach
the level of relevant evidence as a reasonable mind might accept as sufficient to support a conclusion.
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o Medical repatriation as an exception.

While the general rule is that the seafarer’s death should occur during the term of his employment, the seafarer’s
death occurring after the termination of his employment due to his medical repatriation on account of a work-
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related injury or illness constitutes an exception thereto.
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•
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Death caused by the seafarer himself, not compensable.
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o In the following cases, the death by suicide was likewise held not compensable:
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▪ TSM Shipping (Phils.), Inc. v. De Chavez, where the seafarer was found dead inside his cabin bathroom
hanging by the shower cord and covered with blood.
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▪ Wallem Maritime Services, Inc. v. Pedrajas, where the seafarer hanged himself on the Upper Deck B of the
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vessel with a rope tied to his neck.
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▪ Great Southern Maritime Services Corp. v. Surigao, where the seafarer was found dead inside the bathroom of
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his hospital room with a belt tied around his neck.
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▪ Maritime Factors, Inc. v. Hindang, where the seafarer’s body was found hanging by a strap on his neck in a
kneeling position inside the locker (wardrobe) of his cabin.
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MAJOR TOPIC 5
LABOR RELATIONS
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A. RIGHT TO SELF-ORGANIZATION
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1. Who may join, form, or assist labor organizations or workers’ associations
• Who are eligible to join, form or assist a labor organization for purposes of collective bargaining?
o In the private sector:
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1. All persons employed in commercial, industrial and agricultural enterprises;
2. Employees of government-owned and/or controlled corporations without original charters established
under the Corporation Code;
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3. Employees of religious, charitable, medical or educational institutions, whether operating for profit or not;
4. Front-line managers, commonly known as supervisory employees [See discussion below];
5. Alien employees [See discussion below];
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6. Working children [See discussion below];
7. Homeworkers [See discussion below];
8. Employees of cooperatives [See discussion below]; and
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9. Employees of legitimate contractors not with the principals but with the contractors
o In the public sector:
All rank-and-file employees of all branches, subdivisions, instrumentalities, and agencies of government, including
ss
government-owned and/or controlled corporations with original charters, can form, join or assist employees’
e
organizations of their own choosing.
• Are front-line managers or supervisors eligible to join, form or assist a labor organization?
i
fe
Yes, but only among themselves. They cannot join a rank-and-file union.
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• Do alien employees have the right to join a labor organization?
o No, except if the following requisites are complied with:
o
▪ (1) He should have a valid working permit issued by the DOLE; and
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▪ (2) He is a national of a country which grants the same or similar rights to Filipino workers OR which has
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ratified either ILO Convention No. 87 or ILO Convention No. 98 (ON THE RIGHT TO SELF-
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ORGANIZATION OF WORKERS) as certified by the Philippine Department of Foreign Affairs (DFA).
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• Do members of cooperatives have the right to join, form or assist a labor organization?
No, because they are co-owners of the cooperative.
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• What about employees of a cooperative?
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Yes, because they have employer-employee relationship with the cooperative.

• What about members who are at the same time employees of the cooperative?
es
No, because the prohibition covers employees of the cooperative who are at the same time members thereof.
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• Can employees of job contractors join, form or assist a labor organization?

Yes, but not for the purpose of collective bargaining with the principal but with their direct employer – the job
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contractor.
• Are self-employed persons allowed to join, form or assist a labor organization?
li
Yes, for their mutual aid and protection but not for collective bargaining purposes since they have no employers
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but themselves. BUT AS AND BY WAY OF DISTINCTION, THEIR LABOR ORGANIZATION IS CALLED
“WORKERS’ ASSOCIATION.” r
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This rule applies as well to ambulant, intermittent and other workers, rural workers and those without any definite employers. The
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reason for this rule is that these persons have no employers with whom they can collectively bargain.
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2. Restrictions as to managerial employees, employees, supervisory employees, confidential employees,

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employee-members of cooperatives, alien employees, and government employees

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• Who are the persons that are not allowed to form, join or assist labor organizations?
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o In the private sector:

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▪ Top and middle level managerial employees; and

▪ Confidential employees.
o In the public sector
o
▪ The following are not eligible to form employees’ organizations:

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• High-level employees whose functions are normally considered as policy-making or managerial or

whose duties are of a highly confidential nature;
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• Members of the Armed Forces of the Philippines;

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• Police officers;
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• Policemen;
• Firemen; and
• Jail guards.
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• Ineligibility of managerial employees to unionize; right of supervisory employees

There are 3 types of managerial employees:
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1. Top Management
2. Middle Management
3. First-Line Management (also called supervisory level)
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The first two above are absolutely prohibited; but the third, being supervisors, are allowed but only among
themselves.
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46
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• Are confidential employees allowed to join, form or assist a labor organization?
No, under the confidential employee rule. “Confidential employees” are those who meet the following criteria:
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(1) They assist or act in a confidential capacity;
(2) To persons or officers who formulate, determine, and effectuate management policies specifically in the field
of labor relations. If not related to labor relations, an employee can never be considered as confidential employee
ev
as would deprive him of his right to self-organization.
The two (2) criteria are cumulative and both must be met if an employee is to be considered a “confidential
employee” that would deprive him of his right to form, join or assist a labor organization.
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3. Determination of appropriate bargaining unit (ABU), effect of inclusion of employees outside of the
ABU
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• What is a bargaining unit?
A “bargaining unit” refers to a group of employees sharing mutual interests within a given employer unit, comprised
of all or less than all of the entire body of employees in the employer unit or any specific occupational or geographical
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grouping within such employer unit. It may also refer to the group or cluster of jobs or positions within the employer’s
establishment that supports the labor organization which is applying for registration.
• What are the four tests to determine appropriate bargaining unit?
io
Based on jurisprudence, there are certain tests which may be used in determining the appropriate collective bargaining
unit, to wit:
(1) Community or mutuality of interest doctrine;
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(2) Globe doctrine or will of the members;
(3) Collective bargaining history doctrine; and
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(4) Employment status doctrine.
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1. COMMUNITY OR MUTUALITY OF INTEREST DOCTRINE.
Under this doctrine, the employees sought to be represented by the collective bargaining agent must have
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community or mutuality of interest in terms of employment and working conditions as evinced by the type of work they
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perform. It is characterized by similarity of employment status, same duties and responsibilities and substantially similar
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compensation and working conditions.
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St. James School of Quezon City v. Samahang Manggagawa sa St. James School of Quezon City. -
Respondent union sought to represent the rank-and-file employees (consisting of the motor pool, construction and
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transportation employees) of petitioner-school’s Tandang Sora campus. Petitioner-school opposed it by contending that
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the bargaining unit should not only be composed of said employees but must include administrative, teaching and office
personnel in its five (5) campuses. The Supreme Court disagreed with said contention. The motor pool, construction and
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transportation employees of the Tandang Sora campus had 149 qualified voters at the time of the certification election,
hence, it was ruled that the 149 qualified voters should be used to determine the existence of a quorum during the election.
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Since a majority or 84 out of the 149 qualified voters cast their votes, a quorum existed during the certification election.
bl
The computation of the quorum should be based on the rank-and-file motor pool, construction and transportation
employees of the Tandang Sora campus and not on all the employees in petitioner’s five (5) campuses. Moreover, the
administrative, teaching and office personnel are not members of the union. They do not belong to the bargaining unit
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that the union seeks to represent.

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Other cases:
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Ba
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(1) San Miguel Corporation v. Laguesma, involving a petition of the union which seeks to represent the sales
personnel in the various Magnolia sales offices in Northern Luzon. Petitioner company, however, opposed it by taking
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the position that each sales office should constitute one bargaining unit. In disagreeing with this proposition of petitioner,
the High Court said: “What greatly militates against this position (of the company) is the meager number of sales personnel in
each of the Magnolia sales office in Northern Luzon. Even the bargaining unit sought to be represented by respondent union in
et
the entire Northern Luzon sales area consists only of approximately fifty-five (55) employees. Surely, it would not be for
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the best interest of these employees if they would further be fractionalized. The adage ‘there is strength in number’ is the very
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rationale underlying the formation of a labor union.”

rn
(2) San Miguel Corporation Supervisors and Exempt Employees Union v. Laguesma, involving the issue
bl
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of validity of constituting as one CBU of employees working in San Miguel’s three (3) plants located in three (3) different
places, namely: (1) in Cabuyao, Laguna, (2) in Otis, Pandacan, Metro Manila, and (3) in San Fernando, Pampanga. It was
declared that geographical location is immaterial and therefore can be completely disregarded if the communal or mutual
o
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interest of the employees are not sacrificed. The distance among the 3 plants is not productive of insurmountable
difficulties in the administration of union affairs. Neither are there regional differences that are likely to impede the
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operations of a single bargaining representative.

In
(3) Similar to this case is University of the Philippines v. Ferrer-Calleja, where all non-academic rank-and-
an
file employees of the University of the Philippines in its various campuses, to wit: (1) Diliman, Quezon City; (2) Padre
Faura, Manila; (3) Los Baños, Laguna; and (4) the Visayas, were allowed to participate in a certification election as one
bargaining unit.
es
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2. GLOBE DOCTRINE.
This principle is based on the will of the employees. It is called Globe doctrine because this principle was first
C
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enunciated in the United States case of Globe Machine and Stamping Co., where it was ruled, in defining the appropriate
bargaining unit, that in a case where the company’s production workers can be considered either as a single bargaining
unit appropriate for purposes of collective bargaining or as three (3) separate and distinct bargaining units, the determining
factor is the desire of the workers themselves. Consequently, a certification election should be held separately to choose
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which representative union will be chosen by the workers.

International School Alliance of Educators [ISAE] v. Quisumbing. - The Supreme Court ruled here that
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foreign-hired teachers do not belong to the bargaining unit of the local-hires because the former have not indicated their
an
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intention to be grouped with the latter for purposes of collective bargaining. Moreover, the collective bargaining history
of the school also shows that these groups were always treated separately.
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3. COLLECTIVE BARGAINING HISTORY DOCTRINE.
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This principle puts premium to the prior collective bargaining history and affinity of the employees in determining
the appropriate bargaining unit. However, the existence of a prior collective bargaining history has been held as neither
decisive nor conclusive in the determination of what constitutes an appropriate bargaining unit.
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National Association of Free Trade Unions v. Mainit Lumber Development Company Workers Union.
- It was ruled here that there is mutuality of interest among the workers in the sawmill division and logging division as to
justify their formation of a single bargaining unit. This holds true despite the history of said two divisions being treated as
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separate units and notwithstanding their geographical distance from each other.
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4. EMPLOYMENT STATUS DOCTRINE.
The determination of the appropriate bargaining unit based on the employment status of the employees is
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considered an acceptable mode. For instance, casual employees and those employed on a day-to-day basis, according to
the Supreme Court in Philippine Land-Air-Sea Labor Union v. CIR, do not have the mutuality or community of
interest with regular and permanent employees. Hence, their inclusion in the bargaining unit composed of the latter is not
justified. Confidential employees, by the very nature of their functions, assist and act in a confidential capacity to, or have
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access to confidential matters of, persons who exercise managerial functions in the field of labor relations. As such, the
rationale behind the ineligibility of managerial employees to form, assist or join a labor union equally applies to them.
i
Hence, they cannot be allowed to be included in the rank-and-file employees’ bargaining unit. The rationale for this
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ev
inhibition is that if these managerial employees would belong to or be affiliated with a union, the latter might not be
assured of their loyalty to the union in view of evident conflict of interest. The union can also become company-dominated
with the presence of managerial employees in its membership.
o
R
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• Is COMMINGLING or MIXED MEMBERSHIP of supervisors and rank-and-file union in one union
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allowed? Is it a ground to cancel its registration?
Ba
No. It is not allowed. However, it bears noting that in case there is commingling or mixed membership of
Ba
supervisors and rank-and-file employees in one union, the new rule enunciated in Article 256 [245-A] of the Labor
Code, unlike in the old law, is that it cannot be invoked as a ground for the cancellation of the registration of the
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union. The employees so improperly included are automatically deemed removed from the list of members of said
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union. In other words, their removal from the said list is by operation of law.
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4. Non-interference with workers’ rights to self-organization

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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. Such right shall include the right to form, join, or assist
li
labor organizations for the purpose of collective bargaining through representatives of their own choosing and to
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engage in lawful concerted activities for the same purpose for their mutual aid and protection, subject to the provisions
of Article 264 of this Code.
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Ba
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B. LEGITIMATE LABOR ORGANIZATIONS

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1. Registration with the DOLE

Applications for registration of independent labor unions, chartered locals, workers' associations shall be filed with the
et
Regional Office where the applicant principally operates. Applications for registration of federations, national unions or
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workers' associations operating in more than one region shall be filed with the Bureau of Labor Relations or the Regional
h
Offices.
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The Regional Office or the Bureau shall act on all applications for registration or notice of change of name, affiliation,
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merger and consolidation within ten (10) days from receipt either by: (a) approving the application and issuing the
certificate of registration/acknowledging the notice/report; or (b) denying the application/notice for
failure of the applicant to comply with the requirements for registration/notice.
o
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The labor union or workers' association shall be deemed registered and vested with legal personality on the date of issuance
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of its certificate of registration or certificate of creation of chartered local. Such legal personality may be questioned only
In
through an independent petition for cancellation of union registration and not by way of collateral attack in petition for
an
certification election proceedings.
2. Cancellation of Registration
The registration of any legitimate independent labor union, chartered local and workers' association may be cancelled by
es
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the Regional Director, or in the case of federations, national or industry unions and trade union centers, by the Bureau
Director, upon the filing of an independent complaint or petition for cancellation.
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Any party-in-interest may commence a petition for cancellation of registration, except in actions involving violations of
Article 241, which can only be commenced by members of the labor organization concerned.
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• Grounds for cancellation

(a) 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, the list of members who took part in the ratification
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of the constitution and by-laws or amendments thereto, the minutes of ratification, the list of members who took
part in the ratification;
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(b) failure to submit the documents mentioned in the preceding paragraph within thirty (30) days from adoption or
ratification of the constitution and by-laws or amendments thereto;
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(c) misrepresentation, false statements or fraud in connection with the election of officers, minutes of the election
of officers, the list of voters, failure to submit these documents together with the list of the newly elected or
appointed officers and their postal address within thirty (30) days from election;
ev
(d) failure to submit the annual financial report to the Bureau within thirty (30) days after the close of every fiscal
year and misrepresentation, false entries or fraud in the preparation of the financial report;
(e) acting as a labor contractor or engaging in the "cabo" system, or otherwise engaging in any activity prohibited
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by law;
(f) entering into collective bargaining agreements which provide for terms and conditions of employment below
minimum standards established by law;
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(g) commission of any of the acts enumerated under Article 241 of the Labor Code; provided that no petition for
cancellation based on this ground may be granted unless supported by at least thirty (30%) percent of all the
members of the respondent labor organization;
(h) asking for or accepting attorney's fees or negotiation fees from the employer;
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(i) other than for mandatory activities under the Labor Code, checking off special assessments or any other fees
without duly signed individual written authorizations of the members;
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• Cancellation of registration due to non-compliance with the reportorial requirements

Where a registered labor organization in the private sector failed to submit the reports required under Rule V for five
(5) consecutive years despite notices for compliance sent by the Labor Relations Division or the Bureau, the latter
ss
may cause the institution of the administrative process for cancellation of its registration, upon its own initiative or
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upon complaint filed by any party-in-interest.
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No registration of labor organization shall be cancelled administratively by the Bureau due to non-compliance with
ev
the reportorial requirements unless:
(a) non-compliance is for a continuous period of five (5) years;
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(b) the procedures laid down in this Rule were complied with; and
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(c) the labor organization concerned has not responded to any of the notices sent by the Bureau, or its notices were
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returned unclaimed.
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3. Affiliation/disaffiliation from national union or federation
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Ba
• Mother union vis-à-vis affiliate or local chapter/chartered local Ba

The federation or national union (also called “Mother Union”), acting for and in behalf of its affiliate, has the
status of an agent while the affiliate or local chapter/chartered local remains the principal – the basic unit of the
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association.
• Purpose of affiliation
es
The purpose of affiliation is to further strengthen the collective bargaining leverage of the affiliate. No doubt, the
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purpose of affiliation by a local union with a mother union is to increase by collective action its bargaining power in
respect of the terms and conditions of labor.
bl
• Right to disaffiliate.
The right of the affiliate union to disaffiliate from its mother federation or national union is a constitutionally-
li
guaranteed right which may be invoked by the former at any time. It is axiomatic that an affiliate union is a separate
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and voluntary association free to serve the interest of all its members - consistent with the freedom of association
guaranteed in the Constitution. r
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Ba
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• Distinctions as to affiliation & disaffiliation

The following are the distinctions between independently registered union and local chapter/chartered local, insofar
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as their relationship with the federation or national union is concerned:

Independently Registered
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Criteria Union Local Chapter or Chartered Local

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Proper term to describe

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the relationship with

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Affiliation Chartering
federation or national
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union
Proper denomination of
Affiliate Local Chapter or Chartered Local2
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the union
Nature of contractual
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relationship with Principal-Agent Principal-Agent

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federation or national
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Principal – Affiliate Union Principal - Local Chapter/Chartered Local

union Agent – Federation or National Agent – Federation or National Union
Union
Proof of relationship Contract of Affiliation Charter Certificate
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Effect of Does not affect in any way its Since it is a creation of the federation or
affiliation/chartering independent legal personality national union, its legal personality is
dependent upon and coterminous with its
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association with its creator – the federation

or national union
Effect of Disaffiliation Does not affect legal Ceases to have any legal personality
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personality since it has its own Exception: If prior to disaffiliation, it has

independent registration secured independent registration
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2 Technically, a local chapter created through the mode of chartering by a mother union under Article 241 [234-A] of the Labor Code, cannot be properly called
an
an “affiliate” if it has not acquired any independent registration of its own.

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Affiliate refers to:
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▪
(1) An independent union affiliated with a federation or a national union; or
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▪
(2) A local chapter or chartered local which has been subsequently granted independent registration but
did not disaffiliate from the federation or national union which created it.
• SOME PRINCIPLES ON AFFILIATION.
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o Independent legal personality of an affiliate union is not affected by affiliation.
o The affiliate union is a separate and distinct voluntary association owing its creation to the will of its members.
It does not give the mother union the license to act independently of the affiliate union.
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o The fact that the affiliate union is not a legitimate labor organization does not affect the principal-agent
relationship.
o Affiliate union becomes subject of the rules of the federation or national union.
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o The appendage of the acronym of the federation or national union after the name of the affiliate union in the
registration with the DOLE does not change the principal-agent relationship between them. Such inclusion
of the acronym is merely to indicate that the local union is affiliated with the federation or national union at
the time of the registration. It does not mean that the affiliate union cannot independently stand on its own.
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• SOME PRINCIPLES ON DISAFFILIATION.
o Disaffiliation does not divest an affiliate union of its legal personality.
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o Disaffiliation of an affiliate union is not an act of disloyalty.

o Disaffiliation for purposes of forming a new union does not terminate the status of the members thereof as
employees of the company. By said act of disaffiliation, the employees who are members of the local union
ss
did not form a new union but merely exercised their right to register their local union. The local union is free
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to disaffiliate from its mother union.
o Disaffiliation should be approved by the majority of the union members.
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o Disaffiliation terminates the right to check-off federation dues.
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4. Rights of legitimate labor organizations
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• A legitimate labor organization shall have the right:
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a. To act as the representative of its members for the purpose of collective bargaining;
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b. To be certified as the exclusive representative of all the employees in an appropriate bargaining unit for
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purposes of collective bargaining;
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c. To be furnished by the employer, upon written request, with its annual audited financial statements;
d. To own property, real or personal, for the use and benefit of the labor organization and its members;
e. To sue and be sued in its registered name; and
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f. To undertake all other activities designed to benefit the organization and its members, including
cooperative, housing, welfare and other projects not contrary to law.
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5. Rights and conditions of membership in legitimate labor organizations

a. Nature of relationship
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ii. Member-Labor union

The relationship between the union and its members is that of principal and agent, the former being the agent while
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the latter, the principal. Their relationship is fiduciary in character. The union is but an agent of its members for the
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purpose of securing for them fair and just wages and proper, good working conditions.
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Ba
iii. Labor union federation
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In relation to an affiliate or local chapter/chartered local, the federation or national union is commonly known as the
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“mother union.” The mother union, acting for and in behalf of its affiliate, has the status of an agent while the
affiliate or local chapter/chartered local remains the principal. The affiliate union is a separate and distinct voluntary
association owing its creation to the will of its members. It does not give the mother union the license to act
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independently of the affiliate union.

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6. Check off, assessments, union dues, and agency fees

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• Requisites for validity of union dues and special assessments

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The following requisites must concur in order for union dues and special assessments for the union’s incidental
expenses, attorney’s fees and representation expenses to be valid, namely:
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(a) Authorization by a written resolution of the majority of all the members at a general membership
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meeting duly called for the purpose;

(b) Secretary’s record of the minutes of said meeting; and
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(c) Individual written authorizations for check-off duly signed by the employees concerned.
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• Assessment for attorney’s fees, negotiation fees and similar charges.

The rule is that no such attorney’s fees, negotiation fees or similar charges of any kind arising from the negotiation or
conclusion of the CBA shall be imposed on any individual member of the contracting union. Such fees may be
charged only against the UNION FUNDS in an amount to be agreed upon by the parties. Any contract,
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agreement or arrangement of any sort to the contrary is deemed null and void. Clearly, what is prohibited is the
payment of attorney’s fees when it is effected through forced contributions from the workers from their own
funds as distinguished from the union funds.
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• Check-off of union dues and assessments.

“Check-off” means a method of deducting from the employee’s pay at prescribed periods, any amount due for fees,
fines or assessments. It is a process or device whereby the employer, on agreement with the union recognized as the
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proper bargaining representative, or on prior authorization from its employees, deducts union dues and assessments
from the latter’s wages and remits them directly to the union.
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• Individual written authorization, when required.
The law strictly prohibits the check-off from any amount due an employee who is a member of the union, of any
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union dues, special assessment, attorney’s fees, negotiation fees or any other extraordinary fees other than for
mandatory activities under the Labor Code, without the individual written authorization duly signed by the employee.
Such authorization must specifically state the amount, purpose and beneficiary of the deduction. The purpose of the
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individual written authorization is to protect the employees from unwarranted practices that diminish their
compensation without their knowledge or consent.
• Individual written authorization, when not required.
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In the following cases, individual written authorization is not required:
a. Assessment from non-members of the bargaining agent of “agency fees” which should be equivalent to the
dues and other fees paid by members of the recognized bargaining agent, if such non-members accept the
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benefits under the CBA.
b. Deductions for fees for mandatory activities such as labor relations seminars and labor education
activities.
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c. Deductions for withholding tax mandated under the National Internal Revenue Code.
e. Deductions for withholding of wages because of employee’s debt to the employer which is already due.
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f. Deductions made pursuant to a judgment against the worker under circumstances where the wages may
be the subject of attachment or execution but only for debts incurred for food, clothing, shelter and
medical attendance.
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g. Deductions from wages ordered by the court.
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h. Deductions authorized by law such as for premiums for PhilHealth, SSS, Pag-IBIG, employees’
compensation and the like.
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AGENCY FEES
• A non-bargaining union member has the right to accept or not the benefits of the cba.
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There is no law that compels a non-bargaining union member to accept the benefits provided in the CBA. He has
the freedom to choose between accepting and rejecting the CBA itself by not accepting any of the benefits flowing
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therefrom. Consequently, if a non-bargaining union member does not accept or refuses to avail of the CBA-based
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benefits, he is not under any obligation to pay the “agency fees” since, in effect, he does not give recognition to the
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status of the bargaining union as his agent. Ba

• Limitation on the amount of agency fee.
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The bargaining union cannot capriciously fix the amount of agency fees it may collect from its non-members. Article
248(e) of the Labor Code expressly sets forth the limitation in fixing the amount of the agency fees, thus:
es
(1) It should be reasonable in amount; and

(2) It should be equivalent to the dues and other fees paid by members of the recognized collective
e
bargaining agent.
bl
Thus, any agency fee collected in excess of this limitation is a nullity.

• Non-members of the SEBA need not become members thereof
li
The employees who are not members of the certified bargaining agent which successfully concluded the CBA are not
o
required to become members of the latter. Their acceptance of the benefits flowing from the CBA and their act of
paying the agency fees do not make them members thereof. r
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Ba
R
• Check-off of agency fees

“Check-off” of agency fees is a process or device whereby the employer, upon agreement with the bargaining union,
O
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deducts agency fees from the wages of non-bargaining union members who avail of the benefits from the CBA and
remits them directly to the bargaining union.
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• Accrual of right of bargaining union to demand check-off of agency fees.

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The right of the bargaining union to demand check-off of agency fees accrues from the moment the non-bargaining
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union member accepts and receives the benefits from the CBA. This is the operative fact that would trigger such
liability.
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• No individual written authorization by non-bargaining union members required

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To effect the check-off of agency fees, no individual written authorization from the non-bargaining union members
who accept the benefits resulting from the CBA is necessary.
• Employer’s duty to check-off agency fees
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It is the duty of the employer to deduct or “check-off” the sum equivalent to the amount of agency fees from the
non-bargaining union members' wages for direct remittance to the bargaining union.”
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• Minority union cannot demand from the employer to grant it the right to check-off of union dues and
In
assessments from their members.

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The obligation on the part of the employer to undertake the duty to check-off union dues and special assessments
holds and applies only to the bargaining agent and not to any other union/s (called “Minority Union/s”).
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7. Union security clause

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The stipulation in a CBA based on the second sentence of paragraph [e] of Article 259 [248], commonly known as the “union
security clause”, allows the parties thereto to enter into an agreement compulsorily requiring membership of the covered
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employees in the sole and exclusive bargaining agent (SEBA) which successfully negotiated the CBA, as a condition for their
continued employment. The only exceptions to this rule where compulsory membership in the SEBA cannot be enforced are
as follows:
(1) In the case of employees who, at the time of the signing of the CBA, were already members of another union; or
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(2) In the case of religious objectors.

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“Union security” is a generic term which is applied to and comprehends “closed shop,” “union shop,” “maintenance of membership” or
other forms of agreement which impose upon employees the obligation to acquire and retain membership in the SEBA as a
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condition sine qua non for their continued employment.

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C. BARGAINING REPRESENTATIVE
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1. Modes to acquire status as Sole and Exclusive Bargaining Agent (SEBA)
a. Request for SEBA Certification
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• Is voluntary recognition still a proper mode of selecting a SEBA?
No more, because of its repeal and being replaced by the new mode called “REQUEST FOR SEBA
CERTIFICATION” per Department Order No. 40-I-15, Series of 2015, (Sept. 7, 2015).
• What should the employer do if a request for recognition or a demand for CBA negotiation is made by a
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union which has not been certified as the SEBA?
The employer so requested cannot now extend voluntary recognition but may still validly file a petition for
certification election (PCE) under Article 270 [258] of the Labor Code, in order to determine if the requesting union has
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the majority support of the employees in the bargaining unit which it seeks to represent or where it intends to operate.
• What are the situations involved in this new mode of “REQUEST FOR SEBA CERTIFICATION”?
THREE SCENARIOS INVOLVING A REQUEST FOR CERTIFICATION.
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There are three (3) scenarios conceived under the Rules on this mode, namely:
(1) Request for certification in unorganized establishment with only one (1) legitimate union;
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(2) Request for certification in unorganized establishment with more than one (1) legitimate labor organization;
and
(3) Request for certification in organized establishment.
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The foregoing scenarios are discussed below.
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FIRST SCENARIO: Request for certification in an UNORGANIZED establishment with only one (1)
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legitimate union.
a. Validation process.
If the DOLE Regional Director finds the establishment unorganized with only one (1) legitimate labor
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organization in existence, he/she should call a conference within five (5) working days for the submission of the
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following:
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1. The names of employees in the covered bargaining unit who signify their support for the SEBA certification,
provided that said employees comprise at least majority of the number of employees in the covered bargaining
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unit; and
2. Certification under oath by the president of the requesting union or local that all documents submitted are true
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and correct based on his/her personal knowledge.
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The submission shall be presumed to be true and correct unless contested under oath by any member of the
bargaining unit during the validation conference. For this purpose, the employer or any representative of the employer
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shall not be deemed a party-in-interest but only as a bystander to the process of certification.
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If the requesting union or local fails to complete the requirements for SEBA certification during the conference,
the Request should be referred to the Election Officer for the conduct of certification election.
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b. Action on the submission – when SEBA Certification should be issued.

If the DOLE Regional Director finds the requirements complete, he/she should issue, during the conference, a
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Certification as SEBA enjoying the rights and privileges of an exclusive bargaining agent of all the employees in the covered
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bargaining unit.
The DOLE Regional Director should cause the posting of the SEBA Certification for 15 consecutive days in at
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least 2 conspicuous places in the establishment or covered bargaining unit.
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c. Effect of certification.
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Upon the issuance of the Certification as SEBA, the certified union or local shall enjoy all the rights and privileges
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of an exclusive bargaining agent of all the employees in the covered CBU.

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SECOND SCENARIO: Request for certification in unorganized establishment with more than one (1)
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legitimate labor organization.

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If the DOLE Regional Director finds the establishment unorganized with more than one (1) legitimate labor
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organization, he/she should refer the same to the Election Officer for the conduct of certification election. The
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certification election shall be conducted in accordance with the Rules.
THIRD SCENARIO: Request for certification in organized establishment.

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If the Regional Director finds the establishment organized, he/she should refer the same to the Mediator-Arbiter
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for the determination of the propriety of conducting a certification election.

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b. Certification/Consent Election
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• What is certification election?

“Certification election” refers to the process of determining through secret ballot the sole and exclusive bargaining
agent of the employees in an appropriate bargaining unit for purposes of collective bargaining or negotiations.
• Who may file a petition for certification election?
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The petition may be filed by:

1. A legitimate labor organization which may be:
(a) an independent union; or
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(b) a national union or federation which has already issued a charter certificate to its local chapter
participating in the certification election; or
(c) a local chapter which has been issued a charter certificate by the national union or federation.
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2. An employer, when requested by a labor organization to bargain collectively and its majority status is in
doubt.
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c. Bars to the holding of Certification/Consent Election
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• What are the rules prohibiting the filing of petition for certification election (bar rules)?
a. General rule.
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The general rule is that in the absence of a CBA duly registered in accordance with Article 231 of the Labor
Code, a petition for certification election may be filed at any time.
b. Bar rules.
No certification election may be held under the following rules:
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1. Statutory bar rule;
2. Certification year bar rule;
3. Negotiations bar rule;
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4. Bargaining deadlock bar rule; or
5. Contract bar rule.
1. STATUTORY BAR RULE.
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The Labor Code does not contain any provision on this rule but the Rules to Implement the Labor Code embody a
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rule that bars the filing of a PCE within a period of one (1) year from the date of a valid conduct of a certification, consent,
run-off or re-run election where no appeal on the results thereof was made. If there was such an appeal from the order of
the Med-Arbiter, the running of the one-year period is deemed suspended until the decision on the appeal has become
final and executory.
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This is called the statutory bar rule which finds its roots from a similar rule in the United States. Thus, an election
cannot be held in any bargaining unit in which a final and valid election was concluded within the preceding 12-month
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period.
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2. CERTIFICATION YEAR BAR RULE.
Under this rule, a petition for certification election (PCE) may not be filed within one (1) year:
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1. From the date a union is certified as SEBA by virtue of a REQUEST FOR SEBA CERTIFICATION; or
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2. From the date a valid certification, consent, run-off or re-run election has been conducted within the
bargaining unit.
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If after this one year period, the SEBA did not commence collective bargaining with the employer, a PCE may
be filed by a rival union to challenge the majority status of the certified SEBA.
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3. NEGOTIATIONS BAR RULE.

Under this rule, no PCE should be entertained while the sole and exclusive bargaining agent (SEBA) and the
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employer have commenced and sustained negotiations in good faith within the period of one (1) year from the date of a
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valid certification, consent, run-off or re-run election or from the date of voluntary recognition.
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Once the CBA negotiations have commenced and while the parties are in the process of negotiating the terms
and conditions of the CBA, no challenging union is allowed to file a PCE that would disturb the process and unduly
forestall the early conclusion of the agreement.
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4. BARGAINING DEADLOCK BAR RULE.

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Under this rule, a PCE may not be entertained when a bargaining deadlock to which an incumbent or certified
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bargaining agent is a party has been submitted to conciliation or arbitration or has become the subject of a valid notice of
strike or lockout.
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Kaisahan ng Manggagawang Pilipino [KAMPIL-KATIPUNAN] v. Trajano. - The bargaining deadlock-

bar rule was not applied here because for more than four (4) years after it was certified as the exclusive bargaining agent
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of all the rank-and-file employees, it did not take any action to legally compel the employer to comply with its duty to
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bargain collectively, hence, no CBA was executed. Neither did it file any unfair labor practice suit against the employer nor
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did it initiate a strike against the latter. Under the circumstances, a certification election may be validly ordered and held.
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5. CONTRACT BAR RULE.

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Under this rule, a PCE cannot be filed when a CBA between the employer and a duly recognized or certified
bargaining agent has been registered with the Bureau of Labor Relations (BLR) in accordance with the Labor Code. Where
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the CBA is duly registered, a petition for certification election may be filed only within the 60-day freedom period prior to
its expiry. The purpose of this rule is to ensure stability in the relationship of the workers and the employer by preventing
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frequent modifications of any CBA earlier entered into by them in good faith and for the stipulated original period.
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When contract bar rule does not apply.

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The contract-bar rule does not apply in the following cases:

1. Where there is an automatic renewal provision in the CBA but prior to the date when such automatic renewal
became effective, the employer seasonably filed a manifestation with the Bureau of Labor Relations of its
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intention to terminate the said agreement if and when it is established that the bargaining agent does not
represent anymore the majority of the workers in the bargaining unit.
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2. Where the CBA, despite its due registration, is found in appropriate proceedings that: (a) it contains provisions
lower than the standards fixed by law; or (b) the documents supporting its registration are falsified, fraudulent
or tainted with misrepresentation.
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3. Where the CBA does not foster industrial stability, such as contracts where the identity of the representative
is in doubt since the employer extended direct recognition to the union and concluded a CBA therewith less than
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one (1) year from the time a certification election was conducted where the “no union” vote won. This
situation obtains in a case where the company entered into a CBA with the union when its status as exclusive
bargaining agent of the employees has not been established yet.
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4. Where the CBA was registered before or during the last sixty (60) days of a subsisting agreement or during
the pendency of a representation case. It is well-settled that the 60-day freedom period based on the original
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CBA should not be affected by any amendment, extension or renewal of the CBA for purposes of certification
election.
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• What are the requisites for the validity of the petition for certification election?
The following requisites should concur:
1. The union should be legitimate which means that it is duly registered and listed in the registry of legitimate
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labor unions of the BLR or that its legal personality has not been revoked or cancelled with finality.
2. In case of organized establishments, the petition for certification election is filed during (and not before
or after) the 60-day freedom period of a duly registered CBA.
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3. In case of organized establishments, the petition complied with the 25% written support of the members
of the bargaining unit.
4. The petition is filed not in violation of any of the four (4) bar rules [See above discussion thereof].
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• What are the two (2) kinds of majorities (DOUBLE MAJORITY RULE)?
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The process of certification election requires two (2) kinds of majority votes, viz.:
1. Number of votes required for the validity of the process of certification election itself. In order to have
a valid certification election, at least a majority of all eligible voters in the appropriate bargaining unit
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must have cast their votes.
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2. Number of votes required to be certified as the collective bargaining agent. To be certified as the sole
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and exclusive bargaining agent, the union should obtain a majority of the valid votes cast.
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• What are some pertinent principles on certification election?
o The pendency of a petition to cancel the certificate of registration of a union participating in a certification election
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does not stay the conduct thereof.
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The pendency of an unfair labor practice case filed against a labor organization participating in the certification
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election does not stay the holding thereof.
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o Direct certification as a method of selecting the exclusive bargaining agent of the employees is not allowed. This
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is because the conduct of a certification election is still necessary in order to arrive in a manner definitive and
certain concerning the choice of the labor organization to represent the workers in a collective bargaining unit.
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o The “No Union” vote is always one of the choices in a certification election. Where majority of the valid votes
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cast results in “No Union” obtaining the majority, the Med-Arbiter shall declare such fact in the order.
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o Only persons who have direct employment relationship with the employer may vote in the certification election,
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regardless of their period of employment.
b.1.
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CERTIFICATION ELECTION
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IN AN UNORGANIZED ESTABLISHMENT
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• What is meant by “unorganized establishment”?
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As distinguished from “organized establishment,” an “unorganized establishment” is an employer entity where

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there is no recognized or certified collective bargaining union or agent.

A company or an employer-entity, however, may still be considered an unorganized establishment even if there
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are unions in existence therein for as long as not one of them is duly certified as the sole and exclusive bargaining
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representative of the employees in the particular bargaining unit it seeks to operate and represent.
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Further, a company remains unorganized even if there is a duly recognized or certified bargaining agent for rank-
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and-file employees, for purposes of the petition for certification election filed by supervisors. The reason is that the
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bargaining unit composed of supervisors is separate and distinct from the unionized bargaining unit of rank-and-file
employees. Hence, being unorganized, the 25% required minimum support of employees within the bargaining unit of the
supervisors need not be complied with.
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• How should certification election be conducted in an unorganized establishment?

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In case of a petition filed by a legitimate organization involving an unorganized establishment, the Med-Arbiter
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is required to immediately order the conduct of a certification election upon filing of a petition for certification election
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by a legitimate labor organization.

b.2.
CERTIFICATION ELECTION
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IN AN ORGANIZED ESTABLISHMENT
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• What are the requisites for the conduct of a certification election in an organized establishment?
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The Med-Arbiter is required to automatically order the conduct of a certification election by secret ballot in an
organized establishment as soon as the following requisites are fully met:
1. That a petition questioning the majority status of the incumbent bargaining agent is filed before the DOLE
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within the 60-day freedom period;

2. That such petition is verified; and
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3. That the petition is supported by the written consent of at least twenty-five percent (25%) of all the
employees in the bargaining unit.
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• What is consent election?
A “consent election” refers to the process of determining through secret ballot the sole and exclusive bargaining
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agent (SEBA) of the employees in an appropriate bargaining unit for purposes of collective bargaining and negotiation. It
is voluntarily agreed upon by the parties, with or without the intervention of the DOLE.
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• What are the distinctions between consent election and certification election?
Consent election is but a form of certification election. They may be distinguished from each other in the following
manner:
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(1) The former is held upon the mutual agreement of the contending unions; while the latter does not require the
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mutual consent of the parties as it is conducted upon the order of the Med-Arbiter (Mediator-Arbiter).
(2) The former may be conducted with or without the control and supervision of the DOLE; while the latter is always
conducted under the control and supervision of the DOLE.
(3) The former is being conducted as a voluntary mode of resolving labor dispute; while the latter, although non-
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adversarial, is a compulsory method of adjudicating a labor dispute.
(4) The former is given the highest priority; while the latter is resorted to only when the contending unions fail or
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refuse to submit their representation dispute through the former. This is so because under the Implementing Rules,
as amended, even in cases where a PCE is filed, the Med-Arbiter (Mediator-Arbiter), during the preliminary
conference and hearing thereon, is tasked to determine the “possibility of a consent election.” It is only when the
contending unions fail to agree to the conduct of a consent election during the preliminary conference that the
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Med-Arbiter (Mediator-Arbiter) will proceed with the process of certification election by conducting as many
hearings as he may deem necessary up to its actual holding. But in no case shall the conduct of the certification
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election exceed 15 days from the date of the scheduled preliminary conference/hearing after which time, the
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PCE is considered submitted for decision.
(5) The former necessarily involves at least two (2) or more contending unions; while the latter may only involve one
(1) petitioner union.
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(6) The former may be conducted in the course of the proceeding in the latter or during its pendency.
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d. Failure of election, Run-Off Election, Re-run election
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• What is a run-off election?
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A “run-off election” refers to an election between the labor unions receiving the two (2) highest number of votes in
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a certification election or consent election with three (3) or more unions in contention, where such certification election
or consent election results in none of the contending unions receiving the majority of the valid votes cast; provided, that
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the total number of votes for all contending unions, if added, is at least fifty percent (50%) of the number of valid votes
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cast.
• When is it conducted?
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If the above conditions that justify the conduct of a run-off election are present and there are no objections or
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challenges which, if sustained, can materially alter the election results, the Election Officer should motu proprio conduct a
run-off election within ten (10) days from the close of the election proceeding between the labor unions receiving the two
highest number of votes.
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ILLUSTRATION.
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To illustrate, in a certification election involving four (4) unions, namely: Union A, Union B, Union C, and
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Union D, where there are 100 eligible voters who validly cast their votes, and the votes they each garnered are as follows:
Union A – 35; Union B – 25; Union C – 10; Union D - 15; and No Union - 15, a run-off election may be conducted
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between Union A and Union B because:

(1) Not one of the unions mustered the majority vote of 51 votes but Union A and Union B got the first two
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highest number of votes;

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(2) If all the votes for the contending unions are added up, it will result in at least 50% of the valid votes cast
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(Union A – 35; Union B – 25; Union C – 10; Union D - 15 for a total of 85 or 85%); and
(3) There are no objections or challenges which, if sustained, can materially alter the results of the election.
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THE “NO UNION” CHOICE SHOULD NO LONGER BE INCLUDED.

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For obvious reason, the choice of “No Union” should no longer be included in the run-off election.
RE-RUN ELECTION
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“‘Re-run election’ refers to an election conducted to break a tie between contending unions, including between ‘no
union’ and one of the unions. It shall likewise refer to an election conducted after a failure of election has been
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declared by the Election Officer and/or affirmed by the Mediator-Arbiter.”

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2. GROUNDS CITED IN THE RULES FOR RE-RUN ELECTION.

Based on the above-quoted rule, there are 2 situations contemplated thereunder that justify the conduct of a re-
run election, to wit:
(1) To break a tie; or
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(2) To cure a failure of election.
3. RULE IN CASE OF FAILURE OF ELECTION.

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In failure of election, the number of votes cast in the certification or consent election is less than the majority of the
number of eligible voters and there are no challenged votes that could materially change the results of the election. For example,
in a CBU composed of 100 employees, the majority of 100, which is 51, should validly cast their votes in the election;
otherwise, if less than 51 employees have validly cast their votes, there is here a failure of election.
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e. Employer as a mere bystander rule
In all cases, whether the petition for certification election is filed by an employer or a legitimate labor organization, the
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employer shall not be considered a party thereto with a concomitant right to oppose a petition for certification election.
The employer’s participation in such proceedings shall be limited to:
(1) being notified or informed of petitions of such nature; and
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(2) submitting the list of employees during the pre-election conference should the Med-Arbiter
act favorably on the petition.
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D. COLLECTIVE BARGAINING
1. Duty to bargain collectively, bargaining in bad faith

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• Meaning of duty to bargain collectively.
The “duty to bargain collectively” means the performance of a mutual obligation to meet and convene
promptly and expeditiously in good faith for the purpose of negotiating an agreement with respect to wages,
hours of work and all other terms and conditions of employment, including proposals for adjusting any
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grievances or questions arising under such agreement and executing a contract incorporating such agreements if
requested by either party but such duty does not compel any party to agree to a proposal or to make any concession.
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The duty does not compel any party to agree blindly to a proposal nor to make concession. While the law
imposes on both the employer and the bargaining union the mutual duty to bargain collectively, the employer is not
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under any legal obligation to initiate collective bargaining negotiations.
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• Two (2) situations contemplated
The duty to bargain collectively involves two (2) situations, namely:
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1. Duty to bargain collectively in the absence of a CBA under Article 251 of the Labor Code.
2. Duty to bargain collectively when there is an existing CBA under Article 253 of the Labor Code.
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(1) Duty to bargain collectively when there is absence of a CBA
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• How duty should be discharged when there is no cba yet.
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The duty to bargain collectively when there has yet been no CBA in the bargaining unit where the bargaining agent
seeks to operate should be complied with in the following order:
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First, in accordance with any agreement or voluntary arrangement between the employer and the bargaining
agent providing for a more expeditious manner of collective bargaining; and
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Secondly, in its absence, in accordance with the provisions of the Labor Code, referring to Article 250 thereof
which lays down the procedure in collective bargaining.
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(2) Duty to bargain collectively when there is a CBA

• Concept
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When there is a CBA, the duty to bargain collectively shall mean that neither party shall terminate nor modify such
agreement during its lifetime. However, either party can serve a written notice to terminate or modify the agreement
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at least sixty (60) days prior to its expiration date. It shall be the duty of both parties to keep the status quo and
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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. r
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• Freedom period.
The last sixty (60) days of the 5-year lifetime of a CBA immediately prior to its expiration is called the “freedom
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period.” It is denominated as such because it is the only time when the law allows the parties to freely serve a notice
to terminate, alter or modify the existing CBA. It is also the time when the majority status of the bargaining agent
may be challenged by another union by filing the appropriate petition for certification election.
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• Automatic renewal clause: Automatic renewal clause deemed incorporated in all CBAs.
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Pending the renewal of the CBA, the parties are bound to keep the status quo and to treat the terms and conditions
embodied therein still in full force and effect during the 60-day freedom period and/or until a new agreement is
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negotiated and ultimately concluded and reached by the parties. This principle is otherwise known as the “automatic
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renewal clause” which is mandated by law and therefore deemed incorporated in all CBAs.
For its part, the employer cannot discontinue the grant of the benefits embodied in the CBA which just expired as it
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is duty-bound to maintain the status quo by continuing to give the same benefits until a renewal thereof is reached by
the parties. On the part of the union, it has to observe and continue to abide by its undertakings and commitments
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under the expired CBA until the same is renewed.

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• Kiok Loy doctrine.

This doctrine is based on the ruling In Kiok Loy v. NLRC, where the petitioner, Sweden Ice Cream Plant, refused
to submit any counter-proposal to the CBA proposed by its employees’ certified bargaining agent. The High Court
ruled that the employer had thereby lost its right to bargain the terms and conditions of the CBA. Thus, the CBA
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proposed by the union was imposed lock, stock and barrel on the erring company.
The Kiok Loy case epitomizes the classic case of negotiating a CBA in bad faith consisting of the employer’s refusal
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to bargain with the collective bargaining agent by ignoring all notices for negotiations and requests for counter-
proposals. Such refusal to send a counter-proposal to the union and to bargain on the economic terms of the CBA
constitutes an unfair labor practice under Article 248(g) of the Labor Code.
• Other cases after Kiok Loy.
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o Divine Word University of Tacloban v. Secretary of Labor and Employment, Sept. 11, 1992.
o General Milling Corporation v. CA, Feb. 11, 2004.
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2. Collective bargaining agreement (CBA), mandatory provisions
A “Collective Bargaining Agreement” or “CBA” for short, refers to the negotiated contract between a duly recognized or
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certified exclusive bargaining agent of workers and their employer, concerning wages, hours of work and all other
terms and conditions of employment in the appropriate bargaining unit, including mandatory provisions for
grievances and arbitration machineries. It is executed not only upon the request of the exclusive bargaining
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representative but also by the employer.
• Essential requisites of collective bargaining
Prior to any collective bargaining negotiations between the employer and the bargaining union, the following requisites
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must first be satisfied:
1. Employer-employee relationship must exist between the employer and the members of the bargaining
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unit being represented by the bargaining agent;
2. The bargaining agent must have the majority support of the members of the bargaining unit
established through the modes sanctioned by law; and
3. A lawful demand to bargain is made in accordance with law.
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• Some principles on CBA.
o CBA is the law between the parties during its lifetime and thus must be complied with in good faith.
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o Being the law between the parties, any violation thereof can be subject of redress in court.
o CBA is not an ordinary contract as it is impressed with public interest.
o Automatic Incorporation Clause – law is presumed part of the CBA.
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o The benefits derived from the CBA and the law are separate and distinct from each other.
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o Workers are allowed to negotiate wage increases separately and distinctly from legislated wage
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increases. The parties may validly agree in the CBA to reduce wages and benefits of employees
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provided such reduction does not go below the minimum standards.
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o Ratification of the CBA by majority of all the workers in the bargaining unit makes the same binding on
all employees therein.
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o Employees entitled to CBA benefits. The following are entitled to the benefits of the CBA:
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(1) Members of the bargaining union;
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(2) Non-members of the bargaining union but are members of the bargaining unit;
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(3) Members of the minority union/s who paid agency fees to the bargaining union; and
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(4) Employees hired after the expiration of the CBA.

o Pendency of a petition for cancellation of union registration is not a prejudicial question before
CBA negotiation may proceed.
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o CBA should be construed liberally. If the terms of a CBA are clear and there is no doubt as to the
intention of the contracting parties, the literal meaning of its stipulation shall prevail.
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i. Mandatory provisions in a Collective Bargaining Agreement

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1. Grievance Procedure;
2. Voluntary Arbitration;
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3. No Strike-No Lockout Clause; and

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4. Labor-Management Council (LMC).

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If these provisions are not reflected in the CBA, its registration will be denied by the BLR.
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3. Signing, posting, registration

a. Signing
• This involves the signing and execution of a written document, ordinarily denominated as “CBA” or simply as
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“Agreement” by the management and SEBA negotiating panels after a series of negotiations. The document
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embodies all the agreements reached by them on each and every issue raised and resolved during the negotiation
process. At this point, although the panel representatives of both management and the SEBA have affixed their
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signatures on each and every page of the CBA and the same have been notarized by a Notary Public, it cannot as yet
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be considered as having taken effect since there are still certain mandatory legal processes that need to be complied
with, such as the publication, ratification and registration processes, as discussed below.
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b. Posting
• A copy of the newly concluded CBA in at least two (2) conspicuous places in the workplace, at least five (5) days
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prior to the ratification thereof by all the employees comprising the bargaining unit.
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c. Registration
• “Registration” refers to the process of determining whether the application for registration of a CBA complies with the
documentary requirements for registration prescribed in the Rules to Implement the Labor Code.
• Registration of the duly ratified CBA with the BLR or the DOLE Regional Office by submitting five (5) copies
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thereof together with the other documentary requirements and paying the required registration fee
• The non-compliance with the procedural requirements such as the non-filing of the CBA within 30 days from its
execution should not adversely affect its substantive validity. A CBA is more than a contract. It is highly impressed
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with public interest for it is an essential instrument to promote industrial peace. Hence, it bears the blessings not only
of the employer and employees concerned but even of the DOLE. To set it aside on technical grounds is not
conducive to the public good.
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4. Term of CBA, freedom period

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The last sixty (60) days of the 5-year lifetime of a CBA immediately prior to its expiration is called the “freedom
period.” It is denominated as such because it is the only time when the law allows the parties to freely serve a notice
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to terminate, alter or modify the existing CBA. It is also the time when the majority status of the bargaining agent
may be challenged by another union by filing the appropriate petition for certification election.
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E. UNFAIR LABOR PRACTICES
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1. Nature, aspects
• When an act constitutes ULP.
At the outset, it must be clarified that not all unfair acts constitute ULPs. While an act or decision of an
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employer or a union may be unfair, certainly not every unfair act or decision thereof may constitute ULP as defined
and enumerated under the law.
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The act complained of as ULP must have a proximate and causal connection with any of the following 3 rights:
1. Exercise of the right to self-organization;
2. Exercise of the right to collective bargaining; or
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3. Compliance with CBA.
Sans this connection, the unfair acts do not fall within the technical signification of the term “unfair labor practice.”
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• The only ULP which may or may not be related to the exercise of the right to self-organization and
collective bargaining.
The only ULP which is the exception as it may or may not relate to the exercise of the right to self-organization and
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collective bargaining is the act described under Article 248 [f], i.e., to dismiss, discharge or otherwise prejudice or
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discriminate against an employee for having given or being about to give testimony under the Labor Code.
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• Labor code provisions on ULP.
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Under the Labor Code, there are only five (5) provisions related to ULP, to wit:
1. Article 258 [247] which describes the concept of ULPs and prescribes the procedure for their prosecution;
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2. Article 259 [248] which enumerates the ULPs that may be committed by employers;
3. Article 260 [249] which enumerates the ULPs that may be committed by labor organizations;
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4. Article 274 [261] which considers violations of the CBA as no longer ULPs unless the same are gross in
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character which means flagrant and/or malicious refusal to comply with the economic provisions thereof.
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5. Article 278(c) [263(c)] which refers to union-busting, a form of ULP, involving the dismissal from
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employment of union officers duly elected in accordance with the union constitution and by-laws, where the
existence of the union is threatened thereby.
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• Parties who/which may commit ULP.

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A ULP may be committed by an employer or by a labor organization. Article 259 [248] describes the ULPs that may
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be committed by an employer; while Article 260 [249] enumerates those which may be committed by a labor
organization.
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On the part of the employer, only the officers and agents of corporations, associations or partnerships who have
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actually participated in or authorized or ratified ULPs are criminally liable.

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On the part of the union, only the officers, members of governing boards, representatives or agents or members of
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labor associations or organizations who have actually participated in or authorized or ratified the ULPs are criminally
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liable.
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• Elements of ULP.
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1. There should exist an employer-employee relationship between the offended party and the offender; and
2. The act complained of must be expressly mentioned and defined in the Labor Code as an unfair labor
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practice.
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Absent one of the elements aforementioned will not make the act an unfair labor practice.
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• Aspects of ULP.
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Under Article 258 [247], a ULP has two (2) aspects, namely:
1. Civil aspect; and
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2. Criminal aspect.
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The civil aspect of an unfair labor practice includes claims for actual, moral and exemplary damages, attorney’s fees
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and other affirmative reliefs. Generally, these civil claims should be asserted in the labor case before the Labor
Arbiters who have original and exclusive jurisdiction over unfair labor practices. The criminal aspect, on the other
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hand, can only be asserted before the regular court.

2. By employers
a. Interference with, restraint or coercion of employees in the exercise of their right to self-
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organization
• Test of interference, restraint or coercion
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The terms “interfere,” “restrain” and “coerce” are very broad that any act of management that may reasonably tend to
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have an influence or effect on the exercise by the employees of their right to self-organize may fall within their meaning
and coverage. According to the Supreme Court in Insular Life Assurance Co., Ltd., Employees Association-
NATU v. Insular Life Assurance Co., Ltd., the test of whether an employer has interfered with or restrained or
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coerced employees within the meaning of the law is whether the employer has engaged in conduct which may reasonably tend to
interfere with the free exercise of the employees’ rights. It is not necessary that there be direct evidence that any employee
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was in fact intimidated or coerced by the statements or threats of the employer if there is a reasonable inference that
the anti-union conduct of the employer does have an adverse effect on the exercise of the right to self-organization
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and collective bargaining.

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• Totality of conduct doctrine
In ascertaining whether the act of the employer constitutes interference with, restraint or coercion of the employees’
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exercise of their right to self-organization and collective bargaining, the “totality of conduct doctrine” may be applied.
The totality of conduct doctrine means that expressions of opinion by an employer, though innocent in themselves, may
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be held to constitute an unfair labor practice 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. An expression which may be permissibly uttered by one employer, might,
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in the mouth of a more hostile employer, be deemed improper and consequently actionable as an unfair labor practice.
The past conduct of the employer and like considerations, coupled with an intimate connection between the
employer’s action and the union affiliation or activities of the particular employee or employees taken as a whole, may
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raise a suspicion as to the motivation for the employer’s conduct. The failure of the employer to ascribe a valid reason
therefor may justify an inference that his unexplained conduct in respect of the particular employee or employees was
inspired by the latter’s union membership and activities.
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In General Milling, the Supreme Court considered the act of the employer in presenting the letters from February
to June 1993, by 13 union members signifying their resignation from the union clearly indicative of the employer’s
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pressure on its employees. The records show that the employer presented these letters to prove that the union no
longer enjoyed the support of the workers. The fact that the resignations of the union members occurred during the
pendency of the case before the Labor Arbiter shows the employer’s desperate attempt to cast doubt on the legitimate
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status of the union. The ill-timed letters of resignation from the union members indicate that the employer had
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interfered with the right of its employees to self-organization. Because of such act, the employer was declared guilty
of ULP.
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• Interference in the employee’s right to self-organization.
o Interference is always ULP.
The judicial dictum is that any act of interference by the employer in the exercise by employees of their right to self-
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organization constitutes an unfair labor practice. This is the very core of ULP.
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In Hacienda Fatima v. National Federation of Sugarcane Workers – Food and General Trade, the Supreme
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Court upheld the factual findings of the NLRC and the Court of Appeals that from the employer’s refusal to bargain
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to its acts of economic inducements resulting in the promotion of those who withdrew from the union, the use of
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armed guards to prevent the organizers to come in, and the dismissal of union officials and members, one cannot but
conclude that the employer did not want a union in its hacienda - a clear interference in the right of the workers to
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self-organization. Hence, the employer was held guilty of unfair labor practice.
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It was likewise held in Insular Life Assurance Co., Ltd., Employees Association-NATU v. Insular Life Assurance
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Co., Ltd., that it is an act of interference for the employer to send individual letters to all employees notifying them
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to return to work at a time specified therein, otherwise new employees would be engaged to perform their jobs.
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Individual solicitation of the employees or visiting their homes, with the employer or his representative urging the
employees to cease their union activities or cease striking, constitutes ULP. All the above-detailed activities are ULPs
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because they tend to undermine the concerted activity of the employees, an activity to which they are entitled free
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from the employer's molestation.

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o Formation of a union is never a valid ground to dismiss.

o It is ULP to dismiss a union officer or an employee for his union activities.
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b. Yellow Dog Contract

It is one which exacts from workers as a condition of employment that they shall not join or belong to a labor
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organization, or attempt to organize one during their period of employment or that they shall withdraw
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therefrom in case they are already members of a labor organization.

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• Common Stipulations in Yellow Dog Contract.

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A typical yellow dog contract embodies the following stipulations:

(1) A representation by the employee that he is not a member of a labor organization;
(2) A promise by the employee that he will not join a union; and
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(3) A promise by the employee that upon joining a labor organization, he will quit his employment.
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The act of the employer in imposing such a condition constitutes unfair labor practice under Article 248(b) of the
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Labor Code. Such stipulation in the contract is null and void.

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• Origin of the term “Yellow Dog.”

The term “yellow dog” traces its roots to certain commentaries made by the labor press in the United States sometime
in 1921. An example is the following editor’s comment of the United Mine Workers' Journal: “This agreement has been
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well named. It is yellow dog for sure. It reduces to the level of a yellow dog any man that signs it, for he signs away
every right he possesses under the Constitution and laws of the land and makes himself the truckling, helpless slave
of the employer.” Simply put, it is so-called “yellow dog” because the employees were deemed to have to cower before
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their "masters" to get a job.
c. Contracting out of services and functions

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• General rule.
As a general rule, the act of an employer in having work or certain services or functions being performed by union
members contracted out is not per se an unfair labor practice. This is so because contracting-out of a job, work or
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service is clearly an exercise by the employer of its business judgment and its inherent management rights and
prerogatives. Hiring of workers is within the employer’s inherent freedom to regulate its business and is a valid exercise
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of its management prerogative subject only to special laws and agreements on the matter and the fair standards of
justice. The employer cannot be denied the faculty of promoting efficiency and attaining economy by a study of what
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units are essential for its operation. It has the ultimate right to determine whether services should be performed by its
personnel or contracted to outside agencies.
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• When contracting-out becomes ULP.
It is only when the contracting out of a job, work or service being performed by union members will interfere with,
restrain or coerce employees in the exercise of their right to self-organization that it shall constitute an unfair labor
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practice. Thus, it is not unfair labor practice to contract out work for reasons of business decline, inadequacy of
facilities and equipment, reduction of cost and similar reasonable grounds.
d. Company Union
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• Company initiated, dominated or assisted union.
Paragraph [d] of Article 259 [248] considers it an unfair labor practice to initiate, dominate, assist or otherwise interfere
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with the formation or administration of any labor organization, including the giving of financial or other support to
it or its organizers or supporters. Such union is called “company union” as its formation, function or administration has
been assisted by any act defined as unfair labor practice under the Labor Code.
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e. Discrimination
• Coverage of prohibition.
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What is prohibited as unfair labor practice under the law is to discriminate in regard to wages, hours of work, and
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other terms and conditions of employment in order to encourage or discourage membership in any labor organization.
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• Materiality of purpose of alleged discriminatory act.
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In Manila Pencil Co., Inc. v. CIR, it was ruled that even assuming that business conditions justify the dismissal of
employees, it is a ULP of employer to dismiss permanently only union members and not non-unionists.
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In Manila Railroad Co. v. Kapisanan ng mga Manggagawa sa Manila Railroad Co., the non-regularization
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of long-time employees because of their affiliation with the union while new employees were immediately
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regularized was declared an act of discrimination.
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f. Filing of charges or giving of testimony

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• Concept.
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Under paragraph [f] of Article 259 [248] of the Labor Code, it is an unfair labor practice for an employer to dismiss,
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discharge or otherwise prejudice or discriminate against an employee for having given or being about to give testimony
under the Labor Code.
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•
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The only ULP not required to be related to employee’s exercise of the right to self-organization and
collective bargaining.
It must be underscored that Article 259(f) [248 (f)] is the only unfair labor practice that need not be related to the
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exercise by the employees of their right to self-organization and collective bargaining.

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In Itogon-Suyoc Mines, Inc. v. Baldo, it was declared that an unfair labor practice was committed by the employer r
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when it dismissed the worker who had testified in the hearing of a certification election case despite its prior request
for the employee not to testify in the said proceeding accompanied with a promise of being reinstated if he followed
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said request.
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g. CBA-related ULPs
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• Three (3) CBA-related ULPs.

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Article 259 [248] enunciates three (3) CBA-related unfair labor practices, to wit:
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1. To violate the duty to bargain collectively as prescribed in the Labor Code.

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2. To pay negotiation or attorney’s fees to the union or its officers or agents as part of the settlement of
any issue in collective bargaining or any other dispute.
- Article 259 (h) [248(h)] of the Labor Code considers as an unfair labor practice the act of the employer
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in paying negotiation fees or attorney’s fees to the union or its officers or agents as part of the settlement
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of any issue in collective bargaining or any other dispute.

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3. To violate a collective bargaining agreement.

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- Article 259 (i) [248(i)] of the Labor Code should be read in relation to Article 261 thereof. Under Article
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261, as amended, violations of a CBA, except those which are gross in character, shall no longer be
treated as an unfair labor practice and shall be resolved as grievances under the CBA. Gross violations
of CBA shall mean flagrant and/or malicious refusal to comply with the economic provisions of such
agreement.
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- The act of the employer in refusing to implement the negotiated wage increase stipulated in the CBA,
which increase is intended to be distinct and separate from any other benefits or privileges that may be
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forthcoming to the employees, is an unfair labor practice.

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- Refusal for a considerable number of years to give salary adjustments according to the improved salary
scales in the CBA is an unfair labor practice.
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3. By labor organizations
(a) Restraint and coercion of employees in the exercise of their right to self-organization
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• Union may interfere with but not restrain or coerce employees in the exercise of their right to self-organize
o Under Article 260(a) [249 (a)], it is ULP for a labor organization, its officers, agents or representatives to
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restrain or coerce employees in the exercise of their right to self-organization. Compared to similar provision
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of Article 248(a) of the Labor Code, notably lacking is the use of the word “interfere” in the exercise of the
employees’ right to self-organize. The significance in the omission of this term lies in the grant of unrestricted
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license to the labor organization, its officers, agents or representatives to interfere with the exercise by the
employees of their right to self-organization. Such interference is not unlawful since without it, no labor
organization can be formed as the act of recruiting and convincing the employees is definitely an act of
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interference.
(b) Discrimination
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• Under Article 260(b) [249 (b)], it is ULP for a labor organization, its officers, agents or representatives:
a. 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.
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b. To terminate an employee’s union membership on any ground other than the usual terms and conditions
under which membership or continuation of membership is made available to other members.
(c) Duty of Union to Bargain Collectively

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• Under Article 260(c) [249 (c)], it is ULP for a duly certified sole and exclusive bargaining union, its officers, agents
or representatives to refuse or violate the duty to bargain collectively with the employer. This is the counterpart
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provision of Article 259(g) [248 (g)] respecting the violation by the employer of its duty to bargain collectively.
• The obvious purpose of the law is to ensure that the union will negotiate with management in good faith and for
the purpose of concluding a mutually beneficial agreement regarding the terms and conditions of their
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employment relationship.
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(d) Featherbedding Doctrine
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• Article 260(d) [249 (d)] is the “featherbedding” provision in the Labor Code. Patterned after a similar provision in
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the Taft-Hartley Act, “featherbedding” or “make-work” refers to the practice, caused and induced by a union, of
hiring more workers than are needed to perform a given work, job or task or to adopt work procedures which is
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evidently senseless, wasteful, inefficient and without legitimate justifications since it is meant purely for the
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purpose of employing additional workers than are necessary.
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• This is resorted to by the union as a response to the laying-off of workers occasioned by their obsolescence
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because of the introduction of machines, robots or new and innovative technological changes and improvements
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in the workplace or as required by minimum health and safety standards, among other reasons. Its purpose is to
unduly secure the jobs of the workers.
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• Because of these lay-offs, the unions are constrained to resort to some featherbedding practices. Accordingly,
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they usually request that the technological changes be introduced gradually, or not at all, or that a minimum
number of personnel be retained despite such changes. They resort to some ways and methods of retaining
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workers even though there may be little work left for them to do and perform. It therefore unnecessarily
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maintains or increases the number of employees used or the amount of time consumed to work on a specific
job, work or undertaking. By so increasing the demand for workers, featherbedding obviously keeps wages higher.
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• REQUISITES
The requisites for featherbedding are as follows:
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1. The labor organization, its officers, agents or representatives have caused or attempted to cause an
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employer either:
a. to pay or agree to pay any money, including the demand for fee for union negotiations; or
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b. to deliver or agree to deliver any things of value;
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2. Such demand for payment of money or delivery of things of value is in the nature of an exaction; and
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3. The services contemplated in exchange for the exaction are not actually performed or will not be
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performed.
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(e) Demand or acceptance of negotiation fees or attorney’s fees

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• Under Article 260(e) [249 (e)], it is ULP for a labor organization, its officers, agents or representatives to ask for
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or accept negotiation fees or attorney’s fees from employers as part of the settlement of any issue in collective
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bargaining or any other dispute.

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(f) Violation of the CBA

• Under Article 260(f) [249 (f)], it is ULP for a labor organization, its officers, agents or representatives to violate
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a CBA.
• This is the counterpart provision of Article 259(i) [248 (i)] regarding the employer’s act of violating a CBA. But
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it must be noted that under Article 261 of the Labor Code, violation of the CBA is generally considered merely
a grievable issue. It becomes an unfair labor practice only if the violation is gross in character which means that
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there is flagrant and/or malicious refusal to comply with the economic (as distinguished from non-economic)
stipulations in the CBA. This principle applies not only to the employer but to the labor organization as well.
CRIMINAL LIABILITY FOR ULPs OF LABOR ORGANIZATION

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• Persons liable.
• Article 260 [249] is explicit in its provision on who should be held liable for ULPs committed by labor
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organizations. It states that only the officers, members of governing boards, representatives or agents
or members of labor associations or organizations who have actually participated in, authorized or
ratified unfair labor practices shall be held criminally liable.
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F. PEACEFUL CONCERTED ACTIVITIES
• Forms of concerted activities.
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There are three (3) forms of concerted activities, namely:
1. Strike;
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2. Picketing; and
3. Lockout.
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1. Strikes (committed by employees)
• “Strike” means any temporary stoppage of work by the concerted action of the employees as a result of an
industrial or labor dispute.
•
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a. Grounds for strike
The law recognizes only 2 grounds in support of a valid strike, viz.:
1. Collective bargaining deadlock (Economic Strike); and/or
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2. Unfair labor practice (Political Strike).
A strike not based on any of these two grounds is illegal.

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• Violation of CBA, except when gross, is not an unfair labor practice, hence, may not be cited as ground for a
valid strike. Ordinary violation of a CBA is no longer treated as an unfair labor practice but as a mere grievance
which should be processed through the grievance machinery and voluntary arbitration.
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• Inter-union or intra-union dispute is not a valid ground.
• Violation of labor standards is not a valid ground.
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• Wage distortion is not a valid ground.
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b. Mandatory procedural requirements
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• A strike, in order to be valid and legal, must conform to the following procedural requisites:
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1st requisite - It must be based on a valid and factual ground;
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2nd requisite - A notice of strike must be filed with the NCMB-DOLE;

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3rd requisite - A notice must be served to the NCMB-DOLE at least twenty-four (24) hours prior to the
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taking of the strike vote by secret balloting, informing said office of the decision to conduct a strike vote, and
the date, place, and time thereof;
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4th requisite - A strike vote must be taken where a majority of the members of the union obtained by secret
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ballot in a meeting called for the purpose, must approve it;

5th requisite - A strike vote report should be submitted to the NCMB-DOLE at least seven (7) days before
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the intended date of the strike;

6th requisite - Except in cases of union-busting, the cooling-off period of 15 days, in case of unfair labor
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practices of the employer, or 30 days, in case of collective bargaining deadlock, should be fully observed; and
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7th requisite - The 7-day waiting period/strike ban reckoned after the submission of the strike vote report
to the NCMB-DOLE should also be fully observed in all cases.
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o
All the foregoing requisites, although procedural in nature, are mandatory and failure of the union to comply with
any of them would render the strike illegal.
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c. Legal strike vs. illegal strike

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• Valid/Legal strike vs. Illegal strike

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o Legal strike - one called for a valid purpose and conducted through means allowed by law.
o Illegal strike - one staged for a purpose not recognized by law or, if for a valid purpose, it is conducted through
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means not sanctioned by law.

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• When is a strike considered illegal?

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A strike is illegal if it is declared and staged:

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1. Without complying with the procedural but mandatory requisites (See 7 requisites above).
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2. For unlawful purpose such as to compel the dismissal of an employee or to force recognition of the
union or for trivial and puerile purpose or to circumvent contracts and judicial orders.
3. Based on non-strikeable or invalid grounds such as:
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a. Inter-union or intra-union disputes.

b. Simple violation of CBA in contrast to gross violation thereof which is deemed ULP.
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c. Violation of labor standards.

d. Legislated wage orders (wage distortion).
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4. Without first having bargained collectively.

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5. In violation of the “no strike, no lockout” clause in the CBA.

6. Without submitting the issues to the grievance machinery or voluntary arbitration or failing to exhaust the
steps provided therein.
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7. While conciliation and mediation proceeding is on-going at the NCMB.

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8. Based on issues already brought to voluntary or compulsory arbitration.

9. During the pendency of a case involving the same ground/s cited in the notice of strike.
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10. In defiance of an assumption or certification or return-to-work order.

11. In violation of a temporary restraining order or an injunction order.
12. After the conversion of the notice of strike into a preventive mediation case.
13. Against the prohibition by law.
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14. By a minority union.

15. By an illegitimate union.
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16. By dismissed employees.

17. In violation of the company code of conduct which prohibits “inciting or participating in riots, disorders,
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alleged strikes or concerted actions detrimental to [Toyota’s] interest,” The penalty for which is dismissal.
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18. As protest rallies in front of government offices such as in the following cases:
Toyota Motor Phils. Corp. Workers Association [TMPCWA] v. NLRC, where the Supreme Court
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ruled that the protest rallies staged by the employees from February 21 to 23, 2001 in front of the offices
of the Bureau of Labor Relations (BLR) and the DOLE Secretary constitute illegal strike and not
legitimate exercise of their right to peaceably assemble and petition the government for redress of
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grievances. It was illegal for having been undertaken without satisfying the mandatory pre-requisites for a
valid strike under Article 263 of the Labor Code.
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The ruling in Toyota was cited in Solidbank Corporation v. Gamier, as basis in declaring the protest
action of the employees of petitioner Solidbank which was staged in front of the Office of the DOLE
Secretary in Intramuros, Manila, as constitutive of illegal strike since it paralyzed the operations of the
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bank. The protest action in this case was conducted because of the CBA deadlock.
19. As welga ng bayan which is in the nature of a general strike as well as an extended sympathy strike.
d. Prohibited acts during strike

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• Participation in the commission of illegal acts during a strike
o Legality or illegality of strike, immaterial.
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▪ As far as liability for commission of illegal acts during the strike is concerned, the issue of legality or illegality
of the strike is irrelevant. As long as the union officer or member commits an illegal act in the course
of the strike, be it legal or illegal, his employment can be validly terminated.
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o Meaning of “illegal acts.”
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▪ The term “illegal acts” under Article 264(a) may encompass a number of acts that violate existing labor
or criminal laws, such as the following:
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• (1) Violation of Article 264(e) of the Labor Code which provides that “[n]o person engaged in
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picketing shall commit any act of violence, coercion or intimidation or obstruct the free ingress to or
egress from the employer’s premises for lawful purposes, or obstruct public thoroughfares.”
• (2) Commission of crimes and other unlawful acts in carrying out the strike.
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• (3) Violation of any order, prohibition, or injunction issued by the DOLE Secretary or NLRC in
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connection with the assumption of jurisdiction or certification order under Article 263(g) of the Labor
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Code.
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This enumeration is not exclusive as jurisprudence abounds where the term “illegal acts” has been
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interpreted and construed to cover other breaches of existing laws.
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o Liability for illegal acts should be determined on an individual basis. For this purpose, the individual
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identity of the union members who participated in the commission of illegal acts may be proved thru affidavits
and photographs. Simply referring to them as “strikers,” or “complainants in this case” is not enough
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to justify their dismissal.

o Some principles on commission of illegal acts in the course of the strike.
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▪ Only members who are identified as having participated in the commission of illegal acts are
liable. Those who did not participate should not be blamed therefor
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▪ To effectively hold ordinary union members liable, those who participated in the commission of illegal
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acts must not only be identified but the specific illegal acts they each committed should be
described with particularity. r
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▪ If violence was committed by both employer and employees, the same cannot be cited as a ground to
declare the strike illegal.
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e. Liability of union officers and members for illegal strike and illegal acts during strike
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• Liability for declaration of illegality of strike and liability of ordinary workers for commission of illegal
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acts in the course of strike

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o Participation in lawful strike.

▪ An employee who participates in a lawful strike is not deemed to have abandoned his employment. Such
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participation should not constitute sufficient ground for the termination of his employment even if a
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replacement has already been hired by the employer during such lawful strike.
o Participation in illegal strike.
▪ Distinction in the liability between union officers and ordinary union members.
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a. Union officers.
The mere declaration of illegality of the strike will result in the termination of all union officers who
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knowingly participated in the illegal strike. Unlike ordinary members, it is not required, for purposes of
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termination, that the officers should commit an illegal act during the strike.
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However, absent any showing that the employees are union officers, they cannot be dismissed based solely
on the illegality of the strike.
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To illustrate how the “knowing participation” of union officers may be ascertained and established, the
following factors were taken into account in another 2011 case, Abaria v. NLRC, which led to the declaration
that they knowingly participated in the illegal strike:
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(1) Their persistence in holding picketing activities despite the declaration by the NCMB that their union
was not duly registered as a legitimate labor organization and notwithstanding the letter from the
federation’s legal counsel informing them that their acts constituted disloyalty to the national federation;
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and
(2) Their filing of the notice of strike and conducting a strike vote despite the fact that their union has no
legal personality to negotiate with their employer for collective bargaining purposes.
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b. Ordinary union members.
The mere finding or declaration of illegality of a strike will not result in termination of ordinary union members.
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For an ordinary union member to suffer termination, it must be shown by clear evidence that he has committed
illegal acts during the strike.
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o Reason for the distinction.
The reason for this distinction is that the union officers have the duty to guide their members to respect the law. If
instead of doing so, the officers urged the members to violate the law and defy the duly constituted authorities, their
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dismissal from the service is a just penalty or sanction for their unlawful act. Their responsibility as main players in
an illegal strike is greater than that of the ordinary union members and, therefore, limiting the penalty of dismissal
only to the former for their participation in an illegal strike is in order.
2. Picketing
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• “Picketing” is the act of workers in peacefully marching to and fro before an establishment involved in a
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labor dispute generally accompanied by the carrying and display of signs, placards and banners intended to
inform the public about the dispute.
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• Requisites for lawful picketing

o The requisites for a valid strike are not applicable to picketing.
o The most singular requirement to make picketing valid and legal is that it should be peacefully conducted.
o Based on the foregoing provision, the requisites may be summed up as follows:
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▪ 1. The picket should be peacefully carried out;
▪ 2. There should be no act of violence, coercion or intimidation attendant thereto;
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▪ 3. The ingress to (entrance) or egress from (exit) the company premises should not be obstructed; and
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▪ 4. Public thoroughfares should not be impeded.
• Right to picket is protected by the Constitution and the law.
o Unlike a strike which is guaranteed under the Constitutional provision on the right of workers to conduct
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peaceful concerted activities under Section 3, Article XIII thereof, the right to picket is guaranteed under
the freedom of speech and of expression and to peaceably assemble to air grievances under Section
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4, Article III (Bill of Rights) thereof.
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• Effect of the use of foul language during the conduct of the picket.
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o In the event the picketers employ discourteous and impolite language in their picket, such may not result in,
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or give rise to, libel or action for damages.
•
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Picketing vs. Strike.

(a) To strike is to withhold or to stop work by the concerted action of employees as a result of an industrial or
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labor dispute. The work stoppage may be accompanied by picketing by the striking employees outside of the
company compound.
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(b) While a strike focuses on stoppage of work, picketing focuses on publicizing the labor dispute and its incidents
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to inform the public of what is happening in the company being picketed.

(c) A picket simply means to march to and fro in front of the employer’s premises, usually accompanied by the
display of placards and other signs making known the facts involved in a labor dispute. It is but one strike
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activity separate and different from the actual stoppage of work.

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• Phimco Industries, Inc. v. Phimco Industries Labor Association (PILA). - While the right of employees
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to publicize their dispute falls within the protection of freedom of expression and the right to peaceably assemble
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to air grievances, these rights are by no means absolute. Protected picketing does not extend to blocking
ingress to and egress from the company premises. That the picket was moving, was peaceful and was
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not attended by actual violence may not free it from taints of illegality if the picket effectively blocked
entry to and exit from the company premises.
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• When picket considered a strike.

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o In distinguishing between a picket and a strike, the totality of the circumstances obtaining in a case should be
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taken into account.

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o Santa Rosa Coca-Cola Plant Employees Union v. Coca-Cola Bottlers Phils., Inc. - Petitioners contend
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that what they conducted was a mere picketing and not a strike. In disagreeing to this contention, the High
Court emphasized that it is not an issue in this case that there was a labor dispute between the parties as
petitioners had notified the respondent of their intention to stage a strike, and not merely to picket. Petitioners’
insistence to stage a strike is evident in the fact that an amended notice of strike was filed even as respondent
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moved to dismiss the first notice. The basic elements of a strike are present in this case: 106 members of
petitioner Union, whose respective applications for leave of absence on September 21, 1999 were disapproved,
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opted not to report for work on said date, and gathered in front of the company premises to hold a mass
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protest action. Petitioners deliberately absented themselves and instead wore red ribbons and carried placards
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with slogans such as: “YES KAMI SA STRIKE,” “PROTESTA KAMI,” “SAHOD, KARAPATAN NG
MANGGAGAWA IPAGLABAN,” “CBA-’WAG BABOYIN,” “STOP UNION BUSTING.” They
marched to and fro in front of the company’s premises during working hours. Thus, petitioners engaged in a
concerted activity which already affected the company’s operations. The mass concerted activity obviously
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constitutes a strike. Moreover, the bare fact that petitioners were given a Mayor’s permit is not conclusive
evidence that their action/activity did not amount to a strike. The Mayor’s description of what activities
petitioners were allowed to conduct is inconsequential. To repeat, what is definitive of whether the action
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staged by petitioners is a strike and not merely a picket is the totality of the circumstances surrounding the
situation.
• Petitioner union in the 2011 case of Leyte Geothermal Power Progressive Employees Union-ALU-TUCP
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v. Philippine National Oil Company – Energy Development Corporation, contends that there was no
stoppage of work; hence, they did not strike. Euphemistically, petitioner union avers that it “only engaged in
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picketing,” and maintains that “without any work stoppage, [its officers and members] only engaged in xxx
protest activity.” The Supreme Court, however, ruled that it was a strike and not picketing or protest activity that
petitioner union staged. It found the following circumstances in support of such finding:
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(1) Petitioner union filed a Notice of Strike on December 28, 1998 with the DOLE grounded on respondent’s
purported unfair labor practices, i.e., “refusal to bargain collectively, union busting and mass termination.”
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On even date, petitioner Union declared and staged a strike.
(2) The DOLE Secretary intervened and issued a Return-to-Work Order dated January 4, 1999, certifying the
labor dispute to the NLRC for compulsory arbitration. The Order indicated the following facts: (1) filing
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of the notice of strike; (2) staging of the strike and taking control over respondent’s facilities of its Leyte
Geothermal Project on the same day petitioner union filed the notice of strike; (3) attempts by the NCMB
to forge a mutually acceptable solution proved futile; (4) in the meantime, the strike continued with no
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settlement in sight placing in jeopardy the supply of much needed power supply in the Luzon and Visayas
grids.
(3) Petitioner union itself, in its pleadings, used the word “strike.”
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(4) Petitioner union’s asseverations are belied by the factual findings of the NLRC, as affirmed by the CA thus:
“The failure to comply with the mandatory requisites for the conduct of strike is both admitted and clearly
shown on record. Hence, it is undisputed that no strike vote was conducted; likewise, the cooling-off period
was not observed and that the 7-day strike ban after the submission of the strike vote was not complied
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with since there was no strike vote taken.”
• In fine, petitioner union’s bare contention that it did not hold a strike cannot trump the factual findings of the
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NLRC that petitioner union indeed struck against respondent. In fact, and more importantly, petitioner union
failed to comply with the requirements set by law prior to holding a strike.
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3. Lockouts (committed by employer)
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• “Lockout” means the temporary refusal by an employer to furnish work as a result of an industrial or labor
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dispute. It consists of the following:
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1. Shutdowns;
2. Mass retrenchment and dismissals initiated by the employer.
3. The employer’s act of excluding employees who are union members.
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a. Grounds for lockout
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• The law recognizes only 2 grounds in support of a valid lockout (same as strike), viz.:
1. Collective bargaining deadlock; and/or
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2. Unfair labor practice. Ba

b. Mandatory procedural requirement
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• Substantially similar requisites as in strike.

With a slight, insignificant variation, the procedural but mandatory requisites for a valid strike discussed above are
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substantially similar to those applicable for valid lockout. For purposes of ease and clarity, the same are presented as
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follows:
• 1st requisite - It must be based on a valid and factual ground;
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• 2nd requisite - A notice of lockout must be filed with the NCMB-DOLE;

• 3rd requisite - A notice must be served to the NCMB-DOLE at least twenty-four (24) hours prior to the
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taking of the lockout vote by secret balloting, informing said office of the decision to conduct a lockout vote,
and the date, place, and time thereof;
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• 4th requisite - A lockout vote must be taken where a majority of the members of the Board of Directors of
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the corporation or association or of the partners in a partnership obtained by secret ballot in a meeting called
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for the purpose, must approve it;

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• 5th requisite - A lockout vote report should be submitted to the NCMB-DOLE at least seven (7) days before
the intended date of the lockout;
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• 6th requisite - The cooling-off period of 15 days, in case of unfair labor practices of the labor organization,
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or 30 days, in case of collective bargaining deadlock, should be fully observed; and

• 7th requisite - The 7-day waiting period/lockout ban reckoned after the submission of the lockout vote report
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to the NCMB-DOLE should also be fully observed in all cases.

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4. Assumption of jurisdiction by the DOLE Secretary

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• The DOLE Secretary is granted under Article 263(g) of the Labor Code, the extraordinary police power of
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assuming jurisdiction over a labor dispute which, in his opinion, will cause or likely to cause a strike or lockout in an
industry indispensable to the national interest, or the so-called “national interest” cases. Alternatively, he may certify
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the labor dispute to the NLRC for compulsory arbitration.

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• When DOLE Secretary may assume or certify a labor dispute.

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• Article 278(g) [263(g)] of the Labor Code provides that when in the opinion of the DOLE Secretary, the
labor dispute causes or will likely to cause a strike or lockout in an industry indispensable to the
national interest, he is empowered to do either of 2 things:
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1. He may assume jurisdiction over the labor dispute and decide it himself; or
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2. He may certify it to the NLRC for compulsory arbitration, in which case, it will be the NLRC which
shall hear and decide it.
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• This power may be exercised by the DOLE Secretary even before the actual staging of a strike or lockout
since Article 278(g) [263(g)] does not require the existence of a strike or lockout but only of a labor dispute
involving national interest.
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a. Industry indispensable to national interest

• What constitutes a national interest case?
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• The Labor Code vests in the DOLE Secretary the discretion to determine what industries are indispensable
to the national interest. Accordingly, upon the determination by the DOLE Secretary that such industry is
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indispensable to the national interest, he has authority to assume jurisdiction over the labor dispute in the
said industry or certify it to the NLRC for compulsory arbitration.
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• Past issuances of the DOLE Secretary have not made nor attempted to mention specifically what the
industries indispensable to the national interest are. It was only in Department Order No. 40-H-13, Series of 2013,
that certain industries were specifically named, thus:
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“Section 16. Industries Indispensable to the National Interest. – For the guidance of the
workers and employers in the filing of petition for assumption of jurisdiction, the following
industries/services are hereby recognized as deemed indispensable to the national interest:
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a. Hospital sector;
b. Electric power industry;
c. Water supply services, to exclude small water supply services such as
al bottling and refilling stations;
d. Air traffic control; and
e. Such other industries as may be recommended by the National Tripartite
Industrial Peace Council (TIPC).”
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o Obviously, the above enumerated industries are not exclusive as other industries may be considered
indispensable to the national interest based on the appreciation and discretion of the DOLE Secretary or as
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may be recommended by TIPC.

• Different rule on strikes and lockouts in hospitals, clinics and medical institutions.
o As a general rule, strikes and lockouts in hospitals, clinics and similar medical institutions should be avoided.
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o In case a strike or lockout is staged, it shall be the duty of the striking union or locking-out employer to
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provide and maintain an effective skeletal workforce of medical and other health personnel whose
movement and services shall be unhampered and unrestricted as are necessary to insure the proper and
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adequate protection of the life and health of its patients, most especially emergency cases, for the duration of
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the strike or lockout.
o The DOLE Secretary may immediately assume, within twenty four (24) hours from knowledge of the
occurrence of such a strike or lockout, jurisdiction over the same or certify it to the NLRC for compulsory
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arbitration.
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b. Effects of assumption of jurisdiction
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• Some principles on assumption/certification power of the DOLE Secretary.
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o Prior notice and hearing are not required in the issuance of the assumption or certification order.
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o The DOLE Secretary may seek the assistance of law enforcement agencies like the Philippine National Police
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to ensure compliance with the provision thereof as well as with such orders as he may issue to enforce the
same.
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• Return-to-work order
o It is a STATUTORY PART AND PARCEL of assumption/certification order even if not expressly
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stated therein.
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o The moment the DOLE Secretary assumes jurisdiction over a labor dispute involving national interest or
certifies it to the NLRC for compulsory arbitration, such assumption or certification has the effect of
automatically enjoining the intended or impending strike or, if one has already been commenced, of
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automatically prohibiting its continuation. The mere issuance of an assumption or certification order
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automatically carries with it a return-to-work order, even if the directive to return to work is not expressly
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stated therein. It is thus not necessary for the DOLE Secretary to issue another order directing the strikers to
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return to work.
o It is error therefore for striking workers to continue with their strike alleging absence of a return-to-work
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order since Article 263(g) is clear that once an assumption/certification order is issued, strikes are enjoined
or, if one has already taken place, all strikers should immediately return to work.
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o Nature of return-to-work order

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▪ Return-to-work order is compulsory and immediately executory in character. It should be strictly

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complied with by the parties even during the pendency of any petition questioning its validity in order to
maintain the status quo while the determination is being made. Filing of a motion for reconsideration
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does not affect the enforcement of a return-to-work order which is immediately executory.
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▪ Some principles on return-to-work order.

• The issue of legality of strike is immaterial in enforcing the return-to-work order.
• Upon assumption or certification, the parties should revert to the status quo ante litem which refers
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to the state of things as it was before the labor dispute or the state of affairs existing at the time of
the filing of the case. It is the last actual, peaceful and uncontested status that preceded the actual
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controversy.
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• To implement the return-to-work order, the norm is actual reinstatement. However, payroll
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reinstatement in lieu of actual reinstatement may properly be resorted to when special

circumstances exist that render actual reinstatement impracticable or otherwise not conducive to
attaining the purposes of the law.
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Example: University of Sto. Tomas v. NLRC, where the teachers ordered to return to work could not be given
back their academic assignments since the return-to-work order of the DOLE Secretary was issued in the middle
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of the first semester of the academic year. The Supreme Court affirmed the validity of the payroll reinstatement
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order of the NLRC and ruled that the NLRC did not commit grave abuse of discretion in providing for the
alternative remedy of payroll reinstatement. It observed that the NLRC was only trying its best to work out a
satisfactory ad hoc solution to a festering and serious problem.
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• Nature of assumption order or certification order

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o A police power measure

▪ The power to issue assumption or certification orders is an extraordinary authority granted to the
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President and to his alter ego, the DOLE Secretary, the exercise of which should be strictly limited to
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national interest cases. It is in the nature of a police power measure. This is done for the promotion
of the common good considering that a prolonged strike or lockout can be inimical to the national
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economy. It is to protect the NATIONAL INTEREST and not for the protection of labor nor of
capital.
• Effect of defiance or assumption or certification orders on employment of defiant workers
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o Defiance of the order, a valid ground to dismiss.
▪ The defiance by the union, its officers and members of the Labor Secretary's assumption of jurisdiction
or certification order constitutes a valid ground for dismissal.
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▪ The following are the justifications:
1. A strike that is undertaken after the issuance by the DOLE Secretary of an assumption or
certification order becomes a prohibited activity and thus illegal. The defiant striking union
al officers and members, as a result, are deemed to have lost their employment status for having
knowingly participated in an illegal strike.
2. From the moment a worker defies a return-to-work order, he is deemed to have abandoned
his job.
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3. By so defying, the workers have forfeited their right to be readmitted to work.
• All defiant strikers, regardless of whether they are officers or ordinary members, are deemed dismissed.
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o Once the DOLE Secretary assumes jurisdiction over a labor dispute or certifies it to the NLRC for compulsory
arbitration, such jurisdiction should not be interfered with by the application of the coercive processes of a
strike or lockout. Any defiance thereof is a valid ground for the loss of employment status.
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• Period of defiance of the return-to-work order, not material.
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o The length of time within which the return-to-work order was defied by the strikers is not significant in
determining their liability for the legal consequences thereof. The following cases are illustrative of this rule:
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▪ a. University of San Agustin Employees’ Union-FFW v. The CA. - The period of defiance was less
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than nine (9) hours from 8:45 a.m. to 5:25 p.m. on September 19, 2003.
▪ b. Federation of Free Workers v. Inciong. - The period of defiance was only nine (9) days.
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• Some principles on defiance of the Assumption/Certification order.
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o The assumption/certification order may be served at any time of the day or night.
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o No practice of giving 24 hours to strikers within which to return to work. There is no law or jurisprudence
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recognizing this practice.
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o The defiant strikers could be validly replaced.

o The refusal to acknowledge receipt of the assumption/certification orders and other processes is an
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apparent attempt to frustrate the ends of justice, hence, invalid. The union cannot be allowed to thwart the
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efficacy of the said orders issued in the national interest through the simple expediency of refusing to
acknowledge receipt thereof.
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5. Injunctions
As a general rule, strikes and lockouts validly declared enjoy the protection of law and cannot be enjoined unless illegal
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acts are committed in the course of such strikes or lockouts. Ordinarily, the law vests in the NLRC the authority to issue
injunctions to restrain the commission of illegal acts during strikes and pickets. This general prohibition holds true although it
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may appear to be illegal in character because a strike is treated as a weapon that the law guarantees to employees for the
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advancement of their interest and for their protection.

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However, the Supreme Court has ruled in the following cases that the strike itself may be enjoined:
1. San Miguel Corporation v. NLRC, where the strike was based on non-strikeable grounds, that is, for failing to exhaust
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all the steps in the grievance machinery and arbitration proceedings provided in the CBA;
2. Ilaw at Buklod ng Manggagawa v. NLRC, where the strike was held in violation of the law, R.A. No. 6727 which
prohibits the conduct of strike grounded on wage distortion;
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3. Bulletin Publishing v. Sanchez, where the strike was held to compel the employer to ignore the law; and
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4. San Miguel Corporation v. NLRC, where the strike was staged after the notice of strike had been converted into a
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preventive mediation case.

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MAJOR TOPIC 5
TERMINATION OF EMPLOYMENT
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A. SECURITY OF TENURE
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1. Categories of employment as to tenure
a. Regular
• How does one become a regular employee?
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Under the Labor Code, regular employment may be attained in either of three (3) ways, namely:
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.
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2. By period of service. - The employment 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.
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3. By probationary employment. - The employment is considered regular when the employee is allowed to
work after a probationary period.
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• Is the manner or method of paying wage material in determining regularity of employment?

No. The manner and method of payment of wage or salary is immaterial to the issue of whether the employee is
regular or not. So, the fact that an employee is paid on a daily basis or monthly basis is inconsequential on the regularity
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issue.
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b. Casual
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• What is the most important distinguishing feature of casual employment?
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The most important distinction is that the work or job for which he was hired is merely incidental to the principal
business of the employer and such work or job is for a definite period made known to the employee at the time of
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engagement.
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Capule v. NLRC, Yakult Philippines, Inc., G.R. No. 90653, Nov. 12, 1990.
Private respondent company is engaged in the manufacture of cultured milk which is sold under the
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brand name “Yakult.” Petitioners were hired to cut cogon grass and weeds at the back of the factory
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building used by private respondents. They were not required to work on fixed schedule and they
worked on any day of the week on their own discretion and convenience. They were held to be casual
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employees because cutting cogon grass and weeds is but incidental to the principal business of the
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company.
• When does a casual employee become regular?
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Casual employee becomes regular after one year of service by operation of law. The one (1) year period should be
reckoned from the hiring date. Repeated rehiring of a casual employee makes him a regular employee.
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c. Probationary
• Is the period of 6 months in the law on probationary employment (Article 296 [281], LC) the minimum
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or maximum period?
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The answer is it is neither the minimum nor the maximum period of probationary employment. The 6-month period
is mentioned in the law for purposes of setting the standard period. Proof that it is not the maximum is the case of
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Buiser v. Leogardo where the probationary period of 18 months was considered reasonable. In other words,
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probationary period may be for a day, a week, a month or several months, depending on the reasonable discretion of
management.
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• How is probationary period, say, of 6 months computed?

The 6-month probationary period should be reckoned “from the date of appointment up to the same calendar
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date of the 6th month following.”

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• May probationary period be extended?

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Yes, but only upon the mutual agreement in writing by the employer and the probationary employee.
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• What is the effect of allowing a probationary employee to work beyond the probationary period?
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He is considered a regular employee.

• What is the effect if there is no written contract providing for probationary employment?
If there is no written contract, the employee is considered a regular employee from day one of his employment. And
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even if there is one, he is deemed regular if there is no stipulation on probationary period.

• What is the distinction between probationary employment and fixed-term employment?
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The distinction lies in the intention of the parties. If the parties intend to make their relationship regular after the
lapse of the period, say of 6 months, then what is contemplated is probationary employment; if there is no such
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intention of the parties, then, what they have entered into is simply a fixed-term contract.
• What are the grounds to terminate probationary employment?
Under Article 281, a probationary employee may be terminated only on three (3) grounds, to wit:
1. For a just cause; or
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2. For authorized cause; or

3. When the probationary employee fails to qualify as a regular employee in accordance with reasonable
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standards made known by the employer to the employee at the start of the employment.
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• Is procedural due process required in termination of probationary employment?

Yes, but only in the case of Numbers 1 and 2 above.
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Due process for Number 3 is different and unique in the sense that it requires simply the service of a written notice
of termination, not verbal, informing the probationary employee of the termination of his probationary employment
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and attaching thereto the result of the performance evaluation conducted on him. As clearly pointed out above, it is
a fundamental requirement that the reasonable standards expected of the employee during his probationary
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employment was made known to him at the time of his engagement. Necessarily, at the termination thereof, the
supposed performance evaluation should be presented to him. As a matter of due process, an employee has the right
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to know whether he has met the standards for which his performance was evaluated. Should he fail, he also has the
right to know the reasons therefor.
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• When should termination of probationary employment be made?
Termination to be valid must be done prior to lapse of probationary period. Termination a day or a few days after
the lapse of the probationary period cannot be done without just or authorized cause as he has already become a
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regular employee by that time.
d. Project
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• What is the litmus test of project employment?
The litmus test of project employment, as distinguished from regular employment, is whether or not the project
employees were assigned to carry out a specific project or undertaking, the duration and scope of which were
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specified at the time the employees were engaged for that project.
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A true project employee should be assigned to a project which begins and ends at determined or determinable times
and be informed thereof at the time of hiring.
• What are the 6 indicators of project employment?

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Either one or more of the following circumstances, among others, may be considered as indicator/s that an
employee is a project employee:
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1. The duration of the specific/identified undertaking for which the worker is engaged is reasonably
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determinable.
2. Such duration, as well as the specific work/service to be performed, are defined in an employment agreement
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and is made clear to the employee at the time of hiring.
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3. The work/service performed by the employee is in connection with the particular project or undertaking
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for which he is engaged.
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4. The employee, while not employed and awaiting engagement, is free to offer his services to any other
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employer. Ba
5. A report of the termination of employment in the particular project/undertaking is submitted to the DOLE
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Regional Office having jurisdiction over the workplace, within thirty (30) days following the date of his
separation from work.
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6. An undertaking in the employment contract by the employer to pay completion bonus to the project
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employee as practiced by most construction companies.

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• Is length of service material in determining validity of project employment?

No. Length of service is not a controlling determinant of employment tenure.
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• What are some principles on project employment?

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1. Project employees should be informed of their status as such at inception of the employment relationship. r
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2. There must be a written contract of project employment stating the duration of the project employment as
well as the particular work or service to be performed. A written project employment contract is an
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indispensable requirement.
3. Intervals in employment contracts indicate project employment.
4. Continuous, as opposed to intermittent, rehiring shows that employee is regular.
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5. “Project-to-project” basis of employment is valid.

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• On termination of project employment.

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1. Project employees enjoy security of tenure only during the term of their project employment.
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2. Project employees have presumably become regular employees if they are allowed to work beyond the
completion of the project or any phase thereof to which they were assigned or after the “day certain” which
they and their employer have mutually agreed for its completion. Having become regular employees, they can
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no longer be terminated on the basis of the completion of the project or any phase thereof to which they were
deployed.
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e. Seasonal
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• Can a seasonal employee become a regular seasonal employee?

Yes, provided the following requisites are complied with:
1. The seasonal employee should perform work or services that are seasonal in nature; and
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2. They must have also been employed for more than one (1) season.
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• Can a regular seasonal worker file an illegal dismissal case in the event he is not hired for the next
season?
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Yes. The reason is, being a regular seasonal employee, the employer should re-hire him in the next season. During
off-season, his employment is deemed suspended and he is considered as being on leave of absence without pay.
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f. Fixed-term
• What are the requisites in order for fixed-term employment to be valid?
ie
The two (2) requisites or criteria for the validity of a fixed-term contract of employment are as follows:
1. The fixed period of employment was knowingly and voluntarily agreed upon by the parties, without
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any force, duress or improper pressure being brought to bear upon the employee and absent any other
circumstances vitiating his consent; or
2. It satisfactorily appears that the employer and employee dealt with each other on more or less equal terms
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with no moral dominance whatever being exercised by the former on the latter.
• Is fixed-term employment valid if the job is directly related to the principal business of the employer?
Yes. Fixed-term employment is the only exception to the rule that one becomes regular if he is made to perform
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activities directly related to the principal business of the employer (Regularity by virtue of nature of work).
Thus, it was ruled in Philippine Village Hotel v. NLRC, that the fact that private respondents were required to render
n
services necessary or desirable in the operation of petitioner’s business for the duration of the one-month dry-run
operation period, did not in any way impair the validity of their contracts of employment which specifically stipulated
io
that their employment was only for one (1) month.
• When does a fixed-term employee become regular?

1. When he is allowed to work beyond the agreed fixed term.
ss
e
2. When there are successive renewals of fixed-period contracts.
i
• What is the 555 Doctrine?
fe
ev
The 555 Doctrine is a scheme of the employer in hiring workers on a uniformly fixed 5-month basis and replacing
them upon the expiration of their contracts with other workers with the same employment status circumvents their
right to security of tenure.
o
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g. Work-pool employees
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Pr
• “Work pool” refers to a group of workers from which an employer like a construction company draws the workers it
r
Ba
deploys or assigns to its various projects or any phase/s thereof. There is, however, no compulsion for employers to
create a work pool. They may or may not form a work pool.
• Members of a “work pool” may consist of:
Ba
s
(1) Non-project employees or employees for an indefinite period. If they are employed in a particular project, the
es
completion of the project or of any phase thereof will not mean severance of employer-employee relationship.
e
(2) Project employees. These workers in the work pool who are employed in a particular project or in any phase
thereof are considered as such if they are free to leave anytime and offer their services to other employers.
bl
• Mere membership in work pool, not sufficient to make one a regular employee
Under the concept of “work pool,” project employees may or may not be members of a work pool (that is, the employer
li
may or may not have formed a work pool at all). In fact, employees who are members of a “work pool” from which
o
a company draws workers for deployment to its different projects do not become regular employees by reason of that
fact alone. The Court has consistently held that members of a “work pool” can either be project employees or regular r
n
Ba
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non-project employees.
• Cases where membership in the work pool tantamounts to regular employment: The case of Fegurin v. NLRC
O
an
and Francisco Cacho & Co., Inc., illustrates a situation where the workers were declared as regular employees because they
were members of a work pool. Respondent has not rebutted petitioners’ averments that they had been employed for
et
several years before their services were terminated and that they were performing activities usually necessary or desirable
es
in the usual business of the company. The Supreme Court held that considering the nature of the work of petitioners,
h
that of carpenter, laborer or mason, their respective jobs would actually be continuous and on-going. When a project
to which they are individually assigned is completed, they would be assigned to the next project or a phase thereof. In
rn
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other words, they belonged to a "work pool" from which the company would draw workers for assignment to other
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projects at its discretion. They are, therefore, actually "non-project employees."

• Cases where non-membership in the work pool was considered indicative of project employment:
Rada v. NLRC and Philnor Consultants and Planners, Inc.: petitioner was hired as driver for the construction project of
o
o
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private respondent. His contract as such was renewed several times for a total of 8 years. In ruling that petitioner is
not a regular but a project employee, the High Court emphasized the fact that he does not belong to a “work pool”
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from which Philnor would draw workers for assignment to other projects at its discretion. It was likewise apparent
In
from the facts obtaining herein that petitioner was utilized only for one particular project of Philnor. Hence, his
an
termination was declared valid by reason of the completion of the project and the expiration of his employment
contract.
o Philippine National Oil Company-Energy Development Corporation v. NLRC and Francisco Mata: involving private respondent
Mata, a service driver hired by petitioner for a project. He worked there for almost 5 years before he was terminated.
es
h
Thus, it is clear that private respondent Mata is a project employee considering that he does not belong to a "work
pool" from which petitioner PNOC would draw workers for assignment to other projects at its discretion. It is
likewise apparent from the facts of the case that Mata was utilized only for one particular project, the well-completion
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project which was part of the exploration stage of the PNOC Bacon-Manito Geothermal Project. Hence, Mata can
be dismissed upon the termination of the projects as there would be no need for his services. Petitioner cannot be
expected to continue on hiring Mata in the other phases of the project when his services will no longer be needed.
o
• A “work pool” may exist although the workers in the pool do not receive salaries and are free to seek other employment
during temporary breaks in the business, provided that the worker shall be available when called to report for a project.
• There is no impediment to apply the underlying principles involving employees in a “work pool” to industries other than
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the construction industry. Thus, it may be applied to the motion picture industry. Neither may it be argued that a
substantial distinction exists between the projects undertaken in the construction industry and the motion picture
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industry. On the contrary, the raison d’ être of both industries concerns projects with a foreseeable suspension of work.
The same “work pool” principle was applied to a case of a data encoder employed in a corporation engaged in the
ie
business of data encoding and keypunching who entered into 13 separate employment contracts with the latter, each
contract lasting only for a period of 3 months.
ev
2. Legitimate subcontracting v. labor-only contracting
a. Elements
• What are the elements of legitimate job contracting?
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(NOTE: The following THREE (3) words are very important: MANNER & METHOD and RESULT in
determining the elements of legitimate job contracting arrangement).
(a) The contractor is engaged in a distinct and independent business and undertakes to perform the
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job or work on its own responsibility, according to its own MANNER AND METHOD;
(b) The contractor has substantial capital to carry out the job farmed out by the principal on his own
account, MANNER AND METHOD, investment in the form of tools, equipment, machinery
and supervision;
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(c) In performing the work farmed out, the contractor is free from the CONTROL and/or direction of
the principal in all matters connected with the performance of the work EXCEPT as to the RESULT
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thereto; and
(d) The Service Agreement ensures compliance with all the rights and benefits for all the employees
of the contractor under labor laws.
ss
Absence of any of the foregoing requisites makes it a labor-only contracting arrangement.
e
Therefore:
i
fe
ev
o If the first party has control over the manner and method of performing the job or work, including its
result, and the second party who supplied the workers to the first party to perform the job or work has
no such control over such manner and method, then the first party is the direct employer of the workers
o
supplied by the second party to perform the job or work and the second party shall not be considered as
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a legitimate “contractor” but a “labor-only contractor.”
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Contrarily, if the first party has NO control over the manner and method of performing the job or work
Pr
o
as such control thereover is reposed on the second party, and the first party’s interest pertains only to the
r
Ba
result of the performance of the job or work, then there exists here a legitimate job contracting
arrangement where the first party is considered the principal and the second party, the contractor.
Ba
NOTE: “Substantial capital” and “investment in tools, etc.” are two separate requirements.
s
“Substantial capital” and “investment in tools, equipment, implements, machineries and work premises” should be treated as two
es
(2) distinct and separate requirements in determining whether there is legitimate job contracting arrangement. It is
enough that only one of these two requisites is complied with to make the job contracting arrangement legitimate and
e
valid.
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• May individuals engage in legitimate job contracting?

Yes. Legitimate job contracting may not only be engaged by corporations, partnerships or single proprietorships.
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Individuals may become legitimate job contractors themselves for as long as they have SPECIAL SKILLS,
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TALENTS or EXPERTISE which are considered equivalent of the requirement regarding “INVESTMENT IN
TOOLS.” r
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R
• Are individuals engaged as legitimate job contractors required to fulfill the requisites of legitimate job
O
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contracting as afore-described?
NO. They need not be registered as independent contractors with DOLE; they need not have substantial capital (such
as the P5 Million stated above). All that they are required is to have their tools consisting of SPECIAL SKILLS,
et
TALENT or EXPERTISE.
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• What are examples of individuals as independent contractors?

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1. Sonza v. ABS-CBN Broadcasting Corporation - TV and radio talents and others with special talents and skills
may not be employees but legitimate independent contractors.
2. Orozco v. The Fifth Division of the Honorable Court of Appeals - A newspaper columnist is not an
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employee but an independent contractor of the newspaper publishing the column.

te
3. Jose Mel Bernarte v. Philippine Basketball Association - Basketball referee is an independent contractor.
4. Semblante and Pilar v. CA, Gallera de Mandaue, et al. - Cockpit masiador and sentenciador are independent
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contractors.
In
5. Escasinas v. Shangri-la’s Mactan Island Resort - A doctor may be engaged as an independent contractor.
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(2) Labor-only Contracting

• Is labor-only contracting allowed under the law?
es
NO, it is absolutely prohibited.

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• What are the elements of labor-only contracting?

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(a) The contractor does not have either (i) SUBSTANTIAL CAPITAL or (ii) INVESTMENTS in the form
of tools, equipment, machineries, supervision, work premises, among others, AND the contractor's
employees recruited and placed are performing activities which are DIRECTLY RELATED to the main
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business operation of the principal;

- OR-
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(b) The contractor does not exercise the right to CONTROL over the performance of the work of the
employee.
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NOTE: There is labor-only contracting even if only one of the two (2) elements above is present. Further, an
unregistered contractor is presumed to be a labor-only contractor. Registration as independent contractor should be
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made with the DOLE.
• What are the EFFECTS of labor-only contracting?
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1. The labor-only contractor will be treated as the agent or intermediary of the principal. Since the act of an agent
is the act of the principal, representations made by the labor-only contractor to the employees will bind the
principal.
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2. The principal will become the direct employer as if it directly employed the workers supplied by the labor-only
contractor to undertake the contracted job or service. The principal will be responsible to them for all their
entitlements and benefits under labor laws.
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3. The principal and the labor-only contractor will be solidarily treated as the direct employer.
• What are the distinctions between legitimate job contracting and labor-only contracting?
n
The chief distinctions between legitimate job contracting, on the one hand, and the prohibited labor-only
contracting, on the other, may be summed up as follows:
io
1. In the former, no employer-employee relationship exists between the contractual employees of the job
contractor and the principal; while in the latter, an employer-employee relationship is created by law between the
principal and the employees supplied by the labor-only contractor.
ss
2. In the former, the principal is considered only an “indirect employer”; while in the latter, the principal is
e
considered the “direct employer” of the employees supplied by the labor-only contractor.
i
3. In the former, the solidary obligation of the principal and the legitimate job contractor is only for a limited
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ev
purpose, that is, to pay the wages of the contractor’s employees supplied to the principal.. Other than this
obligation of paying the wages, the principal is not responsible for any claim made by the contractor’s employees;
while in the latter, the principal becomes solidarily liable with the labor-only contractor to the latter’s employees
o
in the same manner and extent that the principal is liable to employees directly hired by him/her.
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b. Trilateral relationship
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• What is meant by trilateral relationship?
Ba
As distinguished from employment relationship which is “bilateral” in nature, involving as it does only two (2)
Ba
parties, namely: (1) the employer, and (2) the employee, in legitimate job contracting, it is “trilateral” in character,
s
there being three (3) parties involved, to wit:

1. The principal who farms out a job, work or service to a contractor;
es
2. The contractor who has the capacity to independently undertake the performance of the job, work or service;
e
and
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3. The contractor’s workers engaged by the contractor and farmed out to the principal to accomplish the job,
work or service.
li
• What are the contracts involved in this trilateral relationship?

o
Only two (2) contracts are involved, namely:

1) Service Agreement between the principal and the contractor wherein the obligation arising therefrom is civil r
n
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in nature and thus cognizable by the regular courts.

2) Employment contract between the contractor and its workers supplied to the principal.
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• Is there any employment relationship and/or contractual relationship between the principal and the
contractor’s workers farmed out to the principal?
et
None. There is no employment relationship nor any form of contractual relationship of whatsoever nature between
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the principal and the workers supplied by the contractor. Hence, the principal can ask the contractor to remove any
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of the latter’s employees assigned or farmed out to it anytime without need to observe due process.
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c. Solidary liability
• Solidary Liability of indirect employer with contractor (Article 109, Labor Code)
Every employer or indirect employer shall be held responsible with his contractor or subcontractor for any violation
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of any provision of this Code. For purposes of determining the extent of their civil liability, they shall be considered
as direct employers.
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• The principal will become the direct employer as if it directly employed the workers supplied by the labor-only
contractor to undertake the contracted job or service It will be responsible to them for all their entitlements and
In
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benefits under labor laws. This is so because a finding that a contractor is a labor-only contractor is equivalent to
a declaration that there is an employer-employee relationship between the principal and the workers of the labor-
only contractor.
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B. TERMINATION BY EMPLOYER
h
• What is meant by TWO-FOLD DUE PROCESS requirement?

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Dismissal of employees requires the observance of the two-fold due process requisites, namely:
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1. Substantive aspect which means that the dismissal must be for any of the (1) just causes provided under
the Labor Code or the company rules and regulations promulgated by the employer; or (2) authorized causes
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under the Labor Code; and

2. Procedural aspect which means that the employee must be accorded both STATUTORY DUE PROCESS
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AND CONTRACTUAL DUE PROCESS.

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1. Substantive due process
a. Just causes
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• What are the just causes under the Labor Code?
The just causes in the Labor Code are found in the following provisions thereof:
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(1) Article 297 [282] - (Termination by the Employer) which provides for the following grounds:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or
representative in connection with his work;
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(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized
representative;
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(d) Commission of a crime or offense by the employee against the person of his employer or any immediate
member of his family or his duly authorized representatives; and
(e) Other causes analogous to the foregoing.
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(2) Article 279(a) [264(a)] - (Prohibited Activities) which provides for the termination of the following:
(a) Union officers who knowingly participate in an illegal strike and therefore deemed to have lost their
io
employment status.
(b) Any employee, union officer or ordinary member who knowingly participates in the commission of illegal
acts during a strike (irrespective of whether the strike is legal or illegal), is also deemed to have lost his
ss
employment status.
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(3) Article 278(g) [263(g)] - (National Interest Cases) where strikers who violate orders, prohibitions and/or
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injunctions as are issued by the DOLE Secretary or the NLRC, may be imposed immediate disciplinary action,
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including dismissal or loss of employment status.
(4) Article 259(e) [248(e)] - (Union Security Clause) where violation of the union security agreement in the CBA
o
may result in termination of employment. Under this clause, the bargaining union can demand from the
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employer the dismissal of an employee who commits a breach of union security arrangement, such as failure
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to join the union or to maintain his membership in good standing therein. The same union can also demand
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the dismissal of a member who commits an act of disloyalty against it, such as when the member organizes a
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Ba
rival union. Ba
• Is dismissal based on Company Code of Discipline or Company Rules and Regulations illegal?
s
No.
es
In Sampaguita Auto Transport Corporation v. NLRC, the Supreme Court pronounced that the Court of Appeals
e
erred in ruling that the dismissal of private respondent, a bus driver of petitioner, was illegal because the “grounds
upon which petitioners based respondent’s termination from employment, viz.: ‘hindi lahat ng schedule nailalabas,’
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[‘]mababa ang revenue ng bus, laging kasama an[g] asawa sa byahe’ and ‘maraming naririnig na kwento tungkol sa kanya, nag-uutos
ng conductor para kumita sa hindi magandang paraan[,]’ xxx are not among those enumerated under Article 297 [282] of the
li
Labor Code as just causes for termination of employment.” The irregularities or infractions committed by private
o
respondent in connection with his work as a bus driver constitute serious misconduct or, at the very least, conduct
analogous to serious misconduct, under the above-cited Article 297 [282] of the Labor Code. The requirement in the r
n
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company rules that: ‘3. to obey traffic rules and regulations as well as the company policies. 4. to ensure the
safety of the riding public as well as the other vehicles and motorist (sic)’ is so fundamental and so universal
O
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that any bus driver is expected to satisfy the requirement whether or not he has been so informed.
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(2) SERIOUS MISCONDUCT

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• Requisites.
h
For misconduct or improper behavior to be a just cause for dismissal, the following requisites must concur:
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1. It must be serious; and

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2. It must relate to the performance of the employee’s duties; and

3. It must show that he has become unfit to continue working for the employer.
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All the above three (3) requisites must concur.

• Some principles on serious misconduct
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o Serious misconduct implies that it must be of such grave and aggravated character and not merely trivial
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or unimportant.
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o Simple or minor misconduct would not justify the termination of the services of an employee.
o Possession or use of shabu or other drugs is a valid ground to terminate employment.
o Immorality, as a general rule, is not a just ground to terminate employment. The exception is when
such immoral conduct is prejudicial or detrimental to the interest of the employer.
es
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o Immoral act committed beyond office hours is a valid ground to terminate employment.
o Sexual intercourse inside company premises constitutes serious misconduct.
o The act of a 30-year old lady teacher in falling in love with a 16-year old student is not immoral.
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o Fighting is a ground for termination but only the instigator or aggressor and not the victim who was
constrained to defend himself should be dismissed.
o Challenging superiors to a fight is a just cause for termination.
o
o Assaulting another employee is a just cause for termination.

o Utterance of obscene, insulting or offensive words constitutes serious misconduct.
o Gambling within company premises is a serious misconduct.
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o Rendering service to business rival is a just cause to terminate employment.

o Selling products of a competitor is a just cause for termination.
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o Organizing a credit union by employees in a bank is a serious misconduct.
o Deceiving a customer for personal gain is a just cause for termination.
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o Contracting work in competition with employer constitutes serious misconduct.
o Intoxication which interferes with the employee’s work constitutes serious misconduct.
o The act of a teacher in pressuring a colleague to change the failing grade of a student is serious
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misconduct.
o Sexual harassment is a just ground to dismiss.
o Sleeping while on duty is a ground for termination.
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o Dismissal is too harsh a penalty for eating while at work.
o Pilferage or theft of company-owned property is a just cause to terminate.
o Theft of funds or property not owned by employer is not a ground to terminate.
o
o al
Act of falsification is a valid ground to terminate employment.
Punching-in of time cards of other employees is a just cause for termination.
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(3) INSUBORDINATION OR WILLFUL DISOBEDIENCE OF LAWFUL ORDERS
• Requisites
io
One of the fundamental duties of an employee is to obey all reasonable rules, orders and instructions of the
employer. In order to validly invoke this ground, the following requisites must be complied with, to wit:
1. The employee’s assailed conduct must have been willful or intentional, the willfulness being characterized
by a wrongful and perverse attitude; and
ss
e
2. The order violated must be based on a reasonable and lawful company rule, regulation or policy and made
known to the employee and must pertain to the duties for which he has been engaged to discharge.
i
fe
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• Some principles on insubordination.
o Making false allegations in complaint does not constitute insubordination.
o
o Failure to answer memo to explain constitutes willful disobedience.
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o Another notice is required in case of termination on the ground of failure to answer memo to explain.
o Refusal to undergo random drug testing constitutes both serious misconduct and
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Pr
insubordination.
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Ba
o Refusal to render overtime to meet production deadline constitutes insubordination.

o Refusal to comply with a lawful transfer constitutes insubordination.
Ba
s
(4) GROSS AND HABITUAL NEGLECT OF DUTIES

• Requisites.
es
The following are the requisites:

e
(1) There must be negligence which is gross and/or habitual in character; and
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(2) It must be work-related as would make him unfit to work for his employer.
• Some principles on gross and habitual neglect of duties.
li
o Simple negligence is not sufficient to terminate employment.

o
o The negligence must be gross in character which means absence of that diligence that an ordinarily prudent
man would use in his own affairs.
r
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o As a general rule, negligence must be both gross and habitual to be a valid ground to dismiss.
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o Habituality may be disregarded if negligence is gross or the damage or loss is substantial. “Habitual negligence”
O
implies repeated failure to perform one’s duties for a period of time, depending upon the circumstances.
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o Actual damage, loss or injury is not an essential requisite.

o Gross negligence may result to loss of trust and confidence.
et
o Absences, if authorized, cannot be cited as a ground to terminate employment.

es
o Tardiness or absenteeism, if not habitual, cannot be cited as a ground to terminate employment.

h
o Tardiness or absenteeism, if habitual, may be cited as a ground to terminate employment.

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o Tardiness or absenteeism, if habitual, may be tantamount to serious misconduct.

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o Absences or tardiness due to emergency, ailment or fortuitous event are justified and may not be cited as
just cause to terminate employment.
o Unsatisfactory or poor performance, inefficiency and incompetence are considered just causes for
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dismissal only if they amount to gross and habitual neglect of duties.

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(5) ABANDONMENT OF WORK

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• Concept.
In
Abandonment is not provided for in the Labor Code but it is jurisprudentially considered a form of neglect of duty;
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hence, a just cause for termination of employment under Article 297(b) [282(b)] of the Labor Code.
• Requisites
To constitute abandonment, two (2) elements must concur, namely:
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1) The employee must have failed to report for work or must have been absent without valid or justifiable
reason; and
2) There must have been a clear intention on the part of the employee to sever the employer-employee
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relationship manifested by some overt act.

• Some principles on abandonment.
o Mere absence is not enough to constitute abandonment.
o
o Clear intention to sever employment relationship is necessary.

o Due process in abandonment cases consists only of the service of 2 notices to the employee, viz.:
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a. First notice directing the employee to explain why he should not be declared as having abandoned his
job; and
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Legal Practitioner
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b. Second notice to inform him of the employer’s decision to dismiss him on the ground of
abandonment.
ie
o No hearing is required to validly dismiss an employee for abandonment.
o Notices in abandonment cases must be sent to employee’s last known address per record of the
company. The employer need not look for the employee’s current whereabouts.
ev
o Immediate filing of a complaint for illegal dismissal praying for reinstatement negates abandonment.
o Lapse of time between dismissal and filing of a case is not a material indication of abandonment. Hence,
lapse of 2 years and 5 months or 20 months or 9 months or 8 months before filing the complaint for illegal
R
dismissal is not an indication of abandonment. Under the law, the employee has a 4-year prescriptive period
within which to institute his action for illegal dismissal.
o Filing of a case to pre-empt investigation of the administrative case is tantamount to abandonment.
o
o
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When what is prayed for in the complaint is separation pay and not reinstatement, the filing of
complaint does not negate abandonment.
It is abandonment when what is prayed for in the complaint is separation pay and it was only in the position
paper that reinstatement was prayed for.
n
o Employment in another firm coinciding with the filing of complaint does not indicate abandonment.
o Offer of reinstatement by employer during proceedings before Labor Arbiter and refusal by employee does
io
not indicate abandonment but more of a symptom of strained relations between the parties.
o An employee may be absolved from the charge of abandonment of work but adjudged guilty of AWOL.
These two grounds are separate and distinct from each other.
o An employee who failed to report for work after the expiration of the duly approved leave of absence is
ss
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considered to have abandoned his job.
o An employee who failed to comply with the order for his reinstatement is deemed to have abandoned his
i
work.
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o An employee who, after being transferred to a new assignment, did not report for work anymore is deemed
to have abandoned his job.
o An employee who deliberately absented from work without leave or permission from his employer for the
o
purpose of looking for a job elsewhere is deemed to have abandoned his work.
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o Imprisonment or detention by military does not constitute abandonment.
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o Absence to evade arrest is not a valid justification. To do so would be to place an imprimatur on the
employee’s attempt to derail the normal course of the administration of justice.
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(6) FRAUD
Ba
s
• Requisites.
es
The following are the requisites of this ground:

e
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;
bl
3. It must be committed against the employer or his/her representative; and

4. It must be in connection with the employees' work.
li
• Some principles on fraud.

o
o Failure to deposit collection constitutes fraud.

o Lack of damage or losses is not necessary in fraud cases. The fact that the employer did not suffer losses r
n
Ba
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from the dishonesty of the dismissed employee because of its timely discovery does not excuse the latter
from any culpability.
O
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o Lack of misappropriation or shortage is immaterial in case of unauthorized encashment of personal checks

by teller and cashier.
o Restitution does not have absolutory effect.
et
es
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(7) WILLFUL BREACH OF TRUST AND CONFIDENCE

• Requisites.
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For the doctrine of loss of trust and confidence to apply, the following requisites must be satisfied:
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(1) The employee holds a position of trust and confidence;

(2) There exists an act justifying the loss of trust and confidence, which means that the act that betrays the
employer’s trust must be real, i.e., founded on clearly established facts;
o
te
(3) The employee’s breach of the trust must be willful, i.e., it was done intentionally, knowingly and purposely,
without justifiable excuse; and
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(4) The act must be in relation to his work which would render him unfit to perform it.
In
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• Guidelines
As a safeguard against employers who indiscriminately use “loss of trust and confidence” to justify arbitrary dismissal
of employees, the Supreme Court, in addition to the above elements, came up with the following guidelines for the
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application of the doctrine:

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(1) The loss of confidence must not be simulated;

(2) It should not be used as a subterfuge for causes which are illegal, improper or unjustified;
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(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.
The foregoing guidelines have been prescribed by the Supreme Court due to the subjective nature of this ground
o
which makes termination based on loss of trust and confidence prone to abuse.
• Some principles on the doctrine of loss of trust and confidence.
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o Employee’s position must be reposed with trust and confidence.

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o “Position of trust and confidence” is one where a person is entrusted with confidence on delicate matters,
or with the custody, handling, or care and protection of the employer’s property.
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o Two (2) classes of positions of trust.
▪ The first class consists of managerial employees or those who, by the nature of their position, are
entrusted with confidential and delicate matters and from whom greater fidelity to duty is
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correspondingly expected. They refer to those vested with the powers or prerogatives to lay down and
execute management policies and/or to hire, transfer suspend, lay-off, recall, discharge, assign or
discipline employees or to effectively recommend such managerial actions. Their primary duty consists
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of the management of the establishment in which they are employed or of a department or a subdivision
thereof.
▪ The second class consists of fiduciary rank-and-file employees who, though rank-and-file, are
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routinely charged with the custody, handling or care and protection of the employer's money or
property, or entrusted with confidence on delicate matters, and are thus classified as occupying positions
of trust and confidence. Included under this class are “cashiers, auditors, property custodians, or those
who, in the normal and routine exercise of their functions, regularly handle significant amounts of [the
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employer’s] money or property.”
o Rules on termination of managerial and supervisory employees different from those applicable to
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rank-and-file employees. Thus, with respect to rank-and-file personnel, loss of trust and confidence as
a ground for valid dismissal requires proof of involvement in the alleged events in question and that mere
uncorroborated assertions and accusations by the employer will not be sufficient. But as regards a
managerial employee, the mere existence of a basis for believing that he has breached the trust of his
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employer would suffice for his dismissal.
o There must be “some basis” for the loss of trust and confidence which means that there is reasonable
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ground to believe, if not to entertain the moral conviction, that the concerned employee is responsible for
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the misconduct and that the nature of his participation therein rendered him absolutely unworthy of trust
and confidence demanded by his position.
o Dismissal due to feng shui mismatch is not a valid ground to lose trust and confidence.
o
o Command responsibility of managerial employees is a ground to dismiss.
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o Confidential employee may be dismissed for loss of trust and confidence.
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o Grant of promotions and bonuses negates loss of trust and confidence.

Long years of service, absence of derogatory record and small amount involved are deemed inconsequential
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insofar as loss of trust and confidence is concerned. Ba

o Dropping of criminal charges or acquittal in a criminal case arising from the same act does not affect the
validity of dismissal based on loss of trust and confidence.
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o Full restitution does not absolve employee of offense which resulted in the loss of trust and confidence.
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(8) COMMISSION OF CRIME OR OFFENSE

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• Requisites.
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The following are the requisites for the valid invocation of this ground:
1. A crime or offense was committed by the employee;
2. It was committed against any of the following persons:
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(a) His employer;

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(b) Any immediate member of his employer’s family; or

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(c) His employer’s duly authorized representative.

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• Some principles on the commission of crime or offense.

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o Because of its gravity, work-relation is not necessary. Neither is it necessary to show that the commission
of the criminal act would render the employee unfit to perform his work for the employer.
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(9) OTHER ANALOGOUS CAUSES

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• Analogous causes under established jurisprudence

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The following may be cited as analogous causes:

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1) Violation of company rules and regulations.

2) Theft of property owned by a co-employee, as distinguished from theft of property owned by the employer.
3) Incompetence, inefficiency or ineptitude.
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4) Failure to attain work quota.

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5) Failure to comply with weight standards of employer.

6) “Attitude problem” is analogous to loss of trust and confidence.
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(10) TERMINATION DUE TO ENFORCEMENT OF UNION SECURITY CLAUSE

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• What is a union security clause?

The “union security clause” is a stipulation in a CBA which allows the parties thereto to enter into an agreement
requiring compulsory membership in the sole and exclusive bargaining agent (SEBA) which successfully
negotiated said CBA as a condition for continued employment with the exception of employees who are already
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members of other union/s at the time of the signing of the CBA. Hence, they cannot be compelled to resign from
their minority union/s to join the SEBA.
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• What are the effects of application of this clause?

The following are the effects:
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a. On members of the SEBA. They are not allowed to resign or terminate their membership therefrom. Any
member of the SEBA who resigns or is expelled therefrom may be recommended to the employer by the
SEBA for termination of his employment.
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b. On non-members of the SEBA but members of the minority union/s. They are not bound by the union
security clause if they are members of the minority or other unions at the time of the signing of the CBA.
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Hence, they cannot be compelled to resign from their union/s in order to join the SEBA.
c. On non-members of the SEBA or of any minority union/s. If not a member of the SEBA or any other
unions in the bargaining unit at the time of the signing of the CBA by reason of the fact that he is excepted
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from the coverage of the bargaining unit, the employee cannot be compelled to join the SEBA. (E.g.,
Religious objectors and confidential employees under the Confidential Employee Rule).
d. On new employees hired after the signing of the CBA containing the union security clause. They can
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be compelled to join the SEBA. If they refuse, they can be recommended for termination by the SEBA to
the employer as such refusal is deemed a violation of this clause.
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• Is there an exception to this rule?
Yes. An employee cannot be compelled to join any union based on religious ground (Religious Objectors). For
example: members of the Iglesia ni Kristo (INK) cannot be compelled to join a union; hence, they are not bound by
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the union security doctrine.
• Can religious objectors be denied membership in a union or be disallowed from participating in a
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certification election?
No. Religious objectors, if they choose to, cannot be denied membership in a union or prevented from participating
in a certification election.
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• What are the requisites in order to validly terminate employees based on this clause?
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(1) The union security clause is applicable;
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(2) The bargaining union is requesting for the termination of employment due to enforcement of the union
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security provision in the CBA; and
(3) There is sufficient evidence to support the union’s decision to expel the employee from the union. (Alabang
Country Club, Inc. v. NLRC,).
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All the foregoing requisites should be complied with to justify the termination of employment.
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• Is the employer required to observe due process before terminating an employee who is
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recommended by the SEBA for termination due to violation of the union security clause?
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Yes, the employer should afford both substantive and procedural due process to the employee. It cannot terminate
his employment merely on the basis of the recommendation of the union.
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• Can the employer adopt the due process afforded by the SEBA to the employee in expelling him from
his membership in the SEBA?
es
No. The employer cannot adopt the due process afforded by the SEBA as its own due process for the simple
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reason that such due process concerns the termination of membership of the employee from the SEBA. The due
process in above-cited Alabang Country Club, Inc. v. NLRC, is required for a different purpose - to terminate his
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employment.
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(11) OTHER PRINCIPLES `ON TERMINATION Per Department Order No. 147-15, Series Of 2015
o
• An employee found positive for use of dangerous drugs shall be dealt with administratively which shall be a r
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ground for suspension or termination.

• An employee shall not be terminated from work based on actual, perceived or suspected HIV status.
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• An employee shall not be terminated on basis of actual, perceived or suspected Hepatitis B status.
• An employee who has or had tuberculosis shall not be discriminated against. He/she shall be entitled to work
et
for as long as they are certified by the company's accredited health provider as medically fit and shall be restored
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to work as soon as his/her illness is controlled.

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• An employee may also be terminated based on the grounds provided for under the CBA.
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b. Authorized Causes
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• What are the 2 classes of authorized cause termination?

Under the Labor Code, authorized causes are classified into two (2) classes, namely:
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(1) Business-related causes. – Referring to the grounds specifically mentioned in Article 298 [283], to wit:
a. Installation of labor-saving device;
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b. Redundancy;
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c. Retrenchment;
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d. Closure or cessation of business operations NOT due to serious business losses or financial reverses; and
e. Closure or cessation of business operations due to serious business losses and financial reverses.
(2) Health-related causes. – Referring to disease covered by Article 299 [284] of the Labor Code.
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• What are the two (2) kinds of requisites in the case of business-related causes?
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1. COMMON requisites applicable to all the authorized causes; and

2. UNIQUE requisites applicable to each of the authorized causes.
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• What are the COMMON REQUISITES applicable to the BUSINESS-RELATED causes under
Article 298 [283]?
The following are the five (5) common requisites applicable to the ALL the business-related causes:
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1. There is good faith in effecting the termination;

2. The termination is a matter of last resort, there being no other option available to the employer after resorting
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to cost-cutting measures;
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3. Two (2) separate written notices are served on both the affected employees and the DOLE at least one (1)
month prior to the intended date of termination;
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4. Separation pay is paid to the affected employees, to wit:
(a) If based on (1) installation of labor-saving device, or (2) redundancy. - One (1) month pay or at least
one (1) month pay for every year of service, whichever is higher, a fraction of at least six (6) months shall
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be considered as one (1) whole year.
(b) If based on (1) retrenchment, or (2) closure NOT due serious business losses or financial reverses.
- One (1) month pay or at least one-half (½) month pay for every year of service, whichever is higher, a
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fraction of at least six (6) months shall be considered as one (1) whole year.
(c) If closure is due to serious business losses or financial reverses, NO separation pay is required to be paid.
(d) In case the CBA or company policy provides for a higher separation pay, the same must be followed
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instead of the one provided in Article 298 [283].
5. Fair and reasonable criteria in ascertaining what positions are to be affected by the termination, such as,
but not limited to: nature of work; status of employment (whether casual, temporary or regular); experience;
efficiency; seniority; dependability; adaptability; flexibility; trainability; job performance; discipline; and
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attitude towards work. Failure to follow fair and reasonable criteria in selecting who to terminate would render
the termination invalid.
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NOTE: SENIORITY is not the principal nor the only criterion. The other criteria mentioned above which are lifted
from jurisprudence, are of equal importance.
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• What are the UNIQUE REQUISITES applicable to each of the BUSINESS-RELATED causes under
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Article 298 [283]?
In addition to the COMMON REQUISITES above, the following are the UNIQUE REQUISITES of each of the
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authorized causes:
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(1) INSTALLATION OF LABOR-SAVING DEVICE
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• What are the additional requisites unique to this ground?
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In addition to the five (5) common requisites above, the unique requisites are as follows:
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1. There must be introduction of machinery, equipment or other devices; and
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2. The purpose for such introduction must be valid such as to save on cost, enhance efficiency and other
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justifiable economic reasons.
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(2) REDUNDANCY
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The additional requisites are as follows:

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1. There must be superfluous positions or services of employees;

2. The positions or services are in excess of what is reasonably demanded by the actual requirements of the
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enterprise to operate in an economical and efficient manner; and

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3. 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
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management of the restructuring.

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(3) RETRENCHMENT
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Per latest issuance of the DOLE, the following are the additional requisites:
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1. The retrenchment must be reasonably necessary and likely to prevent business losses;
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2. The losses, if already incurred, are not merely de minimis, but substantial, serious, actual and real, or if only
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expected, are reasonably imminent;

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3. The expected or actual losses must be proved by sufficient and convincing evidence; and
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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.
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This is the only business-related cause under Article 298 [283] which requires proof of losses or imminent losses. The
other grounds of closure or cessation of business operations may be resorted to with or without losses.
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• What are some relevant principles on retrenchment?

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o The fact that there has been economic or other crisis besetting a particular sector or the country as a whole
is not sufficient justification for retrenchment.
o The phrase “retrenchment to prevent losses” means that retrenchment may be undertaken by the
employer before the losses anticipated are actually sustained or realized. The employer need not keep all his
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employees until after his losses shall have materialized. Otherwise, the law could be vulnerable to attack as
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undue taking of property for the benefit of another.

o Best evidence of losses - financial statements audited by independent auditors (not by internal
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auditors).
o Best evidence of losses in a government-controlled corporation - financial statements audited by
COA.
o Income tax returns, not valid since they are self-serving documents.
o
o Mere affidavit on alleged losses is not sufficient.

o Retrenchment effected long after the business losses is not valid.
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o Profitable operations in the past do not affect the validity of retrenchment.

o Retrenchment due to liquidity problem is not valid.
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o Sharp drop in income is not a ground to justify retrenchment. A mere decline in gross income cannot in any
manner be considered as serious business losses. It should be substantial, sustained and real.
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o Litany of woes, in the absence of any solid evidence that they translated into specific and substantial losses
that would necessitate retrenchment, will not suffice to justify retrenchment.
o Rehiring of retrenched employees does not necessarily indicate illegality of retrenchment.
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o In an enterprise which has several branches nationwide, profitable operations in some of them will
not affect the validity of the retrenchment if overall, the financial condition thereof reflects losses.
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(1) CLOSURE OR CESSATION OF BUSINESS OPERATIONS
• Can an employer close its business even if it is not suffering from business losses?
Yes. In fact, closure involves two (2) situations:
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(a) When NOT due to serious business losses or financial reverses; or
(b) When due to serious business losses or financial reverses
It is only in the first that payment of separation pay is required. No such requirement is imposed in the second.
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• What are some relevant principles on closure?
o Principle of closure under Article 283 applies in cases of both total and partial closure or cessation of
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business operations. Management may choose to close only a branch, a department, a plant, or a shop.
o Closure of department or section and hiring of workers supplied by independent contractor as replacements
is valid.
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o Relocation of business may amount to cessation of operations.
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o Closure of business to merge or consolidate with another or to sell or dispose all of its assets, held valid.
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o Audited financial statements necessary only in closure due to losses.
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(2) DISEASE
• What are the newest doctrines on termination due to disease?
o
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o The newest doctrines are the ones enunciated in Deoferio and Fuji on the matter of due process as
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discussed below. The due process applicable to disease, although an authorized cause, is similar to the one
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applicable to just cause termination and not to authorized cause termination.
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Ba
• The DEOFERIO doctrine on the requisites

Ba
o Disease is one of the authorized causes to terminate employment. In the 2014 case of Deoferio v. Intel
s
Technology Philippines, Inc., the Supreme Court divided into two, the requisites that must be complied
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with before termination of employment due to disease may be justified, namely:

(1) Substantive requisites; and
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(2) Procedural requisites.

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o The Deoferio rule on substantive requisites.

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The following are the three (3) substantive requisites:

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

(2) His continued employment is prohibited by law or prejudicial to his health, as well as to the health of r
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his co-employees; and

(3) A competent public health authority issues a medical certificate that the disease is of such nature or at
O
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such a stage that it cannot be cured within a period of six (6) months even with proper medical
treatment.
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o The Deoferio rule on procedural requisites.

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Deoferio, finally pronounced the rule that the employer must furnish the employee two (2) written notices in
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terminations due to disease, namely:

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(1) The notice to apprise the employee of the ground for which his dismissal is sought; and
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(2) The notice informing the employee of his dismissal, to be issued after the employee has been given
reasonable opportunity to answer and to be heard on his defense.
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In other words, due process in termination due to disease is similar to due process for just cause
termination but different from authorized cause termination under Article 298 [283].
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• The FUJI rule – the employee should be given the chance to present countervailing medical certificates.
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o Subsequent to Deoferio, another 2014 case, Fuji Television Network, Inc. v. Arlene S. Espiritu, has
further expounded on the due process requirement in termination due to disease, this time by categorically
specifying the right of the ailing employee to present countervailing evidence in the form of medical
certificates to prove that his dismissal due to disease is not proper and therefore illegal.
es
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o Respondent Arlene was petitioner’s news correspondent/producer “tasked to report Philippine news to Fuji
through its Manila Bureau field office.” She was successively given yearly fixed-term employment contracts
until she was diagnosed with lung cancer sometime in January 2009 when the Chief of News Agency of Fuji
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informed her “that the company will have a problem renewing her contract” since it would be difficult for
her to perform her job. She, however, “insisted that she was still fit to work as certified by her attending
physician.” Subsequently, Arlene and Fuji signed a non-renewal contract where it was stipulated that her
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contract would no longer be renewed after its expiration on May 31, 2009 and that the parties release each
other from liabilities and responsibilities under the employment contract. Arlene received her unpaid salaries
and bonuses but she affixed her signature on the non-renewal contract with the initials “U.P.” for “under
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protest.” The day after Arlene signed the non-renewal contract, she filed a complaint for illegal dismissal
and attorney’s fees with the Labor Arbiter, alleging that she was forced to sign the non-renewal contract
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when Fuji came to know of her illness and that Fuji withheld her salaries and other benefits for March and
April 2009 when she refused to sign. Arlene claimed that she was left with no other recourse but to sign the
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non-renewal contract, and it was only upon signing that she was given her salaries and bonuses, in addition
to separation pay equivalent to 4 years.
o The Supreme Court declared respondent Arlene as having been constructively dismissed. It was likewise
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held here that respondent was not afforded due process, thus:
▪ “There is no evidence showing that Arlene was accorded due process. After informing her employer
of her lung cancer, she was not given the chance to present medical certificates. Fuji immediately
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concluded that Arlene could no longer perform her duties because of chemotherapy. It did not ask her
how her condition would affect her work. Neither did it suggest for her to take a leave, even though
she was entitled to sick leaves. Worse, it did not present any certificate from a competent public health
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authority. What Fuji did was to inform her that her contract would no longer be renewed, and when
she did not agree, her salary was withheld. Thus, the Court of Appeals correctly upheld the finding of
the National Labor Relations Commission that for failure of Fuji to comply with due process, Arlene
was illegally dismissed.”
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• What are some salient points to consider under this ground of disease?
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o If the disease or ailment can be cured within the period of six (6) months with proper medical treatment,
the employer should not terminate the employee but merely ask him to take a leave of absence. The employer
should reinstate him to his former position immediately upon the restoration of his normal health.
o In case the employee unreasonably refuses to submit to medical examination or treatment upon being
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requested to do so, the employer may terminate his services on the ground of insubordination or willful
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disobedience of lawful order.
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o A medical certificate issued by a company’s own physician is not an acceptable certificate for purposes
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of terminating an employment based on Article 284, it having been issued not by a “competent public health
authority,” the person referred to in the law.
o A “competent public health authority” refers to a government doctor whose medical specialization
o
pertains to the disease being suffered by the employee. For instance, if the employee suffers from
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tuberculosis, the medical certificate should be issued by a government-employed pulmonologist who is
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competent to make an opinion thereon. If the employee has cardiac symptoms, the competent physician in
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this case would be a cardiologist.
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Ba
o The medical certificate should be procured by the employer and not by the employee. Ba
2. Procedural due process
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a. Two-notice rule
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• Preliminary clarificatory statement on due process

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At the outset, there is a need to point out the following distinction:

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(1) Due process required to be complied with by the employer in terminating the employee’s employment
(COMPANY-LEVEL DUE PROCESS); and
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(2) Due process required to be observed by the labor authorities/tribunals/courts (Labor Arbiter/NLRC/CA)
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in hearing and deciding labor cases brought before them for adjudication and decision (COURT-LEVEL
DUE PROCESS).
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No. 1 above requires compliance with both the statutory and contractual due process as discussed below; while
No. 2 above requires observance of the constitutional due process.
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It is No. 1 above that is prescribed in the Syllabus, hence, discussion herein will focus thereon.
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• What is the latest rule on due process?

es
o Due process means compliance with BOTH STATUTORY DUE PROCESS and CONTRACTUAL
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DUE PROCESS.
o CONSTITUTIONAL DUE PROCESS is not applicable (Per Agabon doctrine).
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o Statutory due process refers to the one prescribed in the Labor Code (Article 292[b] 277[b]); while
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contractual due process refers to the one prescribed in the Company Rules and Regulations (Per Abbott
Laboratories doctrine).
o Contractual due process was enunciated in the 2013 en banc ruling in Abbott Laboratories, Philippines
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v. Pearlie Ann F. Alcaraz. Thus, it is now required that in addition to compliance with the statutory due
process, the employer should still comply with the due process procedure prescribed in its own company
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rules. The employer’s failure to observe its own company-prescribed due process will make it liable to pay
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an indemnity in the form of nominal damages, the amount of which is equivalent to the P30,000.00 awarded
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under the Agabon doctrine.
• Are the twin-notice requirement and hearing required in all cases of termination?
es
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No. The two-notice requirement and hearing are required only in case of just cause termination BUT NOT IN
AUTHORIZED CAUSE TERMINATION (EXCEPT ON THE GROUND OF DISEASE PER DEOFERIO
DOCTRINE as discussed above).
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• What is the order in which the twin-notice requirement and hearing are implemented by the
employer?
o
The requirement should be implemented in the following order:

1. Service of first written notice;
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2. Conduct of hearing; and

3. Service of second written notice.
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• What is the King of Kings Transport doctrine on just cause procedural due process?
Based on this doctrine which was enunciated in the 2007 case of King of Kings Transport, Inc. v. Mamac, the
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following requirements should be complied with in just cause termination:
(1) First written notice.
The first written notice to be served on the employee should:
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a) Contain the specific causes or grounds for termination against him;
b) Contain a directive that the employee is given the opportunity to submit his written explanation within
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the reasonable period of FIVE (5) CALENDAR DAYS from receipt of the notice:
1) to enable him to prepare adequately for his defense;
2) to study the accusation against him;
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3) to consult a union official or lawyer;
4) to gather data and evidence; and
5) to decide on the defenses he will raise against the complaint.
c) Contain a detailed narration of the facts and circumstances that will serve as basis for the charge against
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the employee. This is required in order to enable him to intelligently prepare his explanation and defenses.
A general description of the charge will not suffice.
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d) Specifically mention which company rules, if any, are violated and/or which among the grounds under
Article 282 is being charged against the employee.
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(2) Hearing required,
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After serving the first notice, the employer should schedule and conduct a hearing or conference wherein the
employee will be given the opportunity to:
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1) explain and clarify his defenses to the charge/s against him;
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2) present evidence in support of his defenses; and
3) rebut the evidence presented against him by the management.
During the hearing or conference, the employee is given the chance to defend himself personally, with the
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assistance of a representative or counsel of his choice. Moreover, this conference or hearing could be used by
the parties as an opportunity to come to an amicable settlement.
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NOTE: See Lopez doctrine and Perez doctrine below
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(3) Second written notice.

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After determining that termination of employment is justified, the employer shall serve the employees a written
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notice of termination indicating that:

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1) all circumstances involving the charge/s against the employee have been considered; and
2) grounds have been established to justify the severance of his employment.
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• What is the LOPEZ doctrine on right to counsel?

bl
Per the 2011 Lopez doctrine, which is the prevailing rule, the right to counsel is neither indispensable
nor mandatory. It becomes mandatory only in two (2) situations:
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o
(1) When the employee himself requests for counsel; or

(2) When he manifests that he wants a formal hearing on the charges against him, in which case, he
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should be assisted by counsel. (See Lopez v. Alturas Group of Companies).
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• What is the PEREZ doctrine on hearing?

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The 2009 Perez doctrine enunciates the new guiding principle on the hearing requirement. It has interpreted the
term “ample opportunity to be heard” as follows:
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(a) “Ample opportunity to be heard” means any meaningful opportunity (verbal or written) given to the
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employee to answer the charges against him and submit evidence in support of his defense, whether in a
hearing, conference or some other fair, just and reasonable way.
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(b) A formal hearing or conference is no longer mandatory. It becomes mandatory only under any of the
following circumstances:
(1) When requested by the employee in writing; or
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(2) When substantial evidentiary disputes exist; or

(3) When a company rule or practice requires it; or
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(4) When similar circumstances justify it.

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(c) the “ample opportunity to be heard” standard in the Labor Code prevails over the “hearing or
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conference” requirement in its Implementing Rules and Regulations. This is how the Supreme Court resolved
the conflict in the following provisions of the Labor Code and its implementing rules:
The Perez doctrine is now the prevailing rule as shown by a catena of cases which cited it after its promulgation.
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• Are the twin-notice requirement and hearing applicable to authorized cause termination?
C
No. Due process in authorized cause termination is deemed complied with upon the separate and simultaneous
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service of a written notice of the intended termination to both:

(1) the employee to be terminated; and
(2) the appropriate DOLE Regional Office, at least one (1) month before the intended date of the termination
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specifying the ground/s therefor and the undertaking to pay the separation pay required under Article 283
of the Labor Code.
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For obvious reason, hearing is not required.

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However, as earlier discussed above, the foregoing due process is DIFFERENT from the authorized cause of disease
as held in Deoferio and Fuji which held that just cause due process is the one that should be followed.
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• Are the twin-notice requirement and hearing applicable to abandonment as a just cause to terminate
employment?
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No. Although considered as a just cause to terminate employment, the procedural due process requirement for
abandonment is different. Obviously, no hearing is required (since the employee has already abandoned his job) but
the following notices should be complied with:
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1) First notice asking the employee to explain why he should not be declared as having abandoned his job; and
2) Second notice informing him of the employer’s decision to dismiss him on the ground of abandonment.
• al
What are the seven (7) standard situations in termination cases?
The rules on termination of employment in the Labor Code and pertinent jurisprudence are applicable to seven (7)
different situations, namely:
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1. The dismissal was for a just cause under Article 282, for an authorized cause under Article 283, or for health
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reasons under Article 284, and due process was observed – This termination is LEGAL.
2. The dismissal was without a just or authorized cause but due process was observed – This termination is
ILLEGAL.
3. The dismissal was without a just or authorized cause and due process was not observed – This termination
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is ILLEGAL.
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4. The dismissal was for a just or authorized cause but due process was not observed – This termination is
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LEGAL.
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5. The dismissal was for a non-existent cause – This termination is ILLEGAL.
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6. The dismissal was not supported by any evidence of termination – This termination is NEITHER LEGAL
NOR ILLEGAL as there is no dismissal to speak of. Reinstatement is ordered not as a relief for illegal
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dismissal but on equitable ground.
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7. The dismissal was brought about by the implementation of a law – This termination is LEGAL.
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3. Illegal dismissal, reliefs therefrom
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• Kinds
i. No just or authorized cause
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If dismissal was done without substantive due process (just or authorized causes under Article 297 [282] - 299 [284]
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of the Labor Code), then it is considered illegal. (ACD Investigation Security Agency, Inc. v. Daquera, G.R. No.
147473, March 30, 2004.)
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See further discussion of just and authorized causes under “B. TERMINATION BY EMPLOYER”.
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ii. Constructive dismissal

• When is there constructive dismissal?
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Constructive dismissal contemplates any of the following situations:

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1) An involuntary resignation resorted to when continued employment is rendered impossible, unreasonable

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or unlikely;
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2) A demotion in rank and/or a diminution in pay; or

3) A clear discrimination, insensibility or disdain by an employer which becomes unbearable to the employee
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that it could foreclose any choice by him except to forego his continued employment.
• What is the test of constructive dismissal?
et
The test of constructive dismissal is whether a reasonable person in the employee’s position would have felt compelled
es
to give up his position under the circumstances. It is an act amounting to dismissal but made to appear as if it were
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not. In fact, the employee who is constructively dismissed may be allowed to keep on coming to work. Constructive
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dismissal is, therefore, a DISMISSAL IN DISGUISE. The law recognizes and resolves this situation in favor of
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the employees in order to protect their rights and interests from the coercive acts of the employer.
• What are examples of constructive dismissal or forced resignation?
o
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o Denying to the workers entry to their work area and placing them on shifts “not by weeks but almost by
month” by reducing their workweek to three days.
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o Barring the employees from entering the premises whenever they would report for work in the morning
without any justifiable reason, and they were made to wait for a certain employee who would arrive in the
In
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office at around noon, after they had waited for a long time and had left.
o Sending to an employee a notice of indefinite suspension which is tantamount to dismissal.
o Imposing indefinite preventive suspension without actually conducting any investigation.
o Changing the employee’s status from regular to casual constitutes constructive dismissal.
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o Preventing the employee from reporting for work by ordering the guards not to let her in. This is clear
h
notice of dismissal.
• What is the distinction between illegal dismissal and constructive dismissal?
C
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In illegal dismissal, the employer openly shows his intention to dismiss the employee. In fact, the employer, in
compliance with due process, asks the employee to explain why he should not be dismissed for committing a wrongful
act and he is given due process prior to terminating him.
o
In contrast, in constructive dismissal, the employer will never indicate that he is terminating the employee. He will
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even allow the employee to report to his work every day. But he will do any of the three (3) acts mentioned above
that indicates his intention to get rid of the services of the employee. This is the reason why it is called “dismissal in
disguise.”
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Legal Practitioner
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a. Reinstatement
The Labor Code grants the remedy of reinstatement in various forms and situations. Its provisions recognizing
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reinstatement as a relief are as follows:
1. Article 229 [223] which provides for reinstatement of an employee whose dismissal is declared illegal by the
ev
Labor Arbiter. This form of reinstatement is self-executory and must be implemented even during the pendency
of the appeal that may be instituted by the employer. (NOTE: See discussion of this topic under Major
Topic “VIII. Jurisdiction and Reliefs; A. Labor Arbiter”, infra)
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2. Article 278(g) [263(g)] which provides for automatic return to work of all striking or locked-out employees,
if a strike or lockout has already taken place, upon the issuance by the DOLE Secretary of an assumption or
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certification order in national interest cases. The employer is required to immediately resume operation and
readmit all workers under the same terms and conditions prevailing before the strike or lockout.
3. Article 292(b) [277(b)] which empowers the DOLE Secretary to suspend the effects of termination pending
the resolution of the termination dispute in the event of a prima facie finding by the appropriate official of the
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DOLE before whom such dispute is pending that the termination may cause a serious labor dispute or is in
implementation of a mass lay-off. Such suspension of the effects of termination would necessarily results in the
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reinstatement of the dismissed employee while the illegal dismissal case is being heard and litigated.
4. Article 294 [279] which grants reinstatement as a relief to an employee whose dismissal is declared illegal in a
final and executory judgment.
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5. Article 301 [286] which involves bona-fide suspension of operation for a period not exceeding six (6) months
i
or the rendition by an employee of military or civic duty. It is required under this provision that the employer
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should reinstate its employees upon resumption of its operation which should be done before the lapse of said
six-month period of bona-fide suspension of operation or after the rendition by the employees of military or civic
duty.
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b. Backwages
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• What is the Bustamante doctrine?
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In 1996, the Supreme Court changed the rule on the reckoning of backwages. It announced a new doctrine in
the case of Bustamante v. NLRC, which is now known as the Bustamante doctrine. Under this rule, the term
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“full backwages” should mean exactly that, i.e., without deducting from backwages the earnings derived
s
elsewhere by the concerned employee during the period of his illegal dismissal.
es
• What are the components of backwages?

e
The components of backwages are as follows:

1. Salaries or wages computed on the basis of the wage rate level at the time of the illegal dismissal and not
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in accordance with the latest, current wage level of the employee’s position.
2. Allowances and other benefits regularly granted to and received by the employee should be made part of
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backwages.
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• What are some principles on backwages?

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o Salary increases during period of unemployment are not included as component in the
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computation of backwages.
O
o Dismissed employee’s ability to earn is irrelevant in the award of backwages.

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o In case reinstatement is ordered, full backwages should be reckoned from the time the compensation
was withheld (which, as a rule, is from the time of illegal dismissal) up to the time of reinstatement, whether
et
actual or in the payroll.

es
o If separation pay is ordered in lieu of reinstatement, full backwages should be computed from the time
h
of illegal dismissal until the finality of the decision. The justification is that along with the finality of the
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Supreme Court’s decision, the issue on the illegality of the dismissal is finally laid to rest.
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o If the illegally dismissed employee has reached the optional retirement age of 60 years, his backwages
should only cover the time when he was illegally dismissed up to the time when he reached 60 years. Under
Article 287, 60 years is the optional retirement age.
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o If the employee has reached 65 years of age or beyond, his full backwages should be computed only up
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to said age. The contention of the employer that backwages should be reckoned only up to age 60 cannot
be sustained.
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o If employer has already ceased operations, full backwages should be computed only up to the date of the
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closure. To allow the computation of the backwages to be based on a period beyond that would be an
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injustice to the employer.

o Any amount received during payroll reinstatement is deductible from backwages.
•
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When is the award of backwages limited?

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(1) When the dismissal is deemed too harsh a penalty;

(2) When the employer acted in good faith; or
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(3) Where there is no evidence that the employer dismissed the employee.
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Thus, the backwages will not be granted in full but limited to 1 year, 2 years or 5 years [per jurisprudence].
c. Separation pay, doctrine of strained relations

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• Is separation pay applicable only to reinstatement as an alternative remedy?

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Yes. Separation pay, as a substitute remedy, is only proper for reinstatement but not for backwages.
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Legal Practitioner
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This remedy is not found in the Labor Code but is granted in case reinstatement is no longer possible or feasible,
such as when any of the following circumstances exists:
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(1) Where the continued relationship between the employer and the employee is no longer viable due to the
strained relations and antagonism between them (Doctrine of Strained Relations).
(2) When reinstatement proves impossible, impracticable, not feasible or unwarranted for varied reasons and
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thus hardly in the best interest of the parties such as:
(a) Where the employee has already been replaced permanently as when his position has already been taken
over by a regular employee and there is no substantially equivalent position to which he may be reinstated.
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(b) Where the dismissed employee’s position is no longer available at the time of reinstatement for reasons
not attributable to the fault of the employer.
(c) When there has been long lapse or passage of time that the employee was out of employer’s employ from
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the date of the dismissal to the final resolution of the case or because of the realities of the situation.
(d) By reason of the injury suffered by the employee.
(e) The employee has already reached retirement age under a Retirement Plan.
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(f) When the illegally dismissed employees are over-age or beyond the compulsory retirement age and their
reinstatement would unjustly prejudice their employer.
(3) Where the employee decides not to be reinstated as when he does not pray for reinstatement in his complaint
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or position paper but asked for separation pay instead.

(4) When reinstatement is rendered moot and academic due to supervening events, such as:
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(a) Death of the illegally dismissed employee.
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(b) Declaration of insolvency of the employer by the court.
(c) Fire which gutted the employer’s establishment and resulted in its total destruction.
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(d) In case the establishment where the employee is to be reinstated has closed or ceased operations.
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(5) To prevent further delay in the execution of the decision to the prejudice of private respondent.
(6) Other circumstances such as (a) when reinstatement is inimical to the employer’s interest; (b) reinstatement
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does not serve the best interests of the parties involved; (c) the employer is prejudiced by the workers’
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continued employment; or (d) that it will not serve any prudent purpose as when supervening facts transpired
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which made execution unjust or inequitable.

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• What is the amount of separation pay in lieu of reinstatement?
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Ba
Per prevailing jurisprudence, the following are the components of separation pay in lieu of reinstatement>
(1) The amount equivalent to at least one (1) month salary or to one (1) month salary for every year of service,
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whichever is higher, a fraction of at least six (6) months being considered as one (1) whole year.
s
(2) Allowances that the employee has been receiving on a regular basis.
• What is the period covered?
es
From start of employment up to the date of finality of decision except when the employer has ceased its operation
e
earlier, in which case, the same should be computed up to the date of closure.
• What is the salary rate to be used in computing it?
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The salary rate prevailing at the end of the period of putative service should be the basis for computation which
refers to the period of imputed service for which the employee is entitled to backwages.
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• What are some important principles on separation pay in lieu of reinstatement?

o
1. Award of separation pay and backwages are not inconsistent with each other. Hence, both may be awarded
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to an illegally dismissed employee. The payment of separation pay is in addition to payment of backwages.
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2. Reinstatement cannot be granted when what is prayed for by employee is separation pay in lieu thereof.
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d. Damages
e. Attorneys’ fees
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• What are the other reliefs that are not provided in the Labor Code but are granted in illegal dismissal
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cases?
h
The following reliefs that are awarded in illegal dismissal cases are missing in Article 279:
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(1) Award of separation pay in lieu of reinstatement.

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(2) Award of penalty in the form of nominal damages in case of termination due to just or authorized cause
but without observance of procedural due process.
(3) Reliefs to illegally dismissed employee whose employment is for a fixed period. The proper relief is only
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the payment of the employee’s salaries corresponding to the unexpired portion of the employment
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contract.
(4) Award of damages and attorney’s fees.
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(5) Award of financial assistance in cases where the employee’s dismissal is declared legal but because of long
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years of service, and other considerations, financial assistance is awarded.

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(6) Imposition of legal interest on separation pay, backwages and other monetary awards.
f. Liabilities of corporate officers

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• Who are considered officers?

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o Article 219(e) [212(e)] of the Labor Code defines “employer” as including 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
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except when acting as employer

o Thus, a person involved in a case or controversy, whether he be a director, trustee, corporate officer or merely a
responsible employee, may rightfully be considered as being embraced in the term “employer.”
o As a general rule, only the juridical employer, whether it be a corporation, partnership, association or any other
o
entity which may be held liable for monetary claims of employees or for all the consequences of the illegality of
their dismissal or for other wrongful acts. Directors, trustees or officers cannot be held liable.
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Legal Practitioner
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g. Burden of proof
• Burden of Proof in Illegal Dismissal Cases
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o When burden of proof is on the employee: While it is the recognized rule in illegal dismissal cases that the employer bears
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the burden of proving that the termination was for a valid or authorized cause, this rule does not apply if the facts
and the evidence do not establish a prima facie case that the employee was dismissed from employment. Before the
employer must bear the burden of proving that the dismissal was legal, the employee must first establish by
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substantial evidence the fact of his dismissal from service.
• Quantum of Evidence: Substantial Evidence
o Section 5, Rule 133 of the Rules of Court provides that “in cases filed before administrative or quasi-judicial bodies, a
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fact may be deemed established if it is supported by substantial evidence, or that amount of relevant evidence
which a reasonable mind might accept as adequate to justify a conclusion.”
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necessarily import preponderant evidence, as is required in an ordinary civil case. It has been defined to be such
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relevant evidence as a reasonable mind might accept as adequate to support a conclusion.( Spouses Giron v.
Obiacoro, CV-331l5, Sept. 28,1994)
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C. TERMINATION BY EMPLOYEE
i e
1. Resignation vs. constructive dismissal
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Voluntary resignation
• Valid resignation must be unconditional and with intent to operate as such.
• In case of termination effected by the employee without just cause, the following requisites must concur:
o
1. The resigning employee should tender a written (not verbal) notice of the termination (commonly known as
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“resignation letter”);
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2. Service of such notice to the employer at least one (1) month in advance; and
3. Written acceptance by the employer of the resignation.
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The 3rd requisite above is not expressly provided in Article 300 [285] but is given such character of a mandatory
requirement under well-established jurisprudence.
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• Burden of Proof in voluntary resignation cases

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o If the employer alleges the employee’s voluntary resignation as the cause of his separation from work, the employer
has the burden to prove the same.
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o When burden shifts to employee: In case he/she alleges that harassment, force, threat, coercion or intimidation has
attended his/her resignation, it is the employee who has the burden to prove the same.
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Constructive Dismissal vs. Voluntary Resignation

li
• Constructive dismissal is involuntary resignation and is due to harsh, hostile, or unfavorable conditions in his/her
o
employment that renders his/her continued employment impossible, unreasonable, or unlikely.

o Voluntary resignation, aside from being voluntary, is a formal pronouncement or relinquishment of an office, r
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accompanied by an intent to relinquish the office and an overt act of relinquishing the same.
• Constructive dismissal is considered an illegal dismissal.
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• Voluntary resignation is a valid mode of terminating employment by the employee.

et
2. Abandonment
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See discussion on Abandonment of Work under Just Causes.

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D. PREVENTIVE SUSPENSION
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• When is preventive suspension proper to be imposed?

Preventive suspension may be legally imposed against an errant employee only while he is undergoing an investigation
for certain serious offenses. Consequently, its purpose is to prevent him from causing harm or injury to the company
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as well as to his fellow employees, hence, his actual presence in the workplace would not be desirable for the
meaningful conduct of the investigation of his case. Its imposition is thus justified only in cases where the
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employee’s continued presence in the company premises during the investigation poses a serious and
imminent threat to the life or property of the employer or of the employee’s co-workers. Without this threat,
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preventive suspension is not proper.

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• What are some relevant principles in preventive suspension?

o Preventive suspension is not a penalty. This is different from PUNITIVE SUSPENSION which is
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imposed as a penalty less harsh than dismissal.

h
o Preventive suspension, by itself, does not signify that the company has already adjudged the employee guilty
of the charges for which she was asked to answer and explain.
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o Preventive suspension is neither equivalent nor tantamount to dismissal.

o If the basis of the preventive suspension is the employee’s absences and tardiness, the imposition of
preventive suspension on him is not justified as his presence in the company premises does not pose any
such serious or imminent threat to the life or property of the employer or of the employee’s co-workers
o
simply “by incurring repeated absences and tardiness.”

o Preventive suspension does not mean that due process may be disregarded.
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Legal Practitioner
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o Preventive suspension should only be for a maximum period of thirty (30) days. After the lapse of the 30-
day period, the employer is required to reinstate the worker to his former position or to a substantially
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equivalent position.
o During the 30-day preventive suspension, the worker is not entitled to his wages and other benefits.
However, if the employer decides, for a justifiable reason, to extend the period of preventive suspension
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beyond said 30-day period, he is obligated to pay the wages and other benefits due the worker during said
period of extension. In such a case, the worker is not bound to reimburse the amount paid to him during
the extension if the employer decides to dismiss him after the completion of the investigation.
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o Extension of period must be justified. During the 30-day period of preventive suspension, the employer is
expected to conduct and finish the investigation of the employee’s administrative case. The period of thirty
(30) days may only be extended if the employer failed to complete the hearing or investigation within said
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period due to justifiable grounds. No extension thereof can be made based on whimsical, capricious or
unreasonable grounds.
Preventive suspension lasting longer than 30 days, without the benefit of valid extension, amounts to
constructive dismissal.
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o Indefinite preventive suspension amounts to constructive dismissal.
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E. FLOATING STATUS
• Lack of applicable provision in the Labor Code

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At the outset, it bears reiterating that although placing an employee like a security guard on “floating” status (or
sometimes called temporary “off-detail” status) is considered a temporary retrenchment measure, the Supreme
i
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Court, in Exocet v. Serrano, recognized the fact that there is similarly no provision in the Labor Code which treats of a
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temporary retrenchment or lay-off. Neither is there any provision which provides for its requisites or its duration.
Nevertheless, since an employee cannot be laid-off indefinitely, the Court has applied Article 301 [286] of the Labor
Code by analogy to set the specific period of temporary lay-off to a maximum of six (6) months. This provision
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states:
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“Article 301 [286]. When Employment Not Deemed Terminated. – The bona-fide suspension of the
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operation of a business or undertaking for a period not exceeding six (6) months, or the fulfillment
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by the employee of a military or civic duty shall not terminate employment. In all such cases, the
employer shall reinstate the employee to his former position without loss of seniority rights if he
indicates his desire to resume his work not later than one (1) month from the resumption of
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operations of his employer or from his relief from the military or civic duty.”
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Clearly from the foregoing article, the concept of “floating status” does not find any direct connection or
relation, except for the six (6)-month period provided therein which has been held as the defining cut-off period that
e
can be used as a consonant basis in determining the reasonableness of the length of time when an employee could be
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deprived of work under this doctrine.

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• “Floating” status doctrine as applied to security guards.

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Applying Article 301 [286] by analogy, the Supreme Court has consistently recognized that security guards may be
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temporarily sidelined by their security agency as their assignments primarily depend on the contracts entered into by
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the latter with third parties. This is called the “floating status” doctrine which is based on and justified under the said
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article. This status, as applied to security guards, is the period of time when security guards are in between assignments
or when they are made to wait after being relieved from a previous post until they are transferred to a new one. In
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security agency parlance, being placed “off-detail” or on “floating” status means “waiting to be posted.”
• Instances which justify application of doctrine.
et
“Floating status” takes place under any of the following circumstances:

es
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(1) When the security agency’s clients decide not to renew their contracts with the agency, resulting in a situation
where the available posts under its existing contracts are less than the number of guards in its roster; or
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(2) When contracts for security services stipulate that the client may request the agency for the replacement of
the guards assigned to it even for want of cause and there are no available posts under the agency’s existing
contracts to which the replaced security guards may be placed.
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As far as No. 2 above is concerned, the Supreme Court has recognized the fact that clients of the security agency
have the right to request for the removal of any of the security guards supplied by the latter to the former without
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need to justify the same. The reason for this is the lack of any employment relationship between the security guards
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and the client.

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Also, under No. 2 above, a relief and transfer order may be issued by the security agency to the security guard
concerned in order to effect it. This order in itself does not sever employment relationship between a security guard
and his agency. And the mere fact that the transfer would be inconvenient for the former does not by itself make
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the transfer illegal.

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• Applicability to other employees.

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While the “floating status” rule is traditionally applicable to security guards who are temporarily sidelined from duty
while waiting to be transferred or assigned to a new post or client, Article 301 [286] has been applied as well to other
industries when, as a consequence of the bona-fide suspension of the operation of a business or undertaking, an
employer is constrained to put employees on “floating status” for a period not exceeding six (6) months.
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Thus, it may also be applied to employees of legitimate contractors or subcontractors under a valid independent
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contracting or subcontracting arrangement under Article 106 of the Labor Code. The same form of dislocation and
displacement also affects their employees every time contracts of services are terminated by their clients or principals.
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Legal Practitioner
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In the meantime that the dislocated employees are waiting for their next assignment, they may be placed on “off
detail” or “floating” status following the same concept applicable to security guards.
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For example, in JPL Marketing Promotions v. CA, this principle was applied to merchandisers hired by petitioner
company which is engaged in the business of recruitment and placement of workers. After they were notified of the
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cancellation of the contract of petitioner with a client where they were assigned and pending their reassignment to
other clients, the merchandisers are deemed to have been placed under “floating status” for a period of not exceeding
six (6) months under Article 301 [286]. Such notice, according to the Court, should not be treated as a notice of
termination but a mere note informing them of the termination of the client’s service contract with petitioner
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company and their reassignment to other clients. The 30-day notice rule under Article 298 [283] does not therefore
apply to this case.
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This was likewise applied to the case of:
(1) A bus driver in Valdez v. NLRC who was placed on floating status after the air-conditioning unit of the bus
he was driving suffered a mechanical breakdown; and
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(2) A Property Manager in Nippon Housing Phil., Inc. v. Leynes, pending her assignment to another project for the
same position.
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• Some principles on “Floating Status” Doctrine.

o When an employee like a security guard is placed on a “floating” status, he is not entitled to any salary,
financial benefit or financial assistance provided by law during the 6-month period thereof.
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o As a general rule, “floating status” beyond 6 months amounts to illegal/constructive dismissal. This is so
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because “floating status” is not equivalent to dismissal so long as such status does not continue beyond a
reasonable time which means six (6) months. After 6 months, the employee should be recalled for work,
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or for a new assignment; otherwise, he is deemed terminated.
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o The security guard who refused to be re-assigned may be dismissed for insubordination.
o Multiple “floating status” amount to constructive dismissal.
o “Floating status” is distinct from preventive suspension. In the case of “floating status,” the employee is out of
o
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work because his employer has no available work or job to assign him to. He is thus left with no choice
but to wait for at least six (6) months before he could claim having been constructively dismissed, should
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his employer fail to assign him to any work or job within said period. In the case of preventive suspension,
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the employee is out of work because he has committed a wrongful act and his continued presence in the
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company premises poses a serious and imminent threat to the life or property of the employer or of his
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co-workers. Without this kind of threat, preventive suspension is not proper. Further, the period of
preventive suspension under the said provisions of the Implementing Rules should not exceed thirty (30)
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days.
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o A complaint filed before the lapse of the 6-month period of floating status is premature, the employee not
having been deemed constructively dismissed at that point. Thus, a complaint filed twenty-nine (29) days
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after the security guard was placed on floating status was declared as having been prematurely filed.
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o However, the filing of a complaint for constructive dismissal prior to the lapse of the 6-month period of
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“floating status” will not be held premature in cases where the intent to terminate the employee is evident
even prior to the lapse of said period.
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o No procedural due process is required before an employee is placed under “floating status.” The reason is
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that there is no termination of employment to speak of at that point.

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F. RETIREMENT
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• Who are covered?

The following employees are eligible to avail of retirement benefits under Article 302 [287] of the Labor Code:
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1) All employees in the private sector, regardless of their position, designation or status and irrespective of the method
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by which their wages are paid;

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2) Part-time employees;
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3) Employees of service and other job contractors;

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4) Domestic workers/kasambahays or persons in the personal service of another;

5) Underground mine workers;
6) Employees of government-owned and/or controlled corporations organized under the Corporation Code
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(without original charters).

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• Who are excluded?

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Article 302 [287], as amended, does not apply to the following employees:
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1. Employees of the national government and its political subdivisions, including government-owned and/or
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controlled corporations, if they are covered by the Civil Service Law and its regulations.
2. Employees of retail, service and agricultural establishments or operations regularly employing not more than
ten (10) employees. These terms are defined as follows:
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a) “Retail establishment” is one principally engaged in the sale of goods to end-users for personal or
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household use. It shall lose its retail character qualified for exemption if it is engaged in both retail and
wholesale of goods.
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b) “Service establishment” is one principally engaged in the sale of service to individuals for their own or
household use and is generally recognized as such.
c) “Agricultural establishment/operation” refers to an employer which is engaged in agriculture. This
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term refers to all farming activities in all branches and includes, among others, the cultivation and tillage of
soil, production, cultivation, growing and harvesting of any agricultural or horticultural commodities,
dairying, raising of livestock or poultry, the culture of fish and other aquatic products in farms or ponds,
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and any activities performed by a farmer or on a farm as an incident to, or in conjunction with, such farming
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operations, but does not include the manufacture and/or processing of sugar, coconut, abaca, tobacco,
pineapple, aquatic or other farm products.
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• What are the two (2) types of retirement under the law (Article 302 [287] of the Labor Code)?
(1) Optional retirement upon reaching the age of sixty (60) years.
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(2) Compulsory retirement upon reaching the age of sixty-five (65) years.
It is the employee who exercises the option under No. 1 above. At age 65, there is no more option of the employee
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to speak of. He has to retire as this age is considered compulsory retirement age.
• May a different retirement age requirement be provided in a Retirement Plan?
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The optional and compulsory retirement schemes provided under Article 302 [287] come into play only in the absence
of a retirement plan or agreement setting forth other forms of optional or compulsory retirement schemes. Thus, if
there is a retirement plan or agreement in an establishment providing for an earlier or older age of retirement (but not
beyond 65 which has been declared the compulsory retirement age), the same shall be controlling.
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• What are the rules on retirement at an earlier age?
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o To be valid, retirement at an earlier age must be voluntarily consented to by the employee.

- In Alpha Jaculbe v. Silliman University, the Supreme Court ruled that in order for retirement at an earlier
age to be valid, it must be shown that the employee’s participation in the plan is voluntary. An
employer is free to impose a retirement age of less than 65 for as long as it has the employees’
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consent. Stated conversely, employees are free to accept the employer’s offer to lower the retirement
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age if they feel they can get a better deal with the retirement plan presented by the employer.
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- Following Jaculbe, the retirement of petitioner in Lourdes Cercado v. Uniprom, Inc. at the age of 47, after
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having served respondent company for 22 years, pursuant to its Employees’ Non-Contributory Retirement
Plan, which provides that employees who have rendered at least 20 years of service may be retired
at the option of the company, was declared illegal because it was not shown that she has given her
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consent thereto. Not even an iota of voluntary acquiescence to respondent’s early retirement age
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option is attributable to petitioner. The assailed retirement plan was not embodied in a CBA or in
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any employment contract or agreement assented to by petitioner and her co-employees. On the
contrary, it was unilaterally and compulsorily imposed on them.
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- The same holding was made in the 2018 en banc case of Alfredo F. Laya, Jr. v. Philippine Veterans Bank,
where petitioner, who was hired by respondent bank as its Chief Legal Counsel with a rank of Vice
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President, was compulsorily retired under the following retirement policy of the bank:
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“Section 2. Early Retirement. A Member may, with the approval of the Board of Directors,
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retire early on the first day of any month coincident with or following his attainment of
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age 50 and completion of at least 10 years of Credited Service.”

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According to petitioner Laya, he was made aware of the retirement plan of respondent bank only
after he had long been employed and was shown a photocopy of the Retirement Plan Rules and
Regulations. His letter of appointment mentioned, among others, his “Membership in the Provident Fund
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Program/Retirement Program” but the Court considered the mere mention thereof not sufficient to
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inform him of the contents or details of the retirement program. To construe from the petitioner's
acceptance of his appointment that he had acquiesced to be retired earlier than the compulsory age r
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of 65 years would, therefore, not be warranted. This is because retirement should be the result of
the bilateral act of both the employer and the employee based on their voluntary agreement that the
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employee agrees to sever his employment upon reaching a certain age.

That the petitioner might be well aware of the existence of the retirement program at the time
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of his engagement did not suffice. His implied knowledge, regardless of duration, did not equate to
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the voluntary acceptance required by law in granting an early retirement age option to the employee.
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The law demanded more than a passive acquiescence on the part of the employee, considering that
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his early retirement age option involved conceding the constitutional right to security of tenure.
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Having thus automatically become a member of the retirement plan through his acceptance of
employment as Chief Legal Officer of respondent bank, the petitioner could not withdraw from the
plan except upon his termination from employment.
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Further, the retirement plan, having been established for respondent bank and approved by its
president more than five years prior to petitioner's employment, was in the nature of a contract of
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adhesion, in respect to which the petitioner was reduced to mere submission by accepting his
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employment, and automatically became a member of the plan. With the plan being a contract of
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adhesion, to consider him to have voluntarily and freely given his consent to the terms thereof as to
warrant his being compulsorily retired at the age of 60 years is factually unwarranted.
To stress, company retirement plans must not only comply with the standards set by the
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prevailing labor laws but must also be accepted by the employees as commensurate to their faithful
services to the employer within the requisite period. Although the employer could be free to impose
a retirement age lower than 65 years for as long its employees consented, the retirement of the
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employee whose intent to retire was not clearly established, or whose retirement was involuntary is
to be treated as a discharge.
- In another 2018 case, Manila Hotel Corporation v. Rosita De Leon, the same ruling was made that an
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employee, in this case a managerial employee, cannot be compulsorily retired at an earlier age
without her express assent thereto. In this case, respondent was retired under the retirement
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provision of the rank-and-file CBA which provides that an employee's retirement is compulsory
when he or she reaches the age of 60 or has rendered 20 years of service, whichever comes first.
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Respondent was only 57 at the time she was compulsorily retired but had already rendered 34 years
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of service as Assistant Credit and Collection Manager/Acting General Cashier. Besides holding that
as managerial employee, she is not covered by the CBA, the Court noted that there was nothing in
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petitioner hotel’s submissions showing that respondent had assented to be covered by the CBA's
retirement provisions. Thus, in the absence of an agreement to the contrary, managerial employees
cannot be allowed to share in the concessions obtained by the labor union through collective
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negotiation.
- Moreover, the rulings in Laya and Cercado were invoked in holding that respondent De Leon was in
effect, illegally dismissed. All told, an employee in the private sector who did not expressly agree to
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an early retirement cannot be retired from the service before he reaches the age of 65 years.
"Acceptance by the employee of an early retirement age option must be explicit, voluntary, free and uncompelled." "The
law demanded more than a passive acquiescence on the part of the employee, considering that his early retirement age
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option involved conceding the constitutional right to security of tenure."
Retiring at an earlier age will amount to illegal dismissal if employee did not consent thereto.
- In accordance with Jaculbe, Cercado, Laya and De Leon, the employee’s retirement at an earlier age
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based solely on a provision of a retirement plan which was not freely assented to by him would be
tantamount to illegal dismissal.
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o By mutual agreement, employers may be granted the sole and exclusive prerogative to retire
employees at an earlier age or after rendering a certain period of service.
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- Cainta Catholic School v. Cainta Catholic School Employees Union [CCSEU], where the Supreme Court
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upheld the exercise by the school of its option to retire employees pursuant to the existing CBA
where it is provided that the school has the option to retire an employee upon reaching the
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age limit of sixty (60) or after having rendered at least twenty (20) years of service to the
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school, the last three (3) years of which must be continuous. Hence, the termination of
employment of the employees, arising as it did from an exercise of a management prerogative
granted by the mutually-negotiated CBA between the school and the union is valid.
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• What is the minimum years of service required for entitlement under the law?
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Five (5) years is the minimum years of service that must be rendered by the employee before he can avail of the
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retirement benefits upon reaching optional or compulsory retirement age under Article 287.
• What is the retirement age of underground mine workers?
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The rule is different. The optional retirement age of underground mine workers is 50 years of age; while the
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compulsory retirement age is 60 years old

• What is the minimum number of years of service required of underground mine workers?
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Minimum years of service is also 5 years.

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• Are the retirement benefits of underground mine workers similar to ordinary retirees?
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Yes. In fact, other than the retirement age, all other requirements as well as benefits provided in the law are applicable
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to underground mine workers.

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AMOUNT OF RETIREMENT PAY

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• What is the amount of retirement pay under the law?

o One-half (½) month salary. r
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In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment,
an employee, upon reaching the optional or compulsory retirement age specified in Article 287, shall be entitled to
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retirement pay equivalent to at least one-half (½) month salary for every year of service, a fraction of at least six (6)
months being considered as one (1) whole year.
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o Components of one-half (½) month salary.

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For purposes of determining the minimum retirement pay due an employee under Article 287, the term “one-half
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month salary” shall include all of the following:

(1) Fifteen (15) days salary of the employee based on his latest salary rate.
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(2) The cash equivalent of five (5) days of service incentive leave;
(3) One-twelfth (1/12) of the 13th month pay due the employee; and
(4) All other benefits that the employer and employee may agree upon that should be included in the
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computation of the employee’s retirement pay.

o “One-half (½) month salary” means 22.5 days.
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“One-half [½] month salary” is equivalent to “22.5 days” arrived at after adding 15 days plus 2.5 days
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representing one-twelfth [1/12] of the 13th month pay plus 5 days of service incentive leave.
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• What are some principles on retirement benefits?

1/12 of 13th month pay and 5 days of service incentive leave (SIL) should not be included if the employee was not
entitled to 13th month pay and SIL during his employment.
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o Example: R & E Transport, Inc. v. Latag, where it was held that employees who are not entitled to 13th
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month pay and SIL pay while still working should not be paid the entire “22.5 days” but only the fifteen (15)
days salary. In other words, the additional 2.5 days representing one-twelfth [1/12] of the 13th month pay and
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the five (5) days of SIL should not be included as part of the retirement benefits.
The employee in this case was a taxi driver who was being paid on the “boundary” system basis. It was
undisputed that he was entitled to retirement benefits after working for fourteen (14) years with R & E
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Transport, Inc. However, he was not entitled to the 13th month pay since Section 3 of the Rules and Regulations
Implementing P.D. No. 851 exempts from its coverage employers of those who are paid on purely boundary
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basis. He was also not entitled to the 5-day service incentive leave pay pursuant to the Rules to Implement the
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Labor Code which expressly excepts field personnel and other employees whose performance is unsupervised
by the employer.
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o But in the 2010 case of Serrano v. Severino Santos Transit, which involves a bus conductor (petitioner) who
worked for 14 years for respondent bus company which did not adopt any retirement scheme. It was held
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herein that even if petitioner as bus conductor was paid on commission basis, he falls within the coverage of
R.A. 7641 (Retirement Pay Law, now Article 287 of Labor Code). This means that his retirement pay should
include the cash equivalent of the 5-day SIL and 1/12 of the 13th month pay for a total of 22.5 days. The
affirmance by the Court of Appeals of the reliance by the NLRC on R & E Transport case was held
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erroneous. For purposes of applying the law on SIL as well as on retirement, there is a difference between
drivers paid under the “boundary system” and conductors paid on commission basis. This is so because in
practice, taxi drivers do not receive fixed wages. They retain only those sums in excess of the “boundary” or
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fee they pay to the owners or operators of the vehicles. Conductors, on the other hand, are paid a certain
percentage of the bus’ earnings for the day. It bears emphasis that under P.D. No. 851 and the SIL Law, the
exclusion from its coverage of workers who are paid on a purely commission basis is only with respect to field
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personnel.
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RETIREMENT BENEFITS OF WORKERS PAID BY RESULTS

• What are the retirement benefits of workers paid by results?
For covered workers who are paid by results and do not have a fixed monthly rate, the basis for the determination
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of the salary for fifteen (15) days shall be their average daily salary (ADS). The ADS is the average salary for the last
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twelve (12) months reckoned from the date of their retirement, divided by the number of actual working days in that
particular period.
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RETIREMENT BENEFITS OF PART-TIME WORKERS
• How should the retirement benefits of part-time workers be computed?
o
Applying the principles under Article 287, as amended, the components of retirement benefits of part-time workers
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may also be computed at least in proportion to the salary and related benefits due them.
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ENTITLEMENT OF EMPLOYEES DISMISSED FOR JUST CAUSE TO RETIREMENT BENEFITS
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• General rule – Entitled because employee has acquired vested right over the retirement benefits.
Razon, Jr. v. NLRC, May 7, 1990.
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• Exception - Where just cause termination is cited in the retirement plan as reason to validly deny claim for
retirement benefits.
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• San Miguel Corporation v. Lao, July 11, 2002.

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Here, the company’s retirement plan prohibits the award of retirement benefits to an employee dismissed for just
cause, a proscription that binds the parties to it.
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RETIREMENT BENEFITS VS. SEPARATION PAY

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• When both retirement pay and separation pay must be paid.

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o Aquino v. NLRC, Feb. 11, 1992.

In this case, the Supreme Court ordered the payment to the retrenched employees of both the separation pay for
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retrenchment embodied in the CBA as well as the retirement pay provided under a separate Retirement Plan.
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The reason is that these two are not mutually exclusive. There is nothing in the CBA nor in the Retirement Plan that
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states that an employee who had received separation pay would no longer be entitled to retirement benefits or that
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collection of retirement benefits was prohibited if the employee had already received separation pay
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• When separation pay may be charged to retirement pay.

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o Ford Philippines Salaried Employees Association v. NLRC, Dec. 11, 1987.

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It is provided in the retirement plan that the retirement, death and disability benefits paid in the plan are considered
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integrated with and in lieu of termination benefits under the Labor Code, thus, the retirement fund may be validly
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used to pay such termination or separation pay because of closure of business.
• When employees are entitled to only one form of benefit.

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o Cipriano v. San Miguel Corporation, Aug. 21, 1968.

The retirement plan provides that the employee shall be entitled to either the retirement benefit provided therein or
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the separation pay provided by law, whichever is higher, the employee cannot be entitled to both benefits.
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Retirement pay under the labor code or retirement plan is separate and distinct from the retirement pay under
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the SSS, GSIS and Pag-IBIG.

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MAJOR TOPIC 7
MANAGEMENT PREROGATIVE
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• What are management prerogatives?
Management prerogatives are granted to the employer to regulate every aspect of their business, generally without
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restraint in accordance with their own discretion and judgment. This privilege is inherent in the right of employers
to control and manage their enterprise effectively. Such aspects of employment include hiring, work assignments,
working methods, time, place and manner of work, tools to be used, processes to be followed, supervision of workers,
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working regulations, transfer of employees, lay-off of workers and the discipline, dismissal and recall of workers.
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• What are the components of the right to discipline?
A. DISCIPLINE
The right or prerogative to discipline covers the following:

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1) Right to discipline;
2) Right to dismiss;
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3) Right to determine who to punish;

4) Right to promulgate rules and regulations;
5) Right to impose penalty; proportionality rule;
6) Right to choose which penalty to impose; and
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7) Right to impose heavier penalty than what the company rules prescribe.
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The proportionality rule simply means that the penalty to be imposed should be commensurate to the offense committed.
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For example, dismissal for committing tardiness or absence for the first time is too harsh a penalty. A warning, a reprimand
would suffice for the first offense, punitive suspension of a day or two, for the second offense, a longer suspension for a
third offense, and finally, dismissal for a fourth offense.
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For committing serious offenses, such as stealing a company-owned property, or stabbing a co-employee, because of their
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nature, would certainly deserve the imposition of the supreme penalty of dismissal, and not just a warning, a reprimand or
punitive suspension.
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B. TRANSFER OF EMPLOYEES
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• What are the various kinds of transfer?
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o Two (2) kinds of transfer. - A transfer means a movement:

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1. From one position to another of equivalent rank, level or salary, without a break in the service; or
2. From one office to another within the same business establishment.
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•
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What are the salient points to consider in transfer?

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o The exercise of the prerogative to transfer or assign employees from one office or area of operation to another is
valid provided there is no demotion in rank or diminution of salary, benefits and other privileges. The
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transfer should not be motivated by discrimination or made in bad faith or effected as a form of punishment or
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demotion without sufficient cause.
Commitment made by the employee like a salesman in the employment contract to be re-assigned r
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anywhere in the Philippines is binding on him.

o Even if the employee is performing well in his present assignment, management may reassign him to a
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new post.
o The transfer of an employee may constitute constructive dismissal when:
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1) When the transfer is unreasonable, inconvenient or prejudicial to the employee;

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2) When the transfer involves a demotion in rank or diminution of salaries, benefits and other privileges; and
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3) When the employer performs a clear act of discrimination, insensibility, or disdain towards the employee,
which forecloses any choice by the latter except to forego his continued employment.
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o The refusal of an employee to be transferred may be held justified if there is a showing that the transfer was
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directed by the employer under questionable circumstances. For instance, the transfer of employees during
the height of their union’s concerted activities in the company where they were active participants is
illegal.
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o An employee who refuses to be transferred, when such transfer is valid, is guilty of insubordination or
willful disobedience of a lawful order of an employer under Article 282 of the Labor Code.
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o Refusal to transfer due to parental obligations, additional expenses, inconvenience, hardship and
anguish is not valid. An employee could not validly refuse lawful orders to transfer based on these
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grounds.
o Refusal to transfer to overseas assignment is valid.
o Refusal to transfer consequent to promotion is valid.
o Transfer to avoid conflict of interest is valid.
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o A transfer from one position to another occasioned by the abolition of the position is valid.
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C. PRODUCTIVITY STANDARDS
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• How may productivity standards be imposed?

o The employer has the prerogative to prescribe the standards of productivity which the employees should
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comply. The productivity standards may be used by the employer as:

1. an incentive scheme; and/or
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2. a disciplinary scheme.
o As an incentive scheme, employees who surpass the productivity standards or quota are usually given
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additional benefits.
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o As a disciplinary scheme, employees may be sanctioned or dismissed for failure to meet the productivity
standards or quota.
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o Illustrative cases: In International School Manila v. International School Alliance of Educators (ISAE),
the teacher was held guilty of gross inefficiency meriting her dismissal on the basis of the Court’s finding that
she failed to measure up to the standards set by the school in teaching Filipino classes.
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o In Reyes-Rayel v. Philippine Luen Thai Holdings Corp., the validity of the dismissal of petitioner who was
the Corporate Human Resources (CHR) Director for Manufacturing of respondent company, on the ground of
inefficiency and ineptitude, was affirmed on the basis of the Court’s finding that petitioner, on two occasions,
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gave wrong information regarding issues on leave and holiday pay which generated confusion among employees
in the computation of salaries and wages.
o In Realda v. New Age Graphics, Inc., petitioner, a machine operator of respondent company, was dismissed
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on the ground, among others, of inefficiency. In affirming the validity of his dismissal, the Supreme Court
reasoned: “(T)he petitioner’s failure to observe Graphics, Inc.’s work standards constitutes inefficiency that is a
valid cause for dismissal. Failure to observe prescribed standards of work, or to fulfill reasonable work
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assignments due to inefficiency may constitute just cause for dismissal. Such inefficiency is understood to mean
failure to attain work goals or work quotas, either by failing to complete the same within the allotted reasonable
period, or by producing unsatisfactory results.”
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D. BONUS
• What is the rule on its demandability and enforceability?
ss
o Bonus, as a general rule, is an amount granted and paid ex gratia to the employee.
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o It cannot be forced upon the employer who may not be obliged to assume the onerous burden of granting
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bonuses or other benefits aside from the employees’ basic salaries or wages. If there is no profit, there should
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be no bonus. If profit is reduced, bonus should likewise be reduced, absent any agreement making such bonus
part of the compensation of the employees.
• When is bonus demandable and enforceable?
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o It becomes demandable and enforceable:
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(1) If it has ripened into a company practice;
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(2) If it is granted as an additional compensation which the employer agreed to give without any condition such
as success of business or more efficient or more productive operation, hence, it is deemed part of wage or
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salary.
(3) When considered as part of the compensation and therefore demandable and enforceable, the amount is
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usually fixed. If the amount thereof is dependent upon the realization of profits, the bonus is not demandable
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and enforceable.
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E. CHANGE OF WORKING HOURS

• What is the extent of the exercise of this prerogative?
bl
o Employers have the freedom and prerogative, according to their discretion and best judgment, to regulate and
control the time when workers should report for work and perform their respective functions.
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o Manila Jockey Club Employees Labor Union – PTGWO, v. Manila Jockey Club, Inc. - The validity of the
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exercise of the same prerogative to change the working hours was affirmed in this case. It was found that while
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Section 1, Article IV of the CBA provides for a 7-hour work schedule from 9:00 a.m. to 12:00 noon and from
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1:00 p.m. to 5:00 p.m. from Mondays to Saturdays, Section 2, Article XI thereof expressly reserves to respondent
the prerogative to change existing methods or facilities and to change the schedules of work. Consequently, the
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hours of work of regular monthly-paid employees were changed from the original 9:00 a.m. to 5:00 p.m. schedule
to 1:00 p.m. to 8:00 p.m. when horse races are held, that is, every Tuesday and Thursday. The 9:00 a.m. to 5:00
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p.m. schedule for non-race days was, however, retained. Respondent, as employer, cited the change in the
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program of horse races as reason for the adjustment of the work schedule. It rationalized that when the CBA
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was signed, the horse races started at 10:00 a.m. When the races were moved to 2:00 p.m., there was no other
choice for management but to change the work schedule as there was no work to be done in the
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morning. Evidently, the adjustment in the work schedule is justified.

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F. BONA FIDE OCCUPATIONAL QUALIFICATIONS

The BFOQ Rule
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• Concept.
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o The employer has the prerogative to impose certain qualifications based on such criteria as race, sex, age, national
origin, civil or marital status, physical appearance (such as a requirement on “pleasing personality” or height and
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weight) and the like.
• Meiorin test.
o This three-step test is used to determine whether an employment policy is justified. Under this test, an employer
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can justify the impugned standard by establishing on the balance of probabilities:

a. That the employer adopted the standard for a purpose rationally connected to the performance of the job;
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b. That the employer adopted the particular standard in an HONEST AND GOOD FAITH BELIEF that it
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was necessary to the fulfilment of that legitimate work-related purpose; and

c. That the standard was REASONABLY necessary to the accomplishment of that legitimate work-related
purpose.
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• Star Paper test

o Consequently, in Star Paper Corp. v. Simbol, April 12, 2006, the Supreme Court held that in order to justify a
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BFOQ, the employer must prove two (2) factors:

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(1) The employment qualification is reasonably related to the essential operation of the job involved; and
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(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.
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In short, the test of reasonableness of the company policy is used because it is parallel to BFOQ. BFOQ is
valid “provided it reflects an inherent quality reasonably necessary for satisfactory job performance.” This is otherwise
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known as the “Reasonable Business Necessity Rule.”
• Specific topics
(a) Civil status/marital status qualification
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(b) Physical appearance qualification
(c) Age qualification
• Relevant cases
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(a) CIVIL STATUS/MARITAL STATUS QUALIFICATION
As far as the qualification of civil status or marital status is concerned, the following cases are relevant:
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(1) PT & T v. NLRC;
(2) Duncan Association of Detailman-PTGWO v. Glaxo Welcome Philippines, Inc.; and
(3) Star Paper Corp. v. Simbol.
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• The PT&T case.

o The employer invoked concealment of civil status as ground to terminate the private respondent employee.
o In the job application form, she indicated in the portion for civil status that she was single although she had
ss
contracted marriage a few months earlier.
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o It appears that the employee had made the same representation in the two successive reliever agreements which
she signed.
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o The company has a policy of not accepting married women for employment.
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o Application of the BFOQ rule in the PT&T case: The Supreme Court ruled that the company policy violates
the right against discrimination afforded all women workers under Article 136 of the Labor Code.
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“[A] requirement that a woman employee must remain unmarried could be justified as a ‘bona
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fide occupational qualification,’ or BFOQ, where the particular requirements of the job would
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justify the same, but not on the ground of a general principle, such as the desirability of spreading
work in the workplace. A requirement of that nature would be valid provided it reflects an inherent
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quality reasonably necessary for satisfactory job performance. Thus, in one case, a no-marriage
rule applicable to both male and female flight attendants, was regarded as unlawful since the
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restriction was not related to the job performance of the flight attendants.”
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• The Duncan case.

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o In Duncan, the contract of employment expressly prohibited an employee from having a relationship with an
employee of a competitor company. It provides:
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“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
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Company as a matter of Company policy.”
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o Application of the BFOQ rule in the Duncan case.
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The company (Glaxo) has a right to guard its trade secrets, manufacturing formulas, marketing strategies and other
confidential programs and information from competitors. It considered the prohibition against personal or marital
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relationships with employees of competitor companies upon Glaxo’s employees reasonable under the circumstances
because relationships of that nature might compromise the interests of Glaxo. In laying down the assailed company
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policy, the Court recognized that Glaxo only aims to protect its interests against the possibility that a competitor company
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will gain access to its secrets and procedures.

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•
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The Star Paper case.

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o The employees in Star Paper were terminated on various occasions, on the basis of the following company policy,
viz.:
“1. New applicants will not be allowed to be hired if in case he/she has [a] relative, up to [the] 3rd
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degree of relationship, already employed by the company.

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“2. In case two of our employees (both singles [sic], one male and another female) developed a
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friendly relationship during the course of their employment and then decided to get married, one of
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them should resign to preserve the policy stated above.”

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o According to the employer, said rule is only intended to carry out its no-employment-for-relatives-within-the-
third-degree-policy which is within the ambit of the prerogatives of management. The Supreme Court, however,
disagreed. It ruled that said policy failed to comply with the standard of reasonableness which is being followed
in our jurisdiction.
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o Application of the BFOQ rule in the Star Paper case.

The Court did not find a reasonable business necessity in the policy. Respondents were hired after they were found fit
for the job, but were asked to resign when they married a co-employee. Petitioners failed to show how the marriage could
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be detrimental to their business operations. The policy is premised on the mere fear that employees married to each other
will be less efficient. If the questioned rule is upheld without valid justification, the employer can create policies based on
an unproven presumption of a perceived danger at the expense of an employee’s right to security of tenure.
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(b) PHYSICAL APPEARANCE QUALIFICATION

•
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The Yrasuegui case.

o This case involves the physical appearance or attribute of an employee which, in this case, is petitioner’s weight.
For several times spanning a total period of five (5) years, petitioner, an international flight steward of respondent
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PAL, was given the opportunity to reduce his weight to the acceptable level in accordance with the weight
standards but he failed to measure up therewith. He was thus terminated for his continued obesity. In his illegal
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dismissal case, one of the issues raised is whether petitioner’s dismissal for obesity can be predicated on the
BFOQ defense.
o Application of the BFOQ rule in the Yrasuegui case:
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Citing Star Paper Corp. and Duncan, the Court ruled that BFOQ is a proper defense that justified petitioner’s dismissal
grounded on his obesity.
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The business of PAL is air transportation. As such, it has committed itself to safely transport its passengers. In order to
achieve this, it must necessarily rely on its employees, most particularly the cabin flight deck crew who are on board the
aircraft. The weight standards of PAL should be viewed as imposing strict norms of discipline upon its employees. In
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other words, the primary objective of PAL in the imposition of the weight standards for cabin crew is flight safety. It
cannot be gainsaid that cabin attendants must maintain agility at all times in order to inspire passenger confidence on
their ability to care for the passengers when something goes wrong.
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(c) AGE QUALIFICATION
• Anti-Age Discrimination in Employment Act.
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R.A. No. 10911 [July 21, 2016], otherwise known as the “Anti-Age Discrimination in Employment Act” prohibits
discrimination against any individual in employment on account of age. This law was lately implemented by DOLE
Department Order No. 170, Series of 2017 [February 02, 2017].
ss
o Coverage. The law shall apply to all employers, publishers, labor contractors or subcontractors, and labor
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organizations, whether or not registered.
o Prohibitions. Under this law, the following are the prohibited discriminatory acts related to employment on
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account of age:
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(a) It shall be unlawful for an employer to:
(1) Print or publish, or cause to be printed or published, in any form of media, including the internet,
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any notice of advertisement relating to employment suggesting preferences, limitations,
specifications and discrimination based on age;
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(2) Require the declaration of age or birth date during the application process;
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(3) Decline any employment application because of the individual’s age;
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(4) Discriminate against an individual in terms of compensation, terms and conditions or privileges of
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employment on account of such individual’s age;
(5) Deny any employee’s or worker’s promotion or opportunity for training because of age;
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(6) Forcibly layoff an employee or worker because of old age; or

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(7) Impose early retirement on the basis of such employee’s or worker’s age.
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(b) It shall be unlawful for a labor contractor or subcontractor, if any, to refuse to refer for employment
or otherwise discriminate against any individual because of such person’s age.
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(c) It shall be unlawful for a labor organization to:

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(1) Deny membership to any individual because of such individual’s age;

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(2) Exclude from its membership any individual because of such individual’s age; or
(3) Cause or attempt to cause an employer to discriminate against an individual in violation of the Rules.
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(d) It shall be unlawful for a publisher to print or publish any notice of advertisement relating to
employment suggesting preferences, limitations, specifications, and discrimination based on age.
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o Exceptions. It shall be lawful for an employer to set age limitations in employment if:
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(a) Age is a bona fide occupational qualification (BFOQ) reasonably necessary in the normal operation of a
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particular business or where the differentiation is based on reasonable factors other than age;
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(b) The intent is to observe the terms of bona fide seniority system that is not intended to evade the purpose
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of the Rules.
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(c) The intent is to observe the terms of a bona fide employee retirement or a voluntary early retirement plan
consistent with the purpose of the Rules; Provided, That such retirement or voluntary retirement plan is
in accordance with the Labor Code, as renumbered, and other related laws; or
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(d) The action is duly certified by the DOLE Secretary after consultation with the stakeholders in
accordance with the purpose of the Rules.
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For purposes of the foregoing exceptions, an employer who invokes the qualifications as provided herein,
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shall submit a report prior to its implementation to the DOLE Regional Office which has jurisdiction over
the workplace. The submission of the report shall be a presumption that the age limitation is in accordance
with the Rules unless proven otherwise by the court.
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Failure to submit said report shall give rise to the presumption that the employer is not allowed to set age
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limitation.
o Employment age of children. The age requirement in the employment of children shall be governed by R.A.
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No. 9231 and its Implementing Rules and Regulations, Article 138 of the Labor Code as renumbered, and other
applicable laws, rules and regulations.
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Upon hiring, the employer may require the child or the guardian to show proof of the child's age for purposes
of compliance with minimum employable age under existing laws.
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G. POST-EMPLOYMENT RESTRICTIONS
(a) NON-COMPETE CLAUSE
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• Is a non-compete clause valid?
Yes. The employer and the employee are free to stipulate in an employment contract prohibiting the employee within a
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certain period from and after the termination of his employment, from:
(1) starting a similar business, profession or trade; or
(2) working in an entity that is engaged in a similar business that might compete with the employer.
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The non-compete clause is agreed upon to prevent the possibility that upon an employee’s termination or resignation, he
might start a business or work for a competitor with the full competitive advantage of knowing and exploiting confidential
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and sensitive information, trade secrets, marketing plans, customer/client lists, business practices, upcoming products,
etc., which he acquired and gained from his employment with the former employer. Contracts which prohibit an employee
from engaging in business in competition with the employer are not necessarily void for being in restraint of trade.
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• What are the requisites in order for a non-compete clause to be valid?
A non-compete clause is not necessarily void for being in restraint of trade as long as there are reasonable limitations
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as to three (3) things: time, place and trade.
Example: The non-compete clause (called “Non-Involvement Provision”) in the 2007 case of Daisy B. Tiu v. Platinum
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Plans Philippines, Inc., provides as follows:
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“8. NON-INVOLVEMENT PROVISION – The EMPLOYEE further undertakes that during his/her
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engagement with EMPLOYER and in case of separation from the Company, whether voluntary or for cause,
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he/she shall not, for the next TWO (2) years thereafter, engage in or be involved with any corporation,
association or entity, whether directly or indirectly, engaged in the same business or belonging to the same
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pre-need industry as the EMPLOYER. Any breach of the foregoing provision shall render the EMPLOYEE
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liable to the EMPLOYER in the amount of One Hundred Thousand Pesos (P100,000.00) for and as
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liquidated damages.”
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Starting on January 1, 1993, petitioner worked for respondent as Senior Assistant Vice-President and Territorial
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Operations Head in charge of its Hongkong and Asean operations under a 5-year contract of employment containing the
afore-quoted clause. On September 16, 1995, petitioner stopped reporting for work. In November 1995, she became the
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Vice-President for Sales of Professional Pension Plans, Inc., a corporation engaged also in the pre-need industry.
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Consequently, respondent sued petitioner for damages before the RTC of Pasig City. Respondent alleged, among others,
that petitioner’s employment with Professional Pension Plans, Inc. violated the above-quoted non-involvement clause in
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her contract of employment. Respondent thus prayed for P100,000 as compensatory damages; P200,000 as moral damages;
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P100,000 as exemplary damages; and 25% of the total amount due plus P1,000 per counsel’s court appearance, as attorney’s
fees.
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Petitioner countered that the non-involvement clause was unenforceable for being against public order or public
policy: First, the restraint imposed was much greater than what was necessary to afford respondent a fair and reasonable
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protection. Petitioner contended that the transfer to a rival company was an accepted practice in the pre-need industry.
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Since the products sold by the companies were more or less the same, there was nothing peculiar or unique to protect.
Second, respondent did not invest in petitioner’s training or improvement. At the time petitioner was recruited, she already r
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possessed the knowledge and expertise required in the pre-need industry and respondent benefited tremendously from it.
Third, a strict application of the non-involvement clause would amount to a deprivation of petitioner’s right to engage in
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the only work she knew.

In affirming the validity of the Non-Involvement Clause, the Supreme Court ratiocinated as follows:
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“xxx A non-involvement clause is not necessarily void for being in restraint of trade
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as long as there are reasonable limitations as to TIME, TRADE, and PLACE.

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“In this case, the non-involvement clause has a TIME LIMIT: two years from the time
petitioner’s employment with respondent ends. It is also limited as to TRADE, since it
only prohibits petitioner from engaging in any pre-need business akin to respondent’s. It
is limited as to PLACE since the prohibition covers only Hongkong and Asean operations.
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“More significantly, since petitioner was the Senior Assistant Vice-President and Territorial
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Operations Head in charge of respondent’s Hongkong and Asean operations, she had been privy
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to confidential and highly sensitive marketing strategies of respondent’s business. To allow her
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to engage in a rival business soon after she leaves would make respondent’s trade secrets
vulnerable especially in a highly competitive marketing environment. In sum, we find the non-
involvement clause not contrary to public welfare and not greater than is necessary to
afford a fair and reasonable protection to respondent.
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“Thus, as held by the trial court and the Court of Appeals, petitioner is bound to pay
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respondent P100,000 as liquidated damages. While we have equitably reduced liquidated

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damages in certain cases, we cannot do so in this case, since it appears that even from the start,
petitioner had not shown the least intention to fulfill the non-involvement clause in good faith.”
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OTHER POST-EMPLOYMENT PROHIBITIONS

• Confidentiality and non-disclosure clause.
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The confidentiality and non-disclosure clause reflects the commitment of the employee that he shall not, either during
the period of his employment with the employer or at any time thereafter, use or disclose to any person, firm or
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corporation any information concerning the business or affairs of his employment, for his own benefit or to the detriment
of the employer. This clause may also cover Former Employer Information and Third Party Information.
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• Non-solicitation clause.
To protect the legitimate business interests of the employer, including its business relationships, the employee under this
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clause, may, directly or indirectly, be prohibited from soliciting or approaching, or accept any business from any person
or entity who shall, at any time within a fixed period preceding the termination of his employment, have been (a) a client,
talent, producer, designer, programmer, distributor, merchandiser, or advertiser of the Company, (b) a party or
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prospective party to an agreement with the employer, or (c) a representative or agent of any client, talent, producer,
designer, programmer, distributor, merchandiser, or advertiser of the employer for the purpose of offering to that person
or entity goods or services which are of the same type as or similar to any goods or services supplied by the employer at
termination.
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• Non-recruitment or anti-piracy clause.
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This clause prohibits the recruitment by the employee of personnel or employees of the employer for a certain period
after his termination of employment, either on his own account or in conjunction with or on behalf of any other person.
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• Inventions ASSIGNMENT CLAUSE (INTELLECTUAL PROPERTY CLAUSE).

In industries engaged in research and development and related activities, this clause requires the employee, within a certain
period, to disclose in confidence to the employer and its subsidiaries and to assign all inventions, improvements, designs,
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original works of authorship, formulas, processes, compositions of matter, computer software programs, databases, mask
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works and trade secrets, whether or not patentable, copyrightable or protectible as trade secrets (collectively, the
“Inventions”), which the employee may solely or jointly conceive or develop or reduce to practice, or cause to be
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conceived or developed or reduced to practice, during the period of his employment with the employer.
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H. CLEARANCE PROCEDURES
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• Requiring clearance before the release of last payments to the employee is a standard procedure among employers,
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whether public or private. Clearance procedures are instituted to ensure that the properties, real or personal,
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belonging to the employer but are in the possession of the separated employee, are returned to the employer before
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the employee’s departure.

• As a general rule, employers are prohibited from withholding wages from employees. However, our law supports
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the employers’ institution of clearance procedures before the release of wages. (Milan et al., v. NLRC, G.R. No.
s
202961, 4 February 2015)

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I. LIMITATIONS ON MANAGEMENT PREROGATIVE; POLICE POWER OF THE STATE

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• What are the limitations to the exercise of these prerogatives?

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1. Limitations imposed by:

a) law;
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b) CBA;
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c) employment contract;
d) employer policy;
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e) employer practice; and
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f) general principles of fair play and justice.

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2. It is subject to police power.

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3. Its exercise should be without abuse of discretion.

4. It should be done in good faith and with due regard to the rights of labor.
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For example, an employer cannot prescribe more than 8 hours as normal working hours in a day because there is a
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law which limits it to 8 hours. In the same vein, the employer cannot insist that an employee should observe 8 hours
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as the daily normal working hours if there is a stipulation in the CBA, employment contract, or there is an employer
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policy or practice that the normal working hours is only 7 hours per day.
• Right to discipline and/or dismiss, subject to police power.
o The employer’s inherent right to discipline is subject to reasonable regulation by the State in the exercise of its
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paramount police power. Thus, the dismissal of employees must be made within the parameters of the law and
pursuant to the basic tenets of equity, justice and fair play. It must not be done arbitrarily and without just cause.
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o Employer’s rules cannot preclude the State from inquiring whether the strict and rigid application or interpretation
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thereof would be harsh to the employee. (Farrol v. CA, G.R. No. 133259, Feb. 10, 2000)
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MAJOR TOPIC 8
JURISDICTION AND RELIEFS
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General Table of Jurisdiction
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NLRC BLR DOLE VA NCMB
Supreme Court Supreme Court Supreme Court Supreme Court
Rule 45 Rule 45 Rule 45 Rule 45
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Court of Appeals Court of Appeals Court of Appeals Court of Appeals
Rule 65 Rule 65 Rule 65 Rule 43
Motion for Motion for Motion for Motion for
Reconsideration
Appeal to
NLRC
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Reconsideration
Appeal to
BLR Director
Reconsideration
Appeal to
DOLE Secretary
Reconsideration
Automatic
Elevation to
No appeal or certiorari
(NCMB is not a quasi-
Voluntary judicial body)
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Arbitrator
Med-Arbiter DOLE Director (or Grievance `NCMB Conciliator-
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Labor Arbiter (or DOLE Regional Med-Arbiter)4 Machinery Mediator

Director) 3
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A. MANDATORY CONCILIATION-MEDIATION, SENA
• SENA
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o “Single Entry Approach” or “SEnA" refers to the administrative approach to provide an accessible, speedy, impartial,
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and inexpensive settlement procedure of all labor and employment issues through a 30-day mandatory conciliation-
mediation to prevent them from ripening into full blown disputes. Conciliation-mediation process is utilized as
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immediate intervention to effect amicable settlement among the differing parties.
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o The “30-day mandatory conciliation-mediation period” refers to the period of 30 calendar days within which to effect a
settlement through mandatory conciliation-mediation services from the conduct of initial conference and to refer
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the issue to the appropriate agency if unsettled.
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Pursuant to the constitutional mandate to promote the preferential use of voluntary modes of settling disputes
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including conciliation-mediation, all issues arising from labor and employment shall be subject to a 30-day mandatory
conciliation-mediation services or SEnA.
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o All issues arising from labor and employment are subject to the 30-day mandatory conciliation-mediation, with the
following exceptions:
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a) Notices of strike/lockout or preventive mediation cases with the NCMB;

b) Issues arising from the interpretation or implementation of the CBA and those arising from interpretation or
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enforcement of company personnel policies which should be processed through the grievance machinery;
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c) Applications for exemption from Wage Orders with the National Wages and Productivity Commission
(NWPC);
d) Issues involving violations of:
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1) Alien Employment Permit (AEP);

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2) Private Employment Agency (PEA) authority or license;

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3) Working Child Permit (WCP) and violations of R.A. No.9231 (Anti-Child Labor Law);
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4) Registration under Department Order No. 18-A, Series of 2011;

5) Professional license issued by the Professional Regulations Commission (PRC) and violation of Professional
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Code of Conduct;
6) Technical Education and Skills Development Authority (TESDA) accreditations; and
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7) Other similar permits, licenses or registrations issued by the DOLE or its attached agencies.
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e) Violations of POEA Rules and Regulations involving:

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1) Serious offenses and offenses penalized with cancellation of license;

2) Disciplinary actions against overseas workers/seafarers which are considered serious offenses or which carry
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the penalty of delisting from the POEA registry at first offense;

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3) Complaints initiated by the POEA;

4) Complaints against an agency whose license is revoked, cancelled, expired or otherwise delisted; and
5) Complaints categorized under the POEA Rules and Regulations as not subject to SEnA.
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f) Issues on occupational safety and health standards involving imminent danger situation, dangerous
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occurrences/disabling injury, and absence of personal protective equipment.

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Previously, under Department Order No. 107-10, Series of 2010 and its implementing rules, there was an enumeration of
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the specific cases covered by SEnA, viz.:

(1) Cases falling under the administrative and quasi-judicial functions of all DOLE offices and attached agencies,
including the NLRC;5 and
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(2) All issues arising from labor and employment,6 which may include the following:
a) Termination or suspension of employment issues;
b) Claims for any sum of money, regardless of amount;
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c) Intra-union and inter-union issues except petition for certification election, after exhaustion of administrative
remedies;
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3 Refers to appeals from decisions of DOLE Regional Directors in certain cases which should be made to the BLR Director and not to the DOLE
Secretary.
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4 Refers to appeals from decisions of Med-Arbiters in certification election cases which should be made to the DOLE Secretary and not to the BLR
Director.
5 Section 2, Department Order No. 107-10.
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6 Section 6, Ibid.
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d) Unfair Labor Practice;
e) Closures, retrenchments, redundancies, temporary lay-offs;
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f) OFW cases;
g) Occupational safety and health standards issues except those involving imminent danger situation;
h) Issues arising from other labor and related issuances (OLRI);
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i) Any other claims arising from employer-employee relationship; and
j) Cases falling under the administrative and quasi-judicial jurisdiction of all DOLE offices and attached agencies,
including NLRC.
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The foregoing enumeration is no longer found in the SEnA IRR of 2016. This does not mean, however, that the
enumerated cases are no longer covered by SEnA; they still are, only that they now are considered falling under the general
phrase “[a]ll issues arising from labor and employment” in this latest implementing rules.
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• The Labor Arbiter.
The Labor Arbiter is an official in the Arbitration Branch of the National Labor Relations Commission (NLRC) who
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hears and decides cases falling under his original and exclusive jurisdiction as provided by law.
• Labor arbiters have no injunctive power; only the commission (NLRC) has this power.
Previously, Labor Arbiters are possessed of injunctive power. This grant of injunctive power, however, was deleted
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in recent NLRC Rules. The Labor Arbiter thus has no more injunctive power. Only the Commission (NLRC) has that
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power.
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• Nature of jurisdiction of labor arbiters - original and exclusive.
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The jurisdiction conferred by Article 224 [217] upon the Labor Arbiters is both original and exclusive, meaning, no other
officers or tribunals can take cognizance of, or hear and decide, any of the cases therein enumerated.
• Exceptions to the original and exclusive jurisdiction of labor arbiters.
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The following cases are the exceptions when the Labor Arbiters may not exercise their original and exclusive
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jurisdiction:
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1. In assumed cases. When the DOLE Secretary or the President exercises his power under Article 278(g)
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[263(g)] of the Labor Code to assume jurisdiction over national interest cases and decide them himself.
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2. In certified cases. When the NLRC exercises its power of compulsory arbitration over similar national interest
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cases that are certified to it by the DOLE Secretary pursuant to the exercise by the latter of his certification
power under the same Article 278(g) [263(g)].
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3. In cases arising from CBA. - When cases arise from the interpretation or implementation of collective
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bargaining agreements and from the interpretation or enforcement of company personnel policies which shall
be disposed of by the Labor Arbiter by referring the same to the grievance machinery and voluntary
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arbitration, as may be provided in said agreements.

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4. In cases submitted for voluntary arbitration. - When the parties agree to submit the case to voluntary
arbitration before a Voluntary Arbitrator or panel of Voluntary Arbitrators who, under Articles 274 [261] and
275 [262] of the Labor Code, are also possessed of original and exclusive jurisdiction to hear and decide cases
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mutually submitted to them by the parties for arbitration and adjudication.

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• Rundown of all cases falling under the jurisdiction of the Labor Arbiters. r
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More particularly, Labor Arbiters shall have original and exclusive jurisdiction to hear and decide the following cases
involving all workers, whether agricultural or non-agricultural:
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1. Under Article 224 [217] of the Labor Code:

(a) Unfair labor practice cases;
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(b) Termination disputes (Illegal dismissal cases);

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(c) Money claims exceeding P5,000.00.

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(d) Claims for actual, moral, exemplary and other forms of damages arising from employer-employee relations;
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and
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(e) Cases involving the legality of strikes and lockouts.
NOTE: Claims for employees’ compensation, SSS, PhilHealth (Medicare) and maternity benefits do not fall
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under the jurisdiction of the Labor Arbiter because these fall under the jurisdiction of other government
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agencies.
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2. Under Article 124 of the Labor Code, as amended by R.A. No. 6727:
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Disputes involving legislated wage increases and wage distortion in unorganized establishments not
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voluntarily settled by the parties pursuant to R.A. No. 6727.

3. Under Article 128(b) of the Labor Code, as amended by R.A. No. 7730:
Contested cases under the exception clause in Article 128(b) of the Labor Code.
4. Under Article 233 [227] of the Labor Code:
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Enforcement of compromise agreements when there is non-compliance by any of the parties thereto,
pursuant to Article 227 of the Labor Code.
5. Under Article 276 [262-A] of the Labor Code:
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Issuance of writ of execution to enforce decisions of Voluntary Arbitrators or panel of Voluntary

Arbitrators, in case of their absence or incapacity, for any reason
6. Under Section 10 of R.A. No. 8042, as amended by R.A. No. 10022:
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Money claims of OFWs arising out of employer-employee relationship or by virtue of any law or contract,
including claims death and disability benefits and for actual, moral, exemplary and other forms of damages.
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7. Other cases as may be provided by law.

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I.
JURISDICTION OVER UNFAIR LABOR PRACTICE CASES
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• Some principles on jurisdiction over ULPs.
o The Labor Arbiter has jurisdiction over all ULPs whether committed by the employers or the labor
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organizations.
o The Labor Arbiter has jurisdiction only over the civil aspect of ULP, the criminal aspect being lodged with
the regular courts.
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II.
JURISDICTION OVER ILLEGAL DISMISSAL CASES
• Some principles on jurisdiction over termination cases.
o al
The validity of the exercise of jurisdiction by Labor Arbiters over illegal dismissal cases is not dependent on
the kind or nature of the ground cited in support of the dismissal; hence, whether the dismissal is
for just cause or authorized cause, it is of no consequence.
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o In case of conflict of jurisdiction between Labor Arbiter and the Voluntary Arbitrator over termination
cases, the former’s jurisdiction shall prevail for the following reasons:
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(1) Termination of employment is not a grievable issue that must be submitted to the grievance machinery
or voluntary arbitration for adjudication. The jurisdiction thereover remains within the original and
exclusive ambit of the Labor Arbiter and not of the Voluntary Arbitrator.
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(2) Even if the CBA provides that termination disputes are grievable, the same is merely discretionary on
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the part of the parties thereto.
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(3) Once there is actual termination, jurisdiction is conferred upon Labor Arbiters by operation of law.
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(4) Interpretation of CBA and enforcement of company personnel policies are merely corollary to an illegal
dismissal case.
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(5) Article 217 is deemed written into the CBA being an intrinsic part thereof.
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o In other words, the Voluntary Arbitrator will only have jurisdiction over illegal dismissal cases when there is
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express agreement thereon by the parties to the CBA, i.e., the employer and the bargaining agent, to
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submit the termination case to voluntary arbitration. Absent the mutual express agreement of the parties,
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Voluntary Arbitrator cannot acquire jurisdiction over termination cases. Ba

o The express agreement must be stated in the CBA or there must be enough evidence on record unmistakably
showing that the parties have agreed to resort to voluntary arbitration.
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III.
JURISDICTION OVER MONEY CLAIMS CASES
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• Classification of money claims.

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Money claims falling within the original and exclusive jurisdiction of the Labor Arbiters may be classified as follows:
1. Any money claim, regardless of amount, when asserted in an illegal dismissal case (where the
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remedy of reinstatement is proper). Here, the money claim is but an accompanying remedy
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subordinated to the principal cause of action, i.e., illegal dismissal; or

2. Any money claim exceeding the amount of ₱5,000.00 per claimant. r
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If the amount does not exceed ₱5,000.00, it is, under Article 129, the DOLE Regional Director who has jurisdiction
to take cognizance thereof. Therefore, the amount of ₱5,000.00 becomes important only when the principal cause of
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action is MONETARY CLAIM.

• Some principles on jurisdiction over money claims
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o Award of statutory benefits even if not prayed for is valid.

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o Claim for notarial fees by a lawyer employed by a company is within the jurisdiction of the Labor Arbiter.
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IV.
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JURISDICTION OVER CLAIMS FOR DAMAGES

• Labor Arbiters have jurisdiction over claims for damages.
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It is now a well-settled rule that claims for damages as well as attorney’s fees in labor cases are cognizable by the
Labor Arbiters, to the exclusion of all other courts. Rulings to the contrary are deemed abandoned or modified
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accordingly.
• Claims for damages of Overseas Filipino Workers (OFWs).
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Claims for actual, moral, exemplary and other forms of damages that may be lodged by overseas Filipino workers are
cognizable by the Labor Arbiters.
V.
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JURISDICTION OVER LEGALITY OF STRIKES AND LOCKOUTS

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• Jurisdictional interplay in strike or lockout cases.

Based on the Labor Code, below is an outline of the interplay in jurisdiction among them.
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1. Filing of a notice of strike or lockout with NCMB. - A union which intends to stage a strike or an employer
which desires to mount a lockout should file a notice of strike or notice of lockout, as the case may be, with the
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NCMB and not with any other office. It must be noted, however, that the NCMB, per Tabigue v.
International Copra Export Corporation, is not a quasi-judicial body; hence, the Conciliators-Mediators
of the NCMB do not have any decision-making power. They cannot issue decisions to resolve the issues
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raised in the notice of strike or lockout. Their role is confined solely to the conciliation and mediation of the
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said issues, although they can suggest to the parties that they submit their dispute to voluntary arbitration
through the Voluntary Arbitrators accredited by the NCMB.
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2. Filing of a complaint to declare the illegality of the strike or lockout with the Labor Arbiter or Voluntary
Arbitrator or panel of Voluntary Arbitrator. - In case a party wants to have the strike or lockout declared
illegal, a complaint should be filed either with the Labor Arbiter under Article 224(a)(5) [217(a)(5)] of the Labor
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Code or, upon mutual agreement of the parties, with the Voluntary Arbitrator or panel of Voluntary Arbitrators
under Article 275 [262] of the same Code. The issue of illegality of the strike or lockout cannot be resolved by
the Conciliators-Mediators of the NCMB as earlier pointed out and discussed.
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3. Filing of an injunction petition with the Commission (NLRC). - In case illegal acts violative of Article 279
[264] are committed in the course of the strike or lockout, a party may file a petition for injunction directly with
the Commission (NLRC) under Article 225(e) [218(e)] of the Labor Code for purposes of securing a temporary
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restraining order (TRO) and injunction. The Labor Arbiters or Voluntary Arbitrators are not possessed of any
injunctive power under the Labor Code. In other words, the aggrieved party, despite the pendency of the case
for the declaration of the illegality of the strike or lockout with the Labor Arbiter or Voluntary Arbitrator, as
the case may be, may directly go to the Commission to secure the injunctive relief.
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4. Assumption of jurisdiction by the DOLE Secretary. – Under Article 278(g) [263(g)] of the Labor Code, the
DOLE Secretary has the power to assume jurisdiction over labor disputes which, in his opinion, may cause or
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likely to cause a strike or lockout in industries indispensable to the national interest (so-called “national
interest” cases). Once he makes the assumption, he shall decide all the issues related to the labor dispute
himself, to the exclusion of all other labor authorities.
5. Certification of the labor dispute to the NLRC. - Under the same provision of Article 278(g) [263(g)] of the
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Labor Code, the DOLE Secretary has the option of not assuming jurisdiction over the labor dispute in national
interest cases. Instead, he may certify it to the NLRC for compulsory arbitration, in which case, it will be the
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NLRC which shall hear and decide all the issues subject of the certification order.
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In case at the time of the said assumption or certification, there is a pending case before the Labor Arbiter or
Voluntary Arbitrator on the issue of illegality of the strike or lockout, the same shall be deemed subsumed in
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the assumed or certified case. Resultantly, it is no longer the Labor Arbiter or the Voluntary Arbitrator who
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should decide the said case but the DOLE Secretary, in the case of assumed cases, or the NLRC, in the case of
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certified cases.
6. Assumption of jurisdiction over a national interest case by the President. - The President of the
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Philippines is not precluded from intervening in a national interest case by exercising himself the powers of his
alter ego, the DOLE Secretary, granted under Article 278(g) [263(g)] by assuming jurisdiction over the same for
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purposes of settling or terminating it.
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7. Submission of a national interest case to voluntary arbitration. - Despite the pendency of the assumed or
certified national interest case, the parties are allowed to submit any issues raised therein to voluntary arbitration
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at any stage of the proceeding, by virtue of Article 278(h) [263(h)] which provides that “(b)efore or at any stage of
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the compulsory arbitration process, the parties may opt to submit their dispute to voluntary arbitration.”
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The foregoing interplay explains why Article 278(i) [263(i)] makes specific reference to the President of the
Philippines, the Secretary of Labor and Employment, the Commission (NLRC) or the Voluntary Arbitrator in
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connection with the law on strike, lockout and picketing embodied in Article 278 [263]. The only labor official
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not so mentioned therein but who has a significant role to play in the interaction of labor officials and tribunals
in strike or lockout cases, is the Labor Arbiter. This is understandable in the light of the separate express grant
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of jurisdiction to the Labor Arbiters under Article 224(a)(5) [217(a)(5)] as above discussed.
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VI.
JURISDICTION OVER CASES INVOLVING
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LEGISLATED WAGE INCREASES AND WAGE DISTORTION

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• Cases in ORGANIZED establishments.

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Jurisdiction is with the Voluntary Arbitrator.

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• Cases in UNORGANIZED establishments

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Jurisdiction is with Labor Arbiter.

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VII.
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JURISDICTION OVER ENFORCEMENT OR ANNULMENT

OF COMPROMISE AGREEMENTS
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• Legal basis
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Article 233 [227] clearly embodies the following provisions on compromise agreements:
“Article 233 [227]. Compromise Agreements. - Any compromise settlement, including those
involving labor standard laws, voluntarily agreed upon by the parties with the assistance of the Bureau
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or the regional office of the Department of Labor, shall be final and binding upon the parties. The
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National Labor Relations Commission or any court shall not assume jurisdiction over issues
involved therein except in case of non-compliance thereof or if there is prima facie evidence
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that the settlement was obtained through fraud, misrepresentation, or coercion.”

Clear from the foregoing provision that, although the compromise agreement may have been entered into by the parties
before the Bureau of Labor Relations (BLR) or the DOLE Regional Office, it is the Labor Arbiter who has jurisdiction
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to take cognizance of the following issues related thereto, to the exclusion of the BLR and the DOLE Regional
Directors:
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(1) To enforce the compromise agreement in case of non-compliance therewith by any of the parties thereto; or
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(2) To nullify it if there is prima facie evidence that the settlement was obtained through fraud, misrepresentation, or
coercion.
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VIII.
JURISDICTION OVER EXECUTION AND ENFORCEMENT
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OF DECISIONS OF VOLUNTARY ARBITRATORS
• Decisions of Voluntary Arbitrators.
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Article 276 [262-A] of the Labor Code prescribes the procedures that Voluntary Arbitrators or panel of Voluntary
Arbitrators should follow in adjudicating cases filed before them. Once a decision has been rendered in a case and
subsequently becomes final and executory, it may be enforced through the writ of execution issued by the same
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Voluntary Arbitrator or panel of Voluntary Arbitrators who rendered it, addressed to and requiring certain public
officers to execute the final decision, order or award.
• Labor Arbiters may issue the Writ Of Execution.
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In situations, however, where the Voluntary Arbitrator or the panel of Voluntary Arbitrators who rendered the decision
is absent or incapacitated for any reason, Article 276 [262-A] grants jurisdiction to any Labor Arbiter in the region
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where the winning party resides, to take cognizance of a motion for the issuance of the writ of execution filed by such
party and accordingly issue such writ addressed to and requiring the public officers mentioned above to execute the
final decision, order or award of the Voluntary Arbitrator or panel of Voluntary Arbitrators.
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IX.
JURISDICTION OVER CASES OF OFWs
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• Labor Arbiters have jurisdiction over all money claims Of OFWs
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All claims of OFWs with a sign of peso are cognizable by the Labor Arbiters, including claims for disability and
death benefits.
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• Exception: Voluntary Arbitrators have jurisdiction over money claims if there exists a CBA
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If there is a CBA between the foreign employer and the bargaining union of the OFWs, the jurisdiction over
monetary claims of OFWs belongs to the Voluntary Arbitrator and not to the Labor Arbiter.
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• OFW-related cases over which the POEA, and not the Labor Arbiters, has jurisdiction.
The Philippine Overseas Employment Administration (POEA) has original and exclusive jurisdiction to hear and
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decide:
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(a) All cases which are administrative in character, involving or arising out of violation of rules and regulations
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relating to licensing and registration of recruitment and employment agencies or entities, including refund
of fees collected from workers and violation of the conditions for the issuance of license to recruit workers.
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(b) Disciplinary action cases and other special cases which are administrative in character, involving employers,
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principals, contracting partners and Filipino migrant workers.

No. 1 above covers recruitment violations or violations of conditions of license; while No. 2 above involves (a)
disciplinary action cases against foreign principals or employers, and (a) disciplinary action cases against land-based
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OFWs and seafarers.

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X.
OTHER ISSUES OVER WHICH
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LABOR ARBITERS HAVE JURISDICTION

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• Jurisdiction over certain issues as provided in jurisprudence.

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In accordance with well-entrenched jurisprudence, the issues, claims or cases of the following fall under the jurisdiction
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of the Labor Arbiters:

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1. Employees in government-owned and/or controlled corporations;

2. Alien parties;
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3. Priests and ministers;

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4. Employees of cooperatives;
5. Counter-claims of employers against employees.
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These will be discussed below.

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1. Jurisdiction over cases involving employees of government-owned and/or

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controlled corporations
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• Prevailing rule.
The hiring and firing of employees of government owned and/or controlled corporations without original charters are
covered by the Labor Code and, therefore, the Labor Arbiters have jurisdiction over illegal dismissal and other cases
that may be filed under this law; while those with original charters are basically governed by the Civil Service Law, rules
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and regulations and, therefore, jurisdiction on any of the cases that may be initiated under this law is vested in the Civil
Service Commission (CSC)
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2. Jurisdiction over disputes involving alien parties

• Choice of law by parties.
A basic policy of contract is to protect the expectations of the parties. Such party expectations are protected by giving
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effect to the parties’ own choice of the applicable law. The choice of law must, however, bear some relationship to
the parties or their transaction. A manning agency, for instance, cannot be faulted for complying with the applicable
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foreign law. By so complying, it has discharged its monetary obligation to the employee.
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• When Philippine law prevails.
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▪
Two contracts of employment were executed in Manila between Pakistan International Airlines Corporation
and two Filipino flight attendants.
▪ Paragraph 10 of the contracts provides:
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• The terms thereof shall be construed and governed by the laws of Pakistan; and
• Only the courts of Karachi, Pakistan shall have jurisdiction to consider any matter arising out of or
under the agreement.
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o They were dismissed prior to expiration of contracts.
o ISSUE: Which law should apply and which court has jurisdiction over the dispute.
o HELD: Philippine law should apply and that the Philippine court has jurisdiction:
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▪ Philippine labor laws and regulations apply to the subject matter of this case, i.e., the employer-employee
relationship between petitioner PIA and private respondents. The relationship is much affected with public
interest and cannot be subject of agreement that what should apply thereto should be some other law.
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▪ Philippine court has jurisdiction because:
• The contract was executed and performed partially in the Philippines;
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• Private respondents are Philippine citizens and residents and based in the Philippines in between their
assigned flights to the Middle East and Europe.
• Petitioner, although a foreign corporation, is licensed to do business (and is actually doing business in
the Philippines) and hence, is a resident in the Philippines.
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3. Jurisdiction over labor cases involving priests and ministers
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• When labor arbiters have jurisdiction.
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The fact that a case involves as parties thereto the church and its religious minister does not ipso facto give the case a
religious significance. If what is involved is a labor case, say illegal dismissal, the relationship of the church, as employer,
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and the priest or minister, as employee is a purely secular matter not related to the practice of faith, worship or doctrines
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of the church. Hence, Labor Arbiters may validly exercise jurisdiction over said labor case.
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The religious minister in Austria v. Hon. NLRC, was not excommunicated or expelled from the membership of the
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church but was terminated from employment based on the just causes provided in Article 297 [282] of the Labor Code.
Indeed, the matter of terminating an employee which is purely secular in nature is different from the ecclesiastical act
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of expelling a member from the religious congregation. As such, the State, through the Labor Arbiter and the NLRC,
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has the right to take cognizance of the case to determine whether the church, as employer, rightfully exercised its
management prerogative to dismiss the religious minister as its employee.
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• Ecclesiastical affair, meaning.

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An “ecclesiastical affair” is one that concerns doctrine, creed, or form of worship of the church, or the adoption and
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enforcement within a religious association of needful laws and regulations for the government of its membership, and
the power of excluding from such association those deemed unworthy of membership. Based on this definition, an
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ecclesiastical affair involves the relationship between the church and its members and relates to matters of faith,
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religious doctrines, worship and governance of the congregation. To be concrete, examples of these so-called
ecclesiastical affairs to which the State cannot meddle, are proceedings for excommunication, ordination of religious
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ministers, administration of sacraments and other activities with attached religious significance.
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4. Jurisdiction over cases of employees of cooperatives

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• Employers may assert counter-claims against employees filed by the latter before the Labor Arbiters.
Almost all labor cases decided by labor courts involve claims asserted by the workers. The question that may be
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propounded is whether the employers can assert counter-claims against their employees before the Labor Arbiters.
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The Supreme Court answered this poser in the affirmative.

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Bañez v. Hon. Valdevilla. - The jurisdiction of Labor Arbiters and the NLRC is comprehensive enough to include
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claims for all forms of damages “arising from the employer-employee relations.” By this clause, Article 217 should
apply with equal force to the claim of an employer for actual damages against its dismissed employee, where the basis
for the claim arises from or is necessarily connected with the fact of termination, and should be entered as a counter-
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claim in the illegal dismissal case. This is in accord with paragraph 6 of Article 217(a), which covers “all other claims,
arising from employer-employee relations.”
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But such counter-claim, being a factual issue, must be asserted before the Labor Arbiter; otherwise, it can no longer
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be passed upon by a reviewing court.

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ISSUES AND CASES OVER WHICH

LABOR ARBITERS HAVE NO JURISDICTION
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• Labor Arbiters have NO jurisdiction over certain issues and cases.

The following issues or cases do not fall under the jurisdiction of Labor Arbiters:
1. Claims for damages arising from breach of a non-compete clause and other post-employment prohibitions;
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2. Claims for payment of cash advances, car, appliance and other loans of employees;
3. Dismissal of corporate officers and their monetary claims;
4. Cases involving entities immune from suit;
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5. Cases falling under the doctrine of forum non conveniens;

6. Quasi-delict or tort cases;
7. Criminal and civil liabilities arising from violations of certain provisions of the Labor Code;
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8. Constitutionality of CBA provisions.

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These will be discussed below.
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1.Claims for damages arising from breach of non-compete clause and other post-
employment prohibitions
• Jurisdiction is lodged with the regular courts.
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In case of violation of the non-compete clause and similar post-employment bans or prohibitions, the employer can
assert his claim for damages against the erring employee with the regular courts and not with the labor courts.
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2. Employer’s claims for cash advances, car, appliance and other personal loans of employees
• Labor Arbiters have no jurisdiction.
With respect to resolving issues involving loans availed of by employees from their employers, it has been the consistent
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ruling of the Supreme Court that the Labor Arbiters have no jurisdiction thereover but the regular courts.
Where the claim to the principal relief sought is to be resolved not by reference to the Labor Code or other labor relations
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statute or a collective bargaining agreement but by the general civil law, the jurisdiction over the dispute belongs to the regular courts of justice
and not to the Labor Arbiter and the NLRC. In such situations, resolutions of the dispute requires expertise, not in labor
management relations nor in wage structures and other terms and conditions of employment, but rather in the
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application of the general civil law. Clearly, such claims fall outside the area of competence or expertise ordinarily
ascribed to Labor Arbiters and the NLRC and the rationale for granting jurisdiction over such claims to these agencies
disappears.”
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The following loans may be cited:
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a. Cash loans/advances are in the nature of simple collection of a sum of money brought by the employer, as
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creditor, against the employee, as debtor. The fact that they were employer and employee at the time of the
transaction does not negate the civil jurisdiction of the trial court. The case does not involve adjudication of
a labor dispute but recovery of a sum of money based on our civil laws on obligation and contract.
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b. Car loans such as those granted to sales or medical representatives by reason of the nature of their work.
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The employer’s demand for payment of the employees’ amortizations on their car loans, or, in the alternative,
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the return of the cars to the company, is not a labor, but a civil, dispute. It involves debtor-creditor relations,
rather than employee-employer relations.
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c. Appliance loans concern the enforcement of a loan agreement involving debtor-creditor relations founded
on contract and do not in any way concern employee relations. As such it should be enforced through a
separate civil action in the regular courts and not before the Labor Arbiter.
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d. Loans from retirement fund also involve the same principle as above; hence, collection therefor may only
be made through the regular courts and not through the Labor Arbiter or any labor tribunal.
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3. Dismissal of directors and corporate officers

• Labor Arbiters have no jurisdiction
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The dismissal of a director or corporate officer is an intra-corporate dispute cognizable by the Regional Trial Court
and not by the Labor Arbiter.
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• Distinctions between corporate officers & employees:

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CORPORATE OFFICERS EMPLOYEES r

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- Refer only to those expressly mentioned in the - Refer to all other officers not mentioned in the
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2019 Revised Corporation Code and bylaws, to 2019 Revised Corporation Code and bylaws.
wit: president, secretary and treasurer and such
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other officers as may be provided for in the

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bylaws. (NOTE: Section 24 of R.A. No. 11232

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[Feb. 20, 2019], otherwise known as the 2019

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Revised Corporation Code added a fifth in the list:

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Compliance Officer, if the corporation is vested

with public interest).
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- They are elected or appointed by the directors - They are generally employed not by the action
or stockholders, and those who are given that of the directors or stockholders but by the
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character either by the 2019 Revised managing officer of the corporation who also
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Corporation Code or by the bylaws. determines the compensation to be paid to

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such employees.
- ----------------------------------------------------
- ----------------------------------------------------
- RTC has jurisdiction in case of dismissal.
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- Labor Arbiter has jurisdiction in case of

- Reason: INTRA-CORPORATE dismissal.
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- Reason: LABOR CASE

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• Matling Doctrine (Matling Industrial and Commercial Corp. v. Ricardo R. Coros, G.R. No. 157802, Oct. 13, 2010)
After his dismissal by Matling as its Vice President for Finance and Administration, respondent Coros filed on August
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10, 2000, a complaint for illegal dismissal against Matling and some of its corporate officers (petitioners). The
petitioners moved to dismiss the complaint, raising the ground, among others, that the complaint pertained to the
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jurisdiction of the SEC due to the controversy being intra-corporate inasmuch as the respondent was a member of
Matling’s Board of Directors aside from being its Vice-President for Finance and Administration prior to his
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termination. The respondent opposed petitioners’ motion to dismiss, insisting that his status as a member of Matling’s
Board of Directors was doubtful, considering that he had not been formally elected as such; that he did not own a
single share of stock in Matling, considering that he had been made to sign in blank an undated indorsement of the
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certificate of stock he had been given in 1992; that Matling had taken back and retained the certificate of stock in its
custody; and that even assuming that he had been a Director of Matling, he had been removed as the Vice President
for Finance and Administration, not as a Director, a fact that the notice of his termination dated April 10, 2000 showed.
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In ruling that Coros’ dismissal was not an intra-corporate dispute but a labor case, the Court employed the following
two-tiered test to determine whether a dispute constitutes an intra-corporate controversy or not, namely:
(1) The status or relationship of the parties (Relationship Test); and
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(2) The nature of the question that is the subject of their controversy (Nature of Controversy Test).
This test simply dictates that before the RTC can take cognizance of a case, the controversy must pertain to any of the
following relationships:
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a) between the corporation, partnership or association and the public;
b) between the corporation, partnership or association and its stockholders, partners, members or officers;
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c) between the corporation, partnership or association and the State as far as its franchise, permit or license to
operate is concerned; and
d) among the stockholders, partners or associates themselves.
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The fact that in Matling, the parties involved are the corporation and Coros, its director and stockholder and at the
same time its Vice President, does not necessarily place the dispute within the ambit of the jurisdiction of the RTC.
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The better policy to be followed in determining jurisdiction over a case should be to consider concurrent factors such
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as the status or relationship of the parties OR the nature of the question that is the subject of their controversy.
In the absence of any one of these factors, the RTC will not have jurisdiction. Furthermore, it does not necessarily
follow that every conflict between the corporation and its stockholders would involve such corporate matters as only
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the RTC can resolve in the exercise of its judicial powers.
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Matling thus prescribes that the criteria for distinguishing between corporate officers who may be ousted from office
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at will, on one hand, and ordinary corporate employees who may only be terminated for just cause, on the other hand,
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do not depend on the nature of the services performed, but on the manner of creation of the office. In respondent
Coros’ case, he was supposedly at once an employee, a stockholder, and a director of Matling. The circumstances
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surrounding his appointment to office must be fully considered to determine whether the dismissal constituted an
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intra-corporate controversy or a labor termination dispute. It must also be considered whether his status as director
and stockholder had any relation at all to his appointment and subsequent dismissal as Vice President for Finance and
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Administration. Obviously enough, the respondent was not appointed as Vice President for Finance and
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Administration because of his being a stockholder or director of Matling. He had started working for Matling on
September 8, 1966, and had been employed continuously for 33 years until his termination on April 17, 2000, first as
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a bookkeeper, and his climb in 1987 to his last position as Vice President for Finance and Administration had been
gradual but steady. Even though he might have become a stockholder of Matling in 1992, his promotion to the position
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of Vice President for Finance and Administration in 1987 was by virtue of the length of quality service he had rendered
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as an employee of Matling. His subsequent acquisition of the status of director/stockholder had no relation to his
promotion. Besides, his status of director/stockholder was unaffected by his dismissal from employment as Vice
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President for Finance and Administration.
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• Other significant cases.

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o Cosare v. Broadcom Asia, Inc., G.R. No. 201298, Feb. 5, 2014.

In this 2014 case, the Supreme Court ruled that the Labor Arbiter, not the regular courts, has original jurisdiction over
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the illegal dismissal case filed by petitioner Cosare who was an incorporator of respondent Broadcom and was holding
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the position of Assistant Vice President for Sales (AVP for Sales) and Head of the Technical Coordination at the time
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of his termination. The following justifications were cited in support of this ruling:
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(1) The mere fact that a person was a stockholder and an officer of the company at the time the subject
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controversy developed does not necessarily make the case an intra-corporate dispute.
(2) A person, although an officer of the company, is not necessarily a corporate officer thereof.
(3) General Information Sheet (GIS) submitted to SEC neither governs nor establishes the nature of office.
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(4) The Nature of the Controversy Test: The mere fact that a person was a stockholder at the time of the filing of
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the illegal dismissal case does not make the action an intra-corporate dispute.
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o Malcaba v. Prohealth Pharma Philippines, G.R. No. 209085, June 6, 2018.

▪ Malcaba had been employed with ProHealth since it started in 1997.
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▪ He was one of its incorporators and a member of the Board of Directors.

▪ He held 1,000,000 shares in the corporation.
▪ He was initially the Vice President for Sales then became President in 2005.
▪ He was President at the time of his dismissal.
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Both Labor Arbiter and NLRC ruled that Malcaba was illegally dismissed.
The CA and the SC held that the Labor Arbiter and NLRC have no jurisdiction and their judgments were void since
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he is a corporate officer and his termination is intra-corporate in nature; hence, jurisdiction thereover belongs to the
RTC.
As a matter of equity, Malcaba was ordered to RETURN P4,937,420 awarded to him by the Labor Arbiter by way of
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separation pay, backwages and 13th month pay.

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o Cacho v. Balagtas, G.R. No. 202974, February 7, 2018.
▪ Balagtas was elected as North Star's Executive Vice President and Chief Executive Officer.
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▪ She filed an illegal dismissal case and the Labor Arbiter awarded her separation pay, full backwages and P3
M moral damages, P2 M exemplary damages and 10% attorney’s fees.
▪ NLRC ruled that Balagtas was a corporate officer at the time of her dismissal and not a mere employee.
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▪ The CA reversed it but the SC affirmed the NLRC’s ruling that what is involved here is an intra-corporate
dispute and not a labor case because:
(1) The Executive Vice President position is one of the corporate offices provided in petitioner North
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Star's By-laws (one or more vice presidents).
(2) Respondent Balagtas was appointed by the Board as petitioner North Star's Executive Vice President.
al Labor cases involving entities immune from suit

• Immune entities cannot be sued for labor law violations.
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In this jurisdiction, the generally accepted principles of international law are recognized and adopted as part of the law
of the land. Immunity of a State and international organizations from suit is one of these universally recognized
principles. It is on this basis that Labor Arbiters or other labor tribunals have no jurisdiction over immune entities.
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• Illustrative case.
In Department of Foreign Affairs v. NLRC, involving an illegal dismissal case filed against the Asian Development
Bank (ADB), it was ruled that said entity enjoys immunity from legal process of every form and therefore the suit
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against it cannot prosper. And this immunity extends to its officers who also enjoy immunity in respect of all acts
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performed by them in their official capacity. The Charter and the Headquarters Agreement granting these immunities
and privileges to the ADB are treaty covenants and commitments voluntarily assumed by the Philippine government
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which must be respected.
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• Exception to the rule
There is an exception to the immunity rule as exemplified by the case of United States v. Hon. Rodrigo, where it
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was held that when the function of the foreign entity otherwise immune from suit partakes of the nature of a proprietary
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activity, such as the restaurant services offered at John Hay Air Station undertaken by the United States Government
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as a commercial activity for profit and not in its governmental capacity, the case for illegal dismissal filed by a Filipino
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cook working therein is well within the jurisdiction of Philippine courts. The reason is that by entering into the
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employment contract with the cook in the discharge of its proprietary functions, it impliedly divested itself of its sovereign
immunity from suit.
• Estoppel does not confer jurisdiction over an immune entity.
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An entity immune from suit cannot be estopped from claiming such diplomatic immunity since estoppel does not
operate to confer jurisdiction to a tribunal that has none over a cause of action.
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DOCTRINE OF FORUM NON CONVENIENS

• Requisites.
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This doctrine is an international law principle which has been applied to labor cases. The following are the requisites
for its applicability:
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(1) That the Philippine court is one to which the parties may conveniently resort;
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(2) That the Philippine court is in a position to make an intelligent decision as to the law and the facts; and
(3) That the Philippine court has or is likely to have power to enforce its decision. r
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• Application to labor cases.

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Petitioners’ invocation of this principle was rejected in Pacific Consultants International Asia, Inc. v. Schonfeld.
Petitioners’ insistence was based on the fact that respondent is a Canadian citizen and was a repatriate. In so rejecting
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petitioners’ contention, the Supreme Court cited the following reasons that do not warrant the application of the said
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principle: (1) the Labor Code does not include forum non conveniens as a ground for the dismissal of the
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complaint; and (2) the propriety of dismissing a case based on this principle requires a factual determination;
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hence, it is properly considered as a defense.

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o Case where doctrine was applied.

This doctrine was applied in the case of The Manila Hotel Corp. and Manila Hotel International Limited v.
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NLRC, where private respondent Marcelo Santos was an overseas worker employed as a printer in a printing press in
the Sultanate of Oman when he was directly hired by the Palace Hotel, Beijing, People’s Republic of China to work in
its print shop. This hotel was being managed by the Manila Hotel International Ltd., a foreign entity registered under
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the laws of Hong Kong. Later, he was terminated due to retrenchment occasioned by business reverses brought about
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by the political upheaval in China (referring to the Tiananmen Square incident) which severely affected the hotel’s
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operations.
In holding that the NLRC was a seriously inconvenient forum, the Supreme Court noted that the main aspects of the
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case transpired in two foreign jurisdictions and the case involves purely foreign elements. The only link that the
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Philippines has with the case is that the private respondent employee (Marcelo Santos) is a Filipino citizen. The Palace
Hotel and MHICL are foreign corporations. Consequently, not all cases involving Filipino citizens can be tried here.
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Respondent employee was hired directly by the Beijing Palace Hotel, a foreign employer, through correspondence sent
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to him while he was working at the Sultanate of Oman. He was hired without the intervention of the POEA or any
authorized recruitment agency of the government. Hence, the NLRC is an inconvenient forum given that all the
incidents of the case - from the time of recruitment, to employment to dismissal - occurred outside the Philippines.
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The inconvenience is compounded by the fact that the proper defendants, the Palace Hotel and MHICL, are not
nationals of the Philippines. Neither are they “doing business in the Philippines.” Likewise, the main witnesses, Mr.
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Shmidt (General Manager of the Palace Hotel) and Mr. Henk (Palace Hotel’s Manager) are non-residents of the
Philippines.
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Neither can an intelligent decision be made as to the law governing the employment contract as such was perfected in
foreign soil. This calls to fore the application of the principle of lex loci contractus (the law of the place where the contract
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was made). It must be noted that the employment contract was not perfected in the Philippines. Private respondent
employee signified his acceptance thereof by writing a letter while he was in the Sultanate of Oman. This letter was
sent to the Palace Hotel in the People’s Republic of China. Neither can the NLRC determine the facts surrounding the
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alleged illegal dismissal as all acts complained of took place in Beijing, People’s Republic of China. The NLRC was not
in a position to determine whether the Tiananmen Square incident truly adversely affected the operations of the Palace
Hotel as to justify respondent employee’s retrenchment.
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Even assuming that a proper decision could be reached by the NLRC, such would not have any binding effect against
the employer, the Palace Hotel, which is a corporation incorporated under the laws of China and was not even served
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with summons. Jurisdiction over its person was not acquired. This is not to say that Philippine courts and agencies
have no power to solve controversies involving foreign employers. Neither could it be said that the Supreme Court
does not have power over an employment contract executed in a foreign country. If the respondent employee were an
“overseas contract worker”, a Philippine forum, specifically the POEA, not the NLRC, would protect him. He is not
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an “overseas contract worker”, a fact which he admits with conviction.
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Constitutionality of labor contract stipulations

• The Halagueña Doctrine
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In Halagueńa v. Philippine Airlines, Inc., it was pronounced that it is not the Labor Arbiter but the regular court
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which has jurisdiction to rule on the constitutionality of labor contracts such as a CBA. Petitioners were female flight
attendants of respondent Philippine Airlines (PAL) and are members of the Flight Attendants and Stewards
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Association of the Philippines (FASAP), the sole and exclusive bargaining representative of the flight attendants, flight
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stewards and pursers of respondent. The July 11, 2001 CBA between PAL and FASAP provides that the compulsory
retirement for female flight attendants is fifty-five (55) and sixty (60) for their male counterpart.
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Claiming that said CBA provision is discriminatory against them, petitioners filed against respondent a Special Civil
Action for Declaratory Relief with Prayer for the Issuance of Temporary Restraining Order and Writ of Preliminary
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Injunction with the Regional Trial Court (RTC) of Makati City.
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In ruling that the RTC has jurisdiction, the Supreme Court cited the following reasons: Ba
(1) The case is an ordinary civil action, hence, beyond the jurisdiction of labor tribunals.
(2) The said issue cannot be resolved solely by applying the Labor Code. Rather, it requires the application of
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the Constitution, labor statutes, law on contracts and the Convention on the Elimination of All Forms of
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Discrimination Against Women (CEDAW). The power to apply and interpret the constitution and CEDAW
is within the jurisdiction of trial courts, a court of general jurisdiction.
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(3) Not every controversy or money claim by an employee against the employer or vice-versa is within the
exclusive jurisdiction of the Labor Arbiter. Actions between employees and employer where the employer-
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employee relationship is merely incidental and the cause of action proceeds from a different source of
obligation are within the exclusive jurisdiction of the regular courts. Here, the employer-employee
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relationship between the parties is merely incidental and the cause of action ultimately arose from different
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sources of obligation, i.e., the Constitution and CEDAW.

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1. JURISDICTION OF THE LABOR ARBITER AS DISTINGUISHED FROM

THE REGIONAL DIRECTOR
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• Labor arbiters have no jurisdiction over small money claims lodged under Article 129.
As earlier emphasized, under Article 129 of the Labor Code, DOLE Regional Directors have jurisdiction over claims
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amounting to ₱5,000 or below, provided the following requisites concur:

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1. The claim must arise from employer-employee relationship;

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2. The claimant does not seek reinstatement; and

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3. The aggregate money claim of each employee does not exceed ₱5,000.00.
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• In INSPECTION OF ESTABLISHMENT CASES under Article 128 (Visitorial And Enforcement

Power), the DOLE REGIONAL DIRECTORS have jurisdiction regardless of whether or not the total
amount of claims per employee exceeds ₱5,000.00.
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o Requisites
For the valid exercise by the DOLE Secretary or any of his duly authorized representatives (DOLE Regional Directors)
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of the visitorial and enforcement powers provided under Article 128(b), the following requisites should concur:
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(1) The employer-employee relationship should still exist;

(2) The findings in question were made in the course of inspection by labor inspectors; and
(3) The employees have not yet initiated any claim or complaint with the DOLE Regional Director under
Article 129, or the Labor Arbiter under Article 217.
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• However, jurisdiction over contested cases under the exception clause in Article 128(b) of the Labor
Code involving inspection of establishments belongs to the Labor Arbiters and not to DOLE Regional
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Directors.
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o Relation of paragraph (b) of Article 128 to the jurisdiction of Labor Arbiters

The Labor Arbiters have jurisdiction over contested cases under the exception clause in Article 128(b), which states:
“xxx. The Secretary or his duly authorized representatives shall issue writs of execution to the appropriate authority
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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
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of inspection.”
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In interpreting the afore-quoted provision of the exception clause, three (3) elements must concur to divest the
Regional Directors or their representatives of jurisdiction thereunder, to wit:
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(a) That the employer contests the findings of the labor regulations officer and raises issues thereon;
(b) That in order to resolve such issues, there is a need to examine evidentiary matters; and
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(c) That such matters are not verifiable in the normal course of inspection.
The 2009 case of Meteoro v. Creative Creatures, Inc., best illustrates the application of the exception clause. Here,
it was held that the Court of Appeals aptly applied the “exception clause” because at the earliest opportunity,
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respondent company registered its objection to the findings of the labor inspector on the ground that there was no
employer-employee relationship between petitioners and respondent company. The labor inspector, in fact, noted in
his report that “respondent alleged that petitioners were contractual workers and/or independent and talent workers
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without control or supervision and also supplied with tools and apparatus pertaining to their job.” In its position
paper, respondent again insisted that petitioners were not its employees. It then questioned the Regional Director’s
jurisdiction to entertain the matter before it, primarily because of the absence of an employer-employee relationship.
Finally, it raised the same arguments before the Secretary of Labor and the appellate court. It is, therefore, clear that
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respondent contested and continues to contest the findings and conclusions of the labor inspector. To resolve the issue
raised by respondent, that is, the existence of an employer-employee relationship, there is a need to examine evidentiary
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matters.
2. REQUIREMENTS TO PERFECT APPEAL TO NATIONAL LABOR

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RELATIONS COMMISSION
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APPEAL IN GENERAL
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• Appeal, meaning and nature.
The term “appeal” refers to the elevation by an aggrieved party to an agency vested with appellate authority of any
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decision, resolution or order disposing the principal issues of a case rendered by an agency vested with original
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jurisdiction, undertaken by filing a memorandum of appeal.
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• Some principles on appeal.
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o Appeals under Article 223 apply only to appeals from the Labor Arbiter’s decisions, awards or orders to the
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Commission (NLRC). Ba
o There is no appeal from the decisions, orders or awards of the NLRC. Clearly, therefore, Article 223 of the
Labor Code is not the proper basis for elevating the case to the Court of Appeals or to the Supreme Court.
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The proper remedy from the decisions, awards or orders of the NLRC to the Court of Appeals is a Rule 65
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petition for certiorari and from the Court of Appeals to the Supreme Court, a Rule 45 petition for review on
certiorari.
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• Appeal from the NLRC to the DOLE Secretary and to the President had long been abolished.
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o Appeal is not a constitutional right but a mere statutory privilege. Hence, parties who seek to avail of it must
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comply with the statutes or rules allowing it.

o A motion for reconsideration is unavailing as a remedy against a decision of the Labor Arbiter. The Labor
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Arbiter should treat the said motion as an appeal to the NLRC.

o
o A “Petition for Relief” should be treated as appeal.

o Affirmative relief is not available to a party who failed to appeal. A party who does not appeal from a r
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decision of a court cannot obtain affirmative relief other than the ones granted in the appealed decision.
• Grounds for appeal to the Commission (NLRC)
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The appeal to the NLRC may be entertained only on any of the following grounds:
a. If there is a prima facie evidence of abuse of discretion on the part of the Labor Arbiter;
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b. If the decision, order or award was secured through fraud or coercion, including graft and corruption;
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c. If made purely on questions of law; and/or

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d. If serious errors in the findings of fact are raised which, if not corrected, would cause grave or irreparable
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damage or injury to the appellant.

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• NLRC has certiorari power.

The first ground above regarding prima facie evidence of abuse of discretion on the part of the Labor Arbiter is actually
an exercise of certiorari power by the NLRC. The case of Triad Security & Allied Services, Inc. v. Ortega, expressly
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recognized this certiorari power of the NLRC. Clearly, according to the 2012 case of Auza, Jr. v. MOL Philippines,
Inc., the NLRC is possessed of the power to rectify any abuse of discretion committed by the Labor Arbiter.
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II.
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PERFECTION OF APPEAL
• Effect of perfection of appeal on execution
To reiterate, the perfection of an appeal shall stay the execution of the decision of the Labor Arbiter except execution
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for reinstatement pending appeal.

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• Perfection of appeal, mandatory and jurisdictional

The perfection of appeal within the period and in the manner prescribed by law is jurisdictional and non-compliance
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with the legal requirements is fatal and has the effect of rendering the judgment final and executory, hence,
unappealable.
• Requisites.
The requisites for perfection of appeal to the NLRC are as follows:
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(1) Observance of the reglementary period;

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(2) Payment of appeal and legal research fee;

(3) Filing of a Memorandum of Appeal;
(4) Proof of service to the other party; and
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(5) Posting of cash, property or surety bond, in case of monetary awards.
The foregoing are discussed below.
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III.
REGLEMENTARY PERIOD
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• Three (3) kinds of reglementary period.
The reglementary period depends on where the appeal comes from, viz.:
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1. Ten (10) calendar days – in the case of appeals from decisions of the Labor Arbiters under Article 223 of
the Labor Code;
2. Five (5) calendar days – in the case of appeals from decisions of the Labor Arbiters in contempt cases; and
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3. Five (5) calendar days – in the case of appeals from decisions of the DOLE Regional Director under Article
129 of the Labor Code.
• Calendar days and not working days.
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The shortened period of ten (10) days fixed by Article 223 contemplates calendar days and not working days. The
same holds true in the case of the 5-day reglementary period under Article 129 of the Labor Code. Consequently,
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Saturdays, Sundays and legal holidays are included in reckoning and computing the reglementary period.
• Exceptions to the 10-calendar day or 5-calendar day reglementary period rule.
The following are the specific instances where the rules on the reckoning of the reglementary period have not been
strictly observed:
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1) 10th day (or 5th day) falling on a Saturday, Sunday or holiday, in which case, the appeal may be filed in the next
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working day.
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2) When NLRC exercises its power to “correct, amend, or waive any error, defect or irregularity whether in substance or form”
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in the exercise of its appellate jurisdiction, as provided under Article 218(c) of the Labor Code, in which case,
the late filing of the appeal is excused.
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3) When technical rules are disregarded under Article 221.
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4) When there are some compelling reasons that justify the allowance of the appeal despite its late filing such as
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when it is granted in the interest of substantial justice.

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• Some principles on reglementary period.
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o The reglementary period is mandatory and not a “mere technicality.” Ba

o The failure to appeal within the reglementary period renders the judgment appealed from final and executory
by operation of law. Consequently, the prevailing party is entitled, as a matter of right, to a writ of execution and
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the issuance thereof becomes a ministerial duty which may be compelled through the remedy of mandamus.
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o The date of receipt of decisions, resolutions or orders by the parties is of no moment. For purposes of appeal,
the reglementary period shall be counted from receipt of such decisions, resolutions, or orders by the counsel
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or representative of record.
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o Miscomputation of the reglementary period will not forestall the finality of the judgment. It is in the interest of
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everyone that the date when judgments become final and executory should remain fixed and ascertainable.
o Date of mailing by registered mail of the appeal memorandum is the date of its filing.
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o Motion for extension of time to perfect an appeal is not allowed. This kind of motion is a prohibited pleading.
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o Motion for extension of time to file the memorandum of appeal is not allowed.
o Motion for extension of time to file appeal bond is not allowed. r
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IV.
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APPEAL FEE AND LEGAL RESEARCH FEE

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• Payment of appeal fee and legal research fee, mandatory and jurisdictional.
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The payment by the appellant of the prevailing appeal fee and legal research fee is both mandatory and
jurisdictional. An appeal is perfected only when there is proof of payment of the appeal fee. It is by no means a mere
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technicality. If not paid, the running of the reglementary period for perfecting an appeal will not be tolled.
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V.
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MEMORANDUM OF APPEAL
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• Requisites.
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The requisites for a valid Memorandum of Appeal are as follows:

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1. The Memorandum of Appeal should be verified by the appellant himself in accordance with the Rules of Court,
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as amended;
2. It should be presented in three (3) legibly typewritten or printed copies;
3. It shall state the grounds relied upon and the arguments in support thereof, including the relief prayed for;
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4. It shall contain a statement of the date the appellant received the appealed decision, award or order; and
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5. It shall be accompanied by:

(i) proof of payment of the required appeal fee and legal research fee;
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(ii) posting of a cash or surety bond (in case of monetary awards); and
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(iii) proof of service upon the other party.

• Requirements not jurisdictional.
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The aforesaid requirements that should be complied with in a Memorandum of Appeal are merely a rundown of the
contents of the required appeal memorandum to be submitted by the appellant. They are not jurisdictional
requirements.
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• Some principles on memorandum of appeal.
o Mere notice of appeal without complying with the other requisites aforestated shall not stop the running
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of the period for perfecting an appeal.
o Memorandum of appeal is not similar to motion for reconsideration.
o Lack of verification in a memorandum of appeal is not a fatal defect. It may easily be corrected by
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requiring an oath.
o An appeal will be dismissed if signed only by an unauthorized representative.
o Only complainants who signed the memorandum of appeal are deemed to have appealed the Labor
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Arbiter’s decision. The prevailing doctrine in labor cases is that a party who has not appealed cannot obtain
from the appellate court any affirmative relief other than those granted, if any, in the decision of the lower
tribunal.
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PROOF OF SERVICE TO ADVERSE PARTY
•
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Failure to serve copy to adverse party, not fatal.
o While it is required that in all cases, the appellant shall furnish a copy of the Memorandum of Appeal to the
other party (appellee), non-compliance therewith, however, will not be an obstacle to the perfection of the
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appeal; nor will it amount to a jurisdictional defect on the NLRC’s taking cognizance thereof.
VII.
POSTING OF BOND
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• When posting of bond required.
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Only in case the decision of the Labor Arbiter or the DOLE Regional Director (under Article 129 of the Labor Code)
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involves a monetary award, that an appeal by the employer may be perfected only upon the posting of a bond, which
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shall either be in the form of (1) cash deposit, (2) surety bond or (3) property bond, equivalent in amount to the
monetary award, but excluding the amount of damages (moral and exemplary) and attorney’s fees. In other
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words, only monetary awards (such as unpaid wages, backwages, separation pay, 13th month pay, etc.) are
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required to be covered by the bond. Moral and exemplary damages and attorney’s fees are excluded.
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• Some principles on posting of bond.
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o Posting of bond is mandatory and jurisdictional.

o The cash or surety bond required for the perfection of appeal should be posted within the reglementary
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period. If a party failed to perfect his appeal by the non-payment of the appeal bond within the 10-calendar day
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period provided by law, the decision of the Labor Arbiter becomes final and executory upon the expiration of
the said period.
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o In case the employer failed to post a bond to perfect its appeal, the remedy of the employee is to file a
motion to dismiss the appeal and not a petition for mandamus for the issuance of a writ of execution.
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o Surety bond must be issued by a reputable bonding company duly accredited by the Commission (NLRC) or
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the Supreme Court.

o The bond shall be valid and effective from the date of deposit or posting, until the case is finally decided,
resolved or terminated, or the award satisfied.
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o
o Posting of a bank guarantee or bank certification is not sufficient compliance with the bond
requirement. It is not equivalent to nor can be considered compliance with the cash, surety or property bond.
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o Cooperatives are not exempted from posting bond.
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o Government is exempt from posting of bond; government-owned and/or controlled corporations,

however, are not exempt therefrom.
O
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o Bond is not required for the NLRC to entertain a motion for reconsideration. An appeal bond is required
only for the perfection of an appeal of a Labor Arbiter’s decision involving a monetary award.
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o Bond is not required to file a Rule 65 petition for certiorari.

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• Justifications for non-posting of bond.

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o No monetary award, no bond required. The rule is clear that when the judgment of the Labor Arbiter does
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not involve any monetary award, no appeal bond is necessary.

o There is no duty to post a bond if the monetary award is not specified in the decision. The Labor
Arbiter’s decision or order should state the amount awarded. If the amount of the monetary award is not
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contained or fixed in the judgment, the appeal bond is not required to be posted.
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o In case of conflict between the body and the fallo of the decision, the latter should prevail.
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RULE ON REDUCTION OF APPEAL BOND

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• Requisites when the amount of appeal bond may be reduced.

(1) The motion should be filed within the reglementary period;
(2) The motion to reduce bond should be based on meritorious grounds; and
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(3) The motion should be accompanied by a partial bond, the amount of which should be reasonable in relation
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to the monetary awards.

• The Mcburnie Doctrine: new guidelines for filing and acceptance of motions to reduce bond.
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The 2013 en banc decision rendered in the case of Andrew James Mcburnie v. Eulalio Ganzon, has enunciated the
following guidelines that must be observed in the matter of the filing and acceptance of motions to reduce appeal
bond, as provided in Section 6, Rule VI of the 2011 NLRC Rules of Procedure:
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(a) The filing of a motion to reduce appeal bond shall be entertained by the NLRC subject to the following
conditions:
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(1) there is meritorious ground; and

(2) a bond in a reasonable amount is posted;
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(b) For purposes of compliance with condition no. (2) above, a motion shall be accompanied by the posting of a
provisional cash or surety bond equivalent to ten percent (10%) of the monetary award subject of the appeal,
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exclusive of damages and attorney's fees;
(c) Compliance with the foregoing conditions shall suffice to suspend the running of the 10-day reglementary
period to perfect an appeal from the Labor Arbiter’s decision to the NLRC;
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(d) 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
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(e) 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 ten (10) days from notice of the NLRC
order within which to perfect the appeal by posting the required appeal bond.
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This Mcburnie ruling has completely overhauled the rules on motion to reduce bond. Before its advent, the issue of
what amount to post by way of partial or provisional bond has continued to hound the party litigants and the courts.
Now, the fixing of “ten percent (10%) of the monetary award subject of the appeal, exclusive of damages and attorney's
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fees” as the “reasonable amount” that should be posted has completely eradicated any and all controversies thereon.
In other words, no more motion for reduction of bond accompanied by said 10% requirement would be denied
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outright on the ground of insufficiency or inadequacy of the partial or provisional bond.
What is left for the determination by the NLRC, using its sound judgment and discretion, are only the issues of (1) the
reasonable final amount of the bond; and (2) what constitute “meritorious grounds.” This determination is important
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since “in all cases, the reduction of the appeal bond shall be justified by meritorious grounds and accompanied by the
posting of the required appeal bond in a reasonable amount.”
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REINSTATEMENT AND/OR EXECUTION PENDING APPEAL
• Pioneer Texturizing Doctrine: reinstatement aspect of labor arbiter’s decision, immediately executory
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even pending appeal; no writ of execution required.
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According to the Pioneer Texturizing doctrine, an order of reinstatement issued by the Labor Arbiter under Article 229
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[223] of the Labor Code is self-executory or immediately executory even pending appeal. This means that the perfection
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of an appeal shall stay the execution of the decision of the Labor Arbiter except execution of the reinstatement pending
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appeal.
• Reinstatement pending appeal, applicable only to the reinstatement order issued by the labor arbiter;
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writ of execution required when reinstatement is ordered by NLRC on appeal, or subsequently by the
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court of appeals or supreme court, as the case may be.

By way of distinction, the rule on reinstatement pending appeal applies only to the order of reinstatement issued by
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the Labor Arbiter and to no other. This means that if the reinstatement order is issued by the NLRC on appeal, or by
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the Court of Appeals or by the Supreme Court, there is a need to secure a writ of execution from the Labor Arbiter of
origin to enforce the reinstatement of the employee whose dismissal is declared illegal.
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• Two (2) options of employer

To implement the reinstatement aspect of a Labor Arbiter’s decision, there are only two (2) options available to the
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employer, to wit:
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1. Actual reinstatement. - The employee should be reinstated to his position which he occupies prior to his
illegal dismissal under the same terms and conditions prevailing prior to his dismissal or separation or, if no
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longer available, to a substantially-equivalent position; or

2. Payroll reinstatement. – The employee should be reinstated in the payroll of the company without requiring
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him to report back to his work.

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• Duty of employer to notify employee ordered reinstated.

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It is required that in case the decision of the Labor Arbiter includes an order of reinstatement, it should contain:
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(a) A statement that the reinstatement aspect is immediately executory; and

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(b) A directive for the employer to submit a report of compliance within ten (10) calendar days from receipt of
the said decision.
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Disobedience of this directive clearly denotes a refusal to reinstate. The employee need not file a motion for the
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issuance of the writ of execution since the Labor Arbiter is mandated thereafter to motu proprio issue the writ. With the
new rules in place, there is hardly any difficulty in determining the employer’s intransigence in immediately complying
with the order.
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• Instances when writ of execution of labor arbiter’s reinstatement order still required.
Under the 2011 NLRC Rules of Procedure, there are two (2) instances when a writ of execution should still be issued
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immediately by the Labor Arbiter to implement his order of reinstatement, even pending appeal, viz.:
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(1) When the employer disobeys the prescribed directive to submit a report of compliance within ten (10)
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calendar days from receipt of the decision; or

(2) When the employer refuses to reinstate the dismissed employee.
The Labor Arbiter shall motu proprio issue a corresponding writ to satisfy the reinstatement wages as they accrue until
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actual reinstatement or reversal of the order of reinstatement.

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• Some principles on reinstatement pending appeal.

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o The Labor Arbiter cannot exercise option of employer by choosing payroll reinstatement pending appeal.
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o If the former position is already filled up, the employee ordered reinstated under Article 223 should be
admitted back to work in a substantially equivalent position.
o Reinstatement to a position lower in rank is not proper.
o
o Reinstatement cannot be refused on the basis of the employment elsewhere of the employee ordered
reinstated.
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o The failure of the illegally dismissed employee who was ordered reinstated to report back to work does not give
the employer the right to remove him, especially when there is a reasonable explanation for his failure.
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o No reinstatement pending appeal should be made when antipathy and antagonism exist.
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o If reinstatement is not stated in the Labor Arbiter’s decision (neither in the dispositive portion nor in the text
thereof), reinstatement is not warranted.
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o Employer has no way of staying execution of immediate reinstatement. He cannot post bond to prevent
its execution.
o Reinstatement pending appeal applies to all kinds of illegal dismissal cases, regardless of the grounds
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thereof.
o Reinstatement pending appeal does not apply when the dismissal is legal but reinstatement is ordered for
some reasons like equity and compassionate justice.
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o The failure of employee ordered reinstated pending appeal to report back to work as directed by the employer
does not give the employer the right to remove him, especially when there is a reasonable explanation for his
failure.
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When former position is already filled up, the employee ordered reinstated pending appeal should be reinstated
to a substantially equivalent position.
Reinstatement to a position lower in rank is not proper.
In case of two successive dismissals, the order of reinstatement pending appeal under Article 223 issued in
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the first case shall apply only to the first case and should not affect the second dismissal. According to Sevilla
v. NLRC, the Labor Arbiter was correct in denying the third motion for reinstatement filed by the petitioner
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because what she should have filed was a new complaint based on the second dismissal. The second dismissal
gave rise to a new cause of action. Inasmuch as no new complaint was filed, the Labor Arbiter could not have
ruled on the legality of the second dismissal.
o Reinstatement pending appeal is not affected by the reinstated employee’s employment elsewhere.
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o Effect of grant of achievement award during reinstatement pending appeal.
In the 2014 case of Garza v. Coca-Cola Bottlers Philippines, Inc., it was pronounced that the act of
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respondent CCBPI in giving an award of a Certificate of Achievement to petitioner for his exemplary sales
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performance during his reinstatement ordered by the Labor Arbiter, while respondent’s appeal with the
NLRC was still pending, constitutes recognition of petitioner’s abilities and accomplishments. It indicates
that he is a responsible, trustworthy and hardworking employee of CCBPI. It constitutes adequate proof
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weighing in his favor.
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C. NATIONAL LABOR RELATIONS COMMISSION
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• Nature.
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The NLRC is an administrative quasi-judicial body. It is an agency attached to the DOLE solely for program and policy
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coordination only. It is in charge of deciding labor cases through compulsory arbitration.

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• Composition of the NLRC

The NLRC is composed of a Chairman and twenty-three (23) members called “Commissioners.”
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The NLRC has tripartite composition. Eight (8) members thereof should be chosen only from among the nominees
of the workers sector and another eight (8) from the employers sector. The Chairman and the seven (7) remaining
members shall come from the public sector, with the latter to be chosen preferably from among the incumbent Labor
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Arbiters.
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• Commission en banc.
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The Commission sits en banc only for the following purposes:

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(1) To promulgate rules and regulations governing the hearing and disposition of cases before any of its divisions
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and regional branches; and

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(2) To formulate policies affecting its administration and operations.

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The NLRC does not sit en banc to hear and decide cases. The banc has no adjudicatory power. The
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Commission exercises its adjudicatory and all other powers, functions, and duties through its eight (8)
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Divisions.
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• NLRC’s eight (8) divisions.

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The NLRC is divided into eight (8) divisions, each one is comprised of three (3) members. Each Division shall consist
of one (1) member from the public sector who shall act as its Presiding Commissioner and one (1) member each from
the workers and employers sectors, respectively.
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The various Divisions of the Commission have exclusive appellate jurisdiction over cases within their
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respective territorial jurisdictions.

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1. JURISDICTION
• Two (2) kinds of jurisdiction.
The NLRC exercises two (2) kinds of jurisdiction:
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1. Exclusive original jurisdiction; and

2. Exclusive appellate jurisdiction.
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• Exclusive original jurisdiction.

The NLRC exercises exclusive and original jurisdiction over the following cases:
a. Petition for injunction in ordinary labor disputes to enjoin or restrain any actual or threatened commission
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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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b. Petition for injunction in strikes or lockouts under Article 264 of the Labor Code.
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c. Certified cases which refer to labor disputes causing or likely to cause a strike or lockout in an industry
indispensable to the national interest, certified to it by the Secretary of Labor and Employment for compulsory
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arbitration by virtue of Article 263(g) of the Labor Code.
d. Petition to annul or modify the order or resolution (including those issued during execution proceedings) of
the Labor Arbiter.
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• Exclusive appellate jurisdiction.
The NLRC exercises exclusive appellate jurisdiction over the following:
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a. All cases decided by the Labor Arbiters.
b. Cases decided by the DOLE Regional Directors or hearing officers involving small money claims under
Article 129 of the Labor Code.
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c. Contempt cases decided by the Labor Arbiters.
EFFECT OF NLRC REVERSAL OF LABOR ARBITER’S ORDER OF REINSTATEMENT

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• Effect of reversal of reinstatement order when employee was actually reinstated.
o The BERGONIO Rule: (Bergonio, Jr. v. South East Asian Airlines, April 21, 2014.)
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After reversal of Labor Arbiter’s decision, the employer’s duty to reinstate the dismissed employee in the actual
service or in the payroll is effectively terminated. The employee, in turn, is not required to return the wages that he
had received prior to the reversal of the LA’s decision.
• Effect of reversal of reinstatement order when employee was reinstated in the payroll.
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o The GENUINO Doctrine: (Marilou S. Genuino v. NLRC, Citibank, N.A., Dec. 4, 2007)
The Refund Doctrine in Genuino no longer applies, per Garcia Doctrine (See below).
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o The WENPHIL Rule: (The prevailing rule) (Wenphil Corporation v. Abing, April 7, 2014)
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The period for computing the backwages due to the dismissed employees during the period of appeal should
END on the date that a higher court (in this case the CA) reversed the labor arbitration ruling of illegal dismissal.”
• Effect of reversal of reinstatement order when employee was neither reinstated to his former position or
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in the payroll.
o ENTITLEMENT TO REINSTATEMENT WAGES.
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The employee is entitled to reinstatement salaries/wages, allowances and benefits under the following doctrines:
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(1) ROQUERO doctrine (Roquero v. Philippine Air Lines, Inc., April 22, 2003); and
(2) GARCIA doctrine (Garcia v. Philippine Airlines, Inc., Jan. 20, 2009 [En Banc]).
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Based on the foregoing doctrines, from the moment an employee is ordered reinstated by the Labor Arbiter on the
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basis of the finding that his dismissal is illegal, up to the time that an appellate tribunal like the NLRC, Court of
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Appeals and Supreme Court, as the case may be, reverses the said finding, the employee is generally entitled to his so-
called “reinstatement wages.”
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ROQUERO DOCTRINE.
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The Roquero doctrine, enunciates the rule that in cases where an employee is ordered reinstated by the Labor Arbiter
and the employer fails or refuses to obey the reinstatement order but initiates an appeal, the employer’s success in
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having the decision of the Labor Arbiter’s decision reversed on appeal will not exculpate him from the liability to pay
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the reinstatement wages of the employee reckoned and computed from the time the employee was ordered reinstated
by the Labor Arbiter until the date of its reversal on appeal. r
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In this case of Roquero, the dismissal of petitioners Roquero and Pabayo was held valid by the Labor Arbiter. On
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appeal to the NLRC, the Labor Arbiter’s decision was reversed and consequently, petitioners were ordered reinstated.
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They did not appeal from that decision of the NLRC but filed a motion for the issuance of a writ of execution of the
order of reinstatement. The Labor Arbiter granted the motion but respondent PAL refused to comply with the said
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order on the ground that it has filed a Petition for Review before the Supreme Court. Subsequently, the CA reversed
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the decision of the NLRC and ruled that the dismissal of petitioners was valid. The Supreme Court later affirmed the
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CA’s decision but it held that the unjustified refusal by PAL to reinstate Roquero who, unlike Pabayo, has not amicably
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settled his case, entitles him to the payment of his reinstatement wages effective from the time PAL failed to reinstate
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him despite the issuance of the writ of execution. Thus, it was mandatory for PAL to actually reinstate Roquero or
reinstate him in the payroll. Having failed to do so, the former must pay the latter the salaries he is entitled to, as if he
was reinstated, from the time of the decision of the NLRC until the finality of the decision of the Supreme Court.
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Following Roquero, it is now the norm that even if the order of reinstatement of the Labor Arbiter is reversed on
appeal, it is obligatory on the part of the employer to reinstate and pay the wages of the dismissed employee during
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the period of appeal until its reversal by the NLRC, or the Court of Appeals or the Supreme Court, as the case may
be. If the employee has been reinstated during the appeal period and such reinstatement order is subsequently reversed
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on appeal with finality, the employee is not required to reimburse whatever salaries he has received for he is entitled
to such, more so if he actually rendered services during the said period.
GARCIA DOCTRINE.
• Modification of the Roquero and Genuino doctrines.
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The Roquero and Genuino doctrines have been modified by the Garcia doctrine. In this case, while respondent Philippine
Airlines (PAL) was undergoing rehabilitation receivership, an illegal dismissal case was filed by petitioners against
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respondent PAL which was decided by the Labor Arbiter in their favor thus ordering PAL to, inter alia, immediately
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comply with the reinstatement aspect of the decision. On appeal, the NLRC reversed the ruling of the Labor Arbiter
and held that their dismissal was valid. The issue of whether petitioners may collect their reinstatement wages during
the period between the Labor Arbiter’s order of reinstatement pending appeal and the NLRC decision overturning
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that of the Labor Arbiter, now that respondent PAL has terminated and exited from rehabilitation proceedings, was
resolved in the negative by the Supreme Court. The following ratiocinations were cited:
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(1) Re: modification of the Genuino doctrine. - The “refund doctrine” in Genuino should no longer be
observed because it easily demonstrates how a favorable decision by the Labor Arbiter could harm, more
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than help, a dismissed employee. The employee, to make both ends meet, would necessarily have to use up
the salaries received during the pendency of the appeal, only to end up having to refund the sum in case of
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a final unfavorable decision. It is mirage of a stop-gap leading the employee to a risky cliff of
insolvency. Further, the Genuino ruling not only disregards the social justice principles behind the rule, but
also institutes a scheme unduly favorable to management. Under such scheme, the salaries dispensed pendente
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lite merely serve as a bond posted in installment by the employer. For in the event of a reversal of the Labor
Arbiter’s decision ordering reinstatement, the employer gets back the same amount without having to spend
ordinarily for bond premiums. This circumvents, if not directly contradicts, the proscription that the “posting
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of a bond [even a cash bond] by the employer shall not stay the execution for reinstatement.”
(2) Re: modification of the Roquero doctrine. – The Roquero doctrine was reaffirmed but with the
modification that “[a]fter the Labor Arbiter’s decision is reversed by a higher tribunal, the employee may be
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barred from collecting the accrued wages, if it is shown that the delay in enforcing the reinstatement pending
appeal was without fault on the part of the employer.”
• Two-fold test under the Garcia Doctrine
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Under Garcia, the test to determine the liability of the employer (who did not reinstate the employee pending appeal)
to pay the wages of the dismissed employee covering the period from the time he was ordered reinstated by the Labor
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Arbiter to the reversal of the Labor Arbiter’s decision either by the NLRC, the Court of Appeals or the High Court, is
two-fold, to wit:
(1) There must be actual delay or the fact that the order of reinstatement pending appeal was not
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executed prior to its reversal; and
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(2) The delay must not be due to the employer’s unjustified act or omission. If the delay is due
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to the employer’s unjustified refusal, the employer may still be required to pay the salaries
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notwithstanding the reversal of the Labor Arbiter’s decision.
In Garcia, there was actual delay in reinstating petitioners but respondent PAL was justified in not complying with the
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reinstatement order of the Labor Arbiter because during the pendency of the illegal dismissal case, the SEC placed
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respondent PAL under an Interim Rehabilitation Receiver who, after the Labor Arbiter rendered his decision, was
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replaced with a Permanent Rehabilitation Receiver. It is settled that upon appointment by the SEC of a rehabilitation
receiver, all actions for claims before any court, tribunal or board against the corporation shall ipso jure be
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suspended. Resultantly, respondent PAL’s “failure to exercise the alternative options of actual reinstatement and
payroll reinstatement was thus justified. Such being the case, respondent’s obligation to pay the salaries pending appeal,
as the normal effect of the non-exercise of the options, did not attach.”
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• Reckoning of the period covered by accrued reinstatement wages.

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To clarify, employees ordered reinstated by the Labor Arbiter are entitled to accrued reinstatement wages only from
the time the employer received a copy of the Labor Arbiter’s decision declaring the employees’ termination illegal
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and ordering their reinstatement up to the date of the decision of the appellate tribunal overturning that of the
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Labor Arbiter. It is not accurate therefore to state that such entitlement commences “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.”
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• Some principles on reinstatement wages.

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o Employer is not liable to pay any reinstatement backwages if reinstatement is ordered not by the Labor
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Arbiter but by the NLRC on appeal and it was not executed by writ and its finding of illegal dismissal is later
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reversed by the Court of Appeals and/or Supreme Court.

o Payroll-reinstated employee is entitled not only to reinstatement wages but also to other benefits during
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the period of payroll reinstatement until the illegal dismissal case is reversed by a higher tribunal.
o Award of additional backwages and other benefits from the time the Labor Arbiter ordered reinstatement
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until actual or payroll reinstatement is proper and valid.

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D. JUDICIAL REVIEW OF LABOR RULINGS

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a. COURT OF APPEALS (Rule 65, Rules of Court)

• Rule 65 Petition for Certiorari, the only mode of elevating a labor case to the Court of Appeals.
The only mode by which a labor case decided by any of the following labor authorities/tribunals may reach the Court
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of Appeals is through a Rule 65 petition for certiorari.

(a) the DOLE Secretary;
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(b) the Commission (NLRC); and

(c) the Director of the Bureau of Labor Relations (BLR) in cases decided by him in his appellate jurisdiction
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(as distinguished from those he decides in his original jurisdiction which are appealable to the DOLE
Secretary).
The remedy of ordinary appeal to the Court of Appeals is not available from their decisions, orders or awards. The
reason for this rule is that their decisions, orders or awards are final and executory and therefore unappealable.
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• The only exception.

The only exception to the foregoing rule is in the case of decisions, orders or awards issued by the Voluntary
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Arbitrator or panel of Voluntary Arbitrators which may be elevated to the Court of Appeals by way of an ordinary
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appeal under a Rule 43 petition for review.

• Filing of Motion for Reconsideration of the decision of the DOLE Secretary, the commission (NLRC)
or the BLR director, a pre-requisite to filing of Rule 65 Petition for Certiorari.
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o The rule on the filing of a Motion for Reconsideration of the decision of the DOLE Secretary, the NLRC and
the BLR Director is mandatory and jurisdictional. Failure to comply therewith would result in the dismissal
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of the Rule 65 certiorari petition. Jurisprudence abounds enunciating the rule that a motion for reconsideration
is a pre-requisite for the filing of a special civil action for certiorari.
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The reason for this rule is that in labor cases, a motion for reconsideration is the plain and adequate
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remedy from an adverse decision of the DOLE Secretary, the NLRC and the BLR Director.
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o THE PHILTRANCO DOCTRINE: a motion for reconsideration should be filed even though it is not
required or even prohibited by the concerned government office.
▪ This was the rule enunciated in the 2014 case of Philtranco Service Enterprises, Inc. v. Philtranco
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Workers Union-Association of Genuine Labor Organizations (PWU-AGLO). 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
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which is the tangible representation of the opportunity given to the office to correct itself. Unless it is filed,
there could be no occasion to rectify. Worse, the remedy of certiorari would be unavailing. Simply put,
regardless of the proscription against the filing of a motion for reconsideration, the same may be filed on the
be instituted. al
assumption that rectification of the decision or order must be obtained and before a petition for certiorari may
• Certiorari petition may be filed even if the decision of the DOLE Secretary, the commission (NLRC), or
the BLR director has already become final and executory
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o This rule applies to the decisions rendered by the DOLE Secretary, the NLRC or the BLR Director (in cases
which he decided in his appellate jurisdiction)
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o If the CA grants the petition and nullifies their decisions on the ground of grave abuse of discretion amounting
to excess or lack of jurisdiction, such decisions are, in contemplation of law, null and void ab initio; hence, they
never became final and executory.
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JUDICIAL REVIEW OF DECISIONS OF VOLUNTARY ARBITRATORS
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• Decisions, final and executory
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As a general rule, decisions or awards of voluntary arbitrators are final, inappealable and executory after ten (10)
calendar days from receipt of a copy thereof by the parties.
• Ordinary appeal under Rule 43 of the 1997 Rules of Civil Procedure – Voluntary Arbitrators are of the
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same level as RTC judges.
o Being a quasi-judicial agency, the decisions and awards of a Voluntary Arbitrator are appealable by way of a
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petition for review to the Court of Appeals under Revised Administrative Circular No. 1-95 which provides for a
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uniform procedure for appellate review of all adjudications of quasi-judicial entities and which is now embodied
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in Section 1, Rule 43 of the 1997 Rules of Civil Procedure. Ba

o The ruling in Luzon Development Bank v. Association of Luzon Development Bank Employees, in effect,
equates the decisions or awards of the Voluntary Arbitrator to those of the Regional Trial Court (RTC). Hence,
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in a petition for certiorari from the awards or decisions of the Voluntary Arbitrator, the Court of Appeals has
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concurrent jurisdiction with the Supreme Court

o In Alcantara, Jr. v. CA, it was held that Luzon Development Bank is still a good law.
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• Period of appeal.
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o A conflict in the reckoning of the reglementary period within which to elevate a case on appeal from the Voluntary
Arbitrator to the CA exists between the law, Article 276 [262-A] of the Labor Code, on the one hand, and the Rules of
Court, particularly Section 4, Rule 43 thereof, on the other. Article 276 [262-A] provides, insofar as pertinent, as follows:
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“The award or decision of the Voluntary Arbitrator or Panel of Voluntary Arbitrators shall contain
the facts and the law on which it is based. It shall be final and executory after ten (10) calendar
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days from receipt of the copy of the award or decision by the parties.”
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Section 4, Rule 43 of the Rules of Court, on the other hand, provides for a 15-day reglementary period for filing an
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appeal, thus:
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“Section 4. Period of appeal. - The appeal shall be taken within fifteen (15) days from notice of the
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award, judgment, final order or resolution, or from the date of its last publication, if publication is
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required by law for its effectivity, or of the denial of petitioner's motion for new trial or
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reconsideration duly filed in accordance with the governing law of the court or agency a quo. Only
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one (1) motion for reconsideration shall be allowed. Upon proper motion and the payment of the
full amount of the docket fee before the expiration of the reglementary period, the Court of Appeals
may grant an additional period of fifteen (15) days only within which to file the petition for review.
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No further extension shall be granted except for the most compelling reason and in no case to exceed
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fifteen (15) days.”

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o The Guagua Doctrine - clarification of the rule on appeal. Finally, the en banc decision in the 2018 case of
▪ Guagua National Colleges v. CA, has laid to rest the above conflict. The Court declared that the variable rulings
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notwithstanding, the period now to be followed in appealing the decisions or awards of the Voluntary
Arbitrators or Panel of Arbitrators should be as follows:
(1) The 10-calendar day period stated in Article 276 [262-A] should be understood as the period within
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which the party adversely affected by the ruling of the Voluntary Arbitrators or Panel of Arbitrators
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may file a motion for reconsideration; and

(2) Only after the resolution of the motion for reconsideration may the aggrieved party appeal to the CA
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by filing the petition for review under Rule 43 of the Rules of Court within 15 days from notice pursuant
to Section 4 of Rule 43.
b. SUPREME COURT (Rule 45, Rules of Court)

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• Rule 45 Petition for Review on Certiorari, the only mode by which a labor case may reach the Supreme
Court.
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Since the Court of Appeals has jurisdiction over the petition for certiorari under Rule 65 that may be filed before it from
the decisions of the NLRC or the DOLE Secretary or the BLR Director (in cases decided by him in his appellate
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jurisdiction), any alleged errors committed by it in the exercise of its jurisdiction would be errors of judgment which
are reviewable by means of a timely appeal to the Supreme Court and not by a special civil action of certiorari.
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If the aggrieved party fails to do so within the reglementary period and the decision accordingly becomes final and
executory, he cannot avail himself of the writ of certiorari, his predicament being the effect of his deliberate inaction. A
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petition for certiorari under Rule 65 cannot be a substitute for a lost appeal under Rule 45; hence, it should
be dismissed.
• The Neypes Doctrine (Fresh Period Rule) - fresh period from denial of Motion for Reconsideration.
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In the 2013 case of Elizabeth Gagui v. Dejero, petitioner successively filed two Motions for Reconsideration of the
CA’s decision but both were denied. Petitioner elevated the case to the Supreme Court under Rule 45. In their
comment, respondents alleged that the instant petition had been filed 15 days after the prescriptive period of appeal
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under Section 2, Rule 45 of the Rules of Court. In her reply, petitioner countered that she has a fresh period of 15 days
from the date she received the Resolution of the CA to file the instant Rule 45 petition. In affirming the contention of
petitioner, the Supreme Court cited the en banc ruling in the case of Neypes v. CA which standardized the appeal
periods, thus:
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“To standardize the appeal periods provided in the Rules and to afford litigants fair opportunity
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to appeal their cases, the Court deems it practical to allow a fresh period of 15 days within which to
file the notice of appeal in the Regional Trial Court, counted from receipt of the order dismissing a
motion for a new trial or motion for reconsideration.
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“Henceforth, this ‘fresh period rule’ shall also apply to Rule 40 governing appeals from the
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Municipal Trial Courts to the Regional Trial Courts; Rule 42 on petitions for review from the Regional
Trial Courts to the Court of Appeals; Rule 43 on appeals from quasi-judicial agencies to the
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Court of Appeals and Rule 45 governing appeals by certiorari to the Supreme Court. The new
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rule aims to regiment or make the appeal period uniform, to be counted from receipt of the order
denying the motion for new trial, motion for reconsideration (whether full or partial) or any final
order or resolution.”
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Consequently, since petitioner in Gagui received the CA Resolution denying her two Motions for Reconsideration
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only on 16 March 2011, she had another 15 days within which to file her Petition, or until 31 March 2011. This
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Petition, filed on 30 March 2011, fell within the prescribed 15-day period.
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E. BUREAU OF LABOR RELATIONS

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1. JURISDICTION
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• Labor officials concerned.

As far as labor relations cases are concerned, the following officials are involved in their adjudication:
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(1) Mediators-Arbiters (Med-Arbiters);

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(2) DOLE Regional Directors; and

(3) BLR Director.
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• Med-arbiter.
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The term “Med-Arbiter” refers to an officer in the DOLE Regional Office or in the BLR authorized to hear and decide
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representation cases, inter-union or intra-union disputes and other related labor relations disputes.
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While the Labor Code refers to this official as “Med-Arbiter,” it should, however, be construed to mean “Mediator-
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Arbiter.” Most recent DOLE issuances have specifically changed such reference to “Mediator-Arbiter” in their provisions.
This is but proper since the word “Med” obviously is an abbreviation of the word “Mediator.”
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• DOLE regional director.

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The Regional Directors are the duly authorized representatives of the DOLE Secretary in the DOLE regional offices. They
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are in charge of the administration and enforcement of labor standards within their respective territorial jurisdictions.
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Although, like the Med-Arbiters, they are not also specifically mentioned in said article, it is a known procedural rule, however,
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that in addition to their jurisdiction over cases falling under Articles 128 and 129 of the Labor Code, they also have jurisdiction
over certain specified cases contemplated under Article 232 [226] of the same Code such as disputes concerning union
registration and cancellation of union registration as well as CBA registration or deregistration cases.
• BLR Director.
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The BLR is headed by a Director who hears and decides certain specified cases over which he has either original or appellate
jurisdiction. In many cases, his name, instead of the BLR, is usually the one impleaded as public respondent in certiorari
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petitions to the CA or subsequent appeals to the Supreme Court. Thus, one would encounter countless cases filed against
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such luminaries like Pura-Ferrer Calleja, Cresenciano B. Trajano, Benedicto Ernesto R. Bitonio Jr., and Hans Leo J. Cacdac,
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among others, who are sued in their capacity as BLR Directors.
2. CASES COGNIZABLE
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The following are the general classifications of the cases falling under the jurisdiction of the said officials, to wit:
(a) Inter-union disputes;
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(b) Intra-union disputes; and

(c) Other related labor relations disputes.
(a) INTER-UNION AND INTRA-UNION DISPUTES

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• Inter-union or representation dispute.

An “inter-union dispute” or “representation dispute” is one occurring or carried on between or among unions. It refers to a case
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involving a petition for certification election filed by a duly registered labor organization which is seeking to be recognized as
the sole and exclusive bargaining agent (SEBA) of the rank-and-file employees or supervisory employees, as the case may be,
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in the appropriate bargaining unit of a company, firm or establishment. If there are two or more legitimate unions involved,
it also refers to any conflict between and among them concerning the issue of which of them should be certified as the SEBA
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for purposes of collective bargaining with the employer. Broadly, it covers any other conflict or dispute between legitimate
labor unions.
• Intra-union or internal union dispute.
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An “intra-union dispute” or “internal union dispute” refers to a conflict within or inside a labor union. It may refer to any conflict
between and among officers and/or members of one particular union, including grievances arising from any violation of the
rights and conditions of membership, violation of or disagreement over any provision of the union’s constitution and by-
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laws, issues over control, supervision and management of its internal affairs, or disputes arising from chartering or affiliation
of a union.
• Rundown of inter-union and intra-union cases
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In accordance with the Labor Code’s Implementing Rules, as amended in 2015, the following is a rundown of all possible inter-
union/intra-union disputes:
a) Cancellation of registration of a labor organization filed by its members or by another labor organization;
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b) Conduct of election of union and workers’ association officers or nullification of election of union and workers'
association officers;
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c) Audit/accounts examination of union or workers' association funds;

d) Deregistration of collective bargaining agreements;
e) Validity/invalidity of union affiliation or disaffiliation;
f) Validity/invalidity of acceptance/non-acceptance for union membership;
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g) Validity/invalidity of impeachment/expulsion of union and workers' association officers and members;
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h) Validity/invalidity of Request for SEBA Certification7 (Replacing “Voluntary Recognition” as a mode of securing sole
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and exclusive bargaining agent status);
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i) Opposition to application for union and CBA registration;
j) Violations of or disagreements over any provision in a union or workers' association constitution and by-laws;
k) Disagreements over chartering or registration of labor organizations and collective bargaining agreements;
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I) Violations of the rights and conditions of union or workers' association membership;
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m) Violations of the rights of legitimate labor organizations, except interpretation of collective bargaining agreements;
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and
n) Such other disputes or conflicts involving the rights to self-organization, union membership and collective
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bargaining -
1) Between and among legitimate labor organizations; or
2) Between and among members of a union or workers’ association.
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(b) OTHER RELATED LABOR RELATIONS DISPUTES

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• Meaning of “Other related labor relations disputes.”

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“Other related labor relations dispute” refers to any conflict between a labor union and the employer or any individual, entity or
group that is not a labor union or workers’ association.
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More specifically, it may refer to any of the following:

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(a) Any conflict between:

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(1) a labor union and an employer, or

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(2) a labor union and a group that is not a labor organization; or

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(3) a labor union and an individual who is not a member of such union;
(b) Cancellation of registration of unions and workers’ associations filed by individuals other than its members, or
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group that is not a labor organization; and

(c) A petition for interpleader involving labor relations.
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ORIGINAL AND EXCLUSIVE JURISDICTION OF MED-ARBITERS, DOLE DIRECTORS AND BLR

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DIRECTOR
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Having known the various cases afore-described, a discussion of the respective jurisdictions of the Med-Arbiters, DOLE
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Directors and BLR Director over these cases may now be made with greater clarity.
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1. MED-ARBITERS
ORIGINAL AND EXCLUSIVE JURISDICTION
• The cases falling under the original and exclusive jurisdiction of the Med-Arbiters are as follows:
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(1) Inter-union disputes (representation or certification election conflicts), such as:

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(a) Request for SEBA certification when made in an unorganized establishment with only one8 or more
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than one (1) legitimate union or in an organized establishment; or

(b) Petition for certification election, consent election, run-off election or re-run election;
(2) Intra-union disputes;
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(3) Other related labor relations disputes;

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7 This is in the nature of an inter-union dispute which may be occasioned by the introduction of a new mode of securing the status of sole and exclusive bargaining
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agent (SEBA).
8 In case the Request is made in an unorganized establishment with only one (1) legitimate union, and the requesting union or local fails to complete the
requirements for SEBA certification during the validation conference before the DOLE Regional Director, in which event, such Request should be referred to
the Election Officer for the conduct of certification election (Section 4, Rule VII of the Rules to Implement the Labor Code, as amended by Department Order
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No. 40-I-15, Series of 2015 [September 07, 2015]. The election should be conducted in accordance with Rule IX thereof.), which necessarily would mean that
such certification election should now be conducted under the jurisdiction of the Mediator-Arbiter to whom the Election Officer is duty-bound to report the
outcome of the election proceeding. Certainly, the ensuing certification election cannot be conducted under the directive of the DOLE Regional Director
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without the participation of the Mediator-Arbiter who, under the law, is the one possessed of the original and exclusive jurisdiction over certification election
cases, including the proclamation of the winning SEBA. (See Section 21, Rule IX, Book V, Rules to Implement the Labor Code, as ordered renumbered by
Section 17, Department Order No. 40-I-15, Series of 2015 [September 07, 2015]. This section was originally numbered Section 20, per Department Order No.
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40-03, Series of 2003, [Feb. 17, 2003], but it was subsequently re-numbered to Section 19, per Department Order No. 40-F-03, Series of 2008 [Oct. 30, 2008]).
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(4) Injunction cases;9 and
(5) Contempt cases.
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On No. 1[a] above, the Mediator-Arbiter will have jurisdiction over a Request for SEBA Certification if it is made in an
organized establishment as well as in instances where it is made in an unorganized establishment with more than
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one (1) legitimate organization. Under this situation, the DOLE Regional Director, before whom the said Request is filed,
is required to refer it to the Mediator-Arbiter for the determination of the propriety of conducting a certification election;
consequently, the Mediator-Arbiter would now have the jurisdiction to take cognizance of the certification election.
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2. DOLE REGIONAL DIRECTORS
•
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ORIGINAL AND EXCLUSIVE JURISDICTION
The DOLE Regional Directors have original and exclusive jurisdiction over numerous cases. But not all of them are
relevant to or connected with the three (3) classes of cases10 expressly mentioned in Article 232 [226]. Only the
following cases cognizable by them are related thereto or connected therewith by virtue of laws and rules:
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(1) Visitorial cases under Article 289 [274], involving examination of books of accounts of independent unions,
local chapters/chartered locals and workers’ associations;
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(2) Union registration-related cases, such as:

a) Applications for union registration of independent unions, local chapters and workers’ associations;
b) Denial of application for registration of said unions;
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c) Petitions for revocation or cancellation of registration of said unions;
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(3) Denial of registration of single-enterprise11 CBAs or petitions for deregistration thereof; and
(4) Request for SEBA certification when made in an unorganized establishment with only one (1) legitimate
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union.
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• On No. 1 above, it is imperative to point out that although by nature, this is an intra-union dispute, the rules, however,
treat this separately from those generally applicable to intra-union disputes and accordingly vest jurisdiction thereover in
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the DOLE Regional Directors and not in the Med-Arbiters.
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o Barles v. Bitonio is clear on this point. It was held here that while intra-union conflicts, such as examinations of accounts
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are under the jurisdiction of the BLR, however, the Rules of Procedure on Mediation-Arbitration purposely and expressly
separated or distinguished examinations of union accounts from the genus of intra-union conflicts and provided a
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different procedure for their resolution. Consequently, original jurisdiction over complaints for examinations of union
accounts is vested not in the Med-Arbiter but in the DOLE Regional Director. This is apparent from Section 3 thereof.
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o But there is a need to point out though that the foregoing rule applies only when the request for examination of books
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of accounts concerns only those of independent unions, local chapters/chartered locals and workers’
associations. If what is involved are those of federations, national unions, industry unions or trade union
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centers, and their local chapters/chartered locals, affiliates and member organizations, the jurisdiction thereover
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is vested with the BLR Director and not with the DOLE Regional Director.
• On No. 2[a] above, as far as workers’ associations are concerned, if they operate in more than one region, the application
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for registration should be filed with the BLR or the Regional Offices, but either way, it should be processed by the BLR.
This is so in order to have a unified resolution of the merits of the application by one, single agency.
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• On No. 4 above, when the Request for SEBA Certification is made in an unorganized establishment with only
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one (1) legitimate union, it should be filed with the DOLE Regional Director who will make an immediate
determination on whether there is majority support by the members of the bargaining unit to the requesting union. Once r
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the majority support is confirmed and the requesting union does not fail to complete the requirements for SEBA
certification during the validation conference, the requesting union is immediately certified by the DOLE Regional
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Director as the SEBA without conducting a certification election.

• As a consequence of this latest change in the Rules, it may be said that the DOLE Regional Director, in a way, is now
empowered to rule on a “representation” issue which, technically speaking, falls under and is covered by the general
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class of “inter-union disputes” that falls within the jurisdiction of the Mediator-Arbiter. In fact, the very Request itself speaks
of “SEBA Certification,” a relief that is not the consequence of “Voluntary Recognition” - the original remedy intended
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to be replaced by this Request mode.

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• For it is clear that under the previous repealed rule on voluntary recognition, the DOLE Regional Director never issues
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a “SEBA Certification”; what is done is the mere recording of the “Notice of Voluntary Recognition” jointly
submitted by the employer and the union to the DOLE Regional Office which issued the recognized labor union’s
certificate of registration or, in the case of local chapter, where the charter certificate and the other documents required
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under Article 241 [234-A] were submitted and filed. Since it is crystal clear under existing laws, rules and jurisprudence
that it is the Mediator-Arbiter who has the original and exclusive jurisdiction to issue a “SEBA Certification” under any
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of the modes12 of selecting a SEBA, it is not surprising if the issue of the validity of the exercise of similar power to issue
the SEBA Certification by the DOLE Regional Director would be raised in an appropriate proceeding.
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• But the rule is quite clear that the Mediator-Arbiter would acquire original jurisdiction over the Request for SEBA
Certification under the following situations:
(1) In case the Request is made in an unorganized establishment with only one (1) legitimate union, and the
requesting union or local fails to complete the requirements for SEBA certification during the validation conference before the
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DOLE Regional Director, in which event, such Request should be referred to the Election Officer for the conduct of
certification election which necessarily would mean that such certification election should now be conducted under the
jurisdiction of the Mediator-Arbiter to whom the Election Officer is duty-bound to report the outcome of the election
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proceeding. Certainly, the ensuing certification election cannot be conducted under the directive of the DOLE Regional
Director without the participation of the Mediator-Arbiter who, under the law, is the one possessed of the original and
exclusive jurisdiction over certification election cases, including the proclamation of the winning SEBA.
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9 Med-Arbiters have the authority to issue temporary restraining orders (TROs) and writs of injunction in appropriate cases.
10 These are (1) inter-union disputes; (2) intra-union disputes; and (3) Other related labor relations disputes.
11 As distinguished from cases involving multi-empoyer CBAs which fall under the original jurisdiction of the BLR Director.
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12 Besides this mode, the other modes of selecting or designating a SEBA are certification election, consent election, run-off election, and lately, re-run election.
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(2) In case the Request is made in an unorganized establishment with more than one (1) legitimate union, in which
event, the DOLE Regional Director is required to refer the Request directly to the Election Officer for the conduct of
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a certification election which should be in accordance with the Rules that state, in its Section 2, Rule VIII, that the
“(Request) shall be heard and resolved by the Mediator-Arbiter.” Resultantly, it is still the Mediator-Arbiter who should
take cognizance of the Request which, in this case, is the equivalent of the Petition for Certification Election over which he
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exercises original jurisdiction.
(3) In case the Request is made in an organized establishment, in which case, the Regional Director should refer the
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same to the Mediator-Arbiter for the determination of the propriety of conducting a certification election.
3. BLR DIRECTOR
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ORIGINAL AND EXCLUSIVE JURISDICTION.
At the outset, it must be stressed that reference in the law and pertinent rules to “BLR”, as far as the issue of jurisdiction
is concerned, should appropriately mean “BLR Director.” This is as it should be because “BLR” is a generic term that
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includes not only the Med-Arbiters and DOLE Regional Directors but the BLR Director himself. More significantly,
there is jurisprudential variance in the cases cognizable by the BLR Director, in relation to Med-Arbiters and DOLE
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Regional Directors, hence, referring to the cases properly falling under the jurisdiction of the “BLR Director” as such
would be more appropriate and less confusing than simply referring to them as falling under the jurisdiction of the
“BLR.”
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• The BLR Director exercises two (2) kinds of jurisdiction, namely: original and appellate. The following cases fall under
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the first:
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(1) Complaints and petitions involving the application for registration, revocation or cancellation of registration
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of federations, national unions, industry unions, trade union centers and their local chapters/chartered
locals, affiliates and member organizations;
(2) Request for examination of books of accounts of said labor organizations13 under Article 289 [274] of the
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Labor Code;
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(3) Intra-union disputes involving said labor organizations;
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(4) Notice of merger, consolidation, affiliation and change of name of said unions and or petition for denial
thereof;
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(5) Registration of multi-employer14 CBAs or petitions for deregistration thereof;

(6) Contempt cases.
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• As far as No. 3 above is concerned, the 2010 case of Atty. Montaño v. Atty. Verceles, is relevant. Petitioner here claimed
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that under the Implementing Rules, it is the DOLE Regional Director and not the BLR (Director) who has jurisdiction over
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intra-union disputes involving federations which, in this case, pertains to the election protests in connection with the
election of officers of the federation (Federation of Free Workers [FFW]). In finding no merit in petitioner’s contention,
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the High Court pointed out that Article 226 of the Labor Code clearly provides that the BLR (Director) and the Regional
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Directors of DOLE have concurrent jurisdiction over inter-union and intra-union disputes. Such disputes include the
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conduct or nullification of election of union and workers’ association officers. There is, thus, no doubt as to the BLR
(Director)’s jurisdiction over the instant dispute involving member-unions of a federation arising from disagreement
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over the provisions of the federation’s constitution and by-laws. It agreed with the following observation of the BLR
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(Director):
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“Rule XVI lays down the decentralized intra-union dispute settlement mechanism. Section 1 states that
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any complaint in this regard ‘shall be filed in the Regional Office where the union is domiciled.’ The concept
of domicile in labor relations regulation is equivalent to the place where the union seeks to operate or has
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established a geographical presence for purposes of collective bargaining or for dealing with employers
concerning terms and conditions of employment.
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“The matter of venue becomes problematic when the intra-union dispute involves a federation,
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because the geographical presence of a federation may encompass more than one administrative
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region. Pursuant to its authority under Article 232 [226], this Bureau exercises original jurisdiction over
intra-union disputes involving federations. It is well-settled that FFW, having local unions all over
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the country, operates in more than one administrative region. Therefore, this Bureau maintains
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original and exclusive jurisdiction over disputes arising from any violation of or disagreement over
any provision of its constitution and by-laws.”
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APPELLATE JURISDICTION OF THE BLR DIRECTOR

AS DISTINGUISHED FROM THAT OF THE DOLE SECRETARY
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• Necessity for jurisdictional distinctions.

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The distinctions pointed out above between the respective jurisdictions of the Med-Arbiters, DOLE Regional Directors and
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the BLR Director acquire significance in determining which of the cases over which they exercise jurisdiction may be appealed
to the BLR Director and those that may be appealed to the DOLE Secretary, both of whom, based on law and jurisprudence,
are possessed of exclusive appellate jurisdiction over certain cases decided by the Med-Arbiters, DOLE Regional Directors
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and BLR Director.

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The Supreme Court had occasion to distinguish the appellate jurisdiction of the BLR Director from that of the DOLE
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Secretary in the case of Abbott Laboratories Philippines, Inc. v. Abbott Laboratories Employees Union. Accordingly, the appellate
jurisdiction of the DOLE Secretary is limited only to the review of decisions rendered by the BLR Director in the exercise
of his exclusive and original jurisdiction. The DOLE Secretary has no jurisdiction over decisions of the BLR Director rendered
in the exercise of his appellate jurisdiction over decisions made by Med-Arbiters and DOLE Regional Directors in the exercise
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of their respective original and exclusive jurisdictions, the reason being that such decisions are final and inappealable.
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13 Referring to federations, national unions, industry unions and trade union centers, as distinguished from independent unions, local chapters and workers’
associations.
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14 As distinguished from cases involving single-enterprise CBAs which fall under the jurisdiction of the DOLE Regional Director.
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• Appeals from decisions of Med-Arbiters
o Decisions in the cases falling under the original and exclusive jurisdiction of the Med-Arbiters are appealable as follows:
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(1) Inter-union disputes (representation or certification election conflicts) – to DOLE Secretary
(a) Request for SEBA certification when made in an unorganized establishment with only one or more than one
(1) legitimate union or in an organized establishment – to DOLE Secretary
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(b) Petition for certification election, consent election, run-off election or re-run election - to DOLE Secretary
(2) Intra-union disputes – to BLR Director
(3) Other related labor relations disputes - to BLR Director
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(4) Injunction cases - to BLR Director
(5) Contempt cases - to BLR Director
o Different rule Re: Appellate jurisdiction over Med-Arbiter’s decisions in inter-union disputes.
▪ Legal basis. al
While generally, the decisions of the Med-Arbiters are appealable to the BLR Director, excepted therefrom are their
decisions in inter-union disputes which are appealable directly to the DOLE Secretary by virtue of Article 272 [259] of the
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Labor Code.
▪ Variance in the rule on appeal in unorganized and organized establishments.
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The rule on appeal in certification election cases in unorganized establishments is different from that of organized
establishments, to wit:
(1) Appeal in unorganized establishments. - The order granting the conduct of a certification election in an
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unorganized establishment is not subject to appeal. Any issue arising from its conduct or from its results is proper
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subject of a protest. Appeal may only be made to the DOLE Secretary in case of denial of the petition within ten (10)
calendar days from receipt of the decision of denial.
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(2) Appeal in organized establishments. - The order granting the conduct of a certification election in an organized
establishment and the decision dismissing or denying the petition for certification election may be appealed to the
DOLE Secretary within ten (10) calendar days from receipt thereof.
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• Appeals from decisions of DOLE Regional Directors
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o Decisions appealable to the BLR Director.

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Not all decisions, awards or orders rendered by the DOLE Regional Directors are appealable to the BLR Director. Only
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decisions in the following cases relevant and related to labor relations, are appealable to the BLR Director: Ba
(1) Visitorial cases under Article 289 [274], involving examination of books of accounts of independent unions,
local chapters/chartered locals and workers’ associations;15
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(2) Union registration-related cases, such as:

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a) Denial of applications for union registration of independent unions, local chapters and
workers’ associations;
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b) Revocation or cancellation of registration of said unions;

(3) Notice of merger, consolidation, affiliation and change of name of said unions and or petition for denial
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thereof;
(4) CBA-related cases, such as:
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a) Application for registration of single-enterprise CBAs or petition for deregistration thereof;

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b)Petition for denial of registration of single-enterprise CBAs or denial of petition deregistration

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As far as No. 1 above is concerned, appellate authority over decisions of the DOLE Regional Directors involving
examinations of union accounts is expressly conferred on the BLR Director under the Rules of Procedure on Mediation-
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Arbitration, to wit:
“RULE II
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MED-ARBITRATION
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“SEC. 3. Jurisdiction of the Regional Director. - The Regional Director shall exercise original and exclusive
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jurisdiction over application for union registration, petitions for cancellation of union registration and complaints for
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examination of union books of accounts.

SEC. 4. Jurisdiction of the Bureau.-
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“(b) The Bureau shall exercise appellate jurisdiction over all cases originating from the Regional
Director involving union registration or cancellation of certificates of union registration and complaints for examination
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of union books of accounts.”

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The language of the law is categorical. Any additional explanation on the matter is superfluous. It is thus clear then that the
DOLE Secretary has no appellate jurisdiction over decisions of DOLE Regional Directors involving petitions for
examinations of union accounts.
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o Cases not appealable to the BLR Director but to some other labor officials.
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For greater clarity in presentation and to avoid any confusion, it is worthy to mention that the decisions of the DOLE
Regional Directors in the following cases which are not related to labor relations are appealable to the DOLE Secretary and
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not to the BLR Director:

(a) Visitorial (inspection) cases under Article 37;
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15 The BLR Director, not the DOLE Secretary, has the appellate authority over decisions of the DOLE Regional Directors involving examinations of union
accounts as provided under Rule II of the Rules of Procedure on Mediation-Arbitration, issued on April 10, 1992, to wit: “SEC. 3. Jurisdiction of the Regional
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Director. - The Regional Director shall exercise original and exclusive jurisdiction over application for union registration, petitions for cancellation of union
registration and complaints for examination of unions books of accounts. SEC. 4. Jurisdiction of the Bureau.- xxx “(b) The Bureau shall exercise appellate
jurisdiction over all cases originating from the Regional Director involving union registration or cancellation of certificates of union registration and complaints
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for examination of union books of accounts.”

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(b) Visitorial (inspection) and enforcement cases16 under Article 128, (either routine or initiated through a complaint);
(c) Occupational safety and health violations;
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(d) Cases related to private recruitment and placement agencies (PRPAs) for local employment, such as:
1) Applications for license or denial thereof;
2) Complaints for suspension or cancellation of license by reason of administrative offenses;
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3) Complaints for illegal recruitment; and
4) Petition for closure of agency.
Additionally, their decisions on small money claims cases arising from labor standards violations in an amount not exceeding
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₱5,000.00 and not accompanied with a claim for reinstatement under Article 129 are appealable to the NLRC.
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REMEDIES FROM DECISIONS OF BLR DIRECTOR AND DOLE SECRETARY
RENDERED IN THEIR APPELLATE JURISDICTION
• Appeals end with BLR director and DOLE secretary.
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o Notably, the remedy of appeal involved in the cases contemplated under Article 232 [226] is available only up to the
level of either the BLR Director or the DOLE Secretary, as the case may be. Appeal to the CA from their decisions
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rendered in their respective appellate jurisdictions is not available; the only remedy being the filing of an original
special civil action for certiorari under Rule 65 of the Rules of Court.
o In the case of decisions rendered by the BLR Director in his appellate jurisdiction, they can no longer be appealed to
the DOLE Secretary because another appeal to the DOLE Secretary is not tenable anymore, the BLR Director’s
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decisions thereon having already become final and executory.
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• Remedy from CA decisions to the Supreme Court.
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There is only one mode to elevate labor cases from the CA to the Supreme Court and that is, through Rule 45 petition for
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review on certiorari.
F. NATIONAL CONCILIATION AND MEDIATION BOARD

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• NCMB is not a quasi-judicial agency.
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o NCMB is not a quasi-judicial agency, according to the 2009 case of Tabigue v. International Copra Export
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Corporation.
o “Quasi-judicial function” is a term which applies to the action, discretion, etc. of public administrative officers
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or bodies, who are required to investigate facts or ascertain the existence of facts, hold hearings, and draw
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conclusions from them as a basis for their official action and to exercise discretion of a judicial nature.
• Not being a quasi-judicial agency, NCMB’S rulings cannot be elevated to, and cognizable by, the Court
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of Appeals.
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o Rule 43 of the Rules of Court applies only to awards, judgments, final orders or resolutions of or authorized by
any quasi-judicial agency in the exercise of its quasi-judicial functions. Hence, NCMB’s decision, not having been
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rendered by a quasi-judicial body, cannot be elevated to the Court of Appeals under said rule.
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1. Jurisdiction
• The NCMB is an agency attached to the DOLE principally in-charge of the settlement of labor disputes through
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conciliation, mediation and voluntary arbitration. It is also charged with the promotion of voluntary approaches
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to labor dispute prevention and settlement

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2. Conciliation as distinguished from mediation

• Conciliation and mediation, meaning.
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o Both the terms “conciliation” and “mediation” refer to a process whereby a third person usually called Conciliator
(in case of conciliation) or Mediator (in case of mediation), intervenes in a dispute involving two or more
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conflicting parties for the purpose of reconciling their differences or persuading them into adjusting or settling
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their dispute. The Conciliator or Mediator normally does not make or render any decision, his role being confined
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to the functions afore-described.

• Distinction between conciliation and mediation.
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o Generally, there are no marked distinctions between conciliation and mediation. The reason is that in both cases,
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a neutral third party (called Conciliator or Mediator) is tasked to assist two or more opposing parties in finding
appropriate resolution to a dispute.
o In the NCMB, the hearing officer is called Conciliator-Mediator. There is no separate classification between
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conciliators and mediators. When the Conciliator-Mediator performs his task, he does not make any distinction
when he is acting as Conciliator or as Mediator.
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o In other jurisdictions, the principal distinction between conciliation and mediation lies on the extent of
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the power and authority granted to the neutral third party.

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o In mediation, the Mediator normally facilitates a deliberation or discussion of the issues between the parties. He
may or may not offer any opinions on the strength and weaknesses of each party's positions and arguments.
Thus, mediation may be classified into two, namely:
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1. Facilitative Mediation where the Mediator does not make or offer any opinion; or
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2. Evaluative Mediation where the Mediator offers an opinion which is not binding on the parties.
It bears stressing, however, that regardless of which of the 2 methods above is chosen, the Mediator is not empowered
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to impose his will on the parties.

o In conciliation, the Conciliator is given more power and authority in that he may not only offer an opinion on
the issues at hand but may actually make a binding opinion thereon provided the parties stipulate in advance to
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this effect. His opinion is based on the facts and the law involved in the controversy before him.
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16 Visitorial cases involve inspection of establishments to determine compliance with labor standards; while enforcement cases involve issuance of compliance
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orders and writs of execution.

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o It may thus be observed that conciliation is more formal than mediation in the sense that the Conciliator’s
opinion, unlike the Mediator’s, may be binding on the parties, although it may be merely temporary in character.
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3. Preventive mediation
• Preventive mediation as a remedy.
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o “Preventive mediation,” as a remedy, is not found in the Labor Code. But under the law which created the NCMB,
it is expressly stated that one of its functions is to provide preventive mediation to disputing parties.
o The term “preventive mediation case” refers to the potential or brewing labor dispute which is the subject of a formal
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or informal request for conciliation and mediation assistance sought by either or both parties in order to remedy,
contain or prevent its degeneration into a full blown dispute through amicable settlement.
• How to initiate preventive mediation.
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Preventive mediation proceeding may be initiated in two (2) ways:
(1) By filing a notice or request of preventive mediation, as distinguished from a notice of strike/lockout; or
(2) By conversion of the notice of strike/lockout into a preventive mediation case.
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• Authority to convert a notice of strike/lockout into a preventive mediation case.
The NCMB has the authority to convert a notice of strike/lockout filed by the union/employer into a preventive
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mediation case under any of the following circumstances:

1. When the issues raised in the notice of strike/lockout are not strikeable in character.
2. When the party which filed the notice of strike/lockout voluntarily asks for the conversion.
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3. When both parties to a labor dispute mutually agree to have it subjected to preventive mediation proceeding.
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Such authority is in pursuance of the NCMB’s duty to exert all efforts at mediation and conciliation to enable the
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parties to settle their dispute amicably and in line with the State policy of favoring voluntary modes of settling labor
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disputes.
• Conversion of a Notice of Strike or Notice of Lockout into a preventive mediation case results in its
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dismissal.
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Once the notice of strike is converted into a preventive mediation case, the notice is deemed dropped from the dockets
as if no notice of strike has been filed. Since there is no more notice of strike to speak about, any strike subsequently
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staged by the union after the conversion is deemed not to have complied with the requirements of a valid strike and
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therefore illegal.
The same rule applies in the case of lockout by an employer.

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• Relevant cases.
A case in point is Philippine Airlines, Inc. v. Secretary of Labor and Employment, where the strike was declared
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illegal for lack of a valid notice of strike in view of the NCMB’s conversion of said notice into a preventive mediation
case.
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It is clear, according to San Miguel Corporation v. NLRC, that the moment the NCMB orders the preventive
mediation in a strike case, the union thereupon loses the notice of strike it had filed. Consequently, if it still defiantly
proceeds with the strike while mediation is on-going, the strike is illegal.
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G. POEA r
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H. DOLE REGIONAL DIRECTORS

1. Jurisdiction
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• Role of the DOLE Regional Directors.

The DOLE has a total of 16 Regional Offices nationwide each one of them is headed by a Regional Director. The DOLE
Regional Directors are the duly “authorized representatives” of the DOLE Secretary referred to in Article 128 of the Labor Code
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which grants to them both visitorial and enforcement powers. They are in charge of the administration and enforcement
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of labor standards within their respective territorial jurisdictions.

• Jurisdiction of the DOLE Regional Directors.
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The DOLE Regional Directors have original and exclusive jurisdiction over the following cases:
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(a) Visitorial (inspection) cases under Article 37;

(b) Visitorial (inspection) and enforcement cases17 under Article 128, (either routine or initiated through a complaint);
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(c) Visitorial cases under Article 289 [274], involving examination of books of accounts of independent unions,
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local chapters/chartered locals and workers’ associations;

(d) Occupational safety and health violations;
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(e) Small money claims cases arising from labor standards violations in an amount not exceeding ₱5,000.00 and not
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accompanied with a claim for reinstatement under Article 129;

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(f) Cases related to private recruitment and placement agencies (PRPAs) for local employment, such as:
1) Applications for license or denial thereof;
2) Complaints for suspension or cancellation of license by reason of administrative offenses;
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3) Complaints for illegal recruitment; and

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4) Petition for closure of agency;

(g) Cases submitted for voluntary arbitration in their capacity as Ex-Officio Voluntary Arbitrators (EVAs) under
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Department Order No. 83-07, Series of 2007.

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(h) Union registration-related cases, such as:

1) Applications for union registration of independent unions, local chapters and workers’ associations;
2) Petitions for denial of application for registration of said unions;18
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17 Visitorial cases involve inspection of establishments to determine compliance with labor standards; while enforcement cases involve issuance of compliance
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orders and writs of execution.

18 Referring to independent unions, local chapters and workers’ associations, as distinguished from federations, national unions, industry unions, trade union
centers and their local chapters/chartered locals, affiliates and member organizations whose application for registration as well as denial or cancellation or
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revocation of registration is cognizable by the BLR Director in his original and exclusive jurisdiction [infra].
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3) Petitions for revocation or cancellation of registration of said unions;
(i) Notice of merger, consolidation, affiliation and change of name of said unions and or petition for denial thereof;
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(j) CBA-related cases, such as:
1) Application for registration of single-enterprise CBAs or petition for deregistration thereof;
2) Petition for denial of registration of single-enterprise CBAs or denial of petition for deregistration thereof; and
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(k) Request for SEBA certification when made in an unorganized establishment with only one (1) legitimate
union.
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LABOR STANDARDS ENFORCEMENT CASES
• Subject of the visitorial and enforcement powers - the establishment and not the employees therein.
o The subject of the visitorial and enforcement powers granted to the DOLE Secretary or his duly authorized
thereof. al
representatives under Article 128 is the establishment which is under inspection and not the employees
o Consequently, any awards granted are not confined to employees who signed the complaint inspection but are
equally applicable to all those who were employed by the establishment concerned at the time the
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complaint was filed, even if they were not signatories thereto. The reason is that the visitorial and
enforcement powers are relevant to, and may be exercised over, establishments, not over individual
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employees thereof, to determine compliance by such establishments with labor standards laws.
Necessarily, in case of an award from such violation by the establishment, all its existing employees
should be benefited thereby. It must be stressed, however, that such award should not apply to those who
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resigned, retired or ceased to be employees at the time the complaint was filed.
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• Original jurisdiction
The DOLE Regional Directors exercise original jurisdiction over the following:
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(a) Cases involving inspection of establishments to determine compliance with labor standards (Visitorial Power); and
(b) Cases involving issuance of compliance orders and writs of execution (Enforcement Power).
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• Visitorial power of regional directors under Article 128(a).
Pursuant to their visitorial power under Article 128(a), the DOLE Regional Directors shall have:
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(a) access to employer’s records and premises at any time of the day or night, whenever work is being undertaken
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therein; and
(b) the right:
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(1) to copy from said records;
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(2) to question any employee and investigate any fact, condition or matter which may be necessary to determine
violations or which may aid in the enforcement of the Labor Code and of any labor law, wage order, or
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rules and regulations issued pursuant thereto.

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• Enforcement power of regional directors under Article 128(b).

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The statutory basis of the authority of the DOLE Regional Directors to administer and enforce labor standards is
found in Article 128(b) of the Labor Code, as amended.
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Pursuant thereto, the DOLE Regional Director, in cases where the employer-employee relationship still exists, shall have the
power:
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a. to issue compliance orders to give effect to the labor standards provisions of the Labor Code and other
labor legislations based on the findings of labor employment and enforcement officers or industrial safety
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engineers made in the course of inspection.

b. to 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
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supported by documentary proofs which were not considered in the course of inspection, in which case, the
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contested case shall fall under the jurisdiction of the Labor Arbiter to whom it should be endorsed by the
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Regional Director.
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c. to order stoppage of work or suspension of operations of any unit or department of an establishment

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when non-compliance with the law or implementing rules and regulations poses grave and imminent danger to
the health and safety of workers in the workplace. Within 24 hours, a hearing shall be conducted to determine
whether an order for the stoppage of work or suspension of operations shall be lifted or not. In case the
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violation is attributable to the fault of the employer, he shall pay the employees concerned their salaries or
wages during the period of such stoppage of work or suspension of operation.
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d. to require employers, by appropriate regulations, to keep and maintain such employment records as may
be necessary in aid of his visitorial and enforcement powers under the Labor Code.
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CASES SUBMITTED TO REGIONAL DIRECTORS AND ASSISTANT REGIONAL

DIRECTORS FOR VOLUNTARY ARBITRATION IN THEIR CAPACITY AS EX-OFFICIO
VOLUNTARY ARBITRATORS (EVAs)
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1. Jurisdiction.
As EVAs, the DOLE Regional Directors and their Assistants have jurisdiction over the following cases:
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(a) All grievances arising from the interpretation or implementation of the CBA;
(b) All grievances arising from the interpretation or enforcement of company personnel policies which remain
unresolved after exhaustion of the grievance procedure;
(c) Cases referred to them by the DOLE Secretary under the DOLE’s Administrative Intervention for
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Dispute Avoidance (AIDA) initiative (provided under DOLE Circular No. 1, Series of 2006); and
(d) Upon agreement of the parties, any other labor dispute may be submitted to the EVAs for voluntary
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arbitration.
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2. Recovery and adjudicatory power
a. Small Money Claims Cases
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• Jurisdiction over claims not exceeding P5,000.
The DOLE Regional Director has original jurisdiction over small money claims cases arising from labor standards
violations in the amount not exceeding P5,000.00 and not accompanied with a claim for reinstatement under Article
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129 of the Labor Code.
Article 129 contemplates the recovery of wages and other monetary claims and benefits, including legal interest,
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owing to an employee arising from employer-employee relations provided the claim does not exceed P5,000.00. Note
must be made that under R.A. No. 10361, otherwise known as the Domestic Workers Act or Batas Kasambahay,
jurisdiction over all labor-related disputes involving a kasambahay, including all money claims, illegal dismissal and other
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issues, is now lodged entirely with the DOLE Regional Director. The Labor Arbiter has no more jurisdiction over small
money claims of ₱5,000.00 or less. Consequently, any appeal therefrom should be done to the DOLE Secretary. (See
Section 37, Chapter VII of R.A. No. 10361 and Section 1, Rule XI of this law’s Implementing Rules and Regulations).
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• Requisites for the valid exercise of jurisdiction by DOLE Regional Directors under article 129.
The following requisites must all concur, to wit:
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(1) The claim is presented by an employee;

(2) The claimant, no longer being employed, does not seek reinstatement; and
(3) The aggregate money claim of the employee does not exceed P5,000.00.
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In the absence of any of the aforesaid three (3) requisites, the Labor Arbiters have original and exclusive
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jurisdiction over all claims arising from employer-employee relations, other than claims for employees’
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compensation, social security, PhilHealth and maternity benefits.
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I. DOLE SECRETARY
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1. Jurisdiction
• Powers of the DOLE secretary.
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The DOLE Secretary, being the head of the Department of Labor and Employment, is possessed of a number of
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powers, some of which are mentioned in the syllabus, to wit:
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1. Visitorial and enforcement powers;

2. Power to suspend the effects of termination;
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3. Assumption of jurisdiction;
4. Appellate jurisdiction; and
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5. Voluntary arbitration powers.

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• Cases falling under the DOLE secretary’s original jurisdiction.

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The DOLE Secretary has original jurisdiction over the following cases:
(1) Petition to assume jurisdiction over labor disputes affecting industries indispensable to the national interest
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(national interest cases);

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(2) Petition to certify national interest cases to the NLRC for compulsory arbitration;
(3) Petition to suspend effects of termination;
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(4) Administrative Intervention for Dispute Avoidance (AIDA) cases;
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(5) Voluntary arbitration cases; and

(6) Contempt cases
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• Three (3) kinds of power under Article 128.

Article 128 of the Labor Code, as amended, basically enunciates the three (3) kinds of power which the DOLE
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Secretary and/or the Regional Directors, his duly authorized representatives, may exercise in connection with the
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administration and enforcement of the labor standards provisions of the Labor Code and of any labor law, wage order
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or rules and regulations issued pursuant thereto.

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The three (3) kinds of power are as follows:

1) Visitorial power:
2) Enforcement power: and
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3) Appellate power or power of review.

• Who exercise the powers.
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Nos. 1 and 2 above are exercised under the original jurisdiction of the DOLE Regional Directors.
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This has been earlier discussed under the separate topic of “VII. PROCEDURE AND
JURISDICTION, E. DOLE Regional Directors, 1. Jurisdiction”, supra. Hence, the same will no
longer be touched under the instant topical discussion.
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The appellate power in No. 3 above may only be exercised by the DOLE Secretary in respect to any decision, order
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or award issued by the DOLE Regional Directors.

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2. Visitorial and enforcement powers

• Nature of the visitorial and enforcement powers.
The visitorial and enforcement powers granted to the DOLE Secretary and the DOLE Regional Directors who are
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his duly authorized representatives, are quasi-judicial in nature.

• It is the Regional Directors who have original jurisdiction to exercise the visitorial and enforcement
powers under Articles 37, 128 and 274.
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In the instances contemplated under Articles 37, 128 and 274, it is the DOLE Regional Directors, the DOLE
Secretary’s duly authorized representatives commonly referred to in these three (3) articles, who have the original
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jurisdiction to exercise the visitorial power granted therein.
• The role of the dole secretary in the exercise of visitorial and enforcement powers is appellate in
nature.
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It is clear from the above disquisition that the original jurisdiction over the exercise of the visitorial and enforcement
powers belongs to the DOLE Regional Directors, as the duly authorized representatives of the DOLE Secretary.
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The role of the DOLE Secretary is confined to the exercise of his appellate jurisdiction over the decisions, orders
and awards of the DOLE Regional Directors in cases brought before them for adjudication under Articles 128 and
274.
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3. Power to suspend effect of termination
• Grounds.
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The DOLE Secretary may suspend the effects of termination pending resolution of the dispute in the event of a
prima facie finding by the appropriate official of the DOLE before whom the dispute is pending that:
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1. the termination may cause a serious labor dispute; and/or

2. the termination is in implementation of a mass lay-off.
• Rationale for suspending the effects of termination.
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The obvious purpose behind this rule is to bring the parties back to the status quo ante litem, that is, their state of
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relationship prior to the termination. In this way, the workers will be litigating the issue of the validity or legality of
their termination on more or less equal footing with the employer since they will be immediately reinstated and
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accordingly not be deprived of their wages while the litigation is on-going.
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• Reinstatement pending resolution of the termination dispute
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Suspension of the effects of termination will necessarily result in the immediate reinstatement of the terminated
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employees. An order of reinstatement pending resolution of the case may thus be issued by the DOLE Secretary
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pursuant to this power.
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• Distinguished from dole secretary’s power of assumption or certification in national interest cases.
o Different power of the DOLE Secretary.
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This power of the DOLE Secretary granted under Article 277(b) should be distinguished from his power to assume
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or certify labor disputes involving industries indispensable to the national interest under Article 263(g). The following
distinctions may be cited:
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First, the exercise of the power to suspend the effects of termination involves only the issue of termination of
employment which may cause a serious labor dispute or is in implementation of a mass lay-off; while the power
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to assume or certify labor disputes is applicable to all labor disputes, irrespective of the grounds therefor, provided
such labor disputes will cause or likely to cause strikes or lockouts in industries indispensable to the national
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interest.
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Second, the former requires the conduct of preliminary determination of the existence of prima facie evidence
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that the termination may cause a serious labor dispute or is in implementation of a mass lay-off to be conducted
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by the appropriate official of the DOLE before whom the termination dispute is pending; while the latter does
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not require such preliminary prima facie determination. In fact, prior notice and hearing are not required before
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the DOLE Secretary may issue an assumption or certification order.

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Third, the “serious labor dispute” contemplated under the former may or may not involve a strike or lockout; while
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the labor dispute referred to in the latter will cause or likely to cause a strike or lockout.
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Fourth, the former may be exercised in cases of termination of employment for as long as any of the two (2)
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grounds mentioned in Article 277(b) exists, irrespective of the nature of the business of the employer; while the
latter may only be exercised in industries indispensable to the national interest.
Fifth, the remedy under the former is immediate reinstatement pending resolution of the termination case; while
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in the latter, the remedy is the automatic return to work of the strikers or locked-out employees, if the strike or
lock-out is on-going at the time of the issuance of the assumption/certification order or the enjoining of the
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strike or lockout, if one has not taken place, pending the resolution of the issues raised in the notice of strike or
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lockout.
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4. Appellate Jurisdiction
a. Various appeals to the DOLE Secretary under the Labor Code and Applicable Rules
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• Offices from which appeals may originate.

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Appeals to the DOLE Secretary may originate from any of the following offices:
(1) DOLE Regional Directors;
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(2) Med-Arbiters;
(3) Director of the Bureau of Labor Relations (BLR); and
(4) Philippine Overseas Employment Administration (POEA).
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• Cases not appealable to the DOLE Secretary

The following decisions, awards or orders are not appealable to the Office of the DOLE Secretary:
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(1) Those rendered by Labor Arbiters that are appealable to the Commission (NLRC) which has exclusive
appellate jurisdiction thereover;
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(2) Those rendered by the Commission (NLRC) since they can be elevated directly to the CA by way of a Rule
65 certiorari petition;
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(3) Those rendered by the BLR Director in the exercise of his appellate jurisdiction since they can be brought
directly to the CA under Rule 65 certiorari petition;
(4) Those rendered by DOLE Regional Directors under Article 129 of the Labor Code since they are appealable
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to the NLRC;
(5) Those issued by DOLE Regional Directors in their capacity as Ex-Officio Voluntary Arbitrators (EVAs) since
they can be brought directly to the CA under Rule 43 of the Rules of Court; and
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(6) Those rendered by Voluntary Arbitrators which are appealable directly to the CA under Rule 43 of the Rules
of Court.
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b. Appeals from DOLE Regional Directors
• Cases appealable to DOLE Secretary.
Not all decisions, awards or orders rendered by the DOLE Regional Directors are appealable to the DOLE Secretary.
Only those issued in the following cases are so appealable:
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(a) Labor standards enforcement cases under Article 128;
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(b) Occupational safety and health violations; and

(c) Complaints against private recruitment and placement agencies (PRPAs) for local employment.
• Cases not appealable to the DOLE Secretary
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As earlier pointed out, the following cases decided by the DOLE Regional Directors are not appealable to the DOLE
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Secretary but to some other agencies/tribunals indicated below:
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(a) Decisions in small money claims cases arising from labor standards violations in the amount not exceeding
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P5,000.00 and not accompanied with a claim for reinstatement under Article 129 are appealable to the
NLRC;
(b) Decisions in cases submitted to DOLE Regional Directors for voluntary arbitration in their capacity as Ex-
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Officio Voluntary Arbitrators (EVAs) under Department Order No. 83-07, Series of 2007 may be elevated directly
to the Court of Appeals by way of a Rule 43 petition. This is so because the DOLE Regional Directors, in
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so deciding, are acting as Voluntary Arbitrators; hence, what should apply are the rules on appeal applicable
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to voluntary arbitration.
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c. Appeals from decisions of Mediators-Arbiters (Med-Arbiters) and BLR director

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(NOTE: See discussion above in connection with

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the jurisdiction of the Bureau of Labor Relations [BLR])

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d. Appeals from decisions of POEA

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• Cases appealable to the DOLE Secretary.

The decisions in the following cases rendered by the Philippine Overseas Employment Administration (POEA) in
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its original jurisdiction are appealable to the DOLE Secretary:

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(a) Recruitment violations and other related cases. - All cases which are administrative in character,
involving or arising out of violation of rules and regulations relating to licensing and registration of r
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recruitment and employment agencies or entities, including refund of fees collected from workers and
violation of the conditions for the issuance of license to recruit workers.
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(b) Disciplinary action cases and other special cases which are administrative in character, involving
employers, principals, contracting partners and Filipino migrant workers.
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It must be noted that the POEA ceased to have any jurisdiction over money claims of OFWs, or those arising out
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of an employer-employee relationship or by virtue of any law or contract involving Filipino workers for overseas
deployment including claims for actual, moral, exemplary and other forms of damages. The jurisdiction over these
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claims was transferred to the Labor Arbiters of the NLRC by virtue of Section 10 of R.A. No. 8042, as amended.
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Hence, appeals therefrom may be instituted to the Commission (NLRC).

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5. DOLE Secretary’s Voluntary Arbitration Powers

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(a) AIDA
• New rule on voluntary settlement of cases by the DOLE Secretary
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A new form of dispute settlement by the DOLE Secretary was introduced by DOLE Circular No. 1, Series of 2006.
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Called Administrative Intervention for Dispute Avoidance (AIDA), this is a new administrative procedure for
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the voluntary settlement of labor disputes in line with the objectives of R.A. No. 9285, Executive Order No. 523
and the mandate of the DOLE to promote industrial peace.
• Nature of administrative intervention by DOLE Secretary.
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This recourse is separate from the established dispute resolution modes of mediation, conciliation and arbitration
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under the Labor Code, and is an alternative to other voluntary modes of dispute resolution such as the voluntary
submission of a dispute to the Regional Director for mediation, to the NCMB for preventive mediation, or to the
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intervention of a regional or local tripartite peace council for the same purpose.
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• Parties who may request for DOLE Secretary’s intervention.

Either or both the employer and the certified collective bargaining agent (or the representative of the employees
where there is no certified bargaining agent) may voluntarily bring to the Office of the DOLE Secretary, through a
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Request for Intervention, any potential or ongoing dispute defined below.

• Potential or on-going dispute.
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A potential or on-going dispute refers to:

i. a live and active dispute;
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ii. that may lead to a strike or lockout or to massive labor unrest; and
iii. is not the subject of any complaint or notice of strike or lockout at the time a Request for Intervention
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is made.
(b) Voluntary arbitration by DOLE Secretary.
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If the intervention through AIDA fails, either or both parties may avail themselves of the remedies provided under
the Labor Code. Alternatively, the parties may submit their dispute to the Office of the DOLE Secretary for
voluntary arbitration. Such voluntary arbitration should be limited to the issues defined in the parties' submission to
voluntary arbitration agreement and should be decided on the basis of the parties' position papers and submitted
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evidence. The Office of the DOLE Secretary is mandated to resolve the dispute within sixty (60) days from the
parties' submission of the dispute for resolution.
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(c) Does the DOLE Secretary assume the role of voluntary arbitrator once he assumes jurisdiction over a
In the 2014 case of Philtranco Service Enterprises, Inc. v. Philtranco Workers Union-Association of Genuine
Labor Organizations (PWU-AGLO), this poser was answered in the negative. A notice of strike was filed by
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respondent union which, after failure of conciliation and mediation by the NCMB, was referred by the Conciliator-
Mediator to the Office of the DOLE Secretary who thereby assumed jurisdiction over the labor dispute. The case
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was resolved by the Acting DOLE Secretary in favor of respondent union. A motion for reconsideration was filed
by petitioner company. The DOLE Secretary, however, declined to rule on the motion citing a DOLE regulation,
applicable to voluntary arbitration, which provided that the Voluntary Arbitrators’ decisions, orders, resolutions or
awards shall not be the subject of motions for reconsideration. The DOLE Secretary took the position that when
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he assumed jurisdiction over the labor dispute, he was acting as a Voluntary Arbitrator. Petitioner subsequently filed
a Rule 65 certiorari petition with the CA. The CA, however, dismissed petitioner company’s Rule 65 certiorari petition
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on the ground, among others, that the decision of the DOLE Secretary, having been rendered by him in his capacity
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as Voluntary Arbitrator, is not subject to a Rule 65 certiorari petition but to a Rule 43 petition for review which
properly covers decisions of Voluntary Arbitrators.
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Before the Supreme Court, petitioner asserted that, contrary to the CA’s ruling, the case is not a simple voluntary
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arbitration case. The character of the case, which involves an impending strike by petitioner’s employees; the nature
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of petitioner’s business as a public transportation company, which is imbued with public interest; the merits of its
case; and the assumption of jurisdiction by the DOLE Secretary – all these circumstances removed the case from
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the coverage of Article 262, and instead placed it under Article 263, of the Labor Code. For its part, respondent
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union argued that the DOLE Secretary decided the assumed case in his capacity as Voluntary Arbitrator; thus, his
decision, being that of a Voluntary Arbitrator, is only assailable via a petition for review under Rule 43.
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The Supreme Court, however, pronounced that:

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“It cannot be said that in taking cognizance of NCMB-NCR CASE No. NS-02-028-07, the Secretary
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of Labor did so in a limited capacity, i.e., as a voluntary arbitrator. The fact is undeniable that by referring
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the case to the Secretary of Labor, Conciliator-Mediator Aglibut conceded that the case fell within the
coverage of Article 263 of the Labor Code; the impending strike in Philtranco, a public transportation
company whose business is imbued with public interest, required that the Secretary of Labor assume
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jurisdiction over the case, which he in fact did. By assuming jurisdiction over the case, the provisions of
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Article 263 became applicable, any representation to the contrary or that he is deciding the case in his capacity
as a voluntary arbitrator notwithstanding.” r
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Consequently, the Supreme Court reversed and set aside the CA ruling and reinstated the case and directed the CA
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“to resolve the same with deliberate dispatch.”

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6. Remedies
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•
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The aggrieved party from a decision of the SOLE may file one motion for reconsideration within ten (10) days
from receipt thereof.
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•
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If the motion for reconsideration is denied, the party may appeal via Rule 65 to the CA 60 days from receipt of
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the denial. Upon denial, the party may proceed via Rule 45 to the SC. [Rule 65, ROC; St. Martin Funeral Home
v. NLRC, G.R. No. 130866 (1998)]
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J. GRIEVANCE MACHINERY
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• Grievance or grievable issue.

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A “grievance” or “grievable issue” is any question raised by either the employer or the union regarding any of the
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following issues or controversies:

1. The interpretation or application of the CBA;
2. The interpretation or enforcement of company personnel policies; or
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3. Violation of any provisions of the CBA or company personnel policies.

• Validity and binding effect of decisions of grievance committee
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A member of the bargaining union who brought his grievable issue for resolution by the Grievance Committee is
bound by whatever disposition the latter may render thereon.
• Elevation of grievance to voluntary arbitration
UNRESOLVED GRIEVANCES
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All grievances submitted to the grievance machinery which are not settled within seven (7) calendar days from
the date of their submission for resolution should automatically be referred to voluntary arbitration prescribed in
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the CBA.
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The various internal procedural steps or stages of resolving grievances under the grievance machinery in a CBA
should be fully exhausted before resort to voluntary arbitration may be made. The 7-calendar day period is usually
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reckoned from the date of their submission for resolution to the last step of the internal grievance machinery. Simply
stated, only after exhausting all the internal procedures and only after the lapse of this period that unsettled or
unadjusted grievances should automatically be referred to voluntary arbitration enunciated in the CBA.
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• A party is not allowed to go directly to court in disregard of voluntary arbitration after decision is
rendered by grievance committee
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Before a party is allowed to seek the intervention of the court, it is a precondition that he should have availed of all
the means of administrative processes afforded him. Hence, if a remedy within the administrative machinery can still
be resorted to by giving the administrative officer concerned every opportunity to decide on a matter that comes
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within his jurisdiction, then such remedy should be exhausted first before the court’s judicial power can be sought.
The premature invocation of the court’s judicial intervention is fatal to one’s cause of action.” Indeed, the underlying
principle of the rule on exhaustion of administrative remedies rests on the presumption that when the
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administrative body, or grievance machinery, is afforded a chance to pass upon the matter, it will decide the same
correctly.
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K. VOLUNTARY ARBITRATOR
1. Jurisdiction
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• Voluntary arbitration.
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“Voluntary arbitration” refers to the mode of settling labor-management disputes in which the parties select a
competent, trained and impartial third person who is tasked to decide on the merits of the case and whose decision
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is final and executory. It is a third-party settlement of a labor dispute involving the mutual consent by the
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representatives of the employer and the labor union involved in a labor dispute to submit their case for arbitration.
• Voluntary arbitrator.
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o Who is a Voluntary Arbitrator?
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A “Voluntary Arbitrator” refers to:
(1) any person who has been accredited by the National Conciliation and Mediation Board (“NCMB” or
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“Board”) as such; or
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(2) any person named or designated in the CBA by the parties as their Voluntary Arbitrator; or
(3) one chosen by the parties with or without the assistance of the NCMB, pursuant to a selection
procedure agreed upon in the CBA; or
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(4) one appointed by the NCMB in case either of the parties to the CBA refuses to submit to voluntary
arbitration.
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This term includes a panel of Voluntary Arbitrators.

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• Voluntary arbitrator acts in quasi-judicial capacity.

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Although not a part of a government unit or a personnel of the Department of Labor and Employment, a Voluntary
Arbitrator, by the nature of his functions, acts in a quasi-judicial capacity. He is a means by which government acts,
or by which a certain government act or function is performed. He performs a state function pursuant to a
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governmental power delegated to him under the Labor Code. The landmark case of Luzon Development Bank v.
Association of Luzon Development Bank Employees, clearly declared that a Voluntary Arbitrator, whether
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acting solely or in a panel, enjoys in law the status of a quasi-judicial agency.
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1. JURISDICTION
• Original and exclusive jurisdiction.
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o In general.
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The Voluntary Arbitrator or panel of Voluntary Arbitrators shall have exclusive and original jurisdiction over the
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following cases:
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(1) Unresolved grievances arising from the interpretation or implementation of the collective bargaining agreement
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(CBA).
(2) Unresolved grievances arising from the interpretation or enforcement of company personnel policies.
(3) Violations of the CBA which are not gross in character.
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(4) Other labor disputes, including unfair labor practices and bargaining deadlocks, upon agreement of the
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parties.
(5) National interest cases.
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(6) Wage distortion issues arising from the application of any wage orders in organized establishments.
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(7) Unresolved grievances arising from the interpretation and implementation of the Productivity Incentive
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Programs under R.A. No. 6971.
a. Jurisdiction over other labor disputes

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Under Article 275 [262] of the Labor Code, upon agreement of the parties, the Voluntary Arbitrator or panel of
Voluntary Arbitrators may also hear and decide all other labor disputes, including unfair labor practices and
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bargaining deadlocks. For this purpose, before or at any stage of the compulsory arbitration process, parties to a
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labor dispute may agree to submit their case to voluntary arbitration.
b. Jurisdiction over national interest cases

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Article 278(g) [263(g)] of the Labor Code which involves the DOLE Secretary’s power of assumption of jurisdiction
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or certification to the NLRC of labor disputes affecting industries indispensable to the national interest, also provides
that “[b]efore or at any stage of the compulsory arbitration process, the parties may opt to submit their
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dispute to voluntary arbitration.”

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This means that even if the case has already been assumed by the DOLE Secretary or certified to the NLRC for
compulsory arbitration, or even during its pendency therewith, the parties thereto may still withdraw the case from
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the DOLE Secretary or NLRC, as the case may be, and submit it to a Voluntary Arbitrator for voluntary arbitration
purposes.
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c. Jurisdiction over wage distortion cases
• Jurisdiction over wage distortion cases depends on whether the establishment is organized or
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unorganized.
o In organized establishments, the employer and the union are required to negotiate to correct the wage
distortion. Any dispute arising from such wage distortion should be resolved through the grievance procedure
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under the CBA and if it remains unresolved, through voluntary arbitration.
o In unorganized establishments, where there are no CBAs or recognized or certified collective bargaining
unions, the jurisdiction is with the Labor Arbiter.
• Some principles.
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(1) Cases cognizable by Voluntary Arbitrators in their original jurisdiction but ERRONEOUSLY filed with Labor
Arbiters, DOLE Regional Offices or NCMB should be disposed of by referring them to the Voluntary
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Arbitrators or panel of Voluntary Arbitrators mutually chosen by the parties.

(2) Cases cognizable by Voluntary Arbitrators but filed with regular courts should be dismissed.
(3) THE WELL-ENTRENCHED RULE IS THAT WHEN A CASE DOES NOT INVOLVE THE
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PARTIES TO A CBA – REFERRING TO THE EMPLOYER AND THE BARGAINING UNION
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- IT IS NOT SUBJECT TO VOLUNTARY ARBITRATION. While individual or group of
employees, without the participation of the union, are granted the right to bring grievance directly to
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the employer, they cannot submit the same grievance, if unresolved by the employer, for voluntary
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arbitration without the union’s approval and participation. The reason is that it is the union which is
the party to the CBA, and not the individual or group of employees. - This rule was lately affirmed in the
2009 case of Tabigue v. International Copra Export Corporation. Pursuant to Article 260 of the Labor
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Code, the parties to a CBA shall name or designate their respective representatives to the grievance machinery
and if the grievance is unsettled in that level, it shall automatically be referred to the voluntary arbitrators
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designated in advance by parties to a CBA. Consequently only disputes involving the union and the
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company shall be referred to the grievance machinery or voluntary arbitrators.”
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2. Remedies
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• Reliefs and remedies that may be granted by Voluntary Arbitrators.
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Besides the procedural remedies discussed above, the Voluntary Arbitrator or panel of Voluntary Arbitrators may
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grant the same reliefs and remedies granted by Labor Arbiters under Article 279 of the Labor Code, such as:
(1) In illegal dismissal cases:
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(a) Actual reinstatement;

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(b) Separation pay in lieu of reinstatement, in case reinstatement becomes impossible, non-feasible or
impractical;
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(c) Full backwages;

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(d) Moral and exemplary damages; and

(e) Attorney’s fees.
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(2) Monetary awards in monetary claims cases in which case, the decision should specify the amount granted
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and the formula used in the computation thereof.

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L. PRESCRIPTION OF ACTIONS
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1. Money claims
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• Prescriptive period is three (3) years under Article 291 of the Labor Code. - The prescriptive period of
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all money claims and benefits arising from employer-employee relations is 3 years from the time the cause of
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action accrued; otherwise, they shall be forever barred.

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• All other money claims of workers prescribe in 3 years. - Article 291 contemplates all money claims
arising from employer-employee relationship, including:
1. Money claims arising from the CBA.
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2. Incremental proceeds from tuition increases.

3. Money claims of Overseas Filipino Workers (OFWs).
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Note must be made that in the 2010 case of Southeastern Shipping v. Navarra, Jr., the 1-year prescriptive period
in Section 28 of POEA-SEC was declared null and void. The reason is that Article 291 of the Labor Code is the
law governing the prescription of money claims of seafarers, a class of overseas contract workers. This law prevails
over said Section 28.
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2. Illegal dismissal
• Legal basis is not Article 291 of the Labor Code but Article 1146 of the Civil Code. - The 3-year prescriptive
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period in Article 291 solely applies to money claims but not to illegal dismissal cases which are not in the nature
of money claims. The prescriptive period of illegal dismissal cases is 4 years under Article 1146 of the Civil
Code.
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128
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,I
Legal Practitioner
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3. Unfair labor practice
• Prescriptive period of ULP cases is 1 year (Article 290, Labor Code). - The prescriptive period for all
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complaints involving unfair labor practices is one (1) year from the time the acts complained of were committed;
otherwise, they shall be forever barred.
• Pre-requisite for prosecution of criminal cases. - Before a criminal action for ULP may be filed, it is a
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condition sine qua non that a final judgment finding that an unfair labor practice act was committed by the
respondent should first be secured or obtained in the labor case initiated before the Labor Arbiter or the
Voluntary Arbitrator, as the case may be. Final judgment is one that finally disposes of the action or proceeding.
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For instance, if the remedy of appeal is available but no appeal is made, then, the judgment is deemed final and
executory. If an appeal is made, then the final judgment rendered by the last tribunal, say the Supreme Court,
to which the case was elevated should be the reckoning factor.
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• Interruption of prescriptive period of offenses. - As far as ULP cases are concerned, the running of the one
(1) year prescriptive period is interrupted during the pendency of the labor proceeding.
• Evidentiary value of the final judgment in the labor case. - In ULP cases, the final judgment in the labor
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case cannot be presented as evidence of the facts proven therein or as evidence of the guilt of the respondent
therein. Its evidentiary or probative value is confined merely in proving the fact of compliance with the
condition sine qua non prescribed by law, i.e., that a final judgment has been secured in the labor proceeding
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finding that an unfair labor practice act was in fact committed by the respondent.
4. Offenses under the Labor Code

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• Prescriptive period is 3 years (Article 290, Labor Code). - The prescriptive period of all criminal offenses
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penalized under the Labor Code and the Rules to Implement the Labor Code is three (3) years from the time of
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commission thereof.
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• Consequence of non-compliance with prescriptive period under Article 290. - Failure to initiate or file the
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criminal action or complaint within the prescriptive period shall forever bar such action.
• Illegal dismissal is not an “offense” under Article 290. - The act of the employer in dismissing an employee
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without cause, although a violation of the Labor Code and its implementing rules, does not amount to an
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“offense” as this term is understood and contemplated under Article 290.
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5. Illegal recruitment
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• Simple illegal recruitment cases. – The prescriptive period is five (5) years. Ba
• Illegal recruitment cases involving economic sabotage. – The prescriptive period is twenty (20) years.
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GOOD LUCK AND CONGRATULATIONS!

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129

Chan LMT Labor Nov2022

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Chan LMT Labor Nov2022

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LAST-MINUTE NOTES

Based on the topics prescribed

Atty. Johanna Celine Mari A. Chan

A. BASIC POLICY ON LABOR

c. Article II, Section 9 of the 1987 Constitution:

d. Article II, Section 10 of the 1987 Constitution

3. Equal work opportunities

4. Right to self-organization and collective bargaining

5. Construction in favor of labor

l. Article 4 of the Labor Code.

evidence which a reasonable mind might accept as adequate to justify a conclusion.”

B. CONSTRUCTION IN FAVOR OF LABOR

1. Construction in favor of labor

and decent living for the laborer.”

s. Article 4 of the Labor Code.

t. Follow this rule in interpreting and construing the following:

collective bargaining agreement (CBA); or

C. BURDEN OF PROOF AND QUANTUM OF EVIDENCE IN LABOR CASES

1. Burden of proof and quantum of evidence

u. Burden of Proof in Illegal Dismissal Cases

v. Burden of Proof in Monetary Claims Cases

w. Quantum of Evidence: Substantial Evidence

evidence which a reasonable mind might accept as adequate to justify a conclusion.”

Giron v. Obiacoro, CV-331l5, Sept. 28,1994)

a Quitclaim executed by a worker because of unconscionably low consideration.

• Under Article III (Bill of Rights):

c. Non-impairment of obligations of contracts. Ba

d. Right to speedy disposition of cases in judicial, quasi-judicial or administrative bodies.

This can be invoked in labor cases at all levels, to wit:

(1) Before quasi-judicial or administrative bodies, such as:

a) Labor Arbiters, NLRC;

(2) Before judicial bodies, such as: r

a) Court of Appeals; and

when labor cases reach these higher level courts.

e. Prohibition against involuntary servitude.

WORK ORDER IN NATIONAL INTEREST CASES.

This means that:

y. Under Article XIII, Section 3 (Social Justice and Human Rights):

d) Guarantee of the rights of all workers to:

a) Full protection to labor;

c) Promotion of equal work opportunities regardless of sex, race or creed; Ba

4. just and humane conditions of work.

or to the dignity of the Republic of the Philippines;

may be required by the Secretary of Labor and Employment;

the expiration of the same without the approval of the DOLE;

and its implementing rules and regulations;

of Labor and Employment;

(m) To allow a non-Filipino citizen to head or manage a licensed recruitment/manning agency.”

a. Elements and Types of Illegal Recruitment

(2) When committed by a syndicate; or

Simple Illegal Recruitment

placement” as this phrase is contemplated under the law.

• When is illegal recruitment considered a crime involving economic sabotage?

1. When committed by a syndicate; or

2. When committed in large scale.

Note: the figure three (3) makes the difference, thus:

✓ 3 or more recruiters regardless of no. of recruitees = by a syndicate

✓ 3 or more recruitees regardless of no. of recruiters = in large scale

When is illegal recruitment committed by a syndicate?

• Elements of illegal recruitment by a syndicate.

If committed against three (3) or more persons individually or as a group.

• Elements of illegal recruitment in large scale.

any prohibited activities under Article 34 of the Labor Code; and