UPDATED LAST-MINUTE NOTES FOR THE

2023 BAR EXAM IN LABOR LAW

Based on the topics prescribed
in the 2023 Bar Syllabus

Prof. Johanna Celine Mari A. Chan

Legal Practitioner

ChanRobles Online Bar Review

www.chanroblesbar.com
-----------------------------------
MAJOR TOPIC 1
BASIC PRINCIPLES

A. LEGAL BASIS

1. 1987 Constitution

• 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.”
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 a Quitclaim executed by a worker because of unconscionably low
consideration.
• Under Article III (Bill of Rights):

a. Freedom of speech, of expression, or of the press, or the right of the people peaceably to
assemble and petition the government for redress of grievances.

This freedom guaranteed under Article III, Section 4 of the constitution is RELEVANT ONLY IN
CONNECTION WITH PICKETING and NOT IN RELATION TO STRIKE which has a different
constitutional basis (Article XIII, Section 3).

b. Right of public and private sector employees to form unions, associations, or societies for
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-organization.

c. Non-impairment of obligations of contracts.

The concept of this right in political law is similar in labor law.

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;
b) Med-Arbiters/BLR;
c) DOLE Regional Directors/DOLE Secretary; and
d) Voluntary Arbitrators.
(2) Before judicial bodies, such as:
a) Court of Appeals; and
b) Supreme Court,
when labor cases reach these higher level courts.

e. Prohibition against involuntary servitude.

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

IN NATIONAL INTEREST CASES.

This means that:

(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
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
(3) When employees are called upon to render military or civic duty.

• 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;
d) Guarantee of the rights of all workers to:

1. self-organization;
2. collective bargaining and negotiations;
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;
7. participate in policy and decision-making processes affecting their rights and benefits as
may be provided by law.

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 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 to expansion and growth.

2. Civil Code

• 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 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.”
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 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 provisions.
• Article 1702 of the Civil Code.
(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).
3. Labor Code

• Under Article 3 of Labor Code:

a) Full protection to labor;
b) Promotion of full employment;
c) Promotion of equal work opportunities regardless of sex, race or creed;
d) Regulation of the relations between workers and employers;
e) Protection of the rights of workers to:

1. self-organization;
2. collective bargaining;
3. security of tenure; and
4. just and humane conditions of work.

B. STATE POLICY TOWARDS LABOR

1. Security of tenure

• Refer to Article 3 of the Labor Code and Article XIII, Section 3 of the 1987 Constitution, as
discussed above.
2. Social justice
• 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.”
• 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.”
• Article II, Section 10 of the 1987 Constitution
“The State shall promote social justice in all phases of national development.”
• See also Article XIII, Section 3 of the 1987 Constitution, as discussed above.

3. Equal work opportunities

• 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”

• See also Article II, Section 9 of the 1987 Constitution as discussed above.

4. Right to self-organization and collective bargaining

• 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.”
• 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.”

• 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

• 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.”
• 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.”
• 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.
6. Burden of proof and quantum of evidence

• Burden of Proof in Illegal Dismissal Cases

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 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.

• 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)
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).

• 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 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.”
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 such relevant evidence as a reasonable
mind might accept as adequate to support a conclusion.( Spouses Giron v. Obiacoro, CV-
331l5, Sept. 28,1994)

• Important principles to remember:

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.
o Remember that in the hierarchy of evidentiary values, proof beyond reasonable doubt is at
the highest level 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.

------------oOo------------
 MAJOR TOPIC 2
PRE-EMPLOYMENT
A. RECRUITMENT AND PLACEMENT OF LOCAL AND MIGRANT WORKERS

1. Definition of Recruitment and Placement

• any act of canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring workers,
and includes referrals, contract services, promising or advertising for local employment,
whether for profit or not; provided, that any person or entity which in any manner, offers or
promises employment for a fee, to two or more persons shall be deemed engaged in
recruitment and placement.

2. Regulation of Recruitment and Placement Activities

a. Regulatory Authorities

1. Philippine Overseas Employment Administration (POEA)

Jurisdiction of POEA:
(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 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.
(b) Disciplinary action cases and other special cases which are administrative in character,
involving employers, principals, contracting partners and Filipino migrant workers.
It must be noted that the POEA ceased to have any jurisdiction over money claims of OFWs, or
those arising out of an employer-employee relationship or by virtue of any law or contract
involving Filipino workers for overseas deployment including claims for actual, moral, exemplary
and other forms of damages. The jurisdiction over these claims was transferred to the Labor
Arbiters of the NLRC by virtue of Section 10 of R.A. No. 8042, as amended. Hence, appeals
therefrom may be instituted to the Commission (NLRC).
See also the discussion under Major Topic 5, Section H – DOLE Secretary
2. Regulatory and Visitorial Powers of the Department of Labor and Employment Secretary
See the discussion under Major Topic 5, Section H – DOLE Secretary
b. Ban on Direct Hiring

• What is direct hiring?

“Direct Hiring” refers to the process of directly hiring workers by employers for overseas
employment as authorized 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;
3. Name hires or workers who are able to secure overseas employment opportunity with an
employer without the assistance or participation of any agency.
• Does the POEA Administrator or the DOLE Secretary or DOLE Regional Director have the power
to issue closure order?

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

No. Salazar v. Achacoso, (March 14, 1990) declared that the exercise by the DOLE Secretary of his
twin powers to 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.

c. Entities Prohibited from Recruiting

• For overseas employment:

o Travel agencies and sales agencies of airline companies, whether the recruitment and
placement is for profit or not, including the following:
 § Officers or members of the Board of any corporation or partners in a partnership
engaged in the 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 travel agency.
§ 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;
§ In case of sea-based OFWs, if the applicant is presently an incorporator, director or
key officer of at 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:

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 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 and Overseas Filipinos Act of 1995), as amended, P.D. 442 (Labor Code of
the Philippines), as amended, and R.A. 9208 (Trafficking in Persons Act of 2003), as
amended, and their implementing rules and regulations;
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

§ 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 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.

d. Suspension or Cancellation of License or Authority

• License vs. Authority

o What is a “license” for overseas recruitment?

“License” refers to the document issued by the DOLE Secretary authorizing a person,
partnership or corporation to operate a private recruitment or manning agency.

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 placement activities in a place stated in the license or in a
specified place.

• 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 by the DOLE and the POEA, or for violation of the Labor
Code and other applicable laws.

• 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 offenses. This is also reflected in the 2016 Revised POEA
Rules and Regulations Governing the Recruitment and 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
revocation of license for pre-employment/recruitment violation cases. Where the penalty of
suspension is 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

o By ANY PERSON, regardless of whether a non-licensee, non-holder, licensee or holder of
authority,
 e. Prohibited Practices [Article 34, Labor Code]

• 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 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.
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, in any manner, offers or promises for a fee employment abroad to two or
more persons.
• 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?
(a) To charge or accept, directly or indirectly, any amount greater than that specified in
the schedule 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;
(b) To furnish or publish any false notice or information or document in relation to
recruitment or employment;
(c) To give any false notice, testimony, information or document or commit any act of
misrepresentation for the purpose of securing a license or authority under the Labor
Code, or for the purpose of documenting hired workers with the POEA, which include
the act of reprocessing workers through a job order that pertains to non-existent work,
work different from the actual overseas work, or work with a different employer
whether registered or not with the POEA;
(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 of employment;
(e) To influence or attempt to influence any person or entity not to employ any worker
who has not applied for employment through his agency or who has formed, joined or
supported, or has contacted or is supported by any union or workers' organization;
(f) To engage in the recruitment or placement of workers in jobs harmful to public health
or morality or to the dignity of the Republic of the Philippines;
(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 may be required by the Secretary of Labor and
Employment;
(h) To substitute or alter to the prejudice of the worker, employment contracts approved
and verified by the DOLE from the time of actual signing thereof by the parties up to
and including the period of the expiration of the same without the approval of the
DOLE;
(i) For an officer or agent of a recruitment or placement agency to become an officer or
member of the Board of any corporation engaged in travel agency or to be engaged
directly or indirectly in the management of travel agency;
(j) To withhold or deny travel documents from applicant workers before departure for
monetary or financial considerations, or for any other reasons, other than those
authorized under the Labor Code and its implementing rules and regulations;
(k) Failure to actually deploy a contracted worker without valid reason as determined by
the Department 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 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
(m) To allow a non-Filipino citizen to head or manage a licensed recruitment/manning
agency.”
3. Illegal recruitment and other prohibited activities

a. Elements and Types of Illegal Recruitment

The essential elements of illegal recruitment vary in accordance with the following classifications:
(1) Simple illegal recruitment;
(2) When committed by a syndicate; or
(3) When committed in large scale.
When illegal recruitment is committed under either Nos. 2 or 3 above or both, it is considered an
offense involving economic sabotage.
Simple Illegal Recruitment
• What are the 2 elements of simple illegal recruitment?
(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
(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 the Labor Code.
• Can a recruiter be a natural or juridical person?

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. 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.
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 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 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.
10. Absence of receipt is not essential to hold a person guilty of illegal recruitment.
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 recruitment.
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 illegal recruitment.
16. Defense of denial cannot prevail over positive identification. Positive identification where
categorical and consistent and not attended by any showing of ill motive on the part of the
eyewitnesses on the matter prevails over alibi and denial. Between the categorical
statements of the prosecution witnesses, on the one hand, and bare denials of the accused,
on the other hand, the former must prevail.

Illegal Recruitment as a Form of Economic Sabotage

• 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:
ü 3 or more recruiters regardless of no. of recruitees = by a syndicate
ü 3 or more recruitees regardless of no. of recruiters = in large scale

• 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.

• Elements of illegal recruitment by a syndicate.

The essential elements of the crime of illegal recruitment committed by a syndicate are as follows:

1. There are at least three (3) persons who, conspiring and/or confederating with one
another, carried out 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
2. Said persons are not licensed or authorized to do so, either locally or overseas.
 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 syndicate.

• When is illegal recruitment considered in large scale?

If committed against three (3) or more persons individually or as a group.

• 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 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.
• Illegal recruitment by large scale as distinguished from illegal recruitment by a syndicate.

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.

• Recruitment in large scale or by a syndicate is malum prohibitum and not malum in se.

b. Illegal recruitment vs. estafa

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.
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 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 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.

• Some relevant principles:

o Same evidence to prove illegal recruitment may be used to prove estafa. It is thus enough
to show that the 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.
o Conviction for both illegal recruitment and estafa is not double jeopardy.

4. Liability of Local Recruitment Agency and Foreign Employer

a. Solidary liability

o The nature of the liability of a local recruiter and its foreign principal is “solidary” or “joint
and several” for any and all claims arising out of the employment contract of OFWs.

• Is the solidary liability of corporate officers with the recruitment agency “automatic” in
character?

No. In order to hold the officers of the agency solidarily liable, it is required that there must be proof
of their 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 implemented. Absent this express statement, a corporate officer may
not be impleaded and made to personally answer for the liability of the corporation.

• 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 participation, together with his employer, if it is shown that he actively
and consciously participated in illegal recruitment.
o Good faith and merely following orders of superiors are not valid defenses of an employee.
o A manager of a recruitment/manning agency is not a mere employee. As such, he
receives job applications, interviews applicants and informs them of the agency’s
requirement of payment of performance or cash bond prior to the applicant’s
 deployment. As the crewing manager, he was at the forefront of the company’s
recruitment activities.

b. Theory of imputed knowledge

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

5. Termination of Contract of Migrant Worker

• Can an OFW acquire regularity of employment?

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.

• What are some relevant principles?

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.
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 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.
o Regular employment does not result from the series of re-hiring of OFWs.
o The fixed-period employment of OFWs is not discriminatory against them nor does it favor
foreign 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.
o The expiration of the employment contracts of OFWs marks its ending.

• 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.

• Is the Agabon doctrine applicable to OFWs who are dismissed for cause but without due
process?

Yes. The Agabon doctrine of awarding indemnity in the form of nominal damages in cases of valid
termination for just or authorized cause but without procedural due process also applies to
termination of OFWs.

• 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.

• 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 reinstatement or full backwages. REASON: Because their employment is fixed-term in nature. The
nature of their 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.

• 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:
(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.
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 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 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 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.”
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 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 negative. The said provision was thus declared still unconstitutional and null and void
despite its replication in R.A. No. 10022.

B. EMPLOYMENT OF NON RESIDENT ALIENS

• What is an ALIEN EMPLOYMENT PERMIT (AEP)?

AEP - a document issued by the DOLE Secretary through the DOLE-Regional Director who has
jurisdiction over the intended place of work of the foreign national, authorizing the foreign national
to work in the Philippines.

• Who are required to procure AEP?

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 between the Philippine-based company and the foreign national where the
former has the power to hire or dismiss the foreign national from employment, pays the
salaries or wages thereof and has authority to control the performance or conduct of the
tasks and duties.

• What are the categories of foreign nationals EXEMPTED from securing AEP?

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 legitimate spouses desiring to work in the Philippines;
c. Owners and representatives of foreign principals whose companies are accredited by the
POEA, who come to the Philippines for a limited period and solely for the purpose of
interviewing Filipino applicants for employment abroad;
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;
e. Permanent resident foreign nationals and probationary or temporary resident visa holders
under Section 13 (a-f) of the Philippine Immigration Act of 1940 and Section 3 of the Alien
Social Integration Act of 1995 (R.A. 7917);
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?

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.
b. President and Treasurer, who are part-owners of the company.
c. Those providing consultancy services who do not have employers in the Philippines.
d. Intra-corporate transferee who is a manager, executive or specialist as defined below in
accordance with Trade Agreements and an employee of the foreign service supplier for at
least one (1) year continuous employment prior to deployment to a branch, subsidiary,
affiliate or representative office in the Philippines.

i. an Executive: a natural person within the organisation who primarily directs the
management of the organisation and exercises wide latitude in decision-making and
receives only general supervision or direction from higher level executives, the board of
 directors, or stockholders of the business; an executive would not directly perform tasks
related to the actual provision of the service or services of the organisation;
ii. a Manager: a natural person within the organisation who primarily directs the
organisation/department/subdivision and exercises supervisory and control functions
over other supervisory, managerial or professional staff; does not include first-line
supervisors unless employees supervised are professionals; does not include employees
who primarily perform tasks necessary for the 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 knowledge of the organisation's service, research
equipment, techniques or management; may include, but is not limited to, members of
a licensed profession.
All other intra-corporate transferees not within these categories as defined above are
required to secure an AEP prior to their employment in the Philippines
e. Contractual service supplier who is a manager, executive or specialist and an employee of
a foreign service supplier which has no commercial presence in the Philippines:

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;
ii. must possess the appropriate educational and professional qualifications; and
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 (OLMA) in accordance with the POEA law, rules and regulations.

• What is the period of validity of an AEP?

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.

C. DISCRIMINATORY PRACTICES

1. Age

• Anti-Age Discrimination in Employment Act.

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].

o Coverage. The law shall apply to all employers, publishers, labor contractors or subcontractors,
and labor organizations, whether or not registered.
o Prohibitions. Under this law, the following are the prohibited discriminatory acts related to
employment on account of age:
(a) It shall be unlawful for an employer to:
(1) Print or publish, or cause to be printed or published, in any form of media, including
the internet, any notice of advertisement relating to employment suggesting
preferences, limitations, specifications and discrimination based on age;
(2) Require the declaration of age or birth date during the application process;
(3) Decline any employment application because of the individual’s age;
(4) Discriminate against an individual in terms of compensation, terms and conditions
or privileges of employment on account of such individual’s age;
(5) Deny any employee’s or worker’s promotion or opportunity for training because of
age;
(6) Forcibly layoff an employee or worker because of old age; or
(7) Impose early retirement on the basis of such employee’s or worker’s age.
(b) It shall be unlawful for a labor contractor or subcontractor, if any, to refuse to refer for
employment or otherwise discriminate against any individual because of such
person’s age.
(c) It shall be unlawful for a labor organization to:
(1) Deny membership to any individual because of such individual’s age;
(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.
(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.
o Exceptions. It shall be lawful for an employer to set age limitations in employment if:
(a) Age is a bona fide occupational qualification (BFOQ) reasonably necessary in the
normal operation of a particular business or where the differentiation is based on
reasonable factors other than age;
(b) The intent is to observe the terms of bona fide seniority system that is not intended to
evade the purpose of the Rules.
(c) The intent is to observe the terms of a bona 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
(d) The action is duly certified by the DOLE Secretary after consultation with the
stakeholders in accordance with the purpose of the Rules.
For purposes of the foregoing exceptions, an employer who invokes the qualifications as
provided herein, 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.
Failure to submit said report shall give rise to the presumption that the employer is not
allowed to set age limitation.
o Employment age of children. The age requirement in the employment of children shall be
governed by R.A. No. 9231 and its Implementing Rules and Regulations, Article 138 of the Labor
Code as renumbered, and other applicable laws, rules and regulations.

Upon hiring, the employer may require the child or the guardian to show proof of the child's
age for purposes of compliance with minimum employable age under existing laws.

2. Gender and/or Marital Status

• 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
(b) Favoring a male employee over a female employee with respect to promotion, training
opportunities, study and scholarship grants solely on account of their sexes.
• What are acts of discrimination under the Magna Carta of Women?
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 Filipino women, especially those in marginalized sector.
Based on the definition of the term “Discrimination Against Women” in R.A. No. 9710, the following
are considered discriminatory acts:
1. Any gender-based distinction, exclusion, or restriction which has the effect or purpose of
impairing or 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, cultural, civil or any other field;
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 enjoyment of opportunities, benefits or privileges;
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 the recognition and protection of their rights and in their
access to and enjoyment of opportunities, benefits, or privileges; or women, more than
men, are shown to have suffered the greater adverse effects of those measures or
practices; and
4. Discrimination compounded by or intersecting with other grounds, status, or condition, such
as ethnicity, age, poverty or religion.
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, security and human dignity.
3. Health Condition

• What are important definitions related to PWDs?

o “Persons with Disability” or “PWD” are those suffering from restriction or different abilities, as
a result of a mental, physical or sensory impairment, to perform an activity in the manner or
within the range considered normal for a human being.
o “Impairment” refers to any loss, diminution or aberration of psychological, physiological, or
anatomical structure or function.
o “Disability” means (1) a physical or mental impairment that substantially limits one or more
psychological, physiological or anatomical functions of an individual or activities of such
individual; (2) a record of such an impairment; or (3) being regarded as having such an
impairment.
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.
o “Marginalized Persons with Disability” refer to persons with disability who lack access to
rehabilitative services and opportunities to be able to participate fully in socio-economic
activities and who have no means of livelihood and whose incomes fall below the poverty
threshold.

• Equal opportunity
Under the law, PWDs are entitled to equal opportunity for employment. Consequently, no PWD
shall be denied access to opportunities for suitable employment. A qualified employee with
disability shall be subject to the same terms and conditions of employment and the same
compensation, privileges, benefits, fringe benefits, incentives or allowances as a qualified able-
bodied person.
Five percent (5%) of all casual emergency and contractual positions in the Departments of Social
Welfare and Development, Health, Education and other government agencies, offices or
corporations engaged in social development shall be reserved for PWDs.
• Are PWDs eligible for apprenticeship and learnership?
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 employment.

• What are the forms of prohibited discriminatory acts against PWDs in terms of employment?
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, 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;
(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;
(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.
(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 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;
(f) Re-assigning or transferring an employee with a disability to a job or position he cannot
perform by reason of his disability;
(g) Dismissing or terminating the services of an employee with disability by reason of his
disability unless the 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;
(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, rather than the impaired sensory, manual or
speaking skills of such applicant or employee, if any; and
(i) Excluding PWD from membership in labor unions or similar organizations.
4. Solo Parents

• No employer shall discriminate against any solo parent employee with respect to terms and
conditions of employment on account of his/her status.

------------oOo------------
 MAJOR TOPIC 3
EMPLOYMENT PROPER

A. MANAGEMENT PREROGATIVE
• What are management prerogatives?
Management prerogatives are granted to the employer to regulate every aspect of their business,
generally without 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, working regulations,
transfer of employees, lay-off of workers and the discipline, dismissal and recall of workers.
1. DISCIPLINE
• What are the components of the right to discipline?
The right or prerogative to discipline covers the following:
1) Right to discipline;
2) Right to dismiss;
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
7) Right to impose heavier penalty than what the company rules prescribe.
The proportionality rule simply means that the penalty to be imposed should be commensurate to the
offense committed. 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.
For committing serious offenses, such as stealing a company-owned property, or stabbing a co-
employee, because of their nature, would certainly deserve the imposition of the supreme penalty of
dismissal, and not just a warning, a reprimand or punitive suspension.
2. TRANSFER OF EMPLOYEES
• What are the various kinds of transfer?

o Two (2) kinds of transfer. - A transfer means a movement:

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.

• What are the salient points to consider in transfer?

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 transfer should not be motivated by discrimination or made in
bad faith or effected as a form of punishment or demotion without sufficient cause.
o Commitment made by the employee like a salesman in the employment contract to be re-
assigned 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 new post.
o The transfer of an employee may constitute constructive dismissal when:

1) When the transfer is unreasonable, inconvenient or prejudicial to the employee;

2) When the transfer involves a demotion in rank or diminution of salaries, benefits and other
privileges; and
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.
o The refusal of an employee to be transferred may be held justified if there is a showing that the
transfer was 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.
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.
 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 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.
o A transfer from one position to another occasioned by the abolition of the position is valid.

3. PRODUCTIVITY STANDARDS
• How may productivity standards be imposed?
o The employer has the prerogative to prescribe the standards of productivity which the
employees should comply. The productivity standards may be used by the employer as:
1. an incentive scheme; and/or
2. a disciplinary scheme.
o As an incentive scheme, employees who surpass the productivity standards or quota are
usually given additional benefits.
o As a disciplinary scheme, employees may be sanctioned or dismissed for failure to meet the
productivity standards or quota.
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.
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, 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 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 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.”
4. BONUS

• What is the rule on its demandability and enforceability?

o Bonus, as a general rule, is an amount granted and paid ex gratia to the employee.
o It cannot be forced upon the employer who may not be obliged to assume the onerous
burden of granting bonuses or other benefits aside from the employees’ basic salaries or
wages. If there is no profit, there should be no bonus. If profit is reduced, bonus should likewise
be reduced, absent any agreement making such bonus part of the compensation of the
employees.

• When is bonus demandable and enforceable?

o It becomes demandable and enforceable:

(1) If it has ripened into a company practice;

(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 salary.
(3) When considered as part of the compensation and therefore demandable and enforceable,
the amount is usually fixed. If the amount thereof is dependent upon the realization of profits,
the bonus is not demandable and enforceable.

5. CHANGE OF WORKING HOURS

• What is the extent of the exercise of this prerogative?
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.
o Manila Jockey Club Employees Labor Union – PTGWO, v. Manila Jockey Club, Inc. - The validity
of the exercise of the same prerogative to change the working hours was affirmed in this case.
It was found that while Section 1, Article IV of the CBA provides for a 7-hour work schedule from
 9:00 a.m. to 12:00 noon and from 1:00 p.m. to 5:00 p.m. from Mondays to 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 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 p.m. schedule for non-race days was, however, retained. Respondent, as
employer, cited the change in the program of horse races as reason for the adjustment of the
work schedule. It rationalized that when the CBA was signed, the horse races started at 10:00
a.m. When the races were moved to 2:00 p.m., there was no other choice for management
but to change the work schedule as there was no work to be done in the morning. Evidently,
the adjustment in the work schedule is justified.

6. BONA FIDE OCCUPATIONAL QUALIFICATIONS (BFOQ)

• Concept.

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 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 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;
b. That the employer adopted the particular standard in an HONEST AND GOOD FAITH BELIEF
that it was necessary to the fulfilment of that legitimate work-related purpose; and
c. That the standard was REASONABLY necessary to the accomplishment of that legitimate
work-related purpose.
• Star Paper test

o Consequently, in Star Paper Corp. v. Simbol, April 12, 2006, the Supreme Court held that in
order to justify a BFOQ, the employer must prove two (2) factors:
(1) The employment qualification is reasonably related to the essential operation of the job
involved; and
(2) There is factual basis for believing that all or substantially all persons meeting the
qualification would be unable to properly perform the duties of the job.

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 known as the “Reasonable Business Necessity
Rule.”
• Specific topics

(a) Civil status/marital status qualification

(b) Physical appearance qualification
(c) Age qualification

(a) CIVIL STATUS/MARITAL STATUS QUALIFICATION

• Relevant cases

As far as the qualification of civil status or marital status is concerned, the following cases are
relevant:

(1) PT & T v. NLRC;

(2) Duncan Association of Detailman-PTGWO v. Glaxo Welcome Philippines, Inc.; and
(3) Star Paper Corp. v. Simbol.

• 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 contracted marriage a few months earlier.
o It appears that the employee had made the same representation in the two successive
reliever agreements which she signed.
o The company has a policy of not accepting married women for employment.
 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.
“[A] requirement that a woman employee must remain unmarried could be
justified as a ‘bona fide occupational qualification,’ or BFOQ, where the particular
requirements of the job would justify the same, but not on the ground of a general
principle, such as the desirability of spreading work in the workplace. A
requirement of that nature would be valid provided it reflects an inherent 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 restriction was not related to the job performance of the flight
attendants.”
• The Duncan case.

o In Duncan, the contract of employment expressly prohibited an employee from having a

relationship with an employee of a competitor company. It provides:

“10. You agree to disclose to management any existing or future relationship you may
have, either by consanguinity or affinity with co-employees or employees of competing
drug companies. Should it pose a possible conflict of interest in management
discretion, you agree to resign voluntarily from the Company as a matter of Company
policy.”

o Application of the BFOQ rule in the Duncan case.

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 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 policy, the Court
recognized that Glaxo only aims to protect its interests against the possibility that a competitor
company will gain access to its secrets and procedures.

• The Star Paper case.

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 degree of relationship, already employed by the company.

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

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.

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 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.

(b) PHYSICAL APPEARANCE QUALIFICATION

• 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 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 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:
Citing Star Paper Corp. and Duncan, the Court ruled that BFOQ is a proper defense that justified
petitioner’s dismissal grounded on his obesity.
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 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.

(c) AGE QUALIFICATION

See discussion above under Discriminatory Practices under Major Topic 2, Section C.

7. MARRIAGE BETWEEN EMPLOYEES OF COMPETITOR-EMPLOYERS

See discussion above of the case of Duncan v. Glaxo Welcome case under Bona Fide
Occupational Qualifications, particularly (a) Civil Status/ Marital Status Qualification.
8. POST-EMPLOYMENT RESTRICTIONS

(a) NON-COMPETE CLAUSE

• 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 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.
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 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.
• 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 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 Plans Philippines, Inc., provides as follows:
“8. NON-INVOLVEMENT PROVISION – The EMPLOYEE further undertakes that during
his/her engagement with EMPLOYER and in case of separation from the Company,
whether voluntary or for cause, 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 pre-need industry as the
EMPLOYER. Any breach of the foregoing provision shall render the EMPLOYEE liable to the
EMPLOYER in the amount of One Hundred Thousand Pesos (P100,000.00) for and as
liquidated damages.”
Respondent sued petitioner for damages. Respondent alleged, among others, that petitioner’s
employment with Professional Pension Plans, Inc. violated the above-quoted non-involvement clause
in her contract of employment.
In affirming the validity of the Non-Involvement Clause, the Supreme Court ratiocinated as
follows:
“xxx A non-involvement clause is not necessarily void for being in restraint of
trade as long as there are reasonable limitations as to TIME, TRADE, and PLACE.
“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.
“More significantly, since petitioner was the Senior Assistant Vice-President and
Territorial Operations Head in charge of respondent’s Hongkong and Asean
operations, she had been privy to confidential and highly sensitive marketing
strategies of respondent’s business. To allow her 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.
“Thus, as held by the trial court and the Court of Appeals, petitioner is bound to
pay respondent P100,000 as liquidated damages. While we have equitably
reduced liquidated 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.”
OTHER POST-EMPLOYMENT PROHIBITIONS
• Confidentiality and non-disclosure clause.

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 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.

• Non-solicitation clause.

To protect the legitimate business interests of the employer, including its business relationships, the
employee under this clause, may, directly or indirectly, be prohibited from soliciting or approaching,
or accept any business from 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 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.

• Non-recruitment or anti-piracy clause.

This clause prohibits the recruitment by the employee of personnel or employees of the employer for
a certain period after his termination of employment, either on his own account or in conjunction with
or on behalf of any other person.

• 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, original works of authorship, formulas, processes,
compositions of matter, computer software programs, databases, mask 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 conceived or developed or reduced to practice, during the period of his employment
with the employer.

B. LABOR STANDARDS

1. Conditions of Employment

a. Covered employees/workers

• 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.

• Who are excluded?

The following are excluded from the coverage of the law on labor standards:
a. Government employees;
b. Managerial employees;
c. Other officers or members of a managerial staff;
d. Workers paid by results;
e. Non-agricultural field personnel; and
f. Members of the family of the employer.
b. Hours of work

• Principles in determining hours worked and employees exempted or not covered

o The following shall be considered as compensable hours worked:

a) All time during which an employee is required to be on duty or to be at the employer’s
premises or to be at a prescribed workplace; and
b) All time during which an employee is suffered or permitted to work.
• “Fair day’s wage for a fair day’s labor,” remains the basic factor in determining the employees’
wages and backwages.

(b.1) Normal hours of work; hours worked

• What is the total normal hours of work per day?

Eight (8) hours daily.

• What is overtime work?

Any work in excess of said eight (8) normal hours is considered overtime work.

• May normal working hours be reduced?

Yes, provided that no corresponding reduction is made on the employee’s wage or salary
equivalent to an 8-hour work day. In instances where the number of hours required by the nature
of work is less than 8 hours, such number of hours should be regarded as the employee’s full
working day.
(b.2) Compressed work week
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:

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,
employee assemblies or referenda.
2. In firms using substances, chemicals and processes or operating under conditions
where there are airborne 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
limits or tolerable levels of exposure, as set in the OSHS.
3. The employer shall notify the DOLE, through its Regional Office having jurisdiction over
the workplace, of the adoption of the CWW scheme. The notice should be made in
DOLE CWW Report Form.

o Effects. A CWW scheme which complies with the foregoing conditions shall have the
following effects:

1. Unless there is a more favorable practice existing in the 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-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 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 (CBA)
or company practice.
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 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.
(b.3.) Meal Periods
Every employer is required to give his employees, regardless of sex, not less than one (1) hour (or 60
minutes) time-off for regular meals.
• 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 to work. If he is required, however, to work while eating, he should be
compensated therefor.

• Are short breaks compensable?

Rest periods of short duration during working hours are considered and counted as hours worked. Rest
periods or coffee breaks running from five (5) to twenty (20) minutes are considered compensable
working time.
(b.4.) Night-shift Differential
• 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 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?

When the work of an employee falls at night time, the receipt of overtime pay shall not preclude
the right to receive night differential pay. The reason is the payment of the night differential pay is
for the work done during the night; while the payment of the overtime pay is for work in excess of
the regular eight (8) working hours.

• How is Night Shift Differential Pay computed?

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

a. On an ordinary day: Plus 10% of the basic hourly rate or a total of 110% of the basic
hourly rate.
b. On a rest day, special day or regular holiday: Plus 10% of the regular hourly rate on a
rest day, special day or regular holiday or a total of 110% of the regular hourly rate.

2. Where night shift (10 p.m. to 6 a.m.) work is overtime work.

a. On an ordinary day: Plus 10% of the overtime hourly rate on an ordinary day or a total
of 110% of the overtime hourly rate on an ordinary day.
b. On a rest day or special day or regular holiday: Plus 10% of the overtime hourly rate on
a rest day or special day or regular holiday.

3. For overtime work in the night shift. Since overtime work is not usually eight (8) hours, the
compensation for overtime night shift work is also computed on the basis of the hourly
rate.

a. On an ordinary day. Plus 10% of 125% of basic hourly rate or a total of 110% of 125% of
basic hourly rate.
b. On a rest day or special 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.

(b.5.) Overtime Work

• What are some basic principles on overtime work?
1. Work rendered after normal eight (8) hours of work is called “overtime work.”
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 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.
5. Illustrations on how overtime is computed:

a. For overtime work performed on an ORDINARY DAY, the overtime pay is plus 25% of
the basic hourly rate.
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.
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.
 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 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?

“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.

“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-working day and renders overtime work on the same day.

• What is emergency overtime work? (Article 89, Labor Code).

a. General rule.

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.
b. Exceptions when employee may be compelled to render overtime work:

1. When the country is at war or when any other national or local emergency has been
declared by the National Assembly or the Chief Executive;
2. When overtime work is necessary to prevent loss of life or property or in case of
imminent danger to public safety due to actual or impending emergency in the locality
caused by serious accident, fire, floods, typhoons, earthquake, epidemic or other disasters
or calamities;
3. When there is urgent work to be performed on machines, installations or equipment, or in
order to avoid serious loss or damage to the employer or some other causes of similar
nature;
4. When the work is necessary to prevent loss or damage to perishable goods;
5. When the completion or continuation of work started before the 8th hour is necessary to
prevent serious obstruction or prejudice to the business or operations of the employer; and
6. When overtime work is necessary to avail of favorable weather or environmental conditions
where performance or quality of work is dependent thereon.
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 may be dismissed on the ground of insubordination or willful
disobedience of the lawful order of the employer.

• Can overtime pay be waived?

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.
(b.6.) Computation of Additional Compensation (Rates Only)

See the above discussions under Night-Shift Differential and Overtime Work.
c. Rest Periods
(c.1.) Weekly Rest Period
• What is the duration of weekly rest period?

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

• Is the employer’s prerogative to determine the rest period of its employees subject to
limitations?

Yes. The employer shall determine and schedule the weekly rest day of his employees subject to
CBA and to such rules and regulations as the DOLE Secretary may provide. However, the employer
shall respect the preference of employees as to their weekly rest day when such preference is
based on religious grounds.
 (c.2) Emergency Rest Day Work
• When can an employer require work on a rest day?

The employer may require any of its employees to work on their scheduled rest day for the
duration of the following emergency and exceptional conditions:
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 which the employer would otherwise suffer;
c. In the event of abnormal pressure of work due to special circumstances, where the
employer cannot ordinarily be expected to resort to other measures;
d. To prevent serious loss of perishable goods;
e. Where the nature of the work is such that the employees have to work continuously for
seven (7) days in a week or more, as in the case of the crew members of a vessel to
complete a voyage and in other similar cases; and
f. When the work is necessary to avail of favorable weather or environmental conditions
where performance or quality of work is dependent thereon.

d. Holidays
(d.1) Holiday pay
• What are the regular and special holidays?

(a) Regular Holidays

New Year's Day - January 1

Maundy Thursday - Movable Date
Good Friday - Movable Date
Eidul Fitr - Movable Date
Eidul Adha - Movable Date
Araw ng Kagitingan - Monday nearest April 9
Labor Day - Monday nearest May 1
Independence Day - Monday nearest June 12
National Heroes Day - Last Monday of August
Bonifacio Day - Monday nearest November 30
Christmas Day - December 25
Rizal Day - Monday nearest December 30

(b) Nationwide Special Holidays

Chinese New Year - Movable Date

EDSA People Power - February 25
Revolution
Black Saturday - Movable Date
Ninoy Aquino Day - Monday nearest August 21
All Saints’ Day - November 1
Feast of Immaculate - December 8
Conception of Mary

• How many are the guaranteed paid regular holidays?

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 employee is paid on a monthly or daily basis.
• 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 Rule, therefore, applies to entitlement to holiday pay during regular holidays and
not during special non-working 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 did not report for work, provided he is
present or is on leave of absence with pay on the workday immediately preceding the holiday.
Should the worker work on that day, such work performed on that day would merit at least twice
or two hundred percent (200%) of the wage rate of the employee.
• What is the coverage of the Holiday Pay Rule? Who are exempted employees?

As a general rule, the holiday pay benefit is applicable to all employees. The following, however,
are not covered by this benefit as they are considered exempted employees:

1. Government employees, whether employed by the National Government or any of its

political subdivisions, including those employed in government-owned and/or
controlled corporations with original charters or created under special laws;
2. Those of retail and service establishments regularly employing less than ten (10) workers;
3. Kasambahay and persons in the personal service of another;
4. Managerial employees, if they meet all of the following conditions:

4.1. Their primary duty is to manage the establishment in which they are employed or
of a department or subdivision thereof;
4.2. They customarily and regularly direct the work of two or more employees therein;
and
4.3. They have the authority to hire or fire other employees of lower rank; or their
suggestions and recommendations as to hiring, firing, and promotion, or any other
change of status of other employees are given particular weight.

5. Officers or members of a managerial staff, if they perform the following duties and
responsibilities:

5.1. Primarily perform work directly related to management policies of their employer;
5.2. Customarily and regularly exercise discretion and independent judgment;
5.3. (a) Regularly and directly assist a proprietor or managerial employee in the
management of the establishment or subdivision thereof in which he or she is
employed; or (b) execute, under general supervision, work along specialized or
technical lines requiring special training, experience, or 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 5.1, 5.2, and 5.3 above.

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 paid a fixed amount for performing work irrespective
of the time consumed in the performance thereof.
• 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. 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 first eight hours. Computation: (Daily rate + COLA) x 200%. The COLA is also
included in computation of regular holiday pay.
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 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 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. 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 -

• If unworked – 100%
• If worked – 1st 8 hours – 200%
• Work in excess of 8 hours – plus 30% of hourly rate on said day

b. If it is an employee’s rest day -

• If unworked – 100%
• If worked – first 8 hours – plus 30% of 200%
• Work in excess of 8 hours – plus 30% of hourly rate on said day
• How is premium pay for SPECIAL (NON-WORKING) DAYS OR SPECIAL HOLIDAYS
computed?

o If the employee did not work, the “no work, no pay” principle shall apply, unless
there is a favorable company policy, practice, or CBA granting payment on a
special day.
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 additional 30 percent of his/her hourly rate on said day. Computation:
(Hourly rate of the basic daily wage x 130% x 130% x number of hours worked).
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. Computation: [(Daily rate x 150%) + COLA].
o If the employee worked in excess of eight hours (overtime work) during a special
day 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. Computation: (Hourly rate of the basic daily
wage x 150% x 130% x number of hours worked).

• Simplified Computation:
a. If unworked -

• 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.

b. If worked -

• First 8 hours – plus 30% of the daily rate of 100%

• Work in excess of 8 hours – plus 30% of hourly rate on said day

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

• First 8 hours – plus 50% of the daily rate of 100%

• Work in excess of 8 hours – plus 30% of hourly rate on said day
• What are the effects of absences on the computation of holiday pay?
1. Employees on leave of absence with pay - entitled to holiday pay when they are on leave
of absence with pay.
2. Employees on leave of absence without pay on the day immediately preceding the
regular holiday - may not be paid the required holiday pay if they have not worked on
such regular holiday.
3. 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 while on such benefits.
4. When day preceding regular holiday is a non-working day or scheduled rest day - should
not be deemed to be on leave of absence on that day, in which case, employees are
entitled to the regular holiday pay if they worked on the day immediately preceding the
non-working day or rest day.
e. Service Charge

• Under RA 11360, All service charges collected by hotels, restaurants and similar establishments
shall be distributed completely and equally among the covered 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) 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, 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.
• 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 shall be distributed completely and equally among the covered workers
except managerial employees.
• Who are not covered?
Specifically excluded from coverage are managerial employees, referring to any person
vested with powers or prerogatives to lay down and execute management policies or hire,
transfer, suspend, lay-off
f. Occupational Safety and Health Standards Law [RA 11058]
“OSH Standards” refer to a set of rules issued by DOLE which mandates the adoption and use of
appropriate practices, means, methods, operations or processes, and working conditions
reasonably necessary to ensure safe and healthful employment.
(f.1.) Covered Workplaces
Refer to establishments, projects, sites, and all other places where work is being undertaken
wherein the number of employees, nature of operations, and risk or hazard involved in the
business, as determined by the Secretary of Labor and Employment.
(f.2.) Duties of Employers, Workers, and Other Persons
• Duties of Employers

Every employer, contractor or subcontractor, if any, and any person who manages, controls or
supervises the work being undertaken shall:

1. Furnish the workers a place of employment free from hazardous conditions that are causing or
are likely to cause death, illness or physical harm to the workers;
2. Give complete job safety instructions or orientation to all the workers especially to those
entering the job for the first time, including those relating to familiarization with their work
environment;
3. Inform workers of:
a. the hazards associated with their work,
b. health risks involved or to which they are exposed to,
c. preventive measures to eliminate or minimize the risks, and steps to be taken in cases of
emergency;
4. Use only approved devices and equipment for the workplace
5. Comply with OSH standards including training, medical examination and, where necessary,
provision of protective and safety devices;
6. Allow workers and their safety and health representatives to participate actively in the process
of organizing, planning, implementing, and evaluating the safety and health program to
improve safety and health in the workplace; and
7. Provide, where necessary, for measures to deal with emergencies and accidents including
first-aid arrangements.

• Duties of Workers

1. Every worker shall participate in ensuring compliance with OSH standards in the workplace.
2. The worker shall make proper use of all safeguards and safety devices furnished for the
worker’s protection and that of others, and shall observe instructions to prevent accidents or
imminent danger situations in the workplace.
3. Worker shall observe the prescribed steps to be taken in cases of emergency.
4. The worker shall report to the supervisor any work hazard that may be discovered in the
workplace.

• Duties of Other Persons

“Other Persons” includes any person, including builder or contractor who visits, builds, renovates or
installs devices or conducts business in any establishment or workplace. They have the duty to
comply with this Law.

(f.3.) Workers’ Right to Know

All workers shall be appropriately informed by the employer about all types of hazards in the
workplace, provided access to training and education on chemical safety, and to orientation on
the data sheet of chemical safety, electrical safety, mechanical safety, and ergonomical safety.
(f.4.) Workers’ Right to Refuse Unsafe Work
Worker has the right to refuse to work without threat or reprisal from the employer if:
a. As determined by the DOLE, an imminent danger situation exists in the workplace that may
result in illness, injury, or death; and
b. Corrective actions to eliminate the danger have not been undertaken by the employer.

(f.5.) Workers’ Right to Personal Protective Equipment (PPE)

PPE shall be provided to employees free of charge. PPE shall include, whenever necessary by
reason of the hazardous work process or environment, protection for their eyes, face, hands and
feet, and lifeline, safety belt, or harness, gas or dust respirators or masks, and protective shields.
2. Wages

a. Definitions

(a.1.) Wage v. Salary

The term “wage” is used to characterize the compensation paid for manual skilled or unskilled
labor. “Salary,” on the other hand, is used to describe the compensation for higher or superior level
of employment.
In cases of execution, attachment or garnishment of the compensation of an employee received
from work issued by the court to satisfy a judicially-determined obligation, a distinction should be
made whether such compensation is considered “wage” or “salary.” Under Article 1708 of the Civil
Code, if considered a “wage,” the employee’s compensation shall not be subject to execution or
attachment or garnishment, except for debts incurred for food, shelter, clothing and medical
attendance. If deemed a “salary,” such compensation is not exempt from execution or
attachment or garnishment. Thus, the salary, commission and other remuneration received by a
managerial employee (as distinguished from an ordinary worker or laborer) cannot be considered
wages. Salary is understood to relate to a position or office, or the compensation given for official
or other service; while wage is the compensation for labor.1
(a.2.) Facilities v. Supplements

• What are facilities?

“Facilities” include articles or services for the benefit of the employee or his family but does not
include tools of the trade or articles or services primarily for the benefit of the employer or
necessary to the conduct of the employer’s business. They are items of expense necessary for the
laborer’s and his family’s existence and subsistence which form part of the wage and when
furnished by the employer, are deductible therefrom, since if they are not so furnished, the laborer
would spend and pay for them just the same.

• What are supplements?

The term “supplements” means extra remuneration or special privileges or benefits given to or
received by the laborers over and above their ordinary earnings or wages.

• What are the distinctions between facilities and supplements?

The benefit or privilege given to the employee which constitutes an extra remuneration over and
above his basic or 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 but its purpose. Thus, free meals
supplied by the ship operator to crew members, out of necessity, cannot be 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.

• What is the rule on deductibility of facilities and supplements?

Facilities are deductible from wage but not supplements.

b. Principles

(b.1.) No Work, No Pay

“No work, no pay” or “fair day’s wage for fair day’s labor” remains to be adhered to in our
jurisdiction as the basic factor in determining the wages of employees. If the worker does not work,
he is generally not entitled to any wage or pay. The exception is when it was the employer who
unduly prevented him from working despite his ableness, willingness and readiness to work; or in
cases where he is illegally locked out or illegally suspended or illegally dismissed, or otherwise
illegally prevented from working, in which event, he should be entitled to his wage.
(b.2.) Equal Pay for Equal Work
"Equal pay for equal work," meaning, "persons who work with substantially equal qualification, skill,
effort and responsibility, under similar conditions, should be paid similar salaries," has been
institutionalized in our jurisdiction. Such that "if an employer accords employees the same position
and rank, the presumption is that these employees perform equal work" as "borne by logic and
human experience." The ramification is that "(i)f the employer pays one employee less than the
rest, it is not for that employee to explain why he receives less or why the others receive more. That
would be adding insult to injury. The employer has discriminated against that employee; it is for the

1 Gaa v. CA, infra; See also Equitable Banking Corp. v. Sadac, G.R. No. 164772, June 8, 2006.
employer to explain why the employee is treated unfairly." (International School Alliance of
Educators v. Quisumbing, et al., G.R. No. 128845)
(b.3.) Fair Wage for Fair Work

See above.

(b.4.) Non-Diminution of Benefits

Albeit Article 100 is clear that the principle of non-elimination and non-diminution of benefits apply
only to the 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.
There is diminution of benefits when the following requisites are present:
1. The grant or benefit is founded on a policy or has ripened into a practice over a long
period of time;
2. The practice is consistent and deliberate;
3. The practice is not due to error in the construction or application of a doubtful or difficult
question of law; and
4. The diminution or discontinuance is done unilaterally by the employer.
The 2014 case of Wesleyan University-Philippines v. Wesleyan University-Philippines Faculty and
Staff Association, succinctly pointed out that the Non-Diminution Rule found in Article 100 of the
Labor Code 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:
(1) An express policy;
(2) A written contract; or
(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 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 (CBA), the employer is likewise under legal compulsion to so comply
therewith.
As to No. 3 above:
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.
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.
• What are the criteria that may be used to determine existence of company practice?
Since there is no hard and fast rule which may be used and applied in determining whether a
certain act of the employer may be considered as having ripened into a practice, the following
criteria may be used to determine whether an act 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
(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.

These shall be discussed below:

1. THE ACT OF THE EMPLOYER HAS BEEN DONE FOR A CONSIDERABLE PERIOD OF TIME.
If done only once as in the case of Philippine Appliance Corporation (Philacor) v. CA, where the
CBA signing bonus was granted only once during the 1997 CBA negotiation, the same cannot be
considered as having ripened into a company practice.
In the following cases, the act of the employer was declared company practice because of the
considerable period of time it has been practiced:
(a) Davao Fruits Corporation v. Associated Labor Unions. - The act of the company of freely
and 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.
 (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 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, also ruled as company practice the act of petitioner of granting for thirty (30) years, its
workers the mandatory 13th month pay computed in accordance with the following
formula: Total Basic Annual Salary divided by twelve (12) and Including in the computation
of the Total Basic Annual Salary the following: basic monthly salary; first eight (8) hours
overtime pay on Sunday and legal/special holiday; night premium pay; and vacation and
sick leaves for each year.
2. THE ACT SHOULD BE DONE CONSISTENTLY AND INTENTIONALLY.
The following cases may be cited to illustrate this principle:
(a) Tiangco v. Leogardo, Jr., where the employer has consistently been granting fixed monthly
emergency allowance to the employees from November, 1976 but discontinued this
practice effective February, 1980 insofar as non-working days are concerned based on the
principle of “no work, no pay.” The Supreme Court 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 CONSTRUCTION OF A
DOUBTFUL OR DIFFICULT QUESTION OF LAW OR PROVISION 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 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:
(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, 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 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 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 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, 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 may ripen into a company practice.
Example: 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.
c. Payment of Wages

• What is the manner and form of payment of wages?

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.

As an exception, however, payment of wages by bank checks, postal checks or money orders
may be allowed only 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
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 indirectly from the arrangement;
c. The employees are given reasonable time during banking hours to withdraw their wages
from the bank which time shall be considered as compensable hours worked if done
during working hours; and
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?

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.

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 circumstances beyond his control have ceased.

d. Prohibitions Regarding Wages

(d.1.) 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 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.

(d.2.) 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.

(d.3.) PROHIBITION ON DEDUCTIONS FROM WAGES

• May employer deduct from wage of employees?

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.

• Are there EXCEPTIONS to this rule?

Yes.

(a) In cases where the worker is insured with his consent by the employer, and the deduction is to
recompense the employer for the amount paid by him as premium on the insurance;
(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
(c) In cases where the employer is authorized by law or regulations issued by the DOLE Secretary.
(d) Deductions for loss or damage under Article 114 of the Labor Code;
(e) Deductions made for agency fees from non-union members who accept the benefits under
the CBA negotiated by the bargaining union. This form of deduction does not require the
written authorization of the non-bargaining union member concerned;
(f) Deductions for value of meal and other facilities;
(g) Deductions for premiums for SSS, PhilHealth, employees’ compensation and Pag-IBIG;
(h) Withholding tax mandated under the National Internal Revenue Code (NIRC);
(i) Withholding of wages because of the employee’s debt to the employer which is already due;
(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 medical attendance;
(k) When deductions from wages are ordered by the court;

(d.4.) PROHIBITION AGAINST DEPOSIT REQUIREMENT.

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

• Permissible Deductions For Loss Or Damages.

If the employer is engaged in a trade, occupation or business where there is such practice of
making deductions or requiring deposits to answer for the reimbursement of loss of or damage
to tools, materials or equipment supplied by the employer to the employee.
 (d.5.) PROHIBITION ON WITHHOLDING OF WAGES.
• Article 116 of the Labor Code prohibits any person, whether employer or not, directly or
indirectly, to withhold any amount from the wages of a worker.
• Under Article 1706 of the Civil Code, withholding of the wages, except for a debt due, is not
allowed to be made by the employer.
• Moreover, under Article 1709 of the same Code, the employer is not allowed to seize or retain
any tool or other articles belonging to the laborer.
(d.6.) KICKBACKS.

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

(d.7.) 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 employment or, when already
employed, for the continuation of such employment or retention therein.

(d.8.) RETALIATORY ACTIONS BY EMPLOYER.

Article 118 of the Labor Code prohibits the employer:

(a) to refuse to pay the wages and benefits of an employee; or

(b) to reduce his wages and benefits; or
(c) to discharge him from employment; or
(d) to discriminate against him in any manner;

on account and by reason of said employee’s:

(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.

(d.9.) 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 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.
Examples: Payrolls, time records, employment records and production records, among others.
e. Wage Distortion

(1) Concept

“Wage distortion” contemplates a situation where an increase in prescribed wage rates results in
either of the following:
1. Elimination of the quantitative differences in the rates of wages or salaries; or
2. Severe contraction of intentional quantitative differences in wage or salary rates between
and among employee groups in an establishment as to effectively obliterate the distinctions
embodied in such wage structure based on the following criteria:

a. Skills;
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 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 the other level in the hierarchy of positions,
negating as a result thereof the distinction between one level of position from the next higher level,
and resulting in a parity between the lowest level and the next higher level or rank, between new
entrants and old hires, there exists a wage distortion. xxx. The concept of wage distortion assumes
an existing grouping or classification of employees which establishes distinctions among such
employees on some relevant or legitimate basis. This classification is reflected in a differing wage
rate for each of the existing classes of employees.
 • What are the elements of wage distortion?

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

(1) An existing hierarchy of positions with corresponding salary rates;
(2) A significant change in the salary rate of a lower pay class without a concomitant increase
in the salary rate of a higher one;
(3) The elimination of the distinction between the two levels; and
(4) The existence of the distortion in the same region of the country.
Normally, a company has a wage structure or method of determining the wages of its employees.
In a problem dealing 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.
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 for each of the existing classes of employees reflects this
classification.
• What is the formula for rectifying or resolving wage distortion?
Following is the formula for the correction of wage distortion in the pay scale structures:

Minimum Wage = % x Prescribed Increase = Distortion Adjustment

Actual Salary
f. Minimum Wage Law

• What is minimum wage?

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

• What is statutory minimum wage?

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

• What is regional minimum wage rate?

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 be lower than the applicable statutory minimum wage rates.
• What are included/excluded in the term “wage rate”?
The term "wage rate" includes cost-of-living allowances as fixed by the RTWPB, but excludes other
wage-related benefits such as overtime pay, bonuses, night shift differential pay, holiday pay,
premium pay, 13th month pay, premium pay, leave benefits, among others.
• Can COLA be integrated into the minimum wage?
Yes. The cost-of-living allowance (COLA) may be ordered integrated into the minimum wage by
the Regional Tripartite Wages and Productivity Board (“RTWPB” or “Regional Board”).
• What is COLA?
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 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.
a. 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 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.
b. 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 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 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.
 g. Holiday Pay
See discussion under Holidays in Major topic 3,Section B (d) Labor Standards - Holidays.

h. 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 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?
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?
It must be paid not later than December 24 of every year.
• Who are excluded from its coverage?
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.
2. Employers already paying their employees 13th month pay or more in a calendar year or its
equivalent at the time of the issuance of the Revised Guidelines.
3. Employers of those who are paid on purely commission, boundary, or task basis, and those
who are paid a fixed amount for performing a specific work, irrespective of the time
consumed in the performance thereof, except where the workers are paid on piece-rate
basis, in which case, the employer shall be covered by the Revised Guidelines insofar as
such workers are concerned. Workers paid on piece-rate basis shall refer to those who are
paid a standard amount for every piece or unit of work produced that is more or less
regularly replicated without regard to the time spent in producing the same.
• Are domestic workers or Kasambahays covered?
Yes. They are now covered under the Kasambahay Law.
• Are extras, casuals and seasonal employees entitled to 13th month pay?
Yes, they are entitled thereto.
• Is 13th month pay part of wage?
13th month pay which is in the nature of additional income, is based on wage but not part of
wage.
• 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 employee within a calendar year.
• 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 that the basic salary of an employee for purposes of computing the 13th month
pay should include all remunerations or earnings paid by the employer for services rendered
during normal working hours.
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 calendar year.

3. Leaves
a. Service Incentive Leave
• What is service incentive leave?
Every covered employee who has rendered at least one (1) year of service is entitled to a
yearly service incentive leave of five (5) days with pay.

The term “at least one year of service” should mean service within twelve (12) months,
whether continuous or broken, reckoned from the date the employee started working,
including authorized absences and paid regular holidays, unless the number of working
days in the establishment as a matter of practice or policy, or that provided in the
employment contract, is less than twelve (12) months, in which case, said period should be
considered as one (1) year for the purpose of determining entitlement to the service
incentive leave benefit.

• Who are excluded from its coverage?

All employees are covered by the rule on service incentive leave except:
1. Government employees, whether employed by the National Government or any of its
political subdivisions, including those employed in government-owned and/or controlled
corporations with original charters or created under special laws;
2. Persons in the personal service of another;
3. Managerial employees, if they meet all of the following conditions:
3.1. Their primary duty is to manage the establishment in which they are employed or of a
department or subdivision thereof;
3.2. They customarily and regularly direct the work of two or more employees therein; and
 3.3. They have the authority to hire or fire other employees of lower rank; or their suggestions
and recommendations as to hiring, firing, and promotion, or any other change of status
of other employees are given particular weight.
4. 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;
4.2. Customarily and regularly exercise discretion and independent judgment;
4.3. (a) Regularly and directly assist a proprietor or managerial employee in the
management of the establishment or subdivision thereof in which he or she is
employed; or (b) execute, under general supervision, work along specialized or
technical lines requiring special training, experience, or knowledge; or (c) execute,
under general supervision, special assignments and tasks; and
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;
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 performing work irrespective of the time consumed
in the performance thereof;
6. Those already enjoying this benefit;
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?
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:
“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.”
• Are unavailed service incentive leaves commutable to cash
Yes. The service incentive leave is commutable to its money equivalent if not used or
exhausted at the end of the year.
b. Maternity Leave
• Who are the women entitled to maternity leave?
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?
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:

Maternity Benefit LIVE CHILDBIRTH, regardless of MISCARRIAGE AND

the mode of delivery EMERGENCY TERMINATION OF
PREGNANCY

Period of maternity leave 105 days of paid leave 60 days of paid leave

For female worker qualified as Additional fifteen (15) days of None

a solo parent under R.A. No. paid leave
8972, or the "Solo Parents'
Welfare Act of 2000"

EXTENDED MATERNITY LEAVE: Available only in case of live None

An option to extend for an childbirth
additional thirty (30) days
without pay

FREQUENCY OF THE GRANT In every instance of live In every instance of pregnancy,

childbirth, regardless of miscarriage or emergency
frequency termination of pregnancy,
regardless of frequency

ALLOCATION OF MATERNITY A female worker entitled to Not available

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

c. Paternity Leave
• What is paternity leave benefit?
o “Paternity leave” covers a married male employee allowing him not to report for work for
seven (7) 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 in her period of recovery and/or in the
nursing of the newly-born child.
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 to the male employee concerned.
o “Cohabiting” refers to the obligation of the husband and wife to live together.

• What is the covered total number of deliveries?

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.

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.
• Is an unavailed paternity leave benefit convertible to cash?
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?
Yes. Any female worker entitled to maternity leave benefits as provided for herein may, at her
option, allocate up to seven (7) days of said benefits to the child’s father, whether or not the same
is married to the female worker. This benefit is over and above that which the father is entitled to
under the Paternity Leave Act.

d. Solo Parent Leave

• What is the solo parent leave?
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.
• 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 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.

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.
• 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 of the offender: Provided, That the mother keeps and raises the child;
(2) Parent left solo or alone with the responsibility of parenthood due to death of spouse;
(3) Parent left solo or alone with the responsibility of parenthood while the spouse is detained
or is serving sentence for a criminal conviction for at least one (1) year;
(4) Parent left solo or alone with the responsibility of parenthood due to physical and/or
mental incapacity of spouse as certified by a public medical practitioner;
(5) Parent left solo or alone with the responsibility of parenthood due to legal separation or de
facto separation from spouse for at least one (1) year, as long as he/she is entrusted with
the custody of the children;
(6) Parent left solo or alone with the responsibility of parenthood due to declaration of nullity or
annulment of marriage as decreed by a court or by a church as long as he/she is entrusted
with the custody of the children;
(7) Parent left solo or alone with the responsibility of parenthood due to abandonment of
spouse for at least one (1) year;
(8) Unmarried mother/father who has preferred to keep and rear her/his child/children instead
of having others care for them or give them up to a welfare institution;
(9) Any other person who solely provides parental care and support to a child or children;
(10) Any family member who assumes the responsibility of head of family as a result of the
death, abandonment, disappearance or prolonged absence of the parents or solo parent.
 • What is the effect of change of status of the solo parent?
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.
• Who are considered children under this law?
"Children" refer to those living with and dependent upon the solo parent for support who are
unmarried, unemployed and not more than eighteen (18) years of age, or even over eighteen (18)
years but are incapable of self-support because of mental and/or physical defect/disability.
• Is an unavailed parental leave convertible to cash?
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.
• Can a female worker avail of both solo parent leave and maternity leave?
Yes. Under R.A. No. 11210 (Expanded Maternity Leave Law), in case the worker qualifies as a solo
parent, the worker shall be granted an additional fifteen (15) days maternity leave with full pay.
e. Leave Benefits for Women Workers under Magna Carta of Women and Anti-Violence against
Women and Children of 2004
Gynelogical leave (R.A. 9710)
• What is this special leave benefit?
A special leave benefit for women was granted under R.A. No. 9710, otherwise known as “The
Magna Carta of Women” [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 to existing laws, rules and regulations
due to surgery caused by gynecological disorders under the following terms and conditions:
1. She has rendered at least six (6) months continuous aggregate employment service for the
last twelve (12) months prior to surgery;
2. 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.
“Gynecological disorders” refer to disorders that would require surgical procedures such as, but
not limited to, dilatation and curettage and those involving female reproductive organs such as
the vagina, cervix, uterus, fallopian tubes, ovaries, breast, adnexa and pelvic floor, as certified by
a competent physician. Gynecological surgeries shall also include hysterectomy, ovariectomy,
and mastectomy.
• Is this leave similar to maternity leave?
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.

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.
Battered woman leave (R.A. No. 9262)
• 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 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.
• 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, 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 employer to comply with the 10-day paid leave.

f. Compassionate Leaves
Compassionate Leaves or Bereavement Leaves are currently not required under the law.
Nevertheless, employers are allowed to provide this special type of leave to their employees, if
agreed to by contract or in cases where such is provided for in their Collective Bargaining
Agreement as in the case of Continental Steel Manufacturing Corp vs. Montaño et al, G.R. 182836.
In this case, the relevant provision provides:
“Section 2. BEREAVEMENT LEAVE—The Company agrees to grant a bereavement
leave with pay to any employee in case of death of the employee’s legitimate
dependent (parents, spouse, children, brothers and sisters) based on the
following…”
 The Court held that the death of an unborn child qualifies as death under the bereavement leave
provision and thus, the employee is entitled to such benefit: “Life is not synonymous with civil
personality. One need not acquire civil personality first before he/she could die.” Additionally, it
held that “being for the benefit of the employee, CBA provisions on bereavement leave and other
death benefits should be interpreted liberally to give life to the intentions thereof. Time and again,
the Labor Code is specific in enunciating that in case of doubt in the interpretation of any law or
provision affecting labor, such should be interpreted in favor of labor. In the same way, the CBA
and CBA provisions should be interpreted in favor of labor.”
4. Special Groups of Employees
a. Women
(a.1.) Discrimination
See discussion under Major Topic 2, C. Discriminatory Practices.
(a.2.) Stipulation against Marriage
• 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 upon getting married, a woman employee shall be
deemed resigned or separated. It is likewise an unlawful act of the employer, to actually
dismiss, discharge, discriminate or otherwise prejudice a woman employee merely by reason of
her marriage.
• What are the relevant jurisprudence on prohibition against marriage?
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.
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 Necessity Rule”:
“1. New applicants will not be allowed to be hired if in case he/she has [a] relative,
up to [the] 3rd degree of relationship, already employed by the company.
“2. In case of two of our employees (both singles [sic], one male and another
female) developed a friendly relationship during the course of their employment
and then decided to get married, one of them should resign to preserve the policy
stated above.”
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 valid:
“10. You agree to disclose to management any existing or future relationship you
may have, either by consanguinity or affinity with co-employees or employees of
competing drug companies. Should it pose a possible conflict of interest in
management discretion, you agree to resign voluntarily from the Company as a
matter of Company policy.”
The Supreme Court ruled that the dismissal based on this stipulation in the employment
contract is a valid exercise of management prerogative. The prohibition against personal or
marital relationships with employees of competitor companies upon its employees was held
reasonable under the circumstances because relationships of that nature might compromise
the interests of the company. In laying down the assailed company policy, the employer only
aims to protect its interests against the possibility that a competitor company will gain access
to its secrets and procedures. Simply put, the reason behind the validity of such a policy is the
avoidance of CONFLICT OF INTEREST.
(a.3.) Prohibited Acts
• 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 maternity leave, facilities and other benefits provided under the Labor Code;
2. To discharge such woman on account of her pregnancy, or while on leave or in
confinement due to her pregnancy;
3. To discharge or refuse the admission of such woman upon returning to her work for fear that
she may again be pregnant;
4. To discharge any woman or any other employee for having filed a complaint or having
testified or being about to testify under the Labor Code; or
5. To require as a condition for or continuation of employment that a woman employee shall
not get married or to stipulate expressly or tacitly that upon getting married, a woman
 employee shall be deemed resigned or separated, or to actually dismiss, discharge,
discriminate or otherwise prejudice a woman employee merely by reason of marriage.
b. Minors
Child labor vs. working child
For legal purposes, the term “child” refers to any person less than eighteen (18) years of age.

A “working child” refers to any child engaged as follows:

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:
(a) in work where he/she is directly under the responsibility of his/her parents or legal
guardian and where only members of the child’s family are employed; or
(b) in “public entertainment or information” which refers to artistic, literary, and cultural
performances for television show, radio program, cinema or film, theater, commercial
advertisement, public relations activities or campaigns, print materials, internet, and other
media.
Allowed working hours and industries of a working child
The term “hours of work” includes (1) all time during which a child is required to be at a prescribed
workplace, and (2) all time during which a child is suffered or permitted to work. Rest periods of
short duration during working hours shall be counted as hours worked.

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, provided that the work shall not be more than four (4) hours at any given day;
(b) For a child 15 years of age but below 18, the hours of work shall not be more than eight (8)
hours a day, and in no case beyond forty (40) hours a week; and
(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.

Prohibited acts
No child below 18 years of age is allowed to be employed as a model in any advertisement
directly or indirectly promoting alcoholic beverages, intoxicating drinks, tobacco and its by-
products, gambling or any form of violence or pornography.
c. Kasambahays
• What is the coverage of the Kasambahay Law?
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:
(a) General househelp;
(b) Yaya;
(c) Cook;
(d) Gardener;
(e) Laundry person; or
(f) Any person who regularly performs domestic work in one household on an occupational
basis.
• Who are EXCLUDED from its coverage?
The following are not covered:
(a) Service providers;
(b) Family drivers;
(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?
“Domestic worker” or “kasambahay” refers to any person engaged in domestic work within an
employment relationship, whether on a live-in or live-out arrangement, such as, but not limited to,
general househelp, "yaya", cook, gardener, or laundry person, but shall exclude service providers,
family drivers, children who are under foster family arrangement, or any person who performs
domestic work only occasionally or sporadically and not on an occupational basis.

This term shall not include children who are under foster family arrangement which refers to
children who are living with a family or household of relative/s and are provided access to
education and given an allowance incidental to education, I.e., "baon", transportation, school
projects, and school activities.

Because of these new terminologies prescribed in the law, the use of the term “househelper” may
no longer be legally correct.

• 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.
• What are the rights and privileges of a kasambahay?
The rights and privileges of the Kasambahay are as follows:
(a) Minimum wage;
(b) Other mandatory benefits, such as the daily and weekly rest periods, service incentive
leave, and 13th month pay;
(c) Freedom from employers' interference in the disposal of wages;
(d) Coverage under the SSS, PhilHealth and Pag-IBIG laws;
(e) Standard of treatment;
(f) Board, lodging and medical attendance;
(g) Right to privacy;
(h) Access to outside communication;
(i) Access to education and training;
(j) Right to form, join, or assist labor organization;
(k) Right to be provided a copy of the employment contract;
(I) Right to certificate of employment;
(m) Right to terminate the employment; and
(n) Right to exercise their own religious beliefs and cultural practices.
The foregoing rights and privileges are discussed below.
• Are the minimum wages subject to review by the RTWPBs or Regional Boards?
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 minimum wage rates of domestic workers.”
• What are some important principles on wage of kasambahay?
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.
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 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 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.
§ 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 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:
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.
§ 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 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?

The following is a rundown of the basic terms and conditions that should be observed in the
employment of a Kasambahay:
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 of eight (8) hours per day, it may be concluded that the
Kasambahay should work for at least a total of sixteen (16) hours per day as normal hours of
work. However, it must be noted that the Labor Code does not contain any provision on the
normal hours of work of househelpers. Article 1695 of the Civil Code, 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.
c. Normal daily hours of work for working child-kasambahay is eight (8) hours per day.
d. 13th month pay. - The Kasambahay who has rendered at least one (1) month of service is
entitled to a 13th 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 employment.
e. Daily rest period. – The Kasambahay shall be entitled to an aggregate daily rest period of
eight (8) hours.
f. Weekly rest period. - The Kasambahay shall be entitled to at least twenty-four (24)
consecutive hours of 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.
g. Service incentive leave. - A Kasambahay who has rendered at least one (1) year of service
shall be entitled 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 cash.
h. Social security benefits. - A Kasambahay who has rendered at least one (1) month of
service shall be covered by the Social Security System (SSS), Employees Compensation
Commission (ECC), Philippine 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.
i. Obligation of employer to register and enroll with SSS, PhilHealth, and Pag-IBIG. - As
employer of the Kasambahay, he/she shall register himself/herself with, and enroll the latter
as his/her employee to the SSS, PhilHealth, and Pag-IBIG.
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 to tools, materials, furniture and equipment in the
household.

k. Standard of treatment. - The Kasambahay shall be treated with respect by the employer or
any member of the household. He/she shall not be subjected to any kind of abuse,
including repeated verbal or psychological, 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.
No. 7610) as amended by R.A. No. 9231, Anti-Trafficking in Persons Act of 2003 (R.A. No.
9208), and other applicable laws.

l. Board, lodging and medical attendance. - The employer shall provide for the basic
necessities of the Kasambahay, to include the following:
(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 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 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 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 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.
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 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 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 establishment.
• What are the rules on termination of Kasambahay?
1. 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.
(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 termination of employment.
2. 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:
(1) Verbal or emotional abuse of the Kasambahay by the employer or any member of the
household;
(2) Inhuman treatment including physical abuse of the Kasambahay by the employer or any
member of the household;
(3) Commission of a crime or offense against the Kasambahay by the employer or any
member of the household;
(4) Violation by the employer of the terms and conditions of the employment contract and
other standards set forth in the law;
(5) Any disease prejudicial to the health of the Kasambahay, the employer, or members of
the household; and
(6) Other causes analogous to the foregoing.
If the Kasambahay leaves without cause, any unpaid salary due, not exceeding the
equivalent of 15 days’ work, shall be forfeited. In addition, the employer may recover from the
Kasambahay deployment expenses, if any, if the services have been terminated within six (6)
months from employment.
3. 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:
(1) Misconduct or willful disobedience by the Kasambahay of the lawful order of the
employer in connection with the former's work;
(2) Gross or habitual neglect or inefficiency by the Kasambahay in the performance of
duties;
(3) Fraud or willful breach of the trust reposed by the employer on the Kasambahay;
(4) Commission of a crime or offense by the Kasambahay against the person of the
employer or any immediate member of the employer's family;
(5) Violation by the Kasambahay of the terms and conditions of the employment contract
and other standards set forth under the law;
(6) Any disease prejudicial to the health of the Kasambahay, the employer, or members of
the household; and
(7) Other causes analogous to the foregoing.
If the employer dismissed the Kasambahay for reasons other than the above, he/she shall pay
the Kasambahay the earned compensation plus indemnity in the amount equivalent to fifteen
(15) days’ work.
4. Invalid ground for termination. - Pregnancy and marriage of the Kasambahay are not valid
grounds for termination of employment.
5. Employment Certification. - Upon the termination of employment, the employer shall issue
the Kasambahay, within five (5) days from request, a certificate of employment indicating the
nature, duration of the service and work description.
d. Homeworkers
• 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 contractor is carried out by a homeworker at his/her home. Materials may or may not be
furnished by the employer or contractor. It differs from regular factory production principally in
that, it is a decentralized form of production where there is ordinarily very little supervision or
regulation of methods of work.
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.
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 cannot be determined with reasonable certainty.
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, subcontractor or any other person:
1. delivers or causes to be delivered any goods, articles or materials to be processed or
fabricated in or about a home and thereafter to be returned or to be disposed of or
distributed in accordance with his direction; or
2. sells any goods, articles or materials for the purpose of having such goods or articles
processed in or about a home and then repurchases them himself or through another after
such processing.
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.
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.
• 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 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.
• What are prohibited homeworks?
No homework shall be performed on the following:
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.
e. Night Workers
• Article 136 [138] of the Labor Code
Any woman who is permitted or suffered to work, with or without compensation, in any night club,
cocktail lounge, massage clinic, bar or similar establishments may be considered a regular employee
of such establishment for purposes of the application of labor and social legislation if the following
requisites concur:
1. She works under the effective control or supervision of the employer; and
2. She has worked therein for a substantial period of time as determined by the DOLE Secretary.

f. Apprentices and Learners

• Apprentice
An “apprentice” is a worker who is covered by a written apprenticeship agreement with an
individual employer or any of the entities recognized under the law. He is a person undergoing
training for an approved apprenticeable occupation during an established period and covered
by an apprenticeship agreement.
• Learner
Learner” refers to a person hired as a trainee in semi-skilled and other industrial occupations which
are non-apprenticeable and which may be learned through practical training on the job for a
period not exceeding three (3) months, whether or not such practical training is supplemented by
theoretical instructions
g. Persons with Disabilities
Under the law, PWDs are entitled to equal opportunity for employment. Consequently, no PWD
shall be denied access to opportunities for suitable employment. A qualified employee with
disability shall be subject to the same terms and conditions of employment and the same
compensation, privileges, benefits, fringe benefits, incentives or allowances as a qualified able-
bodied person.
Five percent (5%) of all casual emergency and contractual positions in the Departments of Social
Welfare and Development, Health, Education and other government agencies, offices or
corporations engaged in social development shall be reserved for PWDs.
• Are PWDs eligible for apprenticeship and learnership?
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 employment.

• 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

(g.1.) Discrimination
(g.1.a.) Magna Carta for Disabled Persons
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, 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;
(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;
(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.
(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 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;
(f) Re-assigning or transferring an employee with a disability to a job or position he cannot
perform by reason of his disability;
(g) Dismissing or terminating the services of an employee with disability by reason of his
disability unless the 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;
(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, rather than the impaired sensory, manual or
speaking skills of such applicant or employee, if any; and
(i) Excluding PWD from membership in labor unions or similar organizations.

(g.1.b.) Mental Health Act

Discrimination under this act refers to any distinction, exclusion or restriction which has the purpose
or effect of nullifying the recognition, enjoyment or exercise, on an equal basis with others, of all
human rights and fundamental freedoms in the political, economic, social cultural, civil or any
other field. It includes all forms of discrimination, including denial of reasonable accommodation.
Special measure solely to protect the rights or secure the advancement of persons with decision-
making impairment capacity shall not be deemed to be discriminatory;
Employers shall develop appropriate policies and programs on mental health issues, correct the
stigma and discrimination associated with mental conditions, identify and provide support for
individuals with mental health conditions to treatment and psychosocial support.
 (g.2.) Incentives for Employers
To encourage the active participation of the private sector in promoting the welfare of PWDs and
to ensure gainful employment for qualified persons with disability, adequate incentives shall be
provided to private entities which employ PWDs.

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 percent (25%) of the total amount paid as salaries and wages to
persons with disability; provided, however, that such 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 of Health
as to his disability, skills and qualifications.

Private entities that improve or modify their physical facilities in order to provide reasonable
accommodation for 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.

5. Sexual Harassment in the Work Environment

a. Sexual Harassment Act
• What are the 3 situations contemplated under this law?
R.A. No. 7877 declares sexual harassment unlawful only in three (3) situations, namely:
(1) employment;
(2) education; and
(3) training environment.
• Can sexual harassment be committed also against a man?
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?
Work, education or training-related sexual harassment is committed by any employer, employee,
manager, supervisor, agent of the employer, teacher, instructor, professor, coach, trainor, or any
other person who, having authority, influence or moral ascendancy over another in a work or
training or education environment, demands, requests or otherwise requires any sexual favor from
another, regardless of whether the demand, request or requirement for 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 who cooperates in the commission thereof by another without which it
would not have been committed, shall also be held liable under the law.
• How is sexual harassment committed in a work-related or employment environment?
In a work-related or employment environment, sexual harassment is committed when:
1. The sexual favor is made a condition in the hiring or in the employment, re-employment or
continued employment of said individual or in granting said individual favorable
compensation, terms, conditions, promotions, or privileges; or the refusal to grant the sexual
favor results in limiting, segregating or classifying the employee which in any way would
discriminate, deprive or diminish employment opportunities or otherwise adversely affect
said employee;
2. The above acts would impair the employee’s rights or privileges under existing labor laws; 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?
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.
The employer or head of office is required to:
1. Promulgate appropriate rules and regulations, in consultation with and jointly approved by
the employees or students or trainees, through their duly designated representatives,
prescribing the procedure for the investigation of sexual harassment cases and the
administrative sanctions therefor. The said rules and 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 conduct meetings, as the case may be, with officers and employees,
teachers, instructors, professors, coaches, 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.
 b. Safe Spaces Act
• Difference between Anti-Sexual Harassment Act of 1995 and Safe Spaces Act:

Anti-Sexual Harassment Act of 1995 Safe Spaces Act

Expands coverage to include:
Covers harassment only in 3 places:
1) Streets and public spaces
1) Employment
2) Online
2) Education 3) Employment
3) Training Environment 4) Education
5) Training environment

Persons who may be liable for Sexual
Harassment:
Employer, employee, manager, supervisor,
agent of the employer, teacher, instructor,
professor, coach, trainor, or any other person
who, having authority, influence or moral
ascendancy over another in a work or
training or education environment,
Persons who may be liable for sexual
harassment (workplace, education and
training environment):
• Employer, employee, manager,
supervisor, agent of the employer,
teacher, instructor, professor, coach,
trainor, or any other person who, having
authority, influence or moral ascendancy
over another; OR
• Between peers; OR
• By a subordinate to a superior officer; OR
• By a student to a teacher; OR
• By a trainee to a trainer.

• Acts that constitute Gender-Based Sexual Harassment in the Workplace:

o Unwelcome sexual advances or requests or demands of a sexual nature that has or could
have a detrimental effect on employment/ education/ job performance or opportunities;
o Conduct of sexual nature which affects the dignity of a person;
o Conduct that creates an intimidating/hostile/humiliating environment for the recipient.
o Common elements of the above acts:
- May be done verbally, physically or through the use of technology such as text
messaging or electronic mail or through any other forms of information and
communication systems.
- Conduct is unwelcome, unreasonable, offensive and pervasive.
• Duties of the Employer
Employers or other persons of authority, influence or moral ascendancy shall:
1. Disseminate or post in a conspicuous place, a copy of the Act;
2. Provide measures to prevent gender-based sexual harassment (e.g. conduct of anti-sexual
harassment seminars);
3. Create a committee on decorum and investigation. This committee shall:
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;
c) Investigate and decide on complaints of sexual harassment w/in 10 days;
d) Protect the complainant from retaliation.
4. Provide and disseminate a code of conduct which shall provide procedures for the
committee AND set administrative penalties
• Liability of Employer
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
o Not taking action on reported acts of sexual harassment.
• DOLE Inspection
DOLE shall conduct yearly spontaneous inspections to ensure compliance of employers and
employees with their obligations.

C. SOCIAL WELFARE LEGISLATION

1. SSS LAW
a. Coverage and exclusions
• Compulsory coverage.
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, 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.
 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: Provided, That a self-employed person shall be
both employee and employer at the same time.

• Compulsory coverage of self-employed persons.

o Coverage in the SSS shall also be compulsory upon such self-employed persons as may be
determined by the Commission under such rules and regulations as it may prescribe, including,
but not limited to, the following:
(a) All self-employed professionals;
(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);
(d) Professional athletes, coaches, trainers and jockeys; and
(e) Individual farmers and fishermen.
o Unless otherwise specified in the law, all provisions thereof applicable to covered employees
shall also be applicable to the covered self-employed persons
o “Self-employed” is any person whose income is not derived from employment as defined
under this Act, as well as those workers enumerated above.

• Compulsory coverage of OFWs.

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 over sixty (60) years of age.
§ 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.
§ Manning agencies are agents of their principals and are considered as employers of sea-
based OFWs.
§ For purposes of the implementation of R.A. No. 11199, any law to the contrary
notwithstanding manning agencies are jointly and severally or solidarily liable with their
principals with respect to the civil liabilities incurred for any violation thereof.
§ The persons having direct control, management or direction of the manning agencies shall
be held criminally liable for any act or omission penalized under R.A. No. 11199
notwithstanding Section 28(f) thereof.
o Land-based OFWs
§ Land-based OFWs are compulsory members of the SSS and considered in the same manner
as self-employed persons under such rules and regulations that the Commission shall
prescribe.
§ 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 agreements with the OFWs' host countries to ensure that the
employers of land-based OFWs, similar to the 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 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 and the DOLE shall negotiate further
agreements to serve the best interests of the OFWs.
§ The DFA, the DOLE and, the SSS shall ensure compulsory coverage of OFWs through bilateral
social security 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:
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 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 basis to maintain their rights to full benefits.
3) Filipino permanent migrants, including Filipino immigrants, permanent residents and
naturalized citizens of their host countries
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.
• Effective date of coverage.
The effectivity date of the compulsory coverage are as follow:
 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 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 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 full benefit.

• 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 other than as prescribed under Section 22-A of
R.A. No. 11199.

EXCLUSIONS
• Excluded employer
Government and any of its political subdivisions, branches or instrumentalities, including corporations
owned or controlled by the Government with original charters.

• Excluded employees.
Workers whose employment or service falls under any of the following circumstances are not covered:
(1) Services where there is no employer-employee relationship in accordance with existing
labor laws, rules, regulations and jurisprudence;
(2) Service performed in the employ of the Philippine Government or instrumentality or agency
thereof;
(3) Service performed in the employ of a foreign government or international organization, or
their wholly-owned instrumentality: Provided, however, That this exemption notwithstanding,
any foreign government, 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 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 R.A.
No. 11199 on coverage and amount of payment of contributions and benefits: Provided,
finally, That the provisions of this Act shall be supplementary to any such agreement: and
(4) Such other services performed by temporary and other employees which may be excluded
by regulation of the Commission. Employees of bona fide independent contractors shall not
be deemed employees of the employer engaging the service of said contractors.
b. Dependents and beneficiaries
The dependents shall be the following:
(1) The legal spouse entitled by law to receive support from the member;
(2) The legitimate, legitimated or legally adopted, and illegitimate child who is unmarried, not
gainfully employed, and has not reached twenty-one (21) years of age, or if over twenty-
one (21) years of age, he is congenitally or while still a minor has been permanently
incapacitated and incapable of self-support, physically or mentally: and
(3) The parent who is receiving regular support from the member.
• Primary beneficiaries.
The following are primary beneficiaries:
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 legally adopted children. However, in the absence of the dependent
legitimate, legitimated children of the member, his/her dependent illegitimate children shall
be entitled to 100% of the benefits
• Secondary beneficiaries.
The following are secondary beneficiaries:
1. The dependent parents, in the absence of the primary beneficiaries.
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.
 c. Benefits
• Two (2) Main Classifications.
The SSS benefits may be classified as follows:
(a) Social security benefits:
1) Sickness
2) Maternity Leave
3) Retirement
4) Unemployment Insurance or Involuntary Separation
5) Disability
6) Death
7) Funeral

(b) Employees’ compensation benefits

(1) SICKNESS BENEFIT

• 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:

A member who has paid at least three (3) monthly contributions in the 12-month period
immediately preceding the semester of sickness or injury and is confined therefor for more than
three (3) days in a hospital or elsewhere with the approval of the SSS, shall, for each day of
compensable confinement or a fraction thereof, be paid by his 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) 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 subsequent year;
(2) The daily sickness benefit shall not be paid for more than two hundred forty (240) days
on account of the same confinement; and
(3) The employee member shall notify his employer of the fact of his sickness or injury within
five (5) calendar 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 employer is not necessary: Provided, That if
the member is unemployed or self-employed, he shall directly 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 notification is necessary, the confinement shall be deemed to have started not
earlier than the fifth day immediately preceding the date of notification.
• Compensable confinement.
o The compensable confinement shall begin on the first day of sickness, and the payment of such
allowances shall be promptly made by the employer every regular payday or on the fifteenth
and last day of each month, and similarly in the case of direct payment by the SSS, for as long
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 member shall have been
exhausted.
o One hundred percent (100%) of the daily benefits provided in the preceding paragraph shall
be reimbursed by the SSS to said employer upon receipt of satisfactory proof of such payment
and legality thereof:
§ Provided, That the employer has notified the SSS of the confinement within five (5) calendar
days after receipt of the notification from the employee member:
§ Provided, further, That if the notification to the SSS is made by the employer beyond five (5)
calendar days after receipt of the notification from the employee member, said employer
shall be reimbursed only for each day of confinement starting from 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 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.

• Notification requirement.
Where the employee member has given the required notification but the employer fails to notify the
SSS of the confinement or to file the claim for reimbursement within the period prescribed in this
section 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 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.
(2) MATERNITY LEAVE BENEFIT
• R.A. NO. 11210, the prevailing law.
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 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 “[a]ll laws, decrees, orders, rules and regulations or parts thereof inconsistent
[therewith].”
(3) RETIREMENT BENEFITS
• Two types of retirement benefits.
Retirement benefit is a cash benefit either in monthly pension or lump sum paid to a member who
can no longer work due to old age.
The two (2) types of retirement benefits are:
1) Monthly pension, and
2) Lump sum amount.
The monthly pension is a lifetime cash benefit paid to a retiree who has paid at least 120 monthly
contributions to the SSS prior to the semester of retirement. The lump sum amount is granted to a
retiree who has not paid the required 120 monthly contributions. It is equal to the total contributions
paid by the member and by the employer including interest.
• Who are qualified.
A member who has paid at least one hundred twenty (120) monthly contributions prior to the
semester of retirement and who:
(1) has reached the age of sixty (60) years and is already separated from employment or has
ceased to be self-employed: or
(2) has reached the age of sixty-five (65) years, shall be entitled for as long as he lives to the
monthly pension,
Provided, That he shall have the option to receive his first eighteen (18) monthly pensions in lump sum
discounted at a preferential rate of interest to be determined by the SSS.
A covered member who is sixty (60) years old at retirement and who does not qualify for pension
benefits as above described, shall be entitled to a lump sum benefit equal to the total contributions
paid by him and on his behalf: Provided, That he is separated from employment and is not continuing
payment of contributions to the SSS on his own.
• Reemployment or resumption of self-employment.
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) and his employer to Section 19 (Employer’s Contributions) of R.A. No.
11199.

• Death of retired member.

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

• Retirement of member after reaching 60.

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

• Retirement of underground mineworkers.

An underground mineworker shall be entitled to retirement benefits if he:
1. has reached the age of 55 years old and is an underground mineworker for at least 5 years
(either continuous or accumulated) prior to the semester of retirement but whose actual date
of retirement is not earlier than March 13, 1998; separated from employment or in the case of
self-employed, has ceased self-employment, and has paid at least 120 monthly contributions
prior to the semester of retirement.
2. has reached the age of 60 years old whether employed or not.
 o Additional monthly benefit allowance.
Pursuant to Memorandum from the Executive Secretary dated 22 February 2017, by authority of the
President of the 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.

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 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.

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 entitled to hospitalization benefits under
PhilHealth only if they have contributed 120 monthly Medicare contributions. The counting of 120
monthly contributions shall start in 1972, when the Medical Care Act of 1969 started implementation.

(4) UNEMPLOYMENT INSURANCE OR INVOLUNTARY SEPARATION BENEFITS

• R.A. No. 11199 grants this benefit to a member who is:
(a) not over sixty (60) years of age;
(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 monthly salary credit for a maximum of two (2) months:
o Provided, That an employee who is involuntarily unemployed can only claim unemployment
benefits once every three (3) years;
o Provided, further, That in case of concurrence of two or more compensable contingencies,
only the highest benefit shall be paid, subject to the rules and regulations that the Commission
may prescribe.
(5) DISABILITY BENEFITS
• Permanent total disability benefits.
o A member shall be entitled to the monthly pension upon: (a) the permanent total disability of
a member who 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 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.

• Reemployment or resumption of self-employment.

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 shall be considered a new member.
o The monthly pension and dependents’ pension shall be suspended upon:
§ 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.
• Death of permanent total disability pensioner.
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
o Provided, That if he has no primary beneficiaries and he dies within sixty (60) months from the
start of his monthly pension, his secondary beneficiaries shall be entitled to a lump sum benefit
equivalent to the total monthly pensions corresponding to the balance of the five-year
guaranteed period excluding the dependents’ pension.
• Permanent total disabilities
The following disabilities shall be deemed permanent total:
(1) Complete loss of sight of both eyes;
(2) Loss of two limbs at or above the ankle or wrists:
(3) Permanent complete paralysis of two limbs;
(4) Brain injury resulting to incurable imbecility or insanity; and
(5) Such cases as determined and approved by the SSS.
• Permanent partial disabilities.
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 determine.
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 disability payable not longer than the period designated in the
schedule provided.
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.
o For the purpose of adjudicating retirement, death and permanent total disability pension
benefits, contributions shall be deemed paid for the months during which the member
received partial disability pension: 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 retirement or death.

(6) DEATH BENEFITS

• Who are entitled.
o Death benefit is a cash benefit either in monthly pension or lump sum paid to the beneficiaries
of a deceased member.
o Upon the death of a member who has paid at least thirty-six (36) monthly contributions prior to
the semester of death, his primary beneficiaries shall be entitled to the monthly pension:
Provided, That if he has no primary beneficiaries, his secondary beneficiaries shall be entitled to
a lump sum benefit equivalent to thirty-six (36) times the monthly pension.
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 contributions paid to the SSS or twelve (12) times the monthly pension,
whichever is higher.

• Types of death benefits

o Based on the foregoing, there are two (2) types of death benefits, to wit:
1) Monthly pension; and
2) Lump sum amount.
o The monthly pension is granted only to the primary beneficiaries of a deceased member who
had paid 36 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 36 monthly contributions before the semester of death. The secondary
beneficiaries shall be entitled to a lump sum benefit.

• Amount of benefits.
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).
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 legally adopted children in the basic pension and 100% of the
dependents’ pension.
§ 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.
• The primary beneficiaries of a deceased member who has paid less than 36 monthly
contributions shall be entitled to lump sum benefit which shall be the higher of:
1. monthly pension times the number of monthly contributions paid prior to the semester of
death; or
2. twelve (12) times the monthly pension.
• The secondary beneficiaries of the deceased member shall be entitled to a lump sum benefit
equivalent to:
1. 36 times the monthly pension; if the member has paid at least 36 monthly contributions prior
to the semester of death; or
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.
• 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 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 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, 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.
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
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 voluntary/self-employed) or the Indigent Program (IP) of
PhilHealth.
(7) FUNERAL BENEFIT
• Amount of funeral benefit.
A funeral grant shall be paid, in cash or in kind, to help defray the cost of funeral expenses upon the
death of a member, including permanently totally disabled member or retiree.
EMPLOYEES’ COMPENSATION BENEFITS
This is the second class of benefits under the SSS Law, the first being the Social Security Benefits
discussed above. For purposes of discussing this topic in an orderly fashion, the same shall be
presented under the topic “DISABILITY AND DEATH BENEFITS”, infra.
2. GSIS LAW (R.A. No. 8291)
a. Coverage and exclusions
• Who are compulsorily required to become members of the GSIS?
1. All government personnel, whether elective or appointive, irrespective of status of appointment,
provided they are receiving fixed monthly compensation and have not reached the mandatory
retirement age of 65 years, are compulsorily covered as members of the GSIS and shall be
required to pay contributions.
2. However, employees who have reached the retirement age of 65 or more shall also be
covered, subject to the following rules:
An employee who is already beyond the mandatory retirement age of 65 shall be compulsorily
covered and be 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 without interruption.
b. Appointive officials who, before reaching the mandatory age of 65, are appointed to
government position by the President of the Republic of the Philippines and shall remain in
government service at age beyond 65.
c. Contractual employees including casuals and other employees with an employee-
government agency relationship are also compulsorily covered, provided they are receiving
fixed monthly compensation and rendering the required number of working hours for the
month.
• What are the classes of membership in the GSIS?
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:
(a) Regular Members – are those employed by the government of the Republic of the
Philippines, national or local, legislative bodies, government-owned and controlled corporations
(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.
(b) Special Members – are constitutional commissioners, members of the judiciary, including
those with equivalent ranks, who are required by law to remit regular monthly contributions for
life insurance policies to the GSIS in order to answer for their life insurance benefits defined
under RA 8291.
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 service and together with the government agency to which he belongs, is required
to pay the monthly contribution.
(b) Inactive member – a member who is separated from the service either by resignation,
retirement, disability, dismissal from the service, retrenchment or, who is deemed retired from
the service under this Act.
• 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 election to public office.
• What is the effect of separation from the service?
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.
• Who are excluded from the compulsory coverage of the GSIS Law?
The following employees are excluded from compulsory coverage:
(a) Uniformed personnel of the Armed Forces of the Philippines (AFP), Philippine National Police
(PNP), Bureau of Fire Protection (BFP) and Bureau of Jail Management and Penology (BJMP);
(b) Barangay and Sanggunian Officials who are not receiving fixed monthly compensation;
(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.
b. Dependents and beneficiaries
• Who are beneficiaries under the GSIS Law?
There are two (2) kinds of beneficiaries under the GSIS Law as follows:
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 legitimate descendants.
• Who are dependents under the GSIS Law?
Dependents shall be the following:
(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 employed, not over the age of majority, or is over the age of majority
but incapacitated and incapable of self-support due to a mental or physical defect acquired
prior to age of majority; and
(c) the parents who are dependent upon the member for support.
Gainful Occupation — Any productive activity that provided the member with income at least equal
to the minimum compensation of government employees.
c. Benefits
The following are the benefits under the GSIS Law:
(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
(d) Separation Benefit
(e) Unemployment Benefit
(f) Disability Benefits
(g) Survivorship Benefits
(h) Funeral Benefits
3. DISABILITY AND DEATH
a. 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 employees as provided under the Labor Code.
o 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 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.
• 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 Insurance System (GSIS) and (3) the Social Security
System (SSS), the administering agencies of the ECP.
• Who are covered by the ECP?
a. General coverage. – The following shall be covered by the Employees’ Compensation
Program (ECP):
 1. All employers;
2. Every employee not over sixty (60) years of age;
3. An employee over 60 years of age who had been paying contributions to the System
(GSIS/SSS) prior to age sixty (60) and has not been compulsorily retired; and
4. Any employee who is coverable by both the GSIS and SSS and should be compulsorily
covered by both Systems.
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;
2. All private sector employees covered by the SSS; and
3. Overseas Filipino workers (OFWs), namely:
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, industry or business undertaking in the Philippines; otherwise, they
shall not be covered by the ECP.
• 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.
• What are the benefits under the ECP?
The following are the benefits provided under the Labor Code:
a. Medical Benefits
b. Disability Benefits
1. Temporary total disability
2. Permanent total disability
3. Permanent partial disability
c. Death Benefit
d. Funeral Benefit
b. POEA-Standard Employment Contract for Seafarers
• Applicable law in cases involving the POEA-SEC.
By express provision of Section 31 of the 2010 POEA-SEC, “[a]ny unresolved dispute, claim or
grievance arising out of or in connection therewith, including the annexes 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 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
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.
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.
• 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 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.
For disability to be compensable under Section 20 (A) of the 2010 POEA-SEC, two elements must
concur:
(1) The injury or illness must be work-related; and
(2) The work-related injury or illness must have existed during the term of the seafarer's
employment contract.
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 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.
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 - 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
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:
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
4. There was no notorious negligence on the part of the seafarer.
• Seafarer has burden of proof in disability claims.
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 health problems while at sea, the circumstances under which he
developed the illness, as well as the symptoms 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 connection to one's work, and thus, allows the seafarer to claim disability benefits therefor.

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 under Section 32-A of this Contract
with the conditions set therein satisfied.”

For illnesses not mentioned under Section 32, the 2010 POEA-SEC creates a disputable presumption
in favor of the seafarer that these illnesses are work-related. However, the presumption does not
necessarily result in an automatic grant of disability compensation. The claimant, on due process
grounds, still has the burden to present substantial evidence that his work conditions caused or at
least increased the risk of contracting the illness. This is because awards 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. 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.
Section 32-A of the 2010 POEA-SEC states that for an occupational disease and the resulting
disability or death to be compensable, all of the following conditions need to be satisfied:
(1) The seafarer's work must involve the risks described therein;
(2) The disease was contracted as a result of the seafarer's exposure to the described risks;
(3) The disease was contracted within a period of exposure and under such other factors
necessary to contract it; and
(4) There was no notorious negligence on the part of the seafarer.
• Non-compensability of self-inflicted injury.
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 employer can prove that such injury, incapacity, disability
or death is directly attributable to the seafarer.
• 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 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 conditions in his PEME; failing which shall disqualify him from receiving disability
compensation.
o An illness shall be considered as pre-existing if prior to the processing of the POEA contract, any
of the following conditions is present, namely:
(a) The advice of a medical doctor on treatment was given for such continuing illness or
condition; or
(b) The seafarer had been diagnosed and has knowledge of such illness or condition but
failed to disclose the same during the PEME, and such cannot be diagnosed during the
PEME.
• 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 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 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 requires further medical attention, then the temporary total
disability period may be extended 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.
• 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 non-compliance.

o Summary of Rules on the periods to assess the seafarer.

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 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 that the company-designated
physician has sufficient justification to extend the period; and
4. If the company-designated physician still fails to give his assessment within the extended
period of 240 days, then the seafarer’s disability becomes permanent and total, regardless
of any justification.
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:
1. that mere inability to work for a period of 120 days does not entitle a seafarer to permanent
and total disability benefits;
2. that the determination of the fitness of a seafarer for sea duty is within the province of the
company-designated physician, subject to the periods prescribed by law;
3. that the company-designated physician has an initial 120 days to determine the fitness or
disability of the seafarer; and
4. that the period of treatment may only be extended to 240 days if a sufficient justification
exists such as when further medical treatment is required or when the seafarer is
uncooperative.
The seafarer has the right to seek a second opinion once the company-designated physician
makes a definitive and final assessment within the 120-day period; otherwise, no such obligation
devolves on the seafarer to consult his own doctor.
• Conditions required for the claim for total and permanent disability benefits to prosper.
In order for a seafarer’s claim for total and permanent disability benefits to prosper, any of the
following conditions should be present:
(a) The company-designated physician failed to issue a declaration as to his fitness to engage
in sea duty or disability even after the lapse of the 120-day period and there is no indication
that further medical treatment would address his temporary total disability, hence, justify an
extension of the period to 240 days;
(b) 240 days had lapsed without any certification issued by the company designated
physician;
(c) The company-designated physician declared that he is fit for sea duty within the 120-day
or 240-day period, as the case may be, but his physician of choice and the doctor chosen
under Section 20 (B) (3) of the POEA-SEC are of a contrary opinion;
(d) The company-designated physician acknowledged that he is partially permanently
disabled but other doctors who he consulted, on his own and jointly with his employer,
believed that his disability is not only permanent but total as well;
(e) The company-designated physician recognized that he is totally and permanently disabled
but there is a dispute on the disability grading;
(f) The company-designated physician determined that his medical condition is not
compensable or work-related under the POEA-SEC but his doctor-of-choice and the third
doctor selected under Section 20 (B) (3) of the POEA-SEC found otherwise and declared
him unfit to work;
(g) The company-designated physician declared him totally and permanently disabled but
the employer refuses to pay 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.
• 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 that within three (3) working days from his repatriation, he is examined by a
company-designated physician. Non-compliance with this mandatory requirement results in
the forfeiture of the right to claim for 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.
• The Third Doctor Rule
o The conflicting findings of the company's doctor and the seafarer's physician often stir suits
for disability compensation. As an extrajudicial measure of settling their differences, the
POEA-SEC gives the parties the 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:
§ there is a valid and timely assessment by the company-designated physician; and
§ the appointed doctor of the seafarer refuted such assessment.
o Note that the third doctor's decision shall be final and binding on both parties.
• Death Benefits of seafarers
o To be entitled to death compensation benefits from the employer, the death of the seafarer:
§ (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.
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:
(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
(4) There was no notorious negligence on the part of the seafarer.
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.
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-related injury or illness constitutes an exception thereto.

• Death caused by the seafarer himself, not compensable.

o In the following cases, the death by suicide was likewise held not compensable:
§ 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.
§ Wallem Maritime Services, Inc. v. Pedrajas, where the seafarer hanged himself on the
Upper Deck B of the vessel with a rope tied to his neck.
§ Great Southern Maritime Services Corp. v. Surigao, where the seafarer was found dead
inside the bathroom of his hospital room with a belt tied around his neck.
§ 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.

D. LABOR RELATIONS

1. Right to Self-Organization
a. Coverage
• Who are eligible to join, form or assist a labor organization for purposes of collective
bargaining?
o In the private sector:
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;
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];
6. Working children [See discussion below];
 7. Homeworkers [See discussion below];
8. Employees of cooperatives [See discussion below]; and
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 government-owned and/or controlled corporations with original charters,
can form, join or assist employees’ organizations of their own choosing.
• Are front-line managers or supervisors eligible to join, form or assist a labor organization?
Yes, but only among themselves. They cannot join a rank-and-file union.
• Do alien employees have the right to join a labor organization?
o No, except if the following requisites are complied with:
§ (1) He should have a valid working permit issued by the DOLE; and
§ (2) He is a national of a country which grants the same or similar rights to Filipino workers
OR which has ratified either ILO Convention No. 87 or ILO Convention No. 98 (ON THE
RIGHT TO SELF-ORGANIZATION OF WORKERS) as certified by the Philippine Department of
Foreign Affairs (DFA).
• Do members of cooperatives have the right to join, form or assist a labor organization?
No, because they are co-owners of the cooperative.
• What about employees of a cooperative?
Yes, because they have employer-employee relationship with the cooperative.
• What about members who are at the same time employees of the cooperative?
No, because the prohibition covers employees of the cooperative who are at the same time
members thereof.
• 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 contractor.
• Are self-employed persons allowed to join, form or assist a labor organization?
Yes, for their mutual aid and protection but not for collective bargaining purposes since they have
no employers but themselves. BUT AS AND BY WAY OF DISTINCTION, THEIR LABOR ORGANIZATION IS
CALLED “WORKERS’ ASSOCIATION.”

This rule applies as well to ambulant, intermittent and other workers, rural workers and those without
any definite employers. The reason for this rule is that these persons have no employers with whom
they can collectively bargain.

b. Eligibility of Membership
• Who are the persons that are not allowed to form, join or assist labor organizations?
o In the private sector:
§ Top and middle level managerial employees; and
§ Confidential employees.
o In the public sector
§ The following are not eligible to form employees’ organizations:
• High-level employees whose functions are normally considered as policy-making or
managerial or whose duties are of a highly confidential nature;
• Members of the Armed Forces of the Philippines;
• Police officers;
• Policemen;
• Firemen; and
• Jail guards.
• Ineligibility of managerial employees to unionize; right of supervisory employees
There are 3 types of managerial employees:
1. Top Management
2. Middle Management
3. First-Line Management (also called supervisory level)
The first two above are absolutely prohibited; but the third, being supervisors, are allowed but only
among themselves.
• 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:
(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 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.
 c. Doctrine of Necessary Implication
Under the confidential employee rule, a rank-and-file employee or a supervisory employee, is
elevated to the position of a managerial employee, under another doctrine called the DOCTRINE
OF NECESSARY IMPLICATION, hence, he is treated as if he is a managerial employee because of
his access to confidential information related to labor relations. THE DOCTRINE OF NECESSARY
IMPLICATION IS THEREFORE THE LEGAL BASIS FOR INELIGIBILITY OF CONFIDENTIAL EMPLOYEE TO JOIN
A UNION.
For example, not all secretaries to top officials of the company may be considered as confidential
employees, unless they have access to confidential information related to labor relations, such as
when they transcribe or type/encode the counter-proposals of management on the proposals of
the SEBA in a CBA negotiation. That access to such counter-proposals is the type of access
contemplated under this rule.
d. Commingling or Mixed Membership
Is COMMINGLING or MIXED MEMBERSHIP of supervisors and rank-and-file union in one union
allowed? Is it a ground to cancel its registration?
No. It is not allowed. However, it bears noting that in case there is commingling or mixed
membership of 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 union. The employees so improperly included
are automatically deemed removed from the list of members of said union. In other words, their
removal from the said list is by operation of law.

e. Effect of Inclusion as Members of Employees Outside the Bargaining Unit

See above.
2. Bargaining Unit
• 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 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?
Based on jurisprudence, there are certain tests which may be used in determining the appropriate
collective bargaining unit, to wit:
(a) Community or mutuality of interest doctrine;
(b) Globe doctrine or will of the members;
(c) Collective bargaining history doctrine; and
(d) Employment status doctrine.
(a) COMMUNITY OR MUTUALITY OF INTEREST DOCTRINE.
Under this doctrine, the employees sought to be represented by the collective bargaining
agent must have community or mutuality of interest in terms of employment and working conditions as
evinced by the type of work they perform. It is characterized by similarity of employment status, same
duties and responsibilities and substantially similar compensation and working conditions.
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 transportation employees) of petitioner-school’s Tandang Sora campus.
Petitioner-school opposed it by contending that 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
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. Since a majority or 84 out of the 149 qualified voters cast
their votes, a quorum existed during the certification election. 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 that the union seeks to represent.
Other cases:
(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 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 the entire Northern Luzon sales area consists only of approximately fifty-five (55)
employees. Surely, it would not be for the best interest of these employees if they would further be
fractionalized. The adage ‘there is strength in number’ is the very rationale underlying the formation of
a labor union.”
(2) San Miguel Corporation Supervisors and Exempt Employees Union v. Laguesma, involving
the issue 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 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
operations of a single bargaining representative.
(3) Similar to this case is University of the Philippines v. Ferrer-Calleja, where all non-academic
rank-and-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.
(b) GLOBE DOCTRINE.
This principle is based on the will of the employees. It is called Globe doctrine because this
principle was first enunciated in the United States case of 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
which representative union will be chosen by the workers.
International School Alliance of Educators [ISAE] v. Quisumbing. - The Supreme Court ruled here
that foreign-hired teachers do not belong to the bargaining unit of the local-hires because the former
have not indicated their intention to be grouped with the latter for purposes of collective bargaining.
Moreover, the collective bargaining history of the school also shows that these groups were always
treated separately.
(c) COLLECTIVE BARGAINING HISTORY DOCTRINE.
This principle puts premium to the prior collective bargaining history and affinity of the
employees in determining the appropriate bargaining unit. 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.
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 separate units and notwithstanding their geographical
distance from each other.
(d) EMPLOYMENT STATUS DOCTRINE.
The determination of the appropriate bargaining unit based on the employment status of the
employees is 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 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. Hence, they cannot be allowed to be included in the rank-and-file
employees’ bargaining unit. The rationale for this 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.
3. Bargaining Representative
Note: 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 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
(2) submitting the list of employees during the pre-election conference should the Med-Arbiter
act favorably on the petition.
 Modes to acquire status as Sole and Exclusive Bargaining Agent (SEBA):
(3.a.) Request for SEBA Certification
• 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 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 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.
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;
(2) Request for certification in unorganized establishment with more than one (1) legitimate
labor organization; and
(3) Request for certification in organized establishment.

The foregoing scenarios are discussed below.

FIRST SCENARIO: Request for certification in an UNORGANIZED establishment with only one (1)
legitimate union.
a. Validation process.
If the DOLE Regional Director finds the establishment unorganized with only one (1) legitimate
labor organization in existence, he/she should call a conference within five (5) working days for the
submission of the following:
1. The names of employees in the covered bargaining unit who signify their support for the
SEBA certification, provided that said employees comprise at least majority of the number of
employees in the covered bargaining unit; and
2. Certification under oath by the president of the requesting union or local that all documents
submitted are true and correct based on his/her personal knowledge.

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 shall not be deemed a party-in-interest but only as a
bystander to the process of certification.

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.

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 Certification as SEBA enjoying the rights and privileges of an exclusive bargaining
agent of all the employees in the covered bargaining unit.
The DOLE Regional Director should cause the posting of the SEBA Certification for 15 consecutive
days in at least 2 conspicuous places in the establishment or covered bargaining unit.

c. Effect of certification.
Upon the issuance of the Certification as SEBA, the certified union or local shall enjoy all the rights
and privileges of an exclusive bargaining agent of all the employees in the covered CBU.

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

THIRD SCENARIO: Request for certification in organized establishment.

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

(3.b.) Certification/Consent Election

• 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?
The petition may be filed by:
1. A legitimate labor organization which may be:
 (a) an independent union; or
(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.
2. An employer, when requested by a labor organization to bargain collectively and its
majority status is in doubt.
2) Bars to the holding of Certification/Consent Election
• What are the rules prohibiting the filing of petition for certification election (bar rules)?
a. General rule.
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:
1. Statutory bar rule;
2. Certification year bar rule;
3. Negotiations bar rule;
4. Bargaining deadlock bar rule; or
5. Contract bar rule.
1. STATUTORY BAR RULE.
The Labor Code does not contain any provision on this rule but the Rules to Implement the Labor
Code embody a 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.
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 period.
2. CERTIFICATION YEAR BAR RULE.
Under this rule, a petition for certification election (PCE) may not be filed within one (1) year:
1. From the date a union is certified as SEBA by virtue of a REQUEST FOR SEBA CERTIFICATION; or
2. From the date a valid certification, consent, run-off or re-run election has been conducted within
the bargaining unit.
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.
3. NEGOTIATIONS BAR RULE.
Under this rule, no PCE should be entertained while the sole and exclusive bargaining agent (SEBA)
and the employer have commenced and sustained negotiations in good faith within the period of
one (1) year from the date of a valid certification, consent, run-off or re-run election or from the date
of voluntary recognition.
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.
4. BARGAINING DEADLOCK BAR RULE.
Under this rule, a PCE may not be entertained when a bargaining deadlock to which an incumbent or
certified bargaining agent is a party has been submitted to conciliation or arbitration or has become
the subject of a valid notice of strike or lockout.
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 of all the rank-and-file employees, it did not take any action to legally compel the
employer to comply with its duty to bargain collectively, hence, no CBA was executed. Neither did it
file any unfair labor practice suit against the employer nor did it initiate a strike against the latter.
Under the circumstances, a certification election may be validly ordered and held.
5. CONTRACT BAR RULE.
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 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 frequent
modifications of any CBA earlier entered into by them in good faith and for the stipulated original
period.
 When contract bar rule does not apply:
1. Where there is an automatic renewal provision in the CBA but prior to the date when such
automatic renewal became effective, the employer seasonably filed a manifestation with the
Bureau of Labor Relations of its intention to terminate the said agreement if and when it is
established that the bargaining agent does not represent anymore the majority of the workers
in the bargaining unit.
2. Where the CBA, despite its due registration, is found in appropriate proceedings that: (a) it
contains provisions lower than the standards fixed by law; or (b) the documents supporting its
registration are falsified, fraudulent or tainted with misrepresentation.
3. Where the CBA does not foster industrial stability, such as contracts where the identity of the
representative is in doubt since the employer extended direct recognition to the union and
concluded a CBA therewith less than one (1) year from the time a certification election was
conducted where the “no union” vote won. This situation obtains in a case where the
company entered into a CBA with the union when its status as exclusive bargaining agent of
the employees has not been established yet.
4. Where the CBA was registered before or during the last sixty (60) days of a subsisting
agreement or during the pendency of a representation case. It is well-settled that the 60-day
freedom period based on the original CBA should not be affected by any amendment,
extension or renewal of the CBA for purposes of certification election.
• 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 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.
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].
• What are the two (2) kinds of majorities (DOUBLE MAJORITY RULE)?
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 must have cast their votes.
2. Number of votes required to be certified as the collective bargaining agent. To be certified
as the sole and exclusive bargaining agent, the union should obtain a majority of the valid
votes cast.
• 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 does not stay the conduct thereof.
o The pendency of an unfair labor practice case filed against a labor organization participating
in the certification election does not stay the holding thereof.
o Direct certification as a method of selecting the exclusive bargaining agent of the employees is
not allowed. This 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.
o The “No Union” vote is always one of the choices in a certification election. Where majority of
the valid votes cast results in “No Union” obtaining the majority, the Med-Arbiter shall declare
such fact in the order.
o Only persons who have direct employment relationship with the employer may vote in the
certification election, regardless of their period of employment.

CERTIFICATION ELECTION
IN AN UNORGANIZED ESTABLISHMENT
• What is meant by “unorganized establishment”?
As distinguished from “organized establishment,” an “unorganized establishment” is an employer entity
where 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 are unions in existence therein for as long as not one of them is duly certified as the sole
and exclusive bargaining representative of the employees in the particular bargaining unit it seeks to
operate and represent.
Further, a company remains unorganized even if there is a duly recognized or certified bargaining
agent for rank-and-file employees, for purposes of the petition for certification election filed by
supervisors. The reason is that the 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.
• How should certification election be conducted in an unorganized establishment?
In case of a petition filed by a legitimate organization involving an unorganized establishment, the
Med-Arbiter is required to immediately order the conduct of a certification election upon filing of a
petition for certification election by a legitimate labor organization.

CERTIFICATION ELECTION
IN AN ORGANIZED ESTABLISHMENT

• What are the requisites for the conduct of a certification election in an organized establishment?
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 within the 60-day freedom period;
2. That such petition is verified; and
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.
• What is consent election?
A “consent election” refers to the process of determining through secret ballot the sole and
exclusive bargaining 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.

• 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:

(1) The former is held upon the mutual agreement of the contending unions; while the latter does
not require the 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-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 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 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 election exceed 15 days from the date of the scheduled
preliminary conference/hearing after which time, the 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.
(6) The former may be conducted in the course of the proceeding in the latter or during its
pendency.

(3.c.) Failure of election, Run-Off Election, Re-run election

• What is a run-off election?
A “run-off election” refers to an election between the labor unions receiving the two (2) highest
number of votes in 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 the total number of votes for all
contending unions, if added, is at least fifty percent (50%) of the number of valid votes cast.
• When is it conducted?
If the above conditions that justify the conduct of a run-off election are present and there are no
objections or challenges which, if sustained, can materially alter the election results, the Election
Officer should 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.
ILLUSTRATION.
To illustrate, in a certification election involving four (4) unions, namely: Union A, Union B, Union
C, and Union D, where there are 100 eligible voters who validly cast their votes, and the votes they
each garnered are as follows: Union A – 35; Union B – 25; Union C – 10; Union D - 15; and No Union - 15,
a run-off election may be conducted between Union A and Union B because:
(1) Not one of the unions mustered the majority vote of 51 votes but Union A and Union B got
the first two highest number of votes;
(2) If all the votes for the contending unions are added up, it will result in at least 50% of the
valid votes cast (Union A – 35; Union B – 25; Union C – 10; Union D - 15 for a total of 85 or
85%); and
(3) There are no objections or challenges which, if sustained, can materially alter the results of
the election.
THE “NO UNION” CHOICE SHOULD NO LONGER BE INCLUDED.
For obvious reason, the choice of “No Union” should no longer be included in the run-off
election.
RE-RUN ELECTION
“‘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 declared by the Election Officer and/or
affirmed by the Mediator-Arbiter.
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
(2) To cure a failure of election.
RULE IN CASE OF FAILURE OF ELECTION.
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.
4. Rights of Labor Organizations
a. Check Off, Assessment, and Agency Fees
• Requisites for validity of union dues and special assessments
The following requisites must concur in order for union dues and special assessments for the union’s
incidental expenses, attorney’s fees and representation expenses to be valid, namely:
(a) Authorization by a written resolution of the majority of all the members at a general
membership meeting duly called for the purpose;
(b) Secretary’s record of the minutes of said meeting; and
(c) Individual written authorizations for check-off duly signed by the employees concerned.
• 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, 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.
• 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 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.
• 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 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 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.
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 benefits under the CBA.
b. Deductions for fees for mandatory activities such as labor relations seminars and labor
education activities.
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.
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.
g. Deductions from wages ordered by the court.
h. Deductions authorized by law such as for premiums for PhilHealth, SSS, Pag-IBIG,
employees’ compensation and the like.
AGENCY FEES
• A non-bargaining union member has the right to accept or not the benefits of the cba.
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 therefrom. Consequently, if a non-bargaining union member
does not accept or refuses to avail of the CBA-based benefits, he is not under any obligation to
pay the “agency fees” since, in effect, he does not give recognition to the status of the bargaining
union as his agent.
• Limitation on the amount of agency fee.
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:
(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 bargaining agent.
Thus, any agency fee collected in excess of this limitation is a nullity.
• Non-members of the SEBA need not become members thereof
The employees who are not members of the certified bargaining agent which successfully
concluded the CBA are not required to become members of the latter. Their acceptance of the
benefits flowing from the CBA and their act of paying the agency fees do not make them
members thereof.
• Check-off of agency fees
“Check-off” of agency fees is a process or device whereby the employer, upon agreement with
the bargaining union, 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.
• Accrual of right of bargaining union to demand check-off of agency fees.
The right of the bargaining union to demand check-off of agency fees accrues from the moment
the non-bargaining union member accepts and receives the benefits from the CBA. This is the
operative fact that would trigger such liability.
• No individual written authorization by non-bargaining union members required
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
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.”
• Minority union cannot demand from the employer to grant it the right to check-off of union
dues and assessments from their members.
The obligation on the part of the employer to undertake the duty to check-off union dues and
special assessments holds and applies only to the bargaining agent and not to any other union/s
(called “Minority Union/s”).

b. Collective Bargaining
• Essential requisites of collective bargaining
Prior to any collective bargaining negotiations between the employer and the bargaining union,
the following requisites must first be satisfied:
1. Employer-employee relationship must exist between the employer and the members of
the bargaining unit being represented by the 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.
• Some principles on CBA.
o CBA is the law between the parties during its lifetime and thus must be complied with in
good faith.
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.
o The benefits derived from the CBA and the law are separate and distinct from each other.
o Workers are allowed to negotiate wage increases separately and distinctly from legislated
wage increases. The parties may validly agree in the CBA to reduce wages and benefits of
employees provided such reduction does not go below the minimum standards.
o Ratification of the CBA by majority of all the workers in the bargaining unit makes the same
binding on all employees therein.
o Employees entitled to CBA benefits. The following are entitled to the benefits of the CBA:
(1) Members of the bargaining union;
(2) Non-members of the bargaining union but are members of the bargaining unit;
(3) Members of the minority union/s who paid agency fees to the bargaining union; and
(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.
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.

(b.1.) Economic (or non-political) Terms and Conditions

(a) Wage Increases; (b) Allowances; (c) Premiums for Work on Rest Days, Holidays, etc.; (d) Meal,
Rice and other Subsidies; (e) Leave Benefits; (f) Union Leave; (g) Uniforms; (h) Union Office; (i)
Promotions; (j) Bonuses; (k) Insurance; (l) Hospitalization; (m) Retirement; (n) Excursion; and (o)
Others which have monetary values.

(b.2.) Non-Economic (or political) Terms and Conditions

(a) Coverage or Scope of the Agreement; (b) Exclusions; (c) Rights and Responsibilities of Parties;
(d) Union Security Arrangement; (e) Job Security (Security of Tenure); (f) Management Rights and
Prerogatives; (g) Company Rules and Regulations; (h) Discipline of Employees; (i) Union Dues and
Special Assessments; (j) Agency Fee; (k) Check-Off; (l) Grievance Machinery; (m) Voluntary
Arbitration; (n) Labor-Management Council (LMC); (o) No-Strike, No-Lockout; (p) Waiver and
Completeness of Agreement; and (q) Duration and Effectivity of Agreement.
(b.3.) Duty to Bargain Collectively
• Meaning of duty to bargain collectively.
The “duty to bargain collectively” means the performance of a mutual obligation to meet and
convene promptly and expeditiously in good faith for the purpose of negotiating an agreement
with respect to wages, hours of work and all other terms and conditions of employment, including
proposals for adjusting any grievances or questions arising under such agreement and executing a
contract incorporating such agreements if requested by either party but such duty does not
compel any party to agree to a proposal or to make any concession.

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 under any legal obligation to initiate collective bargaining
negotiations.
• Two (2) situations contemplated
The duty to bargain collectively involves two (2) situations, namely:
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.
Duty to bargain collectively when there is absence of a CBA
• How duty should be discharged when there is no cba yet.
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:
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

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.
Duty to bargain collectively when there is a CBA
• Concept
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 at least sixty (60) days prior to its expiration date. It shall be
the duty of both parties to keep the status quo and to continue in full force and effect the terms
 and conditions of the existing agreement during the 60-day period and/or until a new agreement
is reached by the parties.
• Freedom period.
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 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.
• Automatic renewal clause: Automatic renewal clause deemed incorporated in all CBAs.
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 negotiated and ultimately concluded and reached by the
parties. This principle is otherwise known as the “automatic 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 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 under the expired CBA until the same is
renewed.

• 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 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 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.
o Divine Word University of Tacloban v. Secretary of Labor and Employment, Sept. 11, 1992.
o General Milling Corporation v. CA, Feb. 11, 2004.

(b.4.) Mandatory Provisions in the Collective Bargaining Agreement (CBA)

1. Grievance Procedure;
2. Voluntary Arbitration;
3. No Strike-No Lockout Clause; and
4. Labor-Management Council (LMC).
If these provisions are not reflected in the CBA, its registration will be denied by the BLR.
5. Unfair Labor Practices
a. Nature and Aspect
• 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 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.

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
3. Compliance with CBA.
Sans this connection, the unfair acts do not fall within the technical signification of the term “unfair
labor practice.”
• 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 collective bargaining is the act described under Article 248 [f], i.e., to dismiss,
discharge or otherwise prejudice or discriminate against an employee for having given or being
about to give testimony under the Labor Code.

• Labor code provisions on ULP.

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;
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;
4. Article 274 [261] which considers violations of the CBA as no longer ULPs unless the same are
gross in character which means flagrant and/or malicious refusal to comply with the
economic provisions thereof.
5. Article 278(c) [263(c)] which refers to union-busting, a form of ULP, involving the dismissal
from employment of union officers duly elected in accordance with the union constitution
and by-laws, where the existence of the union is threatened thereby.
• Parties who/which may commit ULP.
A ULP may be committed by an employer or by a labor organization. Article 259 [248] describes
the ULPs that may be committed by an employer; while Article 260 [249] enumerates those which
may be committed by a labor organization.

On the part of the employer, only the officers and agents of corporations, associations or
partnerships who have actually participated in or authorized or ratified ULPs are criminally liable.

On the part of the union, only the officers, members of governing boards, representatives or
agents or members of labor associations or organizations who have actually participated in or
authorized or ratified the ULPs are criminally liable.
• Elements of ULP.
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 practice.
Absent one of the elements aforementioned will not make the act an unfair labor practice.
• Aspects of ULP.
Under Article 258 [247], a ULP has two (2) aspects, namely:
1. Civil aspect; and
2. Criminal aspect.
The civil aspect of an unfair labor practice includes claims for actual, moral and exemplary
damages, attorney’s fees 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 hand, can only be asserted before
the regular court.
b. By Employers
(b.1.) Interference with, restraint or coercion of employees in the exercise of their right to self-
organization
• Test of interference, restraint or coercion
The terms “interfere,” “restrain” and “coerce” are very broad that any act of management that
may reasonably tend to 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 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 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 and collective bargaining.

• Totality of conduct doctrine

In ascertaining whether the act of the employer constitutes interference with, restraint or coercion
of the employees’ 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 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,
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 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.

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 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 status
of the union. The ill-timed letters of resignation from the union members indicate that the employer
had interfered with the right of its employees to self-organization. Because of such act, the
employer was declared guilty of ULP.

• 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-organization constitutes an unfair labor practice. This is the very core of ULP.

In Hacienda Fatima v. National Federation of Sugarcane Workers – Food and General Trade, the
Supreme Court upheld the factual findings of the NLRC and the Court of Appeals that from the
employer’s refusal to bargain to its acts of economic inducements resulting in the promotion of
those who withdrew from the union, the use of armed guards to prevent the organizers to come in,
and the dismissal of union 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 self-
organization. Hence, the employer was held guilty of unfair labor practice.

It was likewise held in Insular Life Assurance Co., Ltd., Employees Association-NATU v. Insular Life
Assurance Co., Ltd., that it is an act of interference for the employer to send individual letters to all
employees notifying them to return to work at a time specified therein, otherwise new employees
would be engaged to perform their jobs. 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 because they tend to
undermine the concerted activity of the employees, an activity to which they are entitled free
from the employer's molestation.

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.

(b.2.) 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 organization, or attempt to organize one during their period of employment or that they
shall withdraw therefrom in case they are already members of a labor organization.
• Common Stipulations in Yellow Dog Contract.
A typical yellow dog contract embodies the following stipulations:
(1) A representation by the employee that he is not a member of a labor organization;
(2) A promise by the employee that he will not join a union; and
(3) A promise by the employee that upon joining a labor organization, he will quit his
employment.
The act of the employer in imposing such a condition constitutes unfair labor practice under Article
248(b) of the Labor Code. Such stipulation in the contract is null and void.
• 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 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 their "masters" to get a job.
(b.3.) Contracting out of services and functions
• 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 service is clearly an exercise by the employer of its
business judgment and its inherent management rights and prerogatives. Hiring of workers is within
the employer’s inherent freedom to regulate its business and is a valid exercise of its management
prerogative subject only to special laws and agreements on the matter and the fair standards of
justice. The employer cannot be denied the faculty of promoting efficiency and attaining
economy by a study of what 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.

• 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 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.
(b.4.) Company Union
• 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 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.
(b.5.) Discrimination
• Coverage of prohibition.
What is prohibited as unfair labor practice under the law is to discriminate in regard to wages,
hours of work, and other terms and conditions of employment in order to encourage or discourage
membership in any labor organization.

• Materiality of purpose of alleged discriminatory act.

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.

In Manila Railroad Co. v. Kapisanan ng mga Manggagawa sa Manila Railroad Co., the non-
regularization of long-time employees because of their affiliation with the union while new
employees were immediately regularized was declared an act of discrimination.
(b.6.) Filing of charges or giving of testimony
• Concept.
Under paragraph [f] of Article 259 [248] of the Labor Code, it is an unfair labor practice for an
employer to dismiss, discharge or otherwise prejudice or discriminate against an employee for
having given or being about to give testimony under the Labor Code.

• 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 exercise by the employees of their right to self-organization and collective
bargaining.

In Itogon-Suyoc Mines, Inc. v. Baldo, it was declared that an unfair labor practice was committed
by the employer 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 said request.

(b.7.) CBA-related ULPs

• Three (3) CBA-related ULPs.
Article 259 [248] enunciates three (3) CBA-related unfair labor practices, to wit:
1. To violate the duty to bargain collectively as prescribed in the Labor Code.
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 in paying negotiation fees or attorney’s fees to the union or its officers or
agents as part of the settlement of any issue in collective bargaining or any other
dispute.
3. To violate a collective bargaining agreement.
- Article 259 (i) [248(i)] of the Labor Code should be read in relation to Article 261 thereof.
Under Article 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.
 - 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 forthcoming to the employees, is an unfair labor
practice.
- 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.

c. By Organizers
(c.1.) Restraint and coercion of employees in the exercise of their right to self-organization
• 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 restrain or coerce employees in the exercise of their right to self-
organization. Compared to similar provision 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 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 interference.
(c.2.) Discrimination
• 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.
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.3.) Duty of Union to Bargain Collectively
• 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 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 employment relationship.
(c.4.) Featherbedding Doctrine
• Article 260(d) [249 (d)] is the “featherbedding” provision in the Labor Code. Patterned after a
similar provision in 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 evidently senseless, wasteful, inefficient
and without legitimate justifications since it is meant purely for the purpose of employing
additional workers than are necessary.
• This is resorted to by the union as a response to the laying-off of workers occasioned by their
obsolescence because of the introduction of machines, robots or new and innovative
technological changes and improvements in the workplace or as required by minimum health
and safety standards, among other reasons. Its purpose is to unduly secure the jobs of the
workers.
• Because of these lay-offs, the unions are constrained to resort to some featherbedding
practices. Accordingly, they usually request that the technological changes be introduced
gradually, or not at all, or that a minimum number of personnel be retained despite such
changes. They resort to some ways and methods of retaining workers even though there may
be little work left for them to do and perform. It therefore unnecessarily maintains or increases
the number of employees used or the amount of time consumed to work on a specific job,
work or undertaking. By so increasing the demand for workers, featherbedding obviously keeps
wages higher.
• REQUISITES
The requisites for featherbedding are as follows:
1. The labor organization, its officers, agents or representatives have caused or
attempted to cause an employer either:
a. to pay or agree to pay any money, including the demand for fee for union
negotiations; or
b. to deliver or agree to deliver any things of value;
2. Such demand for payment of money or delivery of things of value is in the nature of
an exaction; and
3. The services contemplated in exchange for the exaction are not actually performed
or will not be performed.
 (c.6.) Demand or acceptance of negotiation fees or attorney’s fees
• Under Article 260(e) [249 (e)], it is ULP for a labor organization, its officers, agents or
representatives to ask for or accept negotiation fees or attorney’s fees from employers as part
of the settlement of any issue in collective bargaining or any other dispute.
(c.7.) Violation of the CBA
• Under Article 260(f) [249 (f)], it is ULP for a labor organization, its officers, agents or
representatives to violate a CBA.
• This is the counterpart provision of Article 259(i) [248 (i)] regarding the employer’s act of
violating a CBA. But 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 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
• Persons liable.
• Article 260 [249] is explicit in its provision on who should be held liable for ULPs
committed by labor 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.

6. Peaceful Concerted Activities

a. Strikes (Valid v. Illegal) (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.
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
2. Unfair labor practice (Political Strike).
A strike not based on any of these two grounds is illegal.
• 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.
• Inter-union or intra-union dispute is not a valid ground.
• Violation of labor standards is not a valid ground.
• Wage distortion is not a valid ground.
(a.1.) Mandatory procedural requirements
• A strike, in order to be valid and legal, must conform to the following procedural requisites:
1st requisite - It must be based on a valid and factual ground;
2nd requisite - A notice of strike 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 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;
4th requisite - A strike vote must be taken where a majority of the members of the
union obtained by secret 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 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 practices of the employer, or 30 days, in case of collective bargaining
deadlock, should be fully observed; and
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.
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.
(a.2.) Legal strike vs. illegal strike
• Valid/Legal strike vs. Illegal strike
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 means not sanctioned by law.
• When is a strike considered illegal?
A strike is illegal if it is declared and staged:
1. Without complying with the procedural but mandatory requisites (See 7 requisites above).
 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:
a. Inter-union or intra-union disputes.
b. Simple violation of CBA in contrast to gross violation thereof which is deemed ULP.
c. Violation of labor standards.
d. Legislated wage orders (wage distortion).
4. Without first having bargained collectively.
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.
7. While conciliation and mediation proceeding is on-going at the NCMB.
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.
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.
14. By a minority union.
15. By an illegitimate union.
16. By dismissed employees.
17. In violation of the company code of conduct which prohibits “inciting or participating in
riots, disorders, alleged strikes or concerted actions detrimental to [Toyota’s] interest,” The
penalty for which is dismissal.
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
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 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.

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 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.
(a.3.) Prohibited acts during strike
• Participation in the commission of illegal acts during a strike
o Legality or illegality of strike, immaterial.
§ 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.
o Meaning of “illegal acts.”
§ 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:
• (1) Violation of Article 264(e) of the Labor Code which provides that “[n]o person
engaged in picketing shall commit any act of violence, coercion or intimidation or
obstruct the free ingress to or egress from the employer’s premises for lawful purposes,
or obstruct public thoroughfares.”
• (2) Commission of crimes and other unlawful acts in carrying out the strike.
• (3) Violation of any order, prohibition, or injunction issued by the DOLE Secretary or
NLRC in connection with the assumption of jurisdiction or certification order under
Article 263(g) of the Labor Code.
This enumeration is not exclusive as jurisprudence abounds where the term “illegal acts”
has been interpreted and construed to cover other breaches of existing laws.
o Liability for illegal acts should be determined on an individual basis. For this purpose, the
individual identity of the union members who participated in the commission of illegal acts
may be proved thru affidavits and photographs. Simply referring to them as “strikers,” or
“complainants in this case” is not enough to justify their dismissal.
o Some principles on commission of illegal acts in the course of the strike.
§ Only members who are identified as having participated in the commission of illegal
acts are liable. Those who did not participate should not be blamed therefor
§ To effectively hold ordinary union members liable, those who participated in the
commission of illegal acts must not only be identified but the specific illegal acts they
each committed should be described with particularity.
 § If violence was committed by both employer and employees, the same cannot be
cited as a ground to declare the strike illegal.
(a.4.) Liability of union officers and members for illegal strike and illegal acts during strike
• Liability for declaration of illegality of strike and liability of ordinary workers for commission of
illegal acts in the course of strike
o Participation in lawful strike.
§ An employee who participates in a lawful strike is not deemed to have abandoned his
employment. Such participation should not constitute sufficient ground for the
termination of his employment even if a replacement has already been hired by the
employer during such lawful strike.
o Participation in illegal strike.
§ Distinction in the liability between union officers and ordinary union members.
a. Union officers.
The mere declaration of illegality of the strike will result in the termination of all union officers
who knowingly participated in the illegal strike. Unlike ordinary members, it is not required, for
purposes of termination, that the officers should commit an illegal act during the strike.

However, absent any showing that the employees are union officers, they cannot be
dismissed based solely on the illegality of the strike.

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:
(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; 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.
Ordinary union members.
The mere finding or declaration of illegality of a strike will not result in termination of ordinary
union members. For an ordinary union member to suffer termination, it must be shown by
clear evidence that he has committed illegal acts during the strike.
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 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.

b. Picketing
• “Picketing” is the act of workers in peacefully marching to and from before an establishment
involved in a labor dispute generally accompanied by the carrying and display of signs,
placards and banners intended to inform the public about the dispute.
• 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:
§ 1. The picket should be peacefully carried out;
§ 2. There should be no act of violence, coercion or intimidation attendant thereto;
§ 3. The ingress to (entrance) or egress from (exit) the company premises should not be
obstructed; and
§ 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 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 4, Article III (Bill of Rights) thereof.
• Effect of the use of foul language during the conduct of the picket.
o In the event the picketers employ discourteous and impolite language in their picket, such
may not result in, or give rise to, libel or action for damages.
• 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 labor dispute. The work stoppage may be accompanied by picketing by the
striking employees outside of the company compound.
(b) While a strike focuses on stoppage of work, picketing focuses on publicizing the labor
dispute and its incidents to inform the public of what is happening in the company 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 activity separate and different from the actual
stoppage of work.
• Phimco Industries, Inc. v. Phimco Industries Labor Association (PILA). - While the right of
employees to publicize their dispute falls within the protection of freedom of expression and
the right to peaceably assemble to air grievances, these rights 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 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.
• When picket considered a strike.
o In distinguishing between a picket and a strike, the totality of the circumstances obtaining in
a case should be taken into account.
o Santa Rosa Coca-Cola Plant Employees Union v. Coca-Cola Bottlers Phils., Inc. - Petitioners
contend that what they conducted was a mere picketing and not a strike. In disagreeing to
this contention, the High Court emphasized that it is not an issue in this case that there was a
labor dispute between the 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 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, opted not to report for work on said date, and gathered in front of the
company premises to hold a mass protest action. Petitioners deliberately absented
themselves and instead wore red ribbons and carried placards with slogans such as: “YES
KAMI SA STRIKE,” “PROTESTA KAMI,” “SAHOD, KARAPATAN NG MANGGAGAWA IPAGLABAN,”
“CBA-’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
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 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 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 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:
(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.” 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 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
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.”
(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 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 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.

c. Lockouts (committed by employer)

• “Lockout” means the temporary refusal by an employer to furnish work as a result of an

industrial or labor dispute. It consists of the following:
1. Shutdowns;
2. Mass retrenchment and dismissals initiated by the employer.
3. The employer’s act of excluding employees who are union members.
 Grounds for lockout
• The law recognizes only 2 grounds in support of a valid lockout (same as strike), viz.:
1. Collective bargaining deadlock; and/or
2. Unfair labor practice.
Mandatory procedural requirement
• Substantially similar requisites as in strike.
With a slight, insignificant variation, the procedural but mandatory requisites for a valid strike
discussed above are substantially similar to those applicable for valid lockout. For purposes of ease
and clarity, the same are presented as follows:
• 1st requisite - It must be based on a valid and factual ground;
• 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 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;
• 4th requisite - A lockout vote must be taken where a majority of the members of the Board of
Directors of the corporation or association or of the partners in a partnership obtained by
secret ballot in a meeting called for the purpose, must approve it;
• 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;
• 6th requisite - The cooling-off period of 15 days, in case of unfair labor practices of the labor
organization, 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 to the NCMB-DOLE should also be fully observed in all cases.
d. Assumption of Jurisdiction by the DOLE Secretary

• The DOLE Secretary is granted under Article 263(g) of the Labor Code, the extraordinary police
power of 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 the labor dispute to the NLRC for compulsory
arbitration.
• When DOLE Secretary may assume or certify a labor dispute.
• 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:
1. He may assume jurisdiction over the labor dispute and decide it himself; or
2. He may certify it to the NLRC for compulsory arbitration, in which case, it will be the
NLRC which shall hear and decide it.
• 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.
Industry indispensable to national interest
• What constitutes a national interest case?
• 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 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.
• 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:
“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:
a. Hospital sector;
b. Electric power industry;
c. Water supply services, to exclude small water supply services such
as 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).”
 oObviously, the above enumerated industries are not exclusive as other industries may be
considered indispensable to the national interest based on the appreciation and discretion
of the DOLE Secretary or as may be recommended by TIPC.
• 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.
o In case a strike or lockout is staged, it shall be the duty of the striking union or locking-out
employer to provide and maintain an effective skeletal workforce of medical and other
health personnel whose movement and services shall be unhampered and unrestricted as
are necessary to insure the proper and adequate protection of the life and health of its
patients, most especially emergency cases, for the duration of 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 arbitration.
Effects of assumption of jurisdiction
• Some principles on assumption/certification power of the DOLE Secretary.
o Prior notice and hearing are not required in the issuance of the assumption or certification
order.
o The DOLE Secretary may seek the assistance of law enforcement agencies like the
Philippine National Police to ensure compliance with the provision thereof as well as with
such orders as he may issue to enforce the same.
• Return-to-work order
o It is a STATUTORY PART AND PARCEL of assumption/certification order even if not expressly
stated therein.
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 automatically prohibiting its continuation. The mere issuance
of an assumption or certification order automatically carries with it a return-to-work order,
even if the directive to return to work is not expressly stated therein. It is thus not necessary
for the DOLE Secretary to issue another order directing the strikers to return to work.
o It is error therefore for striking workers to continue with their strike alleging absence of a
return-to-work 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.
o Nature of return-to-work order
§ Return-to-work order is compulsory and immediately executory in character. It should be
strictly complied with by the parties even during the pendency of any petition
questioning its validity in order to maintain the status quo while the determination is
being made. Filing of a motion for reconsideration does not affect the enforcement of a
return-to-work order which is immediately executory.
§ 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 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 controversy.
• To implement the return-to-work order, the norm is actual reinstatement. However,
payroll reinstatement in lieu of actual reinstatement may properly be resorted to
when special circumstances exist that render actual reinstatement impracticable or
otherwise not conducive to attaining the purposes of the law.

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 of the first semester of the academic year. The Supreme
Court affirmed the validity of the payroll reinstatement order of the NLRC and ruled that the
NLRC did not commit grave abuse of discretion in providing for the alternative remedy of
payroll reinstatement. It observed that the NLRC was only trying its best to work out a
satisfactory ad hoc solution to a festering and serious problem.

• Nature of assumption order or certification order

o A police power measure
§ The power to issue assumption or certification orders is an extraordinary authority
granted to the President and to his alter ego, the DOLE Secretary, the exercise of which
should be strictly limited to national interest cases. It is in the nature of a police power
measure. This is done for the promotion of the common good considering that a
prolonged strike or lockout can be inimical to the national economy. 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
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.
 § The following are the justifications:
5. 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 officers and members, as a result, are deemed to have
lost their employment status for having knowingly participated in an illegal strike.
6. From the moment a worker defies a return-to-work order, he is deemed to have
abandoned his job.
7. 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.
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.
• Period of defiance of the return-to-work order, not material.
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:
§ a. University of San Agustin Employees’ Union-FFW v. The CA. - The period of defiance
was less 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.
• Some principles on defiance of the Assumption/Certification order.
o The assumption/certification order may be served at any time of the day or night.
o No practice of giving 24 hours to strikers within which to return to work. There is no law or
jurisprudence recognizing this practice.
o The defiant strikers could be validly replaced.
o The refusal to acknowledge receipt of the assumption/certification orders and other
processes is an apparent attempt to frustrate the ends of justice, hence, invalid. The union
cannot be allowed to thwart the efficacy of the said orders issued in the national interest
through the simple expediency of refusing to acknowledge receipt thereof.

E. TELECOMMUTING ACT (RA11165)

1. Definition
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.
2. Telecommuting Program
An employer in private sector may offer a telecommuting program to its employees, as long as
the following conditions are followed:
(a) Terms and conditions of the program are mutually agreed upon by employers and
employees
(b) That such terms and conditions shall not be less than the minimum labor standards set by law,
and shall include compensable work hours, minimum number of work hours, overtime, rest
days, and entitlement to leave benefits.
(c) The employer shall provide the telecommuting employee with relevant written information in
order to adequately apprise the individual of the terms and conditions of the telecommuting
program, and the responsibilities of employee.

3. Fair Treatment
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. All telecommuting employee shall:
(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.
(b) Have the right to rest periods, regular holidays, and special nonworking days.
(c) Have the same or equivalent workload and performance standards as those of comparable
worker at the employer's premises.
(d) Have the same access to training and career development opportunities as those of
comparable workers at 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 conditions of telecommuting.
(f) Have the same collectible rights as the workers at the employer's premises and shall not be
barred from communicating with workers' representatives.

------------oOo------------
 MAJOR TOPIC 4
POST EMPLOYMENT

A. EMPLOYER-EMPLOYEE RELATIONSHIP
1. Tests to Determine Employer-Employee Relationship

FOUR-FOLD TEST

• What is the 4-fold test of existence of employer-employee relationship?

1. Selection and engagement of the employee;
2. Payment of wages or salaries;
3. Exercise of the power of dismissal; or
4. Exercise of the power to control the employee’s conduct.
These tests, however, are not fool-proof as they admit of exceptions.
• 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 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:
§ Situation 1: If the employer controls the means and methods of performing the job, work
or service, 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 in the results thereof, then the arrangement is called “independent job
contracting” or “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.
TWO-TIERED TEST
• What is the 2-tiered test of employment relationship?
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
(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 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.”
o Under the economic reality test, the proper standard of economic dependence is whether
the worker is 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, the question to ask is - among the parties alleged to
be the employer, to whom is the individual economically dependent?
o Following the broader economic reality test, the Supreme Court found petitioner in Orozco v.
The Fifth Division of the Hon. CA, who is a columnist in the Philippine Daily Inquirer (PDI), not an
employee of PDI but an independent contractor. Thus:
“Petitioner’s main occupation is not as a columnist for respondent but as a women’s
rights advocate working in various women’s organizations. Likewise, she herself admits
that she also contributes articles to other publications. Thus, it cannot be said that
petitioner was dependent on respondent PDI for her continued employment in
respondent’s line of business.
“The inevitable conclusion is that petitioner was not respondent PDI’s employee but an
independent contractor, engaged to do independent work.”
• Is it necessary to have a written contract of employment in order to establish employer-
employee relationship?
o No. It may be an oral or written contract. A written contract is not necessary for
the creation and validity of the relationship.
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.
 2. Kinds of Employment
a. Regular
• How does one become a regular employee?
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.
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.
3. By probationary employment. - The employment is considered regular when the employee
is allowed to work after a probationary period.
• 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 issue.

b. Casual
• What is the most important distinguishing feature of casual employment?
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 engagement.
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 brand name “Yakult.” Petitioners were hired to cut cogon grass and
weeds at the back of the factory building used by private respondents. They were not
required to work on fixed schedule and they worked on any day of the week on their
own discretion and convenience. They were held to be casual employees because
cutting cogon grass and weeds is but incidental to the principal business of the
company.
• When does a casual employee become regular?
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.

c. Probationary
• Is the period of 6 months in the law on probationary employment (Article 296 [281], LC) the
minimum or maximum period?
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 Buiser v. Leogardo where the probationary period of 18 months
was considered reasonable. In other words, probationary period may be for a day, a week, a
month or several months, depending on the reasonable discretion of management.
• 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 date of the 6th month following.”
• May probationary period be extended?
Yes, but only upon the mutual agreement in writing by the employer and the probationary
employee.
• What is the effect of allowing a probationary employee to work beyond the probationary
period?
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 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?
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 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
2. For authorized cause; or
 3. When the probationary employee fails to qualify as a regular employee in accordance with
reasonable standards made known by the employer to the employee at the start of the
employment.
• Is procedural due process required in termination of probationary employment?
Yes, but only in the case of Numbers 1 and 2 above.

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 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 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 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.

• 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 regular employee by that time.

d. Project
• 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 specified at the time the employees were engaged for that project.

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?

Either one or more of the following circumstances, among others, may be considered as
indicator/s that an employee is a project employee:
1. The duration of the specific/identified undertaking for which the worker is engaged is
reasonably determinable.
2. Such duration, as well as the specific work/service to be performed, are defined in an
employment agreement and is made clear to the employee at the time of hiring.
3. The work/service performed by the employee is in connection with the particular project or
undertaking for which he is engaged.
4. The employee, while not employed and awaiting engagement, is free to offer his services to
any other employer.
5. A report of the termination of employment in the particular project/undertaking is submitted
to the DOLE Regional Office having jurisdiction over the workplace, within thirty (30) days
following the date of his separation from work.
6. An undertaking in the employment contract by the employer to pay completion bonus to
the project employee as practiced by most construction companies.
• Is length of service material in determining validity of project employment?
No. Length of service is not a controlling determinant of employment tenure.

• What are some principles on project employment?

1. Project employees should be informed of their status as such at inception of the
employment relationship.
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 indispensable requirement.
3. Intervals in employment contracts indicate project employment.
4. Continuous, as opposed to intermittent, rehiring shows that employee is regular.
5. “Project-to-project” basis of employment is valid.
• On termination of project employment.
1. Project employees enjoy security of tenure only during the term of their project employment.
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 no longer be terminated on the
basis of the completion of the project or any phase thereof to which they were deployed.
e. Seasonal
• 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
2. They must have also been employed for more than one (1) season.
• Can a regular seasonal worker file an illegal dismissal case in the event he is not hired for the
next season?
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.

f. Fixed-term
• What are the requisites in order for fixed-term employment to be valid?
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 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 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 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 services necessary or desirable in the operation of petitioner’s business for the
duration of the one-month dry-run operation period, did not in any way impair the validity of their
contracts of employment which specifically stipulated that their employment was only for one (1)
month.

• When does a fixed-term employee become regular?

1. When he is allowed to work beyond the agreed fixed term.
2. When there are successive renewals of fixed-period contracts.

• What is the 555 Doctrine?

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.

g. Floating Status
• Lack of applicable provision in the Labor Code
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 Court, in Exocet v. Serrano, recognized the fact that there is
similarly no provision in the Labor Code which treats of a temporary retrenchment or lay-off.
Neither is there any provision which provides 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 states:
“Article 301 [286]. When Employment Not Deemed Terminated. – The bona-
fide suspension of the operation of a business or undertaking for a period not
exceeding six (6) months, or the fulfillment by the employee of a military or civic duty
shall not terminate employment. 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 operations of
his employer or from his relief from the military or civic duty.”
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 can be used as a consonant basis in determining the
reasonableness of the length of time when an employee could be deprived of work under this
doctrine.
• “Floating” status doctrine as applied to security guards.
Applying Article 301 [286] by analogy, the Supreme Court has consistently recognized that security
guards may be temporarily sidelined by their security agency as their assignments primarily
depend on the contracts entered into by the latter with third parties. This is called the “floating
status” doctrine which is based on and justified under the said 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 security agency parlance, being placed “off-detail” or on “floating” status means “waiting
to be posted.”
• Instances which justify application of doctrine.
“Floating status” takes place under any of the following circumstances:
(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
(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.
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 need to justify the same. The reason for this is the lack of any
employment relationship between the security guards and the client.
Also, under No. 2 above, a relief and transfer 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 the transfer illegal.
• Applicability to other employees.
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.
Thus, it may also be applied to employees of legitimate contractors or subcontractors under a
valid independent 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. 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.
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 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 company and their reassignment to other clients. The 30-day notice rule under
Article 298 [283] does not therefore apply to this case.
This was likewise applied to the case of:
(1) A bus driver in Valdez v. NLRC who was placed on floating status after the air-conditioning
unit of the bus he was driving suffered a mechanical breakdown; and
(2) A Property Manager in Nippon Housing Phil., Inc. v. Leynes, pending her assignment to
another project for the same position.
• 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.
o As a general rule, “floating status” beyond 6 months amounts to illegal/constructive
dismissal. This is so because “floating status” is not equivalent to dismissal so long as such
status does not continue beyond a reasonable time which means six (6) months. After 6
months, the employee should be recalled for work, or for a new assignment; otherwise, he
is deemed terminated.
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 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 his employer fail to assign him to any work or
job within said period. In the case of preventive suspension, the employee is out of work
because he has committed a wrongful act and his continued presence in the company
premises poses a serious and imminent threat to the life or property of the employer or of
his co-workers. Without this kind of threat, preventive suspension is not proper. Further, the
period of preventive suspension under the said provisions of the Implementing Rules should
not exceed thirty (30) days.
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 after the security guard was placed on floating status
was declared as having been prematurely filed.
o However, the filing of a complaint for constructive dismissal prior to the lapse of the 6-
month period of “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.
o No procedural due process is required before an employee is placed under “floating
status.” The reason is that there is no termination of employment to speak of at that point.

3. Legitimate Subcontracting v. Labor-Only Contracting

a. Elements
• What are the elements of legitimate job contracting?
(NOTE: The following THREE (3) words are very important: MANNER & METHOD and RESULT in
determining the elements of legitimate job contracting arrangement).
(d) The contractor is engaged in a distinct and independent business and undertakes to
perform the job or work on its own responsibility, according to its own MANNER AND
METHOD;
(e) 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;
(f) 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 thereto; and
(g) The Service Agreement ensures compliance with all the rights and benefits for all the
employees of the contractor under labor laws.
Absence of any of the foregoing requisites makes it a labor-only contracting arrangement.
Therefore:
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 supplied by the second party to perform the job
or work and the second party shall not be considered as a legitimate “contractor” but a
“labor-only contractor.”
o Contrarily, if the first party has NO control over the manner and method of performing the
job or work as such control thereover is reposed on the second party, and the first party’s
interest pertains only to the 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.
NOTE: “Substantial capital” and “investment in tools, etc.” are two separate requirements.
“Substantial capital” and “investment in tools, equipment, implements, machineries and work
premises” should be treated as two (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 valid.
• May individuals engage in legitimate job contracting?
Yes. Legitimate job contracting may not only be engaged by corporations, partnerships or single
proprietorships. Individuals may become legitimate job contractors themselves for as long as they
have SPECIAL SKILLS, TALENTS or EXPERTISE which are considered equivalent of the requirement
regarding “INVESTMENT IN TOOLS.”

• Are individuals engaged as legitimate job contractors required to fulfill the requisites of
legitimate job 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, TALENT or EXPERTISE.

• What are examples of individuals as independent contractors?

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 employee but an independent contractor of the newspaper publishing the column.
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 contractors.
5. Escasinas v. Shangri-la’s Mactan Island Resort - A doctor may be engaged as an independent
contractor.

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

• What are the elements of labor-only contracting?

(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 business operation of the principal;
- OR-
(b) The contractor does not exercise the right to CONTROL over the performance of the work of
the employee.
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 made with the DOLE.
• What are the EFFECTS of labor-only contracting?
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.
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.
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?
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:
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.
2. In the former, the principal is considered only an “indirect employer”; while in the latter, the
principal is considered the “direct employer” of the employees supplied by the labor-only
contractor.
3. In the former, the solidary obligation of the principal and the legitimate job contractor is only
for a limited 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 in the same manner
and extent that the principal is liable to employees directly hired by him/her.
b. Trilateral relationship
• What is meant by trilateral relationship?
As distinguished from employment relationship which is “bilateral” in nature, involving as it does
only two (2) parties, namely: (1) the employer, and (2) the employee, in legitimate job contracting,
it is “trilateral” in character, there being three (3) parties involved, to wit:
1. The principal who farms out a job, work or service to a contractor;
2. The contractor who has the capacity to independently undertake the performance of the
job, work or service; and
3. The contractor’s workers engaged by the contractor and farmed out to the principal to
accomplish the job, work or service.
• What are the contracts involved in this trilateral relationship?
Only two (2) contracts are involved, namely:
1) Service Agreement between the principal and the contractor wherein the obligation arising
therefrom is civil in nature and thus cognizable by the regular courts.
2) Employment contract between the contractor and its workers supplied to the principal.
• Is there any employment relationship and/or contractual relationship between the principal
and the contractor’s workers farmed out to the principal?
None. There is no employment relationship nor any form of contractual relationship of whatsoever
nature between the principal and the workers supplied by the contractor. Hence, the principal
can ask the contractor to remove any of the latter’s employees assigned or farmed out to it
anytime without need to observe due process.

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 of any provision of this Code. For purposes of determining the
extent of their civil liability, they shall be considered as direct employers.
• 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 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.

B. TERMINATION OF EMPLOYMENT BY EMPLOYER

• What is meant by TWO-FOLD DUE PROCESS requirement?

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

1. Just Causes
The just causes in the Labor Code are found in the following provisions thereof:
(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;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or
duly authorized representative;
(d) Commission of a crime or offense by the employee against the person of his employer
or any immediate member of his family or his duly authorized representatives; and
(e) Other causes analogous to the foregoing.

(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 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 employment status.

(3) Article 278(g) [263(g)] - (National Interest Cases) where strikers who violate orders,
prohibitions and/or injunctions as are issued by the DOLE Secretary or the NLRC, may be
imposed immediate disciplinary action, 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 may result in termination of employment. Under this clause, the
bargaining union can demand from the employer the dismissal of an employee who
commits a breach of union security arrangement, such as failure to join the union or to
maintain his membership in good standing therein. The same union can also demand the
dismissal of a member who commits an act of disloyalty against it, such as when the
member organizes a rival union.
• Is dismissal based on Company Code of Discipline or Company Rules and Regulations illegal?
No. In Sampaguita Auto Transport Corporation v. NLRC, the Supreme Court pronounced that the
Court of Appeals erred in ruling that the dismissal of private respondent, a bus driver of petitioner,
was illegal because the “grounds upon which petitioners based respondent’s termination from
employment, viz.: ‘hindi lahat ng schedule nailalabas,’ [‘]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 Labor Code as just causes for termination of employment.” The
irregularities or infractions committed by private respondent in connection with his work as a bus
driver constitute serious misconduct or, at the very least, conduct analogous to serious
misconduct, under the above-cited Article 297 [282] of the Labor Code. The requirement in the
 company rules that: ‘3. to obey traffic rules and regulations as well as the company policies. 4. to
ensure the safety of the riding public as well as the other vehicles and motorist (sic)’ is so
fundamental and so universal that any bus driver is expected to satisfy the requirement whether or
not he has been so informed.
(1) SERIOUS MISCONDUCT
• Requisites.
For misconduct or improper behavior to be a just cause for dismissal, the following requisites
must concur:
1. It must be serious; and
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.
All the above three (3) requisites must concur.
• Some principles on serious misconduct
o Serious misconduct implies that it must be of such grave and aggravated character
and not merely trivial or unimportant.
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.
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.
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 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.
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.
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.
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 misconduct.
o Sexual harassment is a just ground to dismiss.
o Sleeping while on duty is a ground for termination.
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 Act of falsification is a valid ground to terminate employment.
o Punching-in of time cards of other employees is a just cause for termination.

(2) INSUBORDINATION OR WILLFUL DISOBEDIENCE OF LAWFUL ORDERS

• Requisites
One of the fundamental duties of an employee is to obey all reasonable rules, orders and
instructions of the employer. In order to validly invoke this 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
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.
• Some principles on insubordination.
o Making false allegations in complaint does not constitute insubordination.
o Failure to answer memo to explain constitutes willful disobedience.
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
insubordination.
o Refusal to render overtime to meet production deadline constitutes insubordination.
o Refusal to comply with a lawful transfer constitutes insubordination.
 (3) GROSS AND HABITUAL NEGLECT OF DUTIES
• Requisites.
The following are the requisites:
(1) There must be negligence which is gross and/or habitual in character; and
(2) It must be work-related as would make him unfit to work for his employer.
• Some principles on gross and habitual neglect of duties.
o Simple negligence is not sufficient to terminate employment.
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.
o As a general rule, negligence must be both gross and habitual to be a valid ground to
dismiss.
o Habituality may be disregarded if negligence is gross or the damage or loss is substantial.
“Habitual negligence” implies repeated failure to perform one’s duties for a period of time,
depending upon the circumstances.
o Actual damage, loss or injury is not an essential requisite.
o Gross negligence may result to loss of trust and confidence.
o Absences, if authorized, cannot be cited as a ground to terminate employment.
o Tardiness or absenteeism, if not habitual, cannot be cited as a ground to terminate
employment.
o Tardiness or absenteeism, if habitual, may be cited as a ground to terminate employment.
o Tardiness or absenteeism, if habitual, may be tantamount to serious misconduct.
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 dismissal only if they amount to gross and habitual neglect of duties.

(4) ABANDONMENT OF WORK

• Concept.
Abandonment is not provided for in the Labor Code but it is jurisprudentially considered a form of
neglect of duty; 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:
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 relationship manifested by some overt act.
• Some principles on abandonment.
o Mere absence is not enough to constitute abandonment.
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.:
a. First notice directing the employee to explain why he should not be declared as having
abandoned his job; and
b. Second notice to inform him of the employer’s decision to dismiss him on the ground of
abandonment.
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.
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 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 When what is prayed for in the complaint is separation pay and not reinstatement, the filing
of complaint does not negate abandonment.
o 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.
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 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 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 work.
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 purpose of looking for a job elsewhere is deemed to have abandoned his
work.
o Imprisonment or detention by military does not constitute abandonment.
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.

(5) FRAUD
• Requisites.
The following are the requisites of this ground:
1. There must be an act, omission, or concealment;
2. The act, omission or concealment involves a breach of legal duty, trust, or confidence justly
reposed;
3. It must be committed against the employer or his/her representative; and
4. It must be in connection with the employees' work.
• Some principles on fraud.
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 from the dishonesty of the dismissed employee because of its timely
discovery does not excuse the latter from any culpability.
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.

(6) WILLFUL BREACH OF TRUST AND CONFIDENCE

• Requisites.
For the doctrine of loss of trust and confidence to apply, the following requisites must be satisfied:
(1) The employee holds a position of trust and confidence;
(2) There exists an act justifying the loss of trust and confidence, which means that the act that
betrays the employer’s trust must be real, i.e., founded on clearly established facts;
(3) The employee’s breach of the trust must be willful, i.e., it was done intentionally, knowingly
and purposely, without justifiable excuse; and
(4) The act must be in relation to his work which would render him unfit to perform it.

• 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 application of the doctrine:
(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;
(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 which makes termination based on loss of trust and confidence prone to
abuse.
• Some principles on the doctrine of loss of trust and confidence.
o Employee’s position must be reposed with trust and confidence.
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.
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 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 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 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
employer’s] money or property.”
o Rules on termination of managerial and supervisory employees different from those
applicable to 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 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 ground to believe, if not to entertain the moral conviction, that the concerned
employee is responsible for 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 Command responsibility of managerial employees is a ground to dismiss.
o Confidential employee may be dismissed for loss of trust and confidence.
o Grant of promotions and bonuses negates loss of trust and confidence.
o Long years of service, absence of derogatory record and small amount involved are
deemed inconsequential insofar as loss of trust and confidence is concerned.
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.
o Full restitution does not absolve employee of offense which resulted in the loss of trust and
confidence.

(7) COMMISSION OF CRIME OR OFFENSE

• Requisites.
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:
(a) His employer;
(b) Any immediate member of his employer’s family; or
(c) His employer’s duly authorized representative.
• Some principles on the commission of crime or offense.
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.

(8) OTHER ANALOGOUS CAUSES

• Analogous causes under established jurisprudence
The following may be cited as analogous causes:
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.
4) Failure to attain work quota.
5) Failure to comply with weight standards of employer.
6) “Attitude problem” is analogous to loss of trust and confidence.

(9) TERMINATION DUE TO ENFORCEMENT OF UNION SECURITY CLAUSE

• 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 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.
• What are the effects of application of this clause?
The following are the effects:
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.
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. 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 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 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.

• 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 the union security doctrine.
• Can religious objectors be denied membership in a union or be disallowed from participating
in a certification election?
No. Religious objectors, if they choose to, cannot be denied membership in a union or prevented
from participating in a certification election.
• What are the requisites in order to validly terminate employees based on this clause?
(1) The union security clause is applicable;
(2) The bargaining union is requesting for the termination of employment due to enforcement
of the union 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,).
All the foregoing requisites should be complied with to justify the termination of employment.
• Is the employer required to observe due process before terminating an employee who is
recommended by the SEBA for termination due to violation of the union security clause?
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.
• Can the employer adopt the due process afforded by the SEBA to the employee in expelling
him from his membership in the SEBA?
No. The employer cannot adopt the due process afforded by the SEBA as its own due process for
the simple 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 employment.

(10) OTHER PRINCIPLES `ON TERMINATION Per Department Order No. 147-15, Series Of 2015
• An employee found positive for use of dangerous drugs shall be dealt with administratively
which shall be a ground for suspension or termination.
• An employee shall not be terminated from work based on actual, perceived or suspected HIV
status.
• 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 for as long as they are certified by the company's accredited health provider
as medically fit and shall be restored to work as soon as his/her illness is controlled.
• An employee may also be terminated based on the grounds provided for under the CBA.

2. Authorized Causes
• What are the 2 classes of authorized cause termination?
Under the Labor Code, authorized causes are classified into two (2) classes, namely:
 (1) Business-related causes. – Referring to the grounds specifically mentioned in Article 298
[283], to wit:
a. Installation of labor-saving device;
b. Redundancy;
c. Retrenchment;
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.
• What are the two (2) kinds of requisites in the case of business-related causes?
1. COMMON requisites applicable to all the authorized causes; and
2. UNIQUE requisites applicable to each of the authorized causes.
• 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:
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 to cost-cutting measures;
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;
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 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 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 instead of the one provided in Article 298 [283].
5. Fair and reasonable criteria in ascertaining what positions are to be affected by the
termination, such as, but not limited to: nature of work; status of employment (whether
casual, temporary or regular); experience; efficiency; seniority; dependability; adaptability;
flexibility; trainability; job performance; discipline; and attitude towards work. Failure to
follow fair and reasonable criteria in selecting who to terminate would render the
termination invalid.
NOTE: SENIORITY is not the principal nor the only criterion. The other criteria mentioned above
which are lifted from jurisprudence, are of equal importance.
• What are the UNIQUE REQUISITES applicable to each of the BUSINESS-RELATED causes under
Article 298 [283]?
In addition to the COMMON REQUISITES above, the following are the UNIQUE REQUISITES of each
of the authorized causes:
(1) INSTALLATION OF LABOR-SAVING DEVICE
• What are the additional requisites unique to this ground?
In addition to the five (5) common requisites above, the unique requisites are as follows:

1. There must be introduction of machinery, equipment or other devices; and

2. The purpose for such introduction must be valid such as to save on cost, enhance efficiency
and other justifiable economic reasons.

(2) REDUNDANCY
• What are the additional requisites unique to this ground?
The additional requisites are as follows:
 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 enterprise to operate in an economical and efficient manner; and
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 management of the restructuring.

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

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.

• What are some relevant principles on retrenchment?

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 employees until after his losses shall have materialized.
Otherwise, the law could be vulnerable to attack as undue taking of property for the
benefit of another.
o Best evidence of losses - financial statements audited by independent auditors (not by
internal 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 Mere affidavit on alleged losses is not sufficient.
o Retrenchment effected long after the business losses is not valid.
o Profitable operations in the past do not affect the validity of retrenchment.
o Retrenchment due to liquidity problem is not valid.
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.
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.
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.

(2) 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:
(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.
• 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 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.
o Relocation of business may amount to cessation of operations.
o Closure of business to merge or consolidate with another or to sell or dispose all of its assets,
held valid.
o Audited financial statements necessary only in closure due to losses.

(3) DISEASE
• What are the newest doctrines on termination due to disease?
o The newest doctrines are the ones enunciated in Deoferio and Fuji on the matter of due
process as discussed below. The due process applicable to disease, although an authorized
cause, is similar to the one applicable to just cause termination and not to authorized cause
termination.

• The DEOFERIO doctrine on the requisites

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

o The Deoferio rule on substantive requisites.

The following are the three (3) substantive requisites:
(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 his co-employees; and
(3) A competent public health authority issues a medical certificate that the disease is of
such nature or at such a stage that it cannot be cured within a period of six (6) months
even with proper medical treatment.

o The Deoferio rule on procedural requisites.

Deoferio, finally pronounced the rule that the employer must furnish the employee two (2)
written notices in terminations due to disease, namely:
(1) The notice to apprise the employee of the ground for which his dismissal is sought; and
(2) The notice informing the employee of his dismissal, to be issued after the employee has
been given reasonable opportunity to answer and to be heard on his defense.

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].

• The FUJI rule – the employee should be given the chance to present countervailing medical
certificates.
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.
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 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 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 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 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 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 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 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
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.”
• What are some salient points to consider under this ground of disease?
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 requested to do so, the employer may terminate his services on the ground of
insubordination or willful disobedience of lawful order.
o A medical certificate issued by a company’s own physician is not an acceptable
certificate for purposes 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 pertains to the disease being suffered by the employee. For instance, if the
employee suffers from tuberculosis, the medical certificate should be issued by a
government-employed pulmonologist who is competent to make an opinion thereon. If
the employee has cardiac symptoms, the competent physician in this case would be a
cardiologist.
o The medical certificate should be procured by the employer and not by the employee.

3. Due Process
a. Two-notice rule
• Preliminary clarificatory statement on due process
At the outset, there is a need to point out the following distinction:
(1) Due process required to be complied with by the employer in terminating the employee’s
employment (COMPANY-LEVEL DUE PROCESS); and
(2) Due process required to be observed by the labor authorities/tribunals/courts (Labor
Arbiter/NLRC/CA) in hearing and deciding labor cases brought before them for
adjudication and decision (COURT-LEVEL DUE PROCESS).
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.
No.1 will be focus of the discussion below.
• Principles regarding due process:
o Due process means compliance with BOTH STATUTORY DUE PROCESS and CONTRACTUAL DUE
PROCESS.
o CONSTITUTIONAL DUE PROCESS is not applicable (Per Agabon doctrine).
o Statutory due process refers to the one prescribed in the Labor Code (Article 292[b] 277[b]);
while 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 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 rules. The employer’s failure to observe its own
company-prescribed due process will make it liable to pay an indemnity in the form of
nominal damages, the amount of which is equivalent to the P30,000.00 awarded under the
Agabon doctrine.
• Are the twin-notice requirement and hearing required in all cases of termination?
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).
• What is the order in which the twin-notice requirement and hearing are implemented by the
employer?
The requirement should be implemented in the following order:
 1. Service of first written notice;
2. Conduct of hearing; and
3. Service of second written notice.
• 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 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:
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 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;
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 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.
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.

(2) Hearing required,

After serving the first notice, the employer should schedule and conduct a hearing or
conference wherein the employee will be given the opportunity to:
1) explain and clarify his defenses to the charge/s against him;
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 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.

NOTE: See Lopez doctrine and Perez doctrine below

(3) Second written notice.

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

• What is the LOPEZ doctrine on right to counsel?

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:
(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 should be assisted by counsel. (See Lopez v. Alturas Group of
Companies).
• What is the PEREZ doctrine on hearing?
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:
(a) “Ample opportunity to be heard” means any meaningful opportunity (verbal or written)
given to the employee to answer the charges against him and submit evidence in support
of his defense, whether in a hearing, conference or some other fair, just and reasonable
way.
(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
(2) When substantial evidentiary disputes exist; or
(3) When a company rule or practice requires it; or
(4) When similar circumstances justify it.
(c) the “ample opportunity to be heard” standard in the Labor Code prevails over the
“hearing or 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.
• Are the twin-notice requirement and hearing applicable to authorized cause termination?
No. Due process in authorized cause termination is deemed complied with upon the separate and
simultaneous 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 specifying the ground/s therefor and the undertaking to pay the
separation pay required under Article 283 of the Labor Code.
For obvious reason, hearing is not required.
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.
• Are the twin-notice requirement and hearing applicable to abandonment as a just cause to
terminate employment?
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:
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.
• 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:
1. The dismissal was for a just cause under Article 282, for an authorized cause under Article
283, or for health 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 is ILLEGAL.
4. The dismissal was for a just or authorized cause but due process was not observed – This
termination is LEGAL.
5. The dismissal was for a non-existent cause – This termination is ILLEGAL.
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 dismissal but on equitable ground.
7. The dismissal was brought about by the implementation of a law – This termination is LEGAL.

4. Termination of Contract of Migrant Workers under RA 8042 as amended by RA 10022

See discussion under Major Topic 2. Pre-Employment, Section A(5) on Termination of Contract of
Migrant Worker.

C. TERMINATION OF EMPLOYMENT BY EMPLOYEE

1. Resignation v. Constructive Dismissal
Constructive Dismissal
• When is there constructive dismissal?
Constructive dismissal contemplates any of the following situations:
1) An involuntary resignation resorted to when continued employment is rendered impossible,
unreasonable or unlikely;
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 that it could foreclose any choice by him except to forego his continued
employment.
• What is the test of constructive dismissal?
The test of constructive dismissal is whether a reasonable person in the employee’s position would
have felt compelled to give up his position under the circumstances. It is an act amounting to
dismissal but made to appear as if it were not. In fact, the employee who is constructively
dismissed may be allowed to keep on coming to work. Constructive dismissal is, therefore, a
 DISMISSAL IN DISGUISE. The law recognizes and resolves this situation in favor of 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 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.
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 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.
o Preventing the employee from reporting for work by ordering the guards not to let her in.
This is clear notice of dismissal.
• What is the distinction between illegal dismissal and constructive dismissal?
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.

In contrast, in constructive dismissal, the employer will never indicate that he is terminating the
employee. He will 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.”

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:
1. The resigning employee should tender a written (not verbal) notice of the termination
(commonly known as “resignation letter”);
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.
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.
• Burden of Proof in voluntary resignation cases
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.
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.

Constructive Dismissal vs. Voluntary Resignation

• Constructive dismissal is involuntary resignation and is due to harsh, hostile, or unfavorable
conditions in his/her 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, accompanied by an intent to relinquish the office and an overt
act of relinquishing the same.
• Constructive dismissal is considered an illegal dismissal.
• Voluntary resignation is a valid mode of terminating employment by the employee.

D. PREVENTIVE SUSPENSION

• 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 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 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, preventive suspension is not proper.

• What are some relevant principles in preventive suspension?

o Preventive suspension is not a penalty. This is different from PUNITIVE SUSPENSION which is
imposed as a penalty less harsh than dismissal.
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.
 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 simply “by incurring repeated absences and
tardiness.”
o Preventive suspension does not mean that due process may be disregarded.
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 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 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.
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 period due to justifiable grounds.
No extension thereof can be made based on whimsical, capricious or unreasonable
grounds.
o Preventive suspension lasting longer than 30 days, without the benefit of valid extension,
amounts to constructive dismissal.
o Indefinite preventive suspension amounts to constructive dismissal.

E. RELIEFS FROM ILLEGAL DISMISSAL

a. Reinstatement
The Labor Code grants the remedy of reinstatement in various forms and situations. Its provisions
recognizing reinstatement as a relief are as follows:

1. Article 229 [223] which provides for reinstatement of an employee whose dismissal is
declared illegal by the Labor Arbiter. This form of reinstatement is self-executory and must be
implemented even during the pendency of the appeal that may be instituted by the
employer.

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 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 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 reinstatement of the
dismissed employee while the illegal dismissal case is being heard and litigated.

4. Article 294 [279] which grants reinstatement as a relief to an employee whose dismissal is
declared illegal in a final and executory judgment.

5. Article 301 [286] which involves bona-fide suspension of operation for a period not
exceeding six (6) months or the rendition by an employee of military or civic duty. It is required
under this provision that the employer 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.

b. Backwages
• What is the Bustamante doctrine?
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 “full backwages” should mean exactly that, i.e., without
deducting from backwages the earnings derived elsewhere by the concerned employee
during the period of his illegal dismissal.

• What are the components of backwages?

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 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 backwages.
• What are some principles on backwages?
o Salary increases during period of unemployment are not included as component in the
computation of backwages.
o Dismissed employee’s ability to earn is irrelevant in the award of backwages.
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 actual or in the payroll.
o If separation pay is ordered in lieu of reinstatement, full backwages should be computed
from the time of illegal dismissal until the finality of the decision. The justification is that
along with the finality of the Supreme Court’s decision, the issue on the illegality of the
dismissal is finally laid to rest.
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.
o If the employee has reached 65 years of age or beyond, his full backwages should be
computed only up to said age. The contention of the employer that backwages should
be reckoned only up to age 60 cannot be sustained.
o If employer has already ceased operations, full backwages should be computed only up
to the date of the closure. To allow the computation of the backwages to be based on a
period beyond that would be an injustice to the employer.
o Any amount received during payroll reinstatement is deductible from backwages.

• When is the award of backwages limited?

(1) When the dismissal is deemed too harsh a penalty;
(2) When the employer acted in good faith; or
(3) Where there is no evidence that the employer dismissed the employee.
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
• Is separation pay applicable only to reinstatement as an alternative remedy?
Yes. Separation pay, as a substitute remedy, is only proper for reinstatement but not for
backwages.
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:
(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 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.
(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 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.
(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 or position paper but asked for separation pay instead.
(4) When reinstatement is rendered moot and academic due to supervening events, such as:
(a) Death of the illegally dismissed employee.
(b) Declaration of insolvency of the employer by the court.
(c) Fire which gutted the employer’s establishment and resulted in its total destruction.
(d) In case the establishment where the employee is to be reinstated has closed or ceased
operations.
(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 does not serve the best interests of the parties involved; (c) the employer is
prejudiced by the workers’ continued employment; or (d) that it will not serve any prudent
purpose as when supervening facts transpired which made execution unjust or inequitable.
 • What is the amount of separation pay in lieu of reinstatement?
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, whichever is higher, a fraction of at least six (6) months being considered as
one (1) whole year.
(2) Allowances that the employee has been receiving on a regular basis.
• What is the period covered?
From start of employment up to the date of finality of decision except when the employer has
ceased its operation 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?
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.
• What are some important principles on separation pay in lieu of reinstatement?
1. Award of separation pay and backwages are not inconsistent with each other. Hence,
both may be awarded to an illegally dismissed employee. The payment of separation pay
is in addition to payment of backwages.
2. Reinstatement cannot be granted when what is prayed for by employee is separation pay
in lieu thereof.
d. Damages
e. Attorneys’ fees
• What are the other reliefs that are not provided in the Labor Code but are granted in illegal
dismissal cases?
The following reliefs that are awarded in illegal dismissal cases are missing in Article 279:
(1) Award of separation pay in lieu of reinstatement.
(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 the payment of the employee’s salaries corresponding to the unexpired portion
of the employment contract.
(4) Award of damages and attorney’s fees.
(5) Award of financial assistance in cases where the employee’s dismissal is declared legal but
because of long years of service, and other considerations, financial assistance is awarded.
(6) Imposition of legal interest on separation pay, backwages and other monetary awards.
f. Liabilities of corporate officers
• Who are considered officers?
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 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 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.

g. Burden of proof
• Burden of Proof in Illegal Dismissal Cases
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: While it is the recognized rule in illegal dismissal
cases that the employer bears 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 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 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.”
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 such relevant evidence as a reasonable mind
might accept as adequate to support a conclusion.( Spouses Giron v. Obiacoro, CV-331l5,
Sept. 28,1994)
 F. RETIREMENT
• Who are covered?
The following employees are eligible to avail of retirement benefits under Article 302 [287] of the
Labor Code:
1) All employees in the private sector, regardless of their position, designation or status and
irrespective of the method by which their wages are paid;
2) Part-time employees;
3) Employees of service and other job contractors;
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 (without original charters).
• Who are excluded?
Article 302 [287], as amended, does not apply to the following employees:
1. Employees of the national government and its political subdivisions, including government-
owned and/or controlled corporations, if they 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:
a) “Retail establishment” is one principally engaged in the sale of goods to end-users for
personal or household use. It shall lose its retail character qualified for exemption if it is
engaged in both retail and wholesale of goods.
b) “Service establishment” is one principally engaged in the sale of service to individuals for
their own or household use and is generally recognized as such.
c) “Agricultural establishment/operation” refers to an employer which is engaged in
agriculture. This 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, and any activities performed
by a farmer or on a farm as an incident to, or in conjunction with, such farming operations,
but does not include the manufacture and/or processing of sugar, coconut, abaca,
tobacco, pineapple, aquatic or other farm products.
• 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.
(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 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?
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.
• What are the rules on retirement at an earlier age?
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’ consent. Stated conversely, employees are free to accept the
employer’s offer to lower the retirement age if they feel they can get a better deal with
the retirement plan presented by the employer.
- Following Jaculbe, the retirement of petitioner in Lourdes Cercado v. Uniprom, Inc. at the
age of 47, after 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 consent thereto. Not
even an iota of voluntary acquiescence to respondent’s early retirement age option is
attributable to petitioner. The assailed retirement plan was not embodied in a CBA or in
any employment contract or agreement assented to by petitioner and her co-employees.
On the contrary, it was unilaterally and compulsorily imposed on them.
- 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 President, was compulsorily retired under the following
retirement policy of the bank:
 “Section 2. Early Retirement. A Member may, with the approval of the Board of
Directors, retire early on the first day of any month coincident with or following his
attainment of age 50 and completion of at least 10 years of Credited Service.”
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 Program/Retirement Program” but the Court
considered the mere mention thereof not sufficient to inform him of the contents or details
of the retirement program. To construe from the petitioner's acceptance of his
appointment that he had acquiesced to be retired earlier than the compulsory age of 65
years would, therefore, not be warranted. This is because retirement should be the result of
the bilateral act of both the employer and the employee based on their voluntary
agreement that the employee agrees to sever his employment upon reaching a certain
age.
That the petitioner might be well aware of the existence of the retirement program at
the time of his engagement did not suffice. His implied knowledge, regardless of duration,
did not equate to the voluntary acceptance required by law in granting an early
retirement age option to the employee. The law demanded more than a passive
acquiescence on the part of the employee, considering that his early retirement age
option involved conceding the constitutional right to security of tenure.
Having thus automatically become a member of the retirement plan through his
acceptance of employment as Chief Legal Officer of respondent bank, the petitioner
could not withdraw from the plan except upon his termination from employment.
Further, the retirement plan, having been established for respondent bank and
approved by its president more than five years prior to petitioner's employment, was in
the nature of a contract of adhesion, in respect to which the petitioner was reduced to
mere submission by accepting his employment, and automatically became a member
of the plan. With the plan being a contract of adhesion, to consider him to have
voluntarily and freely given his consent to the 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 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 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 employee, in this case a managerial employee, cannot be compulsorily
retired at an earlier age without her express assent thereto. In this case, respondent was
retired under the retirement provision of the rank-and-file CBA which provides that an
employee's retirement is compulsory when he or she reaches the age of 60 or has
rendered 20 years of service, whichever comes first. Respondent was only 57 at the time
she was compulsorily retired but had already rendered 34 years of service as Assistant
Credit and Collection Manager/Acting General Cashier. Besides holding that as
managerial employee, she is not covered by the CBA, the Court noted that there was
nothing in petitioner hotel’s submissions showing that respondent had assented to be
covered by the 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 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 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 option involved conceding the constitutional right to security of tenure."

o 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 based solely on a provision of a retirement plan which was not freely
assented to by him would be tantamount to illegal dismissal.

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.
- Cainta Catholic School v. Cainta Catholic School Employees Union [CCSEU], where the
Supreme Court 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 age limit of sixty (60) or after having rendered at least
twenty (20) years of service to the school, the last three (3) years of which must be
continuous. Hence, 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.
• What is the minimum years of service required for entitlement under the law?
Five (5) years is the minimum years of service that must be rendered by the employee before he
can avail of the retirement benefits upon reaching optional or compulsory retirement age under
Article 287.
• What is the retirement age of underground mine workers?
The rule is different. The optional retirement age of underground mine workers is 50 years of age;
while the compulsory retirement age is 60 years old
• What is the minimum number of years of service required of underground mine workers?
Minimum years of service is also 5 years.
• Are the retirement benefits of underground mine workers similar to ordinary retirees?
Yes. In fact, other than the retirement age, all other requirements as well as benefits provided in
the law are applicable to underground mine workers.

AMOUNT OF RETIREMENT PAY

• What is the amount of retirement pay under the law?
o One-half (½) month salary.
In the absence of a retirement plan or agreement providing for retirement benefits of employees
in the establishment, an employee, upon reaching the optional or compulsory retirement age
specified in Article 287, shall be entitled to 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.
o Components of one-half (½) month salary.
For purposes of determining the minimum retirement pay due an employee under Article 287, the
term “one-half month salary” shall include all of the following:
(1) Fifteen (15) days salary of the employee based on his latest salary rate.
(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 computation of the employee’s retirement pay.
o “One-half (½) month salary” means 22.5 days.
“One-half [½] month salary” is equivalent to “22.5 days” arrived at after adding 15 days plus
2.5 days representing one-twelfth [1/12] of the 13th month pay plus 5 days of service incentive
leave.
• 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.
o Example: R & E Transport, Inc. v. Latag, where it was held that employees who are not
entitled to 13th month pay and SIL pay while still working should not be paid the entire “22.5
days” but only the fifteen (15) days salary. In other words, the additional 2.5 days
representing one-twelfth [1/12] of the 13th month pay and 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 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 basis. He was also not entitled to the 5-
day service incentive leave pay pursuant to the Rules to Implement the Labor Code which
expressly excepts field personnel and other employees whose performance is unsupervised
by the employer.
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 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 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 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
personnel.
 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 of the salary for fifteen (15) days shall be their average daily salary (ADS). The
ADS is the average salary for the last twelve (12) months reckoned from the date of their
retirement, divided by the number of actual working days in that particular period.
RETIREMENT BENEFITS OF PART-TIME WORKERS
• How should the retirement benefits of part-time workers be computed?
Applying the principles under Article 287, as amended, the components of retirement benefits of
part-time workers may also be computed at least in proportion to the salary and related benefits
due them.
ENTITLEMENT OF EMPLOYEES DISMISSED FOR JUST CAUSE TO RETIREMENT BENEFITS
• General rule – Entitled because employee has acquired vested right over the retirement
benefits.
Razon, Jr. v. NLRC, May 7, 1990.
• Exception - Where just cause termination is cited in the retirement plan as reason to validly
deny claim for retirement benefits.
• San Miguel Corporation v. Lao, July 11, 2002.
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.

RETIREMENT BENEFITS VS. SEPARATION PAY

• When both retirement pay and separation pay must be paid.
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 retrenchment embodied in the CBA as well as the retirement pay provided
under a separate Retirement Plan. The reason is that these two are not mutually exclusive. There is
nothing in the CBA nor in the Retirement Plan that states that an employee who had received
separation pay would no longer be entitled to retirement benefits or that collection of retirement
benefits was prohibited if the employee had already received separation pay
• When separation pay may be charged to retirement pay.
o Ford Philippines Salaried Employees Association v. NLRC, Dec. 11, 1987.
It is provided in the retirement plan that the retirement, death and disability benefits paid in the
plan are considered integrated with and in lieu of termination benefits under the Labor Code, thus,
the retirement fund may be validly used to pay such termination or separation pay because of
closure of business.
• When employees are entitled to only one form of benefit.
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 the separation pay provided by law, whichever is higher, the employee
cannot be entitled to both benefits.
Retirement pay under the labor code or retirement plan is separate and distinct from the retirement
pay under the SSS, GSIS and Pag-IBIG.

------------oOo------------
 MAJOR TOPIC 5
JURISDICTION AND RELIEFS

General Table of Jurisdiction

NLRC BLR DOLE VA NCMB

Supreme Court Supreme Court Supreme Court Supreme Court

Rule 45 Rule 45 Rule 45 Rule 45

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 Reconsideration Reconsideration Reconsideration

Appeal to Appeal to Appeal to Automatic No appeal or

Elevation to certiorari (NCMB is
NLRC BLR Director DOLE Secretary not a quasi-judicial
Voluntary body)
Arbitrator

Med-Arbiter DOLE Director (or Grievance `NCMB Conciliator-

Med-Arbiter)3 Machinery Mediator
Labor Arbiter (or DOLE Regional
Director) 2

A. LABOR ARBITER

1. Jurisdiction of Labor Arbiter v. Jurisdiction of Regional Director

• 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 amounting to ₱5,000 or below, provided the following requisites concur:
1. The claim must arise from employer-employee relationship;
2. The claimant does not seek reinstatement; and
3. The aggregate money claim of each employee does not exceed ₱5,000.00.
• 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.
o Requisites
For the valid exercise by the DOLE Secretary or any of his duly authorized representatives (DOLE
Regional Directors) of the visitorial and enforcement powers provided under Article 128(b), the
following requisites should concur:
(1) The employer-employee relationship should still exist;
(2) The findings in question were made in the course of inspection by labor inspectors; 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.
• 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 Directors.
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 for the enforcement of their orders, except in cases where
the employer contests the findings of the labor employment and enforcement officer and raises
issues supported by documentary proofs which were not considered in the course of inspection.”

2 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.
3 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.
 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:
(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
(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, 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 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 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 matters.
2. Requisites to Perfect an Appeal with the NLRC

I.
APPEAL IN GENERAL
• Appeal, meaning and nature.
The term “appeal” refers to the elevation by an aggrieved party to an agency vested with
appellate authority of any decision, resolution or order disposing the principal issues of a case
rendered by an agency vested with original jurisdiction, undertaken by filing a memorandum of
appeal.
• Some principles on appeal.
o Appeals under Article 223 apply only to appeals from the Labor Arbiter’s decisions, awards or
orders to the Commission (NLRC).
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. The proper remedy from the decisions, awards or orders of the NLRC to
the Court of Appeals is a Rule 65 petition for certiorari and from the Court of Appeals to the
Supreme Court, a Rule 45 petition for review on certiorari.
• Appeal from the NLRC to the DOLE Secretary and to the President had long been abolished.
o Appeal is not a constitutional right but a mere statutory privilege. Hence, parties who seek to
avail of it must 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 Arbiter should treat the said motion as an appeal to the NLRC.
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 decision of a court cannot obtain affirmative relief other than the ones
granted in the appealed decision.
• Grounds for appeal to the Commission (NLRC)
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;
b. If the decision, order or award was secured through fraud or coercion, including graft
and corruption;
c.If made purely on questions of law; and/or
d. If serious errors in the findings of fact are raised which, if not corrected, would cause
grave or irreparable damage or injury to the appellant.
• 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 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.

II.
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 for reinstatement pending appeal.
• Perfection of appeal, mandatory and jurisdictional
The perfection of appeal within the period and in the manner prescribed by law is jurisdictional and
non-compliance with the legal requirements is fatal and has the effect of rendering the judgment
final and executory, hence, unappealable.
• Requisites.
The requisites for perfection of appeal to the NLRC are as follows:
(1) Observance of the reglementary period;
(2) Payment of appeal and legal research fee;
(3) Filing of a Memorandum of Appeal;
(4) Proof of service to the other party; and
(5) Posting of cash, property or surety bond, in case of monetary awards.
The foregoing are discussed below.
III.
REGLEMENTARY PERIOD
• Three (3) kinds of reglementary period.
The reglementary period depends on where the appeal comes from, viz.:
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
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.
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, 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:
1) 10th day (or 5th day) falling on a Saturday, Sunday or holiday, in which case, the appeal may
be filed in the next working day.
2) When NLRC exercises its power to “correct, amend, or waive any error, defect or irregularity
whether in substance or form” 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.
3) When technical rules are disregarded under Article 221.
4) When there are some compelling reasons that justify the allowance of the appeal despite its
late filing such as when it is granted in the interest of substantial justice.
• Some principles on reglementary period.
o The reglementary period is mandatory and not a “mere technicality.”
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 the issuance thereof becomes a ministerial duty which may
be compelled through the remedy of mandamus.
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 or representative of record.
o Miscomputation of the reglementary period will not forestall the finality of the judgment. It is in
the interest of 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.
o Motion for extension of time to perfect an appeal is not allowed. This kind of motion is a
prohibited pleading.
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.
 IV.
APPEAL FEE AND LEGAL RESEARCH FEE
• Payment of appeal fee and legal research fee, mandatory and jurisdictional.
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 technicality. If not paid, the running of the reglementary
period for perfecting an appeal will not be tolled.
V.
MEMORANDUM OF APPEAL
• Requisites.
The requisites for a valid Memorandum of Appeal are as follows:
1. The Memorandum of Appeal should be verified by the appellant himself in accordance
with the Rules of Court, 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;
4. It shall contain a statement of the date the appellant received the appealed decision,
award or order; and
5. It shall be accompanied by:
(i) proof of payment of the required appeal fee and legal research fee;
(ii) posting of a cash or surety bond (in case of monetary awards); and
(iii) proof of service upon the other party.
• Requirements not jurisdictional.
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.

• Some principles on memorandum of appeal.

o Mere notice of appeal without complying with the other requisites aforestated shall not stop the
running 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 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 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.
VI.
PROOF OF SERVICE TO ADVERSE PARTY
• 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 appeal; nor will it amount to a jurisdictional defect on the
NLRC’s taking cognizance thereof.
VII.
POSTING OF BOND
• When posting of bond required.
Only in case the decision of the Labor Arbiter or the DOLE Regional Director (under Article 129 of
the Labor Code) involves a monetary award, that an appeal by the employer may be perfected
only upon the posting of a bond, which 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 words, only monetary
awards (such as unpaid wages, backwages, separation pay, 13th month pay, etc.) are required to
be covered by the bond. Moral and exemplary damages and attorney’s fees are excluded.

• Some principles on posting of bond.

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 period. If a party failed to perfect his appeal by the non-payment of the appeal
 bond within the 10-calendar day period provided by law, the decision of the Labor Arbiter
becomes final and executory upon the expiration of the said period.
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.
o Surety bond must be issued by a reputable bonding company duly accredited by the
Commission (NLRC) or 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.
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.
o Cooperatives are not exempted from posting bond.
o Government is exempt from posting of bond; government-owned and/or controlled
corporations, however, are not exempt therefrom.
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.
o Bond is not required to file a Rule 65 petition for certiorari.

• Justifications for non-posting of bond.

o No monetary award, no bond required. The rule is clear that when the judgment of the Labor
Arbiter does not involve any monetary award, no appeal bond 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 contained or fixed in the judgment, the appeal bond is not required to
be posted.
o In case of conflict between the body and the fallo of the decision, the latter should prevail.

RULE ON REDUCTION OF APPEAL BOND

• 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
(3) The motion should be accompanied by a partial bond, the amount of which should be
reasonable in relation to the monetary awards.
• The Mcburnie Doctrine: new guidelines for filing and acceptance of motions to reduce bond.
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:
(a) The filing of a motion to reduce appeal bond shall be entertained by the NLRC subject to the
following conditions:
(1) there is meritorious ground; and
(2) a bond in a reasonable amount is posted;
(b) For purposes of compliance with condition no. (2) above, a motion shall be accompanied
by the posting of a provisional cash or surety bond equivalent to ten percent (10%) of the
monetary award subject of the appeal, 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;
(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
(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.
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 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 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 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.”
3. Reinstatement and/or Execution Pending Appeal
• Pioneer Texturizing Doctrine: reinstatement aspect of labor arbiter’s decision, immediately
executory even pending appeal; no writ of execution required.
According to the Pioneer Texturizing doctrine, an order of reinstatement issued by the Labor Arbiter
under Article 229 [223] of the Labor Code is self-executory or immediately executory even pending
appeal. This means that the perfection of an appeal shall stay the execution of the decision of the
Labor Arbiter except execution of the reinstatement pending appeal.
• Reinstatement pending appeal, applicable only to the reinstatement order issued by the labor
arbiter; writ of execution required when reinstatement is ordered by NLRC on appeal, or
subsequently by the 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 the Labor Arbiter and to no other. This means that if the reinstatement order
is issued by the NLRC on appeal, or by the Court of 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.
• 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 employer, to wit:
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 longer available, to a substantially-equivalent position; or
2. Payroll reinstatement. – The employee should be reinstated in the payroll of the company
without requiring him to report back to his work.
• Duty of employer to notify employee ordered reinstated.
It is required that in case the decision of the Labor Arbiter includes an order of reinstatement, it
should contain:
(a) A statement that the reinstatement aspect is immediately executory; and
(b) A directive for the employer to submit a report of compliance within ten (10) calendar days
from receipt of the said decision.
Disobedience of this directive clearly denotes a refusal to reinstate. The employee need not file a
motion for the issuance of the writ of execution since the Labor Arbiter is mandated 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.
• 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 immediately by the Labor Arbiter to implement his order of reinstatement, even
pending appeal, viz.:
(1) When the employer disobeys the prescribed directive to submit a report of compliance
within ten (10) calendar days from receipt of the decision; or
(2) When the employer 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 actual reinstatement or reversal of the order of reinstatement.
• Some principles on reinstatement pending appeal.
o The Labor Arbiter cannot exercise option of employer by choosing payroll reinstatement
pending appeal.
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 Reinstatement cannot be refused on the basis of the employment elsewhere of the employee
ordered reinstated.
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.
o No reinstatement pending appeal should be made when antipathy and antagonism exist.
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.
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 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.
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.
o When former position is already filled up, the employee ordered reinstated pending appeal
should be reinstated to a substantially equivalent position.
o 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 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 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.
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 respondent CCBPI in giving an award of a Certificate of Achievement to petitioner
for his exemplary sales 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 weighing in his favor.

B. NATIONAL LABOR RELATIONS COMMISSION

• Nature.
The NLRC is an administrative quasi-judicial body. It is an agency attached to the DOLE solely for
program and policy coordination only. It is in charge of deciding labor cases through compulsory
arbitration.
• Composition of the NLRC
The NLRC is composed of a Chairman and twenty-three (23) members called “Commissioners.”

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 Arbiters.
• Commission en banc.
The Commission sits en banc only for the following purposes:
(1) To promulgate rules and regulations governing the hearing and disposition of cases before
any of its divisions and regional branches; and
(2) To formulate policies affecting its administration and operations.
The NLRC does not sit en banc to hear and decide cases. The banc has no adjudicatory power. The
Commission exercises its adjudicatory and all other powers, functions, and duties through its eight
(8) Divisions.
• NLRC’s eight (8) divisions.
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.

The various Divisions of the Commission have exclusive appellate jurisdiction over cases within their
respective territorial jurisdictions.
1. JURISDICTION

• Two (2) kinds of jurisdiction.

The NLRC exercises two (2) kinds of jurisdiction:
1. Exclusive original jurisdiction; and
2. Exclusive appellate jurisdiction.
• 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 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.
b. Petition for injunction in strikes or lockouts under Article 264 of the Labor Code.
c. Certified cases which refer to labor disputes causing or likely to cause a strike or lockout in an
industry indispensable to the national interest, certified to it by the Secretary of Labor and
Employment for compulsory arbitration by virtue of Article 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.
• Exclusive appellate jurisdiction.
The NLRC exercises exclusive appellate jurisdiction over the following:
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.
c. Contempt cases decided by the Labor Arbiters.
EFFECT OF NLRC REVERSAL OF LABOR ARBITER’S ORDER OF REINSTATEMENT
• 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.)
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.
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).
o The WENPHIL Rule: (The prevailing rule) (Wenphil Corporation v. Abing, April 7, 2014)
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 in the payroll.
o ENTITLEMENT TO REINSTATEMENT WAGES.
The employee is entitled to reinstatement salaries/wages, allowances and benefits under the
following doctrines:
(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]).
Based on the foregoing doctrines, from the moment an employee is ordered reinstated by the
Labor Arbiter on the basis of the finding that his dismissal is illegal, up to the time that an appellate
tribunal like the NLRC, Court of Appeals and Supreme Court, as the case may be, reverses the said
finding, the employee is generally entitled to his so-called “reinstatement wages.”
ROQUERO DOCTRINE.
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 having the decision of the Labor Arbiter’s decision reversed
on appeal will not exculpate him from the liability to pay 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.
In this case of Roquero, the dismissal of petitioners Roquero and Pabayo was held valid by the
Labor Arbiter. On appeal to the NLRC, the Labor Arbiter’s decision was reversed and
consequently, petitioners were ordered reinstated. 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 order on the
ground that it has filed a Petition for Review before the Supreme Court. Subsequently, the CA
reversed the decision of the NLRC and ruled that the dismissal of petitioners was valid. The
Supreme Court later affirmed the CA’s decision but it held that the unjustified refusal by PAL to
reinstate Roquero who, unlike Pabayo, has not amicably settled his case, entitles him to the
payment of his reinstatement wages effective from the time PAL failed to reinstate 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.
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 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 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.

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 respondent PAL which was decided by the Labor Arbiter in
their favor thus ordering PAL to, inter alia, immediately comply with the reinstatement aspect of the
decision. On appeal, the NLRC reversed the ruling of the Labor Arbiter and held that their dismissal
was valid. The issue of whether petitioners may collect their reinstatement wages during the period
between the Labor Arbiter’s order of reinstatement pending appeal and the NLRC decision
overturning that of the Labor Arbiter, now that respondent PAL has terminated and exited from
rehabilitation proceedings, was resolved in the negative by the Supreme Court. The following
ratiocinations were cited:
(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 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 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 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 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 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
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 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 executed prior to its reversal; and
(2) The delay must not be due to the employer’s unjustified act or omission. If the
delay is due to the employer’s unjustified refusal, the employer may still be
required to pay the salaries 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 reinstatement order of the Labor Arbiter because during the pendency of the
illegal dismissal case, the SEC placed respondent PAL under an Interim Rehabilitation Receiver who,
after the Labor Arbiter rendered his decision, was 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 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.”
• Reckoning of the period covered by accrued reinstatement wages.
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 and ordering their reinstatement up to the date of the decision of
the appellate tribunal overturning that of the 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.”
• Some principles on reinstatement wages.
o Employer is not liable to pay any reinstatement backwages if reinstatement is ordered not by
the Labor Arbiter but by the NLRC on appeal and it was not executed by writ and its finding
of illegal dismissal is later 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 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 until actual or payroll reinstatement is proper and valid.
o
C. 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 of Appeals is through a Rule 65 petition for certiorari.
 (a) the DOLE Secretary;
(b) the Commission (NLRC); and
(c) the Director of the Bureau of Labor Relations (BLR) in cases decided by him in his appellate
jurisdiction (as distinguished from those he decides in his original 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.
• The only exception.
The only exception to the foregoing rule is in the case of decisions, orders or awards issued by the
Voluntary Arbitrator or panel of Voluntary Arbitrators which may be elevated to the Court of
Appeals by way of an ordinary 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.
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 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.
o The reason for this rule is that in labor cases, a motion for reconsideration is the plain and
adequate remedy from an adverse decision of the DOLE Secretary, the NLRC and the BLR
Director.
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 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 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
assumption that rectification of the decision or order must be obtained and before a
petition for certiorari may be instituted.
• 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
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)
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.
JUDICIAL REVIEW OF DECISIONS OF VOLUNTARY ARBITRATORS
• Decisions, final and executory
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 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 petition for review to the Court of Appeals under Revised
Administrative Circular No. 1-95 which provides for a uniform procedure for appellate review of
all adjudications of quasi-judicial entities and which is now embodied in Section 1, Rule 43 of
the 1997 Rules of Civil Procedure.
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, in a petition for certiorari from the awards or decisions of the Voluntary
Arbitrator, the Court of Appeals has concurrent jurisdiction with the Supreme Court
o In Alcantara, Jr. v. CA, it was held that Luzon Development Bank is still a good law.
• Period of appeal.
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:
“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 days from receipt of the copy of the award or
decision by the parties.”

Section 4, Rule 43 of the Rules of Court, on the other hand, provides for a 15-day reglementary
period for filing an appeal, thus:
 “Section 4. Period of appeal. - The appeal shall be taken within fifteen (15) days from
notice of the award, judgment, final order or resolution, or from the date of its last
publication, if publication is required by law for its effectivity, or of the denial of
petitioner's motion for new trial or reconsideration duly filed in accordance with the
governing law of the court or agency a quo. Only one (1) motion for reconsideration
shall be allowed. Upon proper motion and the payment of the full amount of the
docket fee before the expiration of the reglementary period, the Court of Appeals
may grant an additional period of fifteen (15) days only within which to file the
petition for review. No further extension shall be granted except for the most
compelling reason and in no case to exceed fifteen (15) days.”
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 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 which the party adversely affected by the ruling of the Voluntary
Arbitrators or Panel of Arbitrators may file a motion for reconsideration; and
(2) Only after the resolution of the motion for reconsideration may the aggrieved party
appeal to the CA by filing the petition for review under Rule 43 of the Rules of Court
within 15 days from notice pursuant to Section 4 of Rule 43.

D. SUPREME COURT (Rule 45, Rules of Court)

• Rule 45 Petition for Review on Certiorari, the only mode by which a labor case may reach the
Supreme Court.
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 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.

If the aggrieved party fails to do so within the reglementary period and the decision accordingly
becomes final and executory, he cannot avail himself of the writ of certiorari, his predicament
being the effect of his deliberate inaction. A petition for certiorari under Rule 65 cannot be a
substitute for a lost appeal under Rule 45; hence, it should be dismissed.
• The Neypes Doctrine (Fresh Period Rule) - fresh period from denial of Motion for Reconsideration.
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 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:
“To standardize the appeal periods provided in the Rules and to afford litigants
fair opportunity 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.
“Henceforth, this ‘fresh period rule’ shall also apply to Rule 40 governing appeals
from the 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 Court of Appeals and Rule 45 governing appeals by
certiorari to the Supreme Court. The new 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.”
Consequently, since petitioner in Gagui received the CA Resolution denying her two Motions for
Reconsideration only on 16 March 2011, she had another 15 days within which to file her Petition,
or until 31 March 2011. This Petition, filed on 30 March 2011, fell within the prescribed 15-day period.
E. BUREAU OF LABOR RELATIONS

• Labor officials concerned.

As far as labor relations cases are concerned, the following officials are involved in their adjudication:
(1) Mediators-Arbiters (Med-Arbiters);
(2) DOLE Regional Directors; and
 (3) BLR Director.
• Med-arbiter.
The term “Med-Arbiter” refers to an officer in the DOLE Regional Office or in the BLR authorized to hear
and decide representation cases, inter-union or intra-union disputes and other related labor relations
disputes.

While the Labor Code refers to this official as “Med-Arbiter,” it should, however, be construed to mean
“Mediator-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.”
• DOLE regional director.
The Regional Directors are the duly authorized representatives of the DOLE Secretary in the DOLE
regional offices. They are in charge of the administration and enforcement of labor standards within
their respective territorial jurisdictions. Although, like the Med-Arbiters, they are not also specifically
mentioned in said article, it is a known procedural rule, however, 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.
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 petitions to the CA or subsequent appeals to the Supreme
Court. Thus, one would encounter countless cases filed against such luminaries like Pura-Ferrer Calleja,
Cresenciano B. Trajano, Benedicto Ernesto R. Bitonio Jr., and Hans Leo J. Cacdac, among others, who
are sued in their capacity as BLR Directors.

CASES COGNIZABLE
The following are the general classifications of the cases falling under the jurisdiction of the said officials,
to wit:
(a) Inter-union disputes;
(b) Intra-union disputes; and
(c) Other related labor relations disputes.
(a) INTER-UNION AND INTRA-UNION DISPUTES

• 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 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, 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 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.
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-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
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;
b) Conduct of election of union and workers’ association officers or nullification of election of union
and workers' association officers;
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;
 g) Validity/invalidity of impeachment/expulsion of union and workers' association officers and
members;
h) Validity/invalidity of Request for SEBA Certification4 (Replacing “Voluntary Recognition” as a
mode of securing sole and exclusive bargaining agent status);
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;
I) Violations of the rights and conditions of union or workers' association membership;
m) Violations of the rights of legitimate labor organizations, except interpretation of collective
bargaining agreements; and
n) Such other disputes or conflicts involving the rights to self-organization, union membership and
collective bargaining -
1) Between and among legitimate labor organizations; or
2) Between and among members of a union or workers’ association.
(b) OTHER RELATED LABOR RELATIONS DISPUTES
• Meaning of “Other related labor relations disputes.”
“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.

More specifically, it may refer to any of the following:

(a) Any conflict between:
(1) a labor union and an employer, or
(2) a labor union and a group that is not a labor organization; or
(3) a labor union and an individual who is not a member of such union;
(b) Cancellation of registration of unions and workers’ associations filed by individuals other than its
members, or group that is not a labor organization; and
(c) A petition for interpleader involving labor relations.

ORIGINAL AND EXCLUSIVE JURISDICTION OF MED-ARBITERS, DOLE DIRECTORS AND BLR DIRECTOR
Having known the various cases afore-described, a discussion of the respective jurisdictions of the Med-
Arbiters, DOLE Directors and BLR Director over these cases may now be made with greater clarity.
1. MED-ARBITERS
ORIGINAL AND EXCLUSIVE JURISDICTION
• The cases falling under the original and exclusive jurisdiction of the Med-Arbiters are as follows:
(1) Inter-union disputes (representation or certification election conflicts), such as:
(a) Request for SEBA certification when made in an unorganized establishment with only one5
or more 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;
(3) Other related labor relations disputes;
(4) Injunction cases;6 and
(5) Contempt cases.
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 one (1) legitimate organization. Under this situation, the DOLE Regional

4 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 agent (SEBA).
5 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 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 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. 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]).
6 Med-Arbiters have the authority to issue temporary restraining orders (TROs) and writs of injunction in appropriate cases.
 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.

2. DOLE REGIONAL DIRECTORS

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 cases7 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:
(1) Visitorial cases under Article 289 [274], involving examination of books of accounts of
independent unions, local chapters/chartered locals and workers’ associations;
(2) Union registration-related cases, such as:
a) Applications for union registration of independent unions, local chapters and workers’
associations;
b) Denial of application for registration of said unions;
c) Petitions for revocation or cancellation of registration of said unions;
(3) Denial of registration of single-enterprise8 CBAs or petitions for deregistration thereof; and
(4) Request for SEBA certification when made in an unorganized establishment with only one (1)
legitimate union.
• 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 the DOLE Regional Directors and not in the Med-Arbiters.
o Barles v. Bitonio is clear on this point. It was held here that while intra-union conflicts, such as
examinations of accounts 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 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.
o But there is a need to point out though that the foregoing rule applies only when the request for
examination of books 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 centers, and their local chapters/chartered locals,
affiliates and member organizations, the jurisdiction thereover is vested with the BLR Director and
not with the DOLE Regional Director.
• On No. 2[a] above, as far as workers’ associations are concerned, if they operate in more than one
region, the application for registration should be filed with the BLR or the Regional Offices, but either
way, it should be processed by the BLR. This is so in order to have a unified resolution of the merits of
the application by one, single agency.
• On No. 4 above, when the Request for SEBA Certification is made in an unorganized establishment
with only one (1) legitimate union, it should be filed with the DOLE Regional Director who will make
an immediate determination on whether there is majority support by the members of the
bargaining unit to the requesting union. Once 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 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 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 to be replaced by this
Request mode.
• For it is clear that under the previous repealed rule on voluntary recognition, the DOLE Regional
Director never issues a “SEBA Certification”; what is done is the mere recording of the “Notice of
Voluntary Recognition” jointly submitted by the employer and the union to the DOLE Regional
Office which issued the recognized labor union’s certificate of registration or, in the case of local
chapter, where the charter certificate and the other documents required 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 of the modes9 of selecting a SEBA, it is not surprising if the issue of the validity of the

7 These are (1) inter-union disputes; (2) intra-union disputes; and (3) Other related labor relations disputes.
8 As distinguished from cases involving multi-employer CBAs which fall under the original jurisdiction of the BLR Director.
9 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.
 exercise of similar power to issue the SEBA Certification by the DOLE Regional Director would be
raised in an appropriate proceeding.
• But the rule is quite clear that the Mediator-Arbiter would acquire original jurisdiction over 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 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
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.

(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 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
exercises original jurisdiction.

(3) In case the Request is made in an organized establishment, in which case, the Regional Director
should refer the same to the Mediator-Arbiter for the determination of the propriety of conducting
a certification election.

3. BLR DIRECTOR
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 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 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.”
• The BLR Director exercises two (2) kinds of jurisdiction, namely: original and appellate. The following
cases fall under the first:
(1) Complaints and petitions involving the application for registration, revocation or
cancellation of registration of federations, national unions, industry unions, trade union
centers and their local chapters/chartered locals, affiliates and member organizations;
(2) Request for examination of books of accounts of said labor organizations10 under Article
289 [274] of the Labor Code;
(3) Intra-union disputes involving said labor organizations;
(4) Notice of merger, consolidation, affiliation and change of name of said unions and or
petition for denial thereof;
(5) Registration of multi-employer11 CBAs or petitions for deregistration thereof;
(6) Contempt cases.
• As far as No. 3 above is concerned, the 2010 case of Atty. Montaño v. Atty. Verceles, is relevant.
Petitioner here claimed that under the Implementing Rules, it is the DOLE Regional Director and not
the BLR (Director) who has jurisdiction over intra-union disputes involving federations which, in this
case, pertains to the election protests in connection with the election of officers of the federation
(Federation of Free Workers [FFW]). In finding no merit in petitioner’s contention, the High Court
pointed out that Article 226 of the Labor Code clearly provides that the BLR (Director) and the
Regional Directors of DOLE have concurrent jurisdiction over inter-union and intra-union
disputes. Such disputes include the conduct or nullification of election of union and workers’
association officers. There is, thus, no doubt as to the BLR (Director)’s jurisdiction over the instant
dispute involving member-unions of a federation arising from disagreement over the provisions of
the federation’s constitution and by-laws. It agreed with the following observation of the BLR
(Director):
“Rule XVI lays down the decentralized intra-union dispute settlement mechanism.
Section 1 states that any complaint in this regard ‘shall be filed in the Regional Office where
the union is domiciled.’ The concept of domicile in labor relations regulation is equivalent

10 Referring to federations, national unions, industry unions and trade union centers, as distinguished from independent unions, local chapters and workers’ associations.
11 As distinguished from cases involving single-enterprise CBAs which fall under the jurisdiction of the DOLE Regional Director.
 to the place where the union seeks to operate or has established a geographical
presence for purposes of collective bargaining or for dealing with employers concerning
terms and conditions of employment.
“The matter of venue becomes problematic when the intra-union dispute involves a
federation, because the geographical presence of a federation may encompass more
than one administrative region. Pursuant to its authority under Article 232 [226], this Bureau
exercises original jurisdiction over intra-union disputes involving federations. It is well-settled
that FFW, having local unions all over the country, operates in more than one administrative
region. Therefore, this Bureau maintains original and exclusive jurisdiction over disputes
arising from any violation of or disagreement over any provision of its constitution and by-
laws.”

APPELLATE JURISDICTION OF THE BLR DIRECTOR

AS DISTINGUISHED FROM THAT OF THE DOLE SECRETARY
• Necessity for jurisdictional distinctions.
The distinctions pointed out above between the respective jurisdictions of the Med-Arbiters, DOLE
Regional Directors and 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 and BLR
Director.

The Supreme Court had occasion to distinguish the appellate jurisdiction of the BLR Director from that of
the DOLE Secretary in the case of 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
of their respective original and exclusive jurisdictions, the reason being that such decisions are final and
inappealable.

• 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:
(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
(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
(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.
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 Labor Code.
§ Variance in the rule on appeal in unorganized and organized establishments.
The rule on appeal in certification election cases in unorganized establishments is different from that of
organized establishments, to wit:
(1) Appeal in unorganized establishments. - The order granting the conduct of a certification
election in an unorganized establishment is not subject to appeal. Any issue arising from its
conduct or from its results is proper 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.
(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.
 • Appeals from decisions of DOLE Regional Directors
o Decisions appealable to the BLR Director.
Not all decisions, awards or orders rendered by the DOLE Regional Directors are appealable to the BLR
Director. Only decisions in the following cases relevant and related to labor relations, are appealable to
the BLR Director:
(1) Visitorial cases under Article 289 [274], involving examination of books of accounts of
independent unions, local chapters/chartered locals and workers’ associations;12
(2) Union registration-related cases, such as:
a) Denial of applications for union registration of independent unions, local
chapters and workers’ associations;
b) Revocation or cancellation of registration of said unions;
(3) Notice of merger, consolidation, affiliation and change of name of said unions and or
petition for denial thereof;
(4) CBA-related cases, such as:
a) Application for registration of single-enterprise CBAs or petition for deregistration
thereof;
b) Petition for denial of registration of single-enterprise CBAs or denial of petition
deregistration thereof.
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-Arbitration, to wit:
“RULE II
MED-ARBITRATION

“SEC. 3. Jurisdiction of the Regional 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 union 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 for examination of union books of accounts.”
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.
o Cases not appealable to the BLR Director but to some other labor officials.
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 not to the BLR Director:
(a) Visitorial (inspection) cases under Article 37;
(b) Visitorial (inspection) and enforcement cases13 under Article 128, (either routine or initiated
through a complaint);
(c) Occupational safety and health violations;
(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;
3) Complaints for illegal recruitment; and
4) Petition for closure of agency.

12 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 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 for examination of union books of accounts.”
13 Visitorial cases involve inspection of establishments to determine compliance with labor standards; while enforcement cases involve issuance of compliance orders and writs of
execution.
Additionally, their decisions on small money claims cases arising from labor standards violations in an
amount not exceeding ₱5,000.00 and not accompanied with a claim for reinstatement under Article
129 are appealable to the NLRC.
REMEDIES FROM DECISIONS OF BLR DIRECTOR AND DOLE SECRETARY RENDERED IN
THEIR APPELLATE JURISDICTION
• Appeals end with BLR director and DOLE secretary.
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 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 decisions thereon having already become final and
executory.
• Remedy from CA decisions to the Supreme Court.
There is only one mode to elevate labor cases from the CA to the Supreme Court and that is, through
Rule 45 petition for review on certiorari.

F. NATIONAL CONCILIATION AND MEDIATION BOARD

• NCMB is not a quasi-judicial agency.

o NCMB is not a quasi-judicial agency, according to the 2009 case of Tabigue v. International
Copra Export Corporation.
o “Quasi-judicial function” is a term which applies to the action, discretion, etc. of public
administrative officers or bodies, who are required to investigate facts or ascertain the
existence of facts, hold hearings, and draw conclusions from them as a basis for their official
action and to exercise discretion of a judicial nature.
• Not being a quasi-judicial agency, NCMB’S rulings cannot be elevated to, and cognizable by,
the Court of Appeals.
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 rendered by a quasi-judicial body, cannot be elevated to
the Court of Appeals under said rule.

1. Jurisdiction
• The NCMB is an agency attached to the DOLE principally in-charge of the settlement of labor
disputes through conciliation, mediation and voluntary arbitration. It is also charged with the
promotion of voluntary approaches to labor dispute prevention and settlement

2. Conciliation as distinguished from mediation

• Conciliation and mediation, meaning.
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 conflicting parties for the purpose of reconciling their differences
or persuading them into adjusting or settling their dispute. The Conciliator or Mediator normally
does not make or render any decision, his role being confined to the functions afore-
described.
• Distinction between conciliation and mediation.
o Generally, there are no marked distinctions between conciliation and mediation. The reason is
that in both cases, a neutral third party (called Conciliator or Mediator) is tasked to assist two or
more opposing parties in finding appropriate resolution to a dispute.
o In the NCMB, the hearing officer is called Conciliator-Mediator. There is no separate
classification between conciliators and mediators. When the Conciliator-Mediator performs his
task, he does not make any distinction when he is acting as Conciliator or as Mediator.
o In other jurisdictions, the principal distinction between conciliation and mediation lies on the
extent of the power and authority granted to the neutral third party.
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:
1. Facilitative Mediation where the Mediator does not make or offer any opinion; or
2. Evaluative Mediation where the Mediator offers an opinion which is not binding on the
parties.
It bears stressing, however, that regardless of which of the 2 methods above is chosen, the
Mediator is not empowered to impose his will on the parties.
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 this effect. His opinion is based on the facts and the law
involved in the controversy before him.
 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.

3. Preventive mediation

• Preventive mediation as a remedy.

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

The same rule applies in the case of lockout by an employer.

• Relevant cases.

A case in point is Philippine Airlines, Inc. v. Secretary of Labor and Employment, where the strike was
declared illegal for lack of a valid notice of strike in view of the NCMB’s conversion of said notice
into a preventive mediation case.

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.
G. DOLE REGIONAL DIRECTORS

1. Jurisdiction

• 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 which grants to them both visitorial and enforcement
powers. They are in charge of the administration and enforcement of labor standards within their
respective territorial jurisdictions.

• Jurisdiction of the DOLE Regional Directors.

The DOLE Regional Directors have original and exclusive jurisdiction over the following cases:
(a) Visitorial (inspection) cases under Article 37;
(b) Visitorial (inspection) and enforcement cases14 under Article 128, (either routine or initiated
through a complaint);

14 Visitorial cases involve inspection of establishments to determine compliance with labor standards; while enforcement cases involve issuance of compliance orders and writs of
execution.
 (c) Visitorial cases under Article 289 [274], involving examination of books of accounts of
independent unions, local chapters/chartered locals and workers’ associations;
(d) Occupational safety and health violations;
(e) Small money claims cases arising from labor standards violations in an amount not exceeding
₱5,000.00 and not accompanied with a claim for reinstatement under Article 129;
(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;
3) Complaints for illegal recruitment; and
4) Petition for closure of agency;
(g) Cases submitted for voluntary arbitration in their capacity as Ex-Officio Voluntary Arbitrators
(EVAs) under Department Order No. 83-07, Series of 2007.
(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;15
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;
(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
(k) Request for SEBA certification when made in an unorganized establishment with only one (1)
legitimate union.

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 representatives under Article 128 is the establishment which is under inspection and
not the employees thereof.
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 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 employees thereof, to determine compliance by
such establishments with labor standards laws. Necessarily, in case of an award from such
violation by the establishment, all its existing employees should be benefited thereby. It must
be stressed, however, that such award should not apply to those who resigned, retired or
ceased to be employees at the time the complaint was filed.

• Original jurisdiction

The DOLE Regional Directors exercise original jurisdiction over the following:
(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).

• Visitorial power of regional directors under Article 128(a).

Pursuant to their visitorial power under Article 128(a), the DOLE Regional Directors shall have:
(a) access to employer’s records and premises at any time of the day or night, whenever work is
being undertaken therein; and

15 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 revocation of registration is cognizable by the
BLR Director in his original and exclusive jurisdiction [infra].
 (b) the right:
(1) to copy from said records;
(2) to question any employee and investigate any fact, condition or matter which may be
necessary to determine violations or which may aid in the enforcement of the Labor
Code and of any labor law, wage order, or rules and regulations issued pursuant thereto.
• Enforcement power of regional directors under Article 128(b).

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.

Pursuant thereto, the DOLE Regional Director, in cases where the employer-employee relationship
still exists, shall have the power:
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 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 supported by documentary proofs which were not
considered in the course of inspection, in which case, the contested case shall fall under
the jurisdiction of the Labor Arbiter to whom it should be endorsed by the Regional Director.
c. to order stoppage of work or suspension of operations of any unit or department of an
establishment 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 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.
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.
CASES SUBMITTED TO REGIONAL DIRECTORS AND ASSISTANT REGIONAL DIRECTORS FOR
VOLUNTARY ARBITRATION IN THEIR CAPACITY AS EX-OFFICIO VOLUNTARY ARBITRATORS (EVAs)
1. Jurisdiction.

As EVAs, the DOLE Regional Directors and their Assistants have jurisdiction over the following cases:
(a) All grievances arising from the interpretation or implementation of the CBA;
(b) All 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 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 arbitration.
2. Recovery and adjudicatory power

a. Small Money Claims Cases

• 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 129 of the Labor Code.
Article 129 contemplates the recovery of wages and other monetary claims and benefits,
including legal interest, owing to an employee arising 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 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).
• Requisites for the valid exercise of jurisdiction by DOLE Regional Directors under article 129.
The following requisites must all concur, to wit:
(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.
In the absence of any of the aforesaid three (3) requisites, the Labor Arbiters have original and
exclusive jurisdiction over all claims arising from employer-employee relations, other than claims
for employees’ compensation, social security, PhilHealth and maternity benefits.
H. DOLE SECRETARY

1. Jurisdiction

• Powers of the DOLE secretary.

The DOLE Secretary, being the head of the Department of Labor and Employment, is possessed of
a number of powers, some of which are mentioned in the syllabus, to wit:
1. Visitorial and enforcement powers;
2. Power to suspend the effects of termination;
3. Assumption of jurisdiction;
4. Appellate jurisdiction; and
5. Voluntary arbitration powers.
• Cases falling under the DOLE secretary’s original jurisdiction.

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 (national interest cases);
(2) Petition to certify national interest cases to the NLRC for compulsory arbitration;
(3) Petition to suspend effects of termination;
(4) Administrative Intervention for Dispute Avoidance (AIDA) cases;
(5) Voluntary arbitration cases; and
(6) Contempt cases
• 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 Secretary and/or the Regional Directors, his duly authorized representatives, may
exercise in connection with the administration and enforcement of the labor standards provisions
of the Labor Code and of any labor law, wage order or rules and regulations issued pursuant
thereto.
The three (3) kinds of power are as follows:
1) Visitorial power:
2) Enforcement power: and
3) Appellate power or power of review.
• Who exercise the powers.

Nos. 1 and 2 above are exercised under the original jurisdiction of the DOLE Regional Directors.
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.
The appellate power in No. 3 above may only be exercised by the DOLE Secretary in respect to
any decision, order or award issued by the DOLE Regional Directors.
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 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.

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 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.

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.

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.

3. Power to suspend effect of termination

• Grounds.

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:
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.

The obvious purpose behind this rule is to bring the parties back to the status quo ante litem, that
is, their state of 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 accordingly not be deprived of their wages while
the litigation is on-going.

• Reinstatement pending resolution of the termination dispute

Suspension of the effects of termination will necessarily result in the immediate reinstatement of
the terminated employees. An order of reinstatement pending resolution of the case may thus be
issued by the DOLE Secretary pursuant to this power.

• Distinguished from dole secretary’s power of assumption or certification in national interest

cases.

o Different power of the DOLE Secretary.

This power of the DOLE Secretary granted under Article 277(b) should be distinguished from his
power to assume or certify labor disputes involving industries indispensable to the national interest
under Article 263(g). The following distinctions may be cited:

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 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 interest.

Second, the former requires the conduct of preliminary determination of the existence of prima
facie evidence that the termination may cause a serious labor dispute or is in implementation
of a mass lay-off to be conducted by the appropriate official of the DOLE before whom the
termination dispute is pending; while the latter does not require such preliminary prima facie
determination. In fact, prior notice and hearing are not required before the DOLE Secretary
may issue an assumption or certification order.

Third, the “serious labor dispute” contemplated under the former may or may not involve a
strike or lockout; while the labor dispute referred to in the latter will cause or likely to cause a
strike or lockout.

Fourth, the former may be exercised in cases of termination of employment for as long as any
of the two (2) 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 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 strike or lockout, if one has not taken
place, pending the resolution of the issues raised in the notice of strike or lockout.
4. Appellate Jurisdiction

a. Various appeals to the DOLE Secretary under the Labor Code and Applicable Rules

• Offices from which appeals may originate.

Appeals to the DOLE Secretary may originate from any of the following offices:
(1) DOLE Regional Directors;
(2) Med-Arbiters;
(3) Director of the Bureau of Labor Relations (BLR); and
(4) Philippine Overseas Employment Administration (POEA).
• Cases not appealable to the DOLE Secretary

The following decisions, awards or orders are not appealable to the Office of the DOLE Secretary:
(1) Those rendered by Labor Arbiters that are appealable to the Commission (NLRC) which has
exclusive appellate jurisdiction thereover;
(2) Those rendered by the Commission (NLRC) since they can be elevated directly to the CA
by way of a Rule 65 certiorari petition;
(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 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
(6) Those rendered by Voluntary Arbitrators which are appealable directly to the CA under
Rule 43 of the Rules of Court.

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:
(a) Labor standards enforcement cases under Article 128;
(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

As earlier pointed out, the following cases decided by the DOLE Regional Directors are not
appealable to the DOLE Secretary but to some other agencies/tribunals indicated below:
(a) Decisions in 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 129 are appealable to the NLRC;
(b) Decisions in cases submitted to DOLE Regional Directors for voluntary arbitration in their
capacity as Ex-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 so deciding, are acting as
Voluntary Arbitrators; hence, what should apply are the rules on appeal applicable to
voluntary arbitration.
c. Appeals from decisions of Mediators-Arbiters (Med-Arbiters) and BLR director
(NOTE: See discussion above in connection with the jurisdiction of the Bureau of Labor
Relations [BLR])
d. Appeals from decisions of POEA

• Cases appealable to the DOLE Secretary.

The decisions in the following cases rendered by the Philippine Overseas Employment
Administration (POEA) in its original jurisdiction are appealable to the DOLE Secretary:
(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 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.
 (b) Disciplinary action cases and other special cases which are administrative in character,
involving employers, principals, contracting partners and Filipino migrant workers.
It must be noted that the POEA ceased to have any jurisdiction over money claims of OFWs, or
those arising out of an employer-employee relationship or by virtue of any law or contract
involving Filipino workers for overseas deployment including claims for actual, moral, exemplary
and other forms of damages. The jurisdiction over these claims was transferred to the Labor
Arbiters of the NLRC by virtue of Section 10 of R.A. No. 8042, as amended. Hence, appeals
therefrom may be instituted to the Commission (NLRC).
5. DOLE Secretary’s Voluntary Arbitration Powers

(a) AIDA

• New rule on voluntary settlement of cases by the DOLE Secretary

A new form of dispute settlement by the DOLE Secretary was introduced by DOLE Circular No. 1,
Series of 2006. Called Administrative Intervention for Dispute Avoidance (AIDA), this is a new
administrative procedure for 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.

This recourse is separate from the established dispute resolution modes of mediation, conciliation
and arbitration 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 intervention of a regional or local tripartite peace
council for the same purpose.

• 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 Request for Intervention, any potential or ongoing dispute defined
below.

• Potential or on-going dispute.

A potential or on-going dispute refers to:

i. a live and active dispute;

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 is made.

(b) Voluntary arbitration by DOLE Secretary.

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 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.
(c) Does the DOLE Secretary assume the role of voluntary arbitrator once he assumes jurisdiction
over a labor dispute?

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 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 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 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 on the ground, among others, that the
decision of the DOLE Secretary, having been rendered by him in his capacity 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.
Before the Supreme Court, petitioner asserted that, contrary to the CA’s ruling, the case is not a
simple voluntary arbitration case. The character of the case, which involves an impending strike
by petitioner’s employees; the nature 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 the coverage of Article 262,
and instead placed it under Article 263, of the Labor Code. For its part, respondent 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.

The Supreme Court, however, pronounced that:

“It cannot be said that in taking cognizance of NCMB-NCR CASE No. NS-02-028-07, the
Secretary of Labor did so in a limited capacity, i.e., as a voluntary arbitrator. The fact is
undeniable that by referring 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 jurisdiction over
the case, which he in fact did. By assuming jurisdiction over the case, the provisions of
Article 263 became applicable, any representation to the contrary or that he is deciding
the case in his capacity as a voluntary arbitrator notwithstanding.”
Consequently, the Supreme Court reversed and set aside the CA ruling and reinstated the case
and directed the CA “to resolve the same with deliberate dispatch.”
6. Remedies

• The aggrieved party from a decision of the SOLE may file one motion for reconsideration within
ten (10) days from receipt thereof.
• If the motion for reconsideration is denied, the party may appeal via Rule 65 to the CA 60 days
from receipt of 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)]

I. VOLUNTARY ARBITRATOR

1. Jurisdiction

• Voluntary arbitration.

“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 is final and executory. It is a third-party settlement of a
labor dispute involving the mutual consent by the representatives of the employer and the labor
union involved in a labor dispute to submit their case for arbitration.

• Voluntary arbitrator.

o Who is a Voluntary Arbitrator?

A “Voluntary Arbitrator” refers to:

(1) any person who has been accredited by the National Conciliation and Mediation
Board (“NCMB” or “Board”) as such; or
(2) any person named or designated in the CBA by the parties as their 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
(4) one appointed by the NCMB in case either of the parties to the CBA refuses to submit
to voluntary arbitration.
This term includes a panel of Voluntary Arbitrators.

• Voluntary arbitrator acts in quasi-judicial capacity.

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 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 acting
solely or in a panel, enjoys in law the status of a quasi-judicial agency.
 1. JURISDICTION

• Original and exclusive jurisdiction.

o In general.

The Voluntary Arbitrator or panel of Voluntary Arbitrators shall have exclusive and original
jurisdiction over the following cases:
(1) Unresolved grievances arising from the interpretation or implementation of the collective
bargaining agreement (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.
(4) Other labor disputes, including unfair labor practices and bargaining deadlocks, upon
agreement of the parties.
(5) National interest cases.
(6) Wage distortion issues arising from the application of any wage orders in organized
establishments.
(7) Unresolved grievances arising from the interpretation and implementation of the
Productivity Incentive Programs under R.A. No. 6971.
a. Jurisdiction over other labor disputes
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 bargaining deadlocks. For this purpose, before or at any
stage of the compulsory arbitration process, parties to a labor dispute may agree to submit their
case to voluntary arbitration.
b. Jurisdiction over national interest cases
Article 278(g) [263(g)] of the Labor Code which involves the DOLE Secretary’s power of
assumption of jurisdiction or certification to the NLRC of labor disputes affecting industries
indispensable to the national interest, also provides that “[b]efore or at any stage of the
compulsory arbitration process, the parties may opt to submit their dispute to voluntary
arbitration.”
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 the DOLE Secretary or NLRC, as the case may be, and submit it
to a Voluntary Arbitrator for voluntary arbitration purposes.
c. Jurisdiction over wage distortion cases

• Jurisdiction over wage distortion cases depends on whether the establishment is organized or
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 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.

(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 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 PARTIES TO A CBA –
REFERRING TO THE EMPLOYER AND THE BARGAINING UNION - 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 the employer, they cannot submit the
same grievance, if unresolved by the employer, for voluntary 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 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 designated in advance by parties to a CBA.
Consequently only disputes involving the union and the company shall be referred to the
grievance machinery or voluntary arbitrators.”
2. Remedies

• Reliefs and remedies that may be granted by Voluntary Arbitrators.

Besides the procedural remedies discussed above, the Voluntary Arbitrator or panel of Voluntary
Arbitrators may grant the same reliefs and remedies granted by Labor Arbiters under Article 279 of
the Labor Code, such as:
(1) In illegal dismissal cases:
(a) Actual reinstatement;
(b) Separation pay in lieu of reinstatement, in case reinstatement becomes impossible,
non-feasible or impractical;
(c) Full backwages;
(d) Moral and exemplary damages; and
(e) Attorney’s fees.
(2) Monetary awards in monetary claims cases in which case, the decision should specify the
amount granted and the formula used in the computation thereof.
J. PRESCRIPTION OF ACTIONS

1. Money claims

• Prescriptive period is three (3) years under Article 291 of the Labor Code. - The prescriptive
period of all money claims and benefits arising from employer-employee relations is 3 years
from the time the cause of action accrued; otherwise, they shall be forever barred.

• 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.
2. Incremental proceeds from tuition increases.
3. Money claims of Overseas Filipino Workers (OFWs).
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.
2. Illegal dismissal

• Legal basis is not Article 291 of the Labor Code but Article 1146 of the Civil Code. - The 3-year
prescriptive 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.

3. Unfair labor practice

• Prescriptive period of ULP cases is 1 year (Article 290, Labor Code). - The prescriptive period
for all 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 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. 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.
• 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 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 finding that an unfair labor practice
act was in fact committed by the respondent.

4. Offenses under the Labor Code

• Prescriptive period is 3 years (Article 290, Labor Code). - The prescriptive period of all criminal
offenses penalized under the Labor Code and the Rules to Implement the Labor Code is three
(3) years from the time of commission thereof.
• Consequence of non-compliance with prescriptive period under Article 290. - Failure to
initiate or file the 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 without cause, although a violation of the Labor Code and its implementing rules,
does not amount to an “offense” as this term is understood and contemplated under Article
290.

5. Illegal recruitment

• Simple illegal recruitment cases. – The prescriptive period is five (5) years.
• Illegal recruitment cases involving economic sabotage. – The prescriptive period is twenty (20)
years.

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GOOD LUCK AND CONGRATULATIONS!