Last-Minute Pre-Week Notes On Labor Law Revised and Updated For The 2016 Bar Exams

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LAST-MINUTE
PRE-WEEK NOTES ON LABOR LAW
REVISED AND UPDATED FOR THE 2016 BAR EXAMS
======================
NEW LAWS
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R.A. No. 10022 [March 8, 2010], amending R.A. No. 8042, otherwise known as the
Migrant Workers and Overseas Filipinos Act of 1995, as amended, further improving the
standard of protection and promotion of the welfare of migrant workers, their families
and overseas Filipinos in distress and for other purposes.
R.A. No. 10151 [June 21, 2011], allowing the employment of night workers, thereby
repealing Articles 130 and 131 of Presidential Decree Number Four Hundred Forty-Two,
as amended, otherwise known as the Labor Code of the Philippines.
R.A. No. 10361 [January 18, 2013], instituting policies for the protection and welfare of
domestic workers, otherwise known as the Domestic Workers Act or Batas
Kasambahay.
R.A. No. 10395 [March 14, 2013], strengthening tripartism, amending for the purpose
Article 290 [275] of the Labor Code, otherwise known as the Tripartism Law.
Tripartism in labor relations is hereby declared a State policy. Towards this end,
workers and employers shall, as far as practicable, be represented in decision and
policy-making bodies of the government.
R.A. No. 10396 [March 14, 2013], strengthening conciliation-mediation as a voluntary

mode of dispute settlement for all labor cases, amending for this purpose Article 234
[228] of the Labor Code, otherwise known as the Mandatory Conciliation-Mediation
Law.
NEW LABOR ISSUANCES

o
Department Order No. 162, Series of 2016 (issued on July 15, 2016) - Suspending
Registration of New Applicants as Contractors or Subcontractors Under Department
Order No. I8-A.
Labor Advisory No. 10, Series of 2016 (on July 25, 2016) - Prohibition Against LaborOnly Contracting.
Department Order No. 40-I-15, Series of 2015 (Issued on September 07, 2015) REPEALING Voluntary Recognition as a mode of designating a SEBA and replacing it
with the mode known as Request for SEBA Certification.
Department Order No. 147-15, Series of 2015 (Issued on September 07, 2015) Amending the Implementing Rules and Regulations of Book VI of the Labor Code of
the Philippines, As Amended. It seeks to standardize the (r)ules governing the
application of the just and authorized causes of termination of employment under
Articles 297-299 of the Labor Code, as amended.
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Prof. Joselito Guianan Chan
Department Advisory No. 01-2015, Series of 2015, (Issued on July 21, 2015) - entitled
Renumbering of the Labor Code of the Philippines, As Amended. issued after almost
4 years from R.A. No. 10151s enactment on June 21, 2011.
ISSUANCES ON OVERSEAS EMPLOYMENT

1. Omnibus Rules and Regulations Implementing the Migrant Workers and Overseas
Filipinos Act of 1995, as Amended by Republic Act No. 10022, issued on July 8,
2010;1
2. Revised POEA Rules and Regulations Governing the Recruitment and
Employment of Land-Based Overseas Filipino Workers of 2016;2 and
3. 2016 Revised POEA Rules and Regulations Governing the Recruitment and
Employment of Seafarers issued on February 26, 2016.3
-----------------------------------------------SYLLABUS
TOPIC NO. 1
FUNDAMENTAL PRINCIPLES AND POLICIES
A.
CONSTITUTIONAL PROVISIONS
What are the important labor-related constitutional principles?
Under the syllabus, the following labor-related principles are cited:
Under Article II (Declaration of Principles and State Policies):
a.
Promotion of full employment, a rising standard of living, and an improved quality of life
for all.
b. Promotion of social justice in all phases of national development.
c. Full respect for human rights.
d. Vital role of the youth in nation-building.
e. Role of women in nation-building, and fundamental equality before the law of women and
men.
f. Indispensable role of the private sector.
g. Protection-to-labor clause: Section 18. The State affirms labor as a primary social
economic force. It shall protect the rights of workers and promote their welfare.
The ones mentioned in Article II are merely statements of principles and state policies. These are
all not self-executing provisions. They are used only as guides for judicial decisions or legislative
enactments. Being mere statement of principles and policies, no case can be filed for their violation. Only
violation of the laws passed to implement these principles and policies can be proper subject of court
litigation.
Under Article III (Bill of Rights):
a.
1
2
3
Due process and equal protection of the law.

NOTE: THIS CANNOT BE INVOKED BY EMPLOYEES AGAINST THEIR EMPLOYERS IN
CASES OFTERMINATION OF THEIR EMPLOYMENT.
Formerly, Omnibus Rules and Regulations Implementing R.A. No. 8042 jointly issued by the Secretary of Foreign Affairs and Secretary of Labor and Employment on February 29,
1996;
Formerly, POEA Rules and Regulations Governing the Recruitment and Employment of Land-Based Overseas Workers issued on February 4, 2002.
Formerly, POEA Rules and Regulations Governing the Recruitment and Employment of Seafarers issued on May 23, 2003.

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b.
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.
NOTE: THIS FREEDOM IS RELEVANT ONLY IN PICKETING AND NOT IN STRIKE.
c.
Right of public and private sector employees to form unions, associations, or societies for
purposes not contrary to law shall not be abridged.
NOTE: THIS IS KNOWN AS FREEDOM OF ASSOCIATION. THIS PROVISION IS THE
BASIS FOR THE EMPLOYEES RIGHT TO SELF-ORGANIZATION.
d. Non-impairment of obligations of contracts.

NOTE: THE CONCEPT OF THIS RIGHT IN POLITICAL LAW IS SIMILAR IN LABOR LAW.
e.
Right to speedy disposition of cases in judicial, quasi-judicial or administrative bodies.

NOTE: THIS CAN BE INVOKED IN LABOR CASES AT ALL LEVELS.
f.
Prohibitions against involuntary servitude.

NOTE: 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) A STRIKER CAN BE ORDERED TO RETURN TO WORK EVEN AGAINST HIS WILL IN
NATIONAL INTEREST CASES. ACCORDINGLY, IT IS NOT IN VIOLATION OF THE
INVOLUNTARY SERVITUDE PRINCIPLE.
Under Article XIII (Social Justice and Human Rights):

a.
Protection-to-Labor Clause: VERY IMPORTANT

Section 3. The State shall afford full protection to labor, local and overseas, organized and
unorganized, and promote full employment and equality of employment opportunities for all.
It shall guarantee the rights of all workers to self-organization, collective bargaining and
negotiations, and peaceful concerted activities, including the right to strike in accordance with
law. They shall be entitled to security of tenure, humane conditions of work, and a living wage.
They shall also participate in policy and decision-making processes affecting their rights and
benefits as may be provided by law.
The State shall promote the principle of shared responsibility between workers and
employers and the preferential use of voluntary modes in settling disputes, including
conciliation, and shall enforce their mutual compliance therewith to foster industrial peace.
The State shall regulate the relations between workers and employers, recognizing the right
of labor to its just share in the fruits of production and the right of enterprises to reasonable
returns to investments, and to expansion and growth.
What are the kinds of procedural due process that may be asserted in labor cases?
The following are the kinds of procedural due process that may be invoked in labor cases, to wit:
(1) Procedural due process that may be invoked against the employer during the investigation of
the employees administrative case at the company-level, that may lead to his dismissal:
a. Statutory due process per Agabon doctrine which refers to the due process provision in the
Labor Code (Article 277[b]); and
b. Contractual due process per Abbott Laboratories doctrine which refers to the due process
prescribed in the Company Rules and Regulations or Code of Conduct or Code of
Discipline.
(2) Procedural due process that may be invoked once a case has already been filed in the labor
court, such as the Labor Arbiter or the NLRC, and/or brought to higher courts:
a. Constitutional due process under Section 1, Article III of the Constitution since this right
cannot be invoked against the private employer but only against the State or government as
represented by Labor Arbiters, NLRC, CA and SC.
The rule since Agabon is that compliance with the statutorily-prescribed procedural due process
under Article 277(b) would suffice. It is not important whether there is an existing company policy which
also enunciates the procedural due process in termination cases in determining the validity of the
termination. However, under the latest doctrinal en banc ruling in the 2013 case of Abbott Laboratories,

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Philippines v. Pearlie Ann F. Alcaraz, 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 employers 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 similar to the
P30,000.00 awarded under the Agabon doctrine.
When can an employee invoke constitutional due process and right to equal protection of the laws?
To reiterate, as distinguished from company-level investigation conducted by the employer, a
dismissed employee who files an illegal dismissal case may raise the issue of deprivation of his right to
constitutional due process and right to equal protection of the laws against the Labor Arbiter who hears
and decides his case or the Commission (NLRC), Court of Appeals on Rule 65 certiorari petition. The
reason is that, at this stage, the government is now involved through said labor tribunals.
Is right to counsel mandatory?
No. 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).
B.
NEW CIVIL CODE
NOTE: Only three (3) Civil Code provisions are cited in the syllabus, to wit:
Article 19
Article 1700
Article 1702
Does the civil law Principle of Abuse of Rights under Article 19 apply to labor cases?
Yes. The following principle equally applies to labor cases:
Art. 19. Every person must, in the exercise of his rights and in the performance of his
duties, act with justice, give everyone his due, and observe honesty and good faith.
An example is Becmen Service Exporter and Promotion, Inc. v. Spouses Simplicio and Mila
Cuaresma, April 7, 2009, where petitioner recruiter was held liable for damages because it never
rendered immediate aid to the daughter of respondents who died in Saudi Arabia.
Is Article 1700 of the Civil Code applicable to labor cases?
Yes, Article 1700 of the Civil Code provides:
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 incorporated therein even if not so expressly
provided or stipulated in its provisions.
How is Article 1702 of the Civil Code correlated with Article 4 of the Labor Code?
Both Article 1702 of the Civil Code and Article 4 of the Labor Code speak of the rule on
interpretation and construction provisions of law and labor contracts.
Article 1702 of the Civil Code provides:
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 states:

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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.
Article 1700 applies to doubts and ambiguities in

(1) Labor legislations;
(2) Labor contracts such as an employment contract or a CBA;
(3) evidence presented in labor cases.
Article 1700 applies to doubts and ambiguities:
(1) In the Labor Code; and
(2) In the Implementing Rules of the Labor Code.
C.
THE LABOR CODE
What are the distinctions between Labor Relations and Labor Standards?
Labor standards law is that part of labor law which prescribes the minimum terms and
conditions of employment which the employer is required to grant to its employees.
Labor relations law is that part of labor law (Book V of the Labor Code) which deals with
unionism, collective bargaining, grievance machinery, voluntary arbitration, strike, picketing and
lockout.
Labor relations and labor standards laws are not mutually exclusive. They are complementary
to, and closely interlinked with, each other. For instance, the laws on collective bargaining, strikes and
lockouts which are covered by labor relations law necessarily relate to the laws on working conditions
found in Book III.
What is a SEBA?
An exclusive bargaining representative or exclusive bargaining agent or Sole and Exclusive
Bargaining Agent (SEBA), refers to a legitimate labor organization duly certified as the sole and exclusive
bargaining representative or agent of all the employees in a bargaining unit.
Note must be made of the latest innovative amendment of the Labor Codes Implementing Rules
introduced by Department Order No. 40-I-15, Series of 2015, which has expressly repealed the entire
provision on Voluntary Recognition of the Implementing Rules on Book V and replaced it with the
freshly-minted mode of securing the status of a sole and exclusive bargaining agent through a Request
for SEBA Certification or Request. Voluntary recognition is therefore no longer allowed and is
effectively replaced by the Request mode.
(NOTE: This is extensively discussed in Topic No. 7 (Labor Relations Law), infra)
Can individual employee or group of employees bring grievable issues directly to their employer
without the participation of the bargaining union?
Yes. The designation of a SEBA does not deprive an individual employee or group of employees
to exercise their right at any time to present grievances to their employer, with or without the
intervention of the SEBA.
Can individual employee or group of employees bring grievable issues to voluntary arbitration
without the participation of the SEBA?
No, as held in the 2009 case of Tabigue v. International Copra Export Corporation, where the
Supreme Court clarified that an individual employee or group of employees cannot be allowed to
submit or refer unsettled grievances for voluntary arbitration without the participation of the SEBA.
The reason is that it is the SEBA which is a party to the CBA which contains the provision on voluntary
arbitration. Being a party thereto, the SEBA cannot be disregarded when a grievable issue will be
submitted for voluntary arbitration.
In order to have legal standing, the individual members should be shown to have been duly
authorized to represent the SEBA. (NOTE: Insular Hotel Employees Union-NFL v. Waterfront Insular
Hotel Davao, Sept. 22, 2010, reiterated Tabigue).
What is the principle of co-determination?
The principle of co-determination refers to the right given to the employees to co-determine or
share the responsibility of formulating certain policies that affect their rights, benefits and welfare.

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In Philippine Airlines, Inc. (PAL) v. NLRC and Philippine Airlines Employees Association
(PALEA), it was held that the formulation of a Code of Discipline among employees is a shared
responsibility of the employer and the employees. It affirmed the decision of the NLRC which ordered
that the New Code of Discipline should be reviewed and discussed with the union, particularly the
disputed provisions and that copies thereof be furnished each employee.
Does the grant of the right of participation mean co-management of business or intrusion into management
prerogatives?
No. This principle does not mean that workers should approve management policies or decisions.
What is Labor-Management Council (LMC)?
The establishment of Labor-Management Council (LMC) is mandated under the said
constitutional principle of co-determination.
What is the significance of Article 277 of the Labor Code?
Article 277 of the Labor Code enunciates the so-called statutory due process (as distinguished
from constitutional due process) as found in its paragraph (b).
Additionally, Article 277 likewise recognizes the right of any employee, whether employed for a
definite period or not, to join and be a member of a labor union beginning on his first day of service.
------------oOo------------

7
SYLLABUS
TOPIC NO. 2
RECRUITMENT AND PLACEMENT
A.
RECRUITMENT OF
LOCAL AND MIGRANT WORKERS
I.
FOR LOCAL EMPLOYMENT
What is the latest DOLE issuance governing recruitment and placement for local employment?
DEPARTMENT ORDER NO. 141-14, Series of 2014, issued on 20 November 2014, entitled
REVISED RULES AND REGULATIONS GOVERNING RECRUITMENT AND PLACEMENT
FOR LOCAL EMPLOYMENT.
These rules shall apply to every person, partnership or corporation intending to engage or
engaged in the recruitment and placement for local employment through an agency.
What are important terms relevant to recruitment and placement for local employment?
1) Private employment agency or agency refers to any person, partnership or corporation
engaged in the recruitment and placement of workers for local employment. It also refers to
any individual, partnership, corporation or entity licensed by the Department of Labor and
Employment (DOLE) to engage in the recruitment and placement of Kasambahay for local
employment.
2) License refers to a document issued by the Secretary through the Regional Director
authorizing a person, partnership or corporation to operate a private employment agency.
3) Authority to recruit refers to a document issued by the DOLE Secretary through the
Regional Director authorizing a person to conduct recruitment activities for local employment
on behalf of a private employment agency.
4) Representative refers to a person acting as an agent of a private employment agency
registered with the Regional Office and granted Authority to Recruit.
5) Domestic Seafarer refers to any person who is employed or engaged to work in any capacity
on board ship as defined herein.
6) Ship refers to a Philippine registered ship or vessel which navigates within the territorial
jurisdiction of the Philippines or closely adjacent to, sheltered areas or areas where port
regulations apply.
7) Recruitment contract refers to the agreement entered into between a private employment
agency or its representative and a recruit stating the terms and conditions of the recruitment
in a language known and understood by the recruit.
8) Employment contract refers to the individual written agreement between the employer and
the worker stating clearly the terms and conditions of employment in a language known and
understood by the worker.
9) Service contract refers to the agreement entered into between the employer and the private
employment agency stating clearly the terms and conditions of the service.
10) Service fee refers to the amount charged by a private employment agency to a local
employer as payment for actual services rendered in relation to the recruitment and placement
of workers.
11) Employer refers to any person, partnership, corporation or entity engaging the services of a
worker through the private employment agency, and who is party to the employment contract
with the worker. It also refers to any person who engages and controls the services of a
Kasambahay and is party to the employment contract.
12) Non-license or non-holder of authority refers to any person, partnership or corporation
who has not been issued a license or authority to recruit, or whose license or authority to
recruit has been revoked or cancelled by the Regional Director.
What are the qualifications of private employment agency?
The applicant for a license to operate a private employment agency must possess the following:
a. Filipino citizens for single proprietorship and seventy five percent (75%) of the authorized
capital stock is owned and controlled by Filipino citizens for partnership and corporation.
b. Minimum net worth of 1,000,000.00 in case of single proprietorship and a minimum paid up
capital of 1,000,000.00 in case of partnership and corporation; and

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c. Not otherwise disqualified by law or other government rules and regulations to engage in the
business of recruitment and placement of workers for local employment.
What are the disqualifications of private employment agency?
The following are not qualified to engage in the business of recruitment and placement for local
employment:
a) Those who are convicted of illegal recruitment, trafficking in persons, anti-child labor
violation, or crimes involving moral turpitude;
b) Those against whom probable cause or prima facie finding of guilt for illegal recruitment or
other related cases exist particularly to owners or directors of agencies who have committed
illegal recruitment or other related cases.
c) Those agencies whose licenses have been previously revoked or cancelled by the Department
under Sec. 54 of these rules.
d) Cooperatives whether registered or not under the Cooperative Act of the Philippines.
e) Law enforcers and any official and employee of the Department of Labor and Employment
(DOLE).
f) Sole proprietors of duly licensed agencies are prohibited from securing another license to
engage in recruitment and placement.
g) Sole proprietors, partnerships or corporations licensed to engage in private recruitment and
placement for local employment are prohibited from engaging in job contracting or subcontracting activities.
What is the period of validity of the license?
The license shall be valid for period of three (3) years from the date of issuance unless sooner
revoked or cancelled.
Is the license transferable to other persons or entities?
The license or authority to recruit shall not be transferred, conveyed or assigned to any person or
entity other than the one in whose favor it was issued.
What is the effect of change of ownership?
An agency desiring to transfer ownership shall surrender its license to the issuing Regional
Office. The new owner/s of the agency must apply for a new license. A change or transfer of ownership
of a sing proprietorship shall cause the automatic revocation of the license.
In case of death of a single proprietor, the license may be extended for not more than six (6)
months from the death of the proprietor upon the request of the heirs to continue only for the purpose of
winding up the business operations or until its expiration whichever comes first.
A change in the relationship among the partners in a partnership shall cause the immediate
dissolution of the partnership resulting to the automatic revocation of the license.
II.
FOR OVERSEAS EMPLOYMENT
What are the laws relevant to overseas employment?
1. The Labor Code;
2. Republic Act No. 8042, otherwise known as the Migrant Workers and Overseas Filipinos Act of
1995 which became effective on August 25, 1995 [approved on June 7, 1995];
3. R.A. No. 9422 enacted on April 10, 2007 strengthening the regulatory functions of the POEA;
and
4. R.A. No. 10022 enacted on March 8, 2010 amending certain provisions of R.A. No. 8042;
What are the latest rules relevant to overseas employment?
1. Omnibus Rules and Regulations Implementing the Migrant Workers and Overseas Filipinos Act of
1995, as Amended by Republic Act No. 10022, issued on July 8, 2010;1
2. Revised POEA Rules and Regulations Governing the Recruitment and Employment of Land-Based
Overseas Filipino Workers of 2016;2 and
3. 2016 Revised POEA Rules and Regulations Governing the Recruitment and Employment of Seafarers
issued on February 26, 2016.3
1
2
3
Formerly, Omnibus Rules and Regulations Implementing R.A. No. 8042 jointly issued by the Secretary of Foreign Affairs and Secretary of Labor and Employment on February 29,
1996;
Formerly, POEA Rules and Regulations Governing the Recruitment and Employment of Land-Based Overseas Workers issued on February 4, 2002.
Formerly, POEA Rules and Regulations Governing the Recruitment and Employment of Seafarers issued on May 23, 2003.

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What are the important terms related to overseas employment?

FOR SEAFARERS:
1) Seafarer refers to any person who is employed or engaged or works in any capacity on
board a ship.
2) Employment Contract / Standard Employment Contract refers to the POEA - prescribed
contract containing the minimum terms and conditions of employment, which shall
commence upon actual departure of the seafarer from the Philippine airport or seaport in the
point of hire.
3) License refers to the document issued by the Secretary of Labor and Employment or
his/her duly authorized representative authorizing a person, partnership or corporation to
operate a licensed manning agency.
4) Licensed Manning Agency refers to a person, partnership or corporation duly licensed by
the Secretary or his/her duly authorized representative to engage in the recruitment and
placement of Filipino seafarers for a ship plying international waters and for related maritime
activities.
5) Manning Agency Fee refers to the amount charged by a licensed manning agency to its
principal/employer as payment for actual services rendered in relation to the recruitment
and placement of seafarers.
6) Non-licensee refers to a person, partnership or corporation without a valid license to
engage in the recruitment and placement of Filipino seafarers, or whose license had been
revoked, cancelled, expired or otherwise delisted from the roll of licensed manning agencies
registered with the Administration.
FOR LAND-BASED OFWs:
1. Overseas Filipino Worker or Migrant Worker refers to a person who is to be engaged, is
engaged, or has been engaged in a remunerated activity in a State or country of which the
worker is not a citizen. A person to be engaged in a remunerated activity refers to an
applicant worker who has been promised or assured employment overseas.
2. Underage Migrant Worker refers to one who is below the minimum age requirement for
overseas employment as prescribed by the POEA Governing Board.
3. Employment Contract/Offer of Employment refers to an individual written agreement
between the principal/employer and the worker who is hired through a licensed recruitment
agency or through the Administration, containing the minimum terms and conditions of
employment as provided under these Rules.
4. Foreign Placement Agency or FPA refers to any single proprietor, partnership or
corporation duly licensed in the host country to engage in the recruitment of foreign workers
for placement with their clients.
5. Foreign Service Contractor/Staffing Agency refers to any single proprietor, partnership
or corporation duly licensed in the host country to recruit foreign workers for its projects or
for the projects of its clients, and remains as the employer of the deployed workers.
6. License refers to the document issued by the Secretary or his/her duly authorized
representative authorizing a person, partnership or corporation to operate a recruitment
agency.
7. Licensed Recruitment Agency refers to any person, partnership or corporation duly
authorized to engage in the recruitment and placement of workers for overseas employment.
8. Master Employment Contract refers to the model employment agreement submitted by
the principal/employer as defined under these Rules, which contains the terms and
conditions of employment of each worker to be hired by such principal/employer, with such
contract to be duly verified by the POLO or authenticated by the Philippine
Embassy/Consulate and approved by the POEA.
9. Non-licensee refers to a person, sole proprietor, partnership or corporation without a
license to engage in the recruitment and placement of Overseas Filipino Workers, or a
licensed recruitment agency whose license has been revoked, cancelled, expired or delisted
from the roll of licensed recruitment agencies.
LICENSING AND REGULATION
FOR OVERSEAS RECRUITMENT AND PLACEMENT
FOR SEAFARERS & LAND-BASED OFWs:

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Who are qualified to recruit SEAFARERS? What is the required capitalization?

a. Any Filipino citizen acting as a sole proprietor or a partnership, or a corporation at least
seventy-five percent (75%) of the authorized and voting capital stock of which is owned
and controlled by Filipino citizens, may engage in the business of recruitment and
placement of Filipino seafarers.
b. The sole proprietor or the partnership shall have a minimum capitalization of Five
Million Pesos (PhP5,000,000.00); and a minimum paid-up capital of Five Million Pesos
(PhP5,000,000.00) in case of a corporation.
c. Those with existing licenses shall, within four (4) years from effectivity hereof, increase
their capitalization or paid-up capital, as the case may be, to Five Million Pesos
(PhP5,000,000.00) at the rate of Seven Hundred Fifty Thousand Pesos (PhP750,000.00)
every year.
Who are disqualified?
The following persons and entities are disqualified to participate or engage in the recruitment
and placement of seafarers for overseas employment:
a. Travel agencies and sales agencies of airline companies;
b. Officers or members of the Board of any corporation or partners in a partnership engaged in
the business of a travel agency;
c. The applicant is presently an incorporator, director or key officer of at least five (5) licensed
manning agencies; (NOTE: This applies to recruitment of seafarers only).
d. 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;
e. Individuals, partners, officers or directors of an insurance company who make, propose or
provide an insurance contract under the compulsory insurance coverage for seafarers.
f. 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 RA 8042 (Migrant
Workers and Overseas Filipinos Act of 1995), as amended, PD 442 (Labor Code of the
Philippines), as amended, and RA 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
g. 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 RA 8042, as amended, and/or any of his/her relatives within the fourth
civil degree of consanguinity or affinity.
What is the period of validity of license?
The regular license shall be valid up to the full term of four (4) years from the date of issuance of
the provisional license.
Can a license be transferred?
No license shall be used directly or indirectly by any person other than the one in whose favor it
was issued, nor at any place other than that stated in the license, nor may such license be transferred,
conveyed or assigned to any other person or entity.
ILLEGAL RECRUITMENT
(Section 5, R.A. No. 10022)
Who may commit illegal recruitment?
Broadly, illegal recruitment may be committed by any person, regardless of whether such
person is a:
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1.
2.
3.
4.
Non-licensee;
Non-holder of authority;
Licensee; or
Holder of authority.
Any person, whether a non-licensee, non-holder, licensee or holder of authority, may be

held liable for illegal recruitment. Under R.A. No, 8042, as amended by R.A. No. 10022,
license or authority of the illegal recruiter is immaterial.
What constitutes illegal recruitment when committed by a NON-LICENSEE or NON-HOLDER OF
AUTHORITY?
Illegal recruitment, when undertaken by non-licensee or non-holder of authority, shall
mean any act of canvassing, enlisting, contracting, transporting, utilizing, hiring, or
procuring workers and includes referring, contract services, promising or advertising for
employment abroad, whether for profit or not, Provided, That any such non-licensee or nonholder who, in any manner, offers or promises for a fee employment abroad to two or more
persons shall be deemed so engaged.
What constitutes illegal recruitment when committed by ANY PERSON, whether a NONLICENSEE, 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 Secretary of Labor and Employment, or to
make a worker pay or acknowledge any amount greater than that actually received by
him as a loan or advance;
(b) To furnish or publish any false notice or information or document in relation to
recruitment or employment;
(c) To give any false notice, testimony, information or document or commit any act of
misrepresentation for the purpose of securing a license or authority under the Labor
Code, or for the purpose of documenting hired workers with the 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 Department of Labor and Employment from the time of actual signing
thereof by the parties up to and including the period of the expiration of the same
without the approval of the Department of Labor and Employment;
(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.
PROHIBITED ACTIVITIES
IN RELATION TO ILLEGAL RECRUITMENT
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What are the prohibited activities in connection with recruitment for overseas employment?
Besides illegal recruitment, the law additionally provides that it shall also be unlawful for any
person or entity to commit the following prohibited acts:
(1) Grant a LOAN to an overseas Filipino worker with interest exceeding eight percent (8%) per annum,
which will be used for payment of legal and allowable placement fees and make the migrant worker
issue, either personally or through a guarantor or accommodation party, post-dated checks in relation to
the said loan;
(2) Impose a compulsory and exclusive arrangement whereby an overseas Filipino worker is required to
avail of a LOAN only from specifically designated institutions, entities or persons;
(3) Refuse to condone or renegotiate a LOAN incurred by an overseas Filipino worker after the latter's
employment contract has been prematurely terminated through no fault of his or her own;
undergo HEALTH EXAMINATIONS only from specifically designated medical clinics, institutions,
entities or persons, except in the case of a seafarer whose medical examination cost is shouldered by
the principal/shipowner;
undergo TRAINING, SEMINAR, INSTRUCTION OR SCHOOLING of any kind only from
specifically designated institutions, entities or persons, except for recommendatory trainings
mandated by principals/shipowners where the latter shoulder the cost of such trainings;
(6) For a SUSPENDED RECRUITMENT/MANNING AGENCY to engage in any kind of recruitment
activity including the processing of pending workers' applications; and
(7) For a recruitment/manning agency or a foreign principal/employer to pass on the overseas Filipino
worker or deduct from his or her salary the payment of the cost of INSURANCE fees, premium or
other insurance related charges, as provided under the compulsory worker's INSURANCE coverage.
LICENSE VS. AUTHORITY

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.
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.
ELEMENTS OF ILLEGAL RECRUITMENT

What are the elements 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.
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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.
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.
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.
What are some relevant principles on illegal recruitment involving economic sabotage?
1. The number of persons victimized is determinative of the crime. A conviction for large scale illegal
recruitment must be based on a finding in each case of illegal recruitment of three (3) or more persons
having been recruited, whether individually or as a group.
2. Failure to prove at least 3 persons recruited makes the crime a case of simple illegal recruitment.
3. There is no illegal recruitment in large scale based on several informations filed by only one
complainant.
4. The number of offenders is not material in illegal recruitment in large scale.
5. Recruitment in large scale or by a syndicate is malum prohibitum and not malum in se.
ILLEGAL RECRUITMENT VS. 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:
Same evidence to prove illegal recruitment may be used to prove estafa.
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Conviction for both illegal recruitment and estafa, not double jeopardy.
NATURE OF LIABILITY OF LOCAL RECRUITMENT AGENCY

AND FOREIGN EMPLOYER
What is the nature of the liability between local recruiter and its foreign principal?
The nature of their liability 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,1 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?
1. 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.
2. Good faith and merely following orders of superiors are not valid defenses of an employee.
3. 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 agencys requirement of payment of
performance or cash bond prior to the applicants deployment. As the crewing manager, he was at
the forefront of the companys recruitment activities.
THEORY OF IMPUTED KNOWLEDGE

What is meant by this theory?
Knowledge of the agent is deemed knowledge of the principal but not the other way around.
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.
Sunace International Management Services, Inc. v. NLRC 2 - The High Court here has the
opportunity to discuss the application of the theory of imputed knowledge. The OFW (Divina), a
domestic helper in Taiwan, has extended her 12-month contract, after its expiration, for two (2) more
years after which she returned to the Philippines. It was established by evidence that the extension was
without the knowledge of the local recruitment agency, petitioner Sunace. The Court of Appeals,
however, affirmed the Labor Arbiters and NLRCs finding that Sunace knew of and impliedly consented
to the extension of Divinas 2-year contract. It went on to state that It is undisputed that [Sunace] was
continually communicating with [Divinas] foreign employer. It thus concluded that [a]s agent of the
foreign principal, petitioner cannot profess ignorance of such extension as obviously, the act of the
principal extending complainant (sic) employment contract necessarily bound it.
In finding that the application by the CA of this theory of imputed knowledge was misplaced,
the High Court ruled that this theory ascribes the knowledge of the agent, Sunace, to the principal,
employer Xiong, not the other way around. The knowledge of the principal-foreign employer cannot,
therefore, be imputed to its agent, Sunace. There being no substantial proof that Sunace knew of and
consented to be bound under the 2-year employment contract extension, it cannot be said to be privy
thereto. As such, Sunace and its owner cannot be held solidarily liable for any of Divinas claims arising
from the 2-year employment extension. As the New Civil Code provides: Contracts take effect only
between the parties, their assigns, and heirs, except in case where the rights and obligations arising from
the contract are not transmissible by their nature, or by stipulation or by provision of law.
PRE-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. Theirs is always fixed-term in nature.
What are some relevant principles?
1. 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.
2. 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.
3. Regular employment does not result from the series of re-hiring of OFWs.
1
2
G.R. No. 196036, Oct. 23, 2013.

G.R. No. 161757, Jan. 25, 2006.
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4. 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. Seafarers spend most of
their time at sea and understandably, they cannot stay for a long and an indefinite period of
time at sea. Limited access to shore society during the employment will have an adverse
impact on the seafarer. The national, cultural and lingual diversity among the crew during
the contract of employment is a reality that necessitates the limitation of its period.
5. The expiration of the employment contracts of OFWs marks its ending.
What is the effect of hiring a seafarer for overseas employment but assigning him to local vessel?
As held in OSM Shipping Philippines, Inc. v. NLRC, 1 the non-deployment of the ship overseas
did not affect the validity of the perfected employment contract. After all, the decision to use the vessel
for coastwise shipping was made by petitioner only and did not bear the written conformity of private
respondent. A contract cannot be novated by the will of only one party. The claim of petitioner that it
processed the contract of private respondent with the POEA only after he had started working is also
without merit. Petitioner cannot use its own misfeasance to defeat his claim.
What is the effect of non-deployment of OFW to overseas employment?
Petitioner-seafarer, in Santiago v. CF Sharp Crew Management, Inc.2 was not deployed overseas
despite the signing of a POEA-approved employment contract. One of his contentions is that such failure
to deploy was an act designed to prevent him from attaining the status of a regular employee. The
Supreme Court, however, disagreed and ruled that seafarers are considered contractual employees and
cannot be considered as regular employees under the Labor Code. Their employment is governed by the contracts
they sign every time they are rehired and their employment is terminated when the contract expires. The exigencies
of their work necessitate that they be employed on a contractual basis.
What is doctrine of processual presumption?
Presumed-identity approach or processual presumption is an International Law doctrine which
dictates that where a foreign law is not pleaded or, even if pleaded, is not proved, the presumption is that
foreign law is the same as Philippine law. Thus, under this situation, Philippine labor laws should apply
in determining the issues presented in a case.
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.
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.
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.,),3 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?
1
2
3
G.R. No. 138193, March 5, 2003.

G.R. No. 162419, July 10, 2007.
G.R. No. 167614, March 24, 2009.
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The 2014 en banc case of Sameer Overseas Placement Agency, Inc. v. Joy C. Cabiles, 1 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.
What are some principles in regard to monetary awards to OFWs?
1. Monetary award to OFW is not in the nature of separation pay or backwages but a form of
indemnity.
2. Only salaries are to be included in the computation of the amount due for the unexpired portion of
the contract. Overtime, holiday and leave pay and allowances are not included. However, this rule
on exclusion of allowance does not apply in case it is encapsulated in the basic salary clause.
3. Entitlement to overtime pay of OFWs. - As far as entitlement to overtime pay is concerned, the
correct criterion in determining whether or not sailors are entitled to overtime pay is not whether
they were on board and cannot leave ship beyond the regular eight (8) working hours a day, but
whether they actually rendered service in excess of said number of hours. An OFW is not entitled to
overtime pay, even if guaranteed, if he failed to present any evidence to prove that he rendered
service in excess of the regular eight (8) working hours a day.
4. In case of unauthorized deductions from OFWs salary, he shall be entitled to the full
reimbursement of the deductions made with interest at 12% per annum. This is in addition to the
full reimbursement of his placement fee with the same interest of 12% per annum plus his salaries
for the unexpired portion of his employment contract if he is terminated without just, valid or
authorized cause as defined by law or contract.
CLAIMS FOR DISABILITY AND DEATH BENEFITS OF OFWs
Which/Who has jurisdiction over an OFWs claims for disability and death benefits?
a) The Labor Arbiters, NOT the SSS, have jurisdiction over claims for disability, death and other
benefits of OFWs.
b) Labor Arbiters have jurisdiction even if the case is filed by the heirs of the deceased OFW.
Is the Labor Codes concept of permanent total disability similar to that of OFWs?
Yes. The concept of this kind of disability under Article 192 of the Labor Code is applicable to
them as reiterated lately in the 2013 case of Kestrel Shipping Co., Inc. v. Munar.
What are the requisites for compensability of injury or illness of seafarers?
1. It should be work-related; and
2. The injury or illness existed during the term of the seafarers employment contract.
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,2 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.
REMITTANCE OF FOREIGN EXCHANGE EARNINGS

Is remittance of foreign exchange earnings by OFWs mandatory?
Yes. It shall be mandatory for all Filipino workers abroad to remit a portion of their foreign
exchange earnings to their families, dependents, and/or beneficiaries in the country in accordance with
rules and regulations prescribed by the DOLE Secretary. It should be made through the Philippine
banking system.
------------oOo------------
1
2
G.R. No. 170139, Aug. 05, 2014. The foreign employer alleged in this case that respondents dismissal was due to inefficiency in her work and negligence in her duties.
G.R. No. 81510, March 14, 1990.
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SYLLABUS
TOPIC NO. 3
LABOR STANDARDS
A.
HOURS OF WORK
1.
COVERAGE/EXCLUSIONS
(Article 82, Labor Code)
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.
b.
c.
d.
e.
f.
g.
Government employees;
Managerial employees;
Other officers or members of a managerial staff;
Domestic workers or kasambahay and persons in the personal service of another;
Workers paid by results;
Non-agricultural field personnel; and
Members of the family of the employer.
2.
NORMAL HOURS OF WORK
What is the total normal hours of work per day?
Eight (8) hours daily.
What is overtime work?
Any work in excess of eight (8) hours is considered overtime work.
May normal working hours be reduced?
Yes, provided that no corresponding reduction is made on the employees 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 employees full working day.
What are flexible working hours?
Flexible work arrangements refer to alternative arrangements or schedules other than the
traditional or standard work hours, workdays and workweek. The effectivity and implementation of any
of the flexible work arrangements should be temporary in nature.
Under R.A. No. 8972, otherwise known as The Solo Parents Welfare Act of 2000, solo parents are
allowed to work on a flexible schedule. The phrase flexible work schedule is defined in the same law as
the right granted to a solo parent employee to vary his/her arrival and departure time without affecting
the core work hours as defined by the employer.
COMPRESSED WORK WEEK

What is compressed work week?
Compressed Workweek or CWW refers to a situation where the normal workweek is reduced to
less than six (6) days but the total number of work-hours of 48 hours per week remains. The normal
workday is increased to more than eight (8) hours but not to exceed twelve (12) hours, without
corresponding overtime premium. This concept can be adjusted accordingly in cases where the normal
workweek of the firm is five (5) days.
What are the conditions for its validity?
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.
How should compensation be made under a valid CWW?
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 fortyeight (48) hours a week shall be subject to overtime pay.
MEAL BREAK
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What is the rule on time-off for regular meal?

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.
WAITING TIME

What is covered by compensable working hours?
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 employers

premises or to be at a prescribed workplace; and
b. All time during which an employee is suffered or permitted to work.
When is waiting time compensable?
Waiting time spent by an employee shall be considered as working time if waiting is an integral
part of his work or the employee is required or engaged by the employer to wait. Time spent waiting for
work is compensable if it is spent primarily for the benefit of the employer and [its] business.
OVERTIME WORK, OVERTIME PAY

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
eight (8) hours on non-working days, such as rest days and regular and special holidays.
Overtime pay refers to the additional compensation for work performed beyond eight (8) hours
a day. Every employee who is entitled to premium pay is likewise entitled to the benefit of overtime pay.
What is built-in overtime pay?
In case the employment contract stipulates that the compensation includes built-in overtime pay
and the same is duly approved by the DOLE, the non-payment by the employer of any overtime pay for
overtime work is justified and valid.
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.
b. Exceptions when employee may be compelled to render overtime work:
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1. When the country is at war or when any other national or local emergency has been declared
by the National 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 8 th 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.
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.
NIGHT WORK (R.A. NO. 10151),

NIGHT SHIFT DIFFERENTIAL (ARTICLE 86, LABOR CODE)
What is the new law on night work?

R.A. No. 10151 [JUNE 21, 2011].
a. Significance of the law.
R.A. No. 10151 has repealed Article 130 [Nightwork Prohibition] and Article 131 [Exceptions] of
the Labor Code and accordingly renumbered the same articles. Additionally, it has inserted a new
Chapter V of Title III of Book III of the Labor Code entitled Employment of Night Workers which
addresses the issue on nightwork of all employees, including women workers. Chapter V covers newly
renumbered Articles 154 up to 161 of the Labor Code.
b. Coverage of the law.
The law on nightwork applies not only to women but to all persons, who shall be employed or
permitted or suffered to work at night, except those employed in agriculture, stock raising, fishing,
maritime transport and inland navigation, during a period of not less than seven (7) consecutive hours,
including the interval from midnight to five o'clock in the morning, to be determined by the DOLE
Secretary, after consulting the workers representatives/labor organizations and employers.
c. Night worker, meaning.
"Night worker" means any employed person whose work covers the period from 10 o'clock in
the evening to 6 o'clock the following morning provided that the worker performs no less than seven
(7) consecutive hours of work.
NIGHT SHIFT DIFFERENTIAL PAY
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.
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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.
PART-TIME WORK
What is part-time work?
Part-time work is a single, regular or voluntary form of employment with hours of work
substantially shorter than those considered as normal in the establishment. A part-time worker is an
employed person whose normal hours of work are less than those of comparable full-time workers.
Part-time work may take different forms depending on the agreed hours of work in a day, the
days of work in a week or other reference periods. In the Philippines, however, the two most common
and acceptable forms are four (4) hours work per day and weekend work or two (2) full days per week.
CONTRACT FOR PIECE WORK

(SEE CIVIL CODE)
What is contract for piece work under the Civil Code?
By the contract for a piece of work, the contractor binds himself to execute a piece of work for the
employer, in consideration of a certain price or compensation. The contractor may either employ only his
labor or skill, or also furnish the material.
B.
WAGES
WAGE VS. SALARY
What is the basic distinction between wage and 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.
What is the distinction in respect to execution, attachment or garnishment?

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 employees 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.
MINIMUM WAGE DEFINED
What are the attributes of wage?

Wage has the following attributes:
1.
It is the remuneration or earnings, however designated, for work done or to be done or for
services rendered or to be rendered;
2. It is capable of being expressed in terms of money, whether fixed or ascertained on a time, task,
piece or commission basis, or other method of calculating the same;
3. It is payable by an employer to an employee under a written or unwritten contract of
employment for work done or to be done or for services rendered or to be rendered; and
4. It includes the fair and reasonable value, as determined by the DOLE Secretary, of board, lodging,
or other facilities customarily furnished by the employer to the employee. Fair and reasonable
value shall not include any profit to the employer or to any person affiliated with the employer.
What is basic wage?
Basic wage means all the remuneration or earnings paid by an employer to a worker for
services rendered on normal working days and hours but does not include cost-of-living allowances,
profit-sharing payments, premium payments, 13th month pay or other monetary benefits which are not
considered as part of or integrated into the regular salary of the workers.
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Further, as held in Honda Phils., Inc. v. Samahan ng Malayang Manggagawa sa Honda, the
following should be excluded from the computation of basic salary, to wit: payments for sick, vacation
and maternity leaves, night differentials, regular holiday pay and premiums for work done on rest
days and special holidays.
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.
What is the NO WORK, NO PAY principle?
The no work, no pay or fair days wage for fair days labor means that 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.
MINIMUM WAGE SETTING

What is a Wage Order?
The term Wage Order refers to the order promulgated by the Regional Board pursuant to its
wage fixing authority.
When is it proper to issue a Wage Order?
Whenever conditions in the region so warrant, the Regional Board shall investigate and study all
pertinent facts and based on the prescribed standards and criteria, shall proceed to determine whether a
Wage Order should be issued. Any such Wage Order shall take effect after fifteen (15) days from its
complete publication in at least one (1) newspaper of general circulation in the region.
What are the standards/criteria for minimum wage fixing?
In the determination of regional minimum wages, the Regional Board shall, among other relevant
factors, consider the following:
(1) Needs of workers and their families
1)
2)
3)
4)
5)
Demand for living wages;

Wage adjustment vis--vis the consumer price index;
Cost of living and changes therein;
Needs of workers and their families;
Improvements in standards of living.
(2) Capacity to pay

1) Fair return on capital invested and capacity to pay of employers;
2) Productivity.
(3) Comparable wages and incomes
1) Prevailing wage levels.
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(4) Requirements of economic and social development
1) Need to induce industries to invest in the countryside;

2) Effects on employment generation and family income;
3) Equitable distribution of income and wealth along the imperatives of economic and social
development.
What are the methods of fixing the minimum wage rates?
There are two (2) methods, to wit:
1. Floor-Wage method which involves the fixing of a determinate amount to be added to the
prevailing statutory minimum wage rates. This was applied in earlier wage orders; and
2. Salary-Cap or Salary-Ceiling method where the wage adjustment is to be applied to
employees receiving a certain denominated salary ceiling. In other words, workers already
being paid more than the existing minimum wage (up to a certain amount stated in the Wage
Order) are also to be given a wage increase.
The Salary-Cap or Salary-Ceiling method is the preferred mode.
The distinction between the two (2) methods is best shown by way of an illustration. Under the
Floor Wage Method, it would be sufficient if the Wage Order simply set P15.00 as the amount to be
added to the prevailing statutory minimum wage rates; while in the Salary-Ceiling Method, it would be
sufficient if the Wage Order states a specific salary, such as P250.00, and only those earning below it shall
be entitled to the wage increase.
MINIMUM WAGE OF WORKERS PAID BY RESULTS
What are the minimum wage rates of workers paid by results?

According to Article 124 of the Labor Code:
All workers paid by results, including those who are paid on piecework, takay,
pakyaw or task basis, shall receive not less than the prescribed wage rates per eight (8) hours
of work a day, or a proportion thereof for working less than eight (8) hours.
Who are workers paid by results?

They are workers who are engaged on pakyao, piecework, task and other non-time work. They
are so called because they are paid not on the basis of the time spent on their work but according to the
quantity, quality or kind of job and the consequent results thereof.
What are the categories of workers paid by results?

Workers paid by results may be classified into:
a) Supervised workers; and
b) Unsupervised workers.
As the term clearly connotes, supervised workers are those whose manner of work is under the
control of the employer; while unsupervised workers are those whose work is controlled more in the
results than in the manner or method of performing it.
The law does not make any categorical differentiation among the workers paid by results. Thus,
the workers may be on pakyao (sometimes spelled pakyaw), takay or piece-rate or output basis. All of
them are similar in character in that they are all paid on the basis of the results of their work. When the
law does not distinguish, we should not distinguish.
WAGE RATE OF APPRENTICES AND LEARNERS
What is the wage rate of apprentices and learners?
The wage rate of a learner or an apprentice is set at seventy-five percent (75%) of the statutory
minimum wage.
WAGE RATE OF PERSONS WITH DISABILITY (PWDs)

What is the wage rate of PWD?
Under R.A. No. 7277, the wage rate of PWDs had been increased to and fixed at 100% of the
applicable minimum wage.
COMMISSIONS
What is commission?
Commission is the recompense, compensation or reward of an employee, agent, salesman,
executor, trustee, receiver, factor, broker or bailee, when the same is calculated as a percentage on the
amount of his transactions or on the profit of the principal.
Is commission part of wage?
Commission may or may not be considered part of wage/salary depending on the peculiar
circumstances of a case and on the purpose for which the determination is being made. For instance, the
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rule on the inclusion of commissions for purposes of computing the separation pay may essentially differ
from the inclusionary rule thereof for purposes of computing the 13 th month pay.
Is there a law which mandates the payment of commission?
None. According to Lagatic v. NLRC,1 there is no law which requires employers to pay
commissions.
Is there a standard formula to compute commission?

None. There is no law which prescribes a method for computing commission. The determination
of the amount of commissions is the result of collective bargaining negotiations, individual employment
contracts or established employer practice.
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 employees 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;
NON-DIMINUTION OF BENEFITS
What is the applicability of the non-diminution rule in Article 100 of the Labor Code?
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.
The 2014 case of Wesleyan University-Philippines v. Wesleyan University-Philippines Faculty

and Staff Association,2 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.
On No. 3 above, please see discussion below.
1
2
G.R. No. 121004, Jan. 28, 1998.

G.R. No. 181806, March 12, 2014.
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COMPANY PRACTICE
What is company practice?
Company practice is a custom or habit shown by an employers 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.
(See the 2013 case of Vergara, Jr. v. Coca-Cola Bottlers Philippines, Inc.1)
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,2 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. 3 - The act of the company of freely
and continuously including in the computation of the 13 th 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. 4 - 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 UnionNLU,5 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., 6 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:
1
2
3
4
5
6
G.R. No. 176985, April 1, 2013; See also Supreme Steel Corporation v. Nagkakaisang Manggagawa ng Supreme Independent Union (NMS-IND-APL), G.R. No.
185556, March 28, 2011, 646 SCRA 501, 527; TSPIC Corporation v. TSPIC Employees Union (FFW), G.R. No. 163419, Feb. 13, 2008, 545 SCRA 215, 226.
G.R. No. 149434, June 3, 2004.
G.R. No. 85073, Aug. 24, 1993, 225 SCRA 562.
G.R. No. 152456, April 28, 2004, 438 SCRA 239.
G.R. No. 188949, July 26, 2010.
G.R. No. L-57636, May 16, 1983, 122 SCRA 267; 207 Phil. 2235.
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(a) Globe Mackay Cable and Radio Corporation v. NLRC,1 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], 2 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:
(a) Hinatuan Mining Corporation and/or the Manager v. NLRC, 3 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.
BONUS
What is the rule on its demandability and enforceability?

Bonus, as a general rule, is an amount granted and paid ex gratia to the employee.
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?

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.
FACILITIES VS. SUPPLEMENTS

What are facilities?
The term facilities includes 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 employers business. They are items of expense necessary for the laborers
and his familys 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 laborers 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.
1
2
3
G.R. No. 74156, June 29, 1988, 163 SCRA 71.

G.R. No. 163419, Feb. 13, 2008.
G.R. No. 117394, Feb. 21, 1997.
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What is the rule on deductibility of facilities and supplements?

Facilities are deductible from wage but not supplements.
WAGE DISTORTION/RECTIFICATION
What is wage distortion?
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
The above formula was held to be just and equitable.
DIVISOR TO DETERMINE DAILY RATE

Who is a monthly-paid employee?
A monthly-paid employee is one who is paid his wage or salary for every day of the month,
including unworked rest days, special days or regular holidays.
Who is a daily-paid employee?

A daily-paid employee is one who is paid his wage or salary only on the days he actually
worked, except in cases of regular holidays wherein he is paid his wage or salary even if he does not
work during those days, provided that he is present or on leave of absence with pay on the working day
immediately preceding the regular holidays.
What are the factors/divisors in computing benefits and wage deductions?

Equivalent daily rate (EDR), the basis for deductions for absences and for computing overtime
pay and other benefits.
Monthly Rate x 12
No. of Days Considered
Paid in a Year
= Equivalent Daily Rate (EDR)
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REST PERIODS
1.
WEEKLY REST DAY
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 employers 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.
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.
HOLIDAY PAY/PREMIUM PAY

1.
COVERAGE, EXCLUSIONS
Who are covered by the law on holiday pay?

Generally, all employees are entitled to and covered by the law on holiday pay.
Who are excluded from its coverage?

The following are excluded:
a. Those of the government and any of the political subdivisions, including government-owned
and controlled corporations;
b. Those of retail and service establishments regularly employing less than ten (10) workers;
c. Domestic workers or Kasambahays;
d. Persons in the personal service of another;
e. Managerial employees as defined in Book III of the Labor Code;
f. Field personnel and other employees whose time and performance is unsupervised by the
employer;
g. Those who are engaged on task or contract basis or purely commission basis;
h. Those who are paid a fixed amount for performing work irrespective of the time consumed in
the performance thereof;
i. Other officers and members of the managerial staff;
j. Members of the family of the employer who are dependent on him for support.
What are REGULAR and SPECIAL HOLIDAYS?

A. Regular Holidays
New Years Day
Araw ng Kagitingan-
1
9
January (Wednesday)
April (Wednesday)
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Maundy Thursday Good Friday

Labor Day
Independence Day National Heroes DayBonifacio Day
Christmas Day
Rizal Day
-
17
18
1
12
25
30
25
30
April
April
May (Thursday)
June (Thursday)
August (Last Monday of August)
November (Sunday)
December (Thursday)
December (Tuesday)
B. Special (Non-Working) Days

Chinese New Year
Black Saturday
Ninoy Aquino Day
All Saints Day
31
19
21
1
January (Friday)
April
August (Thursday)
November (Saturday)
C. Special Holiday (for all schools)

EDSA Revolution
Anniversary
25
February (Tuesday)
Not included in the enumeration above on regular holidays are (1) Eidl Fitr and
(2) Eidul Adha. The reason is that proclamations declaring the observance of these
national holidays are issued after the approximate dates of the Islamic holidays have
been determined in accordance with the Islamic calendar (Hijra) or the lunar calendar, or
upon Islamic astronomical calculations, whichever is possible or convenient. To this end,
the National Commission on Muslim Filipinos (NCMF) shall inform the Office of the
President on which days the holidays shall respectively fall.
What is the total number of regular holidays?
The total number of regular holidays is twelve (12) days per year. This is important for purposes
of reckoning certain divisors and computation of employee benefits.
What is premium pay for holidays and rest days?

Premium pay refers to the additional compensation required by law to be paid for work
performed within the regular eight (8) hours on non-working days, such as rest days, regular and special
holidays.
How is premium pay for holidays computed?

a. Regular Holidays
If the employee did not work, he/she shall be paid 100 % of his/her salary for that day.
Computation: (Daily rate + Cost of Living Allowance) x 100%. The COLA is included in the
computation of holiday pay.
If the employee worked, he/she shall be paid 200 % of his/her regular salary for that day for the
first eight hours. Computation: (Daily rate + COLA) x 200%. The COLA is also included in
computation of holiday pay.
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.
If the employee worked during a regular holiday that also falls on his/her rest day, he/she shall be
paid an additional 30 % of his/her daily rate of 200 %. Computation: (Daily rate + COLA) x
200%] + (30% [Daily rate x 200%)].
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 % 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);
b. Special (Non-Working) Days
If the employee did not work, the no work, no pay principle shall apply, unless there is a
favorable company policy, practice, or CBA granting payment on a special day.
If the employee worked, he/she shall be paid an additional 30 % of his/her daily rate on the first
eight hours of work. Computation: [(Daily rate x 130%) + COLA).
If the employee worked in excess of eight hours (overtime work), he/she shall be paid an additional
30 % of his/her hourly rate on said day. Computation: (Hourly rate of the basic daily wage x
130% x 130% x number of hours worked).
If the employee worked during a special day that also falls on his/her rest day, he/she shall be paid
an additional 50% of his/her daily rate on the first eight hours of work. Computation: [(Daily
rate x 150%) + COLA].
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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 % 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).
c. Special Holiday for all schools
For private establishments, 25 February 2014 is an ordinary workday and no premium is

required to be paid for work on said day.
On the other hand, employees in private schools, whether academic or administrative personnel,
shall be paid in accordance with the rules for pay on special (non-working) days as stated
above.
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 employees compensation benefits - Employers should
grant the same percentage of the holiday pay as the benefit granted by competent authority
in the form of employees 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 nonworking day or rest day.
2.
HOLIDAY PAY/PREMIUM PAY OF
TEACHERS, PIECE WORKERS, TAKAY,
SEASONAL WORKERS, SEAFARERS
Are private school teachers entitled to holiday pay during semestral vacations? What about
Christmas vacation
No, as far as regular holidays during semestral vacations are concerned.
Yes, as far as regular holidays during Christmas vacation are concerned.
Are hourly-paid teachers entitled to holiday pay?

A school is exempted from paying hourly-paid faculty members their pay for regular holidays,
whether the same be during the regular semesters of the school year or during semestral, Christmas, or
Holy Week vacations. However, it is liable to pay the faculty members their regular hourly rate on days
declared as special holidays or if, for some reason, classes are called off or shortened for the hours they
are supposed to have taught, whether extensions of class days be ordered or not; and in case of
extensions, said faculty members shall likewise be paid their hourly rates should they teach during said
extensions.
Are piece-workers, takay and others paid by results entitled to holiday pay?
Yes. Where a covered employee is paid by results or output such as payment on piece-work, his
holiday pay should not be less than his average daily earnings for the last seven (7) actual working days
preceding the regular holiday. In no case, however, should the holiday pay be less than the applicable
statutory minimum wage rate.
What are the distinctions between supervised and unsupervised workers paid by results to
determine their entitlement to holiday pay?
The principal test to determine entitlement to holiday pay is whether the employees time and
performance of the work are supervised or unsupervised by their employer. If supervised, the
employee is entitled to holiday pay. If unsupervised, he is not.
The distinctions between supervised and unsupervised workers paid by results are as follows:
(1) Those whose time and performance are supervised by the employer. Here, there is an
element of control and supervision over the manner as to how the work is to be
performed. A piece-rate worker belongs to this category especially if he performs his work in
the company premises; and
(2) Those whose time and performance are unsupervised. Here, the employers control is over
the result of the work. Workers on pakyao and takay basis belong to this group. Both classes
of workers are paid per unit accomplished. Piece-rate payment is generally practiced in
garment factories where work is done in the company premises, while payment on pakyao
and takay basis is commonly observed in the agricultural industry, such as in sugar
plantations where the work is performed in bulk or in volumes, hence, difficult to quantify.
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Are seasonal workers entitled to holiday pay?
Yes. Seasonal workers are entitled to holiday pay while working during the season. They may
not be paid the required regular holiday pay during off-season where they are not at work.
Are seafarers entitled to holiday pay?

Yes. Any hours of work or duty including hours of watchkeeping performed by the seafarer on
designated rest days and holidays shall be paid rest day or holiday pay.
What are important principles on holiday pay?

In case of two (2) regular holidays falling on the same day, the worker should be compensated as
follows:
o If unworked 200% for the two regular holidays;
o If worked 200% for the two regular holidays plus premium of 100% for work on that day.
Monthly-paid employees are not excluded from the coverage of holiday pay.
LEAVES
1.
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.

All employees are covered by the rule on service incentive leave except:
a. Those of the government and any of its political subdivisions, including government-owned
and controlled corporations;
b. Domestic workers or kasambahays;
c. Persons in the personal service of another;
d. Managerial employees as defined in Book III of the Labor Code;
e. Field personnel and other employees whose performance is unsupervised by the employer;
f. Those who are engaged on task or contract basis, purely commission basis, or those who are
paid in a fixed amount for performing work irrespective of the time consumed in the
performance thereof;
g. Those who are already enjoying the benefit provided in the law;
h. Those enjoying vacation leave with pay of at least five (5) days;
i. Those employed in establishments regularly employing less than ten (10) employees;
j. Other officers and members of the managerial staff; and
k. Members of the family of the employer who are dependent on him for support.
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.
2.
MATERNITY LEAVE
What is maternity leave?
Maternity leave is the period of time which may be availed of by a woman employee, married or
unmarried, to undergo and recuperate from childbirth, miscarriage or complete abortion during which
she is permitted to retain her rights and benefits flowing from her employment.
What is the period of leave?

60 days for normal delivery
78 days for caesarian delivery
What is the amount granted?
Daily maternity benefit equivalent to 100% of her average daily salary credit for sixty (60) days
or seventy-eight (78) days in case of caesarian delivery/
What is the number of delivery or miscarriage covered?

The maternity benefits shall be paid only for the first four (4) deliveries or miscarriages/
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Is an unmarried woman entitled to maternity leave benefit?

Yes. For as long as a woman is pregnant, she is entitled to maternity leave benefit regardless of
whether she is married or unmarried.
PATERNITY LEAVE
What is paternity leave benefit?
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.
Delivery includes childbirth or any miscarriage.

Spouse refers to the lawful wife. For this purpose, lawful wife refers to a woman who is
legally married to the male employee concerned.
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.
PARENTAL LEAVE
(R.A. No. 8972)
What is parental leave?
Parental leave is the leave benefit granted to a male or female solo parent to enable him/her to
perform parental duties and responsibilities where physical presence is required.
How many days may be availed of as parental leave?

The parental 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?
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A change in the status or circumstance of the parent claiming benefits under this Act, such that
he/she is no longer left alone with the responsibility of parenthood, shall terminate his/her eligibility for
these benefits.
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.
LEAVE FOR VICTIMS OF VIOLENCE

AGAINST WOMEN AND CHILDREN
(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 10day paid leave.
SPECIAL LEAVE BENEFIT FOR WOMEN

What is this special leave benefit [GYNECOLOGICAL SURGERY LEAVE]?
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 or complete abortion.
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.
SERVICE CHARGE
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?

The same rules on service charges apply to all employees of covered employers, regardless of
their positions, designations or employment status, and irrespective of the method by which their wages
are paid except those receiving more than P2,000.00 a month.
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Who are not covered?

Specifically excluded from coverage are employees who are receiving wages of more than
P2,000.00 a month. However, it must be pointed out that the P2,000.00 ceiling is no longer realistic
considering the applicable minimum wages prevailing in the country. Hence, it must be disregarded.
How is the service charge distributed?

a. Percentage of sharing.
All service charges collected by covered employers are required to be distributed at the following
rates:
1. 85% to be distributed equally among the covered employees; and
2. 15% to management to answer for losses and breakages and distribution to employees
receiving more than P2,000.00 a month, at the discretion of the management.
b. Frequency of distribution.
The share of the employees referred to above should be distributed and paid to them not less
often than once every two (2) weeks or twice a month at intervals not exceeding sixteen (16) days.
Can the service charge be integrated into the wages of covered employees?
Yes. In case the service charge is abolished, the share of covered employees should be considered
integrated in their wages, in accordance with Article 96 of the Labor Code. The basis of the amount to be
integrated is the average monthly share of each employee for the past twelve (12) months immediately
preceding the abolition or withdrawal of such charges.
What are some principles on service charge?

Tips and services charges are two different things. Tips are given by customers voluntarily to waiters
and other people who serve them out of recognition of satisfactory or excellent service. There is no
compulsion to give tips under the law. The same may not be said of service charges which are
considered integral part of the cost of the food, goods or services ordered by the customers.
Service charges are not in the nature of profit share and, therefore, cannot be deducted from wage.
THIRTEENTH 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 13 th 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 13 th 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.

The following employers are not covered by the 13th month pay law:
1.
2.
3.
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.
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.
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 13 th 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.
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What is meant by basic salary or basic wage?

Basic salary or basic wage contemplates work within the normal eight (8) working hours in a
day. This means 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.
SEPARATION PAY
What are the separation pays expressly provided under the Labor Code?
The Labor Code prescribes the payment of separation pay only in the following four (4)
situations:
(1) When termination is due to authorized causes:
(1) installation of labor-saving devices;

(2) redundancy;
(3) retrenchment; or
(4) closing or cessation of business operations; and
(5) disease.
What are separation pays provided in jurisprudence?
In accordance with jurisprudence, the following separation pay may be cited:
(1) Separation pay in lieu of reinstatement; and
(2) Separation pay as financial assistance in cases where the dismissal was held valid and legal
but the employee is given financial assistance by reason of long years of service, unblemished
record, substantial justice, etc.
What is the prevailing doctrine regarding grant of financial assistance?
THE TOYOTA DOCTRINE.

Under this doctrine, all grounds in Article 282 of the Labor Code, except analogous causes,
would not merit payment of financial assistance.
In the following cases, the Toyota doctrine was applied; hence, no financial assistance was
awarded because the grounds invoked are in accordance with Article 282:
Reno Foods v. Nagkakaisang Lakas ng Manggagawa (NLM), where it was maintained that
labor adjudicatory officials and the Court of Appeals must demur the award of separation pay based on
social justice when an employees dismissal is based on serious misconduct or willful disobedience; gross
and habitual neglect of duty; fraud or willful breach of trust; or commission of a crime against the person
of the employer or his immediate family grounds under Article 282 of the Labor Code that sanction
dismissals of employees.
Equitable PCI Bank v. Dompor, Moya v. First Solid Rubber Industries, Inc., and Unilever
Philippines, Inc. v. Rivera, where the infractions committed by the respondent constituted serious
misconduct or willful disobedience resulting to loss of trust and confidence.
Central Philippines Bandag Retreaders, Inc. v. Diasnes, and Quiambao v. Manila Electric
Company, involving gross and habitual neglect of duties due to respondents repeated and continuous
absences without prior leave and frequent tardiness.
Exception to Toyota doctrine: When termination is based on analogous causes.
Toyota, however, makes a distinction when the grounds cited are the analogous causes for
termination under Article 282(e), like inefficiency, incompetence, ineptitude, poor performance and
others. It declared that in these cases, the NLRC or the courts may opt to grant separation pay anchored
on social justice in consideration of the length of service of the employee, the amount involved, whether
the act is the first offense, the performance of the employee and the like, using the guideposts enunciated
in PLDT on the propriety of the award of separation pay.
Illustrative cases.
Yrasuegui v. Philippine Airlines, Inc., where the dismissal of petitioner (an international flight
attendant) due to his obesity was held valid as an analogous cause under Article 282(e) of the Labor
Code. The Supreme Court, however, as an act of social justice and for reason of equity, awarded him
separation pay equivalent to one-half (1/2) months pay for every year of service, including his regular
allowances. The Court observed that his dismissal occasioned by his failure to meet the weight standards
of his employer was not for serious misconduct and does not reflect on his moral character.
THE SOLIDBANK DOCTRINE.
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Under this 2010 doctrine, as distinguished from just cause termination, employees terminated
due to authorized cause are not entitled to be paid additional separation pay by way of financial
assistance.
The reason is that the employer is only required under the law to pay his employees separation
pay in accordance with Article 283 of the Labor Code. That is all that the law requires. The Court should
refrain from adding more than what the law requires, as the same is within the realm of the legislature.
RETIREMENT PAY
a.
ELIGIBILITY
Who are covered under the retirement pay law?

The following employees are eligible to avail of retirement benefits under Article 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 helpers or persons in the personal service of another;
3. Underground mine workers;
4. Employees of government-owned and/or controlled corporations organized under the
Corporation Code (without original charters).
Who are excluded?
Article 287, as amended, does not apply to the following employees:
1. Employees of the national government and its political subdivisions, including governmentowned 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 is the optional and compulsory retirement age?
a. Under Article 287.
This article provides for two (2) types of retirement:
(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.
b. Under retirement plan.
The optional and compulsory retirement schemes provided under Article 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.
c. Retirement at an earlier age or after rendering certain period of service.
Based on Article 287 the employers and employees are free to agree and stipulate on the
retirement age, either in a CBA or employment contract. It is only in the absence of such agreement that
the retirement age shall be fixed by law, that is, in accordance with the optional and compulsory
retirement age prescribed under Article 287.
d. By mutual agreement, employers may be granted the sole and exclusive prerogative to retire
employees at an earlier age or after rendering a certain period of service.
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Cainta Catholic School v. Cainta Catholic School Employees Union [CCSEU], where the
Supreme Court 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.
e. To be valid, retirement at an earlier age must be voluntarily consented to by the employee.
In 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 employees 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 employers offer to lower the retirement age if they feel
they can get a better deal with the retirement plan presented by the employer.
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 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 retirement pay under the law?

a. One-half () 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 () month salary for every
year of service, a fraction of at least six (6) months being considered as one (1) whole year.
b. Components of one-half () 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)
(2)
(3)
(4)
Fifteen (15) days salary of the employee based on his latest salary rate.
The cash equivalent of five (5) days of service incentive leave;
One-twelfth (1/12) of the 13th month pay due the employee; and
All other benefits that the employer and employee may agree upon that should be included
in the computation of the employees retirement pay.
c. One-half () month salary means 22.5 days.

One-half [] 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.
Example: R & E Transport, Inc. v. Latag,1 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 13 th 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.
G.R. No. 155214, Feb. 13, 2004.
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But in the 2010 case of Serrano v. Severino Santos Transit,1 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.
J.
WOMEN WORKERS
a.
PROVISIONS AGAINST DISCRIMINATION
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 womens
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.
G.R. No. 187698, Aug. 9, 2010.
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Additionally, women are guaranteed their right to decent work. The State shall progressively
realize and ensure decent work standards for women that involve the creation of jobs of acceptable
quality in conditions of freedom, equity, security and human dignity.
b.
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 pieces of jurisprudence on marriage?

1. Philippine Telegraph and Telephone Company (PT&T) v. NLRC.1 - 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.2 - 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. 3 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.
c.
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.
d.
ANTI-SEXUAL HARASSMENT ACT
(R.A. No. 7877)
1
2
3
G.R. No. 118978, May 23, 1997, 272 SCRA 596, 605.
G.R. No. 164774, April 12, 2006.
G.R. No. 162994, Sept. 17, 2004.
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What are the 3 situations contemplated under this law?

R.A. No. 7877 declares sexual harassment unlawful only in three (3) situations, namely:
(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 employees 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 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.
K.
EMPLOYMENT OF MINORS
(Labor Code and R.A. No. 7678, R.A. No. 9231)
Who is a child or 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 childs 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.
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What are the working hours of a 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) oclock in the
evening and six (6) oclock 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) oclock in the evening and six (6)
oclock in the morning of the following day.
What is the prohibition of employing minors in certain undertakings and advertisements?
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.
L.
HOUSEHELPERS
(Labor Code as amended by R.A. No. 7655,
An Act Increasing the Minimum Wage of Househelpers;
See also Household Service under the Civil Code)
(NOTE: The above provisions of the Labor Code on Househelpers cited in the
2014/2015/2016 Syllabus have already been repealed by R.A. No. 10361, otherwise
known as Domestic Workers Act or Batas Kasambahay approved by President
Benigno S. Aquino III on January 18, 2013).
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.
The following are not covered:
(a)
(b)
(c)
(d)
Service providers;
Family drivers;
Children under foster family arrangement; and
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?
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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.
What is the minimum wage of kasambahay?

Under the Kasambahay Law, the following are the minimum wages of kasambahays:
(a) P2,500.00 a month for those employed in the National Capital Region (NCR);
(b) P2,000.00 a month for those employed in chartered cities and first class municipalities; and
(c) P1,500.00 a month for those employed in other municipalities.
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?

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.
The equivalent minimum daily wage rate of the Kasambahay shall be determined by
dividing the applicable minimum monthly rate by thirty (30) days.
The amount of the minimum wage depends on the geographical area where the
Kasambahay works.
Payment of wages:
1. 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.
2. 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.
3. 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.
4. 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.
5. 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.
6. Prohibition against withholding of wages. It shall be unlawful for an employer, directly or
indirectly, to withhold the wages of the Kasambahay. If the 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
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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 13 th 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.
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.
f.
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.
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s. Prohibition on debt bondage. - It shall be unlawful for the employer or any person acting on
his/her behalf to place the Kasambahay under debt bondage. Debt bondage refers to the rendering of
service by the 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?

a. Pre-termination of employment. The following rules shall be observed:
(1) In case the duration of employment is specified in the contract, the Kasambahay and the
employer may mutually agree upon notice to terminate the contract of employment before the
expiration of its term.
(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.
b. Termination of employment initiated by the Kasambahay. - The Kasambahay may terminate

the employment relationship at any time before the expiration of the contract for any of the following
causes:
(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.
c. Termination of employment initiated by the employer. - An employer may terminate the
employment of the Kasambahay at any time before the expiration of the contract for any of the following
causes:
(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.
d. Invalid ground for termination. - Pregnancy and marriage of the Kasambahay are not valid
grounds for termination of employment.
e. 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.
M.
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EMPLOYMENT OF 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 homeworkers share of SSS, PhilHealth and ECC premium contributions which should be
remitted by the contractor or subcontractor or employer to the SSS with the employers 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.
N.
APPRENTICES AND LEARNERS
What are the distinctions between learnership and apprenticeship?

The following are the distinctions:
1. Practical training. Both learnership and apprenticeship involve practical training on-the-job.
2. Training agreement. Learnership is governed by a learnership agreement;
apprenticeship is governed by an apprenticeship agreement.
while
2. Occupation. Learnership involves learnable occupations consisting of semi-skilled and other

industrial occupations which are non-apprenticeable; while apprenticeship concerns
apprenticeable occupations or any trade, form of employment or occupation approved for
apprenticeship by the DOLE Secretary.
3. Theoretical instructions. Learnership may or may not be supplemented by related theoretical
instructions; while apprenticeship should always be supplemented by related theoretical
instructions.
4. Ratio of theoretical instructions and on-the-job training. For both learnership and
apprenticeship, the normal ratio is one hundred (100) hours of theoretical instructions for
every two thousand (2,000) hours of practical or on-the-job training. Theoretical instruction
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time for occupations requiring less than two thousand (2,000) hours for proficiency should be
computed on the basis of such ratio.
5. Competency-based system. Unlike in apprenticeship, it is required in learnership that it be
implemented based on the TESDA-approved competency-based system.
6. Duration of training. Learnership involves practical training on the job for a period not
exceeding three (3) months; while apprenticeship requires for proficiency, more than three
(3) months but not over six (6) months of practical training on the job.
7. Qualifications. The law does not expressly mention any qualifications for learners; while the
following qualifications are required to be met by apprentices under Article 59 of the Labor
Code:
(a) Be at least fourteen (14) years of age;
(b) Possess vocational aptitude and capacity for appropriate tests; and
(c) Possess the ability to comprehend and follow oral and written instructions.
8. Circumstances justifying hiring of trainees. Unlike in apprenticeship, in learnership, the law,
Article 74 of the Labor Code, expressly prescribes the pre-requisites before learners may be
validly employed, to wit:
(a)
(b)
When no experienced workers are available;

The employment of learners is necessary to prevent curtailment of employment
opportunities; and
(c) The employment does not create unfair competition in terms of labor costs or impair or
lower working standards.
9. Limitation on the number of trainees. In learnership, a participating enterprise is allowed to
take in learners only up to a maximum of twenty percent (20%) of its total regular workforce.
No similar cap is imposed in the case of apprenticeship.
10. Option to employ. In learnership, the enterprise is obliged to hire the learner after the lapse
of the learnership period; while in apprenticeship, the enterprise is given only an option to
hire the apprentice as an employee.
11. Wage rate. The wage rate of a learner or an apprentice is set at seventy-five percent (75%) of
the statutory minimum wage.
O.
PERSONS WITH DISABILITY
(R.A. No. 7277, as Amended by R.A. No. 9442)
Who are persons with disability (PWDs)?
Persons with Disability are those suffering from restriction or different abilities, as a result of
a mental, physical or sensory impairment, to perform an activity in the manner or within the range
considered normal for a human being.
What is impairment?
Impairment refers to any loss, diminution or aberration of psychological, physiological, or
anatomical structure or function.
What is disability?
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.
What is handicap?
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.
b.
RIGHTS OF PERSONS WITH DISABILITY
What are the rights of PWDs?
Under the law, PWDs are entitled to equal opportunity for employment. Consequently, no PWD
shall be denied access to opportunities for suitable employment. A qualified employee with disability
shall be subject to the same terms and conditions of employment and the same compensation,
privileges, benefits, fringe benefits, incentives or allowances as a qualified able-bodied person.
What is the wage rate of PWDs?

The wage rate of PWDs is 100% of the applicable minimum wage.
What is the wage rate of PWD if hired as apprentice or learner?
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A PWD hired as an apprentice or learner shall be paid not less than seventy-five percent (75%) of
the applicable minimum wage.
c.
PROHIBITION ON DISCRIMINATION
AGAINST PERSONS WITH DISABILITY
What is the rule on discrimination against employment of PWDs?
No entity, whether public or private, shall discriminate against a qualified PWD by reason of
disability in 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, study and scholarship grants, solely on account of the
latters 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.
------------oOo------------
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SYLLABUS
TOPIC NO. 4
TERMINATION OF EMPLOYMENT
A.
EMPLOYER-EMPLOYEE RELATIONSHIP
1.
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 employees conduct.
These tests, however, are not fool-proof as they admit of exceptions.
What is the control test?
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.
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.
What is the 2-tiered test of employment relationship?

The two-tiered test enunciated in Francisco v. NLRC,1 is composed of:
(1) The putative employers 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].2
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.3
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.4
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?
Following the broader economic reality test, the Supreme Court found petitioner in Orozco v. The Fifth
Division of the Honorable Court of Appeals,5 who is a columnist in the Philippine Daily Inquirer (PDI), not an
employee of PDI but an independent contractor. Thus:
Petitioners main occupation is not as a columnist for respondent but as a womens rights
advocate working in various womens organizations. Likewise, she herself admits that she also
1
2
3
4
5
G.R. No. 170087, Aug. 31, 2006.

Id.
Id.
Id.
G.R. No. 155207, April 29, 2005.
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contributes articles to other publications. Thus, it cannot be said that petitioner was dependent on
respondent PDI for her continued employment in respondents line of business.
The inevitable conclusion is that petitioner was not respondent PDIs 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?
No. It may be an oral or written contract. A written contract is not necessary for the creation and
validity of the relationship.
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
What are the general classifications of employment?

There are five (5) classifications of employment:
(a) Regular employees referring to those who have been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the employer;
(b) Project employees referring to those whose employment has been fixed for a specific project
or undertaking, the completion or termination of which has been determined at the time of the
engagement of the employee;
(c) Seasonal employees referring to those who work or perform services which are seasonal in
nature, and the employment is for the duration of the season;
(d) Casual employees referring to those who are not regular, project, or seasonal employees;
(e) Fixed-term employees whose term is freely and voluntarily determined by the employer and
the employee.
What is the default employment?
The default employment is regular employment. This means that generally, in the absence of any
specific agreement to the contrary, the employer-employee relationship is deemed to be regular in nature.
Therefore, in order to make the employment some other kind of employment, such as project, seasonal,
casual, fixed-term or probationary, there must be a written contract of employment stipulating the
specific kind of employment.
However, even if there is a written employment contract, if it is not clear that the parties have
stipulated such other kinds of employment (such as project, seasonal, casual, fixed-term or probationary),
the employment relationship will still be considered regular employment which, as earlier stated, is the
default employment.
a.
PROBATIONARY EMPLOYMENT
Is the period of 6 months in the law on probationary employment (Article 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 are the grounds to terminate probationary employment?

Under Article 281, a probationary employee may be terminated only on three (3) grounds, to wit:
1. For a just cause; or
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2. For authorized cause; or

3. When the probationary employee fails to qualify as a regular employee in accordance with
reasonable 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.
No, generally, in the case of No. 3 above. The probationary employment is terminated by merely
serving a notice of termination setting forth the results of the performance evaluation conducted on the
employee which forms as the basis for deciding to terminate the probationary employment.
When should termination of probationary employment be made?

Termination to be valid must be done prior to lapse of probationary period. Termination a few
days after lapse of probationary period cannot be done without due process as he has already become a
regular employee by that time.
b.
REGULAR EMPLOYMENT
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.
c.
PROJECT EMPLOYMENT
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 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?
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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.
d.
SEASONAL EMPLOYMENT
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.
e.
CASUAL EMPLOYMENT
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.
f.
FIXED-TERM EMPLOYMENT
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)
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Thus, it was ruled in Philippine Village Hotel v. NLRC,1 that the fact that private respondents were
required to render services necessary or desirable in the operation of petitioners 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.
NOTE: The practice of hiring of employees 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.
3.
JOB CONTRACTING
Is job contracting valid if the contractor-supplied employees are engaged to perform not merely
peripheral but core jobs with the principal?
Yes, per the 2012 case of Digital Telecommunications Philippines, Inc. v. Digitel Employees
Union (DEU), where the Court recognized the management prerogative to farm out any of its activities,
regardless of whether such activity is peripheral or core in nature.
b.
DEPARTMENT ORDER NO. 18-A (Series of 2011)
What is this issuance?

This is the prevailing implementing rules on legitimate job contracting.
c.
DEPARTMENT CIRCULAR NO. 01-12
What is this issuance?
This was issued by the DOLE Secretary to clarify that Department Order No. 18-A, Series of 2011,
is not applicable to Business Processing Outsourcing (BPO)/Knowledge Process Outsourcing (KPO)
and the Construction Industry because:
(1) BPOs and KPOs since these companies may hire employees in accordance with applicable
laws, and maintain these employees based on business requirements, which may or may not be for
different clients of the BPOs at different periods of the employees' employment.
(2) the Construction Industry because the licensing and the exercise of regulatory powers over
the construction industry are lodged with the Philippine Contractors Accreditation Board (PCAB), which
is under the Construction Industry Authority of the Philippines (ClAP), and not with the DOLE. Thus,
the DOLE, through its regional offices, shall not require contractors licensed by PCAB in the Construction
Industry to register under D.O. 18-A, Series of 2011. Moreover, findings of violation/s on labor standards
and occupational health and safety standards shall be coordinated with PCAB for its appropriate action,
including the possible cancellation/suspension of the contractors license.
d.
TRILATERAL RELATIONSHIP IN JOB CONTRACTING
What is meant by trilateral relationship?
As distinguished from employment contract 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, there
are three (3) parties involved, to wit:
1. The principal who decides to farm 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 contractual workers engaged by the contractor to accomplish the job, work or service.
What are the contracts involved in this trilateral relationship?

1) Service Agreement between principal and contractor the obligation is civil in nature and
thus cognizable by the regular courts.
2) Employment contract between contractor and its contractual workers supplied to principal.
Is there any contractual relationship between principal and the contractors workers farmed out to
it?
There is no contractual relationship of whatsoever nature between the principal and the
contractual workers. Hence, the principal can ask the contractor to remove any contractual
employee assigned or farmed out to it anytime without need to observe due process.
e.
EFFECTS OF LABOR-ONLY CONTRACTING
LEGITIMATE JOB CONTRACTING.
G.R. No. 105033, Feb. 28, 1994.
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What are the requisites of legitimate job contracting?

(1) The contractor must be duly registered with the DOLE. If not registered, the contractor is
presumed a labor-only contractor.
(2) The contractor carries a distinct and independent business and undertakes to perform the
job, work or service on its own responsibility, according to its own manner and method,
and free from control and direction of the principal in all matters connected with the
performance of the work except as to the results thereof;
(3) The contractor has substantial capital and/or investment in the form of tools, equipment,
machineries, work premises, and other materials which are necessary in the conduct of the
business; and
(4) The Service Agreement between principal and contractor should ensure compliance with all
the rights and benefits of workers under Labor Laws such as labor and occupational safety
and health standards, free exercise of the right to self-organization, security of tenure, and
social and welfare benefits.
Absence of any of the foregoing requisites makes it a labor-only contracting arrangement.
What is the amount of substantial capital under the new Rules?

1. In the case of corporations, partnerships or cooperatives paid-up capital stocks/shares of
at least P3 Million; or
2. In the case of single proprietorship - a net worth of at least P3 Million.
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.
May individuals engage in legitimate job contracting?

Yes. Legitimate job contracting may not only be engaged by corporation, partnership or single
proprietorship. Individuals may become legitimate job contractors themselves for as long as they
have SPECIAL SKILLS or TALENTS.
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. All that they are required is to have their tools consisting of SPECIAL SKILL,
TALENT or EXPERTISE.
What are examples of individuals as independent contractors?

1.
2.
3.
4.
5.
Sonza v. ABS-CBN Broadcasting Corporation 1 - TV and radio talents and others with special
talents and skills are not employees but legitimate independent contractors.
Orozco v. The Fifth Division of the Honorable Court of Appeals 2 - A newspaper columnist is
not an employee but an independent contractor of the newspaper publishing the column.
Jose Mel Bernarte v. Philippine Basketball Association 3 - Basketball or soccer referee or umpire,
an independent contractor.
Semblante and Pilar v. CA, Gallera de Mandaue, et al. 4 - Cockpit masiador and sentenciador are
independent contractors.
Escasinas v. Shangri-las Mactan Island Resort5 - A doctor may be engaged as an independent
contractor.
LABOR-ONLY CONTRACTING.
When is there labor-only contracting?

(a) The contractor does not have substantial capital or investments in the form of tools,
equipment, machineries, work premises, among others, and the employees recruited and
placed are performing activities which are usually necessary or desirable to the operation of
the company, or directly related to the main business of the principal within a definite or
predetermined period, regardless of whether such job, work or service is to be performed or
completed within or outside the premises of the principal; OR
(b) The contractor does not exercise the right of control over the performance of the work of the
employee.
1
2
3
4
5
G.R. No. 138051, June 10, 2004.

G.R. No. 155207, Aug. 13, 2008.
G.R. No. 192084, Sept. 14, 2011.
G.R. No. 196426, Aug. 15, 2011.
G.R. No. 178827, March 4, 2009.
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NOTE: Even if only one of the two (2) elements above is present, there is labor-only contracting.
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 employer as if it directly employed the workers supplied by the
labor-only contractor to undertake the subcontracted job or service. It 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.
4. The employees will become employees of the principal, subject to the classifications of
employees under Article 280 of the Labor Code.
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 contractual employees supplied by the laboronly contractor.
2. In the former, the principal is considered only an indirect employer, as this term is understood
under Article 107 of the Labor Code; while in the latter, the principal is considered the direct
employer of the contractual employees in accordance with the last paragraph of Article 106 of
the Labor Code.
3. In the former, the joint and several obligation of the principal and the legitimate job contractor
is only for a limited purpose, that is, to ensure that the employees are paid their wages. Other
than this obligation of paying the wages, the principal is not responsible for any claim made
by the contractual employees; while in the latter, the principal becomes jointly and severally or
solidarily liable with the labor-only contractor to the latters employees in the same manner
and extent that the principal is liable to employees directly hired by him/her, as provided in
Article 106 of the Labor Code, as amended.
4. In the former, the legitimate job contractor undertakes to perform a specific job for the
principal; while in the latter, the labor-only contractor merely provides, supplies, recruits and
places the personnel to work for the principal.
What are the prohibitions other than labor-only contracting?

Contracting out of jobs, works or services when not done in good faith and not justified by the
exigencies of the business such as the following:
(1) Contracting out of jobs, works or services when the same results in the termination or
reduction of regular employees and reduction of work hours or reduction or splitting of
the bargaining unit.
(2) Contracting out of work with a "Cabo." "Cabo" refers to a person or group of persons or
to a labor group which, in the guise of a labor organization, cooperative or any entity,
supplies workers to an employer, with or without any monetary or other consideration,
whether in the capacity of an agent of the employer or as an ostensible independent
contractor.
(3) Taking undue advantage of the economic situation or lack of bargaining strength of the
contractor's employees, or undermining their security of tenure or basic rights, or
circumventing the provisions of regular employment, in any of the following instances:
(i) Requiring them to perform functions which are currently being performed by the
regular employees of the principal; and
(ii) Requiring them to sign, as a precondition to employment or continued employment,
an antedated resignation letter; a blank payroll; a waiver of labor standards including
minimum wages and social or welfare benefits; or a quitclaim releasing the principal,
contractor or from any liability as to payment of future claims.
(4) Contracting out of a job, work or service through an in-house agency.
(5) Contracting out of a job, work or service that is necessary or desirable or directly related to
the business or operation of the principal by reason of a strike or lockout whether actual
or imminent.
(6) Contracting out of a job, work or service being performed by union members when such
will interfere with, restrain or coerce employees in the exercise of their rights to selforganization as provided in Art. 248 (c) of the Labor Code, as amended.
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(7) Repeated hiring of employees under an employment contract of short duration or under a
Service Agreement of short duration with the same or different contractors, which
circumvents the Labor Code provisions on Security of Tenure.
(8) Requiring employees under a subcontracting arrangement to sign a contract fixing the
period of employment to a term shorter than the term of the Service Agreement, unless
the contract is divisible into phases for which substantially different skills are required
and this is made known to the employee at the time of engagement.
(9) Refusal to provide a copy of the Service Agreement and the employment contracts
between the contractor and the employees deployed to work in the bargaining unit of the
principal's certified bargaining agent to the sole and exclusive bargaining agent (SEBA).
(10) Engaging or maintaining by the principal of subcontracted employees in excess of those
provided for in the applicable Collective Bargaining Agreement (CBA) or as set by the
Industry Tripartite Council (ITC).
B.
DISMISSAL FROM EMPLOYMENT
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 Article 282 of the Labor Code or the company rules and regulations
promulgated by the employer; or (2) authorized causes under Articles 283 and 284 thereof;
and
2. Procedural aspect which means that the employee must be accorded due process, the elements
of which are notice and the opportunity to be heard and to defend himself.
What is the distinction between JUST CAUSES and AUTHORIZED CAUSES?

A dismissal based on a just cause means that the employee has committed a wrongful act or
omission; while a dismissal based on an authorized cause means that there exists a ground which the law
itself allows or authorizes to be invoked to justify the termination of an employee even if he has not
committed any wrongful act or omission such as installation of labor-saving devices, redundancy,
retrenchment, closure or cessation of business operations or disease.
1.
JUST CAUSES
What are the just causes under the Labor Code?

The just causes in the Labor Code are found in the following provisions thereof:
(1) Article 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 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 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 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.
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What are just causes under jurisprudence?
In addition to the just causes mentioned in the Labor Code, just causes are also found in
prevailing jurisprudence. The following may be cited as just causes in accordance with prevailing
jurisprudence:
1. Violation of Company Rules and Regulations or Company Code of Discipline.

2. Theft of property owned by a co-employee as distinguished from company-owned property
which is considered serious misconduct.
3. Incompetence, inefficiency or ineptitude.
4. Failure to attain work quota.
5. Failure to comply with weight standards of employer.
6. Attitude problem.
Is dismissal based on Company Code of Discipline or Company Rules and Regulations illegal?
No.
In the 2013 case of 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 respondents
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 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 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.
I.
SERIOUS MISCONDUCT
1. 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 employees 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.
2. SOME PRINCIPLES ON SERIOUS MISCONDUCT.
Serious misconduct implies that it must be of such grave and aggravated character and not
merely trivial or unimportant.
Simple or minor misconduct would not justify the termination of the services of an employee.
Possession or use of shabu or other drugs is a valid ground to terminate employment.
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.
Immoral act committed beyond office hours is a valid ground to terminate employment.
Sexual intercourse inside company premises constitutes serious misconduct.
The act of a 30-year old lady teacher in falling in love with a 16-year old student is not immoral.
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.
Challenging superiors to a fight is a just cause for termination.
Assaulting another employee is a just cause for termination.
Utterance of obscene, insulting or offensive words constitutes serious misconduct.
Gambling within company premises is a serious misconduct.
Rendering service to business rival is a just cause to terminate employment.
Selling products of a competitor is a just cause for termination.
Organizing a credit union by employees in a bank is a serious misconduct.
Deceiving a customer for personal gain is a just cause for termination.
Contracting work in competition with employer constitutes serious misconduct.
Intoxication which interferes with the employees work constitutes serious misconduct.
The act of a teacher in pressuring a colleague to change the failing grade of a student is serious
misconduct.
Sexual harassment is a just ground to dismiss.
Sleeping while on duty is a ground for termination.
Dismissal is too harsh a penalty for eating while at work.
Pilferage or theft of company-owned property is a just cause to terminate.
Theft of funds or property not owned by employer is not a ground to terminate.
Act of falsification is a valid ground to terminate employment.
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Punching-in of time cards of other employees is a just cause for termination.

II.
INSUBORDINATION
OR WILLFUL DISOBEDIENCE OF LAWFUL ORDERS
1. REQUISITES.
One of the fundamental duties of an employee is to obey all reasonable rules, orders and
instructions of the employer. In order to validly invoke this ground, the following requisites must be
complied with, to wit:
1. The employees 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.
2. SOME PRINCIPLES ON INSUBORDINATION.
Making false allegations in complaint does not constitute insubordination.
Failure to answer memo to explain constitutes willful disobedience.
Another notice is required in case of termination on the ground of failure to answer memo to explain.
Refusal to undergo random drug testing constitutes both serious misconduct and insubordination.
Refusal to render overtime to meet production deadline constitutes insubordination.
Refusal to comply with a lawful transfer constitutes insubordination.
III.
GROSS AND HABITUAL NEGLECT OF DUTIES
1. REQUISITES.
The following are the requisites:
(1) There must be negligence which is gross and/or habitual in character; and
(2) It must be work-related as would make him unfit to work for his employer.
2. SOME PRINCIPLES ON GROSS AND HABITUAL NEGLECT OF DUTIES.
Simple negligence is not sufficient to terminate employment.
The negligence must be gross in character which means absence of that diligence that an ordinarily
prudent man would use in his own affairs.
As a general rule, negligence must be both gross and habitual to be a valid ground to dismiss.
Habituality may be disregarded if negligence is gross or the damage or loss is substantial. Habitual
negligence implies repeated failure to perform ones duties for a period of time, depending upon the
circumstances.
Actual damage, loss or injury is not an essential requisite.
Gross negligence may result to loss of trust and confidence.
Absences, if authorized, cannot be cited as a ground to terminate employment.
Tardiness or absenteeism, if not habitual, cannot be cited as a ground to terminate employment.
Tardiness or absenteeism, if habitual, may be cited as a ground to terminate employment.
Tardiness or absenteeism, if habitual, may be tantamount to serious misconduct.
Absences or tardiness due to emergency, ailment or fortuitous event are justified and may not be
cited as just cause to terminate employment.
Unsatisfactory or poor performance, inefficiency and incompetence are considered just causes for
dismissal only if they amount to gross and habitual neglect of duties.
IV.
ABANDONMENT OF WORK
1. CONCEPT.
Abandonment is a form of neglect of duty; hence, a just cause for termination of employment
under Article 282 [b] of the Labor Code.
2. 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 employeremployee relationship manifested by some overt act.
3. SOME PRINCIPLES ON ABANDONMENT.
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Mere absence is not enough to constitute abandonment.

Clear intention to sever employment relationship is necessary.
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 employers decision to dismiss him on the ground of
abandonment.
No hearing is required to validly dismiss an employee for abandonment.
Notices in abandonment cases must be sent to employees last known address per record of the
company. The employer need not look for the employees current whereabouts.
Immediate filing of a complaint for illegal dismissal praying for reinstatement negates abandonment.
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.
Filing of a case to pre-empt investigation of the administrative case is tantamount to abandonment.
When what is prayed for in the complaint is separation pay and not reinstatement, the filing of
complaint does not negate abandonment.
It is abandonment when what is prayed for in the complaint is separation pay and it was only in the
position paper that reinstatement was prayed for.
Employment in another firm coinciding with the filing of complaint does not indicate abandonment.
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.
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.
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.
An employee who failed to comply with the order for his reinstatement is deemed to have
abandoned his work.
An employee who, after being transferred to a new assignment, did not report for work anymore is
deemed to have abandoned his job.
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.
Imprisonment or detention by military does not constitute abandonment.
Absence to evade arrest is not a valid justification. To do so would be to place an imprimatur on the
employees attempt to derail the normal course of the administration of justice.
V.
FRAUD
1. 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. 1
2. SOME PRINCIPLES ON FRAUD.
Failure to deposit collection constitutes fraud.
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.
Lack of misappropriation or shortage is immaterial in case of unauthorized encashment of personal
checks by teller and cashier.
Restitution does not have absolutory effect.
VI.
WILLFUL BREACH OF TRUST AND CONFIDENCE
1. 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
1
Per latest DOLE Department Order No. 147-15, series of 2015, September 07, 2015.
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betrays the employers trust must be real, i.e., founded on clearly established facts;
(3) The employees 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.
2. 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.
3. SOME PRINCIPLES ON THE DOCTRINE OF LOSS OF TRUST AND CONFIDENCE.
Employees position must be reposed with trust and confidence.
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 employers property.
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 includes cashiers, auditors, property custodians, or those who, in the normal and
routine exercise of their functions, regularly handle significant amounts of [the employers] money or
property. They are 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.
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.
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.
Dismissal due to feng shui mismatch is not a valid ground to lose trust and confidence.
Command responsibility of managerial employees is a ground to dismiss.
Confidential employee may be dismissed for loss of trust and confidence.
Grant of promotions and bonuses negates loss of trust and confidence.
Long years of service, absence of derogatory record and small amount involved are deemed
inconsequential insofar as loss of trust and confidence is concerned.
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.
Full restitution does not absolve employee of offense which resulted in the loss of trust and
confidence.
VII.
COMMISSION OF CRIME OR OFFENSE
1. 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 employers family; or
(c) His employers duly authorized representative.
2. SOME PRINCIPLES ON THE COMMISSION OF CRIME OR OFFENSE.
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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.
VIII.
OTHER ANALOGOUS CAUSES
1. 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.
IX.
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 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 another union at the time of the signing of the CBA.
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.
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 unions decision to expel the employee from the
union. (Alabang Country Club, Inc. v. NLRC,1).
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?
G.R. No. 170287, Feb. 14, 2008.
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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,1 is required for a different
purpose - to terminate his employment.
OTHER PRINCIPLES
PER DEPARTMENT ORDER NO. 147-15, SERIES OF 2015
(07 SEPTEMBER 2015):2
An employee found positive for use of dangerous drugs shall be dealt with administratively which
shall be a ground for suspension or termination.3
An employee shall not be terminated from work based on actual, perceived or suspected HIV status.4
An employee shall not be terminated on basis of actual, perceived or suspected Hepatitis B status. 5
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. 6
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 283, to
wit:
a.
b.
c.
d.
Installation of labor-saving device;

Redundancy;
Retrenchment;
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 284 of the Labor Code.
What are the common requisites applicable to the authorized causes under Article 283?
The following are the five (5) common requisites applicable to the ALL the grounds under Article
283:
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 () 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 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 criterion. The other criteria mentioned above which are
lifted from jurisprudence, is of equal importance.
I.
1
2
3
4
5
6
G.R. No. 170287, Feb. 14, 2008.
See Section 6 thereof. (Other Causes of Termination.) xxx

DOLE Department Order No. 53, Series of 2003 in relation to the IRR of R.A. 9165.
DOLE Department Order No. 102, Series of 2010.
DOLE Department Advisory No.5, Series of 2010 Part III C1. par. c.
DOLE Department Order No. 75, Series of 2005.
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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.1
II.
REDUNDANCY
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. 2
III.
RETRENCHMENT

Per latest issuance of the DOLE, 3 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; 4 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 statutory ground in Article 283 which requires this kind of proof. 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?
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.
The phrase retrenchment to prevent losses means that retrenchment must 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.
Best evidence of losses - financial statements audited by independent auditors (not by internal
auditors).
Best evidence of losses in a government-controlled corporation - financial statements audited by
COA.
Income tax returns, not valid since they are self-serving documents.
Mere affidavit on alleged losses is not sufficient.
Retrenchment effected long after the business losses is not valid.
Profitable operations in the past do not affect the validity of retrenchment.
Retrenchment due to liquidity problem is not valid.
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.
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.
Rehiring of retrenched employees does not necessarily indicate illegality of retrenchment.
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.
IV.
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.
1
2
3
4
Per latest DOLE Department Order No. 147-15, series of 2015, September 07, 2015.
Id.
Id.
Balasabas v. NLRC, G.R. No. 85286, August 24,1992; Central Azucarerra dela Carlota v. NLRC, G.R. No. 100092, December 29, 1995.
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What are some relevant principles on closure?

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.
Closure of department or section and hiring of workers supplied by independent contractor as
replacements is valid.
Relocation of business may amount to cessation of operations.
Closure of business to merge or consolidate with another or to sell or dispose all of its assets, held
valid.
Audited financial statements necessary only in closure due to losses.
V.
DISEASE
What are the newest doctrines on termination due to disease?
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.
1. THE DEOFERIO DOCTRINE ON THE REQUISITES.
Disease is one of the authorized causes to terminate employment. In the 2014 case of Deoferio v.
Intel Technology Philippines, Inc.,1 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.
1.1. 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.2
1.2. 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].
2. THE FUJI RULE THE EMPLOYEE SHOULD BE GIVEN THE CHANCE TO PRESENT
COUNTERVAILING MEDICAL CERTIFICATES.
Subsequent to Deoferio, another 2014 case, Fuji Television Network, Inc. v. Arlene S. Espiritu,3
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.
Respondent Arlene was petitioners 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 nonrenewal 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 attorneys 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.
1
2
3
G.R. No. 202996, June 18, 2014.

Per Deoferio v. Intel Technology Philippines, Inc., supra.
Fuji Television Network, Inc. v. Arlene S. Espiritu, G.R. Nos. 204944-45, Dec. 03, 2014.
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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?
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.
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.
A medical certificate issued by a companys 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.
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 governmentemployed 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.
The medical certificate should be procured by the employer and not by the employee.
3.
DUE PROCESS
(a) Twin-Notice Requirement
(b) Hearing; Meaning of Opportunity to be Heard
What is the latest rule on due process?
Due process means compliance with BOTH STATUTORY due process and CONTRACTUAL
due process. CONSTITUTIONAL due process is not applicable (Per Agabon doctrine).
Statutory due process refers to the one prescribed in the Labor Code (Article 277[b]); while
contractual due process refers to the one prescribed in the Company Rules and Regulations (Per Abbott
Laboratories doctrine).
Contractual due process was enunciated in the 2013 en banc ruling in Abbott Laboratories,
Philippines v. Pearlie Ann F. Alcaraz.1 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 employers 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
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,2 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;
1
2
G.R. No. 192571, July 23, 2013.

G.R. No. 166208, June 29, 2007.
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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)
2)
3)
4)
5)
to enable him to prepare adequately for his defense;

to study the accusation against him;
to consult a union official or lawyer;
to gather data and evidence; and
to decide on the defenses he will raise against the complaint.
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: As earlier discussed, 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).
(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 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)
(2)
(3)
(4)
When requested by the employee in writing; or

When substantial evidentiary disputes exist; or
When a company rule or practice requires it; or
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.
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For obvious reason, hearing is not required.

However, as earlier discussed above, the foregoing due process is not applicable to 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 an abandonment case which is a just
cause to terminate employment?
No. Although considered as a just cause to terminate employment, the due process requirement
is different. 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 employers decision to dismiss him on the ground of
abandonment.
What are some notable principles on the hearing requirement?
If employee does not answer, hearing should still proceed.
Outright termination violates due process.
Investigation still required even if incident was witnessed by many.
Meeting, dialogue, consultation or interview is not the hearing required by law. It may not be a
substitute for the actual holding of a hearing.
Prior consultation with union is not part of the due process requirement.
Cross-examination or confrontation of witnesses is not necessary in company investigations.
Co-conspirators confession is not sufficient to merit dismissal.
What are the instances where hearing is not required?

Hearing is not required in the following cases:
1. Termination of project, seasonal, casual or fixed-term employment.

2. Termination of probationary employment on the ground of failure of the probationary
employee to qualify as a regular employee in accordance with reasonable standards made
known to him at the start of the employment.
3. Termination due to abandonment of work.
4. Termination due to authorized causes under Article 283 (installation of labor-saving device,
redundancy, retrenchment or closure of business or cessation of operations). In such cases,
there are no allegations which the employees should refute and defend themselves from.
5. Termination due to disease under Article 284.
6. Termination by the employee (resignation) under Article 285.
7. Termination after 6 months of bona-fide suspension of operation under Article 286. For
purposes of satisfying due process, what is required is simply that the notices provided under
Article 283 be served to both the affected employees and the DOLE at least one (1) month
before the termination becomes effective.
8. Termination due to retirement under Article 287.
9. Termination due to closure or stoppage of work by government authorities when noncompliance with the law or implementing rules and regulations poses grave and imminent
danger to the health and safety of workers in the workplace.
10. Termination of employee who has admitted his guilt for the offense charged.
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.
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C.
RELIEFS FOR ILLEGAL DISMISSAL
What are the reliefs under the Labor Code, particularly under Article 279 thereof?
Under this article, an illegally dismissed employee is entitled to the following reliefs:
(1) Reinstatement without loss of seniority rights and other privileges;
(2) Full backwages, inclusive of regular allowances; and
(3) Other benefits or their monetary equivalent.
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 employees salaries corresponding to the unexpired portion
of the employment contract.
(4) Award of damages and attorneys fees.
(5) Award of financial assistance in cases where the employees 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.
1.
REINSTATEMENT
a.
REINSTATEMENT PENDING APPEAL
Is reinstatement pending appeal solely applicable to reinstatement ordered by the Labor Arbiter?
Yes. Reinstatement is self-executory or immediately executory only if it is ordered by the Labor
Arbiter. This means that the employee ordered reinstated need not file any motion for the issuance of
writ of execution to enforce reinstatement. The employer, in fact, is required to manifest within 10 days
from his receipt of the order of reinstatement which of the two (2) options he is taking:
(1) To reinstate the employee to his former position or to a substantially equivalent position; or
(2) To reinstate him in the payroll, which means the employee need not report for work but only
for the purpose of getting his wage.
There is no way the employer can disregard the reinstatement order. Posting of a bond does not
stay the execution of immediate reinstatement.
In contrast, if ordered by the NLRC, on appeal, or the Court of Appeals, under a Rule 65
certiorari petition, or even by the Supreme Court, reinstatement is not immediately executory. This
means that the employee reinstated should still file a motion for issuance of writ of execution to
enforce the reinstatement.
Are there instances where writ of execution of Labor Arbiters reinstatement order is still required?
Yes, under the following two (2) instances, viz.:

(1) When the employer disobeys the Rules-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.
The employee need not file a motion for the issuance of the writ of execution since the Labor
Arbiter shall thereafter motu proprio issue the writ. Employer may be cited for contempt for his refusal to
comply with the order of reinstatement.
Employer is liable to pay the salaries for the period that the employee was ordered reinstated
pending appeal even if his dismissal is later finally found to be legal on appeal.
What are some relevant principles on reinstatement pending appeal?
The Labor Arbiter cannot exercise option of employer by choosing payroll reinstatement pending
appeal.
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.
Reinstatement to a position lower in rank is not proper.
Reinstatement cannot be refused on the basis of the employment elsewhere of the employee ordered
reinstated.
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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.
No reinstatement pending appeal should be made when antipathy and antagonism exist.
If reinstatement is not stated in the Labor Arbiters decision (neither in the dispositive portion nor in
the text thereof), reinstatement is not warranted.
b.
SEPARATION PAY IN LIEU OF REINSTATEMENT
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 employees 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
employers 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 employers 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 employers 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.
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2.
Reinstatement cannot be granted when what is prayed for by employee is separation pay
in lieu thereof.
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,1 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 employees 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?
Salary increases during period of unemployment are not included as component in the
computation of backwages.
Dismissed employees ability to earn is irrelevant in the award of backwages.
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.
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 Courts decision, the issue on the illegality of the dismissal is finally laid to
rest.
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.
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.
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.
Any amount received during payroll reinstatement is deductible from backwages.
LIMITED 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.
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. It is justified only in
cases where the employees 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 employees coworkers. Without this threat, preventive suspension is not proper.
What are some relevant principles in preventive suspension?

Preventive suspension is not a penalty. This is different from PUNITIVE SUSPENSION which
is imposed as a penalty less harsh than dismissal.
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.
Preventive suspension is neither equivalent nor tantamount to dismissal.
If the basis of the preventive suspension is the employees 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
employees co-workers simply by incurring repeated absences and tardiness.
Preventive suspension does not mean that due process may be disregarded.
G.R. No. 111651, Nov. 28, 1996, 265 SCRA 61.
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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.
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.
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 employees 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.
Preventive suspension lasting longer than 30 days, without the benefit of valid extension,
amounts to constructive dismissal.
Indefinite preventive suspension amounts to 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 employees 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?

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.
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.
Sending to an employee a notice of indefinite suspension which is tantamount to dismissal.
Imposing indefinite preventive suspension without actually conducting any investigation.
Changing the employees status from regular to casual constitutes constructive dismissal.
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.
------------oOo------------
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SYLLABUS
TOPIC NO. 5
MANAGEMENT PREROGATIVES
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.
What are the limitations to the exercise of these prerogatives?
1. Limitations imposed by:
a) law;
b) CBA;
c) employment contract;
d) employer policy;
e) employer practice; and
f) general principles of fair play and justice.
2. It is subject to police power.
3. Its exercise should be without abuse of discretion.
4. It should be done in good faith and with due regard to the rights of labor.
For example, an employer cannot prescribe more than 8 hours as normal working hours in a day
because there is a law which limits it to 8 hours. In the same vein, the employer cannot insist that an
employee should observe 8 hours as the daily normal working hours if there is a stipulation in the CBA,
employment contract, or there is an employer policy or practice that the normal working hours is only 7
hours per day.
A.
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 coemployee, 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.
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B.
TRANSFER OF EMPLOYEES
What are the various kinds of transfer?

a. 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 salient points to consider in transfer?
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.
Commitment made by the employee like a salesman in the employment contract to be reassigned anywhere in the Philippines is binding on him.
Even if the employee is performing well in his present assignment, management may reassign
him to a new post.
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.
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 unions concerted activities in the company
where they were active participants is illegal.
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.
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.
Refusal to transfer to overseas assignment is valid.
Refusal to transfer consequent to promotion is valid.
Transfer to avoid conflict of interest is valid.
A transfer from one position to another occasioned by the abolition of the position is valid.
C.
PRODUCTIVITY STANDARD
How may productivity standards be imposed?

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.
As an incentive scheme, employees who surpass the productivity standards or quota are usually
given additional benefits.
As a disciplinary scheme, employees may be sanctioned or dismissed for failure to meet the
productivity standards or quota.
Illustrative cases:
In the 2014 case of International School Manila v. International School Alliance of Educators
(ISAE),1 the teacher was held guilty of gross inefficiency meriting her dismissal on the basis of the Courts
finding that she failed to measure up to the standards set by the school in teaching Filipino classes.
In the 2012 case of Reyes-Rayel v. Philippine Luen Thai Holdings Corp.,2 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
Courts 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.
1
2
G.R. No. 167286, Feb. 5, 2014.

G.R. No. 174893, July 11, 2012.
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In another 2012 case, Realda v. New Age Graphics, Inc.,1 petitioner, a machine operator of
respondent company, was dismissed on the ground, among others, of inefficiency. In affirming the
validity of his dismissal, the Supreme Court reasoned:
xxx (T)he petitioners 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.
D.
GRANT OF BONUS
See discussion on this subject under Topic III (Labor Standards) above.
E.
CHANGE OF WORKING HOURS
What is the extent of the exercise of this prerogative?

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.
Manila Jockey Club Employees Labor Union PTGWO, v. Manila Jockey Club, Inc.2 - 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.
F.
RULES ON MARRIAGE BETWEEN EMPLOYEES OF COMPETITOR-EMPLOYERS
What is the best illustrative case of this prerogative?

Duncan Association of Detailman-PTGWO v. Glaxo Welcome Philippines, Inc.3 - The contract
of employment in this case expressly prohibited an employee from having a relationship with an
employee of a competitor company. It provides:
10. You agree to disclose to management any existing or future relationship you may have, either
by consanguinity or affinity with co-employees or employees of competing drug companies. Should it
pose a possible conflict of interest in management discretion, you agree to resign voluntarily from the
Company as a matter of Company policy.
The Supreme Court ruled that this stipulation is a valid exercise of management prerogative. The
prohibition against personal or marital relationships with employees of competitor-companies upon its
employees is reasonable under the circumstances because relationships of that nature might compromise
the interests of the company. In other words, the policy is imposed to avoid conflict of interest. In laying
down the assailed company policy, the employer only aims to protect its interests against the possibility
that a competitor company will gain access to its trade secrets, manufacturing formulas, marketing
strategies and other confidential programs and information.
This case of Duncan should be distinguished from the following related cases:
1. Philippine Telegraph and Telephone Company (PT&T) v. NLRC.4 - 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.5 - 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.
1
2
3
4
5
G.R. No. 192190, April 25, 2012.

G.R. No. 167760, March 7, 2007.
G.R. No. 162994, Sept. 17, 2004.
G.R. No. 118978, May 23, 1997, 272 SCRA 596, 605.
G.R. No. 164774, April 12, 2006.
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2. In case of two of our employees (both singles [sic], one male and another female)
developed a friendly relationship during the course of their employment and then decided to
get married, one of them should resign to preserve the policy stated above.
It was in this case of Star Paper that the Supreme Court pronounced that in Duncan, the policy
against marriage has passed and complied with the Reasonable Business Necessity Rule because of the
conflict of interest sought to be avoided. But in PT&T, there was no showing that there ever was a
reasonable business necessity sought to be protected by the policy against marriage. So also as in this case
of Star Paper where there is no showing of such reasonable business necessity.
NOTE: Besides the foregoing, 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.
G.
POST-EMPLOYMENT BAN
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 employees
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.
Starting on January 1, 1993, petitioner worked for respondent as Senior Assistant Vice-President
and Territorial Operations Head in charge of its Hongkong and Asean operations under a 5-year contract
of employment containing the afore-quoted clause. On September 16, 1995, petitioner stopped reporting
for work. In November 1995, she became the Vice-President for Sales of Professional Pension Plans, Inc., a
corporation engaged also in the pre-need industry. Consequently, respondent sued petitioner for
damages before the RTC of Pasig City. Respondent alleged, among others, that petitioners employment
with Professional Pension Plans, Inc. violated the above-quoted non-involvement clause in her contract of
employment. Respondent thus prayed for P100,000 as compensatory damages; P200,000 as moral
damages; P100,000 as exemplary damages; and 25% of the total amount due plus P1,000 per counsels
court appearance, as attorneys fees.
Petitioner countered that the non-involvement clause was unenforceable for being against public
order or public policy: First, the restraint imposed was much greater than what was necessary to afford
respondent a fair and reasonable protection. Petitioner contended that the transfer to a rival company
was an accepted practice in the pre-need industry. Since the products sold by the companies were more
or less the same, there was nothing peculiar or unique to protect. Second, respondent did not invest in
petitioners training or improvement. At the time petitioner was recruited, she already possessed the
knowledge and expertise required in the pre-need industry and respondent benefited tremendously from
it. Third, a strict application of the non-involvement clause would amount to a deprivation of petitioners
right to engage in the only work she knew.
In affirming the validity of the Non-Involvement Clause, the Supreme Court ratiocinated as
follows:
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xxx a non-involvement clause is not necessarily void for being in restraint of trade 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 petitioners
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 respondents. 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 respondents Hongkong and Asean operations, she had been privy to
confidential and highly sensitive marketing strategies of respondents business. To allow her to engage in
a rival business soon after she leaves would make respondents 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.
------------oOo------------
SYLLABUS
TOPIC NO. 6
SOCIAL WELFARE LEGISLATION
A.
SSS LAW
(R.A. No. 8282)
Who are covered employers?

a. An employer or any person who uses the services of another person in business, trade,
industry or any undertaking.
b. A social, civic, professional, charitable and other non-profit organizations which hire the
services of employees are considered employers.
c. A foreign government, international organization or its wholly-owned instrumentality such as
an embassy in the Philippines, may enter into an administrative agreement with the SSS for
the coverage of its Filipino employees.
Who are compulsorily covered employees?

a. A private employee, whether permanent, temporary or provisional, who is not over 60 years
old.
b. A domestic worker or kasambahay who has rendered at least one (1) month of service.
c. A Filipino seafarer upon the signing of the standard contract of employment between the
seafarer and the manning agency which, together with the foreign ship owner, act as
employers.
d. An employee of a foreign government, international organization or their wholly-owned
instrumentality based in the Philippines, which entered into an administrative agreement with
the SSS for the coverage of its Filipino workers.
e. The parent, spouse or child below 21 years old of the owner of a single proprietorship
business.
Are self-employed persons covered?
Yes. A self-employed person, regardless of trade, business or occupation, with an income of at
least P1,000 a month and not over 60 years old, should register with the SSS. Included, but not limited to,
are the following self-employed persons:
a. Self-employed professionals;
b. Business partners, single proprietors and board directors;
c. Actors, actresses, directors, scriptwriters and news reporters who are not under an employeremployee relationship;
d. Professional athletes, coaches, trainers and jockeys;
e. Farmers and fisherfolks; and
f. Workers in the informal sector such as cigarette vendors, watch-your-car boys, hospitality
girls, among others.
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Unless otherwise specified, all provisions of the law, R.A. No. 8282, applicable to covered
employees shall also be applicable to the covered self-employed persons.
A self-employed person shall be both employee and employer at the same time.
Who may be covered voluntarily?

1. Separated Members
A member who is separated from employment or ceased to be self-employed/OFW/nonworking spouse and would like to continue contributing.
2. Overseas Filipino Workers (OFWs)
A Filipino recruited in the Philippines by a foreign-based employer for employment abroad or
one who legitimately entered a foreign country (i.e., tourist, student) and is eventually
employed.
3. Non-working spouses of SSS members
A person legally married to a currently employed and actively paying SSS member who
devotes full time in the management of household and family affairs may be covered on a
voluntary basis, provided there is the approval of the working spouse. The person should
never have been a member of the SSS. The contributions will be based on 50 percent (50%) of
the working spouses last posted monthly salary credit but in no case shall it be lower than
P1,000.
What is the effective date of coverage?

For compulsory coverage:
1. For employer - Compulsory coverage of the employer shall take effect on the first day of his
operation or on the first day he hires employee/s. The employer is given only 30 days from
the date of employment of employee to report the person for coverage to the SSS.
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 or upon payment of the first valid contribution, in case of
initial coverage.
For voluntary coverage:

1. For an OFW upon first payment of contribution, in case of initial coverage.
2. For a non-working spouse upon first payment of contribution.
3. For a separated member on the month he/she resumed payment of contribution.
Who are excluded employers?
Government and any of its political subdivisions, branches or instrumentalities, including
corporations owned or controlled by the Government with original charters.
Who are excluded employees?

Workers whose employment or service falls under any of the following circumstances are not
covered:
(1) Employment purely casual and not for the purpose of occupation or business of the employer;
(2) Service performed on or in connection with an alien vessel by an employee if he is employed
when such vessel is outside the Philippines;
(3) Service performed in the employ of the Philippine Government or instrumentality or agency
thereof;
(4) 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. 8282 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
(5) Such other services performed by temporary and other employees which may be excluded by
regulation of the Social Security Commission. Employees of bona-fide independent contractors
shall not be deemed employees of the employer engaging the service of said contractors.
What are the classifications of benefits?
The SSS benefits may be classified into two (2) as follows:
(a) Social security benefits:
1) Sickness
2) Maternity
3) Retirement
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4) Disability
5) Death and funeral.
(b) Employees compensation benefits.

Who are 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 who are
not yet 21 years of age.
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
Who are 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.
B.
GSIS LAW
(R.A. No. 8291)
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 reelection 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 employeegovernment 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.
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.
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 members assumption to duty on his
original appointment or election to public office.
What is the effect of separation from the service?
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A member separated from the service shall continue to be a member, and shall be entitled to
whatever benefits he has qualified to in the event of any contingency compensable under the GSIS Law.
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.
What are the kinds of benefits under the GSIS Law?

The following are the benefits under the GSIS Law:
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
Compulsory Life Insurance Benefits under the Life Endowment Policy (LEP)
Compulsory Life Insurance Benefits under the Enhanced Life Policy (ELP)
Retirement Benefits
Separation Benefit
Unemployment Benefit
Disability Benefits
Survivorship Benefits
Funeral Benefits
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 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.
LIMITED PORTABILITY LAW
(R.A. No. 7699)
What is limited portability scheme?

R.A. No. 7699 was enacted to enable those from the private sector who transfer to the
government service or from the government sector to the private sector to combine their years of service
and contributions which have been credited with the SSS or GSIS, as the case may be, to satisfy the
required number of years of service for entitlement to the benefits under the applicable laws.
What is totalization?
The term totalization refers to the process of adding up the periods of creditable services or
contributions under each of the Systems, SSS or GSIS, for the purpose of eligibility and computation of
benefits.
What is portability?
On the other hand, the term portability refers to the transfer of funds for the account and benefit
of a worker who transfers from one system to the other.
How are benefits computed?

All services rendered or contributions paid by a member personally and those that were paid by
the employers to either System shall be considered in the computation of benefits which may be claimed
from either or both Systems. However, the amount of benefits to be paid by one System shall be in
proportion to the services rendered or periods of contributions made to that System.
Benefits refer to the following:
1. Old-age benefit;
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2.
3.
4.
5.
Disability benefit;
Survivorship benefit;
Sickness benefit;
Medicare benefit, provided that the member shall claim said benefit from the System where
he was last a member; and
6. Such other benefits common to both Systems that may be availed of through totalization.
When does totalization apply?
a. if a worker is not qualified for any benefits from both Systems; or
b. if a worker in the public sector is not qualified for any benefits from the GSIS; or
c. if a worker in the private sector is not qualified for any benefits from the SSS.
For purposes of computation of benefits, totalization applies in all cases so that the contributions
made by the worker-member in both Systems shall provide maximum benefits which otherwise will not
be available. In no case shall the contribution be lost or forfeited.
What is the effect if worker is not qualified after totalization?
If after totalization, the worker-member still does not qualify for any benefit as listed in the law,
the member will then get whatever benefits correspond to his/her contributions in either or both
Systems.
What is the effect if worker qualifies for benefits in both Systems?

If a worker qualifies for benefits in both Systems, totalization shall not apply.
D.
EMPLOYEES COMPENSATION
COVERAGE AND WHEN COMPENSABLE
What is the State Insurance Fund [SIF]?

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.
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)?
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
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1. Temporary total disability

2. Permanent total disability
3. Permanent partial disability
c. Death Benefit
d. Funeral Benefit
------------oOo------------
SYLLABUS
TOPIC NO. 7
LABOR RELATIONS LAW
A.
RIGHT TO SELF-ORGANIZATION
1.
WHO MAY UNIONIZE
FOR PURPOSES OF COLLECTIVE BARGAINING
Who are eligible to join, form or assist a labor organization for purposes of collective bargaining?
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
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.
Is mixed membership of supervisors and rank-and-file union in one union a ground to cancel its
registration?
No. In case there is mixed membership of supervisors and rank-and-file employees in one union,
the new rule enunciated in Article 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.
Do alien employees have the right to join a labor organization?

No, except if the following requisites are complied with:
(1) He should have a valid working permit issued by the DOLE; and
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(2) He is a national of a country which grants the same or similar rights to Filipino workers OR
which has 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. But employee-members of a cooperative may withdraw as members of the cooperative
for purposes of joining a labor union.
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.
(a)
WHO CANNOT FORM, JOIN OR ASSIST
LABOR ORGANIZATIONS
1. PERSONS NOT ALLOWED TO FORM, JOIN OR ASSIST LABOR ORGANIZATIONS.
a. In the private sector.
1. Top and middle level managerial employees; and

2. Confidential employees.
b. In the public sector.
The following are not eligible to form employees organizations:
1. High-level employees whose functions are normally considered as policy-making or
managerial or whose duties are of a highly confidential nature;
2. Members of the Armed Forces of the Philippines;
3. Police officers;
4. Policemen;
5. Firemen; and
6. Jail guards.
Are managerial employees allowed unionize?
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 selforganization.
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.
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.
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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.
What are some principles on the right to self-organization?

a. Some principles on the right to self-organization.
Any employee, whether employed for a definite period or not, shall, beginning on the
first day of his service, be eligible for membership in any labor organization.
Right to join a union cannot be made subject of a CBA stipulation.
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 employers establishment that supports the labor
organization which is applying for registration.
(a)
TEST TO DETERMINE THE CONSTITUENCY
OF AN APPROPRIATE BARGAINING UNIT
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:
(1)
(2)
(3)
(4)
Community or mutuality of interest doctrine;

Globe doctrine or will of the members;
Collective bargaining history doctrine; and
Employment status doctrine.
1. COMMUNITY OR MUTUALITY OF INTEREST DOCTRINE.

Under this doctrine, the employees sought to be represented by the collective bargaining agent
must have community or mutuality of interest in terms of employment and working conditions as
evinced by the type of 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.1 - Respondent union sought to represent the rank-and-file employees (consisting of the motor pool,
construction and transportation employees) of petitioner-schools Tandang Sora campus. Petitionerschool 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
petitioners 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,2 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, 3 involving
the issue of validity of constituting as one CBU of employees working in San Miguels three (3) plants
1
2
3
G.R. No. 151326, Nov. 23, 2005.
G.R. No. 100485, Sept. 21, 1994.

G.R. No. 110399, Aug. 15, 1997, 277 SCRA 370, 380-381.
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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,1 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 Baos, Laguna; and (4) the Visayas, were allowed to
participate in a certification election as one bargaining unit.
2. GLOBE DOCTRINE.
This principle is based on the will of the employees. It is called Globe doctrine because this
principle was first enunciated in the United States case of Globe Machine and Stamping Co.,2 where it
was ruled, in defining the appropriate bargaining unit, that in a case where the companys 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. 3 - 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.
3. COLLECTIVE BARGAINING HISTORY DOCTRINE.
This principle puts premium to the prior collective bargaining history and affinity of the
employees in determining the appropriate bargaining unit. 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.4 - 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.
4. 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, 5 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 AGENT
What is an exclusive bargaining agent?

The term exclusive bargaining representative or exclusive bargaining agent or sole and exclusive
bargaining agent or SEBA refers to a legitimate labor union duly recognized or certified as the sole and
exclusive bargaining representative or agent of all the employees in a bargaining unit.
What are the modes of determining the sole and exclusive bargaining agent?
The following are the modes:
G.R. No. 96189, July 14, 1992, 211 SCRA 451.
3 NLRB 294 (1937).

G.R. No. 128845, June 1, 2000.
G.R. No. 79526, Dec. 21, 1990.
G.R. No. L-14656, Nov. 29, 1960.
3
4
5
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1. Voluntary recognition (ALREADY REPEALED AND REPLACED BY THE MODE CALLEDD

REQUEST FOR SEBA CERTIFICATION UNDER DEPARTMENT ORDER NO. 40-i-15,
SERIES OF 2015, (SEPT. 7, 2015).
2. Certification election;
3. Consent election;
4. Run-off election;
5. Re-run election (NOW PROVIDED UNDER DEPARTMENT ORDER NO. 40-i-15, SERIES
OF 2015, (SEPT. 7, 2015).
(a)
VOLUNTARY RECOGNITION
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 could have been the reason for such repeal?
Being the sole and exclusive concern and domain of the employees, the previous mode of
allowing the employer to extend voluntary recognition to enable a union to become a SEBA is a
patently incongruous and self-contradictory rule that runs diametrically contrary to the autonomous
process of choosing the SEBA. For by so allowing the employer to extend voluntary recognition to a
union, it is, in a way, no longer the employees but the employer who determines and designates the
SEBA when he is not supposed to have any iota of role in such determination and designation.
Although DEPARTMENT ORDER NO. 40-i-15 that repealed voluntary recognition failed to
explain the rationale behind it, the foregoing disquisition on the bystander role of the employer in the
certification election process can be the only logical rationale for such repeal and its eventual replacement
by the mode of filing a Request for SEBA Certification by the union desiring to be certified as a SEBA,
without need to secure first the consent and voluntary recognition of the employer. And under this new
rule, the DOLE Regional Director is duty-bound to extend such SEBA Certification simply on the basis of
the requesting unions compliance with the requirements.
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?
1. 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.
2. FIRST SCENARIO: Request for certification in 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. 1
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.2
1
2
Section 4, Rule VII, Ibid.

Id.
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If the requesting union or local fails to complete the requirements for SEBA certification during
the conference, the Request should be referred to the Election Officer for the conduct of certification
election.1
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. 2
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. 3
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. 4
d. Certification year bar rule.
The issuance of the SEBA Certification bars the filing of a petition for certification election by any
labor organization for a period of one (1) year from the date of its issuance. It is only upon the expiration
of this 1-year period that any other legitimate labor organization may file a PCE in the same CBU
represented by the certified SEBA for purposes of challenging the majority status of the certified SEBA,
unless a CBA between the employer and the certified SEBA has already been executed and registered
with the Regional Office.5
3. 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.6 The certification election shall be conducted in accordance with the Rules.7
4. 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. 8
5. CONDUCT OF CERTIFICATION ELECTION UNDER THIS MODE.
It is clear that under the three (3) scenarios cited above, the 2nd and 3rd clearly involve the conduct
of certification election. It is only in the 1st that the conduct of certification election is not the order of the
day; there will be certification election only when the requesting union or local fails to complete the
requirements for SEBA certification during the conference, in which event, the DOLE Regional Director
shall refer the Request directly to the Election Officer, not to the Mediator-Arbiter,9 for the conduct of
certification election.10
CERTIFICATION 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.
1
2
3
4
5
6
7
8
9
10
Id., pursuant to Rule IX of the Rules.

Section 4.1., Rule VII, Ibid.
Id.
Section 4.2., Rule VII, Ibid.
Id., in accordance with Rule XVII of the Rules. It must be noted that after certification, an employer is required to bargain with the certified SEBA for a reasonable time, which is
usually one year, in the absence of unusual circumstances. The certified SEBA for that period is conclusively presumed to represent the majority of the employees in the CBU; this
presumption, however, becomes rebuttable after such period. But if the SEBA loses its majority standing because of the commission of ULP by the employer against it, the SEBA can
legally insist on its being such even after the lapse of the 1-year period, without prejudice to the employer being prosecuted for the ULP act.
Section 5, Rule VII, Ibid.
Referring to Rule IX of these Rules.
Section 6, Rule VII, Ibid. in accordance with Rules VIII and IX of the Rules.
It is significant to note that it is the Mediator-Arbiter who has original jurisdiction over inter-union or certification election/representation disputes. (See Article 232 [226], Labor Code).
The Election Officer merely conducts the certification election.
Section 4, Rule VII, in relation and pursuant to Rule IX of the Rules.
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2. An employer, when requested by a labor organization to bargain collectively and its majority
status is in doubt.
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.
2.
3.
4.
5.
Statutory bar rule;

Certification year bar rule;
Negotiations bar rule;
Bargaining deadlock bar rule; or
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
Code1 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-run2 election where no appeal on the results thereof was
made.3 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. 4
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.5
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
1
3
4
5
Section 3(a), Rule VIII, Book V, Rules to Implement the Labor Code, as amended by Department Order No. 40-03, Series of 2003, [Feb. 17, 2003]. See also Section 14(d), Rule VIII
[Certification Election], Book V of the Rules to Implement the Labor Code, as amended by Department Order No. 40-F-03, Series of 2008 [October 30, 2008]. See also Section 4.2.,
Rule VII, Department Order No. 40-I-15, Series of 2015 [September 07, 2015]; Further, see the old provision of Section 3, Rule V, Book V of the Labor Codes Implementing Rules.
New Section 1(tt), Rule I, Book V, Rules to Implement the Labor Code, as amended by Department Order No. 40-03, Series of 2003, [Feb. 17, 2003], and as further added through
the amendment introduced by Section 2, Department Order No. 40-I-15, Series of 2015 [September 07, 2015], entitled Further Amending Department Order No. 40, Series of 2003,
Amending the Implementing Rules and Regulations of Book V of the Labor Code of the Philippines, as Amended.
Section 14(d), Rule VIII [Certification Election], Book V of the Rules to Implement the Labor Code, as amended by Department Order No. 40-F-03, Series of 2008 [October 30, 2008].
Section 3(a), Rule VIII, Book V, Rules to Implement the Labor Code, as amended by Department Order No. 40-03, Series of 2003, [Feb. 17, 2003].
199 See 29 U.S.C. A7 159(c)(3).
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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.
The contract-bar rule does not apply in the following cases:
1. Where there is an automatic renewal provision in the CBA but prior to the date when such
automatic renewal became effective, the employer seasonably filed a manifestation with the
Bureau of Labor Relations of its intention to terminate the said agreement if and when it is
established that the bargaining agent does not represent anymore the majority of the workers
in the bargaining unit.
2. Where the CBA, despite its due registration, is found in appropriate proceedings that: (a) it
contains provisions lower than the standards fixed by law; or (b) the documents supporting its
registration are falsified, fraudulent or tainted with misrepresentation.
3. Where the CBA does not foster industrial stability, such as contracts where the identity of the
representative is in doubt since the employer extended direct recognition to the union and
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?
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?

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.
The pendency of an unfair labor practice case filed against a labor organization participating in the
certification election does not stay the holding thereof.
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.
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.
Only persons who have direct employment relationship with the employer may vote in the
certification election, regardless of their period of employment.
IN AN UNORGANIZED ESTABLISHMENT
What is meant by unorganized establishment?
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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.
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.
CHALLENGING OF VOTES
IN A CERTIFICATION ELECTION
(1) The grounds for challenging a vote remain the same, namely: (a) that there is no employeremployee relationship between the voter and the employer; or (b) that the voter is not a
member of the appropriate bargaining unit which petitioner seeks to represent.
(2) The challenge to the voter should be made and asserted during the PRE-ELECTION
CONFERENCES and not during the election proper which was what was provided in the
old Rules, i.e., that the challenge be made right before [the ballot] is deposited in the ballot box.1
(2) After being challenged during the pre-election conferences, the challenged voter will still be
allowed to vote in the election, although, at the time he/she casts his/her ballot, it shall be
placed in an envelope which shall be sealed by the Election Officer in the presence of the
voter and the representatives of the contending unions. The Election Officer shall then
follow the procedural steps in processing challenged votes laid down in Section 10 of Rule
IX, as quoted above.
(3) The Election Officer, in no case, has authority to rule on questions of voter eligibility
(referring to the said 2 grounds), his/her role being confined only to taking note of all
challenges in the minutes of the election proceedings and to have custody of all envelopes
containing the chalIenged votes.
(4) It is the Mediator-Arbiter who has the authority to rule on such questions of voter
eligibility.2
(5) The Election Officer shall rule on any on-the-spot question relating to and raised during the
conduct of the election.
PROTEST
IN CERTIFICATION ELECTION
What are the requisites for the valid invocation of protest?
The following requirements, as a matter of procedure, must be complied with in order
that a protest would prosper, to wit:
1
2
As previously provided, in Section 10, Rule IX, Book V of the Implementing Rules, that is: An authorized representative of any of the contending unions and the employer may
challenge a vote before it is deposited in the ballot box xxx
But the envelopes shall be opened and the question of eligibility shall be passed upon by the Mediator-Arbiter only if the number of segregated votes will materially alter the results of
the election.
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(1) Any party-in-interest may file a protest with the Election Officer based on any issue
arising from [the certification elections] conduct or from its results.1 Such protest shall
be recorded in the minutes of the election proceedings. Protests not so raised
immediately after the last ballot cast are deemed waived.2
(2) General reservation to file a protest shall be prohibited. The protesting party should
specify the grounds for protest.3
(3) The protesting party must formalize its protest with the Mediator-Arbiter, with
specific grounds, arguments and evidence, within five (5) days after the close of the
election proceedings. If not recorded in the minutes and formalized within the
prescribed period, the protest should be deemed dropped4 or waived.5
What is the meaning of party-in-interest?
It must be noted that only a party-in-interest or more appropriately, a union-ininterest can file a protest. For lack of personality, it cannot therefore be filed by:
(1) a labor union which is not a participant in the certification election.6
(2) a union which has disaffiliated from its mother federation and which has no
independent registration.7
(3) an employer, being legally treated merely as bystander.8
.
RUN-OFF 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.9
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.10
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.11
RE-RUN ELECTION
1
2
3
4
5
6
7
8
9
10
11
Section 19, Rule VIII, Book V, Rules to Implement the Labor Code, as amended by Department Order No. 40-03, Series of 2003, [Feb. 17, 2003], and as previously re-numbered as
Section 18 (from Section 17) by Department Order No. 40-F-03, Series of 2008 [Oct. 30, 2008] and further re-numbered as Section 19 by Section 8, Department Order No. 40-I-15,
Series of 2015 [September 07, 2015], entitled Further Amending Department Order No. 40, Series of 2003, Amending the Implementing Rules and Regulations of Book V of the
Labor Code of the Philippines, as Amended.
Section 13, Rule VIII, Book V, Rules to Implement the Labor Code, as previously amended and re-numbered as Section 12 [formerly Section 13] by Department Order No. 40-03,
Series of 2003, [Feb. 17, 2003], and as further amended and re-numbered as Section 13 by Section 14, Department Order No. 40-I-15, Series of 2015 [September 07, 2015], Ibid.
Id.
Id.
See Samahan Ng Manggagawa Sa Pacific Plastic v. Laguesma, G.R. No. 111245. Jan. 31, 1997.
GOP-CCP Workers Union v. CIR, G.R. No. L-33015, Sept. 10, 1979, 93 SCRA 116.
Reyes v. Ople, G.R. No. L-48192, March 30, 1979, 89 SCRA 279.
See Article 271 [258-A], Labor Code.
Article 268 [256], Labor Code; Section 1 [ss], Rule I, Book V, Rules to Implement the Labor Code, as amended by Department Order No. 40-03, Series of 2003, [Feb. 17, 2003].
Section 1, Rule X, Book V, Ibid.
Id.
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RULE ON RE-RUN ELECTION, NOT FOUND IN LABOR CODE BUT LATELY PROVIDED
IN A DOLE DEPARTMENT ORDER.
a. Belated enunciation of rule on re-run elections.
This mode of choosing the SEBA is not expressly provided in the Labor Code nor in the
original rendering of its implementing rules. It was only in 2015 that an issuance of the DOLE
Secretary has introduced this term for the first time as an amendment to the Rules to Implement
the Labor Code and defines it as follows:
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.1
b. 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.
c. A third ground.
A re-run election is obviously in the nature of a corrective action meant to cure a
seriously defective and distorted certification election. Consequently, a 3rd ground that may be
cited as would justify the conduct of a fair re-run election is when the certification election is
invalidated or nullified by a multitude of reasons that negate the true will, undistorted desire
and informed choice of the employees-electorate. Apt to be cited in this connection are the
following:
(1) Employers commission of ULPs that resulted in the election not being free, orderly,
honest, peaceful and credible or that undermined a unions majority;
(2) Perpetration, not only by the employer but by the contending unions and/or labor
officials as well, of serious election irregularities such as massive disenfranchisement
of voters, lack of secrecy in the voting, election fraud or bribery.
1. RULE IN CASE OF A TIE.
a. Various situations where a tie may occur justifying a re-run election.
Based on the above-quoted provision of the Implementing Rules, the tie contemplated
therein which would justify the holding of a re-run election may occur in any of the following
scenarios:
(1) At least 2 unions are involved and a tie in the votes occurred:
(a) Between the 2 contending unions and the No Union2 choice did not garner the
majority; or
(b) Between 1 of the 2 unions and the No Union choice.
(2) At least 3 unions are involved and a tie in the votes occurred:
(a) Between and among 2 or more or all of the contending unions and the No
Union choice did not muster the majority; or
(b) Between and among 1 or more of the contending unions and the No Union
choice.
(3) A tie in the votes occurred between the 2 unions involved in a run-off election.
It bears stressing that if the No Union choice garners the majority of the votes and thus
wins the certification or consent election, a tie between and among the contending unions will
no longer matter. This means that the employees in the CBU do not want any SEBA to represent
them. Consequently, no CBA negotiation will transpire.
b. Notice of re-run election; when it should be conducted.
In any of the three (3) situations mentioned and discussed above, the Election Officer
should immediately notify the parties of a re-run election. The Election Officer should cause the
posting of the notice of re-run election within five (5) days from the certification, consent or runoff election. The re-run election shall be conducted within ten (10) days after the posting of
notice.3
1
2
3
Underscoring supplied; New Section 1(tt), Rule I, Book V, Rules to Implement the Labor Code, as amended by Department Order No. 40-03, Series of 2003, [Feb. 17, 2003], and as
further added through the amendment introduced by Section 2, Department Order No. 40-I-15, Series of 2015 [September 07, 2015], entitled Further Amending Department Order
No. 40, Series of 2003, Amending the Implementing Rules and Regulations of Book V of the Labor Code of the Philippines, as Amended.
It must be stressed that the No Union choice is always one of the choices in all certification elections, with the sole exception of run-off elections, for obvious reason.
New Section 18, Rule IX, Book V, Rules to Implement the Labor Code, as previously amended by Department Order No. 40-03, Series of 2003, [Feb. 17, 2003], and as added by
Section 16, Department Order No. 40-I-15, Series of 2015 [September 07, 2015], entitled Further Amending Department Order No. 40, Series of 2003, Amending the Implementing
Rules and Regulations of Book V of the Labor Code of the Philippines, as Amended.
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c. Declaration of winner in a re-run election.

The choice receiving the highest votes cast during the re-run election shall be declared
the winner and shall be certified as the SEBA accordingly.1
2. RULE IN CASE OF FAILURE OF ELECTION.
a. When is there a 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.2 For example, in a CBU composed of 100
employees, the majority of 100, which is 51, should participate in the election; otherwise, if less
than 51 employees have participated, there is here a failure of election.
b. Effect of failure of election.
A failure of election shall not bar the filing of a motion for the immediate holding of another
certification or consent election, now to be called re-run election, within six (6) months from the
date of declaration of failure of election.3
c. Action on the motion.
Within 24 hours from receipt of such motion, the Election Officer should immediately schedule
the conduct of such re-run election within 15 days from receipt of the motion and cause the
posting of the notice of re-run election at least 10 days prior to the scheduled date thereof in 2
most conspicuous places in the establishment. The same guidelines and list of voters used in the
first election should be used in the re-run election.4
d. Proclamation and certification of result of election.
Within 24 hours from the final canvass of votes, there being a valid election, the Election
Officer should transmit the records of the case to the Mediator-Arbiter who shall, within the
same period from receipt of the minutes and results of election, issue an order proclaiming the
results of the election and certifying the union which obtained the majority of the valid votes
cast as the SEBA in the subject CBU, under any of the following conditions:
(a) No protest was filed or, even if one was filed, the same was not perfected within the
5-day period for perfection of the protest;
(b) No challenge or eligibility issue was raised or, even if one was raised, the resolution
of the same will not materially change the results of the election.
The winning union shall have the rights, privileges and obligations of a duly certified
SEBA from the time the certification is issued. Where majority of the valid votes cast result in
No Union obtaining the majority, the Mediator-Arbiter should declare such fact in the order. 5
3. ADDITIONAL GROUND WHEN RE-RUN ELECTION IS JUSTIFIED.
a. When election is invalidated.
As earlier pointed out, the conduct of a re-run election may also be justified if the
certification, consent or run-off election has been invalidated or nullified due to certain serious
irregularities that have been committed during the conduct thereof, such as, inter alia,
disenfranchisement of the voters, lack of secrecy in the voting, fraud or bribery or acts of
terrorism, force, threat and intimidation employed by any of the contending unions or the
employer. Such invalidation would necessitate the conduct of a re-run election among the
contending unions to determine the true will and desire of the employees-electorate.6
b. Relevant jurisprudence.
Philippine jurisprudence has not exactly denominated the holding of another certification
election after the invalidation of the first as re-run election but the same may well be deemed
the correct terminology to describe it. Two cases may be cited as good examples of cases where
re-run election was ordered:
1
2
3
Id.
Section 16 [formerly Section 17], Rule IX, Book V, Rules to Implement the Labor Code, as amended by Department Order No. 40-03, Series of 2003, [Feb. 17, 2003], and as renumbered by Department Order No. 40-F-03, Series of 2008 [Oct. 30, 2008].
This provision entitled Effect of failure of election should now be denominated as Section 19, Rule IX, Book V, Rules to Implement the Labor Code, by virtue of the re-numbering
ordered by Section 17, Department Order No. 40-I-15, Series of 2015 [September 07, 2015], entitled Further Amending Department Order No. 40, Series of 2003, Amending the
Implementing Rules and Regulations of Book V of the Labor Code of the Philippines, as Amended. This section was originally numbered Section 18, per Department Order No. 4003, Series of 2003, [Feb. 17, 2003], but it was subsequently re-numbered to Section 17, per Department Order No. 40-F-03, Series of 2008 [Oct. 30, 2008]. This latest 2015 renumbering was effected through said Section 17 which states: Sections subsequent to inserted new provisions and/or renumbered sections are renumbered accordingly.
This provision entitled Action on motion should now be denominated as Section 20, Rule IX, Book V, Rules to Implement the Labor Code, as explained in the immediately preceding
note. Thus, this section was originally numbered Section 19, per Department Order No. 40-03, Series of 2003, [Feb. 17, 2003], but it was subsequently re-numbered to Section 18,
per Department Order No. 40-F-03, Series of 2008 [Oct. 30, 2008].
This provision entitled Proclamation and certification of the result of the election should now be denominated as Section 21, Rule IX, Book V, Rules to Implement the Labor Code, by
virtue of the re-numbering ordered by Section 17, Department Order No. 40-I-15, Series of 2015 [September 07, 2015], entitled Further Amending Department Order No. 40, Series
of 2003, Amending the Implementing Rules and Regulations of Book V of the Labor Code of the Philippines, as Amended. 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].
This latest 2015 re-numbering was effected through said Section 17 which states: Sections subsequent to inserted new provisions and/or renumbered sections are renumbered
accordingly.
See Confederation of Citizens Labor Unions v. Noriel, G.R. No. L-56902. September 21, 1982, 116 SCRA 694.
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(1) Confederation of Citizens Labor Unions v. Noriel;1 and

(2) National Federation of Labor v. The Secretary of Labor.2
CONSENT ELECTION
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 is the distinction between consent election and certification election?

A consent election is one mutually agreed upon by the parties, with or without the intervention
of the DOLE, its purpose being merely to determine the issue of majority representation of all the workers
in an appropriate collective bargaining unit. Whichever union is chosen in the consent election will be
certified by the Med-Arbiter as the SEBA.
A certification election, on the other hand, is one which is ordered by the Med-Arbiter on the
basis of a petition for certification election (PCE) filed by a union which prays that it be certified as the
SEBA in an appropriate bargaining unit.
Can the parties agree to the conduct of consent election even during the pendency of certification
election?
Yes. In fact, the Med-Arbiter, at the start of a certification election case, is required to ask the
parties whether they want a consent election instead of a certification election. And at any stage of the
certification election proceeding, the parties may decide to conduct a consent election with or without the
supervision of the Med-Arbiter. And whichever union emerges as the winner will be the one certified by
the Med-Arbiter as the SEBA.
The reason for the primacy of and priority given to a consent election is that it is a voluntary
mode of settling a labor dispute a mode that is enshrined in the Constitution (Section 3, Article XIII,
1987 Constitution).
AFFILIATION AND DISAFFILIATION OF THE

LOCAL UNION FROM THE MOTHER UNION
1. AFFILIATION.
a. Mother union.
In relation to an affiliate, the federation or national union is commonly known as the mother
union. This term is not found in law but oftentimes, the Supreme Court uses this term to describe a
federation or a national union.
b. Affiliate.
An affiliate refers to:
(1) An independent union affiliated with a federation or a national union; or
(2) A local chapter which has been subsequently granted independent registration but did not
disaffiliate from the federation or national union which created it.
c. A chartered local/local chapter, not an affiliate.
Based on the above definition and description, technically, a local chapter created through the
mode of chartering by a mother union under Article 234-A of the Labor Code, cannot be properly called
an affiliate if it has not acquired any independent registration of its own.
The contract that binds a mother union and an affiliate is called Contract of Affiliation; while
that of a mother union and the chartered local/local chapter is called Charter Certificate.
d. Purpose of affiliation.
The purpose is to further strengthen the collective bargaining leverage of the affiliate. No doubt,
the purpose of affiliation by a local union with a mother union (federation or national union) is to
increase by collective action its bargaining power in respect of the terms and conditions of labor.
e. Principal-agent relationship.
The mother union, acting for and in behalf of its affiliate, has the status of an agent while the local
union remains the principal the basic unit of the association free to serve the common interest of all its
members subject only to the restraints imposed by the constitution and by-laws of the association.
f. Some principles on affiliation.
Independent legal personality of an affiliate union is not affected by affiliation.
Affiliate union becomes subject of the rules of the federation or national union.
1
2
G.R. No. L-56902. Sept. 21, 1982, 116 SCRA 694.

G.R. No. 104556, March 9, 1998, 287 SCRA 599, 607.
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The appendage of the acronym of the federation or national union after the name of the affiliate
union in the registration with the DOLE does not change the principal-agent relationship
between them. Such inclusion of the acronym is merely to indicate that the local union is
affiliated with the federation or national union at the time of the registration. It does not mean
that the affiliate union cannot independently stand on its own.
The fact that it was the federation which negotiated the CBA does not make it the principal
and the affiliate or local union which it represents, the agent.
In case of illegal strike, the local union, not the mother union, is liable for damages.
2. DISAFFILIATION.
a. Right to disaffiliate.
The right of the affiliate union to disaffiliate from its mother federation or national union is a
constitutionally-guaranteed right which may be invoked by the former at any time. It is axiomatic that an
affiliate union is a separate and voluntary association free to serve the interest of all its members consistent with the freedom of association guaranteed in the Constitution.
b. Disaffiliation of independently-registered union and local chapter, distinguished.
The disaffiliation of an independently-registered union does not affect its legitimate status as a
labor organization. However, the same thing may not be said of a local chapter which has no
independent registration since its creation was effected pursuant to the charter certificate issued to it by
the federation or national union. Once a local chapter disaffiliates from the federation or national union
which created it, it ceases to be entitled to the rights and privileges granted to a legitimate labor
organization. Hence, it cannot, by itself, file a petition for certification election.
c. Some principles on disaffiliation.
Disaffiliation does not divest an affiliate union of its legal personality.
Disaffiliation of an affiliate union is not an act of disloyalty.
Disaffiliation for purposes of forming a new union does not terminate the status of the
members thereof as employees of the company. By said act of disaffiliation, the employees
who are members of the local union did not form a new union but merely exercised their
right to register their local union. The local union is free to disaffiliate from its mother union.
Disaffiliation should be approved by the majority of the union members.
Disaffiliation terminates the right to check-off federation dues. The obligation to check-off
federation dues is terminated with the valid disaffiliation of the affiliate union from the
federation with which it was previously affiliated.
Disaffiliation does not affect the CBA. It does not operate to amend it or change the
administration of the contract.
Disaffiliating from the federation and entering into a CBA with the employer does not
constitute an unfair labor practice.
Disaffiliation is not a violation of the union security clause.
(i)
SUBSTITUTIONARY DOCTRINE
1. CHANGE OF BARGAINING REPRESENTATIVE DURING THE LIFE OF A CBA.
It simply refers to the substitution of the bargaining agent by a newly certified agent which
defeated in in the certification election. As new bargaining agent, it is duty-bound to respect the existing
CBA but it can renegotiate for new terms and conditions therein.
2. EFFECT OF SUBSTITUTIONARY DOCTRINE ON THE DEPOSED UNIONS PERSONAL
UNDERTAKINGS.
In case of change of bargaining agent under the substitutionary doctrine, the new bargaining
agent is not bound by the personal undertakings of the deposed union like the no strike, no lockout
clause in a CBA which is the personal undertaking of the bargaining agent which negotiated it.
3. SOME PRINCIPLES ON SUBSTITUTIONARY DOCTRINE.
The substitutionary doctrine cannot be invoked to subvert an existing CBA, in derogation of the
principle of freedom of contract. The substitution of a bargaining agent cannot be allowed if the
purpose is to subvert an existing CBA freely entered into by the parties. Such act cannot be
sanctioned in law or in equity as it is in derogation of the principle underlying the freedom of
contract and good faith in contractual relations.
The substitutionary doctrine is applicable also to a situation where the local union, which was created
through the process of chartering by the mother union, disaffiliates from the latter after it secured an
independent registration. The local union will thus be substituted to that of the federation which
negotiated the CBA as in Elisco-Elirol Labor Union [NAFLU] v. Noriel, where petitioner union was
created through the mode of chartering by the National Federation of Labor Unions (NAFLU) and
later, it secured its independent registration with the BLR and disaffiliated with NAFLU by virtue of
a resolution by its general membership.
(b)
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UNION DUES AND SPECIAL ASSESSMENTS

1. REQUISITES FOR VALIDITY OF UNION DUES AND SPECIAL ASSESSMENTS.
The following requisites must concur in order for union dues and special assessments for the
unions incidental expenses, attorneys 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) Secretarys record of the minutes of said meeting; and
(c) Individual written authorizations for check-off duly signed by the employees concerned.
3. ASSESSMENT FOR ATTORNEYS FEES, NEGOTIATION FEES AND SIMILAR CHARGES.
The rule is that no such attorneys 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 attorneys fees when it is effected through
forced contributions from the workers from their own funds as distinguished from the union funds.
4. CHECK-OFF OF UNION DUES AND ASSESSMENTS.
Check-off means a method of deducting from the employees 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 latters wages and remits them directly to the
union.
5. 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, attorneys 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.
6. 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 employees 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.
(c)
AGENCY FEES
(i)
REQUISITES FOR ASSESSMENT
1. NATURE OF AGENCY FEE - NEITHER CONTRACTUAL NOR STATUTORY BUT QUASICONTRACTUAL.
The bargaining agent which successfully negotiated the CBA with the employer is given the right
to collect a reasonable fee, called agency fee from its non-members - who are employees covered by the
bargaining unit being represented by the bargaining agent - in case they accept the benefits under the
CBA. It is called agency fees because by availing of the benefits of the CBA, they, in effect, recognize
and accept the bargaining union as their agent as well.
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2. 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.
3. 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.
4. NON-MEMBERS OF THE CERTIFIED BARGAINING AGENT 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.
5. 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.
6. 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.
7. NO INDIVIDUAL WRITTEN AUTHORIZATION BY NON-BARGAINING UNION MEMBERS
REQUIRED.
To effect the check-off of agency fees, no individual written authorization from the nonbargaining union members who accept the benefits resulting from the CBA is necessary.
8. EMPLOYERS 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.
10. 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.
RIGHT TO COLLECTIVE BARGAINING
DUTY TO BARGAIN COLLECTIVELY
1. 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.
2. 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.
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WHEN THERE IS ABSENCE OF A CBA
1. 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.

WHEN THERE IS A CBA
1. 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.
2. 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.
3. AUTOMATIC RENEWAL CLAUSE.
a. 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.
4. KIOK LOY DOCTRINE.
This doctrine is based on the ruling In Kiok Loy v. NLRC, 1 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
employers 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.
Divine Word University of Tacloban v. Secretary of Labor and Employment, Sept. 11, 1992.
General Milling Corporation v. CA, Feb. 11, 2004.
2.
COLLECTIVE BARGAINING AGREEMENT (CBA)
1. CBA.
G.R.No. L-54334, Jan. 22, 1986, 141 SCRA 179, 188.
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A Collective Bargaining Agreement or CBA for short, refers to the negotiated contract between
a duly recognized or certified exclusive bargaining agent of workers and their employer, concerning
wages, hours of work and all other terms and conditions of employment in the appropriate bargaining
unit, including mandatory provisions for grievances and arbitration machineries. It is executed not only
upon the request of the exclusive bargaining representative but also by the employer.
2. 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.
3. SOME PRINCIPLES ON CBA.
CBA is the law between the parties during its lifetime and thus must be complied with in good
faith.
Being the law between the parties, any violation thereof can be subject of redress in court.
Non-impairment of obligations of contract. A contract is the law between the parties and courts have
no choice but to enforce such contract so long as it is not contrary to law, morals, good customs or
public policy. Otherwise, courts would be interfering with the freedom of contract of the parties.
CBA is not an ordinary contract as it is impressed with public interest.

Automatic Incorporation Clause law is presumed part of the CBA.
The benefits derived from the CBA and the law are separate and distinct from each other.
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.
Ratification of the CBA by majority of all the workers in the bargaining unit makes the same binding
on all employees therein.
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.
Pendency of a petition for cancellation of union registration is not a prejudicial question before
CBA negotiation may proceed.
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.
(a)
MANDATORY PROVISIONS OF CBA
1. MANDATORY STIPULATIONS OF THE CBA.
The Syllabus mentions 4 provisions that are mandatorily required to be stated in the CBA, to wit:
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.
(i)
GRIEVANCE PROCEDURE
1. GRIEVANCE OR GRIEVABLE ISSUE.
A grievance or grievable issue is any question raised by either the employer or the union
regarding any of the following issues or controversies:
1. The interpretation or implementation of the CBA;
2. The interpretation or enforcement of company personnel policies; or
3. Any claim by either party that the other party is violating any provisions of the CBA or
company personnel policies.
In order to be grievable, the violations of the CBA should be ordinary and not gross in character;
otherwise, they shall be considered as unfair labor practice (ULP).
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Gross violation of the CBA is defined as flagrant and/or malicious refusal by a party thereto to
comply with the economic provisions thereof. If what is violated, therefore, is a non-economic or a
political provision of the CBA, the same shall not be considered as unfair labor practice and may thus be
processed as a grievable issue in accordance with and following the grievance machinery laid down in
the CBA.
2. GRIEVANCE MACHINERY.
Grievance machinery refers to the mechanism for the adjustment and resolution of grievances
arising from the interpretation or implementation of a CBA and those arising from the interpretation or
enforcement of company personnel policies.
3. GRIEVANCE PROCEDURE.
Grievance procedure refers to the internal rules of procedure established by the parties in
their CBA with voluntary arbitration as the terminal step, which are intended to resolve all issues arising
from the implementation and interpretation of their collective agreement. It is that part of the CBA which
provides for a peaceful way of settling differences and misunderstanding between the parties.
The terms grievance procedure and grievance machinery may be used interchangeably.
(ii)
VOLUNTARY ARBITRATION
1. 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.
2. VOLUNTARY ARBITRATOR.
A Voluntary Arbitrator refers to any person who has been mutually named or designated by
the parties to the CBA the employer and the bargaining agent - to hear and decide the issues between
them.
A Voluntary Arbitrator is not an employee, functionary or part of the government or of the
Department of Labor and Employment, but he is authorized to render arbitration services provided
under labor laws.
(iii)
NO STRIKE, NO LOCKOUT CLAUSE
1. SIGNIFICANCE OF THE CLAUSE.
A No Strike, No Lockout clause in the CBA is an expression of the firm commitment of the
parties thereto that, on the part of the union, it will not mount a strike during the effectivity of the CBA,
and on the part of the employer, that it will not stage a lockout during the lifetime thereof.
This clause may be invoked by an employer only when the strike is economic in nature or one
which is conducted to force wage or other concessions from the employer that are not mandated to be
granted by the law itself. It does not bar strikes grounded on unfair labor practices. This is so because it
is presumed that all economic issues between the employer and the bargaining agent are deemed
resolved with the signing of the CBA.
The same rule also applies in case of lockout. The said clause may only be invoked by the union
in case the ground for the lockout is economic in nature but it may not be so cited if the ground is unfair
labor practice committed by the union.
2. EFFECT OF VIOLATION OF THE CLAUSE.
A strike conducted in violation of this clause is illegal.
(iv)
LABOR-MANAGEMENT COUNCIL
1. CREATION OF LMC, CONSTITUTIONALLY AND LEGALLY JUSTIFIED.
The Labor-Management Council (LMC) whose creation is mandated under the Labor Code, is
meant to implement the constitutionally mandated right of workers to participate in policy and
decision-making processes of the establishment where they are employed insofar as said processes will
directly affect their rights, benefits and welfare. This is the body that implements the policy of codetermination in the Constitution.
The LMC is mandated to be created in both organized and unorganized establishments.
2. SELECTION OF REPRESENTATIVES TO LMC.
In organized establishments, the workers representatives to the committee or council should be
nominated by the exclusive bargaining representative.
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In establishments where no legitimate labor organization exists, the workers representative

should be elected directly by the employees at large.
3. LABOR-MANAGEMENT COUNCIL (LMC) VS. GRIEVANCE MACHINERY (GM).
To avoid confusion and possible major legal complication, a clear distinction line should be
drawn between LMC and GM. The following may be cited:
1. Constitutional origin. The creation of the LMC is based on the constitutional grant to
workers of the right to participate in policy and decision-making processes under the 1st paragraph,
Section 3, Article XIII of the 1987 Constitution, thus:
It shall guarantee the rights of all workers to self-organization, collective bargaining and
negotiations, and peaceful concerted activities, including the right to strike in accordance with law.
They shall be entitled to security of tenure, humane conditions of work, and a living wage. They
shall also participate in policy and decision-making processes affecting their rights and benefits
as may be provided by law.
The creation of a GM, on the other hand, is based on a different constitutional provision, the 2nd
paragraph, Section 3, Article XIII of the 1987 Constitution, which provides as follows:
The State shall promote the principle of shared responsibility between workers and
employers and the preferential use of voluntary modes in settling disputes, including
conciliation, and shall enforce their mutual compliance therewith to foster industrial peace.
2. Legal anchor. - The creation of LMC is provided under Article 255 of the Labor Code; while
the formation of a GM is mandated under Article 260 of the same Code.
3. Compulsory provision in the CBA. - Both LMC and GM are compulsorily required to be
embodied in the CBA in order for it to be considered a valid agreement.
4. Purpose for creation. - The LMC is created for the purpose of affording workers the right to
participate in policy and decision-making processes in matters affecting their rights, benefits and welfare;
while that of the GM is to resolve disputes and grievances arising from such policies or decisions or more
specifically, to adjust and resolve grievances arising from (1) the interpretation or implementation of the
CBA or (2) the interpretation or enforcement of company personnel policies.
5. Nature of functions. - The LMC is in the nature of a preventive mechanism meant to prevent
and avoid disputes or grievances by co-determining the proper policies that should be implemented by
the employer in respect of the workers rights, benefits and welfare; while a GM is an adjudicatory
mechanism which is set into motion only when a dispute or grievance occurs.
6. Nature of cognizable issues. The LMC performs non-adversarial and non-adjudicatory tasks
as it concerns itself only with policy formulations and decisions affecting the workers rights, benefits and
welfare and not violations or transgressions of any policy, rule or regulation; while that of the GM is
adversarial and adjudicatory in character since its jurisdiction is confined to resolving and deciding
disputes and grievances between management and the workers arising from violations or transgressions
of existing policies, rules or regulations. In other words, the LMC does not resolve grievable or
contentious issues; the GM does.
A case illustrative of this principle is the 2011 case of Cirtek Employees Labor Union-Federation
of Free Workers v. Cirtek Electronics, Inc. The CBA negotiation between petitioner union and
respondent company was deadlocked resulting in the staging of a strike by the former. The DOLE
Secretary assumed jurisdiction over the labor dispute but before he could rule on the controversy,
respondent created a Labor-Management Council (LMC) through which it concluded with the remaining
officers of petitioner a Memorandum of Agreement (MOA) providing for daily wage increases of P6.00
per day effective January 1, 2004 and P9.00 per day effective January 1, 2005. Petitioner submitted the
MOA to the DOLE Secretary, alleging that the remaining officers signed the MOA under respondents
assurance that should the Secretary order a higher award of wage increase, respondent would comply.
Respecting the MOA, petitioner posits that it was surreptitiously entered into [in] bad faith, it
having been forged without the assistance of the Federation of Free Workers or counsel, adding that
respondent could have waited for the Secretarys resolution of the pending CBA deadlock or that the
MOA could have been concluded before representatives of the DOLE Secretary. As found by the DOLE
Secretary, the MOA came about as a result of the constitution, at respondent's behest, of the LMC which,
he reminded the parties, should not be used as an avenue for bargaining but for the purpose of affording
workers to participate in policy and decision-making. Hence, the agreements embodied in the MOA were not
the proper subject of the LMC deliberation or procedure but of CBA negotiations and, therefore,
deserving little weight.
7. Composition. - The representatives of the workers to the LMC may or may not be nominated
by the recognized or certified bargaining agent, depending on whether the establishment is organized or
unorganized. Thus, in organized establishments, the workers representatives to the LMC should be
nominated by the exclusive bargaining agent. In establishments where no legitimate labor organization
exists, the workers representatives should be elected directly by the employees of the establishment at
large; while those in the GM are nominated solely by the bargaining agent.
(b)
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DURATION OF CBA
(i)
FOR ECONOMIC PROVISIONS
(ii)
FOR NON-ECONOMIC PROVISIONS
1. TERMS OF A CBA.
The terms of a CBA are classified into two (2), viz.:
(a) Representation aspect 5 years which is the lifetime of a CBA;
(b) All other provisions Subject to renegotiation after first 3 years of the 5-year lifetime of
CBA.
2. REPRESENTATION ASPECT.
The phrase representation aspect in Article 253-A of the Labor Code refers to the identity and
majority status of the bargaining agent that successfully negotiated the CBA as the exclusive bargaining
representative of the employees in the appropriate bargaining unit concerned.
The 5-year representation status of the incumbent exclusive bargaining agent should be reckoned
from the effectivity of the CBA. This means that no petition for certification election questioning its
majority status may be entertained during the lifetime of the CBA except within the 60-day freedom
period immediately preceding the expiry date of the 5-year term.
Suspension of CBA for a period longer than 5 years, held valid.
The case of Rivera v. Espiritu,1 is in point. It was held here that the suspension of the CBA
between PAL and PALEA for ten (10) years in order to resolve the strike is not violative of the
Constitution or the law. This is so because the right to free collective bargaining includes the right to
suspend it. There is nothing in Article 253-A which prohibits the parties from waiving or suspending the
mandatory timetables and agreeing on the remedies to enforce the same.
Article 253-A has a two-fold purpose. One is to promote industrial stability and predictability.
Inasmuch as the agreement sought to promote industrial peace at PAL during its rehabilitation, said
agreement satisfies the first purpose of Article 253-A. The other is to assign specific timetables wherein
negotiations become a matter of right and requirement. Nothing in Article 253-A prohibits the parties
from waiving or suspending the mandatory timetables and agreeing on the remedies to enforce the same.
The suspension agreement is a valid exercise of the freedom to contract. Under the principle of
inviolability of contracts guaranteed by the Constitution, the contract must be upheld. The agreement
afforded full protection to labor; promoted the shared responsibility between workers and employers;
and exercised the voluntary modes in settling disputes, including conciliation to foster industrial peace.
3. RE-NEGOTIATION OF ALL PROVISIONS OTHER THAN THE REPRESENTATION ASPECT OF
THE CBA SHOULD BE MADE AFTER FIRST 3 YEARS FROM EFFECTIVITY.
Considering that the five (5) year period is quite long during which the economic situations of the
parties may have already changed, Article 253-A recognizes the need for the parties to re-assess and renegotiate all the provisions of the CBA, except its representation aspect, after the lapse of the first three
(3) years of its 5-year lifetime. Such re-negotiation, however, should only pertain to the terms and
conditions of the parties relationship for the last remaining two (2) years of the CBAs 5-year term. This
re-negotiation process may be invoked by any of the parties as a matter of right.
4. ALL OTHER PROVISIONS, REFER TO BOTH ECONOMIC AND NON-ECONOMIC
PROVISIONS.
The phrase all other provisions mentioned in Article 253-A simply refers to all the provisions of
the CBA irrespective of whether they are economic or non-economic in nature. The only item excepted
therefrom is the representation status of the incumbent exclusive bargaining agent which may only be
questioned during the 60-day freedom period.
5. RETROACTIVITY OF THE CBA.
The application of the rules on retroactivity depends on any of the following two (2) situations:
(a) When the CBA is voluntarily concluded by the parties; or
(b) When the CBA is concluded through arbitral award.
6. RULE WHEN VOLUNTARILY CONCLUDED BY THE PARTIES IN THE NEGOTIATING TABLE.
(a) The effectivity of the CBA shall retroact to the day immediately after the date of expiry of the
old CBA in case the new CBA is concluded and entered into within six (6) months from the
said expiry date.
(b) If the new CBA is entered into beyond six (6) months from the expiry date of the old CBA, the
parties are given the right to negotiate the duration of the retroactivity thereof.
G.R. No. 135547, Jan. 23, 2002.
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7. RULE ON RETROACTIVITY IN CASE OF CONCLUSION OF CBA THROUGH ARBITRAL

AWARD.
a. No law on retroactivity in case of CBA arbitral awards.
The law is silent as to the retroactivity of a CBA secured through arbitral award or that granted
not by virtue of the mutual agreement of the parties but by intervention of the government.
b. Variations in the application of the retroactivity rule.
The rule laid down by the Supreme Court in cases involving this particular issue of retroactivity
varies from case to case. Basically, the rule, based on jurisprudence, may be restated in the following
manner:
(1) Prospectivity rule;
(2) Retroactivity rule which makes the CBA retroactively effective to:
(a) the date of the expiration of the previous CBA; and
(b) the first day after the six-month period following the expiration of the last day of the CBA.
(iii)
FREEDOM PERIOD
1. 60-DAY FREEDOM PERIOD.
When there is an existing CBA, the parties thereto are bound to observe the terms and conditions
therein set forth until its expiration. Neither party is allowed to terminate nor modify such agreement
during its lifetime. The only time the parties are allowed to terminate or modify the agreement is within
the so-called freedom period of at least sixty (60) days prior to its expiration date by serving a notice to
that effect.
2. REASON IT IS CALLED FREEDOM PERIOD.
The last 60 days of the 5-year lifetime of a CBA immediately prior to its expiration is called the
freedom period because:
(a) it is the only time when the law allows the parties to freely serve a notice to terminate, alter
or modify the existing CBA; and
(b) 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.
3. RULE ON FILING OF CERTIFICATION ELECTION VIS--VIS FREEDOM PERIOD.
In a petition involving an organized establishment or enterprise where the majority status of the
incumbent collective bargaining union is questioned by a legitimate labor organization, the Med-Arbiter
shall immediately order the conduct of a certification election if the petition is filed during the last sixty
(60) days of the CBA. Any petition filed before or after the 60-day freedom period shall be dismissed
outright.
The 60-day freedom period based on the original collective bargaining agreement shall not be
affected by any amendment, extension or renewal of the CBA for purposes of certification election.
4. AUTOMATIC RENEWAL CLAUSE.
A petition for certification election challenging the majority status of the existing bargaining agent
should be filed within and not before or after - said 60-day freedom period. Upon the expiration of the
said period and no petition for certification election is filed by a challenging union, the employer is dutybound to continue to recognize the majority status of the incumbent bargaining agent. Negotiation for a
new CBA may even validly commence between the incumbent bargaining agent and the employer
during the 60-day freedom period if no challenge to the bargaining agents majority status is posed by
another union.
3.
UNION SECURITY
1. NATURE AND PURPOSE OF UNION SECURITY CLAUSE.
The union security clause allows the parties thereto to enter into an agreement requiring
compulsory membership in the bargaining agent which successfully negotiated said CBA as a condition
for continued employment with the exception of employees who are already members of another union
at the time of the signing of the CBA.
Union security is a generic term which is applied to and comprehends closed shop, union
shop, maintenance of membership or any other form of agreement which imposes upon the employees
the obligation to acquire or retain union membership as a condition to their continued employment. In
other words, the purpose of a union security arrangement is to guarantee the continued existence of
the union through enforced membership for the benefit of the workers.
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Without this clause, the existence of the union is always subject to uncertainty as its members
may resign anytime resulting in the decimation of its ranks. The union becomes gradually weakened and
increasingly vulnerable to company machinations. In this security clause lies the strength of the union
during the enforcement of the CBA. It is this clause that provides labor with substantial power in
collective bargaining.
2. THE RIGHT NOT TO JOIN A UNION IS NOT ABSOLUTE SINCE IT MAY BE RESTRICTED.
The right of an employee not to join a union is not absolute and must give way to the collective
good of all members of the bargaining unit. When certain employees are obliged to join a particular union
as a requisite for continued employment, as in the case of a union security clause, this condition is a valid
restriction on the freedom or right not to join any labor organization because it is in favor of unionism.
3. UNION SECURITY CLAUSE DOES NOT VIOLATE CONSTITUTIONAL RIGHT TO FREEDOM
OF ASSOCIATION.
A union security clause in a CBA is not a violation or a restriction of the employees right to
freedom of association guaranteed by the Constitution. Labor, being the weaker in economic power and
resources than capital, deserves protection that is actually substantial and material.
4. EMPLOYEES EXEMPTED FROM COVERAGE OF UNION SECURITY CLAUSE.
All employees in the bargaining unit covered by a Union Security Clause in their CBA with the
employer are subject to its terms. However, under law and established jurisprudence, the following kinds
of employees are exempted from its coverage, namely:
1. Employees who, at the time the union security agreement takes effect, are bona-fide members
of a religious organization which prohibits its members from joining labor unions on
religious grounds;
2. Employees who are already members of a union other than the bargaining agent at the time
the union security agreement took effect;
3. Confidential employees who are excluded from the rank-and-file or supervisory bargaining
unit;
4. Supervisory employees who are excluded from becoming members of the rank-and-file union
and vice-versa; and
5. Employees excluded from the union security clause by express terms of the agreement.
(a)
UNION SECURITY CLAUSES:
CLOSED SHOP, UNION SHOP, MAINTENANCE OF MEMBERSHIP SHOP, ETC.
1. CLASSIFICATION OF UNION SECURITY ARRANGEMENTS.
Generally, a union security clause may take the form of:
1.
2.
3.
4.
5.
6.
7.
8.
Closed-shop agreement;
Maintenance of membership agreement;
Union shop agreement;
Modified union shop agreement;
Exclusive bargaining agreement;
Bargaining for members only agreement;
Agency shop agreement; or
Preferential hiring agreement.
Modification of arrangements.
The above classification admits of certain modified types which the parties may agree upon in the
CBA depending on the peculiar requirements of the situation.
2. CLOSED-SHOP AGREEMENT.
A closed-shop may be defined as a scheme in which, by agreement between the employer and
its employees through their bargaining union/agent, no person may be employed unless he or she is,
becomes, and, for the duration of the agreement, remains a member in good standing of the bargaining
union. Basically, this kind of agreement stipulates the undertaking by the employer not to hire or employ
any person who is not a member of the bargaining union. Once employed, it is required that the said
person should remain a member of the bargaining union in good standing as a condition for continued
employment, at least during the whole duration of the CBA.
3. MAINTENANCE OF MEMBERSHIP AGREEMENT.
There is maintenance of membership agreement when employees, who are union members as
of the effective date of the agreement, or who thereafter become members, must maintain union
membership as a condition for continued employment until they are promoted or transferred out of the
bargaining unit, or the agreement is terminated. Its role is to protect the unions current membership. By
its express terms, it covers and renders continued union membership compulsory for: (1) those who were
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already union members at the time the CBA was signed; and (2) the new employees who will become
regular during the life of the CBA.
4. UNION SHOP AGREEMENT.
There is union shop when all new regular employees are required to join the union within a
certain period as a condition for their continued employment. Its role is to compel the membership of
those who are not yet union members. Under this scheme, the employer is given the freedom to hire and
employ any person who is not a member of the bargaining agent. Once such person becomes an
employee, he is required to become a member of the bargaining agent and to remain as such member in
good standing for the whole period of the effectivity of the CBA as a condition for his continued
employment.
5. MODIFIED UNION SHOP AGREEMENT.
Employees under this arrangement who are not union members at the time of the signing or
execution of the CBA are not required to join the bargaining union. However, any and all workers hired
or employed after the signing or execution of the CBA are required to join the bargaining union.
6. EXCLUSIVE BARGAINING AGENT AGREEMENT.
The union which negotiated and concluded the CBA with management is considered and
recognized as the sole and exclusive bargaining agent of all the covered employees in the bargaining unit,
whether they be members or not of the said agent.
7. BARGAINING FOR MEMBERS ONLY AGREEMENT.
Under this arrangement, the union which negotiated and concluded the CBA with management
is recognized as the bargaining agent only for its own members.
8. AGENCY SHOP AGREEMENT.
Under this scheme, there is no requirement for non-members of the bargaining agent to become
its members. However, it is required that such non-union members should pay to the bargaining agent
an agency fee as a condition for their continued employment.
9. PREFERENTIAL HIRING AGREEMENT.
It is the principal feature of this arrangement that the employer gives preference in hiring to the
members of the bargaining agent under equal circumstances and qualifications. Once hired or employed,
they are required to maintain their membership in good standing in the bargaining agent for the duration
of the CBA as a condition for their continued employment.
10. DISMISSAL DUE TO VIOLATION OF UNION SECURITY CLAUSE.
a. Requisites for valid termination based on union security clause.
The following are the requisites that the employer should comply with prior to terminating the
employment of an employee by virtue of the enforcement of the union security clause:
(1) The union security clause is applicable;
(2) The union is requesting for the enforcement of the union security provision in the CBA; and
(3) There is sufficient evidence to support the unions decision to expel the employee from the
union.
The foregoing requisites constitute a just cause for terminating an employee based on the CBAs
union security provision.
b. The due process afforded by the union prior to expulsion is different from the due process
required prior to termination of employment.
The distinction is not hard to comprehend. The due process afforded by the union is meant solely
and exclusively to address the issue of validity of the termination of the membership of the employee in
the union; while that required of the employer is aimed at addressing the issue of validity of the
employees termination of employment. Hence, it is complete error on the part of the employer to adopt
as its own due process what has been earlier afforded by the union to the erring employee without
conducting its own independent and separate due process.
Thus, in declaring the illegality of the dismissal of petitioner in Cario v. NLRC,1 the Supreme
Court noted in regard to the involvement of the company in his dismissal, that the company, upon being
formally advised in writing of the expulsion of petitioner Cario from the union, in turn simply issued a
termination letter to Cario, the termination being made effective the very next day. The Company
should have given petitioner Cario an opportunity to explain his side of the controversy with the union.
Notwithstanding the union security clause in the CBA, the company should have reasonably satisfied
itself by its own inquiry that the union had not been merely acting arbitrarily and capriciously in
impeaching and expelling petitioner Cario. Had the company taken the trouble to investigate the acts
and proceedings of the union, it could have very easily determined that the union had acted arbitrarily in
impeaching and expelling from its ranks petitioner Cario.
G.R. No. 91086, May 8, 1990, 185 SCRA 177.
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11. SOME PRINCIPLES ON TERMINATION DUE TO VIOLATION OF UNION SECURITY

CLAUSE.
Employer is obligated to act upon being demanded by the union to terminate the employment of its
errant members.
Members of the minority union cannot be compelled to join the bargaining union. The union
security clause therefore does not cover employees who are members of the union/s other than the
bargaining union. Not being so covered, they cannot be dismissed for violation of said clause.
The employer has the right to be reimbursed for payment of any claims arising out of dismissals
demanded by the union under the union security clause. Such right of reimbursement may be
invoked:
(1) By express provision in the CBA to that effect; or
(2) By securing it through judicial directive.
(b)
CHECK-OFF; UNION DUES, AGENCY FEES
1. CHECK-OFF OF AGENCY FEE, DIFFERENT FROM CHECK-OFF OF UNION DUES AND
ASSESSMENTS.
Check-off of agency fee does not require the execution by the non-bargaining union members of
individual written authorizations; while such is an indispensable requisite for check-off of union dues
and special assessments from members of the bargaining union.
4.
UNFAIR LABOR PRACTICE
IN COLLECTIVE BARGAINING
(a)
BARGAINING IN BAD FAITH
1. BASIC PRINCIPLES.
It is essential that the employer and the employees should both act in good faith. Where an
employer did not even bother to submit an answer to the bargaining proposals of the union, there is a
clear evasion of the duty to bargain collectively.
2. MAKING A PROMISE DURING THE CBA NEGOTIATIONS, NOT AN INDICATION OF BAD
FAITH.
Promises made by management during the CBA negotiations may not be considered an
indication of bad faith or a scheme of feigning to undertake the negotiation proceedings through empty
promises.
3. ADAMANT STANCE RESULTING IN AN IMPASSE, NOT AN INDICIUM OF BAD FAITH.
The adamant insistence on a bargaining position to the point where the negotiations reach an
impasse does not establish bad faith. Neither can bad faith be inferred from a partys insistence on the
inclusion of a particular substantive provision unless it concerns trivial matters or is obviously
intolerable.
4. PARTIES HAVE NO OBLIGATION TO PRECIPITATELY AGREE TO THE PROPOSALS OF
EACH OTHER.
While the law makes it an obligation for the employer and the employees to bargain collectively
with each other, such compulsion does not include the commitment to precipitately accept or agree to the
proposals of the other. All it contemplates is that both parties should approach the negotiation with an
open mind and make reasonable effort to reach a common ground of agreement.
5. ALLEGATIONS OF BAD FAITH WIPED OUT WITH THE SIGNING OF THE CBA.
With the execution of the CBA, bad faith bargaining can no longer be imputed upon any of the
parties thereto. All provisions in the CBA are supposed to have been jointly and voluntarily incorporated
therein by the parties. The CBA is proof enough that the company exerted reasonable effort at good faith
bargaining.
(b)
REFUSAL TO BARGAIN
1. FAILURE OR REFUSAL OF MANAGEMENT TO GIVE COUNTER-PROPOSALS TO THE
UNIONS DEMANDS.
The failure of the employer to submit its counter-proposals to the demands of the bargaining
union does not, by itself, constitute refusal to bargain. However, it is different if the employer refuses to
submit an answer or reply to the written bargaining proposals of the certified bargaining union. In this
case, unfair labor practice is committed.
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In General Milling Corporation v. CA,1 the Supreme Court found the petitioner guilty of unfair
labor practice for refusing to send a counter-proposal to the union and to bargain anew on the economic
terms of the CBA.
Similarly, in the earlier case of Colegio de San Juan de Letran v. Association of Employees and
Faculty of Letran,2 the petitioner school was declared guilty of unfair labor practice when it failed to
make a timely reply to the proposals of the certified bargaining union more than a month after the
same were submitted to it. In explaining its failure to reply, the school merely offered the feeble excuse
that its Board of Trustees had not yet convened to discuss the matter. Clearly, its actuation showed a lack
of sincere desire to negotiate the CBA thereby rendering it guilty of unfair labor practice.
2. REFUSAL OF A PARTY TO SIGN THE CBA.
A party to a fully-concluded CBA may be compelled to sign it, especially if said refusal to sign is
the only remaining hitch to its being implemented. Such refusal is considered an unfair labor practice.
(c)
INDIVIDUAL BARGAINING
1. EMPLOYERS ACT OF NEGOTIATING WITH UNION MEMBERS INDIVIDUALLY, A ULP.
To negotiate or attempt to negotiate with individual workers rather than with the certified
bargaining agent is an unfair labor practice.
In Insular Life Assurance Co., Ltd., Employees Association-NATU v. Insular Life Assurance
Co., Ltd.,3 respondent company, through its president, sent two (2) sets of letters to the individual strikers
during the strike. The first contained promises of benefits to the employees in order to entice them to
return to work; while the second contained threats to obtain replacements for the striking employees in
the event they did not report for work on June 2, 1958. The respondents contend that the sending of the
letters constituted a legitimate exercise of their freedom of speech. The Supreme Court, however,
disagreed. The said letters were directed to the striking employees individually - by registered special
delivery mail at that - without being coursed through the unions which were representing the employees
in collective bargaining. Moreover, the sending of these letters is not protected by the free speech
provision of the Constitution. The free speech protection under the Constitution is inapplicable where the
expression of opinion by the employer or his agent contains a promise of benefit or threats or reprisal.
2. UNION CANNOT VALIDLY BARGAIN IN BEHALF OF ITS MEMBERS ONLY.
Respondent union in Philippine Diamond Hotel and Resort, Inc. [Manila Diamond Hotel] v.
Manila Diamond Hotel Employees Union, 4 insists that it could validly bargain in behalf of its members
only. The Supreme Court, however, ruled that the same would only fragment the employees of
petitioner. What respondent union will be achieving is to divide the employees, more particularly, the
rank-and-file employees of petitioner hotel. The other workers who are not members are at a serious
disadvantage, because if the same shall be allowed, employees who are non-union members will be
economically impaired and will not be able to negotiate their terms and conditions of work, thus
defeating the very essence and reason of collective bargaining which is an effective safeguard against the
evil schemes of employers in terms and conditions of work. Petitioners refusal to bargain then with
respondent cannot be considered an unfair labor practice to justify the staging of the strike.
(d)
BLUE-SKY BARGAINING
1. CONCEPT.
Blue-sky bargaining means making exaggerated or unreasonable proposals. This kind of
unfair labor practice act may only be committed by the bargaining union.
(e)
SURFACE BARGAINING
1. CONCEPT.
Surface bargaining is defined as going through the motions of negotiating without any
legal intent to reach an agreement. This kind of unfair labor practice may only be committed by the
employer.
1
2
3
4
G.R. No. 146728, Feb. 11, 2004.

G.R. No. 141471, Sept. 18, 2000.
G.R. No. L-25291, Jan. 30, 1971, 37 SCRA 244.
G.R. No. 158075, June 30, 2006.
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5.
UNFAIR LABOR PRACTICE
(ULP)
(a)
NATURE OF ULP
1. 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.
2. 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 selforganization 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.
3. LABOR CODE PROVISIONS ON ULP.
Under the Labor Code, there are only five (5) provisions related to ULP, to wit:
1. Article 247 which describes the concept of ULPs and prescribes the procedure for their
prosecution;
2. Article 248 which enumerates the ULPs that may be committed by employers;
3. Article 249 which enumerates the ULPs that may be committed by labor organizations;
4. Article 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 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 bylaws, where the existence of the union is threatened thereby.
4. PARTIES WHO/WHICH MAY COMMIT ULP.
A ULP may be committed by an employer or by a labor organization. Article 248 describes the
ULPs that may be committed by an employer; while Article 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.
5. ELEMENTS OF ULP.
Before an employer or labor organization may be said to have committed ULP, the following
elements must concur:
1. There should exist an employer-employee relationship between the offended party and the
offender; and
2. The act complained of must be expressly mentioned and defined in the Labor Code as an
unfair labor practice.
Absent one of the elements aforementioned will not make the act an unfair labor practice.
6. ASPECTS OF ULP.
Under Article 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, attorneys fees and other affirmative reliefs. Generally, these civil claims should be asserted in
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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)
ULP OF EMPLOYERS
I.
INTERFERENCE WITH, RESTRAINT OR COERCION OF EMPLOYEES
IN THE EXERCISE OF THEIR RIGHT TO SELF-ORGANIZATION
1. 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 selforganize 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.,1 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 selforganization and collective bargaining.
2. 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 employers 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 employers 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 employers 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 latters union membership and activities.
In General Milling,2 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 employers 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 employers 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.
3. INTERFERENCE IN THE EMPLOYEES RIGHT TO SELF-ORGANIZATION.
a. 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,3
the Supreme Court upheld the factual findings of the NLRC and the Court of Appeals that from the
employers 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 Life4 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
1
2
3
4
G.R. No. L-25291, Jan. 30, 1971, 37 SCRA 244.
General Milling Corporation v. CA, G.R. No. 146728, Feb. 11, 2004.
G.R. No. 149440, Jan. 28, 2003.
Insular Life Assurance Co., Ltd., Employees Association-NATU v. Insular Life Assurance Co., Ltd., G.R. No. L-25291, Jan. 30, 1971, 37 SCRA 244.
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to undermine the concerted activity of the employees, an activity to which they are entitled free from the
employer's molestation.
b. Formation of a union is never a valid ground to dismiss.
c. It is ULP to dismiss a union officer or an employee for his union activities.
II.
YELLOW DOG CONTRACT
1. WHAT IS A 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.
2. COMMON STIPULATIONS IN A YELLOW DOG CONTRACT.
A typical yellow dog contract embodies the following stipulations:
(1) A representation by the employee that he is not a member of a labor organization;
(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.
3. 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 editors 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.1 Simply put, it is socalled yellow dog because the employees were deemed to have to cower before their "masters" to get a
job.2
III.
CONTRACTING OUT OF SERVICES AND FUNCTIONS
1. 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 employers
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.
2. 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.
IV.
COMPANY UNION
1. COMPANY INITIATED, DOMINATED OR ASSISTED UNION.
Paragraph [d] of Article 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.
V.
DISCRIMINATION
1. COVERAGE OF PROHIBITION.
1
2
Joel I. Seidman, The Yellow Dog Contract, The Johns Hopkins Press, 1932, Ch. 1, pp.11-38.
USLegal.com at http://definitions.uslegal.com/y/yellow-dog-contract/; Last accessed: February 14, 2017.
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What is prohibited as unfair labor practice under the law is to discriminate in regard to wages,
hours of work, and other terms and conditions of employment in order to encourage or discourage
membership in any labor organization.
4. MATERIALITY OF PURPOSE OF ALLEGED DISCRIMINATORY ACT.
In Manila Pencil Co., Inc. v. CIR, 1 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.,2 the nonregularization of long-time employees because of their affiliation with the union while new employees
were immediately regularized was declared an act of discrimination.
VI.
FILING OF CHARGES OR GIVING OF TESTIMONY
1. CONCEPT.
Under paragraph [f] of Article 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.
2. THE ONLY ULP NOT REQUIRED TO BE RELATED TO EMPLOYEES EXERCISE OF THE RIGHT
TO SELF-ORGANIZATION AND COLLECTIVE BARGAINING.
It must be underscored that Article 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,3 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.
VII.
CBA-RELATED ULPs
1. THREE (3) CBA-RELATED ULPs.
Article 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 attorneys 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.
VII-A.
PAYMENT OF NEGOTIATION AND ATTORNEYS FEES
1. WHEN PAYMENT CONSIDERED ULP.
Article 248(h) of the Labor Code considers as an unfair labor practice the act of the employer in
paying negotiation fees or attorneys fees to the union or its officers or agents as part of the settlement of
any issue in collective bargaining or any other dispute.
VII-B.
VIOLATION OF THE CBA
1. CORRELATION.
Article 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.
2. CASE LAW.
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.
ULP OF LABOR ORGANIZATIONS

I.
RESTRAINT AND COERCION OF EMPLOYEES
IN THE EXERCISE OF THEIR RIGHT TO SELF-ORGANIZATION
1
2
3
G.R. No. L-16903, Aug. 31, 1965, 14 SCRA 955.

G.R. No. L-19728, July 30, 1964.
G.R. No. L-17739, Dec. 24, 1964.
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1. UNION MAY INTERFERE WITH BUT NOT RESTRAIN OR COERCE EMPLOYEES IN THE
EXERCISE OF THEIR RIGHT TO SELF-ORGANIZE.
Under Article 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.
II.
DISCRIMINATION
Under Article 249(b), it is ULP for a labor organization, its officers, agents or representatives:
(1) 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.
(2) To terminate an employees 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.
III.
DUTY OF UNION TO BARGAIN COLLECTIVELY
1. CONCEPT.
Under Article 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 248(g) respecting the violation by the employer of its duty to
bargain collectively.
2. PURPOSE.
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.
IV.
FEATHERBEDDING DOCTRINE
1. CONCEPT.
Article 260(d) [249(d)] is the featherbedding1 provision in the Labor Code. Patterned after a
similar provision in the Taft-Hartley Act,2 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, robots3 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.4
2. REQUISITES.
1
Etymologically, the term "featherbedding" originally referred to any person who is pampered, coddled, or excessively rewarded. The term originated in the use of feathers to fill
mattresses in beds, providing for more comfort. The modern use of the term in the labor relations setting began in the United States railroad industry, which used feathered
mattresses in sleeping cars. Railway labor unions, confronted with changing technology which led to widespread unemployment, sought to preserve jobs by negotiating contracts
which required employers to compensate workers to do little or no work or which required complex and time-consuming work rules so as to generate a full day's work for an employee
who otherwise would not remain employed. (Merriam-Webster's Dictionary of Law, 1st ed., Merriam-Webster, Inc., 1996. ISBN 0-87779-604-1; Visit also the Knowledge Encyclopedia
at http://www.referenceforbusiness.com/knowledge/ Featherbedding.html; Last visited: Jan. 30, 2017).
It is the Labor Management Relations Act of 1947, better known as the TaftHartley Act, which was enacted on June 23, 1947. It amended the National Labor Relations Act, 29
U.S. Code 158 - Unfair labor practices, Sec. 8[b] [6] thereof, which states: to cause or attempt to cause an employer to pay or deliver or agree to pay or deliver any money or other
thing of value, in the nature of an exaction, for services which are not performed or not to be performed[.]
Featherbedding is the insistence by unions on employment of unnecessary workers, i.e., demanding payment for work no longer performed by workers because of machines or
robots. Featherbedding dramatically increases labor costs and decreases productivity. (See Labor Law Glossary, Matt Austin Labor Law, https://mattaustinlaborlaw.com/labor-lawdictionary/; Last accessed: October 09, 2016).
It must be noted that Section 8(b)(6) of the Taft-Hartley Act has outlawed featherbedding arrangements which is a ULP of the union making the demand for payment of wages for
services which are not performed or not to be performed. However, the prohibitions against featherbedding under this section are made applicable only to payments for workers not to
work. Consequently, the agreement prescribing minimum number of workers to be hired and maintained and other make-work arrangements are considered valid and legal,
notwithstanding the provision of this section.
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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.
On No. 1 above, it is important that the effort at securing payment of sums of money or delivery
of goods or things of value, emanates from and initiated by the union.
On No. 2 above, the act of the employer in paying the money or delivering the things of value
demanded by the union, is against its will and is therefore, as the law states, in the nature of exaction
by the union. Exaction, as a legal term, means an excessive or harsh demand of a reward or fee for an
official service performed in the normal course of duty. It is taking more fee or pay for the services than
what the law allows, under color of ones official authority. 1 While it is a form of extortion, 2 it should,
however, be differentiated from extortion in that, in extortion, the union extorts more than its due,
when something is due; in exaction, the union exacts what is not due, when there is nothing due to it.3
On No. 3 above, although the employer agrees to pay money or deliver things of value, the
employees to whom such payment and delivery are made will not actually do or perform the
contemplated services. Being an exaction, no services would be rendered in exchange for the money paid
or things of value delivered.
3. DEMAND FOR PAYMENT OF STANDBY SERVICES.
A union commits ULP under this provision by causing or attempting to cause an employer to pay
or agree to pay for standby services. Payments for standing-by, or for the substantial equivalent of
standing-by, are not payments for services performed within the meaning of the law. When an
employer receives a bona-fide offer of competent performance of relevant services, it remains for the
employer, through free and fair negotiation, to determine whether such offer should be accepted and
what compensation should be paid for the work done. 4
It is an exaction constitutive of ULP within the meaning of this law for a union to demand of the
employer for a contract calling for payment of compensation for the presence of one of its members at a
jobsite when no unionists work is being done therein, and when the employer indicated that it had no
need for such labor, the union staged a strike to make the employer respond to such demand. The
demand herein is considered not a bona-fide offer of competent performance of relevant services. 5
A unions demand that a theater corporation employ maintenance men at its theater is also an
arguable violation of the anti-featherbedding provision of the law where maintenance men employed at
other theaters under union compulsion did little or no actual work but were merely present on the
premises during working hours.6
4. DEMAND FOR PAYMENT OF MADE WORK.
Where work is actually done by an employee with the employers consent, the unions demand
that the employee be compensated for time spent in doing the work does not violate the law. 7 The law
leaves to collective bargaining the determination of what work, if any, including bona-fide made work,
shall be included as compensable services and what rate of compensation shall be paid for it. 8
A musicians union has been held not to have violated the anti-featherbedding provision by
refusing to permit a union band to perform at the opening game of the baseball season, refusing to permit
a union organist to play at the home games, and picketing the baseball stadium, in order to force the
owner of the baseball team to hire a union band to play at all weekend home games; or by refusing to
give its consent to appearances of travelling bands in a theater unless the theater manager also employs a
local orchestra in connection with certain programs where the local orchestra is to perform actual and not
token services, even though the theater manager does not need or want to employ the local orchestra. 9
1
2
3
4
5
6
7
8
9
Meaning of exaction per USLegal.com found at http://definitions.uslegal.com/e/exaction/. Last visited: June 30, 2016. Note that [t]he act of exacting money or the sum exacted is
also called exaction. See also TheLawDictionary.Com at http://thelawdictionary.org/exaction/, Last accessed: June 30, 2016.
See YourDictionary.com at http://www.yourdictionary.com/exaction. Last visited: June 30, 2016.
See USLegal.com at http://definitions.uslegal.com/e/exaction/. Last visited: June 30, 2016. The FreeDictionary.com at http://legal-dictionary.thefreedictionary.com/exaction,
distinguished these two terms, thus: EXACTION, torts. A willful wrong done by an officer, or by one who, under color of his office, takes more fee or pay for his services than what the
law allows. Between extortion and exaction there is this difference; that in the former case the officer extorts more than his due, when something is due to him; in the latter, he exacts
what is not his due, when there is nothing due to him. Wishard; Co. Litt. 368. Last accessed: June 30, 2016.
NLRB v. Gamble Enterprises, Inc., 345 US 117 97 L Ed 864, 73 S Ct 560.
International Brotherhood of Teamsters, etc., 212 NLRB 968, 1974 CCH NLRB 26867, 87 BNA LRRM 1101.
Consolidated Theaters, Inc. v. Theatrical Stage Employees Union, 69 Cal 2d 713, 73 Cal Rptr 213, 447 P2d 325.
NLRB v. Gamble Enterprises, Inc., 345 US 117, 97 l Ed 864, 73 S Ct 560; American Newspaper Publishers Association v. NLRB, 345 US 100, 97 L Ed 852, 73 S Ct 552, 31 ALR2d
497.
American Newspaper Publishers Association v. NLRB, 345 US 100, 97 L Ed 852, 73 S Ct 552, 31 ALR2d 497.
Musicians Union v. Superior Court of Alameda County, 69 Cal 2d 695, 73 Cal Rptr 201, 447 P2d 313; NLRB v. Gamble Enterprises, Inc., 345 US 117, 97 L Ed 864, 73 S Ct 560.
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Similarly, a printers union does not violate the anti-featherbedding provision by securing payment of
wages to printers from newspapers for setting bogus - duplicate forms for local advertisements
although the newspaper already has cardboard matrices to be used as molds for metal casting from
which to print the same advertisements even though the bogus is ordinarily not used but is melted
down immediately.1
5. DEMAND FOR PAYMENT OF WORK ALREADY COMPENSATED.
The anti-featherbedding provision has been held not to bar a union from demanding payment for
work for which the employer has already paid another person. Hence, a union has been held not guilty
of ULP in demanding payment to it of an amount equal to the wages paid by the employer to a nonunion employee for work to which the unions members were entitled. If the work is actually done by
employees, there can be no conflict with the anti-featherbedding provision, regardless of whether or not
the persons receiving payment are the ones who performed the work. 2
V.
DEMAND OR ACCEPTANCE
OF NEGOTIATION FEES OR ATTORNEYS FEES
1. CONCEPT.
Under Article 249(e), it is ULP for a labor organization, its officers, agents or representatives to
ask for or accept negotiation fees or attorneys fees from employers as part of the settlement of any issue
in collective bargaining or any other dispute.
VI.
VIOLATION OF THE CBA
1. CONCEPT.
Under Article 249(f), it is ULP for a labor organization, its officers, agents or representatives to
violate a CBA.
2. COUNTERPART PROVISION.
This is the counterpart provision of Article 248(i) regarding the employers 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.
VII.
CRIMINAL LIABILITY FOR ULPs OF LABOR ORGANIZATION
1. PERSONS LIABLE.
Article 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.
C.
RIGHT TO PEACEFUL CONCERTED ACTIVITIES
1.
FORMS OF CONCERTED ACTIVITIES
1. FORMS OF CONCERTED ACTIVITIES.
There are three (3) forms of concerted activities, namely:
1. Strike;
2. Lockout; and
3. Picketing.
2. STRIKE.
Strike means any temporary stoppage of work by the concerted action of the employees as a
result of an industrial or labor dispute.
b. Forms and classification of strikes.
A strike may be classified:
1. As to nature:
a. Legal strike - one called for a valid purpose and conducted through means allowed by law.
1
2
American Newspaper Publishers Association v. NLRB, 345 US 100, 97 L Ed 852, 73 S Ct 552, 31 ALR2d 497; International Hod Carriers Bldg. & Common Laborers Union, 135
NLRB 1153 1962 CCH NLRB 10938, 49 BNA LRRM 1638.
Rabouin v. NLRB [CA2] 195 F2d 906.
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b. 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.
c. Economic strike - one declared to demand higher wages, overtime pay, holiday pay, vacation
pay, etc. It is one which is declared for the purpose of forcing wage or other concessions
from the employer for which he is not required by law to grant.
d. Unfair labor practice (ULP) or political strike - one called to protest against the employers
unfair labor practices enumerated in Article 248 of the Labor Code, including gross violation
of the CBA under Article 261 and union-busting under Article 263(c) of the Labor Code.
e. Slowdown strike - one staged without the workers quitting their work but by merely
slackening or reducing their normal work output. It is also called a strike on the installment
plan.
f. Mass leaves - One where the employees simultaneously filed leaves of absence based on
various reasons such as, inter alia, vacation and sick leaves.
g. Wildcat strike - one declared and staged without the majority approval of the recognized
bargaining agent.
h. Sitdown strike - one where the workers stop working but do not leave their place of work.
i. Overtime boycott one involving the act of the workers in refusing to render overtime
work in violation of the CBA, resorted to as a means to coerce the employer to yield to their
demands.
j. Boycott of products one which involves the concerted refusal to patronize an employer's
goods or services and to persuade others to a like refusal.
k. Attempts to damage, destroy or sabotage plant equipment and facilities and similar
activities;
l. The sporting by the workers of closely cropped hair or cleanly shaven heads after their
union filed a notice of strike as a result of a CBA deadlock is a form of illegal strike. 1
2. As to coverage:
a. General strike one which covers and extends over a whole province or country. In this kind
of strike, the employees of various companies and industries cease to work in sympathy
with striking workers of another company. It is also resorted to for the purpose of putting
pressure on the government to enact certain labor-related measures such as mandated wage
increases or to cease from implementing a law which workers consider inimical to their
interest. It is also mounted for purposes of paralyzing or crippling the entire economic
dispensation.
b. Particular strike one which covers a particular establishment or employer or one industry
involving one union or federation.
3. As to purpose:
a. Economic strike.
b. Unfair labor practice strike or political strike.
4. As to the nature of the strikers action:
a. Partial strike one which consists of unannounced work stoppages such as slowdowns,
walkouts or unauthorized extension of rest periods.
b. Sit-down strike.
c. Slowdown strike.
5. As to the extent of the interest of strikers:
a. Primary strike refers to a strike conducted by the workers against their employer, involving
a labor dispute directly affecting them.
b. Secondary strike - refers to a strike staged by the workers of an employer involving an issue
which does not directly concern or affect their relationship but rather, by some
circumstances affecting the workers such as when the employer persists to deal with a third
person against whom the workers have an existing grievance. Workers stage this kind of
strike to secure the economic assistance of their employer to force the third person to yield
to the union on the issues involving it and said third person.
c. Sympathy strike - refers to a strike where the strikers have no demands or grievances or labor
dispute of their own against their employer but nonetheless stage the strike for the purpose
of aiding, directly or indirectly, other strikers in other establishments or companies, without
necessarily having any direct relation to the advancement of the strikers interest. This is
patently an illegal strike. An example of a sympathy strike is the welga ng bayan where
workers refuse to render work to join a general strike which does not involve a labor or
1
National Union of Workers in the Hotel, Restaurant and Allied Industries [NUWHRAIN-APL-IUF] Dusit Hotel Nikko Chapter v. The Honorable CA, G.R. Nos. 163942 and
166295, Nov. 11, 2008.
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industrial dispute between the strikers and the employer struck against but it is staged in
pursuit of certain ends such as reduction in the electric power rates, increase in the
legislated wages, etc.
3. LOCKOUT.
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 employers act of excluding employees who are union members.
4. PICKETING.
Picketing is the act of workers in peacefully marching to and fro 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.
2.
WHO MAY DECLARE A STRIKE OR LOCKOUT?
1. WHO MAY DECLARE A STRIKE?
a. Proper party.
Only a legitimate labor organization may declare a strike. For obvious reason, the employer
cannot.
b. Basic requirements.
As to the personality of the union, the following requirements should be shown before a strike
may be validly declared and staged:
a. The union should be legitimate. A strike conducted by a union which has not been shown to
be a legitimate labor organization is illegal.
b. In organized establishment where there is a certified sole and exclusive bargaining agent
(SEBA), only the recognized or certified collective bargaining union can validly stage a strike.
A minority union cannot stage a strike. A strike conducted by a minority union is patently
illegal because no labor dispute which will justify the conduct of a strike may exist
between the employer and a minority union. To permit the unions picketing activities
would be to flaunt at the will of the majority.
c. In unorganized establishment where there is no certified (SEBA), any legitimate labor
organization in the establishment may declare a strike but only on the ground of unfair labor
practice. The only other ground of bargaining deadlock cannot be invoked in support of a
strike in an unorganized establishment for the simple reason that no CBA can be negotiated
and concluded absent such recognized or certified collective bargaining agent. In this
situation, the existence of a bargaining deadlock is an impossibility.
2. WHO MAY DECLARE A LOCKOUT?
a. Proper party.
Only the employer can declare and stage a lockout. For obvious reason, no union can.
b. Grounds.
The employer may declare a lockout based on any of the two (2) grounds that may similarly be
invoked by the union in staging a strike, i.e., (1) bargaining deadlock; and/or (2) unfair labor practice.
3. WHO MAY STAGE A PICKET?
Although not mentioned in the syllabus, it is important to discuss this point. Distinctively, in case
of picketing, the absence of employment relationship between the employer and the picketers or some
of them does not affect its validity. Picketing, if peacefully carried out, cannot be prohibited even in
the absence of employer-employee relationship. Example: A picket conducted by the employees with
the participation of militant groups like Bayan, Gabriela, etc. will not make the picket illegal.
3.
REQUISITES FOR A VALID STRIKE
1. REQUISITES FOR A VALID STRIKE.
a. Procedural but mandatory requisites.
In accordance with Article 263 and pertinent prevailing jurisprudence, 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;
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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.
I.
FIRST REQUISITE:
EXISTENCE OF VALID AND FACTUAL GROUND/S
1. VALID GROUNDS.
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.
2. SOME PRINCIPLES ON THE FIRST REQUISITE.
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.
II.
SECOND REQUISITE:
FILING OF A NOTICE OF STRIKE
1. NOTICE OF STRIKE.
No labor organization shall declare a strike without first having filed a notice of strike.
III.
THIRD REQUISITE:
SERVICE OF A 24-HOUR PRIOR NOTICE
In the 2005 case of Capitol Medical Center, Inc. v. NLRC, it was imposed as additional requisite
that a 24-hour notice must be served to the NCMB-DOLE prior to the taking of the strike vote by secret
balloting, informing it of the unions decision to conduct a strike vote as well as the date, place, and time
thereof.
IV.
FOURTH REQUISITE:
CONDUCT OF A STRIKE VOTE
1. MAJORITY APPROVAL OF THE STRIKE.
No labor organization shall declare a strike without the necessary strike vote first having been
obtained and reported to the NCMB-DOLE. A decision to declare a strike must be approved by a majority
of the total union membership in the bargaining unit concerned, obtained by secret ballot in meetings or
referenda called for that purpose. This process is called strike vote balloting.
A STRIKE WITHOUT THE MAJORITY SUPPORT OF THE UNION MEMBERS IS CALLED
A WILDCAT STRIKE.
2. PURPOSE.
The purpose of a strike vote is to ensure that the decision to strike broadly rests with the majority
of the union members in general and not with a mere minority.
3. DURATION OF THE VALIDITY OF THE MAJORITY APPROVAL OF A STRIKE.
The majority decision to stage a strike is valid for the duration of the dispute based on
substantially the same grounds considered when the strike vote was taken.
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V.
FIFTH REQUISITE:
SUBMISSION OF THE STRIKE VOTE TO NCMB-DOLE
1. PURPOSE FOR REQUIRING A STRIKE VOTE REPORT.
The evident intention of the law in mandatorily requiring the submission of the strike vote report
is to afford the NCMB of opportunity to verify the truth and veracity of the majority vote by the union
members in support of the intended strike.
2. WHEN TO SUBMIT THE STRIKE VOTE REPORT.
The strike vote report should be submitted to the NCMB-DOLE at least seven (7) days before the
actual staging of the intended strike, subject to the observance of the cooling-off periods provided under
the law.
VI.
SIXTH REQUISITE:
OBSERVANCE OF THE COOLING-OFF PERIOD
1. GENERAL RULE.
The cooling-off periods provided under the law before the intended date of the actual mounting
of the strike are as follows:
1. In case of bargaining deadlock, the cooling-off period is thirty (30) days from the filing of the
notice of strike; or
2. In case of unfair labor practice, the cooling-off period is fifteen (15) days from the filing of the
notice of strike.
2. EXCEPTION: IN CASE OF UNION-BUSTING.
In case of dismissal from employment of union officers (not ordinary members) duly elected in
accordance with the union constitution and by-laws which may constitute union-busting because the
existence of the union is threatened by reason of such dismissal, the 15-day cooling-off period does not
apply and the union may take action immediately after the strike vote is conducted and the results
thereof duly submitted to the regional branch of the NCMB.
In cases of union-busting, only the 15-day cooling-off period need not be observed; all the other
requisites must be fully complied with.
3. RECKONING OF THE COOLING-OFF PERIODS.
The start of the cooling-off periods should be reckoned from the time the notice of strike is filed
with the NCMB-DOLE, a copy thereof having been served on the other party concerned.
4. PURPOSE OF THE COOLING-OFF PERIODS.
The purpose of the cooling-off periods is to provide an opportunity for mediation and
conciliation of the dispute by the NCMB-DOLE with the end in view of amicably settling it.
VII.
SEVENTH REQUISITE:
7-DAY WAITING PERIOD OR STRIKE BAN
1. PURPOSE OF THE 7-DAY WAITING PERIOD OR STRIKE BAN.
The seven (7) day waiting period is intended to give the NCMB-DOLE an opportunity to verify
whether the projected strike really carries the approval of the majority of the union members.
2. WAITING PERIOD/STRIKE BAN VS. COOLING-OFF PERIOD.
The 7-day waiting period or strike ban is a distinct and separate requirement from the cooling-off
period prescribed by law. The latter cannot be substituted for the former and vice-versa.
The cooling-off period is counted from the time of the filing of the notice of strike. The 7-day
waiting period/strike ban, on the other hand, is reckoned from the time the strike vote report is
submitted to the NCMB-DOLE.
Consequently, a strike is illegal for failure to comply with the prescribed mandatory cooling-off
period and the 7-day waiting period/strike ban after the submission of the report on the strike vote.
3. BOTH MUST BE COMPLIED WITH SEPARATELY AND DISTINCTLY FROM EACH OTHER.
The requirements of cooling-off period and 7-day waiting period/strike ban must both be
complied with. The labor union may take the strike vote and report the same to the NCMB-DOLE within
the statutory cooling-off period. In this case, the 7-day waiting period/strike ban should be counted from
the day following the expiration of the cooling-off period. A contrary view would certainly defeat and
render nugatory the salutary purposes behind the distinct requirements of cooling-off period and the
waiting period/strike ban.
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The NCMB Primer on Strike, Picketing and Lockout,1 issued by the NCMB, the agency of
government directly tasked with the implementation and enforcement of this particular legal provision
and requirement, is very clear on this point, thus:
In the event the result of the strike/lockout vote ballot is filed within the
cooling-off period, the 7-day requirement shall be counted from the day following the
expiration of the cooling-off period.2
In other words, the seven (7) days should be added to the cooling-off period of fifteen (15) days,
in case of unfair labor practice, or thirty (30) days, in case of collective bargaining deadlock and it is only
after the lapse of the total number of days after adding the two (2) periods that the strike/lockout may be
lawfully and validly staged.
While there was no categorical declaration on this point, the Supreme Court, in holding in the
2010 case of Phimco Industries, Inc. v. Phimco Industries Labor Association (PILA), 3 that respondents
fully satisfied the legal procedural requirements, noted that the strike notice grounded on collective
bargaining deadlock was filed on March 9, 1995. Consequently, the 30-day cooling-off period would have
lapsed on April 9, 1995. The strike vote was reached on March 16, 1995 and the notification thereof was
filed with the DOLE on March 17, 1995 or well within the cooling-off period. Based on the said rule in the
NCMB Primer, the strike could only be validly staged starting from April 17, 1995 and onwards, i.e., after
the lapse of 7 days from April 9, 1995. Hence, since the actual strike was launched only on April 25, 1995,
there was clearly full compliance with the requisites.
Example: In a case where the notice of strike grounded on ULP is filed on October 1, 2015, and
the strike vote is taken within the cooling-off period, say, on October 5, 2015 and the strike vote report
showing majority support for the intended strike is submitted to the NCMB-DOLE the following day,
October 6, 2015, the question is when can the union legally stage the strike?
Following the above principle, the answer obviously is on October 24, 2015 or any day thereafter.
This is so because the 15-day cooling-off period for ULP expires on October 16 and adding the 7-day
strike ban which should be counted from the day following the expiration of the cooling-off period, the
7th day would be on October 23, 2015. Obviously, the strike cannot be conducted on the 7 th day but rather
after the lapse thereof; hence, it is only on October 24, 2015 and onwards that the union may lawfully
conduct the strike.
4. SOME PRINCIPLES ON COOLING-OFF PERIOD AND 7-DAY WAITING PERIOD.
Deficiency of even one (1) day of the cooling-off period and 7-day strike ban is fatal.
One-day strike without complying with the 7-day strike ban is illegal.
4.
REQUISITES FOR A VALID LOCKOUT
1. 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.
5.
REQUISITES FOR LAWFUL PICKETING
1. THE REQUISITES FOR A VALID STRIKE ARE NOT APPLICABLE TO PICKETING.
The seven (7) requisites for a valid strike discussed above do not apply to picketing.
2. REQUISITES FOR LAWFUL PICKETING.
1
2
3
2nd Edition, December 1995.

No. 6 thereof.
G.R. No. 170830, Aug. 11, 2010.
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The most singular requirement to make picketing valid and legal is that it should be peacefully
conducted. 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.
3. RIGHT TO PICKET IS PROTECTED BY THE CONSTITUTION AND THE LAW.
Unlike a strike which is guaranteed under the Constitutional provision on the right of workers to
conduct peaceful concerted activities under 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.
4. EFFECT OF THE USE OF FOUL LANGUAGE DURING THE CONDUCT OF THE PICKET.
In the event the picketers employ discourteous and impolite language in their picket, such may
not result in, or give rise to, libel or action for damages.
5. 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 employers 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). 1 - While the right of
employees to publicize their dispute falls within the protection of freedom of expression and the right to
peaceably assemble to air grievances, these rights 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.
6. WHEN PICKET CONSIDERED A STRIKE.
In distinguishing between a picket and a strike, the totality of the circumstances obtaining in a
case should be taken into account.
Santa Rosa Coca-Cola Plant Employees Union v. Coca-Cola Bottlers Phils., Inc.2 - 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 companys premises
during working hours. Thus, petitioners engaged in a concerted activity which already affected the
companys operations. The mass concerted activity obviously constitutes a strike. Moreover, the bare fact
that petitioners were given a Mayors permit is not conclusive evidence that their action/activity did not
amount to a strike. The Mayors 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 UnionALU-TUCP v. Philippine National Oil Company Energy Development Corporation,3 contends that
there was no stoppage of work; hence, they did not strike. Euphemistically, petitioner union avers that it
only engaged in picketing, and maintains that without any work stoppage, [its officers and members]
only 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
2
3
G.R. No. 170830, Aug. 11, 2010.

G.R. Nos. 164302-03, Jan. 24, 2007.
G.R. No. 170351, March 30, 2011.
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(1) Petitioner union filed a Notice of Strike on December 28, 1998 with the DOLE grounded on
respondents 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 respondents
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 unions 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 unions 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.
6.
ASSUMPTION OF JURISDICTION BY THE DOLE SECRETARY OR CERTIFICATION OF
THE LABOR DISPUTE TO THE NLRC FOR COMPULSORY ARBITRATION
1. WHEN DOLE SECRETARY MAY ASSUME OR CERTIFY A LABOR DISPUTE.
Article 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 263(g) does not require the existence of a strike or lockout but only of a labor
dispute involving national interest.
2. 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).
Obviously, the above enumerated industries are not exclusive as other industries may be
considered indispensable to the national interest based on the appreciation and discretion of the DOLE
Secretary or as may be recommended by TIPC.
3. DIFFERENT RULE ON STRIKES AND LOCKOUTS IN HOSPITALS, CLINICS AND MEDICAL
INSTITUTIONS.
As a general rule, strikes and lockouts in hospitals, clinics and similar medical institutions should
be avoided.
In case a strike or lockout is staged, it shall be the duty of the striking union or locking-out
employer to provide and maintain an effective skeletal workforce of medical and other health personnel
whose movement and services shall be unhampered and unrestricted as are necessary to insure the
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proper and adequate protection of the life and health of its patients, most especially emergency cases, for
the duration of the strike or lockout.
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.
4. SOME PRINCIPLES ON ASSUMPTION/CERTIFICATION POWER OF THE DOLE SECRETARY.
Prior notice and hearing are not required in the issuance of the assumption or certification order.
The DOLE Secretary may seek the assistance of law enforcement agencies like the Philippine National
Police to ensure compliance with the provision thereof as well as with such orders as he may issue to
enforce the same.
5. RETURN-TO-WORK ORDER.
a. It is a STATUTORY PART AND PARCEL of assumption/certification order even if not
expressly stated therein.
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.
It is error therefore for striking workers to continue with their strike alleging absence of a returnto-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.
b. 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.
c. 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.
7.
NATURE OF ASSUMPTION ORDER
OR CERTIFICATION ORDER
1. 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.
8.
EFFECT OF DEFIANCE OF
ASSUMPTION OR CERTIFICATION ORDERS
1. DEFIANCE OF THE ORDER, A VALID GROUND TO DISMISS.
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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:
1. A strike that is undertaken after the issuance by the DOLE Secretary of an assumption or
certification order becomes a prohibited activity and thus illegal. The defiant striking union
officers and members, as a result, are deemed to have lost their employment status for
having knowingly participated in an illegal strike.
2. From the moment a worker defies a return-to-work order, he is deemed to have abandoned
his job.
3. By so defying, the workers have forfeited their right to be readmitted to work.
2. ALL DEFIANT STRIKERS, REGARDLESS OF WHETHER THEY ARE OFFICERS OR ORDINARY
MEMBERS, ARE DEEMED DISMISSED.
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.
3. PERIOD OF DEFIANCE OF THE RETURN-TO-WORK ORDER, NOT MATERIAL.
The length of time within which the return-to-work order was defied by the strikers is not
significant in determining their liability for the legal consequences thereof. The following cases are
illustrative of this rule:
a. University of San Agustin Employees Union-FFW v. The CA.1 - 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. 2 - The period of defiance was only nine (9) days.
4. SOME PRINCIPLES ON DEFIANCE OF THE ASSUMPTION/CERTIFICATION ORDER.
The assumption/certification order may be served at any time of the day or night.
No practice of giving 24 hours to strikers within which to return to work. There is no law or
jurisprudence recognizing this practice.
The defiant strikers could be validly replaced.
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.
9.
ILLEGAL STRIKE
1. 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.
1
2
G.R. No. 169632, March 28, 2006.

G.R. No. L-49983, April 20, 1992.
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17) In violation of the company code of conduct which prohibits inciting or participating in
riots, disorders, alleged strikes or concerted actions detrimental to [Toyotas] 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, 1 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, 2 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)
LIABILITY OF UNION OFFICERS
(b)
LIABILITY OF ORDINARY WORKERS
These two topics will be discussed jointly because of their close interrelation.
1. 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.
2. PARTICIPATION IN ILLEGAL STRIKE.
a. Distinction in the liability between union officers and ordinary union members.
1. Union officers.
The mere finding or declaration of illegality of the strike will result in the termination of all
union officers who knowingly participated in the illegal strike. Unlike ordinary members, it is not
required, for purposes of termination, that the officers should commit an illegal act during the strike.
However, absent any showing that the 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,3 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 federations 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.
2. Ordinary union members.
The mere finding or declaration of illegality of a strike will not result in termination of ordinary
union members. For an ordinary union member to suffer termination, it must be shown by clear evidence
that he has committed illegal acts during the strike.
b. 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.
c. Some principles on illegality of a strike.
1
2
3
G.R. Nos. 158786 &158789, Oct. 19, 2007.

G.R. No. 159460, Nov. 15, 2010.
G.R. Nos. 154113, 187778, 187861 & 196156, Dec. 7, 2011, 661 SCRA 686.
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The fact that the employees are signatories to the CBA does not in itself sufficiently establish
their status as union officers during the illegal strike. Neither were their active roles during
the bargaining negotiations be considered as evidence of their being union officers.
Only the union officers during the period of illegal strike are liable. If the employees acted
as union officers after the strike, they may not be held liable and, therefore, could not be
terminated in their capacity as such.
Shop stewards are union officers. Hence, they should be terminated upon the declaration of
the illegality of the strike.
Union officers may be dismissed despite the fact that the illegal strike was staged only for
1 day or even for less than 10 hours. This holds true in cases of defiance of the assumption/
certification order issued in national interest cases.
If the dispositive portion of the decision failed to mention the names of union officers,
resort should be made to the text of the decision.
No wholesale dismissal of strikers allowed. The employer cannot just unceremoniously
dismiss a hundred of its employees in the absence of clear and convincing proof that these
people were indeed guilty of the acts charged and then, afterwards, go to court to seek
validation of the dismissal it whimsically executed. That certainly cannot be allowed.
3. PARTICIPATION IN THE COMMISSION OF ILLEGAL ACTS DURING A STRIKE.
a. 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.
b. 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 employers 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.
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.
d. 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.
(c)
LIABILITY OF EMPLOYER
I.
LIABILITY OF EMPLOYER IN CASE OF STRIKE
1. LIABILITY FOR REINSTATEMENT OF STRIKERS.
a. Reinstatement, when proper.
Reinstatement (without backwages) of ordinary rank-and-file union members who did not
participate in the commission of illegal acts during the conduct of the illegal strike may be ordered.
b. No reinstatement for strikers who committed illegal acts.
The strikers who committed illegal acts during and in the course of a strike may be terminated.
They are not entitled to be reinstated. Additionally, they may be held criminally liable therefor.
c. Strikers who failed to return to work forfeit reinstatement.
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Strikers who failed to report for work without proper justification and despite the order
reinstating them to their job are deemed to have forfeited their right to reinstatement.
d. Employer who fails to reinstate strikers who were ordered reinstated by the Labor Arbiter is
liable to pay them backwages reckoned from Labor Arbiters issuance of the reinstatement
order up to its reversal by the NLRC.
2. SEPARATION PAY IN LIEU OF REINSTATEMENT IN STRIKE CASES.
a. Separation pay in lieu of reinstatement, when proper.
In strike cases, the award of separation pay in lieu of reinstatement is proper only when the
strikers did not participate in the commission of illegal acts in the course thereof.
3. BACKWAGES IN STRIKE CASES.
a. If the strike is illegal, no backwages should be paid.
Thus, in the case of Arellano University Employees and Workers Union v. CA, 1 where the strike
was declared illegal, petitioner-union members who were found not to have participated in the
commission of illegal acts during the strike were ordered reinstated to their former positions but without
backwages. If reinstatement is no longer possible, they should receive separation pay of one (1) month
for every year of service in accordance with existing jurisprudence. With respect to the union officers,
their mere participation in the illegal strike warrants their dismissal.
(d)
WAIVER OF ILLEGALITY OF STRIKE
1. VOLUNTARY REINSTATEMENT CONSTITUTES A WAIVER OF THE ILLEGALITY OF THE
STRIKE.
In Citizens Labor Union v. Standard Vacuum Oil Co., 2 the act of the employer in inviting the
workers to return to their posts without making any reference to the pending case involving the issue of
the illegality of the strike or imposing any condition or alteration of the terms of their employment was
deemed a waiver of its right to consider the strikers as wrongdoers. More so in this case when such
invitation was accepted by the strikers. By said act, the parties may be said to have both abandoned their
original positions and come to a virtual compromise to resume unconditionally their former relations.
10.
INJUNCTIONS
I.
INJUNCTION IN PICKETING, STRIKE OR LOCKOUT CASES
1. PROHIBITION ON INJUNCTION AGAINST THE CONDUCT OF STRIKES AND LOCKOUTS.
As a general rule, strikes and lockouts that are validly declared enjoy the protection of the law
and cannot be enjoined unless illegal acts are committed or threatened to be committed in the course
thereof. In the case of strikes, this policy applies even if the strike appears to be illegal in nature. The
rationale for this policy is the protection extended to the right to strike under the Constitution and the
law. It is basically treated as a weapon that the law guarantees to employees for the advancement of their
interest and for their protection.
2. EXCEPTIONS WHEN THE STRIKE ITSELF MAY BE ENJOINED.
However, in some cases, injunctions issued to enjoin the conduct of the strike itself and not only
the commission of illegal or prohibited acts in the course thereof, were held to be valid.
For instance, in San Miguel Corporation v. NLRC, 3 the Supreme Court ruled that injunction may
be issued not only against the commission of illegal acts in the course of the strike but against the strike
itself because the notice of strike filed by the union has been converted into a preventive mediation case.
Having been so converted, a strike can no longer be staged based on said notice. Upon such conversion,
the legal effect is that there is no more notice of strike to speak of.
In the earlier case of San Miguel Corporation v. NLRC,4 the Supreme Court ruled that the NLRC
committed grave abuse of discretion when it denied the petition for injunction to restrain the union from
declaring a strike based on non-strikeable grounds.
3. REGULAR COURTS ARE PROHIBITED FROM ISSUING INJUNCTION AGAINST STRIKES OR
LOCKOUT.
1
2
3
4
G.R. No. 139940, Sept. 19, 2006.

G.R. No. L-7478, May 6, 1955.
G.R. No. 119293, June 10, 2003.
G.R. No. 99266, March 2, 1999, 304 SCRA 1.
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The cases cited above involve the issuance of restraining order or injunction by the NLRC
pursuant to the exercise of its injunctive power. In contrast, regular courts are absolutely prohibited to
grant any injunctive relief in cases of strikes or lockouts.
II.
INJUNCTION IN PICKETING CASES
1. PROHIBITION ON INJUNCTION AGAINST PEACEFUL PICKETING.
As a general rule, injunction cannot be issued against the conduct of picketing by the workers.
Under our constitutional set up, picketing is considered part of the freedom of speech duly guaranteed by
the Constitution. However, excepted from this legal proscription are the situations mentioned below.
2. EXCEPTIONS.
Under the following circumstances, picketing may be enjoined by the NLRC:
(1) Where picketing is carried out through the use of illegal means;
(2) Where picketing involves the use of violence and other illegal acts;
(3) Where picketing affects the rights of third parties and injunction becomes necessary to
protect such rights.
(b)
INNOCENT BYSTANDER RULE
1. WHEN INJUNCTION ON PICKETING IS ALLOWED THROUGH THE REGULAR COURTS AND
NOT THROUGH THE NLRC.
In situations where the picket affects not only the employer but also the business operations of
other establishments owned by third parties, an injunction may be secured by the latter from the regular
courts to enjoin the picket under the Innocent Bystander Rule. Under this rule, the third-party
employers or innocent bystanders who have no employer-employee relationship with the picketing
strikers, may apply for injunction with the regular courts (not with the NLRC) to enjoin the conduct of
the picket.
Because of the absence of such employer-employee relationship, the NLRC cannot entertain such
application for injunction from innocent bystanders. Only the employer of the picketers can apply for
injunctive relief from the NLRC.
------------oOo------------
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SYLLABUS
TOPIC NO. 8
PROCEDURE AND JURISDICTION
PRELIMINARY CONSIDERATIONS
ON PROCEDURE AND JURISDICTION
1. EXISTENCE OF EMPLOYER-EMPLOYEE RELATIONSHIP.
The existence of employer-employee relationship between the parties-litigants, or a reasonable
causal connection to such relationship is a jurisdictional pre-requisite for the exercise of jurisdiction over a
labor dispute by the Labor Arbiters or any other labor tribunals.
2. THE CAUSE OF ACTION MUST ARISE FROM THE EMPLOYER-EMPLOYEE RELATIONSHIP.
Even if there is employer-employee relationship, if the cause of action did not arise out of or was
not incurred in connection with the employer-employee relationship, Labor Arbiters and other labor
tribunals have no jurisdiction thereover.
Actions between employers and employees where the employer-employee relationship is merely
incidental are within the exclusive original jurisdiction of the regular courts.
3. REASONABLE CAUSAL CONNECTION RULE THE RULE IN CASE OF CONFLICT OF
JURISDICTION BETWEEN LABOR COURT AND REGULAR COURT.
Under this rule, if there is a reasonable causal connection between the claim asserted and the
employer-employee relations, then the case is within the jurisdiction of labor courts.
In the absence of such nexus, it is the regular courts that have jurisdiction.
4. THE POWER TO DETERMINE EXISTENCE OF EMPLOYMENT RELATIONSHIP.
Under labor laws, it is not only the Labor Arbiters and the NLRC who/which are vested with the
power to determine the existence of employer-employee relationship.
The following have also the power to make similar determination:
(1) The DOLE Secretary and the DOLE Regional Directors, to the exclusion of the Labor
Arbiter and the NLRC;
(2) The Med-Arbiter;
(3) The Social Security Commission (SSC).
5. IN CASES FILED BY OFWs, LABOR ARBITERS MAY EXERCISE JURISDICTION EVEN ABSENT
THE EMPLOYMENT RELATIONSHIP.
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In Santiago v. CF Sharp Crew Management, Inc., 1 it was held that a seafarer who has already
signed a POEA-approved employment contract but was not deployed overseas and, therefore, there is no
employer-employee relationship, may file his monetary claims case with the Labor Arbiter. This is
because the jurisdiction of Labor Arbiters is not limited to claims arising from employer-employee
relationships. Under Section 10 of R. A. No. 8042 (Migrant Workers and Overseas Filipinos Act of 1995), as
amended, the Labor Arbiter may exercise jurisdiction over the claims of OFWs 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 damage. (See also
the 2012 case of Bright Maritime Corporation v. Fantonial2).
6. LABOR ARBITERS HAVE JURISDICTION EVEN IF THE CASE IS FILED BY THE HEIRS OF THE
OFW.
This was the ruling in Medline Management, Inc. v. Roslinda.3 As heirs, the wife and son of
Juliano Roslinda, the deceased OFW, have the personality to file the claim for death compensation,
reimbursement of medical expenses, damages and attorney's fees before the Labor Arbiter of the NLRC.
7. LABOR DISPUTES, NOT SUBJECT TO BARANGAY CONCILIATION.
Labor cases are not subject to the conciliation proceedings prescribed under P.D. No. 1508
requiring the submission of disputes before the Barangay Lupong Tagapayapa prior to their filing with the
court or other government offices. Instead of simplifying labor proceedings designed at expeditious
settlement or referral to the proper courts or offices to decide them finally, the conciliation of the issues
before the Barangay Lupong Tagapayapa would only duplicate the conciliation proceedings and unduly
delay the disposition of labor cases.
A.
LABOR ARBITER
1. THE LABOR ARBITER.
The Labor Arbiter is an official in the Arbitration Branch of the National Labor Relations
Commission (NLRC) who hears and decides cases falling under his original and exclusive jurisdiction as
provided by law.
2. LABOR ARBITERS HAVE NO INJUNCTIVE POWER; ONLY THE COMMISSION (NLRC) HAS
THIS POWER.
Previously, Labor Arbiters are possessed of injunctive power. This grant of injunctive power,
however, was deleted in recent NLRC Rules. The Labor Arbiter thus has no more injunctive power. Only
the Commission (NLRC) has that power.
1.
JURISDICTION
1. NATURE OF JURISDICTION OF LABOR ARBITERS - ORIGINAL AND EXCLUSIVE.
The jurisdiction conferred by Article 217 upon the Labor Arbiters is both original and exclusive,
meaning, no other officers or tribunals can take cognizance of, or hear and decide, any of the cases therein
enumerated.
2. EXCEPTIONS TO THE ORIGINAL AND EXCLUSIVE JURISDICTION OF LABOR ARBITERS.
The following cases are the exceptions when the Labor Arbiters may not exercise their original
and exclusive jurisdiction:
1. In assumed cases. When the DOLE Secretary or the President exercises his power under
Article 263(g) of the Labor Code to assume jurisdiction over national interest cases and decide
them himself.
2. In certified cases. When the NLRC exercises its power of compulsory arbitration over similar
national interest cases that are certified to it by the DOLE Secretary pursuant to the exercise by
the latter of his certification power under the same Article 263(g).
3. In cases arising from CBA. - When cases arise from the interpretation or implementation of
collective bargaining agreements and from the interpretation or enforcement of company
personnel policies which shall be disposed of by the Labor Arbiter by referring the same to the
grievance machinery and voluntary arbitration, as may be provided in said agreements.
4. In cases submitted for voluntary arbitration. - When the parties agree to submit the case to
voluntary arbitration before a Voluntary Arbitrator or panel of Voluntary Arbitrators who,
under Articles 261 and 262 of the Labor Code, are also possessed of original and exclusive
jurisdiction to hear and decide cases mutually submitted to them by the parties for arbitration
and adjudication.
1
2
3
G.R. No. 162419, July 10, 2007.

G.R. No. 165935, Feb. 8, 2012.
G.R. No. 168715, Sept. 15, 2010.
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3. RUNDOWN OF ALL CASES FALLING UNDER THE JURISDICTION OF THE LABOR

ARBITERS.
More particularly, Labor Arbiters shall have original and exclusive jurisdiction to hear and
decide the following cases involving all workers, whether agricultural or non-agricultural:
1. Under Article 217 of the Labor Code:
(a) Unfair labor practice cases;
(b) Termination disputes (Illegal dismissal cases);
(c) Money claims exceeding P5,000.00.
(d) Claims for actual, moral, exemplary and other forms of damages arising from employeremployee relations; and
(e) Cases involving the legality of strikes and lockouts.
NOTE: Claims for employees compensation, SSS, PhilHealth (Medicare) and maternity benefits
do not fall under the jurisdiction of the Labor Arbiter because these fall under the jurisdiction of other
government agencies.
2. Under Article 124 of the Labor Code, as amended by R.A. No. 6727:
Disputes involving legislated wage increases and wage distortion in unorganized
establishments not voluntarily settled by the parties pursuant to R.A. No. 6727.
3. Under Article 128(b) of the Labor Code, as amended by R.A. No. 7730:
Contested cases under the exception clause in Article 128(b) of the Labor Code.
4. Under Article 227 of the Labor Code:
Enforcement of compromise agreements when there is non-compliance by any of the parties
thereto, pursuant to Article 227 of the Labor Code.
5. Under Article 262-A of the Labor Code:
Issuance of writ of execution to enforce decisions of Voluntary Arbitrators or panel of
Voluntary Arbitrators, in case of their absence or incapacity, for any reason.
6. Under Section 10 of R.A. No. 8042, as amended by R.A. No. 10022:
Money claims of OFWs arising out of employer-employee relationship or by virtue of any
law or contract, including claims death and disability benefits and for actual, moral,
exemplary and other forms of damages.
7. Other cases as may be provided by law.
I.
JURISDICTION OVER UNFAIR LABOR PRACTICE CASES
1. SOME PRINCIPLES ON JURISDICTION OVER ULPs.
The Labor Arbiter has jurisdiction over all ULPs whether committed by the employers or the labor
organizations.
The Labor Arbiter has jurisdiction only over the civil aspect of ULP, the criminal aspect being lodged
with the regular courts.
II.
JURISDICTION OVER ILLEGAL DISMISSAL CASES
1. SOME PRINCIPLES ON JURISDICTION OVER TERMINATION CASES.
The validity of the exercise of jurisdiction by Labor Arbiters over illegal dismissal cases is not
dependent on the kind or nature of the ground cited in support of the dismissal; hence,
whether the dismissal is for just cause or authorized cause, it is of no consequence.
In case of conflict of jurisdiction between Labor Arbiter and the Voluntary Arbitrator over
termination cases, the formers jurisdiction shall prevail for the following reasons:
(1) Termination of employment is not a grievable issue that must be submitted to the
grievance machinery or voluntary arbitration for adjudication. The jurisdiction thereover
remains within the original and exclusive ambit of the Labor Arbiter and not of the
Voluntary Arbitrator.
(2) Even if the CBA provides that termination disputes are grievable, the same is merely
discretionary on the part of the parties thereto.
(3) Once there is actual termination, jurisdiction is conferred upon Labor Arbiters by operation
of law.
(4) Interpretation of CBA and enforcement of company personnel policies are merely corollary
to an illegal dismissal case.
(5) Article 217 is deemed written into the CBA being an intrinsic part thereof.
In other words, the Voluntary Arbitrator will only have jurisdiction over illegal dismissal cases
when there is express agreement of the parties to the CBA, i.e., the employer and the
bargaining agent, to submit the termination case to voluntary arbitration. Absent the mutual
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express agreement of the parties, Voluntary Arbitrator cannot acquire jurisdiction over
termination cases.
The express agreement must be stated in the CBA or there must be enough evidence on record
unmistakably showing that the parties have agreed to resort to voluntary arbitration.
III.
JURISDICTION OVER MONEY CLAIMS CASES
1. CLASSIFICATION OF MONEY CLAIMS.
Money claims falling within the original and exclusive jurisdiction of the Labor Arbiters may be
classified as follows:
1. Any money claim, regardless of amount, when asserted in an illegal dismissal case (where a
claim for reinstatement is asserted). Here, the money claim is but an accompanying remedy
subordinated to the principal cause of action, i.e., illegal dismissal; or
2. Any money claim exceeding the amount of P5,000.00 per claimant.
If the amount does not exceed P5,000.00, it is, under Article 129, the DOLE Regional Director has
jurisdiction to take cognizance thereof.
3. SOME PRINCIPLES ON JURISDICTION OVER MONEY CLAIMS.
Award of statutory benefits even if not prayed for is valid.
Claim for notarial fees by a lawyer employed by a company is within the jurisdiction of the Labor
Arbiter.
(a)
VERSUS REGIONAL DIRECTOR
1. 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 P5,000 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 P5,000.00.
2. IN INSPECTION OF ESTABLISHMENT CASES UNDER ARTICLE 128, DOLE REGIONAL
DIRECTORS HAVE JURISDICTION REGARDLESS OF WHETHER OR NOT THE TOTAL
AMOUNT OF CLAIMS PER EMPLOYEE EXCEEDS P5,000.00.
a. 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.
3. 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.
a. 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.
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.,1 best illustrates the application of the
exception clause. Here, it was held that the Court of Appeals aptly applied the exception clause
1
G.R. No. 171275, July 13, 2009.
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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
Directors jurisdiction to entertain the matter before it, primarily because of the absence of an employeremployee 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.
IV.
JURISDICTION OVER CLAIMS FOR DAMAGES
1. LABOR ARBITERS HAVE JURISDICTION OVER CLAIMS FOR DAMAGES.
It is now a well-settled rule that claims for damages as well as attorneys fees in labor cases are
cognizable by the Labor Arbiters, to the exclusion of all other courts. Rulings to the contrary are deemed
abandoned or modified accordingly.
2. CLAIMS FOR DAMAGES OF OVERSEAS FILIPINO WORKERS (OFWs).
Claims for actual, moral, exemplary and other forms of damages that may be lodged by overseas
Filipino workers are cognizable by the Labor Arbiters.
V.
JURISDICTION OVER LEGALITY OF STRIKES AND LOCKOUTS
JURISDICTIONAL INTERPLAY IN STRIKE OR LOCKOUT CASES
1. A STRIKE OR LOCKOUT IS CROSS-JURISDICTIONAL IN NATURE.
Based on the pertinent provisions of the Labor Code, below is an outline of the interplay in
jurisdiction among them.
1. Filing of a notice of strike or lockout with NCMB. - A union which intends to stage a strike or
an employer which desires to mount a lockout should file a notice of strike or notice of lockout, as the
case may be, with the NCMB and not with any other office. It must be noted, however, that the NCMB,
per Tabigue v. International Copra Export Corporation,1 is not a quasi-judicial body; hence, the
Conciliators-Mediators of the NCMB do not have any decision-making power. They cannot issue
decisions to resolve the issues raised in the notice of strike or lockout. Their role is confined solely to the
conciliation and mediation of the said issues, although they can suggest to the parties that they submit
their dispute to voluntary arbitration through the Voluntary Arbitrators accredited by the NCMB.
2. Filing of a complaint to declare the illegality of the strike or lockout with the Labor Arbiter
or Voluntary Arbitrator or panel of Voluntary Arbitrator. - In case a party wants to have the strike or
lockout declared illegal, a complaint should be filed either with the Labor Arbiter under Article 217(a)(5)
of the Labor Code or, upon mutual agreement of the parties, with the Voluntary Arbitrator or panel of
Voluntary Arbitrators under Article 262 of the same Code. The issue of illegality of the strike or lockout
cannot be resolved by the Conciliators-Mediators of the NCMB as earlier pointed out and discussed.
3. Filing of an injunction petition with the Commission (NLRC). - In case illegal acts violative
of Article 264 are committed in the course of the strike or lockout, a party may file a petition for
injunction directly with the Commission (NLRC) under Article 218(e) of the Labor Code for purposes of
securing a temporary restraining order (TRO) and injunction. The Labor Arbiters or Voluntary
Arbitrators are not possessed of any injunctive power under the Labor Code. In other words, the
aggrieved party, despite the pendency of the case for the declaration of the illegality of the strike or
lockout with the Labor Arbiter or Voluntary Arbitrator, as the case may be, may directly go to the
Commission to secure the injunctive relief.
4. Assumption of jurisdiction by the DOLE Secretary. Under Article 263(g) of the Labor Code,
the DOLE Secretary has the power to assume jurisdiction over labor disputes which, in his opinion, may
cause or likely to cause a strike or lockout in industries indispensable to the national interest (so-called
national interest cases). Once he makes the assumption, he shall decide all the issues related to the
labor dispute himself, to the exclusion of all other labor authorities.
5. Certification of the labor dispute to the NLRC. - Under the same provision of Article 263(g) of
the Labor Code, the DOLE Secretary has the option of not assuming jurisdiction over the labor dispute in
national interest cases. Instead, he may certify it to the NLRC for compulsory arbitration, in which case, it
will be the NLRC which shall hear and decide all the issues subject of the certification order.
G.R. No. 183335, Dec. 23, 2009; See also Hotel Employees Union-NFL v. Waterfront Insular Hotel Davao, G.R. Nos. 174040-41, Sept. 22, 2010.
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In case at the time of the said assumption or certification, there is a pending case before the Labor
Arbiter or Voluntary Arbitrator on the issue of illegality of the strike or lockout, the same shall be deemed
subsumed in the assumed or certified case. Resultantly, it is no longer the Labor Arbiter or the Voluntary
Arbitrator who should decide the said case but the DOLE Secretary, in the case of assumed cases, or the
NLRC, in the case of certified cases.
6. Assumption of jurisdiction over a national interest case by the President. - The President of
the Philippines is not precluded from intervening in a national interest case by exercising himself the
powers of his alter ego, the DOLE Secretary, granted under Article 263(g) by assuming jurisdiction over
the same for purposes of settling or terminating it.
7. Submission of a national interest case to voluntary arbitration. - Despite the pendency of the
assumed or certified national interest case, the parties are allowed to submit any issues raised therein to
voluntary arbitration at any stage of the proceeding, by virtue of Article 263(h) which provides that
(b)efore or at any stage of the compulsory arbitration process, the parties may opt to submit their dispute to
voluntary arbitration.
The foregoing interplay explains why Article 263(i) makes specific reference to the President of
the Philippines, the Secretary of Labor and Employment, the Commission (NLRC) or the Voluntary
Arbitrator in connection with the law on strike, lockout and picketing embodied in Article 263. The only
labor official not so mentioned therein but who has a significant role to play in the interaction of labor
officials and tribunals in strike or lockout cases, is the Labor Arbiter. This is understandable in the light of
the separate express grant of jurisdiction to the Labor Arbiters under Article 217(a)(5) as above discussed.
VI.
JURISDICTION OVER CASES INVOLVING
LEGISLATED WAGE INCREASES AND WAGE DISTORTION
1. CASES IN ORGANIZED ESTABLISHMENTS.
Jurisdiction is with the Voluntary Arbitrator.
2. CASES IN UNORGANIZED ESTABLISHMENTS.
Jurisdiction is with Labor Arbiter.
VII.
JURISDICTION OVER ENFORCEMENT OR ANNULMENT
OF COMPROMISE AGREEMENTS
1. LEGAL BASIS.
Article 227 clearly embodies the following provisions on compromise agreements:
Article 227. Compromise Agreements. - Any compromise settlement, including those
involving labor standard laws, voluntarily agreed upon by the parties with the assistance of the
Bureau or the regional office of the Department of Labor, shall be final and binding upon the
parties. The National Labor Relations Commission or any court shall not assume jurisdiction
over issues involved therein except in case of non-compliance thereof or if there is prima facie
evidence that the settlement was obtained through fraud, misrepresentation, or coercion.
Clear from the foregoing provision that, although the compromise agreement may have been
entered into by the parties before the Bureau of Labor Relations (BLR) or the DOLE Regional Office, it is
the Labor Arbiter who has jurisdiction to take cognizance of the following issues related thereto, to the
exclusion of the BLR and the DOLE Regional Directors:
(1) To enforce the compromise agreement in case of non-compliance therewith by any of the parties
thereto; or
(2) To nullify it if there is prima facie evidence that the settlement was obtained through fraud,
misrepresentation, or coercion.
VIII.
JURISDICTION OVER EXECUTION AND ENFORCEMENT
OF DECISIONS OF VOLUNTARY ARBITRATORS
1. DECISIONS OF VOLUNTARY ARBITRATORS.
Article 262-A of the Labor Code prescribes the procedures that Voluntary Arbitrators or panel of
Voluntary Arbitrators should follow in adjudicating cases filed before them. Once a decision has been
rendered in a case and subsequently becomes final and executory, it may be enforced through the writ of
execution issued by the same Voluntary Arbitrator or panel of Voluntary Arbitrators who rendered it,
addressed to and requiring certain public officers to execute the final decision, order or award.
2. LABOR ARBITERS MAY ISSUE THE WRIT OF EXECUTION.
In situations, however, where the Voluntary Arbitrator or the panel of Voluntary Arbitrators who
rendered the decision is absent or incapacitated for any reason, Article 262-A grants jurisdiction to any
Labor Arbiter in the region where the winning party resides, to take cognizance of a motion for the
issuance of the writ of execution filed by such party and accordingly issue such writ addressed to and
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requiring the public officers mentioned above to execute the final decision, order or award of the
Voluntary Arbitrator or panel of Voluntary Arbitrators.
IX.
JURISDICTION OVER CASES OF OVERSEAS FILIPINO WORKERS (OFWs)
1. LABOR ARBITERS HAVE JURISDICTION OVER ALL MONEY CLAIMS OF OFWs.
All claims of OFWs with a sign of peso are cognizable by the Labor Arbiters, including claims for
disability and death benefits.
2. EXCEPTION: VOLUNTARY ARBITRATORS HAVE JURISDICTION OVER MONEY CLAIMS IF
THERE EXISTS A CBA.
If there is a CBA between the foreign employer and the bargaining union of the OFWs, the
jurisdiction over monetary claims of OFWs belongs to the Voluntary Arbitrator and not to the Labor
Arbiter.
3. OFW-RELATED CASES OVER WHICH THE POEA, AND NOT THE LABOR ARBITERS, HAS
JURISDICTION.
The Philippine Overseas Employment Administration (POEA) has original and exclusive
jurisdiction to hear and decide:
(a) 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.
No. 1 above covers recruitment violations or violations of conditions of license; while No. 2 above
involves (a) disciplinary action cases against foreign principals or employers, and (a) disciplinary action
cases against land-based OFWs and seafarers.
X.
OTHER ISSUES OVER WHICH LABOR ARBITERS HAVE JURISDICTION
1. JURISDICTION OVER CERTAIN ISSUES AS PROVIDED IN JURISPRUDENCE.
In accordance with well-entrenched jurisprudence, the issues, claims or cases of the following fall
under the jurisdiction of the Labor Arbiters:
(a)
(b)
(c)
(d)
Employees in government-owned and/or controlled corporations without original charters;

Domestic workers or kasambahay;
Employees of cooperatives;
Counter-claims of employers against employees.
JURISDICTION OVER CASES OF
DOMESTIC WORKERS OR KASAMBAHAY
1. WHEN LABOR ARBITERS HAVE JURISDICTION.

The Labor Arbiter has jurisdiction if the amount of the claim exceeds P5,000.00; otherwise, the
jurisdiction is vested with the DOLE Regional Director under Article 129 of the Labor Code.
Incidentally, it is no longer legally correct to use the term domestic servant or househelper in
reference to a person who performs domestic work. Under R.A. No. 10361, domestic servant or
househelper should now be referred to as domestic worker or kasambahay.
JURISDICTION OVER CASES OF
EMPLOYEES OF COOPERATIVES
1. WHEN LABOR ARBITERS HAVE JURISDICTION.
The Labor Arbiter has jurisdiction only over monetary claims and illegal dismissal cases
involving employees or member-employees of cooperatives but not the claims or termination of
membership of members thereof. Cooperatives organized under R.A. No. 6938, are composed of
members; hence, issues on the termination of their membership with the cooperative do not fall within
the jurisdiction of the Labor Arbiters.
Simply stated, insofar as member-employees are concerned, there is a need to determine their
cause of action. If what they are asserting arose from their employment relationship with the cooperative,
such as monetary claims or illegal dismissal cases, then, the Labor Arbiter has jurisdiction thereover. But
if the action involves their membership with the cooperative, then, it is considered an intra-cooperative
dispute which falls under the jurisdiction of the Cooperative Development Authority (CDA).
Members of cooperatives or member-employees thereof are not allowed to organize a labor
organization to collectively bargain with the cooperative because they are the owners of the cooperative.
They cannot negotiate with themselves. Only employees of cooperative can organize such labor
organization, for obvious reason.
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JURISDICTION OVER COUNTER-CLAIMS OF EMPLOYERS

1. EMPLOYERS MAY ASSERT COUNTER-CLAIMS AGAINST EMPLOYEES FILED BY THE
LATTER BEFORE THE LABOR ARBITERS.
Almost all labor cases decided by labor courts involve claims asserted by the workers. The
question that may be propounded is whether the employers can assert counter-claims against their
employees before the Labor Arbiters. The Supreme Court answered this poser in the affirmative.
Baez v. Hon. Valdevilla.1 - The jurisdiction of Labor Arbiters and the NLRC is comprehensive
enough to include claims for all forms of damages arising from the employer-employee relations. By
this clause, Article 217 should apply with equal force to the claim of an employer for actual damages
against its dismissed employee, where the basis for the claim arises from or is necessarily connected with
the fact of termination, and should be entered as a counter-claim in the illegal dismissal case. This is in
accord with paragraph 6 of Article 217(a), which covers all other claims, arising from employeremployee relations.
But such counter-claim, being a factual issue, must be asserted before the Labor Arbiter;
otherwise, it can no longer be passed upon by a reviewing court.
XI.
ISSUES AND CASES OVER WHICH
LABOR ARBITERS HAVE NO JURISDICTION
1. LABOR ARBITERS HAVE NO JURISDICTION OVER CERTAIN ISSUES AND CASES.
The following issues or cases do not fall under the jurisdiction of Labor Arbiters:
(a) Claims for damages arising from breach of a non-compete clause and other postemployment prohibitions;
(b) Claims for payment of cash advances, car, appliance and other loans of employees;
(c) Dismissal of corporate officers and their monetary claims;
(d) Cases involving entities immune from suit;
(e) Cases falling under the doctrine of forum non conveniens;
(f) Constitutionality of CBA provisions.
XI-A.
CLAIMS FOR DAMAGES ARISING FROM BREACH OF NON-COMPETE CLAUSE AND OTHER
POST-EMPLOYMENT PROHIBITIONS
1. JURISDICTION IS LODGED WITH THE REGULAR COURTS.
In case of violation of the non-compete clause and similar post-employment bans or prohibitions,
the employer can assert his claim for damages against the erring employee with the regular courts and
not with the labor courts.
XI-B.
EMPLOYERS CLAIMS FOR CASH ADVANCES, CAR, APPLIANCE
AND OTHER PERSONAL LOANS OF EMPLOYEES
1. LABOR ARBITERS HAVE NO JURISDICTION.
With respect to resolving issues involving loans availed of by employees from their employers, it
has been the consistent ruling of the Supreme Court that the Labor Arbiters have no jurisdiction
thereover but the regular courts.
Where the claim to the principal relief sought is to be resolved not by reference to the Labor Code or
other labor relations statute or a collective bargaining agreement but by the general civil law, the jurisdiction over
the dispute belongs to the regular courts of justice and not to the Labor Arbiter and the NLRC. In such situations,
resolutions of the dispute requires expertise, not in labor management relations nor in wage structures
and other terms and conditions of employment, but rather in the application of the general civil law.
Clearly, such claims fall outside the area of competence or expertise ordinarily ascribed to Labor Arbiters
and the NLRC and the rationale for granting jurisdiction over such claims to these agencies disappears.
The following loans may be cited:
a. Cash loans/advances are in the nature of simple collection of a sum of money brought by the
employer, as creditor, against the employee, as debtor. The fact that they were employer and
employee at the time of the transaction does not negate the civil jurisdiction of the trial court.
The case does not involve adjudication of a labor dispute but recovery of a sum of money
based on our civil laws on obligation and contract.
b. Car loans such as those granted to sales or medical representatives by reason of the nature of
their work. The employers demand for payment of the employees amortizations on their car
loans, or, in the alternative, the return of the cars to the company, is not a labor, but a civil,
dispute. It involves debtor-creditor relations, rather than employee-employer relations.
c. Appliance loans concern the enforcement of a loan agreement involving debtor-creditor
relations founded on contract and do not in any way concern employee relations. As such it
G.R. No. 128024, May 9, 2000, 331 SCRA 584.
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should be enforced through a separate civil action in the regular courts and not before the
Labor Arbiter.
d. Loans from retirement fund also involve the same principle as above; hence, collection
therefor may only be made through the regular courts and not through the Labor Arbiter or
any labor tribunal.
XI-C.
DISMISSAL OF DIRECTORS AND CORPORATE OFFICERS
1. LABOR ARBITERS HAVE NO JURISDICTION.
The dismissal of a director or corporate officer is an intra-corporate dispute cognizable by the
Regional Trial Court and not by the Labor Arbiter.
2. MATLING DOCTRINE.
Under this doctrine,1 the following rules should be observed:
(1) The dismissal of regular employees falls under the jurisdiction of Labor Arbiters; while that
of corporate officers falls within the jurisdiction of the regular courts.
(2) The term corporate officers refers only to those expressly mentioned in the Corporation
Code and By-Laws; all other officers not so mentioned therein are deemed employees.
(3) Corporate officers are elected or appointed by the directors or stockholders, and those who
are given that character either by the Corporation Code or by the corporations by-laws.
(4) The Corporation Code specifically mentions only the following corporate officers, to wit:
president, secretary and treasurer and such other officers as may be provided for in the bylaws.
(5) The Board of Directors can no longer create corporate offices because the power of the
Board of Directors to create a corporate office cannot be delegated. Therefore, the term
corporate officers should only refer to the above and to no other. A different interpretation
can easily leave the way open for the Board of Directors to circumvent the constitutionally
guaranteed security of tenure of the employee by the expedient inclusion in the By-Laws of
an enabling clause on the creation of just any corporate officer position.
(6) Distinction between a corporate officer and an employee. - An office is created by the
charter of the corporation and the corporate officer is elected by the directors or
stockholders. On the other hand, an employee occupies no office and generally is
employed not by the action of the directors or stockholders but by the managing officer of the
corporation who also determines the compensation to be paid to such employee.
(7) Because of the Matling doctrine, the rulings in Tabang and Nacpil, are no longer controlling
because they are too sweeping and do not accord with reason, justice, and fair play.
(8) The status of an employee as director and stockholder does not automatically convert his
dismissal into an intra-corporate dispute.
(9) Two (2) elements to determine whether a dispute is intra-corporate or not.
(a) The status or relationship of the parties (Relationship test); and
(b) The nature of the question that is the subject of their controversy. (Nature of controversy
test).
In the absence of any one of these factors, the RTC will not have jurisdiction.
(10) The criteria do not depend on the services performed but on the manner of creation of the
office.
In Matling, respondent Corros was supposedly at once an employee, a stockholder, and a
Director of Matling. The circumstances surrounding his appointment to office must be fully
considered to determine whether the dismissal constituted an intra-corporate controversy or
a labor termination dispute. It must also be considered whether his status as Director and
stockholder had any relation at all to his appointment and subsequent dismissal as Vice
President for Finance and Administration.
Obviously enough, the respondent was not appointed as Vice President for Finance and
Administration because of his being a stockholder or Director of Matling. He had started
working for Matling on September 8, 1966, and had been employed continuously for 33 years
until his termination on April 17, 2000. His first work as a bookkeeper and his climb in 1987
to his last position as Vice President for Finance and Administration had been gradual but
steady. Even though he might have become a stockholder of Matling in 1992, his promotion
to the position of Vice President for Finance and Administration in 1987 was by virtue of the
length of quality service he had rendered as an employee of Matling. His subsequent
acquisition of the status of Director/stockholder had no relation to his promotion. Besides,
his status of Director/stockholder was unaffected by his dismissal from employment as Vice
President for Finance and Administration.
1
Enunciated in the 2010 case of Matling Industrial and Commercial Corp. v. Ricardo R. Coros, G.R. No. 157802, Oct. 13, 2010. This case is an appeal via petition for
review on certiorari. The petitioners challenge the decision of the CA which sustained the ruling of the NLRC to the effect that the Labor Arbiter had jurisdiction because
the respondent, its Vice President for Finance and Administration, was not a corporate officer of petitioner Matling.
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3. SIGNIFICANT CASES DECIDED BASED ON THE MATLING DOCTRINE.

a. Cosare v. Broadcom Asia, Inc., (2014)
In this 2014 case, the Supreme Court ruled that the Labor Arbiter, not the regular courts, has
original jurisdiction over the illegal dismissal case filed by petitioner Cosare who was an incorporator of
respondent Broadcom and was holding the position of Assistant Vice President for Sales (AVP for Sales)
and Head of the Technical Coordination at the time of his termination. The following justifications were
cited in support of this ruling:
(1) The mere fact that a person was a stockholder and an officer of the company at the time the
subject controversy developed does not necessarily make the case an intra-corporate dispute.
(2) A person, although an officer of the company, is not necessarily a corporate officer thereof.
(3) General Information Sheet (GIS) submitted to SEC neither governs nor establishes the nature
of office.
(4) The Nature of the Controversy Test: The mere fact that a person was a stockholder at the time of
the filing of the illegal dismissal case does not make the action an intra-corporate dispute.
b. Other cases:
(1) Barba v. Liceo de Cagayan University (2012);
(2) Marc II Marketing, Inc. and Lucila V. Joson v. Alfredo M. Joson (2011);
(3) Real v. Sangu Philippines, Inc. (2011).
XI-D.
LABOR CASES INVOLVING ENTITIES IMMUNE FROM SUIT
1. IMMUNE ENTITIES CANNOT BE SUED FOR LABOR LAW VIOLATIONS.
In this jurisdiction, the generally accepted principles of international law are recognized and
adopted as part of the law of the land. Immunity of a State and international organizations from suit is
one of these universally recognized principles. It is on this basis that Labor Arbiters or other labor
tribunals have no jurisdiction over immune entities.
2. ILLUSTRATIVE CASE.
In Department of Foreign Affairs v. NLRC, 1 involving an illegal dismissal case filed against the
Asian Development Bank (ADB), it was ruled that said entity enjoys immunity from legal process of
every form and therefore the suit against it cannot prosper. And this immunity extends to its officers
who also enjoy immunity in respect of all acts performed by them in their official capacity. The Charter
and the Headquarters Agreement granting these immunities and privileges to the ADB are treaty
covenants and commitments voluntarily assumed by the Philippine government which must be
respected.
3. EXCEPTION TO THE RULE.
There is an exception to the immunity rule as exemplified by the case of United States v. Hon.
Rodrigo,2 where it was held that when the function of the foreign entity otherwise immune from suit
partakes of the nature of a proprietary activity, such as the restaurant services offered at John Hay Air
Station undertaken by the United States Government as a commercial activity for profit and not in its
governmental capacity, the case for illegal dismissal filed by a Filipino cook working therein is well within
the jurisdiction of Philippine courts. The reason is that by entering into the employment contract with the
cook in the discharge of its proprietary functions, it impliedly divested itself of its sovereign immunity
from suit.
4. ESTOPPEL DOES NOT CONFER JURISDICTION OVER AN IMMUNE ENTITY.
An entity immune from suit cannot be estopped from claiming such diplomatic immunity since
estoppel does not operate to confer jurisdiction to a tribunal that has none over a cause of action.
XI-E.
DOCTRINE OF FORUM NON CONVENIENS
1. REQUISITES.
This doctrine is an international law principle which has been applied to labor cases. The
following are the requisites for its applicability:
(1) That the Philippine court is one to which the parties may conveniently resort;
(2) That the Philippine court is in a position to make an intelligent decision as to the law and the
facts; and
1
2
G.R. No. 113191, Sept. 18, 1996, 262 SCRA 39, 43-44.
G.R. No. 79470, Feb. 26, 1990, 182 SCRA 644, 660.
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(3) That the Philippine court has or is likely to have power to enforce its decision.
2. APPLICATION TO LABOR CASES.
a. Case where doctrine was rejected.
Petitioners invocation of this principle was rejected in Pacific Consultants International Asia,
Inc. v. Schonfeld.1 Petitioners insistence was based on the fact that respondent is a Canadian citizen and
was a repatriate. In so rejecting petitioners contention, the Supreme Court cited the following reasons
that do not warrant the application of the said principle: (1) the Labor Code does not include forum non
conveniens as a ground for the dismissal of the complaint; and (2) the propriety of dismissing a case
based on this principle requires a factual determination; hence, it is properly considered as a defense.
b. Case where doctrine was applied.
This doctrine was applied in the case of The Manila Hotel Corp. and Manila Hotel International
Limited v. NLRC,2 where private respondent Marcelo Santos was an overseas worker employed as a
printer in a printing press in the Sultanate of Oman when he was directly hired by the Palace Hotel,
Beijing, Peoples Republic of China to work in its print shop. This hotel was being managed by the Manila
Hotel International Ltd., a foreign entity registered under the laws of Hong Kong. Later, he was
terminated due to retrenchment occasioned by business reverses brought about by the political upheaval
in China (referring to the Tiananmen Square incident) which severely affected the hotels operations.
In holding that the NLRC was a seriously inconvenient forum, the Supreme Court noted that the
main aspects of the case transpired in two foreign jurisdictions and the case involves purely foreign
elements. The only link that the Philippines has with the case is that the private respondent employee
(Marcelo Santos) is a Filipino citizen. The Palace Hotel and MHICL are foreign corporations.
Consequently, not all cases involving Filipino citizens can be tried here. Respondent employee was hired
directly by the Beijing Palace Hotel, a foreign employer, through correspondence sent to him while he
was working at the Sultanate of Oman. He was hired without the intervention of the POEA or any
authorized recruitment agency of the government. Hence, the NLRC is an inconvenient forum given that
all the incidents of the case - from the time of recruitment, to employment to dismissal - occurred outside
the Philippines. The inconvenience is compounded by the fact that the proper defendants, the Palace
Hotel and MHICL, are not nationals of the Philippines. Neither are they doing business in the
Philippines. Likewise, the main witnesses, Mr. Shmidt (General Manager of the Palace Hotel) and Mr.
Henk (Palace Hotels Manager) are non-residents of the Philippines.
Neither can an intelligent decision be made as to the law governing the employment contract as
such was perfected in foreign soil. This calls to fore the application of the principle of lex loci contractus
(the law of the place where the contract was made). It must be noted that the employment contract was
not perfected in the Philippines. Private respondent employee signified his acceptance thereof by writing
a letter while he was in the Sultanate of Oman. This letter was sent to the Palace Hotel in the Peoples
Republic of China. Neither can the NLRC determine the facts surrounding the alleged illegal dismissal as
all acts complained of took place in Beijing, Peoples Republic of China. The NLRC was not in a position
to determine whether the Tiananmen Square incident truly adversely affected the operations of the Palace
Hotel as to justify respondent employees retrenchment.
Even assuming that a proper decision could be reached by the NLRC, such would not have any
binding effect against the employer, the Palace Hotel, which is a corporation incorporated under the laws
of China and was not even served with summons. Jurisdiction over its person was not acquired. This is
not to say that Philippine courts and agencies have no power to solve controversies involving foreign
employers. Neither could it be said that the Supreme Court does not have power over an employment
contract executed in a foreign country. If the respondent employee were an overseas contract worker, a
Philippine forum, specifically the POEA, not the NLRC, would protect him. He is not an overseas
contract worker, a fact which he admits with conviction.
XI-F.
CONSTITUTIONALITY OF LABOR CONTRACT STIPULATIONS
1. THE HALAGUEA DOCTRINE.
In Halaguea v. Philippine Airlines, Inc.,3 it was pronounced that it is not the Labor Arbiter but
the regular court which has jurisdiction to rule on the constitutionality of labor contracts such as a CBA.
Petitioners were female flight attendants of respondent Philippine Airlines (PAL) and are members of the
Flight Attendants and Stewards Association of the Philippines (FASAP), the sole and exclusive
bargaining representative of the flight attendants, flight stewards and pursers of respondent. The July 11,
2001 CBA between PAL and FASAP provides that the compulsory retirement for female flight attendants
is fifty-five (55) and sixty (60) for their male counterpart.
1
2
3
G.R. No. 166920, Feb. 19, 2007.

G.R. No. 120077, Oct. 13, 2000.
G.R. No. 172013, Oct. 2, 2009.
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Claiming that said CBA provision is discriminatory against them, petitioners filed against
respondent a Special Civil Action for Declaratory Relief with Prayer for the Issuance of Temporary
Restraining Order and Writ of Preliminary Injunction with the Regional Trial Court (RTC) of Makati City.
In ruling that the RTC has jurisdiction, the Supreme Court cited the following reasons:
(1) The case is an ordinary civil action, hence, beyond the jurisdiction of labor tribunals.
(2) The said issue cannot be resolved solely by applying the Labor Code. Rather, it requires the
application of the Constitution, labor statutes, law on contracts and the Convention on the
Elimination of All Forms of Discrimination Against Women (CEDAW). The power to apply
and interpret the constitution and CEDAW is within the jurisdiction of trial courts, a court of
general jurisdiction.
(3) Not every controversy or money claim by an employee against the employer or vice-versa is
within the exclusive jurisdiction of the Labor Arbiter. Actions between employees and
employer where the employer-employee relationship is merely incidental and the cause of
action proceeds from a different source of obligation are within the exclusive jurisdiction of
the regular courts. Here, the employer-employee relationship between the parties is merely
incidental and the cause of action ultimately arose from different sources of obligation, i.e.,
the Constitution and CEDAW.
2.
REINSTATEMENT PENDING APPEAL
1. PIONEER TEXTURIZING DOCTRINE: REINSTATEMENT ASPECT OF LABOR ARBITERS
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 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.
2. 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.
3. TWO (2) OPTIONS OF EMPLOYER.
To implement the reinstatement aspect of a Labor Arbiters 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.
4. 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
employers intransigence in immediately complying with the order.
5. INSTANCES WHEN WRIT OF EXECUTION OF LABOR ARBITERS 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.
6. SOME PRINCIPLES ON REINSTATEMENT PENDING APPEAL.
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Employer has no way of staying execution of immediate reinstatement. He cannot post bond to
prevent its execution.
Reinstatement pending appeal applies to all kinds of illegal dismissal cases, regardless of the
grounds thereof.
Reinstatement pending appeal does not apply when the dismissal is legal but reinstatement is
ordered for some reasons like equity and compassionate justice.
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.
When former position is already filled up, the employee ordered reinstated pending appeal should
be reinstated to a substantially equivalent position.
Reinstatement to a position lower in rank is not proper.
In case of two successive dismissals, the order of reinstatement pending appeal under Article
223 issued in 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.
Reinstatement pending appeal is not affected by the reinstated employees employment elsewhere.
Effect of grant of achievement award during reinstatement pending appeal.
In the 2014 case of Garza v. Coca-Cola Bottlers Philippines, Inc.,1 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 respondents appeal
with the NLRC was still pending, constitutes recognition of petitioners abilities and
accomplishments. It indicates that he is a responsible, trustworthy and hardworking employee of
CCBPI. It constitutes adequate proof weighing in his favor.
3.
REQUIREMENTS TO PERFECT APPEAL TO NLRC
I.
APPEAL IN GENERAL
1. 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.
2. SOME PRINCIPLES ON APPEAL.
Appeals under Article 223 apply only to appeals from the Labor Arbiters decisions, awards or orders
to the Commission (NLRC).
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.
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.
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.
A Petition for Relief should be treated as appeal.
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.
3. 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.
G.R. No. 180972, Jan. 20, 2014.
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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,1 expressly recognized this certiorari power of the NLRC. Clearly,
according to the 2012 case of Auza, Jr. v. MOL Philippines, Inc., 2 the NLRC is possessed of the power to
rectify any abuse of discretion committed by the Labor Arbiter.
II.
PERFECTION OF APPEAL
1. EFFECT OF PERFECTION OF APPEAL ON EXECUTION.
To reiterate, the perfection of an appeal shall stay the execution of the decision of the Labor
Arbiter except execution for reinstatement pending appeal.
2. PERFECTION OF APPEAL, MANDATORY AND JURISDICTIONAL.
The perfection of appeal within the period and in the manner prescribed by law is jurisdictional
and non-compliance with the legal requirements is fatal and has the effect of rendering the judgment final
and executory, hence, unappealable.
3. REQUISITES.
The requisites for perfection of appeal to the NLRC are as follows:
(1)
(2)
(3)
(4)
(5)
Observance of the reglementary period;

Payment of appeal and legal research fee;
Filing of a Memorandum of Appeal;
Proof of service to the other party; and
Posting of cash, property or surety bond, in case of monetary awards.
The foregoing are discussed below.

III.
REGLEMENTARY PERIOD
1. 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.
2. 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.
3. SOME PRINCIPLES ON REGLEMENTARY PERIOD.
The reglementary period is mandatory and not a mere technicality.
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.
1
2
G.R. No. 160871, Feb. 6, 2006.

G.R. No. 175481, Nov. 21, 2012.
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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.
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.
Date of mailing by registered mail of the appeal memorandum is the date of its filing.
Motion for extension of time to perfect an appeal is not allowed. This kind of motion is a prohibited
pleading.
Motion for extension of time to file the memorandum of appeal is not allowed.
Motion for extension of time to file appeal bond is not allowed.
IV.
APPEAL FEE AND LEGAL RESEARCH FEE
1. 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
1. 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.
2. 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.
3. SOME PRINCIPLES ON MEMORANDUM OF APPEAL.
Mere notice of appeal without complying with the other requisites aforestated shall not stop the
running of the period for perfecting an appeal.
Memorandum of appeal is not similar to motion for reconsideration.
Lack of verification in a memorandum of appeal is not a fatal defect. It may easily be corrected by
requiring an oath.
An appeal will be dismissed if signed only by an unauthorized representative.
Only complainants who signed the memorandum of appeal are deemed to have appealed the
Labor Arbiters 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
1. FAILURE TO SERVE COPY TO ADVERSE PARTY, NOT FATAL.
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 NLRCs taking cognizance
thereof.
VII.
POSTING OF BOND
1. WHEN POSTING OF BOND REQUIRED.
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Only in case the decision of the Labor Arbiter or the DOLE Regional Director (under Article 129
of the Labor Code) 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 attorneys 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 attorneys fees are excluded.
2. SOME PRINCIPLES ON POSTING OF BOND.
Posting of bond is mandatory and jurisdictional.
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.
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.
Surety bond must be issued by a reputable bonding company duly accredited by the Commission
(NLRC) or the Supreme Court.
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.
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.
Cooperatives are not exempted from posting bond.
Government is exempt from posting of bond; government-owned and/or controlled corporations,
however, are not exempt therefrom.
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 Arbiters decision involving a monetary
award.
Bond is not required to file a Rule 65 petition for certiorari.
3. JUSTIFICATIONS FOR NON-POSTING OF BOND.
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.
There is no duty to post a bond if the monetary award is not specified in the decision. The Labor
Arbiters 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.
In case of conflict between the body and the fallo of the decision, the latter should prevail.
VII-A.
RULE ON REDUCTION OF APPEAL BOND
1. 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.
2. 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,1
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 Arbiters decision to the NLRC;
G.R. Nos. 178034, 178117, 186984 and 186985, Oct. 17, 2013.
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(d) The NLRC retains its authority and duty to resolve the motion to reduce bond and determine
the final amount of bond that shall be posted by the appellant, still in accordance with the
standards of meritorious grounds and reasonable amount; and
(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.1
The rule set in McBurnie was clarified2 by the Court in the consolidated cases of Sara Lee
Philippines v. Ermilinda Macatlang.3 Thus, while McBurnie has effectively addressed the preliminary
amount of the bond to be posted in order to toll the running of the period to appeal, there is no hard and
fast rule in determining whether the additional bond to be posted is reasonable in relation to the
judgment award. In this case of Sara Lee, petitioner companies4 were held liable by the Labor Arbiter for
the illegal dismissal of 5,984 employees with accompanying award of separation pay and other monetary
benefits amounting to P3,453,664,710.86. Petitioner companies filed their Notice of Appeal with Motion to
Reduce Appeal Bond and To Admit Reduced Amount with the NLRC. They asked the NLRC to reduce
the appeal bond to P1 Million each on the grounds that it is impossible for any insurance company to
cover such huge amount and that, in requiring them to post in full the appeal bond, it would be
tantamount to denying them their right to appeal.
In light of the impossibility for any surety company to cover the appeal bond and the huge
economic losses which the companies and their employees might suffer if the P3.45 Billion bond is
sustained, the NLRC granted the reduction of the appeal bond. The NLRC issued an Order dated 31
March 2006 directing petitioner corporations to post an additional P4.5 Million bond, bringing the total
posted bond to P9 Million. The Court of Appeals, however, reversed and set aside the said 31 March
2006 NLRC Resolution and deemed it reasonable under the circumstances of the case to order the posting
of an additional appeal bond of P1 Billion.
Considering the peculiar circumstances in Sara Lee, the Court has to determine what is the
reasonable amount of appeal bond. The fact was underscored that the amount of 10% of the award is not
a permissible bond but is only such amount that shall be deemed reasonable in the meantime that the
appellants motion is pending resolution by the NLRC. The actual reasonable amount yet to be
determined is necessarily a bigger amount. In an effort to strike a balance between the constitutional
obligation of the state to afford protection to labor, on the one hand, and the opportunity afforded to the
employer to appeal, on the other, it considered the appeal bond in the amount of P725M which is
equivalent to 25% of the monetary award sufficient to perfect the appeal, viz.:
We sustain the Court of Appeals in so far as it increases the amount of the required
appeal bond. But we deem it reasonable to reduce the amount of the appeal bond to P725
Million. This directive already considers that the award if not illegal, is extraordinarily
huge and that no insurance company would be willing to issue a bond for such big
money. The amount of P725 Million is approximately 25% of the basis above calculated.
It is a balancing of the constitutional obligation of the state to afford protection to labor
which, specific to this case, is assurance that in case of affirmance of the award, recovery
is not negated; and on the other end of the spectrum, the opportunity of the employer to
appeal.
By reducing the amount of the appeal bond in this case, the employees would still be
assured of at least substantial compensation, in case a judgment award is affirmed. On
the other hand, management will not be effectively denied of its statutory privilege of
appeal.
In line with Sara Lee and the objective that the appeal on the merits to be threshed out soonest by
the NLRC, the Court, in the 2015 case of Balite v. SS Ventures International, Inc., 5 held that the appeal
1
2
3
4
5
Andrew James Mcburnie v. Eulalio Ganzon, G.R. Nos. 178034, 178117, 186984 and 186985, Oct. 17, 2013.
The fact of clarification was pronounced in Balite v. SS Ventures International, Inc., G.R. No. 195109, Feb. 4, 2015.
G.R. Nos. 180147-180150, 180319 and 180685, June 4, 2014.
This case is a consolidation of 6 cases involving several corporations, namely: Sara Lee Philippines, Inc. (SLPI), Aris Philippines, Inc. (Aris), Sara Lee Corporation (SLC)
and Fashion Accessories Philippines, Inc. (FAPI).
G.R. No. 195109, Feb. 4, 2015.
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bond of P100,000.00 posted by the respondent company for the total monetary award of P490,308.00,
which is equivalent to around 20% thereof, is sufficient to perfect the appeal. With the employer's
demonstrated good faith in filing the motion to reduce the bond on demonstrable grounds coupled with
the posting of the appeal bond in the requested amount, as well as the filing of the memorandum of
appeal, the right of the employer to appeal must be upheld. This is in recognition of the importance of
the remedy of appeal, which is an essential part of our judicial system and the need to ensure that every
party litigant is given the amplest opportunity for the proper and just disposition of his cause freed from
the constraints of technicalities.
B.
NATIONAL LABOR RELATIONS COMMISSION (NLRC)
1. 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.
2. 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.
3. 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.
4. NLRCS 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
1. TWO (2) KINDS OF JURISDICTION.
The NLRC exercises two (2) kinds of jurisdiction:
1. Exclusive original jurisdiction; and
2. Exclusive appellate jurisdiction.
2. 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.
3. 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.
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c. Contempt cases decided by the Labor Arbiters.
2.
EFFECT OF NLRC REVERSAL OF
LABOR ARBITERS ORDER OF REINSTATEMENT
1. EFFECT OF REVERSAL OF REINSTATEMENT ORDER WHEN EMPLOYEE WAS ACTUALLY
REINSTATED.
The BERGONIO Rule:
Bergonio, Jr. v. South East Asian Airlines, April 21, 2014.
After reversal of Labor Arbiters decision, the employers 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 LAs
decision.
2. EFFECT OF REVERSAL OF REINSTATEMENT ORDER WHEN EMPLOYEE WAS REINSTATED
IN THE PAYROLL.
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).
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.
3. EFFECT OF REVERSAL OF REINSTATEMENT ORDER WHEN EMPLOYEE WAS NEITHER
REINSTATED TO HIS FORMER POSITION OR IN THE PAYROLL.
3.1. 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.
3.1.1. 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 employers success in having the decision of the Labor Arbiters 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 Arbiters 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 CAs 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
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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.
3.1.2. GARCIA DOCTRINE.
a. 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 Arbiters 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 Arbiters 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 Arbiters 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.
b. 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 Arbiters 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 employers unjustified act or omission. If the delay is due
to the employers unjustified refusal, the employer may still be required to pay the salaries
notwithstanding the reversal of the Labor Arbiters 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
PALs failure to exercise the alternative options of actual reinstatement and payroll reinstatement was
thus justified. Such being the case, respondents obligation to pay the salaries pending appeal, as the
normal effect of the non-exercise of the options, did not attach.
c. Cases decided after the promulgation of the Garcia doctrine.
Subsequent to Garcia, some of the cases decided in accordance with this doctrine are as follows:
(1)
(2)
(3)
(4)
College of the Immaculate Conception v. NLRC (2010);

Islriz Trading v. Capada (2011);
Pfizer, Inc. v. Velasco (2011); and
C. Alcantara & Sons, Inc. v. CA (2012).
2. 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 Arbiters 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
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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.
4. SOME PRINCIPLES ON REINSTATEMENT WAGES.
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.
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.
Award of additional backwages and other benefits from the time the Labor Arbiter ordered
reinstatement until actual or payroll reinstatement is proper and valid.
3.
REMEDIES
1. EXTRAORDINARY REMEDIES.
a. Nature.
The power of the Commission (NLRC) to grant extraordinary remedies mentioned in No. 3 above
is not provided in the Labor Code or in any other laws. It is a newly created remedy which saw light for
the first time under Rule XII of the 2011 NLRC Rules of Procedure. Past NLRC Rules did not provide
therefor.
Since this is a recent newly minted remedy, there has yet been no decision by the Supreme Court
dwelling on its validity.
What is clear though is that this remedy is not equivalent to nor a substitute for appeal. It is
directed against orders or resolutions issued by the Labor Arbiter in the course of the proceedings
before him where the remedy of appeal is not available. Notably, the remedy of appeal is available only
against the main decision of a case. But orders or resolutions issued prior to the rendition of the decision
in the main as well as orders or resolutions issued thereafter, specifically during the execution stage, are
subject of this rule on extraordinary remedies.
b. Grounds.
The petition filed under this Rule may be entertained only on any of the following grounds:
(a) If there is prima facie evidence of abuse of discretion on the part of the Labor Arbiter;
(b) If serious errors in the findings of facts are raised which, if not corrected, would cause grave
or irreparable damage or injury to the petitioner;
(c) If a party by fraud, accident, mistake or excusable negligence has been prevented from taking
an appeal;
(d) If made purely on questions of law; or
(e) If the order or resolution will cause injustice if not rectified.
c. Initiation through verified petition.
To secure these extraordinary remedies, a party aggrieved by any order or resolution of the Labor
Arbiter including those issued during execution proceedings may file a verified petition to annul or modify
such order or resolution. The petition may be accompanied by an application for the issuance of a
temporary restraining order and/or writ of preliminary or permanent injunction to enjoin the Labor
Arbiter, or any person acting under his/her authority, to desist from enforcing said resolution or order.
4.
CERTIFIED CASES
1. CERTIFIED LABOR DISPUTES.
Certified labor disputes are national interest cases certified by the DOLE Secretary to the
Commission (NLRC) for compulsory arbitration under Article 263(g) of the Labor Code.
2. EFFECTS OF CERTIFICATION OF LABOR DISPUTES.
The certification of a labor dispute to the NLRC has the following effects:
(1) On intended or impending strike or lockout. - Upon certification, the intended or impending
strike or lockout is automatically enjoined, notwithstanding the filing of any motion for reconsideration
of the certification order or the non-resolution of any such motion which may have been duly submitted
to the DOLE Secretary.
(2) On actual strike or lockout. - If a work stoppage has already taken place at the time of the
certification, all striking or locked out employees shall immediately return to work and the employer
shall immediately resume operations and readmit all workers under the same terms and conditions
prevailing before the strike or lockout.
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(3) On cases already filed or may be filed. - All cases between the same parties, except where the
certification order specifies otherwise the issues submitted for arbitration which are already filed or may
be filed, and are relevant to or are proper incidents of the certified case, shall be considered subsumed or
absorbed by the certified case, and shall be decided by the appropriate Division of the Commission.
(4) On other pending cases. - The parties to a certified case, under pain of contempt, shall inform
their counsels and the Division concerned of all cases pending with the Regional Arbitration Branches
and the Voluntary Arbitrators relative or incident to the certified case before it.
(5) On which Division should take cognizance of the certified case in case entity has several
workplaces in different regions. - Whenever a certified labor dispute involves a business entity with
several workplaces located in different regions, the Division having territorial jurisdiction over the
principal office of the company shall acquire jurisdiction to decide such labor dispute; unless the
certification order provides otherwise.
Same effect of certification to the NLRC as in cases assumed directly by DOLE Secretary.
The effects described above are also applicable when the DOLE Secretary directly assumes
jurisdiction over a labor dispute affecting industries imbued with national interest and decides it himself.
C.
BUREAU OF LABOR RELATIONS
MED-ARBITERS
1. MED-ARBITER OR MEDIATOR-ARBITER.
Med-Arbiter or Mediator-Arbiter refers to an officer in the 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, except cancellation of union registration cases.
Some principles on Med-Arbiter.
Injunctive power. The Med-Arbiter is possessed of the power to issue temporary restraining
order and the writ of injunction in appropriate cases.
Contempt power. The Med-Arbiter has contempt power.
Factual findings of Med-Arbiters are accorded great respect. They are binding if they are
supported by substantial evidence and there exists no capricious exercise of judgment
warranting reversal by certiorari.
Execution of decisions, orders or awards of Med-Arbiters. The Med-Arbiter may, upon his own
initiative or on motion of any interested party, issue a writ of execution on a judgment within
five (5) years from the date it becomes final and executory, requiring the Sheriff or a duly
deputized officer to execute or enforce the same.
1.
JURISDICTION
(ORIGINAL AND APPELLATE)
I.
CASES FALLING UNDER THE JURISDICTION OF THE MED-ARBITERS,
DOLE DIRECTORS AND BLR DIRECTOR, IN GENERAL
1. INTRODUCTION.
For purposes of clarity in the otherwise labyrinthine issue of jurisdiction and procedure in the
BLR, there is a need to cite first the cases over which the following officials have their respective
jurisdictions:
(1) Mediator-Arbiter (Med-Arbiter);
(2) DOLE Regional Director; and
(3) BLR Director.
The Mediator-Arbiter and the DOLE Regional Director exercise original and exclusive
jurisdiction over specified cases mentioned below. For his part, the BLR Director exercises not only
appellate but original jurisdiction over some particular cases.
2. CASES COVERED.
There are three (3) general classifications of the cases covered by the jurisdiction of said
officials, to wit:
(a) Inter-union disputes;
(b) Intra-union disputes; and
(c) Other related labor relations disputes.
I-A.
INTER-UNION OR INTRA-UNION DISPUTES
1. INTER-UNION OR REPRESENTATION DISPUTES.
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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 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.
Broadly, an inter-union dispute refers to any conflict between and among legitimate labor
unions involving representation questions for purposes of collective bargaining or to any other conflict or
dispute between legitimate labor unions.
2. INTRA-UNION OR INTERNAL UNION DISPUTES.
An intra-union dispute or internal union dispute refers to a conflict within or inside a labor
union. It is any conflict between and among union members, including grievances arising from any
violation of the rights and conditions of membership, violation of or disagreement over any provision of
the unions constitution and by-laws or disputes arising from chartering or affiliation of a union. It refers
to a case involving the control, supervision and management of the internal affairs of a duly registered
labor union such as those relating to specific violations of the unions constitution and by-laws.
A complaint for any violation of the constitution and by-laws and the rights and conditions of
union membership under Article 241 of the Labor Code, may be filed in the Regional Office where the
union is domiciled.
3. RUNDOWN OF INTER-UNION/INTRA-UNION CASES.
The following is a rundown of all possible inter-union/intra-union disputes:
1) Inter-union disputes:
(a) Validity/invalidity of voluntary recognition, certification election, consent election, run-off
election or re-run election;
(b) Such other disputes or conflicts involving the rights to self-organization, union
membership and collective bargaining between and among legitimate labor organizations.
2) Intra-union disputes:
(a) Conduct or nullification of election of officers of unions and workers' association;
(b) Audit or accounts examination of union or workers' association funds;
(c) Deregistration of collective bargaining agreements;
(d) Validity/invalidity of union affiliation or disaffiliation;
(e) Validity/invalidity of acceptance/non-acceptance for union membership;
(f) Opposition to application for union or CBA registration;
(g) Violations of or disagreements over any provision of the Constitution and By-Laws of a
union or workers' association;
(h) Disagreements over chartering or registration of labor organizations or the registration of
collective bargaining agreements;
(i) Violations of the rights and conditions of membership in a union or workers' association;
(j) Violations of the rights of legitimate labor organizations, except interpretation of CBAs;
(k) Validity/Invalidity of impeachment/expulsion/suspension or any disciplinary action
meted against any officer and member, including those arising from non-compliance with
the reportorial requirement;
(l) Such other disputes or conflicts involving the rights to self-organization, union
membership and collective bargaining between and among members of a union or
workers association.
1-B.
OTHER RELATED LABOR RELATIONS DISPUTES
1. MEANING OF RELATED LABOR RELATIONS DISPUTES.
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.
2. COVERAGE OF RELATED LABOR RELATIONS DISPUTES NOT OTHERWISE COVERED BY
ARTICLE 217.
(a) Any conflict between:
(1) a labor union and the 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.
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Interpleader refers to a proceeding brought by a party against two or more parties with
conflicting claims, compelling the claimants to litigate between and among themselves their respective
rights to the claim, thereby relieving the party so filing from suits they may otherwise bring against it.
II.
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. ORIGINAL AND EXCLUSIVE JURISDICTION OF THE MED-ARBITERS.
The cases falling under the original and exclusive jurisdiction of the Med-Arbiters are as follows:
(a) Inter-union disputes, also known as representation/certification election conflicts;
(b) Intra-union disputes;
(c) Other related labor relations disputes; and
(d) Contempt cases.
Excepted from their jurisdiction is cancellation of union registration cases which are cognizable
by the DOLE Regional Directors.
A. INTER-UNION OR REPRESENTATION DISPUTE.
An inter-union dispute or representation dispute is one occurring or carried on between or
among unions.1 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.2 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. 3
Note must be made of the latest innovative amendment of the Labor Codes Implementing Rules
introduced by Department Order No. 40-I-15, Series of 2015,4 which has expressly repealed the entire
provision5 on Voluntary Recognition of the Implementing Rules on Book V and replaced it with the freshlyminted mode of securing the status of a sole and exclusive bargaining agent through a Request for SEBA
Certification or Request. Voluntary recognition is therefore no longer allowed and is effectively
replaced by the Request mode. The Request basically is in the nature of an inter-union or representation
dispute.
B. INTRA-UNION OR INTERNAL UNION DISPUTE.
An intra-union dispute or internal union dispute refers to a conflict within or inside a labor
union.6 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 unions constitution and by-laws,7 issues over control,
supervision and management of its internal affairs,8 or disputes arising from chartering or affiliation of a
union.9
C. RUNDOWN OF INTER-UNION AND INTRA-UNION CASES.
In accordance with the Labor Codes Implementing Rules, as amended in 2015,10 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;
1
2
3
4
5
6
7
8
9
10
Diokno v. Hon. Cacdac, supra; Bautista v. CA, supra.

Section 1 [9], Rule III, NCMB Manual of Procedures for Conciliation and Preventive Mediation Cases; Appendix 2 [Definition of Terms], NCMB Primer on Strike, Picketing and
Lockout, 2nd Edition, December 1995; Diokno v. Hon. Cacdac, Ibid.; Bautista v. CA, Ibid.
Section 1 [x], Rule I, Book V, Rules to Implement the Labor Code, as amended by Department Order No. 40-03, Series of 2003, [Feb. 17, 2003].
Issued on September 07, 2015.
Particularly its Rule VII [Voluntary Recognition], Book V, Rules to Implement the Labor Code, as amended by Department Order No. 40-03, Series of 2003, [Feb. 17, 2003]. This
provision has been repealed and replaced by a new provision entitled, "REQUEST FOR SOLE AND EXCLUSIVE BARGAINING AGENT (SEBA) CERTIFICATION", pursuant to the
amendment introduced by Section 3, Department Order No. 40-I-15, Series of 2015 [September 07, 2015], entitled Further Amending Department Order No. 40, Series of 2003,
Amending the Implementing Rules and Regulations of Book V of the Labor Code of the Philippines, as Amended.
Diokno v. Hon. Cacdac, supra, citing Bautista v. CA, supra.
Section 1 [bb], Rule I, Book V, Ibid.; Diokno v. Hon. Cacdac, supra; Bautista v. CA, supra.
Section 1 [8], Rule III, NCMB Manual of Procedures for Conciliation and Preventive Mediation Cases; Appendix 2 [Definition of Terms], NCMB Primer on Strike, Picketing and
Lockout, 2nd Edition, December 1995.
Section 1 [bb], Rule I, Book V, Ibid.; Diokno v. Hon. Cacdac, supra; Bautista v. CA, supra.
See Section 1, Rule XI, Book V of the Rules to Implement the Labor Code, as previously amended by Department Order No. 40-F-03, Series of 2008 [October 30, 2008] which
designated this section as Section 1(A), and as further amended by Section 18, Department Order No. 40-I-15, Series of 2015 [September 07, 2015], entitled Further Amending
Department Order No. 40, Series of 2003, Amending the Implementing Rules and Regulations of Book V of the Labor Code of the Philippines, as Amended.
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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 Certification1 (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;2 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.
D. 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. 3
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.4
2. ORIGINAL AND EXCLUSIVE JURISDICTION OF THE DOLE REGIONAL DIRECTORS.
The cases falling under the original and exclusive jurisdiction of the DOLE Regional Directors are
as follows:
(1) Petitions for cancellation of registration of independent unions, local chapters and workers
associations;
(2) Petitions for deregistration of CBAs;
(3) Request for examination of books of accounts of said labor organizations under Article 274
of the Labor Code.
On No. 3 [Examination of Books of Accounts] above, there is a need to point out that although by
nature, this is an intra-union dispute, the rules treat this separately from those applicable to intra-union
disputes and vest jurisdiction thereover in the DOLE Regional Directors and not in the Med-Arbiters.
The case in point is La Tondena Workers Union vs. Secretary of Labor. 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 the resolution of
the same. Original jurisdiction over complaints for examinations of union accounts is vested in the
Regional Director and appellate jurisdiction over decisions of the former is lodged with the BLR. This is
apparent from Sections 3 and 4, Rule II of the Med-Arbitration Rules. Contrast these two sections from
Section 2 and Section 5 of the same Rules. Section 2 expressly vests upon Med-Arbiters original and
exclusive jurisdiction to hear and decide, inter alia, all other inter-union or internal union disputes. Section
5 states that the decisions of the Med-Arbiter shall be appealable to the DOLE Secretary. These are the
provisions consistent with Section 5 of Rule VIII of the Implementing Rules of the Labor Code.
3. ORIGINAL AND EXCLUSIVE JURISDICTION OF THE BLR DIRECTOR.
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 rightfully mean BLR Director.
The BLR Director, therefore, as head of the agency, has the original and exclusive jurisdiction
over the following:
1
2
3
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). The
Labor Codes Implementing Rules, particularly its RULE VII on Voluntary Recognition was actually repealed and replaced by a completely new provision entitled REQUEST FOR
SOLE AND EXCLUSIVE BARGAINING AGENT (SEBA) CERTIFICATION This was introduced by the amendatory provision of Section 3, Department Order No. 40-I-15, Series of
2015 [September 07, 2015], Ibid.
Disputes over the interpretation or implementation of the CBA are considered as grievable issues cognizable by and should be processed through the grievance machinery and
voluntary arbitration provided in the CBA itself. (See Articles 273 [260] and 274 [261], Labor Code).
Section 1 [rr], Rule I, Book V, Rules to Implement the Labor Code, as amended by Department Order No. 40-03, Series of 2003, [Feb. 17, 2003].
Section 1[B] (formerly Section 2), Rule XI, Book V, Rules to Implement the Labor Code, as amended by Department Order No. 40-F-03, Series of 2008 [Oct. 30, 2008].
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(1) Complaints and petitions involving the registration or cancellation of registration of

federations, national unions, industry unions, trade union centers and their local chapters,
affiliates and member organizations;
(2) Request for examination of books of accounts of said labor organizations (federations,
national unions, industry unions and trade union centers) under Article 274 of the Labor
Code;
(3) Intra-union disputes involving said labor organizations (federations, national unions,
industry unions and trade union centers); and
(4) Contempt cases.
As far as No. 3 [Intra-Union Disputes] above is concerned, the 2010 case of Atty. Montao v.
Atty. Verceles,1 is relevant. Petitioner here claimed that under the Implementing Rules, it is the Regional
Director of the DOLE and not the BLR 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 petitioners contention, the
High Court pointed out that Article 226 of the Labor Code clearly provides that the BLR 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 BLRs jurisdiction over the instant dispute involving member-unions of a federation
arising from disagreement over the provisions of the federations constitution and by-laws. It agreed with
the following observation of the BLR:
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 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 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.
II.
APPELLATE JURISDICTION OF THE BLR DIRECTOR
1. CASES FALLING UNDER THE APPELLATE JURISDICTION OF THE BLR DIRECTOR.
The BLR Director exercises exclusive appellate jurisdiction over the following cases:
(a) All decisions of the Med-Arbiters in (1) intra-union disputes, and (2) other related labor
relations disputes.
NOTE: Decisions in inter-union disputes or representation/certification election
conflicts, are NOT appealable to the BLR Director but directly to the DOLE
Secretary. [See discussion below].
(b) All decisions originating from the DOLE Regional Directors in the cases falling under their
original jurisdiction as enumerated above.
2. APPELLATE JURISDICTION OVER MED-ARBITERS DECISIONS IN INTER-UNION DISPUTES
OR CERTIFICATION ELECTION CASES IS LODGED WITH THE DOLE SECRETARY AND NOT
WITH THE BLR DIRECTOR.
To reiterate, decisions of Med-Arbiters in certification election cases or inter-union disputes are
appealable not to the BLR Director but directly to the DOLE Secretary by virtue of Article 259 of the
Labor Code.
It must be noted that the rule on appeal in certification election cases in unorganized
establishments is different from that of organized establishments.
(a) Rule on 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) days from receipt
of the decision of denial.
(b) Rule on 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 may be appealed to the DOLE Secretary within ten (10) days from receipt thereof.
3. APPEALS AND REMEDIES FROM DECISIONS OF THE BLR DIRECTOR.
a. Jurisdictional distinctions.
1
G.R. No. 168583, July 26, 2010.
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The distinctions pointed out above between the respective jurisdictions of the DOLE Regional
Directors, Med-Arbiters and the BLR Director find significance in determining which of the cases may be
appealed to the BLR Director and those that may be appealed to the DOLE Secretary. Thus, the rule may
be stated as follows:
(1) Decisions in cases cognizable by the BLR Director in the exercise of his original and
exclusive jurisdiction are appealable to the DOLE Secretary;
(2) Decisions in cases cognizable by the Med-Arbiters in their original and exclusive jurisdiction
are appealable to the BLR Director with the single exception of decisions in certification
election or inter-union disputes which, as earlier emphasized, are directly appealable to the
DOLE Secretary as mandated under Article 259 of the Labor Code; and
(3) Decisions in cases cognizable by the DOLE Regional Directors in their original and
exclusive jurisdiction are appealable to the BLR Director.
b. Remedies.
(1) On No. 1 above. The decision rendered by the DOLE Secretary in his appellate jurisdiction
may be elevated to the Court of Appeals by way of Rule 65 petition for certiorari.
(2) On Nos. 2 and 3 above. - The decisions rendered by the BLR Director in his appellate
jurisdiction may be elevated directly to the Court of Appeals by way of Rule 65 petition for
certiorari. It cannot be appealed to the DOLE Secretary because they were rendered by the
BLR Director in the exercise of his appellate jurisdiction. Simply stated, another appeal to the
DOLE Secretary is not allowed under the situations contemplated in Nos. 2 and 3 above, the
decisions being final and executory.
4. EXAMPLES OF SPECIFIC CASES.
a. APPEALS FROM DENIAL OF APPLICATION FOR REGISTRATION AND
CANCELLATION OF REGISTRATION OF LABOR ORGANIZATIONS.
For purposes of appeal, the issue of union registration involves two (2) situations, to wit:
(1) Denial of application for union registration; and
(2) Revocation or cancellation of union registration.
On denial of application for union registration.
(1) If the denial is made by the Regional Office in cases involving application for registration
of independent unions, local chapters and workers associations, the same may be
appealed to the BLR Director; or
(2) If the denial is made by the BLR Director in cases involving federations, national unions,
industry unions and trade union centers, the same is appealable to the DOLE Secretary.
On revocation or cancellation of union registration.
(1) If decision is rendered by the Regional Director. - The decision of the Regional Director
in the cases over which he has original jurisdiction, may be appealed to the BLR Director by
any of the parties within ten (10) days from receipt thereof, copy furnished the opposing
party.
(2) If decision is rendered by the BLR Director. - The decision of the BLR Director, in the
exercise of his original jurisdiction, may be appealed to the DOLE Secretary by any party
within the same period of ten (10) days, copy furnished the opposing party.
5. EXCEPTION WHEN DOLE SECRETARY MAY ENTERTAIN APPEAL DIRECTLY FROM THE
DOLE REGIONAL DIRECTORS DECISION WITHOUT PASSING THROUGH THE BLR
DIRECTOR.
The Heritage Hotel Manila v. National Union of Workers in the Hotel, Restaurant and Allied
Industries-Heritage Hotel Manila Supervisors Chapter (NUWHRAIN-HHMSC).1 In this 2011 case, the
Supreme Court allowed a deviation from the standing rule on the appellate jurisdiction of the BLR
Director over a decision of the DOLE Regional Director when the BLR Director inhibited himself from
taking cognizance of the appeal from the decision of the DOLE Regional Director because he was a
former counsel of respondent. The DOLE Secretary may thus legally assume jurisdiction over an appeal
from the decision of the DOLE Regional Director in the event that the BLR Director inhibits himself from
the case. In the absence of the BLR Director, there is no person more competent to resolve the appeal
than the DOLE Secretary. Thus, jurisdiction remained with the BLR despite the BLR Directors
inhibition. When the DOLE Secretary resolved the appeal, she merely stepped into the shoes of the BLR
Director and performed a function that the latter could not himself perform. She did so pursuant to her
power of supervision and control over the BLR.
III.
ADMINISTRATIVE FUNCTIONS OF THE BLR AND LRDs
G.R. No. 178296, Jan. 12, 2011.
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In addition to the afore-mentioned controversies over which they have concurrent original and
exclusive jurisdiction, the BLR and the Labor Relations Divisions (LRDs) in the DOLE Regional Offices
likewise have concurrent jurisdiction over the following administrative functions:
1. Registration of labor unions;
2. Keeping of registry of labor unions;
3. Maintenance and custody of the files of Collective Bargaining Agreements (CBAs) and other
related agreements.
4. Records of settlement of labor disputes; and
5. Copies of orders and decisions of Voluntary Arbitrators.
It must be noted that it is the registration of the labor organization with the BLR and not with
the Securities and Exchange Commission (SEC) which makes it a legitimate labor organization with
rights and privileges granted under the Labor Code.
D.
NATIONAL CONCILIATION AND MEDIATION BOARD
(NCMB)
1.
NATURE OF PROCEEDINGS
1. NCMB IS NOT A QUASI-JUDICIAL AGENCY.
NCMB is not a quasi-judicial agency, according to the 2009 case of Tabigue v. International
Copra Export Corporation. 1
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.
2. NOT BEING A QUASI-JUDICIAL AGENCY, NCMBS RULINGS CANNOT BE ELEVATED TO,
AND COGNIZABLE BY, THE COURT OF APPEALS.
Rule 43 of the Rules of Court applies only to awards, judgments, final orders or resolutions of or
authorized by any quasi-judicial agency in the exercise of its quasi-judicial functions. Hence, NCMBs
decision, not having been rendered by a quasi-judicial body, cannot be elevated to the Court of Appeals
under said rule.
2.
CONCILIATION VS. MEDIATION
1. CONCILIATION AND MEDIATION, MEANING.
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.
3. DISTINCTION BETWEEN CONCILIATION AND MEDIATION.
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.
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.
In other jurisdictions, the principal distinction between conciliation and mediation lies on the
extent of the power and authority granted to the neutral third party.
In mediation, the Mediator normally facilitates a deliberation or discussion of the issues between
the parties. He may or may not offer any opinions on the strength and weaknesses of each party's
positions and arguments. Thus, mediation may be classified into two, namely:
1. Facilitative Mediation where the Mediator does not make or offer any opinion; or
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.
G.R. No. 183335, Dec. 23, 2009.
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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.
It may thus be observed that conciliation is more formal than mediation in the sense that the
Conciliators opinion, unlike the Mediators, may be binding on the parties, although it may be merely
temporary in character.
3.
PREVENTIVE MEDIATION
1. PREVENTIVE MEDIATION AS A REMEDY.
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.
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.
2. HOW TO INITIATE PREVENTIVE MEDIATION.
Preventive mediation proceeding may be initiated in two (2) ways:
(1) By filing a notice or request of preventive mediation, as distinguished from a notice of
strike/lockout; or
(2) By conversion of the notice of strike/lockout into a preventive mediation case.
3. 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 NCMBs 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.
4. 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.
5. RELEVANT CASES.
A case in point is Philippine Airlines, Inc. v. Secretary of Labor and Employment,1 where the
strike was declared illegal for lack of a valid notice of strike in view of the NCMBs conversion of said
notice into a preventive mediation case.
It is clear, according to San Miguel Corporation v. NLRC, 2 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.
E.
DOLE REGIONAL DIRECTORS
1.
JURISDICTION
1. JURISDICTION OF THE DOLE REGIONAL DIRECTORS.
The DOLE Regional Directors have original and exclusive jurisdiction over the following cases:
(a) Labor standards enforcement cases under Article 128;
(b) 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;
(c) Occupational safety and health violations;
1
2
G.R. No. 88210, Jan. 23, 1991, 193 SCRA 223.

G.R. No. 119293, June 10, 2003.
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(d) Registration of unions and cancellation thereof, cases filed against unions and other labor
relations related cases;
(e) Complaints against private recruitment and placement agencies (PRPAs) for local employment;
and
(f) Cases submitted to them for voluntary arbitration in their capacity as Ex-Officio Voluntary
Arbitrators (EVAs) under Department Order No. 83-07, Series of 2007.
I.
LABOR STANDARDS ENFORCEMENT CASES
1. SUBJECT OF THE VISITORIAL AND ENFORCEMENT POWERS: THE ESTABLISHMENT AND
NOT THE EMPLOYEES THEREIN.
The subject of the visitorial and enforcement powers granted to the DOLE Secretary or his duly
authorized representatives under Article 128 is the establishment which is under inspection and not the
employees thereof.
Consequently, 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.
2. 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).
3. 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 employers records and premises at any time of the day or night, whenever work is
being undertaken therein; and
(b) the right:
(1) to copy from said records;
(2) to question any employee and investigate any fact, condition or matter which may be
necessary to 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.
4. 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.
II.
SMALL MONEY CLAIMS CASES
1. JURISDICTION OVER CLAIMS NOT EXCEEDING P5,000.
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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 or domestic worker or kasambahay, arising from
employer-employee relations provided the claim does not exceed P5,000.00.
2. 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 or domestic worker or kasambahay;
(2) The claimant, no longer being employed, does not seek reinstatement; and
(3) The aggregate money claim of the employee or domestic worker or kasambahay 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.
III.
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 DOLEs 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
F.
DOLE SECRETARY
1. 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/effects of termination;
3. Assumption of jurisdiction;
4. Appellate jurisdiction; and
5. Voluntary arbitration powers.
1.
VISITORIAL AND ENFORCEMENT POWERS
1. 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.
2. 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.
3. NATURE OF THE VISITORIAL AND ENFORCEMENT POWERS.
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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.
4. 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 Secretarys duly authorized representatives commonly referred to in these three (3) articles,
who have the original jurisdiction to exercise the visitorial power granted therein.
5. 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.
2.
POWER TO SUSPEND EFFECTS OF TERMINATION
1. 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.
2. 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 ongoing.
3. 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.
4. DISTINGUISHED FROM DOLE SECRETARYS POWER OF ASSUMPTION OR CERTIFICATION
IN NATIONAL INTEREST CASES.
a. 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 lockedout employees, if the strike or lock-out is on-going at the time of the issuance of the
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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.
3.
ASSUMPTION OF JURISDICTION
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.
4.
APPELLATE JURISDICTION
I.
VARIOUS APPEALS TO THE DOLE SECRETARY
UNDER THE LABOR CODE AND APPLICABLE RULES
1. 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).
2. 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.
II.
APPEALS FROM DOLE REGIONAL DIRECTORS
1. 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.
2. 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.
III.
APPEALS FROM DECISIONS OF
MEDIATORS-ARBITERS (MED-ARBITERS) AND BLR DIRECTOR
(NOTE: The discussion of this sub-topic is presented alongside the comments on the topic of
VIII. PROCEDURE AND JURISDICTION, C. Bureau of Labor Relations Med-Arbiters, 1.
Jurisdiction (Original and Appellate), supra)
V.
APPEALS FROM DECISIONS OF POEA
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1. 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.
VOLUNTARY ARBITRATION POWERS
1. AIDA.
a. 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.
b. 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.
c. Parties who may request for DOLE Secretarys 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.
d. Potential or on-going dispute.
A potential or on-going dispute refers to:
(a) a live and active dispute;
(b) that may lead to a strike or lockout or to massive labor unrest; and
(c) is not the subject of any complaint or notice of strike or lockout at the time a Request for
Intervention is made.
2. 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.
3. 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),1 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,
1
G.R. No. 180962, Feb. 26, 2014. Although this case involves a decision of the DOLE Secretary, the principle enunciated herein equally applies to the NLRC.
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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 companys 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 CAs ruling, the case is not a
simple voluntary arbitration case. The character of the case, which involves an impending strike by
petitioners employees; the nature of petitioners business as a public transportation company, which is
imbued with public interest; the merits of its case; and the assumption of jurisdiction by the DOLE
Secretary all these 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.
G.
GRIEVANCE MACHINERY
AND VOLUNTARY ARBITRATION
1.
SUBJECT MATTER OF GRIEVANCE
1. GRIEVANCE OR GRIEVABLE ISSUE.
A grievance or grievable issue is any question raised by either the employer or the union
regarding any of the following issues or controversies:
1. The interpretation or application of the CBA;
2. The interpretation or enforcement of company personnel policies; or
3. Violation of any provisions of the CBA or company personnel policies.
2. VALIDITY AND BINDING EFFECT OF DECISIONS OF GRIEVANCE COMMITTEE.
A member of the bargaining union who brought his grievable issue for resolution by the
Grievance Committee is bound by whatever disposition the latter may render thereon.
ELEVATION OF GRIEVANCE TO VOLUNTARY ARBITRATION
1. UNRESOLVED GRIEVANCES.
All grievances submitted to the grievance machinery which are not settled within seven (7)
calendar days from the date of their submission for resolution should automatically be referred to
voluntary arbitration prescribed in the CBA.
The various internal procedural steps or stages of resolving grievances under the grievance
machinery in a CBA should be fully exhausted before resort to voluntary arbitration may be made. The 7calendar day period is usually reckoned from the date of their submission for resolution to the last step of
the internal grievance machinery. Simply stated, only after exhausting all the internal procedures and
only after the lapse of this period that unsettled or unadjusted grievances should automatically be
referred to voluntary arbitration enunciated in the CBA.
2. A PARTY IS NOT ALLOWED TO GO DIRECTLY TO COURT IN DISREGARD OF VOLUNTARY
ARBITRATION AFTER DECISION IS RENDERED BY GRIEVANCE COMMITTEE.
Before a party is allowed to seek the intervention of the court, it is a precondition that he should
have availed of all the means of administrative processes afforded him. Hence, if a remedy within the
administrative machinery can still be resorted to by giving the administrative officer concerned every
opportunity to decide on a matter that comes within his jurisdiction, then such remedy should be
exhausted first before the courts judicial power can be sought. The premature invocation of the courts
judicial intervention is fatal to ones cause of action. Indeed, the underlying principle of the rule on
exhaustion of administrative remedies rests on the presumption that when the administrative body, or
grievance machinery, is afforded a chance to pass upon the matter, it will decide the same correctly.
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2.
VOLUNTARY ARBITRATOR
1. 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.
2. VOLUNTARY ARBITRATOR.
a. 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
This term includes a panel of Voluntary Arbitrators.
3. 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, 1
clearly declared that a Voluntary Arbitrator, whether acting solely or in a panel, enjoys in law the
status of a quasi-judicial agency.
(a)
JURISDICTION
1. ORIGINAL AND EXCLUSIVE JURISDICTION.
a. 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.
b. Rights disputes.
Nos. 1, 2 and 3 above, which are provided for under Article 261 of the Labor Code, are commonly
known as rights disputes. This kind of disputes contemplates the existence of a CBA already concluded
or, at any rate, a situation in which no effort is made to bring about a formal change in its terms or to
create a new one. The dispute relates either to the meaning or proper application of a particular provision
therein with reference to a specific situation or to an omitted case. In the latter event, the claim is
founded upon some incident of the employment relation or asserted one, independent of those covered
by the collective agreement. In either case, the claim is to rights accrued and not merely to new ones
created for the future.
c. Interest disputes.
Bargaining deadlocks are often referred to as interest disputes. This kind of disputes relates to
disputes over the formation of collective agreements or efforts to secure them. They arise where there is
no such agreement or where it is sought to change the terms of one and therefore the issue is not whether
1
G.R. No. 120319, Oct. 6, 1995.
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an existing agreement controls the controversy. They look to the acquisition of rights for the future, not
to assertion of rights claimed to have vested in the past.
I.
III.
JURISDICTION OVER OTHER LABOR DISPUTES
Under Article 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.
IV.
JURISDICTION OVER NATIONAL INTEREST CASES
Article 263(g) of the Labor Code which involves the DOLE Secretarys 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.
V.
JURISDICTION OVER WAGE DISTORTION CASES
Jurisdiction over wage distortion cases depends on whether the establishment is organized or
unorganized.
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.
In unorganized establishments, where there are no CBAs or recognized or certified collective
bargaining unions, the jurisdiction is with the Labor Arbiter.
VI.
EXERCISE OF JURISDICTION
1. HOW VOLUNTARY ARBITRATOR ACQUIRES JURISDICTION.
The Voluntary Arbitrator or panel of Voluntary Arbitrators shall exercise jurisdiction over a
specific case only under the following:
(1) Upon receipt of a Submission Agreement duly signed by both parties;
(2) Upon receipt of a Notice to Arbitrate when there is refusal to arbitrate by one party;
(3) Upon receipt of an appointment or designation as Voluntary Arbitrator by the NCMB (Board)
in either of the following circumstances:
(3.1.) In the event that the parties failed to select a Voluntary Arbitrator; or
(3.2.) In the absence of a named Voluntary Arbitrator in the CBA and the party upon whom
the Notice to Arbitrate is served does not favorably reply within seven (7) days from
receipt of such notice.
2. HOW INITIATED.
Based on the foregoing discussion, an arbitration may be initiated either by way of:
(1) A Submission Agreement; or
(2) A Demand or Notice to Arbitrate invoking the arbitration clause in the CBA; or
(3) An Appointment from the NCMB.
A Submission Agreement refers to a written agreement by the parties submitting their case for
arbitration, containing a statement of the issues, the name of their chosen Voluntary Arbitrator and a
stipulation and an undertaking to abide by and comply with the resolution that may be rendered therein,
including the cost of arbitration.
A Notice to Arbitrate refers to a formal demand made by one party to the other for the
arbitration of a particular dispute in the event of refusal by one party in a CBA to submit the same to
arbitration
3. SOME PRINCIPLES.
1) Cases cognizable by Voluntary Arbitrators in their original jurisdiction but 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.
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 THE EMPLOYER AND THE BARGAINING UNION - IT IS NOT
2)
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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 unions 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.
(b)
PROCEDURE
EXECUTION PROCEEDINGS
IN VOLUNTARY ARBITRATION CASES
1. PROCEDURAL RULES IN THE ENFORCEMENT OF WRIT OF EXECUTION.
In the enforcement of a writ of execution, the Sheriff or other authorized officer should be guided
by the Procedural Guidelines in the Execution of Voluntary Arbitration Awards/Decisions. These Guidelines
should be followed in the execution of the awards or decision of Voluntary Arbitrators or panel of
Voluntary Arbitrators. Other rules that may be pertinently observed and followed are the following:
(1) 2012 NLRC Sheriffs Manual on Execution of Judgment;
(2) Memorandum of Agreement between the NLRC and the NCMB dated July 26, 1996; and
(3) Revised Rules of Court, as amended, in the absence of applicable rules.
2. EXECUTION MOTU PROPRIO OR UPON MERE MOTION WITHIN FIVE (5) YEARS FROM
FINALITY OF DECISION.
The Voluntary Arbitrator or panel of Voluntary Arbitrators may, motu proprio or on motion of
any interested party, issue a writ of execution on a judgment within five (5) years from the date it
becomes final and executory.
3. WHEN LABOR ARBITER MAY ISSUE THE WRIT OF EXECUTION.
In case the Voluntary Arbitrator or panel of Voluntary Arbitrators who rendered and issued the
decision, order or award is, for any reason, absent or incapacitated, the Labor Arbiter in the region
where the movant resides, may issue the writ of execution. But unlike the Voluntary Arbitrator or panel
of Voluntary Arbitrators who issued the decision, order or award, the Labor Arbiter cannot issue such
writ motu proprio but only upon motion of any interested party.
4. PERSONS WHO MAY ENFORCE THE WRIT OF EXECUTION.
Any of the following persons may be required to enforce the writ of execution:
(1) The Sheriff of the Commission (NLRC);
(2) A duly deputized officer;
(3) A Special Sheriff;
(4) The Sheriff of the regular courts; or
(5) Any public official whom the parties may designate in the submission agreement to execute
the final decision, order or award.
(c)
REMEDIES
1. 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, nonfeasible or impractical;
(c) Full backwages;
(d) Moral and exemplary damages; and
(e) Attorneys 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.
H.
COURT OF APPEALS
1.
RULE 65, RULES OF COURT
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1. 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 inappealable.
2. 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.
3. 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.
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.
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.
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 UnionAssociation of Genuine Labor Organizations (PWU-AGLO).1 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.
4.
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.
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).
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
1. 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.
2. ORDINARY APPEAL UNDER RULE 43 OF THE 1997 RULES OF CIVIL PROCEDURE
VOLUNTARY ARBITRATORS ARE OF THE SAME LEVEL AS RTC JUDGES.
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.
The ruling in Luzon Development Bank v. Association of Luzon Development Bank
Employees,2 in effect, equates the decisions or awards of the Voluntary Arbitrator to those of the
1
2
G.R. No. 180962, Feb. 26, 2014. Although this case involves a decision of the DOLE Secretary, the principle enunciated herein equally applies to the NLRC.
G.R. No. 120319, October 6, 1995.
163

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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.
In Alcantara, Jr. v. CA,1 it was held that Luzon Development Bank is still a good law.
3. PERIOD OF APPEAL 15 DAYS.
Rule 43 of the Rules of Court requires that the petition for review to be taken to the Court of
Appeals should be filed within fifteen (15) days from notice of the award, judgment or final order or
resolution of the Voluntary Arbitrator.
I.
SUPREME COURT
1.
RULE 45, RULES OF COURT
1. 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.
2. THE NEYPES DOCTRINE (FRESH PERIOD RULE) - FRESH PERIOD FROM DENIAL OF
MOTION FOR RECONSIDERATION.
In the 2013 case of Elizabeth Gagui v. Dejero, 2 petitioner successively filed two Motions for
Reconsideration of the CAs 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. CA3 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.
J.
PRESCRIPTION OF ACTIONS
1. MONEY CLAIMS CASES.
a. 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.
b. 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).
1
2
3
G.R. No. 143397, Aug. 6, 2002.

G.R. No. 196036, Oct. 23, 2013.
G.R. No. 141524, Sept. 14, 2005.
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Note must be made that in the 2010 case of Southeastern Shipping v. Navarra, Jr.,1 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 CASES.
a. Legal basis is not Article 291 of the Labor Code but Article 1146 of the Civil Code. - The 3year 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 (ULP) CASES.
a. 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.
b. 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.
c. 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.
d. 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 PENALIZED UNDER THE LABOR CODE AND ITS IMPLEMENTING RULES AND
REGULATIONS (IRR).
a. 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.
b. 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.
c. 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 CASES.
a. Simple illegal recruitment cases. The prescriptive period is five (5) years.
b. Illegal recruitment cases involving economic sabotage. The prescriptive period is twenty
(20) years.
6. ACTIONS INVOLVING UNION FUNDS.
A complaint or petition for audit or examination of funds and books of accounts prescribes
within three (3) years:
(a) from the date of submission of the annual financial report to the DOLE; or
(b) from the date the same should have been submitted as required by law, whichever comes
earlier.
It should be noted, however, that this provision on the prescriptive period applies only to a
legitimate labor organization which has submitted the financial report required under the Labor Code.
7. CLAIMS FOR SSS BENEFITS.
a. Action against employer.
The right to institute the necessary action against the employer for non-remittance of
contributions may be commenced within twenty (20) years:
(1) from the time the delinquency is known; or
(2) from the time the assessment is made by the SSS; or
(3) from the time the benefit accrues, as the case may be.
b. Action for disability claims.
1
G.R. No. 167678, June 22, 2010.
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The prescriptive period in the filing of disability benefit claim is ten (10) years from the date of
occurrence of disability.
8. CLAIMS FOR GSIS BENEFITS.
Claims for benefits, except for life and retirement, prescribe after four (4) years from the date of
contingency.
------------oOo-----------10/25/16
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