PART 2 LABOR RELATIONS

BOOK V TITLE IV - LABOR ORGANIZATIONS

Art. 234. Requirements of registration. Any applicant labor organization,

association or group of unions or workers shall acquire legal personality and shall be
entitled to the rights and privileges granted by law to legitimate labor organizations
upon issuance of the certificate of registration based on the following requirements.
1. Fifty pesos (P50.00) registration fee;
2. The names of its officers, their addresses, the principal address of the labor
organization, the minutes of the organizational meetings and the list of the
workers who participated in such meetings;
3. The names of all its members comprising at least twenty percent (20%) of all the
employees in the bargaining unit where it seeks to operate; (As amended by
Executive Order No. 111, December 24, 1986)
4. If the applicant union has been in existence for one or more years, copies of its
annual financial reports; and
5. Four (4) copies of the constitution and by-laws of the applicant union, minutes of
its adoption or ratification, and the list of the members who participated in it. (As
amended by Batas Pambansa Bilang 130, August 21, 1981)

Principle of Agency Applied

Principal are the employees.
Agent of the employees is the local or chapter.
Agent of the local or chapter is the federation or national union.
The employees are the principals, and the labor organization is merely an agent of
the former. Consequently, the cancellation of the unions registration would not
deprive the consenting member-employees of their righto continue the case as they
are considered as the principals

Independent Registration VS Chartering

INDEPENDENT REGISTRATION CHARTERING

GOVERNING Art 234 (340). Art 234-A (241)
LAW
HOW Obtained by union organizers in an Registered Union or
enterprise through their own accord Federation issues a charter

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 to union in an enterprise
and registers the charter
with the regional office or
the BLR
RESULT Independent union Chapter or Local

LEGAL Has legal personality No legal personality once

PERSONALITY disaffiliates with the
legitimized labor union
WHERE FILED To be filed in the DOLE Regional Charter certificate issued
Office where applicants principal shall be filed with the BLR
office is located or Regional Office.

Filing must be within 30

days after issuance of
charter certificate

How a Local Chapter Becomes Legitimate Labor Organization

Progressive Dev. Corp. vs Sec of Labor, GR No. 96425, February
4, 1992
Facts:
On June 19,1990, respondent Pambansang Kilusan ng Paggawa
(KILUSAN)-TUCP (hereinafter referred to as Kilusan) filed with the
Department of Labor and Employment (DOLE) a petition for certification
election among the rank-and-file employees of the petitioner alleging that
it is a legitimate labor federation and its local chapter, Progressive
Development Employees Union, was issued charter certificate No.
90-6-1153. Kilusan claimed that there was no existing collective
bargaining agreement and that no other legitimate labor organization
existed in the bargaining unit.
In its "Supplemental Position Paper" dated September 3, 1990, the
petitioner insisted that upon verification with the Bureau of Labor
Relations (BLR), it found that the alleged minutes of the organizational
meeting was unauthenticated, the list of members did not bear the
corresponding signatures of the purported members, and the constitution
and bylaws did not bear the signatures of the members and was not duly
subscribed. It argued that the private respondent therefore failed to
substantially comply with the registration requirements provided by the
rules.

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 Issue:
Whether or not there was compliance with the requirements.
Ruling:
No. We are merely saying that the local union must first comply with the
statutory requirements in order to exercise this right. Big federations and
national unions of workers should take the lead in requiring their locals
and chapters to faithfully comply with the law and the rules instead of
merely snapping union after union into their folds in a furious bid with
rival federations to get the most number of members.
Requirements before a local or chapter becomes a legitimate labor
organization.A local or chapter therefore becomes a legitimate labor
organization only upon submission of the following to the BLR: 1) A
charter certificate, within 30 days from its issuance by the labor federation
or national union, and 2) The constitution and by-laws, a statement on
the set of officers, and the books of accounts all of which are certified
under oath by the secretary or treasurer, as the case may be, of such
local or chapter, and attested to by its president. Absent compliance with
these mandatory requirements, the local or chapter does not become a
legitimate labor organization.

DOLE Department Order No. 9 Series of 1997

Section 2. Requirements for registration of labor organizations. - (I) The application for
registration of an independent union shall be supported by the following:
(a)The names of its officers, their addresses, the principal address of the labor
organization, the minutes of the organizational meetings and the list of workers who
participated in such meetings;
(b)The number of employees and names of all its members comprising at least twenty
percent (20%) of the employees in the bargaining unit where it seeks to operate;
(c)If the applicant union has been in existence for one or more years, two copies of its
annual financial reports, unless it has not collected any amount from the members, in
which case a statement to this effect shall be included in the application; and
(d)Four copies of its constitution and by-laws, minutes of its adoption or ratification,
and the list of the members who participated in it. However, the list of ratifying
members shall be dispensed with where the constitution and by-laws was ratified or
adopted during the organizational meeting referred to in paragraph (a) above. In such

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case, the factual circumstances of the ratification shall be recorded in the minutes of
the organizational meeting.

Where to file Application for Registration?

Regional Office where applicant principally operates -Independent Unions,
Chartered Locals, Workers Association.
Bureau or Regional Office Federations, National Unions or Workers
Association.

Disaffiliation only upon the written resolution approved by the majority of the total
memberhip adopted at a general membership meeting called for the purpose.

When to disaffiliate?
May only disaffiliate during the 60-day freedom period immediately preceding the
expiration of the CBA.

Effects:
Disaffiliated Union may join a new federation.

Substitutionary Doctrine
Binding of the members of the new or disaffiliated and independent union to the
CBA up until the latters expiration date.

Revocation of Charter
Federation may revoke a charter by serving a verified notice of revocation to the
latter on the ground of disloyalty or other grounds as provided by its constitution
or by-laws.

Effect of Cancellation of Registration of Federation or National Union

RA 9481 - AN ACT STRENGTHENING THE WORKERS' CONSTITUTIONAL RIGHT TO
SELF-ORGANIZATION, AMENDING FOR THE PURPOSE PRESIDENTIAL DECREE NO.
442, AS AMENDED, OTHERWISE KNOWN AS THE LABOR CODE OF THE PHILIPPINES

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 SEC. 3. Article 238 of the Labor Code is hereby amended to read as follows:
o "ART. 238. Cancellation of Registration. - The certificate of registration of
any legitimate labor organization, whether national or local, may be
cancelled by the Bureau, after due hearing, only on the grounds specified
in Article 239 hereof."
SEC. 4. A new provision is hereby inserted into the Labor Code as Article 238-A t
o read as follows:
o "ART. 238-A. Effect of a Petition for Cancellation of Registration. - A
petition for cancellation of union registration shall not suspend the
proceedings for certification election nor shall it prevent the filing of a
petition for certification election.
o In case of cancellation, nothing herein shall restrict the right of the union
to seek just and equitable remedies in the appropriate courts."

Art. 239. Grounds for cancellation of union registration. The following shall
constitute grounds for cancellation of union registration:

Fraudulent Acts
1. Misrepresentation, false statement or fraud in connection with the adoption or
ratification of the constitution and by-laws or amendments thereto, the minutes
of ratification and the list of members who took part in the ratification;

Inaction or Omission
2. Failure to submit the documents mentioned in the preceding paragraph within
thirty (30) days from adoption or ratification of the constitution and by-laws or
amendments thereto;
3. Misrepresentation, false statements or fraud in connection with the election of
officers, minutes of the election of officers, the list of voters, or failure to submit
these documents together with the list of the newly elected/appointed officers
and their postal addresses within thirty (30) days from election;
4. Failure to submit the annual financial report to the Bureau within thirty (30) days
after the closing of every fiscal year and misrepresentation, false entries or fraud
in the preparation of the financial report itself;
Failure to comply with requirements under Articles 237 and 238.
a. Art. 237. Additional requirements for federations or national unions.
Subject to Article 238, if the applicant for registration is a federation or a

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 national union, it shall, in addition to the requirements of the preceding
Articles, submit the following:
i. Proof of the affiliation of at least ten (10) locals or chapters, each
of which must be a duly recognized collective bargaining agent in
the establishment or industry in which it operates, supporting the
registration of such applicant federation or national union; and
ii. The names and addresses of the companies where the locals or
chapters operate and the list of all the members in each company
involved.
b. Art. 238. Conditions for registration of federations or national unions. No
federation or national union shall be registered to engage in any
organization activity in more than one industry in any area or region, and
no federation or national union shall be registered to engage in any
organizational activity in more than one industry all over the country.
The federation or national union which meets the requirements and
conditions herein prescribed may organize and affiliate locals and
chapters without registering such locals or chapters with the Bureau.
Locals or chapters shall have the same rights and privileges as if they
were registered in the Bureau, provided that such federation or national
union organizes such locals or chapters within its assigned organizational
field of activity as may be prescribed by the Secretary of Labor.
The Bureau shall see to it that federations and national unions shall only
organize locals and chapters within a specific industry or union.]
(Repealed by Executive Order No. 111, December 24, 1986)
Art. 238. Cancellation of registration; appeal. The certificate of
registration of any legitimate labor organization, whether national or
local, shall be cancelled by the Bureau if it has reason to believe, after
due hearing, that the said labor organization no longer meets one or
more of the requirements herein prescribed.
[The Bureau upon approval of this Code shall immediately institute
cancellation proceedings and take such other steps as may be necessary
to restructure all existing registered labor organizations in accordance
with the objective envisioned above.] (Repealed by Executive Order No.
111, December 24, 1986)

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Unlawful Acts
1. Acting as a labor contractor or engaging in the "cabo" system, or otherwise
engaging in any activity prohibited by law;
2. Entering into collective bargaining agreements which provide terms and
conditions of employment below minimum standards established by law;
3. Asking for or accepting attorneys fees or negotiation fees from employers;
4. Other than for mandatory activities under this Code, checking off special
assessments or any other fees without duly signed individual written
authorizations of the members;
5. Failure to submit list of individual members to the Bureau once a year or
whenever required by the Bureau; and

Itogon-Suyoc Mines, Inc. vs. Sangilo-Itogon Workers' Union, GR

No. L-24189. August 30, 1968
Facts:
The controversy arose because prior to May 28, 1958, ItogonSuyoc Mines,
Inc., through its general superintendent Claude Fertig, had been
dismissing from its employ members of respondent Sangilo - Itogon
Workers' Union. On May 28, 1958, sensing that its members were being
eased out of employment one by one, Sangilo called a strike,
accompanied by picketing carried out at or near petitioner's mine premises
which lasted until about June 2, 1958.
During judicial inquiry by the CIR it was found that Sangilos registration
was cancelled due to non-compliance with the statutory requirements of
submitting the list of members. However it was through a witness that it
was found out that there was no final order cancelling the registration.
Issue: Whether or not Sangilo is still registered.
Ruling:
Yes, it is. Failure to comply with the statutory requirements will lead to
cancellation or registration: Failure to submit list of membership of the
organization. However, there is no order final in character cancelling
Sangilo's registration permit and dropping its name from the roster of
legitimate labor unions. Sangilo's status does not appear in the record to
have changed. Therefore, Sangilo still enjoys all the rights accorded by
law to a legitimate labor union.

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Art. 250(241). Rights and Conditions of Membership in a Labor Organization.
Right of the Union Members
1. Deliberative and Decision-Making Right- the right to participate in deliberations
on major policy questions and decide by secret ballot.
2. Right to Information the right to be informed about:
a. The organizations constitution and by-laws
b. The collective bargaining agreement and labor laws.
3. Right over Money matters the right of the members:
a. Against imposition of excessive fees;
b. Against unauthorized collection of contributions or unauthorized
disbursements
c. To require adequate records of income and expenses;
d. To access financial records;
e. To vote on officers compensation;
f. To vote on special assessment; and
g. To be deducted a special assessment only with the members written
authorization
4. Political right the right to vote and be voted for, subject to lawful provisions on
qualifications and disqualifications
NOTE: Any violation of the above rights and conditions of membership shall be a
ground for cancellation of union registration or expulsion of an officer from office,
whichever is appropriate. Atleast 30% of all the members of the union or any
member or members specifically concerned may report such violation to the bureau.
(IRR, Labor Code)

Persons who are Prohibited from Becoming Members/Officers of Labor

Organization
1. Non-employees
2. Subversives or those engaged in subversive activities
3. Persons who have been convicted of crimes involving moral turpitude.
NOTE: In general, a union is free to select its own members, and no person has an
absolute right to membership in a union.

Check off vs. Agency fee

Check off is a method of deducting from an employees at prescribed period
the amounts due to the union for fees, fines or assessments.

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 RATIO: Union dues are the lifeblood of the union. All unions are
authorized to collect reasonable membership fees, union dues,
assessments and fines and other contributions for labor education and
research, mutual death and hospitalization benefits, welfare fund, strike
fund and credit and cooperative undertakings.
Jurisdiction over Check-off Disputes
Being an intra-union conflict, the RD of DOLE has jurisdiction over check-
off disputes
Agency fee are dues equivalent to union dues, charged from the non-union
members who or benefited by or under the CBA

Special Assessment vs. Check-Off

Special Assessment Check-Off

How approved By written resolution
(union dues)
approved by majority of all
By obtaining the individual
the members at a meeting written authorization duly signed
duly called for that purpose
by the employee which must
specify the amount, purpose and
beneficiary
Exception to Such NO EXCEPTION; 1. For mandatory activities
Requirment Written resolution is provided under the Code;
mandatory at all instances and
2. When non-members of
the union avail of the
benefits of the CBA. Said
non-members may be
assessed agency fees
equivalent to that paid by
members only by a Board
Resolution approved by a
majority of the members
in a general meeting
called for the purpose.

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Art. 251(242). Rights of Legitimate Labor Organizations
Rights of the Legitimate LO:
1. Undertake activities for the benefit of the organization and its members;
2. Sue and be sued;
3. Exclusive representative of all employees;
4. Represent union members;
5. Furnished by employers of audited financial statements;
6. Own properties; and
7. Exemption from taxes

Compromise Binding Upon Minority Members of Union

A Compromise agreement between the Union and the Company, pursuant to which the
complaint in an unfair labor practice case had been withdrawn and dismissed, is binding
upon the minority members of the union.
The action taken by said minority members in disauthorizing the counsel of record and
filing another unfair labor practice case against the company is contrary to the policy of
the Magna Carta of Labor, which promotes the settlement of differences between
management and labor by mutual agreement.

BOOK V Title V COVERAGE

Art. 243. Coverage and Employees Right to Self-Organization

All persons employed in commercial, industrial and agricultural enterprises and in

religious, charitable, medical, or educational institutions, whether operating for profit or
not, shall have the right to self-organization and to form, join, or assist labor
organizations of their own choosing for purposes of collective bargaining. Ambulant,
intermittent and itinerant workers, self-employed people, rural workers and those
without any definite employers may form labor organizations for their mutual aid and
protection.

Organizing in general

The rights to organize and to bargain, in general sense, are given not exclusively to
employees. Even workers who are not employees of any particular employer may form

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their organizations to protect their interest. The organization enjoys protection under
the Bill of Rights.

Consistent with the Constitutional mandate, Article 243 of the Code allows all persons
employed in commercial, industrial and agricultural enterprises to form, join or assist
labor organizations of their own choosing for purposes of collective bargaining.

The right is extended even to those employed in traditionally non-profit organizations

like religious, charitable, medical or educational institutions. This extension of the right
departs from the policy under the old Industrial Peace Act (R.A. No. 875) which
withheld the right to organize from employees of non-profit firms.

The right to form, join or assist a labor organization is granted to all kinds of employees
of all kinds of employers- public or private, profit or nonprofit, commercial or religious.
Their usual form of organization is a union and the usual purpose is collective
bargaining and their employers.

Right to organize cannot be bargained away

Southern Philippines Federation of Labor (SPFL) vs. Calleja, G.R. No.

80882, April 24, 1989

Said the Supreme Court: although we have upheld the validity of the CBA
as the law among the parties, its provisions cannot override what is
expressly provided by the law that only managerial employees are
ineligible to join, assist or form any labor organization. Therefore,
regardless of the challenged employees designations, whether they are
employed as supervisors or in the confidential payrolls, if the nature of
their job does not fall under the definition of managerial as defined in
the Labor Code, they are eligible to be member of the bargaining unit and
to vote in the certification election. Their right to self-organization must be
upheld in the absence of an express provision of law to the contrary. It
cannot be curtailed by a collective bargaining agreement.

SAN JOSE CITY ELECTRIC SERVICE COOPERATIVE, INC.

(SAJELCO) vs. MINISTRY OF LABOR AND EMPLOYMENT and
MAGKAISA-ADLO

This is a petition for certiorari under Rule 65 of the Rules of Court.

Petitioner San Jose City Electric Service Cooperative, Inc. (SAJELCO, for

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brevity) seeks the reversal of the Order (pp. 38-40, Rollo) of Pura Ferrer-
Calleja, Director of Bureau of Labor Relations in BLR Case No. A-10-259-
86 which affirmed the Order of Med-Arbiter Antonio R. Cortez to conduct a
certification election among the rank-and-file employees of SAJELCO.

Private respondent Manggagawang Nagkakaisa ng SAJELCO-Association of

Democratic Labor Organization (MAGKAISA-ADLO) filed a petition (pp. 16-
18, Rollo) for direct certification election with the Regional Office No. 111
of the Department of Labor and Employment in San Fernando, Pampanga.
The petition alleged that MAGKAISA-ADLO is a legitimate labor
organization duly registered with the Ministry of Labor and Employment;
that there are more or less fifty-four (54) rank and file employees in
SAJELCO; that almost 62% of the employees sought to be represented
have supported the filing of the petition; that there has been no valid
certification election held in SAJELCO during the twelve (12) month period
prior to the filing of the petition and that there is no other union in the
bargaining unit.

The Med-Arbiter who was assigned to the case issued an Order (pp. 24-
26, Rollo) granting the petition for direct certification election on the basis
of the pleadings filed. The Order said that while some of the members of
petitioner union are members of the cooperative, it cannot be denied that
they are also employees within the contemplation of the Labor Code and
are therefore entitled to enjoy all the benefits of employees, including the
right to self-organization (pp. 25, Rollo). This Order was appealed by
SAJELCO to the Bureau of Labor Relations.

Issue: Whether or not the employees-members of an electric cooperative

can organize themselves for purposes of collective bargaining.

Held:

The petition is GRANTED. The assailed Order of respondent Pura Ferrer-

Calleja, Director of the Bureau of Labor Relations is hereby MODIFIED to
the effect that only the rank-and-file employees of petitioner who are not
its members-consumers are entitled to self-organization, collective
bargaining, and negotiations, while other employees who are members-
consumers thereof cannot enjoy such right. The direct certification
election conducted on April 13, 1987 is hereby set aside. The Regional
Office III of the Department of Labor and Employment in San Fernando,
Pampanga is hereby directed: (a) to determine the number of rank and
file employees of SAJELCO who are not themselves members-consumers;
(b) to resolve whether or not there is compliance with the requirements
set forth in Article 257 of the Labor Code; and (c) in the affirmative, to

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immediately conduct a direct certification election among the rank and file
employees of SAJELCO who are not members-consumers.

ERNESTO CALLADO vs. INTERNATIONAL RICE RESEARCH

INSTITUTE (IRRI) G.R. No. 106483 May 22, 1995/ ROMERO, J.:

Facts:
Ernesto Callado, petitioner, was employed as a driver at the IRRI. One
day while driving an IRRI vehicle on an official trip to the NAIA and back
to the IRRI, petitioner figured in an accident.

Petitioner was informed of the findings of a preliminary investigation

conducted by the IRRI's Human Resource Development Department
Manager. In view of the findings, he was charged with:

(1) Driving an institute vehicle while on official duty under the

influence of liquor;
(2) Serious misconduct consisting of failure to report to supervisors
the failure of the vehicle to start because of a problem with the car
battery, and
(3) Gross and habitual neglect of duties.

Petitioner submitted his answer and defenses to the charges against

him. However, IRRI issued a Notice of Termination to petitioner.

Thereafter, petitioner filed a complaint before the Labor Arbiter for illegal
dismissal, illegal suspension and indemnity pay with moral and exemplary
damages and attorney's fees.

IRRI wrote the Labor Arbiter to inform him that the Institute enjoys
immunity from legal process by virtue of Article 3 of Presidential Decree
No. 1620, 5 and that it invokes such diplomatic immunity and privileges as
an international organization in the instant case filed by petitioner, not
having waived the same.

While admitting IRRI's defense of immunity, the Labor Arbiter,

nonetheless, cited an Order issued by the Institute to the effect that "in all
cases of termination, respondent IRRI waives its immunity," and,
accordingly, considered the defense of immunity no longer a legal
obstacle in resolving the case.

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The NLRC found merit in private respondent's appeal and, finding that
IRRI did not waive its immunity, ordered the aforesaid decision of the
Labor Arbiter set aside and the complaint dismissed.

In this petition petitioner contends that the immunity of the IRRI as an

international organization granted by Article 3 of Presidential Decree No.
1620 may not be invoked in the case at bench inasmuch as it waived the
same by virtue of its Memorandum on "Guidelines on the handling of
dismissed employees in relation to P.D. 1620."

The issue raised is whether the (IRRI) waive its immunity from suit in
this dispute which arose from an employer-employee relationship?

Held:
The court said Art. 3. Immunity from Legal Process. The Institute shall
enjoy immunity from any penal, civil and administrative proceedings,
except insofar as that immunity has been expressly waived by the
Director-General of the Institute or his authorized representatives.

The SC upholds the constitutionality of the fore quoted law. There is in

this case "a categorical recognition by the Executive Branch of the
Government that IRRI enjoys immunities accorded to international
organizations, which determination has been held to be a political
question conclusive upon the Courts in order not to embarrass a political
department of Government.

It is a recognized principle of international law and under our system of

separation of powers that diplomatic immunity is essentially a political
question and courts should refuse to look beyond a determination by the
executive branch of the government, and where the plea of diplomatic
immunity is recognized and affirmed by the executive branch of the
government as in the case at bar, it is then the duty of the courts to
accept the claim of immunity upon appropriate suggestion by the principal
law officer of the government or other officer acting under his direction.

The raison d'etre for these immunities is the assurance of unimpeded

performance of their functions by the agencies concerned.

The grant of immunity to IRRI is clear and unequivocal and an express

waiver by its Director-General is the only way by which it may relinquish
or abandon this immunity.

In cases involving dismissed employees, the Institute may waive its

immunity, signifying that such waiver is discretionary on its part.

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VICTORIANO VS. ELIZALDE UNION
Facts:
Benjamin Victoriano (Appellee), a member of the religious sect known as
the Iglesia ni Cristo, had been in the employ of the Elizalde Rope
Factory, Inc. (Company) since 1958. He was a member of the Elizalde
Rope Workers Union (Union) which had with the Company a CBA
containing a closed shop provision which reads as follows:
Membership in the Union shall be required as a condition of employment
for all permanent employees workers covered by this Agreement.

Under Sec 4(a), par 4, of RA 975, prior to its amendment by RA 3350, the
employer was not precluded from making an agreement with a labor
organization to require as a condition of employment membership therein,
if such labor organization is the representative of the employees.
On June 18, 1961, however, RA 3350 was enacted, introducing an
amendment to par 4 subsection (a) of sec 4 of RA 875, as follows: but
such agreement shall not cover members of any religious sects which
prohibit affiliation of their members in any such labor organization. Being
a member of a religious sect that prohibits the affiliation of its members
with any labor organization, Appellee presented his resignation to
appellant Union. The Union wrote a formal letter to the Company asking
the latter to separate Appellee from the service because he was resigning
from the Union as a member. The Company in turn notified Appellee and
his counsel that unless the Appellee could achieve a satisfactory
arrangement with the Union, the Company would be constrained to
dismiss him from the service.Appellee filed an action for injunction to
enjoin the Company and the Union from dismissing Appellee. The Union
invoked the union security clause of the CBA and assailed the
constitutionality of RA 3350 and contends it discriminatorily favors those
religious sects which ban their members from joining labor unions.

Issue:
Whether Appellee has the freedom of choice in joining the union or not.

Held:

The court said Yes, The Constitution and RA 875 recognize freedom of
association. Sec 1 (6) of Art III of the Constitution of 1935, as well as Sec
7 of Art IV of the Constitution of 1973, provide that the right to form

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associations or societies for purposes not contrary to law shall not be
abridged. Section 3 of RA 875 provides that employees shall have the
right to self-organization and to form, join of assist labor organizations of
their own choosing for the purpose of collective bargaining and to engage
in concerted activities for the purpose of collective bargaining and other
mutual aid or protection. What the Constitution and the Industrial Peace
Act recognize and guarantee is the right to form or join associations.

The individual employee, at various times in his working life, is confronted

by two aggregates of power collective labor, directed by a union, and
collective capital, directed by management. The union, an institution
developed to organize labor into a collective force and thus protect the
individual employee from the power of collective capital, is, paradoxically,
both the champion of employee rights, and a new source of their
frustration. Moreover, when the Union interacts with management, it
produces yet a third aggregate of group strength from which the
individual also needs protection the collective bargaining relationship.

The Act does not require as a qualification, or condition, for joining any
lawful association membership in any particular religion or in any religious
sect; neither does the Act require affiliation with a religious sect that
prohibits its members from joining a labor union as a condition or
qualification for withdrawing from a labor union. Joining or withdrawing
from a labor union requires a positive act Republic Act No. 3350 only
exempts members with such religious affiliation from the coverage of
closed shop agreements. So, under this Act, a religious objector is not
required to do a positive act-to exercise the right to join or to resign from
the union. He is exempted ipso jure without need of any positive act on
his part.

Kapatiran sa meat and Canning Division v. Calleja, 162 SCRA 367

(88)

Facts:
From 1984 to 1987 TUPAS was the sole and exclusive collective
bargaining representative of the workers in the Meat and Canning Division
of the Universal Robina Corporation, with a 3-year collective bargaining
agreement (CBA) which was to expire on November 15, 1987.

On October 8, 1987, the NEW ULO, composed mostly of workers

belonging to the IGLESIA NI KRISTO sect, registered as a labor union.

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On October 12, 1987, the TUPAS staged a strike. ROBINA obtained an
injunction against the strike, resulting in an agreement to return to work
and for the parties to negotiate a new CBA.

The next day, October 13, 1987, NEW ULO, claiming that it has "the
majority of the daily wage rank and file employees numbering 191," filed
a petition for a certification election at the Bureau of Labor Relations.

TUPAS moved to dismiss the petition for being defective in form and that
the members of the NEW ULO were mostly members of the Iglesia ni
Kristo sect which three (3) years previous refused to affiliate with any
labor union. It also accused the company of using the NEW ULO to defeat
TUPAS' bargaining rights.

On November 17, 1987, the Med-Arbiter ordered the holding of a

certification election within 20 days. TUPAS appealed to the Bureau
Kapatiran sa Meat of Labor Relations BLR. In the meantime, it was able to
negotiate a new 3-year CBA with ROBINA, which was signed on December
3, 1987 and to expire on November 15, 1990. MA, affirmed by BLR,
ordered cert election.

Issue/s:
1. Whether or not Iglesia members can form a labor org which can be a
legitimate labor organization
2. Whether or not cert election barred by newly signed CBA between
TUPAS and Robina Meat factory

SC:
The right of members of the IGLESIA NI KRISTO sect not to join a labor
union for being contrary to their religious beliefs, does not bar the
members of that sect from forming their own union

The fact that TUPAS was able to negotiate a new CBA with ROBINA within
the 60-day freedom period of the existing CBA, does not foreclose the
right of the rival union, NEW ULO, to challenge TUPAS' claim to majority
status, by filing a timely petition for certification election on October 13,
1987 before TUPAS' old CBA expired on November 15, 1987 and before it
signed a new CBA with the company on December 3, 1987.

A"certification election is the best forum in ascertaining the majority status

of the contending unions wherein the workers themselves can freely
choose their bargaining representative thru secret ballot.

Page 17
ART. 254(244) RIGHT OF EMPLOYEES IN THE PUBLIC SERVICE

Employees of government corporations established under the Corporation Code shall

have the right to organize and to bargain collectively with their respective employers.
All other employees in the civil service shall have the right to form associations for
purposes not contrary to law.

The highest law of the land guarantees to government employees the right to organize
and to negotiate, but not the right to strike.

Excepted Employees
Excepted from the application of E.O. No. 180, however, are members of the Armed
Forces of the Philippines, including police officers, policemen, firemen and jail guards.
(Sec. 4.) For reasons of security and safety, they are not allowed to unionize.

E.O. No. 180 also declares that high level employees whose functions are normally
considered as policy making or managerial, or whose duties are of a high confidential
nature shall not be eligible to join the organization of rank-and-file government
employees. A high level employee is one whose function are normally considered
policy determining, managerial or one whose duties are highly confidential in nature. A
managerial function refers to the exercise of powers such as: (1) to effectively
recommend such managerial actions; (2) to formulate or execute management policies
and decisions; (3) to hire, transfer, suspend, lay-off, recall, dismiss, assign or discipline
employees.

Art. 255(245) INELIGIBILITY OF MANAGERIAL EMPLOYEES TO JOIN ANY

LABOR ORGANIZATION; RIGHT OF SUPERVISORY

Managerial employees are not eligible to join, assist or form any labor organization.
Supervisory employees shall not be eligible for membership in a labor organization of
the rank-and-file employees but may join, assist or form separate labor organizations of
their own. The rank-and-file union and the supervisors union operating within the same
establishment may join the same federation or national union.

Effect of inclusion as members of employees outside the bargaining unit

The inclusion as union members of employees outside the bargaining unit shall not be a
ground for the cancellation of the registration of the union. Said employees are
automatically deemed removed from the list of membership of said union.

Categories of employeesThis code classifies and defines the three categories of

employees for purposes of applying the law on labor relations. They are managerial,
supervisory, and rank-and-file.

Page 18
This three-tiered classification is made by R.A. No. 6715 (popularized as Herrera-Veloso
law). This law, which took effect on March 21, 1989 (15 days after its publication in the
Philippine Daily Inquirer), provides that although supervisory employees shall not be
eligible for membership in a labor organization of the rank-and-file employees, they
may, however join, assist or form separate labor organization of their own.

UNITED PEPSI-COLA SUPERVISORY UNION (UPSU) vs. HON.

BIENVENIDO E. LAGUESMA and PEPSI-COLA PRODUCTS,
PHILIPPINES, INC.

Facts:
Petitioner is a union of supervisory employees. It appears that on March
20, 1995 the union filed a petition for certification election on behalf of
the route managers at Pepsi-Cola Products Philippines, Inc. However, its
petition was denied by the med-arbiter and, on appeal, by the Secretary
of Labor and Employment, on the ground that the route managers are
managerial employees and, therefore, ineligible for union membership
under the first sentence of Art. 245 of the Labor Code, which provides:

Ineligibility of managerial employees to join any labor organization;

right of supervisory employees. Managerial employees are not
eligible to join, assist or form any labor organization. Supervisory
employees shall not be eligible for membership in a labor
organization of the rank-and-file employees but may join, assist or
form separate labor organizations of their own.

Petitioner brought this suit challenging the validity of the order, dismissed.
The right of the people, including those employed in the public and
private sectors, to form unions, associations, or societies for purposes not
contrary to law shall not be abridged.

Issue/s:
(1) whether the route managers at Pepsi-Cola Products Philippines, Inc.
are managerial employees
(2) whether Art. 245, insofar as it prohibits managerial employees from
forming, joining or assisting labor unions, violates Art. III, 8 of the
Constitution.

Held: The court decided that it is partly Yes and No.

Page 19
A distinction exists between those who have the authority to devise,
implement and control strategic and operational policies (top and middle
managers) and those whose task is simply to ensure that such policies are
carried out by the rank-and-file employees of an organization (first-level
managers/supervisors). What distinguishes them from the rank-and-file
employees is that they act in the interest of the employer in supervising
such rank-and-file employees.

Managerial employees may therefore be said to fall into two distinct

categories: the managers per se, who compose the former group
described above, and the supervisors who form the latter group.

#1: It appears that this question was the subject of two previous
determinations by the Secretary of Labor and Employment, in accordance
with which this case was decided by the med-arbiter.

Constitutionality of Art. 245:

Art.245 is the result of the amendment of the Labor Code in 1989
by R.A. No. 6715, otherwise known as the Herrera-Veloso Law.
Unlike the Industrial Peace Act or the provisions of the Labor Code
which it superseded, R.A. No. 6715 provides separate definitions of
the terms managerial and supervisory employees, as follows:

Art. 212. Definitions. . . .

(m) managerial employee is one who is vested with powers or

prerogatives to lay down and execute management policies and/or
to hire transfer, suspend, lay off, recall, discharge, assign or
discipline employees. Supervisory employees are those who, in the
interest of the employer, effectively recommend such managerial
actions if the exercise of such authority is not merely routinely or
clerical in nature but requires the use of independent judgment. All
employees not falling within any of the above definitions are
considered rank-and-file employees for purposes of this Book.

Nor is the guarantee of organizational right in Art. III, infringed by a ban

against managerial employees forming a union. The right guaranteed in
Art. III, is subject to the condition that its exercise should be for purposes
not contrary to law. In the case of Art. 245, there is a rational basis for
prohibiting managerial employees from forming or joining labor
organizations.

Page 20
Metrolab vs Confessor

Facts:

Metro Drug Corporation Employees Association-Federation of Free

Workers (Union) is a labor organization representing the rank and file
employees of petitioner Metrolab Industries, Inc. (Metro Drug, Inc.).

CBA expired. The negotiations for a new CBA, however, ended in a

deadlock. Union filed a notice of strike against Metrolab and Metro Drug
Inc. SOLE Torres issued an order resolving all the disputed items in the
CBA and ordered the parties involved to execute a new CBA.

On the basis of its management prerogative, Metrolab laid off 94 of its

rank and file employees, including executive secretaries. Acting Labor
Secretary Nieves Confesor issued a resolution declaring the layoff of
Metrolab's 94 rank and file workers illegal and ordered their
reinstatement.

Contention of Metrolab: The executive secretaries of the President,

Executive Vice-President, Vice-President, Vice-President for Sales,
Personnel manager, and Director for Corporate Planning who may have
access to vital labor relations information or who may otherwise act in a
confidential capacity to persons who determine or formulate management
policies. This being the case, they could not be made members of a labor
organization.

The issue raised is can the executive secretaries be given the benefit of
whatever the Union avails by way of its petitions. Stated differently, can
they be members of a labor organization?

SC:
No, as they are considered confidential employees. Although Article 245 of
the Labor Code limits the ineligibility to join, form and assist any labor
organization to managerial employees, jurisprudence has extended this
prohibition to confidential employees or those who by reason of their
positions or nature of work are required to assist or act in a fiduciary
manner to managerial employees and hence, are likewise privy to
sensitive and highly confidential records.

By the very nature of their functions, they 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

Page 21
 rationale behind the ineligibility of managerial employees to form, assist or
join a labor union equally applies to them.

Moreover, unionization of confidential employees for the purpose of

collective bargaining would mean the extension of the law to persons or
individuals who are supposed to act "in the interest of the employers. It is
not farfetched that in the course of collective bargaining, they might
jeopardize that interest which they are duty-bound to protect.

Finally, confidential employees cannot be classified as rank and file. The

nature of employment of confidential employees is quite distinct from the
rank and file, thus, warranting a separate category. Excluding confidential
employees from the rank and file bargaining unit, therefore, is not
tantamount to discrimination.

ART. 257(246) NON-ABRIDGEMENT OF RIGHT TO SELF-ORGANIZATON

It shall be unlawful for any person to restrain, coerce, discriminate against or unduly
interfere with employees and workers in their exercise of the right to self-organization.
Such right shall include the right to form, join, or assist labor organizations for the
purpose of collective bargaining through representatives of their own choosing and to
engage in lawful concerted activities for the same purpose for their mutual aid and
protection, subject to the provisions of Article 264 of this Code.

Concept of the Right to Self-Organization this is a key article that offers an

inclusionary definition of the right to self-organization by saying not what it is but what
it includes. It includes at least two rights: (1) right to form, join or assist labor
organizations, and (2) the right to engage in lawful concerted activities. The labor
organization may be a union or association of employees, as mentioned in article
219(g). Its purposes may be collective bargaining or dealing with the employer.

BOOK V TITLE VI UNFAIR LABOR PRACTICE

ART. 258. [247] CONCEPT OF UNFAIR LABOR PRACTICE AND PROCEDURE

FOR PROSECUTION THEREOF

Unfair labor practices violate the constitutional right of workers and employees to
self-organization, are inimical to the legitimate interests of both labor and
management, including their right to bargain collectively and otherwise deal with
each other in an atmosphere of freedom and mutual respect, disrupt industrial

Page 22
peace and hinder the promotion of healthy and stable labor-management
relations.

Consequently, unfair labor practices are not only violations of the civil rights of
both labor and management but are also criminal offenses against the State
which shall be subject to prosecution and punishment as herein provided.

Subject to the exercise by the President or by the Secretary of Labor and

Employment of the powers vested in them by Articles 278 [263] and 279 [264]
of this Code, the civil aspects of all cases involving unfair labor practices, which
may include claims for actual, moral, exemplary and other forms of damages,
attorneys fees and other affirmative relief, shall be under the jurisdiction of the
Labor Arbiters. The Labor Arbiters shall give utmost priority to the hearing and
resolution of all cases involving unfair labor practices. They shall resolve such
cases within thirty (30) calendar days from the time they are submitted for
decision.

Recovery of civil liability in the administrative proceedings shall bar recovery

under the Civil Code.

No criminal prosecution under this Title may be instituted without a final

judgment finding that an unfair labor practice was committed, having been first
obtained in the preceding paragraph. During the pendency of such administrative
proceeding, the running of the period of prescription of the criminal offense
herein penalized shall be considered interrupted: Provided, however, that the
final judgment in the administrative proceedings shall not be binding in the
criminal case nor be considered as evidence of guilt but merely as proof of
compliance of the requirements therein set forth.

Elements of ULP
1. There is employer-employee relationship between the offender and the
offended
2. The act done is expressly defined in the Code as an act of unfair labor
practice

Aspect of ULP
Unfair labor practice has civil as well as criminal aspects. The civil aspect may
include liability for damages and these may be passed upon by a labor arbiter.

Civil Aspect Compliance before Criminal Aspect may be Instituted

To prosecute ULP as criminal offense is not possible until after finality of
judgment in the labor case, finding that the respondent indeed committed unfair
labor practice.

Page 23
 Prescription
The offense prescribes in one year under Article 305 [290].

ART. 259. [248] UNFAIR LABOR PRACTICES OF EMPLOYERS

It shall be unlawful for an employer to commit any of the following unfair labor
practice:

(a) To interfere with, restrain or coerce employees in the exercise of their right
to self-organization;

(b) To require as a condition of employment that a person or an employee shall

not join a labor organization or shall withdraw from one to which he belongs;

(c) To contract out services or functions being performed by union members

when such will interfere with, restrain or coerce employees in the exercise of
their rights to self-organization;

(d) To initiate, dominate, assist or otherwise interfere with the formation or

administration of any labor organization, including the giving of financial or other
support to it or its organizers or supporters;

(e) To discriminate in regard to wages, hours of work and other terms and
conditions of employment in order to encourage or discourage membership in
any labor organization. Nothing in this Code or in any other law shall stop the
parties from requiring membership in a recognized collective bargaining agent as
a condition for employment, except those employees who are already members
of another union at the time of the signing of the collective bargaining
agreement. Employees of an appropriate bargaining unit who are not members
of the recognized collective bargaining agent may be assessed a reasonable fee
equivalent to the dues and other fees paid by members of the recognized
collective bargaining agent, if such non-union members accept the benefits
under the collective bargaining agreement: Provided, that the individual
authorization required under Article 250 [241], paragraph (o) of this Code shall
not apply to the non-members of the recognized collective bargaining agent;

(f) To dismiss, discharge or otherwise prejudice or discriminate against an

employee for having given or being about to give testimony under this Code;

(g) To violate the duty to bargain collectively as prescribed by this Code;

Page 24
 (h) 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;
or

(i) To violate a collective bargaining agreement.

The provisions of the preceding paragraph notwithstanding, only the officers and
agents of corporations, associations or partnerships who have actually
participated in, authorized or ratified unfair labor practices shall be held
criminally liable.

NO ULP: Illustrative Instances

Personnel Movements. It is the prerogative of the company to promote,
transfer or even demote its employees in other position when the interest of the
company reasonably demand it. Unless there are instances which directly point
to interference by the company with the employees rights to self-organization,
the transfer of an employee should be considered as within the bounds allowed
by law.

Acceptance of Mass Resignation. Acceptance of mass resignation is not ULP.

Grant of Profit-Sharing Benefits to Non-Union Members. Management

has the prerogative to regulate, according to its discretion and judgment, all
aspects of employment. The grant by the employer of profit-sharing benefits to
the employees outside the bargaining unit falls under the ambit of management
prerogative.

Forced Vacation Leave. Where the vacation leave without pay, which the
employer requires employees to take in view of the economic crisis, is neither
malicious, oppressive nor vindictive, ULP is not committed.

Issuance of Rules or Policy. Every business enterprise endeavors to increase

its profits. In the process, it may adopt or devise means designed towards that
goal. The free will of management to conduct its own business affairs to achieve
its purpose cannot be denied

Taking Action Against Slowdown. An employer does not commit an unfair

labor practice by discharging employees who engage in a slowdown, even if their
objective is a pay increase which is lawful.

Page 25
Nine ULP Acts of Employer

Interference. An act which restrains, coerces, or interferes with employees in the

exercise of their right to self-organization is an Unfair Labor Practice.

Dabuet et al, vs. Roche Pharmaceuticals, Inc., No. L-45402, April

30, 1987

Facts: The individual petitioners, who were all officers of the Roche
Products Labor Union, wrote the company expressing the grievances of
the union and seeking a formal conference with management regarding
the previous dismissal of the unions president and vice-president. At the
meeting, the companys general manager, instead of discussing the
problems affecting the labor union and management, allegedly berated
the petitioners for writing that letter and called the letter and the person
who prepared it stupid.

Feeling that he was the one alluded to, since he prepared the letter, the
counsel For the labor union filed a case for grave slander against the
general manager. The charge was based on the affidavit executed by the
petitioners. The company and the manager, in turn, filed a complaint for
perjury against the petitioners alleging that their affidavit contained false
statements.

The respondent company, furthermore, construed the execution by the

petitioners of the affidavit as an act of breach of trust and confidence and
inimical to the interest of the company, for which they were suspended
and later on dismissed.

Ruling: The respondent company has committed unfair labor practicee in

dismissing the petitioners without just and valid cause.

In Republic Savings Bank vs. CIR, where the dismissed employees had
written a letter decried by the Bank as patently libellous for alleging
immorality, nepotism and favouritism on the part of the Bank president,
thus amounting to behavior necessitating their dismissal, the Court
declared the dismissal illegal as the letter was a concerted activity
protected by R.A. No. 875.

Where, as in the case, the letter written by and for the union addressed to
management referred to employee grievances and/or labor-management
issues and the employees concerned were all officers of the union, then
seeking a renegotiation of the collective bargaining agreement, a fact
which respondent company does not deny, there should, all the more, be

Page 26
 a recognition of such a letter as an act for the mutual aid, protection and
benefit of the employees concerned. This recognition, in turn, should
extend to the petitioners execution of an affidavit in support of the charge
of slander against private respondent, for calling unions lawyer, who
prepared the letter, and the contents thereof stupid.

Breach of trust and confidence, the grounds alleged for petitioners

dismissal, must not be indiscriminately used as a shield to dismiss an
employee arbitrarily.

We, thus, hold that respondent company's act in dismissing the

Petitioners, who then constituted the remaining and entire officialdom of
the Roche Products Labor Union, after the union's president and vice-
president had been earlier dismiss and when the collective bargaining
agreement in the company was about to be renegotiated, was an unfair
labor practice under Sec. 4(a) (1) of the Industrial Peace Act. Their
dismissal, under the circumstances, amounted to interference with, and
restraint or coercion of, the petitioners in the exercise of their right to
engage in concerted activities for their mutual aid and protection.

Totality of Conduct Doctrine. The culpability of employers remarks is to be

evaluated not only on the basis of their implications, but against the background of and
in conjunction with collateral circumstances.

The Insular Life Assurance Co., Ltd., Employees Association-ATU

vs. The Insular Life Assurance Co., Ltd., G.R. No. L-25291,
January 30, 1971

The company president sent individual letters to the striking employees

urging them to abandon their strike with promise of free coffee and
movies and paid overtime. He also warned them that if they failed to
return to work by a certain date, they might be replaced in their jobs.
Aside from this, company-hired men broke into the picket line, resulting in
violence and the filing of criminal charges against some union officers and
members. When the strike was over, the company refused to readmit the
unionists facing criminal charges. The court ruled:

(1) Letter to individual employees.-It is an act of interference for the

employer to send a letter 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 union activity or cease striking, constitutes unfair labor practice. All the

Page 27
 above-detailed activities are unfair labor practices because they tend to
undermine the concerted activity of the employees, an activity to which they
are entitled free from the employer's molestation.

(2) Strike-breaking.- When the respondents offered reinstatement and

attempted to "bribe" the strikers with "comfortable cots," "free coffee and
occasional movies," "overtime" pay for "work performed in excess of eight
hours," and "arrangements" for their families, so they would abandon the
strike and return to work, they were guilty of strike-breaking and/or union-
busting and, consequently, of unfair labor practice.

(3) Acts violative of right to organize.- Violative of the right to organize,

form and join labor organizations are the following acts: the offer of a
Christmas bonus to all "loyal" employees of a company shortly after the
making of a request by the union to bargain; wage increases given for the
purpose of mollifying employees after the employer has refused to bargain
with the union, or for the purpose of inducing striking employees to return to
work; the employer's promises of benefits in return for the strikers'
abandonment of their strike in support of their union; and the employer's
statement, made about 6 weeks after the strike started, to a group of strikers
in a restaurant to the effect that if the strikers returned to work, they would
receive new benefits in the form of hospitalization, accident insurance, profit-
sharing, and a new building to work in.

(4) Test of interference or coercion.- The test of whether an employer has

interfered with and coerced employees is whether the employer has engaged
in conduct which it may reasonably be said tends to interfere with the free
exercise of employees' right. It is not necessary that there be direct evidence
that any employee was in fact intimidated or coerced by statements of
threats of the employer if there is a reasonable inference that anti-union
conduct of the employer does have an adverse effect on self-organization and
collective bargaining.

(5) The totality conduct doctrine.-The letters of the company president to

the individual strikers should not be considered by themselves alone but
should be read in the light of the preceding and subsequent circumstances
surrounding them. The letters should be interpreted according to the "totality
of conduct doctrine," whereby the culpability of an employer's remarks were
to be evaluated not only on the basis of their implicit implications, but were
to be appraised against the background of and in conjunction with collateral
circumstances.

Page 28
ARTICLE 259(248): UNFAIR LABOR PRACTICES OF EMPLOYERS

Successor employer ruling is an enforcement of the legal recourse called

piercing the veil of corporate entity. This means that the separateness of corporate
personality will be disregarded if it is being used to escape corporate obligations. The
corporate veil will be lifted and the people behind the veil will be identified and made
answerable for the corporate liabilities.

Yellow dog condition requires as a condition for employment that a person or

employee shall not join a labor organization or shall withdraw from one to which he
belongs.

Contracting out means to contract out services or functions being performed by union
members when such will interfere with, restrain or coerce employees in the exercise of
their right to self-organization (Shell Oil Workers Union v. Shell Ltd, May 31,
1971).

Runaway shop is an unfair labor practice of management, which usually takes place by
affecting the transfer of ownership, the plant itself, or its equipment, or by temporary
closing its business purposely to bust the union or evade the payment of legitimate
obligations.

Company unionism is considered ULP because the officers will be beholden to the
employers and they will not look after the interest of whom they represent.

Discrimination for or against union membership

The test of discrimination is whether the discharge of an employee is motivated

by his union activity. Such interference must be based on evidence, direct or
circumstantial, and not upon mere suspicion.

Valid discrimination

Union Security clause is term applied to any form of agreement, which imposes upon
employees the obligation to acquire or retain union membership at the expense of their
employment if they fail to do so. The objective is to assure continued existence of the
union through enforced membership. In a sense, there is discrimination when certain
employees are obliged to join a particular union. But it is discrimination favoring
unionism; it is a valid kind of discrimination.

Page 29
Kinds of union security agreements:

1. Closed-shop agreement. The company can hire only union members and
they must remain as union members to retain employment in the company.
Exceptions:
a. Employees belonging to any religious sects who prohibit affiliation of their
members with any labor organization are not covered by such agreement.
The free exercise of religious belief is superior to contract rights.
b. Members of the rival union are not covered by such arrangement.
c. Confidential employees excluded from rank and file bargaining unit
d. Employees excluded by express term of the agreement.

2. Agency shop agreement is an agreement whereby employees must either

join the union or pay to the union as exclusive bargaining agent a sum equal to
that paid by the members.

Discrimination because of testimony

To dismiss, discharge or otherwise prejudice or discriminate against an employee for

having given or being about to give testimony under this Code.

Violation of duty to bargain is to violate the duty to bargain collectively as prescribed

by this Code.

The following acts are held to constitute refusal to bargain:

a. Alleging the union is irresponsible.
b. Transferring operation to elude the union (Runaway shop)

Paid negotiation means 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
disputes.

Violation of CBA must be gross, flagrant and/or malicious refusal to comply with the
economic provision of the CBA. The grossly violate phrase is an amendment by R.A.
No. 6715. Hence, if the violation is not gross, it is not ULP but a grievance issue under
CBA.

Relief in ULP cases

Subject to the exercise by the President or by the Secretary of Labor and

Employment of the powers vested in them by articles 263 and 264 of this Code,
the civil aspects of all cases involving unfair labor practices, which may include
claims for actual, moral, exemplary and other forms of damages, attorneys fees
and other affirmative relief, shall be under the jurisdiction of the Labor Arbiters.
The Labor Arbiters shall give utmost priority to the hearing and resolution of all

Page 30
 cases involving unfair labor practices. They shall resolve such cases within thirty
(30) calendar days from the time they are submitted for decision.

Recovery of civil liability in the administrative proceedings shall bar recovery

under the Civil Code. No criminal prosecution under this Title may be instituted
without a final judgment finding that an unfair labor practice was committed,
having been first obtained in the preceding paragraph.

ULP not subject to compromise

ULPs are not only violations of civil rights of both labor and management but are also
criminal offenses against the State, which shall be subject to prosecution and
punishment. ULP cases are not, in view of the public interest involved, subject to
compromise.

Employers Responsibility for ULP acts by subordinate officials

Only the officers and agents of corporations, associations or partnerships who have
actually participated in, authorized or ratified unfair labor practices shall be held
criminally liable.

BOOK V TITLE VII COLLECTIV BARGAINING & ADMINISTRATION OF

AGREEMENTS

ART. 261(250) PROCEDURE IN COLLECTIVE BARGAINING

The following procedures shall be observed in collective bargaining:

1. When a party desires to negotiate an agreement, it shall serve a written
notice upon the other party with a statement of its proposals. The other
party shall make a reply thereto not later than ten (10) calendar days from
receipt of such notice;

2. Should differences arise on the basis of such notice and reply, either party
may request for a conference which shall begin not later than ten (10)
calendar days from the date of request.

3. If the dispute is not settled, the Board shall intervene upon request of either
or both parties or at its own initiative and immediately call the parties to
conciliation meetings. The Board shall have the power to issue subpoenas
requiring the attendance of the parties to such meetings. It shall be the duty

Page 31
 of the parties to participate fully and promptly in the conciliation meetings
the Board may call;

4. During the conciliation proceedings in the Board, the parties are prohibited
from doing any act which may disrupt or impede the early settlement of the
disputes; and

5. The Board shall exert all efforts to settle disputes amicably and encourage
the parties to submit their case to a voluntary arbitrator. (As amended by
Section 20, Republic Act No. 6715, March 21, 1989)

COLLECTIVE BARGAINING Nature

Collective Bargaining, could be viewed as an economic method by which a union (or
anyone purporting to represent a group of workers) contracts for the sale of its
members' labor in exchange for wages and other benefits. The presence of an
"intermediary" in collective bargaining distinguishes it from individual bargaining where
an employee directly negotiates for himself. In many respects, however, both types of
bargaining seek to achieve similar and related goals, although in collective bargaining,
the employees' representative seeks not only economic benefits and work security for
its constituents but likewise, security for itself as an organization in the form of union
security clauses.

JURISDICTIONAL PRECONDITIONS TO COLLECTIVE BARGAINING

KIOKLOY VS NLRC G.R. NO. L-54344
While it is a mutual obligation of the parties to bargain, the employer,
however, is not under any legal duty to initiate contract negotiation. The
mechanics of collective bargaining is set in motion only when the following
jurisdictional preconditions are present, namely,
(1) possession of the status of majority representation of the
employees' representative in accordance with any of the means of
selection or designation provided for by the Labor Code;
(2) proof of majority representation; and
(3) a demand to bargain under Article 251, par. (a) of the New
Labor Code . ... all of which preconditions are undisputedly present
in the instant case.

Page 32
COLLECTIVE BARGAINING AGREEMENT
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.

MANDATORY PROVISIONS OF THE CBA:

1. wages
2. hours of work
3. grievance machinery
4. voluntary arbitration
5. family planning
6. rates of pay mutual observance clause

ART. 263(252) 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.

DUTY TO BARGAIN COLLECTIVELY - the performance of a mutual obligation:

a. 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
b. EXECUTING A CONTRACT incorporating such agreements if requested
by either party.

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LIMITATIONS:
1. The duty to bargain collectively does not compel any party to:
a. agree to a proposal; or
b. make a concession.
No room for Take it or Leave it posture.
2. the parties cannot stipulate terms and conditions of employment which are below
the minimum requirements prescribed by law

Collective bargaining does not end with the execution of the agreement. It is a
continuous process. The duty to bargain imposes on the parties during the term of their
agreement the mutual obligation to meet and confer promptly and expeditiously and in
good faith for the purpose of adjusting any grievances or question arising under such
agreement.

FOUR (4) FORMS OF ULP IN BARGAINING:

a. Failure or refusal to meet and convene.
b. Evading the mandatory subjects of bargaining.
c. Bad faith in bargaining [boulwarism], including failure or refusal to execute the
CBA, if requested.
d. Gross violation of the CBA.

Successor Employer Rule: Continuity & Identity

The duty to hire
The duty to arbitrate the extent of a successors obligations under an existing
collective bargaining agreement
The duty to bargain with the union recognized or certified as the employees
bargaining representative during the predecessors incumbency; and
The duty to remedy a predecessors unfair labor practices

Do economic exigencies justify refusal to bargain?

An employer has been held not guilty of refusal to bargain by adamantly rejecting the
union's economic demands where he is operating at a loss, on a low profit margin, or in
a depressed industry, as long as he continues to negotiate. But financial hardship
constitutes no excuse for refusing to bargain collectively.

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ACTS NOT DEEMED REFUSAL TO BARGAIN:
1. Adoption of an adamant bargaining position in good faith
2. Refusal to bargain over demands for commission of ULP
3. Refusal to bargain during period of illegal strike
4. There is no request for bargaining
5. Union seeks recognition for an inappropriately large unit
6. Union seeks to represent some persons who are excluded from the Code
7. The rank-and-file unit includes supervisors or inappropriate otherwise
8. The demand for recognition and bargaining is made within the year following a
certification election in which the clear choice was no union and no ad interim
significant change has taken place in the unit
9. The union makes unlawful bargaining demands

NON-REPLY TO PROPOSAL
Kiok Loy v. NLRC 141 SCRA 179 (1986)

The case at bar is not a case of first impression, for in the Herald Delivery
Carriers Union (PAFLU) vs. Herald Publications the rule had been laid
down that "unfair labor practice is committed when it is shown that the
respondent employer, after having been served with a written bargaining
proposal by the petitioning Union, did not even bother to submit an
answer or reply to the said proposal This doctrine was reiterated anew
in Bradman vs. Court of Industrial Relations wherein it was further ruled
that "while the law does not compel the parties to reach an agreement, it
does contemplate that both parties will approach the negotiation with an
open mind and make a reasonable effort to reach a common ground of
agreement

As a last-ditch attempt to effect a reversal of the decision sought to be

reviewed, petitioner capitalizes on the issue of due process claiming, that
it was denied the right to be heard and present its side when the Labor
Arbiter denied the Company's motion for further postponement.

Petitioner's aforesaid submittal failed to impress Us. Considering the

various postponements granted in its behalf, the claimed denial of due
process appeared totally bereft of any legal and factual support. As herein
earlier stated, petitioner had not even honored respondent Union with any

Page 35
 reply to the latter's successive letters, all geared towards bringing the
Company to the bargaining table. It did not even bother to furnish or
serve the Union with its counter proposal despite persistent requests
made therefore. Certainly, the moves and overall behavior of petitioner-
company were in total derogation of the policy enshrined in the New
Labor Code which is aimed towards expediting settlement of economic
disputes. Hence, this Court is not prepared to affix its imprimatur to such
an illegal scheme and dubious maneuvers.

MANDATORY SUBJECTS OF BARGAINING

It is the obligation of the employer and the employees representative to bargain
with each other with respect to wages, hours, and other terms and conditions of
employment.. They are statutory or mandatory proposals. An employers refusal to
negotiate a mandatory subject of bargaining is an unfair labor practice although the
employer has every desire to reach agreement and earnestly and in all good faith
bargains to that end.
A mere remote, direct, or incidental impact is insufficient to render a subject a
mandatory subject of bargaining. It must materially or significantly affect the terms and
conditions of employment. However, conditions of employment include not only what
an employer has already granted but also what it has announced it intends to grant.
The following are examples of matters considered as mandatory subjects:
1. Wages
2. Hours of work
3. Grievance machinery
4. Voluntary arbitration
5. Family planning
6. Rates of Pay
7. Mutual Observance Clause

No Duty to Agree Even on Mandatory Subjects - Employers duty to

bargain is limited to mandatory bargaining subjects; as to other matters, he is free to
bargain or not. However, the Act does not compel agreements between employees and
employers, and neither party is legally obligated to yield even on a mandatory subject.
Where the subject of the dispute is a mandatory bargaining subject, either party may
bargain to an impasse (deadlock) as long as he bargains in good faith.
Bargaining to the Point of Impasse: Not Necessarily Bad Faith -
Insistence on a bargaining position to the point where the negotiations reach an

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impasse does not automatically 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 manners or is obviously intolerable.
Bargaining to the point of deadlock may or may not amount to bargaining in bad
faith depending whether the insistence refers to a mandatory or a non-mandatory
subject.
Mandatory subject - Either party may bargain to an impasse as long as
he bargains in good faith.
Non-mandatory subject - a party may not insist in bargaining to the
point of impasse. His instance may be construed as evasion of duty to
bargain.
Boulwarism - Bargaining technique where a proposal is offered on a "take it or
leave it" basis. (NLRB v. General Electric Co. US Court of Appeals, 418 F.2d 736, 1970)
Ratification; Mandatory Requirements The Implementing Rules require
the posting of the CBA in two conspicuous locations for five days. The proper ratifying
group is not just the majority union but the majority of all the workers in the bargaining
unit represented in the negotiation. Non-compliance of the requirements will render the
CBA ineffective (ATU v. Trajano, GR No. L-75321, June 20, 1988)
Ratification; Not Needed Ratification is not needed when the CBA is a
product of an arbitral awards by appropriate government authority or by a voluntary
arbitrator. Arbitral awards may result from voluntary arbitration under Art. 262, or from
the secretarys assumption of jurisdiction or certification of the dispute to the NLRC,
under Art. 263(g).
Posting in two conspicuous locations for five days is still required, for the
information of the employees affected.

ART. 263 [253] DUTY TO BARGAIN COLLECTIVELY WHEN THERE EXISTS A

COLLECTIVE BARGAINING AGREEMENT
When there is a CBA, the duty to bargain collectively shall also mean that neither
party shall terminate nor modify such agreement during its lifetime. But 60 days before
the CBA expires, either party may notify the other in writing that it desires to terminate
or modify the agreement. During the 60-day period and until a new agreement is
reached, the CBA remains in full force and effect.
Automatic Renewal Clause - Although a CBA has expired, it continues to have
legal effects as between the parties until a new CBA has been entered into (Pier &
Arrastre Stevedoring Services, Inc. v. Confessor, G.R. No. 110854, February 13, 1995).

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This is so because the law makes it a duty of the parties to keep the status quo and to
continue in full effect the terms and conditions of the existing agreement until a new
agreement is reached by the parties. (Art. 253, LC). (2008 Bar Question)

ART. 264 [235-A] TERMS OF A COLLECTIVE BARGAINING AGREEMENT

Duration of a CBA
5 years for the representation aspect
3 years for all other provisions
The representation aspect refers identity and majority status of the union that
negotiated the CBA as the exclusive bargaining representative. All other provisions
refer to the rest of the CBA, economic as well as noneconomic provisions other than
representational provisions.
If the CBA is the very first for the bargaining unit, the parties have to decide the
CBA effectivity date. Those made within 6 months after date of expiry of the CBA are
subject to automatic retroaction to the day immediately following the date of expiry.

Effectivity and Retroactivity

If the CBA is the very first for the bargaining unit, the parties have to decide the
CBA effectivity date
Those made within 6 months after date of expiry of the CBA are subject to
automatic retroaction to the day immediately following the date of expiry
Those not made within 6 months, the parties may agree to the date of
retroaction
Rules on retroactivity does not apply if the provisions were imposed by the Secretary of
Labor by virtue of arbitration. It applies only if the agreement was voluntarily made by
the parties. (St. Lukes Medical Center, Inc. v. Hon. Ruben Torres, GR No. 99395, June
29, 1993)

ART. 266(254) NO INJUNCTION RULE

No temporary or permanent injunction or restraining order in any case involving or

growing out of labor disputes shall be issued by any court or other entity, except as
otherwise provided in Articles 218 (Powers of the Commission/NLRC) and 264
(Prohibited Activities) of this Code.

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REASON: injunction contradicts the constitutional preference for voluntary modes of
dispute settlement

Requisites for Labor Injunctions

1. There must first be a labor dispute.
2. Filing of verified petition.
3. Hearing after due and personal notice has been served, in such manner as the
Commission shall direct, to:
a. all known persons against whom the relief is sought; and
b. also to the Chief Executive or other public officials of the province or
city within which the unlawful acts have been threatened or committed
charges with the duty to protect the complainants property.
4. Reception at the hearing of the testimonies of witnesses with opportunity for
cross-examination, in support of the allegations of the complaint made under the
oath as well as testimony in opposition thereto.
5. Finding of fact of the Commission to the effect that:
a. Prohibited of unlawful acts have been threatened and will be
committed, or have been committed and will be continued unless
retrained, but no injunction or temporary restraining order shall be
issued on account of any threat, prohibited or unlawful act, except
against the persons, association or organization making the threat or
committing the prohibited or unlawful act or actually authorizing or
ratifying the same after actual knowledge thereof;

b. Substantial and irreparable injury to the complainants property will

follow;
Irreparable Injury an injury which cannot be adequately
compensated in damages due to the nature of the injury itself or the
nature of the right or property injured or when there exists no
pecuniary standards for the measurement of damages.
c. that as to each item of relief to be granted, greater injury will be
inflicted upon complainant by the denial of the relief than will be inflicted
upon the defendants by the granting of the relief;
d. that complainant has no adequate remedy at law ; and

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 Adequate Remedy one of that affords relief with reference to the
matter in controversy and which is appropriate to the particular
circumstances of the case. If the remedy is specifically provided by
law, it is presumed to be adequate (PAL v. NLRC, GR No. 120567,
March 20, 1998)

e. That public officers charged with the duty to protect complainants

property are unable or unwilling to furnish adequate protection.
6. Posting of a bond.

Jurisdiction to Issue Injuction

General Rule: Only the following are authorized to issue injunctions or retraining orders:

1. NLRC or any division (Art. 218) ;

2. President. In case of labor dispute in industries which are indispensible to national
interest. (Art 263).
3. Secretary of Labor. In case of labor dispute in industries which are indispensible to
National interest. Regular courts are without authority to issue injunctions orders in
cases involving or originating from labor disputes even if the complaint was filed by
non-striking employees and the employer was made respondent.
Exception: A regular court may issue injunction to protect the interest of neutral
employers in common situs picketing, provided the injunction does not in any way
curtail the right of the union to strike and/or picket.

No court or entity shall enjoin any picketing, strike or lockout except as provided in
Articles 218 and 263 of the Labor Code, as amended. The National Labor Relations
Commission proper shall have the power to issue temporary injunctions but only after
due notice and hearing and in accordance with its rules. It may also issue restraining
orders to appropriate cases subject as a general rule to the requirements of due notice
and hearing.
Petitions for injunctions or restraining orders shall be handled or resolved with extreme
care and caution. All efforts to conciliate or settle amicably the issues in the main
dispute and those involved in petitions for injunctions shall be exhausted. Injunction
and restraining orders therefore may be issued only in case of extreme necessity based

Page 40
on legal grounds clearly established, after due consultations or hearing and when all
efforts at conciliation are exhausted.

Injunction orders shall be enforced only to the extent necessary to correct violations of
law and shall not prevent the workers exercising the right to peaceful picketing. The
right to ingress or egress may be exercised only for lawful purposes as may be
indicated in the injunctive orders or in line with established jurisprudence.
Injunction orders issued under Article 218 and 263 of the Labor Code, as amended shall
be served and enforced by appropriate officials or employees of the National Labor
Relations Commission or by such officials or employees of the Department of Labor and
Employment who may be designated by the labor secretary.
The assistance of other civilian authorities like national, local or city officials may be
sought, if necessary. Only under extreme circumstances shall the assistance of the
PC/INP be enlisted and in such cases, the police authorities shall only serve on a
supportive capacity to labor department officials or employees. All efforts must be
exerted in all cases to bring about a voluntary and peaceful compliance with injunctive
orders. PC/INP representatives shall be guided by duly promulgated guidelines.

THIRD PARTIES/INNOCENT BYSTANDERS

While the general rule is that the regular courts are without authority to issue injunction
orders in cases involving or originating from labor disputes even if the complaint was
filed by non-striking employees and the employer was made a respondent; it may still
issue injunction to protect the interest of neutral employers in common situs picketing.

In cases of strikes/picketing, third parties or innocent bystanders may secure a court

(regular court) injunction to protect their rights. (PAFLU vs. CLORIBEL)

Republic Flour Mills vs. Reyes 18 SCRA 796

Facts:
Respondent AIA Feed Mills, Inc. filed a petition for injunction before the
CFI of Rizal, alleging, among others, that petitioner unions declared a
strike against their employer, RFM and picket lines were formed around
the premises of the company preventing the peaceful passing of other
persons not connected with said employer. Respondent is a lessee
occupying a parcel of land owned by RFM.

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It claimed that it is a completely different corporation from RFM with a
different set of officers and employees; and there was no employer-
employee relation between the striking employees and respondent; and
that due to the picket lines formed by the striking unions the employees
of herein respondent could not enter and leave its premises thereby
causing the same to stop its operation which constitute an invasion of its
property rights and therefore causing irreparable and substantial
damages.
Petitioners, Republic Flour Mills Workers Association and PAFLU, filed a
motion to dismiss, arguing that the injunction prayed for by herein
respondent is a labor injunction and because the petition for injunction
failed to allege the jurisdictional requisites provided for in Section 9 (b) of
Republic Act 875 it is fatally defective and, therefore, should be dismissed.
The respondent Judge found that AIA Feed Mills, Inc. is a distinct and
separate entity from the RFM., that it has a distinct personnel of its own,
that it was engaged in a different business, and that petitioner unions
picketing had no connection whatsoever with herein respondent. Based on
said findings, the respondent Judge issued the writ of preliminary
injunction.
Issue:
Whether or not the respondent Judge Reyes had jurisdiction to issue the
writ of preliminary injunction in question.
Held:
No. There is no labor dispute between the petitioners and respondent AIA
Feed Mills, Inc., and neither is there an employer-employee relation
between them.
The Court declared that the writ of preliminary injunction issued by the
respondent Judge is not a labor injunction that is provided for in Section
9, paragraph (d) of Republic Act 875. The court may issue an injunction,
whether temporary or permanent, as provided in said section of Republic
Act 875, only in a case involving or growing out of a labor dispute.
No labor dispute existed between the petitioner unions and the
respondent AIA Feed Mills, Inc. The preliminary injunction issued by the
respondent Judge was, therefore, one that was within its jurisdiction to
issue pursuant to the provisions of Rule 60 of the Rules of Court (now
Rule 58 of the Revised Rules of Court.)

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 The writ of preliminary injunction issued by the respondent Judge did not
in any way curtail the right of petitioner unions to picket, because the writ
simply and clearly ordered and commanded the petitioner unions to
desist from preventing AIA Feed Mills; employees from entering its
premises.
The writ did not prevent petitioner unions from picketing against their
employer, the Republic Flour Mills, Inc. The record shows that the
respondent Judge issued the writ of preliminary injunction after a hearing.
The respondent Judge, therefore, had not acted in a manner that was in
violation of the law or with grave abuse of discretion when he issued the
writ of preliminary injunction in question.

ART. 267(255) EXCLUSIVE BARGAINING REPRESENTATION AND WORKERS

PARTICIPATION IN POLICY AND DECISION-MAKING

EXTENT OF THE WORKERS RIGHT TO PARTICIPATE

Such right refers ONLY to participation in grievance procedures and voluntary modes of
settling disputes and NOT to formulation of corporate programs and policies.
NOTE: An employer may solicit questions, suggestions and complaints from
employees even though the employees are represented by a union, provided:
1. the collective bargaining representative executes an agreement waiving the right
to be present on any occasion when employee grievances are being adjusted by the
employer and
2. employer acts strictly within the terms of this waiver agreement.

EXTENT OF WORKERS RIHT TO PARTICIPATE

PAL v. NLRC
August 13, 1993
Facts:
PAL completely revised its 1966 Code of Discipline. The Code was
circulated among the employees and was immediately implemented, and
some employees were forthwith subjected to the disciplinary measures
embodied therein. The Philippine Airlines Employees Association (PALEA)

Page 43
 filed a complaint before the National Labor Relations Commission (NLRC).
PALEA contended that PAL, by its unilateral implementation of the Code,
was guilty of unfair labor practice, specifically Paragraphs E and G of
Article 249 and Article 253 of the Labor Code. PALEA alleged that copies
of the Code had been circulated in limited numbers; that being penal in
nature the Code must conform to the requirements of sufficient
publication, and that the Code was arbitrary, oppressive, and prejudicial to
the rights of the employees. It prayed that implementation of the Code be
held in abeyance; that PAL should discuss the substance of the Code with
PALEA; that employees dismissed under the Code be reinstated and their
cases subjected to further hearing; and that PAL be declared guilty of
unfair labor practice and be ordered to pay damages PAL asserted its
prerogative as an employer to prescribe rules and regulations regarding
employees' conduct in carrying out their duties and functions, and alleging
that by implementing the Code, it had not violated the collective
bargaining agreement (CBA) or any provision of the Labor Code. Assailing
the complaint as unsupported by evidence, PAL maintained that Article
253 of the Labor Code cited by PALEA referred to the requirements for
negotiating a CBA which was inapplicable as indeed the current CBA had
been negotiated
Issue:
Whether or not the formulation of a Code of Discipline among employees
is a shared responsibility of the employer and the employees.
Held:
Petitioner's assertion that it needed the implementation of a new Code of
Discipline considering the nature of its business cannot be
overemphasized. In fact, its being a local monopoly in the business
demands the most stringent of measures to attain safe travel for its
patrons. Nonetheless, whatever disciplinary measures are adopted cannot
be properly implemented in the absence of full cooperation of the
employees. Such cooperation cannot be attained if the employees are
restive on account, of their being left out in the determination of cardinal
and fundamental matters affecting their employment.

LABOR MANAGEMENT COUNCILS

- Deal with the employer on matters affecting employees rights, benefits and welfare.
They may be formed even if there is already a union in the company.

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INDIVIDUAL GRIEVANCE
Individual grievance can be about concerns an employee may have relating to their
specific terms and conditions of employment, working conditions and or practices.
Any employee who has a complaint arising out of his or her employment should seek to
have that complaint addressed by using the appropriate university's procedure for his or
her staff group.
It is expected that the majority of such complaints will not develop into formal
grievances but will be dealt with and satisfactorily resolved through informal discussion,
as described below.
However, whenever the formal procedures are used, the employee has a right to have
his or her complaint carefully and impartially considered and to receive, after
appropriate consideration and discussion, a final response which will either:

a) explain to the employee why a situation complained of must stay as it is or a

decision complained of will remain unaltered, or

b) change the situation or decision complained of to address the employee's

concerns, or

c) provide details of an alternative solution which is acceptable to the employee and

which is considered by his or her line manager and department to be
appropriate, taking account of the complaint raised and the impact of the
proposed solution on any other affected party.

Where two or more employees within the same department have identical complaints
about a particular situation, their complaints should be dealt with simultaneously by
means of the individual grievance procedure described below. This procedure is not
available where employees have a grievance affecting more than one department. In
these circumstances collective grievances that cannot be resolved by informal
discussion may be raised under the procedure for resolving differences.

COLLECTIVE BARGAINING UNIT DEFINED

- 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.

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APPROPRIATENESS OF BU; FACTORS CONSIDERED
- an effort to inject a public policy component into the initial shaping of the collective
bargaining structure, so as to encourage the practice and procedure of collective
bargaining and enhance the likelihood of a more viable and harmonious collective
bargaining relationship
It has been consistently held valid and appropriate that the bargaining unit may consist
of all rank-and-file employees in the company, regardless of the difference in their
positions and other considerations. (Laguna College vs. CIR, et al., 25 SCRA 167)

THE GLOBE DOCTRINE this principle is based on the will of the employees. This
rule was first enunciated in the United States case of Globe Machine and Stamping Co.,
where it was ruled that in defining appropriate bargaining unit, the determining factor is
the desire of the workers themselves, through referendum, plebiscites, certification
election, etc.

ONE-UNION, ONE-COMPANY POLICY - the proliferation of unions in an employer

unit is discouraged as a matter of policy unless there are compelling reasons which
would deny a certain class of employees the right to self-organization for purposes of
collective bargaining.

EXCEPTION:
- Supervisory employees who are allowed to form their own unions apart from the
rank-and-file employees
- The policy should yield to the right of employees to form unions for purposes not
contrary to law, self-organization and to enter into collective bargaining negotiations.
Two companies cannot be treated into a single bargaining unit even if their
businesses are related.

Subsidiaries or corporations formed out of former divisions of a mother company

following reorganization may constitute a separate bargaining unit.

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SUBSIDIARIES AND SPUN-OFF CORPORATIONS

San Miguel Employees vs. Confessor, Sept. 19, 1996

FACTS:
On June 28, 1990, petitioner-union SMC Union-PTGWO concluded a CBA
with SMC to take effect upon the expiration of the Previous CBA on June
30, 1989. This CBA provided that the agreement shall remain in force until
June 30, 1992, but that in accordance with Article 253-A of the labor Code
as amended. The terms of the agreement, insofar as the representation
aspect is concerned, shall be for 5 yrs. from July 1, 1999 to June 30,
1994. In keeping with its vision and strategy for business expansion, SMC
management informed its employees in a letter dated August 13, 1991
that the company will undergo restructuring. Effective October 1, 1991,
the Magnolia and the Feeds and Livestock Division were spun-off and
became two distinct corporations. Notwithstanding the spin-offs, the CBA
in force and the effect. As a result of spin-offs: 1. Each of the companies
are run by, supervised and controlled by different management teams
including separate human resource/ personnel managers. 2. Each
company enforces its own administrative and operational rules and
policies and are not dependent on each other in their operations. 3. Each
entity maintains separate financial statements and are audited separately
from each other. The CBA negotiation started in July 1992. During the
negotiations, the petitioner-union insisted that the bargaining unit of SMC
should still include the employees of the spun-off corporations, Magnolia
and SMFI, and the renegotiated terms of the CBA shall be effective only
for the remaining two years is until June 30, 1994. SMC, on the other
hand, contended that the members/employees who had moved to
Magnolia and SMFI automatically ceased to be part of the bargaining unit
at the SMC, and that, the CBA should be effective three years in
accordance with Article 253-A of the Labor Code.

ISSUES:
1. Whether or not the duration of the renegotiated terms of the CBA is
three yrs. or two; and
2. Whether or not the bargaining unit of the SMC includes also employees
of Magnolia and SMFI. Pertinent to the first issue is Art. 253-A of the LC,
as amended. The Supreme Court quoting a book, defines the two classes

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 of CBA provisions. The representation aspect refers to the identity and
majority status of the union and the negotiated CBA as the exclusive
bargaining representative of the appropriate bargaining unit concerned.
All other provisions simply refers to the rest of the CBA, economic as well
non-economic provisions, other than representational. Then the court
explains the three and five yr. term.

HELD:
1. The framers of the law wanted to maintain industrial peace and
stability having both the management and the labor work
harmoniously together without any disturbance. Thus no outside union
can enter the establishment within 5 years and challenge the status of
the incumbent union as the exclusive bargaining agent. Likewise, the
terms and conditions of employment (economic and non-economic)
cannot be questioned by the employers and employees during the
period of the effectivity of the CBA. The CBA is in contract between the
parties and the parties must respect the terms and conditions of the
agreement. Notably, the framers of the law did not give the fixed
terms and conditions of employment. It can be gleaned from their
discussions that it was left to the parties to fix the period. The issue as
to the non-representation provisions of the CBA need not be labored
especially when we take note of the Memorandum of the Sec. of Labor
dated Feb 24, 1994. In the said memorandum, the Sec of Labor had
the occasion to clarify the term of the renegotiated terms of the CBA
vis- -vis the term of the bargaining agent, to wit: As a matter of
policy the parties are encouraged to enter into a renegotiated CBA
with a term which would coincide with the aforesaid 5 yrs. term of the
bargaining representative. In the event however that the parties, by
mutual agreement, enter into a renegotiated contract with the term of
3 yrs. or one which does not coincide with the said 5 yr term, and the
said agreement is ratified by the said majority members in the
bargaining unit, the subject contract is valid and legal and therefore,
binds the contracting parties. The same will however not adversely
affect the right of another union to challenge the majority status of the
incumbent bargaining agent within 60 days before the lapse of the
original 5 yrs. term of the CBA. Thus, we do not find grave abuse of
discretion on the part of the Sec of Labor in the ruling that the
effectivity of the renegotiated terms of the CBA shall be for 3 years.

2. Magnolia and SMFI became district entities with separate juridical

personalities. Thus, they cannot belong to a single bargaining unit as
held in the case of Diagton vs Ople. Petitioner attempt to include the

Page 48
 employees of Magnolia and SMFI in the SMC bargaining unit so as to
have a bigger mass base of employees has, therefore, no more valid
ground. Moreover, in determining an appropriate bargaining unit, the
test of grouping is mutuality or commonality of interests. The
employees sought to be represented by the collective bargaining agent
must have substantial mutual interests in terms of employment and
working conditions evidenced by the type of work they performed.
Considering the spin-offs, the companies would consequently have
their respective and distinctive concerns in terms of nature of work,
wages, hours of work and other conditions of employment. Interests of
employees in different companies perforce differ. SMC is engaged in
the business of beer manufacturing. Magnolia is involved in the
manufacturing and processing products while the SMFI is involved in
the production of feeds and processing of chicken. The nature of their
products and scale of their business may require different
compensation packages. The different companies may have different
volumes of work and different working conditions. For such reason, the
employees of the different companies see the need to group
themselves together to organize themselves into distinct and organize
groups. It would then be best to have separate bargaining units for
different companies where employees can bargain separately
according to their needs and according to their own working
conditions.

SUMMATION OF SIGNIFICANCE
To employees:
- Collective bargaining develops a sense of self-respect and responsibility among the
employees.
- It increases the strength of the workforce, thereby, increasing their bargaining
capacity as a group.
- Collective bargaining increases the morale and productivity of employees.
- It restricts managements freedom for arbitrary action against the employees.
Moreover, unilateral actions by the employer are also discouraged.
- Effective collective bargaining machinery strengthens the trade unions movement.
- The workers feel motivated as they can approach the management on various matters
and bargain for higher benefits.

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- It helps in securing a prompt and fair settlement of grievances. It provides a flexible
means for the adjustment of wages and employment conditions to economic and
technological changes in the industry, as a result of which the chances for conflicts are
reduced.

To employers:
- It becomes easier for the management to resolve issues at the bargaining level rather
than taking up complaints of individual workers.
- Collective bargaining tends to promote a sense of job security among employees and
thereby tends to reduce the cost of labor turnover to management.
- Collective bargaining opens up the channel of communication between the workers
and the management and increases worker participation in decision making.
- Collective bargaining plays a vital role in settling and preventing industrial disputes.

To Society:
- Collective bargaining leads to industrial peace in the country
- It results in establishment of a harmonious industrial climate which supports which
helps the pace of a nations efforts towards economic and social development since the
obstacles to such a development can be reduced considerably.
- The discrimination and exploitation of workers is constantly being checked.
- It provides a method or the regulation of the conditions of employment of those who
are directly concerned about them.

ART. 268-272 (256-259) PETITION FOR CERTIFICATION OF ELECTION

BARGAINING UNIT- a group of employees of a given employer, comprised of all or

less than all the entire body of the employees, which, consistent with equity to the
employer, indicate to be best suited to serve the reciprocal rights and duties of the
parties under the collective bargaining provision of the law.

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CERTIFICATION ELECTION the process of determining by secret ballot the sole
and exclusive bargaining agent of the employees in an appropriate bargaining unit, for
purposes of collective bargaining

Four Factors in Determining the Appropriate Bargaining Unit

1. the express will or desire of the employees (Globe Doctrine); the desires of all
the employees are relevant to the determination of the appropriate bargaining unit.
The relevance of the wishes of the employees concerning their inclusion or exclusion
from a proposed bargaining unit is inherent in the basic right to self organization
2. the substantial and mutuality interest factor;
3. prior collective bargaining history; and
4. employment status, such as
a. temporary
b. seasonal, and
c. probationary employee

Community of Interest Doctrine

1. similarity in the scale and manner of determining earnings

2. similarity in employment benefits, hours of work and other terms and conditions of
employment
3. similarity in the kinds of work performed
4. similarity in the qualifications, skills and training of the employees
5. frequency of contract or interchange among the employees
6. common supervision and determination of labor-relations policy
7. history of previous collective bargaining
8. desires of the affected employees
9. extent of union organization

Modes of Choosing the Exclusive Bargaining Unit

1. SELECTION - certification election
2. DESIGNATION - voluntary recognition

Voluntary Recognition
the process whereby the employer recognizes a labor organization as the
exclusive bargaining representative of the employees in the appropriate

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bargaining unit after a showing that the labor organization is supported by at
least a majority of the employees in the bargaining unit.

Certification Election with or without Run-Off

Who Files Petition for C. E.
The petition for certification election must be filed by a legitimate labor organization.
Article 242 enumerates the exclusive rights of a legitimate labor organization among
which is the right to be certified as the exclusive representative of all the employees in
an appropriate collective bargaining unit for purposes of collective bargaining.

Progressive Dev. Corp. vs. Sec. of Labor, Feb. 4, 92

The controversy in this case centers on the requirements before a local or
chapter of a federation may file a petition for certification election and be
certified as the sole and exclusive bargaining agent of the petitioner's
employees, the court held that to determine the validity of labor unions
art.234 requiremets of registration must be complied with. If its
application for registration is vitiated by falsification and serious
irregularities, especially those appearing on the face of the application and
the supporting documents, a labor organization should be denied
recognitin as a legitimate labor org.
Wherefore, inasmuch as the legal personality of respondent union had
been seriously challenge, it would have been more prudent to have
granted petitioners request for the suspension of proceedings in the cert
election case,until the issue of the legality of the unions registration shall
have been resolved failure of the med-arbiter and public respondent to
heed the request constituted a grave abuse of discretion.

Employer Not a Party in C. E.

The employer cannot file a petition for certification election; only a legitimate labor
organization can file such petition.

When to File Petition

a. when there is a CBA, the labor organization can file a petition for certification
election within the 60-day freedom period (CONTRACT-BAR RULE)
b. when there is no CBA, then the labor organization can file a petition for
certification election at any time, subject to the Deadlock Bar Rule.

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Who can Vote in the C. E.
The petition must be supported by the written consent of at least 25% of all the
employees in the appropriate bargaining unit.

Consent Election
to determine the issue of majority representation of all the workers in the appropriate
collective bargaining unit mainly for the purpose of determining the administrator of the
CBA when the contracting union suffered massive disaffiliation but not for the purpose
of determining the bargaining agent for purposes of collective bargaining.

Double Majority Rule

1. In determining the eligible votes cast [FIRST MAJORITY], include spoiled ballots

2. In determining valid votes [SECOND MAJORITY], eliminate spoiled ballots but

include challenged votes

Rules which Prevent the Holding of a Certification Election

1. Deadlock bar rule- when there is a deadlock in collective bargaining and the same
has been submitted to NCMB for conciliation and mediation the same bars any petition
or conduct of certification election.
2. One year bar rule
3. Negotiation bar rule
4. Contract bar rule
Contract-Bar Rule
while a valid and registered CBA of a fixed duration is subsisting, the BLR is not
allowed to hold an election contesting the majority status of the incumbent union
during the five year term of the CBA except during the sixty day period immediately
prior to the expiration of the CBA.

Deadlock Bar Rule

a petition for certification election cannot be entertained if, before the filing of the
petition for certification election, a bargaining deadlock to which an incumbent or
certified bargaining agent is a party, had been submitted to conciliation or arbitration or
had become the subject of a valid notice of strike or lockout.

Kaisahan vs. Trajano, Sept. 9, 1991

In the case of Kaisahan ng Manggagawang Pilipino [KAMPIL-KATIPUNAN]
vs. Trajano, [G. R. No. 75810, September 9, 1991, 201 SCRA 453 (1991)],
the bargaining deadlock-bar rule was not applied because the duly

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 certified exclusive bargaining agent of all rank-and-file employees did not,
for more than four (4) years, take any action to legally compel the
employer to comply with its duty to bargain collectively, hence, no CBA
was executed; nor did it file any unfair labor practice suit against the
employer or initiate a strike against the latter. Under the circumstances, a
certification election may be validly held.

Negotiation Bar Rule

a petition for certification election cannot be entertained if, before the filing of the
petition for certification election, the duly recognized or certified union has commenced
negotiations with the employer in accordance with Art. 250 of the Labor Code.

Certification Year Rule

no petition for certification election may be filed within one year from the date of a valid
certification, consent, or run-off election or from the date of voluntary recognition

BOOK V Title VII-A GRIEVANCE MACHINERY & VOLUNTARY ARBITRATION

ART. 260. Grievance machinery and voluntary arbitration.

Grievance Machinery is a mechanism for the adjustment of controversies or
disputes arising from the interpretation or implementation of the CBA and the
interpretation or enforcement of company personnel policies. (D.O. No. 40-03, Rule
XIX, Sec.1).
Voluntary Arbitration is a contractual proceeding where parties to a dispute
select a judge of their own choice and by consent submit their controversy to him for
determination.
All grievances not settled within seven (7) days from the date of its submission to
the grievance machinery shall automatically be referred to voluntary arbitration
prescribed in the CBA (Santuyo v. Remerco Garments Manufacturing Inc., G.R. No.
174420, March 22, 2010).
Enforceability Against Transferee of Enterprise
Labor Contracts: In Personam; its Exceptions
The rule is that unless expressly assumed, labor contracts such as
employment contracts and collective bargaining agreements are not enforceable

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 against a transferee of an enterprise, labor contracts being in personam, thus
binding only between the parties. A labor contract merely creates an action in
personam and does not create any real right which should be respected by third
parties. This conclusion draws its force from the right of an employer to select
his employees and to decide when to engage them as protected under our
Constitution, and the same can only be restricted by law through the exercise of
the police power.
Wiley Doctrine
States that, a duty to arbitrate arising from a collective bargaining agreement
survives the employers ceasing to do business as a separate entity after its merger
with a substantially large corporation, so as to be binding on the larger corporation,
where relevant similarity and continuity of operations across the change in
ownership is evidenced by the wholesale transfer of smaller corporations
employees to the larger corporations plant.

ART. 261. Jurisdiction of Voluntary Arbitrators or panel of Voluntary

Arbitrators.
Jurisdiction of Voluntary Arbitrators
Exclusive and Original Jurisdiction Conferred by Law
1. All unresolved grievances arsing from the interpretation or
implementation of the CBA;
2. Hear and decide Wage distortion issues arsing from the application of
any wage orders in organized establishments;
3. Unresolved grievances arising from the Interpretation or enforcement
of company personnel policies; and
4. Unresolved grievances arising from the interpretation and
implementation of the Productivity incentive programs under RA No.
6071.
Gross Violation of the CBA
-is a flagrant and/or malicious refusal to comply with the economic provisions of
the CBA.

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 Distinguish from Mediation

Arbitrator Mediator
A person accredited by the Board as A disinterested party, usually a
such or a person named or government employee who helps in
designated in the CBA by the parties settling disputes involving terms and
to act as their Voluntary Arbitrator or conditions of a CBA and is not
one chosen with or without the assigned and paid by the State.
assistance of the NCMB, pursuant to
a selection procedure agreed upon in
the CBA, or any official authorized by
the Sec. Of Labor to act as Voluntary
Arbitrator upon written request and
agreement of parties to a labor
dispute.
Nature of Proceedings
Informal proceedings; Arbitrator A mediator renders no final and
determines what is admissible as binding decision and merely suggests
evidence. solutions. He usually suggests that
parties submit the issue to an
arbitrator.
Precedent
Arbitrators are not obliged to follow
precedents set by other arbitration in
similar cases.
Appeal
Appeal is to the CA under Rule 43 of
the Rules of Court.

BOOK V TITLE VIII STRIKES & LOCKOUTS & FOREIGN INVOLVEMENT IN

TRADE UNION ACTIVITIES

ART. 278(263) STRIKES, PICKETING AND LOCKOUTS

STRIKE - Any temporary stoppage of work by the concerted action of employees as a

result of an industrial or labor dispute.
NOTE:
Strike is the most effective weapon of labor in protecting the rights of employees
to improve the terms and conditions of their employment.

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 Government employees may form labor unions but are not allowed to strike.
Only legitimate labor organizations are given the right to strike.
Ununionized workers may hold a protest action but not a strike
Not all concerted activities are strikes; they may only be protest actions. And
they do not necessarily cause work stoppage by the protesters. A strike, in
contrast, is always a group action accompanied by work stoppage.

GROUNDS FOR THE DECLARATION OF STRIKE:

1. a deadlock in collective bargaining (ECONOMIC)
2. unfair labor practices (POLITICAL)

ECONOMIC STRIKE
A voluntary strike because the employee will declare a strike to compel
management to grant its demands.
It is initiated by the collective bargaining agent of the appropriate bargaining unit
can declare an economic strike.
It has a cooling off period of 30 days from the filing of the notice of strike
before the intended date of actual strike subject to the 7-day strike ban and such
is mandatory without exception.
Notice of strike and strike vote maybe dispensed with and they may strike
immediately.
Employees are not entitled to Strike Duration Pay in case of legal strike based on
the principle that a fair days wage accrues only for a fair days labor.

UNFAIR LABOR PRACTICE STRIKE

An involuntary strike; the labor organization is forced to go on strike because of
the ULP committed against them by the employer. It is an act of self-defense
since the employees are being pushed to the wall and their only remedy is to
stage a strike.
It is initiated either by Collective bargaining agent or the legitimate labor
organization in behalf of its members.
It has a cooling off period of 15 days from the filing of the notice of strike.

As an exception, the cooling off period may be dispensed with and the union
may take immediate action in case of dismissal from employment of their
officers duly elected in accordance with the unions Constitution and by-laws,
which may constitute union busting where the existence of the union is
threatened. HOWEVER, it must still observe the mandatory 7-day period before
it can stage a valid strike.

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 The employees may be awarded the Strike Duration Pay in case of legal strike,
which is paid in the discretion of the authority deciding the case.

FERRER vs. CIR

Facts:
Immediately after holding an election, which Inhelder Laboratories Inc.
and Sister Companies Employees Union obtained the requisites majority,
the Union submitted to the Management of respondent corporations a set
of demands for a collective bargaining agreement. This led to negotiations
and lasted for several weeks. As an agreement was reached on some
points, the same were incorporated into a draft of agreement, which, in
turn, became the basis for, or was followed by, further negotiations. As
additional points of agreement were reached, another draft of agreement
was prepared.
In a meeting held before said Conciliation Division, another such draft was
drawn, to which the Management refers as "final draft". However,
petitioners' representatives pressed for the inclusion, in the agreement, of
a union clause, an accumulated sick leave clause, and an accumulated
vacation leave clause, apart from the increase of the high cost of living
monthly allowance from P20.00 to P30.00, the creation of a grievance
committee and a general salary increase.

The negotiations continued and in the course of which, respondents

contend, the Management agreed to increase the high cost of living
allowance to P25.00, provided that the other demands were withdrawn, to
which petitioners allegedly gave their conformity.

Another draft of agreement which the representatives of Management,

again, characterizes as "final" was, accordingly, prepared, and the
representatives of both parties initialed it, with the understanding,
according to respondents, that the agreement would be signed soon.
However, petitioners' representative asked for the inclusion in the
agreement a union shop or union security clause. This request not having
been granted, the Union later refused to sign the agreement.

Petitioners filed a 30-day notice of strike upon the ground that respondent
corporations had been bargaining in bad faith. On the other hand, the
Management of respondent corporations filed unfair labor practice against
petitioner Union on the ground of alleged refusal to bargain. Meanwhile,
the Management of respondent corporations suspended, transferred

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and/or demoted union members. Hence, before the expiration of the 30-
day period, petitioners declared a strike.

At this juncture, two (2) unfair labor practice cases commenced in the
Court of Industrial Relation where one was filed by the Management of
Inhelder Laboratories, Inc. and its sister companies (Inhelder, Inc. and
San Roque Trading Corporation) against the Labor Union of employees
thereof and some officers and members of the Union, and the other by
the latter against the former. Being interrelated, the two cases were
jointly heard.

In due course, the trial Judge, rendered a decision dismissing the

complaints in both cases. On motion for reconsideration filed by the
Management, the Court of Industrial Relations en banc, reconsidered the
latter's decision, insofar as it dismissed the complaint of the Management,
and decreed that the officers and members of the Union who had
participated in a peaceful strike staged by the latter from July 1 to July 15,
1963, "be considered to have lost their status as employees of the
companies" aforementioned.

Respondents Inhelder Laboratories, Inc and its sister companies, Inhelder,

Inc. and San Roque Trading Corporation maintain that petitioners failed to
give a 30-day notice of their intention to strike and the strike had
allegedly been called in bad faith.

On the other hand, petitioner Union and its members contend that the
strike was provoked by alleged unfair labor practices on the part of the
respondents and that petitioners had acted in good faith in staging said
strike.

Hence, this appeal by certiorari taken by the Union and its members
adversely affected by the said resolution.

Issue: WON the strike was illegal or not.

Ruling:

Although the Management may have had the strict legal right to take
against union members the disciplinary and other administrative measures
above referred to, there is no denying the fact that the time chosen by
the Management therefore, when considered in relation with the attending
circumstances, reasonably justified the belief of the Union that the real or
main purpose of the Management was to discourage membership in the
Union, to discredit the officers thereof, to weaken the Union and to induce

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 or compel the same to sign the draft of agreement Exhibit D as amended,
on May 29 and 30 or 31, 1963. As stated in the decision of His Honor, the
trial Judge, said belief was confirmed by the fact that prosecutors of the
Court of Industrial Relations found sufficient grounds to file and did file,
against the Management, a complaint for unfair labor practices.

In other words, both parties had performed acts which understandably

induced each to believe that the other was guilty of such practices
although, as we now analyze the whole situation, without the excitement,
the heat and the passion of the direct participants in the labor dispute, at
the peak thereof, such belief may not turn out to be borne out to the
objective realities and both were reasonably justified in taking the
counter measures adopted by them. As a consequence, we hold that the
strike in question had been called to offset what petitioners were
warranted in believing in good faith to be unfair labor practices on the
part of Management, that petitioners were not bound, therefore, to wait
for the expiration of thirty (30) days from notice of strike before staging
the same, that said strike was not, accordingly, illegal and that the strikers
had not thereby lost their status as employees of respondents herein.
Upon the other hand, considering that the latter have been absolved from
the charge of unfair labor practice, the reinstatement of the strikers must
be without backpay.

TESTS IN DETERMINING THE LEGALITY OF A STRIKE

SIX (6) FACTORS AFFECTING LEGALITY OF STRIKES

1. Statutory Prohibition
Employees in the public service are prohibited to engage in strikes. While
they may enjoy the right to organize as recognized under the Constitution, they
are prohibited from staging strikes, demonstrations, mass leaves, walkouts and
other forms of mass action which will result in temporary stoppage or disruption
of public service. Their remedy is to refer the dispute to the Public Sector Labor-
Management Council.

2. Purpose must be ULP and Economic

PURPOSE TEST The strike must be due to either bargaining deadlock
and/or unfair labor practice.

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3. Compliance with Procedural Requirements of the Law
3.1. Notice of Strike
No labor organization shall declare a strike without first having
filed a notice of strike. A notice of strike must be filed with the National
Conciliation and Mediation Board (NCMB) of the Department of Labor
and Employment (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.

3.2. Cooling-off Period

It is that period of time given the NCMB to mediate and conciliate the
parties. It is also that span of time allotted by law for the parties to
settle their disputes in a peaceful manner, before staging a strike or
lockout. It is reckoned from the time when the notice of strike or lockout
is filed with the NCMB, a copy of said notice having been served on the
other party concerned. Otherwise, the mere filing without proof of valid
service to the other party concerned will not trigger the running of the
cooling-off period.
The cooling-off periods provided under the law before the intended date
of the actual mounting of the strike subject to the 7-day strike ban are
as follows:
a. In case of bargaining deadlock, the cooling-off period is thirty (30)
days from the filing of the notice of strike.
b. In case of unfair labor practice, the cooling-off period is fifteen (15)
days from the filing of the notice of strike

EXCEPTION: IN CASE OF UNION-BUSTING

In case of an unfair labor practice involving the 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.

3.3. Strike Vote and Strike Report

No labor organization shall declare a strike without the
necessary strike vote first having been obtained and reported to the

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 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. 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. At the same time, it is meant to discourage wildcat
strikes, union bossism and even corruption. 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.
The evident intention of the law in mandatorily requiring the
submission of the strike vote report is to reasonably regulate the right to
strike which is essential to the attainment of legitimate policy objectives
embodied in the law. Verily, mere substantial compliance with a
mandatory provision will not suffice. Strict adherence to the mandate of
the law is required. 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.

3.4. 7-day 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. 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. 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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4. Injunction
This is the remedy to enjoin an intended or impending strike or lockout, to
compel all the striking workers or locked out employees to return to work, and to
compel the employer to re-admit all workers under the same terms and
conditions prevailing before the strike or lockout. This is simply to maintain the
status quo of the situation and/or return to the normal situation.

5. Agreement of parties
A no-strike prohibition in a CBA is applicable only to economic strikes and
ULP strike is not covered wherein workers may go on strike based on ULP
despite the no-strike provision.
6. Lawful means and methods
A strike is legal when lawful means concur with lawful purpose.
MEANS EMPLOYED TEST A strike may be legal at its inception but
eventually be declared illegal if the strike is accompanied by violence which is
widespread, pervasive and adopted as a matter of policy and not merely violence
which is sporadic which normally occur in strike area.
CONVERSION DOCTRINE This doctrine involves conversion of strike from
economic to ULP and vice versa. A strike or lockout may start as an economic but
later on due to the actuations of the parties, the same may be converted to ULP or
vice versa. Under such situation, the conversion shall apply in which case the
requirements for the converted strike shall be observed.

Procedural Requirements: Mandatory

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:

a) It must be based on a valid and factual ground;

b) A notice of strike must be filed with the NCMB-DOLE;
c) 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;
d) 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;
e) A strike vote report should be submitted to the NCMB-DOLE at least
seven (7) days before the intended date of the strike;

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 f) 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
g) 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 preceding requisites, although procedural in nature, are mandatory and
failure to comply with any of them would render the strike illegal.

NFSW vs. Ovejera

Facts
This is a petition for prohibition seeking to annul the decision dated
February 20, 1982 of Labor Arbiter Ethelwoldo R. Ovejera of the National
Labor Relations Commission (NLRC) with station at the Regional
Arbitration Branch No. VI-A, Bacolod City, which, among others, declared
illegal the ongoing strike of the National Federation of Sugar Workers
(NFSW) at the Central Azucarera de la Carlota (CAC), and to restrain the
implementation thereof.

NFSW has been the bargaining agent of CAC rank and file
employees and has concluded with CAC a collective bargaining
agreement effective from 1981 to 1984. Under Art. VII, Sec. 5 of the said
CBA, Bonuses: the parties also agree to maintain the present practice on
the grant of Christmas bonus, milling bonus, and amelioration bonus to
the extent as the latter is required by law.

On November 28, 1981, NFSW struck allegedly to compel the

payment of the 13th month pay under PD 851, in addition to the
Christmas, milling and amelioration bonuses being enjoyed by CAC
workers. Thus, to settle the strike, a compromise agreement was
concluded between CAC and NFSW. Under paragraph 4 thereof, The
parties agree to abide by the final decision of the Supreme Court in any
case involving the 13th Month Pay Law if it is clearly held that the
employer is liable to pay a 13th month pay separate and distinct from the
bonuses already given.

On January 22, 1982, NFSW filed with the Ministry of Labor and
Employment (MOLE) Regional Office in Bacolod City a notice to strike
based on non-payment of the 13th month pay. Six days after, NFSW

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struck. One day after the commencement of the strike, a report of the
strike-vote was filed by NFSW with MOLE.

On February 8, 1982, CAC filed a petition with the Regional

Arbitration to declare the strike illegal, principally for being violative of
Batas Pambansa Blg. 130, that is, the strike was declared before the
expiration of the 15-day cooling-off period for unfair labor practice (ULP)
strikes, and the strike was staged before the lapse of seven days from the
submission to MOLE of the result of the strike-vote.

After the submission of position papers and hearing, Labor Arbiter

Ovejera declared the NFSW strike illegal. On February 26, 1982, the NFSW
by passing the NLRC filed the instant Petition for prohibition alleging
that Labor Arbiter Ovejera, CAC and the PC Provincial Commander of
Negros Occidental were threatening to immediately enforce the February
20, 1982 decision which would violate fundamental rights of the
petitioner.

Issue
WON the strike declared by NFSW is illegal, wherein the resolution
of which mainly depends on the mandatory or directory character of the
cooling-off period and the 7-day strike ban after report to MOLE of the
result of a strike-vote, as prescribed in the Labor Code
Ruling
The provisions hardly leave any room for doubt that the cooling-off
period in Art. 264(c) and the 7-day strike ban after the strike-vote report
prescribed in Art. 264(f) were meant to be, and should be deemed,
mandatory.

When the law says "the labor union may strike" should the dispute
"remain unsettled until the lapse of the requisite number of days (cooling-
off period) from the filing of the notice," the unmistakable implication is
that the union may not strike before the lapse of the cooling-off period.
Similarly, the mandatory character of the 7-day strike ban after the report
on the strike-vote is manifest in the provision that "in every case," the
union shall furnish the MOLE with the results of the voting "at least seven
(7) days before the intended strike, subject to the (prescribed) cooling-off
period." It must be stressed that the requirements of cooling-off period
and 7-day strike ban must both be complied with, although the labor

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union may take a strike vote and report the same within the statutory
cooling-off period.

If only the filing of the strike notice and the strike-vote report
would be deemed mandatory, but not the waiting periods so specifically
and emphatically prescribed by law, the purposes for which the filing of
the strike notice and strike-vote report is required would not be achieved,
as when a strike is declared immediately after a strike notice is served, or
when as in the instant case the strike-vote report is filed with MOLE
after the strike had actually commenced Such interpretation of the law
ought not and cannot be countenanced. It would indeed be self-defeating
for the law to imperatively require the filing on a strike notice and strike-
vote report without at the same time making the prescribed waiting
periods mandatory.

(b) Purposes of strike notice and strike-vote report. In requiring a strike

notice and a cooling-off period, the avowed intent of the law is to provide
an opportunity for mediation and conciliation. It thus directs the MOLE "to
exert all efforts at mediation and conciliation to effect a voluntary
settlement" during the cooling-off period . As applied to the CAC-NFSW
dispute regarding the 13th month pay, MOLE intervention could have
possibly induced CAC to provisionally give the 13th month pay in order to
avert great business loss arising from the project strike, without
prejudice to the subsequent resolution of the legal dispute by competent
authorities; or mediation/conciliation could have convinced NFSW to at
least postpone the intended strike so as to avoid great waste and loss to
the sugar central, the sugar planters and the sugar workers themselves, if
the strike would coincide with the mining season.

The cooling-off period and the 7-day strike ban after the filing of a
strike- vote report, as prescribed in Art. 264 of the Labor Code, are
reasonable restrictions and their imposition is essential to attain the
legitimate policy objectives embodied in the law. We hold that they
constitute a valid exercise of the police power of the state.
NFSW strike is illegal. The NFSW declared the strike six (6) days
after filing a strike notice, i.e., before the lapse of the mandatory cooling-
off period. It also failed to file with the MOLE before launching the strike a
report on the strike-vote, when it should have filed such report "at least
seven (7) days before the intended strike." Under the circumstances, we
are perforce constrained to conclude that the strike staged by petitioner is
not in conformity with law. This conclusion makes it unnecessary for us to
determine whether the pendency of an arbitration case against CAC on

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 the same issue of payment of 13th month pay has rendered illegal the
above strike under Art. 265 of the Labor Code which provides:
It shall likewise be unlawful to declare a strike or lockout after
assumption of jurisdiction by the President or the Minister, or after
certification or submission of the dispute to compulsory or voluntary
arbitration or during the pendency of cases involving the same grounds
for the strike or lockout.

EFFECTS OF GOOD FAITH OF STRIKES ON LEGALITY OF STRIKE

General Rule: A strike grounded on ULP is illegal if no such acts actually exist.

Exception: Even if no ULP acts are committed by the Employer, if the Employees believe
in good faith that ULP acts exist so as to constitute a valid ground to strike, then the
strike held pursuant to such belief may be legal. Where the union believed that the
Employer committed ULP and the circumstances warranted such belief in good faith,
the resulting strike may be considered legal although, subsequently, such allegations of
ULP were found to be groundless. (NUWHRAINInterim Junta v. NLRC, G.R. No.
125561, Mar. 6, 1998)

WHEN CAN THE SECRETARY OF LABOR ASSUME JURISDICTION OVER A

STRIKE
When there exists a labor dispute causing or likely to cause a strike or lockout in an
industry indispensable to the national interest. The power of assumption of jurisdiction
or certification by the Secretary of Labor is in the nature of a police power measure.
(Philtread Workers Union v. Sec. Confesor, G.R. No. 117169. March 12, 1997)

Conditions for a valid exercise of the assumption of jurisdiction authority

1. Both parties have requested the Secretary of Labor to assume jurisdiction over
the labor dispute; or
2. After a conference called by the Secretary of Labor on the propriety of the
issuance of the Assumption or Certification Order, motu proprio or upon request or
petition by either party to the labor dispute (Operational Guidelines of D.O. No. 40-
G-03 series of 2010 as amended by D.O. No. 40-H-13 series of 2013, Sec.1)

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DEFIANCE OF RETURN TO WORK ORDER

A return-to-work order is a statutory part and parcel of the Secretarys assumption or

certification order. Following an assumption or certification order, returning to work, on
the part of a worker, is not a matter of option or voluntariness but of obligation.
In case of non-compliance with return-to-work order in connection with the certification
or assumption of jurisdiction by the Secretary of Labor, the party concerned may be
subjected to immediate disciplinary action, including dismissal or loss of employment
status or payment by the locking-out employer of backwages, damages and other
affirmative relief, even criminal prosecution against either or both of them.
The Secretary of Labor may cite the defiant party in contempt, pursuant to the power
vested in him under the provisions of the Labor Code.

EFFECTS OF THE ASSUMPTION OF JURISDICTION OF THE SECRETARY OF

LABOR

1. Automatically enjoins intended or impending strike or lockout as specified in the

assumption or certification order;
2. If one has already taken place at the time of assumption or certification, all striking
or locked-out employees shall within 24 hours return to work from receipt of an
assumption or certification order and
3. The employer shall immediately resume operations and re-admit all workers under
the same terms and conditions prevailing before the strike or lockout (Operational
Guidelines of D.O. No. 40-G-03, Series of 2010, Sec. 3)
Exception: When the reinstatement would be impracticable and would only
exacerbate the situation such as when hotel employees shaved their heads or
cropped their hair which embarrassed the hotel to its guests and disrupted its
operations.

NO STRIKE CLAUSE IN CBA

A no strike, no lock-out is a valid provision in the CBA. However, it only applies to
economic provisions. It cannot prevent a strike which is grounded on unfair labor
practice. [Malayang Samahan ng mga Manggagawa sa Greenfield v. Ramos , 2000]

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Master Iron Labor Union VS NLRC, February 17, 1993
Facts:

The Master Iron Labor Works Construction is a duly organized

corporate entity engaged in steel fabrication and other related business
activities. Sometimes in February 1987, the Master Iron Labor Union
(MILU) entered into a collective bargaining agreement (CBA) with the
Corporation subcontracted outside workers to do the usual jobs done by
its regular workers including those done outside of the company plant. As
a result, the regular workers were scheduled by the management to work
on a rotation basis allegedly to prevent financial losses thereby allowing
the workers only (10) working days a month. Thus, MILU requested
implementation of the grievance procedure which had also been agreed
upon in the CBA, but the Corporation ignored the request. MILU filed a
notice with the Department of Labor and Employment.
The Corporation and MILU reached an agreement whereby the
Corporation acceded to give back the usual work to its regular employees
who are members of MILU. Notwithstanding said agreement, the
Corporation continued the practice of hiring outside workers. When the
MILU president, Wilfredo Abulencia, insisted I doing his regular work of
cutting steel bars which was being done by casual workers, a supervisor
reprimanded him, charged him with insubordination and suspended him
for three (3) days. Upon the request of MILU, Francisco Jose of the DOLE
called for conciliation conferences. The Corporation, however, insisted that
the hiring of casual worker was a management prerogative. It later
ignored subsequent scheduled conciliation conference. MILU staged the
strike on the following grounds: (a) violation of CBA; (b) discrimination;
(c) unreasonable suspension of union officials; and (d) unreasonable
refusal to entertain grievance. MILU staged the strike, maintaining picket
lines on the road leading to the Corporations plant entrance and
premises. Then, in the morning of July 28, 1987, the soldiers who had
been summoned by the Corporations counsel, came and arrested the
picketers. Consequently, the corporation filed a petition for injunction
before the NLRC which, on September 24, 1987, issued an order direction
the workers to remove the barricades and other obstructions which
prevented ingress to and egress from the company premises.
MILU filed a position paper with counter-complaint before the NLR,
in said counter-complaint, the workers charged the Corporation with
unfair labor practice for subcontracting work that was normally done by its

Page 69
regular workers thereby causing the reduction of the latters workdays;
illegal suspension of Abulencia without any investigations; discrimination
for hiring casual workers in violation of the CBA, and illegal dispersal of
the picket lines. Thereafter, Labor arbiter declared strike illegal. NLRC
affirmed. Petitioners contend that notwithstanding the non-strike provision
in the CBA, the strike they staged was legal because the reasons therefor
are non-economic in nature. They assert the NLRC abused its discretion in
holding that there was failure to exhaust the provision on grievance
procedure in view of the fact that they themselves sought grievance
meetings but the Corporation ignored such requests.

Issue: Whether or not the strike was illegal because of the no-strike
clause

Held: No. it is non-economic in nature.

Much more than an economic issue, the said practice of the Corporation
was a blatant violation of the CBA and unfair labor practice on the part
of the employer under Article 248 of the Labor Code. Although the end
result, should the Corporation be required to observe the CBA, may be
economic in nature because the workers would then e given their regular
working hours and therefore their just pay, not one of the said grounds is
an economic demand within the meaning of the law on labor strikes.
Professor Perfecto Fernandez, in his book Law on Strike, Picketing and
Lockouts, states that an economic strike involves issues relating to
demands for higher wages, higher pension or overtime rates, pensions,
profit sharing, shorter working hours, fewer work days for the same pay,
elimination of night work, lower retirement age, more healthful working
conditions, better health services, better sanitation and more safety
appliances. The demands of the petitioners, being covered by the CBA,
are definitely within the power of the Corporation to grant and therefore
the strike was not an economic strike.
The other grounds, i.e., discrimination, unreasonable suspension of union
officials and unreasonable refusal to entertain grievance, had been
ventilated before the Labor Arbiter. They are clearly unfair labor practices
as defined in the Labor Code. The subsequent withdrawal of petitioners
complaint for unfair labor practice which was granted by Labor Arbiter
Ceferine Diosana who also considered the case closed and terminated
may not, therefore, be considered as having converted their other
grievance into economic demands.

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STRIKE DURATION PAY

General Rule: Strikers are not entitled to their wages during the period of a strike,
even if the strike is legal

Reason: No work, no pay, or a fair days wage for a fair days labor.
Remedy: A worker who absents himself from work as a result of a strike, must seek
reimbursement of his wages from his union which declared the strike, or he might have
his unused vacation leaves.

Exceptions:
1. In case of a unfair labor strike, in the discretion of the authority deciding the case.
2. Where the strikers voluntarily and unconditionally offered to return, but the employer
refused to accept the offer.

Effect: They are entitled to backwages from the date the offer was made.
3. Where there is return-to-work order and the employees are discriminated.

Effect: They are entitled to backwages from the date of discrimination.

4. Where the employees did not participate in the strike but were practically locked-out
by the employer.
5. When reinstatement is no longer possible.
6. Agreement of the parties.

VICARIOUS LIABILITY RULE

Vicarious liability rule is a legal doctrine that assigns liability for an injury to a person
who did not cause the injury but who has a particular legal relationship to the person
who did act negligently. The employer is charged with legal responsibility for the
negligence of the employee because the employee is held to be an agent of the
employer. If a negligent act is committed by an employee acting within the general
scope of her or his employment, the employer will held liable for damages.

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LOSS OF EMPLOYMENT BY REASON OF STRIKE

1. Any union officer who knowingly participates in an illegal strike; and

2. Any worker or union officer who knowingly participates in the commission of illegal
acts during a strike may be declared to have lost his employment, even if a replacement
had been hired by the employer during such lawful strike.
Mere participation in an illegal strike by a union officer is sufficient ground to terminate
his employment. In case of a lawful strike, the union officer must commit illegal acts
during a strike for him to be terminated.

GOOD FAITH STRIKE

A strike justified by belief in good faith that the employer was committing unfair labor
practice at the time the strikers went on strike. Good faith saves the strike from being
declared illegal and the strikers from being declared to have lost their employment
status.

RULE ON REINSTATEMENT OF STRIKING WORKERS

General Rule: Striking employees are entitled to reinstatement, regardless of whether or
not the strike was the consequence of the employers unfair labor practice.
Reason: Because while out on strike, the strikers are not considered to have abandoned
their employment, but rather have only ceased for their labor. The declaration of a
strike is not a renunciation of employment relation.

Exceptions:
The following strikers are not entitled to reinstatement:
1. Union officers who knowingly participate in an illegal strike; and
2. Any striker/union member who knowingly participates in the commission of illegal
acts during the strike.
Backwages in Economic strike:

General Rule: In economic strike, the strikers are not entitled to backwages on
the principle that a fair days wage accrues only for a fair days labor.
Exception: Backwages in ULP strike

The following are entitled to backwages:

Page 72
 1. Involuntary strikers illegally locked-out;
2. Voluntary strikers in Unfair Labor Practice who offered to return to
work unconditionally; and
3. If there is a strike-duration pay in Collective Bargaining Agreement.

DISTINCTION BETWEEN VOLUNTARY AND INVOLUNTARY STRIKES

Voluntary strike which the employee will declare a strike to compel management to
grant its demands while Involuntary strike is a strike wherein the labor organization is
forced to go on strike because of the unfair labor practice committed against them by
the employer. It is an act of self-defense since the employees are pushed to the wall
and their only remedy is to stage a strike.

ART. 279(264). PROHIBITED ACTIVITIES

GROUNDS FOR THE DECLARATION OF STRIKE:

1. Deadlock in collective bargaining (ECONOMIC); and/or
2. Unfair labor practices (POLITICAL)

ECONOMIC ULP STRIKE

STRIKE [POLITICAL]
A. NATURE
- A voluntary - An involuntary strike; the labor organization is forced to go on strike
strike because because of the ULP committed against them by the employer. It is an
the employee act of self-defense since the employees are being pushed to the wall
will declare a and their only remedy is to stage a strike.
strike to
compel
management
to grant its
demands.
B. INITIATED BY:
- The collective - either
bargaining agent a. Collective bargaining agent or
of the appropriate b. the legitimate labor organization in behalf of its members
bargaining unit
can declare an
economic strike.

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 C. COOLING OFF PERIOD
-30 days from
the filing of the
notice of strike -15 days from the filing of the notice of strike.
before the
intended date of
actual strike
subject to the 7-
day strike ban.
D. EXCEPTION TO THE COOLING-OFF PERIOD
- No - the cooling off period may be dispensed with, and the union may take
exception immediate action in case of dismissal from employment of their officers
mandatory. duly elected in accordance with the unions Constitution and By-laws,
which may constitute union busting where the existence of the
union is threatened.

- Notice of - BUT it must still observe the mandatory 7-day period before it
strike and can stage a valid strike.
strike vote
maybe
dispensed
with. They
may strike
immediately.
E. STRIKE DURATION PAY IN CASE OF A LEGAL STRIKE

- not entitled to - may be awarded the said paid in the discretion of the authority deciding
said pay based on the case.
the principle that
a fair days wage
accrues only for a
fair days labor

CHARACTERISTICS OF STRIKES:
1. There must be an established relationship between the strikers and the person/s
against whom the strike is called
2. The relationship must be one of employer and employee

Page 74
 3. The existence of a dispute between the parties and the utilization by labor of the
weapon of concerted refusal to work as a means of persuading or coercing
compliance with the working mens demands
4. The contention advanced by the workers that although the work ceases, the
employment relation is deemed to continue albeit in a state of belligerent
suspension
5. There is work stoppage, which stoppage is temporary
6. The work stoppage is done through the concerted action of the employees
7. The striking group is a legitimate labor organization, and in case of bargaining
deadlock, is the employees sole bargaining representative.

TESTS IN DETERMINING THE LEGALITY OF A STRIKE:

1. Purpose Test
2. Compliance with Procedural and substantive requirements of law
3. Means employed test

1. PURPOSE TEST - The strike must be due to either

- bargaining deadlock and/or
- unfair labor practice.

2. COMPLIANCE WITH PROCEDURAL & SUBSTANTIVE REQUIREMENTS OF

LAW to wit (a-d):

a. notice of strike
b. 30/15-day cooling-off period before the intended date of actual strike
subject to the 7-day strike ban.

COOLING OFF PERIOD - that period of time given the NCMB to mediate
and conciliate the parties.
It is that span of time allotted by law for the parties to settle
theirdisputes in a peaceful manner, before staging a strike or lockout.

c. strike vote

Page 75
 STRIKE VOTE - a requirement wherein the decision to declare a
strike must be:
1. approved by a MAJORITY of the total union
membership in the bargaining unit concerned [not of the
whole bargaining unit],
2. obtained by SECRET BALLOT in MEETINGS OR
REFERENDA called for the purpose.

PURPOSE OF A STRIKE VOTE: - to ensure that the intende

strike is a majority decision
- The report on the strike vote must be submitted to the DOLE at
least 7 days before the intended strike subject to the cooling-off
period.

d. 7-day strike ban

7-DAY STRIKE BAN it is the 7 day waiting period before the date of
the purported strike [within which the union intending to conduct a strike
must at least submit a report to the Department as to the result of the
strike vote] intended to give the Department an opportunity TO VERIFY
whether the projected strike really carries the imprimatur of the majority
of the union members in addition to the cooling off period before actual
strike.

3. MEANS EMPLOYED TEST-A strike may be legal at its inception but eventually be
declared illegal if the strike is accompanied by violence which violence is
widespread, pervasive and adopted as a matter of policy and not merely violence
which is sporadic which normally occur in a strike area [see prohibited activities
under art. 264].

NOTE: The 3 tests must concur. Non-compliance with any of the aforementioned
requisites renders the strike illegal.

EFFECT OF GOOD FAITH OF STRIKERS ON LEGALITY OF STRIKE - A strike

may be considered legal where the union believed that the company committed ULP
and the circumstances warranted such belief in good faith, although subsequently
such allegations of ULP are found out as not true. (Bacus vs. Ople)

Page 76
 TOTALITY DOCTRINE - the culpability of an employers remarks are to be
evaluated not only on the basis of their implicit implications but are to be appraised
against the background of and in conjunction with collateral circumstances.
Under this doctrine expressions of opinion by an employer which, though
innocent in themselves, frequently were held to be culpable because:

a. of the circumstances under which they were uttered

b. the history of the particular employers labor relations of anti-union bias or
a. because of their connection with an established collateral plan of coercion
or interference.

WHEN CAN THE SEC. OF LABOR ASSUME JURISDICTION OVER A STRIKE?

1. there exists a labor dispute causing or likely to cause a strike or lockout in
a INDUSTRY INDISPENSABLE TO THE NATIONAL INTEREST,
2. the Secretary of Labor and Employment may:
A. decide it, or
B. certify the same to the NLRC for COMPULSORY ARBITRATION.

NOTE: What constitutes indispensable industry is based solely upon the

discretion of the Secretary of Labor.

EFFECTS OF THE ASSUMPTION OF JURISDICTION OF THE SECRETARY

1. AUTOMATICALLY ENJOINS the intended or impending strike or lockout as

specified in the assumption or certification order;
2. if one has already taken place at the time of assumption or certification, all
striking or locked-out employees shall IMMEDIATELY RETURN TO WORK;
and
3. The employer shall immediately resume operations and READMIT ALL
WORKERS under the same terms and conditions prevailing before the strike or
lockout.

A motion for reconsideration does not suspend the effects as the assumption
order is immediately executory.

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ISSUES THAT THE SECRETARY OF LABOR CAN RESOLVE WHEN HE
ASSUMES JURISDICTION OVER A LABOR DISPUTE:

a. Only issues submitted to the Secretary may be resolved by him. (PAL vs.
Sec. of Labor, 23 January 1991).b
b. Issues submitted to the Secretary for resolution and such issues involved
in the labor dispute itself. (St. Scholasticas College vs. Torres; 29 June
1992)
c. Secretary of Labor may subsume pending labor cases before Labor
Arbiters which are involved in the dispute and decide even issues falling
under the exclusive and original jurisdiction of labor arbiters such as the
declaration of legality or illegality of strike. (Intl Pharmaceuticals vs. Sec
of Labor; 09 January 1992).
d. Power of Sec. of Labor is plenary and discretionary. (St. Lukes Medical
Center vs. Torres; 29 June 1993; reiterated in PAL vs. Confesor; 10 March
1994).

IN CASE THE STRIKE IS DECLARED LEGAL, ARE THE STRIKERS ENTITLED

TO STRIKE DURATION PAY?

GENERAL RULE: Strikers are not entitled to their wages during the period of a
strike, even if the strike is legal.

EXCEPTIONS:
1. In case of a ULP STRIKE, in the discretion of the authority deciding the case
[see table for more distinction bet. Economic and ULP strike]

2. Where the strikers VOLUNTARILY AND UNCONDITIONALLY OFFERED TO

RETURN TO WORK, but the employer refused to accept the offer [e.g. of an
unconditional offer: we will return tomorrow and NOT willing to return
provided]

They are entitled to backwages from the date the offer was made

3. Where there is RETURN-TO-WORK ORDER and the employees are

discriminated against.

Page 78
 - They are entitled to backwages from the date of discrimination.

RULE ON REINSTATEMENT OF STRIKING WORKERS:

GENERAL RULE : Striking employees are entitled to reinstatement, regardless of

whether or not the strike was the consequence of the employers ULP
REASON: because while out on strike, the strikers are not considered to have
abandoned their employment, but rather have only ceased from their labor.

The declaration of a strike is NOT a renunciation of employment relation.

EXCEPTIONS - The following strikers are NOT entitled to reinstatement:

1. Union officers who knowingly participate in an illegal strike; and
2. any striker/union member who knowingly participates in the commission
of illegal acts during the strike.
Those union members who joined an illegal strike but have not committed any
illegal act shall be reinstated but without any backwages.

RULE IN STRIKES IN HOSPITALS

1. It shall be the duty of striking employees or locking-out employer

to provide and maintain an effective SKELETAL WORKFORCE of
medical and other health personnel for the duration of the strike or
lockout.

2. SECRETARY OF LABOR MAY IMMEDIATELY ASSUME

JURISDICTION WITHIN 24 HOURS FROM KNOWLEDGE of
the occurrence of such strike or lock-out or certify it to the
Commission for compulsory arbitration.

LABOR ORGANIZATIONS
1. No labor organization or employer shall declare a strike or lockout
without first having bargained collectively in accordance with Title VII of
this Book or
without first having filed the notice required in Art. 263 or
without the necessary strike or lockout vote first having been obtained and
reported to the Department.

Page 79
NO strike or lockout shall be declared:
a. AFTER assumption of jurisdiction by the President or the Secretary or
b. AFTER certification or submission of the dispute to compulsory or voluntary
arbitration or
c. DURING the pendency of cases involving the same grounds for the strike or
lockout.

THIRD PERSONS
NO person [3rd persons] all obstruct, impede or interfere with by force, violence,
coercion, threats or intimidation
any peaceful picketing by employees
during any labor controversy or in the exercise of the right of self-
organization or collective bargaining or
shall aid or abet such obstruction or interference.

EMPLOYERS
NO employer shall use or employ any STRIKE-BREAKER nor shall any person be
employed as a strikebreaker

PUBLIC OFFICIAL OR EMPLOYEE

NO public official or employee, including officers and personnel of the New Armed
Forces of the Philippines of the Integrated National Police, or armed persons,

shall bring in, introduce or escort in any manner, any individual who seeks
to replace strikes in entering or leaving the premises of a strike area, or work
in place of the strikers.

The police force shall keep out of the picket lines unless actual violence or
other criminal acts occur therein:

Provided, That nothing herein shall be interpreted to prevent any public officers
from taking any measure necessary to:
a. maintain peace and order,
b. protect life and property, and/or
c. enforce the law and legal order.

Page 80
 PERSONS ENGAGED IN PICKETING
NO person engaged in PICKETING shall:
a. commit any act of violence, coercion or intimidation or
b. obstruct the free ingress to or egress from the employers premises for lawful
purposes ,or
c. obstruct public thoroughfares

AFLU v. CLORIBEL, 27 SCRA 465

FACTS: Petitioner labor union picketed against Metrobank, which is

occupying an office space in the Wellington building. Wellington
complained that the picketers were annoyingly blocking the common
passageway of the building, the only ingress and egress being used by the
occupants of the second to the sixth floors thereof as well as by their
respective employees, clients and customers, so that the picket has
caused a disruption of the business of Wellington as well as the other
lessors in the building.

ISSUE: Does the court have the power to enjoin the picket, despite being
peaceful?

HELD: Yes. The courts are vested with the power to limit the exercise of
the right of peaceful picketing to parties involved in the labor dispute, or
having a direct interest to the context of this issue. Wellington is a mere
"innocent bystander" who is not involved in the labor dispute. Thus, they
are entitled to seek protection of their rights from the courts and the
courts may, accordingly, legally extend the same.

ART. 280 (265) IMPROVED OFFER V. REDUCED OFFER BALLOTING

Improved Offer Balloting is a referendum conducted by the NCMB on or before the

30th day of the strike, for the purpose of determining whether or not the improved offer
of the employer is acceptable to the union members. When at least a majority of the
union members vote to accept the improved offer, the striking workers shall
immediately return to work and the employer shall thereupon readmit them upon
signing of the agreement.

Reduced Offer Balloting is a referendum conducted by the NCMB on or before the

30th day of lockout, for the purpose of determining whether or not the reduced offer of
the union is acceptable to the board of directors, trustees or partners. When at least a

Page 81
majority of the board of directors or trustees or the partners holding the controlling
interest in the partnership, vote to accept the reduced offer, the workers shall
immediately return to work and the employer shall thereupon readmit them upon
signing of the agreement.

IMPROVED OFFER BALLOTING REDUCED OFFER BALLOTING

AS TO PURPOSE

1. To determine whether or not the 1. To determine whether or not improved

improved offer of the employer is
acceptable to the union members.
2. To ascertain the real sentiment of the
silent majority of the union members
on strike,
offer of the union is acceptable to
board, trustees and partners.
2. To ascertain the real sentient of the
silent majority of the union members
on strike

AS TO PERIOD OF FILING

On or before the 30th day of the STRIKE On or before the 30th day of the LOCKOUT

ART. 281 (266) ARREST AND DETENTION

GENERAL RULE: A police officer cannot arrest or detain a union member for union
activities without previous consultations with the Secretary of Labor.

EXCEPT on the grounds of:

3. National Security;
4. Public peace; and
5. Commission of a crime

An arrest can be lawfully made in the following cases:

1. Any person who obstructs the free and lawful ingress and egress from
the employers premises or who obstructs public thoroughfares.
2. Any person who shall have in his possession deadly weapons in
violation of B.P. Blg. 6 (An Act Reducing the Penalty For Illegal
Possession Of Bladed, Pointed Or Blunt Weapons, and For Other
Purposes, Amending For The Purpose P.D. No. 9) and firearms and
explosives (Guidelines for the Conduct of PNP/AFP Personnel in Labor
Disputes)

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ART. 284 (269) PROHIBITIONS AGAINST ALIENS; EXCEPTIONS

GENERAL RULE: All aliens, natural or juridical as well as foreign organizations

are strictly prohibited from engaging in all forms of trade union activities.

EXCEPTIONS: Aliens who: (a) work in the country with valid permits issued by
the DOLE; and (b) are nationals of a country which grants the same or similar
rights to Filipino workers.

ART. 288-292(273-277) SPECIAL PROVISIONS

Visitorial Power Under Art. 128 v. Art. 289

VISITORIAL POWER UNDER 128 VISITORIAL POWER UNDER 289

Pertains to Administrative Speaks of enforcement of law or
enforcement of : regulation relating only to financial
a. Labor Code provisions activities and records of labor
b. All labor laws organizations.
c. Wage orders in employer
establishments
3.
Inspection may be done through the Needs sworn complaint filed and
DOLEs initiative supported by at least 20% of the
organizations membership.
NOTE: In Art 249, 30% violation of
members rights.

Note: Art. 128 is broader than Art. 289.

ART. 290(275) TRIPARTISM AND TRIPARTITE CONFERENCES

Tripartism is the representation of the three sectors the public or the government,
the employers and the workers in policy-making bodies of the government.
1. Such kind representation in the policy-making bodies of private
enterprises is not ordained, not even by the Philippine Constitution and does
not men representation in the corporate board.
2. What is provided is workers participation in policy and decision-making
process directly affecting their rights, benefits and welfare.

Page 83
Tripartism is observed in the following government agencies:
1. NLRC;
2. National Wages and Productivity Commission;
3. Employees Compensation Commission;
4. POEA Governing Board;
5. Philippine Health Insurance Corporation;
6. Social Security Commission; and
7. GSIS Board of Trustees

Note: This amendment created the National Tripartite Industrial Peace Council

ART. 292 (277) MISCELLANEOUS PROVISIONS

Note: Article 292(b) speaks of statutory/procedural due process to be observed in

terminating an employee under any of the grounds provided for under Art 297 or the
just causes (see Art 297)

The last part of Article 292(b)is different from the assumption or certification powers of
the Secretary of Labor provided for under Article 278(g) in that the former needs a
hearing first before the Secretary of Labor may suspend the effects of the termination
pending resolution of the dispute.

BOOK VI POST EMPLOYMENT

BOOK VI TITLE I TERMINATION OF EMPLOYMENT

ART. 294(279) - SECURITY OF TENURE

Security of tenure - the constitutional right granted the employee, that the employer
shall not terminate the services of an employee except for just cause or when
authorized by law.

The following are entitled to security of tenure:

1) Regular employee
2) Probationary employee
3) Seasonal employee
4) Project employee
5) Other forms of employment during the effectivity thereof

Managerial employees also enjoy security of tenure. The principle of security of tenure
applies not only to rank-and-file employees but also to managerial employees. (PLDT
vs. Tolentino, G. R. No. 143171, Sept. 21, 2004).

Page 84
The fact that one is a managerial employee does not by itself exclude him from the
protection of the constitutional guarantee of security of tenure. ( Fujitsu Computer
Products Corporation of the Philippines vs. CA, G. R. No. 158232, April 8, 2005;
Maglutac vs. NLRC, 189 SCRA 767 [1990]).

An employee who is unjustly dismissed from work shall be entitled to reinstatement

without loss of seniority rights and other privileges and to his full backwages, inclusive
of allowances, and to his other benefits or their monetary equivalent computed from
the time his compensation was withheld from him up to the time of his actual
reinstatement.

ART. 297(282) TERMINATION BY EMPLOYER

Management Rights

Our laws recognize and respect the exercise by management of certain rights and
prerogatives. For this reason, courts often decline to interfere in legitimate business
decisions of employers. In fact, labor laws discourage interference in employers
judgment concerning the conduct of their business. (Philippine Industrial Security
Agency Corporation vs. Aguinaldo, G. R. No. 149974, June 15, 2005; Mendoza vs. Rural
Bank of Lucban, G.R. No. 155421, July 7, 2004).

An employer can regulate, generally without restraint, according to its own discretion
and judgment, every aspect of its business. (Deles, Jr. vs. NLRC, G. R. No. 121348,
March 9, 2000).

This privilege is inherent in the right of employers to control and manage their
enterprise effectively. (Mendoza vs. Rural Bank of Lucban, G.R. No. 155421, 07 July
2004).

Just Causes of Termination

1) Serious Misconduct For misconduct or improper behavior to be a just cause for

dismissal, it is necessary that: (i) it must be serious; (ii) it must relate to the
performance of the employees duties; and (iii) it must show that the employee has
become unfit to continue working for the employer.

Immorality - As a general rule, immorality 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.

The standard to be used to determine whether the immoral conduct

adversely affects the interest of the employer is whether the immoral act is of

Page 85
 such nature which may be considered calculated to undermine or injure such
interest or which would make the worker incapable of performing his work.

Sexual harassment - Republic Act No. 7877, approved on February 14, 1995,
otherwise known as the Anti-Sexual Harassment Act of 1995 declares
sexual harassment unlawful in the employment, education or training
environment.

R. A. No. 7877 punishes sexual harassment if the same is:

a. work-related; or
b. education-related; or
c. training-related.

Cheating Falsification is a wrongful act the commission of which would

merit the dismissal of the culprit.

2) Willful Disobedience willful disobedience by the employee of the lawful orders

of his employer or representative in connection with his work.

Elements

Gold City Integrated Port Services, Inc. v. NLRC, G.R. No. 86000, 21
September 1990

Facts:

Private respondent Jose Balcaso figured in a fist fight inside their immediate
superiors office despite being told to stop provoking his co-employee and
that he should behave properly. Consequently, private respondent was
terminated from service for alleged inability of Balcaso to get along with his
co-employees and with the companys customers. Balcaso then filed a
complaint for illegal dismissal and contented that there was no evidence he
had willfully disobeyed any order given by his superior during the incident.

Issue:

Whether the act of Balcaso may be considered just cause for his termination
from service.

Held:

The High Court held that private respondents act constituted willful
disobedience to a lawful order of petitioners representative which was
obviously connected with private respondents work. The Court explained that

Page 86
 willful disobedience of the employers lawful orders, as a just cause for
dismissal of an employee, envisages the concurrence of at least two
requisites:

a. the employees assailed conduct must have been willful or intentional, the
willfulness being characterized by a wrongful and perverse attitude; and
b. the order violated must have been reasonable, lawful, made known to the
employee and must pertain to the duties which he had been engaged to
discharge.

Transfer when valid - The Supreme Court has recognized and upheld the
prerogative of management to transfer an employee from one office to
another within the business establishment, provided there is no demotion in
rank or diminution of salary, benefits, and other privileges; and the action is
not motivated by discrimination, made in bad faith, or effected as a form of
punishment or demotion without sufficient cause. This is a privilege inherent
in the employers right to control and manage its enterprise effectively.
(Mendoza vs. Rural Bank of Lucban, G. R. No. 155421, July 7, 2004; Benguet
Electric Cooperative vs. Fianza, G. R. No. 158606, March 9, 2004).

Homeowners SLA vs. NLRC, G.R. No. 97067, September 26, 1996

Facts:
Private respondent Marylin Cabatbat filed a complaint for illegal dismissal
after she was terminated from her employment as Branch Accountant for her
refusal to be transferred to the Urdaneta Branch as she maintained that her
re-assignment from San Carlos Branch to Urdaneta Branch involved a
promotion which she can rightfully decline without being guilty of willful
disobedience, a just cause for termination. Petitioner, however, averred that
the re-assignment was merely a transfer to another post which she cannot
validly refuse without incurring the concomitant disciplinary measures the
petitioner corporation may deem fit to impose, which in this case is
termination.
Issue:
Whether Cabatbats refusal to be transferred to the Urdaneta Branch
constitutes a ground for dismissal from employment.

Page 87
Held:
Yes. The petitioners decision to transfer private respondent to the Urdaneta
Branch was made without grave abuse of discretion. As creditably explained
by management, the reason for the transfer was due to the exigency to uplift
the operational efficiency of the Urdaneta Branch, and that private
respondents continued failure to report to said branch has continuously
exposed the bank to lack of control in its cash operation and has also resulted
to a backlog in its recordkeeping and delay in the accomplishment of
reportorial requirements, all of which fall under the scope of the
responsibilities of the Branch Accountant.

Escobin v. NLRC, 289 SCRA 48, April 15, 1998

Facts:
PISI is a duly licensed security agency. It hired Escobin and several other
security guards to work as guards in the premises of Basilan Plantations, Inc.
in Basilan, Mindanao. Escobin and his companions were residents of Basilan
and heads of families. After working for five years as guards in the
plantation, Escobin and his group were placed under reserved or floating
status. This was due to the reduction of the security force ordered by
Basilan Plantations, Inc. Later, the guards placed on reserved or floating
status were instructed by registered letter to report to PISI Head Office in
Metro Manila for posting to PISI clients within Metro Manila. The guards did
not reply. A second letter was sent but the guards likewise failed to reply.
PISI sent individual letters to the guards ordering them to explain why no
disciplinary action should be taken against them for failing to comply with
PISIs order. The guards did not send their answers to PISI. PISI dismissed
the guards on the ground of insubordination or willful disobedience to lawful
orders of their employer. During the proceedings before the Labor Arbiter,
the guards justified their inability to comply with PISIs order to report to the
head office in Metro Manila, saying: they were residents of Basilan, have
families of their own in Basilan, have never traveled beyond Visayas and
Mindanao, not provided by PISI with fare money as they cannot, on their
own, finance their travel from Basilan to Manila.

Page 88
 Issue:
Assuming the allegations of the guards were true, was the dismissal valid?
Held:
No, the dismissal was not valid. Disobedience, to be a just cause for
termination, must be willful and perverse mental attitude rendering the
employees act inconsistent with proper subordination. A willful or
intentional disobedience justifies dismissal only when the rule, order or
instruction is;(1) reasonable and lawful, (2) sufficiently known to the
employee, and (3) connected with the duties which the employee has been
engaged to discharge. The reasonableness and lawfulness of a rule depend
on the circumstances of each case. Reasonableness pertains to the kind or
character of directives and commands and to the manner in which they are
made. In this case, the order to report to the Manila office fails to meet this
standard. It was grossly inconvenient for the guards who were residents
and heads of families in Basilan. The guards were not provided with funds
to defray their transportation and living expenses. The dismissal in this case
was too harsh a penalty for the insubordination which was neither willful nor
intentional. The guards failure to answer PISIs show-cause letters does
not negate this conclusion as PISI granted other guards a second chance to
explain, an opportunity it denied Escobin and his group

Transfer with promotion; if rejected - In Dosch vs. NLRC, [208 Phil. 259; 123
SCRA 296 (1983)], the refusal of the employee to be transferred was upheld
because no law compels an employee to accept a promotion and because the
position he was supposed to be promoted to did not even exist at that time.

3) Neglect of duties the following are the grounds for gross neglect of duties:
Element of habituality may be disregarded where loss is substantial.
Element of habituality may be disregarded if totality of evidence justifies
dismissal.
Element of actual loss or damage, not an essential requisite.
Habitual tardiness or habitual absenteeism may be a ground for termination.

Abandonment - Abandonment of work is a valid ground to terminate an

employment. To constitute abandonment, two (2) elements must concur, namely:
a. the failure to report for work or absence without valid or justifiable reason;
and

Page 89
 b. a clear intention to sever the employer-employee relationship. This is the
more determinative factor being manifested by some overt acts.

4) Dishonesty An act of dishonesty may constitute either of the following grounds:

serious misconduct, fraud, willful breach of trust and confidence.

Falsification a wrongful act the commission of which would merit the

dismissal of the culprit;
Theft if the violation consists in the theft of funds or property not belonging
to the employer, the same may not be cited as basis to terminate the
employment of the violator;
Unauthorized use of vehicle the dismissal of an employee for violation of
the rule against the use of company-owned vehicles for private purposes
without the prior authority of the employer, is valid.

5) Loss of confidence The law and jurisprudence have long recognized the right of
employers to dismiss employees by reason of loss of trust and confidence. Thus, if
there is sufficient evidence to show that the employee has been guilty of breach of
trust or that his employer has ample reason to distrust him, the labor tribunal
cannot justly deny to the employer the authority to dismiss such employee, more so
in cases where the latter occupies a position of responsibility.

When applicable; position of trust

Riker vs. Ople, G.R. No. 50492, October 27, 1987

Facts:

On 23 April 1976, it was verbally agreed that respondent Mayon Imperial

Hotel would engage the petitioner Vincent Rikers services as general
manager of the hotel beginning 1 May 1976 on a four months probationary
basis. A proposed contract for two years with the terms and conditions stated
therein was considered by the parties. Said contract as signed by the
petitioner but not by the respondent. Hardly a month passed when
respondent began to notice that petitioner could not be a good manager. He
was a lavish in entertaining his guests at the hotel and he would be drunk
occasionally. On 20 August 1976, petitioner received a letter from respondent
hotel informing him that a working visa for him was not secured and a
change of status of the members of his family was not obtained, advising him
therefore, to leave on or before 23 August 1976. Consequently, petitioner
filed a complaint for illegal dismissal.

Page 90
 Issue:
Whether petitioner was illegally dismissed.

Held:
No. By the very nature of his position, the maintenance of an employer-
employee relationship is highlv dependent upon the trust and confidence
reposed on the employee by the employer. The loss of trust and confidence
by the employer would instantly mean the termination of employment. It has
been repeatedly held by the Supreme Court in a long line of decisions that
where an employee has been guilty of breach of trust or that his employer
has ample reason to distrust him, a labor tribunal cannot deny the employer
the authority to dismiss the employee.

Proof required: substantial evidence - It must rest on substantial grounds and

not on the employers arbitrariness, whims, caprices or suspicion; otherwise,
the employee would eternally remain at the mercy of the employer. It should
be genuine and not simulated; nor should it appear as a mere afterthought to
justify earlier action taken in bad faith or a subterfuge for causes which are
improper, illegal or unjustified. It has never been intended to afford an
occasion for abuse because of its subjective nature. (Atlas Consolidated
Mining & Development Corporation vs. NLRC,G. R. No. 122033, May 21,
1998).

Guidelines for Applying Doctrine of loss of confidence - In the 2004 case of

Charles Joseph U. Ramos vs. The Honorable Court of Appeals and Union Bank
of the Philippines, [G.R. No. 145405, June 29, 2004], the Supreme Court held
that, in order to validly dismiss an employee on the ground of loss of trust
and confidence under Article 282, the following guidelines must be followed:

a. The loss of confidence must not be simulated;

b. It should not be used as a subterfuge for causes which are illegal,
improper or unjustified;
c. It may not be arbitrarily asserted in the face of overwhelming
evidence to the contrary;
d. It must be genuine, not a mere afterthought, to justify earlier action
taken in bad faith; and
e. The employee involved holds a position of trust and confidence.
(Tolentino vs. PLDT, G. R. No. 160404, June 8, 2005).

6) Commission of a Crime or Offense Art. 11 (2) of RPC commission of a crime

of offense by the employee against the person of his employer or any immediate
member of his family or his duly authorized representative; conviction or prosecution
is not required.

Page 91
7) Other causes analogous to the foregoing a cause must be due to the
voluntary or willful act or omission of the employee (Nadura vs Benguet
Consolidated;
GR L-17780).

ART. 298(283) CLOSURE OF ESTABLISHMENT AND REDUCTION OF

PERSONNEL

AUTHORIZED CAUSES OF TERMINATION BY THE EMPLOYER:

1. installation of labor-saving devices (AUTOMATION)

2. REDUNDANCY (superfluity in the performance of a particular work)

redundancy, for purposes of the Labor Code, exists where the services of an
employee are in excess of what is reasonably demanded by the actual
requirements of the enterprise. (Wishire File Co. Inc. vs. NLRC)

Reorganization as a cost-saving device is acknowledged by jurisprudence. An

employer is not precluded from adopting a new policy conducive to a more
economical and effective management, and the law does not require that the
employer should be suffering financial losses before he can terminate the services
of the employee on the ground of redundancy (DOLE PHILIPPINES, INC et al., vs.
NATIONAL LABOR RELATIONS COMMISSION et al.)

3. RETRENCHMENT to prevent losses (there is excess of employees and employer

wants to prevent financial losses)

REDUNDANCY V. RETRENCHMENT

Sebeguero v NLRC Sept. 27, 1995

Facts:
Petitioners were regular employees of private respondent GTI Sportswear
Corporation who were given "temporary lay-off" notices by the latter
sometime on January 1991 due to alleged lack of work and heavy losses

Page 92
caused by the cancellation of orders from abroad and by the garments
embargo of 1990.
Believing that their "temporary lay-off" was a ploy to dismiss them which
was resorted to because of their union activities and was in violation of
their right to security of tenure since there was no valid ground therefor,
the laid-off employees filed with the Labor Arbiter's office in the NCR
complaints for illegal dismissal, unfair labor practice, underpayment of
wages, and non-payment of overtime pay and 13th month pay.
GTI denied the claim of illegal dismissal and asserted that it was its
prerogative to lay-off its employees temporarily for a period not exceeding
six months to prevent losses due to lack of work or job orders from
abroad, and that the lay-off affected both union and non-union members.
It justified its failure to recall the laid-off employees after the lapse of six
months because of the subsequent cancellations of job orders made by its
foreign principals, a fact which was communicated to the petitioners and
the other complainants who were all offered severance pay. Twenty-two
(22) of the 38 complainants accepted the separation pay. The petitioners
herein did not.
Issue:
Whether or not the lay-off is a valid retrenchment or an illegal
constructive dismissal

Held:
Redundancy exists where the services of an employee are in excess of
what is reasonably demanded by the actual requirements of the
enterprise. A position is redundant where it is superfluous, and superfluity
of a position or positions may be the outcome of a number of factors,
such as overhiring of workers, decreased volume of business, or dropping
of a particular product line or service activity previously manufactured or
undertaken by the enterprise.

Retrenchment, on the other hand, is used interchangeably with the term

"lay-off." It is the termination of employment initiated by the employer
through no fault of the employee's and without prejudice to the latter,
resorted to by management during periods of business recession,
industrial depression, or seasonal fluctuations, or during lulls occasioned
by lack of orders, shortage of materials, conversion of the plant for a new
production program or the introduction of new methods or more efficient
machinery, or of automation. Simply put, it is an act of the employer of
dismissing employees because of losses in the operation of a business,

Page 93
 lack of work, and considerable reduction on the volume of his business, a
right consistently recognized and affirmed by this Court.

To determine whether the petitioners were validly retrenched or were

illegally dismissed, the SC determined whether there was compliance with
the law regarding a valid retrenchment at anytime within the six month-
period that they were temporarily laid-off.

Here, both the Labor Arbiter and the NLRC found that the private
respondent was suffering and would continue to suffer serious losses,
thereby justifying the retrenchment of some of its employees, including
the petitioners

CONDITIONS UNDER WHICH AN EMPLOYER MAY RETRENCH:

(a) Substantial losses which are not merely de minimis in extent;
(b) Imminence of such substantial losses;
(c) Retrenchment would effectively prevent the expected and additional losses;
(d) The alleged losses and expected losses must be proven by sufficient and
convincing evidence. (NDC-GUTHRIE PLANTATIONS, INC., vs. NATIONAL LABOR
RELATIONS COMMISSION, ET. AL)

Lopez Sugar Corp. vs. Federation of Free Workers, Aug. 30, 1990
The controversy in this case is that whether or not petitioners application
for clearance to retrench its employees should be granted.

It was ruled by the Supreme Court in the negative stating the provisions
of article 283 of the Labor Code as amended.

Furthermore, the principal difficulty with petitioners case as above

presented was that no proof of actual declining gross and net revenues
was submitted. No audited financial statements showing the financial
condition of petitioner corporation during the above mentioned crop years
were submitted.

Bogo-Medellin Sugar Cane Planters vs NLRC, Sept. 25, 1998

The Petitioners were given the chance to present sufficient and substantial
evidence of business loss to justify retrenchment in which they have failed
to do so wherefore the court ruled that;

The following requisites of a valid retrenchment:

Page 94
 (1) the losses incurred are substantial and not deminimis:
(2) the losses are actual or reasonably imminent;
(3) the retrenchment is reasonably necessary and is likely to be
effective in preventing the expected imminent losses sought to be
forestalled, are proven by sufficient and convincing evidence.

In the present case, petitioners miserably failed to prove (1) substantial

losses and (2) the reasonable necessity of the retrenchment.

No Sufficient and Substantial Evidence of Business Loss

To justify retrenchment, the employer must prove serious business losses.

Indeed, not all business losses suffered by the employer would justify
retrenchment under this article. The Court has held that the "loss'
referred to in Article 283 cannot be just any kind or amount of loss;
otherwise, a company could easily feign excuses to suit its whims and
prejudices or to rid itself of unwanted employees.

Upon the other hand, it appears from the record that petitioner, after
reducing its work force, advised 110 casual workers to register with the
company personnel officer as extra workers. Petitioner, as earlier noted,
argued that it did not actually hire casual workers but that it merely
organize(d) a pool of extra workers from which workers could be drawn
whenever vacancies occurred by reason of regular workers going on leave
of absence. Both the Labor Arbiter and the NLRC did not accord much
credit to petitioners explanation but petitioner has not shown that the
Labor Arbiter and the NLRC were merely being arbitrary and capricious in
their evaluation.

4. Closing or CESSATION OF OPERATION of the establishment or undertaking

UNLESS the closing is for the purpose of circumventing the provisions of the Labor
Code.

NORTH DAVAO MINING CORPORATION vs NLRC, March 13,

1996

The Petitioner is forced by huge business losses to close its business,

is it legally required to pay separation benefits to its employees at the
time of its closure in an amount equivalent to the separation pay paid
to those who were separated when the company was still a going
concern?

Page 95
 To resolve the issue, the court revisit the provision of law adverted to
by the parties in their submissions, namely, Art. 283 of the Labor
Code.
As already stated, Art. 283 of the Labor Code does not obligate an
employer to pay separation benefits when the closure is due to losses.
In the case before us, the basis for the claim of the additional
separation benefit is alleged discrimination, i.e., unequal treatment of
employees, which is proscribed as an unfair labor practice by Art. 248
(e) of said Code.

Under the facts and circumstances of the present case, the grant of a
lesser amount of separation pay to private respondent was done, not
by reason of discrimination, but rather, out of sheer financial
bankruptcy a fact that is not controlled by management
prerogatives. Stated differently, the total cessation of operation due to
mind-boggling losses was a supervening fact that prevented the
company from continuing to grant the more generous amount of
separation pay.
The fact that North Davao at the point of its forced closure voluntarily
paid any separation benefits at all although not required by law
and 12.5-days worth at that, should have elicited admiration instead of
condemnation. But to require it to continue being generous when it is
no longer in a position to do so would certainly be unduly oppressive,
unfair and most revolting to the conscience.

Closure of Business
Serious Business Losses
REAHS CORP v NLRC April 15, 1997

Facts:

Multiple complaints were filed by herein petitioners employees due to a

closure of its business establishment which is a health and sauna parlor
and a sing-along coffee shop without paying due wages, separation pay
and other benefits under the law.
Also, they allege that the closure of the health parlor was illegal as they
were not notified.

Page 96
In their defense, Respondent replied that due to poor business, increase
in the rental cost and the failure of Meralco to reconnect the electrical
services in the establishment, it suffered losses leading to its closure.

Sometime in May 1993, the labor arbiter rendered judgment dismissing

private respondents' complaints for unfair labor practice and illegal
dismissal but upholding the claims for separation pay, underpayment of
wages, holiday pay and 13th month pay.
All private respondents were awarded separation pay.

Petitioners appealed the labor arbiter's decision to the NLRC, contending

mainly that Article 283 of the Labor Code, "exempts establishment(s) from
payment of termination pay when the closure of business is due to serious
business losses or financial reverses"; that the petitioners acting chairman
of the board, board member and accountant acting manager of Reah's
Corporation, cannot be held jointly and severally liable with Reah's "unless
there is evidence to show that the cause of the closure of the business
was due to the criminal negligence of the [respondent] officers.

Issue:

Whether or not the petitioners business establishment closure requires

them to pay their employees due wages, separation pay and other
benefits under the law.

Held:

The grant of separation pay, as an incidence of termination of

employment under Article 283, is a statutory obligation on the part of the
employer and a demandable right on the part of the employee, except
only where the closure or cessation of operations was due to serious
business losses or financial reverses and there is sufficient proof of this
fact or condition. In the absence of such proof of serious business losses
or financial reverses, the employer closing his business is obligated to pay
his employees and workers their separation pay.

Therefore the rule is that in all cases of business closure or cessation of

operation or undertaking of the employer, the affected employee is
entitled to separation pay.
This is consistent with the state policy of treating labor as a primary social
economic force, affording full protection to its rights as well as its
welfare.

The exception is when the closure of business or cessation of operations is

due to serious business losses or financial reverses; duly proved, in which

Page 97
 case, the right of affected employees to separation pay is lost for obvious
reasons.
Here, the corporation's alleged serious business losses and financial
reverses were not amply shown or proved.

Previous Generosity Ruling

BSSI v NLRC April 2, 1993

Facts:
BSSI was engaged in the manufacture and sale of computer forms. Due to
financial reverses, its creditors, the Development Bank of the Philippines
(DBP) and the Asset Privatization Trust (APT), took possession of its
assets, including a manufacturing plant in Marilao, Bulacan.

As a retrenchment measure, some plant employees, including the private

respondents, were laid off sometime on May 1988, after prior notice, and
were paid separation pay equivalent to one-half (1/2) month pay for every
year of service. Upon receipt of their separation pay, the private
respondents signed individual releases and quitclaims in favor of BSSI.

BSSI retained some employees in an attempt to rehabilitate its business

as a trading company.

However, barely two and a half months later, these remaining employees
were likewise discharged because the company decided to cease business
operations altogether. Unlike the private respondents, that batch of
employees received separation pay equivalent to a full month's salary for
every year of service plus mid-year bonus.

Protesting against the discrimination in the payment of their separation

benefits, the twenty-seven (27) private respondents filed three (3)
separate complaints against the BSSI. These cases were later
consolidated.

Petitioners denied that there was unlawful discrimination in the payment

of separation benefits to the employees. They argued that the first batch
of employees was paid "retrenchment" benefits mandated by law, while
the remaining employees were granted higher "separation" benefits
because their termination was on account of the closure of the business.

Page 98
The Labor Arbiter ruled in favor of the herein private respondents to
which petitioners appealed to the NLRC.

Upon appeal, the Second Division sometime on February 1991, affirmed

the decision of the Labor Arbiter.

Petitioners' motion for reconsideration of the resolution having been

denied, they have taken the present recourse.

Issue:
Whether or not Petitioners contention regarding the differentials of the
separation benefits is correct.

Held:
The SC ruled based on the following observations of the Commission
which are relevant.

Granting that the 16 May 1988 termination was a retrenchment scheme,

and the 31 July 1988 and the 28 February 1989 were due to closure, the
law requires the granting of the same amount of separation benefits to
the affected employees in any of the cases.

BSSI argued that the giving of more separation benefit to the second and
third batches of employees separated was their expression of gratitude
and benevolence to the remaining employees who have tried to save and
make the company viable in the remaining days of operations.

This justification is not plausible. There are workers in the first batch who
have rendered more years of service and could even be said to be more
efficient than those separated subsequently, yet they did not receive the
same recognition.

Understandably, their being retained longer in their job and be not

included in the batch that was first terminated, was a concession enough
and may already be considered as favor granted by the respondents to
the prejudice of the complainants.

As it happened, there are workers in the first batch who have rendered
more years in service but received lesser separation pay, because of that
arrangement made by the respondents in paying their termination
benefits.

Clearly, there was impermissible discrimination against the private

respondents in the payment of their separation benefits. The law requires
an employer to extend equal treatment to its employees. It may not, in

Page 99
 the guise of exercising management prerogatives, grant greater benefits
to some and less to others. Management prerogatives are not absolute
prerogatives but are subject to legal limits, collective bargaining
agreements, or general principles of fair play and justice
(UST vs. NLRC, 190 SCRA 758)

Article 283 of the Labor Code, as amended, protects workers whose

employment is terminated because of closure of the establishment or
reduction of personnel. (Abella vs. NLRC, 152 SCRA 141, 145).

5. INSTALLATION of labor saving devices(Automation, Robotics)

ART. 299(284) DISEASE AS GROUND FOR TERMINATION

a. the disease is incurable within 6 months and the continued employment of

the employee is prohibited by law or prejudicial to his health as well as to the
health of his co-employees

b. with a certification from public health officer that the disease is incurable
within 6 months despite due medication and treatment.

Before an employer could dismiss an employee based on a disease, Section 8 of

Rule 1, Book VI of the Omnibus Rules Implementing the Labor Code requires a
certification by a competent public health authority that the disease is of such a
nature or at such stage that it cannot be cured within a period of 6 months even
with proper medical treatment. (Cathay Pacific Airways vs. NLRC and Martha
Singson)

DISCRIMINATION IN ANY FORM FROM PRE-EMPLOYMENT TO POST-EMPLOYMENT,

INCLUDING HIRING, PROMOTION OR ASSIGNMENT, BASED ON THE ACTUAL,
PERCEIVED OR SUSPECTED HIV STATUS OF AN INDIVIDUAL IS PROHIBITED.
TERMINATION FROM WORK ON THE SOLE BASIS OF ACTUAL, PERCEIVED OR
SUSPECTED HIV STATUS IS DEEMED UNLAWFUL. (SEC. 35, RA 8504, HIV/AIDS
LAW)

Page
100
CAUSE OF SEPARATION PAY
TERMINATIO
N
Automation Equivalent to at least one month pay or at least one month
pay for every year of service, whichever is higher
Redundancy Equivalent to at least one month pay or at least one month
pay for every year of service, whichever is higher

Retrenchme Equivalent to one month pay or at least one-half month pay

nt for every year of service

Closures or Equivalent to one month pay or at least one-half month pay

cessation of for every year of service
operations (If due to severe financial losses, no separation pay due.)
not due to
serious
business
losses or
financial
reverses

Disease Equivalent to at least one-month salary or to month

salary for every year of service, whichever is greater, a
fraction of at least 6 months shall be considered one (1)
whole year.

NOTE: ARTICLE 283 governs the grant of separation benefits in case of closures or
cessation of operation of business establishments NOT due to serious business
losses or cessation of operation [North Davao Mining Corp. vs. NLRC, et al].
Therefore, the employee is not entitled to such benefit if the closure was due to
SERIOUS BUSINESS LOSSES.

When termination of employment is brought by the failure of an employee to meet

the standards of the employer in case of probationary employment, it shall be
sufficient that a written notice is served the employee within a reasonable time from
the effective date of termination.

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 When termination is brought about by the completion of the contract or phase
thereof, no prior notice is required

PROCEDURE TO TERMINATE EMPLOYMENT

Section 1, Rule XIV of the Implementing Rules and Regulations of the Labor Code
provides:
Section 1. Security of tenure and due process. No workers shall be dismissed except
for a just or authorized cause provided by law and after due process.
In order to effect a valid/legal dismissal of an employee, the termination should be:
1. For a just cause or authorized cause

2. In compliance with the employees right to due process

Two Facets of Termination

To reiterate, the above-stated provision provides for the two essential requirements to
effect a valid termination in accordance with law. The provisions states that an
employer seeking to dismiss an employee should comply with both substantive and
procedural due process.

ACT OF DISMISSAL
As part of substantive due process, an act of dismissal refers to the grounds upon
which the employees dismissal is based. The legality of such act of dismissal must be
within the grounds provided under Article 282 to 284 of the Labor Code.

MANNER OF DISMISSAL
Procedural due process requires that an employees dismissal should comply with the
procedural requirements laid down by the Labor Code and other special laws.

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Standards of Due Process
As a general rule, the Constitution provides that the essential elements of due process
are notice and hearing whereby a person is given the right to be informed of the
charges against him and that he is given the opportunity to be heard. In termination
cases, notice and hearing are cannot be dispensed with.

Article 277(b) of the Labor Code provides:

(b) Subject to the constitutional right of workers to security of tenure and their right to
be protected against dismissal except for a just and authorized cause and without
prejudice to the requirement of notice under Article 283 of this Code, the employer shall
furnish the worker whose employment is sought to be terminated a written notice
containing a statement of the causes for termination and shall afford the latter ample
opportunity to be heard and to defend himself with the assistance of his representative
if he so desires in accordance with company rules and regulations promulgated
pursuant to guidelines set by the Department of Labor and Employment. Any decision
taken by the employer shall be without prejudice to the right of the worker to contest
the validity or legality of his dismissal by filing a complaint with the regional branch of
the National Labor Relations Commission. The burden of proving that the termination
was for a valid or authorized cause shall rest on the employer. The Secretary of the
Department of Labor and Employment may suspend the effects of the termination
pending resolution of the dispute in the event of a prima facie finding by the
appropriate official of the Department of Labor and Employment before whom such
dispute is pending that the termination may cause a serious labor dispute or is in
implementation of a mass lay-off.

TWO-NOTICE RULE
As stated in Article 277(b), the Labor Code requires that two notices be furnished to the
employee prior to his or her dismissal, namely:

1. First Notice: Notice of Appraisal

It is a written notice served on the employee specifying the ground or grounds of

termination, and gives the employee a reasonable opportunity within which he or she
can explain his or her side.
Reasonable Opportunity

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 Reasonable opportunity refers to every kind of assistance that the management
must accord to the employees to enable them to prepare adequately for their
defense, e.g. gathering of data, evidence, etc. (King of Kings Transport v. Mamac)

What should the first notice contain?

In the case of Unilever Philippines v. Rivera (G.R. No. 201701, June 3, 2013), the
first notice should contain the following: (1) detailed narrative of facts and
circumstances that will serve as basis for the (2) charge or specific causes or grounds
for termination, and a (3) directive that the employees are given the opportunity to
submit their written explanation within a (4) reasonable period.

2. Second Notice: Notice of Termination

It is a written notice of termination served upon the employee, indicating that upon
due consideration of all the circumstances, the grounds upon which his or her
termination is based have been established to justify the termination.

BURDEN OF PROOF - SUBSTANTIAL EVIDENCE

In termination cases, as a general rule, the employer has the burden of proving that the
dismissal is for a just or authorized cause provided by the Labor Code (act of dismissal),
and that the employee is given the opportunity to be heard and defend himself (manner
of dismissal). Further, substantial evidence is required to prove that there exists a just
or authorized cause of termination

DISMISSAL FOR CAUSE BUT WITHOUT DUE PROCESS

Prior to the rulings of Wenphil, Serrano, and Agabon, the Supreme Court in a number of
cases that the twin requirement of due process, notice and hearing, can be dispensed
without violating the constitutional rights of the employee. Hence, there exists an
illegality in the manner of dismissal of the employee by the employer.
The Court, in Wenphil, Serrano, and Agabon, modified this rule.

WENPHIL VS NLRC 170 SCRA 69

WENPHIL DOCTRINE

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Facts:
Private respondent Roberto Mallare was hired by petitioner Wenphil
as a crew member at its Cubao Branch. He thereafter became the
assistant head of the Backroom Department.On May 20, 1985, private
respondent had an altercation with a co-employee, Job Barrameda
regarding the tending of the salad bar. Mallare slapped Barramedas cap,
stepped on the latters foot, and picked up the ice scooper and brandished
it againstthe latter.The incident was reported to the assistant manager,
Delilah Hermosura, who immediately asked Mallare to see her. Mallare
refused to see Hermosura and it took the security guard to bring him to
her. Mallare then shouted profane words instead of making an explanation
before her. He stated that the matter should be settled only by him and
Barrameda.
The store manager, on the basis of Hermosuras report, suspended
Mallare and Barrameda until further notice. Later that day, the store
manager issued a memorandum suspending Barrameda for one week and
dismissing Mallare from service,in accordance with their Personnel Manual.
The notice of dismissal was served on Mallare on May 25,
1985..Respondent Mallare filed a complaint against petitioner Wenphil for
unfair labor practice, illegal suspension, and illegal dismissal.Petitioner
contended that under its Personnel Manual, which had been read and
understood by respondent Mallare, an investigation shall only be
conducted if the offense committed by the erring employee is punishable
with a penalty higher than suspension of fifteen says and the erring
employee requests for an investigation of the incident. Petitioner alleged
that since respondent Mallare did not ask for an investigation, he is
deemed to have waived such right. The Labor Arbiter dismissed the
complaint for lack of merit, since hearing cannot be conducted due to the
repeated absence of private respondents counsel. The NLRC set aside the
appealed decision and ordered the reinstatement of the private
respondent to his former position, without loss of seniority and other
benefits and one (1) year back wages without qualification and deduction.
Hence, the instant petition for review.

ISSUE:
Whether or not an employee dismissed for just cause but without due
process be reinstated to work.
Ruling:

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 The basic requirement of due process is that which it hears before
it condemns, proceeds upon inquiry and renders judgment only after trial.
The dismissal of an employee must be for a just cause and after due
process. Petitioner committed an infraction of the second requirement
thus it must be imposed a sanction for its failure to give a formal notice
and conduct an investigation as required by law before dismissing Mallare
from employment. Petitioner must indemnify the dismissed employee
which depends on the facts of each case and the gravity of the omission
committed by the employer.
Under the so-called WENPHIL DOCTRINE if the services of
the employee was terminated due to a just or authorized cause
but the affected employees right to due process has been
violated, the dismissal is legal but the employee is entitled to
damages by way of indemnification for the violation of the right.
In the last couple of decades, the Supreme Court has grappled
with the legal effect and the corresponding sanction in cases
where there exists a just and valid ground to justify the dismissal
but the employer fails to comply with the due process
requirement of the law. Prior to the promulgation in 1989 of
Wenphil v. NLRC, [170 SCRA 69, February 8, 1989], the
prevailing doctrine held that dismissing employees without
giving them proper notices and an opportunity to be heard was
illegal and that, as a consequence thereof, they were entitled to
reinstatement plus full backwages. Wenphil abandoned this
jurisprudence and ruled that if the dismissal was for a just or an
authorized cause but done without due process, the termination
was valid but the employer should be sanctioned with the
payment of indemnity ranging from P1,000.00 to P10,000.00.

Serrano vs. NLRC / ISETANN - GR No. 117040

SERRANO DOCTRINE
Facts:
Serrano was a regular employee in Isetann Department Store as a
head security cheker. Isetann, for cost-cutting purposes phased out its
security section and instead hired an independent security agency.
Petitioner filed for a case of illegal dismissal, illegal layoff, under payment
of wages and nonpayment of salary and overtime pay with the labor
arbiter.

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 The LA rendered a decision in favor of Serrano. It stated that
Isetann failed to establish that it had retrenched its security division, that
the petitioner was not accorded due process, etc. and even stated that
the day after Serranos dismissal, Isetann employed a safety and security
supervisor with similar duties to that of the former. The NLRC on the
other hand reversed the LA but ordered Isetann to pay separation pay
equivalent to one month per year of service, unpaid salary, etal. It held
that the phase-out of the security section was a valid exercise of
management prerogative on the part of Isetann, for which the NLRC
cannot substitute its judgment in the absence of bad faith or abuse of
discretion on the part of the latter; and that the security and safety
supervisors position was long in place prior to Serranos separation from
the company, or the phase-out of the Security Section.

Issue:
Whether or not the dismissal was illegal.
Held:
An employers good faith in implementing a redundancy program is not
necessarily put in doubt by the availment of the services of an
independent contractor to replace the services of the terminated
employees to promote economy and efficiency. Absent proof that
management acted in a malicious or arbitrary manner, the Court will not
interfere with the exercise of judgment by an employer.If termination of
employment is not for any of the cause provided by law, it is illegal and
the employee should be reinstated and paid backwages. To contend that
even if the termination is for a just cause, the employee concerned should
be reinstated and paid backwages would be to amend Art 279 by adding
another ground for considering dismissal illegal.If it is shown that the
employee was dismissed for any of the causes mentioned in Art 282, the
in accordance with that article, he should not be reinstated but must be
paid backwages from the time his employment was terminated until it is
determined that the termination of employment is for a just cause
because the failure to hear him before he is dismissed renders the
termination without legal effect.

SERRANO vs. ISETANN et. al. abandoned the WENPHIL

DOCTRINE and ruled that if the employee is dismissed under just
or authorized cause but the affected employees right to due
process has been violated, his dismissal becomes ineffectual.

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Therefore, the employee is entitled to backwages from the time
he was dismissed until the determination of the justness of the
cause of the dismissal. In 2000, the Supreme Court promulgated
Serrano v. NLRC, [G.R. No. 117040, January 27, 2000], which
modified Wenphil. It considered such termination ineffectual
(not illegal) and sanctioned the employer with payment of full
backwages plus nominal and moral damages, if warranted by the
evidence. In case the dismissal was for an authorized cause,
separation pay in accordance with Article 283 of the Labor Code
should be awarded.

AGABON, et al. v. NLRC G.R. No. 158693

AGABON DOCTRINE
Facts:
Virgilio and Jenny Agabon worked for respondent Riviera Home
Improvements, Inc. as gypsum and cornice installers from January 1992
until Feb 1999. Their employment was terminated when they were
dismissed forallegedly abandoning their work. Petitioners Agabon then
filed a case of illegal dismissal. The LA ruled in favor of the spouses and
ordered Riviera to pay them their money claims. The NLRC reversed the
LA, finding that the Agabons were indeed guilty of abandonment. TheCA
modified the LA by ruling that there was abandonment but ordering
Riviera to pay the Agabons money claims.///The arguments of both
parties are as follows :The Agabons claim, among others that Riviera
violated the requirements of notice and hearing when the latter did not
send written letters of termination to their addresses. Riviera admitted to
not sending the Agabons letters of termination to their last known
addresses because the same would be futile, as the Agabons do not
reside there anymore. However, it also claims that the Agabons
abandoned their work. More than once, they subcontracted installation
works for other companies. They already were warned of termination if
the same act was repeated, still, they disregarded the warning.
Issue:
Whether or not the petitioners were illegally dismissed.

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Held:
No. To dismiss an employee, the law required not only the
existence of a just and valid cause but also enjoins the employer to give
the employee the right to be heard and to defend himself. Abandonment
is the deliberate and unjustified refusal of an employee to resume his
employment. For a valid finding or abandonment, two factors are
considered: failure to report for work without a valid reason; and, a clear
intention to sever employer-employee relationship with the second as the
more determinative factor which is manifested by overt acts from which it
may be deduced that the employees has no more intention to work.Where
the employer had a valid reason to dismiss an employee but did not follow
the due process requirement, the dismissal may be upheld but the
employer will be penalized to pay an indemnity to the employee. This
became known as the Wenphil Doctrine of the Belated Due process
Rule.Art. 279 means that the termination is illegal if it is not for any of the
justifiable or authorized by law. Where the dismissal is for a just cause,
the lack of statutory due process should not nullify the dismissal but the
employer should indemnify the employee for the violation of his statutory
rights. The indemnity should be stiffer to discourage the abhorrent
practice of dismiss now, pay later which we sought to deter in Serrano
ruling. The violation of employees rights warrants the payment of nominal
damages.

AGABON vs. NLRC (Nov. 17, 2004) abandoned the Serrano

doctrine and REINSTATED THE WENPHIL DOCTRINE. The
sanctions, however must be stiffer than that imposed in Wenphil.
In 2004, the Supreme Court in Agabon v. NLRC, [G.R. No.
158693, November 17, 2004], abandoned Serrano and effectively
reverted to Wenphil (known also as the Belated Due Process
Rule) and held that a dismissal due to abandonment - a just
cause - was not illegal or ineffectual, even if done without due
process; but the employer should indemnify the employee with
nominal damages for non-compliance with statutory due
process. (Glaxo Wellcome Phils., Inc. v. Nagkakaisang
Empleyado ng Wellcome-DFA, G.R. No. 149349, March 11, 2005)

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 JAKA Food Processing vs. Pacot -GR No. 151378
TEMPERED VS STIFFER SANCTIONS
Facts:
Respondents were earlier hired by petitioner JAKA Foods
Processing Corporation until the latter terminated their employment
because the corporation was in dire financial straits. It is not disputed,
however, that the termination was effected without JAKA complying with
the requirement under Article 283 of the Labor Code regarding the service
of a written notice upon the employees and the Department of Labor and
Employment at least one (1) month before the intended date of
termination. Respondents filed complaints for illegal dismissal,
underpayment of wages and nonpayment of service incentive leave and
13th month pay against JAKA. The Labor Arbiter rendered a decision
declaring the termination illegal and ordering JAKA to reinstate
respondents with full backwages, and separation pay if reinstatement is
not possible. The Court of Appeals reversed said decision and ordered
respondent JAKA to pay petitioners separation pay equivalent to one (1)
month salary, the proportionate 13th month pay and, in addition, full
backwages from the time their employment was terminated.
Issue:
Whether or not full backwages and separation pay be awarded to
respondents when employers effected termination without complying with
the twin notice rule.
Held:
The dismissal of the respondents was for an authorized cause
under Article 283. A dismissal for authorized cause does not necessarily
imply delinquency or culpability on the part of the employee. Instead, the
dismissal process is initiated by the employers exercise of his
management prerogative, i.e. when the employer opts to install labor-
saving devices, when he decides to cease business operations or when
he undertakes to implement a retrenchment program.

Accordingly, it is wise to hold that:

if the dismissal is based on a just cause but the employer failed
to comply with the notice requirement, the sanction to be

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 imposed upon him should be tempered because the dismissal
was initiate by an act imputable to the employee.
2) if the dismissal is based on an authorized cause but the
employer fails to comply with the notice requirement, the
sanction should be stiffer because the dismissal process was
initiated by the employers exercise of his management
prerogative. Thus, dismissal was upheld but ordered JAKA to pay each
of the respondents the amount of PhP 50,000.00 representing nominal
damages for non-compliance with statutory due process.

PREVENTIVE SUSPENSION
When there is an imminent threat to the lives and properties of the employer, his
family and representatives as well as the offenders co-workers by the continued service
of the employee then he may be placed under preventive suspension pending his
investigation, leading to termination.
preventive suspension should not last for more than thirty (30) days. The
employee should be made to resume his work after 30 days.
it can be extended provided the employees wages are paid after the 30 day
period.

The Supreme Court held in Gatbonton Vs NLRC that :

Preventive suspension is a disciplinary measure for the protection of the
companys property pending investigation of any alleged malfeasance or
misfeasance committed by the employee. The employer may place the
worker concerned under preventive suspension if his continued employment
poses a serious and imminent threat to the life or property of the employer or
of his co-workers. However, when it is determined that there is no sufficient
basis to justify an employees preventive suspension, the latter is entitled to
the payment of salaries during the time of preventive suspension.

CONSEQUENCES OF TERMINATION

SEPARATION PAY FOUR CONTEXT

SEPARATION PAY FOR AUTHORIZED CAUSES UNDER ARTS. 283-284.

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 Separation Pay. An employee lawfully dismissed for a just cause is not
entitled to any separation pay; while an employee separated for an authorized
cause is entitled to separation pay in accordance with the rates prescribed by
law. (Chan. The Labor Code of the Philippines Annotated Volume II).
Art. 298. [283] Closure of Establishment and Reduction of Personnel.
The employer may also terminate the employment of any employee due to the
installation of labor-saving devices, redundancy, retrenchment to prevent losses
or the closing or cessation of operation of the establishment or undertaking
unless the closing is for the purpose of circumventing the provisions of this Title,
by serving a written notice on the workers and the Ministry of Labor and
Employment at least one (1) month before the intended date thereof. In case of
termination due to the installation of labor-saving devices or redundancy, the
worker affected thereby shall be entitled to a separation pay equivalent to at
least his one (1) month pay or to at least one (1) month pay for every year of
service, whichever is higher. In case of retrenchment to prevent losses and in
cases of closures or cessation of operations of establishment or undertaking not
due to serious business losses or financial reverses, the separation pay shall be
equivalent to one (1) month pay or at least one-half (1/2) 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.
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. (Chan.
The Labor Code of the Philippines Annotated Volume II).
Art. 299. [284] Disease as a Ground of Termination An employer may
terminate the services of an employee who has been found to be suffering from
any disease and whose continued employment is prohibited by law or is
prejudicial to his health as well as to the health of his co-employees: Provided,
That he is paid separation pay equivalent to at least one (1) month salary or to
one-half (1/2) month salary for every year of service, whichever is greater, a
fraction of at least six (6) months being considered as one (1) whole year.

SEPARATION PAY AS FINANCIAL ASSISTANCE IN LEGAL DISMISSAL UNDER

ART. 282
The basis of the grant of financial assistance is equity. (Chan. The Labor
Code of the Philippines Annotated Volume II).

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 An employee who is dismissed for just cause is generally not entitled to
separation pay. A reading of Art. 279 in relation to Art. 282 of the Labor Code,
reveals that an employee who is dismissed for cause after appropriate
proceedings in compliance with due process requirements is not entitled to an
award of separation pay. In some cases however, the SC awarded separation
pay to a legally dismissed employee on the grounds of equity and social justice.
This is not allowed though when the employee has been dismissed for serious
misconduct or some other causes reflecting on his moral character or personal
integrity. (Etcuban, Jr. v. Sulpicio Lines, Inc. G.R. No. 148410, Jan. 17, 2005,
among others).

SEPARATION PAY IN LIEU OF REINSTATEMENT

If reinstatement is no longer possible, the employer has the alternative of
paying the employee his separation pay in lieu of reinstatement. (Manila Water
Co, Inc. v. Pena, G.R. No. 158255, Jul. 8, 2004).
Reinstatement cannot be awarded when what is prayed for is separation
pay. As pronounced in Dela Cruz v. NLRC, [G.R. No. 121288, November 20,
1998], the petitioner therein would have been entitled to reinstatement as a
consequence of his illegal dismissal from employment. However, by expressly
asking for separation pay, he is deemed to have opted for separation pay in lieu
of reinstatement.
In Deguzman v. NLRC, [G.R. No. 167701, Dec. 12, 2007], and in several
other earlier cases, where the employee explicitly prayed for an award of
separation pay in lieu of reinstatement, it was held that by so praying, he
forecloses reinstatement as a relief by implication. Consequently, he is entitled
to separation pay equivalent to one month pay for every year of services,
computed from the time of his illegal dismissal up to the finality of the
judgement, as an alternative to reinstatement.
The amount of separation pay that should be paid in lieu of reinstatement
is not provided in the Labor Code or its implementing rules. Jurisprudence,
however, dictates that the following should be included in its computation:
a) The amount equivalent to at least one (1) month salary or to one (1)
month salary for every year of services, whichever is higher, a fraction
of at least six (6) months being considered as one (1) whole year.
(Sec. 4[b], Rule I, Book VI, Rules to Implement the Labor Code).
b) Allowances that the employee has been receiving on a regular basis.
(Planters Products, Inc. v. NLRC, G.R. No. 78524, Jan. 20, 1989).

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SEPARATION PAY AS AN EMPLOYEE BENEFIT
Employers may lawfully and effectively reduce their personnel by offering
resignation benefits through a Voluntary Resignation Program where employees
are afforded the right to voluntarily terminate the employment relationship. If
made in good faith, such as scheme should be considered a valid form of
terminating employment. Consequently, the employer need not comply with the
requirement under Article 283 of the Labor Code that notice be sent to the
Department of Labor and Employment at least a month prior to the effectivity of
the termination of employment. The reason is that by applying to voluntarily
resign, the employee thereby acknowledges the existence of a valid cause for
terminating his employment. (Dole Philippines Inc. v. NLRC, G.R. No. 120009,
Sept. 13, 2001; International Hardware, Inc. v. NLRC, G.R. No. 80770, Aug. 10,
1989).

BACKWAGES

DISTINGUISH FROM SEPARATION PAY

Separation pay in lieu of reinstatement and backwages are two different
things. Payment of separation pay is not inconsistent with payment of
backwages. (Cabatulan v. Buat, G.R. No. 147142, Feb. 14, 2005).
Separation pay is paid when reinstatement is not possible; while backwages are
paid for the compensation which otherwise the employee should have earned
had he not been illegally dismissed. (Equitable Banking Corp. v. Sadac, G.R. No.
164772, June 8, 2006).
Separation pay is computed on the basis of employees length of service;
while backwages are based on the actual period when he was unlawfully
prevented from working. (Lim v. NLRC, G.R. Nos. 79907 and 79975, Mar. 16,
1989).
Separation pay is paid where a wherewithal during the period that an
employee is looking for another employment; while backwages are paid for the
loss of earnings during the period between illegal dismissal and reinstatement.
(Quebec, Sr. v. NLRC, G.R. No. 123184, Jan. 22, 1999).
Separation pay is oriented towards the immediate future; while
backwages involve the restoration of the past income lost. (Lopez, Jr. v. NLRC,
G.R. No. 109166, Jul. 6, 1995).

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 Separation pay cannot be paid in lieu of backwages. (Torillo v. Leogardo,
G.R. No. 77205, May 27, 1991).

FULL BACKWAGES
MERCURY DRUG RULE (PRIOR TO R.A. 6715)
MERCURY DRUG VS. CIR 56 SCRA 694
MAKASIAR, J.:p
Procedural History:
Petitioner Mercury Drug Co., Inc. seeked the reversal of the decision of
respondent Court of Industrial Relations dated January 17, 1964 and its
order dated February 25, 1964 denying petitioners' motion for
reconsideration of the said decision.

Statement of Facts:
Private respondent Dayao was employed on February 13, 1956 by the
petitioners originally as driver, later assigned as delivery man, then as
checker and was last promoted to the position of assistant chief checker in
the checking department until his separation on April 10, 1961.
Days before April 10, 1961, Dayao urged petitioners to pay them overtime
pay, criticized their employees' association for failing to protect the
welfare of the employees by not securing such additional compensation
for overtime, and campaigned among his co-employees to organize
another labor union. Hearing of Dayao's union activities, petitioner called
for Dayao on April 10, 1961, told him to resign and persuaded him to
accept the amount of P562.50 as termination pay and to sign a clearance
stating to the effect that he has no claims whatsoever of any kind and
nature against herein petitioners.
On April 25, 1963, exactly two years and fifteen days from his separation
on April 10, 1961, Dayao filed a complaint for unfair labor practice against
petitioners for dismissing him because of his having campaigned among
his co-employees to become members of a new labor union that he was
then organizing.
In their answer to the ULP complaint, petitioners interposed as their only
defense that Dayao "was separated from the service ... for cause because

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of creating trouble with another employee who was also dismissed and
that even if the said complainant was separated for cause, he received
compensation pay and hereby relieved respondent from whatever claim or
claims that he had against respondents." They also relied on laches, aside
from estoppel, to defeat Dayao's ULP charge.
SC held that the petitioners were guilty of unfair labor practices. There
was no sufficient basis for discharging Dayao from employment.
Acceptance of termination pay does not divest a laborer the right to
prosecute his employer for unfair labor practice acts, much less for signing
the clearance paper. Acceptance of those benefits would not amount to
estoppel. SC stated that there was clear interference with the union
activity and that his dismissal from employment was discriminatory. And
since there was illegal dismissal, Dayao was entitled to backwages.
Issue:
How much backwages shall be allowed private respondent Dayao.
Answer:
Dayao should be paid backwages equivalent to one year, eleven months,
and fifteen days without further disqualifications, which is computed from
4 years prescriptive period less the period of delay in instituting the ULP
charge (2 years and 15 days).
Reasoning:
While this case was submitted for decision on March 29, 1965, the delay
in its resolution is not due to the parties. However, it should be noted that
private respondent Dayao filed his ULP charge with reinstatement and
back wages about two years and fifteen days after his separation on April
10, 1961. As aforestated, the shortest prescriptive period for the filing of
all other actions for which the statute of limitations does not fix a period,
is four years. The period of delay in instituting this ULP charge with claim
for reinstatement and back wages, although within the prescriptive period,
should be deducted from the liability of the employer to him for back
wages. In order that the employee however should be relieved from
proving his income during the period he was out of the service and the
employer from submitting counter-proofs, which may delay the execution
of the decision, the employer in the case at bar should be directed to pay
private respondent Dayao backwages equivalent to one year, eleven
months, and fifteen days without further disqualifications.

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Holding:
WHEREFORE, THE PETITION IS HEREBY DISMISSED AND PETITIONERS
ARE HEREBY DIRECTED: (1) TO PAY PRIVATE RESPONDENT NARDO
DAYAO BACK WAGES EQUIVALENT TO ONE YEAR, ELEVEN MONTHS, AND
FIFTEEN DAYS; (2) TO REINSTATE HIM AFTER CERTIFICATION OF HIS
PHYSICAL FITNESS BY A GOVERNMENT PHYSICIAN; AND (3) TO PAY THE
COSTS.

Justice Teehankee's Dissent:

Justice Teehankee dissented from the specific result in the judgement,
awarding respondent backwages only in an amount equivalent to 1 year,
11 months and 15 days. Such delay in filing the complaint should in no
manner prejudice the amount of the back wages award justly due
respondent particularly, when it is considered that he pursued with
vigor his complaint after its filing on April 25, 1963 and obtained favorable
judgment in the industrial court within a year as per said court's decision
of January 17, 1964 and its en banc resolution of February 25, 1964
denying petitioner's motion for reconsideration.

Hence, an award of back wages equivalent to three years (where

the case is not terminated sooner) should serve as the base
figure for such awards without deduction, subject to deduction
where there are mitigating circumstances in favor of the employer but
subject to increase by way of exemplary damages where there are
aggravating circumstances (e.g. oppression or dilatory appeals) on the
employer's part. He submitted that the minimum award to which
respondent is entitled should be at the very least the equivalent
of the proposed base figure of three years pay. Employers should be
put on notice as a deterrent that if they pursue manifestly dilatory and
unmeritorious appeals and thus delay satisfaction of the judgment justly
due their employee(s), they run the risk of exemplary and punitive
damages being assessed against them by way of an increased award of
back wages to the wrongfully discharged employee(s) commensurate to
the delay caused by the appeal process.

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RULE AFTER R.A. 6715 (DATE TO RECKON MARCH 21, 1989)
ALEX FERRER VS. NLRC
JULY 5, 1993
MELO, J.:
Procedural History:
The petition for certiorari seeks to annul and set aside: (a) the decision
dated June 20, 1991 of the Second Division of the National Labor
Relations Commission (NLRC) which affirmed in toto the decision of April
5, 1990 of Labor Arbiter dismissing the complaint for illegal dismissal and
unfair labor practice on the ground that both the company and the union
merely complied with the collective bargaining agreement provision
sanctioning the termination of any employee who fails to retain
membership in good standing with the union; and (b) the NLRC resolution
denying the motion for the reconsideration of said decision.

Statement of Facts:
Petitioners were regular and permanent employees of the Occidental
Foundry Corporation (OFC) which was under the management of Hui Kam
Chang. As piece workers, petitioners' earnings ranged from P110 to P140
a day. They had been in the employ of OFC for about ten years at the
time of their dismissal in 1989.
On January 5, 1989, the Samahang Manggagawa ng Occidental Foundry
Corporation-FFW (SAMAHAN) and the OFC entered into a collective
bargaining agreement (CBA) which would be effective for the three-year
period between October 1, 1988 and September 30, 1991. It included a
union security clause saying that failure to retain membership in good
standing with the UNION shall be ground for the operation of paragraph 1
hereof and the dismissal by the company of the aforesaid employee upon
written request by the union.
Several intraunion squabbles took place as to the election of the officers
due to their alleged inattentiveness to the economic demands of the
members. This prompted the union to send a letter to Hui Kam Chang,
requesting for the dismissal of several people, including petitioners Ferrer
et. al. The petitioners professed their innocence to the chages levelled
against them by SAMAHAN and FFW, but received no reply. As such, they

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filed a complained for illegal dismissal and unfair labor practice before the
NLRC against Hui Kam Chang, OFC, SAMAHAN, and FFW.
Labor Arbiter dismissed the complaint, saying that OFC was merely
complying with the mandatory provisions of the CBA, and that SAMAHAN
and FFW cannot be charged with illegal dismissal as there was no
employer-employee relationship between them and the petitioners. NLRC
affirmed the decision of Labor Arbiter. Hence the appeal.
SC held that the petitioners were illegally dismissed because while the
CBAs union security clause was valid, both parties thereto should see to it
that no right is violated or impaired during its implementation. There was
an absence of notice and hearing when the petitioners were illegally
dismissed. Due process was inexistent.
Issue:
Whether or not the petitioners, who were illegally dismissed, were entitled
to backwages.
Answer:
Yes. The petitioners can receive their full back wages computed from the
moment their compensation was withheld after their dismissal in 1989 up
to the date of actual reinstatement.
Reasoning:
With the passage of Republic Act No. 6715 which took effect on March 21,
1989, Article 279 of the Labor Code was amended to read as follows:
Security of Tenure. In cases of regular employment, the
employer shall not terminate the services of an employee
except for a just cause or when authorized by this Title. An
employee who is unjustly dismissed from work shall be
entitled to reinstatement without loss of seniority rights and
other privileges and to his full backwages, inclusive of
allowances, and to his other benefits or their monetary
equivalent computed from the time his compensation was
withheld from him up to the time of his actual
reinstatement.

and as implemented by Section 3, Rule 8 of the 1990 New Rules of

Procedure of the National Labor Relations Commission, it would seem that

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the Mercury Drug Rule (Mercury Drug Co., Inc. vs. Court of Industrial
Relations, 56 SCRA 694 [1974]) which limited the award of back wages of
illegally dismissed workers to three (3) years "without deduction or
qualification" to obviate the need for further proceedings in the course of
execution, is no longer applicable.
A legally dismissed employee may now be paid his back wages,
allowances, and other benefits for the entire period he was out of
work subject to the rule enunciated before the Mercury Drug
Rule, which is that the employer may, however, deduct any
amount which the employee may have earned during the period
of his illegal termination. Computation of full back wages and
presentation of proof as to income earned elsewhere by the illegally
dismissed employee after his termination and before actual reinstatement
should be ventilated in the execution proceedings before the Labor Arbiter
concordant with Section 3, Rule 8 of the 1990 new Rules of Procedure of
the National Labor Relations Commission.
The petitioners can receive their back wages computed from the moment
their compensation was withheld after their dismissal in 1989 up to the
date of actual reinstatement. In such a scenario, the award of back wages
can extend beyond the 3-year period fixed by the Mercury Drug Rule
depending, of course, on when the employer will reinstate the employees.
Holding:
WHEREFORE, the decision appealed from is hereby SET ASIDE and private
respondents are hereby ordered to reinstate petitioners to their former or
equivalent positions without loss of seniority rights and with full back
wages, inclusive of allowances and other benefits or their monetary
equivalent, pursuant to Article 279 of the Labor Code, as amended by
Republic Act No. 6715.

PINES CITY VS. NLRC

NOV. 10, 1993
NOCON, J.:
Procedural History:
This a petition for certiorari seeking the reversal of the resolution of public
respondent National Labor Relations Commission dated November 29,

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1990, in NLRC Case No. 01-04-0056-89, which affirmed in toto the
decision of the Labor Arbiter dated February 28,1990.

Statement of Facts:
Private respondents Bentrez et. al., were all employed as teachers on
probationary basis by petitioner Pines City Educational Center. All the
private respondents, except Roland Picart and Lucia Chan, signed
contracts of employment with petitioner for a fixed duration. On March 31,
1989, due to the expiration of private respondents' contracts and their
poor performance as teachers, they were notified of petitioners' decision
not to renew their contracts anymore.
On April 10, 1989, private respondents filed a complaint for illegal
dismissal before the Labor Arbiter, alleging that their dismissals were
without cause and in violation of due process. Except for private
respondent Leila Dominguez who worked with petitioners for one
semester, all other private respondents were employed for one to two
years. They were never informed in writing by petitioners regarding the
standards or criteria of evaluation so as to enable them to meet the
requirements for appointment as regular employees.
For their part, petitioners contended that private respondents' separation
from employment, apart from their poor performance, was due to the
expiration of the periods stipulated in their respective contracts. In the
case of private respondent Dangwa Bentrez, the duration of his
employment contract was for one year, or beginning June, 1988 to March
1989 whereas in the case of the other private respondents, the duration
of their employment contracts was for one semester, or beginning
November, 1988 to March 1989.
On February 28, 1990, the Labor Arbiter rendered judgment in favor of
private respondents, ordering their reinstatement and the payment of
their full backwages and other benefits and privileges without qualification
and deduction from the time they were dismissed up to their actual
reinstatement. The computation of backwages covered only the period
private respondents were terminated up to January 31, 1990 or 10
months and does not include backwages from January 31, 1990 up to
their actual reinstatement. In support of this decision, the Labor Arbiter
rationalized that the teacher's contracts were vague and did not include
the specific description of duties and assignments of private respondents.

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NLRC affirmed the decision of Labor Arbiter. Hence, the appeal.
SC held that insofar as the private respondents who knowingly and
voluntarily agreed upon fixed periods of employment are concerned, their
services were lawfully terminated by reason of the expiration of the
periods of their respective contracts. With respect to the remaining private
respondents Roland Picart and Lucia Chan, both of whom did not sign any
contract fixing the periods of their employment nor to have knowingly and
voluntarily agreed upon fixed periods of employment, petitioners had the
burden of proving that the termination of their services was legal. As
probationary employees, they are likewise protected by the security of
tenure provision of the Constitution. Consequently, they cannot be
removed from their positions unless for cause.
Issue:
Whether or not private respondents Picart and Chan, who were illegally
dismissed, were entitled to payment of backwages.
Answer:
Yes. Private respondents Picart and Chan were entitled to payment of
backwages. However, in the computation of the backwages, the total
amount derived from employment elsewhere by the employee from the
date of dismissal up to the date of reinstatement, if any, should be
deducted therefrom.
Reasoning:
The order for their reinstatement and payment of full backwages and
other benefits and privileges from the time they were dismissed up to
their actual reinstatement was proper, conformably with Article 279 of the
Labor Code, as amended by Section 34 of Republic Act No. 6715, 14
which took effect on March 21, 1989. It should be noted that private
respondents Roland Picart and Lucia Chan were dismissed illegally on
March 31, 1989, or after the effectivity of said amendatory law.
However, in ascertaining the total amount of backwages payable
to them, SC went back to the rule prior to the Mercury Drug Rule
that the total amount derived from employment elsewhere by
the employee from the date of dismissal up to the date of
reinstatement, if any, should be deducted therefrom. SC restated
the underlying reason that employees should not be permitted to enrich
themselves at the expense of their employer. In addition, the law abhors
double compensation. To this extent, SCs ruling in Alex Ferrer, et al., v.

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 NLRC, et al., G.R. No. 100898, promulgated on July 5, 1993, was hereby
modified.
Holding:
WHEREFORE, the resolution of public respondent National Labor Relations
Commission dated November 29, 1990 is hereby MODIFIED. Private
respondents Roland Picart and Lucia Chan are ordered reinstated without
loss of seniority rights and other privileges and their backwages paid in
full inclusive of allowances, and to their other benefits or their monetary
equivalent pursuant to Article 279 of the Labor Code, as amended by
Section 34 of Republic Act No. 6715, subject to deduction of income
earned elsewhere during the period of dismissal, if any, to be
computed from the time they were dismissed up to the time of
their actual reinstatement. The rest of the Labor Arbiter's decision
dated February 28, 1990, as affirmed by the NLRC is set aside.

PINES CITY RULING ABANDONED

BUSTAMANTE VS. NLRC
Nov. 28, 1996
PADILLA, J.
Procedural History:
This is a Motion for Reconsideration filed for a previous decision issued by
SC.
Statement of Facts:
On 15 March 1996, SC First Division promulgated a decision, stating that
backwages shall be paid to petitioners from the time of their illegal
dismissal on 25 June 1990 up to the date of their reinstatement. If
reinstatement is no longer feasible, a one-month salary shall be paid the
petitioners as ordered in the Labor Arbiter's decision, in addition to the
adjudged backwages.
Private respondent moved to reconsider the decision on grounds that
assuming that petitioners were entitled to backwages, computation
thereof should not start from cessation of work up to actual
reinstatement, and that salary earned elsewhere (during the period of
illegal dismissal) should be deducted from the award of such backwages.

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 From here, SC stated that over the years, it applied different methods in
the computation of backwages:
1. The first labor relations law governing the award of backwages was
Republic Act No. 875, the Industrial Peace Act, approved on 17 June
1953. Sections 5 and 15 thereof provided that backpay (the same as
backwages) could be awarded where, in the opinion of the Court of
Industrial Relations (CIR) such was necessary to effectuate the policies of
the Industrial Peace Act. As the CIR was given wide discretion to grant or
disallow payment of backpay (backwages) to an employee, it also had the
implied power of mitigating (reducing) the backpay where backpay was
allowed. Thus, in the exercise of its jurisdiction, the CIR increased or
diminished the award of backpay, depending on several circumstances,
among them, the employee's employment in other establishments during
the period of illegal dismissal. The same was enunciated in the case of
Itogon-Suyoc Mines, Inc. v. Sagilo-Itogon Workers' Union.
2. SC found occasion in the case of Mercury Drug Co., Inc., et al. v. CIR, et
al. to rule that a fixed amount of backwages without further qualifications
should be awarded to an illegally dismissed employee (hereinafter the
Mercury Drug rule). However, Justice Teehankee dissented from the
majority and opined that an award of back wages equivalent to three
years (where the case is not terminated sooner) should serve as the base
figure for such awards without deduction, subject to deduction where
there are mitigating circumstances in favor of the employer but subject to
increase by way of exemplary damages where there are aggravating
circumstances (e.g. oppression or dilatory appeals) on the employer's
part."
3. The proposal on the three-year backwages was subsequently adopted in
later cases.
4. Then came Presidential Decree No. 442 (the Labor Code of the
Philippines) which was signed into law on 1 May 1974 and which took
effect on 1 November 1974. The law specifically declared that the award
of backwages was to be computed from the time compensation was
withheld from the employee up to the time of his reinstatement. This
nothwithstanding, the rule generally applied by the Court after the
promulgation of the Mercury Drug case, and during the effectivity of P.D.
No. 442 was still the Mercury Drug rule. A survey of cases from 1974 until
1989, when the amendatory law to P.D. No. 442, namely, R.A. No. 6715
took effect, supports this conclusion.
5. In the case of New Manila Candy Workers Union (Naconwa-Paflu) v. CIR
(1978), or after the Labor Code (P.D. No. 442) had taken effect, the Court
still followed the Mercury Drug rule to avoid the necessity of a hearing on

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 earnings obtained elsewhere by the employee during the period of illegal
dismissal. In an even later case (1987) the Court declared that the general
principle is that an employee is entitled to receive as backwages all the
amounts he may have received from the date of his dismissal up to the
time of his reinstatement. However, in compliance with the jurisprudential
policy of fixing the amount of backwages to a just and reasonable level,
the award of backwages equivalent to three (3) years, without
qualification or deduction, was nonetheless followed.
6. In a more direct approach to the rule on the award of backwages, this
Court declared in the 1990 case of Medado v. Court of Appeals that "any
decision or order granting backwages in excess of three (3) years is null
and void as to the excess". In sum, during the effectivity of P.D. 442, the
Court enforced the Mercury Drug rule and, in effect, qualified the
provision under P.D. No. 442 by limiting the award of backwages to three
(3) years.
7. On 21 march 1989, Republic Act No. 6715 took effect, amending the
Labor Code. In here, an illegally dismissed employee is entitled to his full
backwages from the time his compensation was withheld from him
(which, as a rule, is from the time of his illegal dismissal) up to the time of
his actual reinstatement. It was true that SC had ruled in the case of Pines
City Educational Center vs. NLRC (G.R. No. 96779, 10 November 1993,
227 SCRA 655) that "in ascertaining the total amount of backwages
payable to them (employees), SC went back to the rule prior to the
Mercury Drug rule that the total amount derived from employment
elsewhere by the employee from the date of dismissal up to the date of
reinstatement, if any, should be deducted therefrom." The rationale for
such ruling was that, the earning derived elsewhere by the dismissed
employee while litigating the legality of his dismissal, should be deducted
from the full amount of backwages which the law grants him upon
reinstatement, so as not to unduly or unjustly enrich the employee at the
expense of the employer.
Issue:
Whether or not the ruling in Pines City v NLRC must still be observed.
Answer:
No. SC categorically concluded the final computation of the backwages
after reconsidering the ruling mentioned in Pines City v. NLRC case.
Those who were illegally dismissed are entitled to the payment of full
backwages.

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Reasoning:
With the evident legislative intent as expressed in Rep. Act No. 6715,
above-quoted, backwages to be awarded to an illegally dismissed
employee, should not, as a general rule, be diminished or reduced
by the earnings derived by him elsewhere during the period of
his illegal dismissal. The underlying reason for this ruling is that the
employee, while litigating the legality (illegality) of his dismissal, must still
earn a living to support himself and family, while full backwages have to
be paid by the employer as part of the price or penalty he has to pay for
illegally dismissing his employee.
The clear legislative intent of the amendment in Rep. Act No. 6715 is to
give more benefits to workers than was previously given them under the
Mercury Drug rule or the "deduction of earnings elsewhere" rule. Thus, a
closer adherence to the legislative policy behind Rep. Act No. 6715 points
to "full backwages" as meaning exactly that, i.e., without deducting from
backwages the earnings derived elsewhere by the concerned employee
during the period of his illegal dismissal.
Therefore, in accordance with R.A No. 6715, petitioners were entitled to
their full backwages, inclusive of allowances and other benefits or their
monetary equivalent, from the time their actual compensation was
withheld from them up to the time of their actual reinstatement. As to
reinstatement of petitioners, SC has already ruled that since reinstatement
is no longer feasible, because the company would be unjustly prejudiced
by the continued employment of petitioners who at present are overage, a
separation pay equal to one-month salary granted to them in the Labor
Arbiter's decision was in order and, therefore, affirmed in the Court's
decision of 15 March 1996. Furthermore, since reinstatement in this case
is no longer feasible, the amount of backwages shall be computed from
the time of their illegal termination on 25 June 1990 up to the time of
finality of this decision.
Holding:
ACCORDINGLY, private respondent's Motion for Reconsideration, dated 10
April 1996, is DENIED.

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NO RETROACTIVITY
MARANAW HOTELS AND RESORTS CORPORATION (CENTURY
PARK SHERATON MANILA), petitioner,
vs.
COURT OF APPEALS, HON. SANTIAGO O. TAADA (Voluntary
Arbitrator) and GREGORIO GALE, respondents.
Facts:
For blurting out offensive remarks against his supervisors in their absence
but promptly reported to them, private respondent Gregorio Gale, a
roomboy at the five-star Century Park Sheraton Manila owned and
operated by petitioner Maranaw Hotels and Resorts Corporation, was
dismissed for "discourtesy and use of disrespectful and impolite language
against a superior which constitutes gross misconduct."
Gregorio Gale subsequently instituted a complaint for illegal dismissal
which, conformably with their collective bargaining agreement, was then
submitted to retired Judge Santiago O. Taada for voluntary arbitration.
On 13 December 1989, after hearing and the submission of the evidence,
position papers and memoranda of the parties, Voluntary Arbitrator
Taada rendered a decision pertinent portions of which read
After going over the evidence adduced by the parties, the Arbitrator finds
no evidence that there was fighting, nor challenging to a fight, no
assaulting nor intimidation of co-employees or supervisors within the hotel
premises. What was established as per evidence on record was more of
discourtesy, and use of disrespectful and impolite language uttered by
complainant which falls under Section 2, Rule VI of the Rules of the Hotel
and carries the penalty of 7 days of suspension for first offense. The
evidence shows it was a first offense.
IN VIEW OF THE FOREGOING, the Arbitrator finds and so holds that
complainant Gregorio Gale has violated Section 2, Rule VI of the Rules of
the Hotel and orders his suspension for a period of seven (7) days.
However, as per admission of the parties, Mr. Gale has already been
dismissed. In case complainant Mr. Gale has been out of his job as
roomboy of the Hotel for more than that period of 7 days, his immediate
reinstatement is hereby ordered with right to collect his share in the
service charge.
Issue: Is the respondent entitled to full back wages?

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Held: This is not to overlook the passage of R.A. 6715, amending among
others Art. 279 of the Labor Code, which now provides
Art. 279. Security of Tenure. In cases of regular employment, the
employer shall not terminate the services of an employee except for just
cause or when authorized by this Title. An employee who is unjustly
dismissed from work shall be entitled to reinstatement without loss of
seniority rights and other privileges and to his full backwages, inclusive of
allowances, and to his other benefits or their monetary equivalent
computed from the time his compensation was withheld from him up to
the time of his actual reinstatement. (Emphasis supplied).
But as We resolved in Sealand Service, Inc. v. NLRC
[I]t may be mentioned in passing that the amendatory provision in R.A.
6715, which entitled an employee who is unjustly dismissed from work to
his full backwages inclusive of allowance, and to his other benefits or their
monetary equivalent computed from the time his compensation was
withheld from him up to the time of actual reinstatement has no
application in the case at bar, said amendment having taken effect on
March 21, 1989, after the decision sought to be enforced in the case had
become final and executory. We have ruled in Lantion, et al. v. NLRC, et
al., that said amendment has no retroactive application.
In the case before Us, since the illegal dismissal of private respondent
occurred on 4 December 1987, or before R.A. 6715 took effect on 21
March 1989, he is entitled only to three (3) years' backwages, inclusive of
all allowances and other benefits, without deducting any renumerations he
may have received as member of the Armed Forces of the Philippines, or
from any other employment, and not to his full wages from the time he
was dismissed up to the present. Certainly, private respondent cannot be
allowed to receive salary from petitioner for the whole duration that he
was not working as roomboy by reason of his unjust dismissal, while at
the same time, draw compensation as member of the Armed Forces of the
Philippines which would not have been possible had he continued to work
for petitioner; for that would be unjust enrichment. Consequently, if
private respondent already received more than what he is entitled to in
accordance herewith, he should reimburse petitioner such amount in
excess of what is due him; otherwise, petitioner should make good the
corresponding deficiency.

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REINSTATEMENT WITHOUT BACKWAGES
An illegally dismissed employee is entitled to either reinstatement, if viable, or
separation pay if reinstatement is no longer viable, and backwages. In certain cases,
however, the Court has ordered the reinstatement of the employee without backwages
considering the fact that (1) the dismissal of the employee would be too harsh a
penalty; and (2) the employer was in good faith in terminating the employee.
For instance, in the case of Cruz v. Minister of Labor and Employment the Court ruled
as follows:
The Court is convinced that petitioner's guilt was substantially established.
Nevertheless, we agree with respondent Minister's order of reinstating petitioner
without backwages instead of dismissal which may be too drastic. Denial of backwages
would sufficiently penalize her for her infractions. The bank officials acted in good faith.
They should be exempt from the burden of paying backwages. The good faith of the
employer, when clear under the circumstances, may preclude or diminish recovery of
backwages. Only employees discriminately dismissed are entitled to backpay. x x x
Likewise, in the case of Jtogon-Suyoc Mines, Inc. v. National Labor Relations
Commission, the Court pronounced that "[t)he ends of social and compassionate justice
would therefore be served if private respondent is reinstated but without backwages in
view of petitioner's good faith."

REINSTATEMENT NOT FEASIBLE; SEPARATION PAY IN LIEU OF

REINSTATEMENT
If reinstatement is no longer possible, the employer has the alternative of paying the
employee his separation pay in lieu of reinstatement. (Manila Water Co, Inc. v. Pena,
G.R. No. 158255, Jul. 8, 2004)
The amount of separation pay that should be paid in lieu of reinstatement is not
provided in the Labor Code or its implementing rules. Jurisprudence, however, dictates
that the following should be included in its computation:
a) The amount equivalent to at least one (1) month salary or to one (1)
month salary for every year of services, whichever is higher, a fraction
of at least six (6) months being considered as one (1) whole year.
(Sec. 4[b], Rule I, Book VI, Rules to Implement the Labor Code).

b) Allowances that the employee has been receiving on a regular basis.

(Planters Products, Inc. v. NLRC, G.R. No. 78524, Jan. 20, 1989).

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STRAINED RELATIONSHIP BAR TO REINSTATEMENT
Under the existing law, an employee who is unjustly dismissed from work shall be
entitled to reinstatement without loss of seniority rights. It must be emphasized,
though, that the has declared that there are specific circumstances obtaining where
reinstatement is not practicable remedy, as when the relations between the employer
and the employee have been so severely strained that it is no longer fitting to order
reinstatement or when the employee decides not to be reinstated. (Cabatulan vs. Buat,
et al., GR no. 147142, Feb 12, 2005)
When reinstatement to their former position is no longer possible under the
circumstances, an award equivalent to three years backwages plus separation pay to
compensate for their illegal separation is thus proper.
The circumstances prevailing in this case do not warrant the reinstatement of the
illegally dismissed private respondents. The antagonism and imputations of bad faith
caused a severe strain in the relationship between petitioner and private respondents,
that a more equitable disposition would be an award of separation pay, in lieu of
reinstatement, plus backwages for not more than three years years without qualification
or deduction. (China City Restaurant Corporation vs. NLRC, GR no. 97196, Jan 22,
1993)

DAMAGES AND INDEMNITY

Moral damages are recoverable in dismissal cases only where the dismissal was
attended by bad faith or fraud or constituted an act oppressive to labor, or was done in
a manner contrary to morals, good customs or public policy.
Exemplary damages in dismissal cases may be awarded only if the dismissal was
effected in wanton, oppressive or malevolent manner. (Garcia, 234 SCRA 632)

ATTORNEYS FEES
The award of attorneys fee is warranted pursuant to Article 111 of the Labor Code. Ten
(10%) percent of the total award is usually the reasonable amount of attorneys fees
awarded. It is settled that where an employee was forced to litigate and, thus, incur
expenses to protect his rights and interest, the award of attorneys fees is legally and
morally justifiable. (Lambert Pawnbrokers and Jewelry Corporation v. Binamira, G.R. No.
170464, July 12, 2010, 624 SCRA 705)

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 ART. 285. TERMINATION BY EMPLOYEE
An employee may terminate:
1. without just cause- by serving a written notice on the employer at least one
month in advance. The employer upon whom no such notice was served may hold
the employee liable for damages.

2. With just cause - an employee may put an end to his employment without serving
any notice on the employer for any of the following just causes:

a. Serious insult by the employer or his representative on the hour and person
of the employee;

b. Inhuman and unbearable treatment accorded the employee by the employer

or his representative;

c. Commission of a crime or offense by the employer or his representative

against the person of the employee or any of the immediate members of his
family; and

d. Other causes analogous to any of the foregoing.

RESIGNATION
Is the voluntary act of the employees who are compelled by personal reasons to
dissociate themselves from their employment.

It must be done with:

1. Intention of relinquishing an office
2. Accompanied by the act of abandonment

RESIGNATION NOTICE
-The employee must serve a written notice on the employer at least one (1) month
in advance.

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Rationale: to afford the employer the opportunity to find replacement for the
resigning employee, at least within the 1 month period.

RESIGNATION PAY
- An employee who voluntarily resigns from his work is not entitled to separation
pay. There is no provision in the Labor Code which grants separation pay to
voluntarily resigning employees.

However, by way of exceptions, there are at least two instances where an

employee who voluntarily resigns is entitled to receive separation pay, as follows:

1. When payment of separation pay is stipulated in the employment contract

or Collective Bargaining Agreement (CBA, for companies with existing
bargaining agent or union);
2. When it is sanctioned by established employer practice or policy.

CONSTRUCTIVE DISMISSAL
Is defined as quitting because continued employment is rendered impossible,
unreasonable or unlikely, as an offer involving demotion in rank and a diminution in
pay. (jo Cinema corp. vs. Abellana GR no. 132837, june 28, 2001)

Constructive dismissal does not always involve forthright dismissal or diminution in

rank, compensation, benefit and privileges. There may be constructive dismissal if
an act of clear discrimination, insensibility or disdain by an employer becomes so
unbearable on the part or the employee that it could foreclose any choice by him
except to forego his continued employment.

FORCED RESIGNATION
-the employee is made to do or perform an involuntary act submission or tender
of resignation meant to validate the action of management in inveigling, luring or
influencing or practically forcing the employee to effectuate the termination of
employment, instead of doing the termination himself.

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ART. 286- WHEN EMPLOYMENT NOT DEEMED TERMINATED:
1. Bona fide suspension of the operation of a business or undertaking for a period
not exceeding six (6) months; or
2. Fulfillment by the employee of a military or civic duty.

SUSPENSION OF OPERATIONS
-There is no termination of employment during the bona fide suspension of business
operations. The establishment simply temporarily suspends its operations for
legitimate and valid reasons, including but not limited to, serious financial losses or
business reverses, force majeure (fire, flood, typhoon, etc.), failure to obtain a
permit or license to operate, or due to a lawful order by a competent authority.

FLOATING STATUS
-Floating status means an indefinite period of time when one does not receive any
salary or financial benefit provided by law (Mojar et al. vs Agro Commercial Security
Service Agency Inc., et al., G.R. No. 187188).

SENTINEL SECURITY AGENCY VS NLRC, SEPT. 3, 1998

Facts:
The complainants were employees of Sentinel Security Agency. They
were assigned to render guard duty at the premises of [Philippine
American Life Insurance Company] at Jones Avenue, Cebu City. Philippine
American Life Insurance Company, the Client, sent notice to replace all
the security guards in the companys offices at the cities of Cebu, Bacolod,
Cagayan de Oro, Dipolog and Ilagan. Agency issued a Relief and Transfer
Order replacing the complainants as guards [of the Client] and for then to
be re-assigned [to] other clients. As ordered, the complainants reported
but were never given new assignments but instead they were told that
they were replaced because they are already old. The complainants
prayed for payment of separation pay and other labor standard benefits.
Issue: Whether the employees were illegally dismissed by their employer,
Sentinel Security Agency, Inc., and in holding petitioner to be equally
liable therefor.

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 Held:
The transfer of an employee involves a lateral movement within the
business or operation of the employer, without demotion in rank,
diminution of benefits or, worse, suspension of employment even if
temporary. The recall and transfer of security guards require
reassignment to another post and are not equivalent to their placement
on floating status. Off-detailing security guards for a reasonable period
of six months is justified only in bona fide cases of suspension of
operation, business or undertaking.
The Client did not, as it could not, illegally dismiss the complainants.
Thus, it should not be held liable for separation pay and back wages. But
even if the Client is not responsible for the illegal dismissal of the
complainants, it is jointly and severally liable with the Agency for the
complainants service incentive leave pay.
As the indirect employer, the Client is jointly and severally liable with the
contractor for the workers wages, in the same manner and extent that it
is liable to its direct employees. This liability of the Client covers the
payment of the service incentive leave pay of the complainants during the
time they were posted at the Cebu branch of the Client. As service had
been rendered, the liability accrued, even if the complainants were
eventually transferred or reassigned.

PROLONGED FLOATING STATUS MAY AMOUNT TO CONSTRUCTIVE

DISMISSAL
The floating status of an employee should last only for a legally prescribed period of
time. When the floating status of an employee lasts for more than six months, he
may be considered to have been constructively dismissed from service. Thus, he is
entitled to the corresponding benefits for separation. (agro commercial security
services agency, Inc. vs NLRC GR no. 82823-24, july 31, 1989)

AGRO COMMERCIAL SECURITY SERVICES VS. NLRC, JULY 31,

1989

Facts : Private respondents, numbering forty-six (46) in all, worked as

security guards and/or janitors under individual contracts with
petitioner. They were assigned to firms and offices where petitioner
had contracts providing security and janitorial services.

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In the early part of 1986, petitioner's service contracts with various
corporations and government agencies to which private respondents
were previously assigned had been terminated generally due to the
sequestration of the said offices by the Presidential Commission on
Good Government. Accordingly, many of the private respondents were
placed on "floating status" on September 16, 1986. A number of them
had been put on that status even earlier.

On account of the uncertainty of their employment with the petitioner,

on July 25, 1986, private respondents filed a complaint for illegal
dismissal in the Arbitration Branch of the Department of Labor and
Employment against petitioner. They sought the payment of their
respective separation pay, 13th month pay for 1986 and service
incentive leave pay. the respondent labor arbiter ruled in favor of the
private respondents whose decision as above-related was affirmed by
the NLRC.

Hence, the herein petition alleging that the petitioner was denied due
process of law by the NLRC and it committed a grave abuse of
discretion in considering private respondents as employees of
petitioner, in ruling that the "floating status" of private respondents
amounted to an illegal dismissal, and in causing the execution of the
judgment pending a complete and full adjudication of the issues.

ISSUE: whether the 17 security guards were illegally dismissed by

their employer

HELD: As regards the other seventeen (17) private respondents, they

admittedly remained in "floating status" for more than six (6) months.
Such a 'floating status" is not unusual for security guards employed in
security agencies as their assignments primarily depend on the
contracts entered into by the agency with third parties. Such a
stipulated status is, therefore, lawful.

The "floating status" of such an employee should last only for a

reasonable time. In this case, respondent labor arbiter correctly held
that when the "floating status" of said employees lasts for more than

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 six (6) months, they may be considered to have been illegally
dismissed from the service. Thus, they are entitled to the
corresponding benefits for their separation.

ART. 302(287) RETIREMENT. Any employee may be retired upon reaching the
retirement age established in the collective bargaining agreement or other applicable
employment contract.
In case of retirement, the employee shall be entitled to receive such retirement benefits
as he may have earned under existing laws and any collective bargaining agreement
and other agreements: Provided, however, That an employee's retirement benefits
under any collective bargaining and other agreements shall not be less than those
provided herein.
In the absence of a retirement plan or agreement providing for retirement benefits of
employees in the establishment, an employee upon reaching the age of sixty (60) years
or more, but not beyond sixty-five (65) years which is hereby declared the compulsory
retirement age, who has served at least five (5) years in the said establishment, may
retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month
salary for every year of service, a fraction of at least six (6) months being considered as
one whole year.
Unless the parties provide for broader inclusions, the term one-half (1/2) month salary
shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and the
cash equivalent of not more than five (5) days of service incentive leaves.
An underground mining employee upon reaching the age of fifty (50) years or more,
but not beyond sixty (60) years which is hereby declared the compulsory retirement
age for underground mine workers, who has served at least five (5) years as
underground mine worker, may retire and shall be entitled to all the retirement benefits
provided for in this Article.
Retail, service and agricultural establishments or operations employing not more than
ten (10) employees or workers are exempted from the coverage of this provision.
Violation of this provision is hereby declared unlawful and subject to the penal
provisions provided under Article 288 of this Code.
Nothing in this Article shall deprive any employee of benefits to which he may be
entitled under existing laws or company policies or practices."
Kinds of Retirement:
1. Compulsory as required by law and contributory in nature.
2. Through Agreement of Employer and Employees in CBA or other agreements.

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 3. Expressly announced in the Company policy.

Republic Act 7641 (Retirement Pay Law)

AN ACT AMENDING ARTICLE 287 OF PRESIDENTIAL DECREE NO. 442, AS AMENDED,
OTHERWISE KNOWN AS THE LABOR CODE OF THE PHILIPPINES, BY PROVIDING FOR
RETIREMENT PAY TO QUALIFIED PRIVATE SECTOR EMPLOYEES IN THE ABSENCE OF
ANY RETIREMENT PLAN IN THE ESTABLISHMENT
Section 1. Article 287 of Presidential Decree No. 442, as amended, otherwise known as
the Labor Code of the Philippines, is hereby amended to read as follows:
"Art. 287. Retirement. Any employee may be retired upon reaching the retirement
age established in the collective bargaining agreement or other applicable employment
contract.
"In case of retirement, the employee shall be entitled to receive such retirement
benefits as he may have earned under existing laws and any collective bargaining
agreement and other agreements: Provided, however, That an employee's retirement
benefits under any collective bargaining and other agreements shall not be less than
those provided herein.
"In the absence of a retirement plan or agreement providing for retirement benefits of
employees in the establishment, an employee upon reaching the age of sixty (60) years
or more, but not beyond sixty-five (65) years which is hereby declared the compulsory
retirement age, who has served at least five (5) years in the said establishment, may
retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month
salary for every year of service, a fraction of at least six (6) months being considered as
one whole year.
"Unless the parties provide for broader inclusions, the term one-half (1/2) month salary
shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and the
cash equivalent of not more than five (5) days of service incentive leaves.
"Retail, service and agricultural establishments or operations employing not more than
(10) employees or workers are exempted from the coverage of this provision.
"Violation of this provision is hereby declared unlawful and subject to the penal
provisions provided under Article 288 of this Code."
Section 2. Nothing in this Act shall deprive any employee of benefits to which he may
be entitled under existing laws or company policies or practices.

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