CCV NOTES FOR THE 2019 Labor Relations

PRELIMINARIES

What are the distinctions between Labor Relations and Labor Standards?

“Labor standards law” is that part of labor law which prescribes the
minimum terms and conditions of employment which the employer is
required to grant to its employees.
“Labor relations law” is that part of labor law (Book V of the Labor Code)
which deals with unionism, collective bargaining, grievance machinery,
voluntary arbitration, strike, picketing and lockout.

Labor relations and labor standards laws are not mutually exclusive. They
are complementary to, and closely interlinked with, each other. For
instance, the laws on collective bargaining, strikes and lockouts which are
covered by labor relations law necessarily relate to the laws on working
conditions found in Book III.

What is the principle of co-determination?

The principle of co-determination refers to the right given to the employees

to participate in policy and decision-making processes that affect their
rights, benefits and welfare.

In PAL v. NLRC and PALEA,2 it was held that the formulation of a Code of
Discipline among employees is a shared responsibility of the employer and
the employees. It affirmed the decision of the NLRC which ordered that the
New Code of Discipline should be reviewed and discussed with the union,
particularly the disputed provisions and that copies thereof be furnished
each employee.

IA. EMPLOYER-EMPLOYEE RELATIONSHIP

IA1. Four-Fold Test

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

a. Selection and engagement of the employee;
b. Payment of wages or salaries;
c. Exercise of the power of dismissal; or
d. Exercise of the power to control the employee’s conduct.

These tests, however, are not fool-proof as they admit of exceptions.

The control test is the controlling test which means that the employer

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controls or has reserved the right to control the employee not only as to the
result of the work to be done but also as to the means and methods by
which the same is to be accomplished.

What is the 2-tiered test of employment relationship?

The two-tiered test enunciated in Francisco v. NLRC,1 is composed of:
(1) The putative employer’s power to control the employee with respect to the
means and methods by which the work is to be ccomplished[control test]; and
(2) The underlying economic realities of the activity or relationship [broader
economic reality test].2
Employment relationship under the control test is determined by asking whether
“the person for whom the services are performed reserves the right to control not
only the end to be achieved but also the manner and means to be used in reaching
such end.”3

The broader economic reality test calls for the determination of the nature of the
relationship based on the circumstances of the whole economic activity, namely:
(1) The extent to which the services performed are an integral part of the
employer’s business;
(2) The extent of the worker’s investment in equipment and facilities;
(3) The nature and degree of control exercised by the employer;
(4) The worker’s opportunity for profit and loss;
(5) The amount of initiative, skill, judgment or foresight required for the success
of the claimed independent enterprise;
(6) The permanency and duration of the relationship between the worker and the
employer; and
(7) The degree of dependency of the worker upon the employer for his continued
employment in that line of business.4

Under the economic reality test, the proper standard of economic dependence is
whether the worker is dependent on the alleged employer for his continued
employment in that line of business. 5 Following the broader economic reality
test, the Supreme Court found petitioner in Orozco v. The Fifth Division of the
Honorable Court of Appeals,6 who is a columnist in the Philippine Daily Inquirer
(PDI), not an employee of PDI but an independent contractor. Thus:
“Petitioner’s main occupation is not as a columnist for respondent but as a
women’s rights advocate working in various women’s organizations. Likewise,
she herself admits that she also contributes articles to other publications. Thus, it
cannot be said that petitioner was dependent on respondent PDI for her
continued employment in respondent’s line of business.
“The inevitable conclusion is that petitioner was not respondent PDI’s employee
but an independent contractor, engaged to do independent work.”

Is it necessary to have a written contract of employment in order to

establish employer-employee relationship?
No. It may be an oral or written contract. A written contract is not
necessary for the creation and validity of the relationship.

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The only exception is in the case of Kasambahay where it is required that
the contract of employment should be in writing.
1 G.R. No. 170087, Aug. 31, 2006.
2 Id.
3 Id.
4 Id.
5 Id.
6 G.R. No. 155207, April 29, 2005.

IA2. KINDS OF EMPLOYMENT

What are the general classifications of employment?

There are five (5) classifications of employment:

(a) Regular employees referring to those who have been “engaged to
perform activities which are usually necessary or desirable in the usual
business or trade of the employer”;
(b) Project employees referring to those “whose employment has been fixed
for a specific project or undertaking, the completion or termination of
which has been determined at the time of the engagement of the
employee”;
(c) Seasonal employees referring to those who work or perform services
which are seasonal in nature, and the employment is for the duration of the
season;
(d) Casual employees referring to those who are not regular, project, or
seasonal employees;
(e) Fixed-term employees whose term is freely and voluntarily determined
by the employer and the employee.

a. REGULAR EMPLOYMENT
How does one become a regular employee?
Under the Labor Code, regular employment may be attained in either of
three (3) ways, namely:
1. By nature of work. - The employment is deemed regular when the
employee has been engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer.
2. By period of service. - The employment is reckoned as regular when the
employee has rendered at least one (1) year of service, whether such service
is continuous or broken, with respect to the activity in which he is employed
and his employment shall continue while such activity exists.
3. By probationary employment. - The employment is considered regular
when the employee is allowed to work after a probationary period.

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PROBATIONARY EMPLOYMENT

How is probationary period, say, of 6 months computed?

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

May probationary period be extended?

Yes, but only upon the mutual agreement by the employer and the
probationary employee.

What is the effect of allowing a probationary employee to work beyond

the probationary period?
He is considered a regular employee.

What is the effect if there is no written contract providing for

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

What are the grounds to terminate probationary employment?

Under Article 281, a probationary employee may be terminated only on
three (3) grounds, to wit:
1. For a just cause; or
2. For authorized cause; or
3. When the probationary employee fails to qualify as a regular employee in
accordance with reasonable standards made known by the employer to the
employee at the start of the employment.

Is procedural due process required in termination of probationary

employment?
Yes, but only in the case of Numbers 1 and 2 above.
No, in the case of No. 3 above.

When should termination of probationary employment be made?

Termination to be valid must be done prior to lapse of probationary period.
Termination a few days after lapse of probationary period cannot be done
without due process as he has already become a regular employee by that
time.

Is the manner or method of paying wage material in determining

regularity of employment?
No. The manner and method of payment of wage or salary is immaterial to
the issue of whether the employee is regular or not.

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b. PROJECT EMPLOYMENT

What is the litmus test of project employment?

The litmus test of project employment, as distinguished from regular
employment, is whether or not the project employees were assigned to
carry out a specific project or undertaking, the duration and scope of which
were specified at the time the employees were engaged for that project.
A true project employee should be assigned to a project which begins and
ends at determined or determinable times and be informed thereof at the
time of hiring.

What are the indicators of project employment?

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

Is length of service material in determining validity of project

employment?
No. Length of service is not a controlling determinant of employment
tenure.

What are some principles on project employment?

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

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

c. SEASONAL EMPLOYMENT

Can a seasonal employee become a regular seasonal employee?

Yes, provided the following requisites are complied with:
1. The seasonal employee should perform work or services that are seasonal
in nature; and
2. They must have also been employed for more than one (1) season.

Can a regular seasonal worker file an illegal dismissal case in the event he
is not hired for the next season?
Yes. The reason is, being a regular seasonal employee, the employer should
re-hire him in the next season. During off-season, his employment is
deemed suspended and he is considered as being on leave of absence
without pay.

d. CASUAL EMPLOYMENT

What is the most important distinguishing feature of casual employment?

The most important distinction is that the work or job for which he was
hired is merely incidental to the principal business of the employer and
such work or job is for a definite period made known to the employee at the
time of engagement.

When does a casual employee become regular?

Casual employee becomes regular after one year of service by operation of
law. The one (1) year period should be reckoned from the hiring date.
Repeated rehiring of a casual employee makes him a regular employee.

e. FIXED-TERM EMPLOYMENT

What are the requisites in order for fixed-term employment to be valid?

The two (2) requisites or criteria for the validity of a fixed-term contract of
employment are as follows:
1. The fixed period of employment was knowingly and voluntarily agreed

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upon by the parties, without any force, duress or improper pressure being
brought to bear upon the employee and absent any other circumstances
vitiating his consent; or
2. It satisfactorily appears that the employer and employee dealt with each
other on more or less equal terms with no moral dominance whatever being
exercised by the former on the latter.

Is fixed-term employment valid if the job is directly related to the principal

business of the employer?
Yes. Fixed-term employment is the only exception to the rule that one
becomes regular if he is made to perform activities directly related to the
principal business of the employer (Regularity by virtue of nature of work)

When does a fixed-term employee become regular?

1. When he is allowed to work beyond the agreed fixed term.
2. When there are successive renewals of fixed-period contracts.
NOTE: The practice of hiring of employees on a uniformly fixed 5-month
basis and replacing them upon the expiration of their contracts with other
workers with the same employment status circumvents their right to
security of tenure.

IA3. JOB CONTRACTING

Is job contracting valid if the contractor-supplied employees are engaged

to perform not merely peripheral but core jobs with the principal?
Yes, per the 2012 case of Digital Telecommunications Philippines, Inc. v.
Digitel Employees Union (DEU), where the Court recognized the
management prerogative to farm out any of its activities, regardless of
whether such activity is peripheral or core in nature.

Comparison of DEPARTMENT ORDER NO. 174 (Series of 2017)

vs. DO 18-A Series of 2011

Department Order No. 18-A Department Order No. 174

Series of 2011
RULES IMPLEMENTlNG ARTICLES 106
T0 109 OF THE LABOR CODE, AS
AMENDED
By virtue of the power vested in the
Secretary of Labor and Employment
under Articles 5 and 106 to 109 of the
Labor Code of the Philippines, as
amended, the following regulations
governing contracting and
subcontracting arrangements are
hereby issued:
Section 1. Guiding principles.
Contracting and subcontracting
arrangements are expressly allowed by
Series of 2017
RULES IMPLEMENTING ARTICLES 106
TO 109 OF THE LABOR CODE, AS
AMENDED
By virtue of the power vested in the
Secretary of Labor and Employment
under Articles 5 and 106 to 109 of the
Labor Code of the Philippines, as
amended, the following regulations
governing contracting and
subcontracting arrangements are
hereby issued:
Section 1. Guiding Principle. Non-
permissible forms of contracting and
subcontracting arrangements

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law and are subject to regulations for
the promotion of employment and the
observance of the rights of workers to
just and humane conditions of work,
security of tenure, self-organization
and collective bargaining. Labor-only
contracting as defined herein shall be
prohibited.
Section 2. Coverage. These Rules shall
apply to all parties of contracting and
subcontracting arrangements where
employer-employee relationships exist.
It shall also apply to cooperatives
engaging in contracting or
subcontracting arrangements.
Contractors and subcontractors
referred to in these Rules are
prohibited from engaging in
recruitment and placement activities as
defined in Article 13(b) of the Labor
Code, whether for local or overseas
employment.
Section 3. Definition of terms. The
following terms as used in these Rules,
shall mean:
(a) “Bond/s” refers to the bond under
Article 108 of the Labor Code that the
principal may require from the
contractor to be posted equal to the
cost of labor under contract. The same
may also refer to the security or
guarantee posted by the principal for
the payment of the services of the
contractors under the Service
Agreement.
(b) “Cabo” refers to a person or group
of persons or to a labor group which, in
the guise of a labor organization,
cooperative or any entity, supplies
workers to an employer, with or
without any monetary or other
consideration, whether in the capacity
of an agent of the employer or as an
ostensible independent contractor.
(c) “Contracting” or “Subcontracting”
refers to an arrangement whereby a
principal agrees to put out or farm out
with a contractor the performance or
completion of a specific job, work or
service within a definite or
predetermined period, regardless of
whether such job, work or service is to
be performed or completed within or
outside the premises of the principal.
(d) “Contractor” refers to any person or
entity, including a cooperative,
engaged in a legitimate contracting or
undermine the Constitutional and
statutory right to security of tenure
of workers.
Section 2. Coverage. These Rules
shall apply to all parties in an
arrangement where employer-
employee relationship exists.
Contractors and subcontractors
referred to in these Rules are
prohibited from engaging in
recruitment and placement activities as
defined in Article 13(b) of the Labor
Code, whether for local or overseas
employment.
Section 3. Definition of terms. The
following terms, as used in these
Rules, shall mean:
a) "Bond" — refers to the bond
under Article 108 of the Labor Code
that the principal may require from the
contractor to be posted equal to the cost
of labor under contract.
(b) “Cabo” - refers to a person or
group of persons or to a labor group
which, in the guise of a labor
organization, cooperative or any entity,
supplies workers to an employer, with
or without any monetary or other
consideration, whether in the capacity
of an agent of the employer or as an
ostensible independent contractor.
(c) “Contracting” or “Subcontracting” -
refers to an arrangement whereby a
principal agrees to put out or farm out
with a contractor the performance or
completion of a specific job, work or
service within a definite or
predetermined period, regardless of
whether such job, work or service is to
be performed or completed within or
outside the premises of the principal.
(d) "Contractor" — refers to any
person or entity engaged in a
legitimate contracting or
CCV Notes on Labor Relations | 8
subcontracting arrangement providing
either services, skilled workers,
temporary workers, or a combination
of services to a principal under a
Service Agreement.
(e) “Contractor’s employee” includes
one employed by a contractor to
perform or complete a job, work, or
service pursuant to a Service
Agreement with a principal. It shall
also refer to regular employees of the
contractor whose functions are not
dependent on the performance or
completion of a specific job, work or
service within a definite period of time,
i.e., administrative staff.
(f) “In-house agency” refers to a
contractor which is owned, managed,
or controlled directly or indirectly by
the principal or one where the principal
owns/represents any share of stock,
and which operates solely or mainly for
the principal.
(g) “Net Financial Contracting Capacity
(NFCC)” refers to the formula to
determine the financial capacity of the
contractor to carry out the job, work or
services sought to be undertaken
under a Service Agreement. NFCC is
current assets minus current liabilities
multiplied by K, which stands for
contract duration equivalent to: 10 for
one year or less; 15 for more than one
(1) year up to two (2) years; and 20
for more than two (2) years, minus the
value of all outstanding or ongoing
projects including contracts to be
started.
(h) “Principal” refers to any employer,
whether a person or entity, including
government agencies and
government-owned and controlled-
subcontracting arrangement providing
services for a specific job or
undertaking farmed out by principal
under a Service Agreement.
(e) "Contractor's employee" — refers to
employee of the contractor hired to
perform or complete a job or work farmed
out by the principal pursuant to a Service
Agreement with the latter.
(f) "In-house agency" — refers to a
contractor which is owned, managed, or
controlled directly or indirectly by the
principal or one where the principal
owns/represents any share of stock, and
which operates solely or mainly for the
principal.
(g) "In-house cooperative" — refers to
a cooperative which is managed, or
controlled directly or indirectly by the
principal or one where the principal or any
of its officers owns/represents any equity
or interest, and which operates solely or
mainly for the principal.
(h) "Labor-only contracting" - refers to
arrangement where the contractor or
subcontractor merely recruits, supplies or
places workers to perform a job or work
for a principal, and the elements
enumerated in Section 5 hereunder are
present.
(i) "Principal" — refers to any natural or
juridical entity, whether an employer or
not, who puts out or farms out a job or
work to a contractor.
CCV Notes on Labor Relations | 9
corporations, who/which puts out or
farms out a job, service or work to a
contractor.
(i) “Right to control” refers to the right
reserved to the person for whom the
services of the contractual workers are
performed, to determine not only the
end to be achieved, but also the
manner and means to be used in
reaching that end.
(j) “Service Agreement” refers to the (j) "Service Agreement" — refers to the
contract between the principal and contract between the principal and
contractor containing the terms and contractor containing the terms and
conditions governing the performance conditions governing the performance or
or completion of a specific job, work or completion of a specific job or work
service being farmed out for a definite being farmed out for a definite or
or predetermined period. predetermined period.

(k) "Solidary liability" refers to the (k) "Solidary liability" — refers to the
liability of the principal, pursuant to the liability of the principal, pursuant to the
provision of Article 109 of the Labor provision of Article 109 of the Labor Code,
Code, as direct employer together with as direct employer together with the
the contractor for any violation of any contractor for any violation of any
provision of the Labor Code. provision of the Labor Code.
It also refers to the liability of the
principal, in the same manner and It also refers to the liability of the
extent that he/she is liable to his/her principal, in the same manner and extent
direct employees, to the extent of the that he/she is liable to his/her direct
work performed under the contract employees, to the extent of the work
when the contractor fails to pay the performed under the contract when the
wages of his/her employees, as contractor fails to pay the waged of
provided in Article 106 of the Labor his/her employees, as provided in
Code, as amended. Article 106 of the Labor Code, as
amended.
(l) ”Substantial capital" refers to paid- (l) "Substantial capital" — refers to
up capital stocks/shares of at least paid-up capital stock/shares at least
Three Million Pesos (P3,000,000.00) in Five Million Pesos (P5,000,000.00) in the
the case of corporations, partnerships case of corporations, partnerships and
and cooperatives; in the case of single cooperatives; in the case of single
proprietorship, a net worth of at least proprietorship, a net worth of at least
Three Million Pesos (P3,000,000.00). Five Million Pesos (P5,000,000.00).
(m) “Trilateral Relationship” refers to
the relationship in a contracting or
subcontracting arrangement where
there is a contract for a specific job,
work or service between the principal
and the contractor, and a contract of
employment between the contractor
and its workers. There are three (3)
parties involved in these
arrangements: the principal who
decides to farm out a job, work or
service to a contractor; the contractor
who has the capacity to independently
undertake the performance of the job,
work or service; and the contractual
workers engaged by the contractor to
accomplish the job, work or service.

CCV Notes on Labor Relations | 10

 Section 4. Regulation of Contracting
or Subcontracting. The Secretary of
Labor and Employment shall regulate
contracting and subcontracting
arrangement by absolutely prohibiting
labor-only contracting, and restricting
job contracting allowed under the
provisions of the Labor Code, as
amended.
Section 4. Legitimate contracting or
subcontracting. Contracting or
subcontracting shall be legitimate if all
the following circumstances concur: (a)
The contractor must be registered in
accordance with these Rules and
carries a distinct and independent
business and undertakes to perform
the job, work or service on its own
responsibility, according to its own
manner and method, and free from
control and direction of the principal in
all matters connected with the
performance of the work except as to
the results thereof;(b) The contractor
has substantial capital and/or
investment; and (c) The Service
Agreement ensures compliance with all
the rights and benefits under Labor
Laws.
Section 5. Trilateral relationship in
contracting arrangements; Solidary
liability. In legitimate contracting or
subcontracting arrangement there
exists:

(a) An employer-employee relationship

between the contractor and the
employees it engaged to perform the
specific job, work or service being
contracted; and
(b) A contractual relationship between
the principal and the contractor as
governed by the provisions of the Civil
Code.

In the event of any violation of any

provision of the Labor Code, including
the failure to pay wages, there exists a
solidary liability on the part of the
principal and the contractor for
purposes of enforcing the provisions of
the Labor Code and other social
legislation, to the extent of the work
performed under the employment
contract. However, the principal shall
be deemed the direct employer of the
contractor’s employee in cases where
there is a finding by a competent
authority of labor-only contracting, or

CCV Notes on Labor Relations | 11

commission of prohibited activities as
provided in Section 7, or a violation of
either Sections 8 or 9 hereof.
Section 6. Prohibition against labor-
only contracting. Labor-only
contracting is hereby declared
prohibited. For this purpose, labor only
contracting shall refer to an
arrangement where:
(a) The contractor does not have
substantial capital or investments
in the form of tools, equipment,
machineries, work premises,
among others, and the employees
recruited and placed are
performing activities which are
usually necessary or desirable to
the operation of the company, or
directly related to the main
business of the principal within a
definite or predetermined period,
regardless of whether such job,
work or service is to be performed
or completed within or outside the
premises of the principal; or
(b) The contractor does not
exercise the right to control over
the performance of the work of the
employee.
Section 5. Absolute Prohibition against
Labor-only Contracting. Labor-only
contracting, which is totally prohibited,
refers to an arrangement where:
a) i. The contractor or subcontractor
does not have substantial capital, or
ii. The contractor or subcontractor
does not have investments in the
form of tools, equipment,
machineries, supervision, work
premises, among others; and
iii. The contractor's or
subcontractor's employees recruited
and placed are performing activities
which are directly related to the main
business operation of the principal; or
b) The contractor or subcontractor does
not exercise the right to control over
the performance of the work of the
employee.
Section 6. Other Illicit Forms of
Employment Arrangements. In
addition to Section 5 of these Rules, the
following are hereby declared prohibited
for being contrary to the law or public
policy:
a) When the principal farms out
work to a "Cabo".
b) Contracting out of job or work
through an in-house agency.
c) Contracting out of job or work
through an in-house cooperative
which merely supplies workers to
the principal.
d) Contracting out of a job or work by
reason of a strike or lockout
whether actual or imminent.
e) Contracting out of a job or work
being performed by union members
and such will interfere with, restrain
or coerce employees in the exercise
of their rights to self-organization
as provided in Article 259 of the
Labor Code, as amended.
f) Requiring the
contractor's/subcontractor's
employees to perform functions
which are currently being
CCV Notes on Labor Relations | 12
 performed by the regular
employees of the principal.
g) Requiring the
contractor's/subcontractor's
employees to sign, as a precondition
to employment or continued
employment, an antedated
resignation letter; a blank payroll;
a waiver of labor standards
including minimum wages and
social or welfare benefits; or a
quitclaim releasing the principal or
contractor from liability as to
payment of future claims; or
require the employee to become
member of a cooperative.
h) Repeated hiring by the
contractor/subcontractor of
employees under an employment
contract of short duration.
i) Requiring employees under a
contracting/subcontracting
arrangement to sign a contract
fixing the period of employment to a
term shorter than the term of the
Service Agreement, unless the
contract is divisible into phases for
which substantially different skills
are required and this is made
known to the employee at the time
of engagement.
j) Such other practices, schemes or
employment arrangements
designed to circumvent the right
of workers to security of tenure.

Section 7. When principal is deemed

the direct employer of the
contractor's or subcontractor's
employees. In the event that there is a
finding that the contractor or
subcontractor is engaged in labor-only
contracting under Section 5 and other
illicit forms of employment
arrangements under Section 6 of these
Rules, the principal shall be deemed
the direct employer of the
contractor's or subcontractor's
employees.

Section 8. Permissible Contracting

or Subcontracting Arrangements.
Notwithstanding Sections 5 and 6 hereof,
contracting or subcontracting shall only
be allowed if all the following
circumstances concur:
a) The contractor or
subcontractor is engaged in a distinct
and independent business and

CCV Notes on Labor Relations | 13

 undertakes to perform the job or work on
its own responsibility, according to its own
manner and method;
b) The contractor or
subcontractor has substantial capital to
carry out the job farmed out by the
principal on his account, manner and
method, investment in the form of tools,
equipment, machinery and supervision;
c) In performing the work
farmed out, the contractor or
subcontractor is free from the control
and/or direction of the principal in all
matters connected with the performance
of the work except as to the result
thereto; and
d) The Service Agreement
ensures compliance with all the rights
and benefits for all the employees of the
contractor or subcontractor under the
labor laws.

Section 9. Solidary Liability. In the event

of violation of any provision of the Labor
Code, including the failure to pay wages,
there exists a solidary liability on the part
of the principal and the contractor for
purposes of enforcing the provisions of the
Labor Code and other social legislations,
to the extent of the work performed
under the employment contract.

Section 7. Other Prohibitions.

Notwithstanding Section 6 of these
Rules, the following are hereby
declared prohibited for being contrary
to law or public policy:

A. Contracting out of jobs, works or

services when not done in good faith
and not justified by the exigencies of
the business such as the following:

(1) Contracting out of jobs, works or

services when the same results in the
termination or reduction of regular
employees and reduction of work
hours or reduction or splitting of the
bargaining unit.

(2) Contracting out of work with a

“Cabo”.

(3) Taking undue advantage of the

economic situation or lack of
bargaining strength of the contractor’s
employees, or undermining their
security of tenure or basic rights, or
circumventing the provisions of regular

CCV Notes on Labor Relations | 14

employment, in any of the following
instances:

(i) Requiring them to perform functions

which are currently being
performed by the regular employees of
the principal; and

(ii) Requiring them to sign, as a

precondition to employment or
continued employment, an antedated
resignation letter; a blank payroll; a
waiver of labor standards including
minimum wages and social or welfare
benefits; or a quitclaim releasing the
principal, contractor or from any
liability as to payment of future claims.

(4) Contracting out of a job, work or

service through an in-house agency.

(5) Contracting out of a job, work or

service that is necessary or desirable
or directly related to the business or
operation of the principal by reason of
a strike or lockout whether actual or
imminent.

(6) Contracting out of a job, work or

service being performed by union
members when such will interfere with,
restrain or coerce employees in the
exercise of their rights to self-
organization as provided in Art. 248 (c)
of the Labor Code, as amended.

(7) Repeated hiring of employees

under an employment contract of short
duration or under a Service Agreement
of short duration with the same or
different contractors, which
circumvents the Labor Code provisions
on Security of Tenure.

(8) Requiring employees under a

subcontracting arrangement to sign a
contract fixing the period of
employment to a term shorter than the
term of the Service Agreement, unless
the contract is divisible into phases for
which substantially different skills are
required and this is made known to the
employee at the time of engagement.

(9) Refusal to provide a copy of the

Service Agreement and the
employment contracts between the
contractor and the employees
deployed to work in the bargaining unit

CCV Notes on Labor Relations | 15

of the principal’s certified bargaining
agent to the sole and exclusive
bargaining agent (SEBA).
(10) Engaging or maintaining by the
principal of subcontracted employees
in excess of those provided for in the
applicable Collective Bargaining
Agreement (CBA) or as set by the
Industry Tripartite Council (ITC).
B. Contracting out of jobs, works or
services analogous to the above when
not done in good faith and not justified
by the exigencies of the business.
Section 8. Rights of contractor’s
employees. All contractor's employees,
whether deployed or assigned as
reliever, seasonal, week-ender,
temporary, or promo-jobbers, shall be
entitled to all the rights and privileges
as provided for in the Labor Code, as
amended, to include the following:
(a) Safe and healthful working
conditions;
(b) Labor standards such as but not
limited to service incentive leave,
rest days, overtime pay, holiday
pay, 13th month pay, and
separation pay as may be provided
in the Service Agreement or under
the Labor Code;
(c) Retirement benefits under the
SSS or retirement plans of the
contractor, if there is any;
(d) Social security and welfare
benefits;
(e) Self-organization, collective
bargaining and peaceful concerted
activities; and
(f) Security of tenure.
Section 9. Required contracts under
these Rules.
(a) Employment contract between the
contractor and its employee.
Notwithstanding any oral or written
stipulations to the contrary, the
contract between the contractor and its
employee shall be governed by the
provisions of Articles 279 and 280 of
the Labor Code, as amended. It shall
include the following terms and
conditions:
i. The specific description of the
job, work or service to be
performed by the employee;
ii. The place of work and terms and
conditions of employment,
Section 10. Rights of Contractor's/
Subcontractor's Employees. All
contractor's/subcontractor's employees,
shall be entitled to security of tenure and
all the rights and privileges as provided
for in the Labor Code, as amended, to
include the following:
a) Safe and healthful working conditions;
b) Labor standards such as but not
limited to service incentive leave, rest
days, overtime pay, holiday pay, 13th
month pay, and separation pay;
c) Retirement benefits under
the SSS or retirement plans of
the contractor/subcontractor;
d) Social security and welfare benefits;
and
e) Self-organization, collective
bargaining and peaceful concerted
activities including the right to strike.
Section 11. Required Contracts under
these Rules.
a) Employment contract between
the contractor/subcontractor and
its employees. Notwithstanding any
oral or written stipulations to the
contrary, the contract between the
contractor/subcontractor and its
employees shall be governed by the
provisions of Articles 294 and 295 of
the Labor Code, as amended, including
the provisions on general labor
standards. It shall include the following
stipulations:
i. The specific description of
the job or work to be
CCV Notes on Labor Relations | 16
 including a statement of the wage
rate applicable to the individual
employee; and
iii. The term or duration of
employment that must be
coextensive with the Service
Agreement or with the specific
phase of work for which the
employee is engaged.
The contractor shall inform the
employee of the foregoing terms and
conditions of employment in writing on
or before the first day of his/her
employment.
performed by the employee;
and
ii. The place of work and terms
and condition of employment,
including a statement of the
wage rate applicable to the
individual employee.
The contractor/subcontractor
shall inform the employee of the
foregoing stipulations in writing
on or before the first day of
his/her employment.

(b) Service Agreement between the

principal and the contractor. The b) Service Agreement between the
Service Agreement shall include the principal and the contractor. The
following: Service Agreement shall include the
i. The specific description of the following:
job, work or service being i. The specific description of the job or
subcontracted. work being subcontracted, including its
ii. The place of work and terms and term or duration;
conditions governing the ii. The place or work and terms and
contracting arrangement, to conditions governing the contracting
include the agreed amount of arrangement, to include the agreed
the services to be rendered, the amount of the contracted job or work
standard administrative fee of as well as the standard administrative
not less than ten percent (10%) fee of not less than ten percent (10%)
of the total contract cost. of the total contract cost; and
iii. Provisions ensuring compliance iii. A provision on the issuance of the
with all the rights and benefits bond/s as defined in Section 3(a)
of the employees under the renewable every year.
Labor Code and these Rules on:
provision for safe and healthful
working conditions; labor
standards such as, service
incentive leave, rest days,
overtime pay, 13th month pay
and separation pay; retirement
benefits; contributions and
remittance of SSS,
Philhealth,Pag-lbig Fund, and
other welfare benefits; the right
to self-organization, collective
bargaining and peaceful
concerted action; and the right
to security of tenure.
iv. A provision on the Net Financial
Contracting Capacity of the
contractor, which must be equal
to the total contract cost.
v. A provision on the issuance of
the bond/s as defined in Section
3(m) renewable every year.
vi. The contractor or subcontractor
shall directly remit monthly the
employers’ share and

CCV Notes on Labor Relations | 17

 employees’ contribution to the
SSS, ECC, Philhealth and Pag-
ibig.
vii. The term or duration of
engagement.

The Service Agreement must

conform to the DOLE Standard
Computation and Standard Service
Agreement, which form part of these
Rules as Annexes “A ” and “B”.
Section 10. Duties of the principal.
Pursuant to the authority of the
Secretary of Labor and Employment to
restrict or prohibit the contracting of
labor to protect the rights of the
workers and to ensure compliance with
the provisions of the Labor Code, as
amended, the principal, as the indirect
employer or the user of the services of
the contractor, is hereby required to
observe the provisions of these Rules.
Section 11. Security of tenure of
contractor’s employees. It is
understood that all contractor’s
employees enjoy security of tenure
regardless of whether the contract of
employment is co-terminus with the
service agreement, or for a specific job,
work or service, or phase thereof.

Section 12. Effect of Violation of the

Provisions on the Rights of Contractor's
Employees and Required Contracts. A
finding of violation of either Sections 10 or
11 hereof, shall render the principal the
direct employer of the employees of the
contractor or subcontractor, pursuant to
Article 109 of the Labor Code, as
amended.

Section 12. Observance of required

standards of due process;
requirements of notice. In all cases of
termination of employment, the
standards of due process laid down in
Article 277(b) of the Labor Code, as
amended, and settled jurisprudence on
the matter, must be observed. Thus,
the following is hereby set out to clarify
the standards of due process that must
be observed:

I. For termination of employment

based on just causes as defined in
Article 282 of the Code, the
requirement of two written notices
served on the employee shall observe
the following:

CCV Notes on Labor Relations | 18

(A) The first written notice should
contain:
(1) The specific causes or grounds for
termination;
(2) Detailed narration of the facts and
circumstances that will serve as basis
for the charge against the employee. A
general description of the charge will
not suffice;
(3) The company rule, if any, that is
violated and/or the ground under Art.
282 that is being charged against the
employee; and
(4) A directive that the employee is
given opportunity to submit a written
explanation within a reasonable period.

“Reasonable period” should be

construed as a period of at least five
(5) calendar days from receipt of the
notice to give the employee an
opportunity to study the accusation,
consult a union official or lawyer,
gather data and evidence, and decide
on the defenses against the complaint.

(B) After serving the first notice, the

employer should afford the employee
ample opportunity to be heard and to
defend himself/herself with the
assistance of his/her representative if
he/she so desires, as provided in
Article 277(b) of the Labor Code, as
amended.

“Ample opportunity to be heard” means

any meaningful opportunity (verbal or
written) given to the employee to
answer the charges against him/her
and submit evidence in support of
his/her defense, whether in a hearing,
conference or some other fair, just and
reasonable way. A formal hearing or
conference becomes mandatory only
when requested by the employee in
writing or substantial evidentiary
disputes exist or a company rule or
practice requires it, or when similar
circumstances justify it.

(C) After determining that termination

of employment is justified, the
employer contractor shall serve the
employee a written notice of
termination indicating that: (1) all
circumstances involving the charge
against the employees have been
considered: and (2) the grounds have

CCV Notes on Labor Relations | 19

been established to justify the
severance of their employment.

The foregoing notices shall be served

on the employee’s last known address.

II. For termination of employment

based on authorized causes defined in
Article 283 of the Labor Code, the
requirement of due process shall be
deemed complied with upon service of
a written notice to the employee and
the appropriate regional office of the
Department of Labor and Employment
at least thirty days before the
effectivity of the termination,
specifying the ground or grounds for
termination.

III. If the termination is brought about

by the completion of the contract or
phase thereof, no prior notice is
required. If the termination is brought
about by the failure of a probationary
employee to meet the reasonable
standards of the employer, which was
made known to the employee at the
time of his/her employment, it shall be
sufficient that a written notice is served
upon the employee within a reasonable
time prior to the expiration of the
probationary period.

Section 13. Effect of termination of Section 13. Effect of termination of

employment. The termination of
employment of the contractor
employee prior to the expiration of the
Service Agreement shall be governed
by Articles 282, 283 and 284 of the
Labor Code.
employment. The termination of
employment of the contractor
employee prior to the expiration of the
Service Agreement shall be governed
by Articles 297, 298 and 299 of the
Labor Code.

In case the termination of employment In case the termination of employment

is caused by the pre-termination of the
Service Agreement not due to
authorized causes under Article 283,
the right of the contractor employee to
unpaid wages and other unpaid
benefits including unremitted legal
mandatory contributions, e.g., SSS,
Philhealth, Pag-ibig, ECC, shall be
borne by the party at fault, without
prejudice to the solidary liability of the
parties to the Service Agreement.
is caused by the pre-termination of the
Service Agreement not due to
authorized causes under Article 298,
the right of the contractor employee to
unpaid wages and other unpaid
benefits including unremitted legal
mandatory contributions, e.g., SSS,
Philhealth, Pag-ibig, ECC, shall be
borne by the party at fault, without
prejudice to the solidary liability of the
parties to the Service Agreement.

Where the termination results from the
expiration of the service agreement, or
from the completion of the phase of the
job, work or service for which the
employee is engaged, the latter may
Where the termination results from the
expiration of the Service Agreement, or
from the completion of the phase of the job
or work for which the employee is engaged,
the latter may opt to wait for re-

CCV Notes on Labor Relations | 20

opt for payment of separation benefits
as may be provided by law or the
Service Agreement, without prejudice
to his/her entitlement to the
completion bonuses or other
emoluments, including retirement
benefits whenever applicable.
Section 14. Mandatory Registration and
Registry of Legitimate Contractors.
Consistent with the authority of the
Secretary of Labor and Employment to
restrict or prohibit the contracting out
of labor to protect the rights of
workers, it shall be mandatory for all
persons or entities, including
cooperatives, acting as contractors, to
register With the Regional Office of the
Department of Labor and Employment
(DOLE) where it principally operates.
Failure to register shall give rise to the
presumption that the contractor is
engaged in labor-only contracting.
Accordingly, the registration system
governing contracting arrangements
and implemented by the Regional
Offices of the DOLE is hereby
established, with the Bureau of
Working Conditions (BWC) as the
central registry.
Section 15. Requirements for
registration. The application for
registration as a contractor shall be
filed at the DOLE Regional Office in the
region where it seeks to principally
operate. The applicant shall provide in
the application form the following
information:
(a) The name and business address of
the applicant and the areas where it
seeks to operate;
(b) The names and addresses of
officers, if the applicant is a
corporation, partnership, cooperative
or a labor organization;
(c) The nature of the applicant’s
business and the industry or industries
where the applicant seeks to operate;
employment within three (3) months to
resign and transfer to another contractor-
employer. Failure of the contractor to
provide new employment for the employee
shall entitle the latter to payment of
separation benefits as may be provided by
law or the Service Agreement, whichever is
higher, without prejudice to his/her
entitlement to completion bonuses or other
emoluments, including retirement benefits
whenever applicable. The mere expiration
of the Service Agreement shall not be
deemed as a termination of employment
of the contractor's/subcontractor's
employees who are regular employees of
the latter.
Section 14. Mandatory Registration and
Registry of Legitimate Contractors.
Consistent with the authority of the
Secretary of Labor and Employment to
restrict or prohibit the contracting out
of labor to protect the rights of
workers, it shall be mandatory for all
persons or entities, including
cooperatives, acting as contractors, to
register With the Regional Office of the
Department of Labor and Employment
(DOLE) where it principally operates.
Failure to register shall give rise to the
presumption that the contractor is
engaged in labor-only contracting.
Accordingly, the registration system
governing contracting arrangements
and implemented by the Regional
Offices of the DOLE is hereby
established, with the Bureau of Working
Conditions (BWC) as the central
registry.
Section 15. Requirements for
registration. The application for
registration as a contractor shall be
filed at the DOLE Regional Office in the
region where it seeks to principally
operate. The applicant shall provide in
the application form the following
information:
(a) The name and business address of
the applicant and the areas where it
seeks to operate;
(b) The names and addresses of
officers, if the applicant is a
corporation, partnership, cooperative
or a labor organization;
(c) The nature of the applicant’s
business and the industry or industries
where the applicant seeks to operate;
CCV Notes on Labor Relations | 21
(d) The number of regular workers and
the total workforce;
(e) The list of clients, if any, the
number of personnel assigned to each
client, if any, and the services provided
to the client;
(f) The description of the phases of the
contract, including the number of
employees covered in each phase,
where appropriate: and
(g) Proof of compliance with substantial
capital requirement as defined in
Section 3(l) of these Rules.
The application shall be supported by:
(a) A certified true copy of a certificate
of registration of firm or business name
from the Securities and Exchange
Commission (SEC), Department of
Trade and Industry (DTI), Cooperative
Development Authority (CDA), or from
the DOLE if the applicant IS a labor
organization;
(b) A certified true copy of the license
or business permit issued by the local
government unit or units where the
contractor operates;
(c) A certified listing, with proof of
ownership or lease contract, of
facilities, tools, equipment, premises
implements, machineries and work
premises, that are actually and directly
used by the contractor in the
performance or completion of the job,
work or service contracted out. In
addition, the applicant shall submit a
photo of the office building and
premises where it holds office;
(d) A copy of audited financial
statements if the applicant is a
corporation, partnership, cooperative
or a labor organization, or copy of the
latest ITR if the applicant is a sole
proprietorship; and
(e) A sworn disclosure that the
registrant, its officers and owners or
principal stockholders or any one of
them, has not been operating or
previously operating as a contractor
under a different business name or
entity or with pending cases of
violations of these Rules and/or labor
standards, or with a cancelled
registration. In case any of the
foregoing has a pending case, a copy of
the complaint and the latest status of
the case shall be attached.
(d) The number of regular workers and
the total workforce;
(e) The list of clients, if any, the
number of personnel assigned to each
client, if any, and the services provided
to the client;
(f) The description of the phases of the
contract, including the number of
employees covered in each phase,
where appropriate: and
(g) Proof of compliance with substantial
capital requirement as defined in
Section 3(j) of these Rules.
The application shall be supported by:
(a) A certified true copy of a certificate
of registration of firm or business name
from the Securities and Exchange
Commission (SEC), Department of
Trade and Industry (DTI), Cooperative
Development Authority (CDA), or from
the DOLE if the applicant IS a labor
organization;
(b) A certified true copy of the license
or business permit issued by the local
government unit or units where the
contractor operates;
(c) A certified listing, with proof of
ownership or lease contract, of
facilities, tools, equipment, premises
implements, machineries and work
premises, that are actually and directly
used by the contractor in the
performance or completion of the job,
work or service contracted out. In
addition, the applicant shall submit a
photo of the office building and
premises where it holds office;
(d) A copy of audited financial
statements if the applicant is a
corporation, partnership, cooperative
or a labor organization, or copy of the
latest ITR if the applicant is a sole
proprietorship; and
(e) A sworn disclosure that the
registrant, its officers and owners or
principal stockholders or any one of
them, has not been operating or
previously operating as a contractor
under a different business name or
entity or with pending cases of
violations of these Rules and/or labor
standards, or with a cancelled
registration. In case any of the
foregoing has a pending case, a copy of
the complaint and the latest status of
the case shall be attached.
CCV Notes on Labor Relations | 22
The application shall be verified. It
shall include a DOLE certification of
attendance to orientation seminar on
these Rules and an undertaking that
the contractor shall abide by all
applicable labor laws and regulations.
Section 16. Filing and processing of
application. The application with all
supporting documents shall be filed in
triplicate in the Regional Office where
the applicant principally operates. No
application for registration shall be
accepted unless all the requirements in
the preceding Section are complied
with.
Section 17. Verification inspection.
Within two (2) working days upon
receipt of the application with complete
supporting documents, the authorized
representative of the Regional Director
shall conduct a verification inspection
of the facilities, tools, equipment, and
work premises of the applicant.
Section 18. Approval or denial of the
application. The Regional Office shall
deny or approve the application within
one (1) working day after the
verification inspection.
Applications that fail to meet the
requirements set forth in Section 15 of
these Rules shall be denied.
Section 19. Registration fee. Payment
of registration fee of Twenty- Five
Thousand Pesos (P25,000.00) shall be
required upon approval of the
application.
Upon registration, the Regional Office
shall return one set of the duly-
stamped application documents to the
applicant, retain one set for its file, and
transmit the remaining set to the
Bureau of Working Conditions (BWC)
within five (5) days from registration.
Section 20. Validity of certificate of
registration of contractors. The
contractor shall be deemed registered
only on the date of issuance of its
Certificate of Registration.
The Certificate of Registration shall be
effective for three (3) years, unless
cancelled after due process. The same
shall be valid in the region where it is
registered.
Section 16. Filing and processing of
application. The application with all
supporting documents shall be filed in
triplicate in the Regional Office where
the applicant principally operates. No
application for registration shall be
accepted unless all the requirements in
the preceding Section are complied
with.
Section 17. Verification inspection.
Within two (2) working days upon
receipt of the application with complete
supporting documents, the authorized
representative of the Regional Director
shall conduct a verification inspection
of the facilities, tools, equipment, and
work premises of the applicant.
Section 18. Approval or denial of the
application. The Regional Office shall
deny or approve the application within
three (3) working days after the
verification inspection.
Applications that fail to meet the
requirements set forth in Section 15 of
these Rules shall be denied.
Section 19. Registration fee. Payment
of registration fee of One Hundred
Thousand Pesos (P100,000.00) shall be
required upon approval of the
application.
Upon registration, the Regional Office
shall return one set of the duly-
stamped application documents to the
applicant, retain one set for its file, and
transmit the remaining set to the
Bureau of Working Conditions (BWC)
within five (5) days from registration.
Section 20. Validity of certificate of
registration of contractors. The
contractor shall be deemed registered
only on the date of issuance of its
Certificate of Registration.
The Certificate of Registration shall be
effective for two (2) years, unless
cancelled after due process. The same
shall be valid in the region where it is
registered.
CCV Notes on Labor Relations | 23
In case the contractor has Service
Agreements or operates outside the
region where it is registered, it shall
request a duly authenticated copy of its
Certificate of Registration from the
registering Regional Office and submit
the same to the DOLE Regional Office
where it seeks to operate, together
with a copy of its Service Agreement/s
in the area, for purposes of monitoring
compliance with these Rules.
Section 21. Renewal of registration. All
registered contractors shall apply for
renewal of their Certificates of
Registration thirty (30) days before the
expiration of their registration to
remain in the roster of legitimate
service contractors. The applicant shall
pay a registration renewal fee of
Twenty-Five Thousand Pesos
(P25,000.00) to the DOLE Regional
Office.
Copies of all the updated supporting
documents in letters (a) to (e) of
Section 15 hereof shall be attached to
the duly accomplished application form,
including the following:
(a) Certificate of membership and proof
of payment of SSS, Philhealth, BIR,
ECG and Pag-lbig contributions for the
last three (3) years, as well as loan
amortizations; and
(b) Certificate of pending or no pending
labor standards violation case/s with
the National Labor Relations
Commission (NLRC) and Department of
Labor and Employment (DOLE). The
pendency of a case will not prejudice
the renewal of the registration, unless
there is a finding of violation of labor
standards by the DOLE Regional
Director.
Section 22. Semi-annual reporting. The
contractor shall submit in triplicate its
subscribed semi-annual report using a
prescribed form to the appropriate
Regional Office. The report shall
include:
(a) A list of contracts entered with the
principal during the subject reporting
period;
(b) The number of workers covered by
each contract with the principal;
In case the contractor has Service
Agreements or operates outside the
region where it is registered, it shall
request a duly authenticated copy of its
Certificate of Registration from the
registering Regional Office and submit
the same to the DOLE Regional Office
where it seeks to operate, together
with a copy of its Service Agreement/s
in the area, for purposes of monitoring
compliance with these Rules.
Section 21. Renewal of registration. All
registered contractors shall apply for
renewal of their Certificates of
Registration thirty (30) days before the
expiration of their registration to
remain in the roster of legitimate
service contractors. The applicant shall
pay a registration renewal fee of One
Hundred Thousand Pesos
(P100,000.00) to the DOLE Regional
Office.
Copies of all the updated supporting
documents in letters (a) to (e) of
Section 15 hereof shall be attached to
the duly accomplished application form,
including the following:
(a) Certificate of membership and proof
of payment of SSS, Philhealth, BIR,
ECG and Pag-lbig contributions for the
last three (3) years, as well as loan
amortizations; and
(b) Certificate of pending or no pending
labor standards violation case/s with
the National Labor Relations
Commission (NLRC) and Department of
Labor and Employment (DOLE). The
pendency of a case will not prejudice
the renewal of the registration, unless
there is a finding of violation of labor
standards by the DOLE Regional
Director.
Section 22. Semi-annual reporting. The
contractor shall submit in triplicate its
subscribed semi-annual report using a
prescribed form to the appropriate
Regional Office. The report shall
include:
(a) A list of contracts entered with the
principal during the subject reporting
period;
(b) The number of workers covered by
each contract with the principal;
CCV Notes on Labor Relations | 24
(c) Proof of payment of remittances to
the Social Security System (888), the
Pag-lblg Fund, Philhealth, Employees
Compensation Commission (ECC), and
Bureau of Internal Revenue (BlR) due
its employees during the subject
reporting period and of amortization of
declared loans due from its employees;
and
(d) A certified listing of all cases filed
against the contractor before the NLRC
and DOLE.
The Regional Office shall return one set
of the duly-stamped report to the
contractor, retain one set for its file,
and transmit the remaining set to the
Bureau of Working Conditions (BWC)
within five (5) days from receipt
thereof.
Section 23. Grounds for cancellation of
registration. The Regional Director
shall, upon a verified complaint, cancel
or revoke the registration of a
contractor after due process, based on
any of the following grounds:
(a) Misrepresentation of facts in the
application;
(b) Submission of a falsified or
tampered application or supporting
documents to the application for
registration;
(c) Non-submission of Service
Agreement between the principal and
the contractor when required to do so;
(d) Non-submission of the required
semi-annual report as provided in
Section 22 (Semi-annual reporting)
hereof;
(e) Findings through arbitration that
the contractor has engaged in labor-
only contracting and/or the prohibited
activities as provided in Section 7
(Other Prohibitions) hereof;
(f) Non-compliance with labor
standards and working conditions;
(g) Findings of violation of Section 8
(Rights of contractor’s employees) or
Section 9 (Required contracts) of these
Rules;
(h) Non-compliance with SSS, the
HDMF, Pag-lbig, Philhealth, and ECG
laws; and
(i) Collecting any fees not authorized
by law and other applicable rules and
regulations.
(c) Proof of payment of remittances to
the Social Security System (888), the
Pag-lblg Fund, Philhealth, Employees
Compensation Commission (ECC), and
Bureau of Internal Revenue (BlR) due
its employees during the subject
reporting period and of amortization of
declared loans due from its employees;
and
(d) A certified listing of all cases filed
against the contractor before the NLRC
and DOLE.
The Regional Office shall return one set
of the duly-stamped report to the
contractor, retain one set for its file,
and transmit the remaining set to the
Bureau of Working Conditions (BWC)
within five (5) days from receipt
thereof.
Section 23. Grounds for cancellation of
registration. The Regional Director
shall, upon a verified complaint, cancel
or revoke the registration of a
contractor after due process, based on
any of the following grounds:
(a) Misrepresentation of facts in the
application;
(b) Submission of a falsified or
tampered application or supporting
documents to the application for
registration;
(c) Non-submission of Service
Agreement between the principal and
the contractor when required to do so;
(d) Non-submission of the required
semi-annual report as provided in
Section 22 (Semi-annual reporting)
hereof;
(e) Final findings that the contractor
has engaged in labor-only contracting
and/or other illicit forms of
employment arrangements as provided
in Section 6 hereof;
(f) Non-compliance with labor
standards and working conditions;
(g) Findings of violation of Section 10
(Rights of contractor’s employees) or
Section 11 (Required contracts);
(h) Non-compliance with SSS, the
HDMF, Pag-lbig, Philhealth, and ECG
laws;
(i) Collecting any fees not authorized
by law and other applicable rules and
regulations; and
CCV Notes on Labor Relations | 25

Section 24. Due process in cancellation
of registration. Complaint/s based on
any of the grounds enumerated in the
preceding Section against the
contractor shall be filed in writing and
under oath with the Regional Office
which issued the Certificate of
Registration.
The complaint/s shall state the
following:
(a) The name/s and address/es of the
complainant/s;
(b) Name and address of the
contractor;
(c) The ground/s for cancellation;
(d) When and where the action
complained of happened;
(e) The amount of money claim, if any;
and
(f) The relief/s sought.
Upon receipt of the complaint, the
Regional Director shall direct the
contractor, with notice to the
complainant, to file a verified
answer/counter affidavit within ten
(10) calendar days without extension,
incorporating therein all pertinent
documents in support of his/her
defenses, with proof of service of a
copy to the complainant. Failure to file
an answer/counter affidavit shall
constitute a waiver on the part of the
respondent. No motion to dismiss shall
be entertained.
The Regional Director or his duly
authorized representative may conduct
a clarificatory hearing within the
prescribed ten (10) calendar days
within which to file a verified
answer/counter affidavit.
Within the said ten (10) calendar days
period, the contractor shall make the
necessary corrections/rectifications on
the violations that are immediately
rectifiable upon its own initiative in
order to be fully compliant.
The Regional Director may avail himself
of all reasonable means to ascertain
the facts of the case, including conduct
(j) Violations of any provisions of the
Labor Code.
Section 24. Due process in cancellation
of registration. Complaint/s based on
any of the grounds enumerated in the
preceding Section against the
contractor shall be filed in writing and
under oath with the Regional Office
which issued the Certificate of
Registration.
The complaint/s shall state the
following:
(a) The name/s and address/es of the
complainant/s;
(b) Name and address of the
contractor;
(c) The grounds;
(d) When and where the action
complained of happened;
(e) The amount of money claim, if any;
and
(f) The relief/s sought.
Within the said seven (7) calendar days
period, the contractor shall make necessary
corrections/rectifications on the
violations that are immediately
rectifiable upon its initiative in order to
be fully compliant.
The Regional Director may avail himself
of all reasonable means to ascertain the
facts of the case, including conduct of
inspection, where appropriate, and
examination of informed persons.
CCV Notes on Labor Relations | 26
of inspection, where appropriate, and
examination of informed persons.
The proceedings before the Regional
Office shall be summary in nature.
The conduct of hearings shall be
terminated within fifteen (15) calendar
days from the first scheduled
clarificatory hearing. The Regional
Director shall resolve the case within
ten (10) working days from the date of
the last hearing. If there is no
necessity to conduct a hearing, the
case shall be resolved within ten (10)
working days from receipt of the
verified answer/counter affidavit.
Any motion for reconsideration from
the Order of the Regional Director shall
be treated as an appeal.
Section 25. Appeal. The Order of the
Regional Director is appealable to the
Secretary within ten (10) working days
from receipt of the copy of the Order.
The appeal shall be filed with the
Regional Office which issued the
cancellation Order. The Office of the
Secretary shall have thirty (30)
working days from receipt of the
records of the case to resolve the
appeal. The Decision of the Secretary
shall become final and executory after
ten (10) days from receipt thereof by
the parties. No motion for
reconsideration of the Decision shall be
entertained.
Section 26. Effects of cancellation of
registration. A final Order of
cancellation shall divest the contractor
of its legitimate status to engage in
contracting/subcontracting.
Such Order of cancellation shall be a
ground to deny an application for
renewal of registration to a contractor
under the Rules.
The cancellation of the registration of
the contractor for engaging in labor-
only contracting or for Violation of any
of the provisions of these Rules
The proceedings before the Regional
Office shall be summary in nature.
The conduct of hearings shall be
terminated within ten (10) calendar days
from the first scheduled clarificatory
hearing. The Regional Director shall
resolve the case within seven (7)
working days from the date of the last
hearing. If there is no necessity to
conduct a hearing, the case shall be
resolved with seven (7) working days from
receipt of the verified answer/counter
affidavit.
Any motion for reconsideration from the
Order of the Regional Director shall be
treated as an appeal.
Section 25. Appeal. The Order of the
Regional Director is appealable to the
Secretary within ten (10) working days
from receipt of the copy of the Order.
The appeal shall be filed with the
Regional Office which issued the
cancellation Order. The Office of the
Secretary shall have thirty (30)
working days from receipt of the
records of the case to resolve the
appeal. The Decision of the Secretary
shall become final and executory after
ten (10) days from receipt thereof by
the parties. No motion for
reconsideration of the Decision shall be
entertained.
Section 26. Effects of cancellation of
registration. A final Order of
cancellation shall divest the contractor
of its legitimate status to engage in
contracting/subcontracting.
Such Order of cancellation shall be a
ground to deny an application for
renewal of registration to a contractor
under the Rules.
No contractor whose registration is
cancelled under these Rules or any of its
officers shall be allowed to operate, and
apply for new registration as contractor
under either the same or different name.
The cancellation of the registration of
the contractor for engaging in labor-
only contracting or for Violation of any
of the provisions of these Rules
CCV Notes on Labor Relations | 27
involving a particular Service
Agreement will not, however, impair
the validity of existing legitimate job-
contracting arrangements the
contractor may have entered into with
other principals prior to the
cancellation of its registration. Any
valid and subsisting Service Agreement
shall be respected until its expiration;
thereafter, contracting with a delisted
contractor shall make the principal
direct employer of all employees under
the Service Agreement pursuant to
Articles 106 and 109 of the Labor
Code.
Section 27. Effects of finding of labor-
only contracting and/or violation of
Sections 7. 8 or 9 of the Rules. A
finding by competent authority of
labor-only contracting shall render the
principal jointly and severally liable
with the contractor to the latter's
employees, in the same manner and
extent that the principal IS liable to
employees directly hired by him/her, as
provided in Article 106 of the Labor
Code, as amended.
A finding of commission of any of the
prohibited activities in Section 7, or
violation of either Sections 8 or 9
hereof, shall render the principal the
direct employer of the employees of
the contractor or subcontractor,
pursuant to Article 109 of the Labor
Code, as amended.
Section 28. Retaliatory measures.
Pursuant to Article 118 of the Labor
Code, as amended, it shall be unlawful
for the principal, contractor, or any
party privy to the contract or services
provided to refuse to pay or reduce the
wages and benefits, and discharge or
in any manner discriminate against any
worker who has filed any complaint or
instituted any proceeding on wages
(under Title II, Book III of the Labor
Code), labor standards violation, or has
testified or is about to testify in such
proceedings.
Section 29. Enforcement of labor
standards and working conditions.
Consistent with Article 128 (Visitorial
and Enforcement Power) of the Labor
Code, as amended, the Regional
Director through his/her duly
involving a particular Service
Agreement will not, however, impair
the validity of existing legitimate job-
contracting arrangements the
contractor may have entered into with
other principals prior to the cancellation
of its registration. Any valid and
subsisting Service Agreement shall be
respected until its expiration;
thereafter, contracting with a delisted
contractor shall make the principal
direct employer of all employees under
the Service Agreement pursuant to
Articles 106 and 109 of the Labor
Code., as amended.
Section 27. Retaliatory measures.
Pursuant to Article 118 of the Labor
Code, as amended, it shall be unlawful
for the principal, contractor, or any
party privy to the contract or services
provided to refuse to pay or reduce the
wages and benefits, and discharge or in
any manner discriminate against any
worker who has filed any complaint or
instituted any proceeding on wages
(under Title II, Book III of the Labor
Code), labor standards violation, or has
testified or is about to testify in such
proceedings.
Section 28. Enforcement of Labor
Standards and Working Conditions.
Consistent with Article 128 of the Labor
Code, as amended, the Regional
Director through his/her duly
authorized representatives, shall
CCV Notes on Labor Relations | 28
authorized representatives, shall
conduct routine inspection of
establishments engaged in contracting
arrangement regardless of the number
of employees engaged by the principal
or by the contractor.
They shall have access to employer’s
records and premises at any time of
the day or night whenever work is
being undertaken therein, and the right
to copy therefrom, to question any
employee and investigate any fact,
condition or matter which may be
necessary to determine violations or
which may aid in the enforcement of
the Labor Code and of any labor law,
wage order, or rules and regulations
issued pursuant thereto.
The findings of the duly authorized
representative shall be referred to the
Regional Director for appropriate action
as provided for in Article 128, and shall
be furnished the collective bargaining
agent, if any.
Based on the visitorial and enforcement
power of the Secretary of Labor and
Employment in Article.128 (a), (b), (c),
and (d), the Regional Director shall
issue compliance orders to give effect
to the labor standards provisions of the
Labor Code, other labor legislation, and
these Rules.
Section 30. Duty to produce copy of
contract between the principal and the
contractor. The principal or the
contractor shall be under an obligation
to produce a copy of the Service
Agreement in the ordinary course of
inspection. The contractor shall likewise
be under an obligation to produce a
copy of any contract of employment
when directed to do so by the Regional
Office Director or his/her authorized
representative.
Section 31. Tripartite implementation
and monitoring of compliance; Use of
registration fees. A region-based
tripartite monitoring team on the
observance of labor standards in
contracting and subcontracting
arrangements shall be constituted as a
subcommittee of the Regional Tripartite
Industrial Peace Council (RTIPC) within
fifteen (15) days from the effectivity of
conduct routine inspection of
establishments engaged in contracting
arrangement regardless of the number
of employees engaged by the principal
or by the contractor.
They shall have access to employer's
records and premises at any time of
the day or night whenever work is
being undertaken therein, and the
right to copy therefrom, to question
any employee and investigate any
fact, condition or matter which may be
necessary to determine violations or
which may aid in the enforcement of
the Labor Code and of any labor law,
wage order, or rules and regulations
issued pursuant thereto.
The findings of the duly authorized
representative shall be referred to the
Regional Director for appropriate
action as provided for in Article 128,
and shall be furnished the collective
bargaining agent, if any.
Based on the visitorial and
enforcement power of the Secretary of
Labor and Employment in Article 128
(a), (b), (c), and (d), the Regional
Director shall issue compliance orders
to give effect to the labor standards
provisions of the Labor Code other
labor legislation, and these Rules.
Section 29. Duty to produce copy of
contract between the principal and the
contractor. The principal or the
contractor shall be under an obligation
to produce a copy of the Service
Agreement in the ordinary course of
inspection. The contractor shall likewise
be under an obligation to produce a
copy of any contract of employment
when directed to do so by the Regional
Office Director or his/her authorized
representative.
Section 30. Tripartite implementation
and monitoring of compliance.
A region-based tripartite monitoring
team on the observance of labor
standards in contracting and
subcontracting arrangements shall be
constituted as a subcommittee of the
Regional Tripartite Industrial Peace
Council (RTIPC) within fifteen (15) days
from the effectivity of these Rules. It
CCV Notes on Labor Relations | 29
these Rules. It shall submit a quarterly
regional monitoring report to the DOLE
Secretary and to the National Tripartite
Industrial Peace Council (NTIPC). The
Bureau of Working Conditions (BWC)
shall ensure the implementation of this
provision, and shall conduct capacity
building to the members of the regional
tripartite monitoring team.
shall submit a quarterly regional
monitoring report to the DOLE
Secretary and to the National Tripartite
Industrial Peace Council (NTIPC). The
Bureau of Working Conditions (BWC)
shall ensure the implementation of this
provision, and shall conduct capacity
building to the members of the regional
tripartite monitoring team.

For this purpose, a portion of the

collected registration fees shall be used
in the operation of the region-based
tripartite monitoring team, including in
the development of an internet-based
monitoring system and database. It
shall likewise be used for transmittal of
the monthly report of all registered
contractors to the Bureau of Local
Employment (BLE), and in generating
labor market information.

Section 32. Oversight function of the

National TIPC. The National Tripartite
Industrial Peace Council (NTIPC) as
created under Executive Order No. 49,
Series of 1998, as amended, shall
serve as the oversight committee to
verify and monitor the following:

(a) Engagement in allowable

contracting activities; and

(b) Compliance with administrative

reporting requirements.

Section 33. Collective bargaining

and/or Industry Tripartite Council
(ITC). Nothing herein shall preclude the
parties in collective bargaining
agreements (CBAs) to determine the
functions that can or cannot be farmed
out or contracted out to a legitimate
contractor, including the terms and
conditions of the workers’ engagement
under the arrangement, provided the
provisions of these Rules are observed.

In industries with established Industry

Tripartite Councils (ITCs), the tripartite
partners may agree, through a
voluntary code of good practices, on
the functions or processes that can or
cannot be contracted out to a
legitimate contractor.
Section 34. Financial. Relief Program; Section 31. Financial. Relief Program;
Tripartite Co-Regulation Engagement. Tripartite Co-Regulation Engagement.
A Financial Relief Program or A Financial Relief Program or
Unemployment Assistance Fund shall Unemployment Assistance Fund shall

CCV Notes on Labor Relations | 30

be established for employees under a
Service Agreement or employees in
transition from one Service Agreement
to the next. For this purpose, the
National Tripartite Industrial Peace
Council (NTIPC), upon the effectivity of
this issuance, shall constitute a Local
Service Provider Tripartite Working
Group (LSP-TWG) composed of
representatives of the stakeholders in
the industry. The LSP-TWG shall:
(a) Recommend the mechanics and
details in setting up the Financial Relief
Program or Unemployment Assistance
Fund with proposed funding sources
before end of June 2012; and
(b) Draw-up the terms of a Tripartite
Co-Regulation Engagement in ensuring
full compliance with labor laws for
approval/endorsement by the NTIPC,
including a proposed Table of
Progressive Rate of Increases in the
minimum capitalization requirement at
reasonable intervals to ensure that
only legitimate contractors can engage
in subcontracting arrangement.
Section 35. Enrollment in DOLE
programs on improving compliance
with labor standards. For purposes of
ensuring compliance with labor
standards, the principal and
subcontractors covered by these Rules
are encourage to enroll and participate
in the DOLE Kapatiran Work
Improvement for Small Enterprise
(WISE)-TAV Program (Department
Advisory No. 06, dated 07 March 2011)
and/or in the lncentivizing
Compliance Program (Department
Order No. 115-11).
Section 36. Contracting or
subcontracting arrangements in the
Construction and Other Industries.
Contracting or subcontracting
arrangements in the Construction
Industry, under the licensing coverage
of the Philippine Construction
Accreditation Board (PCAB), shall be
covered by the applicable provisions of
these Rules and shall continue to be
governed by Department Order No. 19,
Series of 1993 (Guidelines Governing
the Employment of Workers in the
Construction industry); Department
Order No. 13, Series of 1998
(Guidelines Governing the Occupational
be established for employees under a
Service Agreement or employees in
transition from one Service Agreement
to the next. For this purpose, the
National Tripartite Industrial Peace
Council (NTIPC), upon the effectivity of
this issuance, shall constitute a Local
Service Provider Tripartite Working
Group (LSP-TWG) composed of
representatives of the stakeholders in
the industry. The LSP-TWG shall:
(a) Recommend the mechanics and
details in setting up the Financial Relief
Program or Unemployment Assistance
Fund with proposed funding sources
before end of June 2018; and
(b) Draw-up the terms of a Tripartite
Co-Regulation Engagement in ensuring
full compliance with labor laws for
approval/endorsement by the NTIPC,
including a proposed Table of
Progressive Rate of Increases in the
minimum capitalization requirement at
reasonable intervals to ensure that only
legitimate contractors can engage in
subcontracting arrangement.
Section 32. Enrollment in DOLE
Programs on Improving Compliance
with Labor Standards. For purposes of
ensuring compliance with labor
standards, the principal and
subcontractors covered by these Rules
are mandatorily required to enroll and
participate in the DOLE programs such
as the Incentivizing Compliance
Program (Department Order No. 115-
11).
Section 33. Contracting or
Subcontracting in the Construction and
Other Industries. Contracting or
subcontracting arrangements in the
Construction Industry, under the
licensing coverage of the Philippine
Construction Accreditation Board
(PCAB), shall not be covered by the
provisions of these Rules and shall
continue to be governed by
Department Order No. 19, Series of
1993 (Guidelines Governing the
Employment of Workers in the
Construction Industry) and Department
Order No. 13, Series of 1998
(Guidelines Governing the Occupational
CCV Notes on Labor Relations | 31
Safety and Health in the Construction
Industry); and DOLE-DPWH-DILG-DTI
and PCAB Memorandum of Agreement-
Joint Administrative Order No. 1, Series
of 2011 (on coordination and
harmonization of policies and programs
on occupational safety and health in
the construction industry).
In industries covered by a separate
regulation of the DOLE or other
government agency, contracting or
subcontracting therein shall be
governed by these Rules unless
expressly provided otherwise.
Section 37. Prohibition on DOLE
officials or employees. Any official or
employee of the DOLE or its attached
agencies is prohibited from engaging or
having any interest in any contracting
or subcontracting business.
Section 38. Non-impairment of existing
contracts; Non-diminution of benefits.
Subject to the provisions of Articles
106 to 109 of the Labor Code, as
amended, the applicable provisions of
the Civil Code and existing
jurisprudence, nothing herein shall
impair the rights or diminish the
benefits being enjoyed by the parties
to existing contracting or
subcontracting arrangements.
The effectivity of Certificates of
Registration acquired under
Department Order No. 18, Series of
2002, issued on 21 February 2002,
shall be respected until expiration.
Section 39. Supersession. All rules and
regulations issued by the Secretary of
Labor and Employment inconsistent
with the provisions of these Rules are
hereby superseded.
Section 40. Separability Clause. If any
provision or portion of these Rules are
declared void or unconstitutional, the
remaining portions or provisions hereof
shall continue to be valid and effective.
Section 41. Effectivity. This
Department Order shall be effective
fifteen (15) days after completion of its
publication in a newspaper of general
circulation.
Safety and Health in the Construction
Industry); and DOLE-DPWH-DILG-DTI
and PCAB Memorandum of Agreement-
Joint Administrative Order No. 1, Series
of 2011 (on coordination and
harmonization of policies and programs
on occupational safety and health in
the construction industry).
In industries covered by a separate
regulation of the DOLE or other
government agency, contracting
therein shall be governed by these
Rules unless expressly provided
otherwise.
Section 34. Prohibition on DOLE
officials or employees. Any official or
employee of the DOLE or its attached
agencies is prohibited from engaging or
having any interest in any contracting
or subcontracting business.
Section 35. Supersession. All rules and
regulations issued by the Secretary of
Labor and Employment inconsistent
with the provisions of these Rules are
hereby superseded.
Section 36. Separability Clause. If any
provision or portion of these Rules are
declared void or unconstitutional, the
remaining portions or provisions hereof
shall continue to be valid and effective.
Section 37. Effectivity. This
Department Order shall be effective
fifteen (15) days after completion of its
publication in a newspaper of general
circulation.
CCV Notes on Labor Relations | 32
DEPARTMENT CIRCULAR NO. 01-12

What is this issuance?

This was issued by the DOLE Secretary to clarify that Department Order
No. 18-A, Series of 2011, is not applicable to Business Processing
Outsourcing (BPO)/Knowledge Process Outsourcing (KPO) and the
Construction Industry because:
(1) BPOs and KPOs since these companies may hire employees in
accordance with applicable laws, and maintain these employees based on
business requirements, which may or may not be for different clients of the
BPOs at different periods
of the employees' employment.
(2) the Construction Industry because the licensing and the exercise of
regulatory powers over the construction industry are lodged with the
Philippine Contractors Accreditation Board (PCAB), which is under the
Construction Industry Authority of the Philippines (ClAP), and not with the
DOLE. Thus, the DOLE, through its regional offices, shall not require
contractors licensed by PCAB in the Construction Industry to register under
D.O. 18-A, Series of 2011. Moreover, findings of violation/s on labor
standards and occupational health and safety standards shall be
coordinated with PCAB for its appropriate action, including the possible
cancellation/suspension of the contractor’s license.

TRILATERAL RELATIONSHIP IN JOB CONTRACTING

What is meant by trilateral relationship?
As distinguished from employment contract which is “bilateral” in nature,
involving as it does only two (2) parties, namely: (1) the employer, and (2)
the employee, in legitimate job contracting, there are three (3) parties
involved, to wit:
1. The principal who decides to farm out a job, work or service to a
contractor;
2. The contractor who has the capacity to independently undertake the
performance of the job, work or service; and
3. The contractual workers engaged by the contractor to accomplish the job,
work or service.

EFFECTS OF LABOR-ONLY CONTRACTING LEGITIMATE JOB

CONTRACTING.

What are the requisites of legitimate job contracting?

(1) The contractor must be duly registered with the DOLE. If not registered,
the contractor is presumed a labor-only contractor.
(2) The contractor carries a distinct and independent business and
undertakes to perform the job, work or service on its own responsibility,
according to its own manner and method, and free from control and
direction of the principal in all matters connected with the performance of
the work except as to the results thereof;

CCV Notes on Labor Relations | 33

(3) The contractor has substantial capital and/or investment in the form of
tools, equipment, machineries, work premises, and other materials which
are necessary in the conduct of the business; and
(4) The Service Agreement between principal and contractor should ensure
compliance with all the rights and benefits of workers under Labor Laws
such as labor and occupational safety and health standards, free exercise of
the right to self-organization, security of tenure, and social and welfare
benefits. Absence of any of the foregoing requisites makes it a labor-only
contracting arrangement.

What is the amount of substantial capital under the new Rules?

1. In the case of corporations, partnerships or cooperatives – paid-up
capital stocks/shares of at least P5 Million; or
2. In the case of single proprietorship - a net worth of at least P5 Million.

“Substantial capital” and “investment in tools, etc.” are two separate

requirements.
“Substantial capital” and “investment in tools, equipment, implements,
machineries and work premises” should be treated as two (2) distinct and
separate requirements in determining whether there is legitimate job
contracting arrangement.

May individuals engage in legitimate job contracting?

Yes. Legitimate job contracting may not only be engaged by corporation,
partnership or single proprietorship. Individuals may become legitimate
job contractors themselves for as long as they have SPECIAL SKILLS or
TALENTS.

Are individuals engaged as legitimate job contractors required to fulfill

the requisites of legitimate job contracting
as afore-described?
NO. They need not be registered as independent contractors with DOLE;
they need not have substantial capital. All that they are required is to have
their tools consisting of SPECIAL SKILLS or TALENTS.

What are examples of individuals as independent contractors?

1. Sonza v. ABS-CBN Broadcasting Corporation1 - TV and radio talents and

others with special talents and skills are not employees but legitimate
independent contractors.

2. Orozco v. The Fifth Division of the Honorable Court of Appeals2 - A

newspaper columnist is not an employee but an independent contractor of
the newspaper publishing the column.

CCV Notes on Labor Relations | 34

3. Jose Mel Bernarte v. Philippine Basketball Association3 - Basketball or
soccer referee or umpire, an independent contractor.

4. Semblante and Pilar v. CA, Gallera de Mandaue, et al.4 - Cockpit

masiador and sentenciador are independent contractors.

5. Escasinas v. Shangri-la’s Mactan Island Resort5 –

A doctor may be engaged as an independent contractor.
Respondent hotel resort, pursuant to Article 157 of the Labor Code which
requires that an employer which employs more than 200 workers, should
“furnish” its employees with the services of a full-time registered nurse, a
part-time physician and dentist, and an emergency clinic, engaged the
services of respondent doctor who, in turn, hired petitioners as full-time
registered nurses. Petitioners contend that they are regular employees of
respondent hotel resort. The Supreme Court, in holding that respondent
doctor is an independent contractor and that petitioners are employees of
the doctor and not of respondent hotel resort, declared:
“Against the above-listed determinants, the Court holds that respondent
doctor is a legitimate independent contractor. That Shangri-la provides the
clinic premises and medical supplies for use of its employees and guests
does not necessarily prove that respondent doctor lacks substantial capital
and investment. Besides, the maintenance of a clinic and provision of
medical services to its employees is required under Art. 157, which are not
directly related to Shangri-la’s principal business - operation of hotels and
restaurants.
“As to payment of wages, respondent doctor is the one who underwrites the
following: salaries, SSS contributions and other benefits of the staff; group
life, group personal accident insurance and life/death insurance for the
staff with minimum benefit payable at 12 times the employee’s last drawn
salary, as well as value added taxes and withholding taxes, sourced from her
P60,000.00 monthly retainer fee and 70% share of the service charges
from Shangri-la’s guests who avail of the clinic services.
“With respect to the supervision and control of the nurses and clinic staff, it
is not disputed that a document, ‘Clinic Policies and Employee Manual’
claimed to have been prepared by respondent doctor exists, to which
petitioners gave their conformity and in which they acknowledged their co-
terminus employment status. It is thus presumed that said document, and
not the employee manual being followed by Shangri-la’s regular workers,
governs how they perform their respective tasks and responsibilities.
“Contrary to petitioners’ contention, the various office directives issued by
Shangri-la’s officers do not imply that it is Shangri-la’s management and
not respondent doctor who exercises control over them or that Shangri-la
has control over how the doctor and the nurses perform their work. The
letter addressed to respondent doctor dated February 7, 2003 from a
certain Tata L. Reyes giving instructions regarding the replenishment of
emergency kits is, at most, administrative in nature, related as it is to safety
matters; while the letter dated May 17, 2004 from Shangri-la’s Assistant
Financial Controller, Lotlot Dagat, forbidding the clinic from receiving cash

CCV Notes on Labor Relations | 35

payments from the resort’s guests is a matter of financial policy in order to
ensure proper sharing of the proceeds, considering that Shangri-la and
respondent doctor share in the guests’ payments for medical services
rendered. In fine, as Shangri-la does not control how the work should be
performed by petitioners, it is not petitioners’ employer.”
1 G.R. No. 138051, June 10, 2004.
2 G.R. No. 155207, Aug. 13, 2008.
3 G.R. No. 192084, Sept. 14, 2011.
4 G.R. No. 196426, Aug. 15, 2011.
5 G.R. No. 178827, March 4, 2009.

LABOR-ONLY CONTRACTING
When is there labor-only contracting?

(a) The contractor does not have substantial capital or investments in the
form of tools, equipment, machineries, work premises, among others, and
the employees recruited and placed are performing activities which are
usually necessary or desirable to the operation of the company, or directly
related to the main business of the principal within a definite or
predetermined period, regardless of whether such job, work or service is to
be performed or completed within or outside the premises of the principal;

OR

(b) The contractor does not exercise the right of control over the
performance of the work of the employee.
NOTE: Even if only one of the two (2) elements above is present, there is
labor-only contracting.

What are the effects of labor-only contracting?

1. The labor-only contractor will be treated as the agent or intermediary of
the principal. Since the act of an agent is the act of the principal,
representations made by the labor-only contractor to the employees will
bind the principal.
2. The principal will become the employer as if it directly employed the
workers supplied by the labor-only contractor to undertake the
subcontracted job or service. It will be responsible to them for all their
entitlements and benefits
under labor laws.
3. The principal and the labor-only contractor will be solidarily treated as
the direct employer.
4. The employees will become employees of the principal, subject to the
classifications of employees under Article 280 of the Labor Code.

What are the distinctions between legitimate job contracting and labor-
only contracting?
The chief distinctions between legitimate job contracting, on the one hand,

CCV Notes on Labor Relations | 36

and the prohibited labor-only contracting, on the other, may be summed up
as follows:
1. In the former, no employer-employee relationship exists between the
contractual employees of the job contractor and the principal; while in the
latter, an employer-employee relationship is created by law between the
principal and the contractual employees supplied by the labor-only
contractor.
2. In the former, the principal is considered only an “indirect employer,” as
this term is understood under Article 107 of the Labor Code; while in the
latter, the principal is considered the “direct employer” of the contractual
employees in accordance with the last paragraph of Article 106 of the Labor
Code.
3. In the former, the joint and several obligation of the principal and the
legitimate job contractor is only for a limited purpose, that is, to ensure that
the employees are paid their wages. Other than this obligation of paying the
wages, the principal is not responsible for any claim made by the
contractual employees; while in the latter, the principal becomes jointly
and severally or solidarily liable with the labor-only contractor to the
latter’s employees in the same manner and extent that the principal is liable
to employees directly hired by him/her, as provided in Article 106 of the
Labor Code, as amended.
4. In the former, the legitimate job contractor undertakes to perform a
specific job for the principal; while in the latter, the labor-only contractor
merely provides, supplies, recruits and places the personnel to work for the
principal.

What are the prohibitions other than labor-only contracting?

Contracting out of jobs, works or services when not done in good faith and
not justified by the exigencies of the business such as the following:
(1) Contracting out of jobs, works or services when the same results in the
termination or reduction of regular employees and reduction of work hours
or reduction or splitting of the bargaining unit.
(2) Contracting out of work with a "Cabo." "Cabo" refers to a person or
group of persons or to a labor group which, in the guise of a labor
organization, cooperative or any entity, supplies workers to an employer,
with or without any monetary or other consideration, whether in the
capacity of an agent of the employer or as an ostensible independent
contractor.
(3) Taking undue advantage of the economic situation or lack of bargaining
strength of the contractor's employees, or undermining their security of
tenure or basic rights, or circumventing the provisions of regular
employment, in any of the following instances:
(i) Requiring them to perform functions which are currently being
performed by the regular employees of the principal; and
(ii) Requiring them to sign, as a precondition to employment or continued
employment, an antedated resignation letter; a blank payroll; a waiver of
labor standards including minimum wages and social or welfare benefits;
or a quitclaim releasing the principal, contractor or from any liability as to

CCV Notes on Labor Relations | 37

payment of future claims.
(4) Contracting out of a job, work or service through an in-house agency.
(5) Contracting out of a job, work or service that is necessary or desirable or
directly related to the business or operation of the principal by reason of a
strike or lockout whether actual or imminent.
(6) Contracting out of a job, work or service being performed by union
members when such will interfere with, restrain or coerce employees in the
exercise of their rights to self-organization as provided in Art. 248 (c) of the
Labor Code, as amended.
(7) Repeated hiring of employees under an employment contract of short
duration or under a Service Agreement of short duration with the same or
different contractors, which circumvents the Labor Code provisions on
Security of Tenure.
(8) Requiring employees under a subcontracting arrangement to sign a
contract fixing the period of employment to a term shorter than the term of
the Service Agreement, unless the contract is divisible into phases for which
substantially different skills are required and this is made known to the
employee at the time of engagement.
(9) Refusal to provide a copy of the Service Agreement and the employment
contracts between the contractor and the employees deployed to work in
the bargaining unit of the principal's certified bargaining agent to the sole
and exclusive bargaining agent (SEBA).
(10) Engaging or maintaining by the principal of subcontracted employees
in excess of those provided for in the applicable Collective Bargaining
Agreement (CBA) or as set by the Industry Tripartite Council (ITC).

II. LEGITIMATE LABOR ORGANIZATIONS

What is exclusive bargaining representative/agent?

“Exclusive bargaining representative” or “exclusive bargaining agent”
refers to a legitimate labor organization duly recognized or certified as the
sole and exclusive bargaining representative or agent of all the employees
in a bargaining unit.
Can individual employee or group of employees bring grievable issues
directly to their employer without the participation of the bargaining
union?
Yes. The designation of a bargaining agent does not deprive an individual
employee or group of employees to exercise their right at any time to
present grievances to their employer, with or without the intervention of
the bargaining agent.

Can individual employee or group of employees bring grievable issues to

voluntary arbitration without the participation of the bargaining union?

CCV Notes on Labor Relations | 38

No, as held in the 2009 case of Tabigue v. International Copra Export
Corporation,1 where the Supreme Court clarified that an individual employee
or group of employees cannot be allowed to submit or refer unsettled
grievances for voluntary arbitration without the participation of the
bargaining union/agent. The reason is that it is the bargaining union/agent
which is a party to the CBA which contains the provision on voluntary
arbitration. Being a party thereto, it cannot be disregarded when a grievable
issue will be submitted for voluntary arbitration.
In order to have legal standing, the individual members should be shown to
have been duly authorized to represent the bargaining union/agent.

What is Labor-Management Council (LMC)?

The establishment of LMC is mandated under the said constitutional

principle of co-determination. This is the body where workers, through
their representatives, together with representatives of the employer, are
allowed to participate in policy and decision-making processes that affect
their rights, benefits and welfare.

IIA. RIGHT TO SELF-ORGANIZATION

IIA1. WHO MAY UNIONIZE FOR PURPOSES OF COLLECTIVE

BARGAINING

Who are eligible to join, form or assist a labor organization for purposes
of collective bargaining?

In the private sector:

1. All persons employed in commercial, industrial and agricultural
enterprises;
2. Employees of government-owned and/or controlled corporations
without original charters established under the Corporation Code;
3. Employees of religious, charitable, medical or educational institutions,
whether operating for profit or not;
4. Front-line managers, commonly known as supervisory employees [See
discussion below];
5. Alien employees [See discussion below];
6. Working children [See discussion below];
7. Homeworkers [See discussion below];
8. Employees of cooperatives [See discussion below]; and
9. Employees of legitimate contractors not with the principals but with the
contractors

In the public sector:

All rank-and-file employees of all branches, subdivisions, instrumentalities,

CCV Notes on Labor Relations | 39

and agencies of government, including government-owned and/or
controlled corporations with original charters, can form, join or assist
employees’ organizations of their own choosing.

Are front-line managers or supervisors eligible to join, form or assist a

labor organization?
Yes, but only among themselves. They cannot join a rank-and-file union.

Is mixed membership of supervisors and rank-and-file union in one

union a ground to cancel its registration?
No. In case there is mixed membership of supervisors and rank-and-file
employees in one union, the new rule enunciated in Article 245-A of the
Labor Code, unlike in the old law, is that it cannot be invoked as a ground
for the cancellation of the registration of the union. The employees so
improperly included are automatically deemed removed from the list of
members of said union. In other words, their removal from the said list is
by operation of law.

Do alien employees have the right to join a labor organization?

No, except if the following requisites are complied with:
(1) He should have a valid working permit issued by the DOLE; and
(2) He is a national of a country which grants the same or similar rights to
Filipino workers or which has ratified either ILO Convention No. 87 or ILO
Convention No. 98, as certified by the Philippine Department of Foreign
Affairs (DFA).

Do members of cooperatives have the right to join, form or assist a labor
organization?
No, because they are co-owners of the cooperative.

What about employees of a cooperative?

Yes, because they have employer-employee relationship with the
cooperative.

What about members who are at the same time employees of the
cooperative?
No, because the prohibition covers employees of the cooperative who are at
the same time members thereof.
But employee-members of a cooperative may withdraw as members of the
cooperative for purposes of joining a labor union.

Can employees of job contractors join, form or assist a labor

organization?
Yes, but not for the purpose of collective bargaining with the principal but
with their direct employer– the job contractor.

CCV Notes on Labor Relations | 40

Are self-employed persons allowed to join, form or assist a labor
organization?
Yes, for their mutual aid and protection but not for collective bargaining
purposes since they have no employers but themselves.
This rule applies as well to ambulant, intermittent and other workers,
rural workers and those without any definite employers. The reason for
this rule is that these persons have no employers with whom they can
collectively bargain.

(a) WHO CANNOT FORM, JOIN OR ASSIST LABOR ORGANIZATIONS

1. PERSONS NOT ALLOWED TO FORM, JOIN OR ASSIST LABOR

ORGANIZATIONS.

a. In the private sector.

1. Top and middle level managerial employees; and
2. Confidential employees.

b. In the public sector.

The following are not eligible to form employees’ organizations:
1. High-level employees whose functions are normally considered as policy-
making or managerial or whose duties are of a highly confidential nature;
2. Members of the Armed Forces of the Philippines;
3. Police officers;
4. Policemen;
5. Firemen; and
6. Jail guards.

Are managerial employees allowed unionize?

There are 3 types of managerial employees:
1. Top Management
2. Middle Management
3. First-Line Management (also called supervisory level)
The first two above are absolutely prohibited; but the third are allowed but
only among themselves.

Are confidential employees allowed to join, form or assist a labor

organization?
No, under the confidential employee rule.
“Confidential employees” are those who meet the following criteria:
(1) They assist or act in a confidential capacity;
(2) To persons or officers who formulate, determine, and effectuate
management policies specifically in the field of labor relations.
The two (2) criteria are cumulative and both must be met if an employee is
to be considered a “confidential employee” that would deprive him of his
right to form, join or assist a labor organization.

CCV Notes on Labor Relations | 41

What are some principles on the right to self-organization?
a. Some principles on the right to self-organization.
Any employee, whether employed for a definite period or not, shall,
beginning on the first day of his service, be eligible for membership in any
labor organization.
Right to join a union cannot be made subject of a CBA stipulation.

2. BARGAINING UNIT
What is a bargaining unit?
A “bargaining unit” refers to a group of employees sharing mutual interests
within a given employer unit, comprised of all or less than all of the entire
body of employees in the employer unit or any specific occupational or
geographical grouping within such employer unit. It may also refer to the
group or cluster of jobs or positions within the employer’s establishment
that supports the labor organization which is applying for registration.

(a) TEST TO DETERMINE THE CONSTITUENCY OF AN APPROPRIATE

BARGAINING UNIT

What are the four tests to determine appropriate bargaining unit?

Based on jurisprudence, there are certain tests which may be used in
determining the appropriate collective bargaining unit, to wit:
(1) Community or mutuality of interest doctrine;
(2) Globe doctrine or will of the members;
(3) Collective bargaining history doctrine; and
(4) Employment status doctrine.

1. COMMUNITY OR MUTUALITY OF INTEREST DOCTRINE.

Under this doctrine, the employees sought to be represented by the
collective bargaining agent must have community or mutuality of interest
in terms of employment and working conditions as evinced by the type of
work they perform. It is characterized by similarity of employment status,
same duties and responsibilities and substantially similar compensation
and working conditions.

St. James School of Quezon City v. Samahang Manggagawa sa St. James

School of Quezon City.1 -
Respondent union sought to represent the rank-and-file employees
(consisting of the motor pool, construction and transportation employees)
of petitioner-school’s Tandang Sora campus. Petitioner-school opposed it
by contending that the bargaining unit should not only be composed of said
employees but must include administrative, teaching and office personnel
in its five (5) campuses.
The Supreme Court disagreed with said contention. The motor pool,
construction and transportation employees of the Tandang Sora campus
had 149 qualified voters at the time of the certification election, hence, it

CCV Notes on Labor Relations | 42

was ruled that the 149 qualified voters should be used to determine the
existence of a quorum during the election. Since a majority or 84 out of the
149 qualified voters cast their votes, a quorum existed during the
certification election. The computation of the quorum should be based on
the rank-and-file motor pool, construction and transportation employees of
the Tandang Sora campus and not on all the employees in petitioner’s five
(5) campuses. Moreover, the administrative, teaching and office personnel
are not members of the union. They do not belong to the bargaining unit
that the union seeks to represent.
1 G.R. No. 151326, Nov. 23, 2005.

2. GLOBE DOCTRINE.
This principle is based on the will of the employees. It is called Globe
doctrine because this principle was first enunciated in the United States
case of Globe Machine and Stamping Co.,1 where it was ruled, in defining
the appropriate bargaining unit, that in a case where the company’s
production workers can be considered either as a single bargaining unit
appropriate for purposes of collective bargaining or as three (3) separate
and distinct bargaining units, the determining factor is the desire of the
workers themselves. Consequently, a certification election should be held
separately to choose which representative union will be chosen by the
workers.

International School Alliance of Educators [ISAE] v. Quisumbing.2 - The

Supreme Court ruled here that foreign hired teachers do not belong to the
bargaining unit of the local-hires because the former have not indicated
their intention to be grouped with the latter for purposes of collective
bargaining. Moreover, the collective bargaining history of the school also
shows that these groups were always treated separately.

3. COLLECTIVE BARGAINING HISTORY DOCTRINE.

This principle puts premium to the prior collective bargaining history and
affinity of the employees in determining the appropriate bargaining unit.
However, the existence of a prior collective bargaining history has been
held as neither decisive nor conclusive in the determination of what
constitutes an appropriate bargaining unit.

National Association of Free Trade Unions v. Mainit Lumber Development

Company Workers Union.3 - It was ruled here that there is mutuality of
interest among the workers in the sawmill division and logging division as
to justify their formation of a single bargaining unit. This holds true despite
the history of said two divisions being treated as separate units and
notwithstanding their geographical distance from each other.

4. EMPLOYMENT STATUS DOCTRINE.

The determination of the appropriate bargaining unit based on the
employment status of the employees is considered an acceptable mode. For

CCV Notes on Labor Relations | 43

instance, casual employees and those employed on a day-to-day basis,
according to the Supreme Court in Philippine Land-Air-Sea Labor Union v.
CIR, 4 do not have the mutuality or community of interest with regular and
permanent employees. Hence, their inclusion in the bargaining unit
composed of the latter is not justified. Confidential employees, by the very
nature of their functions, assist and act in a confidential capacity to, or have
access to confidential matters of, persons who exercise managerial
functions in the field of labor relations. As such, the rationale behind the
ineligibility of managerial employees to form, assist or join a labor union
equally applies to them. Hence, they cannot be allowed to be included in
the rank-and-file employees’ bargaining unit. The rationale for this
inhibition is that if these managerial employees would belong to or be
affiliated with a union, the latter might not be assured of their loyalty to the
union in view of evident conflict of interest. The union can also become
company-dominated with the presence of managerial employees in its
membership.

3. BARGAINING AGENT

What is an exclusive bargaining agent?

The term “exclusive bargaining representative” or “exclusive bargaining
agent” refers to a legitimate labor union duly recognized or certified as the
sole and exclusive bargaining representative or agent of all the employees
in a bargaining unit.

What are the modes of determining the sole and exclusive bargaining
agent?

The following are the modes:

1. Voluntary recognition;
2. Certification election;
3. Consent election;
4. Run-off election;
5. Re-run election.

(a) VOLUNTARY RECOGNITION

What is voluntary recognition?

“Voluntary recognition” refers to the process by which a legitimate labor
union is voluntarily recognized by the employer as the exclusive
bargaining representative or agent in a bargaining unit and reported as
such with the Regional Office in accordance with the Rules to Implement
the Labor Code.

When is voluntary recognition proper?

Voluntary recognition is proper only in cases where there is only one

CCV Notes on Labor Relations | 44

legitimate labor organization existing and operating in a bargaining unit. It
cannot be done in case there are two or more unions in contention.
1 3 NLRB 294 (1937).
2 G.R. No. 128845, June 1, 2000.
3 G.R. No. 79526, Dec. 21, 1990.
4 G.R. No. L-14656, Nov. 29, 1960.

(b) CERTIFICATION ELECTION

What is certification election?
“Certification election” refers to the process of determining through secret
ballot the sole and exclusive bargaining agent of the employees in an
appropriate bargaining unit for purposes of collective bargaining or
negotiations.

Who may file a petition for certification election?

The petition may be filed by:

1. A legitimate labor organization which may be:
(a) an independent union; or
(b) a national union or federation which has already issued a charter
certificate to its local chapter participating in the certification election; or
(c) a local chapter which has been issued a charter certificate by the
national union or federation.
2. An employer, when requested by a labor organization to bargain
collectively and its majority status is in doubt.

What are the rules prohibiting the filing of petition for certification
election (bar rules)?

a. General rule.
The general rule is that in the absence of a CBA duly registered in
accordance with Article 231 of the Labor Code, a petition for certification
election may be filed at any time.

b. Bar rules.
No certification election may be held under the following rules:
1. Certification year bar rule;
2. Negotiations bar rule;
3. Bargaining deadlock bar rule; or
4. Contract bar rule.

1. CERTIFICATION YEAR BAR RULE.

Under this rule, a petition for certification election may not be filed within
one (1) year:
1. from the date the fact of voluntary recognition has been entered; or
2. from the date a valid certification, consent, run-off or re-run election has
been conducted within the bargaining unit.

CCV Notes on Labor Relations | 45

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

3. BARGAINING DEADLOCK BAR RULE.

Under this rule, a petition for certification election may not be entertained
when a bargaining deadlock to which an incumbent or certified bargaining
agent is a party has been submitted to conciliation or arbitration or has
become the subject of a valid notice of strike or lockout.

Kaisahan ng Manggagawang Pilipino [KAMPIL-KATIPUNAN] v. Trajano. -

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

4. CONTRACT BAR RULE.

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

When contract bar rule does not apply.

The contract-bar rule does not apply in the following cases:
1. Where there is an automatic renewal provision in the CBA but prior to
the date when such automatic renewal became effective, the employer
seasonably filed a manifestation with the Bureau of Labor Relations of its
intention to terminate the said agreement if and when it is established that
the bargaining agent does not represent anymore the majority of the
workers in the bargaining unit.
2. Where the CBA, despite its due registration, is found in appropriate
proceedings that: (a) it contains provisions lower than the standards fixed

CCV Notes on Labor Relations | 46

by law; or (b) the documents supporting its registration are falsified,
fraudulent or tainted with misrepresentation.
3. Where the CBA does not foster industrial stability, such as contracts
where the identity of the representative is in doubt since the employer
extended direct recognition to the union and concluded a CBA therewith
less than one (1) year from the time a certification election was conducted
where the “no union” vote won. This situation obtains in a case where the
company entered into a CBA with the union when its status as exclusive
bargaining agent of the employees has not been established yet.
4. Where the CBA was registered before or during the last sixty (60) days of
a subsisting agreement or during the pendency of a representation case. It
is well-settled that the 60-day freedom period based on the original CBA
should not be affected by any amendment, extension or renewal of the CBA
for purposes of certification election.

What are the requisites for the validity of the petition for certification
election?
The following requisites should concur:
1. The union should be legitimate which means that it is duly registered and
listed in the registry of legitimate labor unions of the BLR or that its legal
personality has not been revoked or cancelled with finality.
2. In case of organized establishments, the petition for certification election
is filed during (and not before or after) the 60-day freedom period of a duly
registered CBA.
3. In case of organized establishments, the petition complied with the 25%
written support of the members of the bargaining unit.
4. The petition is filed not in violation of any of the four (4) bar rules [See
above discussion thereof].

What are the two (2) kinds of majorities?

The process of certification election requires two (2) kinds of majority
votes, viz.:
1. Number of votes required for the validity of the process of certification
election itself. In order to have a valid certification election, at least a
majority of all eligible voters in the appropriate bargaining unit must
have cast their votes.
2. Number of votes required to be certified as the collective bargaining
agent. To be certified as the sole and exclusive bargaining agent, the union
should obtain a majority of the valid votes cast.

What are some pertinent principles on certification election?

The pendency of a petition to cancel the certificate of registration of a
union participating in a certification election does not stay the conduct
thereof.
The pendency of an unfair labor practice case filed against a labor
organization participating in the certification election does not stay the
holding thereof.
Direct certification as a method of selecting the exclusive bargaining agent

CCV Notes on Labor Relations | 47

of the employees is not allowed. This is because the conduct of a
certification election is still necessary in order to arrive in a manner
definitive and certain concerning the choice of the labor organization to
represent the workers in a collective bargaining unit.
The “No Union” vote is always one of the choices in a certification election.
Where majority of the valid votes cast results in “No Union” obtaining the
majority, the Med-Arbiter shall declare such fact in the order.
Only persons who have direct employment relationship with the employer
may vote in the certification election, regardless of their period of
employment.

CERTIFICATION ELECTION IN AN UNORGANIZED ESTABLISHMENT

What is meant by “unorganized establishment”?

As distinguished from “organized establishment,” an “unorganized
establishment” is an employer entity where there is no recognized or
certified collective bargaining union or agent.
A company or an employer-entity, however, may still be considered an
unorganized establishment even if there are unions in existence therein for
as long as not one of them is duly certified as the sole and exclusive
bargaining representative of the employees in the particular bargaining unit
it seeks to operate and represent.
Further, a company remains unorganized even if there is a duly recognized
or certified bargaining agent for rank-and-file employees, for purposes of
the petition for certification election filed by supervisors. The reason is that
the bargaining unit composed of supervisors is separate and distinct from
the unionized bargaining unit of rank-and-file employees. Hence, being
unorganized, the 25% required minimum support of employees within the
bargaining unit of the supervisors need not be complied with.

How should certification election be conducted in an unorganized

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

CERTIFICATION ELECTION IN AN ORGANIZED ESTABLISHMENT

What are the requisites for the conduct of a certification election in an

organized establishment?
The Med-Arbiter is required to automatically order the conduct of a
certification election by secret ballot in an organized establishment as soon
as the following requisites are fully met:
1. That a petition questioning the majority status of the incumbent
bargaining agent is filed before the DOLE within the 60-day freedom

CCV Notes on Labor Relations | 48

period;
2. That such petition is verified; and
3. That the petition is supported by the written consent of at least twenty-
five percent (25%) of all the employees in the bargaining unit.

RUN-OFF ELECTION
What is run-off election?
A “run-off election” refers to an election between the labor unions receiving
the two (2) highest number of votes in a certification election or consent
election with three (3) or more choices, where such a certification election
or consent election results in none of the three (3) or more choices
receiving the majority of the valid votes cast, provided that the total
number of votes for all contending unions is at least fifty percent (50%) of
the number of votes cast.

RE-RUN ELECTION
When should a re-run election be conducted?
A re-run election may be justified if certain irregularities have been
committed during the conduct of the certification election such as, inter
alia, disenfranchisement of the voters, lack of secrecy in the voting, fraud or
bribery, in which case, the certification election should be invalidated. Such
invalidation would necessitate the conduct of a re-run election among the
contending unions to determine the true will and desire of the employee-
electorates.

CONSENT ELECTION
What is consent election?
A “consent election” refers to the process of determining through secret
ballot the sole and exclusive representative of the employees in an
appropriate bargaining unit for purposes of collective bargaining and
negotiation. It is voluntarily agreed upon by the parties, with or without the
intervention of the DOLE.

What is the distinction between consent election and certification election?

A consent election is one mutually agreed upon by the parties, with or
without the intervention of the DOLE, its purpose being merely to
determine the issue of majority representation of all the workers in an
appropriate collective bargaining unit; while a certification election is one
which is ordered by the DOLE. The purpose for both electoral exercise is
the same, i.e., to determine the sole and exclusive bargaining agent of all
the employees in an appropriate bargaining unit for the purpose of
collective bargaining. From the very nature of consent election, it is a
separate and distinct process from certification election and has nothing to
do with the import and effect of the latter.

Can the parties agree to the conduct of consent election even during the
pendency of certification election?

CCV Notes on Labor Relations | 49

Yes. In fact, the Med-Arbiter is required to determine if the contending
labor unions are willing to submit themselves to a consent election. And if
they do, the Med-Arbiter should conduct consent election instead of
certification election.

AFFILIATION AND DISAFFILIATION OF THE LOCAL UNION FROM

THE MOTHER UNION

1. AFFILIATION.
a. Mother union.
In relation to an affiliate, the federation or national union is commonly
known as the “mother union.” This term is not found in law but oftentimes,
the Supreme Court uses this term to describe a federation or a national
union.
b. Affiliate.
An “affiliate” refers to:
(1) An independent union affiliated with a federation or a national union; or
(2) A local chapter which has been subsequently granted independent
registration but did not disaffiliate from the federation or national union
which created it.
c. A chartered local/local chapter, not an affiliate.
Based on the above definition and description, technically, a local chapter
created through the mode of chartering by a mother union under Article
234-A of the Labor Code, cannot be properly called an “affiliate” if it has
not acquired any independent registration of its own.
d. Purpose of affiliation.
The purpose is to further strengthen the collective bargaining leverage of
the affiliate. No doubt, the purpose of affiliation by a local union with a
mother union (federation or national union) is to increase by collective
action its bargaining power in respect of the terms and conditions of labor.
e. Contract of agency.
The mother union, acting for and in behalf of its affiliate, has the status of
an agent while the local union remains the principal – the basic unit of the
association free to serve the common interest of all its members subject
only to the restraints imposed by the constitution and by-laws of the
association.
f. Some principles on affiliation.
Independent legal personality of an affiliate union is not affected by
affiliation.
Affiliate union becomes subject of the rules of the federation or national
union.
The appendage of the acronym of the federation or national union after
the name of the affiliate union in the registration with the DOLE does not
change the principal-agent relationship between them. Such inclusion of
the acronym is merely to indicate that the local union is affiliated with the
federation or national union at the time of the
registration. It does not mean that the affiliate union cannot independently
stand on its own.
The fact that it was the federation which negotiated the CBA does not

CCV Notes on Labor Relations | 50

make it the principal and the affiliate or local union which it represents, the
agent.
In case of illegal strike, the local union, not the mother union, is liable for
damages.

2. DISAFFILIATION.
a. Right to disaffiliate.
The right of the affiliate union to disaffiliate from its mother federation or
national union is a constitutionally-guaranteed right which may be invoked
by the former at any time. It is axiomatic that an affiliate union is a separate
and voluntary association free to serve the interest of all its members -
consistent with the freedom of association guaranteed in the Constitution.
b. Disaffiliation of independently-registered union and local chapter,
distinguished.
The disaffiliation of an independently-registered union does not affect its
legitimate status as a labor organization.
However, the same thing may not be said of a local chapter which has no
independent registration since its creation was effected pursuant to the
charter certificate issued to it by the federation or national union. Once a
local chapter disaffiliates from the
federation or national union which created it, it ceases to be entitled to the
rights and privileges granted to a legitimate labor organization. Hence, it
cannot, by itself, file a petition for certification election.
c. Some principles on disaffiliation.
Disaffiliation does not divest an affiliate union of its legal personality.
Disaffiliation of an affiliate union is not an act of disloyalty.
Disaffiliation for purposes of forming a new union does not terminate the
status of the members thereof as employees of the company. By said act of
disaffiliation, the employees who are members of the local union did not
form a new union but merely exercised their right to register their local
union. The local union is free to disaffiliate
from its mother union.
Disaffiliation should be approved by the majority of the union members.
Disaffiliation terminates the right to check-off federation dues. The
obligation to check-off federation dues is terminated with the valid
disaffiliation of the affiliate union from the federation with which it was
previously affiliated.
Disaffiliation does not affect the CBA. It does not operate to amend it or
change the administration of the contract.
Disaffiliating from the federation and entering into a CBA with the
employer does not constitute an unfair labor practice.
Disaffiliation is not a violation of the union security clause.

(i) SUBSTITUTIONARY DOCTRINE

1. CHANGE OF BARGAINING REPRESENTATIVE DURING THE LIFE OF

A CBA.
It simply refers to the substitution of the bargaining agent by a newly

CCV Notes on Labor Relations | 51

certified agent which defeated in in the certification election. As new
bargaining agent, it is duty-bound to respect the existing CBA but it can
renegotiate for new terms and conditions therein.

2. EFFECT OF SUBSTITUTIONARY DOCTRINE ON THE DEPOSED

UNION’S PERSONAL UNDERTAKINGS.
In case of change of bargaining agent under the substitutionary doctrine,
the new bargaining agent is not bound by the personal undertakings of the
deposed union like the “no strike, no lockout” clause in a CBA which is the
personal undertaking of the bargaining agent which negotiated it.

3. SOME PRINCIPLES ON SUBSTITUTIONARY DOCTRINE.

The substitutionary doctrine cannot be invoked to subvert an existing
CBA, in derogation of the principle of freedom of contract. The substitution
of a bargaining agent cannot be allowed if the purpose is to subvert an
existing CBA freely entered into by the parties. Such act cannot be
sanctioned in law or in equity as it is in derogation of the principle
underlying the freedom of contract and good faith in contractual relations.
The substitutionary doctrine is applicable also to a situation where the
local union, which was created through the process of chartering by the
mother union, disaffiliates from the latter after it secured an independent
registration. The local union will thus be substituted to that of the
federation which negotiated the CBA as in Elisco-Elirol Labor Union
[NAFLU] v. Noriel, where petitioner union was created through the mode
of chartering by the National Federation of Labor Unions (NAFLU) and
later, it secured its independent registration with the BLR and disaffiliated
with NAFLU by virtue of a resolution by its general membership.

(b) UNION DUES AND SPECIAL ASSESSMENTS

1. REQUISITES FOR VALIDITY OF UNION DUES AND SPECIAL
ASSESSMENTS.
The following requisites must concur in order for union dues and special
assessments for the union’s incidental expenses, attorney’s fees and
representation expenses to be valid, namely:
(a) Authorization by a written resolution of the majority of all the members
at a general membership meeting duly called for the purpose;
(b) Secretary’s record of the minutes of said meeting; and
(c) Individual written authorizations for check-off duly signed by the
employees concerned.

3. ASSESSMENT FOR ATTORNEY’S FEES, NEGOTIATION FEES AND

SIMILAR CHARGES.
The rule is that no such attorney’s fees, negotiation fees or similar charges
of any kind arising from the negotiation or conclusion of the CBA shall be
imposed on any individual member of the contracting union. Such fees may
be charged only against the union funds in an amount to be agreed upon by
the parties. Any contract, agreement or arrangement of any sort to the
contrary is deemed null and void. Clearly, what is prohibited is the payment

CCV Notes on Labor Relations | 52

of attorney’s fees when it is effected through forced contributions from the
workers from their own funds as distinguished from the union funds.

4. CHECK-OFF OF UNION DUES AND ASSESSMENTS.

“Check-off” means a method of deducting from the employee’s pay at
prescribed periods, any amount due for fees, fines or assessments. It is a
process or device whereby the employer, on agreement with the union
recognized as the proper bargaining representative, or on prior
authorization from its employees, deducts union dues and assessments
from the latter’s wages and remits them directly to the union.

5. INDIVIDUAL WRITTEN AUTHORIZATION, WHEN REQUIRED.

The law strictly prohibits the check-off from any amount due an employee
who is a member of the union, of any union dues, special assessment,
attorney’s fees, negotiation fees or any other extraordinary fees other than
for mandatory activities under the Labor Code, without the individual
written authorization duly signed by the employee. Such authorization
must specifically state the amount, purpose and beneficiary of the
deduction. The purpose of the individual written authorization is to protect
the employees from unwarranted practices that diminish their
compensation without their knowledge or consent.

6. INDIVIDUAL WRITTEN AUTHORIZATION, WHEN NOT REQUIRED.

In the following cases, individual written authorization is not required:
a. Assessment from non-members of the bargaining agent of “agency fees”
which should be equivalent to the dues and other fees paid by members of
the recognized bargaining agent, if such non-members accept the benefits
under the CBA.
b. Deductions for fees for mandatory activities such as labor relations
seminars and labor education activities.
c. Deductions for withholding tax mandated under the National Internal
Revenue Code.
e. Deductions for withholding of wages because of employee’s debt to the
employer which is already due.
f. Deductions made pursuant to a judgment against the worker under
circumstances where the wages may be the subject of attachment or
execution but only for debts incurred for food, clothing, shelter and medical
attendance.
g. Deductions from wages ordered by the court.
h. Deductions authorized by law such as for premiums for PhilHealth, SSS,
Pag-IBIG, employees’ compensation and the like.

(c) AGENCY FEES

(i) REQUISITES FOR ASSESSMENT

CCV Notes on Labor Relations | 53

1. NATURE OF AGENCY FEE - NEITHER CONTRACTUAL NOR
STATUTORY BUT QUASI-CONTRACTUAL.
The bargaining agent which successfully negotiated the CBA with the
employer is given the right to collect a reasonable fee, called “agency fee”
from its non-members - who are employees covered by the bargaining unit
being represented by the bargaining agent - in case they accept the benefits
under the CBA. It is called “agency fees” because by availing of the benefits
of the CBA, they, in effect, recognize and accept the bargaining union as
their “agent” as well.

2. A NON-BARGAINING UNION MEMBER HAS THE RIGHT TO ACCEPT

OR NOT THE BENEFITS OF THE CBA.
There is no law that compels a non-bargaining union member to accept the
benefits provided in the CBA. He has the freedom to choose between
accepting and rejecting the CBA itself by not accepting any of the benefits
flowing therefrom.
Consequently, if a non-bargaining union member does not accept or refuses
to avail of the CBA-based benefits, he is not under any obligation to pay the
“agency fees” since, in effect, he does not give recognition to the status of
the bargaining union as his agent.

3. LIMITATION ON THE AMOUNT OF AGENCY FEE.

The bargaining union cannot capriciously fix the amount of agency fees it
may collect from its non-members. Article 248(e) of the Labor Code
expressly sets forth the limitation in fixing the amount of the agency fees,
thus:
(1) It should be reasonable in amount; and
(2) It should be equivalent to the dues and other fees paid by members of
the recognized collective bargaining agent.
Thus, any agency fee collected in excess of this limitation is a nullity.

4. NON-MEMBERS OF THE CERTIFIED BARGAINING AGENT NEED

NOT BECOME MEMBERS THEREOF.
The employees who are not members of the certified bargaining agent
which successfully concluded the CBA are not required to become members
of the latter. Their acceptance of the benefits flowing from the CBA and
their act of paying the agency fees do not make them members thereof.

5. CHECK-OFF OF AGENCY FEES.

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

6. ACCRUAL OF RIGHT OF BARGAINING UNION TO DEMAND CHECK-

OFF OF AGENCY FEES.
The right of the bargaining union to demand check-off of agency fees

CCV Notes on Labor Relations | 54

accrues from the moment the non-bargaining union member accepts and
receives the benefits from the CBA. This is the operative fact that would
trigger such liability.

7. NO INDIVIDUAL WRITTEN AUTHORIZATION BY NON-

BARGAINING UNION MEMBERS REQUIRED.
To effect the check-off of agency fees, no individual written authorization
from the non-bargaining union members who accept the benefits resulting
from the CBA is necessary.

8. EMPLOYER’S DUTY TO CHECK-OFF AGENCY FEES.

It is the duty of the employer to deduct or “check-off” the sum equivalent to
the amount of agency fees from the non-bargaining union members' wages
for direct remittance to the bargaining union.”

10. MINORITY UNION CANNOT DEMAND FROM THE EMPLOYER TO

GRANT IT THE RIGHT TO CHECK-OFF OF UNION DUES AND
ASSESSMENTS FROM THEIR MEMBERS.
The obligation on the part of the employer to undertake the duty to check-
off union dues and special assessments holds and applies only to the
bargaining agent and not to any other union/s (called “Minority Union/s”).

IIB. RIGHT TO COLLECTIVE BARGAINING

DUTY TO BARGAIN COLLECTIVELY

1. MEANING OF DUTY TO BARGAIN COLLECTIVELY.

The “duty to bargain collectively” means the performance of a mutual
obligation to meet and convene promptly and expeditiously in good faith
for the purpose of negotiating an agreement with respect to wages, hours of
work and all other terms and conditions of employment, including
proposals for adjusting any grievances or questions arising under such
agreement and executing a contract incorporating such agreements if
requested by either party but such duty does not compel any party to agree
to a proposal or to make any concession.

The duty does not compel any party to agree blindly to a proposal nor to
make concession. While the law imposes on both the employer and the
bargaining union the mutual duty to bargain collectively, the employer is
not under any legal obligation to initiate collective bargaining negotiations.

2. TWO (2) SITUATIONS CONTEMPLATED.

The duty to bargain collectively involves two (2) situations, namely:
1. Duty to bargain collectively in the absence of a CBA under Article 251 of
the Labor Code.
2. Duty to bargain collectively when there is an existing CBA under Article
253 of the Labor Code.

CCV Notes on Labor Relations | 55

DUTY TO BARGAIN COLLECTIVELY WHEN THERE IS ABSENCE OF A
CBA (NO CBA)

1. HOW DUTY SHOULD BE DISCHARGED WHEN THERE IS NO CBA

YET.
The duty to bargain collectively when there has yet been no CBA in the
bargaining unit where the bargaining agent seeks to operate should be
complied with in the following order:
First, in accordance with any agreement or voluntary arrangement between
the employer and the bargaining agent providing for a more expeditious
manner of collective bargaining; and
Secondly, in its absence, in accordance with the provisions of the Labor
Code, referring to Article 250 thereof which lays down the procedure in
collective bargaining.

DUTY TO BARGAIN COLLECTIVELY WHEN THERE IS A CBA

1. CONCEPT.
When there is a CBA, the duty to bargain collectively shall mean that
neither party shall terminate nor modify such agreement during its lifetime.
However, either party can serve a written notice to terminate or modify the
agreement at least sixty (60) days prior to its expiration date. It shall be the
duty of both parties to keep the status quo and to continue in full force and
effect the terms and conditions of the existing agreement during the 60-day
period and/or until a new agreement is reached by
the parties.

2. FREEDOM PERIOD.
The last sixty (60) days of the 5-year lifetime of a CBA immediately prior to
its expiration is called the “freedom period.”
It is denominated as such because it is the only time when the law allows
the parties to freely serve a notice to terminate, alter or modify the existing
CBA. It is also the time when the majority status of the bargaining agent
may be challenged by another union by filing the appropriate petition for
certification election.

3. AUTOMATIC RENEWAL CLAUSE.

a. Automatic renewal clause deemed incorporated in all CBAs.
Pending the renewal of the CBA, the parties are bound to keep the status
quo and to treat the terms and conditions embodied therein still in full
force and effect during the 60-day freedom period and/or until a new
agreement is negotiated and ultimately concluded and reached by the
parties. This principle is otherwise known as the “automatic renewal
clause” which is mandated by law and therefore deemed incorporated in all
CBAs.
For its part, the employer cannot discontinue the grant of the benefits
embodied in the CBA which just expired as it is duty-bound to maintain the

CCV Notes on Labor Relations | 56

status quo by continuing to give the same benefits until a renewal thereof is
reached by the parties.
On the part of the union, it has to observe and continue to abide by its
undertakings and commitments under the expired CBA until the same is
renewed.

4. KIOK LOY DOCTRINE.

This doctrine is based on the ruling In Kiok Loy v. NLRC, 1 where the
petitioner, Sweden Ice Cream Plant, refused to submit any counter-
proposal to the CBA proposed by its employees’ certified bargaining agent.
The High Court ruled that the employer had thereby lost its right to bargain
the terms and conditions of the CBA. Thus, the CBA proposed by the union
was imposed lock, stock and barrel on the erring company.
The Kiok Loy case epitomizes the classic case of negotiating a CBA in bad
faith consisting of the employer’s refusal to bargain with the collective
bargaining agent by ignoring all notices for negotiations and requests for
counter-proposals. Such refusal to send a counter-proposal to the union
and to bargain on the economic terms of the CBA constitutes an unfair
labor practice under Article 248(g) of the Labor Code.

2. COLLECTIVE BARGAINING AGREEMENT (CBA)

A. CBA.
A “Collective Bargaining Agreement” or “CBA” for short, refers to the
negotiated contract between a duly recognized or certified exclusive
bargaining agent of workers and their employer, concerning wages, hours
of work and all other terms and conditions of employment in the
appropriate bargaining unit, including mandatory provisions for grievances
and arbitration machineries. It is executed not only upon the request of the
exclusive bargaining representative but also by the employer.

B. ESSENTIAL REQUISITES OF COLLECTIVE BARGAINING.

Prior to any collective bargaining negotiations between the employer and
the bargaining union, the following requisites must first be satisfied:
1. Employer-employee relationship must exist between the employer and
the members of the bargaining unit being represented by the bargaining
agent;
2. The bargaining agent must have the majority support of the members of
the bargaining unit established through the modes sanctioned by law; and
3. A lawful demand to bargain is made in accordance with law.

C. SOME PRINCIPLES ON CBA.

CBA is the law between the parties during its lifetime and thus must be
complied with in good faith.
Being the law between the parties, any violation thereof can be subject of
redress in court.

CCV Notes on Labor Relations | 57

Non-impairment of obligations of contract. A contract is the law between
the parties and courts have no choice but to enforce such contract so long as
it is not contrary to law, morals, good customs or public policy. Otherwise,
courts would be interfering with the freedom of contract of the parties.
CBA is not an ordinary contract as it is impressed with public interest.
Automatic Incorporation Clause – law is presumed part of the CBA.
The benefits derived from the CBA and the law are separate and distinct
from each other.
Workers are allowed to negotiate wage increases separately and distinctly
from legislated wage increases. The parties may validly agree in the CBA to
reduce wages and benefits of employees provided such reduction does not
go below the minimum standards.

Ratification of the CBA by majority of all the workers in the bargaining

unit makes the same binding on all employees therein.

Employees entitled to CBA benefits. The following are entitled to the

benefits of the CBA:
(1) Members of the bargaining union;
(2) Non-members of the bargaining union but are members of the
bargaining unit;
(3) Members of the minority union/s who paid agency fees to the
bargaining union; and
(4) Employees hired after the expiration of the CBA.

Pendency of a petition for cancellation of union registration is not a

prejudicial question before CBA negotiation may proceed.
CBA should be construed liberally. If the terms of a CBA are clear and
there is no doubt as to the intention of the contracting parties, the literal
meaning of its stipulation shall prevail.

(a) MANDATORY PROVISIONS OF CBA

1. MANDATORY STIPULATIONS OF THE CBA.

The Syllabus mentions 4 provisions that are mandatorily required to be
stated in the CBA, to wit:
1. Grievance Procedure;
2. Voluntary Arbitration;
3. No Strike-No Lockout Clause; and
4. Labor-Management Council (LMC).
If these provisions are not reflected in the CBA, its registration will be
denied by the BLR.

1 G.R.No. L-54334, Jan. 22, 1986, 141 SCRA 179, 188.

CCV Notes on Labor Relations | 58

(i) GRIEVANCE PROCEDURE

1. “GRIEVANCE” OR “GRIEVABLE ISSUE”.

A “grievance” or “grievable issue” is any question raised by either the
employer or the union regarding any of the following issues or
controversies:
1. The interpretation or implementation of the CBA;
2. The interpretation or enforcement of company personnel policies; or
3. Any claim by either party that the other party is violating any provisions
of the CBA or company personnel policies.
In order to be grievable, the violations of the CBA should be ordinary and
not gross in character; otherwise, they shall be considered as unfair labor
practice (ULP).
Gross violation of the CBA is defined as flagrant and/or malicious refusal
by a party thereto to comply with the economic provisions thereof. If what
is violated, therefore, is a non-economic or a political provision of the CBA,
the same shall not be considered as unfair labor practice and may thus be
processed as a grievable issue in accordance with and following the
grievance machinery laid down in the CBA.

2. GRIEVANCE MACHINERY.
“Grievance machinery” refers to the mechanism for the adjustment and
resolution of grievances arising from the interpretation or implementation
of a CBA and those arising from the interpretation or enforcement of
company personnel policies.

3. GRIEVANCE PROCEDURE.
“Grievance procedure” refers to the internal rules of procedure established
by the parties in their CBA with voluntary arbitration as the terminal step,
which are intended to resolve all issues arising from the implementation
and interpretation of their collective agreement. It is that part of the CBA
which provides for a peaceful way of settling differences and
misunderstanding between the parties.
The terms “grievance procedure” and “grievance machinery” may be used
interchangeably.

(ii) VOLUNTARY ARBITRATION

1. VOLUNTARY ARBITRATION.
“Voluntary arbitration” refers to the mode of settling labor-management
disputes in which the parties select a competent, trained and impartial
third person who is tasked to decide on the merits of the case and whose
decision is final and executory.

2. VOLUNTARY ARBITRATOR.
A “Voluntary Arbitrator” refers to any person who has been mutually

CCV Notes on Labor Relations | 59

named or designated by the parties to the CBA – the employer and the
bargaining agent - to hear and decide the issues between them.
A Voluntary Arbitrator is not an employee, functionary or part of the
government or of the Department of Labor and Employment, but he is
authorized to render arbitration services provided under labor laws.

(iii) “NO STRIKE, NO LOCKOUT” CLAUSE

1. SIGNIFICANCE OF THE CLAUSE.
A “No Strike, No Lockout” clause in the CBA is an expression of the firm
commitment of the parties thereto that, on the part of the union, it will not
mount a strike during the effectivity of the CBA, and on the part of the
employer, that it will not stage a lockout during the lifetime thereof.
This clause may be invoked by an employer only when the strike is
economic in nature or one which is conducted to force wage or other
concessions from the employer that are not mandated to be granted by the
law itself. It does not bar strikes grounded on unfair labor practices. This is
so because it is presumed that all economic issues between the employer
and the bargaining agent are deemed resolved with the signing of the CBA.
The same rule also applies in case of lockout. The said clause may only be
invoked by the union in case the ground for the lockout is economic in
nature but it may not be so cited if the ground is unfair labor practice
committed by the union.

2. EFFECT OF VIOLATION OF THE CLAUSE.

A strike conducted in violation of this clause is illegal.

(iv) LABOR-MANAGEMENT COUNCIL

1. CREATION OF LMC, CONSTITUTIONALLY AND LEGALLY

JUSTIFIED.
The Labor-Management Council (LMC) whose creation is mandated under
the Labor Code, is meant to implement the constitutionally mandated right
of workers to participate in policy and decision-making processes of the
establishment where they are employed insofar as said processes will
directly affect their rights, benefits and welfare. This is the body that
implements the policy of co-determination in the Constitution. The LMC is
mandated to be created in both organized and unorganized establishments.

2. SELECTION OF REPRESENTATIVES TO LMC.

In organized establishments, the workers’ representatives to the committee
or council should be nominated by the exclusive bargaining representative.
In establishments where no legitimate labor organization exists, the
workers’ representative should be elected directly by the employees at large.

3. LABOR-MANAGEMENT COUNCIL (LMC) VS. GRIEVANCE

MACHINERY (GM).

CCV Notes on Labor Relations | 60

To avoid confusion and possible major legal complication, a clear
distinction line should be drawn between LMC and GM. The following may
be cited:
a. Constitutional origin. – The creation of the LMC is based on the
constitutional grant to workers of the right to participate in policy and
decision-making processes under the 1st paragraph, Section 3, Article XIII
of the 1987 Constitution, thus:
“It shall guarantee the rights of all workers to self-organization, collective
bargaining and negotiations, and peaceful concerted activities, including
the right to strike in accordance with law. They shall be entitled to security
of tenure, humane conditions of work, and a living wage. They shall also
participate in policy and decision-making processes affecting their rights
and benefits as may be provided by law.”

The creation of a GM, on the other hand, is based on a different

constitutional provision, the 2nd paragraph, Section 3, Article XIII of the
1987 Constitution, which provides as follows:
“The State shall promote the principle of shared responsibility between
workers and employers and the preferential use of voluntary modes in
settling disputes, including conciliation, and shall enforce their mutual
compliance therewith to foster industrial peace.”
b. Legal anchor. - The creation of LMC is provided under Article 255 of the
Labor Code; while the formation of a GM is mandated under Article 260 of
the same Code.
c. Compulsory provision in the CBA. - Both LMC and GM are compulsorily
required to be embodied in the CBA in order for it to be considered a valid
agreement.
d. Purpose for creation. - The LMC is created for the purpose of affording
workers the right to participate in policy and decision-making processes in
matters affecting their rights, benefits and welfare; while that of the GM is
to resolve disputes and
grievances arising from such policies or decisions or more specifically, to
adjust and resolve grievances arising from (1) the interpretation or
implementation of the CBA or (2) the interpretation or enforcement of
company personnel policies.
e. Nature of functions. - The LMC is in the nature of a preventive
mechanism meant to prevent and avoid disputes or grievances by co-
determining the proper policies that should be implemented by the
employer in respect of the workers’ rights, benefits and welfare; while a GM
is an adjudicatory mechanism which is set into motion only when a dispute
or grievance occurs.
f. Nature of cognizable issues. – The LMC performs non-adversarial and
non-adjudicatory tasks as it concerns itself only with policy formulations
and decisions affecting the workers’ rights, benefits and welfare and not
violations or transgressions of any policy, rule or regulation; while that of
the GM is adversarial and adjudicatory in character since its jurisdiction is
confined to resolving and deciding disputes and grievances between
management and the workers arising from violations or transgressions of
existing policies, rules or regulations. In other words, the LMC does not

CCV Notes on Labor Relations | 61

resolve grievable or contentious issues; the GM does.
A case illustrative of this principle is the 2011 case of Cirtek Employees
Labor Union-Federation of Free Workers v. Cirtek Electronics, Inc. The
CBA negotiation between petitioner union and respondent company was
deadlocked resulting in the staging of a strike by the former. The DOLE
Secretary assumed jurisdiction over the labor dispute but before he could
rule on the controversy, respondent created a Labor-Management Council
(LMC) through which it concluded with the remaining officers of petitioner
a Memorandum of Agreement (MOA) providing for daily wage increases of
P6.00 per day effective January 1, 2004 and P9.00 per day effective
January 1, 2005. Petitioner submitted the MOA to the DOLE Secretary,
alleging that the remaining officers signed the MOA under respondent’s
assurance that should the Secretary order a higher award of wage increase,
respondent would comply.
Respecting the MOA, petitioner posits that it was “surreptitiously entered
into [in] bad faith,” it having been forged without the assistance of the
Federation of Free Workers or counsel, adding that respondent could have
waited for the Secretary’s resolution of the pending CBA deadlock or that
the MOA could have been concluded before representatives of the DOLE
Secretary. As found by the DOLE Secretary, the MOA came about as a
result of the constitution, at respondent's behest, of the LMC which, he
reminded the parties, should not be used as an avenue for bargaining but
for the purpose of affording workers to participate in policy and decision-
making. Hence, the agreements embodied in the MOA were not the proper
subject of the LMC deliberation or procedure but of CBA negotiations and,
therefore, deserving little weight.
g. Composition. - The representatives of the workers to the LMC may or
may not be nominated by the recognized or certified bargaining agent,
depending on whether the establishment is organized or unorganized.
Thus, in organized establishments, the workers’ representatives to the LMC
should be nominated by the exclusive bargaining agent. In establishments
where no legitimate labor organization exists, the workers’ representatives
should be elected directly by the employees of the establishment at large;
while those in the GM are nominated solely by the bargaining agent.

(b) DURATION OF CBA

(i) FOR ECONOMIC PROVISIONS

(ii) FOR NON-ECONOMIC PROVISIONS

1. TERMS OF A CBA.
The terms of a CBA are classified into two (2), viz.:
(a) Representation aspect – 5 years which is the lifetime of a CBA;
(b) All other provisions – Subject to renegotiation after first 3 years of the
5-year lifetime of CBA.

CCV Notes on Labor Relations | 62

2. REPRESENTATION ASPECT.
The phrase “representation aspect” in Article 253-A of the Labor Code
refers to the identity and majority status of the bargaining agent that
successfully negotiated the CBA as the exclusive bargaining representative
of the employees in the appropriate bargaining unit concerned.
The 5-year representation status of the incumbent exclusive bargaining
agent should be reckoned from the effectivity of the CBA. This means that
no petition for certification election questioning its majority status may be
entertained during the lifetime of the CBA except within the 60-day
freedom period immediately preceding the expiry date of the 5-year term.

Suspension of CBA for a period longer than 5 years, held valid.

The case of Rivera v. Espiritu,1 is in point. It was held here that the
suspension of the CBA between PAL and PALEA for ten (10) years in order
to resolve the strike is not violative of the Constitution or the law. This is so
because the right to free collective bargaining includes the right to suspend
it. There is nothing in Article 253-A which prohibits the parties from
waiving or suspending the mandatory timetables and agreeing on the
remedies to enforce the same.
Article 253-A has a two-fold purpose. One is to promote industrial stability
and predictability. Inasmuch as the agreement sought to promote industrial
peace at PAL during its rehabilitation, said agreement satisfies the first
purpose of Article 253-A. The other is to assign specific timetables wherein
negotiations become a matter of right and requirement. Nothing in Article
253-A prohibits the parties from waiving or suspending the mandatory
timetables and agreeing on the remedies to enforce the same. The
suspension agreement is a valid exercise of the freedom to contract. Under
the principle of inviolability of contracts guaranteed by the Constitution,
the contract must be upheld. The agreement afforded full protection to
labor; promoted the shared responsibility between workers and employers;
and exercised the voluntary modes in settling disputes, including
conciliation to foster industrial peace.

3. RE-NEGOTIATION OF ALL PROVISIONS OTHER THAN THE

REPRESENTATION ASPECT OF THE CBA SHOULD BE MADE AFTER
FIRST 3 YEARS FROM EFFECTIVITY.
Considering that the five (5) year period is quite long during which the
economic situations of the parties may have already changed, Article 253-A
recognizes the need for the parties to re-assess and re-negotiate all the
provisions of the CBA, except its representation aspect, after the lapse of
the first three (3) years of its 5-year lifetime. Such re-negotiation, however,
should only pertain to the terms and conditions of the parties’ relationship
for the last remaining two (2) years of the CBA’s 5-year term. This re-
negotiation process may be invoked by any of the parties as a matter of
right.

4. “ALL OTHER PROVISIONS,” REFER TO BOTH ECONOMIC AND

CCV Notes on Labor Relations | 63

NON-ECONOMIC PROVISIONS.
The phrase “all other provisions” mentioned in Article 253-A simply refers
to all the provisions of the CBA irrespective of whether they are economic
or non-economic in nature. The only item excepted therefrom is the
representation status of the incumbent exclusive bargaining agent which
may only be questioned during the 60-day freedom period.

5. RETROACTIVITY OF THE CBA.

The application of the rules on retroactivity depends on any of the following
two (2) situations:
(a) When the CBA is voluntarily concluded by the parties; or
(b) When the CBA is concluded through arbitral award.

6. RULE WHEN VOLUNTARILY CONCLUDED BY THE PARTIES IN THE

NEGOTIATING TABLE.
(a) The effectivity of the CBA shall retroact to the day immediately after the
date of expiry of the old CBA in case the new CBA is concluded and entered
into within six (6) months from the said expiry date.
(b) If the new CBA is entered into beyond six (6) months from the expiry
date of the old CBA, the parties are given the right to negotiate the duration
of the retroactivity thereof.

7. RULE ON RETROACTIVITY IN CASE OF CONCLUSION OF CBA

THROUGH ARBITRAL AWARD.
a. No law on retroactivity in case of CBA arbitral awards.
The law is silent as to the retroactivity of a CBA secured through arbitral
award or that granted not by virtue of the mutual agreement of the parties
but by intervention of the government.
b. Variations in the application of the retroactivity rule.
The rule laid down by the Supreme Court in cases involving this particular
issue of retroactivity varies from case to case. Basically, the rule, based on
jurisprudence, may be restated in the following manner:
(1) Prospectivity rule;
(2) Retroactivity rule which makes the CBA retroactively effective to:
(a) the date of the expiration of the previous CBA; and
(b) the first day after the six-month period following the expiration of the
last day of the CBA.

(iii) FREEDOM PERIOD

1. 60-DAY FREEDOM PERIOD.

When there is an existing CBA, the parties thereto are bound to observe the
terms and conditions therein set forth until its expiration. Neither party is
allowed to terminate nor modify such agreement during its lifetime. The
only time the parties are allowed to terminate or modify the agreement is
within the so-called “freedom period” of at least sixty (60) days prior to its
expiration date by serving a notice to that effect.”

CCV Notes on Labor Relations | 64

1 G.R. No. 135547, Jan. 23, 2002.

2. REASON IT IS CALLED “FREEDOM PERIOD.”

The last 60 days of the 5-year lifetime of a CBA immediately prior to its
expiration is called the “freedom period” because:
(a) it is the only time when the law allows the parties to freely serve a notice
to terminate, alter or modify the existing CBA; and
(b) it is also the time when the majority status of the bargaining agent may
be challenged by another union by filing the appropriate petition for
certification election.

3. RULE ON FILING OF CERTIFICATION ELECTION VIS-À-VIS

FREEDOM PERIOD.
In a petition involving an organized establishment or enterprise where the
majority status of the incumbent collective bargaining union is questioned
by a legitimate labor organization, the Med-Arbiter shall immediately order
the conduct of a certification election if the petition is filed during the last
sixty (60) days of the CBA. Any petition filed before or after the 60- day
freedom period shall be dismissed outright.
The 60-day freedom period based on the original collective bargaining
agreement shall not be affected by any amendment, extension or renewal of
the CBA for purposes of certification election.

4. AUTOMATIC RENEWAL CLAUSE.

A petition for certification election challenging the majority status of the
existing bargaining agent should be filed within – and not before or after -
said 60-day freedom period. Upon the expiration of the said period and no
petition for certification election is filed by a challenging union, the
employer is duty-bound to continue to recognize the majority status of the
incumbent bargaining agent. Negotiation for a new CBA may even validly
commence between the incumbent bargaining agent and the employer
during the 60-day freedom period if no challenge to the bargaining agent’s
majority status is posed by another union.

UNION SECURITY

1. NATURE AND PURPOSE OF UNION SECURITY CLAUSE.

The “union security clause” allows the parties thereto to enter into an
agreement requiring compulsory membership in the bargaining agent
which successfully negotiated said CBA as a condition for continued
employment with the exception of employees who are already members of
another union at the time of the signing of the CBA. “Union security” is a
generic term which is applied to and comprehends “closed shop,” “union
shop,” “maintenance of membership” or any other form of agreement
which imposes upon the employees the obligation to acquire or retain
union membership as a condition to their continued employment. In other
words, the purpose of a union security arrangement is to guarantee the
continued existence of the union through enforced membership for the

CCV Notes on Labor Relations | 65

benefit of the workers.
Without this clause, the existence of the union is always subject to
uncertainty as its members may resign anytime resulting in the decimation
of its ranks. The union becomes gradually weakened and increasingly
vulnerable to company machinations. In this security clause lies the
strength of the union during the enforcement of the CBA. It is this clause
that provides labor with substantial power in collective bargaining.

2. THE RIGHT NOT TO JOIN A UNION IS NOT ABSOLUTE SINCE IT

MAY BE RESTRICTED.
The right of an employee not to join a union is not absolute and must give
way to the collective good of all members of the bargaining unit. When
certain employees are obliged to join a particular union as a requisite for
continued employment, as in the case of a union security clause, this
condition is a valid restriction on the freedom or right not to join any labor
organization because it is in favor of unionism.

3. UNION SECURITY CLAUSE DOES NOT VIOLATE CONSTITUTIONAL

RIGHT TO FREEDOM OF ASSOCIATION.
A union security clause in a CBA is not a violation or a restriction of the
employee’s right to freedom of association guaranteed by the Constitution.
Labor, being the weaker in economic power and resources than capital,
deserves protection that is actually substantial and material.

4. EMPLOYEES EXEMPTED FROM COVERAGE OF UNION SECURITY

CLAUSE.
All employees in the bargaining unit covered by a Union Security Clause in
their CBA with the employer are subject to its terms. However, under law
and established jurisprudence, the following kinds of employees are
exempted from its coverage, namely:
1. Employees who, at the time the union security agreement takes effect, are
bona-fide members of a religious organization which prohibits its members
from joining labor unions on religious grounds;
2. Employees who are already members of a union other than the
bargaining agent at the time the union security agreement took effect;
3. Confidential employees who are excluded from the rank-and-file or
supervisory bargaining unit;
4. Supervisory employees who are excluded from becoming members of the
rank-and-file union and vice-versa; and
5. Employees excluded from the union security clause by express terms of
the agreement.

CCV Notes on Labor Relations | 66

(a) UNION SECURITY CLAUSES: CLOSED SHOP, UNION SHOP,
MAINTENANCE OF MEMBERSHIP SHOP, ETC.

1. CLASSIFICATION OF UNION SECURITY ARRANGEMENTS.

Generally, a union security clause may take the form of:

1. Closed-shop agreement;
2. Maintenance of membership agreement;
3. Union shop agreement;
4. Modified union shop agreement;
5. Exclusive bargaining agreement;
6. Bargaining for members only agreement;
7. Agency shop agreement; or
8. Preferential hiring agreement.

Modification of arrangements.
The above classification admits of certain modified types which the parties
may agree upon in the CBA depending on the peculiar requirements of the
situation.

2. CLOSED-SHOP AGREEMENT.
A “closed-shop” may be defined as a scheme in which, by agreement
between the employer and its employees through their bargaining
union/agent, no person may be employed unless he or she is, becomes, and,
for the duration of the agreement, remains a member in good standing of
the bargaining union. Basically, this kind of agreement stipulates the
undertaking by the employer not to hire or employ any person who is not a
member of the bargaining union. Once employed, it is required that the
said person should remain a member of the bargaining union in good
standing as a condition for continued employment, at least during the
whole duration of the CBA.

3. MAINTENANCE OF MEMBERSHIP AGREEMENT.

There is “maintenance of membership agreement” when employees, who
are union members as of the effective date of the agreement, or who
thereafter become members, must maintain union membership as a
condition for continued employment until they are promoted or transferred
out of the bargaining unit, or the agreement is terminated. Its role is to
protect the union’s current membership. By its express terms, it covers and
renders continued union membership compulsory for: (1) those who were
already union members at the time the CBA was signed; and (2) the new
employees who will become regular during the life of the CBA.

4. UNION SHOP AGREEMENT.

There is “union shop” when all new regular employees are required to join
the union within a certain period as a condition for their continued

CCV Notes on Labor Relations | 67

employment. Its role is to compel the membership of those who are not yet
union members. Under this scheme, the employer is given the freedom to
hire and employ any person who is not a member of the bargaining agent.
Once such person becomes an employee, he is required to become a
member of the bargaining agent and to remain as such member in good
standing for the whole period of the effectivity of the CBA as a condition for
his continued employment.

5. MODIFIED UNION SHOP AGREEMENT.

Employees under this arrangement who are not union members at the time
of the signing or execution of the CBA are not required to join the
bargaining union. However, any and all workers hired or employed after
the signing or execution of the CBA are required to join the bargaining
union.

6. EXCLUSIVE BARGAINING AGENT AGREEMENT.

The union which negotiated and concluded the CBA with management is
considered and recognized as the sole and exclusive bargaining agent of all
the covered employees in the bargaining unit, whether they be members or
not of the said agent.

7. BARGAINING FOR MEMBERS ONLY AGREEMENT.

Under this arrangement, the union which negotiated and concluded the
CBA with management is recognized as the bargaining agent only for its
own members.

8. AGENCY SHOP AGREEMENT.

Under this scheme, there is no requirement for non-members of the
bargaining agent to become its members. However, it is required that such
non-union members should pay to the bargaining agent an agency fee as a
condition for their continued employment.

9. PREFERENTIAL HIRING AGREEMENT.

It is the principal feature of this arrangement that the employer gives
preference in hiring to the members of the bargaining agent under equal
circumstances and qualifications. Once hired or employed, they are
required to maintain their membership in good standing in the bargaining
agent for the duration of the CBA as a condition for their continued
employment.

10. DISMISSAL DUE TO VIOLATION OF UNION SECURITY CLAUSE.

a. Requisites for valid termination based on union security clause.
The following are the requisites that the employer should comply prior to
terminating the employment of an employee by virtue of the enforcement of
the union security clause:
(1) The union security clause is applicable;
(2) The union is requesting for the enforcement of the union security

CCV Notes on Labor Relations | 68

provision in the CBA; and
(3) There is sufficient evidence to support the union’s decision to expel the
employee from the union.
The foregoing requisites constitute a just cause for terminating an
employee based on the CBA’s union security provision.
b. The due process afforded by the union prior to expulsion is different
from the due process required prior to termination of employment.
The distinction is not hard to comprehend. The due process afforded by the
union is meant solely and exclusively to address the issue of validity of the
termination of the membership of the employee in the union; while that
required of the employer is aimed at addressing the issue of validity of the
employee’s termination of employment. Hence, it is complete error on the
part of the employer to adopt as its own due process what has been earlier
afforded by the union to the erring employee without conducting its own
independent and separate due process.
Thus, in declaring the illegality of the dismissal of petitioner in Cariño v.
NLRC,1 the Supreme Court noted in regard to the involvement of the
company in his dismissal, that the company, upon being formally advised
in writing of the expulsion of petitioner Cariño from the union, in turn
simply issued a termination letter to Cariño, the termination being made
effective the very next day. The Company should have given petitioner
Cariño an opportunity to explain his side of the controversy with the union.
Notwithstanding the union security clause in the CBA, the company should
have reasonably satisfied itself by its own inquiry that the union had not
been merely acting arbitrarily and capriciously in impeaching and expelling
petitioner Cariño. Had the company taken the trouble to investigate the
acts and proceedings of the union, it could have very easily determined that
the union had acted arbitrarily in impeaching and expelling from its ranks
petitioner Cariño.

11. SOME PRINCIPLES ON TERMINATION DUE TO VIOLATION OF

UNION SECURITY CLAUSE.
Employer is obligated to act upon being demanded by the union to
terminate the employment of its errant members.
Members of the minority union cannot be compelled to join the bargaining
union. The union security clause therefore does not cover employees who
are members of the union/s other than the bargaining union. Not being so
covered, they cannot be dismissed for violation of said clause.
The employer has the right to be reimbursed for payment of any claims
arising out of dismissals demanded by the union under the union security
clause. Such right of reimbursement may be invoked:
(1) By express provision in the CBA to that effect; or
(2) By securing it through judicial directive.

(b) CHECK-OFF; UNION DUES, AGENCY FEES

1. CHECK-OFF OF AGENCY FEE, DIFFERENT FROM CHECK-OFF OF

UNION DUES AND ASSESSMENTS.

CCV Notes on Labor Relations | 69

Check-off of agency fee does not require the execution by the non-
bargaining union members of individual written authorizations; while such
is an indispensable requisite for check-off of union dues and special
assessments from members of the bargaining union.

4. UNFAIR LABOR PRACTICE IN COLLECTIVE BARGAINING

(a) BARGAINING IN BAD FAITH

1. BASIC PRINCIPLES.

It is essential that the employer and the employees should both act in good
faith. Where an employer did not even bother to submit an answer to the
bargaining proposals of the union, there is a clear evasion of the duty to
bargain collectively.

2. MAKING A PROMISE DURING THE CBA NEGOTIATIONS, NOT AN

INDICATION OF BAD FAITH.
Promises made by management during the CBA negotiations may not be
considered an indication of bad faith or a scheme of feigning to undertake
the negotiation proceedings through empty promises.

3. ADAMANT STANCE RESULTING IN AN IMPASSE, NOT AN

INDICIUM OF BAD FAITH.
The adamant insistence on a bargaining position to the point where the
negotiations reach an impasse does not establish bad faith. Neither can bad
faith be inferred from a party’s insistence on the inclusion of a particular
substantive provision unless it concerns trivial matters or is obviously
intolerable.

4. PARTIES HAVE NO OBLIGATION TO PRECIPITATELY AGREE TO

THE PROPOSALS OF EACH OTHER.
While the law makes it an obligation for the employer and the employees to
bargain collectively with each other, such compulsion does not include the
commitment to precipitately accept or agree to the proposals of the other.
All it contemplates is that both parties should approach the negotiation
with an open mind and make reasonable effort to reach a common ground
of agreement.

5. ALLEGATIONS OF BAD FAITH WIPED OUT WITH THE SIGNING OF

THE CBA.
With the execution of the CBA, bad faith bargaining can no longer be
imputed upon any of the parties thereto. All provisions in the CBA are
supposed to have been jointly and voluntarily incorporated therein by the
parties. The CBA is proof enough that the company exerted reasonable

CCV Notes on Labor Relations | 70

effort at good faith bargaining.

1 G.R. No. 91086, May 8, 1990, 185 SCRA 177.

(b) REFUSAL TO BARGAIN

1. FAILURE OR REFUSAL OF MANAGEMENT TO GIVE COUNTER-

PROPOSALS TO THE UNION’S DEMANDS.
The failure of the employer to submit its counter-proposals to the demands
of the bargaining union does not, by itself, constitute refusal to bargain.
However, it is different if the employer refuses to submit an answer or reply
to the written bargaining proposals of the certified bargaining union. In this
case, unfair labor practice is committed.
In General Milling Corporation v. CA,1 the Supreme Court found the
petitioner guilty of unfair labor practice for refusing to send a counter-
proposal to the union and to bargain anew on the economic terms of the
CBA.
Similarly, in the earlier case of Collegio de San Juan de Letran v.
Association of Employees and Faculty of Letran,2 the petitioner school was
declared guilty of unfair labor practice when it failed to make a timely reply
to the proposals of the certified bargaining union more than a month after
the same were submitted to it. In explaining its failure to reply, the school
merely offered the feeble excuse that its Board of Trustees had not yet
convened to discuss the matter. Clearly, its actuation showed a lack of
sincere desire to negotiate the CBA thereby rendering it guilty of unfair
labor practice.

2. REFUSAL OF A PARTY TO SIGN THE CBA.

A party to a fully-concluded CBA may be compelled to sign it, especially if
said refusal to sign is the only remaining hitch to its being implemented.
Such refusal is considered an unfair labor practice.

(c) INDIVIDUAL BARGAINING

1. EMPLOYER’S ACT OF NEGOTIATING WITH UNION MEMBERS

INDIVIDUALLY, A ULP.

To negotiate or attempt to negotiate with individual workers rather than

with the certified bargaining agent is an unfair labor practice.
In Insular Life Assurance Co., Ltd., Employees Association-NATU v.
Insular Life Assurance Co., Ltd.,3 respondent company, through its
President, sent two (2) sets of letters to the individual strikers during the
strike. The first contained promises of benefits to the employees in order to
entice them to return to work; while the second contained threats to obtain
replacements for the striking employees in the event they did not report for
work on June 2, 1958. The respondents contend that the sending of the
letters constituted a legitimate exercise of their freedom of speech. The

CCV Notes on Labor Relations | 71

Supreme Court, however, disagreed. The said letters were directed to the
striking employees individually - by registered special delivery mail at that -
without being coursed through the unions which were representing the
employees in collective bargaining. Moreover, the sending of these letters is
not protected by the free speech provision of the Constitution. The free
speech protection under the Constitution is inapplicable where the
expression of opinion by the employer or his agent contains a promise of
benefit or threats or reprisal.

2. UNION CANNOT VALIDLY BARGAIN IN BEHALF OF ITS MEMBERS

ONLY.

Respondent union in Philippine Diamond Hotel and Resort, Inc. [Manila

Diamond Hotel] v. Manila Diamond Hotel Employees Union,4 insists that
it could validly bargain in behalf of “its members” only. The Supreme Court,
however, ruled that the same would only “fragment the employees” of
petitioner. What respondent union will be achieving is to divide the
employees, more particularly, the rank-and-file employees of petitioner
hotel. The other workers who are not members are at a serious
disadvantage, because if the same shall be allowed, employees who are non-
union members will be economically impaired and will not be able to
negotiate their terms and conditions of work, thus defeating the very
essence and reason of collective bargaining which is an effective safeguard
against the evil schemes of employers in terms and conditions of work.
Petitioner’s refusal to bargain then with respondent cannot be considered
an unfair labor practice to justify the staging of the strike.

(d) BLUE-SKY BARGAINING

CONCEPT.
“Blue-sky bargaining” means making exaggerated or unreasonable
proposals. This kind of unfair labor practice act may only be committed by
the bargaining union.

(e) SURFACE BARGAINING

CONCEPT.
“Surface bargaining” is defined as “going through the motions of
negotiating” without any legal intent to reach an agreement. This kind of
unfair labor practice may only be committed by the employer.

1 G.R. No. 146728, Feb. 11, 2004.

2 G.R. No. 141471, Sept. 18, 2000.
3 G.R. No. L-25291, Jan. 30, 1971, 37 SCRA 244.
4 G.R. No. 158075, June 30, 2006.

CCV Notes on Labor Relations | 72

5. UNFAIR LABOR PRACTICE (ULP)

(A) NATURE OF ULP

1. WHEN AN ACT CONSTITUTES ULP.

At the outset, it must be clarified that not all unfair acts constitute ULPs.
While an act or decision of an employer or a union may be unfair, certainly
not every unfair act or decision thereof may constitute ULP as defined and
enumerated under the law.

The act complained of as ULP must have a proximate and causal

connection with any of the following 3 rights:
1. Exercise of the right to self-organization;
2. Exercise of the right to collective bargaining; or
3. Compliance with CBA.

Sans this connection, the unfair acts do not fall within the technical
signification of the term “unfair labor practice.”

2. THE ONLY ULP WHICH MAY OR MAY NOT BE RELATED TO THE

EXERCISE OF THE RIGHT TO SELFORGANIZATION AND COLLECTIVE
BARGAINING.

The only ULP which is the exception as it may or may not relate to the
exercise of the right to self-organization and collective bargaining is the act
described under Article 248 [f], i.e., to dismiss, discharge or otherwise
prejudice or discriminate against an employee for having given or being
about to give testimony under the Labor Code.

3. LABOR CODE PROVISIONS ON ULP.

Under the Labor Code, there are only five (5) provisions related to ULP, to
wit:
a. Article 247 which describes the concept of ULPs and prescribes the
procedure for their prosecution;
b. Article 248 which enumerates the ULPs that may be committed by
employers;
c. Article 249 which enumerates the ULPs that may be committed by labor
organizations;
d. Article 261 which considers violations of the CBA as no longer ULPs
unless the same are gross in character which means flagrant and/or
malicious refusal to comply with the economic provisions thereof.
e. Article 263 [c] which refers to union-busting, a form of ULP, involving
the dismissal from employment of union officers duly elected in accordance
with the union constitution and by-laws, where the existence of the union is
threatened thereby.

CCV Notes on Labor Relations | 73

4. PARTIES WHO/WHICH MAY COMMIT ULP.

A ULP may be committed by an employer or by a labor organization.

Article 248 describes the ULPs that may be committed by an employer;
while Article 249 enumerates those which may be committed by a labor
organization.

On the part of the employer, only the officers and agents of corporations,
associations or partnerships who have actually participated in or authorized
or ratified ULPs are criminally liable.
On the part of the union, only the officers, members of governing boards,
representatives or agents or members of labor associations or organizations
who have actually participated in or authorized or ratified the ULPs are
criminally liable.

5. ELEMENTS OF ULP.
Before an employer or labor organization may be said to have committed
ULP, the following elements must concur:
a. There should exist an employer-employee relationship between the
offended party and the offender; and
b. The act complained of must be expressly mentioned and defined in the
Labor Code as an unfair labor practice.
Absent one of the elements aforementioned will not make the act an unfair
labor practice.

6. ASPECTS OF ULP.

Under Article 247, a ULP has two (2) aspects, namely:

a. Civil aspect; and
b. Criminal aspect.
The civil aspect of an unfair labor practice includes claims for actual, moral
and exemplary damages, attorney’s fees and other affirmative reliefs.
Generally, these civil claims should be asserted in the labor case before the
Labor Arbiters who have original and exclusive jurisdiction over unfair
labor practices.
The criminal aspect, on the other hand, can only be asserted before the
regular court.

(B) ULP COMMITTED BY EMPLOYERS

I. INTERFERENCE WITH, RESTRAINT OR COERCION OF EMPLOYEES

IN THE EXERCISE OF THEIR RIGHT TO SELF-ORGANIZATION

1. TEST OF INTERFERENCE, RESTRAINT OR COERCION.

CCV Notes on Labor Relations | 74

The terms “interfere,” “restrain” and “coerce” are very broad that any act of
management that may reasonably tend to have an influence or effect on the
exercise by the employees of their right to self-organize may fall within
their meaning and coverage.
According to the Supreme Court in Insular Life Assurance Co., Ltd.,
Employees Association-NATU v. Insular Life Assurance Co., Ltd.,1 the test
of whether an employer has interfered with or restrained or coerced
employees within the meaning of the law is whether the employer has
engaged in conduct which may reasonably tend to interfere with the free
exercise of the employees’ rights.
It is not necessary that there be direct evidence that any employee was in
fact intimidated or coerced by the statements or threats of the employer if
there is a reasonable inference that the anti-union conduct of the employer
does have an adverse effect on the exercise of the right to self-organization
and collective bargaining.

2. TOTALITY OF CONDUCT DOCTRINE.

In ascertaining whether the act of the employer constitutes interference

with, restraint or coercion of the employees’ exercise of their right to self-
organization and collective bargaining, the “totality of conduct doctrine”
may be applied.
The totality of conduct doctrine means that expressions of opinion by an
employer, though innocent in themselves, may be held to constitute an
unfair labor practice because of the circumstances under which they were
uttered, the history of the particular employer’s labor relations or anti-
union bias or because of their connection with an established collateral plan
of coercion or interference. An expression which may be permissibly
uttered by one employer, might, in the mouth of a more hostile employer,
be deemed improper and consequently actionable as an unfair labor
practice. The past conduct of the employer and like considerations, coupled
with an intimate connection between the employer’s action and the union
affiliation or activities of the particular employee or employees taken as a
whole, may raise a suspicion as to the motivation for the employer’s
conduct. The failure of the employer to ascribe a valid reason therefor may
justify an inference that his unexplained conduct in respect of the particular
employee or employees was inspired by the latter’s union membership and
activities.

3. INTERFERENCE IN THE EMPLOYEE’S RIGHT TO SELF-

ORGANIZATION.

a. Interference is always ULP.

The judicial dictum is that any act of interference by the employer in the
exercise by employees of their right to self-organization constitutes an
unfair labor practice. This is the very core of ULP.

CCV Notes on Labor Relations | 75

In Hacienda Fatima v. National Federation of Sugarcane Workers – Food
and General Trade,2 the Supreme Court upheld the factual findings of the
NLRC and the Court of Appeals that from the employer’s refusal to bargain
to its acts of economic inducements resulting in the promotion of those who
withdrew from the union, the use of armed guards to prevent the organizers
to come in, and the dismissal of union officials and members, one cannot
but conclude that the employer did not want a union in its hacienda - a
clear interference in the right of the workers to self-organization. Hence,
the employer was held guilty of unfair labor practice.

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

c. It is ULP to dismiss a union officer or an employee for his union

activities.

II. YELLOW DOG CONTRACT

1. WHAT IS A YELLOW DOG CONTRACT?

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

2. COMMON STIPULATIONS IN A YELLOW DOG CONTRACT.

A typical yellow dog contract embodies the following stipulations:

(a) A representation by the employee that he is not a member of a labor
organization;
(b) A promise by the employee that he will not join a union; and
(c) A promise by the employee that upon joining a labor organization, he
will quit his employment.

The act of the employer in imposing such a condition constitutes unfair

labor practice under Article 248(b) of the Labor Code. Such stipulation in
the contract is null and void.

III. CONTRACTING OUT OF SERVICES AND FUNCTIONS

1. GENERAL RULE.
As a general rule, the act of an employer in having work or certain services
or functions being performed by union members contracted out is not per
se an unfair labor practice. This is so because contracting-out of a job, work
or service is clearly an exercise by the employer of its business judgment
and its inherent management rights and prerogatives. Hiring of workers is
within the employer’s inherent freedom to regulate its business and is a

CCV Notes on Labor Relations | 76

valid exercise of its management prerogative subject only to special laws
and agreements on the matter and the fair standards of justice. The
employer cannot be denied the faculty of promoting efficiency and attaining
economy by a study of what units are essential for its operation. It has the
ultimate right to determine whether services should be performed by its
personnel or contracted to outside agencies.
1 G.R. No. L-25291, Jan. 30, 1971, 37 SCRA 244.
2 G.R. No. 149440, Jan. 28, 2003.

2. WHEN CONTRACTING-OUT BECOMES ULP.

It is only when the contracting out of a job, work or service being performed
by union members will interfere with, restrain or coerce employees in the
exercise of their right to self-organization that it shall constitute an unfair
labor practice. Thus, it is not unfair labor practice to contract out work for
reasons of business decline, inadequacy of facilities and equipment,
reduction of cost and similar reasonable grounds.

IV. COMPANY UNION

COMPANY INITIATED, DOMINATED OR ASSISTED UNION.

Paragraph [d] of Article 248 considers it an unfair labor practice to initiate,
dominate, assist or otherwise interfere with the formation or
administration of any labor organization, including the giving of financial
or other support to it or its organizers or supporters. Such union is called
“company union” as its formation, function or administration has been
assisted by any act defined as unfair labor practice under the Labor Code.

V. DISCRIMINATION

1. COVERAGE OF PROHIBITION.
What is prohibited as unfair labor practice under the law is to discriminate
in regard to wages, hours of work, and other terms and conditions of
employment in order to encourage or discourage membership in any
labor organization.

2. MATERIALITY OF PURPOSE OF ALLEGED DISCRIMINATORY ACT.

In Manila Pencil Co., Inc. v. CIR,1 it was ruled that even assuming that
business conditions justify the dismissal of employees, it is an unfair labor
practice of employer to dismiss permanently only union members and not
non-unionists.
In Manila Railroad Co. v. Kapisanan ng mga Manggagawa sa Manila
Railroad Co.,2 the non-regularization of long-time employees because of
their affiliation with the union while new employees were immediately
regularized was declared an act of discrimination.

VI. FILING OF CHARGES OR GIVING OF TESTIMONY

CCV Notes on Labor Relations | 77

1. CONCEPT.
Under paragraph [f] of Article 248 of the Labor Code, it is an unfair labor
practice for an employer to dismiss, discharge or otherwise prejudice or
discriminate against an employee for having given or being about to give
testimony under the Labor Code.

2. THE ONLY ULP NOT REQUIRED TO BE RELATED TO EMPLOYEE’S

EXERCISE OF THE RIGHT TO SELF ORGANIZATION AND
COLLECTIVE BARGAINING.
It must be underscored that Article 248(f) is the only unfair labor practice
that need not be related to the exercise by the employees of their right to
self-organization and collective bargaining.
In Itogon-Suyoc Mines, Inc. v. Baldo,3 it was declared that an unfair labor
practice was committed by the employer when it dismissed the worker who
had testified in the hearing of a certification election case despite its prior
request for the employee not to testify in the said proceeding accompanied
with a promise of being reinstated if he followed said request.

VII. CBA-RELATED ULPs

1. THREE (3) CBA-RELATED ULPs.

Article 248 enunciates three (3) CBA-related unfair labor practices, to wit:
a. To violate the duty to bargain collectively as prescribed in the Labor
Code.
b. To pay negotiation or attorney’s fees to the union or its officers or agents
as part of the settlement of any issue in collective bargaining or any other
dispute.
c. To violate a collective bargaining agreement.

VII-B. PAYMENT OF NEGOTIATION AND ATTORNEY’S FEES

1. WHEN PAYMENT CONSIDERED ULP.

Article 248(h) of the Labor Code considers as an unfair labor practice the
act of the employer in paying negotiation fees or attorney’s fees to the union
or its officers or agents as part of the settlement of any issue in collective
bargaining or any other dispute.
1 G.R. No. L-16903, Aug. 31, 1965, 14 SCRA 955.
2 G.R. No. L-19728, July 30, 1964.
3 G.R. No. L-17739, Dec. 24, 1964.

VII-C. VIOLATION OF THE CBA

1. CORRELATION.
Article 248(i) of the Labor Code should be read in relation to Article 261

CCV Notes on Labor Relations | 78

thereof. Under Article 261, as amended, violations of a CBA, except those
which are gross in character, shall no longer be treated as an unfair labor
practice and shall be resolved as grievances under the CBA. Gross violations
of CBA shall mean flagrant and/or malicious refusal to comply with the
economic provisions of such agreement.

2. CASE LAW.
The act of the employer in refusing to implement the negotiated wage
increase stipulated in the CBA, which increase is intended to be distinct and
separate from any other benefits or privileges that may be forthcoming to
the employees, is an unfair labor practice. Refusal for a considerable
number of years to give salary adjustments according to the improved
salary scales in the CBA is an unfair labor practice.

ULP OF LABOR ORGANIZATIONS

I. RESTRAINT AND COERCION OF EMPLOYEES IN THE EXERCISE OF

THEIR RIGHT TO SELF-ORGANIZATION

UNION MAY INTERFERE WITH BUT NOT RESTRAIN OR COERCE

EMPLOYEES IN THE EXERCISE OF THEIR RIGHT TO SELF-
ORGANIZE.
Under Article 249(a), it is ULP for a labor organization, its officers, agents
or representatives to restrain or coerce employees in the exercise of their
right to self-organization. Compared to similar provision of Article 248(a)
of the Labor Code, notably lacking is the use of the word “interfere” in the
exercise of the employees’ right to self-organize. The significance in the
omission of this term lies in the grant of unrestricted license to the labor
organization, its officers, agents or representatives to interfere with the
exercise by the employees of their right to self-organization. Such
interference is not unlawful since without it, no labor organization can be
formed as the act of recruiting and convincing the employees is definitely
an act of interference.

II. DISCRIMINATION

1. CONCEPT.
Under Article 249(b), it is ULP for a labor organization, its officers, agents
or representatives to cause or attempt to cause an employer to discriminate
against an employee, including discrimination against an employee with
respect to whom membership in such organization has been denied, or to
terminate an employee on any ground other than the usual terms and
conditions under which membership or continuation of membership is
made available to other members.

CCV Notes on Labor Relations | 79

III. DUTY OF UNION TO BARGAIN COLLECTIVELY

1. CONCEPT.
Under Article 249(c), it is ULP for a duly certified sole and exclusive
bargaining union, its officers, agents or representatives to refuse or violate
the duty to bargain collectively with the employer. This is the counterpart
provision of Article 248(g) respecting the violation by the employer of its
duty to bargain collectively.

2. PURPOSE.
The obvious purpose of the law is to ensure that the union will negotiate
with management in good faith and for the purpose of concluding a
mutually beneficial agreement regarding the terms and conditions of their
employment relationship.

IV. ANTI-FEATHERBEDDING DOCTRINE

1. CONCEPT.
Under Article 249(d), it is ULP for a labor organization, its officers, agents
or representatives to cause or attempt to cause an employer to pay or
deliver or agree to pay or deliver any money or other things of value, in the
nature of an exaction, for services which are not performed or not to be
performed, including the demand for fee for union negotiations.
This practice of the union is commonly known as “featherbedding” as it
unduly and unnecessarily maintains or increases the number of employees
used or the amount of time consumed to work on a specific job. This is done
by the employees to unduly secure their jobs in the face of technological
advances or as required by minimum health and safety standards, among
other justifications. These featherbedding practices have been found to be
wasteful and without legitimate justifications.

2. DEMAND FOR PAYMENT OF STANDBY SERVICES.

A union commits an unfair labor practice under this provision by causing or
attempting to cause an employer to pay or agree to pay for standby services.
Payments for “standing-by,” or for the substantial equivalent of “standing-
by,” are not payments for “services performed” within the meaning of the
law. When an employer received a bona-fide offer of competent
performance of relevant services, it remains for the employer, through free
and fair negotiation, to determine whether such offer should be accepted
and what compensation should be paid for the work done.

V. DEMAND OR ACCEPTANCE OF NEGOTIATION FEES OR

ATTORNEY’S FEES

CONCEPT.
Under Article 249(e), it is ULP for a labor organization, its officers, agents

CCV Notes on Labor Relations | 80

or representatives to ask for or accept negotiation fees or attorney’s fees
from employers as part of the settlement of any issue in collective
bargaining or any other dispute.

VI. VIOLATION OF THE CBA

1. CONCEPT.
Under Article 249(f), it is ULP for a labor organization, its officers, agents
or representatives to violate a CBA.

2. COUNTERPART PROVISION.
This is the counterpart provision of Article 248(i) regarding the employer’s
act of violating a CBA. But it must be noted that under Article 261 of the
Labor Code, violation of the CBA is generally considered merely a grievable
issue.
It becomes an unfair labor practice only if the violation is gross in
character which means that there is flagrant and/or malicious refusal to
comply with the economic (as distinguished from non-economic)
stipulations in the CBA. This principle applies not only to the employer but
to the labor organization as well.

VII. CRIMINAL LIABILITY FOR ULPs OF LABOR ORGANIZATION

PERSONS LIABLE.
Article 249 is explicit in its provision on who should be held liable for ULPs
committed by labor organizations. It states that only the officers, members
of governing boards, representatives or agents or members of labor
associations or organizations who have actually participated in, authorized
or ratified unfair labor practices shall be held criminally liable.

III. RIGHT TO PEACEFUL CONCERTED ACTIVITIES

1. FORMS OF CONCERTED ACTIVITIES.

There are three (3) forms of concerted activities, namely:

A. Strike;
B. Lockout; and
C. Picketing.

A. STRIKE.
“Strike” means any temporary stoppage of work by the concerted action of
the employees as a result of an industrial or labor dispute.

CCV Notes on Labor Relations | 81

 Forms and classification of strikes.

A strike may be classified:

1. As to nature:
a. Legal strike - one called for a valid purpose and conducted through
means allowed by law.
b. Illegal strike - one staged for a purpose not recognized by law or, if for a
valid purpose, it is conducted through means not sanctioned by law.
c. Economic strike - one declared to demand higher wages, overtime pay,
holiday pay, vacation pay, etc. It is one which is declared for the purpose of
forcing wage or other concessions from the employer for which he is not
required by law to grant.
d. Unfair labor practice (ULP) or political strike - one called to protest
against the employer’s unfair labor practices enumerated in Article 248 of
the Labor Code, including gross violation of the CBA under Article 261 and
unionbusting under Article 263(c) of the Labor Code.
e. Slowdown strike - one staged without the workers quitting their work
but by merely slackening or reducing their normal work output. It is also
called “a strike on the installment plan.”
f. Mass leaves - One where the employees simultaneously filed leaves of
absence based on various reasons such as, inter alia, vacation and sick
leaves.
g. Wildcat strike - one declared and staged without the majority approval of
the recognized bargaining agent.
h. Sitdown strike - one where the workers stop working but do not leave
their place of work.
i. Overtime boycott – one involving the act of the workers in refusing to
render overtime work in violation of the CBA, resorted to as a means to
coerce the employer to yield to their demands.
j. Boycott of products – one which involves the concerted refusal to
patronize an employer's goods or services and to persuade others to a like
refusal.
k. Attempts to damage, destroy or sabotage plant equipment and facilities
and similar activities;
l. The sporting by the workers of closely cropped hair or cleanly shaven
heads after their union filed a notice of strike as a result of a CBA deadlock
is a form of illegal strike.1

2. As to coverage:
a. General strike – one which covers and extends over a whole province or
country. In this kind of strike, the employees of various companies and
industries cease to work in sympathy with striking workers of another
company. It is also resorted to for the purpose of putting pressure on the
government to enact certain labor-related measures such as mandated
wage increases or to cease from implementing a law which workers
consider inimical to their interest. It is also mounted for purposes of
paralyzing or crippling the entire economic dispensation.

CCV Notes on Labor Relations | 82

b. Particular strike – one which covers a particular establishment or
employer or one industry involving one union or federation.

3. As to purpose:
a. Economic strike.
b. Unfair labor practice strike or political strike.

4. As to the nature of the strikers’ action:

a. Partial strike – one which consists of unannounced work stoppages such
as slowdowns, walkouts or unauthorized extension of rest periods.
b. Sit-down strike.
c. Slowdown strike.

5. As to the extent of the interest of strikers:

a. Primary strike – refers to a strike conducted by the workers against their

employer, involving a labor dispute directly affecting them.

b. Secondary strike - refers to a strike staged by the workers of an employer

involving an issue which does not directly concern or affect their
relationship but rather, by some circumstances affecting the workers such
as when the employer persists to deal with a third person against whom the
workers have an existing grievance. Workers stage this kind of strike to
secure the economic assistance of their employer to force the third person
to yield to the union on the issues involving it and said third person.

c. Sympathy strike - refers to a strike where the strikers have no demands

or grievances or labor dispute of their own against their employer but
nonetheless stage the strike for the purpose of aiding, directly or indirectly,
other strikers in other establishments or companies, without necessarily
having any direct relation to the advancement of the strikers’ interest. This
is patently an illegal strike. An example of a sympathy strike is the “welga
ng bayan” where workers refuse to render work to join a general strike
which does not involve a labor or industrial dispute between the strikers
and the employer struck against but it is staged in pursuit of certain ends
such as reduction in the electric power rates, increase in the legislated
wages, etc.

CCV Notes on Labor Relations | 83

B. LOCKOUT.
“Lockout” means the temporary refusal by an employer to furnish work as a
result of an industrial or labor dispute.

It consists of the following:

1. Shutdowns;
2. Mass retrenchment and dismissals initiated by the employer.
3. The employer’s act of excluding employees who are union members.

C. PICKETING.
“Picketing” is the act of workers in peacefully marching to and fro before an
establishment involved in a labor dispute generally accompanied by the
carrying and display of signs, placards and banners intended to inform the
public about the dispute.

WHO MAY DECLARE A STRIKE OR LOCKOUT?

1. WHO MAY DECLARE A STRIKE?

a. Proper party.
Only a legitimate labor organization may declare a strike. For obvious
reason, the employer cannot.
1 National Union of Workers in the Hotel, Restaurant and Allied Industries
[NUWHRAIN-APL-IUF] Dusit Hotel Nikko Chapter v. The Honorable CA,
G.R. Nos. 163942 and 166295, Nov. 11, 2008.

b. Basic requirements.
As to the personality of the union, the following requirements should be
shown before a strike may be validly declared and staged:

1. The union should be legitimate. A strike conducted by a union which has

not been shown to be a legitimate labor organization is illegal.

2. In organized establishment where there is a certified bargaining agent,

only the recognized or certified collective bargaining union can validly stage
a strike.
A minority union cannot stage a strike. A strike conducted by a minority
union is patently illegal because no labor dispute which will justify the
conduct of a strike may exist between the employer and a minority union.
To permit the union’s picketing activities would be to flaunt at the will of
the majority.

CCV Notes on Labor Relations | 84

3. In unorganized establishment where there is no certified bargaining
agent, any legitimate labor organization in the establishment may declare a
strike but only on the ground of unfair labor practice. The only other
ground of bargaining deadlock cannot be invoked in support of a strike in
an unorganized establishment for the simple reason that no CBA can be
negotiated and concluded absent such recognized or certified collective
bargaining agent. In this situation, the existence of a bargaining deadlock is
an impossibility.

2. WHO MAY DECLARE A LOCKOUT?

a. Proper party.
Only the employer can declare and stage a lockout. For obvious reason, no
union can.

b. Grounds.
The employer may declare a lockout based on any of the two (2) grounds
that may similarly be invoked by the union in staging a strike, i.e., (1)
bargaining deadlock; and/or (2) unfair labor practice.

3. WHO MAY STAGE A PICKET?

Although not mentioned in the syllabus, it is important to discuss this

point. Distinctively, in case of picketing, the absence of employment
relationship between the employer and the picketers or some of them does
not affect its validity. Picketing, if peacefully carried out, cannot be
prohibited even in the absence of employer-employee relationship.
Example: A picket conducted by the employees with the participation of
militant groups like Bayan, Gabriela, etc. will not make the picket illegal.

REQUISITES FOR A VALID STRIKE

1. REQUISITES FOR A VALID STRIKE.

a. Procedural but mandatory requisites.

In accordance with Article 263 and pertinent prevailing jurisprudence, a
strike, in order to be valid and legal, must conform to the following
procedural requisites:
1st requisite - It must be based on a valid and factual ground;
2nd requisite - A notice of strike must be filed with the NCMB-DOLE;
3rd requisite - A notice must be served to the NCMB-DOLE at least twenty-
four (24) hours prior to the taking of the strike vote by secret balloting,
informing said office of the decision to conduct a strike vote, and the date,
place, and time thereof;
4th requisite - A strike vote must be taken where a majority of the members

CCV Notes on Labor Relations | 85

of the union obtained by secret ballot in a meeting called for the purpose,
must approve it;
5th requisite - A strike vote report should be submitted to the NCMB-DOLE
at least seven (7) days before the intended date of the strike;
6th requisite - Except in cases of union-busting, the cooling-off period of 15
days, in case of unfair labor practices of the employer, or 30 days, in case of
collective bargaining deadlock, should be fully observed; and
7th requisite - The 7-day waiting period/strike ban reckoned after the
submission of the strike vote report to the NCMB-DOLE should also be
fully observed in all cases.
All the foregoing requisites, although procedural in nature, are mandatory
and failure of the union to comply with any of them would render the strike
illegal.

I. FIRST REQUISITE: EXISTENCE OF VALID AND FACTUAL

GROUND/S

1. VALID GROUNDS.
The law recognizes only 2 grounds in support of a valid strike, viz.:
a. Collective bargaining deadlock (Economic Strike); and/or
b. Unfair labor practice (Political Strike).
A strike not based on any of these two grounds is illegal.

2. SOME PRINCIPLES ON THE FIRST REQUISITE.

Violation of CBA, except when gross, is not an unfair labor practice, hence,
may not be cited as ground for a valid strike. Ordinary violation of a CBA is
no longer treated as an unfair labor practice but as a mere grievance which
should be processed through the grievance machinery and voluntary
arbitration.
Inter-union or intra-union dispute is not a valid ground.
Violation of labor standards is not a valid ground.
Wage distortion is not a valid ground.

II. SECOND REQUISITE: FILING OF A NOTICE OF STRIKE

No labor organization shall declare a strike without first having filed a
notice of strike.

III. THIRD REQUISITE: SERVICE OF A 24-HOUR PRIOR NOTICE

In the 2005 case of Capitol Medical Center, Inc. v. NLRC, it was imposed as
additional requisite that a 24-hour notice must be served to the NCMB-
DOLE prior to the taking of the strike vote by secret balloting, informing it
of the union’s decision to conduct a strike vote as well as the date, place,
and time thereof.

CCV Notes on Labor Relations | 86

IV. FOURTH REQUISITE: CONDUCT OF A STRIKE VOTE

1. MAJORITY APPROVAL OF THE STRIKE.

No labor organization shall declare a strike without the necessary strike
vote first having been obtained and reported to the NCMB-DOLE.
A decision to declare a strike must be approved by a majority of the total
union membership in the bargaining unit concerned, obtained by secret
ballot in meetings or referenda called for that purpose. This process is
called “strike vote balloting.”

2. PURPOSE.
The purpose of a strike vote is to ensure that the decision to strike broadly
rests with the majority of the union members in general and not with a
mere minority.

3. DURATION OF THE VALIDITY OF THE MAJORITY APPROVAL OF A

STRIKE.
The majority decision to stage a strike is valid for the duration of the
dispute based on substantially the same grounds considered when the
strike vote was taken.

V. FIFTH REQUISITE: SUBMISSION OF THE STRIKE VOTE TO NCMB-

DOLE

1. PURPOSE FOR REQUIRING A STRIKE VOTE REPORT.

The evident intention of the law in mandatorily requiring the submission of
the strike vote report is to afford the NCMB of opportunity to verify the
truth and veracity of the majority vote by the union members in support of
the intended strike.
2. WHEN TO SUBMIT THE STRIKE VOTE REPORT.
The strike vote report should be submitted to the NCMB-DOLE at least
seven (7) days before the actual staging of the intended strike, subject to the
observance of the cooling-off periods provided under the law.

VI. SIXTH REQUISITE: OBSERVANCE OF THE COOLING-OFF PERIOD

1. GENERAL RULE.
The cooling-off periods provided under the law before the intended date of
the actual mounting of the strike are as follows:
a. In case of bargaining deadlock, the cooling-off period is thirty (30) days
from the filing of the notice of strike; or
b. In case of unfair labor practice, the cooling-off period is fifteen (15) days
from the filing of the notice of strike.

2. EXCEPTION: IN CASE OF UNION-BUSTING.

CCV Notes on Labor Relations | 87

In case of dismissal from employment of union officers (not ordinary
members) duly elected in accordance with the union constitution and by-
laws which may constitute union-busting because the existence of the union
is threatened by reason of such dismissal, the 15-day cooling-off period
does not apply and the union may take action immediately after the strike
vote is conducted and the results thereof duly submitted to the regional
branch of the NCMB.

In cases of union-busting, only the 15-day cooling-off period need not be

observed; all the other requisites must be fully complied with.

3. RECKONING OF THE COOLING-OFF PERIODS.

The start of the cooling-off periods should be reckoned from the time the
notice of strike is filed with the NCMB-DOLE, a copy thereof having been
served on the other party concerned.

4. PURPOSE OF THE COOLING-OFF PERIODS.

The purpose of the cooling-off periods is to provide an opportunity for
mediation and conciliation of the dispute by the NCMB-DOLE with the end
in view of amicably settling it.

VII. SEVENTH REQUISITE: 7-DAY WAITING PERIOD OR STRIKE BAN

1. PURPOSE OF THE 7-DAY WAITING PERIOD OR STRIKE BAN.

The seven (7) day waiting period is intended to give the NCMB-DOLE an
opportunity to verify whether the projected strike really carries the
approval of the majority of the union members.

2. WAITING PERIOD/STRIKE BAN VS. COOLING-OFF PERIOD.

The 7-day waiting period or strike ban is a distinct and separate
requirement from the cooling-off period prescribed by law. The latter
cannot be substituted for the former and vice-versa.
The cooling-off period is counted from the time of the filing of the notice of
strike. The 7-day waiting period/strike ban, on the other hand, is reckoned
from the time the strike vote report is submitted to the NCMB-DOLE.
Consequently, a strike is illegal for failure to comply with the prescribed
mandatory cooling-off period and the 7-day waiting period/strike ban after
the submission of the report on the strike vote.

3. BOTH MUST BE COMPLIED WITH SEPARATELY AND DISTINCTLY

FROM EACH OTHER.

The requirements of cooling-off period and 7-day waiting period/strike ban

must both be complied with. The labor union may take the strike vote and
report the same to the NCMB-DOLE within the statutory cooling-off

CCV Notes on Labor Relations | 88

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.
The NCMB Primer on Strike, Picketing and Lockout,1 issued by the NCMB,
the agency of government directly tasked with the implementation and
enforcement of this particular legal provision and requirement, is very clear
on this point, thus:
“In the event the result of the strike/lockout vote ballot is filed within the
cooling-off period, the 7-day requirement shall be counted from the day
following the expiration of the cooling-off period.”2
In other words, the seven (7) days should be added to the cooling-off period
of fifteen (15) days, in case of unfair labor practice, or thirty (30) days, in
case of collective bargaining deadlock and it is only after the lapse of the
total number of days after adding the two (2) periods that the
strike/lockout may be lawfully and validly staged.
While there was no categorical declaration on this point, the Supreme
Court, in holding in the 2010 case of Phimco Industries, Inc. v. Phimco
Industries Labor Association (PILA),3 that respondents fully satisfied the
legal procedural requirements, noted that the strike notice grounded on
collective bargaining deadlock was filed on March 9, 1995. Consequently,
the 30-day cooling-off period would have lapsed on April 9, 1995. The strike
vote was reached on March 16, 1995 and the
notification thereof was filed with the DOLE on March 17, 1995 or well
within the cooling-off period. Based on the said rule in the NCMB Primer,
the strike could only be validly staged starting from April 17, 1995 and
onwards, i.e., after the lapse of 7 days from April 9, 1995. Hence, since the
actual strike was launched only on April 25, 1995, there was clearly full
compliance with the requisites.
Example: In a case where the notice of strike grounded on ULP is filed on
October 1, 2015, and the strike vote is taken within the cooling-off period,
say, on October 5, 2015 and the strike vote report showing majority support
for the intended strike is submitted to the NCMB-DOLE the following day,
October 6, 2015, the question is when can the union legally stage the strike?
Following the above principle, the answer obviously is on October 24, 2015
or any day thereafter. This is so because the 15-day cooling-off period for
ULP expires on October 16 and adding the 7-day strike ban which “should
be counted from the day following the expiration of the cooling-off period,”
the 7th day would be on October 23, 2015. Obviously, the strike cannot be
conducted on the 7th day but rather after the lapse thereof; hence, it is only
on October 24, 2015 and onwards that the union may lawfully conduct the
strike.

4. SOME PRINCIPLES ON COOLING-OFF PERIOD AND 7-DAY

WAITING PERIOD.
Deficiency of even one (1) day of the cooling-off period and 7-day strike
ban is fatal.
One-day strike without complying with the 7-day strike ban is illegal.

CCV Notes on Labor Relations | 89

Strike Procedure
Guidelines:

 3 Notices Required: 1) Notice of Strike (NCMB [DOLE] and

Employer); 2) Notice of Strike Vote (NCMB [DOLE]); 3) Notice of
Results of Strike Vote (NCMB [DOLE]).
 3 Important Periods: 1) Cooling-off Periods (except Union Busting);
2) 7-Day Strike Ban; 3) 24 hours
 During Cooling-off period, all efforts for conciliation and mediation
exerted for voluntary settlement.
 Notice of Results of Strike Vote will start 7-day strike ban.
 7- Day Strike Ban is NOT an addition to the cooling-off period. BUT,
even if you finish the 7-day Strike Ban, you MUST wait until the cooling-
off period lapses before staging a strike.

CCV Notes on Labor Relations | 90

4. REQUISITES FOR A VALID LOCKOUT

SUBSTANTIALLY SIMILAR REQUISITES AS IN STRIKE.

With a slight, insignificant variation, the procedural but mandatory

requisites for a valid strike discussed above are substantially similar to
those applicable for valid lockout. For purposes of ease and clarity, the
same are presented as follows:
1st requisite - It must be based on a valid and factual ground;
2nd requisite - A notice of lockout must be filed with the NCMB-DOLE;
3rd requisite - A notice must be served to the NCMB-DOLE at least
twenty-four (24) hours prior to the taking of the lockout vote by secret
balloting, informing said office of the decision to conduct a lockout vote,
and the date, place, and time thereof;
4th requisite - A lockout vote must be taken where a majority of the
members of the Board of Directors of the corporation or association or of
the partners in a partnership obtained by secret ballot in a meeting called
for the purpose, must approve it;
5th requisite - A lockout vote report should be submitted to the NCMB-
DOLE at least seven (7) days before the intended date of the lockout;
6th requisite - The cooling-off period of 15 days, in case of unfair labor
practices of the labor organization, or 30 days, in case of collective
bargaining deadlock, should be fully observed; and
7th requisite - The 7-day waiting period/lockout ban reckoned after the
submission of the lockout vote report to the NCMB-DOLE should also be
fully observed
1 2nd Edition, December 1995.
2 No. 6 thereof.
3 G.R. No. 170830, Aug. 11, 2010.in all cases.

5. REQUISITES FOR LAWFUL PICKETING

a. THE REQUISITES FOR A VALID STRIKE ARE NOT APPLICABLE TO

PICKETING.
The seven (7) requisites for a valid strike discussed above do not apply to
picketing.

b. REQUISITES FOR LAWFUL PICKETING.

The most singular requirement to make picketing valid and legal is that it
should be peacefully conducted.

Based on the foregoing provision, the requisites may be summed up as

follows:
1. The picket should be peacefully carried out;
2. There should be no act of violence, coercion or intimidation attendant

CCV Notes on Labor Relations | 91

thereto;
3. The ingress to (entrance) or egress from (exit) the company premises
should not be obstructed; and
4. Public thoroughfares should not be impeded.

c. RIGHT TO PICKET IS PROTECTED BY THE CONSTITUTION AND

THE LAW.
Unlike a strike which is guaranteed under the Constitutional provision on
the right of workers to conduct peaceful concerted activities under Section
3, Article XIII thereof, the right to picket is guaranteed under the freedom
of speech and of expression and to peaceably assemble to air grievances
under Section 4, Article III (Bill of Rights) thereof.

d. EFFECT OF THE USE OF FOUL LANGUAGE DURING THE CONDUCT

OF THE PICKET.
In the event the picketers employ discourteous and impolite language in
their picket, such may not result in, or give rise to, libel or action for
damages.

PICKETING VS. STRIKE.

(a) To strike is to withhold or to stop work by the concerted action of

employees as a result of an industrial or labor dispute. The work stoppage
may be accompanied by picketing by the striking employees outside of the
company compound.

(b) While a strike focuses on stoppage of work, picketing focuses on

publicizing the labor dispute and its incidents to inform the public of what
is happening in the company being picketed.

(c) A picket simply means to march to and fro in front of the employer’s
premises, usually accompanied by the display of placards and other signs
making known the facts involved in a labor dispute. It is but one strike
activity separate and different from the actual stoppage of work.
Phimco Industries, Inc. v. Phimco Industries Labor Association (PILA).1 -
While the right of employees to publicize their dispute falls within the
protection of freedom of expression and the right to peaceably assemble to
air grievances, these rights are by no means absolute. Protected picketing
does not extend to blocking ingress to and egress from the company
premises. That the picket was moving, was peaceful and was not attended
by actual violence may not free it from taints of illegality if the picket
effectively blocked entry to and exit from the company premises.

WHEN PICKET CONSIDERED A STRIKE.

In distinguishing between a picket and a strike, the totality of the
circumstances obtaining in a case should be taken into account.
Santa Rosa Coca-Cola Plant Employees Union v. Coca-Cola Bottlers Phils.,

CCV Notes on Labor Relations | 92

Inc.2 - Petitioners contend that what they conducted was a mere picketing
and not a strike. In disagreeing to this contention, the High Court
emphasized that it is not an issue in this case that there was a labor dispute
between the parties as petitioners had notified the respondent of their
intention to stage a strike, and not merely to picket. Petitioners’ insistence
to stage a strike is evident in the fact that an amended
notice of strike was filed even as respondent moved to dismiss the first
notice. The basic elements of a strike are present in this case: 106 members
of petitioner Union, whose respective applications for leave of absence on
September 21, 1999 were disapproved, opted not to report for work on said
date, and gathered in front of the company premises to hold a mass protest
action. Petitioners deliberately absented themselves and instead wore red
ribbons and carried placards with slogans such as:
“YES KAMI SA STRIKE,” “PROTESTA KAMI,” “SAHOD, KARAPATAN NG
MANGGAGAWA IPAGLABAN,” “CBA-’WAG BABOYIN,” “STOP UNION
BUSTING.” They marched to and fro in front of the company’s premises
during working hours. Thus, petitioners engaged in a concerted activity
which already affected the company’s operations. The mass concerted
activity obviously constitutes a strike. Moreover, the bare fact that
petitioners were given a Mayor’s permit is not conclusive evidence that
their action/activity did not amount to a strike. The Mayor’s description of
what activities petitioners were allowed to conduct is inconsequential. To
repeat, what is definitive of whether the action staged by petitioners is a
strike and not merely a picket is the totality of the circumstances
surrounding the situation.
1 G.R. No. 170830, Aug. 11, 2010.
2 G.R. Nos. 164302-03, Jan. 24, 2007.

Petitioner union in the 2011 case of Leyte Geothermal Power Progressive

Employees Union-ALU-TUCP v. Philippine National Oil Company – Energy
Development Corporation,1 contends that there was no stoppage of work;
hence, they did not strike. Euphemistically, petitioner union avers that it
“only engaged in picketing,” and maintains that “without any work
stoppage, [its officers and members] only engaged in xxx protest activity.”
The Supreme Court, however, ruled that it was a
strike and not picketing or protest activity that petitioner union staged. It
found the following circumstances in support of such finding:
(1) Petitioner union filed a Notice of Strike on December 28, 1998 with the
DOLE grounded on respondent’s purported unfair labor practices, i.e.,
“refusal to bargain collectively, union busting and mass termination.” On
even date, petitioner Union declared and staged a strike.
(2) The DOLE Secretary intervened and issued a Return-to-Work Order
dated January 4, 1999, certifying the labor dispute to the NLRC for
compulsory arbitration. The Order indicated the following facts: (a) filing of
the notice of strike; (b) staging of the strike and taking control over
respondent’s facilities of its Leyte Geothermal Project on the same day
petitioner union filed the notice of strike; (c) attempts by the NCMB to
forge a mutually acceptable solution proved futile; (d) in the meantime, the
strike continued with no settlement in sight placing in jeopardy the supply

CCV Notes on Labor Relations | 93

of much needed power supply in the Luzon and Visayas grids.
(3) Petitioner union itself, in its pleadings, used the word “strike.”
(4) Petitioner union’s asseverations are belied by the factual findings of the
NLRC, as affirmed by the CA thus: “The failure to comply with the
mandatory requisites for the conduct of strike is both admitted and clearly
shown on record. Hence, it is undisputed that no strike vote was conducted;
likewise, the cooling-off period was not observed and that the 7-day strike
ban after the submission of the strike vote was not complied with since
there was no strike vote taken.”
In fine, petitioner union’s bare contention that it did not hold a strike
cannot trump the factual findings of the NLRC that petitioner union indeed
struck against respondent. In fact, and more importantly, petitioner union
failed to comply with the requirements set by law prior to holding a strike.

6. ASSUMPTION OF JURISDICTION BY THE DOLE SECRETARY OR

CERTIFICATION OF THE LABOR DISPUTE TO THE NLRC FOR
COMPULSORY ARBITRATION

WHEN DOLE SECRETARY MAY ASSUME OR CERTIFY A LABOR

DISPUTE?

Article 263(g) of the Labor Code provides that when in the opinion of the
DOLE Secretary, the labor dispute causes or will likely to cause a strike or
lockout in an industry indispensable to the national interest, he is
empowered to do either of 2 things:
1. He may assume jurisdiction over the labor dispute and decide it himself;
or
2. He may certify it to the NLRC for compulsory arbitration, in which case,
it will be the NLRC which shall hear and decide it.

This power may be exercised by the DOLE Secretary even before the actual
staging of a strike or lockout since Article 263(g) does not require the
existence of a strike or lockout but only of a labor dispute involving national
interest.

WHAT CONSTITUTES A NATIONAL INTEREST CASE?

The Labor Code vests in the DOLE Secretary the discretion to determine
what industries are indispensable to the national interest. Accordingly,
upon the determination by the DOLE Secretary that such industry is
indispensable to the national interest, he has authority to assume
jurisdiction over the labor dispute in the said industry or certify it to the
NLRC for compulsory arbitration.
Past issuances of the DOLE Secretary have not made nor attempted to
mention specifically what the industries indispensable to the national
interest are. It was only in Department Order No. 40-H-13, Series of 2013,
that certain industries were specifically named, thus:

CCV Notes on Labor Relations | 94

“Section 16. Industries Indispensable to the National Interest. – For the
guidance of the workers and employers in the filing of petition for
assumption of jurisdiction, the following industries/services are hereby
recognized as deemed indispensable to the national interest:
a. Hospital sector;
b. Electric power industry;
c. Water supply services, to exclude small water supply services such as
bottling and refilling stations;
d. Air traffic control; and
e. Such other industries as may be recommended by the National Tripartite
Industrial Peace Council (TIPC).”
Obviously, the above enumerated industries are not exclusive as other
industries may be considered indispensable to the national interest based
on the appreciation and discretion of the DOLE Secretary or as may be
recommended by TIPC.

DIFFERENT RULE ON STRIKES AND LOCKOUTS IN HOSPITALS,

CLINICS AND MEDICAL INSTITUTIONS

As a general rule, strikes and lockouts in hospitals, clinics and similar

medical institutions should be avoided.
In case a strike or lockout is staged, it shall be the duty of the striking union
or locking-out employer to provide and maintain an effective skeletal
workforce of medical and other health personnel whose movement and
services shall be unhampered and unrestricted as are necessary to insure
the proper and adequate protection of the life and health of its patients,
most especially emergency cases, for the duration of the strike or lockout.
The DOLE Secretary may immediately assume, within twenty four (24)
hours from knowledge of the occurrence of such a strike or lockout,
jurisdiction over the same or certify it to the NLRC for compulsory
arbitration.
1 G.R. No. 170351, March 30, 2011.

SOME PRINCIPLES ON ASSUMPTION/CERTIFICATION POWER OF

THE DOLE SECRETARY.

Prior notice and hearing are not required in the issuance of the
assumption or certification order.
The DOLE Secretary may seek the assistance of law enforcement agencies
like the Philippine National Police to ensure compliance with the provision
thereof as well as with such orders as he may issue to enforce the same.

RETURN-TO-WORK ORDER.

a. It is always part of assumption/certification order even if not expressly

stated therein.

CCV Notes on Labor Relations | 95

The moment the DOLE Secretary assumes jurisdiction over a labor dispute
involving national interest or certifies it to the NLRC for compulsory
arbitration, such assumption or certification has the effect of automatically
enjoining the intended or impending strike or, if one has already been
commenced, of automatically prohibiting its continuation. The mere
issuance of an assumption or certification order automatically carries with
it a return-to-work order, even if the directive to return to work is not
expressly stated therein. It is thus not necessary for the DOLE Secretary to
issue another order directing the strikers to return to work.
It is error therefore for striking workers to continue with their strike
alleging absence of a return-to-work order since Article 263(g) is clear that
once an assumption/certification order is issued, strikes are enjoined or, if
one has already taken place, all strikers should immediately return to work.

b. Nature of return-to-work order.

Return-to-work order is compulsory and immediately executory in
character. It should be strictly complied with by the parties even during the
pendency of any petition questioning its validity in order to maintain the
status quo while the determination is being made. Filing of a motion for
reconsideration does not affect the enforcement of a return-to-work order
which is immediately executory.

c. Some principles on return-to-work order.

The issue of legality of strike is immaterial in enforcing the return-to-work
order.
Upon assumption or certification, the parties should revert to the status
quo ante litem which refers to the state of things as it was before the labor
dispute or the state of affairs existing at the time of the filing of the case. It
is the last actual, peaceful and uncontested status that preceded the actual
controversy.
To implement the return-to-work order, the norm is actual reinstatement.
However, payroll reinstatement in lieu of actual reinstatement may
properly be resorted to when special circumstances exist that render actual
reinstatement impracticable or otherwise not conducive to attaining the
purposes of the law.

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

NATURE OF ASSUMPTION ORDER OR CERTIFICATION ORDER

CCV Notes on Labor Relations | 96

A POLICE POWER MEASURE.
The power to issue assumption or certification orders is an extraordinary
authority granted to the President and to his alter ego, the DOLE Secretary,
the exercise of which should be strictly limited to national interest cases. It
is in the nature of a police power measure. This is done for the promotion of
the common good considering that a prolonged strike or lockout can be
inimical to the national economy.

EFFECT OF DEFIANCE OF ASSUMPTION OR CERTIFICATION ORDERS

1. DEFIANCE OF THE ORDER, A VALID GROUND TO DISMISS.

The defiance by the union, its officers and members of the Labor Secretary's
assumption of jurisdiction or certification order constitutes a valid ground
for dismissal.

The following are the justifications:

a. A strike that is undertaken after the issuance by the DOLE Secretary of
an assumption or certification order becomes a prohibited activity and thus
illegal. The defiant striking union officers and members, as a result, are
deemed to have lost their employment status for having knowingly
participated in an illegal strike.
b. From the moment a worker defies a return-to-work order, he is deemed
to have abandoned his job.
c. By so defying, the workers have forfeited their right to be readmitted to
work.

2. ALL DEFIANT STRIKERS, REGARDLESS OF WHETHER THEY ARE

OFFICERS OR ORDINARY MEMBERS, ARE DEEMED DISMISSED.
Once the DOLE Secretary assumes jurisdiction over a labor dispute or
certifies it to the NLRC for compulsory arbitration, such jurisdiction should
not be interfered with by the application of the coercive processes of a strike
or lockout. Any defiance thereof is a valid ground for the loss of
employment status.

3. PERIOD OF DEFIANCE OF THE RETURN-TO-WORK ORDER, NOT

MATERIAL.
The length of time within which the return-to-work order was defied by the
strikers is not significant in determining their liability for the legal
consequences thereof.
The following cases are illustrative of this rule:
a. University of San Agustin Employees’ Union-FFW v. The CA.1 - The
period of defiance was less than nine (9) hours from 8:45 a.m. to 5:25 p.m.
on September 19, 2003.
b. Federation of Free Workers v. Inciong. 2 - The period of defiance was
only nine (9) days.

CCV Notes on Labor Relations | 97

4. SOME PRINCIPLES ON DEFIANCE OF THE ASSUMPTION /
CERTIFICATION ORDER.
The assumption/certification order may be served at any time of the day
or night.
No practice of giving 24 hours to strikers within which to return to work.
There is no law or jurisprudence recognizing this practice.
The defiant strikers could be validly replaced.
The refusal to acknowledge receipt of the assumption /certification orders
and other processes is an apparent attempt to frustrate the ends of justice,
hence, invalid. The union cannot be allowed to thwart the efficacy of the
said orders issued in the national interest through the simple expediency of
refusing to acknowledge receipt thereof.

ILLEGAL STRIKE

1. WHEN IS A STRIKE CONSIDERED ILLEGAL?

A strike is illegal if it is declared and staged:

1) Without complying with the procedural but mandatory requisites (See 7
requisites above).
2) For unlawful purpose such as to compel the dismissal of an employee or
to force recognition of the union or for trivial and puerile purpose or to
circumvent contracts and judicial orders.
3) Based on non-strikeable or invalid grounds such as:
a) Inter-union or intra-union disputes.
b) Simple violation of CBA in contrast to gross violation thereof which is
deemed ULP.
c) Violation of labor standards.
d) Legislated wage orders (wage distortion).

4) Without first having bargained collectively.

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

6) Without submitting the issues to the grievance machinery or voluntary

arbitration or failing to exhaust the steps provided therein.
7) While conciliation and mediation proceeding is on-going at the NCMB.
8) Based on issues already brought to voluntary or compulsory arbitration.
9) During the pendency of a case involving the same ground/s cited in the
notice of strike.
10) In defiance of an assumption or certification or return-to-work order.
11) In violation of a temporary restraining order or an injunction order.
12) After the conversion of the notice of strike into a preventive mediation
case.
13) Against the prohibition by law.

CCV Notes on Labor Relations | 98

14) By a minority union.
15) By an illegitimate union.
16) By dismissed employees.
17) In violation of the company code of conduct which prohibits “inciting or
participating in riots, disorders, alleged strikes or concerted actions
detrimental to [Toyota’s] interest,” The penalty for which is dismissal.
18) As protest rallies in front of government offices such as in the following
cases:
Toyota Motor Phils. Corp. Workers Association [TMPCWA] v. NLRC,3
where the Supreme Court ruled that the protest rallies staged by the
employees from February 21 to 23, 2001 in front of the offices of the Bureau
of Labor Relations (BLR) and the DOLE Secretary constitute illegal strike
and not legitimate exercise of their right to peaceably assemble and petition
the government for redress of grievances. It was illegal for having been
undertaken without satisfying the mandatory pre-requisites for a valid
strike under Article 263 of the Labor Code.

The ruling in Toyota was cited in Solidbank Corporation v. Gamier, 4 as

basis in declaring the protest action of the employees of petitioner
Solidbank which was staged in front of the Office of the DOLE Secretary in
Intramuros, Manila, as constitutive of illegal strike since it paralyzed the
operations of the bank. The protest action in this case was conducted
because of the CBA deadlock.
19) As welga ng bayan which is in the nature of a general strike as well as
an extended sympathy strike.
1 G.R. No. 169632, March 28, 2006.
2 G.R. No. L-49983, April 20, 1992.
3 G.R. Nos. 158786 &158789, Oct. 19, 2007.
4 G.R. No. 159460, Nov. 15, 2010.

(a) LIABILITY OF UNION OFFICERS

(b) LIABILITY OF ORDINARY WORKERS

These two topics will be discussed jointly because of their close

interrelation.

1. PARTICIPATION IN LAWFUL STRIKE.

An employee who participates in a lawful strike is not deemed to have
abandoned his employment. Such participation should not constitute
sufficient ground for the termination of his employment even if a
replacement has already been hired by the employer during such lawful
strike.

2. PARTICIPATION IN ILLEGAL STRIKE.

a. Distinction in the liability between union officers and ordinary union
members.
1. Union officers.
The mere finding or declaration of illegality of the strike will result in the

CCV Notes on Labor Relations | 99

termination of all union officers who knowingly participated in the illegal
strike.
Unlike ordinary members, it is not required, for purposes of termination,
that the officers should commit an illegal act during the strike.
However, absent any showing that the employees are union officers, they
cannot be dismissed based solely on the illegality of the strike.
To illustrate how the “knowing participation” of union officers may be
ascertained and established, the following factors were taken into account
in another 2011 case, Abaria v. NLRC,1 which led to the declaration that
they knowingly participated in the illegal strike:
(1) Their persistence in holding picketing activities despite the declaration
by the NCMB that their union was not duly registered as a legitimate labor
organization and notwithstanding the letter from the federation’s legal
counsel informing them that their acts constituted disloyalty to the national
federation; and
(2) Their filing of the notice of strike and conducting a strike vote despite
the fact that their union has no legal personality to negotiate with their
employer for collective bargaining purposes.

2. Ordinary union members.

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

b. Reason for the distinction.

The reason for this distinction is that the union officers have the duty to
guide their members to respect the law. If instead of doing so, the officers
urged the members to violate the law and defy the duly constituted
authorities, their dismissal from the service is a just penalty or sanction for
their unlawful act. Their responsibility as main players in an illegal strike is
greater than that of the ordinary union members and, therefore, limiting
the penalty of dismissal only to the former for their participation in an
illegal strike is in order.

c. Some principles on illegality of a strike.

The fact that the employees are signatories to the CBA does not in itself
sufficiently establish their status as union officers during the illegal strike.
Neither were their active roles during the bargaining negotiations be
considered as evidence of their being union officers.
Only the union officers during the period of illegal strike are liable. If the
employees acted as union officers after the strike, they may not be held
liable and, therefore, could not be terminated in their capacity as such.
Shop stewards are union officers. Hence, they should be terminated upon
the declaration of the illegality of the strike.
Union officers may be dismissed despite the fact that the illegal strike was
staged only for 1 day or even for less than 10 hours. This holds true in cases

CCV Notes on Labor Relations | 100

of defiance of the assumption/ certification order issued in national interest
cases.
If the dispositive portion of the decision failed to mention the names of
union officers, resort should be made to the text of the decision.
No wholesale dismissal of strikers allowed. The employer cannot just
unceremoniously dismiss a hundred of its employees in the absence of clear
and convincing proof that these people were indeed guilty of the acts
charged and then, afterwards, go to court to seek validation of the dismissal
it whimsically executed. That certainly cannot be allowed.

3. PARTICIPATION IN THE COMMISSION OF ILLEGAL ACTS DURING

A STRIKE.

a. Legality or illegality of strike, immaterial.

As far as liability for commission of illegal acts during the strike is
concerned, the issue of legality or illegality of the strike is irrelevant. As
long as the union officer or member commits an illegal act in the course of
the strike, be it legal or illegal, his employment can be validly terminated.

b. Meaning of “illegal acts.”

The term “illegal acts” under Article 264(a) may encompass a number of
acts that violate existing labor or criminal laws, such as the following:

(1) Violation of Article 264(e) of the Labor Code which provides that “[n]o
person engaged in picketing shall commit any act of violence, coercion or
intimidation or obstruct the free ingress to or egress from the employer’s
premises for lawful purposes, or obstruct public thoroughfares.”
(2) Commission of crimes and other unlawful acts in carrying out the strike.
(3) Violation of any order, prohibition, or injunction issued by the DOLE
Secretary or NLRC in connection with the assumption of jurisdiction or
certification order under Article 263(g) of the Labor Code.

This enumeration is not exclusive as jurisprudence abounds where the term

“illegal acts” has been interpreted and construed to cover other breaches of
existing laws.
Liability for illegal acts should be determined on an individual basis. For
this purpose, the individual identity of the union members who participated
in the commission of illegal acts may be proved thru affidavits and
photographs. Simply referring to them as “strikers,” or “complainants in
this case” is not enough to justify their dismissal.
1 G.R. Nos. 154113, 187778, 187861 & 196156, Dec. 7, 2011, 661 SCRA 686.

d. Some principles on commission of illegal acts in the course of the strike.

 Only members who are identified as having participated in the
commission of illegal acts are liable. Those who did not participate should
not be blamed therefor.
 To effectively hold ordinary union members liable, those who

CCV Notes on Labor Relations | 101

participated in the commission of illegal acts must not only be identified
but the specific illegal acts they each committed should be described with
particularity.
 If violence was committed by both employer and employees, the same
cannot be cited as a ground to declare the strike illegal.

(c) LIABILITY OF EMPLOYER

I. LIABILITY OF EMPLOYER IN CASE OF STRIKE

1. LIABILITY FOR REINSTATEMENT OF STRIKERS.
a. Reinstatement, when proper.
Reinstatement (without backwages) of ordinary rank-and-file union
members who did not participate in the commission of illegal acts during
the conduct of the illegal strike may be ordered.
b. No reinstatement for strikers who committed illegal acts.
The strikers who committed illegal acts during and in the course of a strike
may be terminated. They are not entitled to be reinstated. Additionally,
they may be held criminally liable therefor.
c. Strikers who failed to return to work forfeit reinstatement.
Strikers who failed to report for work without proper justification and
despite the order reinstating them to their job are deemed to have forfeited
their right to reinstatement.
d. Employer who fails to reinstate strikers who were ordered reinstated by
the Labor Arbiter is liable to pay them backwages reckoned from Labor
Arbiter’s issuance of the reinstatement order up to its reversal by the NLRC.

2. SEPARATION PAY IN LIEU OF REINSTATEMENT IN STRIKE CASES.

a. Separation pay in lieu of reinstatement, when proper.
In strike cases, the award of separation pay in lieu of reinstatement is
proper only when the strikers did not participate in the commission of
illegal acts in the course thereof.

3. BACKWAGES IN STRIKE CASES.

a. If the strike is illegal, no backwages should be paid.
Thus, in the case of Arellano University Employees and Workers Union v.
CA,1 where the strike was declared illegal, petitioner-union members who
were found not to have participated in the commission of illegal acts during
the strike were ordered reinstated to their former positions but without
backwages. If reinstatement is no longer possible, they should receive
separation pay of one (1) month for every year of service in accordance with
existing jurisprudence. With respect to the union officers, their mere
participation in the illegal strike warrants their dismissal.

(d) WAIVER OF ILLEGALITY OF STRIKE

1. VOLUNTARY REINSTATEMENT CONSTITUTES A WAIVER OF THE
ILLEGALITY OF THE STRIKE.
In Citizens Labor Union v. Standard Vacuum Oil Co.,2 the act of the
employer in inviting the workers to return to their posts without making

CCV Notes on Labor Relations | 102

any reference to the pending case involving the issue of the illegality of the
strike or imposing any condition or alteration of the terms of their
employment was deemed a waiver of its right to consider the strikers as
wrongdoers.
More so in this case when such invitation was accepted by the strikers. By
said act, the parties may be said to have both abandoned their original
positions and come to a virtual compromise to resume unconditionally
their former relations.
1 G.R. No. 139940, Sept. 19, 2006.
2 G.R. No. L-7478, May 6, 1955.

10. INJUNCTIONS

I. INJUNCTION IN PICKETING, STRIKE OR LOCKOUT CASES

1. PROHIBITION ON INJUNCTION AGAINST THE CONDUCT OF
STRIKES AND LOCKOUTS.
As a general rule, strikes and lockouts that are validly declared enjoy the
protection of the law and cannot be enjoined unless illegal acts are
committed or threatened to be committed in the course thereof.
In the case of strikes, this policy applies even if the strike appears to be
illegal in nature. The rationale for this policy is the protection extended to
the right to strike under the Constitution and the law. It is basically treated
as a weapon that the law guarantees to employees for the advancement of
their interest and for their protection.

2. EXCEPTIONS WHEN THE STRIKE ITSELF MAY BE ENJOINED.

However, in some cases, injunctions issued to enjoin the conduct of the
strike itself and not only the commission of illegal or prohibited acts in the
course thereof, were held to be valid.
For instance, in San Miguel Corporation v. NLRC,1 the Supreme Court ruled
that injunction may be issued not only against the commission of illegal
acts in the course of the strike but against the strike itself because the notice
of strike filed by the union has been converted into a preventive mediation
case. Having been so converted, a strike can no longer be staged based on
said notice. Upon such conversion, the legal effect is that there is no more
notice of strike to speak of.

In the earlier case of San Miguel Corporation v. NLRC,2 the Supreme Court
ruled that the NLRC committed grave abuse of discretion when it denied
the petition for injunction to restrain the union from declaring a strike
based on non-strikeable grounds.

3. REGULAR COURTS ARE PROHIBITED FROM ISSUING INJUNCTION

AGAINST STRIKES OR LOCKOUT.
The cases cited above involve the issuance of restraining order or injunction
by the NLRC pursuant to the exercise of its injunctive power. In contrast,

CCV Notes on Labor Relations | 103

regular courts are absolutely prohibited to grant any injunctive relief in
cases of strikes or lockouts.

II. INJUNCTION IN PICKETING CASES

1. PROHIBITION ON INJUNCTION AGAINST PEACEFUL PICKETING.
As a general rule, injunction cannot be issued against the conduct of
picketing by the workers. Under our constitutional set up, picketing is
considered part of the freedom of speech duly guaranteed by the
Constitution. However, excepted from this legal proscription are the
situations mentioned below.
2. EXCEPTIONS.
Under the following circumstances, picketing may be enjoined by the
NLRC:
(1) Where picketing is carried out through the use of illegal means;
(2) Where picketing involves the use of violence and other illegal acts;
(3) Where picketing affects the rights of third parties and injunction
becomes necessary to protect such rights.

(b) “INNOCENT BYSTANDER RULE”

1. WHEN INJUNCTION ON PICKETING IS ALLOWED THROUGH THE
REGULAR COURTS AND NOT THROUGH THE
NLRC.
In situations where the picket affects not only the employer but also the
business operations of other establishments owned by third parties, an
injunction may be secured by the latter from the regular courts to enjoin
the picket under the
“Innocent Bystander Rule.” Under this rule, the third-party employers or
“innocent bystanders” who have no employer-employee relationship with
the picketing strikers, may apply for injunction with the regular courts (not
with the NLRC) to enjoin the conduct of the picket.
Because of the absence of such employer-employee relationship, the NLRC
cannot entertain such application for injunction from “innocent
bystanders.” Only the employer of the picketers can apply for injunctive
relief from the NLRC.

1 G.R. No. 119293, June 10, 2003.

2 G.R. No. 99266, March 2, 1999, 304 SCRA 1.

--------------- 000000 ----------------

III. DISMISSAL FROM EMPLOYMENT

What is meant by two-fold due process requirement?

Dismissal of employees requires the observance of the two-fold due process
requisites, namely:
1. Substantive aspect which means that the dismissal must be for any of the
(1) just causes provided under Article 282 of the Labor Code or the

CCV Notes on Labor Relations | 104

company rules and regulations promulgated by the employer; or (2)
authorized causes under Articles 283 and 284 thereof; and

2. Procedural aspect which means that the employee must be accorded due
process, the elements of which are notice and the opportunity to be heard
and to defend himself.

What is the distinction between JUST CAUSES and AUTHORIZED

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

IIIA. JUST CAUSES

What are the just causes under the Labor Code?

The just causes in the Labor Code are found in the following provisions
thereof:

(1) Article 282 - (Termination by the Employer) which provides for the
following grounds:
(a) Serious misconduct or willful disobedience by the employee of the
lawful orders of his employer or representative in connection with his work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by
his employer or duly authorized representative;
(d) Commission of a crime or offense by the employee against the person of
his employer or any immediate member of his family or his duly authorized
representatives; and
(e) Other causes analogous to the foregoing.

(2) Article 264(a) - (Prohibited Activities) which provides for the

termination of the following: (a) Union officers who knowingly participate
in an illegal strike and therefore deemed to have lost their employment
status.
(b) Any employee, union officer or ordinary member who knowingly
participates in the commission of illegal acts during a strike (irrespective of
whether the strike is legal or illegal), is also deemed to have lost his
employment status.

(3) Article 263(g) - (National Interest Cases) where strikers who violate
orders, prohibitions and/or injunctions as are issued by the DOLE

CCV Notes on Labor Relations | 105

Secretary or the NLRC, may be imposed immediate disciplinary action,
including dismissal or loss of employment status.

(4) Article 248(e) - (Union Security Clause) where violation of the union
security agreement in the CBA may result in termination of employment.
Under this clause, the bargaining union can demand from the employer the
dismissal of an employee who commits a breach of union security
arrangement, such as failure to join the union or to maintain his
membership in good standing therein. The same union can also demand
the dismissal of a member who commits an act of disloyalty against it, such
as when the member organizes a rival union.

What are just causes under jurisprudence?

In addition to the just causes mentioned in the Labor Code, just causes are
also found in prevailing jurisprudence. The following may be cited as just
causes in accordance with prevailing jurisprudence:
1. Violation of Company Rules and Regulations or Company Code of
Discipline.
2. Theft of property owned by a co-employee as distinguished from
company-owned property which is considered serious misconduct.
3. Incompetence, inefficiency or ineptitude.
4. Failure to attain work quota.
5. Failure to comply with weight standards of employer.
6. Attitude problem.

Is dismissal based on Company Code of Discipline or Company Rules and

Regulations illegal?
No.
In the 2013 case of Sampaguita Auto Transport Corporation v. NLRC, the
Supreme Court pronounced that the Court of Appeals erred in ruling that
the dismissal of private respondent, a bus driver of petitioner, was illegal
because the “grounds upon which petitioners based respondent’s
termination from employment, viz.: ‘hindi lahat ng schedule
nailalabas,’[‘]mababa ang revenue ng bus, laging kasama an[g] asawa sa
byahe’ and ‘maraming naririnig na kwento tungkol sa kanya, naguutos
ng conductor para kumita sa hindi magandang paraan[,]’ xxx are not
among those enumerated under Article 282 of the Labor Code as just
causes for termination of employment.” The irregularities or infractions
committed by private respondent in connection with his work as a bus
driver constitute serious misconduct or, at the very least, conduct
analogous to serious misconduct, under the above-cited Article 282 of the
Labor Code. The requirement in the company rules that: ‘3. to obey traffic
rules and regulations as well as the company policies. 4. to ensure the safety
of the riding public as well as the other vehicles and motorist (sic)’ is so
fundamental and so universal that any bus driver is expected to satisfy the
requirement whether or not he has been so informed.

CCV Notes on Labor Relations | 106

IIIA. SERIOUS MISCONDUCT

1. REQUISITES.
For misconduct or improper behavior to be a just cause for dismissal, the
following requisites must concur:
a. It must be grave; and
b. It must relate to the performance of the employee’s duties; and
c. It must show that he has become unfit to continue working for the
employer.
All the above three (3) requisites must concur.

2. SOME PRINCIPLES ON SERIOUS MISCONDUCT.

• Serious misconduct implies that it must be of such grave and aggravated
character and not merely trivial or unimportant.
• Simple or minor misconduct would not justify the termination of the
services of an employee.
• Possession or use of shabu or other drugs is a valid ground to terminate
employment.
• Immorality, as a general rule, is not a just ground to terminate
employment. The exception is when such immoral conduct is prejudicial or
detrimental to the interest of the employer.
• Immoral act committed beyond office hours is a valid ground to terminate
employment.
• Sexual intercourse inside company premises constitutes serious
misconduct.
• The act of a 30-year old lady teacher in falling in love with a 16-year old
student is not immoral.
• Fighting is a ground for termination but only the instigator or aggressor
and not the victim who was constrained to defend himself should be
dismissed.
• Challenging superiors to a fight is a just cause for termination.
• Assaulting another employee is a just cause for termination.
• Utterance of obscene, insulting or offensive words constitutes serious
misconduct.
• Gambling within company premises is a serious misconduct.
• Rendering service to business rival is a just cause to terminate
employment.
• Selling products of a competitor is a just cause for termination.
• Organizing a credit union by employees in a bank is a serious misconduct.
• Deceiving a customer for personal gain is a just cause for termination.
• Contracting work in competition with employer constitutes serious
misconduct.
• Intoxication which interferes with the employee’s work constitutes serious
misconduct.
• The act of a teacher in pressuring a colleague to change the failing grade of
a student is serious misconduct.
• Sexual harassment is a just ground to dismiss.
• Sleeping while on duty is a ground for termination.

CCV Notes on Labor Relations | 107

• Dismissal is too harsh a penalty for eating while at work.
• Pilferage or theft of company-owned property is a just cause to terminate.
• Theft of funds or property not owned by employer is not a ground to
terminate.
• Act of falsification is a valid ground to terminate employment.
• Punching-in of time cards of other employees is a just cause for
termination.

IIIB. INSUBORDINATION OR WILLFUL DISOBEDIENCE OF LAWFUL

ORDERS

1. REQUISITES.
One of the fundamental duties of an employee is to obey all reasonable
rules, orders and instructions of the employer. In order to validly invoke
this ground, the following requisites must be complied with, to wit:
a. The employee’s assailed conduct must have been willful or intentional,
the willfulness being characterized by a wrongful and perverse attitude; and
b. The order violated must be based on a reasonable and lawful company
rule, regulation or policy and made known to the employee and must
pertain to the duties for which he has been engaged to discharge.

2. SOME PRINCIPLES ON INSUBORDINATION.

Making false allegations in complaint does not constitute insubordination.
Failure to answer memo to explain constitutes willful disobedience.
Another notice is required in case of termination on the ground of failure
to answer memo to explain.
Refusal to undergo random drug testing constitutes both serious
misconduct and insubordination.
Refusal to render overtime to meet production deadline constitutes
insubordination.
Refusal to comply with a lawful transfer constitutes insubordination.

IIIC. GROSS AND HABITUAL NEGLECT OF DUTIES

1. REQUISITES.
The following are the requisites:
(a) There must be negligence which is gross and/or habitual in character;
and
(b) It must be work-related as would make him unfit to work for his
employer.

2. SOME PRINCIPLES ON GROSS AND HABITUAL NEGLECT OF

DUTIES.
Simple negligence is not sufficient to terminate employment.
The negligence must be gross in character which means absence of that
diligence that an ordinarily prudent man would use in his own affairs.

CCV Notes on Labor Relations | 108

As a general rule, negligence must be both gross and habitual to be a valid
ground to dismiss.
Habituality may be disregarded if negligence is gross or the damage or loss
is substantial. “Habitual negligence” implies repeated failure to perform
one’s duties for a period of time, depending upon the circumstances.
Actual damage, loss or injury is not an essential requisite.
Gross negligence may result to loss of trust and confidence.
Absences, if authorized, cannot be cited as a ground to terminate
employment.
Tardiness or absenteeism, if not habitual, cannot be cited as a ground to
terminate employment.
Tardiness or absenteeism, if habitual, may be cited as a ground to
terminate employment.
Tardiness or absenteeism, if habitual, may be tantamount to serious
misconduct.
Absences or tardiness due to emergency, ailment or fortuitous event are
justified and may not be cited as just cause to terminate employment.
Unsatisfactory or poor performance, inefficiency and incompetence are
considered just causes for dismissal only if they amount to gross and
habitual neglect of duties.

IIID. ABANDONMENT OF WORK

1. CONCEPT.
Abandonment is a form of neglect of duty; hence, a just cause for
termination of employment under Article 282 [b] of the Labor Code.

2. REQUISITES.
To constitute abandonment, two (2) elements must concur, namely:
a. The employee must have failed to report for work or must have been
absent without valid or justifiable reason; and
b. There must have been a clear intention on the part of the employee to
sever the employer-employee relationship manifested by some overt act.

3. SOME PRINCIPLES ON ABANDONMENT.

Mere absence is not enough to constitute abandonment.
Clear intention to sever employment relationship is necessary.
Due process in abandonment cases consists only of the service of 2 notices
to the employee, viz.:
a. First notice directing the employee to explain why he should not be
declared as having abandoned his job; and
b. Second notice to inform him of the employer’s decision to dismiss him on
the ground of abandonment.
No hearing is required to validly dismiss an employee for abandonment.
Notices in abandonment cases must be sent to employee’s last known
address per record of the company. The employer need not look for the
employee’s current whereabouts.

CCV Notes on Labor Relations | 109

Immediate filing of a complaint for illegal dismissal praying for
reinstatement negates abandonment.
Lapse of time between dismissal and filing of a case is not a material
indication of abandonment. Hence, lapse of 2 years and 5 months or 20
months or 9 months or 8 months before filing the complaint for illegal
dismissal is not an indication of
abandonment. Under the law, the employee has a 4-year prescriptive
period within which to institute his action for illegal dismissal.
Filing of a case to pre-empt investigation of the administrative case is
tantamount to abandonment.

When what is prayed for in the complaint is separation pay and not
reinstatement, the filing of complaint does not
negate abandonment.
It is abandonment when what is prayed for in the complaint is separation
pay and it was only in the position paper that reinstatement was prayed for.
Employment in another firm coinciding with the filing of complaint does
not indicate abandonment.
Offer of reinstatement by employer during proceedings before Labor
Arbiter and refusal by employee does not indicate abandonment but more
of a symptom of strained relations between the parties.
An employee may be absolved from the charge of abandonment of work
but adjudged guilty of AWOL. These two grounds are separate and distinct
from each other.
An employee who failed to report for work after the expiration of the duly
approved leave of absence is considered to have abandoned his job.
An employee who failed to comply with the order for his reinstatement is
deemed to have abandoned his work.
An employee who, after being transferred to a new assignment, did not
report for work anymore is deemed to have abandoned his job.
An employee who deliberately absented from work without leave or
permission from his employer for the purpose of looking for a job elsewhere
is deemed to have abandoned his work.
Imprisonment or detention by military does not constitute abandonment.
Absence to evade arrest is not a valid justification. To do so would be to
place an imprimatur on the employee’s attempt to derail the normal course
of the administration of justice.

IIIE. FRAUD

1. REQUISITES.
The following are the requisites of this ground:
a. There must be an act, omission, or concealment;
b. The act, omission or concealment involves a breach of legal duty, trust, or
confidence justly reposed;
c. It must be committed against the employer or his/her representative;

CCV Notes on Labor Relations | 110

and
d. It must be in connection with the employees' work.1

2. SOME PRINCIPLES ON FRAUD.

Failure to deposit collection constitutes fraud.
Lack of damage or losses is not necessary in fraud cases. The fact that the
employer did not suffer losses from the dishonesty of the dismissed
employee because of its timely discovery does not excuse the latter from
any culpability.
Lack of misappropriation or shortage is immaterial in case of
unauthorized encashment of personal checks by teller and cashier.
Restitution does not have absolutory effect.

IIIF. WILLFUL BREACH OF TRUST AND CONFIDENCE

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

2. GUIDELINES.
As a safeguard against employers who indiscriminately use “loss of trust
and confidence” to justify arbitrary dismissal of employees, the Supreme
Court, in addition to the above elements, came up with the following
guidelines for the application of the doctrine:
(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; and
(d) It must be genuine, not a mere afterthought, to justify earlier action
taken in bad faith.
The foregoing guidelines have been prescribed by the Supreme Court due to
the subjective nature of this ground which makes termination based on loss
of trust and confidence prone to abuse.

3. SOME PRINCIPLES ON THE DOCTRINE OF LOSS OF TRUST AND

CONFIDENCE.
Employee’s position must be reposed with trust and confidence.
“Position of trust and confidence” is one where a person is entrusted with

CCV Notes on Labor Relations | 111

confidence on delicate matters, or with the custody, handling, or care and
protection of the employer’s property.

Two (2) classes of positions of trust.

The first class consists of managerial employees or those who, by the
nature of their position, are entrusted with confidential and delicate
matters and from whom greater fidelity to duty is correspondingly
expected. They refer to those vested with the powers or prerogatives to lay
down and execute management policies and/or to hire, transfer suspend,
lay-off, recall, discharge, assign or discipline employees or to effectively
recommend such managerial actions. Their primary duty consists of the
management of the establishment in which they are employed or of a
department or a subdivision thereof.

The second class includes “cashiers, auditors, property custodians, or those

who, in the normal and routine exercise of their functions, regularly handle
significant amounts of [the employer’s] money or property.” They are
fiduciary rank-and-file employees who, though rank-and-file, are routinely
charged with the custody, handling or care and protection of the employer's
money or property, or entrusted with confidence on delicate matters, and
are thus classified as occupying positions of trust and confidence.

1 Per latest DOLE Department Order No. 147-15, series of 2015, September
07, 2015.

Rules on termination of managerial and supervisory employees different

from those applicable to rank-and-file employees. Thus, with respect to
rank-and-file personnel, loss of trust and confidence as a ground for valid
dismissal requires proof of involvement in the alleged events in question
and that mere uncorroborated assertions and accusations by the employer
will not be sufficient. But as regards a managerial employee, the mere
existence of a basis for believing that he has breached the trust of his
employer would suffice for his dismissal.
There must be “some basis” for the loss of trust and confidence which
means that there is reasonable ground to believe, if not to entertain the
moral conviction, that the concerned employee is responsible for the
misconduct and that the nature of his participation therein rendered him
absolutely unworthy of trust and confidence demanded by his position.
Dismissal due to feng shui mismatch is not a valid ground to lose trust and
confidence.
Command responsibility of managerial employees is a ground to dismiss.
Confidential employee may be dismissed for loss of trust and confidence.
Grant of promotions and bonuses negates loss of trust and confidence.
Long years of service, absence of derogatory record and small amount
involved are deemed inconsequential insofar as loss of trust and confidence
is concerned.
Dropping of criminal charges or acquittal in a criminal case arising from

CCV Notes on Labor Relations | 112

the same act does not affect the validity of dismissal based on loss of trust
and confidence.
Full restitution does not absolve employee of offense which resulted in the
loss of trust and confidence.

IIIG. COMMISSION OF CRIME OR OFFENSE

1. REQUISITES.
The following are the requisites for the valid invocation of this ground:
a. A crime or offense was committed by the employee;
b. It was committed against any of the following persons:
(i) His employer;
(ii) Any immediate member of his employer’s family; or
(iii) His employer’s duly authorized representative.

2. SOME PRINCIPLES ON THE COMMISSION OF CRIME OR OFFENSE.

Because of its gravity, work-relation is not necessary. Neither is it
necessary to show that the commission of the criminal act would render the
employee unfit to perform his work for the employer.

IIIH. OTHER ANALOGOUS CAUSES

1. ANALOGOUS CAUSES UNDER ESTABLISHED JURISPRUDENCE.

The following may be cited as analogous causes:
a) Violation of company rules and regulations.
b) Theft of property owned by a co-employee, as distinguished from theft of
property owned by the employer.
c) Incompetence, inefficiency or ineptitude.
d) Failure to attain work quota.
e) Failure to comply with weight standards of employer.
f) “Attitude problem” is analogous to loss of trust and confidence.

IIII. TERMINATION DUE TO ENFORCEMENT OF UNION SECURITY

CLAUSE

What is a union security clause?

The “union security clause” is a stipulation in a CBA which allows the
parties thereto to enter into an agreement requiring membership in the
exclusive collective bargaining agent which successfully negotiated said
CBA as a condition for continued employment with the exception of
employees who are already members of another union at the time of the
signing of the CBA.

What are the effects of application of this clause?

The following are the effects:

CCV Notes on Labor Relations | 113

1. On members of the bargaining union/agent. They are not allowed to
resign or terminate their membership therefrom. Any member of the
bargaining agent who resigns or is expelled therefrom may be
recommended to the employer by the bargaining agent for termination of
his employment.
2. On non-members of the bargaining union/agent but members of the
minority union/s. They are not bound by the union security clause if they
are members of the minority or other unions at the time of the signing of
the CBA.
Hence, they cannot be compelled to resign from their union/s in order to
join the bargaining agent.
3. On non-members of the bargaining union/agent or of any minority
union/s. If not a member of the bargaining agent or any other unions in the
bargaining unit at the time of the signing of the CBA by reason of the fact
that he is excepted from the coverage of the bargaining unit, the employee
cannot be compelled to join the bargaining agent.
4. On new employees hired after the signing of the CBA containing the
union security clause. They can be compelled to join the bargaining agent.
If they refuse, they can be recommended for termination.

Is there an exception to this rule?

Yes. An employee cannot be compelled to join a union based on religious
ground. For example: members of the Iglesia ni Kristo (INK) cannot be
compelled to join a union; hence, they are not bound by the union security
doctrine.

What are the requisites in order to validly terminate employees based on

this clause?
(1) The union security clause is applicable;
(2) The bargaining union is requesting for the termination of employment
due to enforcement of the union security provision in the CBA; and
(3) There is sufficient evidence to support the union’s decision to expel the
employee from the union.
All the foregoing requisites should be complied with to justify the
termination of employment.

OTHER CAUSES PER DEPARTMENT ORDER NO. 147-15, SERIES OF

2015 (07 SEPTEMBER 2015):1

An employee found positive for use of dangerous drugs shall be dealt with
administratively which shall be a ground for suspension or termination.2
An employee shall not be terminated from work based on actual,
perceived or suspected HIV status.3
An employee shall not be terminated on basis of actual, perceived or
suspected Hepatitis B status.4
An employee who has or had Tuberculosis shall not be discriminated
against. He/she shall be entitled to work for as long as they are certified by

CCV Notes on Labor Relations | 114

the company's accredited health provider as medically fit and shall be
restored to work as soon as his/her illness is controlled.5
An employee may also be terminated based on the grounds provided for
under the CBA.

IV. AUTHORIZED CAUSES

What are the 2 classes of authorized cause termination?

Under the Labor Code, authorized causes are classified into two (2) classes,
namely:
(1) Business-related causes. – Referring to the grounds specifically
mentioned in Article 283 (298), to wit:
a. Installation of labor-saving device;
b. Redundancy;
c. Retrenchment to prevent losses;
d. Closure or cessation of business operations NOT due to serious business
losses or financial reverses; and
e. Closure or cessation of business operations due to serious business losses
and financial reverses.

(2) Health-related causes. – Referring to disease covered by Article 284 299

of the Labor Code.

What are the common requisites applicable to the authorized causes under
Article 283?
The following are the five (5) common requisites applicable to the ALL the
grounds under Article 283:
1. There is good faith in effecting the termination;
2. The termination is a matter of last resort, there being no other option
available to the employer after resorting to cost-cutting measures;
3. Two (2) separate written notices are served on both the affected
employees and the DOLE at least one (1) month prior to the intended date
of termination;

4. Separation pay is paid to the affected employees, to wit:

(a) If based on (1) installation of labor-saving device, or (2) redundancy. -

One (1) month pay or at least one (1) month pay for every year of service,
whichever is higher, a fraction of at least six (6) months shall be considered
as one (1) whole year.
(b) If based on (1) retrenchment, or (2) closure NOT due serious business
losses or financial reverses. – One (1) month pay or at least one-half (½)
month pay for every year of service, whichever is higher, a fraction of at

CCV Notes on Labor Relations | 115

least six (6) months shall be considered as one (1) whole year.

(c) If closure is due to serious business losses or financial reverses, NO

separation pay is required to be paid.
(d) In case the CBA or company policy provides for a higher separation pay,
the same must be followed instead of the one provided in Article 283.

5. Fair and reasonable criteria in ascertaining what positions are to be

affected by the termination, such as, but not limited to: nature of work;
status of employment (whether casual, temporary or regular); experience;
efficiency; seniority; dependability; adaptability; flexibility; trainability; job
performance; discipline; and attitude towards work. Failure to follow fair
and reasonable criteria in selecting who to terminate would render the
termination invalid.

I. INSTALLATION OF LABOR-SAVING DEVICE

What are the additional requisites unique to this ground?

In addition to the five (5) common requisites above, the unique requisites
are as follows:
1. There must be introduction of machinery, equipment or other devices;
and

1 See Section 6 thereof. (Other Causes of Termination.) xxx

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

2. The purpose for such introduction must be valid such as to save on cost,
enhance efficiency and other justifiable economic reasons.1

II. REDUNDANCY
What are the additional requisites unique to this ground?
The additional requisites are as follows:
1. There must be superfluous positions or services of employees;
2. The positions or services are in excess of what is reasonably demanded
by the actual requirements of the enterprise to operate in an economical
and efficient manner; and
3. There must be an adequate proof of redundancy such as but not limited
to the new staffing pattern, feasibility studies/proposal, on the viability of
the newly created positions, job description and the approval by the
management of the restructuring.2

CCV Notes on Labor Relations | 116

III. RETRENCHMENT

What are the additional requisites unique to this ground?

Per latest issuance of the DOLE, 3 the following are the additional
requisites:
1. The retrenchment must be reasonably necessary and likely to prevent
business losses;
2. The losses, if already incurred, are not merely de minimis, but
substantial, serious, actual and real, or if only expected, are reasonably
imminent;
3. The expected or actual losses must be proved by sufficient and
convincing evidence;4 and
4. The retrenchment must be in good faith for the advancement of its
interest and not to defeat or circumvent the employees' right to security of
tenure.
This is the only statutory ground in Article 283 which requires this kind of
proof. The other grounds of closure or cessation of business operations may
be resorted to with or without losses.

What are some relevant principles on retrenchment?

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

Best evidence of losses - financial statements audited by independent

auditors (not by internal auditors).
Best evidence of losses in a government-controlled corporation - financial
statements audited by COA.
Income tax returns, not valid since they are self-serving documents.
Mere affidavit on alleged losses is not sufficient.
Retrenchment effected long after the business losses is not valid.
Profitable operations in the past do not affect the validity of retrenchment.
Retrenchment due to liquidity problem is not valid.
Sharp drop in income is not a ground to justify retrenchment. A mere
decline in gross income cannot in any manner be considered as serious
business losses. It should be substantial, sustained and real.
Litany of woes, in the absence of any solid evidence that they translated
into specific and substantial losses that would necessitate retrenchment,
will not suffice to justify retrenchment.
Rehiring of retrenched employees does not necessarily indicate illegality of
retrenchment.

CCV Notes on Labor Relations | 117

In an enterprise which has several branches nationwide, profitable
operations in some of them will not affect the validity of the retrenchment if
overall, the financial condition thereof reflects losses.

IV. CLOSURE OR CESSATION OF BUSINESS OPERATIONS

Can an employer close its business even if it is not suffering from business
losses?

Yes. In fact, closure involves two (2) situations:

(a) When NOT due to serious business losses or financial reverses; or
(b) When due to serious business losses or financial reverses

It is only in the first that payment of separation pay is required. No such

requirement is imposed in the second.

What are some relevant principles on closure?

Principle of closure under Article 283 applies in cases of both total and
partial closure or cessation of business operations. Management may
choose to close only a branch, a department, a plant, or a shop.

1 Per latest DOLE Department Order No. 147-15, series of 2015, September
07, 2015.
2 Id.
3 Id.
4 Balasabas v. NLRC, G.R. No. 85286, August 24,1992; Central Azucarerra
dela Carlota v. NLRC, G.R. No. 100092, December 29, 1995.

Closure of department or section and hiring of workers supplied by

independent contractor as replacements is valid.
Relocation of business may amount to cessation of operations.
Closure of business to merge or consolidate with another or to sell or
dispose all of its assets, held valid.
Audited financial statements necessary only in closure due to losses.

V. DISEASE

1. THE DEOFERIO DOCTRINE ON THE REQUISITES.

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

CCV Notes on Labor Relations | 118

(a) Substantive requisites; and
(b) Procedural requisites.

1.1. THE DEOFERIO RULE ON SUBSTANTIVE REQUISITES.

The following are the three (3) substantive requisites:
(a) An employee has been found to be suffering from any disease;
(b) His continued employment is prohibited by law or prejudicial to his
health, as well as to the health of his co-employees; and
(c) A competent public health authority issues a medical certificate that the
disease is of such nature or at such a stage that it cannot be cured within a
period of six (6) months even with proper medical treatment.2

1.2. THE DEOFERIO RULE ON PROCEDURAL REQUISITES.

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

Due process in termination due to disease is similar to due process for

just cause termination but different from authorized cause termination
under Article 298 [283].
From these perspectives, it was held in Deoferio that the CA erred in not
finding that the NLRC gravely abused its discretion when it ruled that the
twin-notice requirement does not apply to Article 284 (Disease) of the
Labor Code. This conclusion is totally devoid of any legal basis; its ruling is
wholly unsupported by law and jurisprudence. In other words, the NLRC’s
unprecedented, whimsical and arbitrary ruling, which the CA erroneously
affirmed, amounted to a jurisdictional error.

2. THE FUJI RULE – THE EMPLOYEE SHOULD BE GIVEN THE

CHANCE TO PRESENT COUNTERVAILING MEDICAL
CERTIFICATES.
Subsequent to Deoferio, another 2014 case, Fuji Television Network, Inc. v.
Arlene S. Espiritu,3 has further expounded on the due process requirement
in termination due to disease, this time by categorically specifying the right
of the ailing employee to present countervailing evidence in the form of
medical certificates to prove that his dismissal due to disease is not proper
and therefore illegal.
Respondent Arlene was petitioner’s news correspondent/producer “tasked
to report Philippine news to Fuji through its Manila Bureau field office.”
She was successively given yearly fixed-term employment contracts until
she was diagnosed with lung cancer sometime in January 2009 when the
Chief of News Agency of Fuji informed her “that the company will have a
problem renewing her contract” since it would be difficult for her to
perform her job. She, however, “insisted that she was still fit to work as

CCV Notes on Labor Relations | 119

certified by her attending physician.” Subsequently, Arlene and Fuji signed
a non-renewal contract where it was stipulated that her contract would no
longer be renewed after its expiration on May 31, 2009 and that the parties
release each other from liabilities and responsibilities under the
employment contract. Arlene received her unpaid salaries and bonuses but
she affixed her signature on the non-renewal contract with the initials
“U.P.” for “under protest.” The day after Arlene signed the non-renewal
contract, she filed a complaint for illegal dismissal and attorney’s fees with
the Labor Arbiter, alleging that she was forced to sign the non-renewal
contract when Fuji came to know of her illness and that Fuji withheld her
salaries and other benefits for March and April 2009 when she refused to
sign. Arlene claimed that she was left with no other recourse but to sign the
non-renewal contract, and it was only upon signing that she was given her
salaries and bonuses, in addition to separation pay equivalent to 4 years.
The Supreme Court declared respondent Arlene as having been
constructively dismissed. It was likewise held here that respondent was not
afforded due process, thus:
“There is no evidence showing that Arlene was accorded due process. After
informing her employer of her lung cancer, she was not given the chance to
present medical certificates. Fuji immediately concluded that Arlene could
no longer perform her duties because of chemotherapy. It did not ask her
how her condition would affect her work. Neither did it suggest for her to
take a leave, even though she was entitled to sick leaves. Worse, it did not
present any certificate from a competent public health authority. What Fuji
did was to inform her that her contract would no longer be renewed, and
when she did not agree, her salary was withheld. Thus, the Court of Appeals
correctly upheld the finding of the National Labor Relations Commission
that for failure of Fuji to comply with due process, Arlene was illegally
dismissed.”

1 G.R. No. 202996, June 18, 2014.

2 Per Deoferio v. Intel Technology Philippines, Inc., supra.
3 Fuji Television Network, Inc. v. Arlene S. Espiritu, G.R. Nos. 204944-45,
Dec. 03, 2014.

What are some salient points to consider under this ground?

If the disease or ailment can be cured within the period of six (6) months
with proper medical treatment, the employer should not terminate the
employee but merely ask him to take a leave of absence. The employer
should reinstate him to his former position immediately upon the
restoration of his normal health.
In case the employee unreasonably refuses to submit to medical
examination or treatment upon being requested to do so, the employer may
terminate his services on the ground of insubordination or willful
disobedience of lawful order.
A medical certificate issued by a company’s own physician is not an
acceptable certificate for purposes of terminating an employment based on
Article 284, it having been issued not by a “competent public health
authority,” the person referred to in the law.

CCV Notes on Labor Relations | 120

A “competent public health authority” refers to a government doctor
whose medical specialization pertains to the disease being suffered by the
employee. For instance, if the employee suffers from tuberculosis, the
medical certificate should be issued by a government-employed
pulmonologist who is competent to make an opinion thereon. If the
employee has cardiac symptoms, the competent physician in this case
would be a cardiologist.
The medical certificate should be procured by the employer and not by the
employee.

V. DUE PROCESS
(a) Twin-Notice Requirement
(b) Hearing; Meaning of Opportunity to be Heard

What is the latest rule on due process?

Due process means compliance with both STATUTORY due process and
CONTRACTUAL due process.

CONSTITUTIONAL due process is not applicable (Per Agabon doctrine).

Statutory due process refers to the one prescribed in the Labor Code
(Article 277[b]); while contractual due process refers to the one prescribed
in the Company Rules and Regulations (Per Abbott Laboratories doctrine).

Contractual due process was enunciated in the 2013 en banc ruling in

Abbott Laboratories, Philippines v. Pearlie Ann F. Alcaraz.1 Thus, it is now
required that in addition to compliance with the statutory due process, the
employer should still comply with the due process procedure prescribed in
its own company rules. The employer’s failure to observe its own company-
prescribed due process will make it liable to pay an indemnity in the form
of nominal damages, the amount of which is
equivalent to the P30,000.00 awarded under the Agabon doctrine.

Are the twin-notice requirement and hearing required in all cases of

termination?
No. The two-notice requirement and hearing are required only in case of
just cause termination in the following order:
1. Service of first written notice;
2. Conduct of hearing; and
3. Service of second written notice.

What is the King of Kings Transport doctrine on just cause procedural due
process?
Based on this doctrine which was enunciated in King of Kings Transport,
Inc. v. Mamac,2 the following requirements should be complied with in just
cause termination:

CCV Notes on Labor Relations | 121

(1) First written notice.
The first written notice to be served on the employee should:
a) Contain the specific causes or grounds for termination against him;
b) Contain a directive that the employee is given the opportunity to submit
his written explanation within the reasonable period of FIVE (5)
CALENDAR DAYS from receipt of the notice:
1) to enable him to prepare adequately for his defense;
2) to study the accusation against him;
3) to consult a union official or lawyer;
4) to gather data and evidence; and
5) to decide on the defenses he will raise against the complaint.

c) Contain a detailed narration of the facts and circumstances that will

serve as basis for the charge against the employee. This is required in order
to enable him to intelligently prepare his explanation and defenses. A
general description of the charge will not suffice.

d) Specifically mention which company rules, if any, are violated and/or

which among the grounds under Article 282 is being charged against the
employee.

(2) Hearing required,

After serving the first notice, the employer should schedule and conduct a
hearing or conference wherein the employee will be given the opportunity
to:
a) explain and clarify his defenses to the charge/s against him;
b) present evidence in support of his defenses; and
c) rebut the evidence presented against him by the management.

1 G.R. No. 192571, July 23, 2013.

2 G.R. No. 166208, June 29, 2007.

During the hearing or conference, the employee is given the chance to

defend himself personally, with the assistance of a representative or
counsel of his choice. Moreover, this conference or hearing could be used
by the parties as an opportunity to come to an amicable settlement.

(3) Second written notice.

After determining that termination of employment is justified, the
employer shall serve the employees a written notice of termination
indicating that:
a) all circumstances involving the charge/s against the employee have been
considered; and
b) grounds have been established to justify the severance of his
employment.

CCV Notes on Labor Relations | 122

What is the Perez doctrine on hearing?
The Perez doctrine enunciates the new guiding principle on the hearing
requirement. It has interpreted the term “ample opportunity to be heard”
as follows:

(a) “Ample opportunity to be heard” means any meaningful opportunity

(verbal or written) given to the employee to answer the charges against him
and submit evidence in support of his defense, whether in a hearing,
conference or some other fair, just and reasonable way.

(b) A formal hearing or conference is no longer mandatory. It becomes

mandatory only under any of the following circumstances:
(1) When requested by the employee in writing; or
(2) When substantial evidentiary disputes exist; or
(3) When a company rule or practice requires it; or
(4) When similar circumstances justify it.

(c) the “ample opportunity to be heard” standard in the Labor Code

prevails over the “hearing or conference” requirement in its Implementing
Rules and Regulations. This is how the Supreme Court resolved the conflict
in the following provisions of the Labor Code and its implementing rules:
The Perez doctrine is now the prevailing rule as shown by a catena of cases
which cited it after its promulgation.

Are the twin-notice requirement and hearing applicable to authorized

cause termination?
No. Due process in authorized cause termination is deemed complied with
upon the separate and simultaneous service of a written notice of the
intended termination to both:
(1) the employee to be terminated; and
(2) the appropriate DOLE Regional Office, at least one (1) month before the
intended date of the termination specifying the ground/s therefor and the
undertaking to pay the separation pay required under Article 283 of the
Labor Code.
For obvious reason, hearing is not required.
Are the twin-notice requirement and hearing applicable to an
abandonment case which is a just cause to terminate
employment?
No. Although considered as a just cause to terminate employment, the due
process requirement is different. No hearing is required (since the
employee has already abandoned his job) but the following notices should
be complied with:
1) First notice asking the employee to explain why he should not be
declared as having abandoned his job; and
2) Second notice informing him of the employer’s decision to dismiss him
on the ground of abandonment.

CCV Notes on Labor Relations | 123

What are some notable principles on the hearing requirement?
If employee does not answer, hearing should still proceed.
Outright termination violates due process.
Investigation still required even if incident was witnessed by many.
Meeting, dialogue, consultation or interview is not the hearing required by
law. It may not be a substitute for the actual holding of a hearing.
Prior consultation with union is not part of the due process requirement.
Cross-examination or confrontation of witnesses is not necessary in
company investigations.
Co-conspirator’s confession is not sufficient to merit dismissal.

What are the instances where hearing is not required?

Hearing is not required in the following cases:

1. Termination of project, seasonal, casual or fixed-term employment.
2. Termination of probationary employment on the ground of failure of the
probationary employee to qualify as a regular employee in accordance with
reasonable standards made known to him at the start of the employment.
3. Termination due to abandonment of work.
4. Termination due to authorized causes under Article 283 (installation of
labor-saving device, redundancy, retrenchment or closure of business or
cessation of operations). In such cases, there are no allegations which the
employees should refute and defend themselves from.
5. Termination due to disease under Article 284.
6. Termination by the employee (resignation) under Article 285.
7. Termination after 6 months of bona-fide suspension of operation under
Article 286. For purposes of satisfying due process, what is required is
simply that the notices provided under Article 283 be served to both the
affected employees and the DOLE at least one (1) month before the
termination becomes effective.
8. Termination due to retirement under Article 287.
9. Termination due to closure or stoppage of work by government
authorities when non-compliance with the law or implementing rules and
regulations poses grave and imminent danger to the health and safety of
workers in the workplace.
10. Termination of employee who has admitted his guilt for the offense
charged.

What are the seven (7) standard situations in termination cases?

The rules on termination of employment in the Labor Code and pertinent

jurisprudence are applicable to seven (7) different situations, namely:
1. The dismissal was for a just cause under Article 282, for an authorized
cause under Article 283, or for health reasons under Article 284, and due
process was observed – This termination is LEGAL.
2. The dismissal was without a just or authorized cause but due process was
observed – This termination is ILLEGAL.

CCV Notes on Labor Relations | 124

3. The dismissal was without a just or authorized cause and due process
was not observed – This termination is ILLEGAL.
4. The dismissal was for a just or authorized cause but due process was not
observed – This termination is LEGAL.
5. The dismissal was for a non-existent cause – This termination is
ILLEGAL.
6. The dismissal was not supported by any evidence of termination – This
termination is NEITHER LEGAL NOR ILLEGAL as there is no dismissal to
speak of. Reinstatement is ordered not as a relief for illegal dismissal but on
equitable ground.
7. The dismissal was brought about by the implementation of a law – This
termination is LEGAL.

IB3. RELIEFS FOR ILLEGAL DISMISSAL

A. RELIEFS UNDER ARTICLE 279 OF THE LABOR CODE.

Under this article, an illegally dismissed employee is entitled to the
following reliefs:
(1) Reinstatement without loss of seniority rights and other privileges;
(2) Full backwages, inclusive of regular allowances; and
(3) Other benefits or their monetary equivalent.

B. OTHER RELIEFS NOT FOUND IN ARTICLE 279 BUT AWARDED IN

ILLEGAL DISMISSAL CASES PER JURISPRUDENCE.

The following reliefs that are awarded in illegal dismissal cases are missing
in Article 279:
(a) Award of separation pay in lieu of reinstatement.
(b) Award of penalty in the form of nominal damages in case of termination
due to just or authorized cause but without observance of procedural due
process.
(c) Reliefs to illegally dismissed employee whose employment is for a fixed
period. The proper relief is only the payment of the employee’s salaries
corresponding to the unexpired portion of the employment contract.
(d) Award of damages and attorney’s fees.
(e) Award of financial assistance in cases where the employee’s dismissal is
declared legal but because of long years of service, and other
considerations, financial assistance is awarded.
(f) Imposition of legal interest on separation pay, backwages and other
monetary awards.

IB3A1. REINSTATEMENT

a. REINSTATEMENT PENDING APPEAL

(Article 223, Labor Code)

CCV Notes on Labor Relations | 125

Is reinstatement pending appeal solely applicable to reinstatement
ordered by the Labor Arbiter?
Yes. Reinstatement is self-executory or immediately executory only if it is
ordered by the Labor Arbiter. This means that the employee ordered
reinstated need not file any motion for the issuance of writ of execution to
enforce reinstatement.
The employer, in fact, is required to manifest within 10 days from his
receipt of the order of reinstatement which of the two (2) options he is
taking:
(1) To reinstate the employee to his former position or to a substantially
equivalent position; or
(2) To reinstate him in the payroll, which means the employee need not
report for work but only for the purpose ofgetting his wage.
There is no way the employer can disregard the reinstatement order.
Posting of a bond does not stay the execution of immediate reinstatement.
In contrast, if ordered by the NLRC, on appeal, or the Court of Appeals,
under a Rule 65 certiorari petition, or even by the Supreme Court,
reinstatement is not immediately executory. This means that the employee
reinstated should still file a motion for issuance of writ of execution to
enforce the reinstatement.

Are there instances where writ of execution of Labor Arbiter’s

reinstatement order is still required?
Yes, under the 2011 NLRC Rules of Procedure, there are two (2) instances
when a writ of execution should still be issued immediately by the Labor
Arbiter to implement his order of reinstatement, even pending appeal, viz.:
(1) When the employer disobeys the Rules-prescribed directive to submit a
report of compliance within ten (10) calendar days from receipt of the
decision; or
(2) When the employer refuses to reinstate the dismissed employee.
The Labor Arbiter shall motu proprio issue a corresponding writ to satisfy
the reinstatement wages as they accrue until actual reinstatement or
reversal of the order of reinstatement.
The employee need not file a motion for the issuance of the writ of
execution since the Labor Arbiter shall thereafter motu proprio issue the
writ. Employer may be cited for contempt for his refusal to comply with the
order of reinstatement. Employer is liable to pay the salaries for the period
that the employee was ordered reinstated pending appeal even if his
dismissal is later finally found to be legal on appeal.

What are some relevant principles on reinstatement pending appeal?

The Labor Arbiter cannot exercise option of employer by choosing payroll
reinstatement pending appeal.
If the former position is already filled up, the employee ordered reinstated
under Article 223 should be admitted back to work in a substantially
equivalent position.
Reinstatement to a position lower in rank is not proper.
Reinstatement cannot be refused on the basis of the employment

CCV Notes on Labor Relations | 126

elsewhere of the employee ordered reinstated.
The failure of the illegally dismissed employee who was ordered reinstated
to report back to work does not give the employer the right to remove him,
especially when there is a reasonable explanation for his failure.
No reinstatement pending appeal should be made when antipathy and
antagonism exist.
If reinstatement is not stated in the Labor Arbiter’s decision (neither in the
dispositive portion nor in the text thereof), reinstatement is not warranted.

b. SEPARATION PAY IN LIEU OF REINSTATEMENT

Is separation pay applicable only to reinstatement as an alternative

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

CCV Notes on Labor Relations | 127

closed or ceased operations.
(5) To prevent further delay in the execution of the decision to the prejudice
of private respondent.
(6) Other circumstances such as (a) when reinstatement is inimical to the
employer’s interest; (b) reinstatement does not serve the best interests of
the parties involved; (c) the employer is prejudiced by the workers’
continued employment; or (d) that it will not serve any prudent purpose as
when supervening facts transpired which made
execution unjust or inequitable.

What is the amount of separation pay in lieu of reinstatement?

Per prevailing jurisprudence, the following are the components of
separation pay in lieu of reinstatement>
(1) The amount equivalent to at least one (1) month salary or to one (1)
month salary for every year of service, whichever is higher, a fraction of at
least six (6) months being considered as one (1) whole year.
(2) Allowances that the employee has been receiving on a regular basis.

What is the period covered?

From start of employment up to the date of finality of decision except when
the employer has ceased its operation earlier, in which case, the same
should be computed up to the date of closure.

What is the salary rate to be used in computing it?

The salary rate prevailing at the end of the period of putative service
should be the basis for computation which refers to the period of imputed
service for which the employee is entitled to backwages.

What are some important principles on separation pay in lieu of

reinstatement?
1. Award of separation pay and backwages are not inconsistent with each
other. Hence, both may be awarded to an illegally dismissed employee. The
payment of separation pay is in addition to payment of backwages.
2. Reinstatement cannot be granted when what is prayed for by employee is
separation pay in lieu thereof.

What is the provision of the Labor Code enunciating STATUTORY DUE

PROCESS?
Article 277, paragraph (b) of the Labor Code enunciates the so-called
statutory due process.

SEPARATION PAY

What are the separation pays expressly provided under the Labor Code?
The Labor Code prescribes the payment of separation pay only in the

CCV Notes on Labor Relations | 128

following four (4) situations:
(1) When termination is due to authorized causes:
(1) installation of labor-saving devices;
(2) redundancy;
(3) retrenchment; or
(4) closing or cessation of business operations; and
(5) disease.

What are separation pays provided in jurisprudence?

In accordance with jurisprudence, the following separation pay may be
cited:
(1) Separation pay in lieu of reinstatement; and
(2) Separation pay as financial assistance in cases where the dismissal was
held valid and legal but the employee is given financial assistance by reason
of long years of service, unblemished record, substantial justice, etc.

What is the prevailing doctrine regarding grant of financial assistance?

THE TOYOTA DOCTRINE.

Under this doctrine, all grounds in Article 282 of the Labor Code, except
analogous causes, would not merit payment of financial assistance.
In the following cases, the Toyota doctrine was applied; hence, no financial
assistance was awarded because the grounds invoked are in accordance
with Article 282:
Reno Foods v. Nagkakaisang Lakas ng Manggagawa (NLM), where it was
maintained that labor adjudicatory officials and the Court of Appeals must
demur the award of separation pay based on social justice when an
employee’s dismissal is based on serious misconduct or willful
disobedience; gross and habitual neglect of duty; fraud or willful breach of
trust; or commission of a crime against the person of the employer or his
immediate family – grounds under Article 282 of the Labor Code that
sanction dismissals of employees.
Equitable PCI Bank v. Dompor, Moya v. First Solid Rubber Industries, Inc.,
and Unilever Philippines, Inc. v. Rivera, where the infractions committed
by the respondent constituted serious misconduct or willful disobedience
resulting to loss of trust and confidence.
Central Philippines Bandag Retreaders, Inc. v. Diasnes, and Quiambao v.
Manila Electric Company, involving gross and habitual neglect of duties
due to respondent’s repeated and continuous absences without prior leave
and frequent tardiness.

Exception to Toyota doctrine: When termination is based on analogous

causes.
Toyota, however, makes a distinction when the grounds cited are the
analogous causes for termination under Article 282(e), like inefficiency,
incompetence, ineptitude, poor performance and others. It declared that in
these cases, the NLRC or the courts may opt to grant separation pay
anchored on social justice in consideration of the length of service of the

CCV Notes on Labor Relations | 129

employee, the amount involved, whether the act is the first offense, the
performance of the employee and the like, using the guideposts enunciated
in PLDT on the propriety of the award of separation pay.

Illustrative cases.
Yrasuegui v. Philippine Airlines, Inc., where the dismissal of petitioner (an
international flight attendant) due to his obesity was held valid as an
analogous cause under Article 282(e) of the Labor Code. The Supreme
Court, however, as an act of
social justice and for reason of equity, awarded him separation pay
equivalent to one-half (1/2) month’s pay for every year of service, including
his regular allowances. The Court observed that his dismissal occasioned by
his failure to meet the weight standards of his employer was not for serious
misconduct and does not reflect on his moral character.

THE SOLIDBANK DOCTRINE.

Under this 2010 doctrine, as distinguished from just cause termination,
employees terminated due to authorized cause are not entitled to be paid
additional separation pay by way of financial assistance. The reason is that
the employer is only required under the law to pay his employees
separation pay in accordance with Article 283 of the Labor Code. That is all
that the law requires. The Court should refrain from adding more than what
the law requires, as the same is within the realm of the legislature.

IB3A2. BACKWAGES

What is the Bustamante doctrine?

In 1996, the Supreme Court changed the rule on the reckoning of
backwages. It announced a new doctrine in the case of Bustamante v.
NLRC,1 which is now known as the Bustamante doctrine. Under this rule,
the term “full backwages” should
mean exactly that, i.e., without deducting from backwages the earnings
derived elsewhere by the concerned employee during the period of his
illegal dismissal.

What are the components of backwages?

The components of backwages are as follows:
1. Salaries or wages computed on the basis of the wage rate level at the time
of the illegal dismissal and not in accordance with the latest, current wage

CCV Notes on Labor Relations | 130

level of the employee’s position.
2. Allowances and other benefits regularly granted to and received by the
employee should be made part of backwages.

What are some principles on backwages?

Salary increases during period of unemployment are not included as
component in the computation of backwages.
Dismissed employee’s ability to earn is irrelevant in the award of
backwages.
In case reinstatement is ordered, full backwages should be reckoned from
the time the compensation was withheld (which, as a rule, is from the time
of illegal dismissal) up to the time of reinstatement, whether actual or in
the payroll.
If separation pay is ordered in lieu of reinstatement, full backwages should
be computed from the time of illegal dismissal until the finality of the
decision. The justification is that along with the finality of the Supreme
Court’s decision, the issue on the illegality of the dismissal is finally laid to
rest.
If the illegally dismissed employee has reached the optional retirement age
of 60 years, his backwages should only cover the time when he was illegally
dismissed up to the time when he reached 60 years. Under Article 287, 60
years is the optional retirement age.
If the employee has reached 65 years of age or beyond, his full backwages
should be computed only up to said age. The contention of the employer
that backwages should be reckoned only up to age 60 cannot be sustained.
If employer has already ceased operations, full backwages should be
computed only up to the date of the closure. To allow the computation of
the backwages to be based on a period beyond that would be an injustice to
the employer.
Any amount received during payroll reinstatement is deductible from
backwages.

LIMITED BACKWAGES
When is the award of backwages limited?
(1) When the dismissal is deemed too harsh a penalty;
(2) When the employer acted in good faith; or
(3) Where there is no evidence that the employer dismissed the employee.
Thus, the backwages will not be granted in full but limited to 1 year, 2 years
or 5 years.

IB4 PREVENTIVE SUSPENSION

When is preventive suspension proper to be imposed?

Preventive suspension may be legally imposed against an errant employee
only while he is undergoing an investigation for certain serious offenses.
Consequently, its purpose is to prevent him from causing harm or injury to

CCV Notes on Labor Relations | 131

the company as well as to his fellow employees. It is justified only in cases
where the employee’s continued presence in the company premises during
the investigation poses a serious and imminent threat to the life or property
of the employer or of the employee’s co-workers. Without this threat,
preventive suspension is not proper.

What are some relevant principles in preventive suspension?

Preventive suspension is not a penalty. Preventive suspension, by itself,
does not signify that the company has already adjudged the employee guilty
of the charges for which she was asked to answer and explain.
Preventive suspension is neither equivalent nor tantamount to dismissal.
If the basis of the preventive suspension is the employee’s absences and
tardiness, the imposition of preventive suspension on him is not justified as
his presence in the company premises does not pose any such serious or
imminent threat to the life or property of the employer or of the employee’s
co-workers simply “by incurring repeated
absences and tardiness.”
Preventive suspension does not mean that due process may be
disregarded.
Preventive suspension should only be for a maximum period of thirty
(30) days. After the lapse of the 30-day period, the employer is required to
reinstate the worker to his former position or to a substantially equivalent
position.

1 G.R. No. 111651, Nov. 28, 1996, 265 SCRA 61.

During the 30-day preventive suspension, the worker is not entitled to his
wages and other benefits. However, if the employer decides, for a justifiable
reason, to extend the period of preventive suspension beyond said 30-day
period, he is obligated to pay the wages and other benefits due the worker
during said period of extension. In such a case, the worker is not bound to
reimburse the amount paid to him during the extension if the employer
decides to dismiss him after the completion of the investigation.
Extension of period must be justified. During the 30-day period of
preventive suspension, the employer is expected to conduct and finish the
investigation of the employee’s administrative case. The period of thirty
(30) days may only be extended if the employer failed to complete the
hearing or investigation within said period due to justifiable grounds. No
extension thereof can be made based on whimsical, capricious or
unreasonable grounds.
Preventive suspension lasting longer than 30 days, without the benefit of
valid extension, amounts to constructive dismissal.
Indefinite preventive suspension amounts to constructive dismissal.

IB5 CONSTRUCTIVE DISMISSAL

Q: Distinguish Actual from Constructive Dismissal?

CCV Notes on Labor Relations | 132

When is there constructive dismissal?
Constructive dismissal contemplates any of the following situations:
1) An involuntary resignation resorted to when continued employment is
rendered impossible, unreasonable or unlikely;
2) A demotion in rank and/or a diminution in pay; or
3) A clear discrimination, insensibility or disdain by an employer which
becomes unbearable to the employee that it could foreclose any choice by
him except to forego his continued employment.

What is the test of constructive dismissal?

The test of constructive dismissal is whether a reasonable person in the
employee’s position would have felt compelled to give up his position under
the circumstances. It is an act amounting to dismissal but made to appear
as if it were not. In fact, the employee who is constructively dismissed may
be allowed to keep on coming to work. Constructive dismissal is, therefore,
a dismissal in disguise. The law recognizes and resolves this situation in
favor of the employees in order to protect their rights and interests from the
coercive acts of the employer.

What are examples of constructive dismissal or forced resignation?

Denying to the workers entry to their work area and placing them on shifts
“not by weeks but almost by month” by reducing their workweek to three
days.
Barring the employees from entering the premises whenever they would
report for work in the morning without any justifiable reason, and they
were made to wait for a certain employee who would arrive in the office at
around noon, after they had waited for a long time and had left.
Sending to an employee a notice of indefinite suspension which is
tantamount to dismissal.
Imposing indefinite preventive suspension without actually conducting
any investigation.
Changing the employee’s status from regular to casual constitutes
constructive dismissal.
Preventing the employee from reporting for work by ordering the guards
not to let her in. This is clear notice of dismissal.

----------------------------------------oOo------------------------------------------

IV. PROCEDURE AND JURISDICTION

PRELIMINARY CONSIDERATIONS ON PROCEDURE AND
JURISDICTION

1. EXISTENCE OF EMPLOYER-EMPLOYEE RELATIONSHIP.

CCV Notes on Labor Relations | 133

The existence of employer-employee relationship between the parties-
litigants, or a reasonable causal connection to such relationship is a
jurisdictional pre-requisite for the exercise of jurisdiction over a labor
dispute by the Labor Arbiters or any other labor tribunals.

2. THE CAUSE OF ACTION MUST ARISE FROM THE EMPLOYER-

EMPLOYEE RELATIONSHIP.
Even if there is employer-employee relationship, if the cause of action did
not arise out of or was not incurred in connection with the employer-
employee relationship, Labor Arbiters and other labor tribunals have no
jurisdiction thereover.
Actions between employers and employees where the employer-employee
relationship is merely incidental are within the exclusive original
jurisdiction of the regular courts.

3. REASONABLE CAUSAL CONNECTION RULE – THE RULE IN CASE

OF CONFLICT OF JURISDICTION BETWEEN LABOR COURT AND
REGULAR COURT.
Under this rule, if there is a reasonable causal connection between the
claim asserted and the employer-employee relations, then the case is within
the jurisdiction of labor courts. In the absence of such nexus, it is the
regular courts that have jurisdiction.

4. THE POWER TO DETERMINE EXISTENCE OF EMPLOYMENT

RELATIONSHIP.
Under labor laws, it is not only the Labor Arbiters and the NLRC
who/which are vested with the power to determine the existence of
employer-employee relationship.
The following have also the power to make similar determination:
(1) The DOLE Secretary and the DOLE Regional Directors, to the exclusion
of the Labor Arbiter and the NLRC;
(2) The Med-Arbiter;
(3) The Social Security Commission (SSC).

5. IN CASES FILED BY OFWs, LABOR ARBITERS MAY EXERCISE

JURISDICTION EVEN ABSENT THE EMPLOYMENT
RELATIONSHIP.
In Santiago v. CF Sharp Crew Management, Inc.,1 it was held that a seafarer
who has already signed a POEA-approved employment contract but was
not deployed overseas and, therefore, there is no employer-employee
relationship, may file his monetary claims case with the Labor Arbiter. This
is because the jurisdiction of Labor Arbiters is not limited to claims arising
from employer-employee relationships. Under Section 10 of R. A. No. 8042
(Migrant Workers and Overseas Filipinos Act of 1995), as amended, the
Labor Arbiter may exercise jurisdiction over the claims of OFWs arising out
of an employer-employee relationship or by virtue of any law or contract
involving Filipino workers for overseas deployment, including claims for

CCV Notes on Labor Relations | 134

actual, moral, exemplary and other forms of damage. (See also the 2012
case of Bright Maritime Corporation v. Fantonial2).

6. LABOR ARBITERS HAVE JURISDICTION EVEN IF THE CASE IS

FILED BY THE HEIRS OF THE OFW.
This was the ruling in Medline Management, Inc. v. Roslinda.3 As heirs, the
wife and son of Juliano Roslinda, the deceased OFW, have the personality
to file the claim for death compensation, reimbursement of medical
expenses, damages and attorney's fees before the Labor Arbiter of the
NLRC.
7. LABOR DISPUTES, NOT SUBJECT TO BARANGAY CONCILIATION.
Labor cases are not subject to the conciliation proceedings prescribed
under P.D. No. 1508 requiring the submission of disputes before the
Barangay Lupong Tagapayapa prior to their filing with the court or other
government offices. Instead of simplifying labor proceedings designed at
expeditious settlement or referral to the proper courts or offices to decide
them finally, the conciliation of the issues before the Barangay Lupong
Tagapayapa would only duplicate the conciliation proceedings and unduly
delay the disposition of labor cases.

LABOR ARBITER

1. THE LABOR ARBITER.

The Labor Arbiter is an official in the Arbitration Branch of the National
Labor Relations Commission (NLRC) who hears and decides cases falling
under his original and exclusive jurisdiction as provided by law.

2. LABOR ARBITERS HAVE NO INJUNCTIVE POWER; ONLY THE

COMMISSION (NLRC) HAS THIS POWER.
Previously, Labor Arbiters are possessed of injunctive power. This grant of
injunctive power, however, was deleted in recent NLRC Rules. The Labor
Arbiter thus has no more injunctive power. Only the Commission (NLRC)
has that power.
1 G.R. No. 162419, July 10, 2007.
2 G.R. No. 165935, Feb. 8, 2012.
3 G.R. No. 168715, Sept. 15, 2010.

3. JURISDICTION
a. NATURE OF JURISDICTION OF LABOR ARBITERS - ORIGINAL AND
EXCLUSIVE.
The jurisdiction conferred by Article 217 upon the Labor Arbiters is both
original and exclusive, meaning, no other officers or tribunals can take
cognizance of, or hear and decide, any of the cases therein enumerated.

b. EXCEPTIONS TO THE ORIGINAL AND EXCLUSIVE JURISDICTION

OF LABOR ARBITERS.
The following cases are the exceptions when the Labor Arbiters may not

CCV Notes on Labor Relations | 135

exercise their original and exclusive jurisdiction:
1. In assumed cases. When the DOLE Secretary or the President exercises
his power under Article 263(g) of the Labor Code to assume jurisdiction
over national interest cases and decide them himself.
2. In certified cases. When the NLRC exercises its power of compulsory
arbitration over similar national interest cases that are certified to it by the
DOLE Secretary pursuant to the exercise by the latter of his certification
power under the same Article 263(g).
3. In cases arising from CBA. - When cases arise from the interpretation or
implementation of collective bargaining agreements and from the
interpretation or enforcement of company personnel policies which shall be
disposed of by the Labor Arbiter by referring the same to the grievance
machinery and voluntary arbitration, as may be provided in said
agreements.
4. In cases submitted for voluntary arbitration. - When the parties agree to
submit the case to voluntary arbitration before a Voluntary Arbitrator or
panel of Voluntary Arbitrators who, under Articles 261 and 262 of the
Labor Code, are also possessed of original and exclusive jurisdiction to hear
and decide cases mutually submitted to them by the parties for arbitration
and adjudication.

4. RUNDOWN OF ALL CASES FALLING UNDER THE JURISDICTION OF

THE LABOR ARBITERS.

More particularly, Labor Arbiters shall have original and exclusive

jurisdiction to hear and decide the following cases involving all workers,
whether agricultural or non-agricultural:

1. Under Article 217 of the Labor Code:

(a) Unfair labor practice cases;
(b) Termination disputes (Illegal dismissal cases);
(c) Money claims exceeding P5,000.00.
(d) Claims for actual, moral, exemplary and other forms of damages arising
from employer-employee relations; and
(e) Cases involving the legality of strikes and lockouts.
NOTE: Claims for employees compensation, SSS, Philhealth (Medicare)
and maternity benefits do not fall under the jurisdiction of the Labor
Arbiter because these fall under the jurisdiction of other government
agencies.

2. Under Article 124 of the Labor Code, as amended by R.A. No. 6727:
Disputes involving legislated wage increases and wage distortion in
unorganized establishments not voluntarily settled by the parties pursuant
to R.A. No. 6727.

3. Under Article 128(b) of the Labor Code, as amended by R.A. No. 7730:
Contested cases under the exception clause in Article 128(b) of the Labor
Code.

CCV Notes on Labor Relations | 136

4. Under Article 227 of the Labor Code:
Enforcement of compromise agreements when there is non-compliance by
any of the parties thereto, pursuant to Article 227 of the Labor Code.
5. Under Article 262-A of the Labor Code:
Issuance of writ of execution to enforce decisions of Voluntary Arbitrators
or panel of Voluntary Arbitrators, in case of their absence or incapacity, for
any reason.
6. Under Section 10 of R.A. No. 8042, as amended by R.A. No. 10022:
Money claims of OFWs arising out of employer-employee relationship or by
virtue of any law or contract, including claims death and disability benefits
and for actual, moral, exemplary and other forms of damages.

7. Other cases as may be provided by law.

I. JURISDICTION OVER UNFAIR LABOR PRACTICE CASES

1. SOME PRINCIPLES ON JURISDICTION OVER ULPs.
The Labor Arbiter has jurisdiction over all ULPs whether committed by the
employers or the labor organizations.
The Labor Arbiter has jurisdiction only over the civil aspect of ULP, the
criminal aspect being lodged with the regular courts.

II. JURISDICTION OVER ILLEGAL DISMISSAL CASES

1. SOME PRINCIPLES ON JURISDICTION OVER TERMINATION CASES.
The validity of the exercise of jurisdiction by Labor Arbiters over illegal
dismissal cases is not dependent on the kind or nature of the ground cited
in support of the dismissal; hence, whether the dismissal is for just cause or
authorized cause, it is of no consequence.
In case of conflict of jurisdiction between Labor Arbiter and the Voluntary
Arbitrator over termination cases, the former’s jurisdiction shall prevail for
the following reasons:
(1) Termination of employment is not a grievable issue that must be
submitted to the grievance machinery or voluntary arbitration for
adjudication. The jurisdiction thereover remains within the original and
exclusive ambit of the Labor Arbiter and not of the Voluntary Arbitrator.
(2) Even if the CBA provides that termination disputes are grievable, the
same is merely discretionary on the part of the parties thereto.
(3) Once there is actual termination, jurisdiction is conferred upon Labor
Arbiters by operation of law.
(4) Interpretation of CBA and enforcement of company personnel policies
are merely corollary to an illegal dismissal case.
(5) Article 217 is deemed written into the CBA being an intrinsic part
thereof.
In other words, the Voluntary Arbitrator will only have jurisdiction over
illegal dismissal cases when there is express agreement of the parties to the
CBA, i.e., the employer and the bargaining agent, to submit the termination
case to voluntary arbitration. Absent the mutual express agreement of the
parties, Voluntary Arbitrator cannot acquire jurisdiction over termination
cases.
The express agreement must be stated in the CBA or there must be enough

CCV Notes on Labor Relations | 137

evidence on record unmistakably showing that the parties have agreed to
resort to voluntary arbitration.

III. JURISDICTION OVER MONEY CLAIMS CASES

1. CLASSIFICATION OF MONEY CLAIMS.
Money claims falling within the original and exclusive jurisdiction of the
Labor Arbiters may be classified as follows:
1. Any money claim, regardless of amount, when asserted in an illegal
dismissal case (hence, accompanied with a claim for reinstatement). Here,
the money claim is but an accompanying remedy subordinated to the
principal cause of action, i.e., illegal dismissal; or
2. Any money claim exceeding the amount of P5,000.00 per claimant.
If the amount does not exceed P5,000.00, it is, under Article 129, the DOLE
Regional Director has jurisdiction to take cognizance thereof.

3. SOME PRINCIPLES ON JURISDICTION OVER MONEY CLAIMS.

Award of statutory benefits even if not prayed for is valid.
Claim for notarial fees by a lawyer employed by a company is within the
jurisdiction of the Labor Arbiter.

(a) LABOR ARBITER VERSUS REGIONAL DIRECTOR

1. LABOR ARBITERS HAVE NO JURISDICTION OVER SMALL MONEY

CLAIMS LODGED UNDER ARTICLE 129.
As earlier emphasized, under Article 129 of the Labor Code, DOLE Regional
Directors have jurisdiction over claims amounting to P5,000 or below,
provided the following requisites concur:
1. The claim must arise from employer-employee relationship;
2. The claimant does not seek reinstatement; and
3. The aggregate money claim of each employee does not exceed
P5,000.00.

2. IN INSPECTION OF ESTABLISHMENT CASES UNDER ARTICLE 128,

DOLE REGIONAL DIRECTORS HAVE JURISDICTION REGARDLESS OF
WHETHER OR NOT THE TOTAL AMOUNT OF CLAIMS PER EMPLOYEE
EXCEEDS
P5,000.00.
a. Requisites.
For the valid exercise by the DOLE Secretary or any of his duly authorized
representatives (DOLE Regional Directors) of the visitorial and
enforcement powers provided under Article 128(b), the following requisites
should concur:
(1) The employer-employee relationship should still exist;
(2) The findings in question were made in the course of inspection by labor
inspectors; and
(3) The employees have not yet initiated any claim or complaint with the
DOLE Regional Director under Article 129, or the Labor Arbiter under
Article 217.

CCV Notes on Labor Relations | 138

3. HOWEVER, JURISDICTION OVER CONTESTED CASES UNDER THE
EXCEPTION CLAUSE IN ARTICLE 128(b) OF THE LABOR CODE
INVOLVING INSPECTION OF ESTABLISHMENTS BELONGS TO THE
LABOR ARBITERS AND NOT TO DOLE REGIONAL DIRECTORS.

a. Relation of paragraph (b) of Article 128 to the jurisdiction of Labor

Arbiters.
The Labor Arbiters have jurisdiction over contested cases under the
exception clause in Article 128(b). which states:
“xxx. The Secretary or his duly authorized representatives shall issue writs
of execution to the appropriate authority for the enforcement of their
orders, except in cases where the employer contests the findings of the
labor employment and enforcement officer and raises issues supported by
documentary proofs which were not considered in the course of
inspection.”
In interpreting the afore-quoted provision of the exception clause, three (3)
elements must concur to divest the Regional Directors or their
representatives of jurisdiction thereunder, to wit:
(a) That the employer contests the findings of the labor regulations officer
and raises issues thereon;
(b) That in order to resolve such issues, there is a need to examine
evidentiary matters; and
(c) That such matters are not verifiable in the normal course of inspection.
The 2009 case of Meteoro v. Creative Creatures, Inc.,1 best illustrates the
application of the exception clause. Here, it was held that the Court of
Appeals aptly applied the “exception clause” because at the earliest
opportunity, respondent company registered its objection to the findings of
the labor inspector on the ground that there was no employer-employee
relationship between petitioners and respondent company. The labor
inspector, in fact, noted in his report that “respondent alleged that
petitioners were contractual workers and/or independent and talent
workers without control or supervision and also supplied with tools and
apparatus pertaining to their job.” In its position paper, respondent again
insisted that petitioners were not its employees. It then questioned the
Regional Director’s jurisdiction to entertain the matter before it, primarily
because of the absence of an employer-employee relationship. Finally, it
raised the same arguments before the Secretary of Labor and the appellate
court. It is, therefore, clear that respondent contested and continues to
contest the findings and conclusions of the labor inspector. To resolve the
issue raised by respondent, that is, the existence of an employer-employee
relationship, there is a need to examine evidentiary matters.

IV. JURISDICTION OVER CLAIMS FOR DAMAGES

1. LABOR ARBITERS HAVE JURISDICTION OVER CLAIMS FOR

DAMAGES.
It is now a well-settled rule that claims for damages as well as attorney’s
fees in labor cases are cognizable by the Labor Arbiters, to the exclusion of

CCV Notes on Labor Relations | 139

all other courts. Rulings to the contrary are deemed abandoned or modified
accordingly.

2. CLAIMS FOR DAMAGES OF OVERSEAS FILIPINO WORKERS (OFWs).

Claims for actual, moral, exemplary and other forms of damages that may
be lodged by overseas Filipino workers are cognizable by the Labor
Arbiters.

V. JURISDICTION OVER LEGALITY OF STRIKES AND LOCKOUTS

JURISDICTIONAL INTERPLAY IN STRIKE OR LOCKOUT CASES

1. A STRIKE OR LOCKOUT IS CROSS-JURISDICTIONAL IN NATURE.

Based on the pertinent provisions of the Labor Code, below is an outline of

the interplay in jurisdiction among them.

1. Filing of a notice of strike or lockout with NCMB. - A union which intends

to stage a strike or an employer which desires to mount a lockout should
file a notice of strike or notice of lockout, as the case may be, with the
NCMB and not with any other office.
It must be noted, however, that the NCMB, per Tabigue v. International
Copra Export Corporation,2 is not a quasi-judicial body; hence, the
Conciliators-Mediators of the NCMB do not have any decision-making
power. They cannot issue decisions to resolve the issues raised in the notice
of strike or lockout. Their role is confined solely to the conciliation and
mediation of the said issues, although they can suggest to the parties that
they submit their dispute to voluntary arbitration through the Voluntary
Arbitrators accredited by the NCMB.

2. Filing of a complaint to declare the illegality of the strike or lockout with

the Labor Arbiter or Voluntary Arbitrator or panel of Voluntary Arbitrator.
- In case a party wants to have the strike or lockout declared illegal, a
complaint should be filed either with the Labor Arbiter under Article
217(a)(5) of the Labor Code or, upon mutual agreement of the parties, with
the Voluntary Arbitrator or panel of Voluntary Arbitrators under Article
262 of the same Code. The issue of illegality of the strike or lockout cannot
be resolved by the Conciliators-Mediators of the NCMB as earlier pointed
out and discussed.

3. Filing of an injunction petition with the Commission (NLRC). - In case

illegal acts violative of Article 264 are committed in the course of the strike
or lockout, a party may file a petition for injunction directly with the
Commission (NLRC) under Article 218(e) of the Labor Code for purposes of
securing a temporary restraining order (TRO) and injunction.
The Labor Arbiters or Voluntary Arbitrators are not possessed of any
injunctive power under the Labor Code. In other words, the aggrieved

CCV Notes on Labor Relations | 140

party, despite the pendency of the case for the declaration of the illegality of
the strike or lockout with the Labor Arbiter or Voluntary Arbitrator, as the
case may be, may directly go to the Commission to secure the injunctive
relief.

4. Assumption of jurisdiction by the DOLE Secretary. –

Under Article 263(g) of the Labor Code, the DOLE Secretary has the power
to assume jurisdiction over labor disputes which, in his opinion, may cause
or likely to cause a strike or lockout in industries indispensable to the
national interest (so-called “national interest” cases). Once he makes the
assumption, he shall decide all the issues related to the labor dispute
himself, to the exclusion of all other labor authorities.

5. Certification of the labor dispute to the NLRC. –

Under the same provision of Article 263(g) of the Labor Code, the DOLE
Secretary has the option of not assuming jurisdiction over the labor dispute
in national interest cases. Instead, he may certify it to the NLRC for
compulsory arbitration, in which case, it will be the NLRC which shall hear
and decide all the issues subject of the certification order.
In case at the time of the said assumption or certification, there is a pending
case before the Labor Arbiter or Voluntary Arbitrator on the issue of
illegality of the strike or lockout, the same shall be deemed subsumed in the
assumed or certified case.
Resultantly, it is no longer the Labor Arbiter or the Voluntary Arbitrator
who should decide the said case but the DOLE Secretary, in the case of
assumed cases, or the NLRC, in the case of certified cases.

6. Assumption of jurisdiction over a national interest case by the President.

–
The President of the Philippines is not precluded from intervening in a
national interest case by exercising himself the powers of his alter ego, the
DOLE Secretary, granted under Article 263(g) by assuming jurisdiction
over the same for purposes of settling or terminating it.
1 G.R. No. 171275, July 13, 2009.
2 G.R. No. 183335, Dec. 23, 2009; See also Hotel Employees Union-NFL v.
Waterfront Insular Hotel Davao, G.R. Nos. 174040-41, Sept. 22, 2010.

7. Submission of a national interest case to voluntary arbitration.

- Despite the pendency of the assumed or certified national interest case,
the parties are allowed to submit any issues raised therein to voluntary
arbitration at any stage of the proceeding, by virtue of Article 263(h) which
provides that “(b)efore or at any stage of the compulsory arbitration
process, the parties may opt to submit their dispute to voluntary
arbitration.”

The foregoing interplay explains why Article 263(i) makes specific

CCV Notes on Labor Relations | 141

reference to the President of the Philippines, the Secretary of Labor and
Employment, the Commission (NLRC) or the Voluntary Arbitrator in
connection with the law on strike, lockout and picketing embodied in
Article 263. The only labor official not so mentioned therein but who has a
significant role to play in the interaction of labor officials and tribunals in
strike or lockout cases, is the Labor Arbiter. This is understandable in the
light of the separate express grant of jurisdiction to the Labor Arbiters
under Article 217(a)(5) as above discussed.

JURISDICTION OVER CASES INVOLVING

LEGISLATED WAGE INCREASES AND WAGE DISTORTION

1. CASES IN ORGANIZED ESTABLISHMENTS.

Jurisdiction is with the Voluntary Arbitrator.

2. CASES IN UNORGANIZED ESTABLISHMENTS.

Jurisdiction is with Labor Arbiter.

JURISDICTION OVER ENFORCEMENT OR ANNULMENT

OF COMPROMISE AGREEMENTS

1. LEGAL BASIS.
Article 227 clearly embodies the following provisions on compromise
agreements:
“Article 227. Compromise Agreements. - Any compromise settlement,
including those involving labor standard laws, voluntarily agreed upon by
the parties with the assistance of the Bureau or the regional office of the
Department of Labor, shall be final and binding upon the parties. The
National Labor Relations Commission or any court shall not assume
jurisdiction over issues involved therein except in case of non-compliance
thereof or if there is prima facie evidence that the settlement was obtained
through fraud, misrepresentation, or coercion.”
Clear from the foregoing provision that, although the compromise
agreement may have been entered into by the parties before the Bureau of
Labor Relations (BLR) or the DOLE Regional Office, it is the Labor Arbiter
who has jurisdiction to take cognizance of the following issues related
thereto, to the exclusion of the BLR and the DOLE Regional Directors:
(1) To enforce the compromise agreement in case of non-compliance
therewith by any of the parties thereto; or
(2) To nullify it if there is prima facie evidence that the settlement was
obtained through fraud, misrepresentation, or coercion.

JURISDICTION OVER EXECUTION AND ENFORCEMENT

OF DECISIONS OF VOLUNTARY ARBITRATORS

1. DECISIONS OF VOLUNTARY ARBITRATORS.

Article 262-A of the Labor Code prescribes the procedures that Voluntary

CCV Notes on Labor Relations | 142

Arbitrators or panel of Voluntary Arbitrators should follow in adjudicating
cases filed before them. Once a decision has been rendered in a case and
subsequently becomes final and executory, it may be enforced through the
writ of execution issued by the same Voluntary Arbitrator or panel of
Voluntary Arbitrators who rendered it, addressed to and requiring certain
public officers to execute the final decision, order or award.

2. LABOR ARBITERS MAY ISSUE THE WRIT OF EXECUTION.

In situations, however, where the Voluntary Arbitrator or the panel of
Voluntary Arbitrators who rendered the decision is absent or incapacitated
for any reason, Article 262-A grants jurisdiction to any Labor Arbiter in the
region where the winning party resides, to take cognizance of a motion for
the issuance of the writ of execution filed by such party and accordingly
issue such writ addressed to and requiring the public officers mentioned
above to execute the final decision, order or award of the Voluntary
Arbitrator or panel of Voluntary Arbitrators.

JURISDICTION OVER CASES OF OVERSEAS FILIPINO WORKERS

(OFWs)

1. LABOR ARBITERS HAVE JURISDICTION OVER ALL MONEY CLAIMS

OF OFWs.
All claims of OFWs with a sign of peso are cognizable by the Labor Arbiters,
including claims for disability and death benefits.

2. EXCEPTION: VOLUNTARY ARBITRATORS HAVE JURISDICTION

OVER MONEY CLAIMS IF THERE EXISTS A CBA.
If there is a CBA between the foreign employer and the bargaining union of
the OFWs, the jurisdiction over monetary claims of OFWs belongs to the
Voluntary Arbitrator and not to the Labor Arbiter.

3. OFW-RELATED CASES OVER WHICH THE POEA, AND NOT THE

LABOR ARBITERS, HAS JURISDICTION.
The Philippine Overseas Employment Administration (POEA) has original
and exclusive jurisdiction to hear and decide:

(a) All cases which are administrative in character, involving or arising out
of violation of rules and regulations relating to licensing and registration of
recruitment and employment agencies or entities, including refund of fees
collected from workers and violation of the conditions for the issuance of
license to recruit workers.

(b) Disciplinary action cases and other special cases which are
administrative in character, involving employers, principals, contracting
partners and Filipino migrant workers.

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

OTHER ISSUES OVER WHICH LABOR ARBITERS HAVE

JURISDICTION

1. JURISDICTION OVER CERTAIN ISSUES AS PROVIDED IN

JURISPRUDENCE.
In accordance with well-entrenched jurisprudence, the issues, claims or
cases of the following fall under the jurisdiction of the Labor Arbiters:
(a) Employees in government-owned and/or controlled corporations
without original charters;
(b) Domestic workers or kasambahay;
(c) Employees of cooperatives;
(d) Counter-claims of employers against employees.

JURISDICTION OVER CASES OF DOMESTIC WORKERS OR

KASAMBAHAY

1. WHEN LABOR ARBITERS HAVE JURISDICTION.

The Labor Arbiter has jurisdiction if the amount of the claim exceeds
P5,000.00; otherwise, the jurisdiction is vested with the DOLE Regional
Director under Article 129 of the Labor Code.
Incidentally, it is no longer legally correct to use the term “domestic
servant” or “househelper” in reference to a person who performs domestic
work. Under R.A. No. 10361, “domestic servant” or “househelper” should
now be referred to as “domestic worker” or “kasambahay.”

JURISDICTION OVER CASES OF EMPLOYEES OF

COOPERATIVES

1. WHEN LABOR ARBITERS HAVE JURISDICTION.

The Labor Arbiter has jurisdiction only over monetary claims and illegal
dismissal cases involving employees of cooperatives but not the claims or
termination of membership of members thereof. Cooperatives organized
under R.A. No. 6938, are composed of members; hence, issues on the
termination of their membership with the cooperative do not fall within the
jurisdiction of the Labor Arbiters.

Perpetual Help Credit Cooperative, Inc. v. Faburada. –

Petitioner in this case contends that the Labor Arbiter has no jurisdiction to
take cognizance of the complaint of private respondents who are not
members but employees of the cooperative.

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The Supreme Court ruled that there is no evidence that private respondents
are members of petitioner cooperative and even if they are, the dispute is
about payment of wages, overtime pay, rest day and termination of
employment. Under Article 217 of the Labor Code, these disputes are within
the original and exclusive jurisdiction of the Labor Arbiters.

In the 2010 case of San Miguel Corp. v. Semillano,1 petitioner asserts that
the present case is outside the jurisdiction of the labor tribunals because
respondent Vicente Semillano is a member of the Alilgilan Multi-Purpose
Coop (AMPCO), not an employee of petitioner SMC. Petitioner is of the
position that the instant dispute is intra-cooperative in nature falling
within the jurisdiction of the Arbitration Committee of the Cooperative
Development Authority. AMPCO was contracted by petitioner to supply it
with workers to perform the task of segregating bottles, removing dirt
therefrom, filing them in designated places, loading and unloading the
bottles to and from the delivery trucks, and to perform other tasks as may
be ordered by SMC’s officers. Semillano, together with the other
respondents, filed the complaint for regularization with petitioner SMC,
contending that AMPCO was a mere labor-only contractor.
The High Court declared in this case that AMPCO was a labor-only
contractor and consequently pronounced that all the respondents,
including Semillano, were regular employees of petitioner. On this issue of
jurisdiction, the High Court held that the Labor Arbiter has jurisdiction
because precisely, Semillano has joined the others in filing this complaint
because it is his position that petitioner SMC is his true employer and liable
for all his claims under the Labor Code.

JURISDICTION OVER COUNTER-CLAIMS OF EMPLOYERS

1. EMPLOYERS MAY ASSERT COUNTER-CLAIMS AGAINST

EMPLOYEES FILED BY THE LATTER BEFORE THE LABOR
ARBITERS.
Almost all labor cases decided by labor courts involve claims asserted by
the workers. The question that may be propounded is whether the
employers can assert counter-claims against their employees before the
Labor Arbiters.
The Supreme Court answered this poser in the affirmative.
Bañez v. Hon. Valdevilla.2 –
The jurisdiction of Labor Arbiters and the NLRC is comprehensive enough
to include claims for all forms of damages “arising from the employer-
employee relations.” By this clause, Article 217 should apply with equal
force to the claim of an employer for actual damages against its dismissed
employee, where the basis for the claim arises from or is necessarily
connected with the fact of termination, and should be entered as a counter-
claim in the illegal dismissal case.

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This is in accord with paragraph 6 of Article 217(a), which covers “all other
claims, arising from employer-employee relations.”
But such counter-claim, being a factual issue, must be asserted before the
Labor Arbiter; otherwise, it can no longer be passed upon by a reviewing
court.

ISSUES AND CASES OVER WHICH LABOR ARBITERS HAVE NO

JURISDICTION

1. LABOR ARBITERS HAVE NO JURISDICTION OVER CERTAIN ISSUES

AND CASES.
The following issues or cases do not fall under the jurisdiction of Labor
Arbiters:
(a) Claims for damages arising from breach of a non-compete clause and
other post-employment prohibitions;
(b) Claims for payment of cash advances, car, appliance and other loans of
employees;
(c) Dismissal of corporate officers and their monetary claims;
(d) Cases involving entities immune from suit;
(e) Cases falling under the doctrine of forum non conveniens;
(f) Constitutionality of CBA provisions.
1 G.R. No. 164257, July 5, 2010.
2 G.R. No. 128024, May 9, 2000, 331 SCRA 584.

CLAIMS FOR DAMAGES ARISING FROM BREACH OF NON-COMPETE

CLAUSE AND OTHER POST-EMPLOYMENT PROHIBITIONS

JURISDICTION IS LODGED WITH THE REGULAR COURTS.

In case of violation of the non-compete clause and similar post-
employment bans or prohibitions, the employer can assert his claim for
damages against the erring employee with the regular courts and not with
the labor courts.

EMPLOYER’S CLAIMS FOR CASH ADVANCES, CAR, APPLIANCE AND

OTHER PERSONAL LOANS OF EMPLOYEES

1. LABOR ARBITERS HAVE NO JURISDICTION.

With respect to resolving issues involving loans availed of by employees
from their employers, it has been the consistent ruling of the Supreme
Court that the Labor Arbiters have no jurisdiction thereover but the regular
courts.
Where the claim to the principal relief sought is to be resolved not by
reference to the Labor Code or other labor relations statute or a collective
bargaining agreement but by the general civil law, the jurisdiction over
the dispute belongs to the regular courts of justice and not to the Labor
Arbiter and the NLRC. In such situations, resolutions of the dispute
requires expertise, not in labor management relations nor in wage

CCV Notes on Labor Relations | 146

structures and other terms and conditions of employment, but rather in the
application of the general civil law. Clearly, such claims fall outside the area
of competence or expertise ordinarily ascribed to Labor Arbiters and the
NLRC and the rationale for granting jurisdiction over such claims to these
agencies disappears.”
The following loans may be cited:
a. Cash loans/advances are in the nature of simple collection of a sum of
money brought by the employer, as creditor, against the employee, as
debtor. The fact that they were employer and employee at the time of the
transaction does not negate the civil jurisdiction of the trial court. The case
does not involve adjudication of a labor dispute but recovery of a sum of
money based on our civil laws on obligation and contract.
b. Car loans such as those granted to sales or medical representatives by
reason of the nature of their work. The employer’s demand for payment of
the employees’ amortizations on their car loans, or, in the alternative, the
return of the cars to the company, is not a labor, but a civil, dispute. It
involves debtor-creditor relations, rather than employee-employer
relations.
c. Appliance loans concern the enforcement of a loan agreement involving
debtor-creditor relations founded on contract and do not in any way
concern employee relations. As such it should be enforced through a
separate civil action in the regular courts and not before the Labor Arbiter.
d. Loans from retirement fund also involve the same principle as above;
hence, collection therefor may only be made through the regular courts and
not through the Labor Arbiter or any labor tribunal.

DISMISSAL OF DIRECTORS AND CORPORATE OFFICERS

1. LABOR ARBITERS HAVE NO JURISDICTION.

The dismissal of a director or corporate officer is an intra-corporate dispute
cognizable by the Regional Trial Court and not by the Labor Arbiter.

2. MATLING DOCTRINE.

Under this doctrine,1 the following rules should be observed:

(1) The dismissal of regular employees falls under the jurisdiction of Labor
Arbiters; while that of corporate officers falls within the jurisdiction of the
regular courts.
(2) The term “corporate officers” refers only to those expressly mentioned
in the Corporation Code and By-Laws; all other officers not so mentioned
therein are deemed employees.
(3) Corporate officers are elected or appointed by the directors or
stockholders, and those who are given that character either by the
Corporation Code or by the corporation’s by-laws.
(4) The Corporation Code specifically mentions only the following
corporate officers, to wit: president, secretary
and treasurer and such other officers as may be provided for in the by-laws.
(5) The Board of Directors can no longer create corporate offices because

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the power of the Board of Directors to create a corporate office cannot be
delegated. Therefore, the term “corporate officers” should only refer to the
above and to no other. A different interpretation can easily leave the way
open for the Board of Directors to circumvent the constitutionally
guaranteed security of tenure of the employee by the expedientinclusion in
the By-Laws of an enabling clause on the creation of just any corporate
officer position.

(6) Distinction between a corporate officer and an employee. - An “office” is

created by the charter of the corporation and the “corporate officer” is
elected by the directors or stockholders. On the other hand, an “employee”
occupies no office and generally is employed not by the action of the
directors or stockholders but by the managing officer of the corporation
who also determines the compensation to be paid to such employee.

(7) Because of the Matling doctrine, the rulings in Tabang and Nacpil, are
no longer controlling because they are “too sweeping and do not accord
with reason, justice, and fair play.”1 Enunciated in the 2010 case of Matling
Industrial and Commercial Corp. v. Ricardo R. Coros, G.R. No. 157802, Oct.
13, 2010.
This case is an appeal via petition for review on certiorari. The petitioners
challenge the decision of the CA which sustained the ruling of the NLRC to
the effect that the Labor Arbiter had jurisdiction because the respondent,
its Vice President for Finance and Administration, was not a corporate
officer of petitioner Matling.

(8) The status of an employee as director and stockholder does not

automatically convert his dismissal into an intra-corporate dispute.

(9) Two (2) elements to determine whether a dispute is intra-corporate or

not.
(a) The status or relationship of the parties (Relationship test); and
(b) The nature of the question that is the subject of their controversy.
(Nature of controversy test).
In the absence of any one of these factors, the RTC will not have
jurisdiction.

(10) The criteria do not depend on the services performed but on the
manner of creation of the office.
In Matling, respondent Corros was supposedly at once an employee, a
stockholder, and a Director of Matling. The circumstances surrounding his
appointment to office must be fully considered to determine whether the
dismissal constituted an intra-corporate controversy or a labor termination
dispute. It must also be considered whether his status as Director and
stockholder had any relation at all to his appointment and subsequent
dismissal as Vice President for Finance and Administration.
Obviously enough, the respondent was not appointed as Vice President for

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Finance and Administration because of his being a stockholder or Director
of Matling. He had started working for Matling on September 8, 1966, and
had been employed continuously for 33 years until his termination on April
17, 2000. His first work as a bookkeeper and his climb in 1987 to his last
position as Vice President for Finance and Administration had been
gradual but steady. Even though he might have become a stockholder of
Matling in 1992, his promotion to the position of Vice President for Finance
and Administration in 1987 was by virtue of the length of quality service he
had rendered as an employee of Matling. His subsequent acquisition of the
status of Director/stockholder had no relation to his promotion. Besides,
his status of Director/stockholder was unaffected by his dismissal from
employment as Vice President for Finance and Administration.

3. SIGNIFICANT CASES DECIDED BASED ON THE MATLING

DOCTRINE.
a. Cosare v. Broadcom Asia, Inc., (2014)
In this 2014 case, the Supreme Court ruled that the Labor Arbiter, not the
regular courts, has original jurisdiction over the illegal dismissal case filed
by petitioner Cosare who was an incorporator of respondent Broadcom and
was holding the position of Assistant Vice President for Sales (AVP for
Sales) and Head of the Technical Coordination at the time of his
termination. The following justifications were cited in support of this
ruling:
(1) The mere fact that a person was a stockholder and an officer of the
company at the time the subject controversy
developed does not necessarily make the case an intra-corporate dispute.
(2) A person, although an officer of the company, is not necessarily a
corporate officer thereof.
(3) General Information Sheet (GIS) submitted to SEC neither governs nor
establishes the nature of office.
(4) The Nature of the Controversy Test: The mere fact that a person was a
stockholder at the time of the filing of the illegal dismissal case does not
make the action an intra-corporate dispute.

b. Other cases:
(1) Barba v. Liceo de Cagayan University (2012);
(2) Marc II Marketing, Inc. and Lucila V. Joson v. Alfredo M. Joson (2011);
(3) Real v. Sangu Philippines, Inc. (2011).

LABOR CASES INVOLVING ENTITIES IMMUNE FROM SUIT

1. IMMUNE ENTITIES CANNOT BE SUED FOR LABOR LAW

VIOLATIONS.
In this jurisdiction, the generally accepted principles of international law
are recognized and adopted as part of the law of the land. Immunity of a
State and international organizations from suit is one of these universally
recognized principles. It is on this basis that Labor Arbiters or other labor
tribunals have no jurisdiction over immune entities.

CCV Notes on Labor Relations | 149

2. ILLUSTRATIVE CASE.
In Department of Foreign Affairs v. NLRC,1 involving an illegal dismissal
case filed against the Asian Development Bank (ADB), it was ruled that said
entity enjoys immunity from legal process of every form and therefore the
suit against it cannot prosper. And this immunity extends to its officers who
also enjoy immunity in respect of all acts performed by them in their official
capacity. The Charter and the Headquarters Agreement granting these
immunities and privileges to the ADB are treat
covenants and commitments voluntarily assumed by the Philippine
government which must be respected.

3. EXCEPTION TO THE RULE.

There is an exception to the immunity rule as exemplified by the case of
United States v. Hon. Rodrigo,2 where it was held that when the function of
the foreign entity otherwise immune from suit partakes of the nature of a
proprietary activity, such as the restaurant services offered at John Hay Air
Station undertaken by the United States Government as a commercial
activity for profit and not in its governmental capacity, the case for illegal
dismissal filed by a Filipino cook working therein is well within the
jurisdiction of Philippine courts. The reason is that by entering into the
employment contract with the cook in the discharge of its proprietary
functions, it impliedly divested itself of its sovereign immunity from suit.
1 G.R. No. 113191, Sept. 18, 1996, 262 SCRA 39, 43-44.
2 G.R. No. 79470, Feb. 26, 1990, 182 SCRA 644, 660.

4. ESTOPPEL DOES NOT CONFER JURISDICTION OVER AN IMMUNE

ENTITY.
An entity immune from suit cannot be estopped from claiming such
diplomatic immunity since estoppel does not operate to confer jurisdiction
to a tribunal that has none over a cause of action.

DOCTRINE OF FORUM NON CONVENIENS

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

2. APPLICATION TO LABOR CASES.

a. Case where doctrine was rejected.
Petitioners’ invocation of this principle was rejected in Pacific Consultants
International Asia, Inc. v. Schonfeld.1 Petitioners’ insistence was based on

CCV Notes on Labor Relations | 150

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

b. Case where doctrine was applied.

This doctrine was applied in the case of The Manila Hotel Corp. and Manila
Hotel International Limited v. NLRC,2 where private respondent Marcelo
Santos was an overseas worker employed as a printer in a printing press in
the Sultanate of Oman when he was directly hired by the Palace Hotel,
Beijing, People’s Republic of China to work in its print shop. This hotel was
being managed by the Manila Hotel International Ltd., a foreign entity
registered under the laws of Hong Kong. Later, he was terminated due to
retrenchment occasioned by business reverses brought about by the
political upheaval in China (referring to the Tiananmen Square incident)
which severely affected the hotel’s operations.
In holding that the NLRC was a seriously inconvenient forum, the Supreme
Court noted that the main aspects of the case transpired in two foreign
jurisdictions and the case involves purely foreign elements. The only link
that the Philippines has with the case is that the private respondent
employee (Marcelo Santos) is a Filipino citizen. The Palace Hotel and
MHICL are foreign corporations. Consequently, not all cases involving
Filipino citizens can be tried here. Respondent employee was hired
directly by the Beijing Palace Hotel, a foreign employer, through
correspondence sent to him while he was working at the Sultanate of
Oman. He was hired without the intervention of the POEA or any
authorized recruitment agency of the government.
Hence, the NLRC is an inconvenient forum given that all the incidents of
the case - from the time of recruitment, to employment to dismissal -
occurred outside the Philippines. The inconvenience is compounded by the
fact that the proper defendants, the Palace Hotel and MHICL, are not
nationals of the Philippines. Neither are they “doing business in the
Philippines.” Likewise, the main witnesses, Mr. Shmidt (General Manager
of the Palace Hotel) and Mr. Henk (Palace Hotel’s Manager) are non-
residents of the Philippines.
Neither can an intelligent decision be made as to the law governing the
employment contract as such was perfected in foreign soil. This calls to fore
the application of the principle of lex loci contractus (the law of the place
where the contract was made). It must be noted that the employment
contract was not perfected in the Philippines. Private respondent employee
signified his acceptance thereof by writing a letter while he was in the
Sultanate of Oman. This letter was sent to the Palace Hotel in the People’s
Republic of China. Neither can the NLRC determine the facts surrounding
the alleged illegal dismissal as all acts complained of took place in Beijing,
People’s Republic of China. The NLRC was not in a position to determine

CCV Notes on Labor Relations | 151

whether the Tiananmen Square incident truly adversely affected the
operations of the Palace Hotel as to justify respondent employee’s
retrenchment.
Even assuming that a proper decision could be reached by the NLRC, such
would not have any binding effect against the employer, the Palace Hotel,
which is a corporation incorporated under the laws of China and was not
even served with summons. Jurisdiction over its person was not acquired.
This is not to say that Philippine courts and agencies have no power to solve
controversies involving foreign employers. Neither could it be said that the
Supreme Court does not have power over an employment contract executed
in a foreign country. If the respondent employee were an “overseas contract
worker”, a Philippine forum, specifically the POEA, not the NLRC, would
protect him. He is not an “overseas contract worker”, a fact which he admits
with conviction.

CONSTITUTIONALITY OF LABOR CONTRACT STIPULATIONS

1. THE HALAGUEÑA DOCTRINE.

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

CCV Notes on Labor Relations | 152

parties is merely incidental and the cause of action ultimately arose from
different sources of obligation, i.e., the Constitution and CEDAW.
1 G.R. No. 166920, Feb. 19, 2007.
2 G.R. No. 120077, Oct. 13, 2000.
3 G.R. No. 172013, Oct. 2, 2009.

2. REINSTATEMENT PENDING APPEAL

1. PIONEER TEXTURIZING DOCTRINE: REINSTATEMENT ASPECT OF

LABOR ARBITER’S DECISION, IMMEDIATELY EXECUTORY EVEN
PENDING APPEAL; NO WRIT OF EXECUTION REQUIRED.
According to the Pioneer Texturizing doctrine, an order of reinstatement
issued by the Labor Arbiter under Article 223 of the Labor Code is self-
executory or immediately executory even pending appeal. This means that
the perfection of an appeal shall stay the execution of the decision of the
Labor Arbiter except execution of the reinstatement pending appeal.

2. REINSTATEMENT PENDING APPEAL, APPLICABLE ONLY TO THE

REINSTATEMENT ORDER ISSUED BY THE LABOR ARBITER; WRIT OF
EXECUTION REQUIRED WHEN REINSTATEMENT IS ORDERED BY
NLRC ON APPEAL, OR SUBSEQUENTLY BY THE COURT OF APPEALS
OR SUPREME COURT, AS THE CASE MAY BE.
By way of distinction, the rule on reinstatement pending appeal applies
only to the order of reinstatement issued by the Labor Arbiter and to no
other. This means that if the reinstatement order is issued by the NLRC on
appeal, or by the Court of Appeals or by the Supreme Court, there is a need
to secure a writ of execution from the Labor Arbiter of origin to enforce the
reinstatement of the employee whose dismissal is declared illegal.

3. TWO (2) OPTIONS OF EMPLOYER.

To implement the reinstatement aspect of a Labor Arbiter’s decision, there
are only two (2) options available to the employer, to wit:
1. Actual reinstatement. - The employee should be reinstated to his position
which he occupies prior to his illegal dismissal under the same terms and
conditions prevailing prior to his dismissal or separation or, if no longer
available, to a substantially-equivalent position; or
2. Payroll reinstatement. – The employee should be reinstated in the
payroll of the company without requiring him to report back to his work.

4. DUTY OF EMPLOYER TO NOTIFY EMPLOYEE ORDERED

REINSTATED.
It is required that in case the decision of the Labor Arbiter includes an
order of reinstatement, it should contain:
(a) A statement that the reinstatement aspect is immediately executory; and
(b) A directive for the employer to submit a report of compliance within ten
(10) calendar days from receipt of the said decision.
Disobedience of this directive clearly denotes a refusal to reinstate. The

CCV Notes on Labor Relations | 153

employee need not file a motion for the issuance of the writ of execution
since the Labor Arbiter is mandated thereafter to motu proprio issue the
writ. With the new rules in place, there is hardly any difficulty in
determining the employer’s intransigence in immediately complying with
the order.

5. INSTANCES WHEN WRIT OF EXECUTION OF LABOR ARBITER’S

REINSTATEMENT ORDER STILL REQUIRED.
Under the 2011 NLRC Rules of Procedure, there are two (2) instances when
a writ of execution should still be issued immediately by the Labor Arbiter
to implement his order of reinstatement, even pending appeal, viz.:
(1) When the employer disobeys the prescribed directive to submit a report
of compliance within ten (10) calendar days from receipt of the decision; or
(2) When the employer refuses to reinstate the dismissed employee.
The Labor Arbiter shall motu proprio issue a corresponding writ to satisfy
the reinstatement wages as they accrue until actual reinstatement or
reversal of the order of reinstatement.

6. SOME PRINCIPLES ON REINSTATEMENT PENDING APPEAL.

Employer has no way of staying execution of immediate reinstatement. He

cannot post bond to prevent its execution.

Reinstatement pending appeal applies to all kinds of illegal dismissal

cases, regardless of the grounds thereof.

Reinstatement pending appeal does not apply when the dismissal is legal
but reinstatement is ordered for some reasons like equity and
compassionate justice.

The failure of employee ordered reinstated pending appeal to report back

to work as directed by the employer does not give the employer the right to
remove him, especially when there is a reasonable explanation for his
failure.

When former position is already filled up, the employee ordered reinstated
pending appeal should be reinstated to a substantially equivalent position.

Reinstatement to a position lower in rank is not proper.

In case of two successive dismissals, the order of reinstatement pending
appeal under Article 223 issued in the first case shall apply only to the first
case and should not affect the second dismissal. According to Sevilla v.
NLRC, the Labor Arbiter was correct in denying the third motion for
reinstatement filed by the petitioner because what she should have filed
was a new complaint based on the second dismissal. The second dismissal
gave rise to a new cause of action. Inasmuch as no new complaint was filed,

CCV Notes on Labor Relations | 154

the Labor Arbiter could not have ruled on the legality of the second
dismissal.
Reinstatement pending appeal is not affected by the reinstated employee’s
employment elsewhere.
Effect of grant of achievement award during reinstatement pending
appeal.
In the 2014 case of Garza v. Coca-Cola Bottlers Philippines, Inc.,1 it was
pronounced that the act of respondent CCBPI in giving an award of a
Certificate of Achievement to petitioner for his exemplary sales
performance during his reinstatement ordered by the Labor Arbiter, while
respondent’s appeal with the NLRC was still pending, constitutes
recognition of petitioner’s abilities and accomplishments. It indicates that
he is a responsible, trustworthy and hardworking employee of CCBPI. It
constitutes adequate proof weighing in his favor.

3. REQUIREMENTS TO PERFECT APPEAL TO NLRC

I. APPEAL IN GENERAL
1. APPEAL, MEANING AND NATURE.
The term “appeal” refers to the elevation by an aggrieved party to an agency
vested with appellate authority of any decision, resolution or order
disposing the principal issues of a case rendered by an agency vested with
original jurisdiction, undertaken by filing a memorandum of appeal.

2. SOME PRINCIPLES ON APPEAL.

Appeals under Article 223 apply only to appeals from the Labor Arbiter’s
decisions, awards or orders to the Commission (NLRC).
There is no appeal from the decisions, orders or awards of the NLRC.
Clearly, therefore, Article 223 of the Labor Code is not the proper basis for
elevating the case to the Court of Appeals or to the Supreme Court. The
proper remedy from the decisions, awards or orders of the NLRC to the
Court of Appeals is a Rule 65 petition for certiorari and from the Court of
Appeals to the Supreme Court, a Rule 45 petition for review on certiorari.
Appeal from the NLRC to the DOLE Secretary and to the President had
long been abolished.
Appeal is not a constitutional right but a mere statutory privilege. Hence,
parties who seek to avail of it must comply with the statutes or rules
allowing it.
A motion for reconsideration is unavailing as a remedy against a decision
of the Labor Arbiter. The Labor Arbiter should treat the said motion as an
appeal to the NLRC.
A “Petition for Relief” should be treated as appeal.
Affirmative relief is not available to a party who failed to appeal. A party
who does not appeal from a decision of a court cannot obtain affirmative
relief other than the ones granted in the appealed decision.

3. GROUNDS FOR APPEAL TO THE COMMISSION (NLRC).

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The appeal to the NLRC may be entertained only on any of the following
grounds:
a. If there is a prima facie evidence of abuse of discretion on the part of the
Labor Arbiter;
b. If the decision, order or award was secured through fraud or coercion,
including graft and corruption;
c. If made purely on questions of law; and/or
d. If serious errors in the findings of fact are raised which, if not corrected,
would cause grave or irreparable damage or injury to the appellant.

NLRC has certiorari power.

The first ground above regarding prima facie evidence of abuse of
discretion on the part of the Labor Arbiter is actually an exercise of
certiorari power by the NLRC. The case of Triad Security & Allied Services,
Inc. v. Ortega,2 expressly recognized this certiorari power of the NLRC.
Clearly, according to the 2012 case of Auza, Jr. v. MOL Philippines, Inc.,3
the NLRC is possessed of the power to rectify any abuse of discretion
committed by the Labor Arbiter.

II. PERFECTION OF APPEAL

1. EFFECT OF PERFECTION OF APPEAL ON EXECUTION.

To reiterate, the perfection of an appeal shall stay the execution of the
decision of the Labor Arbiter except execution for reinstatement pending
appeal.

2. PERFECTION OF APPEAL, MANDATORY AND JURISDICTIONAL.

The perfection of appeal within the period and in the manner prescribed by
law is jurisdictional and non-compliance with the legal requirements is
fatal and has the effect of rendering the judgment final and executory,
hence, unappealable.

3. REQUISITES.
The requisites for perfection of appeal to the NLRC are as follows:
(1) Observance of the reglementary period;
(2) Payment of appeal and legal research fee;
(3) Filing of a Memorandum of Appeal;
(4) Proof of service to the other party; and
(5) Posting of cash, property or surety bond, in case of monetary awards.
The foregoing are discussed below.

1 G.R. No. 180972, Jan. 20, 2014.

2 G.R. No. 160871, Feb. 6, 2006.
3 G.R. No. 175481, Nov. 21, 2012.

III. REGLEMENTARY PERIOD

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1. TWO (2) KINDS OF REGLEMENTARY PERIOD.
The reglementary period depends on where the appeal comes from, viz.:

a. Ten (10) calendar days – in the case of appeals from decisions of the
Labor Arbiters under Article 223 of the Labor Code; and
b. Five (5) calendar days – in the case of appeals from decisions of the
DOLE Regional Director under Article 129 of the Labor Code.
Calendar days and not working days.
The shortened period of ten (10) days fixed by Article 223 contemplates
calendar days and not working days. The same holds true in the case of the
5-day reglementary period under Article 129 of the Labor Code.
Consequently, Saturdays, Sundays and legal holidays are included in
reckoning and computing the reglementary period.

2. EXCEPTIONS TO THE 10-CALENDAR DAY OR 5-CALENDAR DAY

REGLEMENTARY PERIOD RULE.
The following are the specific instances where the rules on the reckoning of
the reglementary period have not been strictly observed:
a) 10th day (or 5th day) falling on a Saturday, Sunday or holiday, in which
case, the appeal may be filed in the next working day.
b) Reliance on erroneous notice of decision as when the notice expressly
states “working days” and not “calendar days.”
c) Appeal from decisions of Labor Arbiters in direct contempt cases – five
(5) calendar days.
d) Filing of petition for extraordinary remedies from orders or resolutions
of Labor Arbiters or on third party claims – ten (10) calendar days.
e) When NLRC exercises its power to “correct, amend, or waive any error,
defect or irregularity whether in substance or form” in the exercise of its
appellate jurisdiction, as provided under Article 218(c) of the Labor Code,
in which case, the late filing of the appeal is excused.
f) When technical rules are disregarded under Article 221.
g) When there are some compelling reasons that justify the allowance of the
appeal despite its late filing such as when it is granted in the interest of
substantial justice.

3. SOME PRINCIPLES ON REGLEMENTARY PERIOD.

The reglementary period is mandatory and not a “mere technicality.”
The failure to appeal within the reglementary period renders the judgment
appealed from final and executory by operation of law. Consequently, the
prevailing party is entitled, as a matter of right, to a writ of execution and
the issuance thereof becomes a ministerial duty which may be compelled
through the remedy of mandamus.
The date of receipt of decisions, resolutions or orders by the parties is of
no moment. For purposes of appeal, the reglementary period shall be
counted from receipt of such decisions, resolutions, or orders by the
counsel or representative of record.
Miscomputation of the reglementary period will not forestall the finality of

CCV Notes on Labor Relations | 157

the judgment. It is in the interest of everyone that the date when judgments
become final and executory should remain fixed and ascertainable.
Date of mailing by registered mail of the appeal memorandum is the date
of its filing.
Motion for extension of time to perfect an appeal is not allowed. This kind
of motion is a prohibited pleading.
Motion for extension of time to file the memorandum of appeal is not
allowed.
Motion for extension of time to file appeal bond is not allowed.

IV. APPEAL FEE AND LEGAL RESEARCH FEE

1. PAYMENT OF APPEAL FEE AND LEGAL RESEARCH FEE,
MANDATORY AND JURISDICTIONAL.
The payment by the appellant of the prevailing appeal fee and legal
research fee is both mandatory and jurisdictional. An appeal is perfected
only when there is proof of payment of the appeal fee. It is by no means a
mere technicality. If not paid, the running of the reglementary period for
perfecting an appeal will not be tolled.

V. MEMORANDUM OF APPEAL

1. REQUISITES.
The requisites for a valid Memorandum of Appeal are as follows:
a. The Memorandum of Appeal should be verified by the appellant himself
in accordance with the Rules of Court, as amended;
b. It should be presented in three (3) legibly typewritten or printed copies;
c. It shall state the grounds relied upon and the arguments in support
thereof, including the relief prayed for;
d. It shall contain a statement of the date the appellant received the
appealed decision, award or order; and
e. It shall be accompanied by:
(i) proof of payment of the required appeal fee and legal research fee;
(ii) posting of a cash or surety bond (in case of monetary awards); and
(iii) proof of service upon the other party.

2. REQUIREMENTS NOT JURISDICTIONAL.

The aforesaid requirements that should be complied with in a
Memorandum of Appeal are merely a rundown of the contents of the
required appeal memorandum to be submitted by the appellant. They are
not jurisdictional requirements.

3. SOME PRINCIPLES ON MEMORANDUM OF APPEAL.

Mere notice of appeal without complying with the other requisites
aforestated shall not stop the running of the period for perfecting an
appeal.
Memorandum of appeal is not similar to motion for reconsideration.
Lack of verification in a memorandum of appeal is not a fatal defect. It

CCV Notes on Labor Relations | 158

may easily be corrected by requiring an oath.
An appeal will be dismissed if signed only by an unauthorized
representative.
Only complainants who signed the memorandum of appeal are deemed to
have appealed the Labor Arbiter’s decision. The prevailing doctrine in labor
cases is that a party who has not appealed cannot obtain from the appellate
court any affirmative relief other than those granted, if any, in the decision
of the lower tribunal.

VI. PROOF OF SERVICE TO ADVERSE PARTY

1. FAILURE TO SERVE COPY TO ADVERSE PARTY, NOT FATAL.

While it is required that in all cases, the appellant shall furnish a copy of the
Memorandum of Appeal to the other party (appellee), non-compliance
therewith, however, will not be an obstacle to the perfection of the appeal;
nor will it amount to a jurisdictional defect on the NLRC’s taking
cognizance thereof.

VII. POSTING OF BOND

1. WHEN POSTING OF BOND REQUIRED.

Only in case the decision of the Labor Arbiter or the DOLE Regional
Director (under Article 129 of the Labor Code) involves a monetary award,
that an appeal by the employer may be perfected only upon the posting of a
bond, which shall either be in the form of (1) cash deposit, (2) surety bond
or (3) property bond, equivalent in amount to the monetary award, but
excluding the amount of damages (moral and exemplary) and attorney’s
fees. In other words, only monetary awards (such as unpaid wages,
backwages, separation pay, 13th month pay, etc.) are required to be covered
by the bond. Moral and exemplary damages and attorney’s fees are
excluded.

2. SOME PRINCIPLES ON POSTING OF BOND.

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

CCV Notes on Labor Relations | 159

Posting of a bank guarantee or bank certification is not sufficient
compliance with the bond requirement. It is not equivalent to nor can be
considered compliance with the cash, surety or property bond.
Cooperatives are not exempted from posting bond.
Government is exempt from posting of bond; government-owned and/or
controlled corporations, however, are not exempt therefrom.
Bond is not required for the NLRC to entertain a motion for
reconsideration. An appeal bond is required only for the perfection of an
appeal of a Labor Arbiter’s decision involving a monetary award.
Bond is not required to file a Rule 65 petition for certiorari.

3. JUSTIFICATIONS FOR NON-POSTING OF BOND.

No monetary award, no bond required. The rule is clear that when the
judgment of the Labor Arbiter does not involve any monetary award, no
appeal bond is necessary.
There is no duty to post a bond if the monetary award is not specified in
the decision. The Labor Arbiter’s decision or order should state the amount
awarded. If the amount of the monetary award is not contained or fixed in
the judgment, the
appeal bond is not required to be posted.
In case of conflict between the body and the fallo of the decision, the latter
should prevail.

VII-A. RULE ON REDUCTION OF APPEAL BOND

1. REQUISITES WHEN THE AMOUNT OF APPEAL BOND MAY BE
REDUCED.
(a) The motion should be filed within the reglementary period;
(b) The motion to reduce bond should be based on meritorious grounds;
and
(c) The motion should be accompanied by a partial bond, the amount of
which should be reasonable in relation to the monetary awards.

2. THE MCBURNIE DOCTRINE: NEW GUIDELINES FOR FILING AND

ACCEPTANCE OF MOTIONS TO REDUCE BOND.
The 2013 en banc decision rendered in the case of Andrew James Mcburnie
v. Eulalio Ganzon,1 has enunciated the following guidelines that must be
observed in the matter of the filing and acceptance of motions to reduce
appeal bond, as provided in Section 6, Rule VI of the 2011 NLRC Rules of
Procedure:

(a) The filing of a motion to reduce appeal bond shall be entertained by the
NLRC subject to the following conditions:
(1) there is meritorious ground; and
(2) a bond in a reasonable amount is posted;

(b) For purposes of compliance with condition no. (2) above, a motion shall

CCV Notes on Labor Relations | 160

be accompanied by the posting of a provisional cash or surety bond
equivalent to ten percent (10%) of the monetary award subject of the
appeal, exclusive of damages and attorney's fees;
(c) Compliance with the foregoing conditions shall suffice to suspend the
running of the 10-day reglementary period
to perfect an appeal from the Labor Arbiter’s decision to the NLRC;
(d) The NLRC retains its authority and duty to resolve the motion to reduce
bond and determine the final amount of bond that shall be posted by the
appellant, still in accordance with the standards of meritorious grounds
and reasonable amount; and
(e) In the event that the NLRC denies the motion to reduce bond, or
requires a bond that exceeds the amount of the provisional bond, the
appellant shall be given a fresh period of ten (10) days from notice of the
NLRC order within which to perfect the appeal by posting the required
appeal bond.
This Mcburnie ruling has completely overhauled the rules on motion to
reduce bond. Before its advent, the issue of what amount to post by way of
partial or provisional bond has continued to hound the party litigants and
the courts. Now, the fixing of “ten percent (10%) of the monetary award
subject of the appeal, exclusive of damages and attorney's fees” as the
“reasonable amount” that should be posted has completely eradicated any
and all controversies thereon. In other words, no more motion for
reduction of bond accompanied by said 10% requirement would be denied
outright on the ground of insufficiency or inadequacy of the partial or
provisional bond. What is left for the determination by the NLRC, using its
sound judgment and discretion, are only the issues of (1) the reasonable
final amount of the bond; and (2) what constitute “meritorious grounds.”
This determination is important since “in all cases, the reduction of the
appeal bond shall be justified by meritorious grounds and accompanied by
the posting of the required appeal bond in a reasonable amount.”2

The rule set in McBurnie was clarified3 by the Court in the consolidated
cases of Sara Lee Philippines v. Ermilinda Macatlang.4 Thus, while
McBurnie has effectively addressed the preliminary amount of the bond to
be posted in order to toll the running of the period to appeal, there is no
hard and fast rule in determining whether the additional bond to be posted
is reasonable in relation to the judgment award. In this case of Sara Lee,
petitioner companies5 were held liable by the Labor Arbiter for the illegal
dismissal of 5,984 employees with accompanying award of separation pay
and other monetary benefits amounting to P3,453,664,710.86. Petitioner
companies filed their Notice of Appeal with Motion to Reduce Appeal Bond
and To Admit Reduced Amount with the NLRC. They asked the NLRC to
reduce the appeal bond to P1 Million each on the grounds that it is
impossible for any insurance company to cover such huge amount and that,
in requiring them to post in full the appeal bond, it would be tantamount to
denying them their right to appeal. In light of the impossibility for any
surety company to cover the appeal bond and the huge economic losses
which the companies and their employees might suffer if the P3.45 Billion
bond is sustained, the NLRC granted the reduction of the appeal bond. The

CCV Notes on Labor Relations | 161

NLRC issued an Order dated 31 March 2006 directing petitioner
corporations to post an additional P4.5 Million bond, bringing the total
posted bond to P9 Million. The Court of Appeals, however, reversed and set
aside the said 31 March 2006 NLRC Resolution and deemed it reasonable
under the circumstances of the case to order the posting of an additional
appeal bond of P1 Billion. Considering the peculiar circumstances in Sara
Lee, the Court has to determine what is the reasonable amount of appeal
bond. The fact was underscored that the amount of 10% of the award is not
a permissible bond but is only such amount that shall be deemed
reasonable in the meantime that the appellant’s motion is pending
resolution by the NLRC. The actual reasonable amount yet to be
determined is necessarily a bigger amount. In an effort to strike a balance
between the constitutional obligation of the state to afford protection to
labor, on the one hand, and the opportunity afforded to the employer to
appeal, on the other, it considered the appeal bond in the amount of P725M
which is equivalent to 25% of the monetary award sufficient to perfect the
appeal, viz.:
“We sustain the Court of Appeals in so far as it increases the amount of the
required appeal bond. But we deem it reasonable to reduce the amount of
the appeal bond to P725 Million. This directive already considers that the
award if not illegal, is extraordinarily huge and that no insurance company
would be willing to issue a bond for such big money. The amount of P725
Million is approximately 25% of the basis above calculated. It is a balancing
of the constitutional obligation of the state to afford protection to labor
which, specific to this case, is assurance that in case of affirmance of the
award, recovery is not negated; and on the other end of the spectrum, the
opportunity of the employer to appeal.
“By reducing the amount of the appeal bond in this case, the employees
would still be assured of at least substantial compensation, in case a
judgment award is affirmed. On the other hand, management will not be
effectively denied of its statutory privilege of appeal.”
In line with Sara Lee and the objective that the appeal on the merits to be
threshed out soonest by the NLRC, the Court, in the 2015 case of Balite v.
SS Ventures International, Inc.,6 held that the appeal bond of P100,000.00
posted by the respondent company for the total monetary award of
P490,308.00, which is equivalent to around 20% thereof, is sufficient to
perfect the appeal. With the employer's demonstrated good faith in filing
the motion to reduce the bond on demonstrable grounds coupled with the
posting of the appeal bond in the requested amount, as well as the filing of
the memorandum of appeal, the right of the employer to appeal must be
upheld. This is in recognition of the importance of the remedy of appeal,
which is an essential part of our judicial system and the need to ensure that
every party litigant is given the amplest opportunity for the proper and just
disposition of his cause freed from the constraints of technicalities.
1 G.R. Nos. 178034, 178117, 186984 and 186985, Oct. 17, 2013.
2 Andrew James Mcburnie v. Eulalio Ganzon, G.R. Nos. 178034, 178117,
186984 and 186985, Oct. 17, 2013.
3 The fact of clarification was pronounced in Balite v. SS Ventures
International, Inc., G.R. No. 195109, Feb. 4, 2015.

CCV Notes on Labor Relations | 162

4 G.R. Nos. 180147-180150, 180319 and 180685, June 4, 2014.
5 This case is a consolidation of 6 cases involving several corporations,
namely: Sara Lee Philippines, Inc. (SLPI), Aris Philippines, Inc. (Aris), Sara
Lee Corporation (SLC) and Fashion Accessories Philippines, Inc. (FAPI).
6 G.R. No. 195109, Feb. 4, 2015.

B. NATIONAL LABOR RELATIONS COMMISSION (NLRC)

1. NATURE.
The NLRC is an administrative quasi-judicial body. It is an agency attached
to the DOLE solely for program and policy coordination only. It is in
charge of deciding labor cases through compulsory arbitration.

2. COMPOSITION OF THE NLRC.

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

3. COMMISSION EN BANC.

The Commission sits en banc only for the following purposes:

(a) To promulgate rules and regulations governing the hearing and
disposition of cases before any of its divisions and regional branches; and
(b) To formulate policies affecting its administration and operations.
The NLRC does not sit en banc to hear and decide cases. The en banc has
no adjudicatory power. The Commission exercises its adjudicatory and all
other powers, functions, and duties through its eight (8) Divisions.

4. NLRC’S EIGHT (8) DIVISIONS.

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

1. JURISDICTION

TWO (2) KINDS OF JURISDICTION.

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

CCV Notes on Labor Relations | 163

1. EXCLUSIVE ORIGINAL JURISDICTION.
The NLRC exercises exclusive and original jurisdiction over the following
cases:
a. Petition for injunction in ordinary labor disputes to enjoin or restrain any
actual or threatened commission of any or all prohibited or unlawful acts or
to require the performance of a particular act in any labor dispute which, if
not restrained or performed forthwith, may cause grave or irreparable
damage to any party.
b. Petition for injunction in strikes or lockouts under Article 264 of the
Labor Code.
c. Certified cases which refer to labor disputes causing or likely to cause a
strike or lockout in an industry indispensable to the national interest,
certified to it by the Secretary of Labor and Employment for compulsory
arbitration by virtue of Article 263(g) of the Labor Code.
d. Petition to annul or modify the order or resolution (including those
issued during execution proceedings) of the Labor Arbiter.

2. EXCLUSIVE APPELLATE JURISDICTION.

The NLRC exercises exclusive appellate jurisdiction over the following:
a. All cases decided by the Labor Arbiters.
b. Cases decided by the DOLE Regional Directors or hearing officers
involving small money claims under Article 129 of the Labor Code.
c. Contempt cases decided by the Labor Arbiters.

EFFECT OF NLRC REVERSAL OF LABOR ARBITER’S ORDER OF

REINSTATEMENT

1. EFFECT OF REVERSAL OF REINSTATEMENT ORDER WHEN

EMPLOYEE WAS ACTUALLY REINSTATED.
The BERGONIO Rule:
Bergonio, Jr. v. South East Asian Airlines, April 21, 2014.
After reversal of Labor Arbiter’s decision, the employer’s duty to reinstate
the dismissed employee in the actual service or in the payroll is effectively
terminated. The employee, in turn, is not required to return the wages that
he had received prior to the reversal of the LA’s decision.

2. EFFECT OF REVERSAL OF REINSTATEMENT ORDER WHEN

EMPLOYEE WAS REINSTATED IN THE PAYROLL.

The GENUINO Doctrine:

Marilou S. Genuino v. NLRC, Citibank, N.A., Dec. 4, 2007.
The Refund Doctrine in Genuino no longer applies, per Garcia Doctrine.
The WENPHIL Rule: (The prevailing rule)
Wenphil Corporation v. Abing, April 7, 2014.
The period for computing the backwages due to the dismissed employees
during the period of appeal should END on the date that a higher court (in
this case the CA) reversed the labor arbitration ruling of illegal dismissal.”

CCV Notes on Labor Relations | 164

3. EFFECT OF REVERSAL OF REINSTATEMENT ORDER WHEN
EMPLOYEE WAS NEITHER REINSTATED TO HIS
FORMER POSITION OR IN THE PAYROLL.

Entitlement to reinstatement salaries/wages, allowances and benefits

under the following doctrines:
(1) ROQUERO doctrine; and
(2) GARCIA doctrine.
Roquero v. Philippine Air Lines, Inc., April 22, 2003.
Garcia v. Philippine Airlines, Inc., Jan. 20, 2009 (En Banc).

3.1. ENTITLEMENT TO REINSTATEMENT WAGES.

From the moment an employee is ordered reinstated by the Labor Arbiter
on the basis of the finding that his dismissal is illegal, up to the time that an
appellate tribunal like the NLRC, Court of Appeals and Supreme Court, as
the case may be, reverses the said finding, the employee is generally
entitled to his so-called “reinstatement wages.” The issue of entitlement to
this benefit has been the subject of several doctrinal rulings now known as
follows:
(1) Roquero doctrine; and
(3) Garcia doctrine.

3.1.1. ROQUERO DOCTRINE.

The Roquero doctrine, enunciates the rule that in cases where an employee
is ordered reinstated by the Labor Arbiter and the employer fails or refuses
to obey the reinstatement order but initiates an appeal, the employer’s
success in having the decision of the Labor Arbiter’s decision reversed on
appeal will not exculpate him from the liability to pay the reinstatement
wages of the employee reckoned and computed from the time the employee
was ordered reinstated by the Labor Arbiter until the date of its reversal on
appeal.
In this case of Roquero, the dismissal of petitioners Roquero and Pabayo
was held valid by the Labor Arbiter. On appeal to the NLRC, the Labor
Arbiter’s decision was reversed and consequently, petitioners were ordered
reinstated. They did not appeal from that decision of the NLRC but filed a
motion for the issuance of a writ of execution of the order of reinstatement.
The Labor Arbiter granted the motion but respondent PAL refused to
comply with the said order on the ground that it has filed a Petition for
Review before the Supreme Court. Subsequently, the CA reversed the
decision of the NLRC and ruled that the dismissal of petitioners was valid.
The Supreme Court later affirmed the CA’s decision but it held that the
unjustified refusal by PAL to reinstate Roquero who, unlike Pabayo, has not
amicably settled his case, entitles him to the payment of his reinstatement
wages effective from the time PAL failed to reinstate him despite the
issuance of the writ of execution. Thus, it was mandatory for PAL to
actually reinstate Roquero or reinstate him in the payroll. Having failed to
do so, the former must pay the latter the salaries he is entitled to, as if he
was reinstated, from the time of the decision of the NLRC until the finality

CCV Notes on Labor Relations | 165

of the decision of the Supreme Court.
Following Roquero, it is now the norm that even if the order of
reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory on
the part of the employer to reinstate and pay the wages of the dismissed
employee during the period of appeal until its reversal by the NLRC, or the
Court of Appeals or the Supreme Court, as the case may be. If the employee
has been reinstated during the appeal period and such reinstatement order
is subsequently reversed on appeal with finality, the employee is not
required to reimburse whatever salaries he has received for he is entitled to
such, more so if he actually rendered services during the said period.

3.1.2. GARCIA DOCTRINE.

a. Modification of the Roquero and Genuino doctrines.
The Roquero and Genuino doctrines have been modified by the Garcia
doctrine. In this case, while respondent Philippine Airlines (PAL) was
undergoing rehabilitation receivership, an illegal dismissal case was filed by
petitioners against respondent PAL which was decided by the Labor Arbiter
in their favor thus ordering PAL to, inter alia, immediately comply with the
reinstatement aspect of the decision. On appeal, the NLRC reversed the
ruling of the Labor Arbiter and held that their dismissal was valid. The
issue of whether petitioners may collect their reinstatement wages during
the period between the Labor Arbiter’s order of reinstatement pending
appeal and the NLRC decision overturning that of the Labor Arbiter, now
that respondent PAL has terminated and exited from rehabilitation
proceedings, was resolved in the negative by the Supreme Court.

The following ratiocinations were cited:

(1) Re: modification of the Genuino doctrine. - The “refund doctrine” in

Genuino should no longer be observed because it easily demonstrates how a
favorable decision by the Labor Arbiter could harm, more than help, a
dismissed employee. The employee, to make both ends meet, would
necessarily have to use up the salaries received during the pendency of the
appeal, only to end up having to refund the sum in case of a final
unfavorable decision. It is mirage of a stopgap leading the employee to a
risky cliff of insolvency. Further, the Genuino ruling not only disregards the
social justice principles behind the rule, but also institutes a scheme unduly
favorable to management. Under such scheme, the salaries dispensed
pendente lite merely serve as a bond posted in installment by the employer.
For in the event of a reversal of the Labor Arbiter’s decision ordering
reinstatement, the employer gets back the same amount without having to
spend ordinarily for bond premiums. This circumvents, if not directly
contradicts, the proscription that the “posting of a bond [even a cash bond]
by the employer shall not stay the execution for reinstatement.”
(2) Re: modification of the Roquero doctrine. – The Roquero doctrine was
reaffirmed but with the modification that “[a]fter the Labor Arbiter’s
decision is reversed by a higher tribunal, the employee may be barred from
collecting the accrued wages, if it is shown that the delay in enforcing the

CCV Notes on Labor Relations | 166

reinstatement pending appeal was without fault on the part of the
employer.”

b. Two-fold test under the Garcia doctrine.

Under Garcia, the test to determine the liability of the employer (who did
not reinstate the employee pending appeal) to pay the wages of the
dismissed employee covering the period from the time he was ordered
reinstated by the Labor Arbiter to the reversal of the Labor Arbiter’s
decision either by the NLRC, the Court of Appeals or the High Court, is
two-fold, to wit:
(1) There must be actual delay or the fact that the order of reinstatement
pending appeal was not executed prior to its reversal; and
(2) The delay must not be due to the employer’s unjustified act or omission.
If the delay is due to the employer’s unjustified refusal, the employer may
still be required to pay the salaries notwithstanding the reversal of the
Labor Arbiter’s decision.
In Garcia, there was actual delay in reinstating petitioners but respondent
PAL was justified in not complying with the reinstatement order of the
Labor Arbiter because during the pendency of the illegal dismissal case, the
SEC placed respondent PAL under an Interim Rehabilitation Receiver who,
after the Labor Arbiter rendered his decision, was replaced with a
Permanent Rehabilitation Receiver. It is settled that upon appointment by
the SEC of a rehabilitation receiver, all actions for claims before
any court, tribunal or board against the corporation shall ipso jure be
suspended. Resultantly, respondent PAL’s “failure to exercise the
alternative options of actual reinstatement and payroll reinstatement was
thus justified. Such being the case, respondent’s obligation to pay the
salaries pending appeal, as the normal effect of the non-exercise of the
options, did not attach.”

c. Cases decided after the promulgation of the Garcia doctrine.

Subsequent to Garcia, some of the cases decided in accordance with this
doctrine are as follows:
(1) College of the Immaculate Conception v. NLRC (2010);
(2) Islriz Trading v. Capada (2011);
(3) Pfizer, Inc. v. Velasco (2011); and
(4) C. Alcantara & Sons, Inc. v. CA (2012).

RECKONING OF THE PERIOD COVERED BY ACCRUED

REINSTATEMENT WAGES.
To clarify, employees ordered reinstated by the Labor Arbiter are entitled to
accrued reinstatement wages only from the time the employer received a
copy of the Labor Arbiter’s decision declaring the employees’ termination
illegal and ordering their reinstatement up to the date of the decision of the
appellate tribunal overturning that of the Labor Arbiter. It is not accurate
therefore to state that such entitlement commences “from the moment the
reinstatement order was issued up to the date when the same was reversed
by a higher court without fear of refunding what he had received.”

CCV Notes on Labor Relations | 167

SOME PRINCIPLES ON REINSTATEMENT WAGES.
Employer is not liable to pay any reinstatement backwages if reinstatement
is ordered not by the Labor Arbiter but by the NLRC on appeal and it was
not executed by writ and its finding of illegal dismissal is later reversed by
the Court of Appeals and/or Supreme Court.
Payroll-reinstated employee is entitled not only to reinstatement wages but
also to other benefits during the period of payroll reinstatement until the
illegal dismissal case is reversed by a higher tribunal.
Award of additional backwages and other benefits from the time the Labor
Arbiter ordered reinstatement until actual or payroll reinstatement is
proper and valid.

REMEDIES

1. EXTRAORDINARY REMEDIES.
a. Nature.
The power of the Commission (NLRC) to grant extraordinary remedies
mentioned in No. 3 above is not provided in the Labor Code or in any other
laws. It is a newly created remedy which saw light for the first time under
Rule XII of the 2011 NLRC Rules of Procedure. Past NLRC Rules did not
provide therefor. Since this is a recent newly minted remedy, there has yet
been no decision by the Supreme Court dwelling on its validity.
What is clear though is that this remedy is not equivalent to nor a substitute
for appeal. It is directed against “orders” or “resolutions” issued by the
Labor Arbiter in the course of the proceedings before him where the
remedy of appeal is not available. Notably, the remedy of appeal is available
only against the main decision of a case. But orders or resolutions issued
prior to the rendition of the decision in the main as well as orders or
resolutions issued thereafter, specifically during the execution stage, are
subject of this rule on extraordinary remedies.

b. Grounds.
The petition filed under this Rule may be entertained only on any of the
following grounds:
(a) If there is prima facie evidence of abuse of discretion on the part of the
Labor Arbiter;
(b) If serious errors in the findings of facts are raised which, if not
corrected, would cause grave or irreparable damage or injury to the
petitioner;
(c) If a party by fraud, accident, mistake or excusable negligence has been
prevented from taking an appeal;
(d) If made purely on questions of law; or
(e) If the order or resolution will cause injustice if not rectified.

c. Initiation through verified petition.

To secure these extraordinary remedies, a party aggrieved by any order or

CCV Notes on Labor Relations | 168

resolution of the Labor Arbiter including those issued during execution
proceedings may file a verified petition to annul or modify such order or
resolution. The petition may be accompanied by an application for the
issuance of a temporary restraining order and/or writ of preliminary or
permanent injunction to enjoin the Labor Arbiter, or any person acting
under his/her authority, to desist from enforcing said resolution or
order.

CERTIFIED CASES

1. CERTIFIED LABOR DISPUTES.

“Certified labor disputes” are national interest cases certified by the DOLE
Secretary to the Commission (NLRC) for compulsory arbitration under
Article 263(g) of the Labor Code.
2. EFFECTS OF CERTIFICATION OF LABOR DISPUTES.
The certification of a labor dispute to the NLRC has the following effects:
(1) On intended or impending strike or lockout. - Upon certification, the
intended or impending strike or lockout is automatically enjoined,
notwithstanding the filing of any motion for reconsideration of the
certification order or the non-resolution of any such motion which may
have been duly submitted to the DOLE Secretary.
(2) On actual strike or lockout. - If a work stoppage has already taken place
at the time of the certification, all striking or locked out employees shall
immediately return to work and the employer shall immediately resume
operations and readmit all workers under the same terms and conditions
prevailing before the strike or lockout.
(3) On cases already filed or may be filed. - All cases between the same
parties, except where the certification order specifies otherwise the issues
submitted for arbitration which are already filed or may be filed, and are
relevant to or are proper incidents of the certified case, shall be considered
subsumed or absorbed by the certified case, and shall be decided by the
appropriate Division of the Commission.
(4) On other pending cases. - The parties to a certified case, under pain of
contempt, shall inform their counsels and the Division concerned of all
cases pending with the Regional Arbitration Branches and the Voluntary
Arbitrators relative or incident to the certified case before it.
(5) On which Division should take cognizance of the certified case in case
entity has several workplaces in different regions. - Whenever a certified
labor dispute involves a business entity with several workplaces located in
different regions, the Division having territorial jurisdiction over the
principal office of the company shall acquire jurisdiction to decide such
labor dispute; unless the certification order provides otherwise.

Same effect of certification to the NLRC as in cases assumed directly by

DOLE Secretary.
The effects described above are also applicable when the DOLE Secretary
directly assumes jurisdiction over a labor dispute affecting industries
imbued with national interest and decides it himself.

CCV Notes on Labor Relations | 169

BUREAU OF LABOR RELATIONS
– MED-ARBITERS
1. MED-ARBITER OR MEDIATOR-ARBITER.
“Med-Arbiter” or “Mediator-Arbiter” refers to an officer in the Regional
Office or in the BLR authorized to hear and decide representation cases,
inter-union or intra-union disputes and other related labor relations
disputes, except cancellation of union registration cases.
Some principles on Med-Arbiter.
Injunctive power. The Med-Arbiter is possessed of the power to issue
temporary restraining order and the writ of injunction in appropriate cases.
Contempt power. The Med-Arbiter has contempt power.
Factual findings of Med-Arbiters are accorded great respect. They are
binding if they are supported by substantial evidence and there exists no
capricious exercise of judgment warranting reversal by certiorari.
Execution of decisions, orders or awards of Med-Arbiters. The Med-
Arbiter may, upon his own initiative or on motion of any interested party,
issue a writ of execution on a judgment within five (5) years from the date it
becomes final and executory, requiring the Sheriff or a duly deputized
officer to execute or enforce the same.

1. JURISDICTION
(ORIGINAL AND APPELLATE)

I. CASES FALLING UNDER THE JURISDICTION OF THE MED-

ARBITERS, DOLE DIRECTORS AND BLR DIRECTOR, IN GENERAL

1. INTRODUCTION.
For purposes of clarity in the otherwise labyrinthine issue of jurisdiction
and procedure in the BLR, there is a need to cite first the cases over which
the following officials have their respective jurisdictions:
(1) Mediator-Arbiter (Med-Arbiter);
(2) DOLE Regional Director; and
(3) BLR Director.
The Mediator-Arbiter and the DOLE Regional Director exercise original
and exclusive jurisdiction over specified cases mentioned below. For his
part, the BLR Director exercises not only appellate but original jurisdiction
over some particular cases.

2. CASES COVERED.
There are three (3) general classifications of the cases covered by the
jurisdiction of said officials, to wit:
(a) Inter-union disputes;
(b) Intra-union disputes; and
(c) Other related labor relations disputes.

I-A. INTER-UNION OR INTRA-UNION DISPUTES

CCV Notes on Labor Relations | 170

1. INTER-UNION OR REPRESENTATION DISPUTES.
An “inter-union dispute” or “representation dispute” is one occurring or
carried on between or among unions. It refers to a case involving a petition
for certification election filed by a duly registered labor organization which
is seeking to be recognized as the sole and exclusive bargaining agent of the
rank-and-file employees or supervisory employees, as the case may be, in
the appropriate bargaining unit of a company, firm or establishment.
Broadly, an “inter-union dispute” refers to any conflict between and among
legitimate labor unions involving representation questions for purposes of
collective bargaining or to any other conflict or dispute between legitimate
labor unions.

2. INTRA-UNION OR INTERNAL UNION DISPUTES.

An “intra-union dispute” or “internal union dispute” refers to a conflict
within or inside a labor union. It is any conflict between and among union
members, including grievances arising from any violation of the rights and
conditions of membership, violation of or disagreement over any provision
of the union’s constitution and by-laws or disputes arising from chartering
or affiliation of a union. It refers to a case involving the control, supervision
and management of the internal affairs of a duly registered labor union
such as those relating to specific violations of the union’s constitution and
by-laws. A complaint for any violation of the constitution and by-laws and
the rights and conditions of union membership under Article 241 of the
Labor Code, may be filed in the Regional Office where the union is
domiciled.

3. RUNDOWN OF INTER-UNION/INTRA-UNION CASES.

The following is a rundown of all possible inter-union/intra-union disputes:
1) Inter-union disputes:
(a) Validity/invalidity of voluntary recognition, certification election,
consent election, run-off election or re-run election;
(b) Such other disputes or conflicts involving the rights to self-organization,
union membership and collective bargaining between and among
legitimate labor organizations.
2) Intra-union disputes:
(a) Conduct or nullification of election of officers of unions and workers'
association;
(b) Audit or accounts examination of union or workers' association funds;
(c) Deregistration of collective bargaining agreements;
(d) Validity/invalidity of union affiliation or disaffiliation;
(e) Validity/invalidity of acceptance/non-acceptance for union
membership;
(f) Opposition to application for union or CBA registration;
(g) Violations of or disagreements over any provision of the Constitution
and By-Laws of a union or workers' association;
(h) Disagreements over chartering or registration of labor organizations or
the registration of collective bargaining agreements;
(i) Violations of the rights and conditions of membership in a union or
workers' association;

CCV Notes on Labor Relations | 171

(j) Violations of the rights of legitimate labor organizations, except
interpretation of CBAs;
(k) Validity/Invalidity of impeachment/expulsion/suspension or any
disciplinary action meted against any officer and member, including those
arising from non-compliance with the reportorial requirement;
(l) Such other disputes or conflicts involving the rights to self-organization,
union membership and collective bargaining between and among members
of a union or workers’ association.

1-B. OTHER RELATED LABOR RELATIONS DISPUTES

1. MEANING OF “RELATED LABOR RELATIONS DISPUTES.”
“Related labor relations dispute” refers to any conflict between a labor
union and the employer or any individual, entity or group that is not a labor
union or workers’ association.

2. COVERAGE OF RELATED LABOR RELATIONS DISPUTES NOT

OTHERWISE COVERED BY ARTICLE 217.
(a) Any conflict between:
(1) a labor union and the employer, or
(2) a labor union and a group that is not a labor organization; or
(3) a labor union and an individual who is not a member of such union;
(b) Cancellation of registration of unions and workers associations filed by
individuals other than its members, or group that is not a labor
organization; and
(c) A petition for interpleader involving labor relations.
“Interpleader” refers to a proceeding brought by a party against two or
more parties with conflicting claims, compelling the claimants to litigate
between and among themselves their respective rights to the claim, thereby
relieving the party so filing from suits they may otherwise bring against it.

II. ORIGINAL AND EXCLUSIVE JURISDICTION OF MED-ARBITERS,

DOLE DIRECTORS AND BLR DIRECTOR
Having known the various cases afore-described, a discussion of the
respective jurisdictions of the Med-Arbiters, DOLE Directors and BLR
Director over these cases may now be made with greater clarity.
1. ORIGINAL AND EXCLUSIVE JURISDICTION OF THE MED-
ARBITERS.
The cases falling under the original and exclusive jurisdiction of the Med-
Arbiters are as follows:
(a) Inter-union disputes, also known as representation/certification
election conflicts;
(b) Intra-union disputes;
(c) Other related labor relations disputes; and
(d) Contempt cases.
Excepted from their jurisdiction is cancellation of union registration cases
which are cognizable by the DOLE Regional Directors.

2. ORIGINAL AND EXCLUSIVE JURISDICTION OF THE DOLE

CCV Notes on Labor Relations | 172

REGIONAL DIRECTORS.
The cases falling under the original and exclusive jurisdiction of the DOLE
Regional Directors are as follows:
(1) Petitions for cancellation of registration of independent unions, local
chapters and workers’ associations;
(2) Petitions for deregistration of CBAs;
(3) Request for examination of books of accounts of said labor
organizations under Article 274 of the Labor Code.
On No. 3 [Examination of Books of Accounts] above, there is a need to
point out that although by nature, this is an intra-union dispute, the rules
treat this separately from those applicable to intra-union disputes and vest
jurisdiction thereover in the DOLE Regional Directors and not in the Med-
Arbiters.
The case in point is La Tondena Workers Union vs. Secretary of Labor.
Intra-union conflicts such as examinations of accounts are under the
jurisdiction of the BLR. However, the Rules of Procedure on Mediation-
Arbitration purposely and expressly separated or distinguished
examinations of union accounts from the genus of intra-union conflicts and
provided a different procedure for the resolution of the same. Original
jurisdiction over complaints for examinations of union accounts is vested in
the Regional Director and appellate jurisdiction over decisions of the
former is lodged with the BLR. This is apparent from Sections 3 and 4, Rule
II of the Med-Arbitration Rules. Contrast these two sections from Section 2
and Section 5 of the same Rules. Section 2 expressly vests upon Med-
Arbiters original and exclusive jurisdiction to hear and decide, inter alia, all
other inter-union or internal union disputes. Section 5 states that the
decisions of the Med-Arbiter shall be appealable to the DOLE Secretary.
These are the provisions consistent with Section 5 of Rule VIII of the
Implementing Rules of the Labor Code.

3. ORIGINAL AND EXCLUSIVE JURISDICTION OF THE BLR

DIRECTOR.
At the outset, it must be stressed that reference in the law and pertinent
rules to “BLR”, as far as the issue of jurisdiction is concerned, should
rightfully mean “BLR Director.”
The BLR Director, therefore, as head of the agency, has the original and
exclusive jurisdiction over the following:
(1) Complaints and petitions involving the registration or cancellation of
registration of federations, national unions, industry unions, trade union
centers and their local chapters, affiliates and member organizations;
(2) Request for examination of books of accounts of said labor
organizations (federations, national unions, industry unions and trade
union centers) under Article 274 of the Labor Code;
(3) Intra-union disputes involving said labor organizations (federations,
national unions, industry unions and trade union centers); and
(4) Contempt cases.
As far as No. 3 [Intra-Union Disputes] above is concerned, the 2010 case of
Atty. Montaño v. Atty. Verceles,1 is relevant. Petitioner here claimed that
under the Implementing Rules, it is the Regional Director of the DOLE and

CCV Notes on Labor Relations | 173

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

1 G.R. No. 168583, July 26, 2010.

II. APPELLATE JURISDICTION OF THE BLR DIRECTOR

1. CASES FALLING UNDER THE APPELLATE JURISDICTION OF THE

BLR DIRECTOR.
The BLR Director exercises exclusive appellate jurisdiction over the
following cases:
(a) All decisions of the Med-Arbiters in (1) intra-union disputes, and (2)
other related labor relations disputes.
NOTE: Decisions in inter-union disputes or representation/certification
election conflicts, are NOT appealable to the BLR Director but directly to
the DOLE Secretary. [See discussion below].
(b) All decisions originating from the DOLE Regional Directors in the cases
falling under their original jurisdiction as enumerated above.

2. APPELLATE JURISDICTION OVER MED-ARBITER’S DECISIONS IN

INTER-UNION DISPUTES OR CERTIFICATION ELECTION CASES IS

CCV Notes on Labor Relations | 174

LODGED WITH THE DOLE SECRETARY AND NOT WITH THE BLR
DIRECTOR.
To reiterate, decisions of Med-Arbiters in certification election cases or
inter-union disputes are appealable not to the BLR Director but directly to
the DOLE Secretary by virtue of Article 259 of the Labor Code.
It must be noted that the rule on appeal in certification election cases in
unorganized establishments is different from that of organized
establishments.
(a) Rule on appeal in unorganized establishments. - The order granting the
conduct of a certification election in an unorganized establishment is not
subject to appeal. Any issue arising from its conduct or from its results is
proper subject of a protest. Appeal may only be made to the DOLE
Secretary in case of denial of the petition within ten (10) days from receipt
of the decision of denial.
(b) Rule on appeal in organized establishments. - The order granting the
conduct of a certification election in an organized establishment and the
decision dismissing or denying the petition may be appealed to the DOLE
Secretary within ten (10) days from receipt thereof.

3. APPEALS AND REMEDIES FROM DECISIONS OF THE BLR

DIRECTOR.
a. Jurisdictional distinctions.
The distinctions pointed out above between the respective jurisdictions of
the DOLE Regional Directors, Med-Arbiters and the BLR Director find
significance in determining which of the cases may be appealed to the BLR
Director and those that may be appealed to the DOLE Secretary. Thus, the
rule may be stated as follows:
(1) Decisions in cases cognizable by the BLR Director in the exercise of his
original and exclusive jurisdiction are appealable to the DOLE Secretary;
(2) Decisions in cases cognizable by the Med-Arbiters in their original and
exclusive jurisdiction are appealable to the BLR Director with the single
exception of decisions in certification election or inter-union disputes
which, as earlier emphasized, are directly appealable to the DOLE Secretary
as mandated under Article 259 of the Labor Code; and
(3) Decisions in cases cognizable by the DOLE Regional Directors in their
original and exclusive jurisdiction are appealable to the BLR Director.
b. Remedies.
(1) On No. 1 above. – The decision rendered by the DOLE Secretary in his
appellate jurisdiction may be elevated to the Court of Appeals by way of
Rule 65 petition for certiorari.
(2) On Nos. 2 and 3 above. - The decisions rendered by the BLR Director in
his appellate jurisdiction may be elevated directly to the Court of Appeals
by way of Rule 65 petition for certiorari. It cannot be appealed to the DOLE
Secretary because they were rendered by the BLR Director in the exercise of
his appellate jurisdiction.
Simply stated, another appeal to the DOLE Secretary is not allowed under
the situations contemplated in Nos. 2 and 3 above, the decisions being final
and executory.

CCV Notes on Labor Relations | 175

4. EXAMPLES OF SPECIFIC CASES.

a. APPEALS FROM DENIAL OF APPLICATION FOR REGISTRATION

AND CANCELLATION OF REGISTRATION
OF LABOR ORGANIZATIONS.

For purposes of appeal, the issue of union registration involves two (2)
situations, to wit:
(1) Denial of application for union registration; and
(2) Revocation or cancellation of union registration.
On denial of application for union registration.
(1) If the denial is made by the Regional Office in cases involving
application for registration of independent unions, local chapters and
workers’ associations, the same may be appealed to the BLR Director; or
(2) If the denial is made by the BLR Director in cases involving federations,
national unions, industry unions and trade union centers, the same is
appealable to the DOLE Secretary.
On revocation or cancellation of union registration.
(1) If decision is rendered by the Regional Director. - The decision of the
Regional Director in the cases over which he has original jurisdiction, may
be appealed to the BLR Director by any of the parties within ten (10) days
from receipt thereof, copy furnished the opposing party.
(2) If decision is rendered by the BLR Director. - The decision of the BLR
Director, in the exercise of his original jurisdiction, may be appealed to the
DOLE Secretary by any party within the same period of ten (10) days, copy
furnished the opposing party.

5. EXCEPTION WHEN DOLE SECRETARY MAY ENTERTAIN APPEAL

DIRECTLY FROM THE DOLE REGIONAL
DIRECTOR’S DECISION WITHOUT PASSING THROUGH THE BLR
DIRECTOR.

The Heritage Hotel Manila v. National Union of Workers in the Hotel,

Restaurant and Allied Industries-Heritage Hotel Manila Supervisors
Chapter (NUWHRAIN-HHMSC).1 In this 2011 case, the Supreme Court
allowed a deviation from the standing rule on the appellate jurisdiction of
the BLR Director over a decision of the DOLE Regional Director when the
BLR Director inhibited himself from taking cognizance of the appeal from
the decision of the DOLE Regional Director because he was a former
counsel of respondent. The DOLE Secretary may thus legally assume
jurisdiction over an appeal from the decision of the DOLE Regional
Director in the event that the BLR Director inhibits himself from the case.
In the absence of the BLR Director, there is no person more competent to
resolve the appeal than the DOLE Secretary. Thus, jurisdiction remained
with the BLR despite the BLR Director’s inhibition. When the DOLE
Secretary resolved the appeal, she merely stepped into the shoes of the BLR
Director and performed a function that the latter could not himself

CCV Notes on Labor Relations | 176

perform. She did so pursuant to her power of supervision and control over
the BLR.

III. ADMINISTRATIVE FUNCTIONS OF THE BLR AND LRDs

In addition to the afore-mentioned controversies over which they have
concurrent original and exclusive jurisdiction, the BLR and the Labor
Relations Divisions (LRDs) in the DOLE Regional Offices likewise have
concurrent jurisdiction over the following administrative functions:
1. Registration of labor unions;
2. Keeping of registry of labor unions;
3. Maintenance and custody of the files of Collective Bargaining
Agreements (CBAs) and other related agreements.
4. Records of settlement of labor disputes; and
5. Copies of orders and decisions of Voluntary Arbitrators.
It must be noted that it is the registration of the labor organization with the
BLR and not with the Securities and Exchange Commission (SEC) which
makes it a legitimate labor organization with rights and privileges granted
under the Labor Code.

D. NATIONAL CONCILIATION AND MEDIATION BOARD

(NCMB)

1. NATURE OF PROCEEDINGS

1. NCMB IS NOT A QUASI-JUDICIAL AGENCY.

NCMB is not a quasi-judicial agency, according to the 2009 case of Tabigue
v. International Copra Export Corporation.2
“Quasi-judicial function” is a term which applies to the action, discretion,
etc. of public administrative officers or bodies, who are required to
investigate facts or ascertain the existence of facts, hold hearings, and draw
conclusions from them
as a basis for their official action and to exercise discretion of a judicial
nature.
2. NOT BEING A QUASI-JUDICIAL AGENCY, NCMB’S RULINGS
CANNOT BE ELEVATED TO, AND COGNIZABLE BY, THE
COURT OF APPEALS.
Rule 43 of the Rules of Court applies only to awards, judgments, final
orders or resolutions of or authorized by any quasi-judicial agency in the
exercise of its quasi-judicial functions. Hence, NCMB’s decision, not having
been rendered by a quasi-judicial body, cannot be elevated to the Court of
Appeals under said rule.

2. CONCILIATION VS. MEDIATION

1. CONCILIATION AND MEDIATION, MEANING.
Both the terms “conciliation” and “mediation” refer to a process whereby a
third person usually called Conciliator (in case of conciliation) or Mediator
(in case of mediation), intervenes in a dispute involving two or more
conflicting parties for the purpose of reconciling their differences or

CCV Notes on Labor Relations | 177

persuading them into adjusting or settling their dispute. The Conciliator or
Mediator normally does not make or render any decision, his role being
confined to the functions afore-described.
1 G.R. No. 178296, Jan. 12, 2011.
2 G.R. No. 183335, Dec. 23, 2009.

3. DISTINCTION BETWEEN CONCILIATION AND MEDIATION.

Generally, there are no marked distinctions between conciliation and
mediation. The reason is that In both cases, a
neutral third party (called Conciliator or Mediator) is tasked to assist two or
more opposing parties in finding appropriate resolution to a dispute.
In the NCMB, the hearing officer is called Conciliator-Mediator. There is no
separate classification between conciliators and mediators. When the
Conciliator-Mediator performs his task, he does not make any distinction
when he is acting
as Conciliator or as Mediator.
In other jurisdictions, the principal distinction between conciliation and
mediation lies on the extent of the power and authority granted to the
neutral third party.
In mediation, the Mediator normally facilitates a deliberation or discussion
of the issues between the parties. He may or may not offer any opinions on
the strength and weaknesses of each party's positions and arguments. Thus,
mediation may be classified into two, namely:
1. Facilitative Mediation where the Mediator does not make or offer any
opinion; or
2. Evaluative Mediation where the Mediator offers an opinion which is not
binding on the parties.
It bears stressing, however, that regardless of which of the 2 methods above
is chosen, the Mediator is not empowered to impose his will on the parties.
In conciliation, the Conciliator is given more power and authority in that he
may not only offer an opinion on the issues at hand but may actually make
a binding opinion thereon provided the parties stipulate in advance to this
effect. His opinion is based on the facts and the law involved in the
controversy before him.
It may thus be observed that conciliation is more formal than mediation in
the sense that the Conciliator’s opinion, unlike the Mediator’s, may be
binding on the parties, although it may be merely temporary in character.

3. PREVENTIVE MEDIATION

1. PREVENTIVE MEDIATION AS A REMEDY.

“Preventive mediation,” as a remedy, is not found in the Labor Code. But
under the law which created the NCMB, it is expressly stated that one of its
functions is to provide preventive mediation to disputing parties.
The term “preventive mediation case” refers to the potential or brewing
labor dispute which is the subject of a formal or informal request for
conciliation and mediation assistance sought by either or both parties in
order to remedy, contain or prevent
its degeneration into a full blown dispute through amicable settlement.

CCV Notes on Labor Relations | 178

2. HOW TO INITIATE PREVENTIVE MEDIATION.
Preventive mediation proceeding may be initiated in two (2) ways:
(1) By filing a notice or request of preventive mediation, as distinguished
from a notice of strike/lockout; or
(2) By conversion of the notice of strike/lockout into a preventive
mediation case.

3. AUTHORITY TO CONVERT A NOTICE OF STRIKE/LOCKOUT INTO A

PREVENTIVE MEDIATION CASE.
The NCMB has the authority to convert a notice of strike/lockout filed by
the union/employer into a preventive mediation case under any of the
following circumstances:
1. When the issues raised in the notice of strike/lockout are not strikeable in
character.
2. When the party which filed the notice of strike/lockout voluntarily asks
for the conversion.
3. When both parties to a labor dispute mutually agree to have it subjected
to preventive mediation proceeding.
Such authority is in pursuance of the NCMB’s duty to exert all efforts at
mediation and conciliation to enable the parties to settle their dispute
amicably and in line with the State policy of favoring voluntary modes of
settling labor disputes.

4. CONVERSION OF A NOTICE OF STRIKE OR NOTICE OF LOCKOUT

INTO A PREVENTIVE MEDIATION CASE RESULTS
IN ITS DISMISSAL.
Once the notice of strike is converted into a preventive mediation case, the
notice is deemed dropped from the dockets as if no notice of strike has been
filed. Since there is no more notice of strike to speak about, any strike
subsequently staged by the union after the conversion is deemed not to
have complied with the requirements of a valid strike and therefore illegal.
The same rule applies in the case of lockout by an employer.

5. RELEVANT CASES.
A case in point is Philippine Airlines, Inc. v. Secretary of Labor and
Employment,1 where the strike was declared illegal for lack of a valid notice
of strike in view of the NCMB’s conversion of said notice into a preventive
mediation case.
It is clear, according to San Miguel Corporation v. NLRC,2 that the moment
the NCMB orders the preventive mediation in a strike case, the union
thereupon loses the notice of strike it had filed. Consequently, if it still
defiantly proceeds with the strike while mediation is on-going, the strike is
illegal.

1 G.R. No. 88210, Jan. 23, 1991, 193 SCRA 223.

2 G.R. No. 119293, June 10, 2003.

CCV Notes on Labor Relations | 179

E. DOLE REGIONAL DIRECTORS

1. JURISDICTION

1. JURISDICTION OF THE DOLE REGIONAL DIRECTORS.

The DOLE Regional Directors have original and exclusive jurisdiction over
the following cases:
(a) Labor standards enforcement cases under Article 128;
(b) Small money claims cases arising from labor standards violations in the
amount not exceeding P5,000.00 and not accompanied with a claim for
reinstatement under Article 129;
(c) Occupational safety and health violations;
(d) Registration of unions and cancellation thereof, cases filed against
unions and other labor relations related cases;
(e) Complaints against private recruitment and placement agencies
(PRPAs) for local employment; and
(f) Cases submitted to them for voluntary arbitration in their capacity as
Ex-Officio Voluntary Arbitrators (EVAs) under Department Order No. 83-
07, Series of 2007.

I. LABOR STANDARDS ENFORCEMENT CASES

1. SUBJECT OF THE VISITORIAL AND ENFORCEMENT POWERS: THE

ESTABLISHMENT AND NOT THE EMPLOYEES
THEREIN.
The subject of the visitorial and enforcement powers granted to the DOLE
Secretary or his duly authorized representatives under Article 128 is the
establishment which is under inspection and not the employees thereof.
Consequently, any awards granted are not confined to employees who
signed the complaint inspection but are equally applicable to all those who
were employed by the establishment concerned at the time the complaint
was filed, even if they were not signatories thereto. The reason is that the
visitorial and enforcement powers are relevant to, and may be exercised
over, establishments, not over individual employees thereof, to determine
compliance by such establishments with labor standards laws. Necessarily,
in case of an award from such violation by the establishment,
all its existing employees should be benefited thereby. It must be stressed,
however, that such award should not apply to those who resigned, retired
or ceased to be employees at the time the complaint was filed.

2. ORIGINAL JURISDICTION.
The DOLE Regional Directors exercise original jurisdiction over the
following:
(a) Cases involving inspection of establishments to determine compliance
with labor standards (Visitorial Power); and (b) Cases involving issuance of
compliance orders and writs of execution (Enforcement Power).

CCV Notes on Labor Relations | 180

3. VISITORIAL POWER OF REGIONAL DIRECTORS UNDER ARTICLE
128(a).
Pursuant to their visitorial power under Article 128(a), the DOLE Regional
Directors shall have:
(a) access to employer’s records and premises at any time of the day or
night, whenever work is being undertaken therein; and
(b) the right:
(1) to copy from said records;
(2) to question any employee and investigate any fact, condition or matter
which may be necessary to determine violations or which may aid in the
enforcement of the Labor Code and of any labor law, wage order, or rules
and regulations issued pursuant thereto.

4. ENFORCEMENT POWER OF REGIONAL DIRECTORS UNDER

ARTICLE 128(b).
The statutory basis of the authority of the DOLE Regional Directors to
administer and enforce labor standards is found in Article 128(b) of the
Labor Code, as amended.
Pursuant thereto, the DOLE Regional Director, in cases where the
employer-employee relationship still exists, shall have the power:
a. to issue compliance orders to give effect to the labor standards provisions
of the Labor Code and other labor legislations based on the findings of
labor employment and enforcement officers or industrial safety engineers
made in the course of inspection.
b. to issue writs of execution to the appropriate authority for the
enforcement of their orders, except in cases where the employer contests
the findings of the labor employment and enforcement officer and raises
issues supported by documentary proofs which were not considered in the
course of inspection, in which case, the contested case shall fall under the
jurisdiction of the Labor Arbiter to whom it should be endorsed by the
Regional Director.
c. to order stoppage of work or suspension of operations of any unit or
department of an establishment when non-compliance with the law or
implementing rules and regulations poses grave and imminent danger to
the health and safety of workers in the workplace. Within 24 hours, a
hearing shall be conducted to determine whether an order for the stoppage
of work or suspension of operations shall be lifted or not. In case the
violation is attributable to the fault of the employer, he shall pay the
employees concerned their salaries or wages during the period of such
stoppage of work or suspension of operation.
d. to require employers, by appropriate regulations, to keep and maintain
such employment records as may be necessary in aid of his visitorial and
enforcement powers under the Labor Code.

II. SMALL MONEY CLAIMS CASES

1. JURISDICTION OVER CLAIMS NOT EXCEEDING P5,000.

The DOLE Regional Director has original jurisdiction over small money

CCV Notes on Labor Relations | 181

claims cases arising from labor standards violations in the amount not
exceeding P5,000.00 and not accompanied with a claim for reinstatement
under Article 129 of the Labor Code.
Article 129 contemplates the recovery of wages and other monetary claims
and benefits, including legal interest, owing to an employee or domestic
worker or kasambahay, arising from employer-employee relations provided
the claim does not exceed P5,000.00.

2. REQUISITES FOR THE VALID EXERCISE OF JURISDICTION BY

DOLE REGIONAL DIRECTORS UNDER ARTICLE 129.
The following requisites must all concur, to wit:
(1) The claim is presented by an employee or domestic worker or
kasambahay;
(2) The claimant, no longer being employed, does not seek reinstatement;
and
(3) The aggregate money claim of the employee or domestic worker or
kasambahay does not exceed P5,000.00.
In the absence of any of the aforesaid three (3) requisites, the Labor
Arbiters have original and exclusive jurisdiction over all claims arising from
employer-employee relations, other than claims for employees’
compensation, social security, PhilHealth and maternity benefits.

III. CASES SUBMITTED TO REGIONAL DIRECTORS AND ASSISTANT

REGIONAL DIRECTORS FOR VOLUNTARY ARBITRATION IN THEIR
CAPACITY AS EX-OFFICIO
VOLUNTARY ARBITRATORS (EVAs)

1. JURISDICTION.
As EVAs, the DOLE Regional Directors and their Assistants have
jurisdiction over the following cases:
(a) All grievances arising from the interpretation or implementation of the
CBA;
(b) All grievances arising from the interpretation or enforcement of
company personnel policies which remain unresolved after exhaustion of
the grievance procedure;
(c) Cases referred to them by the DOLE Secretary under the DOLE’s
Administrative Intervention for Dispute
Avoidance (AIDA) initiative (provided under DOLE Circular No. 1, Series
of 2006); and
(d) Upon agreement of the parties, any other labor dispute may be
submitted to the EVAs for voluntary arbitration.

F. DOLE SECRETARY
1. POWERS OF THE DOLE SECRETARY.
The DOLE Secretary, being the head of the Department of Labor and
Employment, is possessed of a number of powers, some of which are
mentioned in the syllabus, to wit:
1. Visitorial and enforcement powers;

CCV Notes on Labor Relations | 182

2. Power to suspend/effects of termination;
3. Assumption of jurisdiction;
4. Appellate jurisdiction; and
5. Voluntary arbitration powers.

1. VISITORIAL AND ENFORCEMENT POWERS

1. THREE (3) KINDS OF POWER UNDER ARTICLE 128.

Article 128 of the Labor Code, as amended, basically enunciates the three
(3) kinds of power which the DOLE Secretary and/or the Regional
Directors, his duly authorized representatives, may exercise in connection
with the administration and enforcement of the labor standards provisions
of the Labor Code and of any labor law, wage order or rules and regulations
issued pursuant thereto.
The three (3) kinds of power are as follows:
1) Visitorial power:
2) Enforcement power: and
3) Appellate power or power of review.

2. WHO EXERCISE THE POWERS.

Nos. 1 and 2 above are exercised under the original jurisdiction of the
DOLE Regional Directors.
This has been earlier discussed under the separate topic of “VII.
PROCEDURE AND JURISDICTION, E. DOLE Regional
Directors, 1. Jurisdiction”, supra. Hence, the same will no longer be
touched under the instant topical discussion.
The appellate power in No. 3 above may only be exercised by the DOLE
Secretary in respect to any decision, order or award issued by the DOLE
Regional Directors.

3. NATURE OF THE VISITORIAL AND ENFORCEMENT POWERS.

The visitorial and enforcement powers granted to the DOLE Secretary and
the DOLE Regional Directors who are his duly authorized representatives,
are quasi-judicial in nature.

4. IT IS THE REGIONAL DIRECTORS WHO HAVE ORIGINAL

JURISDICTION TO EXERCISE THE VISITORIAL AND
ENFORCEMENT POWERS UNDER ARTICLES 37, 128 AND 274.
In the instances contemplated under Articles 37, 128 and 274, it is the
DOLE Regional Directors, the DOLE Secretary’s duly authorized
representatives commonly referred to in these three (3) articles, who have
the original jurisdiction to exercise the visitorial power granted therein.

5. THE ROLE OF THE DOLE SECRETARY IN THE EXERCISE OF

VISITORIAL AND ENFORCEMENT POWERS IS APPELLATE IN
NATURE.
It is clear from the above disquisition that the original jurisdiction over the

CCV Notes on Labor Relations | 183

exercise of the visitorial and enforcement powers belongs to the DOLE
Regional Directors, as the duly authorized representatives of the DOLE
Secretary.
The role of the DOLE Secretary is confined to the exercise of his appellate
jurisdiction over the decisions, orders and awards of the DOLE Regional
Directors in cases brought before them for adjudication under Articles 128
and 274.

2. POWER TO SUSPEND EFFECTS OF TERMINATION

1. GROUNDS.
The DOLE Secretary may suspend the effects of termination pending
resolution of the dispute in the event of a prima facie finding by the
appropriate official of the DOLE before whom the dispute is pending that:
1. the termination may cause a serious labor dispute; and/or
2. the termination is in implementation of a mass lay-off.

2. RATIONALE FOR SUSPENDING THE EFFECTS OF TERMINATION.

The obvious purpose behind this rule is to bring the parties back to the
status quo ante litem, that is, their state of relationship prior to the
termination. In this way, the workers will be litigating the issue of the
validity or legality of their termination on more or less equal footing with
the employer since they will be immediately reinstated and accordingly not
be deprived of their wages while the litigation is on-going.

3. REINSTATEMENT PENDING RESOLUTION OF THE TERMINATION

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

4. DISTINGUISHED FROM DOLE SECRETARY’S POWER OF

ASSUMPTION OR CERTIFICATION IN NATIONAL INTEREST
CASES.
a. Different power of the DOLE Secretary.
This power of the DOLE Secretary granted under Article 277(b) should be
distinguished from his power to assume or certify labor disputes involving
industries indispensable to the national interest under Article 263(g). The
following distinctions may be cited:
First, the exercise of the power to suspend the effects of termination
involves only the issue of termination of employment which may cause a
serious labor dispute or is in implementation of a mass lay-off; while the
power to assume or certify labor disputes is applicable to all labor disputes,
irrespective of the grounds therefor, provided such labor disputes will cause
or likely to cause strikes or lockouts in industries indispensable to the
national interest.
Second, the former requires the conduct of preliminary determination of
the existence of prima facie evidence that the termination may cause a

CCV Notes on Labor Relations | 184

serious labor dispute or is in implementation of a mass lay-off to be
conducted by the appropriate official of the DOLE before whom the
termination dispute is pending; while the latter does not require such
preliminary prima facie determination. In fact, prior notice and hearing are
not required before the DOLE Secretary may issue an assumption or
certification order.
Third, the “serious labor dispute” contemplated under the former may or
may not involve a strike or lockout; while the labor dispute referred to in
the latter will cause or likely to cause a strike or lockout.
Fourth, the former may be exercised in cases of termination of employment
for as long as any of the two (2) grounds mentioned in Article 277(b) exists,
irrespective of the nature of the business of the employer; while the latter
may only be exercised in industries indispensable to the national interest.
Fifth, the remedy under the former is immediate reinstatement pending
resolution of the termination case; while in the latter, the remedy is the
automatic return to work of the strikers or locked-out employees, if the
strike or lock-out is on-going at the time of the issuance of the
assumption/certification order or the enjoining of the strike or lockout, if
one has not taken place, pending the resolution of the issues raised in the
notice of strike or lockout.

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

4. APPELLATE JURISDICTION

I. VARIOUS APPEALS TO THE DOLE SECRETARY

UNDER THE LABOR CODE AND APPLICABLE RULES

1. OFFICES FROM WHICH APPEALS MAY ORIGINATE.

Appeals to the DOLE Secretary may originate from any of the following
offices:
(1) DOLE Regional Directors;
(2) Med-Arbiters;
(3) Director of the Bureau of Labor Relations (BLR); and
(4) Philippine Overseas Employment Administration (POEA).

2. CASES NOT APPEALABLE TO THE DOLE SECRETARY.

The following decisions, awards or orders are not appealable to the Office of
the DOLE Secretary:
(1) Those rendered by Labor Arbiters that are appealable to the
Commission (NLRC) which has exclusive appellate jurisdiction thereover;
(2) Those rendered by the Commission (NLRC) since they can be elevated

CCV Notes on Labor Relations | 185

directly to the CA by way of a Rule 65 certiorari petition;
(3) Those rendered by the BLR Director in the exercise of his appellate
jurisdiction since they can be brought directly to the CA under Rule 65
certiorari petition;
(4) Those rendered by DOLE Regional Directors under Article 129 of the
Labor Code since they are appealable to the NLRC;
(5) Those issued by DOLE Regional Directors in their capacity as Ex-Officio
Voluntary Arbitrators (EVAs) since they can be brought directly to the CA
under Rule 43 of the Rules of Court; and
(6) Those rendered by Voluntary Arbitrators which are appealable directly
to the CA under Rule 43 of the Rules of Court.

II. APPEALS FROM DOLE REGIONAL DIRECTORS

1. CASES APPEALABLE TO DOLE SECRETARY.

Not all decisions, awards or orders rendered by the DOLE Regional
Directors are appealable to the DOLE Secretary.
Only those issued in the following cases are so appealable:
(a) Labor standards enforcement cases under Article 128;
(b) Occupational safety and health violations; and
(c) Complaints against private recruitment and placement agencies
(PRPAs) for local employment.

2. CASES NOT APPEALABLE TO THE DOLE SECRETARY.

As earlier pointed out, the following cases decided by the DOLE Regional
Directors are not appealable to the DOLE Secretary but to some other
agencies/tribunals indicated below:
(a) Decisions in small money claims cases arising from labor standards
violations in the amount not exceeding P5,000.00 and not accompanied
with a claim for reinstatement under Article 129 are appealable to the
NLRC;
(b) Decisions in cases submitted to DOLE Regional Directors for voluntary
arbitration in their capacity as Ex-Officio Voluntary Arbitrators (EVAs)
under Department Order No. 83-07, Series of 2007 may be elevated
directly to the Court of Appeals by way of a Rule 43 petition. This is so
because the DOLE Regional Directors, in so deciding,
are acting as Voluntary Arbitrators; hence, what should apply are the rules
on appeal applicable to voluntary arbitration.

III. APPEALS FROM DECISIONS OF

MEDIATORS-ARBITERS (MED-ARBITERS) AND BLR DIRECTOR
(NOTE: The discussion of this sub-topic is presented alongside the
comments on the topic of “VIII. PROCEDURE AND JURISDICTION, C.
Bureau of Labor Relations – Med-Arbiters, 1. Jurisdiction (Original and
Appellate)”, supra)

V. APPEALS FROM DECISIONS OF POEA

CCV Notes on Labor Relations | 186

1. CASES APPEALABLE TO THE DOLE SECRETARY.
The decisions in the following cases rendered by the Philippine Overseas
Employment Administration (POEA) in its original jurisdiction are
appealable to the DOLE Secretary:
(a) Recruitment violations and other related cases. - All cases which are
administrative in character, involving or arising out of violation of rules and
regulations relating to licensing and registration of recruitment and
employment agencies or entities, including refund of fees collected from
workers and violation of the conditions for the issuance of license to recruit
workers.
(b) Disciplinary action cases and other special cases which are
administrative in character, involving employers, principals, contracting
partners and Filipino migrant workers.
It must be noted that the POEA ceased to have any jurisdiction over money
claims of OFWs, or those arising out of an employer-employee relationship
or by virtue of any law or contract involving Filipino workers for overseas
deployment including claims for actual, moral, exemplary and other forms
of damages. The jurisdiction over these claims was transferred to the Labor
Arbiters of the NLRC by virtue of Section 10 of R.A. No. 8042, as amended.
Hence, appeals therefrom may be instituted to the Commission (NLRC).

5. VOLUNTARY ARBITRATION POWERS

1. AIDA.
a. New rule on voluntary arbitration by the DOLE Secretary.
A new form of dispute settlement by the DOLE Secretary was introduced by
DOLE Circular No. 1, Series of 2006.
Called Administrative Intervention for Dispute Avoidance (AIDA), this is a
new administrative procedure for the voluntary settlement of labor disputes
in line with the objectives of R.A. No. 9285, Executive Order No. 523 and
the mandate of the DOLE to promote industrial peace.
b. Nature of administrative intervention by DOLE Secretary.
This recourse is separate from the established dispute resolution modes of
mediation, conciliation and arbitration under the Labor Code, and is an
alternative to other voluntary modes of dispute resolution such as the
voluntary submission of a dispute to the Regional Director for mediation, to
the NCMB for preventive mediation, or to the intervention of a regional or
local tripartite peace council for the same purpose.
c. Parties who may request for DOLE Secretary’s intervention.
Either or both the employer and the certified collective bargaining agent (or
the representative of the employees where there is no certified bargaining
agent) may voluntarily bring to the Office of the DOLE Secretary, through a
Request for Intervention, any potential or ongoing dispute defined below.
d. Potential or on-going dispute.
A potential or on-going dispute refers to:
(a) a live and active dispute;
(b) that may lead to a strike or lockout or to massive labor unrest; and

CCV Notes on Labor Relations | 187

(c) is not the subject of any complaint or notice of strike or lockout at the
time a Request for Intervention is made.

2. VOLUNTARY ARBITRATION BY DOLE SECRETARY.

If the intervention through AIDA fails, either or both parties may avail
themselves of the remedies provided under the Labor Code. Alternatively,
the parties may submit their dispute to the Office of the DOLE Secretary for
voluntary arbitration. Such voluntary arbitration should be limited to the
issues defined in the parties' submission to voluntary arbitration agreement
and should be decided on the basis of the parties' position papers and
submitted evidence. The Office of the DOLE Secretary is mandated to
resolve the dispute within sixty (60) days from the parties' submission of
the dispute for resolution.

3. DOES THE DOLE SECRETARY ASSUME THE ROLE OF VOLUNTARY

ARBITRATOR ONCE HE ASSUMES JURISDICTION OVER A LABOR
DISPUTE?
In the 2014 case of Philtranco Service Enterprises, Inc. v. Philtranco
Workers Union-Association of Genuine Labor Organizations (PWU-
AGLO),1 this poser was answered in the negative. A notice of strike was
filed by respondent union which, after failure of conciliation and mediation
by the NCMB, was referred by the Conciliator-Mediator to the Office of the
DOLE Secretary who thereby assumed jurisdiction over the labor dispute.
The case was resolved by the Acting DOLE Secretary in favor of respondent
union. A motion for reconsideration was filed by petitioner company. The
DOLE Secretary, however, declined to rule on the motion citing a DOLE
regulation, applicable to voluntary arbitration, which provided that the
Voluntary Arbitrators’ decisions, orders, resolutions or awards shall not be
the subject of motions for reconsideration. The DOLE Secretary took the
position that when he assumed jurisdiction over the labor dispute, he was
acting as a Voluntary Arbitrator. Petitioner subsequently filed a Rule 65
certiorari petition with the CA. The CA, however, dismissed petitioner
company’s Rule 65 certiorari petition on the ground, among others, that
the decision of the DOLE Secretary, having been rendered by him in his
capacity as Voluntary Arbitrator, is not subject to a Rule 65 certiorari
petition but to a Rule 43 petition for review which properly covers decisions
of Voluntary Arbitrators.
Before the Supreme Court, petitioner asserted that, contrary to the CA’s
ruling, the case is not a simple voluntary arbitration case. The character of
the case, which involves an impending strike by petitioner’s employees; the
nature of petitioner’s business as a public transportation company, which is
imbued with public interest; the merits of its case; and the assumption of
jurisdiction by the DOLE Secretary – all these circumstances removed the
case from the coverage of Article 262, and instead placed it under Article
263, of the Labor Code. For its part, respondent union argued that the
DOLE Secretary decided the assumed case in his capacity as Voluntary
Arbitrator; thus, his decision, being that of a Voluntary Arbitrator, is only
assailable via a petition for review under Rule 43.

CCV Notes on Labor Relations | 188

The Supreme Court, however, pronounced that:
“It cannot be said that in taking cognizance of NCMB-NCR CASE No. NS-
02-028-07, the Secretary of Labor did so in a limited capacity, i.e., as a
voluntary arbitrator. The fact is undeniable that by referring the case to the
Secretary of Labor, Conciliator-Mediator Aglibut conceded that the case fell
within the coverage of Article 263 of the Labor Code; the impending strike
in Philtranco, a public transportation company whose business is imbued
with public interest, required that the Secretary of Labor assume
jurisdiction over the case, which he in fact did. By assuming jurisdiction
over the case, the provisions of Article 263 became applicable, any
representation to the contrary or that he is deciding the case in his capacity
as a voluntary arbitrator notwithstanding.”
Consequently, the Supreme Court reversed and set aside the CA ruling and
reinstated the case and directed the CA “to resolve the same with deliberate
dispatch.”
Although this case involves a decision of the DOLE Secretary, the principle
enunciated herein equally applies to the NLRC.

1 G.R. No. 180962, Feb. 26, 2014.

G. GRIEVANCE MACHINERY AND VOLUNTARY ARBITRATION

1. SUBJECT MATTER OF GRIEVANCE
1. GRIEVANCE OR GRIEVABLE ISSUE.
A “grievance” or “grievable issue” is any question raised by either the
employer or the union regarding any of the following issues or
controversies:
1. The interpretation or application of the CBA;
2. The interpretation or enforcement of company personnel policies; or
3. Violation of any provisions of the CBA or company personnel policies.

2. VALIDITY AND BINDING EFFECT OF DECISIONS OF GRIEVANCE

COMMITTEE.
A member of the bargaining union who brought his grievable issue for
resolution by the Grievance Committee is bound by whatever disposition
the latter may render thereon.

ELEVATION OF GRIEVANCE TO VOLUNTARY ARBITRATION

1. UNRESOLVED GRIEVANCES.
All grievances submitted to the grievance machinery which are not settled
within seven (7) calendar days from the date of their submission for
resolution should automatically be referred to voluntary arbitration
prescribed in the CBA. The various internal procedural steps or stages of
resolving grievances under the grievance machinery in a CBA should be
fully exhausted before resort to voluntary arbitration may be made. The 7-
calendar day period is usually reckoned from the date of their submission
for resolution to the last step of the internal grievance machinery. Simply
stated, only after exhausting all the internal procedures and only after the

CCV Notes on Labor Relations | 189

lapse of this period that unsettled or unadjusted grievances should
automatically be referred to voluntary arbitration enunciated in the CBA.

2. A PARTY IS NOT ALLOWED TO GO DIRECTLY TO COURT IN

DISREGARD OF VOLUNTARY ARBITRATION AFTER
DECISION IS RENDERED BY GRIEVANCE COMMITTEE.
Before a party is allowed to seek the intervention of the court, it is a
precondition that he should have availed of all the means of administrative
processes afforded him. Hence, if a remedy within the administrative
machinery can still be resorted to by giving the administrative officer
concerned every opportunity to decide on a matter that comes within his
jurisdiction, then such remedy should be exhausted first before the court’s
judicial power can be sought. The premature invocation of the court’s
judicial intervention is fatal to one’s cause of action.” Indeed, the
underlying principle of the rule on exhaustion of administrative remedies
rests on the presumption that when the administrative body, or grievance
machinery, is afforded a chance to pass upon the matter, it will decide the
same correctly.

2. VOLUNTARY ARBITRATOR
1. VOLUNTARY ARBITRATION.
“Voluntary arbitration” refers to the mode of settling labor-management
disputes in which the parties select a competent, trained and impartial
third person who is tasked to decide on the merits of the case and whose
decision is final and executory. It is a third-party settlement of a labor
dispute involving the mutual consent by the representatives of the
employer and the labor union involved in a labor dispute to submit their
case for arbitration.
2. VOLUNTARY ARBITRATOR.
a. Who is a Voluntary Arbitrator?
A “Voluntary Arbitrator” refers to:
(1) any person who has been accredited by the National Conciliation and
Mediation Board (“NCMB” or “Board”) as such; or
(2) any person named or designated in the CBA by the parties as their
Voluntary Arbitrator; or
(3) one chosen by the parties with or without the assistance of the NCMB,
pursuant to a selection procedure agreed upon in the CBA; or
(4) one appointed by the NCMB in case either of the parties to the CBA
refuses to submit to voluntary arbitration.
This term includes a panel of Voluntary Arbitrators.

3. VOLUNTARY ARBITRATOR ACTS IN QUASI-JUDICIAL CAPACITY.

Although not a part of a government unit or a personnel of the Department
of Labor and Employment, a Voluntary Arbitrator, by the nature of his
functions, acts in a quasi-judicial capacity. He is a means by which
government acts, or by which a certain government act or function is
performed. He performs a state function pursuant to a governmental power
delegated to him under the Labor Code. The landmark case of Luzon
Development Bank v. Association of Luzon Development Bank

CCV Notes on Labor Relations | 190

Employees,1 clearly declared that a Voluntary Arbitrator, whether acting
solely or in a panel, enjoys in law the status of a quasi-judicial agency.
1 G.R. No. 120319, Oct. 6, 1995.

(a) JURISDICTION

1. ORIGINAL AND EXCLUSIVE JURISDICTION.

a. In general.
The Voluntary Arbitrator or panel of Voluntary Arbitrators shall have
exclusive and original jurisdiction over the following cases:
(1) Unresolved grievances arising from the interpretation or
implementation of the collective bargaining agreement (CBA).
(2) Unresolved grievances arising from the interpretation or enforcement
of company personnel policies.
(3) Violations of the CBA which are not gross in character.
(4) Other labor disputes, including unfair labor practices and bargaining
deadlocks, upon agreement of the parties.
(5) National interest cases.
(6) Wage distortion issues arising from the application of any wage orders
in organized establishments.
(7) Unresolved grievances arising from the interpretation and
implementation of the Productivity Incentive Programs under R.A. No.
6971.

b. Rights disputes.
Nos. 1, 2 and 3 above, which are provided for under Article 261 of the Labor
Code, are commonly known as “rights disputes.” This kind of disputes
contemplates the existence of a CBA already concluded or, at any rate, a
situation in which no effort is made to bring about a formal change in its
terms or to create a new one. The dispute relates either to the meaning or
proper application of a particular provision therein with reference to a
specific situation or to an omitted case. In the latter event, the claim is
founded upon some incident of the employment relation or asserted one,
independent of those covered by the collective agreement. In either case,
the claim is to rights accrued and not merely to new ones created for the
future.

c. Interest disputes.
Bargaining deadlocks are often referred to as “interest disputes.” This kind
of disputes relates to disputes over the formation of collective agreements
or efforts to secure them. They arise where there is no such agreement or
where it is sought to change the terms of one and therefore the issue is not
whether an existing agreement controls the controversy. They look to the
acquisition of rights for the future, not to assertion of rights claimed to have
vested in the past.

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III. JURISDICTION OVER OTHER LABOR DISPUTES
Under Article 262 of the Labor Code, upon agreement of the parties, the
Voluntary Arbitrator or panel of Voluntary Arbitrators may also hear and
decide all other labor disputes, including unfair labor practices and
bargaining deadlocks.

For this purpose, before or at any stage of the compulsory arbitration

process, parties to a labor dispute may agree to submit their case to
voluntary arbitration.

IV. JURISDICTION OVER NATIONAL INTEREST CASES

Article 263(g) of the Labor Code which involves the DOLE Secretary’s
power of assumption of jurisdiction or certification to the NLRC of labor
disputes affecting industries indispensable to the national interest, also
provides that “[b]efore or at any stage of the compulsory arbitration
process, the parties may opt to submit their dispute to voluntary
arbitration.”
This means that even if the case has already been assumed by the DOLE
Secretary or certified to the NLRC for compulsory arbitration, or even
during its pendency therewith, the parties thereto may still withdraw the
case from the DOLE Secretary or NLRC, as the case may be, and submit it
to a Voluntary Arbitrator for voluntary arbitration purposes.

V. JURISDICTION OVER WAGE DISTORTION CASES

Jurisdiction over wage distortion cases depends on whether the
establishment is organized or unorganized.
In organized establishments, the employer and the union are required to
negotiate to correct the wage distortion.
Any dispute arising from such wage distortion should be resolved through
the grievance procedure under the CBA and if it remains unresolved,
through voluntary arbitration.
In unorganized establishments, where there are no CBAs or recognized or
certified collective bargaining unions, the jurisdiction is with the Labor
Arbiter.

VI. EXERCISE OF JURISDICTION

1. HOW VOLUNTARY ARBITRATOR ACQUIRES JURISDICTION.
The Voluntary Arbitrator or panel of Voluntary Arbitrators shall exercise
jurisdiction over a specific case only under the following:
(1) Upon receipt of a Submission Agreement duly signed by both parties;
(2) Upon receipt of a Notice to Arbitrate when there is refusal to arbitrate
by one party;
(3) Upon receipt of an appointment or designation as Voluntary Arbitrator
by the NCMB (Board) in either of the following circumstances:
(3.1.) In the event that the parties failed to select a Voluntary Arbitrator; or
(3.2.) In the absence of a named Voluntary Arbitrator in the CBA and the

CCV Notes on Labor Relations | 192

party upon whom the Notice to Arbitrate is served does not favorably reply
within seven (7) days from receipt of such notice.

2. HOW INITIATED.
Based on the foregoing discussion, an arbitration may be initiated either by
way of:
(1) A Submission Agreement; or
(2) A Demand or Notice to Arbitrate invoking the arbitration clause in the
CBA; or
(3) An Appointment from the NCMB.
A “Submission Agreement” refers to a written agreement by the parties
submitting their case for arbitration, containing a statement of the issues,
the name of their chosen Voluntary Arbitrator and a stipulation and an
undertaking to abide by and comply with the resolution that may be
rendered therein, including the cost of arbitration.
A “Notice to Arbitrate” refers to a formal demand made by one party to the
other for the arbitration of a particular dispute in the event of refusal by
one party in a CBA to submit the same to arbitration

3. SOME PRINCIPLES.

1) Cases cognizable by Voluntary Arbitrators in their original jurisdiction

but filed with Labor Arbiters, DOLE Regional Offices or NCMB should be
disposed of by referring them to the Voluntary Arbitrators or panel of
Voluntary Arbitrators mutually chosen by the parties.

2) Cases cognizable by Voluntary Arbitrators but filed with regular courts

should be dismissed.

3) THE WELL-ENTRENCHED RULE IS THAT WHEN A CASE DOES NOT

INVOLVE THE PARTIES TO A CBA – THE EMPLOYER AND THE
BARGAINING UNION - IT IS NOT SUBJECT TO VOLUNTARY
ARBITRATION.
While individual or group of employees, without the participation of the
union, are granted the right to bring grievance directly to the employer,
they cannot submit the same grievance, if unresolved by the employer, for
voluntary arbitration without the union’s approval and participation. The
reason is that it is the union which is the party to the CBA, and not the
individual or group of employees. –
This rule was lately affirmed in the 2009 case of Tabigue v. International
Copra Export Corporation. Pursuant to Article 260 of the Labor Code, the
parties to a CBA shall name or designate their respective representatives to
the grievance machinery and if the grievance is unsettled in that level, it
shall automatically be referred to the voluntary arbitrators designated in
advance by parties to a CBA. Consequently only disputes involving the
union and the company shall be referred to the grievance machinery or
voluntary arbitrators.”

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(b) PROCEDURE EXECUTION PROCEEDINGS IN VOLUNTARY
ARBITRATION CASES

1. PROCEDURAL RULES IN THE ENFORCEMENT OF WRIT OF

EXECUTION.
In the enforcement of a writ of execution, the Sheriff or other authorized
officer should be guided by the Procedural Guidelines in the Execution of
Voluntary Arbitration Awards/Decisions. These Guidelines should be
followed in the execution of
the awards or decision of Voluntary Arbitrators or panel of Voluntary
Arbitrators. Other rules that may be pertinently observed and followed are
the following:
(1) 2012 NLRC Sheriffs’ Manual on Execution of Judgment;
(2) Memorandum of Agreement between the NLRC and the NCMB dated
July 26, 1996; and
(3) Revised Rules of Court, as amended, in the absence of applicable rules.
2. EXECUTION MOTU PROPRIO OR UPON MERE MOTION WITHIN
FIVE (5) YEARS FROM FINALITY OF DECISION.
The Voluntary Arbitrator or panel of Voluntary Arbitrators may, motu
proprio or on motion of any interested party, issue a writ of execution on a
judgment within five (5) years from the date it becomes final and executory.

3. WHEN LABOR ARBITER MAY ISSUE THE WRIT OF EXECUTION.

In case the Voluntary Arbitrator or panel of Voluntary Arbitrators who
rendered and issued the decision, order or award is, for any reason, absent
or incapacitated, the Labor Arbiter in the region where the movant resides,
may issue the writ of execution. But unlike the Voluntary Arbitrator or
panel of Voluntary Arbitrators who issued the decision, order or award, the
Labor Arbiter cannot issue such writ motu proprio but only upon motion of
any interested party.

4. PERSONS WHO MAY ENFORCE THE WRIT OF EXECUTION.

Any of the following persons may be required to enforce the writ of
execution:
(1) The Sheriff of the Commission (NLRC);
(2) A duly deputized officer;
(3) A Special Sheriff;
(4) The Sheriff of the regular courts; or
(5) Any public official whom the parties may designate in the submission
agreement to execute the final decision, order or award.

(c) REMEDIES
1. RELIEFS AND REMEDIES THAT MAY BE GRANTED BY VOLUNTARY
ARBITRATORS.
Besides the procedural remedies discussed above, the Voluntary Arbitrator
or panel of Voluntary Arbitrators may grant the same reliefs and remedies
granted by Labor Arbiters under Article 279 of the Labor Code, such as:

CCV Notes on Labor Relations | 194

(1) In illegal dismissal cases:
(a) Actual reinstatement;
(b) Separation pay in lieu of reinstatement, in case reinstatement becomes
impossible, non-feasible or impractical;
(c) Full backwages;
(d) Moral and exemplary damages; and
(e) Attorney’s fees.
(2) Monetary awards in monetary claims cases in which case, the decision
should specify the amount granted and the formula used in the
computation thereof.

H. COURT OF APPEALS

1. RULE 65, RULES OF COURT

RULE 65 PETITION FOR CERTIORARI, THE ONLY MODE OF

ELEVATING A LABOR CASE TO THE COURT OF
APPEALS.
The only mode by which a labor case decided by any of the following labor
authorities/tribunals may reach the Court of Appeals is through a Rule 65
petition for certiorari.
(a) the DOLE Secretary;
(b) the Commission (NLRC); and
(c) the Director of the Bureau of Labor Relations (BLR) in cases decided by
him in his appellate jurisdiction (as distinguished from those he decides in
his original jurisdiction which are appealable to the DOLE Secretary).
The remedy of ordinary appeal to the Court of Appeals is not available from
their decisions, orders or awards. The reason for this rule is that their
decisions, orders or awards are final and executory and therefore
inappealable.

2. THE ONLY EXCEPTION.

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

3. FILING OF MOTION FOR RECONSIDERATION OF THE DECISION

OF THE DOLE SECRETARY, THE COMMISSION (NLRC) OR THE BLR
DIRECTOR, A PRE-REQUISITE TO FILING OF RULE 65 PETITION FOR
CERTIORARI.
The rule on the filing of a Motion for Reconsideration of the decision of the
DOLE Secretary, the NLRC and the BLR Director is mandatory and
jurisdictional. Failure to comply therewith would result in the dismissal of
the Rule 65 certiorari petition. Jurisprudence abounds enunciating the rule
that a motion for reconsideration is a pre-requisite for the filing of a special
civil action for certiorari.
The reason for this rule is that in labor cases, a motion for reconsideration

CCV Notes on Labor Relations | 195

is the plain and adequate remedy from an adverse decision of the DOLE
Secretary, the NLRC and the BLR Director.
THE PHILTRANCO DOCTRINE: a motion for reconsideration should be
filed even though it is not required or even prohibited by the concerned
government office. This was the rule enunciated in the 2014 case of
Philtranco Service Enterprises, Inc. v. Philtranco Workers Union-
Association of Genuine Labor Organizations (PWUAGLO).1 Thus, while a
government office may prohibit altogether the filing of a motion for
reconsideration with respect to its decisions or orders, the fact remains that
certiorari inherently requires the filing of a motion for reconsideration
which is the tangible representation of the opportunity given to the office to
correct itself. Unless it is filed, there could be no occasion to rectify. Worse,
the remedy of certiorari would be unavailing. Simply put, regardless of the
proscription against the filing of a motion for reconsideration, the same
may be filed on the assumption that rectification of the decision or order
must be obtained and before a petition for certiorari may be instituted.

4. CERTIORARI PETITION MAY BE FILED EVEN IF THE DECISION OF

THE DOLE SECRETARY, THE COMMISSION (NLRC), OR THE BLR
DIRECTOR HAS ALREADY BECOME FINAL AND EXECUTORY.
This rule applies to the decisions rendered by the DOLE Secretary, the
NLRC or the BLR Director (in cases which he decided in his appellate
jurisdiction). If the CA grants the petition and nullifies their decisions on
the ground of grave abuse of discretion amounting to excess or lack of
jurisdiction, such decisions are, in contemplation of law, null and void ab
initio; hence, they never became final and executory.

JUDICIAL REVIEW OF DECISIONS OF VOLUNTARY ARBITRATORS

1. DECISIONS, FINAL AND EXECUTORY.

As a general rule, decisions or awards of Voluntary Arbitrators are final,
inappealable and executory after ten (10) calendar days from receipt of a
copy thereof by the parties.

2. ORDINARY APPEAL UNDER RULE 43 OF THE 1997 RULES OF CIVIL

PROCEDURE – VOLUNTARY ARBITRATORS ARE OF THE SAME LEVEL
AS RTC JUDGES.
Being a quasi-judicial agency, the decisions and awards of a Voluntary
Arbitrator are appealable by way of a petition for review to the Court of
Appeals under Revised Administrative Circular No. 1-95 which provides
for a uniform procedure for appellate review of all adjudications of quasi-
judicial entities and which is now embodied in Section 1, Rule 43 of the
1997 Rules of Civil Procedure.
The ruling in Luzon Development Bank v. Association of Luzon
Development Bank Employees,2 in effect, equates the decisions or awards
of the Voluntary Arbitrator to those of the Regional Trial Court (RTC).
Hence, in a petition for certiorari from the awards or decisions of the
Voluntary Arbitrator, the Court of Appeals has concurrent jurisdiction with

CCV Notes on Labor Relations | 196

the Supreme Court. Although this case involves a decision of the DOLE
Secretary, the principle enunciated herein equally applies to the NLRC.
In Alcantara, Jr. v. CA,1 it was held that Luzon Development Bank is still a
good law.
1 G.R. No. 180962, Feb. 26, 2014.
2 G.R. No. 120319, October 6, 1995.

3. PERIOD OF APPEAL – 15 DAYS.

Rule 43 of the Rules of Court requires that the petition for review to be
taken to the Court of Appeals should be filed within fifteen (15) days from
notice of the award, judgment or final order or resolution of the Voluntary
Arbitrator.

I. SUPREME COURT

1. RULE 45, RULES OF COURT

RULE 45 PETITION FOR REVIEW ON CERTIORARI, THE ONLY MODE

BY WHICH A LABOR CASE MAY REACH THE SUPREME COURT.
Since the Court of Appeals has jurisdiction over the petition for certiorari
under Rule 65 that may be filed before it from the decisions of the NLRC or
the DOLE Secretary or the BLR Director (in cases decided by him in his
appellate jurisdiction), any alleged errors committed by it in the exercise of
its jurisdiction would be errors of judgment which are reviewable by means
of a timely appeal to the Supreme Court and not by a special civil action of
certiorari.
If the aggrieved party fails to do so within the reglementary period and the
decision accordingly becomes final and executory, he cannot avail himself
of the writ of certiorari, his predicament being the effect of his deliberate
inaction. A petition for certiorari under Rule 65 cannot be a substitute for a
lost appeal under Rule 45; hence, it should be dismissed.

2. THE NEYPES DOCTRINE (FRESH PERIOD RULE) - FRESH PERIOD

FROM DENIAL OF MOTION FOR RECONSIDERATION.
In the 2013 case of Elizabeth Gagui v. Dejero,2 petitioner successively filed
two Motions for Reconsideration of the CA’s decision but both were denied.
Petitioner elevated the case to the Supreme Court under Rule 45. In their
comment, respondents alleged that the instant petition had been filed 15
days after the prescriptive period of appeal under Section 2, Rule 45 of the
Rules of Court. In her reply, petitioner countered that she has a fresh
period of 15 days from the date she received the Resolution of the CA to file
the instant Rule 45 petition. In affirming the contention of petitioner, the
Supreme Court cited the en banc ruling in the case of Neypes v. CA3 which
standardized the appeal periods, thus:
“To standardize the appeal periods provided in the Rules and to afford
litigants fair opportunity to appeal their cases, the Court deems it practical
to allow a fresh period of 15 days within which to file the notice of appeal in

CCV Notes on Labor Relations | 197

the Regional Trial Court, counted from receipt of the order dismissing a
motion for a new trial or motion for reconsideration.
“Henceforth, this ‘fresh period rule’ shall also apply to Rule 40 governing
appeals from the Municipal Trial Courts to the Regional Trial Courts; Rule
42 on petitions for review from the Regional Trial Courts to the Court of
Appeals; Rule 43 on appeals from quasi-judicial agencies to the Court of
Appeals and Rule 45 governing appeals by certiorari to the Supreme Court.
The new rule aims to regiment or make the appeal period uniform, to be
counted from receipt of the order denying the motion for new trial, motion
for reconsideration (whether full or partial) or any final order or
resolution.”
Consequently, since petitioner in Gagui received the CA Resolution denying
her two Motions for Reconsideration only on 16 March 2011, she had
another 15 days within which to file her Petition, or until 31 March 2011.
This Petition, filed on 30 March 2011, fell within the prescribed 15-day
period.

J. PRESCRIPTION OF ACTIONS

1. MONEY CLAIMS CASES.

a. Prescriptive period is three (3) years under Article 291 of the Labor Code.
- The prescriptive period of all money claims and benefits arising from
employer-employee relations is 3 years from the time the cause of action
accrued; otherwise, they shall be forever barred.
b. All other money claims of workers prescribe in 3 years. - Article 291
contemplates all money claims arising from employer-employee
relationship, including:
1. Money claims arising from the CBA.
2. Incremental proceeds from tuition increases.
3. Money claims of Overseas Filipino Workers (OFWs).
Note must be made that in the 2010 case of Southeastern Shipping v.
Navarra, Jr.,4 the 1-year prescriptive period in Section 28 of POEA-SEC was
declared null and void. The reason is that Article 291 of the Labor Code is
the law governing the prescription of money claims of seafarers, a class of
overseas contract workers. This law prevails over said Section 28.

2. ILLEGAL DISMISSAL CASES.

a. Legal basis is not Article 291 of the Labor Code but Article 1146 of the
Civil Code. - The 3-year prescriptive \ period in Article 291 solely applies to
money claims but not to illegal dismissal cases which are not in the nature
of money claims. The prescriptive period of illegal dismissal cases is 4 years
under Article 1146 of the Civil Code.

3. UNFAIR LABOR PRACTICE (ULP) CASES.

a. Prescriptive period of ULP cases is 1 year (Article 290, Labor Code). - The
prescriptive period for all complaints involving unfair labor practices is one
(1) year from the time the acts complained of were committed; otherwise,

CCV Notes on Labor Relations | 198

they shall be forever barred.

1 G.R. No. 143397, Aug. 6, 2002.

2 G.R. No. 196036, Oct. 23, 2013.
3 G.R. No. 141524, Sept. 14, 2005.
4 G.R. No. 167678, June 22, 2010.

b. Pre-requisite for prosecution of criminal cases. - Before a criminal action

for ULP may be filed, it is a condition sine qua non that a final judgment
finding that an unfair labor practice act was committed by the respondent
should first be secured or obtained in the labor case initiated before the
Labor Arbiter or the Voluntary Arbitrator, as the case may be. Final
judgment is one that finally disposes of the action or proceeding. For
instance, if the remedy of appeal is available but no appeal is made, then,
the judgment is deemed final and executory. If an appeal is made, then the
final judgment rendered by the last tribunal, say the Supreme Court, to
which the case was elevated should be the reckoning factor.
c. Interruption of prescriptive period of offenses. - As far as ULP cases are
concerned, the running of the one (1) year prescriptive period is interrupted
during the pendency of the labor proceeding.
d. Evidentiary value of the final judgment in the labor case. - In ULP cases,
the final judgment in the labor case cannot be presented as evidence of the
facts proven therein or as evidence of the guilt of the respondent therein. Its
evidentiary or probative value is confined merely in proving the fact of
compliance with the condition sine qua non prescribed by law, i.e., that a
final judgment has been secured in the labor proceeding finding that an
unfair labor practice act was in fact committed by the respondent.

4. OFFENSES PENALIZED UNDER THE LABOR CODE AND ITS

IMPLEMENTING RULES AND REGULATIONS (IRR).
a. Prescriptive period is 3 years (Article 290, Labor Code). - The
prescriptive period of all criminal offenses penalized under the Labor Code
and the Rules to Implement the Labor Code is three (3) years from the time
of commission thereof.
b. Consequence of non-compliance with prescriptive period under Article
290. - Failure to initiate or file the criminal action or complaint within the
prescriptive period shall forever bar such action.
c. Illegal dismissal is not an “offense” under Article 290. - The act of the
employer in dismissing an employee without cause, although a violation of
the Labor Code and its implementing rules, does not amount to an
“offense” as this term is understood and contemplated under Article 290.

5. ILLEGAL RECRUITMENT CASES.

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

CCV Notes on Labor Relations | 199

6. ACTIONS INVOLVING UNION FUNDS.
A complaint or petition for audit or examination of funds and books of
accounts prescribes within three (3) years:
(a) from the date of submission of the annual financial report to the DOLE;
or
(b) from the date the same should have been submitted as required by law,
whichever comes earlier. It should be noted, however, that this provision on
the prescriptive period applies only to a legitimate labor organization which
has submitted the financial report required under the Labor Code.

7. CLAIMS FOR SSS BENEFITS.

a. Action against employer.
The right to institute the necessary action against the employer for non-
remittance of contributions may be commenced within twenty (20) years:
(1) from the time the delinquency is known; or
(2) from the time the assessment is made by the SSS; or
(3) from the time the benefit accrues, as the case may be.
b. Action for disability claims.
The prescriptive period in the filing of disability benefit claim is ten (10)
years from the date of occurrence of disability.
8. CLAIMS FOR GSIS BENEFITS.
Claims for benefits, except for life and retirement, prescribe after four (4)
years from the date of contingency.

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CCV Notes on Labor Relations | 200